[ Page 3017 ]

CONTENTS

Privilege

Clarification of previous remarks. Mr. Schroeder — 3017

Hon. Mr. Macdonald — 3017

Mr. Schroeder — 3017

Mr. Speaker — 3017

Withdrawal of imputations of corruption. Hon. Mr. Hall — 3017

Mr. Speaker — 3017

Mr. Smith, — 3018

Mr. Speaker — 3018

Mrs. Jordan — 3018

Hon. Mr. Hall — 3018

Mr. Speaker — 3019

Mr. D.A. Anderson — 3019

Routine proceedings

Land Registry Amendment Act, 1974 (Bill 121). Hon. Mr. Hall.

Introduction and first reading — 3019

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

Amendment to vote 137.

Mr. Bennett — 3020

Mr. Cummings — 3026

Mr. Gibson — 3028

Mr. D.A. Anderson — 3031

Mr. Smith — 3033

Mr. Wallace — 3038

Mr. Gardom — 3040

Mr. Phillips — 3041

APPENDIX — 3042

FRIDAY, MAY 10, 1974

The House met at 10 a.m.

Prayers.

MR. H.W. SCHROEDER (Chilliwack): A point of privilege, please, Mr. Speaker.

MR. SPEAKER: Would the Hon. Member state his point of privilege?

MR. SCHROEDER: I would like to clarify for the Members' sake attitudes attributed to me in this House in a speech made last Tuesday, which I thought were clearly understood immediately following those remarks. But they apparently have remained alive both between Members of the House and with the press. I'd like to make a brief statement.

MR. SPEAKER: Would the Hon. Member proceed?

MR. SCHROEDER: I have been charged with an attitude of bigotry arising out of the remarks of that speech that I mentioned just a moment ago.

I have reviewed not only my attitudes, but I have reviewed also the words that were spoken. I have made approaches to the Jewish community, and they have been very happy with the explanation I have given them based on the words that were spoken.

I think that it can be easily assumed by reviewing the speech that nothing deprecative was intended towards those people of the Jewish community. If anything, their competence was elevated, in my opinion, because a comparison was made with the competence of the Minister being discussed at the time, and it would have elevated the Minister's competence if bigotry indeed did exist.

I dissociate myself from an attitude of bigotry toward these people. I have indeed committed my life to the basic tenets to which these people subscribe. As I've stated to the press, I don't believe that those who know me and who know my attitudes would find an anti-Semitic attitude anywhere existing.

The person who wrote the article, I'm sorry to say, did not make any approach to me, did not check with me regarding any statements or attitudes. As a result, I would like the Members of this House to know, and I want it to be perfectly clear today, that the attitude first attributed to me is, in my basis, unfounded, and I believed after the withdrawal of the remark by the Hon. Minister that the thing had been cleared up. That's basically it.

HON. A.B. MACDONALD (Attorney-General): Mr. Speaker, the Member has expressed his good intentions, but I must say that I regret that he did not withdraw or apologize for the actual words used.

MR. SCHROEDER: I am not aware of an apology that's necessary. If there was a misdemeanour, I would be happy to apologize. However, in the case that there was just a misdemeanour of which I am unaware, I will apologize just in case.

MR. SPEAKER: May I point out to the Hon. Member that any insults or affronts that may be offered to the community at large are not a question of privilege? Therefore, there is no, requirement to apologize so far as a Member's words are concerned unless they affect the privileges of another Member within this House. As to whether a Member apologizes to the community concerned is, of course, a matter for his own conscience, and is a matter really of courtesy that one would expect from any Member of the House.

HON. E. HALL (Provincial Secretary): Mr. Speaker, towards the adjournment yesterday afternoon I rose on a point of order to ask the Member for North Okanagan (Mrs. Jordan) to withdraw some words which I considered to be offensive. She clearly stated that she was of the opinion that there was corruption in government.

Following some points of order and Chairman's explanations, there was not an unqualified withdrawal of the charge. I availed myself of standing order 129 (5) and I received from you, Mr. Speaker, a verified copy of the Member's words.

I wish now to state to you that I clearly demand an unqualified withdrawal of her words in which she says: "....corruption within the government." I would ask you so to rule.

MR. R.H. McCLELLAND (Langley): What are you quoting from?

MR. SPEAKER: Order, please. May I first make it absolutely clear to this House that any Member may request of the Speaker a verified copy of the transcript under subparagraph 5 of standing order 129. That is done by signing, as you must, in writing such a request. If it relates to a question of privilege, a statement itself that relates to a question will be supplied by the Speaker duly verified by him. That is my duty under that standing order.

That is what the Hon. Provincial Secretary is referring to: a verified copy of the transcript.

MR. D.E. SMITH (North Peace River): Mr. Speaker, I believe the transcript is limited to 25 lines. Is that not correct?

MR. SPEAKER: In normal cases. Where the question is one of privilege, the whole question of

[ Page 3018 ]

privilege must be before the House. That, in this particular instance, is the whole question of what the Hon. Member said, what was then said in reply and what was said after that by the Hon. Member concerned.

Both the complainant and the complainee are in the transcript, duly verified, as they should be. That applies whether it be your complaint, the complaint of the Member for Chilliwack or the complaint from any other aspect of this House — verified by the Speaker under standing order 129.

I listened and compared the transcript that was supplied with the actual verbal statements made on the tape, and I made the necessary corrections, where the editors had left out repetitions because of reading or scanning, and made it precisely as it was on the tape.

MR. McCLELLAND: Did you have the Member who was speaking in attendance at the time?

MR. SPEAKER: No, I am not required to do that. If the Hon. Members doubt the Speaker and doubt the Speaker's word, I invite you at any time to sit with me and verify the tape with me. It's an imputation against the Speaker.

MR. McCLELLAND: You should do that in the first place.

MR. SPEAKER: The Hon. Member for Langley does not make the rules in this House. The House makes them.

MR. SMITH: Mr. Speaker, am I to understand, then, that when a question of privilege is raised in the House, the full transcript, if that was required, would be available to any Member of the House?

MR. SPEAKER: Dealing with the point at issue only. In other words, I would not in fairness to the Hon. Member for North Okanagan (Mrs. Jordan) simply give her statement originally in the House, but what transpired later when she made other remarks that in effect amount to a denial or amount to, indeed, a withdrawal.

If such happens — I said if such happens — in fairness to the Members concerned it would be wrong of the Speaker to limit it to 25 words. We must deal with the transaction in which the privilege is raised.

MR. SMITH: Well then, Mr. Speaker, would it not be fair to all parties concerned, when a matter of this type comes before the House, that not only the person who is alleging an offence or a charge by the one who is to be charged would have the advantage of seeing the transcript at one and the same time?

MR. SPEAKER: Well, if the House would want that to be a rule, then I propose that you change standing orders to put that into effect. I do the best I can, and I say this: if any Member doubts for one second that I would accurately and carefully and most judiciously listen to the tape and make sure that the transcript was accurate, then I can only take that as a want of confidence in my judgment or my intelligence.

MR. SMITH: I respect your judgment and the position that you occupy, Mr. Speaker. But I would think that a Member who is being charged of anything which is a result of things that were said on the floor of this House should not be required to reply in any manner until they have had the same privilege of reviewing and seeing the information that the person who is making the charge has had.

MR. SPEAKER: I agree with you that under our rules in May, where a Member is caught unaware, it is a general policy — and one that I would approve — that the Member be entitled to make himself informed and that a future date be set for the matter to be gone into.

With that in mind I would suggest that unless the Hon. Member for North Okanagan wishes to make a statement now, I would urge her to reserve her rights in this matter as to her statement until she has had the opportunity I invite her to have — before, say, Monday — to examine the transcript and to examine her words on the tape and then determine her course of action on Monday. Would she be prepared to take that course?

MRS. P.J. JORDAN (North Okanagan): Thank you, Mr. Speaker. I accept the course and would like to avail myself of it.

HON. MR. HALL: Mr. Speaker, speaking to that point: it's 'all very well and good having debates like this stretching over days, but the Member herself said she would wait for the Blues. She's had an opportunity at the Blues; so what we have now is a typical thing where smears of corruption and innuendo last for four days. The Member knows full well what she said — full well!

I made no charges. I asked for complete withdrawal of what the Member knows she said; and she knows she said it, as she confirmed to me this morning that she knew she said it. What a scurrilous performance!

MRS. JORDAN: Mr. Speaker, I would ask the Minister to withdraw the statement that I confirmed to him this morning that I said it.

HON. MR. HALL: I will not.

[ Page 3019 ]

MR. SPEAKER: Order, please! Hon. Members, I realize that it leaves something hanging in the air for four days. I regret that. But the Hon. Member for North Okanagan has not seen the correct version of the tapes. There were alterations in the tapes. I don't know that they effect in the least the very gravamen of her charge.

Nonetheless, I think that in fairness to rules of this House she should have the opportunity. I therefore appoint Monday at 2 o'clock for further discussion of this matter of privilege.

HON. D.G. COCKE (Minister of Health): Mr. Speaker, just to keep the record straight, I'm sure you didn't mean the tapes; you meant the transcript when you were saying that there were corrections.

MR. SPEAKER: I'm sorry, not in the tapes, in the transcripts. The transcripts have repetitions....

Interjections.

MR. SPEAKER: Order, please! The transcripts had repetitions crossed out.... Order, please!

AN HON. MEMBER: Oh, oh!

MR. SPEAKER: May I point out to the Members that in the presence of editors of Hansard last night I listened to the tapes. The tapes are in the custody of the editors and in no one else's custody. In their presence I listened to the tapes and added to the transcripts words that had been deleted from the transcripts by the editors for the sake of clarity.

They had words like the Chairman saying "Order" several times and various hesitations that occurred as a result of the interchange. They had cut those out. I put everything back in that was audible on the tape — that was adding to and in no way subtracting from the tape.

MR. D.A. ANDERSON (Victoria): Mr. Speaker, in the light of the fact that much of our difficulty seems to stem from a lack of a record, I would like to move that until such time as the Speaker and his committee report on the distribution of the Blues.... I would ask the unanimous consent at this time to move that until the Speaker's committee reports, the distribution of the blues to MLAs be restored.

MR. SPEAKER: There's no way that you can move that without a notice.

MR. D.A. ANDERSON: Mr. Speaker, I would like to ask the unanimous consent that this be moved at this time.

MR. SPEAKER: May I point out to you that on two occasions Members have taken Blues out of the chamber here, and they have been apparently...? I do not know this for sure. But, at any rate, transcripts appear to have been used in the newspapers; and they are doing a disservice to Hon. Members, including, I would point out, the Hon. Member for Chilliwack (Mr. Schroeder).

MR. D.A. ANDERSON: Mr. Speaker, on that very point. If the Blues are being circulated to the press, and I believe you're correct in your statement.... I believe they have been circulated by a government Member, but that's beside the point. If they are being circulated to the press, the people who are put in the worst position of all happen to be the ordinary Members of the Legislative Assembly. I have in my hand, for example....

Interjections.

MR. D.A. ANDERSON: Could I ask...?

MR. SPEAKER: The answer is no.

Interjections.

MR. SPEAKER: May we get on with the business of the House? There's no appointed time for debate on this subject.

Interjections.

HON. W.L. HARTLEY (Minister of Public Works): Mr. Speaker, I would like to turn to something more beautiful. I'd like to introduce 10 beautiful tour guide girls who will be working and serving all of us this summer, starting on May 18. The tour guides will be on duty all weekend and I'd like to ask you to welcome them. I'm sure they'll be serving us all well this summer.

Introduction of bills.

LAND REGISTRY
AMENDMENT ACT, 1974

On a motion by Hon. Mr. Hall, Bill 121, Land Registry, Amendment Act, 1974, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Orders of the day.

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

[ Page 3020 ]

ESTIMATES: DEPARTMENT OF LANDS,
FORESTS AND WATER RESOURCES

(continued)

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

On the amendment to vote 137.

MR. W.R. BENNETT (Leader of the Opposition): Mr. Chairman, in just reviewing some of the questions that were asked and haven't been answered by the Minister, I think what we've been discussing is a series of incidents in the takeover of the forest industry that would indicate an attitude of nationalization or provincialization that originally was our intent in bringing forth a series of incidents in taking over mills, clearly required a statement from the Minister on his intention with his department on the future of the private forest industry in British Columbia: whether the government is going to be partially involved; whether they're setting up a major complex in each region; whether the intent of the government after they set up these complexes is a continuing expansion until the industry is completely taken over.

I believe it's in the interest of this House to know the intention of the Minister for the forest industry. This industry represents over 50 per cent of the income, and jobs in this province are directly related to it. I believe that a statement of his philosophy is necessary at this time to clear the air.

I'd like to say that since the takeover of Ocean Falls and the takeover of Columbia Cellulose, the takeover of Plateau Mills and then Kootenay Forest Products, we have a pattern emerging where the Minister is involving the taxpayers' money in activities that were normally reserved for the private sector.

Now I think what we have here is a philosophical statement that's required. What is the intention? Is there a timetable? Is there a schedule for this Minister in his takeover of the forest industry?

The big questions is: can the Minister adjudicate fairly over all the industries while he has a specific interest of maintaining a high performance of a government mill in an area where you have surrounding private mills? Is there not a conflict of interest in adjudicating and in allocating timber supplies, or in allocating how chips are moved and the price of those chips?

This is the point we've been trying to make. Secondly, is the Minister's preoccupation in taking over industry contravening or misusing the power of his office to achieve the takeovers that cannot be achieved under normal bargaining conditions? Indeed, can normal bargaining conditions ever exist when any industry or any company he wishes to take over continues to operate at the pleasure of the Minister and at the pleasure of this government?

I think the question we are discussing here is very broad, and it concerns whether this Minister can so separate his interests in proving his performance as a major business entrepreneur with public funds and also remain free to allocate that timber surrounding that mill to other complexes that may make his management or the management he selects and directs look weak indeed. And does not the survival of his government office then start to depend on how well he runs these complexes in competition with the complexes and the manufacturing complex of wood products surrounding that area?

The point is bigger than any one mill or any one takeover, but these form part of the pattern we are concerned about. This Minister apparently has used powers and suggestions in his office to take over these companies that are not available in the normal buying or selling of a company if they existed between private individuals, whether they existed with private citizens or corporate citizens in this province — the same clout and the same club and the same advantage to direct the sale and force the sale and demand that at the government's price. These aren't available on a normal market. These are powers that are given to the Minister not so he can take over the industry but so he can manage it wisely and fairly and allocate the timber not for government business or private businesses but for the benefit of all the people of the province, for their benefit through taxation, for their benefit through employment, and for the corporate benefit of small timber mills and large timber mills to operate under the conditions and rules set down by this Minister.

But we have an unfortunate series of events that have been questioned, not necessarily by me in any personal vendetta with this Minister, as was suggested by the Hon. Minister of Transport and Communications (Hon. Mr. Strachan), but in the interests of clarifying a situation while we have this Minister's estimates and a chance to question him fully on the whole series of takeovers for the first time in this Legislature.

Some of these takeovers were taking place during the session of 1973 and we had no estimates in the fall of 1973. Surely it is our duty and our responsibility as Members of the opposition to question in detail what he did during these takeovers, whether these allegations from people involved are true and what intent he has for the future of these operations and expanding them. They are not built; they are bought. They are taken over with the public's money and the public has a right to know.

In the defence of this Minister we've seen not one question answered as to whether he was right or wrong in his attitudes which are under question, whether he misused the power in taking over Plateau Mills, whether the government can be accused of

[ Page 3021 ]

sloppy handling in the case of taking over Columbia Cellulose and his interference or the changing of the contract and the allocating of a contract for the sale of newsprint from Ocean Falls. All of these things must be explained to the Legislature.

We're here to find out for the public, who, through no choice of their own, now find themselves in ownership of most of these enterprises. These enterprises weren't listed or detailed in any platform or policy that I saw. There was no mandate given for the takeover of these. We would like to know what the intent is, how they were taken over, to what purpose and what plan, and if it is going to be the gradual and complete takeover of the industry.

The defence by the Minister himself and the defence by the Hon. Minister of Transport and Communications (Hon. Mr. Strachan) took great glee in listing directors of private companies, showing that they had foreign connections. And this is fine. They are responsible to their shareholders, but they are also responsible as corporate citizens for how they cut, and with the rights to manufacture our timber resources in this province. This Minister and this government has the power to make these corporate citizens cooperate and operate in the best interests of British Columbia. Their shareholders have a right to know beyond that how they are managing their affairs reflecting their equity investment.

This Minister has a double responsibility in this Legislature. The taxpayers, through no choice of their own, now are the equity owners of these enterprises. He also has to explain, on behalf of the equity owners, his stewardship of these companies and how he took them over. He also has to explain, as Minister of Lands, Forests and Water Resources, how he is enforcing the rules that this company operates on. He has a dual role: one to the investors in equity ownership and the other to the citizens of this province as to the fairness and his attitudes in making sure they are being fairly dealt with and dealt with under the same conditions as all companies are dealt with.

There is a difference between the private sector and the public sector. Particularly for a government which talks about open government, there should be no hesitation in tabling documents in this Legislature to the citizens of this province as equity owners of this enterprise relating the details of a newsprint contract that has been questioned in the newspaper and been questioned in this Legislature since last fall. We only have to bring up the type of discussion we've had because this Minister has right now on the order paper, out of 72 questions left unanswered, over a third of the questions which are directly the responsibility of this Minister in not providing information to this Legislature.

In question period this same Minister has a history of taking as notice and not providing answers to this Legislature. This is not the open government that other Ministers talk about. I am not condemning the whole government because there are other Ministers who volunteer information in advance before, it is requested. I respect them for it, and I respect them in meeting their responsibilities for the type of government they said they were going to be operating.

But this Minister feels he is above the Legislature. We do not get answers to our questions, either orally or on the order paper. We have not had answers to any of the many questions relating to the forest industry and the takeover of these companies that were asked last Tuesday evening. This is what this debate is all about and this amendment. It is an attitude of irresponsibility in meeting the commitment to manage this department and this resource to the benefit of the people. If we can't get the answers we must assume the worst.

We must assume, then, that the Ocean Falls newsprint contract is not favourable to British Columbia. In fact, we have the statement of Mr Vesak, the manager and director of Ocean Falls, at various times in the newspapers stating that the new contract with Gottesman company and Mr. Wallach had a fixed term going to 1976. We have further statements from Mr. Vesak in the newspapers that perhaps the return is conservative by today's standards but they had the security of a fixed agreement, a fixed price. These are statements from the manager of Ocean Falls; these are statements from a director of Ocean Falls.

We must assume that this director and manager knows what he is talking about. We have a right to question it, with the mystery and with the conjecture and with the detailing of this contract — which the Minister admits was a bad contract because he has said he has renegotiated it. You don't renegotiate a good contract; you renegotiate a bad contract. I think, then, if we renegotiated it and the Minister is worried about a competitive aspect which doesn't exist in the newsprint market, the only reason for keeping this contract hidden is to protect Mr. Wallach and Gottesman national in their selling arrangements with other corporations.

That's the excuse Mr. Wallach gave for not making it public. His reason was that it didn't make any difference to the government that he might have various agreements with different newsprint companies in the sale of newsprint, and it was to his advantage not to make this document public — not to the citizens of British Columbia.

Newsprint is in short supply. Newsprint is in heavy demand. Newsprint has a projected increasing price over the next three years. That's no time to go for a conservative agreement — we won't get quite the market price. That's not the time to go for a fixed agreement to 1976 and get less than market. That's

[ Page 3022 ]

the time that the actual management skill in negotiating contracts comes in. That's where the astuteness and the ability of the directors and the managers and the people that are directing the affairs of this company for British Columbia comes in, in maximizing the sale price on an open and fair market for the people of British Columbia. That was the reason for taking it over.

But we have to concern ourselves with Ocean Falls. We have to concern ourselves that it may be that the whole future of this complex is in doubt. We have to be concerned that we have just had a major study done by Sandwell. I think that in the interests of this Legislature, in clarifying the situation, that that study, which I understand has now been completed, should be tabled in the Legislature. I am concerned that that study may recommend such things as: "Run Ocean Falls while this high newspaper market continues, and when it falls below a certain price, close it forever."

There is concern in the Ocean Falls community that there is no permanency to this company, that there is no permanency to the newsprint plant. I think the workers there and the legislators here should have the benefit of the knowledge of the Sandwell report, as it relates to the future of the operations of Ocean Falls, such marketing agreements as this Minister and this corporation have entered into, and whether indeed there is a future for the employees there. Was it a good deal for British Columbia? Is it a good deal? Are we being taken on a poor contract? Indeed, does this contract specify, when it is sold at a fixed price, and when it has a terminal date going to 1976, that it can't be sold? No B.C. newsprint can be sold on what is called the black market.

Is this a condition in the contract? If it isn't why isn't it? These questions were asked the other night. Instead of answers we have had attacks on the former government. We have even had attacks on myself, which I don't mind. But really, what we are trying to get to here is the operation of Ocean Falls, the operation of the whole Lands, Forests and Water Resources department, the conduct of this Minister in setting up a mini-empire and putting the people of British Columbia into equity ownership, and as to whether he knows the difference in adjudicating fairly between two companies where he is operating both for the government in the enforcement of the rules and the equity ownership of the people on the other hand, in competition and in conjunction with the equity ownership of private citizens, corporate citizens, small and large.

Although the natural target is the large forestry complex, many small companies in this province and many individuals earn their living in the forestry industry. Many would like to find out if it is the intention of this Minister to make them civil servants in his takeover bids. Many would like a statement from this Minister on his intentions.

It all goes back to a history of when he started Ocean Falls, Columbia Cellulose, and then that controversial one, Plateau Mills. Plateau Mills, if we go back, wasn't a big forestry giant. It was a series of shareholders from our province and a collection of small shareholders from the United States. It turns out that some of the local shareholders in Canada wanted to sell, and they offered it to IT&T, and that's fine. I think if he said that that company is too large, there is a written policy that this government actually doesn't want any investment from outside our province, if there is a written policy that this government doesn't want specifically U.S. Investment, or if this government doesn't want specifically, Japanese investment, that's fine. But we have seen the rules changed from time to time.

This mill, this sale, was turned down because the Minister said he didn't want the company bought and furthered by American interests. Yet in other complexes, in other forestry ventures since then, we have American investment much greater than the $7 million. The American investment in other aspects of our economy certainly is greater than $7 million. Yet he said that he didn't want American investment.

If that is the policy of the government, set the policy and make it for all companies, in all industries. But don't pick and choose as the mood sits just because you want to use it as a reason to block a sale to take over a company.

Don't say, in the case of Kootenay Forest Products, that you don't want Japanese investment in the forestry industry when Crestbrook wanted to take over Kootenay Forest Products, and almost simultaneously have the Minister of Industrial Development (Hon. Mr. Lauk) announcing that he has got a trade trip to Japan to encourage investment in this province. If you don't want Japanese investment, then say so. But don't use it as a reason to block the sale of a forestry company just because you want to take it over yourself.

Come clean with the people. Tell us the motives. Let us adjudicate on this matter and judge it, with all of the information of your intention, and why you are taking these steps. Why is it necessary to use this type of pressure? Indeed, there is pressure — there's pressure in Kootenay Forest Products and there's pressure in Plateau Mills.

It doesn't mean threatening, or using pressure — the Minister doesn't have to call them into his office, and say he's going to kick the censored out of them. All he has to do is say: "You are operating here at the pleasure of the government. Your very economic future depends on you being cooperative with us. Your very economic future and right of survival depends on whether I want you to continue, because you are cutting under licence to the Province of

[ Page 3023 ]

British Columbia. We, the people, own the resources, as we always have. You have a right to cut. If you don't meet our conditions, if you don't sell to me, then of course your days in this province are numbered. Get out now while the going's good. Get your price because next year we might not be so generous. We might not offer you as much."

[Mr. Dent in the chair.]

Make an offer they can't refuse, because when you set the rules, control the resource and can block any free sale on the free market of a corporation or a company or a small individual mill, then this person has no other alternative but to take the offer you make.

When you use excuses like the Minister did in his office in Victoria when he was talking to the negotiators from Plateau Mills.... The Minister said that he didn't want the company sold to any American — not just IT&T but any American. The Minister would say that they can sell to a Canadian company, but he intimates that the company could anticipate difficulties that they had not heretofore experienced in the operation of the mill if they didn't meet his dictates in how he wanted that mill. Is that a threat? Certainly it is a threat. It is the only threat that's needed when you have the control and the responsibility for controlling fairly the management of this resource in our province.

The management of that resource shouldn't just be to the benefit of acquiring companies. It is supposed to be to the total benefit of all the citizens. If the Minister is making this choice in his own mind between public and private ownership, then the public should be privy to the information he has in making these judgments before he used these types of tactics to start his slow — maybe not so slow — but gradual take over of the industry.

Really, is he meeting his commitment to the office when he uses that office for the purpose of taking over the industry? The province has the timber. They have collective stumpage. We set the manner in which it can be cut. We set the ecological controls. We do everything but own it. We do everything but own the manufacturing facilities.

With that manufacturing facility, they have two rights — the right to make a profit and the right to lose money.

The province collects their stumpage regardless. The Province of British Columbia collects their stumpage. The Province of British Columbia has the right to direct how that wood should be cut and to what recovery rate.

Do we need the additional responsibility or the additional job of actually running the manufacturing facility? Can we fairly run it where we have other facilities next door doing the same type of work, depending on that same Minister who is running this one, to allocate the timber on a fair basis to allow them economic survival, and on the fact that he won't favour the mill that now becomes his pet project? He clearly place himself in conflict of interest.

Interjections.

MR. BENNETT: That 's what I said — the people of the province as the owner of the resources and the collector of taxes.

When he also gets to equal responsibility of equity ownership, he's operating on two different responsibilities.

Interjections.

MR. BENNETT: Mr. Attorney-General, you miss a very major point here. The very major point is that the preoccupation of an politician from any party in proving that his managerial I kills are better than those around him is to favour his own.

I say that when you get into these corporations that is natural. But because people have only one person to sell to now, when the Minister uses such types of methods — that you can anticipate difficulties that you have not heretofore experienced if you do not meet the conditions — in fact, if you do not sell to the Government of British Columbia.... You don't have the right of free sale of your timber and manufacturing facility. You don't have any security. The Minister can veto any sale; there can be only one buyer, so any threat, the implied threat and the threats that wreched in the case of Plateau Mills....

Interjections

MR. BENNETT: Well does the Minister deny them? I'm asking question. I'm re-asking questions that were asked the other day, questions that you've never answered in this House. There are questions left on the order paper; there are questions left unanswered in all question periods; there are questions here in the estimates that you don't answer.

Many other Ministers, Mr. Chairman, answer questions; they volunteer information. They treat this House with the respect it deserves; they treat it with the open government they talk about.

But from this department, this important department covering B.C.'s major resource, we can't get any answers — not only answers to the management of the resource now that the Minister has embarked on being an entrepreneur on our behalf — not necessarily by our choice but by his — but we can't get any answers on how he acquired these corporations, these companies. By what methods?

[ Page 3024 ]

Methods that are up to question by the very people he dealt with. Questions and charges that were initiated with them, not in this House, but with the very people who were forced to deal with this Minister, people who were offered no other choice when they sold their mill.

I've asked him: in the charges from the directors of Plateau Mills who sold the mill and who said that the Minister used pressure to force them to sell to the government, does he deny that?

In his very office, he said that they could anticipate difficulties that they had not heretofore experienced. He doesn't have to use the crudity of saying he's going to kick the censored out of them, which has been mentioned in other places. His threats can be more subtle, equally as heavy. It's an offer they can't refuse; they have no other choice.

We have those American directors who are small individuals. This wasn't MacMillan Bloedel; this wasn't the white knight charging off to tackle J.V. Clyne, beard him in his den, or tackle the forestry giants. This was a little firm made up of many small investors — 90 per cent of it was owned in the United States.

HON. G.R. LEA (Minister of Highways): IT&T.

MR. BENNETT: He wasn't talking to IT&T here, that was the buyer he turned down. I'm talking about the way he dealt with the people who were selling. These are the people who did not initiate that sale. These people were selling to accommodate the Canadian shareholders, a group of them, who wished to sell out. This wasn't dealing with IT&T; this is talking to a group of small individual investors, people like Mr. Goodwin from just across the line, people like the American directors who I can list — there's Mr. Brown, Mr. Goodwin....

These people aren't any mysterious corporate giants; they're people like you and I. They're concerned about living next door to a country that may have anti-American attitudes. It was their wish that if the local vendors, the people who initiated the sale, the people in the Vanderhoof area, if it didn't sell to IT&T, they wanted to retain ownership of this company. They wanted to retain ownership.

When it was turned down to IT&T, they would just as gladly have owned. But why would you want to continue to own in a province that tells you that you can anticipate difficulties that you haven't heretofore experienced?

That gives you an idea of the direction which this government is going: if you aren't taken over today, you might be taken over at a lower price tomorrow — it's an offer you can't refuse. Next year it's lower; the next year it's lower. There's only one buyer; sell to us now when we're in a good mood. Sell to us because we don't want any American owners. No American owners.

These are the attitudes of takeover. To what purpose? A clear purpose that has never been defined o this House by this Minister.

Equity ownership for the citizens of British Columbia — and we can't find out how, why and what is the master plan for taking over these companies. It's a little embarrassing for us that a Minister representing the Province of British Columbia would feel he had to use pressure and threats to take over a company when he won't even tell us why or to what purpose.

The final deal in this company, Mr. Chairman, was not between any giants. The giants were gone. It was a group of small shareholders in the United States and Canada selling out and a couple of small shareholders or individuals who were trying to arrange financing to buy in Canada because they understood that it could be sold to Canadian content.

Now if, as the Minister said, they couldn't sell to them because he doubted their ability to finance, even though they guaranteed the financing, it means again that he'll deal only with bigness, that the individual still hasn't got the opportunity to take a chance and buy a mill in this province with the hope of achieving some sort of economic success. But he will sell or guarantee a sale only to a major company.

What sort of doubletalk is this? What sort of doubletalk is it when the excuse of no American ownership is used in one case, yet you go ahead and encourage American participation to a much greater degree somewhere else? What sort of doubletalk is it when you won't allow Japanese ownership in one case because you really want to take over the mill, yet other departments of this government are encouraging it somewhere else?

This whole Plateau Mills situation all on its own — forgetting the same type of tactics that were suggested in Kootenay Forest Products, suggesting the unusual circumstances surrounding Columbia Cellulose, suggesting the fact that....

This Minister even questions that we have the right to find out reasons why he appoints certain directors to the company. In Can-Cel, he says: "Why wouldn't I employ the largest envelope maker in Kansas City?" That's fine, but if envelope making is a criteria, what was the criteria for being a director? What are the qualifications? If it's making envelopes, we'd like to find out why the Canadian envelope makers weren't included, why we had to go to four people from outside Canada with a lot of experience that, in fact, control this company. And on what recommendation?

I'm concerned again when we're talking about Mr. Wallach. The Minister who appointed him as a director said: "When he was made a director, I hadn't even met him." Well, what mysterious person told him he had to appoint Mr. Wallach if he hadn't already met him? How was Mr. Wallach's name plucked out of the hat or out of thin air? I'd rather

[ Page 3025 ]

he said he knew him. At least we'd know there'd be some connection, that he had high confidence in his ability because he knew him for many years. But he said in the Legislature here the other day: "I've never met the gentleman." But he's met him since, I'm glad of that. But he said he'd never met him at that time. He said he's met him since. Well, with the deal we've got at Ocean Falls, a lot of us wish he hadn't met him since either.

Going back to Plateau Mills: forgetting all of the other activities, all the concerns and all the other mystery and all the other concerns surrounding all of these other areas, what about Plateau? What about a Minister that would threaten anybody that if they didn't sell to this government they would experience difficulties they hadn't heretofore experienced in the operation of the mill in British Columbia?

I'd like to read a letter from one of those negotiating people who met with this Minister in his office. It's from Mr. B.R. Goodwin, 1065 East Walker Street, Blackfoot, Idaho. It's addressed to Mr. Bill Bennett, Leader of the Opposition. He says, regarding this deal:

"The proposal to sell Plateau Mills arose from an unsolicited offer from IT&T to purchase our mill at Vanderhoof, B.C.

"The U.S. partners did not want to sell the mill at all, but agreed to cooperate with the Canadian partners who initiated the discussion regarding selling the mill. It was agreed by both Canadian and U.S. partners that if the IT&T sale failed to materialize, Plateau Mills would no longer be for sale.

"An offer of approximately $8.6 million was made by IT&T in 1972, and after some months of negotiation in which IT&T and ourselves spent thousands of dollars in auditing fees, we obtained approval to sell to IT&T from the Canadian federal government.

"We then sought approval of the sale to IT&T from the British Columbia government, but were told by the Hon. Robert Williams that we could not sell the firm to the IT&T, or to any American, period.

"In view of B.C.'s encouragement of Japanese investment, as well as the fact that the government is seeking investment from other countries, we found this objection from the Minister in regard to American investment very surprising."

Interjection.

MR. BENNETT: It is surprising. It wasn't because IT&T was too big; it was because they were American. It was not because they were a corporate giant but because they were Americans. The Minister of Highways (Hon. Mr. Lea) applauded because he doesn't want them as tourists — he said that. He doesn't want them as investors, and he doesn't want any cooperation between the two countries at all.

I go on:

"In the meeting held in the Minister's office in Victoria where the 'no American' statement was made, the Hon. R. Williams gave our firm three alternatives following his veto of the IT&T sale. One was to sell to the government. Secondly, we could sell to a Canadian firm or individual. Thirdly, we could maintain to operate ourselves.

"In the second and third propositions, the future success of Plateau Mills seemed questionable — questionable when the Minister intimated that we could anticipate difficulties that we had not heretofore experienced in the operation of the mill."

Who would want to continue under a situation like that?

"Knowing that every mill operates in B.C. at the government's pleasure, and that timber quota and supply is at the will of the government, we realized that anything other than selling out to the government itself would be difficult — this in spite of the fact that we had planned to stay on if the IT&T deal fell through.

"In the same meeting Mr. Williams referred to the NDP government in Saskatchewan and wanted to make it clear to us that the B.C. NDP government would not be embarking on a like programme of starting up businesses, which he referred to as a mistake. Rather their idea was to take over established businesses such as Plateau.

"Another remark made by the Minister confirmed our decision to sell out to the government. After the Minister said that he personally would prefer to take Plateau Mills. over in the same manner as Allende confiscated industry in Chile, we began to feel that we have little choice between retaining the business or selling out at that time, in spite of our original desire to keep the company together and operate it.

"We were very happy with our association in B.C. The partners never took a dividend from the company, but continued to reinvest in the company, building it into one of the soundest and most successful lumber operations in the province.

"This will give you some idea of how the sale ever came about to the B.C. government. As one of the U.S. partners, I can assure you that we enjoyed our association with the Canadians and appreciated being a part of a pioneering northwest forestry operation,

[ Page 3026 ]

Plateau Mills.

"Yours truly,

"B.R. Goodwin."

This is not any charge from inside the House. This is a letter sent to me repeating some of the statements made by these directors and shareholders when this company was taken over.

HON. MR. LEA: An unbiased report.

MR. BENNETT: Certainly it would be unbiased. This man is gone. He's no longer in Canada. He offered this letter only on an informational basis.

At the time that some of the directors were questioned — and it might be wise to question them again — they hadn't received their cheque. Who's going to say anything till they've got their money and gone when they are now dealing with a country that operates like a banana republic?

I think that that conduct in office is indefensible. I think that the citizens, when they elect their public representatives and when they're given additional responsibilities in the cabinet, have a responsibility of behaviour. Over and above that, their directions on where they're taking a department as important as forestry in the Province of British Columbia....

Interjections.

MR. BENNETT: The Highways Minister, Mr. Chairman, is quite free to discuss his department when his estimates are up. We're here trying to get answers from a Minister who hasn't provided answers in this House. This department is important.

You may think it's smart and funny to use some sort of old attack, and you can do that because politicking is allowable outside the House, but inside, in committee now....

AN HON. MEMBER: No politics in here, though.

MR. BENNETT: ...we're trying to find some answers about the direction of this department. We're trying to find answers on where the department is going and why certain events took place. We are trying to find clarification on charges that were initiated outside this House.

Interjections

MR. BENNETT: I didn't know the mail stopped at the border now. That might be the next....

MR. A.V. FRASER (Cariboo): How is the research coming into the potholes?

MR. BENNETT: I think that it's important enough, and it may be that some of those Ministers over there, Mr. Chairman, are insensitive enough not o spot the conflict of area and management and responsibility. Some of them may be insensitive enough that they don't realize the responsibility of office to ethical behaviour of no threats and of not utilizing any pressure, and that indeed they're more than individuals on a power trip trying to be major lumber barons. They're here to serve the people of British Columbia.

There's information regarding all of these deals which causes concern in British Columbia. There's information regarding Ocean Falls that isn't presented in this Legislature. There is the Sandwell study. There's the agreement with Gottesman and Company. There's the fact that this director of Can-Cel can be the president of a company now that he has an inner connection with this government to make an agreement that isn't being shown to this House. There's even the reason the Minister gave that it's for competitive reasons, which is not a valid reason in the marketing of newsprint. If, as he states, he has negotiated this contract and filed the one that existed before- the one he just negotiated, let the people be the judge.

MR. R.T. CUMMINGS (Vancouver–Little Mountain): The Leader of the Opposition (Mr. Bennett) seems to have obsession with the word "takeover," probably with good reason because he knows how to takeover. Do you remember November 17? Does the Hon. Member for Langley (Mr. McClelland) remember November 17? Did you think ability was enough?

MR. CHAIRMAN: Order, please!

MR. BENNETT: Point of order. In keeping with the whole defence of some silly little attack from this government, they have now got the Member almost capable of doing that type of attack on his feet, inasmuch as it's hard to read in the Blues afterwards. Nobody knows what he says.

That has nothing to do with the estimates of this Minister; it's in keeping with the speech made by the Minister of Transport and Communications (Hon. Mr. Strachan) in this debate and others, who rather than answer and defend the department are using attacks of situations not relating to this department.

MR. CHAIRMAN: Order, please! On the point of order....

MR. BENNETT: Mr. Chairman, you should call it before I have to bring it to your attention.

MR. CHAIRMAN: Order, please! On the point of order raised by the Hon.....

[ Page 3027 ]

Interjections.

MR. BENNETT: If You were any good you'd still be Leader.

Interjections.

MR. CHAIRMAN: Order, please! I would appeal to Members on both sides of the House....

Interjections.

MR. CHAIRMAN: Order!

Interjections.

MR. CHAIRMAN: Would the Hon. Member for Vancouver–Little Mountain (Mr. Cummings) remain in his seat, please?

Interjections.

MR. CHAIRMAN: Order, please!

Interjections.

MR. CHAIRMAN: Would the Hon. Members...? Order, please! Do the Hon. Members wish to proceed with the business of the committee or not?

AN HON. MEMBER: I never heard the Chairman move to rise to report progress. Maybe it can be done.

Interjections.

MR. CHAIRMAN: Would the Hon. Member for Vancouver–Little Mountain be seated for a moment?

Interjections.

MR. CHAIRMAN: If the Hon. Members are ready to proceed with the business of the committee, on the point of order made by the Leader of the Opposition, the point is well taken. The Hon. Member for Vancouver–Little Mountain (Mr. Cummings) was clearly proceeding in a direction which was not directly relevant to the Minister's estimates. I would ask him to relate his remarks to the Minister's estimates before us and to the amendment.

MR. CUMMINGS: Can I use the work "takeover" — just like the Leader of the Opposition?

MR. CHAIRMAN: Order, please. In regard to the point of order we are dealing with an amendment that the Minister's salary be reduced by $1 because of a lack of confidence in his administrative responsibilities. You are to speak to that amendment.

MR. CUMMINGS: Well, let's talk about Plateau Mills. The citizens are very, very happy. They are making lots of money. There was a red herring here — lots of red herrings. In fact, one of the worst red herrings was the phony offer from Smithers. It was backed by the Household Finance in the Social Credit Party. You know, those backers....

MR. BENNETT: On a point of order, Mr. Chairman, this Member said that there was an offer made in the private industry to buy a mill, and he said that it was backed by the Social Credit Party. At no time, either through the private industry or through any elected office, will this party be part of takeovers. Would you ask him to withdraw it?

MR. CHAIRMAN: Order, please. It is not a point of order. The Hon. Leader of the Opposition may correct the statement when he again takes his place

MR. D.M. PHILLIPS (South Peace River): Ask him to withdraw.

MR. CHAIRMAN: Order, please! I would ask the Leader of the Opposition to state under what standing order he is making his request.

MR. BENNETT: I'm asking him to withdraw an untrue statement. There have been withdrawals demanded in this House.

MR. CHAIRMAN: Order, please! The Leader of the Opposition may rise on a point of order and correct this statement. It is left at that.

MR. BENNETT: On what basis, Mr. Chairman, can I ask someone to withdraw?

MRS. P.J. JORDAN (North Okanagan): Mr Chairman, come out of the clouds! You read through Hansard and the bias of the Chair is sickening!

MR. CHAIRMAN: Order, please! The occasion for asking an Hon, Member to withdraw his remark is if it is an offensive remark under standing order 43 (2), If it is an incorrect statement it may be that the Hon Member could be mistaken. It is quite permissible then for another Hon. Member to rise and make a point of order to correct the statement, preferably after he has completed his remarks. But it is not necessary to ask him to withdraw it. It is just a matter of correcting the record on an incorrect statement.

MR. BENNETT: Mr. Chairman, on a point of information, do you mean this Member can continue on that basis without my having the right to ask him

[ Page 3028 ]

to withdraw where I consider that he is...?

MR. CHAIRMAN: Order, please! Where there is disagreement about the facts of a situation it is permissible for a Member on a point of order to correct the statement but not to ask him to withdraw it unless the remarks are offensive under standing order 43 (2). I would ask the Hon. Second Member for Vancouver–Little Mountain to continue.

MR. CUMMINGS: We were talking about Plateau Mills. This phony offer that came from Smithers — they couldn't even get their financing from Household Finance. This isn't a real offer, yet the papers made a big deal of it. When you really want to talk about takeovers, ask the Hon. Member for Columbia River (Mr. Chabot) what it is like to be taken over by sheer money.

MR. CHAIRMAN: Order, please! I would ask the Hon. Second Member for Vancouver–Little Mountain to keep his remarks strictly relevant to the amendment before us.

MR. CUMMINGS: A real takeover is done this way....

MR. BENNETT: On a point of order, I think you should direct quite clearly that this Member does not have any information on the forest 'industry. His whole presentation is mischievous. I wish you would direct him as to what estimate we are on, just so that he may know. We are on the Department of Lands, Forests and Water Resources and we are on the amendment to the Minister's salary.

MR. CHAIRMAN: Order, please! The Hon. Second Member for Vancouver–Little Mountain may proceed. Keep your remarks strictly relevant to the amendment before us, please.

MR. CUMMINGS: Between the Chairman and the Leader of the Opposition I feel like I am being hammered down here pretty badly. There seems to be a lack of free speech.

SOME HON. MEMBERS: Oh, oh!

MR. CUMMINGS: I can hardly open my mouth without them hollering.

Interjections.

MR. PHILLIPS: You are embarrassing the Deputy Premier even.

MR. BENNETT: Roy, you'll never make the cabinet now.

MR. CUMMINGS: He'd only be an office boy in IT&T if it weren't for being born into a noble family.

MR. CHAIRMAN: Order, please! I would ask the Hon. Member not to make personal references but to keep his remarks strictly relevant.

MR. CUMMINGS: Do you know who I am meaning? This is ridiculous. You won't let me speak so let's call the question.

MR. BENNETT: Are you proud of him, Jim?

MR. G.F. GIBSON (North Vancouver–Capilano): This didn't exactly start out as a jolly and productive day and it has been going downhill ever since. We have spent three days rattling around in one little corner of the Minister's vast empire.

Interjection.

MR. GIBSON: That's right. That was exactly what I was going to say, Mr. Minister. We were put there in the first place by the amendment moved by the Leader of the Opposition. We have unfortunately been kept there for three days by the intransigence of the Minister in his unwillingness to reply.

I would very much hope that we can get off this subject this morning and deal with the amendment and then get on to some of the other concerns of this Minister like, for example, the whole taxation structure of the forest industry and the Pearse commission and things like the Columbia River and nuclear energy and....

MR. CHAIRMAN: Order, please! I would ask the Hon. Member to confine his remarks to the amendment, please.

MR. GIBSON: Mr. Chairman, since the amendment relates, as you stated, to the Minister's administrative responsibility, I presume it is not out of order to enumerate some of his administrative responsibilities, which is what I was doing.

I'll return to the narrow terms of reference of the points made by the Leader of the Opposition. He elaborated somewhat today on charges concerning the takeover of Plateau Mills. He raised a couple of questions which I think the Minister must answer.

Did the Minister really, in his office, confirm a refusal to approve the sale of Plateau Mills to any American — any American whatsoever? A very simple question. Could the Minister respond to it and could he then describe where he gets his legislative authority for that kind of stand, if that was indeed his stand? To the best of my knowledge this Legislature has not, as yet, adopted a policy on foreign ownership. I have strong views on foreign

[ Page 3029 ]

ownership. Many other Members of this assembly do. But the point that must concern any of us is the unilateral executive exercise of such power without legislative authority in debate.

Secondly, did he tell the then owners of Plateau Mills that they would run into unforeseen difficulties if they didn't do what the Minister wanted them to do — namely to sell out to the government? If he did indeed do that, what did he have in the back of his mind? Was this more backroom muscle which we have seen used before in this government?

That is the essence, as I see it, of the two charges on Plateau Mills. This Minister can, I think, stand up and deal with those pretty quickly this morning.

We move on to the matter of Ocean Falls on which much more time has been spent. The charges from the opposition so far have been pretty thin. I'll go over them briefly.

The charge is, first of all, that the Minister has allowed Ocean Falls to deal with a large international organization. I think that is undoubted. "Gottesman is a Giant" is a headline in the Province this morning. This brokerage firm is a large international organization, but that is not, of itself, wrong.

The Leader of the Opposition has gone on to imply and I say only "imply" because I have been unable to find a specific statement on this — that the Minister has been condoning the sale of Ocean Falls newsprint on the black market of the world and specifically of the third world.

Ah, but it is the phrase "black market," Mr. Member. That is what it is called.

The Minister can very simply stand up and reply to that.

The Leader of the Opposition has also said the contract held by the government with Gottesman is a bad contract and he has made some statements which disagree with the Minister's interpretation of that contract. For example, is it fixed price or not? If the charges from the opposition have been pretty vague and pretty unsupported, the Minister's answers have been no better and have caused the continuation of this debate.

The Minister, for example, in reply to the charges that the contract was not a good one, has said the contract provided that prices would be better than the west-coast price. Mr. Chairman, when you are dealing on an international market that is booming, when the demand all over the world is very high, when the west-coast price is basically fixed by long-term arrangements between established sellers and established buyers, that price is naturally going to be lower than the international price. Naturally the spot market price will be better.

Any company that chooses to high-grade the international market and chooses to get all that the traffic will bear at a time of scarcity is going to make more money. That same company, at a time of growing capacity, is going to find those markets dry up because the established producers with excess capacity will start selling their excess capacity more cheaply than a high-cost producer like Ocean Falls.

It is no defence against this contract being a bad contract that the base price is higher than the west-coast price. It should not only be higher under the circumstances of this company's trading, it should be tremendously higher. The Minister hasn't made anything specific there at all.

Next, he is hiding behind the argument of corporate secrecy on the grounds that disclosure of this agreement would hurt what the Minister refers to as this little British Columbian company in this giant world of international trading companies. I suggest the Minister isn't hiding behind corporate secrecy because it would hurt the company; I suggest he is hiding corporate secrecy because it would hurt the government if the deals of this contract were revealed.

The contract has not been tabled and it must be tabled. There have been too many suspicions raised. The Minister has raised some of those suspicions himself by saying that the original contract had to be renegotiated and it is under renegotiation again. I think this House might well be tolerant of that sort of procedure if we knew the details of the original contract and the current contract, and if we knew the government's targets in going ahead with its renegotiation. We appreciate that you make the best deal you can at the time. Then times change and you try to make a better deal. That is why it is very dangerous in this day's world to enter into long-term, fixed-price arrangements unless you get an awfully good deal on the other side.

But as much as the government might dislike it and as much as they might want to keep these things secret, I suggest to them that it is an inevitable outcome of the extension of the government into an operational role in the economy. It is a well-established principle of government that, wherever there is authority, there must be responsibility. That's the opposite side of the coin. Very specifically there must be responsibility to this Legislature.

The NDP has talked about the virtues of decentralization. I hope the Minister of Industrial Development, Trade and Commerce (Hon. Mr. Lauk) is listening to this because he surely will approve. The ultimate decentralization in business terms is private enterprise. The Minister of Industrial Development knows that. He has to suffer in a cabinet that thinks otherwise.

Interjections

MR. GIBSON: The Minister of Health wants to talk about GM, but I didn't know they were in the

[ Page 3030 ]

forest business, Mr. Chairman.

Interjection.

MR. CHAIRMAN: Order, please! Would the Hon. Member please proceed with his remarks on the amendment?

MR. GIBSON: I suggest the bigger business units get, the less real decentralization there is, to answer that Minister. When the biggest unit of all gets into business, which is the government, then your decentralization is completely lost. Government should regulate industry, not run industry. When the government gets into that joint set of responsibilities, it gets into a conflict of interest inevitably.

MR. CHAIRMAN: Order, please! I would ask the Hon. Member to confine his remarks to reasons why he would support or not support the amendment before us, rather than getting into a discussion on the philosophy of the forest industry. Would he relate his remarks to the amendment?

MR. GIBSON: Mr. Chairman, I am just suggesting that this conflict of interest is the one that makes it obligatory on this government to make public the information that this Legislature and the people of British Columbia need to judge whether these conflicting responsibilities are being properly exercised.

If the government simply wants the authority to know what is going on in a business so they can properly regulate it — so the forest service can make sure the cut is done properly every year so the necessary taxation can go properly forward — that is one thing. That is one authority with a commensurate degree of responsibility on the other side.

If the government wants authority to subsidize in some areas, then it starts spending the public's money on business enterprises and its degree of responsibility for the operation of those enterprises goes up.

But if it wants to go all the way and take unto itself the authority to operate a business — and there can be no question that this Minister on the board and with his power to issue instructions to Ocean Falls and Cen-Cel has authority to operate — it seems to me that operational details must be made available to this Legislature. One of the most important operational details and, indeed, the centre-piece of this whole amendment debate is the contract.

The Minister can very simply do two things. He can table the contract and he can give us an assurance, first making his own definition of "black market" in any way he might wish, that none of the Ocean Falls newsprint is finding its way into newsprint black markets of the world.

Alternatively, he can say that it is and give reasons why it should and why this is for the benefit of the people of British Columbia. Mr. Wallach, president of Gottesman, is quoted in the Vancouver Province as saying:

"In answer to your question about whether I have any comment on that, I will say that we are not selling newsprint at any gouging price."

He then repeated that Gottesman sells at the standard Canadian newsprint price.

AN HON. MEMBER: What is the standard Canadian newsprint price?

MR. GIBSON: Exactly. The Member says: "What is the standard Canadian newsprint price?" The Province says they were unable to find what a standard Canadian newsprint price is, particularly in the markets of the world.

Interjection.

MR. GIBSON: Would you ask that Minister to pave a pot hole, Mr. Chairman?

What is the standard Canadian price that the Minister's contractor, Mr. Wallach, feels he sells at? Could the Minister just give us those details? Who's right: the Leader of the Opposition or Mr. Wallach? Is this contract a fixed price or not? We have heard repeated charges from the Leader of the Opposition that it is a fixed-price contract. We have heard Mr. Wallach say it is not a fixed-price contract. We have heard the Leader of the Opposition say it is a black market. We have heard Mr. Wallach say he is not selling anything at any gouging price. Could the Minister clarify that for Members of this House before we vote on this amendment which, as I say, Mr. Chairman, I hope will be soon?

Could the Minister also answer another very specific question about the relationship between Gottesman and the British Columbia government and, in this case, Can-Cel? In an interview here with Mr. Wallach, Mr. Wallach is reported to have stated that he didn't believe that there was any conflict in his firm having the Ocean Falls contract while he is a Can-Cel director.

Well, that is an interesting statement which we might go into at greater length later. But I would ask the Minister very specifically: does Can-Cel have any business dealings with Mr. Wallach through Gottesman International or in any other way? Does Mr. Wallach have relationships with Can-Cel of a business nature other than his simple presence on the board of directors? That is an important question in this matter of conflict of interest.

Finally, Mr. Chairman, while the Minister is considering what matters he might table, I would suggest that the public has paid a good deal of money in recent months for an in-depth study on Ocean

[ Page 3031 ]

Falls done by Sandwell. The public has paid for this study. The government has received that report.

The Minister has agreed that it has received that report. I asked the Minister in this House if he would table that report. He said that he would not.

Mr. Chairman, I ask him again to table that report. If he refuses to, I ask him how he possibly justifies a so-called open government, having got a report of this kind critical to the future of one of the enterprises now owned by the people of British Columbia, critical to the future of the people of Ocean Falls who are very concerned about it. How can he justify not tabling that report, allowing that concern to continue and not allowing this Legislature — to which I hope this government is still responsible — to have the facts to decide whether the arrangements the government is making on Ocean Falls are good ones or not?

MR. D.A. ANDERSON (Victoria): Mr. Chairman, the claim that Ocean Falls newsprint is being sold internationally and that we are losing out up to $20 million — I say "we," being the people of British Columbia — occurs on tape 308-1 of the draft Hansard.

I am looking at that at the moment. First effective line says: "If we were selling...we would get" so much. "In some sales the price has gone" up to so much. "It is...unlikely.... If we take it to $ 500...there can be an excessive...profit...." The countries that would be buying newsprint on the black market...if the price was $213...if Gottesman International...et cetera. Turning over: "These people are probably buying Canadian newsprint...and so on, ad infinitum.

The whole tenor of the claim has not been researched properly and is based on speculation. It was, as the Member for West Vancouver–Howe Sound (Mr. L.A. Williams) pointed out, a tenuous argument, saying that if this was done something else might happen, therefore if those two things took place, a third thing might have happened. And this goes on and on and on throughout the charges made. It is poorly researched; it is not based on factual knowledge. At least, if there is information, it has not yet been released.

The reason I raise this is that we are much in the position of those with hindsight. In this Legislature we are looking back at the efforts of the Minister, and back of the efforts of the company. And you know, when he made the original deal, prices were different, circumstances were different. There may well be excellent justification for the deal that he made.

It may well be that this type of approach of taking the very highest market in the world.... I don't know where it may be — it may be 10 rolls of newsprint, 10 tons out of a world production of many, many, many millions — saying, "Aha, if we sold everything at that price, we would be millionaires." That's the same type of thing as those people who run around kicking themselves for not buying IBM stock 25 years ago because if they spent $5,000 on it, they would now have $500 million in the bank — things of that nature.

It is a type of construction based on the iffy propositions of market which is very difficult, as the Member for West Vancouver–Howe Sound, pointed out for us to accept. It is not a good case.

The claims made and the figures given are based on no affidavits or any information whatsoever. They are not based on anything but speculation.

The Minister's estimates are up, and we have said this — the Member for West Vancouver–Howe Sound made this point. The point was made by the Member for North Vancouver-Capilano who just sat down. I would like to repeat it: the fact is, the charges which the Minister has to answer are pretty strange.

But then you get onto some other statements made, and this worries us a lot more. I quote again:

"...because of their close relationship with this Minister" — that is the Minister of Lands, Forests and Water Resources, Mr. Chairman — "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..."

Now, it is a claim there that because of special influence and special position there were selling arrangements made and influence used which led to massive profits. Well, the massive profits have been totally unproven, but the charge has been made. I, like the other Members of my party who have spoken, regret that we have not had from the Minister information which deals with this charge.

Is there a question of special interests? How did Mr. Wallach get on the board? Is his position on the board in some way prejudicial to his position as a sales agent for the Ocean Falls corporation? Perhaps I should reverse that and ask: is his position as a sales agent from Ocean Falls something that would, should preclude him from being on the board? I am not sure that it should. After all, you want on your board information on world prices and selling arrangements. But again, the charge to be made of special influence and: "...the relationship with this Minister and this government which has led to massive profits on the black market." The black market, I might add, which has never been defined by anyone who has put it forward in this House.

I don't quite know what you meant by a black market in newsprint, because certainly no one yet has defined it. It is clear that there are varying prices around the world, depending on supply contracts. But whether a black market or illegal market really exists has not been stated, and certainly not proven.

So I trust that the Minister, when he speaks, will

[ Page 3032 ]

discuss the issue of conflict of interest. Should that man be where he is? Is he taking advantage of a special position to make special profit? Finally, the other question: was the agreement between the company and his sales corporation a good one from the point of view of the people of British Columbia?

There is another aspect which I trust the Minister could make public. I can see no reason for him not to make this public.

Mr. Vesak of Ocean Falls made statements regarding destinations of paper from his mill — or from our mill, the government's mill at Ocean Falls. He named a number of countries. He talked of Argentina; he talked of other countries of the world where the production was going to. So quite clearly, if the mill manager knows where it is going to, he probably also knows the amounts. Why is it that the Minister will not make this information public? He must have it or can certainly obtain it very easily, and which certainly any member of the press — or ourselves, I guess we could say — could obtain by sending someone or having a person in Ocean Falls simply check with the guy who puts the stencils on the side of the rolls of paper. This is not confidential information. Surely, this type of information, which has been requested, which could deal with some of the issues raised could certainly be made public by the Minister.

I raise these points because we have here a company which the Minister is constantly trying to portray as just a company like the private companies. But that is not the case. Public money has been used to purchase it. Public money has been used in its operation. It is owned by the public, and the shareholders are represented by us in this House, by Members of the opposition in particular.

A public corporation is not in the same position as the private company in the industry. The Minister knows this full well. The arguments that somehow or another because they are in competition with other companies, therefore, information need not be made public, is pretty fallacious.

This is a tremendously convenient argument. But it obviously does not hold water because public moneys are involved. That is a whole distinction which I think the Minister should address himself to. It is a good indication of why public companies should not be formed in areas where they are in competition with private enterprise.

We have here a company whose success or failure, as the last few days have shown, is clearly tied to the Minister's reputation. They're meant to be in competition with the private sector. Who knows? They might be doing fairly well in competition with the private sector. But the Minister's reputation is involved and it therefore becomes incumbent upon him in the House to give some sort of accounting of his stewardship of that particular company; and we haven't had it.

It's a very good example of why, when a government gets involved in business, you have conflicts of interest; you have the possibility of special favours from the government to that particular company; you have the possibility of others being placed at a disadvantage as the government tries to protect its own reputation as well as, of course, the public interest. It's a clear indication of how the regulatory function of government collapses under the strain of having public companies competing with the private.

The regulatory function simply doesn't exist when it comes to the public company — and I'm glad the Minister of Mines (Hon. Mr. Nimsick) is listening, because he also is going to have this problem with a vengeance if he gets into the mining field.

Now what were the terms of the original contract? Surely the original contract can be made public. Surely the claim of Mr. Wallach, who flatly denied that there were any black market dealings, who said that all the newsprint that his company obtained from Ocean Falls is sold under contract at "the standard Canadian export price" — it may not be an absolute, fixed, dollars-and-cents price precisely, Mr. Chairman, but probably that means within a certain range — who said that this price fluctuates according to the importing country and this is well known in the industry, who said: "We sell it at exactly the same price charged by MacMillan Bleodel, Crown Zellerbach, or anybody else," who said that this applied to every kind of newsprint from Ocean Falls and none was put aside for any other kind of deal, and who further said: "We happen to be a very reputable organization;" and finally he said that he couldn't discuss the terms of his contract with Ocean Falls because he deals with other suppliers in Canada.... These are all reasonable statements from this man, all statements which could be confirmed by the Minister in two or three minutes in this House.

I cannot understand the reluctance of the government to at least give the minimal information to the people's representatives — to the shareholders' representatives in this instance. Charges have been made of a close relationship with this Minister and this government which has led to "a favourable arrangement" for Gottesman and, of course, Wallach.

Now this is a pretty serious charge, and the Minister really cannot ignore it by simply saying that it's unproven — which is true. He cannot ignore it by saying that it should act as a private company, and private companies wouldn't have to answer such a question. It's not a private company; it's a public corporation, and we represent the public interest- at least in regard to the questioning.

I don't wish to proceed at great length on this but I would like to point out that we are reaching a situation where private companies are becoming

[ Page 3033 ]

infinitely more responsive to public pressure, public concern, awareness of the public on issues such as the environment and others than are the Crown corporations or public companies.

We have examples even in Japan of people attending shareholders' meetings, getting up and questioning the largest corporations in the world as to their dealings in war supplies, napalm, things of that nature, and getting results vis-à-vis the management of these companies.

We have a situation in the United States where the same thing takes place, where private corporations have become responsive to the public will and the public concern. We see in British Columbia, I think, a dangerous development which is that under the guise of protecting the competitive position of public corporations, no information will be made available to people who ask questions which are legitimate. Let me repeat: I do not feel the case has been proven. I feel it's very tenuous; I feel it's tenuous because, of course, they've taken hypothetical major markets in a very, very small area of the world in terms of the market for pulp and paper and this has been interpolated into potential losses of up to $20 million — in other words, an assumption that this price prevails in many other markets as well. This is obviously fallacious. The Minister knows this, I know this and I'm sure that the person who put it forward now knows that.

We've talked about a black market — again totally undefined. There is no illegal market ever mentioned that I know of. We've talked of this relationship between Wallach and the government — I think without evidence — without anything more than has been put forward. Really and truly, there isn't much proof of that; in fact, there is virtually none at all except the claim.

At the same time we're faced by a government attitude which gives credence to these charges because they refuse to take what are reasonable steps to deal with reasonable requests for information. If the government wished to prove that they had given, as has been claimed, a special deal to our friend Wallach because of his close connection to the Hon. Minister of Lands, Forests and Water Resources and the government, they could do nothing better than what they are doing now: namely, refusing to answer reasonable questions and adopting instead an arrogant attitude, which is that there is no need to provide information of any sort to the opposition,

I agree with the Minister in his statement that fixed-price contracts such as the Columbia River, such as the deal on the Skagit, agreements such as the Wenner-Gren, are pretty poor examples of business skill. There's no question that I agree with him there, and our Members have discussed that and I won't go on to it. But that really is not relevant to the charge, or claim, made on the question of Ocean Falls.

Ocean Falls was not a public corporation during the administration of the previous government. It was not. It is now under the administration of this government. There are legitimate questions which have been asked as well as some wild claims.

I can only ask the Minister, when he gets up to speak — as I trust he will — to deal with some of these, because this constant refusal to answer only suggests there is something to hide.

It the answers are given in good faith and there are areas where the Minister explains why secrecy is necessary, probably public opinion and good sense will prevail and he will escape criticism for making such statements. But when he refuses both the illegitimate questions as well as the legitimate, when he refuses totally to make any information public of any sort, he risks having people believe that he does not wish to answer good questions, that he does not wish to answer legitimate questions and he does not wish to answer illegitimate questions — and the reason is identical: because he's got something to hide.

I urge the Minister, prior to passage or defeat of this amendment, to get up and tell what he can in the most frank and candid manner. Sure, there may be things which he feels he cannot reveal, but so far we've had nothing except a total refusal to answer. That's a type of thing which leaves a certain ring of truth, a certain cloak of truth, around many statements which I feel to be thoroughly unproven, unresearched and, indeed, unfair.

MR. D.E. SMITH (North Peace River): It's obvious that the Minister has decided that the best defence of his position is to sit in his place and reveal nothing to the Members of this Legislature, in much the same manner as he had revealed nothing to the people of the Province of British Columbia concerning the operations of his department. For a Member of this Legislature that was so vocal as a Member of the opposition, it's strange how silent he has become since being appointed the Minister of Lands, Forests and Water Resources.

We've asked a number of important points. Regardless of how the Members of the Liberal Party have tried in one way or another to discredit the arguments that we have made and then turn around and say: "Unfortunately, because the Minister does not answer any of the charges, we feel that the Minister is not fulfilling his duty," there are specific charges to be answered, Mr. Chairman.

We made a case on the basis of documented evidence. It's a case that was carefully researched, and the people of British Columbia are entitled to answers. They've not received any answers from the Minister outside of this House. As long as that Minister decides to maintain a veil of silence in the House, the people of British Columbia will never

[ Page 3034 ]

really know what is going on within the Department of Lands, Forests and Water Resources.

It's not an attitude or a manner which happened overnight; it's an attitude and a manner that was adopted by the Minister right after his appointment to the position he now occupies.

Yes, we've said it before and we'll say it again: the only defence he seems to have is to ridicule and then sit in his place in this House and say nothing to the charges that have been made.

There has been a great reluctance by the Minister to not only answer the charges that we have posed but there has been a great reluctance on his part to answer any of the questions which have been placed upon the order paper, questions which are of importance. The people of this province should certainly have the benefit of those answers. There are too many uncomforting and disturbing reports from northwestern British Columbia concerning the preferential position of the Crown corporation Can-Cel with respect to the deals and the manner in which they are treated when you compare it with the manner that other private companies are treated by this Minister. There have been suggestions of intimidation of companies and threats towards them by suggestion that the right to harvest timber, which is the lifeblood of any company, might be removed.

The Minister, if he wishes to come clean with the people of this province, must rise in this debate and say publicly and in view of all the Members of this Legislature what his position is with respect to the office that he holds and the portfolio which is under his jurisdiction.

At the present time, Mr. Chairman, there are 73 questions still on the order paper and 25 of those are directed to the Minister of Lands, Forests and Water Resources. If the Minister is not prepared to give the Members of this House the benefit of answers to those questions when they're on the order paper, then before this vote goes through he should give us the answers in person when he rises in this debate.

The matter of intervention by the Government of British Columbia into the business sector is one of record. There is a great deal of difference, Mr. Chairman, between a Member of the cabinet and a Minister of the Crown serving as a director for a corporation such as B.C. Hydro or perhaps, in some cases, even B.C. Railway and those same Members of cabinet serving as directors for Crown corporations or Crown companies that operate in direct competition to all the others in the business sector in British Columbia.

I think it's agreed that B.C. Hydro is a utility serving all of the people of the Province of British Columbia and there may be good reason for a cabinet Minister or perhaps even more than one cabinet Minister to be a director of that particular corporation, working on behalf of the people of British Columbia. There is really no conflict or competition there. But even at that, the affairs of even a corporation like B.C. Hydro should be brought into public view through this Legislative Assembly.

But that's one thing, Mr. Chairman. It's a completely different matter for the cabinet Ministers to sit in this House and occupy positions of responsibility and at one and the same time be of Crown corporations such as Ocean Falls and B.C. Cellulose. That's exactly the position of the Minister of Lands, Forests and Water Resources at the present time. He not only sits in this House as Minister of the portfolio of Lands, Forests and Water Resources but he also sits on the board of directors of Ocean Falls and B.C. Cellulose — definite conflict of interest.

If he is to serve the corporations on whose boards of directors he sits as a member, he must divorce himself completely from the Legislature and act in what he considers to be the best interests of that company. On the other hand, when he sits in this House or acts as a Minister of the Crown, his responsibility is not to any one corporation; his responsibility is to all the people in the Province of British Columbia and to act on their best behalf. In that respect, I submit, there is a definite conflict of interest. The Minister cannot serve two masters. If it is his choice to act as a Minister of the Crown, then there's no excuse and no viable reason why he should sit on, the directorship of Crown corporations which are in competition to other businesses in the province.

We have a situation with respect to Gottesman-Central National Corporation where the president of that company, Mr. Wallach, also serves as a director of Can-Cel. But compared to the position of this Minister, that conflict of interest loses its importance. The greater conflict of interest occurs, in my opinion, when a Minister of the Crown serves not only as a Minister for a very important portfolio — the most important in this province — but also serves as a director of Crown corporations.

We are also aware of the fact that, for one reason or another, the position of some of our senior civil servants has been compromised by appointing them as directors of Crown corporations. That's an unfortunate position because if anyone should be free from the influence and the extreme pressure of politics, it's the people who are responsible to the Ministers for carrying out policy — the top civil servants of our province.

I don't imagine any one of them ever asked to be appointed as a director of Plateau Mills or B.C. Cellulose. The unfortunate thing is that they are directors of those corporations whether they asked to be or not. I would think there's another example of conflict of interest.

They wish with all their heart to do a good job for the people of British Columbia in the position they

[ Page 3035 ]

happen to hold at the present time. These are top positions within the civil service and within the Department of Lands, Forests, and Water Resources. Yet they're asked at one and the same time to sit as directors of Crown corporations.

If these people are there only as a requirement of the Companies Act, then the Minister should say so. But if that's the only requirement then certainly there must be other people in British Columbia who are not in top positions within the civil service who could be appointed as directors of those corporations, to remove once and for all those people from the political arena and from the position of potential conflict of interest.

Any Crown corporation through its management and directors must try to operate in a competitive market and show a profit. Actually, if it doesn't show a profit, then in the eyes of the public it's a failure. All we have to do is look back to the failure of some of the Crown corporations in the Province of Saskatchewan to realize what can happen when the government enters into that field of private business.

So there'll be a great reluctance for any director or any person in a position of management to show anything but a profitable picture to the public. I submit that this is the exact position of the Minister of Lands, Forests and Water Resources. In his desire to make the Crown corporations appear to be profitable, he could, even unintentionally, be swayed in the decisions that he makes to the detriment of all the people in the Province of British Columbia. The sad part about that is the fact that none of us will ever know if the decisions he made were beneficial in the long run to everyone in the province or if the decisions he made were only beneficial in the short run to the Crown corporation which must appear above all costs to be profitable.

There was a great deal of mystery surrounding the purchase of one of the corporations — Plateau Mills. There was a great deal of publicity concerning the purchase of that corporation by the Province of British Columbia. It was suggested one of the reasons that IT&T was not looked at too favourably was that they were short of cash. Now, that might be a reasonable suggestion if they had failed to sign a firm agreement with the Province of British Columbia or somebody had a great deal of knowledge about their ability to arrange finance with the banking concerns of either British Columbia or the United States, wherever they chose to raise their money. But one of the facts we do know is that IT&T set forth in a formal agreement to Plateau Mills their offer to purchase.

I think we should read into the record at this point in time the actual offer that they made, just so we can get it on the record. The directors and the owners who signed this document, which I have a copy of, said this:

"We hereby offer to purchase all of the issued and outstanding shares of Plateau Mills from the shareholders for a consideration of $10 million. The consideration shall be paid as follows: a cheque made payable to you in trust for the shareholders in the amount of $1,000 which accompanies this offer."

There was a great deal of static made over the fact that the only valid thing that was enforced at the present time was a cheque for $1,000 which was not even certified.

Tell me, Mr. Chairman, in ordinary business dealings with large corporations, is it necessary to certify the deposit cheque? Really, does it matter what amount is paid, whether it be $1 or $10,000 at that particular point in time? I don't think it matters one whit. What you are entering into is a signed contract between a purchaser and a seller to provide, according to the terms of the contract, the purchase price on a specified basis. That cheque could easily have been for $1 and it would have still been legal and binding upon both parties at that particular point in time.

But the interesting part is the other terms which they apparently included with the original of this document, a cheque for $1,000:

"$8,999,000 payable in cash as follows: $999,000 on closing as hereafter defined; $3 million on the seventh banking day following the closing; $5 million the six months following closing.

"We shall cause Synco Holdings Ltd. to issue at closing to the shareholders or their nominees or Brigham Young University, whomsoever you may direct, $1 million worth of fully-paid, non-assessable, 6 per cent redeemable, convertible, preferred shares of Synco.

"The closing shall mean August 1, 1973, at such time of day and at such office in Vancouver, B.C. as we shall agree or at such other time and place before or after August 1, 1973 as we may mutually agree to."

I would suggest that that was a firm offer made by a company to buy a business in British Columbia.

The interesting part of that is the fact that the American shareholders were not really interested in selling Plateau Mills. But guess who was interested in negotiating the sale even before the provincial government became involved? Guess who was interested? It was the Canadian shareholders who were really interested in selling their assets.

The American shareholders yielded to the wishes of their directors in Canada and said, "Okay, we'll look at the offer from Synco." They didn't say they would accept it but they said they would look at it. Prior to that time it is documented that they were really not even thinking of selling Plateau Mills.

Under that situation we certainly can't say it was

[ Page 3036 ]

the Americans who wished to sell it, even though the Minister, in statements to the press, said he was not interested in this company going to American shareholders. There were already American shareholders in Plateau Mills. As a matter of fact, we have American directors in Can-Cel, so I can see very little difference in that respect.

MR. CHAIRMAN: Order, please! I would ask the Hon. Member to relate his remarks to the amendment before us, please.

MR. SMITH: The amendment, Mr. Chairman, is to reduce the Minister's salary by $1. It's a motion of non-confidence in the administration of the Minister of Lands, Forests and Water Resources. I'm trying to document a case with respect to this Minister and the manner in which he conducts the department. I'm not just talking about just any corporation or one in which the Province of British Columbia has no interest. I'm talking about a corporation that the government of British Columbia decided to purchase. Once they did, it came under the direct responsibility of the Minister of Lands, Forests and Water Resources.

He's answerable to this assembly for the operation of that company and he's answerable to the statements made by one Mr. B.R. Goodwin, a former shareholder of Plateau Mills, who in recent days forwarded a letter to the Hon. Leader of the Opposition (Mr. Bennett). It seems the import of that letter has either escaped the Minister or he refuses to answer any of the matters raised.

I think it's well to realize that this man, who is now completely free — they've been paid free of any undue pressure or influence from any source, was interested enough to forward a letter concerning his recollection of and comments on the deal surrounding Plateau Mills. And he said:

"The proposal to sell Plateau Mills arose from an unsolicited offer from IT&T to purchase our mill at Vanderhoof.

"The U.S. partners did not want to sell the mill, but agreed to cooperate with Canadian partners who initiated the discussions regarding selling the mill.

"It was agreed by both Canadian and U.S. partners that if the IT&T sale failed to materialize, Plateau Mills would no longer be for sale."

I think that's a very enlightening statement: "If the agreement did not materialize Plateau Mills would no longer be for sale,"

"An offer of approximately $8.6 million was made by IT&T in 1972. After some months of negotiation in which IT&T and ourselves spent thousands of dollars in auditing fees, which would be customary at that point in time, we obtained approval to sell IT&T from the Canadian federal government.

"We then sought approval for of the sale from British Columbia, but we were told by the Hon. Robert Williams that we could not sell the firm to IT&T or to any American."

That is strange, in view of the circumstances surrounding the directorship of Can-Cel and in view of the negotiated contract to sell newsprint from Ocean Falls. That's very strange.

It is incumbent upon the Minister, Mr. Chairman, to enlighten this Legislature and say why he would make such a statement. Was it because he is anti-American? I don't think so. I think it was because of the final conclusion of that particular deal that he had in mind all the time — that here was a private company which he would like to add to the portfolio of business enterprises in this province.

It was a profitable venture, a firm that was making money. They were happy with their arrangements and they had no intention of selling. But all of a sudden, the Minister intervenes. It's a strange view, particularly when we consider the other side of the coin.

This is the double standard that we talked about since this debate began — the double standard employed by the Minister. It is okay to sell newsprint from Ocean Falls to an American firm. It is okay to have Americans on the board of directors of Can-Cel Corporation. It is fine for the Minister of Industrial Development, Trade and Commerce to openly solicit more business with the Japanese people, the Japanese interests. It is fine to encourage development capital from other parts of the world but it's not in the best interests of British Columbia for a firm who originally has no intentions of selling to accept an offer from IT&T.

But if it so happens that after conversations with the Minister the directors of Plateau Mills realized that there was only one buyer, and that had to be the Province of British Columbia, they really didn't have too many alternatives, did they? As a matter of fact, it is documented in the letter from Mr. Goodwin. It says:

"Our alternatives were as follows: One was to sell to the government at the same price offered by IT&T. Secondly, we could sell to a Canadian firm or individual" — as implied by the Minister. "Thirdly, we could continue to operate ourselves." The interesting part is that he goes on to say:

"In the second and third propositions, the future success of Plateau Mills seemed questionable when the Minister intimated that we could anticipate difficulties that we had not heretofore experienced in the operation of the Mills.

"Knowing that every mill that operates in

[ Page 3037 ]

B.C. at the government's pleasure, and that timber quota and supply is at the will of the government, we realized that anything other than selling out to the government itself would be difficult — this in spite of the fact that we had planned to stay on if the IT&T deal fell through."

Is that not substantive evidence concerning a Minister wielding undue and unnecessary force upon a company in the Province of British Columbia? I suggest to you that it is, Mr. Chairman.

Certainly, any corporation knowing that their livelihood depended upon the perpetuation of cutting rights and timber quotas in the province knew that the one person who could either deal fairly with them or, if he desired, make it impossible for them to continue was the Minister of Lands, Forests and Water Resources.

MR. CHAIRMAN: Order, please, I would point out to the Hon. Member that that particular point has been made a number of times. I would caution him that it has become repetitious.

MR. SMITH: I am sorry, Mr. Chairman, that we may have to be a little repetitious, but the fact of the matter is that since this motion was proposed we have not heard the Minister reply, at any time....

MR. CHAIRMAN: Order, please. I would also point out to the Hon. Member that while he may press the Minister with questions, he cannot demand an answer. The answers are at the discretion of the Minister.

MR. SMITH: Mr. Chairman, I realize the rules of the House, and I appreciate them as much as you do. But certainly it is permissible for Members of the opposition to press for answers. I realize the Minister does not have to answer, according to the rules of this assembly, but I would say that if the Minister does not rise in his place in this House and answer the charges that have been validated and documented by the Members of the opposition in this House, then he is derelict in his duty in this province. It is a disgrace to the Members of this assembly and a disgrace to the people of British Columbia that a Minister who represents the most important portfolio in this House refuses to give answers either in this House or outside of it. That's a disgrace, Mr. Chairman.

He can sit there and bury his head as long as he likes, but the people of British Columbia have a right to know what is going on in this province — more so now than they have ever had before.

Whenever we deal with the whole legislative programme that has unfolded before us in the last 18 months, the people of British Columbia can have more right than ever before to inquire of the Ministers of this government about their actions, what they are doing, and ask for responsibility and statements concerning the operations of their departments.

It is not good enough to use innuendo and laugh off the charges that have been laid on the floor of this House, Mr. Chairman. It is not good enough. Those of us in this House deserve more than that, and we intend to get more than that before this Minister's estimates are through — let me tell you that.

Let's take a look at it. I have spent the last few minutes documenting matters which I consider to be a conflict of interest. I don't think there is any question that now, more than ever before, it is incumbent upon Ministers of the Crown to zealously stay away from the areas where conflict of interest exist — more than ever before, because of the situation that we have before us now, with more Crown corporations and the government entering into more business enterprises than ever before.

I think the Attorney-General realizes more than anyone else, as chief law enforcement officer in this province, that it is incumbent upon members of the cabinet to look very closely at their position as cabinet Ministers and the conflict of interest which can and may occur if they at one and the same time accept appointments to provincial corporations or to Crown companies.

Yes, Mr. Chairman, we have a right to inquire or we would be derelict in our duty. The unfortunate part of it is that inquire as we may, we certainly have not, to this time, received any answers from the Minister — not one single, solitary answer to the charges that have been made.

HON. A.B. MACDONALD (Attorney-General): Was there a conflict of interest when Ray Williston served on Hydro?

MR. SMITH: I discussed that. I'll say it again, repeat it for the benefit of the Attorney-General. I said that in my opinion it's a very different situation for a Minister of the Crown to be a director on a corporation such as B.C. Hydro which is a utility company serving the total province of British Columbia. Or, perhaps in some cases with justification to be a director of B.C. Railway which is a form of transportation for all the people in British Columbia. That's one thing, because B.C. Hydro does not operate, really, in competition with other Crown corporations. And as long as they make their reports available in this province....

Interjections.

MR. SMITH: Only in a small way.

MR. CHAIRMAN: Order, please. I would draw to

[ Page 3038 ]

the attention of the Hon. Member the quote from page 424 of the 19th edition of May section (1) that: if a Member persists in irrelevance or tedious repetition either of his own arguments or the arguments used by other Members of a debate, his attention to this should be called by either the Chairman or the Speaker. And I would so do.

MR. SMITH: Thank you, Mr. Chairman, I have no intentions of repeating my remarks. But, the Hon. Attorney-General came back into the chamber and I asked me what I considered conflict of interest. I'll tell him what I consider conflict of interest: B.C. Hydro and B.C. Railway — perhaps it is valid to sit on those boards of directors, but not in situations like Ocean Falls and Can-Cel which are Crown corporations or companies owned either entirely or almost entirely by the Crown and which compete with other companies throughout the Province of British Columbia. There's a conflict of interest there, Mr. Attorney-General, I submit to you.

Mr. Chairman, during the course of this debate we have validated a number of points. This motion is a motion of non-confidence in the Minister of Lands, Forests and Water Resources. It's also much more than that.

It shows non-confidence not only in this Minister but also in the Premier, and in fact, in the whole cabinet of British Columbia. There's a demonstrated lack of credibility on the part of this government. The confused, amateurish, bungling manner in which this cabinet conducts the affairs of this province is open to question.

MR. CHAIRMAN: Order, please. I'd ask the Hon. Member to confine his remarks to the amendment.

MR. SMITH: Oh, I am.

HON. MR. LEA: Is that the way you felt when you were in cabinet, Ed?

MR. J.R. CHABOT (Columbia River): The bungling of that Minister — a dirty, rotten, filthy mess.

MR. CHAIRMAN: Order, please. Would the Hon. Members not speak from their seats, please?

MR. CHABOT: I'm speaking from my seat.

MR. SMITH: There's certainly, in our opinion, ample evidence to point to the fact that the Ocean Falls corporation has not been operated in the best interests of the people of British Columbia. In fact, the ones who are making a profit in this are international financiers.

There's been a calculated move on the part of this Minister to discourage investment capital on one hand, then on the other hand turn around and talk about industrial democracy and need to develop a different relationship in this province.

The Minister employs a double standard, Mr. Chairman. It's a standard which could best be summarized by saying: don't do as I do, just do as I say. It's time for the Members of this Legislature, including the NDP back bench, to stand up and be counted. They were elected, as I was, to represent the legitimate and best interests of the people who gave us the privilege of representing them in this assembly.

Now is the time for the back-bench Members of the NDP to decide whether they are going to protect the cabinet benches and perpetuate themselves in office, or to vote as their conscience dictates.

This amendment has brought into very sharp focus the failure of this Minister and the government he represents to do the very things they were given the mandate to do: to govern fairly and equitably in the best interest of all British Columbians. That is what we're asking for inside and outside of this House, Mr. Chairman, fair and equitable treatment for all British Columbians.

In our opinion, a double standard has been employed and is in effect in the Province of British Columbia through the power that this Minister has under his control. One standard as Minister of Lands Forests and Water Resources; another standard as a person who operates as a director of Crown corporations. It's not possible to divorce the two and do an effective job of both.

In our submission the people who have lost are the people of British Columbia, and that is exactly why we voted and moved a motion of non-confidence in this Minister.

MR. G.S. WALLACE (Oak Bay): Mr. Chairman, I'll be brief.

I had not appreciated the length and detail that this debate on the amendment was to pursue. My earlier comments were brief and related specifically to the focal point of this amendment which is the Minister's responsibility in regard to the Ocean Falls situation and the sale of pulp and newsprint.

I just very briefly want to make the position of this party very clear.

There are many other very important issues in regard to this Minister's portfolio which must be debated and commented upon and described back and forth across the chamber, which are not specifically related to the focal point of this amendment.

At the same time I wouldn't want to neglect to comment upon the amendment, but making it very clear that I certainly reserve the right later in this debate under the Minister's vote to get on to a more general appraisal of the whole problems of his

[ Page 3039 ]

department in relation to many subjects — pollution control, water resources, damming, northern development, you name it. We could have a debate lasting six weeks on this Minister's estimates if you wanted to cover everything. But it's my intention, on behalf of this party, at least to touch later in the debate on some of these rather large and important issues.

As for this focal issue — and I say, with respect, that I think the official opposition have wandered far and wide from the official reason in the amendment given for introducing it.

I would also say that to me it rings just a little hollow to hear the Social Credit Members complain about the fact that they are not getting any answers from the Minister because I sat here in this House for three years and if there was anyone who became experts at not giving answers, it was the Ministers of the Social Credit government.

Let me make it plain, Mr. Chairman, I think all Ministers of any stripe politically should give answers to fair questions asked by the opposition. I'm not defending this Minister. But I'm just saying....

AN HON. MEMBER: Do you hear that, Bob?

MR. WALLACE: I'm not defending this Minister. We want an answer.

But on the other hand....

Interjections.

MR. CHAIRMAN: Order, please.

Interjections.

MR. WALLACE: Could we have a little order, Mr. Chairman?

MR. CHAIRMAN: I would point out to the Hon. Members of the House that it is the privilege of each Member to be heard in silence by the other Members of the House. I would ask all Members to accord this right to the Hon. Member for Oak Bay.

MR. WALLACE: Thank you, Mr. Chairman. Having made the point that all Ministers should answer fair and reasonable questions.... Frankly, if the Minister doesn't answer, this is the reason that I will support this amendment without any reservation. But it comes a little hollow from the Socreds to make that — point when they were experts at not answering questions when they were in power.

This question of the Ocean Falls situation is one that gives rise for concern.

I will just go back a moment to October 12 when the decision was announced that the contract with Crown Zellerbach was to be terminated and the newsprint would be sold directly to Gottesman-Central. It was asked at that time, first of all, whether there might not be some conflict of interest on the part of the president of that organization who also happened to be a director of Can-Cel. But the other interesting discrepancy which arose even at that time was the fact that the Minister made the following statement. I'm quoting the Vancouver Province of October 13, 1973. Williams said:

"The Ocean Falls Corporation was free to make additional marketing arrangements. We are not obliged to market totally through them. We have some flexibility. The market offshore will give us a better net return."

On that same day in New York Mr. Wallach said the agreement was for three years for the full production with options for renewal, but he declined any other details of the contract. The newspaper goes on to state that there was no explanation for the difference between his reference to sales of the full production and Williams' reference to flexibility of marketing. The Minister declined to elaborate.

The fact is that right at the time that this change of agreement — the cancellation of the Crown Zellerbach agreement and the switch to Gottesman-Central — there was a discrepancy. The two stories produced by the two sides to the agreement did not jive. Since then and in debates yesterday and today, the Minister said the contract has been renegotiated and, in fact, is being renegotiated now.

I have to support the opinion expressed by the other two opposition parties that this is a public company using taxpayers' money. I personally am not so concerned about the implication of "black market" sales of newsprint by Gottesman-Central. I don't think this government or any government can be responsible for the actions of another party who buys goods from this government or from a private concern and then chooses to sell it this way or that way. I think it's rather ridiculous to imply that any Canadian supplier can be responsible for the actions of subsequent deals by people or companies or concerns who buy from Canadian producers. I don't think it's a good idea that perhaps we're selling at one price to Gottesman and they're turning over an enormous profit. In that case one would certainly feel this was a bad arrangement.

But the central issue in this debate and this amendment is that there is reasonable evidence to believe this is the government doing public business with the taxpayers' money in the particular area — in this case in the selling of newsprint — and that it is the obligation of this Minister and this government to tell the public what has happened in this particular instance without necessarily giving every detail of the whole negotiation or the agreement. Simply give us

[ Page 3040 ]

the basic outline of what the prices were initially and what the renegotiated prices are and some complete refutation or some evidence to disprove the serious charges made by the official opposition.

The Minister has said it is not customary for two sides to an agreement to reveal all the details of that agreement in the marketplace. I only accept that to a point. The point where I cannot accept it is the fact that this government was elected in large measure on its platform that it, on behalf of the people, could do a better job in the marketplace.

The government was critical of Crown Zellerbach for letting the Ocean Falls site run down and it brought the proposal to take over Ocean Falls to this House with some social reasons as well as economic. I'm not about to run away from that fact. This party supported the government takeover of Ocean Falls on the basis that we felt there were social reasons as well as economic in terms of continuing employment. After considering the facts put before us, this party supported the government's action in preserving Ocean Falls as a town and supporting the concept that government could perhaps restore a town to being viable, productive, and creating jobs.

We now find it's still losing money; we find that there's deep dissatisfaction. I won't go over all the evidence for that; we're getting close to adjournment time. But one of the reporters from the Vancouver Sun has written a very complete and detailed article about the fact that the so-called social benefits which were to follow from having the government take over Ocean Falls have not occurred and that there is dissatisfaction and difficulty among the residents of Ocean Falls.

I'll finish by saying that even that isn't the most important point of this issue. The issue on which the amendment is based relates to the Minister's inadequacy in the way in which he has administered the whole problem of Ocean Falls and the fact that there is reasonable evidence that the deal he has made with Gottesman-Central was a bad deal. It was a bad deal made with public money. Therefore, the Minister must answer and give facts and figures to this House and to the people of the province as to what exactly has happened and what the taxpayers can expect in the future in relation to the present renegotiated settlement.

As I say, Mr. Chairman, the debate has ranged beyond that focal point, but it's our opinion in this party that that's the central issue introduced by the official opposition. We certainly reserve the right to discuss the Minister's estimates on a wider basis when the House resumes its sitting on Monday.

MR. G.B. GARDOM (Vancouver–Point Grey): The crux of this debate really relates only to one thing and that is to accountability. If there's not accountability, the spectre of conflict arises. There have been extremely strong accusations of conflict by the official opposition. If these accusations are true, I think it should result, according to the best tenets in the history of parliamentary democracy, not only in the resignation of the Minister but even more than that — a trip by the Premier to Government House for an election writ.

The Minister has chosen not to be frank and not to disclose the information he has at hand. All of that information may well effectively and properly answer the questions that have been raised by the official opposition and could properly dispel the cloud the Leader of the Opposition has attempted to enshroud this Minister with.

But I would like to say that accountability is a two-way street. The Leader of the Opposition has not demonstrated his willingness or capacity to properly substantiate the charges he has been making against this Minister of the Crown. It has been sort of a paint-brush attack. The charges may be valid but they have not been substantiated. So one has got to ask if they are true.

If they are not true, it could result perhaps in nothing more than character assassination, which was a practice carried on before in this House even more loudly by the Minister in question when he was in opposition. But such practices really never produced any public or political gain for the individual or party concerned, and even less, in my view, for the dignity of parliament.

The issue is accountability. There wasn't accountability in B.C. for 20 years under the former administration. The New Democratic Party argued long and hard about that, and rightfully so. But where was the public outcry and concern expressed then by the Leader of the Opposition and by the Social Credit Party? What sort of a fight to the last breath was he then waging for a record of debate, or for a Hansard, or for a question period, or for a Public Accounts committee that was nothing but an instrument of hush-hush? Where, indeed, Mr. Chairman, were their programmes to ensure that the activities of Crown corporations were to become properly subject to public scrutiny? How often did he, or any of them, fight for sunshine laws or for an ombudsman or for an auditor-general? How often did they say that public expenditure was to be subject to complete public review? It seems to me that he was pretty well "Silent Bill." Make no mistake about that.

It is unfortunate to see what has happened to the philosophy that was so very clearly enunciated by the government when they were in opposition.

Then they asked for the truth, the whole truth and nothing but the truth. Now that question is being put to this Minister. I say let's have the facts and let's stop the nonsense. This is one reason why I have argued and pleaded year after year that we have an ombudsman to inform and properly inquire into the

[ Page 3041 ]

possibilities of discrepancies if a Minister refuses to answer problems that arise in his department.

For the same reason I have argued for an auditor-general, Mr. Chairman, to check into unwarranted expenditures of the follies of contracts. Those people would be free and unfettered from political stripe or persuasion. They would be impartial watchdogs, and they would be able to provide a cure to the very thing that is being argued in this House this afternoon.

MR. PHILLIPS: It is interesting to me, Mr. Chairman, to hear the Leader of the Conservative Party stand up in this House and talk about the past. He himself is one of the greatest political opportunists that ever walked into this chamber. I would like to tell him, Mr. Chairman....

MR. D.E. LEWIS (Shuswap): Shame, shame!

MR. CHAIRMAN: Order, please. An affront upon an Hon. Member, as the Hon. Member for South Peace River is aware, is not permitted under the rules. I would ask the Hon. Member to withdraw the personal imputation.

MR. PHILLIPS: If it was taken as a personal affront, I will certainly withdraw it. I am sick and tired, Mr. Chairman, of hearing about the past. Maybe the leader of the Conservative Party will realize that this is 1974 and that the official opposition....

MR. WALLACE: I know you don't like to hear about the past.

MR. PHILLIPS: You know, Mr. Chairman, it is very easy for the leader of the Conservative Party to talk about the past because his party has never been in power in the past. Certainly, when you haven't done anything, it is pretty hard to blame them for making mistakes.

MR. WALLACE: I've seen what others have done.

MR. CHAIRMAN: Order, please. Hon. Member, the amendment is concerning the Hon. Minister of Lands, Forests and Water Resources.

MR. PHILLIPS: Well, Mr. Chairman, it is interesting that you didn't call the Hon. leader of the Conservative Party to order when he was rambling on about what went on in the past. You never once mentioned it. Never once did you mention it.

MR. LEWIS: It's all true.

MR. CHAIRMAN: The Hon. Member related his remarks to the amendment and I would ask the Hon. Member for South Peace River to do the same.

MR. PHILLIPS: I do want to talk about the past for a moment because the Minister whose salary we are voting a non-confidence vote upon, as the Second Member for Vancouver–Point Grey (Mr. Gardom) just said, was probably one of the worst character assassination personalities that ever entered this Legislature.

But today, when the pressure is on him — not because of his personality but because of his dealings in the largest industry in the Province of British Columbia — this Minister has been nothing but arrogant and callous toward the opposition during this debate — arrogant and callous.

HON. G.V. LAUK (Minister of Industrial Development, Trade and Commerce): You talk about arrogance — wow!

MR. PHILLIPS: He wouldn't even take the time of day to answer any of the charges that have been made against him. This Minister has taken a holier-than-thou attitude as if to question his ability and motives was a breach of parliament. He feels that the official opposition is something that he just has to completely overlook — like a thorn in his side.

HON. R.M. STRACHAN (Minister of Transport and Communications): I wonder if the House would give permission to ignore the clock and take this to the vote now. If the Member would sit down, I'll put the vote.

It's obvious they don't want to take a vote because they have so many people away.

Mr. Chairman, I move that the committee rise, report progress and ask leave to sit again. It is obvious they don't want to take a vote — too many people away.

Motion approved.

The House resumed; Mr. Speaker in the chair.

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

Leave granted.

Presenting reports.

Mr. G.H. Anderson from the Select Standing Committee on Agriculture presented the committee's first report which was taken as read and received. (See appendix.)

Hon. Mr. Strachan moves adjournment of the House.

[ Page 3042 ]

Motion approved.

The House adjourned at 1 p.m.

APPENDIX

The following report is referred to on page 3041:

Mr. G. H. Anderson presented the Report of the Select Standing Committee on Agriculture, as follows:

REPORT

LEGISLATIVE COMMITTEE ROOM,
May 10, 1974

MR. SPEAKER:

Your Select Standing Committee on Agriculture begs leave to report as follows:

The Select Standing Committee on Agriculture, in accordance with the following resolution passed by the 1973 Fall Session of the Legislature, held one and a half weeks of hearings in the Province and one week of investigation in the Yakima, Wenatchee, and Lake Chelan areas of the State of Washington.

"That this House authorize the Select Standing Committee on Agriculture, upon prorogation of the House, to examine into and study the following matters, namely:

(1) Continuation of the investigation of tree-fruit marketing in British Columbia;

(2) Vegetable growing and marketing practices in Interior and Coast regions.

"The Chairman of the said Committee shall, between Sessions file with Mr. Speaker a monthly report setting forth particulars of the meetings and a general statement of activities and expenses of the Committee during the preceding month."

Hearings were held on vegetable marketing and growing in the City of Vernon during the week of November 27, 1973. Further hearings were held in connection with vegetable growing and marketing in Abbotsford on December 3, 1973, Cloverdale on December 4, 1973, Parksville on December 6, 1973, and Victoria on December 7, 1973. In connection with the tree-fruit investigations the Committee spent January 21 and 22, 1974, in Yakima and surrounding area, and January 23, 24, and 25, 1974, in the Wenatchee and Lake Chelan area.

The fruit-growing industry in British Columbia is composed of almost 3,000 growers producing fruit on farms varying in size from one to 250 acres or more, and the greater percentage of orchards is in the 7 to 40-acre range.

Approximately 70 briefs were received from growers as well as briefs from B.C. Tree Fruits, B.C. Fruit Growers Association, and the Fruit Marketing Board. The majority of the briefs that were received from growers complained that they were not receiving a sufficient amount of money for their product to return to them:

(1) Return on investment;

(2) Management fee;

(3) Cost of production, which includes upkeep of equipment, payment of labour, fertilizers, gasoline, irrigation water, sprays, etc.

There is a measure of relief promised by the Provincial Government in the Farm Income Assurance Act, but every effort should be made to make the industry self sufficient on its own.

The Committee visited packing houses and orchards, both old and new, and many vegetable farms, but the first part of the Report will deal only with tree fruits.

The Committee recognizes that some growers in British Columbia are attempting to make a living for themselves and their family from orchards about 7 to 12 acres in size. Many growers are attempting to grow fruit in areas which are not suited due to climatic conditions. In some cases there were briefs that stated, or answers to questions asked by the Committee, some growers were attempting to grow the wrong variety for the location of their orchard.

[ Page 3042A ]

The industry in British Columbia is operating 21 packing house organizations, of which 19 are co-ops. Marketing is carried out by B.C. Tree Fruits Ltd., a grower owned sales organization under licence from the B.C. Fruit Board. Both of these organizations have three members who are elected by grower delegates at annual conventions.

The growers cooperatively own a processing plant known as Sun Rype Ltd. for fruit that is not suitable for the fresh market, and which also cans citrus juices from concentrate purchased in the United States to ensure a year-round operation. This plant returns all profits to the packing houses after deducting operating expenses.

The charge was also made that the grading system is too severe with a consequent culling-out of too much fruit which is sent to Sun Rype Ltd. This allegation was denied by industry officials and the Committee bad no way of determining the truth or otherwise of these charges.

The industry also, in the name of B.C. Tree Fresh Storage Ltd., owns controlled atmosphere storage facilities which allow them to preserve and market fruit until approximately the month of June.

The marketing of British Columbia tree fruit, with a production in 1973 of over 7 million boxes of apples and one of the best cherry crops for many years, is obliged to sell in a Continental market, and of late there have been a few markets opening in Europe and South America, and there have been attempts to begin marketing in the Orient. Added to the growers' problems in 1974 has been the difficulty of securing sufficient cars for the transportation of their products to the markets. The Committee found that the marketing organization has always been able to dispose of the total crop but that there is great fluctuation in price from year to year, and often a poor return to the grower.

The charge was made before the Committee that B.C. Tree Fruits was top heavy with personnel and overpaid executives. According to other reports received by the Committee, B.C. Tree Fruits Ltd. operates for 4.8 cents of the volume dollar, which compares favourably with some fruit-marketing agencies and is distinctly superior to others.

There were also objections to the method of pooling the various varieties of fruit in that the producer of poor-quality fruit had the effect of lowering the price to the better growers.

The most commonly heard complaint was that the marketing agency is tied in too closely with the wholesale agencies and that the agency was fearful of losing the support of the wholesalers if they insisted on a better price for the products.

Statements were made by the industry to the effect that some growers would leave their fruit on the trees too long in an attempt to achieve a better colour quality. This results in a relatively high incidence of watercore and poor keeping quality.

The industry does allow sales to be made from the orchard direct to the consumer with the stipulation that no one vehicle transport more than 20 boxes of a given product. There are also fruit stands licensed throughout the valley from Osoyoos to Kamloops and in the Kootenay area.

The prices for 1972 and 1973 have reflected a better return to the grower than in the two preceding years, but the Committee feels that many growers are still not receiving sufficient returns to cover their costs and to give an adequate income.

During the week of August 27 to 31, 1973, the Committee held extensive hearings in the City of Penticton with representatives of the wholesale and retail trade who do the majority of handling of the fruit to the consumer.

No evidence was uncovered to show that they were receiving excessive mark-ups. This is a very difficult thing to ascertain when the retail price of fruit, over a 12-

[ Page 3042B ]

month period, fluctuates to such a great extent. Evidence was put forward by all wholesale representatives who appeared before the Committee to show that they purchased and marketed British Columbia fruit in preference to the imports even though the price of the British Columbia fruit, as set by B.C. Tree Fruits Ltd., was higher in most cases.

The wholesalers expressed the opinion that they could do this as long as all wholesalers followed the same practice, but that there had been instances when one wholesaler had imported several car loads of fruit from the United States for less than cost to the others. In these instances they felt they had to do the same to be competitive.

The most notable thing for the Committee on their visit to the State of Washington fruit-growing areas, was the attitude of their producers in contrast to some of our own. They have had two good years in a row with regard to crop and price and were optimistic that they could continue in the industry on a profit-making basis. Having doubled their production over the past 10 years they are continuing to increase the acreage of orchard plantings. Many of our producers are very pessimistic about the future of their industry.

In comparison to our British Columbia orchards, the American grower appears to be more demanding in the management of his orchard. ne Committee observed that

(1) he utilizes every square foot of land possible;

(2) he has a system of tagging trees that do not produce well, and after two or three years of poor production he removes the tree and replaces it with a new one;

(3) he has invested considerable capital in orchard heating and frost control systems.

The suggestion was made during the Canadian tour that the British Columbia crop is too large to be marketed by one sales agency, but we found in the United States there were marketing agencies who were handling approximately the same volume of fruit and in the case of the Wenoka Sales Agency it was handling an apple crop of 4½ million boxes but with less personnel. There were approximately 40 agencies handling the Washington crop of 42 million boxes, and there seemed to be a widely held opinion that this was too many.

The American grower seems to be moving toward only the varieties that show best returns and some were marketing hybrids known in the trade as "sports." The American grower is also moving in a greater way toward high-density planting with semi-dwarf trees and although inter-planting is common for orchard renewal there is a large percentage of the Americans using the method known as "block replacement," that is the removal of sections of old orchard with trees planted too far apart and replacing the whole section with high-density planting. It must be realized that fruit planting to picking is approximately seven years. No grower can remove his whole orchard at one time without suffering a loss of income unless he seeks employment off the farm. This makes it particularly difficult for the owner of the small orchards to replant the varieties that would bring a higher return as he depends on the production of the whole orchard for income.

In the packing house segment of the industry in British Columbia the Fruit Board is charged with the responsibility of finding a packing house for all growers needing this assistance regardless of the quality of their fruit.

In the State of Washington the packing houses exercise greater control over their growers supplying fruit, and we visited cooperative packing houses who had member growers on probation with a certain length of time to upgrade their products.

[ Page 3042C ]

The growers failing to do so are expelled from the co-op and must find some other packing house on their own to handle their fruit.

Due to the recent increase in demand for what can be described as contemporary wines, a higher price is received by the American grower for processed fruit as this makes the cheapest base obtainable for these wines. This market should be pursued to a greater extent by the British Columbia industry.

There is also legislation in the State of Washington that, in most cases, does not allow the sale of Cee grade apples on the fresh market, whereas in British Columbia this practice is continued. The Americans have a commission which levies a charge on every box of fruit shipped to the fresh market which results in a very large budget for advertising and promoting the high quality of Washington fruit. Some of the in-put costs in Washington, such as land, fertilizer, sprays, and equipment are lower than they are in British Columbia, which is an advantage to their producers.

On both sides of the Border there are areas where the high cost of irrigation water is a significant cost of production.

The Washington industry supplied the Committee with a list of return to grower prices and from this a comparison sheet was made, shown as Appendix A.

The Lake Chelan area of Washington grows apples that bring consistently higher prices than those grown in the Wenatchee and Yakima areas. This seems to be due to a combination of climate and frost-free days, sunshine, elevation, and soil conditions. As the comparison list shows, British Columbia in 1972 had a greater return to the grower per box than the Wenatchee and Yakima area but slightly lower that the Lake Chelan fruit. This would make it seem that the British Columbia grower is complaining unnecessarily, until one realizes that the Canadian in-put costs are greater, combined with a slightly higher cost for labour.

The marketing agencies in the State of Washington have horticulturists assigned to the packing houses to control the quality of fruit coming into the packing houses. On receipt of fruit that they consider not to be of the best quality they will notify the grower that this fruit must be assigned to the No. 2 Pool for fast marketing at a lower price than the best quality returns. This segregates over-mature fruit which does have a shorter shelf life from the better quality, and results in less claims on the shipper and does not reduce the pool price of the No. 1 fruit.

Recommendations

(1) At the Fall Session of the Legislature a Farm Income Assurance Act was passed as well as the Agricultural Credit Act. It is the feeling of your Committee that those growers who are attempting to operate in an area unsuited for fruit-growing should be encouraged to borrow the funds necessary to convert to a different variety or to convert to a different agricultural product more suited to the land being farmed.

(2) The Committee feels that, generally speaking, a viable orchard to support a family on a full-time basis should be a minimum of 20 acres to allow for replanting and a sufficient volume of fruit.

(3) The Committee feels that B.C. Tree Fruits should attempt to bring more innovation into the marketing of fruit through an extension of the system of fruit stands to other Interior and Coast areas, farmers markets, grower direct sales, etc. There could be a system of allowing growers to make direct sales to retailers controlled by B.C. Tree Fruits by the issuing of tags to be affixed to the boxes and for which there would be charged a suitable fee to support the industry. We are convinced that consumption of fresh fruit can be increased within the Province by making the product more readily accessible to the consumer.

[ Page 3042D ]

(4) The Committee generally endorses the principles of the study by S. C. Hudson, a Consulting Economist with the Agricultural Consultant Services, and submitted to the Minister of Agriculture in September 1973. The Committee wishes to stress the importance of Mr. Hudson's idea for amalgamating the packing associations into five from the existing eight on an area basis, which hopefully would lead to the amalgamation of some of the packing houses themselves with the resultant savings from the closing of old inefficient plants.

(5) We feel that any help should be for the average and better grower rather than the less productive grower. Any calculations with regard to cost of production under the Farm Income Assurance Act should be based on the figure of 750 boxes per acre as a minimum. From our observations in the United States we feel this is a more realistic figure than the 500 boxes per acre that some growers have suggested.

(6) The pooling system should be changed and the marketing agency should have more control over the grade of fruit entering the packing house. This control could be exercised from the time the trees are in blossom. Fruit that does not meet the highest standards could be marketed immediately. This fruit should be assigned to a second pool where it would not have the effect of lowering the price and increasing the claims on the higher quality fruit.

(7) The provisions of the Agricultural Credit Act should be made available to growers with small orchards who wish to remain in the industry, in order that they may purchase orchards from other small growers who wish to leave the industry and thus lead to a more profitable operation. The Committee is satisfied that the Agricultural Credit Act provides assistance for new growers wishing to enter the industry.

(8) Steps should be taken to increase the controlled atmosphere storage capacity of the industry.

(9) Increased efforts should be made by industry to expand and accelerate its exploration of all possible markets for processed fruit and by-products.

All of which is respectfully submitted.

G. H. ANDERSON, Chairman

APPENDIX A

1972 COMPARISONS OF AVERAGE APPLE PRICES BY AREA

(per 40-pound box to grower)

Juice apples in British Columbia, 1972 (Cee Grade and Culls), $19 to $26.50 per ton. Price should be up $30 for 1973.

Peelers, pooled with fresh apples, 1972, at $110 per ton.

Guarantee for 1973 crop is $125 per ton and price could be higher, today's market price is $150 per ton. Packing house charges are $20 to $30 per ton.

Sources: Kelowna Growers Exchange Co-op, Chelan Growers Co-op, Wenoka Sales and Shippers.

Culls and peelers only: B.C. Tree Fruits Ltd.