CONTENTS

British Columbia Railway Company Construction Loan Amendment Act, 1975 (Bill 27). Second reading. Hon. Mr. Lauk — 3323

TUESDAY, JUNE 10, 1975

The House met at 8:30 p.m.

HON. D.G. COCKE (Minister of Health): Mr. Speaker, on a matter of privilege. I wonder if as the weather becomes hotter you would give some consideration to the males in this House wearing jackets, and the fact that maybe they shouldn't be — as a matter to improve their comfort. I'm not all too sure that it is good for people to be overheated mentally, emotionally and also physically.

MR. SPEAKER: Well, if it is too comfortable in here, we'll be here all summer. (Laughter.) I'll give it some thought.

Orders of the day.

HON. E. HALL (Provincial Secretary): Adjourned debate on second reading of Bill 27.

BRITISH COLUMBIA RAILWAY COMPANY
CONSTRUCTION LOAN AMENDMENT ACT, 1975
(continued)

HON. G.V. LAUK (Minister of Economic Development): I could hear the Member for Langley (Mr. McClelland) already with his daily joke. Somebody has got to provide him with some new material.

Mr. Speaker, just before we adjourned for supper I was asking the question: where is the Leader of the Opposition (Mr. Bennett)? I suggested perhaps he was on the phone to Kelowna checking with Pa, finding out what he was going to say with respect to the serious charges levelled against the Bennett regime with respect to their handling of the accounts of the British Columbia Railway.

Well, we seem to have smoked him out, and I hope he stays long enough to speak in this debate, because I would be very interested to hear what he has to say.

I see the three chairs towards the back wall of the independents are vacant. I hope they are on their way because, Mr. Speaker, people all over this province are asking the question: "What about their political future? Are these independents going to go to the Social Credit Party? Are they going, and, if they do go, will it be on a matter of principle, philosophy or just a lunge for power?" I would be interested to hear their comments in this debate, Mr. Speaker, with respect to this bill and the serious charges that have been levelled against the Bennett administration.

MR. SPEAKER: The Hon. Member just related it to this bill at about the right time, I would say, before he was interrupted.

HON. MR. LAUK: I'm beginning to sense your proclivities, Mr. Speaker. (Laughter.)

MR. SPEAKER: I hope they are public. (Laughter.)

HON. MR. LAUK: Mr. Speaker, before the supper adjournment I raised several issues, and the issues that were raised are serious ones. It is clear that the accounts of the B.C. Railway were false. The statement in the financial documents that were filed were false. There was a deliberate attempt to hide the true financial affairs of the British Columbia Railway from the public of British Columbia. That is a serious charge that has not been answered, and cannot be.

Mr. Speaker, this government will support the railway. It is an important and integral part of the transportation system of this province. It has brought resource development to the inaccessible regions and social and economic development. It must be supported. I know every Member of this House does so.

But the record, as I said before, must be set straight. We must know who made those mistakes and why. The accusations against this administration on fiscal mismanagement are based on so-called overruns, Mr. Speaker, overruns that occurred in the past, overruns that have occurred in the past in other departments in other times. But never, never has this government and never will this government deliberately mislead the people of this province with respect to its public accounts. Never!

That is why I charge, Mr. Speaker, that this is the worst scandal of political life in this province since the Sommers case.

MR. W.R. BENNETT (Leader of the Opposition): I would hope the Premier extends me the same courtesy as I extended to him last Friday, when he made his presentation in the House.

I looked with interest at the newspapers following the Premier's presentation on Friday on Bill 27, because the headlines should have read the next day: "Barrett Government Consistent — BCR losses of $32 million fit the pattern of losses in Crown corporations with ICBC losing $36 million, the B.C. Ferries estimated by the Minister himself to lose $25 million, the transit division of Hydro estimated to lose $17 million, by the Minister's estimate, along with overruns in Human Resources of $103 million, and overruns of over $700 million in the two years of budgeting, as presented by this Finance Minister and this government."

I thought that is what the headlines would have read. I thought they would have read: "Here is the government consistent in its financial inconsistency and mismanagement."

They went along partially on the front pages with

[ Page 3324 ]

the headline-seeking tactics of the Premier, the smokescreen he put up to cover up what has happened to this railroad since August of 1972. But he didn't fool the columnists and he didn't fool the editorial writers (laughter) because nobody appears to have supported the Premier. A lot of them consider his tactic for what it was.

I would just like to quote a few paragraphs from an article in The Vancouver Sun.

HON. W.S. KING (Minister of Labour): By whom?

MRS. P.J. JORDAN (North Okanagan): Be quiet and listen!

MR. BENNETT: By the business editor, Mr. Froehlich. He said:

"Barrett's huffing and puffing about the fact that British Columbians were never given a true picture about the BCR is ironic. After all, Barrett himself in a very short time has created his own little pride and joy about which British Columbians know very little, when it comes to financial details. Of course, we are referring to the good old Insurance Corp. of British Columbia, that wonderful institution that would show the private insurance companies a thing or two about operating efficiency."

AN HON. MEMBER: Hear, hear!

MR. BENNETT: He goes on to say:

"Barrett used to speak glowingly about the fact that ICBC would never be subsidized, that it would be run efficiently and that it would not be used as a political tool. Well, by now everyone knows that certainly this is not the case. We now know that it is the cabinet which decides what the ICBC insurance rates will be. We now know that Barrett's statement that ICBC would lose only a modest amount was made at a time when the corporation was aware that the amount would be more than modest. We now know that when Bob Strachan, the Minister in charge of ICBC, said the loss would not surpass $18 million, it eventually amounted to $24 million."

AN HON. MEMBER: What about B.C. Rail?

MR. BENNETT: And we now know that the government is subsidizing ICBC to the tune of at least $120 million a year, which always goes to prove that a straight man sooner or later becomes so good in his job he becomes the comedian. The Premier and Minister of Finance may have become the comedian, but the performance he put on wasn't funny. In his attempt to attack and re-fight the election battles of '72, '69, '66, '63, '60 and '56, he indeed was attacking many of the fine people who have worked within the British Columbia Railroad, as it is called now, or on the Pacific Great Eastern as it was called before.

It is not funny to the Broadbents. It is not funny to the Esterbrooks and Trasks and others who have a history of commitment — people who came up through the ranks and built that railroad and directed it and were on the board of directors and in senior management. It is not funny that the record of carving out a pioneer railroad.... And that is not just the expression. It is a pioneer railroad. The Premier has called it a pioneer railroad, and it is. The Premier deliberately set out to mislead the public....

MR. SPEAKER: Order, please. The Hon. Member has gone too far in saying that any Member deliberately sets out to mislead the public.

MR. BENNETT: I am only quoting examples. I just want to quote this. It is exactly the same phrase as the Economic Development Minister (Hon. Mr. Lauk) just used about the former government.

MRS. JORDAN: Right on!

MR. BENNETT: I wrote it down!

MR. D.M. PHILLIPS (South Peace River): The Member for Oak Bay (Mr. Wallace) did it twice this afternoon in his speech and you let him by with it!

MR. SPEAKER: Order, please. I asked a Member on the other side to withdraw precisely the same thing before the adjournment.

MR. BENNETT: Just a second, Mr. Speaker. I will withdraw it, but it is just that the Hon. Economic Development Minister used that phrase. I copied it down.

MR. SPEAKER: Who did?

MR. PHILLIPS: The Hon. Minister of Economic Development!

MR. BENNETT: Just while I was in here this evening.

MR. SPEAKER: Concerning whom?

MR. PHILLIPS: Just 10 minutes ago!

MR. BENNETT: Concerning the former Premier of the province, the former government.

[ Page 3325 ]

HON. D. BARRETT (Premier): His words were "deliberately misleading by the former government", Mr. Member. Be accurate.

MR. BENNETT: All right. The government set out on Friday — I withdraw that — to deliberately mislead the people of this province. The government of today.

HON. MR. BARRETT: That's your accusation, is it?

MRS. JORDAN: Be quiet!

MR. PHILLIPS: Sit down and be quiet!

MR. BENNETT: I would remind the Premier that we sat in silence during his speech. We gave you every opportunity to make your speech. I would like to have the same courtesy. It may be unbecoming to your traditional pattern of conduct, but perhaps just once the Premier of this province could sit and listen to a response when he was considered every courtesy in this Legislature last Friday.

As I was saying, Mr. Speaker, it is not funny to the people who built this railway. This railway that built this province has a long history, a history of ups and downs, a history of some successes and some failures, and apparently right now we are once more again in one of those dips to which this railway has become accustomed.

MR. A.V. FRASER (Cariboo): You don't even know how to run it!

MR. SPEAKER: Order, please. Would the Members on that side of the House allow their leader to speak, too?

MR. G.S. WALLACE (Oak Bay): He is heckling his leader, Mr. Speaker.

MR. BENNETT: We have come from a period of growth and success to a period of concern over the future of the railroad, a concern for the very development and the loading factor.

I think it would be wise right now to discuss some of the history of the railroad because this railroad has an unusual history. It was incorporated in 1912 to be a branch line to the Grand Trunk Pacific which was a line from Winnipeg to Prince Rupert, and which later became part of the Canadian National. The incorporation of this railroad included B.C. government legislation to guarantee the railway and also provide a development grant.

Now the original builders of the railway, Stewart, Foley and Welsh, all Americans who provided most of the financing from Britain, had poor success with the railway. Eventually it went broke, and the government, to realize its guarantee, took it over. That was in 1917, and the PGE became a railroad of and owned by the people of British Columbia.

The railway had been and was a political white elephant from the start. At the time it went broke the PGE had failed to reach its initial objective of connecting with the CN in its run into Prince Rupert. Following the government takeover, the chief business of the PGE was passenger traffic from Whytecliff to the area of Lion's Gate, and this operated as a commuter transport. In 1922 the PGE was completed into Quesnel, linking it with Squamish and creating the first opportunity for any real revenue freight to be carried over the line, even though the value of that freight was under $1 million a year.

Eventually a backhaul business was developed, hauling wood down to the coast for use at Woodfibre and Port Melon. This freight business became semi-viable during World War II, and in 1949 the extension between Quesnel and Prince George was begun by the coalition government of the day. This was completed in 1953, after we had had a change of government.

The Squamish to North Vancouver extension was begun in 1954 and completed in 1956. In 1955, Prince George to Dawson Creek; the Fort St. John extension was begun and completed in 1958. The later construction of the O'Dell-Fort St. John extension and the Fort St. James-Leo Creek extension were both developed as branch feeder lines, mainly to provide service to the developing forest industry.

MR. C. LIDEN (Delta): Who wrote your speech?

AN HON. MEMBER: He has 10 more pages.

MR. BENNETT: Mr. Speaker, the original quality of the railroad was 60-pound steel, and it had spikes that could be literally pulled by hand from the ties. In terms of what the government bought, its history with the railway has been one of rebuilding the line from Squamish north, from day one. For this reason such things as labour and track laying have been associated with the capital cost rather than an operating expense, and upgrading has been synonymous with building.

Similarly, when new extensions were built, such as the O'Dell extension or the extension from Prince George to Fort St. John, these were initially built to specifications of quality when related to anticipated traffic-to-cost. Traffic-to-cost because this has been the policy of for construction and development of this railway north. Traffic-to-cost — that should be the theory behind the development and construction of a resource railway.

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This has never been a railway to move people; it's been a railway to open up the interior of British Columbia and the northern reaches of British Columbia to provide the economic wealth of that area to build the economy of this province, to provide employment, to provide jobs, to provide taxes and revenue to government to provide services to people. The very success we have today — the successes of other governments in providing services, the success that this government today has in providing services — have all been fed, in part, by the tremendous economic expansion this province has had by the construction, extension and development of the British Columbia Railway.

If the highways as they were constructed were the lifeline and the link of the people with the coast, then the railroad was the economic link that drew this province together, Mr. Speaker. This was the link that brought British Columbia together. This is the link that transformed this province from being a province with a population that extended just beyond the Fraser Valley.

This is the policy that extended the economic thrust and the decentralization, which I hope will continue in the future, away from the coast and into the interior and the north of this province, opening an area where living is not easy, but where living and life can be better. This railroad has been and always will be an important part of building the economy of British Columbia.

It was no accident when we look back and find that after the railway was extended, the forest industry, the major industry in this province, instead of being captive and solely a product from the coast, now the dominant part of the forest industry is in the interior of the Province of British Columbia. A dramatic change from the 1940s and the early 1950s, and a change that not only benefited the interior, but also brought benefits to the whole province. The resource line, then, north. The extensions to Dease Lake, the extensions that we're talking about now, and for which this bill is to provide capital, were indeed developed to make transportation available for important minerals, important wealth that could feed the economy of this province.

It's a quote by many people that there's more coal in the Stikine than anywhere in the world. Today we see the re-evaluation of coal as an important mineral, an important product, a product that a few years ago sat wasting. You couldn't give it away. The mines closed in Alberta; the mines closed at Drumheller; they closed all over. But now coal is of premium value because of its energy source. The Stikine and the northern areas where this railway was to go are bountiful in this mineral and many, many others. The reason this railway was extended, and the reason why it is linking now — is almost linking the northernmost reaches with the southernmost reaches of this province — is that it will make available cheap transportation to all of the natural resources for which this province is so lucky to be blessed, and which are important to our continuing economy.

We only have to look at the recent strike on the BCR to realize the importance of the railway, to realize that the cost factor of hauling lumber by truck makes it uneconomic in the type of market that we've had in 1974 where we had a dipping market, and that the rail extension with lower freight rates, indeed, is important as a continuing transportation source. So I am in favour of the extension of the railway. I am in favour of more capital for the railway. I am in favour of and proud of the history of the railway.

I would like to deal specifically with some of the things the Premier said the other day because I think that many of the statements, some of the reports and some of the statements, have created doubt and a smokescreen for the real facts of what I consider the development of the railway.

I don't think this railway will be built or that this province will grow while we deal with charges and counter-charges and statements such as were made by the Premier. His statements must be cleared up, and once they're cleared up, I would hope that this province could get on with the job of building and growing.

Right now in British Columbia we have a serious unemployment problem — 100,000 of our people unemployed. We have a serious economic problem where industry is not developing and growing to create that employment. We have a serious problem that affects this railroad and its viability. The problem is that the mineral production and the forest production from that great northern area that these extensions were to bring into the mainstream of the economy and develop the economy are not being developed because of economic policies of this government.

We're dealing with more than the extension of a railway; we're dealing now with the feasibility of that railway having been destroyed by the destruction of the mining industry, the destruction of the forest industry, and destruction of the confidence for long-term investment. Indeed, the very load factors upon which this railway was predicated are threatened in the north right now. These things have been brought to the people's attention during Bill 31, and brought more dramatically to our attention as the mineral production and expansion has not gone ahead.

Now I want to deal with some of the statements by the Premier as I find them in Hansard from his Friday's speech. First of all, from Hansard, the Premier dealt with the auditors, Buttar & Chiene, and the principal of the company, Mr. Walker, who is president and who did the audit for the British Columbia Railway. It is my understanding that Buttar

[ Page 3327 ]

& Chiene were not appointed by the last government. It is my understanding that this auditing firm has been doing this railway for other governments, and for many years.

In reading the charges the Premier made relating to Mr. Walker's professional capacity, and the problem with the board of accountants, I would like to read what the Premier said. At this time the Premier was quoting evidence about non-professional conduct before the institute's professional conduct inquiry board panel.

"The panel having found unanimously that the said member, Douglas McKenzie Walker, violated rule 21 of the code of ethics and rules of professional conduct as alleged in paragraphs 1 and 2 of the statement of complaint by reporting on and associating himself for or on behalf of the firm of Buttar & Chiene with the financial statements and auditor's report thereon for the British Columbia Railway Co. for the year ended December 31, 1972, when he failed to obtain sufficient information" — this is the charge — "to warrant the expression of unqualified opinion expressed thereon and therein; and that the said member has been incompetent in professional matters within the meaning of bylaw 6783 in force in all material time and also bylaw 6883 in force at the present time as alleged in paragraph 3 of the statement of complaint."

I think we should deal with that because the Premier makes it a very strong part of what he considers a political scandal in his attempt to attack the government of the past. Here is an outside auditing firm, as all businesses and all corporations have auditing firms. There was no suggestion of malfeasance; there are no criminal charges. What is the charge? That he "failed to obtain sufficient information to warrant the expression of unqualified opinion expressed thereon and therein." Well, I looked at the 1972 annual report because the railway ends December 31, 1972 — that's the year end. I looked to see what president and directors might hamper the outside auditors having a full search and making a full search of all of the business of the B.C. Railway, because the audit would be conducted after the end of the fiscal year; it would be conducted in the spring of 1973. But the board of directors as of the end of 1972 were: president — the Hon. David Barrett; executive vice-president, William S. King; director, J.S. Broadbent; director, E.F. Rowland; director, R.E. Swanson; secretary of the company, G.S. Bryson. They didn't suggest that these people didn't allow Mr. Walker to obtain sufficient information.

But this is the directive and this is the management of the railway. These are the people who had control of the railway at a time when Mr. Walker and Buttar & Chiene were called before an inquiry board. It was for this year — this fiscal year; this is the year we're talking about — for which Mr. Walker was called before an inquiry board. It wasn't 1971; it wasn't 1970; it wasn't for the year 1969, 1968, 1967, 1966, 1965, 1964. It was for the year 1972.

Apparently I read into this that Mr. Walker did a lazy audit while he had a green, incompetent president and board of directors. That's what I see.

SOME HON. MEMBERS: Oh, oh!

MR. BENNETT: Here we have new management so the auditor sloughed off. That's what it says right in their report. It would be very irresponsible for anyone else to read into that something else — very irresponsible, because that's exactly what happened. The auditor and directors of record are responsible for the financial statement and they are responsible for any interference or restriction to that auditor. That is a year that is in question — 1972; those are the principals of the company.

I also read that we have a new director, a Mr. R.E. Swanson. Mr. Swanson is well acquainted with the B.C. Railway. Mr. Swanson was for many years chief engineer, engineering branch, Department of Transport. He would have known if there was anything wrong. For years he had done an inspection on behalf of the Department of Transport because he was the chief engineer. He was responsible for providing reports to this Legislature, reports to the Minister that would have been the reports that were questioned by an alert opposition during those years when they had the Minister up for estimates.

In his report from 1967 — here's part of his report to the Legislature. I read it.

"Dispatching was checked from various locations and at all times communication was maintained with the dispatcher in Vancouver. At Fort St. James it was noted an excellent job of track clean-up had been completed. The piggyback ramp was completed and in order and the facilities to Imperial Oil Co. bulk plant were inspected and found to be up to the required standards.

"It is recommended that both the north and south turnouts from the mainline to serve this extension be equipped with reflectorized switch targets rather than oil-burning switch lights. In view of this extension being properly completed I would recommend that pursuant to section 179 of the rail Act it be declared open for the carriage of traffic."

He inspected the rail line; he inspected the construction; he made reports. Here's his summary.

"It can be reported that the Pacific Great Eastern railway is being properly maintained and operated. Its facilities are being expanded commensurate with the growth of British

[ Page 3328 ]

Columbia. I have found it be in safe operating condition, and that the public interest is being served.

(Signed)

Robert E. Swanson, Chief Engineer."

And here we have the report from 1968. He talks about the various weights of rail. He talks about all of the expansion. He did a visual and personal check of the railroad. And what was the summary of the 1968 report, Mr. Speaker?

"It can be reported that the Pacific Great Eastern Railway is being properly maintained and its facilities improved and expanded commensurate with the growth of British Columbia so that it is in safe operating condition and the public interest is being properly served."

He has done a complete report, which I won't read here, on the total construction, expansion and extension of this railway. In 1969 again, Mr. Speaker, he signs a report dealing with the railway. Again his conclusion:

"It can be reported that the Pacific Great Eastern Railway is being properly operated and maintained and is serving the public in a safe and proper manner.

(Signed)

Robert E. Swanson, "

In 1970, he again has done a complete report, visual inspection....

MR. SPEAKER: Would the Hon. Member face towards his microphone? It is hard for Hansard to pick it up.

MR. BENNETT: Yes, Sir.

MR. SPEAKER: Thank you. I assume you wanted it on the tape.

MR. BENNETT: Here is a quote out of the 1970 report. He says:

"This line is laid with 85-lb. rail and is in a much-improved condition over the past year. The track and structures are adequate for the type and volume of traffic and it will serve its purpose until the extension imposes heavier traffic and speed is increased as urgency demands."

This is where he deals with the way a resource revenue railway is constructed: early standards, building up those standards and grades as the loading factor and the necessity for speed for that loading factor are required, dealing with the railway on a proper resource-economic basis. He deals with the grading completed. He talks about the northern extension from Fort St. John to Fort Nelson, a distance of 250 miles: "Progress can be reported."

"Inspections were made during the year on various phases of this construction. In one case, reports of improper drainage by a farmer were investigated and corrections made.

"In another case, reports of problems at level crossings were investigated and corrective measures were ordered to be put into effect.

"During the annual inspection trip, the construction was inspected and level crossings were checked.

"It can be reported that two major grade crossings in the Fort St. John area have been signalized, and signals were in operation at the time of the inspection. Mackenzie Avenue, when signalized, incorporated a flashing forewarning sign to vehicular traffic on the north approach."

He goes on. This is the type of detailed report he made year after year. Mr., Swanson, in whom the present government has enough confidence, with his knowledge of the railway, after giving it a clean bill of health both as to construction standards and extensions year after year.... Reports were available to them as Members of this assembly to question and check.

The conclusion of the 1970 report:

"It can be reported that the Pacific Great Eastern railway is being properly maintained, properly operated commensurate with serving the public in a safe and proper manner.

"It can also be reported that the extensions of this railway are being located and constructed in a proper and efficient manner.

(Signed)

Robert E. Swanson, Engineer."

Now here we have the new director, a director who is playing an important part in the direction of this railway, who for years in his professional capacity and with the responsibility that he has had in the Department of Transport giving this railway an acceptable rating. Not only the construction and extension, but the principle of that type of construction and extension has been praised in his report year after year after year. This is the gentleman who was a director of the railway in 1972 when the railway, apparently during that period when he was a director, had an insufficient audit, that being the only year mentioned in the board of inquiry of professional conduct of the chartered accountants. Yet this gentleman has had a long history of inspecting this railway and knowledge of this railway. Certainly he should have been in a position to advise the other directors if all of the information wasn't being provided to the auditor. Or maybe there was some reason for restricting it. I don't know. But he was a director, and the president of that railroad was

[ Page 3329 ]

the Hon. David Barrett.

Again in 1973, the next fiscal year, we have the same board of directors, the same president, Hon. David Barrett. The directors are the Hon. William S. King, E.F. Roland, R.E. Swanson. They have dropped some. But, you know, we had the same type of financial report, except this report under this system of accounting had gone on for many years. The excuse given for the first loss pointed out the style of accounting that the railway had conducted with the type of depreciation they had allowed.

The reason given for the losses on the railway weren't faulty construction; they weren't faulty planning. The reasons the new vice-president of the railway, Mr. Norris, gave — he says:

"While the railway established records in many important areas in 1973, gross revenues and the net profit from operations accruing at a record pace prior to August were affected drastically during the final months of the year by a series of developments: strikes on the national railways; two strikes of 12 days duration on the B.C. Railway; wage settlements which were retroactive to the beginning of the year; and an extremely critical car shortage."

He doesn't mention any other reason for the loss that year. The directors and the accountants still haven't questioned the accounting procedures; in fact, they're still reasonably happy. Perhaps 1973 was a mistake. Maybe in 1974 the railway will be in profit. They don't have to look for alibis. They don't have to rewrite history in order to explain a larger loss in 1974. At that time they're still confident.

Now the government, in somehow...

AN HON. MEMBER: What was the report on Dease Lake?

MR. BENNETT: ...trying to deal with Buttar and Chiene — we have statements by the Premier the other day. Following on the resignation of Buttar and Chiene, new auditors were appointed: Messrs Peat, Marwick, Mitchell and Co., chartered accountants of Vancouver. This firm is one of the partnerships forming the international family of Peat, Marwick, Mitchell and Co. The Canadian partnership is owned by the Canadian partners. They have an extensive background involving a number of major audit clients in transportation and transportation-related fields, including the Canadian National Railway.

They've already been stung by their last auditors; they were in charge when the audit in question, that the Premier quoted, was conducted. And whom did they appoint to clean it up? Peat, Marwick. Lo and behold, Peat, Marwick. This is the same Peat, Marwick, and here I have an article from Business and Finance. It says: "Fraud at Penn Central." "The shareholders are suing the directors and the accountants of Penn Central." And who are they suing? "Peat, Marwick, Mitchell and Co., the company's former auditors, filed false financial statements for the railroad." (Laughter.) Peat, Marwick, Mitchell and Co.

Interjections.

MR. BENNETT: That's the new auditors.

I make no attack on Peat, Marwick. I only point out that the Premier the other day, in attacking Mr. Walker, in attacking Buttar and Chiene, made a great to-do about an international reputation. I only bring some publicity regarding that international reputation to this House.

AN HON. MEMBER: Were they convicted?

MR. BENNETT: Now I would like to deal, Mr. Speaker, with other comments and statements of the Premier.

The Premier talked about reports, and development of the railway, and how it's been predicated on information from reports. I have here a report of the B.C. Railway dated June, 1973. It says: "British Columbia Railway Comparative Analysis Vis-à-vis Canadian National, C.P. Rail, Algoma Central, Northern Alberta, Ontario Northland, Quebec Northshore." It's by the research and development department of the British Columbia Railway. This is June, 1973. What did they say?

Well, they compare the management of the B.C. Railway with other railways. They compare it, and where do they get their comparisons from? They get them from Statistics Canada; they get them from annual reports of the other railways; they get summary statistics, financial statistics: equipment, track and fuel; operating traffic. The special sources of information in this analysis are listed below, and they list many categories. I believe that the people they quote and the statistics they quote are unimpeachable. They deal with, as I say, the Canadian National, the Canadian Pacific, Quebec Northshore, the British Columbia Railway, Ontario Northland, Algoma Central and Northern Alberta.

What they say is that the prime criteria in deciding which railways to include in the analysis was the availability of statistical information. Statistics Canada's publication presents information on nine railways operating in Canada, including the BCR. That's why these railways were included. But what do they say?

They compare these railroads on average freight revenue per mile. The British Columbia Railway average freight revenue is $633 a ton. CP Rail and CN Rail, which are national lines, have a higher average — $755 and $810. But Algoma Central has $284, Northern Alberta $478, Ontario Northland $306,

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Quebec Northshore $190. B.C. Rail per ton mile is 2.38 cents - this is where we're getting better revenue per ton mile. CP Rail only gets 1.3, the CN 1.36, Algoma Central 1.68, Northern Alberta 1.61, Ontario Northland 1.70 and Quebec Northshore 0.74. The B.C. Rail, with its history of sound management and the people who built the railroad and directed it — I'm talking about the working people of that railroad — should be proud of a report like that. They compare more than favourably; they lead all the other railroads in Canada in revenue per ton mile.

What about in other areas? We have areas like operating expenses — very important to the success of a railroad, Mr. Speaker. Road maintenance, equipment maintenance, traffic, transport and general — these are the costs that make up a railroad. What is the operating ratio of expenses to revenue on the B.C. Rail; It's only 77.3 per cent, while the Canadian Pacific has an expense ratio — this is the actual operations — of 89.5, Canadian National 96.3, Algoma Central 69.6, Northern Alberta 97.3, Ontario Northland 94.3, Quebec Northshore 67.5. That's very interesting, Mr. Speaker, because it shows that of all the railways only one has a better expense ratio to revenue than the BCR. It was profitable by analysis.

In a short while I'll be making a chart available....

Interjection.

MR. BENNETT: This is in the government's own report — BCR's own report.

Now I want to talk about depreciation expense as a percentage against gross revenue. The Quebec Northshore has a gross revenue of $53 million, depreciation of $5.5 million — a ratio of 10.5 per cent; the Canadian National has gross revenue of $923 million, depreciation expense of $96 million — a depreciation of 10.4 per cent; B.C. Rail had gross revenue of $37.9 million, depreciation expense of $3.9 million and a depreciation ratio of 10.3. It's all consistent and all in line with the Canadian Pacific, the Canadian National, the Ontario Northland, the Quebec Northshore and other railroads, showing that consistently in this report done in 1973 within the B.C. Railway, using unimpeachable sources, this railway was not only well managed, but it was one of the best darn managed railroads in this country and a railroad in which we can take pride.

I wonder why this statistical report wasn't tabled the other day.

I also want to quote from the Minty report. Depreciation has been much a point in discussion by the Premier the other day. The Minty report states in section 12: "In this regard since 1956 the company has used for depreciation purposes rates employed by the Canadian Pacific Railway in its own operations." Apparently there's something wrong with using depreciation rates the same as the Canadian Pacific. Apparently now we can try to divert attention from the major loss in 1974 and 1973 and the tragedy that has struck this railway since 1972. That's not good enough — we have to rewrite history. We have to rewrite it to make our case a little better; we have to rewrite it for political advantage, no matter if we touch the people who worked for years to build this railroad. Forget the politicians — all of us must take the abuse. But how about the working people within the railway? How do you think they feel, those who are active now and those who were active before, with this type of political attack destroying their reputations, to try and save a government that is declining, and that has a history of losses in ICBC and other areas? I find it shocking, shocking that last Friday the Premier of the Province, in an attempt to save a government and his party from going down the drain, in a last-ditch attempt to rally the forces who've lost confidence in his leadership, resorts to this type of attack.

SOME HON. MEMBERS: Shame, shame!

MR. R.H. McCLELLAND (Langley): He's trying to save his own political face.

MR. BENNETT: Mr. Speaker, selective reports and selective reading from selective reports was his attack. Selective reading from selective reports not even recognizing who was in control of the BCR as the directorate when poor Mr. Walker of Buttar & Chiene had his unfortunate experience of not doing a sufficient audit. I didn't hear the Premier telling the House that the other day. Not at all. He would have left the impression that there was some other president and directorate in control of the railroad when that insufficient audit took place.

Now the Premier made some reference to the Leader of the Opposition in regard to a very real concern we had that was expressed to us by the working people of this railroad that there had been political interference in the middle management of the railroad. As you may recollect, Mr. Speaker, late last fall there was a strike on the railway. The Premier was not here; he was off in Japan and Hawaii sunning himself while the economy of this province ground to a halt. The Premier wasn't here to deal with it, either as the Premier or the president of the railway. So I, as Leader of the Opposition, having three MLAs representing constituencies vitally affected, dispatched them on a task force to meet not only with the railways, but also with municipal officials and others along the length of that line to determine the trouble and see if we could get the railway moving and bring some prosperity in advance of Christmas to the people of the interior.

The report they brought back was a report directly

[ Page 3331 ]

quoting the men on the railway when they met with numbers of them, not individually but in large groups, and that charge was their charge. That charge was part of the report. Their concerns then became our concerns, and we expressed them. We are still concerned, and that charge is valid. I believe the working men of the railway.

HON. MR. BARRETT: Name names!

MR. BENNETT: It's unfortunate that the Premier and president of the railway was sunning himself in Hawaii, right in front of Christmas, when this tragedy struck the railway.

Interjections.

HON. MR. BARRETT: Name names!

MR. BENNETT: Mr. Speaker, the Premier filed a list of senior and middle personnel, he says. He said there's been no changes. Well, I tell you, there's been a shuffling around in that railway. Why, I have here a report — R.E. Swanson and Associates, February 26, 1973.

HON. MR. BARRETT: It's filed with the House.

MR. BENNETT: "Dear Mr. Premier," it starts out. It's addressed to the Hon. Premier. "In accordance with your instructions at the last board meeting of the B.C. Railway, I am submitting herewith an organizational chart, set forth as shuffling of the personnel in the area of management of the B.C. Railway."

HON. MR. BARRETT: Of course!

MRS. JORDAN: Shuffling the deck!

MR. BENNETT: Mr. Speaker, a report by Mr. Swanson. He says there was a shuffling and a jiggling. He even made a recommendation. We've got all sorts of charts: move from column A to column B; eliminate this position. You don't fire; you just wipe out a position. All sorts of charts.

Mr. Speaker, I wonder what we paid for the report. It would be very interesting to know what we paid for this report. Perhaps the Premier will tell us how much this report cost. Perhaps the Premier will tell us.

HON. MR. BARRETT: You tell us. You make the charge, you tell us.

MR. BENNETT: Here were the changes that were started.

HON. MR. BARRETT: The Sawyer report was filed too. Why don't you refer to that?

MR. BENNETT: Oh, yes, then there's also the Sawyer report. I'll deal with that. There were personnel changes on the railway.

HON. MR. BARRETT: Name one that was political.

MR. BENNETT: In the Sawyer report we get all sorts of quotes. The Sawyer report has some very interesting things contained in it, Mr. Speaker. Right off the beginning he says: "The BCR has developed into a large organization with an important role to play in the economic life of the province." It says: "Since a recent organization development, responsibility at the top has become divided, causing gaps in structures."

I guess the first reorganization wasn't enough. We need reports on another. But he confirms this and says other things about the BCR:

"A review and comparison of operating criteria between the BCR and six other railway systems in Canada indicate that the BCR obtains a relatively high rating performance. Of the 16 points of comparison, BCR is judged as above average in six categories, below average in just two categories, with the remaining eight as average."

That is pretty good, pretty good for a railway that is under attack. Pretty good for management that the Premier says tried to mislead the public, management who were on the board of directors before he was there, but have since disappeared. Are any of the working men of the railway?

It also goes on, and I quote from the Sawyer report:

"An alternative which incorporates the present BCR into one or both of the national systems was rejected after considering recent history. It seems unlikely that the extensive recent developments of the BCR, with consequent overall development of the province, would have occurred had the priorities been allocated in Ottawa or Montreal rather than in Victoria."

It says that British Columbia must keep control of our own resource railway, but they go on to say that there is room for cooperation. In this report they go on to say that there is room for cooperation.

I am pleased to say that memorandums of intent as late as 1971, and which came after years of discussion, were the forerunners of what should be a good rail agreement for the northwestern part of the province — good if it doesn't call for just loans from the federal government; good if the province keeps control of its own railway; good if we can keep a

[ Page 3332 ]

British Columbia thrust and meet British Columbia needs rather than become a feeder for the national railways who have no concern for what must go hand-in-hand with the development of this railway, the economic resource development of this province.

I want to go on because another report that was quoted by the Premier was the Touche Ross report — again, selected quotes from selected reports. But I would like to quote from the Touche Ross report because they identified what the problem is in B.C. right in the beginning, in the introduction. They must have known something. Of course, this report just happened. They did know something, didn't they? They say that the Dease Lake extension must be evaluated within an extremely complex context of railway, public policy and economic considerations.

Translated, that means that the railway must forge north along with the province having an aggressive, responsible resource policy that will allow for the expansion of this industry to provide the economic base and the load factor for the railway. That is what they are saying.

Yet we know now that Bill 31 has destroyed the possibility of a large part of that load factor. Do you know what that means? That means that the extension which this government has been continuing, extolling, saying they are in favour of, and asking more money for, is threatened because the very load factor upon which it was predicted has been attacked and destroyed by the actions of this government which hasn't had a public resource policy to go along with the expansion of the railway.

We have quotes all the time. Many were quoted in the debate on Bill 31, but in The Province on June 10, here is a quote that sums it all up: "Government Cutting Own Throat on Railway":

" R. H. Seraphim, a Vancouver geologist–engineer consultant, pointed out that had the potential mines already known been developed, they would have provided a daily 43-car freight train of output for BCR to haul.

"Government policy discouraging the development of mining in B.C. has removed what might have been a substantial reason to complete construction of the Dease Lake extension of the B.C. Railway. Economic justification for the extension, which Premier Barrett said last Friday the province has no choice but to complete, vanished with the mining prospects, Mr. Seraphim contended."

Well, they didn't just vanish last Friday, and this situation hasn't been there. This extension has been going on since the new directorate took over in September of 1972. They have been aware of the extension of the railway, and they must have known in their minds and their hearts what they were going to do to the mining and resource industries of this province. But they kept the extension going, and at the same time they put the thumbs down on the mining industry and the resource industries. They haven't developed a responsible public policy to go along with the extension of the railway.

Mr. Speaker, if there is a tragedy, if there is a political cover-up, if there is incompetence, if there is something about which the public should be concerned, it's that very fact. That has been going on for two and a half years. You can't hide behind the election battles of the '60s and stay away from accountability of two and a half years of tragedy, because the losses, the overruns, the trouble started when the government changed and the directorate changed on the B.C. Railway. Make no mistake about that! You only have to read the balance sheet and the reports and find out the costs, because they all have taken place since the fall of '72. The contracts and the extension had just started; the contracts were only awarded in the summer of '72. If the new directorate taking over in September were concerned and on the job, they could have made changes. They've had the opportunity; they've had two and a half years. But now that the chickens have come home to roost they rewrite history. They rewrite history, they get selective reports, they give incomplete accountings of reports and they try to create a smokescreen.

Let me tell you, governments in the past, the government today and governments in the future will be accountable. All of them will make mistakes, but I hope all of them have the courage to live with their own mistakes and not attempt to rewrite history and not attempt to selectively read reports and not bear the accountability and responsibility for destroying the economic facts and reason for the extension of the railway in the first place. They have destroyed the economic reason for this railway taking place. That economic fact and the destruction of the mineral industry and the lack of confidence in the forest industry is a very real reason why we should be considering greatly the bill before us of some hundreds of millions of dollars going into a railway in which the government of the day has destroyed the very reason for its being. It's more than just the continued expansion; it's the very prosperity of British Columbia itself.

There has been a lot of discussion about whether the right route was chosen — all sorts of reasons about incomplete data and incomplete reports. There have been different reports about routes — I even have a press release here that deals with the routes and suggests that they were the right routes for the extension north. This is a press release — July 23, 1973 — from the Minister of Lands and Forests (Hon. R.A. Williams). What does he say in his press release? He says: "The routes selected ...." He said:

"Four alternative routes and rail systems were considered and examined in the planning

[ Page 3333 ]

of the northwest British Columbia rail system. A task force of provincial officials provided resource commodity data and development projections for the region. A consulting team retained by the Minister of Transport undertook a mathematical analysis of the results. The routes selected — route four in the B.C. Rail location study was proposed by the province on the basis of maximum access to known and estimated forest and mineral resources of the northwest quarter of British Columbia."

This is the rail system that is cited in the agreement; this is the rail system that was already under construction. It reaffirms the selection of the route.

MR. FRASER: Aha! He didn't tell them that.

MR. BENNETT: What else does he say? He talks about the impact of rail extensions into northwestern B.C. He talks about the reason for the extension. "Two very large copper properties lying in the Stikine River basin will benefit from the extension. These are Stikine Copper on Galore Creek and Liard Copper on Shaft Creek." We know who got shafted; we know who's up a creek. It's the people of the Province of British Columbia.

He goes on to say about the prospects for asbestos, for coal. By George, even in those days they trotted out the copper smelter! I haven't heard much about that lately.

The right route was selected. Here we have, on the basis of that, the joint transportation development programme in northern British Columbia. This is an agreement in principle. I know it was based on a lot of study that didn't start in the fall of 1972. It goes back to discussions between the CN and the PGE, as it was known then — the Government of Canada and the Government of British Columbia. Then it was signed with the former Transportation Minister, Mr. Don Jamieson. Hopefully, Mr. Speaker, this will be a good agreement for British Columbia. But this agreement has been in doubt, although I know the Economic Development Minister (Hon. Mr. Lauk) has resurrected it lately, because last year the Premier was threatening the CNR, saying: "We'll break the agreement. We won't go ahead." There are reports in Hansard — I don't want to go into that because it may come up later in the debate.

Another thing the Premier did the other day was read into the Blues a very controversial thing, and that was part of the court record regarding charges on the B.C. Railway dealing with a court case. He was properly questioned by the Second Member for Vancouver–Point Grey (Mr. Gardom). I'd like perhaps to read from the defence. Here is the defence...

Interjection.

MR. BENNETT: ...in the Supreme Court of British Columbia between M.E.L. Paving and the B.C. Railway Co. and Joseph S. Broadbent, defendant. Statement of the defence of the defendant, Joseph S. Broadbent:

"(1) The defendant denies generally each and every allegation of the facts contained in the statement of claim, except paragraphs 1, 2 and 4, which are admitted."

In answer to the paragraph dealing with the statement of claim, the defendant said that he was an employee of his co-defendant, but he ceased to be so employed in the month of October, 1973.

"The defendant denies being negligent as alleged, or at all. The defendant says that if he were guilty of any of the acts or omissions alleged, which is not admitted but denied, then such were not the approximate causes of the damage claimed by the plaintiff, or, alternately, the plaintiff could, by the exercise of reasonable skill and care, have avoided the consequences thereof.

"The defendant denies being fraudulent as alleged, or at all.

"The defendant denies that he conspired against the plaintiff as alleged, or at all. The defendant denies that the plaintiff suffered any loss or damage as alleged, or at all, and put it to the strict proof thereof.

"Whereupon the defendant, Joseph Broadbent asks that the claims of the plaintiff be dismissed with costs."

Now I didn't come to plead the case. I only am reading documents of record. I am neither a party in the case nor am I a lawyer in the case, but I merely read into the record these statements of defence in contrast to the statements for the prosecution that the Premier read. I will not read the statement of defence put up by the British Columbia Railway because it's too long, but I'll table it.

Interjections.

MR. SPEAKER: I just want to point out to the Hon. Member that of the allegations that were made in the plaintiff's claim, alleged fraud, the statement of defence denies this. So far, so good. But I hope we won't go any further because...

MR. BENNETT: I said I wasn't going any further.

MR. SPEAKER: ...once that was done before in a case that was quite famous in this province, and the court held that it was contempt of the court to republish those pleadings. I think the Members will remember that case in 1955.

[ Page 3334 ]

MR. BENNETT: I surely am concerned, Mr. Speaker, because I think we have to be concerned about statements that are made and will be made in this House in regard to a case between a contractor and the B.C. Railway, which belongs to the people of the Province of British Columbia. I would hate that any information put forward by the Premier may prejudice the case. I would hope that in seeking political advantage he hasn't prejudiced the province's case — B.C. Railway's case. I would hope, when this trial takes place, that we don't find out that he's prejudiced the case for political advantage. The people of the province would hate to see that.

MR. SPEAKER: I think the Hon. Member should be careful. He should not venture into any judgments on the case whatsoever.

MR. BENNETT: I just said I hoped that wouldn't happen.

MR. SPEAKER: In a way you're stating it by indirection.

Interjections.

MR. SPEAKER: Order, please. Would the Hon. Member pursue another matter?

Interjections.

MR. BENNETT: Yes, Mr. Speaker.

One of the reports that was widely quoted in the Premier's speech was the Wakeley report. This is the Premier's lifeline report along with the Hanrahan report, reports that were developed.... One was developed between January 8 to 30, 1975. "We need information quick; get a report." The Wakeley report from January 30, given February 27. You know — reports developed in a hurry to give the lifeline for the defence which was going to be manufactured to cloud the public and create a smokescreen for another loss in a Crown corporation of British Columbia.

You know, Mr. Wakeley even says in the report in a letter to Mr. Norris: "Attached herewith is a report on the history of the line from O'Dell to Dease Lake, as requested. In the short time available to me I have done the best possible job I'm capable of, but I'm certain that a project of this nature would take at least six months."

Interjections.

MR. BENNETT: "Take at least six months." And this was a report that was drafted in a hurry.

MRS. JORDAN: A typewriter job.

MR. BENNETT: Manufactured in a hurry.

Interjections.

MR. BENNETT: This report deals with engineering facts that happened long before Mr. Wakeley came to the railway.

It deals with situations, a lot of it on hearsay, that were developed than things that happened long before it became part of the railway. Here is the report, and I would say that this report, both in the time and because of the fact that Mr. Wakeley, with due respect, was not with the railway nor was the engineer who was responsible for the railway still with it, dealing with those facts that this report deals with in the years in the early and middle 60s.... Unfortunately, that gentleman was killed, is not available.

The Premier quoted from this report, and I would like to quote from it. Here's a quote from the report. It says:

"Although no documentary evidence is available to support the statement that the route selected followed basically the route recommended in the Wenner-Gren British Columbia Development Commission report dated December 15, 1959, the railway as constructed appears to follow this proposed route."

The government has these studies of Colonel Bingham that was part of the Wenner-Gren studies. Now you may question the fact of Wenner-Gren, but these studies...

HON. G.R. LEA (Minister of Highways): Oh, no! (Laughter.)

MR. BENNETT: ...the studies that were done — and I think that the Minister was at that time probably in the Yukon — the studies that were done in relation to that company and taken over by the province...

HON. MR. LAUK: He found out we were building a monorail.

MR. BENNETT: ...proved to be — this was a railway study — proved to be very exacting and very precise in regard to the construction and the outcome of the construction of the Peace River dam. Those engineering reports were found to be, and have proven to be exacting and precise, more precise than the reports that were prepared for other projects.

Along with that report, the Bingham report, an adviser to Mr. Bingham was Mr. Mitchell, who was chief engineer of the BCR prior to Mr. Wakeley. He assisted Mr. Bingham in the preparation of this study, and this study, in all its completeness, became the

[ Page 3335 ]

basis for all the northern studies and loadings that came after. This study has been available, and while it is not held in the BCR over the possibility and the early days of a threatened action and suit for the report because the people wanted more money than the province paid, this report has been in the possession of the Government of B.C. and available and part of all the reports and all of the surveys that came after. This is the report that preceded it.

Yet Mr. Wakeley, in this quick report, the hurry-up report, the save-the-Premier report — "save and give me some last vestige of credibility as my credibility declines around the province...."

MR. PHILLIPS: The people hate him.

MR. BENNETT: Yet there in this report is some mention, and this report is available. This report was available, but Mr. Wakeley, with his short history with the railway, didn't know this, and even admits to the ignorance of such a report being the basis for reports when all he had to do was ask the people who worked in that railroad, who came up through the ranks, who had really been responsible for this success. He should have asked them, because they knew it was there. That's a mistake, an oversight, but what will happen when you are charged with getting a hurry-up report, the lifeline report, the bail-out report for the Premier?

Here we have a speech or a presentation, call it what you will. It was given to this Legislature last Friday — inconsistencies, partial reporting, selective reporting, reporting of events that didn't occur as alluded. Here is a railway of which we have reason to be proud. Here is a railway that has had a successful operating ratio for years. If we take the normal graph of operating ratio, we realize that this railway, from 1960 through to 1972, never went out of the 70 per cent range in expenses as part of the revenue. But in the years with the new president, the new directorate, the new ways, expenses have climbed, in the end of 1973, to 84.2, and the end of 1974, 109 per cent of revenue. Now that's on the new accounting. Under the old accounting it would have been 129 per cent and 100 percent.

None of the railways in Canada operate on that type of over-expenditure. For one period even the CNR, with all the things we know about it, only went to 103 per cent. All railroads operate under 100 per cent, but not the BCR with the new president and the new director and the new smokescreen and the new overruns and the new tragedies.

Now, Mr. Speaker, if I thought the NDP were going to be re-elected, I'd vote against this bill.

SOME HON. MEMBERS: Oh, oh!

MR. BENNETT: I'd vote against it because I would know that with the policies they have and have had, they would continue to destroy the economy and destroy the reason for this railroad.

Their resource policies have destroyed more than the economy of this province, destroyed more than the expectation of our people. They have created unemployment and have brought into an uncertain future the rail line that has built this province, that created that prosperity. Make no bones about that, Mr. Speaker! This railway was at the heart and the root of the prosperity that has fed this province and brought us to where we are today.

Now, Mr. Speaker, we are at the crossroads. It is hypocritical of this NDP government to continue to construct after destroying the very reason for the railway. It is hypocritical to get up and speak on this bill when for two and a half years they have been destroying the resources that would be carried by this railway.

AN HON. MEMBER: Hear, hear!

MR. BENNETT: But I am going to support the bill...

SOME HON. MEMBERS: Oh, oh!

MR. BENNETT: ...because I know this government will be beaten! This government will not survive!

SOME HON. MEMBERS: Oh, oh!

MR. BENNETT: This government will not survive! In their defeat, Mr. Speaker, and with their defeat, Mr. Speaker, not only will the railway be the winner, but the province will be the winner, the people will be winners, and the future generations will know....

MR. PHILLIPS: Get back on welfare.

MR. BENNETT: The future generations that will live with the success of this province that has only stumbled with their incompetence will be thankful that we had the courage not only of the convictions that this railroad should go ahead, but confidence in the people to defeat the government that destroyed its future.

HON. MR. BARRETT: Even the independents won't buy that.

MR. SPEAKER: The Hon. Minister of Transport and Communications.

MR. FRASER: Pipsqueak, go to your own seat! Minister of Pipsqueak, go to your own seat.

[ Page 3336 ]

MR. SPEAKER: Order, please. Members are not permitted to speak from other than their seat.

MR. FRASER: The Member is yakking over there.

MR. SPEAKER: Order, please. And other Members are not permitted to call other Members "pip-squeaks." So would the Hon. Member desist from his expression?

MR. FRASER: You know what I am talking about.

HON. R.M. STRACHAN (Minister of Transport and Communications): Mr. Speaker, that was a speech that sounded as if it had been written by a committee that had no terms of reference....

AN HON. MEMBER: There is old ICBC himself.

HON. MR. STRACHAN: Let me tell you, no matter how hard you try, you'll never reach Bennett senior....

MR. SPEAKER: Hon. Members, a point of order.

HON. MR. BARRETT: Mr. Speaker, the Leader of the Opposition (Mr. Bennett) came in the House and asked the House purposely not to interrupt. We accepted that request.

MR. BENNETT: You did interrupt.

HON. MR. BARRETT: Oh, don't be silly! We sat in silence.

Interjections.

MR. SPEAKER: Order. I recall the government Leader (Hon. Mr. Barrett) interrupting the Leader of the Opposition on a point of order that had to do with a charge of deliberate misleading, if that is what the Member is referring to. But I gather that most of the speech was heard without too much interruption. I hope that the Hon. Members of the opposition will extend the same courtesy on the other side.

HON. MR. STRACHAN: Now can I proceed, Mr. Speaker?

MR. SPEAKER: I hope so.

HON. MR. STRACHAN: Thank you. It was only the second sentence.

No matter how hard he tries, he still is not as good a flimflam artist as his predecessor, Bennett the Senior. He tried very hard, he went all over the lot, he accused the NDP of everything under the sun, but he failed to get to the nub of the issue that was raised by the Premier last Friday — the fact there was a cooking of the books of the PGE prior to 1972. That was the nub of the issue! It really wasn't about the Dease Lake extension or any of the other things he talked about. The fact was there was a cooking of the books prior to 1972! A man whom we are told was a financial genius came up with this. The fact that the charge against the chartered accountant was based on the 1972 annual report doesn't alter the fact that in each preceding year, there it was. I have read it. In each preceding year, exactly the same thing. The evidence is in there from 1957 on. This House was fed false figures. False Figures! Phony books!

Interjections.

HON. MR. STRACHAN: Run out! Run out! Go on! Run out! Go on! On your way! Run! Run! Go on! Run! There you go! There you go!

MR. SPEAKER: Order, please.

Interjections.

MR. SPEAKER: Order, please. Could we have order, please?

AN HON. MEMBER: Shove him out! Shove him out!

AN HON. MEMBER: Wild guy! He's a wild man!

HON. MR. STRACHAN: By the sound of my voice, let me tell him what I had to tell his father once: go outside and spit up the crow feathers. Spit up the crow feathers! He is still spitting them up since last Friday when he had to sit there....

Oh, he's back! Good! You got rid of some crow feathers, did you? Good.

You are spitting up the crow feathers after two and a half years or two years of absolute falsehoods against this government — absolute falsehoods. Everything we've done you've attacked. But you didn't get to the nub; you ignored completely the Minty report. You ignored it completely.

"Mr. Minty noted among other things that there appeared to be little or no internal or external audit check on millions of dollars spent annually" — not just one year, spent annually — "on construction of the B.C. Railway engineering. He recommended that the external auditors not be unduly restricted in settling the terms of their audit engagements, as appeared to be the case in the past." That's the Minty report.

Interjections.

[ Page 3337 ]

HON. MR. STRACHAN: Yes, in the Blues, The Price Waterhouse report revealed that this great jewel in the previous administration crown had in fact cumbersome, inefficient and inadequate financial accounting and control practices — in one instance the cost of 1,000 freight cars bought in 1971 for $16.3 million was written off as a charge to equipment rentals over 15 years. That means we're still paying for it.

AN HON. MEMBER: That's right.

HON. MR. STRACHAN: That means we're still paying for it. One of the factors in any change of the cost-earning ratio — we're still paying for it.

What else was said that you didn't apply yourself to? The accusation you made in this House, once when the Premier wasn't here....

Interjection.

HON. MR. STRACHAN: No, no. You wait and see.

Interjection.

HON. MR. STRACHAN: I want to read the quote from the Leader of the Official Opposition (Mr. Bennett) when Buttar & Chiene resigned. You said they resigned "because they weren't prepared to change the auditing procedures because of the mounting losses that the railway wished to hide this year." Prove that charge. You didn't attempt to prove it tonight and you couldn't.

Interjection.

HON. MR. STRACHAN: You said they resigned because "they weren't prepared to change the auditing procedures because of the mounting losses that the railway wished to hide this year." Prove that one.

I'll give you something else to prove. You said: "The question of B.C. Rail's senior and middle management...." You referred to that. On December 1, 1974, you were demanding a royal commission to investigate political changes involving those employees. Name one employee — name one...

AN HON. MEMBER: Name one!

HON. MR. STRACHAN: ...instead of just standing there like that. Name one instead of going on the way you did.

Interjections.

HON. MR. STRACHAN: The Minty report indicated that Einar Gunderson, the former railway director, had restricted the auditors in their work prior to 1972, not just 1972, and so it goes right on — it goes right down the line.

Interjections.

HON. MR. STRACHAN: Mr. Speaker, we heard this Leader of the Opposition tonight saying that what we had done was destroying the development of the north. That railway went ahead without one economic report, without a single economic report. You can't name a single economic report, no economic studies, no engineering. He talked about the importance of the railway.

Interjection.

HON. MR. STRACHAN: He talked about the importance of the railway, and, Mr. Speaker....

Interjections.

HON. MR. STRACHAN: Mr. Speaker, I have supported every single bill in this House for the Pacific Great Eastern railway for more than 20 years.

MR. G.B. GARDOM (Vancouver–Point Grey): Blindly.

HON. MR. STRACHAN: Not blindly. I believed that the reports we had been supplied with were honest reports. I believed they were honest reports.

Interjections.

HON. MR. STRACHAN: I was wrong. I was wrong.

Interjections.

MR. SPEAKER: Order!

Interjections.

HON. MR. STRACHAN: But, Mr. Speaker....

Interjections.

HON. MR. STRACHAN: I believed the reports we had been getting were honest reports. I believed that railway was important to open up the north and central British Columbia. I supported the Pacific Great Eastern railway bills.

Interjections.

[ Page 3338 ]

MR. SPEAKER: Order, please.

Interjections.

HON. MR. STRACHAN: Could I have a little order, please, Mr. Speaker?

Interjections.

HON. MR. STRACHAN: I've listened to what's been said.

MR. SPEAKER: Order, please. I think a certain amount of barracking is all right, but you're really overdoing it, don't you think; The Hon. Second Member for Vancouver–Point Grey (Mr. Gardom) — if the Hon. Member wants to continue heckling, perhaps he could do it outside.

HON. MR. STRACHAN: The Leader of the Opposition talked about somebody rewriting history. History is revealed with each passing year. That's what we had on Friday: history as it was, not as it was told to us at the time. What we'd like to be able to do is not rewrite history but rewrite some of the contracts we were saddled with. That's what we should be able to do, but we can't do it; that's one of the problems we face, too.

For that man — this so-called Leader of the Opposition — to talk about having faith in the future of this province, that he would like to see it opened up, that if he thought we were going to be the government he would vote against this bill — that's reprehensible.

He talks about decentralization. What a shallow statement from a group of people who have opposed every measure of this government directed towards decentralization of the growth and the gravity of this problem to try and bring some balance into the province.

Had they been the government of this province in the last three years, the whole weight of growth and population in this province would have finished up almost solely in the lower mainland of British Columbia. And let me tell you, Mr. Speaker, that had they been the government, the railroad would be closed down between the north and the south. And the CNR would be closed down from Prince George to Prince Rupert. Had we not been the government there'd be no Cellulose and the whole....

MR. McCLELLAND: He's a fumbling old man. A fumbling old man.

[Mr. Speaker rises.]

MR. SPEAKER: Order, please! Will the Hon. Member please withdraw the statement that he just made which is an insult to any Member of the House? Calling a Member of this House a "fumbling old man" is an insult and despicable. Will you kindly withdraw it?

[Mr. Speaker resumes his seat]

MR. McCLELLAND: I withdraw, Mr. Speaker.

MR. SPEAKER: Thank you.

MR. McCLELLAND: An insult to old men.

HON. MR. STRACHAN: Thank you, very much, for obeying the rules of the House in that courteous manner, as you always do. Mr. Speaker....

MR. McCLELLAND: Go on with your harangue.

HON. MR. STRACHAN: Oh, look who's talking about a harangue! My goodness! I won't return the kind of talk that that man has given to this House ever since he came here. Thank God he won't be back again. He's a one-timer. And he deserves to be a one-timer. He deserves to be a one-timer! With what you've done to this House, you do. You make me sometimes ashamed to be a Member of this House. You make me ashamed to be a Member of this House. A good many times.

MR. SPEAKER: Would the Hon. Member proceed with his remarks, please?

HON. MR. STRACHAN: Mr. Speaker, had that group been the government of this province, we know that the deals that were going ahead at that time would have meant the closing of the two pulp mills in Prince Rupert, would have meant that the logging industry related to them in that whole Terrace area would have been gone without the impetus of the Minister of Lands, Forests and Water Resources (Hon. R.A. Williams) that kept that going and provided the developing economy for the movement of chips. Eurocan would have been closed down; and that whole northwest section of this province would have been ghost country.

AN HON. MEMBER: They opposed Can-Cel.

HON. MR. STRACHAN: Yes, they opposed it. They've opposed every single thing we've done to bring growth and balance to the Province of British Columbia. And for them to stand up and say that if they thought that we were going to be elected, they would vote against the bill.... Now what sort of thing is that? What sort of way is that to approach any piece of legislation?

It's a bitterness and a hatred and a dislike and a

[ Page 3339 ]

failure to bring into this House a real feeling for the good and the benefit of this province.

MR. BENNETT: Rubbish!

HON. MR. STRACHAN: I supported this railway because I believed in this province. I believed in its future, irrespective of government. And that's what I've always believed. And on that I've based my every action in this House — for the good of the province, irrespective of who was in power at the time, how ruthless they were, how they pushed the House around, how cruel they were to the Members. I never allowed that to interfere in my duty to this province. My duty to this province is to keep that B.C. Railway going and to keep some balance in the province. You've not only done this province harm tonight; you've done yourself harm, you've done your party harm and you won't be back and you shouldn't be back.

MR. G.H. ANDERSON (Kamloops): Mr. Speaker, I don't intend to take too much time in this debate because I think the main issues have been pretty well covered. They've been covered over and over again by various Members at various times. I intend to support the bill at the time of the vote. Although there's been a lot of recrimination back and forth from both sides of the floor, a lot of it justified, I have to say at this time that I think one of the finest things the previous government did was to complete that railroad that, as many people used to say, started nowhere and ended nowhere. So at least it was completed from Squamish into North Vancouver and then to Prince George, which made the link-up that was very necessary. I would certainly compliment the previous government for that. It was a good decision. It was a decision that had to be made and it was made. Once again, I compliment them for it.

One of the things that we have not argued about tonight at all in any way is the necessity for the British Columbia Railway in this province. All Members from all sides of the House from all parties — not one has said that these extensions shouldn't have been carried on or that the railroad shouldn't have been improved, or shouldn't have been extended. It's necessary to develop the resources. If we're ever going to open up the heart of this province, and especially the north, we have to have that transportation system.

I agree very much with the Minister of Economic Development (Hon. Mr. Lauk) when he said that railroads do not make money. Of course they don't make money, unless it happens to be the CPR that owns the downtown heart of Winnipeg and the downtown heart of Regina and the downtown heart of Calgary. Marathon Realty is wheeling and dealing in all this land that was given to them at the time they built it. That, of course, never shows as a profit for the railway, and they continually petition the federal government for subsidies and they always get these subsidies, continually, year after year, in ever-increasing amounts. But they have been making money with the real estate operation. Unfortunately, B.C. Railway didn't get these large land grants so they are in a position that they have to operate at a deficit.

I was a little heavy-hearted listening to the debate today, Mr. Speaker, because although the Member that I succeeded from Kamloops (Mr. Gaglardi) didn't carve himself too much of a niche in this province as far as the public is concerned, the previous Premier did. I'm speaking now of Maxi-Bennett. I was very disappointed to hear the speech from the Leader of the Opposition. I won't call him Mini-Bennett, as I don't think that would be parliamentary, but it certainly wasn't Maxi-Bennett standing in his place tonight, or the debate would have taken a very different turn, I would think.

We heard for so many years about the financial genius of this man, this monetary wizard. I remember one time, about a year and a half ago — I'm sorry she's not in her seat — the Hon. Member for North Okanagan (Mrs. Jordan) paid him that great compliment when she was comparing him to our previous Premier. She said he's a man who really knows business: he knows money, he knows finance he can walk a straight fence with both ears to the ground. Remember that, Hon. Members? It's in Hansard. That was one of the better speeches that she's made in this House.

But the previous Premier did have this reputation; he had it with many people who are not necessarily Social Credit, but he did have it solidly with the old-line, steady Social Credit supporters: you could always depend upon him to pull us out of any financial trouble we got in. He was a genius at the money game, and on the wheeling and dealing and the financial gambling he could always be counted on to bring British Columbia out ahead. After the report on the Columbia River was tabled was when the cracks started to appear in the foundation, Now that this report has been tabled, we find that an idol is falling — and it is an idol; not one of mine necessarily, but an idol of many people in the province is tumbled to the ground. We find that instead of the sagacious businessman we had a snake oil salesman — one of the old style snake oil salesmen, sometimes called hucksters — book cookers that can twist facts around and hide them in ledgers and limit the investigation of the auditing company so that no one really knows what's going on at all until we've had these investigations by two different companies.

What I'm very curious about is: when these directives were sent out, and when these limitations were put on, where was the board of directors? Was it a one-man board of directors? Was it a board of

[ Page 3340 ]

directors being told and dictated to and ordered by one person, or weren't they all there when these decisions were made? This is something that I would like to have some answers for, and I hope when the Premier closes debate that perhaps some of this will be brought to the floor of this House.

We heard the Leader of the Opposition giving fact after fact after fact as he drew red herring after red herring after red herring across the trail. He talked about ton miles; he talked about various other weights; he talked about Sukunka coal and Yukon coal. As a former engineer, I know that when you burn coal properly it's smokeless but it certainly wasn't burned properly tonight because there was a smokescreen laid in this Legislature like it's never been laid before. As far as ton miles are concerned, I am concerned about whether there was a heavyweight on that board of directors who was leading the rest around by the nose.

I think that since we've had this second incident come up — an incident that will certainly go a long way to destroy the faith of long-time Social Crediters in the previous government of this province — they will be deserting them by hordes in the very near future, and certainly by the next election.

I would like to see the same type of investigation into the department that was run for so many years by the previous Member for Kamloops. Every time I drive around the highways of this province, and around my own riding, and find the way they crack up I wonder what we've done on the contracts. Were the bases properly put under the roads? Were they up to specifications? I think that if I can get a little more information, one of these days before too long in this House I will be asking for an investigation into those contracts. Were they followed? Was the proper material used? I would feel quite sure, after driving up the Cariboo trail and some of the others that have been breaking up for the last five years, which started in some cases a year or two after they were built, that we could have the same type of situation that went on in the Highways department in this province as has gone on in the railway.

Mr. Speaker, I said I'd be brief, but I just felt that I had to stand up and take my place in this debate and reiterate that last Friday an idol fell in this province, and it is going to be reflected in the next election.

MR. D.E. SMITH (North Peace River): Mr. Speaker, I think that we've had an interesting evening. As we listened to the debate, really what is being said by the Members of the NDP and the Premier is that, in his opinion, one firm of auditors is superior to another. But this evening we've also listened to the fact that the firm of auditors which he seems to feel has superior knowledge to do a better job have at times stubbed their toes, as people in business and in every profession occasionally do. That has been reflected in an article that was quoted this evening by the Hon. Leader of the Opposition (Mr. Bennett).

So when we try to base the arguments and the debate on not only the reliability of the auditors, but also on the rail use of the PGE — now known as the B.C. Railway — on an auditor's report and an auditor's statement, I think we miss the whole purpose and point of the debate of this bill, because basically the debate on this bill is to provide additional funds to a railway which is a resource development railway. It has never been classed as anything else. I suggest to you, Mr. Speaker, that it will be many, many years yet before it will progress to the stage of a mainline railway from one extremity to the other and be looked at on the same basis as the CN or the CP.

I know from first-hand experience that a deliberate decision was made to extend the railway north from Fort St. John to Fort Nelson in as quick a time as possible. That was a deliberate decision by the directors of the B.C. Railway. Why was that decision made on that basis? I suggest to the Members of this House that it was made upon that basis to provide a service to a new, developing area, to the community at Fort Nelson which really wanted to see that railway there as quickly as possible.

There is great potential in the Fort Nelson area; there always has been. The thing that was frustrating the development of the area was the fact that everything had to come in and out by very expensive transportation methods, mainly trucks. And it is not an economical way to move freight in; it certainly is not an economical way to move raw resources to the market.

As a matter of fact, Mr. Speaker, I suppose in the last number of years since the building of a dehydration plant at 285 for separating the sulphur and liquid products from the natural gas before it was fed into the pipeline to supply British Columbians and the export market, the companies involved had to burn off hundreds of thousands of dollars worth of chemical because there was no market for it and no means of getting it to market. That chemical was sulphur, and it was burned off in the smokestacks. It had to be because there was no way of economically transporting an oversupply of sulphur, because we were in a position of oversupply, to a market that would be available. It would have had to go at least to Fort St. John and then by rail from there to the coast, and it was just not economically possible to do that.

So immediately, as the railway was extended to Fort Nelson, a market developed for that one product alone from the plant. That was only one of the things that happened. It also made it possible for a viable lumber industry to locate in an extremely

[ Page 3341 ]

resource-rich area.

It was possible for two business people who had a number of years experience in the lumber industry to move from Prince George to Fort Nelson and start a sawmill, a plywood chipping complex that will see an investment this fall of better than $4 million in plant and equipment — Tackema Lumber Co.

It is also interesting to note that the first wood processed through their plant and the first logs sawn will come from the Indian people's land at mile 295. This particular tribe of Indians has already sold a substantial amount of timber to Tackema Lumber, who in turn have taken them into the corporation as shareholders and retained a small percentage of the profits from the sale of timber to purchase those shares. The remainder goes to the Indian people themselves. So don't ever try to suggest to people who live in the Fort Nelson area that the extension of the railway is a pipedream or that it was foolish, because they know the value of it.

True, there have been problems, but I would like to draw to the attention of this House the fact that of the 250-mile extension from Fort St. John to Fort Nelson, about 200 miles of it — close to that — is through extremely difficult terrain, muskeg country, Mr. Speaker, country where we have not had the previous experience in engineering and building a railway in that type of country to know exactly how to handle the conditions.

How do you float a track across 20 feet of muskeg, which is a continually floating mass of material? They found out ways to do it by building a pad and building a base; and literally the railway in places does float. It is rough, and for years you will not be able to compare that line to a mainline transportation standard. But, Mr. Speaker, it does the job. It hauls merchandise from the Fort Nelson area to the markets. It hauls back the goods that people require to stay in business and to operate their firms in that part of the country at rates that are far more competitive than anything else they have ever experienced before.

It is also possible that that railway will be the key to a vast development beyond Fort Nelson and into the Arctic via river transportation. At the present time, a tremendous complex goes out of Great Slave Lake up through the Northwest Territories and into the Mackenzie delta area through Alberta. It is not unreasonable to believe that a good portion of that merchandise originates through the ports in the City of Vancouver, as it does.

Why ship it all the way to Alberta, to Edmonton, up over a resource development railway in Alberta, across Slave Lake, and into the Mackenzie River system when it would be easier and simpler to ship that merchandise from Vancouver over the B.C. Railway to Fort Nelson and put it onto river barges at that particular location? There is good reason to use that route, Mr. Speaker, because of the fact that the river system in that particular part of the country opens up 10 days to three weeks ahead of the system which uses as part of the route Great Slave Lake, for the simple reason that the ice goes out of the rivers in northern British Columbia before the ice is out of the lake. In order to get merchandise from one side of the lake to the other, the barges, unfortunately, have to cross the lake. They can't do that for 10 days to three weeks later than they can if they go the Fort Nelson route.

So that is a potential market that will open up as a result of a resource-oriented railway built by the previous government and taken over now as part of the assets of the province by the present government. That is what it was intended to do. There could have been a decision made by the previous government, I suppose, to take their time on the Fort Nelson extension, to build 50 miles a year. With the weather conditions and the construction conditions that we have, it wouldn't seem entirely unreasonable to a better standard. The only difference is, Mr. Speaker, it would have taken five years to get there instead of less than two. As a result, the people in Fort Nelson would probably still be waiting for the railway to reach that destination, So that was a conscious decision made by a previous administration for the benefit of the people who live in the north, I think it was the right decision, even though we now have to spread money on re-laying some of the track and in relocating some areas where we have had extreme difficulty with grades. What is new about that? Every railway in Canada at one time or another has experienced those problems. They are still having those same types of problems from Prince Rupert to Prince George, and they will have each and every year.

So it seems to me that when we talk about the value of the B.C. Railway to the Province of British Columbia, we don't equate it....

Interjections. (Laughter.)

MR. SMITH: That's a good joke; I'll stop till they're finished.

MR. SPEAKER: Order, please.

Interjection.

MR. SMITH: It's a good joke; I'll wait until they're finished, Mr. Speaker.

It seems to me that we do not equate the value of a railway to one auditor's report as compared to another. We equate the value of the railway to the people of British Columbia in terms of what it has meant to the communities along that line as it branched northwards and then up to Fort St. James

[ Page 3342 ]

and eventually to Dease Lake. We equate it with the growth of Prince George and the communities beyond Prince George on the eastern side of the mountains: the community of Mackenzie, the communities of Chetwynd, Hudson Hope, Fort St. John, Taylor, Fort Nelson and Dawson Creek, all of which have experienced tremendous growth as a direct result of the extension of the B.C. Railway.

The Peace River country has not only given us a market for lumber products, which we did not have before on a competitive basis, it has allowed the mills up there to put in chippers and as a result send their chips to Mackenzie where there is a market, at least for some of them. It's allowed every farmer in the Peace River country to expand his operation and become more stable as a result of that because of the fact that the railway was available to haul feed grain and other grains to market. All we have to do is reflect back to last year when the railway strike was in effect and see what happened to some of the communities, including the community of Fort St. John, caught at a time when all of the farmers in that country wanted to ship grain to market. The market was there; the only thing that was a problem was that the railway was out on strike.

It was estimated that about 35 cars of grain a day would have left the Fort St. John area, and a similar amount from the Dawson Creek area, to markets which were available had the railway been operating. Instead of that, we sat there with plugged elevators for months as a result of the backlog that developed. Farmers couldn't get paid for grain they couldn't sell, and when they can't get paid their creditors have to wait a little longer. So it becomes an intricate part of the economic fibre and life of those communities. It has been part and parcel of the development of northern British Columbia.

I think that we really should reflect on that point in speaking to this bill, because if we really believe that all of British Columbia has something to offer, and we really believe that small communities of 10,000 to 25,000 population scattered throughout the length and breadth of the province are preferable to 2 million or 2.5 million people living within a radius of 25 miles of the ocean, then we must develop the transportation links. But that's only one part of it, and this has been referred to by previous speakers. That is, a railway can only haul the merchandise in that is required by the economy of that area, and they can only haul to market the products that are manufactured or produced out of that particular area.

We can talk about secondary industry as long as we desire in the Province of British Columbia. There's never a debate about development takes place on the floor of this House that somebody doesn't bring up the matter of secondary industry and how negligent the previous government and the previous administration was in this respect and how great the potential is, but I suggest that if we look at and analyse the picture properly in this province, we will remain a producer of raw resources for some years to come, particularly in northern, north central, northeastern and northwestern British Columbia. This is the basis of the livelihood of those communities.

I'm sure that there is a great potential there untapped and even unknown at the present time. Certainly with respect to coal deposits we have ample knowledge already to assure that particular industry as a viable one in terms of the product available for many, many years to come, and of course there are many deposits we have no knowledge of.

I don't think we know really what our supply of asbestos is in the Province of British Columbia, except for that which is in the immediate area of Cassiar.

We have a potential for a number of viable copper operations, mills that will refine their product and ship a semi-refined product to market, all through British Columbia and particularly through the north.

There is a deposit of low-grade iron ore immediately adjacent to our eastern boundary. What the value of it is in terms of productivity I don't think has ever really been properly catalogued yet, but we know it is there and it may have extremely valuable commercial development ahead for that particular deposit. Certainly if we compare its value to what we used to think about when we talked about coal deposits in relation to their markets just a few years ago it may have far greater potential than we have ever really known.

There is ample water in northern British Columbia to develop industry. We have ample hydro-electric power. As a matter of fact if it wasn't for the Peace River Dam at the present time a great part of British Columbia would be suffering blackouts or brownouts almost every night of the week, because it is a known fact that 50 per cent of the power developed and put through the B.C. Hydro system comes from Portage Mountain Dam.

Interjection.

MR. SMITH: Oh, I think so. Just sit around and listen. You may learn something and I think we are going to be here until 11 o'clock, so....

AN HON. MEMBER: I can't stand the heat. (Laughter.)

MR. SMITH: You can't stand it? (Laughter.) You'll have to leave. He got up and made his remarks last Friday, and since then when we get down to discussion of the real merits of the B.C. Railway, he can't stand it.

But it has been and will continue to be one of the

[ Page 3343 ]

great resource development vehicles for all British Columbia. It is unfortunate that many of the people in the province don't appreciate the real value of the railway. I suppose that because of statements made by the Premier last Friday some will be quick to accept his argument and jump on that as a reason why we should not grant funds for any more extensions for the B.C. Railway. Even the Premier doesn't believe that, but some people will and some people will use this as an argument.

It is not an argument that is in keeping with the economic life of this province. There is no way of determining in advance the exact problems that a newly developing railway will encounter. There is no way of predicting accurately in advance the exact amount of material that will be used.

I recall the development of the railway in our sister province, right across the border from us.

[Mr. L.A. Williams in the chair.]

It is good to see you in the chair, Mr. Speaker.

I recall the problems, the trials and tribulations of a development in northwestern Alberta, a resource railway, Mr. Speaker.

AN HON. MEMBER: The NAR.

MR. SMITH: No, not the NAR. No, this was built by the CN to serve newly developing resource areas out by Grand Cache out by Grande Prairie. You know what happened there, Mr. Speaker? They ran into exactly the same type of construction problems, or very similar construction problems, as what we experienced on the extension of the B.C. Rail.

They ran into the fact that regardless of how accurate their engineering was before the project, they found that they had underestimated the quantities of material that would have to be moved in order to build a substantial grade. As a matter of fact they even ran into a lawsuit on the particular matter as to whether the contractor was eligible, or should receive payment for the extra material that he had to move over and above what was bid in.

So it is not unusual to run into these problems on the construction of a railway. Without reflecting on what might happen on this one, all I can say is that these problems exist, that regardless of the engineers employed, or the method of determining quantities, it is very seldom that the job works out precisely with the engineers' calculations. As a matter of fact, in most instances there is a tremendous overrun in the amount of material that has to be moved as compared to what was originally suggested when the tenders were called on the specific project.

Let's not forget that this is a resource-development railway, that it was built for a specific purpose — to service and bring northern British Columbia into the main stream of this province. In that respect, it has done a remarkably successful job.

SOME HON. MEMBERS: Hear, hear!

MR. SMITH: If anyone doubts that, let him talk to the people serviced by the railway in that part of the country, and find out what they think about it. Because it is there, the country has probably developed three to four times as quickly as would have happened without the railway.

At one time northeastern British Columbia looked at the rest of the province and said that as far as B.C. is concerned, they don't even know we exist. Our total economy is tied to the Province of Alberta and it will always remain that way until we get proper communications and transportation links developed to the other parts of British Columbia. Slowly but surely that happened — first of all, with the Hart Highway, and then with the extension of the B.C. Railway.

It was then, and only then, that the basic potential of the Peace River country really came into its own. Even the farming potential was inhibited before that time — strangled, held back because there was no available market for grain that could be produced in light quantities at a lesser cost right across the border from us in the Province of Alberta. It was only after the extension of the railway, when the farmers of the Peace River country were able to ship feed grain from that part of the country to the Cariboo, to the Kamloops area and to the lower mainland, that the grain industry really developed in northern British Columbia.

Now we have Fort Nelson developing on the same basis. They'll not become the same agricultural community as the area south of them, but they have a far greater potential in terms of timber, in terms of mining, and in terms of petroleum resource development, Hopefully, a lot of the byproducts from the petroleum industry can be semi-refined in Fort Nelson, shipped by rail to, probably, a synthetics or plastics plant, and will be the basis of a secondary industry. I don't see it happening in that particular community for a while yet. But these are the things that have developed British Columbia, and will continue to do so.

The railway is a vital lifeline to the north. Regardless of the problems that may be experienced in building the line, in retaining it because of slides and unpredictable weather and soil conditions, it will still be there to serve the people of British Columbia. It will require capital expenditures from time to time and it will require new rolling stock, provided we retain the outlook that the resources of the north must be developed.

[ Page 3344 ]

MR. BENNETT: That's right.

MR. SMITH: The only thing that is inhibiting the railway and the northern part of British Columbia at the present time, the future of that part of the country, are the policies of the NDP.

MR. BENNETT: Yes, right. They're a threat to the future of the province.

MR. SMITH: On one hand, they say they want to develop the railway. On the other hand, they enact policies that destroy development that is already there and frustrate anything that would take place in the future.

MR. BENNETT: Shocking!

MR. SMITH: Mr. Speaker, it is a shocking situation. That's true, it is a shocking situation, because that is exactly what is happening in far too many instances in the north right now. Fortunately for the people of British Columbia, it is not going to last too long. There is a solution.

MR. BENNETT: That's right.

MR. SMITH: The solution will be spelled out loud and clear by the electorate in the next election.

AN HON. MEMBER: Hear, hear!

MR. SMITH: That is the way...

MR. BENNETT: Help is on the way!

MR. SMITH: ...the problem will be resolved. The B.C. Railway will continue to operate for the betterment of the people in the Province of British Columbia. The only thing that will be missing are the Ministers who now occupy the cabinet benches under the NDP banner.

MR. BENNETT: Thank goodness!

Hon. Mr. King moves adjournment of the debate.

Motion approved.

MR. SPEAKER: I'd like to advise the Hon. Members that the visiting parliamentary group from the Yukon have arrived this evening. They are here overnight and we'll be seeing them, I hope, in the morning at the public accounts committee meeting, which they're interested in seeing, and also at 10 o'clock for estimates, which they are also interested in seeing.

Interjection.

MR. SPEAKER: I have no comment on the comment.

Interjection.

HON. MR. HALL: I think that we'll follow the practice of today and deal with Water Resources, then go to Highways.

Hon. Mr. Hall moves adjournment of the House.

Motion approved.

The House adjourned at 10:54 p.m.