[ Page 1079 ]

CONTENTS

Routine proceedings

Oral questions

Lease to Halfmoon Bay Estates. Mr. Lockstead — 1079

Circumvention of strata conversion regulations. Mr. Gibson — 1079

Summer employment by Highways department. Mr. Wallace — 1079

By-election in Vancouver East. Mr. Macdonald — 1080

Ferries dining room service. Mr. Wallace — 1080

Human rights branch inquiries. Mr. King — 1080

Victoria recycling depot. Mr. Barber — 1081

Ore shipments from Denison Mines. Mr. Gibson — 1081

Sale of Can-Cel shares. Mr. Wallace — 1081

Transition house funding. Ms. Brown — 1081

Thompson River study. Hon. Mr. Nielsen answers — 1082

Motion

Adjournment of House on matter of urgent public importance. Mr. King — 1082

Hon. Mr. Wolfe — 1082

Mr. Speaker rules — 1082

Hon. Mr. Bennett — 1082

Mr. Speaker — 1083

Mr. King — 1083

Mr. Lauk — 1083

Mr. Speaker — 1083

Statement

Agricultural aid to developing countries. Hon. Mr. Phillips — 1084

Ms. Brown — 1084

Mr. Speaker — 1085

Routine proceedings

British Columbia Railway Company Construction Loan Amendment Act, 1976

(Bill 5)

Second reading.

Hon. Mr. Wolfe — 1086

Mr. Lauk — 1086

Mr. Nicolson — 1096

Mr. Gibson — 1102

Mr. Wallace — 1105

Mr. King — 1108

Mr. D'Arcy — 1110

Hon. Mr. Wolfe — 1111

Division on second reading — 1112

Errata — 1113

MONDAY, APRIL 26, 1976

The House met at 2 p.m.

Prayers.

HON. G.M. McCARTHY (Vancouver–Little Mountain): Mr. Speaker, in the House this afternoon we have members of the Social Credit Party Women's Auxiliary. I would like to ask all members of the House to welcome this very dedicated group of women who were successful in bringing the Social Credit Party administration to British Columbia last December.

MR. W.S. KING (Leader of the Opposition): Mr. Speaker, in the gallery today we have a former member of this House. I would ask the House to join me in welcoming a gentleman who served for some 27 years in the Legislature of British Columbia. As Minister of Mines in the former government and as the member for Kootenay for many, many years he made a great contribution to the public life of this province. I would ask the House to welcome Leo Nimsick.

MS. K.E. SANFORD (Comox): Mr. Speaker, seated in the gallery today is a group of students from the Campbell River Senior Secondary School who are accompanied by their teachers and sponsors, Chris Round, John Ison, Larry Short. I would ask the House to join me in making them welcome.

Presenting reports.

Hon. Mr. Phillips files the annual financial statement of the B.C. Railway.

Oral questions.

LEASE TO HALFMOON BAY ESTATES

MR. D.F. LOCKSTEAD (Mackenzie): Mr. Speaker, to the hon. Minister of Environment. With respect to a foreshore lease granted to the Halfmoon Bay Estates on lot 303 or 304 at Porpoise Bay, Sechelt, B.C., is that the same application, Mr. Minister, that was rejected last year upon the advice of the departmental officials and the recommendation of the village of Sechelt?

HON. J.A. NIELSEN (Minister of Environment): I wonder if I may request from the member some specific reference as to which application he is now speaking of, and I will gather that information. Are you saying that an application is now before the department or has been approved?

MR. LOCKSTEAD: It's the same application that I wrote to the minister about some time ago. The lease was granted on March 25 of this year.

If the minister is going to look into this, I wonder if he would be good enough to look into the fact that the principal officer of Halfmoon Bay Estates was active in the general election on behalf of the Social Credit candidate in Coquitlam and may now be active in Vancouver East, and that his wife is president of the Social Credit constituency

MR. SPEAKER: Order, please.

MR. LOCKSTEAD: Well, I am interested in whether there is a conflict of interest, Mr. Speaker.

MR. SPEAKER: If that is your question, then ask that question.

MR. LOCKSTEAD: Well, yes, I do ask the question. I am asking the minister if he'd like to look into the possibility of a conflict of interest in this matter, Mr. Speaker.

HON. MR. NIELSEN: I can assure the member that if the applicant was the Premier he wouldn't get any more consideration than anyone else.

CIRCUMVENTION OF STRATA
CONVERSION REGULATIONS

MR. G. F. GIBSON (North Vancouver–Capilano): Mr. Speaker, a question for the Attorney-General in his capacity of...the Landlord and Tenant Act. Is the Attorney-General aware of current attempts to circumvent the strata conversion regulations whereby the conversions have to obtain municipal approval by the sale of so-called cooperative units, and will he take measures to plug this legal loophole?

HON. G.B. GARDOM (Attorney-General): I'd very much like to thank the member for the question and also for notice of the question earlier today. I'm unaware of the matter which you've mentioned. I'll look into it and I'll have to take it as notice this afternoon.

SUMMER EMPLOYMENT BY
DEPARTMENT OF HIGHWAYS

MR. G.S. WALLACE (Oak Bay): Mr. Speaker, I'd like to direct a question to the Minister of Labour with regard to the summer employment of students and the fact that in this area over the weekend certain students who had been given employment by the Department of Highways were notified at very short notice that, in fact, the job was not available. I'm wondering if the minister could tell the House

[ Page 1080 ]

whether these difficulties are related to the conflict between the policy of the government of paying students two-thirds of union wages, whether that conflict between the government and the employee's union has anything to do with this change of decision by the Department of Highways.

HON. L.A. WILLIAMS (Minister of Labour): Mr. Speaker, I would be pleased if I could have the opportunity of having specifics from the hon. member. I'm not aware of any such decision being made by the Department of Highways, and I'm completely unaware that there's been any dispute as to the student employment rate that is being paid for the jobs under the summer student employment programme. If he has specifics, I'd be pleased to look into it.

BY-ELECTION IN VANCOUVER EAST

MR. A.B. MACDONALD (Vancouver East): Mr. Speaker, I'd like to ask the Premier, enumeration having been long completed — and I can't ask whether they're playing politics with the Constitution Act because that would be out of order — but I do ask when will you set the date for the Vancouver East by-election.

HON. W.R. BENNETT (Premier): The same answer that I've given this member before: when the report is given to me from Mr. Morton, through the Provincial Secretary's office, I'm sure they'll call the by-election.

MR. MACDONALD: Mr. Speaker, is the Premier saying that enumeration hasn't been completed?

HON. MR. BENNETT: I'm just saying that I'm waiting for the report.

MR. G.R. LEA (Prince Rupert): On a supplemental to the Premier, Mr. Speaker. Has the Premier asked for the report from Mr. Morton? I mean, are you trying to get this underway as quickly as possible?

HON. MR. BENNETT: No, but I have asked the Provincial Secretary, to whom Mr. Morton would report.

FERRIES DINING ROOM SERVICE

MR. WALLACE: Mr. Speaker, I'd like to ask the Minister of Transport and Communications a question regarding the far-reaching decisions that have been made on the ferry service, and particularly in relation to the closing of the dining rooms on the ferries. Could I ask the minister if consideration was given to the awarding of a franchise to any private enterprise catering company to provide dining room service on the ferries?

HON. J. DAVIS (Minister of Transport and Communications): Mr. Speaker, consideration will be given to that possibility. However, negotiations are currently underway with the union and it would be inappropriate to raise that subject with any certainty at the moment.

MR. WALLACE: I would like then to get clarification from the minister. Is the decision to close the dining rooms not a final one?

HON. MR. DAVIS: The decision to close some of the dining rooms is definitely final. The large new ferries do not contain any facilities on them for dining rooms. This was a decision made, several years ago. Other dining rooms will be closed in the coming months.

MR. WALLACE: On a supplementary, Mr. Speaker. In the planning of these changes, what was the projected saving in dollars? By how much will expenditures be decreased if the dining rooms are closed on the ferry system?

I HON. MR. DAVIS: Mr. Speaker, I'll take that question as notice. The figure would be an estimate. I'm sure I could get it shortly. It will run into several millions of dollars a year.

HUMAN RIGHTS BRANCH INQUIRIES

MR. KING: Mr. Speaker, a question to the Minister of Labour. With respect to two human rights board of inquiry requests which the minister has received, I understand, from the director of human rights, specifically the case of Dr. Johanna Bruhn-Mou and the College of Dental. Surgeons, and the case of Dr. W.G. McLure and the College of Physicians and Surgeons and the B.C. Human Rights Code, did the minister receive either personal or written representation from any of the parties to these disputes since the request was received from the human rights branch?

HON. MR. WILLIAMS: With respect to the request for the board of inquiry involving the College of Physicians and Surgeons, I discussed the matter with the Human Rights Commission, which is one of the parties, but I had no representations from the College of Physicians and Surgeons or Dr. McLure, whom I believe is named as a party.

As the member is aware, Mr. Speaker, that board of inquiry is in place and I believe its hearings commence on May 30.

[ Page 1081 ]

With respect to the complaint of Dr. Bruhn-Mou, I believe it is, and the dental college, the only representations I have received — and I don't really categorize them as that — is a letter from Dr. Bruhn-Mou inquiring as to when it would be possible for the board to be established, and expressing some concern about the time when examinations can be taken in this province. But that was only an inquiry; I have had no representations made to me by the dental college.

MR. KING: I wonder if the Minister could tell me why he has found it advisable to change the administrative procedure with respect to the appointment of boards of inquiry, and exercise political control over the election and appointment of these committees rather than have that process....

MR. SPEAKER: Order please. Hon. Leader of the Opposition, if you're going to ask a question, it must be couched in terms that does not in any way reflect upon something that the minister may or may not have done or said. If you have proof of the fact that this is a proper question, fine — otherwise, I would have to rule it out of order.

MR. KING: Mr. Speaker, the minister did make a statement to the house, for which he was granted leave, indicating that he had changed the administrative procedure. I am asking why he chose to do this rather than have these boards selected by an impartial chairman.

HON. MR. WILLIAMS: Mr. Speaker, I wish the house to know that appointments of boards of inquiry by me are made strictly in accordance with the legislation. I have not delegated that authority, as was the case under the former minister.

VICTORIA RECYCLING DEPOT

MR. C. BARBER (Victoria): My question, Mr. Speaker, is to the Minister of the Environment. As he and this House are well aware, the greater Victoria recycling depot is the largest and most successful operation of its kind in Canada. I have been waiting for weeks to hear what the minister is going to do. My question today is: can the Minister of the Environment inform this House what action he has taken, if any, to prevent the dissolution of the greater Victoria recycling depot?

HON. MR. NIELSEN: In response to the member I might add that that recycling depot has not requested any assistance since you first asked your question. There is an outstanding request on behalf of the recycling depot for a grant from the provincial government and which has been, and is, under consideration.

The first question you asked did not come to pass in that they did not close down the recycling depot; they cut back somewhat on their budget. My understanding now is that they are seeking funds or seeking relief from certain costs. Since they decided to cut back on their budget, and have sought relief, I am not aware that they have sought direct relief from the Department of Environment. However, I hope to have very, very quickly for you, some time during this week, I trust, some very definite action in response to that.

ORE SHIPMENTS FROM DENISON MINES

MR. GIBSON: Mr. Speaker, a question for the Minister of Transport and Communications. In view of the announcement of Denison Mines last week of their plans to bring into production a five-million-ton coal property just south of Chetwynd, I wonder if the minister could tell us the government's policy as to whether this ore is to be shipped out through Prince Rupert or down the BCR line through Squamish.

HON. MR. DAVIS: Mr. Speaker, this matter is still under very active discussion in cabinet.

SALE OF CAN-CEL SHARES

MR. WALLACE (Oak Bay): Mr. Speaker, I would like to ask the Premier a question with regard to the statement on Thursday, April 22, by Mr. Ronald Gross, president of Canadian Cellulose Ltd., that the board of directors of Canadian Cellulose had proposed to the government that it reduce its holdings in the company. Has the government sold any shares in Can-Cel since assuming office in December, 1975?

HON. MR. BENNETT: No.

MR. WALLACE: Supplementary, Mr. Speaker: in the light of the board's proposal and the chairman's statement, has any member or members of the cabinet met with the board of directors of Can-Cel to discuss the matter of the government's ownership of 81 per cent of the company?

HON. MR. BENNETT: Mr. Speaker, through you to the member for Oak Bay: I haven't, and I'll take your question as notice and inquire from the cabinet. I'm not aware of any formal meetings.

TRANSITION HOUSE FUNDING

MS. R. BROWN (Vancouver-Burrard): Mr. Speaker, my question is to the Minister of Human Resources. Mr. Minister, have you yet worked out

[ Page 1082 ]

your terms of reference for funding for transition houses?

HON. W.N. VANDER ZALM (Minister of Human Resources): Mr. Speaker, I think this was made fairly clear at the time: they will be paid on a per diem basis for services provided.

MS. BROWN: Supplemental. Would the minister explain how new transition houses will come into being? There are presently three in existence. How will new ones come into being?

HON. MR. VANDER ZALM: Mr. Speaker, if someone deems there to be a need for a further transition house they can make application and certainly we will consider assisting wherever and in whatever way we can.

THOMPSON RIVER STUDY

HON. MR. NIELSEN: Mr. Speaker, the member for Prince Rupert (Mr. Lea) requested on April 15 a list of persons who were in attendance at a meeting relative to the Thompson River study in West Vancouver. I ask the member if he would prefer to receive the list or have me read it. It's quite lengthy.

MR. LEA: Table it.

HON. MR. NIELSEN: Fine.

Presenting reports.

Hon. Mr. Gardom presents the annual report for 1975 of the Racing Commission.

Hon. Mr. Gardom presents the annual reports of the Privacy Act, for the period ending December 31, 1974, and for the period ending December 31, 1975.

Hon. Mr. Curtis presents the 1975 report for Dunhill Development Corp.

MR. KING: Mr. Speaker, I rise on a matter of urgent public importance.

MR. SPEAKER: Do you have a copy of the motion or the information which you wish to put before me?

MR. KING: Yes, Mr. Speaker. I ask leave to move the adjournment of the House for the purpose of discussing a definite matter of urgent public importance, namely the shocking increase of 2.4 per cent in the cost of living index for British Columbia, reported on April 21 by Statistics Canada.

This represents an actual increase of approximately 25 per cent in the cost of food alone for our B.C. residents, subsequent to the lifting of the B.C. price freeze by the provincial government. Uncontrolled increases in auto insurance, electricity and gas rates, home heating oil, food, drugs, beverages, plus increases in the sales tax and income tax have driven the increase in the cost of living in B.C. this year to the highest rates in the whole of Canada.

The figures from Statistics Canada were only released on April 21; consequently this is the first opportunity, Mr. Speaker, I have had to raise them, and I submit they warrant immediate debate as being urgent matters affecting the citizens of this province.

MR. SPEAKER: Would you please give me a copy of the statement which you have just read, if you don't mind?

HON. E.M. WOLFE (Minister of Finance): Mr. Speaker, on a point of order, this very matter is dealt with in a bill before the House at this time — the Anti-Inflation Measures Act.

MR. SPEAKER: Thank you, Hon. Member.

Replying to the hon. Leader of the Opposition, in response to his request to have an immediate debate under standing order 35 on the matter of the increase in the cost-of-living index, as the hon. Leader of the Opposition knows, in order to qualify under standing order 35 the matter must be one of definite urgent public importance. While it is true that the hon. Leader of the Opposition has not had an opportunity prior to today's sitting to raise the reported increase before this House, it is also true that a matter of cost-of-living index increases is one of continuing concern, I believe, for all of us. It is not really a matter that has suddenly thrust itself upon us out of the blue.

Interjection.

MR. SPEAKER: Order, please. It is something that, while it is of concern — and I do not dispute the concern that people feel about it — it is not a matter of urgent public importance to be debated precisely at this particular time in this House.

It would also appear clear in reading from Sir Erskine May that your request to debate this matter cannot really get around the rule of anticipation as discussed on page 368 of Sir Erskine May's Parliamentary Practice. For that reason, and those reasons, I must say to the hon. Leader of the Opposition that the request for an emergency debate is out of order according to the rules of our House. I so rule.

HON. MR. BENNETT: A point of order, Mr.

[ Page 1083 ]

Speaker.

Interjections.

MR. SPEAKER: One moment, please. We have the hon. Premier on a point of order.

HON. MR. BENNETT: Mr. Speaker, without being the first one to break the new Whips' agreement, because I understand they'd agreed on a certain course of procedure in this Legislature.... However, if it is of concern to the opposition, we could deviate from the proposed legislation and debate Bill 16 today, which would cover this very subject.

MR. SPEAKER: That is a matter that the Chair has no knowledge of. If it is a matter that the Leader of the Opposition and the hon. Premier of the province wish to see that bill advanced ahead of others, then that is up to the House Leader (Hon. Mrs. McCarthy) to put it to the House.

Interjections.

HON. MR. BENNETT: Full debate under that bill.

MR. SPEAKER: Order, please. But the matter which I have had to deal with is a matter of a request by the Leader of the Opposition for a debate on a matter of public importance. There will be no debate once I have reached a decision, which I have done. I have ruled that the matter is not one that qualifies under standing order 35 and, therefore, is not debatable.

MR. KING: A point of order, Mr. Speaker. I appreciate the ruling that you have made, but I would point out that by leave of the House it certainly would be permissible to debate this motion that I have offered. I suggest, Mr. Speaker, that with leave of the House. under the circumstances that we have, despite a bill which the government has introduced and which, again, would be anticipation in terms of whether or not it comes before the House for debate...

MR. SPEAKER: Order, please.

MR. KING: ...we have a revelation, developed extraneous from this province through Statistics Canada.

MR. SPEAKER: Order, please! Now we are getting into a debate on the matters which you wish to raise before the House. It is simply a matter on which I have given you the opinion of the Speaker. I have ruled that it is out of order. However, I am a servant of the House and at your disposal. Shall leave be granted?

Leave not granted.

MR. G.V. LAUK (Vancouver Centre): On a point of order, Mr. Speaker, according to standing order 35 of our rules, leave to make a motion for the adjournment of the House must be asked after the ordinary daily routine of business has been concluded, which has been done. The member desiring to make such a motion does so. If objection is taken, which Mr. Speaker has found, Mr. Speaker requests those members who support the motion to rise in their places and, if not less than nine members rise accordingly, Mr. Speaker calls upon the member who has asked for leave.

AN HON. MEMBER: He doesn't understand the rules. (Laughter.)

Interjections.

MR. SPEAKER: Hon. member, I have already followed the provisions of rule 35, sections 1 and 2. In dealing with the matter I have ruled that it is out of order, and that ends the matter at this particular time.

Interjections.

MR. SPEAKER: I have also followed upon the recommendations and the suggestion of the hon. Leader of the Opposition. I have asked for leave, which was denied.

MR. LAUK: Mr. Speaker, on another point of order. This concerns the request that was made by the Leader of the Opposition that you have just ruled on. It is customary, I say with respect to the Chair, to hear the arguments on the point of order upon which Your Honour is ruling.

MR. SPEAKER: Essentially I'm afraid you're wrong. The matter is closed.

MR. LAUK: Mr. Speaker, it's....

MR. SPEAKER: Order, please.

MR. LAUK: It's showing disrespect for this....

SOME HON. MEMBERS: Order!

[Mr. Speaker rises.]

MR. SPEAKER: Order! Would the member please take his seat?

[ Page 1084 ]

Interjection.

MR. SPEAKER: Order! The matter was dealt with. I listened to the request of the hon. Leader of the Opposition, I pointed out why it was not in order, and that concludes the issue as it was before the House. I also allowed the hon. Leader of the Opposition to make a further point. I asked leave of the House — which was denied — to debate the matter, and that concludes it, Hon. Member.

[Mr. Speaker resumes his seat.]

AGRICULTURAL AID
TO DEVELOPING COUNTRIES

HON. D.M. PHILLIPS (Minister of Agriculture): With leave of the House I'd be prepared to make a statement which I promised to the House some time ago regarding agricultural aid to developing countries. If the House is still interested in the subject I'd be pleased to make the report.

Leave granted.

HON. MR. PHILLIPS: I was going to do it last week but there was nobody here.

For the purpose of information and clarification, I wish to make the following brief statement about the Agricultural Aid to Developing Countries and World Disaster Areas Fund.

The fund has been operating since 1969 on the interest from a $5 million perpetual fund. This interest amounts to approximately $375,000 per year. In recent years, the applications for grants from non-governmental relief and development agencies to carry out mainly development projects in the Third World have far exceeded the interest money available to support, in part, these worthwhile activities. As all members know, a sum of $5 million was placed in the Department of Agriculture estimates in the previous fiscal year to more adequately meet the needs of the development and relief agencies. It is the clear intention of this government to carry on with this important programme.

For further clarification, I would point out that the programme for the 1976-77 fiscal year comprises two elements. First, the sum of $350,000 will be included in the Department of Agriculture's estimates to support development education work within the province as well as to support administrative project evaluation and other expenses pertaining to the fund. Secondly, the $5 million grant fund will also be included in estimates to support eligible development projects and disaster relief work as is needed in the Third World.

Now there were a lot of questions about the educational portion of the fund, and I shall proceed.

Development education programmes within the province are recognized as an important activity necessary to create a greater awareness and concern for the problems in the less fortunate areas of the world. In 1975, the advisory committee of the fund provided, for the first time, grants to co-ordinate development education work. Major support was granted to the new agency called IDERA — Industrial Development Education Resource Association — for the purpose of development and delivery of a co-ordinated programme on behalf of some two dozen relief and development agencies sponsoring a programme in common. An annual budget of $100,000 was approved by the fund's committee and made available to IDERA on a quarterly basis depending on performance. IDERA has received to date two quarterly payments of $25,000. The government will continue its support of the IDERA programme for the next two quarters on the same basis, and will at that time review both the performance and the benefits resulting from the IDERA's efforts.

Additionally, the fund made several small grants to support similar work conducted by other groups such as Interfaith, an agency supported by three churches.

I want to emphasize at this time that development education work can be expensive if not measured against productivity. The advisory committee do not propose to support development education programmes that are unlikely to be productive or are poorly co-ordinated with other groups engaged in a like activity.

Finally, the advisory committee to the fund has, on the basis of seven years of successful experience and interaction with major development and relief agencies, developed criteria which are used in evaluating all requests for support. Copies of the criteria and the formal application form now in use are available from the Department of Agriculture.

The advisory committee to the fund also publishes an annual report. The 1975 copy will be available shortly.

I hope that this relieves all of the areas of question that were in the members' minds, and that they'll know that this great government is going to carry on this great programme.

MR. SPEAKER: Order, please. I think that statement has now been concluded.

MS. BROWN: I appreciate the Minister of Agriculture answering in detail my questions.

MR. SPEAKER: Order, please. Are you on a point of order?

MS. BROWN: Yes, a point of order.

[ Page 1085 ]

MR. SPEAKER: What is your point of order, please?

MS. BROWN: I'm not permitted to respond?

MR. SPEAKER: No.

MS. BROWN: Okay, then, I'll make it a point of order.

MR. SPEAKER: I'm sorry, but there's quite a difference between responding and a point of order, Hon. Member.

MS. BROWN: If you work at it, Mr. Speaker, it can be one and the same.

On a point of order....

MR. SPEAKER: Hon. Member, would you take your seat, please?

There's a great deal of difference between responding to a statement made in the House by leave and rising on a point of order. If the hon. member wishes to pursue this matter further, would the hon. member please do it in question period tomorrow? That is the rule that I suggest to the House and that is a rule, I think, we will adhere to in the House.

If the Minister is prepared to make the statement outside of the question period, in order not to take away time from the question period, if an hon. member wishes to pursue further that subject matter, he will have ample opportunity to do it tomorrow.

Your point of order?

MS. BROWN: Mr. Speaker, I had no intention of being disrespectful to this House. The precedent had been set. Other members had been permitted to make responses and this is why I did it.

MR. SPEAKER: Order! No they hadn't, hon. member, with respect.

MS. BROWN: However, I certainly accept your ruling and I will withhold my thanks and appreciation to the member for replying to my question. (Laughter.)

MR. SPEAKER: Please do.

Orders of the day.

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

ESTIMATES: DEPARTMENT OF FINANCE

On vote 61: minister's office, $78,246.

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

HON. G.M. McCARTHY (Provincial Secretary): I move we go to public bills and orders, Mr. Speaker. I would ask the Leader of the Opposition (Mr. King) at this time; we had an agreement between the leaders earlier today that we would move to the second reading of Bill 5. But if the opposition would like, and the government would be pleased to move to the second reading of Bill 16, which is the....

SOME HON. MEMBERS: Oh, oh!

Interjections.

HON. MRS. McCARTHY: Mr. Speaker, I would ask the Leader of the Opposition if he would grant that we move to Bill 16.

MR. W.S. KING (Leader of the Opposition): Well, Mr. Speaker, Bill 16 is completely irrelevant to the point raised earlier.

SOME HON. MEMBERS: Oh, oh!

Interjections.

MR. SPEAKER: Order, please!

MR. KING: Really that is the problem, and we have an agreement according to the government. I suggest that that agreement be followed.

AN HON. MEMBER: What a farce!

Interjections.

HON. MRS. McCARTHY: Mr. Speaker....

Interjections.

MR. SPEAKER: Order, please! The Provincial Secretary has the floor.

HON. MRS. McCARTHY: Mr. Speaker, as agreed with the government, we had just hoped that we could have the agreement of the opposition because of the subject matter of Bill 16 in regard to inflation. However, as per our earlier agreement, I would suggest that we move then to Bill 5, second reading.

Interjections.

MR. G.S. WALLACE (Oak Bay): Point of order.

[ Page 1086 ]

MR. SPEAKER: The hon. member for Oak Bay on a point of order.

MR. WALLACE: Mr. Speaker, since we questioned the Minister in question period about providing the financial data and since he's tabled the data just minutes ago, could we be assured that members of the opposition will immediately receive copies of the annual financial report of the BCR?

AN HON. MEMBER: Get it Xeroxed and pass it out.

MR. SPEAKER: First of all, Hon. Member, that's really not a point of order. I think it is a question that you should direct to the minister during the course of this afternoon — at no other time. It's not a point of order to be taken on the floor of the House.

Second reading of Bill 5.

BRITISH COLUMBIA RAILWAY COMPANY
CONSTRUCTION LOAN AMENDMENT ACT, 1976

HON. E.M. WOLFE (Minister of Finance ): Thank you, Mr. Speaker. Bill 5 is the British Columbia Railway Company Construction Loan Amendment Act.

Mr. Speaker, the purpose of this bill is to increase the borrowing power of the British Columbia Railway Company from $650 million to $900 million. This borrowing is necessary for the committed extension of the railway into the resource-rich areas in the northern part of the province and to cover the cost of operating the line.

While there are now losses in the operation of the railway, hon. members are aware that the British Columbia Railway is a resource railroad essential to the basic economy of large segments of our province, and to the existence of the communities which it serves and the livelihood of the citizens of those communities.

These facts, and the essentiality of its service, must be measured against these losses in any realistic assessment of the railroad and the financial support provided by this bill. Mr. Speaker, I move second reading.

MR. G.V. LAUK (Vancouver Centre): Mr. Speaker, I can't help but register the opposition's disappointment at the very short shrift that has been given to a number of finance bills by the hon. minister.

I think that when expenditures and extensions of capacity to loan by Crown corporations and so on in the amounts that have been put before this Legislature this spring are being discussed, the minister has a responsibility to go into some further detail and report as best he can how the moneys are to be expended, for what purposes and over what period of time — particularly in this bill, Mr. Speaker, when we have a situation where the railway is operating at a loss and, although unreported, has been operating at a loss for many, many years.

There are reasons, perhaps. But those reasons have not been elaborated on by the Minister of Finance. He's in charge of this bill and it's incumbent upon him to prepare the kind of information that is necessary for us to deliberate and to vote intelligently on all sides of the House on this important measure.

Mr. Speaker, the history of this railroad has been a good one in the sense that it has brought economic development to inaccessible or near-inaccessible regions of our province. The British Columbia Railroad, although used as a political football, has from time to time brought those benefits most clearly to Mr. Speaker's own riding as well as many others.

But the decisions that surround the railroad, the problems that are coming home to roost in the last three or four years, the difficulties in management and in finance, in construction, have been brought about by a legacy of political interference on the part of the previous Social Credit administration. This legacy of playing with the railroad as a political football has to be paid for by the people of British Columbia today.

It's disappointing to me, Mr. Speaker, to see that that history, yet again, has not been corrected by this new administration. The accounting practices of that railway, Mr. Speaker, involved a deliberate and wholesale cover-up...

HON. D.M. PHILLIPS (Minister of Economic Development): Order, Mr. Speaker.

MR. LAUK: ...of the finances and the losses of that railway for so many years. It was disappointing, indeed, to have that revelation laid before this House last spring.

Losses were varied, Mr. Speaker. The auditors for the railway, since 1916, were disgraced, resigned and were subsequently suspended by the Institute of Chartered Accountants. What this railway needs is a new and refreshing look. What happens? The new administration, breaking another promise that they will have Crown corporations at arm's length from the government, place another minister in charge of the BCR, the Minister of Economic Development (Hon. Mr. Phillips) .

With great respect, Mr. Speaker, it's surprising indeed that so much responsibility had been placed on the shoulders of this particular minister. It's a surprise, and I will not reflect on his abilities one way or the other. But any man could not possibly cope with all the responsibilities that the minister has.

[ Page 1087 ]

In four or five months that minister has under his charge two major departments — two major Crown corporations. He must have something to do with the land commission and in all of this, Mr. Speaker, our fears have proved correct. In four months no new directions have been taken, no definitive decisions, and every public utterance of this hon. member has revealed an abysmal lack of understanding of those Crown corporations and departments over which he has charge. I see no new creative responses.

AN HON. MEMBER: What for?

MR. LAUK: The other day the hon. minister outlined his industrial strategy for the province and it was almost word for word one of my old press releases from a year ago. I am complimented but at the same time, Mr. Speaker, I would think that within four months, coming into power as they have on the promise of great, new industrial strategies, that there would be something new with this bill again.

The British Columbia Railway Company Construction Loan Amendment Act, 1976: we would expect that accompanying this bill there would be a full report through the Minister of Finance, that there would be changes in financial structure, where the railroad is going in the north, that there would be management decisions with respect to the management itself, that there would be a detailed response on the northwest rail agreement. None of these have been forthcoming in the opening remarks of the Minister of Finance — a great disappointment indeed.

Yes, Mr. Speaker, the railroad is a development railroad. It is the most unique railroad in North America. It has two development lines: one, the Dease Lake extension, and the other going to Fort Nelson — important lines bringing the lifeblood of the economy to those remote regions, if I could be so bold as to refer to your riding, Mr. Speaker, as a remote region.

In any event, this needed economic development was carried over a railway that was designed and engineered in a very sloppy fashion by the previous Social Credit administration. It's been well documented, Mr. Speaker, the neglect, the political interference and the cover-up of financial losses that has gone on with this railway in the last 10 years or so of the previous Social Credit government.

The financing, Mr. Speaker, of this railroad must be radically changed. The total railroad must be completely refinanced or it will always operate from hand to mouth and depend on its political masters for its financing and the needed corporate decisions that should be made that are so essential for the healthy survival of this railway.

It's been used, as I say, historically as a political football by W.A.C. Bennett. He called it his greatest jewel. It turned subsequently into his greatest shame. The Dease Lake route was chosen more as a result of whimsy rather than good planning — that's well documented — and he, that previous Premier, ruled the railroad with an iron hand, not for the good of British Columbia; the primary interest was not for economic development and jobs or transportation decisions, but for political jiggery-pokery during election time.

In only three years, the NDP administration struggled with the decision to either proceed or not to proceed with the Dease Lake extension. That Dease Lake extension was the result of political decision-making on the part of W.A.C. Bennett, and it was followed by the servants of the railway, day after day — and the Fort Nelson line as well. We saw derailment after derailment because of the hidden defects, the low standard of construction on the road, so that costs could be represented to the public as much lower than they needed to be. Penny wise and pound foolish, Mr. Speaker.

For years they kept the costs down — in the 1960s — and this added exponentially to the greater cost of upgrading the line in the 1970s under the NDP administration. The previous NDP administration paid the legacy of political interference in the British Columbia Railway. Now is the time for this government to act and bring about new management and a new financial structure, but this government says one thing and does another. It promised, as I say, that Crown corporations would be at arm's length from cabinet. It has not happened. I wonder if it ever will.

The British Columbia Railway needs new management at the top, a new president and chief executive officer who knows how to make corporate, not political, decisions, who will accurately report their accounts to the House and be held responsible for their debts.

The NDP, coping with the financial morass, the hidden costs, the cover-up and the lawsuits caused by political decision-making under the previous Social Credit administration, delayed that process for three years, Mr. Speaker. But now this administration has an opportunity that it should not let slip through its fingers. Don't have an overtaxed minister on the board of directors.

MR. G.F. GIBSON (North Vancouver–Capilano): We have an overtaxed public!

MR. LAUK: Don't have cabinet ministers on the board at all, Mr. Speaker.

HON. L.A. WILLIAMS (Minister of Labour): You were the executive vice-president. You were on there.

MR. LAUK: That's right.

[ Page 1088 ]

Interjections.

MR. LAUK: Don't get excited, Mr. Minister of Labour. Don't get excited. I'm going to deal with you in a moment.

The Minister of Labour, when he was a backbencher of the opposition Liberals many, many years ago....

AN HON. MEMBER: Four months ago.

MR. LAUK: Four months ago? That's right. I'm sorry. It seemed many years ago because you act so at home over there. It's so easy to shrug off 25 years of a political commitment to the Liberal Party and now sit in the seat of power — the seats of the mighty, Mr. Speaker.

But that Minister of Labour, when he was an opposition Liberal, spoke on this very subject, and we indicated to him, both the then-Premier and myself, that the course of action that would be taken would be to accept that principle: we would appoint executive officers and a board of directors that would be clearly separate from political interference on the part of the government.

Interjections.

MR. LAUK: Now maybe the Minister of Labour has not heard my remarks in approaching this subject. He has not heard of the political cover-ups, the financial cover-ups of that railroad under the previous Social Credit administration. Maybe he missed a speech of the then Premier, Premier Barrett, on Friday, June 6, 1975. Perhaps he wasn't in the House, Mr. Speaker. Perhaps he didn't hear about the many reports that had to be filed and prepared before any decision could be made with this sad railway.

Well, that's on record. It's on a Hansard, brought to this House by the NDP administration. He should read it again — and I refer to Hansard, page 3165, Friday, June 6, 1975, the sordid history of financial cover-up of this railway. The reports were filed in 1974 and 1973, the Touche-Ross report, the Minty report, other reports, cataloguing clearly the difficulties with this railway that had to be sorted out by the previous administration.

HON. MR. WILLIAMS: You were on there. You could have done something. You accomplished nothing.

MR. LAUK: Oh, it's so easy. "You were on there; you could have done something." I keep on mentioning the mess that this railway was in, and we were moving towards putting, clearly, a new management in charge of that railway.

What have they done? They've appointed the Minister of Economic Development (Hon. Mr. Phillips) . Now you know, Mr. Speaker, we will expect that the Minister of Labour will urge his colleagues to appoint an independent chief executive officer and a board of directors — I hope he does — and is consistent with his promise, because certainly that is supportable on this side of the House.

It is regrettable indeed that the NDP administration did not act within its term of office to do that very thing. Regrettable, but I don't think particularly blameworthy, in light of the fact of the tremendous problems that we had to sort out in that relatively short period of time. I think that it should be pointed out again, in covering last year's loan amendment Act with respect to the BCR, that there was reference made to the Minty report. It was clearly stated in there, Mr. Speaker, by M.J. Minty — the effectiveness of the B.C. Railway financial systems which had been prepared by the comptroller-general, Mr. Minty. 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 on construction of the B.C. Railway engineering division. He recommended "the external auditors not be unduly restricted in setting the terms of their audit engagements as appeared to be the case in the past." Direct political interference caused a financial cover-up of the BCR.

It took us almost two and a half years to sort that mess out. Mr. Minty also recommended that an independent engineering consultant be hired to review the methods of the engineering division. In a letter attached to his report he commented as follows:

"With respect to the awarding of contracts for all rail-line extensions, I confirm that the company's officials have seen fit to limit spending on preliminary engineering studies, a practice which has contributed directly to overruns in the order of $17 million on contracts completed to date."

That was April, 1973. At the fall session of 1973 two more reports were tabled in this House, one on financial reporting by Price Waterhouse and another on engineering by Swan-Wooster Engineering.

The Price Waterhouse report revealed that this great jewel in the previous administration's crown had, in fact, "cumbersome, inefficient, inadequate financial accounting and control practices." It was recommended there that further study be done to sort that mess out.

As has been stated on previous occasions, on October 30, 1974, the professional conduct committee of the Institute of Chartered Accountants of British Columbia laid a complaint against Buttar and Chiene, the auditors of the railway. The complaint related to the B.C. Railway auditing. The panel found unanimously that the said member

[ Page 1089 ]

violated the rules of the code of ethics and rules of professional conduct by reporting on and associating itself, for and on behalf of the firm of Buttar and Chiene, with the financial statements and auditor's report thereon for the British Columbia Railway Company for the year ending 1972, when he had failed to obtain sufficient information to warrant the expression of the unqualified opinion expressed thereon. That firm was subsequently suspended.

The record shows that in section 8 of the report that I referred to by Mr. Minty, Einar Gunderson, an admitted campaign fund raiser for the Social Credit government of that day, restricted the auditors in their work, and, according to the comptroller, E.M. Gunderson restricted the extent to which the external auditors could go into their auditing with a consequent limitation of fees charged, and a consequent change, Mr. Speaker, in the figures represented to the public of British Columbia.

This is all well documented. The new auditors, Peat, Marwick and Co. provided last year for the first time in the railway's history an accurate reflection of the accounts of the railway. The mess was slowly beginning to sort itself out. After 20 years of financial cover-up and finagling and deception, finally the NDP administration was able to clarify, to sort out and to accurately reflect the true situation with respect to the railroad.

Now I say this: the next step has to be the financial restructuring of the railway. That entire railroad has to be totally refinanced. The expenses of the Dease Lake extension, the upgrading of the Fort Nelson line and the tremendous increase in costs generally require that this railway be totally refinanced.

In so doing, this government has an opportunity to appoint an independent officer who knows how to make corporate decisions and not one who will respond to his political masters and again continue this unsavoury practice of using the railroad as a political football. With this new chief executive officer, Mr. Speaker, the BCR would have a chance to become a jewel in the crown of all the people of British Columbia. Political decisions would be eliminated, the accounts would be accurately reported, and the corporation could be held responsible for accurately reported debts.

We expect that the BCR someday will be profitable, but as a development railroad, using track and developing lines into inaccessible areas, it's a slow process indeed to develop the revenue the railway needs to make a profit. But we can expect that in the future. In the meantime, we should regard the development lines of the BCR as highways. In the same way that we do not expect a profit from the highways that we build in the province, we should not expect a profit immediately from the development lines of the BCR.

With these new accounting directions that I'm proposing, we could accurately reflect the profit picture of the railway. Its regular line we would consider operational. Its development lines — the Dease Lake extension and still the one to Fort Nelson — could be considered developmental and separately accounted for. An attempt to do just that has been made as a first step last year. I would hope that the next step is taken.

With respect to management again, we need corporate managers. We need someone who is not just familiar with railroading, but someone who has a vast experience in administration and in corporate decisions, a person who will be strong enough to resist undue political pressure from their political masters, because the public in the long run own the railway. It's to the public that the officers and the board of directors of that railway must answer.

The Dease Lake extension, Mr. Speaker, was an unfortunate decision, not in that the line is to be built, not in that it was a totally disastrous decision, but in that the way the decision was made was so characteristic of the political whimsy of the previous Social Credit administration. We are told that the route was merely a line imaginarily drawn by the finger of the previous Premier across the map, and that the then president of the BCR said: "How high?" That's how you make decisions, it seems.

I hope that does not continue, as that kind of practice is costly. The pre-engineering studies were practically non-existent. The estimates of costs were artificially under-represented, and therefore overruns occurred constantly. Even with overruns and construction delays, the line to Fort Nelson has caused great loss to revenue, to the orderly economic development of the north and to the orderly operation of the railroad. The lines that were built were hopelessly inadequate. The previous Social Credit administration and the officers of the railroad at that time knew it was hopelessly inadequate, but they built the line for political purposes, without regard for the safety, the property and the lives of the people of the north.

This was a shocking state of affairs, and that administration, of course, stands condemned. I raise it now, Mr. Speaker, because this new administration has a tremendous opportunity to correct that terrible wrongdoing. They have an opportunity to restructure the railroad, to refinance it, to bring in new management and to avoid making those kinds of purely political decisions that sometimes may cause injury to the person and his property.

As I say, day after day, derailment after derailment, we finally made decisions under the NDP administration to upgrade the line to Fort Nelson, a cost of which, had it been done properly when the line was first built, could have been avoided — a tremendous cost that, as I say, exponentially through

[ Page 1090 ]

inflation in the 1972-75 period was very great indeed. This is why these borrowing powers are being requested today. We are paying for the political deception and financial cover-ups of the past. We are paying for the ineptitude of the management of the railway in the past.

I will not mention any further the rumour that a former minister of the Social Credit administration of the past will be called upon to head up this railway, except to say this: that former minister was a member of the board of directors when he approved the Buttar and Chiene auditing and reporting of the accounts of the railway, which was a deliberate cover-up to hide the costs and the losses of that railway.

Secondly, that person is a partisan — an old boy of the Social Credit Party.

MR. SPEAKER: Order, please, Hon. Member. In the last few minutes in your address on second reading of this bill you accused a previous administration of Liberal cover-up of the operations of the B.C. Railway. I suggest to you that that is not a term in keeping with the best parliamentary tradition and suggest that you use other words or withdraw that term, please.

MR. LAUK: With respect, Mr. Speaker, I cannot. The evidence is before this House in Hansard of last spring; the evidence is before this House in three different reports. It was a deliberate deception; it was a deliberate cover-up of the previous Social Credit administration. I will not withdraw those remarks.

MR. SPEAKER: Order!

SOME HON. MEMBERS: Withdraw!

MR. SPEAKER: Hon. member, when you are referring in general terms I have allowed you a fair amount of latitude. As I recall, and I am sure that Hansard will show it, you referred to a previous minister of the Crown specifically...

MR. LAUK: That's correct.

MR. SPEAKER: ...and then concluded those remarks by suggesting that he was involved in a deliberate cover-up, if I interpret your remarks correctly.

MR. LAUK: Correct.

MR. SPEAKER: If that is what you meant, I suggest you withdraw that remark, because it is an imputation against the character of a previous hon. member of this House.

MR. LAUK: Which I am entitled to do, Mr. Speaker. It is only unparliamentary, I say with respect, if I impugn an improper motive to a present sitting member. It is not improper for me to impugn any kind of motive to any previous member of this House. I therefore refuse to withdraw the remark.

MR. SPEAKER: Hon. Member, it is the tradition of this House to withdraw remarks whether they impugn the character of a sitting member of the House or someone else who has at some other time on some other day been a member of this House. I think it would only be proper if you would withdraw that imputation.

MR. LAUK: Mr. Speaker, I cannot. That's the gravamen of my charge. My charge is that a former minister of the Crown was a member of the board of directors of the railway that deliberately interfered with accounting practices of the railway to cover up costs and losses. That has been documented; that has been proven. How can I say that the sun won't rise in the morning?

MR. H.J. LLOYD (Fort George): That was never proven.

MR. LAUK: It certainly was.

MR. SPEAKER: Hon. Member, you are now referring to conclusions that you may have reached in your opinion and in the opinion of others at a time when the minister to whom you referred is no longer a member of this House. Now I would ask you once more to withdraw the imputation that you placed upon the character of a former minister of the government of the province of that day.

MR. GIBSON: If I might rise on a point of order, Mr. Speaker, I think it would be unfortunate if we started to adopt procedures in debate which would be such as to unduly inhibit the expression of opinion, particularly when the hon. member concerned alleges that they are backed by tacts spoken in this House. I would draw to Your Honour's attention that there has been no attempt by any member of this House to restrain members opposite from impugning the motives of the former Premier, for example, or the member whose seat has been vacated and which the former Premier is now contesting. I hold no particular brief for any of those parties, neither the former Social Credit minister nor the former Premier. I simply wish to suggest, Your Honour, that it is only equitable that equal latitude should be allowed on both parts.

MR. SPEAKER: Hon. Member, in speaking to your point of order, I have allowed more than a

[ Page 1091 ]

lenient attitude to the hon. member who is taking his place in second reading of this debate in the remarks that he has made, and in some of the imputations that have been involved in those remarks. But when it came to a matter of instead of reflecting generally upon the administration who previously sat in office, but to specifically single out a single cabinet minister and by his imputation suggest that this cabinet minister was less than, shall we say, doing his job and duty, I think that that imputation of wrongdoing is incorrect and should not take place on the floor of the House. That is why I ask the hon. member to withdraw that remark.

I am not suggesting that he hasn't the opportunity available to him, as all members of this House have, to express an opinion upon the performance of a former administration, and I've allowed fairly strong terms to be used in this debate this afternoon. But I would ask the hon. first member for Vancouver Centre now, because he did enter into an area of imputation on the character of an individual person, who was not in the house at the time the report he referred to came down, to withdraw that imputation.

MS. K.E. SANFORD (Comox): Mr. Speaker, on a point of order with respect to your request to withdraw the remarks made by the hon. first member for Vancouver Centre, I got out my copy of the budget speech and would like to read to you just one sentence and make a comment on that.

MR. SPEAKER: Has it anything to do with the matter which I am discussing with the hon. first member for Vancouver Centre?

MS. SANFORD: Yes, it reflects directly on this, Mr. Speaker.

It says: "How can the former Premier and Minister of Finance of this province have the gall to ask people anywhere to vote for him after the way he has blown their money on one of the fanciest spending sprees this country has ever seen?"

Now it seems to me, Mr. Speaker, that you are reflecting there on the character of the former Premier and the former Minister of Finance (Hon. Mr. Barrett) .

MS. R. BROWN (Vancouver-Burrard): Good point!

MR. SPEAKER: Order, Hon. Members! At the moment the Speaker has to deal with a matter that's before the house, not something that was said in a budget speech. That is for the hon. minister who presented the budget speech to be concerned with. My concern right now, to the hon. first member for Vancouver Centre, is that I agree that the remark you made relates to a man who is no longer a member of this House. It was also a remark which related to a time when he was not a member of this House. I am not going to force the hon. member to withdraw it. I've requested that he do that in a spirit of good debate because I do think that there's an imputation there that perhaps would be best if it was not made at this particular time.

MR. G.R. LEA (Prince Rupert): On the same point of order — it's more of a point of information from the Chair, Mr. Speaker — if a member of the opposition or a member of the government back bench is to rise in his place and speak about a former cabinet minister, where it had been proved either by a court of law or by documentation that that person has handled that portfolio in a way that is not beneficial to the people of British Columbia, or has handled it just badly administratively, it's a point of fact that you're talking about. Are you suggesting that members of the opposition or other members of the House can't bring that point of fact into the discussion in the House if it's true? I don't see where it's maligning anyone if what a member is speaking about is the truth which has been documented, or if a cabinet minister was found guilty by a court of law. I'd like your ruling on that or some information.

MR. SPEAKER: It's not a matter of a ruling; it's a matter that I suggested to the hon. first member for Vancouver Centre that it was bordering on the border of unparliamentary language in the manner that it was used. That is what I suggested to the member.

Would the hon. member for, Vancouver Centre please proceed?

Interjection.

MR. SPEAKER: Are you on a point of order, Hon. Member?

MS. SANFORD: Yes, Mr. Speaker. I'm just trying to assist in getting this clarified for the House, because it seems to me that when the Minister of Finance, who was also an hon. member of this House, uttered the words that are contained in the budget speech that I had read previously, it seems to me that it reflects equally on the character of a former member of the House.

MR. SPEAKER: Order! Hon. Member, will you please take your seat?

I didn't order a retraction. I suggested to the hon. first member for Vancouver Centre that I considered the remark to be on the borderline of unparliamentary. Now he has suggested that he will not withdraw the remark and has no intention of doing it. I have asked the hon. member to proceed and I expect that is what he will do if everyone will

[ Page 1092 ]

give him the courtesy of having the floor.

MR. LAUK: Thank you, Mr. Speaker. What I was outlining to the House is the fact that decisions were made — and I should repeat this again, the reports that were made to this House last spring. In the Minty report, for example, according to the comptroller: "E.M. Gunderson restricted the extent to which the external auditors can go into their auditing with a consequent limitation of fees charged." It is also documented in the Touche-Ross and Minty report that the accounting procedures adopted by the railway in those days were approved by the board of directors.

They were approved by the board of directors, a member of whom was Mr. Williston, the impugned former member. I would suggest that he is culpable to that degree, the result of which was a financial cover-up of the railway's loss and financial position.

In addition, the decisions that were made by the railway with respect to the development lines to Fort Nelson and the Dease Lake extension were political decisions. Their timing was political, the nature of them was political and, as a result, the costs that were burdened and placed upon the shoulders of the NDP administration were horrendous. They were needless. They were needless. They were pointless. They were purely out of political whimsy. Purely out of political jiggery-pokery on the part of the previous Social Credit administration.

Interjections.

MR. LAUK: And you know it, Mr. Member for Columbia River.

Interjections.

MR. LAUK: Well, at least I have aroused, or perhaps Mr. Speaker has, by your interruptions, the attention of the opposite side. But it seems to me that if this administration is acting responsibly, they would have something to say now about what they are going to do to change that bad, bad history of the BCR.

It seems to me, Mr. Speaker, that when the Hon. Provincial Secretary (Hon. Mrs. McCarthy) introduced the women from the Social Credit League, she should have mentioned that they were not entitled, even by sounds, to participate in the debate on the floor.

AN HON. MEMBER: Ohhhhh!

MR. LAUK: You know, Mr. Speaker...

MR. J.J. KEMPF (Omineca): Against the women again! (Laughter.)

Interjections.

MR. LAUK: ...it seems to me that the opportunity that this government now has is being missed as each day passes. That is a deep regret to me. Cataloguing the problems with the railroad has been done. Now what about the solutions? I think that if they chose Mr. Williston to head the railway, not only would the public be disappointed, but because of his political past, his independence from political interference would be in question.

AN HON. MEMBER: You'll hear no more of B.C....

MR. LAUK: Oh, there's maybe no question about that, Mr. Member. But that is not what I am arguing about — that in the instance when he was on the board of directors there was a financial cover-up; therefore his role with the railway was impugned, and, secondly, he was a Social Credit cabinet minister.

How can you say you are going to keep the railway at arm's length if you are calling in one of the old boys? You can't do it. He may be the most honourable man. Mistakes have been made by honourable men in the past. But how on earth do you appoint them to a board and expect the public and the opposition to support it as being evidence of controlling and governing the Crown corporation at arm's length from the government? I say it's evidence in the opposite direction and I say that they should avoid making that kind of decision at all costs.

The expenses of upgrading the Fort Nelson line caused by the neglect and cover-up of the past are underway and in completion.

AN HON. MEMBER: Catch 22.

MR. H.J. LLOYD (Fort George): On a point of order, I don't see any particular effort made by the member over there to withdraw the statement the Chair asked him to withdraw. I think the accusation he is making is completely out of order. He suggests that the review commissioned by the NDP said that there was improper accounting. There was never any impartial trial of that; there was never any royal commission to suggest there was any improper accounting.

AN HON. MEMBER: Hear, hear!

MR. SPEAKER: Order, please. Would you state your point of order?

MR. LLOYD: I think he should withdraw these statements that there's a cover-up. He's impugning a member who has served this Legislature and served

[ Page 1093 ]

this province in one of the heaviest portfolios, and served it, I would say, very well. He's not here to defend himself, and he hasn't got any documented proof that there was any alleged cover-up. I feel that's one of the most honourable members who ever sat in this House, and I believe he should be asked to withdraw those remarks.

MR. SPEAKER: Hon. members, speaking to the point of order raised by the hon. member for Fort George: first of all, the first member for Vancouver Centre (Mr. Lauk) is not impugning the character or the record of anyone who is presently a member of this House.

I've suggested to the first member for Vancouver Centre that his remarks were perhaps a little intemperate, and he must take responsibility for those. I do not intend to ask him, or order him, to withdraw the remarks that he has made so far, although they have, at times, to the ear of the Speaker, been in the category which I think would be close to being unparliamentary. Perhaps as long as the hon. member doesn't invade the field of unparliamentary language any further than I have heard him do this afternoon, he would resume his place in the debate.

MR. LAUK: Perhaps the hon. member who took the point of order has not been briefed about what has occurred in the past two years in this Legislature with respect to the railway, so I will repeat what has happened. Perhaps he will do the courtesy of at least now representing the people of Fort George by listening, if not referring back to what's happened in this House and in this province in terms of public affairs in the past two years.

MR. SPEAKER: Hon. member, may I suggest to you...?

MR. LAUK: Is Mr. Speaker going to enter into the debate or is he going to rule the House?

Interjections.

MR. SPEAKER: Hon. Member, may I suggest to you that the matters which you have entered into, and the debate that has taken place, will be amply reported in Hansard and available to the hon. member for Fort George if he desires to read them at his own leisure. So rather than continually repeat the debate that you have already offered to the House, would you like to proceed on the basis of some new subject matter?

MR. LAUK: Mr. Speaker, I have just taken my place in this debate. I do not intend to be hampered or directed in terms of debate, as proper as it is, from the Chair or anyone else. I was elected to represent the people of Vancouver Centre and the people of this province. I will not be curtailed! I know it's uncomfortable for Social Credit members to hear how there was a financial cover-up. I know it's uncomfortable, but they're going to hear it, Mr. Speaker, and they'll hear it again if necessary because it was a sham and a disgrace. It caused a needless expense on the part of the Crown corporation that is paid for by the people of this province.

Several reports were filed in this House over the past three years. The Minty report was only one. There was the Swan-Wooster report, which sadly catalogued the neglect, the negligence of the building of the line to Fort Nelson. The derailments, the injury to people, the loss of revenue and property was catastrophic. It raised unnecessarily the expectation of the people of that area, and it caused hardship. It was as a result of this political deception for election and political purposes.

MR. KERSTER: Can we get back to Bill 5 now?

MR. LAUK: You know, Mr. Speaker, it was not me; it was not any member of this party who said that a former Social Credit bagman, a director of the BCR then...it was not me who said that he restricted the extent to which the external auditors could go into their auditing. It was Minty, a distinguished public servant, the comptroller-general of the province of British Columbia. It was not the previous Premier, it was not me, it was not the former Minister of Labour, the member for Revelstoke (Mr. King) ; it was Mr. Minty. Is he to withdraw his remarks?

What about the documentation that has been outlined? The member for Fort George said that there has been no inquiry, no trial. I think the Institute of Chartered Accountants would be interested in hearing about that. The hearing procedures, as outlined in their circulars, are well known. The Minister of Finance (Hon. Mr. Wolfe) knows them only too well.

You know that their hearing procedures are impeccable, that they, as a profession, keep close watch on the integrity and ethical behaviour of their members. The trial, indeed, was held, and the verdict was brought down. It was: guilty.

Interjection.

MR. LAUK: It was a hearing, Mr. Minister. I quoted it word for word — and there has been no suggestion that the hearing of the Institute of Chartered Accountants was improper, incorrectly held or not according to fair rules of a hearing. There's been nothing like that. There was no appeal by the auditors who were suspended. No, the trial

[ Page 1094 ]

was held; the verdict was: guilty.

MR. SPEAKER: Order, Hon. Member. I think you realize that you are on your feet debating the principle of Bill 5, which is to increase the borrowing power of the British Columbia Railway Co. and that the remarks and the debate that you follow must be relevant to the principle of that bill. Therefore I'd ask you to relate your remarks to the principle of that bill and stay within the rules of debate rather than wander into some other areas that might be canvassed at some other time in some other debate.

MR. LAUK: Thank you, Mr. Speaker. With respect to Bill 5, I'm relating these remarks in this way: that the tremendous costs for which we are now asked to provide extension of loaning power to the Crown corporation, the costs that are forcing us to do that, were caused by the years of negligence in the running of the railway. In order to document that charge I have quoted from these reports.

MR. R.L. LOEWEN (Burnaby-Edmonds): Are you talking about government or about history?

MR. LAUK: It seems to me that the new administration has a tremendous opportunity, but by the very objections and the points of order that have been raised I fear that they are going to miss the opportunity because they don't understand what happened. They don't understand. I fear that the management of the railway will be continually subjected to the political interference of the past and that silly political decisions will be made, costing the people of British Columbia great amounts of money to subsidize, in a needless way, the operations and the extensions of the railway.

MR. LOEWEN: What's the recommendation?

MR. LAUK: My recommendation is that there be a total refinancing of the railway, that there be an immediate restructuring of its management and board of directors that will clearly and in fact — not only apparently, but in fact — demonstrate to the public of British Columbia that the railway will now stand on its own without political interference, will accurately reflect its accounts and be accountable for its performance. It's only in that way, Mr. Speaker, that we can avoid that kind of political whimsy that caused ...

HON. K.R. MAIR (Minister of Consumer Services): That's six whimsies.

MR. LAUK: Seven.

...the tremendous losses that we now have to pay through this loan amendment Act.

You know, when these reports were tabled in the House, as to the accounts of the railway over the past several years, the hon. member for Cariboo (Hon. Mr. Fraser) — who's listening so attentively — in response.... And I want you all to think about the Clarkson, Gordon report when I read to you the member for Cariboo's response. You know the Clarkson, Gordon report, that impeccable document that we're making decisions about — what was a deficit and what wasn't, and what were the true accounts of the province of British Columbia.

But in response to Bill 27 of last spring, the B.C. Railway Loan Amendment Act, he said: "After reading all these reports, the Minty report, the Touche-Ross and the Swan-Wooster..." and he had heard the arguments.... He even heard about that conspiracy and fraud charge against the former head of the railway that was still going to be heard and still is to be heard in civil court. And far be it from me to discuss something that may be sub judice on the floor of this House — never, never do it. But fraud and conspiracy charges were raised nevertheless. But we now know, as we knew last spring, that that former chief officer of the railroad, charged with conspiracy and fraud, acted, in all matters respecting the lawsuit, with the full knowledge, consent and direction of the board of directors. And who was on the board? W.A.C. Bennett, Mr. Williston and Mr. Gunderson. Is this matter not a serious matter? Didn't you know about that, hon. members?

I hear no points of order. I'll continue to relate to you from Hansard on page 3304, June 10, 1975, when the Minister of Highways (Hon. Mr. Fraser), as he now is, said in response to the Premier (Mr. Barrett), as he then was: "If you examine back the records...." I hope I get the inflection right, Mr. Speaker:

If you examine back the records of this railroad, what the former government did is what was done in accounting practices right back to the start of the railroad. I would say that I think any one of us could hire another accounting firm and come up with the answers that we want if we were giving those kind of directions to them.

MR. LEA: Oh, oh!

AN HON. MEMBER: Who said that?

MR. LAUK; Isn't that a shocker, Mr. Speaker, especially related to the charges....

Interjections.

MR. LEA: Did you do that with the Clarkson, Gordon report?

AN HON. MEMBER: Ohhh!

[ Page 1095 ]

MR. LAUK; It raises that question, doesn't it? It raises that question. Butter and cheese all over.... Buttar and Chiene all over again. (Laughter.)

Well, let's look positively to the future. Let's talk about the tremendous value of this railway — and it is a very valuable Crown corporation. It is an integral part; it is the lifeblood of the economic system of this province.

MR. LOEWEN: Would you fire all the directors of B.C. Rail? Would you fire them all?

MR. LAUK: You know, the member for Burnaby-Edmonds wasn't even in this province last year.

SOME HON. MEMBERS: Oh, oh!

MR. LOEWEN: Would you fire all the directors of BCR?

MR. LAUK: Do you know that what we have to have is a railway that reflects accurately its accounts, that will make corporate railway decisions? But it must also be — and I contend that it can be, even at arm's length, and especially at arm's length from the government — a railroad that can make those kinds of economic development decisions that are so necessary to the lifeblood of the north. What are those? Those are decisions that would incorporate and embrace the concepts and the principles of the northwest rail agreement that was signed in July, 1973. That was, again, the agreement or memorandum of understanding reached between the NDP administration and the federal government with respect to the northwest rail agreement in November of last year that would have put on the table $117 million. It would have brought to bear the cooperation of the federal government and may avoid some of the kinds of financial pressure, or at least some of its pressure, on the BCR today. Again, a political decision has intervened.

The administration has decided that they came out against the agreement when it was announced in November; before, they were claiming credit for it — last spring — but they were angry....

Interjection.

MR. LAUK; Are you going to buy another suit in Calgary, Mr. Member? (Laughter.)

MR. SPEAKER: Hon. Member, could I just interrupt you for one quick moment? I must ask you if you are in this debate as the designated speaker. If so, continue.

MR. LAUK; Yes, I am, Mr. Speaker.

MR. SPEAKER: Thank you, Hon. Member. Proceed.

Interjections.

MR. LAUK: I was anointed in front of a few thousand personal friends this morning.

HON. MRS. McCARTHY: If you have that many.

MR. D.G. COCKE (New Westminster): That's not you, Gracie; that's him.

MR. LAUK: I see the Provincial Secretary (Hon. Mrs. McCarthy) is always the mistress of the obvious.

Mr. Speaker, this opportunity that was missed is a deep regret to us all. We know that last spring, some of you who were sitting in this House at that time.... Some of you, I know, were residents of this province at that time — not all, but some of you were. You had not yet moved your car dealerships into Vancouver.

SOME HON. MEMBERS: Oh, oh!

MR. G. MUSSALLEM (Dewdney): I beg your pardon. Take it back!

MR. LAUK: Oh, I'm sorry. The member for Dewdney (Mr. Mussallem) has had a car dealership in this province of long standing. (Laughter.)

AN HON. MEMBER: Longer than you've been standing. (Laughter.)

MR. LAUK: We'll try and reform that situation. You know, last spring they said: "Well, this railway agreement that was signed in 1973 between the NDP and the federal government, this railway agreement was our idea." Do you remember that?

MR. LEA: Yes, I remember that.

MR. LAUK: Yes, they said: "It was our idea." They said: "Oh, we had it all negotiated before you took office in 1972." Well, we searched around the filing cabinets of the ministerial offices in those days and didn't find any record of it.

HON. MR. MAIR: Nothing's changed. In fact, you even took the cabinets.

MR. LAUK: That's right. I couldn't find a cabinet in my office,

Interjections.

MR. LAUK: So we made inquiries. I think, Mr.

[ Page 1096 ]

Speaker, that they were a very effective outgoing administration in '72, because even the federal government had no record of any such negotiated agreement for the northwest railway. Anyway, they took credit for it. They must have taken credit for it because they saw a good thing. I was reflecting at that time on the intelligence and good judgment of the opposition, as it then was, and said to myself: "Well, at least they will support this rail agreement because it is a good thing." It seems to me they changed horses in mid-stream, the stream being the provincial election last fall.

We went pressing on with negotiations to implement that agreement. When we had and announced them, the Premier, as he now is — the Leader of the Opposition as he then was — said: "I am against it. I am against it." He took the stolen document that was in his possession and condemned it to the public of British Columbia.

I have a copy of that stolen document. I retrieved it; I can't relate how, but I retrieved it.

MR. C.S. ROGERS (Vancouver South): Who's your fence?

MR. LAUK; Yes, I got it from a fence. Thank you, Mr. Member.

AN HON. MEMBER: Brown manila envelope.

MR. LAUK; In a brown manila envelope with some family-planning material.

Interjections.

MR. LAUK; You know, Mr. Speaker...

Interjections.

MR. LAUK: ...we looked over the agreement in principle and we looked over the implementation agreement of November last. There were no appreciable or substantive changes. Once again, when the new administration takes office on December 22 last year, they did not pick up that $170 million on the table to help defray the cost of this very expensive but needed railway. They leave it on the table. Why? Pure political...

AN HON. MEMBER: Whimsy!

MR. LAUK: ...whimsy. Whimsy. In other words, the Premier of the day has to save face as the Premier of past days, drawing his finger on an imaginary line on a map, showing Mr. Broadbent and the railway officials where he wants the line to go. That's no way to run a railway, Mr. Speaker. It costs money that way; it costs the people money; it costs the people money in a very insidious way.

You know, I suggest that the arguments that were made in favour of the agreement far outweigh the arguments against it. The originating traffic for the BCR will bring greater revenues. The economic development that will be brought about by the Dease Lake extension in the line, if it goes farther, will bring that kind of social and economic benefit to that region that they've never had before. They're not thinking, Mr. Speaker; they're just hiding behind a political face-saving device. Who suffers? The BCR suffers and the people suffer.

Well, that agreement is still on the table. I think that they refused to pick up the money that was made available by the agreement because they want to expand the deficit position of the 1975-76 fiscal year. They didn't want to in any way bring in any unneeded revenue to not reflect a black picture. I find that a very reprehensible, irresponsible thing for a government to do. Certainly we can understand statements and commitments made during a campaign if they are heated, if they are childish, if they are petulant. They will be forgotten when people take office.

But unfortunately, what particularly characterizes this administration is that not only do they not forget; that is their entire — if I can call it — philosophical thrust: petulance, back-biting, name-calling and refusing to act responsibly as government.

I do hope that when they are ready to sign the agreement with the federal government that the federal government is still in the mood to agree, or it will be a tremendous loss to this province. Federal money — that money we contributed to, hard-earned taxpayers' dollars from British Columbia — we're getting some of it back. At a time when the federal government is withdrawing from health programmes and other shared-cost programmes between the provinces and the federal government, this administration turns away from $117 million. "What's another $117 million?" they say. It's money that is needed to complete the Dease Lake extension and to bring needed jobs and economic development to the north.

The Stikine copper resource — the corporations and companies involved that will develop that resource are poised and ready to proceed as soon as that railway can be completed, and in fast order. The fastest way to get it completed is to sign this agreement to restructure that railway, refinance that railway and stop using it as a political football.

MR. L. NICOLSON (Nelson-Creston): Mr. Speaker, once again we are debating a bill which seems to come up annually. Once again, I think it is a bill about which there is a great necessity for some debate to take place.

[ Page 1097 ]

It is obvious that not only are the people of the province of British Columbia somewhat in the dark about the operations of the British Columbia Railway, but it appears that barrel loads of the government caucus also seem to be in that same situation.

MR. GIBSON: Flat-car loads.

MR. NICOLSON: Yes, flat-car loads, that's right, Mr. Member.

It is a fact that in the letter of transmittal from Mr. Minty, the comptroller-general, on August 5, 1973, in tabling his report — the letter of transmittal to the Premier of the day said:

"With respect to the awarding of contracts for the rail-line extensions, I confirm that the company's officials have seen fit to limit spending on preliminary engineering studies, a practice which has directly contributed to overruns in the order of $17 million on contracts completed to date."

This is one of the most important aspects to this railway — the way in which it was handled in the past and the necessity for increased borrowings today, because we're still living, Mr. Speaker, with the type of management that B.C. Rail had prior to September of 1972.

It was very difficult for the immediate past government to handle problems of the British Columbia Railway, and it will be a challenge to this new government to turn the British Columbia Railway around so that it can be a jewel in the province for the people of British Columbia.

The first member for Vancouver Centre (Mr. Lauk) I think made an excellent suggestion. He made about four direct concrete, constructive proposals — one of which would have been to separate those extensions, the Dease extension and the Fort Nelson extension which Mr. Minty commented upon in his letter of transmittal on April 5.

Of course, he made many recommendations, one about head office and distribution of payroll cheques and so on. But I think more important, he pointed to some of the deficiencies. He recommended that immediate steps should be taken to carry out a properly supervised physical stock-taking of all classes of operating materials. He commented on the electronic data processing system which was being under-utilized and suggested ways in which it could be improved. So as the comptroller-general made suggestions and as the directors of B.C. Rail in 1973 and '74 and '75 tried to comply with those recommendations, it has led to some improvements, and I think the suggestions made by this past director, the first Member for Vancouver Centre, I think that if they were to be acted upon, particularly in terms of creating a clear, visible picture about the operation of the railway, particularly as it pertains to the two sorriest parts of the operation of the railway...the manner in which the Dease and Fort Nelson extensions were embarked upon....

Mr. Minty said it would be advisable to call upon an "independent engineering consultant to review the methods of the engineering division and firstly establishing tender specifications and secondly calculating and measuring work performed by contractors." Those are pretty serious areas to be deficient in and they were very serious and they led to significant dollar overruns as was later brought in in the Touche-Ross report.

Then, of course, he made the statement which some of the members seem to be rather incredulous about "that the external auditors should not be unduly restricted in settling the terms of their audit engagements, as appeared to be the case in the past. This would include the incorporation of essential explanatory notes and references in the audited financial statements in order to comply with the statutory requirements."

I noticed in the report which the Minister had the courtesy to table today in the House that it's rather refreshing to see that, to be rather positive about some of the things, Peat, Marwick, Mitchell have been retained as the auditors, a firm of chartered accountants. They have a world-wide reputation and they have been very well respected in British Columbia. Their local branch, I think, is quite an exemplary group.

In the report it shows that the opening deficit, which at the beginning of the previous fiscal year was $66 million and rose to $98 million, rose in this past fiscal year from $98 million to $144 million, and, of course, there were increased interest and debt expenses and they will be increased even more by this act of borrowing.

But one of the very interesting things in the report I can only speculate about because we are not taking the suggestion made by the former director, my colleague from Vancouver Centre (Mr. Lauk) . I look at the item for road maintenance in terms of income and deficit expenditures under operating expenses and I see a figure for the last fiscal year of $12 million and this year almost $20 million, and it approximately equals the operating deficit. Also, of course, equipment maintenance of $10 million is up from almost $9 million the previous fiscal year.

I wonder how much of the road maintenance is due to the inadequately engineered and improperly constructed extensions, how much of the equipment maintenance might be due to derailments, or is it just routine maintenance. I guess if I expect to get answers the best time to ask this would be in third reading but, in general, I look at this and I wonder and can't help but agree with the suggestions made that if the Dease Lake extension and the Fort Nelson

[ Page 1098 ]

extension were taken and shown separately, or at least separately in an appendix, we might have some glimmering of what is going on here.

I do know that costs of construction are capitalized from the date that the line is certified operational, and I am not certain what parts of those lines are certified as operational. I can't see that from the report. It's fairly brief. I do see that some explanatory notes are given, as suggested by Mr. Minty. That's a great help to us in trying to come to grips with this. Mr. Minty pointed out also in point 9 that no amounts for depreciation had been charged in the accounts prior to 1956, and in the years subsequent to that date, depreciation rates have been calculated nominally at approximately 2 per cent per annum, presumably to conform with rates used by Canadian Pacific Railway Co.

The resultant accumulated depreciation allowances appear to be grossly inadequate, and to remedy this it is recommended that a thorough review of the policy be undertaken with a view to adjust book values against deficit account, and, of course, that was done. It was done and it was introduced in the House and was debated in the House. Yet I don't think that the story has really reached all the people of British Columbia in terms of what became apparent when the independent reports were made.

AN HON. MEMBER: Oh, yes.

MR. NICOLSON: Also, of course, in the note section of his report, Mr. Minty pointed out that the basis of inventory valuation is not disclosed, and he said: "Accepted disclosure demands that the basis of valuation of inventories should be clearly stated in the financial statements." This was not done previously.

He gives details of certain problems. He talks about internal audit and many of the operations of the railway. So it came to pass that a full report on.... As a result of this and other reports, the firm of chartered accountants who were responsible for the bookkeeping procedures was suspended. Mr. Minty also mentioned other things in terms of what he found out, in terms of engineering construction. He said: "Formal board approval does not appear to have been consistently obtained. Board of directors' minutes reviewed for the past two years include only a few such formal approvals." He says: "For example, West Vancouver tunnel. Many other major revisions, additions, although available to the board by the monthly management reports, do not appear to have received formal approval." Major overrun categories — In the Keen Industries contracts on the Fort Nelson line — were due to muskeg-fill requirements.

He talks about capital and construction costs. The company does a large part of the construction work on lines, extensions representing millions of dollars annually. These dollars are not included in formal annual budgets and there's little or no external check on these activities of the engineering division. External and internal auditors have thus far avoided this particular area — some concern must be expressed about the expenditures of dollars here.

So we see that a great deal of the problems on the railway might stem to the pioneer philosophy that seemed to be used. In fact, it was almost a sandbox mentality with which, I'm sure, through what must have been a great deal of political interference we can almost imagine extensions being planned in a non-professional way and without the engineering background. We could almost see the Premier, who served the province from 1952 to 1972, drawing little lines in the sand, or maybe taking out a stick and saying: "Well, we can push this through from here to here." Is that the way it was, Scott? Am I striking a chord?

MR. WALLACE: It makes me shudder to think that that might be right.

MR. NICOLSON: I think it is right. I think it's quite obvious from what has come to light.

So we have the Minty report. Then, as a result of that, we had tabled in the House two more reports, one on financial reporting and control practices, authorized by Price Waterhouse and company, and one on engineering. This was in response to Mr. Minty's remarks and his expressions of alarm and caution. So there was that one offered by Price Waterhouse and company, and one on engineering and contract methods by Swan-Wooster Engineering.

The Price Waterhouse report revealed that this jewel had become cumbersome, inefficient and inadequate in financial accounting and control practices. In one instance they noted that the cost of 1,000 freight cars, bought in 1971 for $16.3 million, was written off as a charge to equipment rental over 15 years. They said that, in their view, it was not in keeping with generally accepted accounting practices.

That's pretty strong language, Mr. Speaker. You know, in this House I guess we use much stronger language when we want to make a point. But they are very subtle in the professional world, and when they say "In our view, this is not in keeping with generally accepted accounting practices," that is a rather serious charge. Of course, some rather serious steps were taken as a result of that when Buttar and Chiene were suspended. Of course, the Leader of the Opposition at that time — in the years 1972-75 the opposition, and now the government party — seemed to be obsessed with two things. They talked about the alleged profit of the railway. They said that the railway had made $992,000 profit, as reported in the last year of Social Credit, 1972.

[ Page 1099 ]

MR. WALLACE: Did they pay the shareholders?

MR. NICOLSON: Well, I don't know. There might be a cheque lying somewhere NSF, Mr. Member.

Of course, he said that Buttar and Chiene were fired because they wouldn't take direction from the government. That's what the now Premier had to say at that time.

MR. KING: Is he going to hire them back?

MR. NICOLSON: Well, for this year we have Peat, Marwick and Mitchell, and that's an encouraging sign. I'm an optimist.

So Buttar and Chiene had been those auditors all through the Social Credit years, and the present Premier said that 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. That's what the present Premier had to say.

He said that they weren't prepared to change the auditing procedures. That's a rather serious thing to say. You know, we get in quite a flap in here, Mr. Speaker, about what members can and cannot say. But, you know, that turned out to be incorrect.

MR. WALLACE: Term it an illogical inexactitude.

MR. NICOLSON: That's right.

What really happened to them? Did they resign because they were asked by the government to change their auditing procedures? Was there any connection between them and the supposed profit that the present government boasted about when they were in opposition?

Buttar and Chiene resigned apparently for personal reasons, and on October 30, 1974, the professional conduct committee of the Institute of Chartered Accountants laid a complaint against Douglas McKenzie Walker, the sole principal of Buttar and Chiene. The complaint related to the B.C. Railway auditing.

On November 27, the institute's professional conduct inquiry board panel held a hearing on the complaint. After hearing the evidence, the findings were as follows:

"And 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 and on behalf of the firm of Buttar and Chiene with the financial statements and auditors' reports thereon for the British Columbia Railway Co. for the year ended December 31, 1972, when he had failed to obtain sufficient information to warrant expression of the unqualified opinion expressed thereon and therein, and the said member has been incompetent in professional matters within the meaning of the bylaw 6783, in force at all material times, and also bylaw 6883, in force at the present time, as alleged in paragraph 3 of the statement of complaint."

So we have the person who is now the Premier making a careless charge — a wild charge — that we were getting rid of Buttar and Chiene because they wouldn't take political direction. It's really ironic that they were suspended, because they had taken political direction through Mr. Gunderson, and had taken direction when the former Premier, W.A.C. Bennett, was a director of the railway and when Mr. Ray Williston, who was then the Minister of Lands, Forests and Water Resources, was a director of the railway. The Institute of Chartered Accountants found the practices that were going on under that directorship to be so serious as to result in very, very stiff professional sanction.

Mr. Speaker, as a government we were charged to try to bring as much of the facts to light as possible about what had happened, and also to try to change the direction in order that these things would not happen again, and to have a good, open and honest look at what were the problems being faced by the railway and how we might take some remedial action, recognizing the sorry state of affairs and how it had resulted. As a result of some of the recommendations, we did take action.

I notice that Peat, Marwick and Mitchell, in the present report and in last year's financial report, said they tried to keep to the accounting regulations of the Canadian Transport Commission. They point out, of course, that in some respects it's impossible to do. They say that the Canadian Transport Commission prescribes the accounting regulations for Canadian railways subject to their jurisdiction. B.C. Railway is not subject to their jurisdiction, but the management considered that the accounting regulations are the most appropriate basis of accounting railways in Canada, and accordingly they adopted them. It's unfortunate that the commission cannot review the policies and rates of an organization such as B.C. Railway. So they cannot put their stamp of approval on this report, but it has been done in line with those regulations.

Of course, when we found out what the state of affairs was: that the annual report submitted to the House.... It was concluded that the financial statement, as of December 1, 1973, on an overall basis did not fairly represent the cumulative operating results of the railway to that date, and certain of the past policies did not conform to the accounting regulations of the Canadian Transport Commission. As a result of that, we thought it would be best to

[ Page 1100 ]

have a review which would go back, and to make a restatement of the prior years.

Retroactive effect was given to the 1974 accounting policies and rates from January 1, 1957, the date which is accepted as that when the Squamish–Prince George section of the railway became operational. The decision to reflect those changes retroactively was considered necessary because the financial statement of December 31, 1973, was not prepared in accordance with proper accounting principles. Because certain past policies did not conform with accounting regulations, to establish a basis of preparation and comparison of the 1974 report and statements, and because of significant effect of such changes and previous recorded amounts, adjustments arising from such a retroactive statement gave rise to an increase of $62 million in the reported deficit of the railway as of December 31, 1973.

So in those years from 1957 to 1963 there was a $62 million deficit in the railway, of which $9.7 million applied to the year 1973. They said a profit of $900,000. In fact, when it was properly audited, it turned out to be a deficit of $9.7 million. Of course, they had committed B.C. Rail to extensions that were done without proper engineering, and, of course, that's pointed out in another report.

HON. A.J. FRASER (Minister of Highways): You don't even know where the railroad runs.

MR. NICOLSON: The annual auditor's report has said that for many years now the annual financial reports of the B.C. Railway have not been done according to the Canadian Transport Commission regulations...

HON. MR. FRASER: They don't have to.

MR. NICOLSON: ...and they don't have to be, but they should be. They should be done that way.

SOME HON. MEMBERS: Oh, oh!

MR. NICOLSON: They are done that way, Mr. Minister of Highways, if you read this report. They were done this way this year. They were done that way last year.

Interjections.

MR. NICOLSON: I know that the Minister of Highways has contempt for the accounting profession. He doesn't believe in auditors' reports. He believes that if you pay the piper, you know, they'll play the tune you want them to play. But I would just say, through you, Mr. Speaker, to whomever is listening on the government benches: don't appoint that minister to any Crown corporation. Please don't. Do yourself a favour, and do the opposition a favour, and do the people of British Columbia a favour, because we can't have that kind of an attitude — that brazen political attitude — in terms of interfering with Crown corporations and auditors and so on. That would be most embarrassing to the government. It would be embarrassing to British Columbia.

So it isn't the first time that we're asked to pass one of these bills increasing the borrowing power. Between 1966 and 1972 bills were passed by this Legislature subsidizing the B.C. Railway in the total amount of $120 million, but it was from consolidated revenue. It wasn't borrowing like we're doing today. This is another good step. This is borrowing. We're not going to purchase more shares in the British Columbia Railway, and that's a good step. We're continuing to be above board there, and I commend the minister on that.

If we look at what happened in the past, prior to 1972, from 1957 to 1972, we had subsidies of $120 million and we had bookkeeping, accounting practices of $57 million. That is $177 million, Mr. Speaker. We could certainly say $57 million of that is a cover-up and $120 million may be whimsical legislation. You say it's strong language to suggest that it was whimsy, but I'll say that it was whimsical legislation. I'm very sensitive to the Chair....

MR. G.H. KERSTER (Coquitlam): You're also boring us to death.

MR. NICOLSON: You might find this boring, but you know the people of British Columbia don't find the misappropriation of $177 million boring, Mr. Member.

Interjection.

MR. NICOLSON: Now, Mr. Speaker, this $177 million, this was just sort of bookkeeping, and money passing back and forth. But then we have to look into the future and the Swan-Wooster report that dealt with the engineering was tabled in the House in the fall session of 1973.

Swan-Wooster detailed the Fort St. James and Dease Lake extension. They noted only limited records were available and they were very critical of the limited degree of pre-construction engineering performed.

The question was raised in the spring of 1973 by one of the members for Point Grey.

AN HON. MEMBER: Oh, oh!

MR. NICOLSON: They found that this limited pre-construction engineering directly contributed to the unrealistic estimates of quantities and costs at the

[ Page 1101 ]

time contracts were awarded. This, of course, led directly to the overruns being experienced on the Dease Lake extension. On this extension they said there was a marked lack of pre-engineering.

Again, Mr. Speaker, very strong language. It would be like a member in this house getting up and calling another member a buffoon, or perhaps calling him a two-bit minister. Well, it might even be as strong as if a member of this House got up and called another member a liar. It's very strong language in the parlance of engineers to say that there was a marked lack of pre-engineering, because engineers aren't noted for their verbosity. They come to the point.

MR. GIBSON: It means the bridge would fall down.

MR. NICOLSON: Yes, it means the bridge would fall down, or they could get a hundred-and-some-odd derailments a year — that type of thing.

Mr. Speaker, one of the causes of having to extend the borrowing power of B.C. Rail is certainly the Dease Lake extension. Of course, as a result of this, we asked, when we were government, Touche-Ross and Co. for a course of action. They found that the capital-cost estimate of the project used by the previous administration was $69 million. They estimated it needed to be increased by up to $102 million as of December, 1972. Now that's a $102 million overrun, Mr. Speaker.

When I heard some of those members over there talking about $100 million overruns, I just thought they were rounding this thing off.

HON. MR. FRASER: Yours were clerical errors.

MR. NICOLSON: This was a planned clerical error. It was a pre-election error, Mr. Minister of Highways, and I don't know if you knew about it. You were in the back bench then and you were kept in the dark about things, so I'm not going to blame you even though you live on that railway line. But you should have been — and righteously been — indignant about the way in which the railway was treated as it goes through. Williams Lake is such a major point on the railway. It runs through your riding.

They also found that two major traffic generators used to justify the original projections, the Stikine-Dease pulp mill and the Groundhog coal fields, were not likely to be developed. They concluded that the wood supply at either Dease Lake or Stikine Crossing would provide one-quarter to one-third of the production required for an economically efficient and viable pulp mill. That's what Touche-Ross came up with. I believe the government has been using Touche-Ross as consultants since they've been government, so I don't think anyone is going to attack their integrity or their ability. I found them very competent when I was a minister and used their services, and I think the present government agrees.

Notwithstanding the reservations, Touche-Ross concluded that the Dease Lake extension still appeared to be financially feasible after taking into account a federal capital-cost grant, which is, of course, one of the keystones to the development of the northern rail links. They recommended that the construction continue, at least as far as the vicinity of the junction of the Skeena and Sustut Rivers, to negotiate a firm commitment from the federal government for a grant and, if it was received, to continue to Dease Lake.

This government has decided that that is not what they should do. In fact, they played politics with this before the '72 election, then during the '75 election, and now, as part of generating the so-called $541 million overrun, of course, they refused to sign the agreement with the federal government and refused to bring in about $30 million which was one of the generators that they used in creating that deficit.

Following the Touche-Ross report, capital costs with their resulting overruns continued to mount. Because of this, we ordered a further evaluation by Swan-Wooster.

Swan-Wooster was asked to advise whether a decision by the railway to proceed with the winter-works programme on two particular contracts on the Dease Lake extension between miles 222 and 216 would produce certain savings in costs. Swan-Wooster reported that it would be feasible and preferable to carry out the operation in winter, and that possible completion dates for the extension would be in the latter part of 1976 with winter grading in mid-1978 without....

So we, as government, used outside consulting firms and engineers to advise on courses of action. We didn't take a little stick and drag it through a sandbox and say: "Well, this looks good. We'll take this point here and we'll run it up this valley" — not looking at environmental concerns, not looking at native Indian land claims and various other things before committing B.C. Rail to horrendous expenses.

The first report was dated February 27, 1975. It's a factual history of the Fort Nelson and Dease Lake extensions, prepared by George Hanrahan, general counsel of British Columbia Railway. Mr. Hanrahan carefully outlined the history of the contracts that were left for clearing and grading, and the overrun on each contract. He reported that the total amount of these contracts was $16,400,000. The total cost of the extension to date is approximately $72 million — that was as of last year, the middle of 1975.

MR. SPEAKER: Hon. member, may I draw to your attention the fact that you have less than two

[ Page 1102 ]

minutes?

MR. NICOLSON: Yes. So we see that the lack of planning, the sandbox engineering which was practised not by competent directors or professionals, the overriding of whatever competence there was in terms of engineering capability and planning capability in B.C. Rail, the overriding of any of this expertise by Mr. Gunderson — the often-defeated Social Credit candidate and then, of course, identified as the bagman of Social Credit through all those 20 years — the overriding by Mr. Ray Williston and the overriding by the former Premier, W.A.C. Bennett.... A standard practice is what has put the British Columbia Railway in this position, and so we are once again forced to borrow to pay for the neglect of a former Social Credit government.

MR. G.F. GIBSON (North Vancouver–Capilano): Mr. Speaker, this bill, or more properly the introduction of this bill by the minister concerned, has all of what have become to be thought of as the hallmarks of this government, which is to say, arrogant and bush league.

If the minister was going to the normal markets to collect $250 million the way he has come to this House to collect it, he couldn't raise a cent with this bill. It is ordinary for lenders to require some kind of detailed explanation, generally in the form of a prospectus. I suggest the voters of the province of British Columbia deserve at least as much — not a two- or three-minute introduction by a minister giving only very vague thoughts on the use of $250 million of the taxpayers' money.

That lack of prospectus, Mr. Speaker, may relate somewhat to the usefulness of prospectuses that we are used to getting out of that group. Do you remember the Social Credit prospectus last fall that said that there would be no tax increase? It was the same prospectus that said there were going to be more runs on the B.C. ferries instead of people being laid off. Maybe that's why the minister is afraid to look into the future a little bit; but he has to do so. The people of the province deserve as much.

The BCR is not a small company, Mr. Speaker. If you look at the balance sheet, which the Minister of Economic Development (Hon. Mr. Phillips) had the timely courtesy to table in the House only an hour before this debate commenced, you will see that it is a company with assets of $650 million. It has employment, as you know, that ranges to over 3,500 people, not counting construction workers. It is a tremendously important part of our economy. Yet what are we given by this minister to justify this loan of $250 million?

I've got here a prospectus from a very small company for a very small offering — $250,000, not $250 million. It runs, to a sheaf of pages, over 20 pages thick, giving some detail about what that company is proposing to do.

I have here another prospectus — B.C. Telephone Company prospectus, over which the Minister of Finance manages a large number of shares held in right of the province. B.C. Telephone, for a recent loan in the amount of $46 million, put out a document about 30 pages in thickness, with a tremendous amount of information on the financial position of that company and how they propose to use it. Why can't we get this kind of information out of that minister before we're asked for that authorization, Mr. Speaker? I say that is simply not good enough.

Listen to what a usual prospectus should contain that this minister's remarks did not. First of all, a general review of overall operations, not just in that balance sheet that was tabled today, but some detail as to how the company is going and what are its prospects. "Regulation and Rates" — that's another title in the B.C. Telephone prospectus. What is BCR doing about rates? Is the new government legislation for the regulation of public agencies going to include the BCR? These are material factors affecting this proposed loan of $250 million.

"Shareholders and Management" — you know, we haven't even got an indication of who is going to be the chief executive officer of this company during the time that this loan is going to be drawn down. I'll have more to say about that later.

"Use of Proceeds" is another title in the B.C. Telephone prospectus index. What are we told about that use of proceeds? Financing the extensions, coverage of losses, those two quick phrases: that's all we are told. How many losses? How, much is the extension supposed to cost?

Here is another heading: "Interest Coverage." Well, I can tell you the heading on that one. Interest isn't covered at all. There is hardly enough total revenue to cover the interest more than two and a half times, let alone enough net profit to cover the interest. It is simply not there.

"Asset Coverage, Consolidated Capitalization." We're entitled to all of these things, Mr. Speaker, and we don't have it out of this minister. It is just shocking as a Legislature to be asked for authorization for this kind of money without the back-up, especially, Mr. Speaker, given the history of accounting on this railway and given the history of accounting under a government of a party that is now again back in charge of this province and this railway. We simply do not have the guarantees.

What was the record? Hon. members who spoke before have gone through the record with such clarity that I will do no more than recap it. The fact of the matter is that the deficit on the BCR up until the end of 1973 was understated by an amount in excess of $63 million because of absolutely improper and

[ Page 1103 ]

incompetent and misleading auditing practices that started out with depreciation and went right to interest charged up to capitalization, and track-laying labour and maintenance put into capital instead of charged off — right down the piece. It was an extended misleading of the people of British Columbia and it was done by the party opposite that is now asking us for another $250 million with no assurance from the minister concerned that controls have been improved.

What's this money to be used for, Mr. Speaker? The minister said "an extension of the railway." An extension was budgeted, as of last June, in a report received in this House at something like $150 million — $127 million more for the Dease Lake, if I am right there, and another $25 million for the other extension. Is this figure still accurate, Mr. Speaker, or have costs escalated a good deal in the last year? I suspect that they have escalated a good deal, but doesn't this House deserve that information?

The losses last year were $45 million; they were $32 million the year before. What are they going to be next year — this coming year? Doesn't this House deserve a forecast of how much the losses are going to be before we are asked to authorize a loan? We haven't even got that net figure, let alone a forecast of revenues, a forecast of rates, a forecast of expenses. We are being asked to buy a pig in a poke.

The debt as of January 2, 1976, according to this balance sheet, was $466 million in long-term debt and $25 million in parity bonds, which totals about $491 million. By order-in-council there was a further $50 million incurrence of debt authorized in mid-January. This, by my arithmetic, totals something less than $550 million. The current authorization of the railway's borrowing power is $650 million. There is $100 million slack right in there. So really, if this bill passes, there will be $350 million left, and if it doesn't pass, there is still $100 million left for right now. It is not exactly what you'd call an urgent cash situation, especially considering the relatively comfortable working capital position of the railway as of January 2, with a working capital of about $10 million and cash in the bank of $29 million. Given that, Mr. Speaker, why couldn't the government take the time to give us the full and complete picture of BCR before asking for this kind of borrowing authorization?

What's the current labour situation? The members of this House know that it's difficult. They know that negotiations are going on, but when are we to have some words from either the minister responsible for the railway or the Minister of Finance, who introduced this bill, about some long-term improvements in the labour relations climate in the British Columbia Railway? Does this government have any plans in that direction? I tell you, Mr. Speaker, that if they do not, then this essential service in this province is going to continue to be disrupted year after year. The labour relations history of the party opposite is not one that gives this House any reason for complacency in that regard.

There is a clear and present need for the parties to get together on both sides and have a single spokesman on both sides — for the unions to get together, in other words, and have a bargaining council to deal with the railway. That should be encouraged.

What is the state of the northwest transportation agreement with the federal government which, on the originally contemplated basis, would have brought $117 million into the coffers of the BCR for assistance in certain building programmes and in exchange for certain running rights for the CNR? All we have, Mr. Speaker, is the statement of the Minister of Transport and Communications (Hon. Mr. Davis) in this House some time ago, in which he listed five reasons why the current government did not see fit to proceed with the agreement that was negotiated by the past government and became a cause celebre with the stolen briefcase in the last election. What the minister did not say is what modifications would be required and what kind of an agreement would be acceptable to this government and what negotiations were currently going on. This is, to put it mildly, a material factor in the question of whether or not an additional $250 million in borrowing authority is required and, in particular, whether or not it is required now.

What is the current thinking of the BCR management on the Ashcroft-Clinton cut-off? What effect do they expect that connection to have on BCR revenues and potential traffic diversions, particularly of lumber currently brought down from the interior, all the way down the line, expensively switched through to Vancouver and then hauled back east, that perhaps might more rationally be taken on to the transcontinental railroad's main lines by the Ashcroft-Clinton cut-off? The difficulty is that this would have serious financial consequences for the BCR and for Hydro as well.

The necessity, therefore, is to work out an arrangement with the national railroads in order that British Columbia could have the financial advantages of the through-haul, and yet the economy of the province and of the country could have the advantages in effect would reflect back to the local mills.

What kind of thinking is going on in those areas, and, Mr. Speaker, what about a new executive officer? Surely this is an important question if we are going to give them $250 million to play about with.

[Deputy Speaker in the chair.]

I plead, Mr. Speaker, with the government: let it

[ Page 1104 ]

not be a recycled Socred. The hon. first member for Vancouver Centre (Mr. Lauk), who spoke in this debate, said it should be a man of vast experience. I plead with the government: let it not be a man of half-vast experience.

Mr. Speaker, what is the intention of this government in the railway in the north? To what extent has the government gone over the studies of traffic possibilities? Do they really think that with mineral legislation as it is now they are going to generate the traffic that is necessary to justify that extension? Do they believe that the construction should be continued until that mineral traffic is in sight? I am so hopeful that the Minister of Mines and Petroleum Resources (Hon. Mr. Waterland) will do something this session. I'm very hopeful of that.

But until it happens, Mr. Speaker, we have no guarantee, We have a little bit of drilling going on up there — I'm glad that they came back into the Stikine property. That's terribly important, but it's going to take time for them to do anything to generate substantial amounts of tonnage, so we have time on that construction project. Let us not move any faster than we can see the traffic. Mr. Speaker, that is so fundamental to the costs of this railway and to the extension that the minister says this borrowing is for that at the very minimum this House deserves some account of that.

At the south end of the system, what does the government propose to do about the great difficulties in the Vancouver terminal area — not only of the BCR but also of the B.C. Hydro railway, of the Roberts Bank railway which is, of course, operated by the BCR, and of the interchanges with the CP and the CN and the Burlington Northern? There's been a lot of talk over the years about a terminal railway. What is the thinking of the government in that area? Are there ways in which we could acquire for the province of British Columbia, through the BCR and the B.C. Hydro railway, a larger percentage of the terminal revenues and, at the same time, make moves towards rationalizing the interchange of freight in that very complex area?

Mr. Speaker, the British Columbia Railway is a great railway. It is essential to the economy of this province. Its continuity of operation is essential. It is a world leader in communications, Mr. Speaker. The things they have done on that railway with microwave are just marvelous. You can go into the communications centre in North Vancouver, which is in my riding, I am proud to say, and they punch a button and all of a sudden you are talking to a conductor on a train that's a thousand miles up the line. It's an absolutely unbelievable system, and I give great credit to that railway for the things they have developed. Generally speaking, it is a well-run operation except where there has been too much political meddling.

Interjection.

MR. GIBSON: When you add in enough of the lines, Mr. Member, you can get to a thousand miles. But I'll tell you, I'll split the difference with you. When it's for the benefit of the BCR, you won't object to a little hyperbole, will you?

Mr. Speaker, as I said, the problems have arisen when there has been too much political influence injected. There has to be some. The people of British Columbia are the shareholders of this railway and the railway must be responsive to government policy. But let us moderate that political influence and, above all, let us get it into the open and keep it in the open. I say, Mr. Speaker, that the situation will not be satisfactory until we reach the stage when we have an independent board of directors, an independent chief executive officer and the rule that if the government wishes to give instructions, those instructions must be in writing and they must be public knowledge. Then the government has responsibility for its actions because the public knows what it's directing and what it's not.

There should be monthly reporting, Mr. Speaker. If McDonald's hamburger company can have a daily report on their operations in each of their restaurants, the BCR can do something once a month to tell us how things are going.

MR. LAUK: They just report the number of hamburgers sold, not their accounts.

MR. GIBSON: Mr. Speaker, to increase this openness, this proper political control, the BCR management should regularly report to an all-party committee of this Legislature...

AN HON. MEMBER: Hear, hear!

MR. GIBSON: ...not one established to the grace and favour of this government, but a continuing reference, year after year, to one of the standing committees.

MR. LAUK: Speaking about hamburgers, are you going to talk about Phillips?

MR. GIBSON: And there should be, Mr. Speaker, an independent chief executive officer.

Mr. Speaker, with all of these defects in the presentation that has been made to us by the government, and given the fact that there is in no way a critical cash shortage for the British Columbia Railway, I am not prepared to be a rubber stamp for this government in sloppy legislation inadequately justified and not immediately necessary. The presentation which this minister has given us is just not good enough. Until such a presentation is

[ Page 1105 ]

available and a proper justification is available, which should be the minimum expected from any group who say that "whatever else it is, we at least know how to manage the finances of this province," which is what that group over there claims, Mr. Speaker, this kind of legislation is not supportable.

MR. G.S. WALLACE (Oak Bay): Mr. Speaker, the main point in the debate this afternoon has been the incredible insult to the House by the minister talking for about two minutes on a bill to increase borrowing by $250 million after we have gone through a whole budget debate about what a very serious thing it is to borrow money.

AN HON. MEMBER: That's right.

MR. WALLACE: That's all we have in the budget from the black-ink boys — that the very important thing is that you mustn't get into debt.

I am glad the Attorney-General (Hon. Mr. Gardom) is here, because there's some excellent speeches in Hansard that the Attorney-General made from this side of the House.

MR. LAUK: Arrest that man!

MR. WALLACE: This bill even breaks the record established when the former Attorney-General spoke, because here we've got borrowing of $250 million in two lines, 22 words — 11 million bucks a word. Now when the Attorney-General took that approach when he was on this side of the House, there were even a few more lines in the bill and not so much to be borrowed per word.

I think it becomes really disturbing, the ambiguous or ambivalent way in which this government talks about financial matters. All through the budget debate we get this pious claim that somehow or other.... I'm certainly glad the minister of ICBC has finally got here this afternoon because he's another one who's been talking about how important it is to avoid debt. He's nodding in agreement.

While I agree that there's a difference between capital expenditure and operating expenditure, there's not that much difference. It costs this province and the taxpayer money that is borrowed, whether it's borrowed to close an operating deficit or a capital expenditure.

I quoted the figure earlier on when we debated the bill to increase the borrowing of B.C. Hydro: the net debt on B.C. Hydro had increased 61 per cent in five years and now, or at least up until the end of 1975, the net debt had increased 135 per cent in five years on the B.C. Railway. So it's just a little bit much to sit here through the budget debate and hear the tremendous conviction which the government brings to bear on the wisdom of trying to get by without borrowing, but then when it comes to capital-expenditure borrowing, the sky's the limit. This seems to be the impression one gets from the debates.

I suppose, since we are all agreed on the importance of a developing railway line to gain access to natural resources, that to vote against this bill will be like voting against motherhood. The government will be saying that this member or this party is opposed to the development of our natural resources — and, of course, that kind of response hardly merits comment.

But I just can't buy this ambivalent approach by the government that it is somehow sinful to get into the red ink on your operating budget, but when it's capital expenditures, the sky's the limit. I'm not suggesting that we could get by without borrowing money. But when the minister stands up and asks for permission to increase borrowing by a quarter of a billion dollars, and gives the simplest general explanation, then I think he's doing less than honour to his own very responsible position as perhaps one of the most important cabinet ministers in this province. This is, I think, particularly regrettable in the light of the budget speech which we assume he wrote and which contained scathing criticism, some of it really beyond the bounds of fair play, against others who had formerly, in the judgment of the government, spent money unwisely. And we're asked here, without any real accountability, to simply vote for this bill because we need it for the continuation of two extensions of the railway.

Even if we overlook all that evidence we've had since the House went into session, I would say that any private individual or any private enterprise, in considering large amounts of borrowing, would want to look at the record and see what the company has been doing lately to determine whether or not it seems reasonable to increase still further the money that's to be poured into said company. If you read the account which was put together and signed by general counsel George T. Hanrahan last year and entitled "A History of the Fort Nelson and Dease Lake Extensions," there's very little in there that would sustain your confidence that further borrowings would be well spent. In fact, much to the contrary. The information in this report, it is stated at the end, was obtained from the office of the chief engineer of the railway, dated January 30, 1975.

Mr. Speaker, this afternoon many members have referred to various reports, and I don't plan to repeat what's been stated. But throughout this history of the Fort Nelson and Dease Lake extension time and time again the statement appears that nowhere in these reports is there any reference to capital cost projections.

The company which repeatedly seems to have been awarded contracts, Peter Kiewit and

[ Page 1106 ]

Sons the overruns are very far out of line with the project cost. One contract....

AN HON. MEMBER: Have you ever built a railroad?

MR. WALLACE: I haven't built a railroad anywhere. I'm just saying that we have professionals — or we expect that a government would seek professional advice whether you're building a doghouse or a hotel or a railroad or whatever — and the facts and figures speak for themselves, Mr. Member. Time after time, in this report, the overrun is of the order of 50, 60, sometimes 100 per cent. As I mentioned a moment ago, in several places in the report there is no reference to capital cost projections. It seems as though the general philosophy was that we need the railroad, so let's forge ahead with the expense and, whatever it costs, we'll borrow the money to pay for it.

Interjection.

MR. WALLACE: I don't think that's a responsible position, and it certainly doesn't sound like the kind of fiscal responsibility which both the Minister of Finance (Hon. Mr. Wolfe) and the Premier (Hon. Mr. Bennett) have emphasized in earlier debates this session, particularly in the budget debate.

Interjection.

MR. WALLACE: When the bill to provide the money to operate such an expensive business as a railroad comes before the House, we're just asked, really, to go along and sign a blank cheque to borrow another $250 million. As I say, it comes as somewhat of a surprise that the Attorney-General (Hon. Mr. Gardom) at least hasn't influenced the Minister of Finance to give a little more information. Even when introducing the bill, even if you don't write into the actual bill that there'll be $20 million here, or $50 million somewhere else, but if even the minister would do this House what I think is nothing more than its due — to have some explanation as to where this $250 million is to be spent. We asked this question under Hydro, and the Minister of Labour (Hon. Mr. Williams) at least responded by stating the different projects which would cost approximately so much at certain times.

Now we realize that the precise costs and some of the obstacles that can unexpectedly be encountered in such an important project in tough countryside is difficult to predict, but I don't think you should ask us just to stand up very glibly and, without any question or without any kind of general explanation, approve this kind of borrowing when the budget that we discussed would not allow for one single dollar in the red. We needn't transgress on a former vote of this House, but we've all expressed from our opposition places some of the real hardship that is going to be a consequence of insisting only on black ink.

There are many other factors about the B.C. Railway which I wouldn't take the time to go into, because the general thrust of my criticism is the glib, impudent way in which we're asked, just in two lines of a bill, to say okay, we'll increase the borrowing capacity by a very large amount of money on the general claim, which is valid to a point, that we need the money to continue the extensions that are embarked upon.

I think the question should also be raised as to where the railway agreement — or the negotiation to reach agreement — with the federal government is concerned. We heard from the Premier during the election campaign that the money that was to accrue to British Columbia was not adequate, or the terms of the agreement were not satisfactory, and that it was being brought forward as an election plum or attraction for the then government. But if it's not good enough, and the $35 million wasn't enough, surely when we're debating a bill like this the least we should know is what is the government's position and how much better they believe they can do in negotiating with the federal government than was done by the former government in power.

The whole question of labour strife on the railroad to the onlooker is a nightmare. It seems to have endless series of strikes, which are costly not only to the railway as such from loss of revenue, but also in the loss in export revenue and the loss of jobs, temporarily at least, to the people who work on the railway, and to the communities that are seriously penalized during these strikes.

So for a variety of reasons, and because of the very obvious mess that the railway is in, I think it's really rather impudent to come before the opposition and just say: "We want to continue these extensions. We need to borrow $250 million, and if you're not in favour of it then you must be opposed to economic development in British Columbia." That's nonsense! Just because the end is desirable, we have every right and responsibility to criticize the means and the way in which problems have developed on the railroad. If I was putting money into a private venture and putting up risk capital to let a private business borrow money for expansion, I certainly wouldn't want to see the record of that private concern comparable to the record of the B.C. Railway.

I'm not even prepared to go into the argument I've heard this afternoon as to how much of it is political interference and to what degree we need a new board of officers or a non-political president, or whatever, although that may well have a lot to do with some of the problems in the past. But I think that with

[ Page 1107 ]

anything as technically complicated and as important as building a railway line, it seems incredible that the initial studies done to determine what is, in fact, involved in creating that extension were so trivial or so superficial and inadequate. We don't even have the minister telling us this afternoon, or giving us some kind of outline, who is presently involved in engineering studies or to what degree the errors that we've learned — this is the new government — are from the errors of the past. He just stands up and says: "Give us the money."

I'm trying to cover the subject quickly because I could spend a lot of time, as I say, quoting from former speeches on Hydro and BCR borrowing by the Minister of Education (Hon. Mr. McGeer) and the Attorney-General (Hon. Mr. Gardom) and the Minister of Labour (Hon. Mr. Williams) . I can well remember one particular time when I hadn't been in this House very long and I voted to support the government of that time in asking for a bill just like this. The three then-Liberal gentlemen were very mocking of me for being so naive and stupid just to give the government that kind of support without asking for some specifics.

AN HON. MEMBER: They changed their minds.

MR. WALLACE: Mr. Speaker, I think, since I don't seem to be getting too much attention from the Minister of Education, that maybe we should quote some of his old speeches to him.

AN HON. MEMBER: How cruel! How cruel!

MR. WALLACE: All about accountability, Mr. Minister, through you, Mr. Speaker.

Interjection.

MR. WALLACE: Maybe they happen to have one of the speeches of February 16, 1972, from the Attorney-General. It's almost dramatic that it's only half an hour time difference from the speech he was making. He said, Mr. Speaker:

The government this afternoon at 5:45 is asking the 55 members of this House to make a decision concerning $500 million, a judgment decision without facts, without statements, without economic projections as to how this money is to be applied, as to when it's to be applied, as to where it's to be applied, or as to why it is needed.

AN HON. MEMBER: How did he vote?

MR. WALLACE: Now we have three ministers in the present cabinet.... I could take up a lot of time in the House because we've done a fair bit of research on this and we've got oodles of speeches from all three former Liberal members going on and on in the same theme.

AN HON. MEMBER: Very excellent speeches.

Interjections.

MR. WALLACE: I just feel that there's been a dramatic reversal of opinion, Mr. Speaker, now that these three members are part of the cabinet. One has to assume that they've changed their minds and their opinions as to the importance of accountability to the taxpayer.

AN HON. MEMBER: Opportunism.

MR. WALLACE: Again, as I say, this isn't quite the position they took in the budget debate when we were talking about operating funds and the terrible sin it is to get into debt. Apparently not only is it such a different matter when it's capital expenditure, but you no longer feel that the opposition should be asking all these questions.

MR. LAUK; Opportunism knocks, eh, Pat?

MR. WALLACE: Either you don't feel we should be asking the questions or you're not prepared to give us some of the answers. The availability of the financial report provided to this House just minutes before we get into debate on this bill, I think, is another example of the impudence and haughty attitude of this government.

I asked in the question period a week or two ago if we could have the financial statement, the annual statement of the B.C. Railway, so that at least we could have come preliminary time to study just exactly what the financial situation is prior to this debate. I was told that, well, there are very sensitive labour negotiations going on and it would disclose too much financial information which might prejudice management's position in the bargaining procedures.

Mr. Speaker, I was under the impression that the public of British Columbia own the B.C. Railway. I think that attitude that somehow or other we cannot be told all the financial facts about one of the very important assets which are at least reputed to be owned by all the people in the province is, I think, a very superior and high-handed approach for the government to take.

I feel that undoubtedly we must continue development of the railway for the reasons on which I'm sure all parties in the House agree, that we have tremendous natural resources which are only valuable when they're either cut or mined and shipped to port. But as I say, the idea that just because it's a good idea, and because you need money to do it, you

[ Page 1108 ]

should come into the House and just tell us to approve borrowing of sums of this dimension is just a bit much.

As I mentioned a moment ago, it becomes particularly galling when three of the cabinet, who are busy putting forward this point of view, have spent literally many hours on this side of the House in previous years asking for just the kind of detail and accountability that we're now asking from this side of, the House. It seems quite clear that it now suits these particular ministers of cabinet to completely reverse their position. It should give the people of British Columbia some very serious thought that their commitment to the principle of accountability seems to have gone right out the window since they took office in this government.

I notice there's a strange silence across the way, Mr. Speaker, because it would seem that the facts do speak for themselves. I was hoping that I was wrong, and that perhaps the Minister of Education (Hon. Mr. McGeer) would get up and perhaps suggest to his cabinet colleagues that, yes, we need the money, but I think the very least we should do is tell the opposition parties approximately how much money we need right away, for which projects and over what period of time, and what interest rate we anticipate paying and so on.

In fact, talking about interest rate, I thought it was very interesting this afternoon that the Minister of Economic Development (Hon. Mr. Phillips) talked about the income from the agricultural aid fund which, by my calculations, works out to about 7.5 per cent. Yet I notice that the bond that was just issued by order-in-council in January of this year is paying 10.4 per cent. It seems to me we're earning a great deal less from our investments than we're paying to other people who lend the government money, or lend the BCR money — and that's a spread of about 3 percentage points.

These are some of the questions, and perhaps there's an answer to them. There may well be, but the point again comes back to the relative silence from the government on a bill with far-reaching ramifications, involving large sums of money and involving very considerable debt charges. I notice that up until the end of 1975 the annual debt charges for the railway alone was something over $18 million, and I quoted similar or comparable figures for B.C. Hydro.

These are some of the reasons, Mr. Speaker, why not only is this bill of great importance, but of even more significance is the inadequate and high-handed way in which the government has asked the opposition to support this kind of borrowing of large sums of money with limited, if any, explanation. As I say, it is particularly tragic that the three of the cabinet who are asking us to approve this bill know very well in their own hearts that this bill is not the way in which business should be conducted in this House.

It doesn't really matter whether it's $250 or $250 million.

It doesn't really matter whether it's dealing with operating debt or capital debt. It all costs the taxpayer money to pay the interest on the debt.

If we can finish on a somewhat facetious note, I guess we could quote the company that says: "Never borrow money needlessly." We're not convinced on this side of the House that we may well be borrowing money, not only needlessly but with a lack of efficiency in managing the very project for which the money is borrowed,

MR. W.S. KING (Leader of the Opposition): Mr. Speaker, I'm not going to take too much time in dealing with this bill. I just want to reaffirm some of the statements that h ave been made by opposition members of the three opposition parties in the House.

I think it is a regrettably vague bill. I think it's regrettable that we have a vague minister who is not prepared when he stands up and introduces the bill for second reading to be somewhat more expansive on precisely what the money is to be earmarked for. The minister has a history of being extremely reticent to give any detail of the financial purposes to which this government intends to put its authority in the province. He's becoming known as the mute minister. He had the opportunity, when he rose in his place to move second reading of the bill, to expand and give the opposition some indication of whether or not this borrowing of $250 million is to service simply the expansion projects on the railway in terms of the capital needs for completion up there, whether or not it bears any resemblance or any relevance to the question of legal liability to which the railway has been induced by questionable conduct in dealing with contractors on that northern expansion.

Perhaps some of the money is to be used for the costs that have been granted to contractors as a result of a recent court case. We don't know that. I think the minister might well have explained what use the money is intended to be put to.

I wonder to what extent any portion of this money is going to be used for upgrading the physical plant on the existing railway. I wonder to what extent a railway, which has traditionally been a resource railway and consequently one of very slow speed.... I wonder to what extent there might be plans to modernize and to bring the grade and the trackage up to the standards of the Canadian railway transport's No. 1 railway designation. Because there is a relationship between that need and between the deficiency in the railway's physical plant to the current and the historic industrial relations problems on the railway which we have witnessed over the past number of years.

[ Page 1109 ]

One of the problems is that the trackage is so slow that the government is presently embroiled in somewhat of a revolt by their workers because they are concerned about having to spend such long hours moving trains from point A to point B. Sure, it's been a resource railway of low speed in the past, but I wonder to what extent the government is going to start setting some priorities on making at least the portion of the railway which is now fairly well utilized in terms of tonnage a more viable operation, a more modern operation in which tonnage can be moved more expeditiously, a railway which accommodates more reasonable working hours for the employees on the property and hence would tend to ease some of the conflict in industrial relations which the railway and the government are now confronted with. These are questions which should be answered.

We have no idea, as other speakers have indicated, whether or not the $250 million increased borrowing authority is to accommodate simply the expansion projects of the railway, whether it is to service in substantial part outstanding debt, whether it is for some new approach to the existing plants and modernization, whether it is for the purpose of introducing some new technological mechanisms on the railway which would perhaps put it in a more viable and a more profitable margin of operation. These are questions that should be answered. I am certainly concerned that the minister is so rather offhand about introducing a bill involving these kinds of taxpayers' dollars with such a cursory explanation — indeed, no explanation at all — simply to read the name of the bill, to outline the amount of moneys that you are seeking authorization to borrow but to offer no explanation whatsoever in terms of what these increased moneys are to be used for.

I think the question of industrial relations has been raised by a number of speakers. It is something that is of continuing interest to this House because it bears heavily on whether or not the railway is going to become a profitable enterprise. We have had protracted interruptions of service on that railway. As every member of the House admits, that not only adversely affects the profitability of the railway, but it has an absolutely startling effect on the economy of the whole northern area of the province. Surely if we are to develop increased tonnage, increased customer patronage for the railway which will justify the dollars which have already been spent on expansion and extension to the north, then that area of the province has to be convinced, and they have to be secure in the knowledge that there is a reliable transportation link to bring their produce and their commodities to the markets of the lower mainland and the tidewater points, and so on.

This is a matter that is of serious concern. While I appreciate, perhaps as much or more than anyone in this House, that industrial relations problems are not simplistic — they're very deep — there is a related matter here contained in this bill. At least there well could be if the government was willing to spell out what their priorities are in terms of the spending of this money.

I hope that when the minister closes debate on this bill he will move himself to give somewhat of a detailed explanation of what this money is to be used for. I hope he will take the House into his confidence in terms of giving us a resume of the priorities that have been struck by the board of directors, not only for the precise expenditure of these funds, but for an administrative change in the operation of that railway which this government came to office promising.

As someone previous said, the government passed themselves off to the electorate of this province as a group of hard-nosed administrators and shrewd businessmen. So far, I'm struck by the singular absence of a businesslike approach to the administration of the affairs of this province, particularly to the Crown corporations. I think it is not only a matter of the opposition calling for the government to shape up; I believe that the people of this province are very soon going to demand that the government shape up and display those qualities that they express to have in such great quality and quantity.

[Mr. Speaker in the chair.]

So, Mr. Speaker, I am concerned that a bill as brief as this, simply asking for authority to increase the borrowing power by $250 million in a two-sentence bill, is followed by a minister who apparently has such little regard for the amount of money involved that he introduces it with perhaps little more than a two-sentence introduction also.

If the minister is really serious about seeking the cooperation of the opposition for expeditious passage of bills in this House, then he's going to have to take his duties a bit more seriously. He's going to have to be prepared to come up with more detail on the purposes to which he intends to put this money, and he's going to have to be a good deal more expansive than he has been prepared to demonstrate in any of his duties so far in the current session of the Legislature.

So, Mr. Speaker, I'm not going to belabour or flog the point any further, but I do appeal to the minister to, when he closes debate, get up and in good conscience and in all sincerity give some accounting of precisely what this money is earmarked to be utilized for, and what the priorities and what the administrative objectives of the board of directors are on that railway. Are there going to be any major shifts, maybe major changes in the administrative structure of the railway? Is the government planning

[ Page 1110 ]

to move at arm's length as politicians from that important Crown corporation so that we can be assured, as opposition, and the citizens of this province can be assured that the decisions that are made are decisions based on sound business considerations rather than political considerations?

These are questions the opposition has a right to receive some answers to, and I want to say to the Minister of Finance (Hon. Mr. Wolfe) that I trust that he's going to break out of his mute silence that has characterized his performance over all of this session and come up with a stirring defence of why this money is necessary for the increased borrowing power of the railway, and why he should have the support and the cooperation of the opposition in this House, Mr. Speaker.

MR. C. D'ARCY (Rossland-Trail): Mr. Speaker, I'm rising in the debate of second reading of Bill 5 because I am concerned about this little bill which says in a few lines that we are being asked to add $250 million to the debt of the B.C. Railway. The implication in the bill is that it's a debt problem that will be borne by the railway and the users of the railway. I would suggest, Mr. Speaker, that this is a debt problem that will be borne by the taxpayers of this province — by the people of British Columbia. It's going to cost the railway — that is, the people of B.C. — a minimum of $25 million a year just in finance charges alone. Probably more like $30 million a year, but I'll be charitable.

Of course, we know we are likely to be told by the government and by the railway management that the debt repayment is going to come from freight revenue. I suggest that this railway has deficits now; it has had operating deficits for a number of years, if not throughout its entire lifetime, and these deficits have been and will continue to be borne by the taxpayers of this province. Mr. Speaker, if the taxpayers of this province are paying off annual indebtedness and annual operating costs of the B.C. Railway, that means that either taxes are higher than they otherwise would be, or there is insufficient tax money for other purposes to be spent on all of the people of all of the province.

I would ask what the government intends to do, or what the railway would intend to do with any of this money, about the industries in the communities along the existing railway line, because we know that this money, at least most of it, will be spent on the Dease Lake extension — on completing it. But we have problems along the existing railway, problems that have existed for 60 or 70 years, ever since the railway was incorporated. There are industries along that line — sawmills, pulp mills, paper mills, cattle ranches, mines. Is this going to mean higher freight charges to them, higher rates making it more difficult for them to compete with similar industries in the rest of the province? Is this going to mean that they are going to have a tougher time competing in the open market for capital? This is capital which is sorely needed, not just for expansion of industry in these communities, but just to remain in the same spot.

As I have outlined in this House several times before in this session, there are very serious problems in the lumber industry of British Columbia, particularly in the Cariboo and the areas served by the B.C. Rail. There are problems because the sawmills are not going to be able to keep up their present production unless there is significant pulp mill expansion. Is this going to make it much more difficult for corporate management of the private sector to make decisions and to attract capital to expand their pulp and paper operations if they are looking at higher freight rates?

Of course the railway doesn't have to put the freight rates up; they can simply run a higher deficit and charge that to the taxpayers of this province, which makes the difficulty of competing in world markets and the difficulty of completing in the capital markets of North America and the world that much more difficult for all of British Columbia, not just for the area served by the B.C. Railway.

What about the communities if there are lay-offs, if sawmills, which have been operating on a 12-month basis, now find they can only operate on an eight- or nine-month basis — only operate on one or two shifts instead of three? This means higher unemployment, higher social costs, loss to the merchants of those communities and, once again, a general falling of real estate and commercial values. I'm very concerned about all of these questions.

We have seen over the years in this province a problem of regional disparities. I think there's no secret and it's been accepted — and deplored, I think — by all political parties that it's not unusual. In fact, most of the history of the province has seen generally higher personal incomes, generally higher standards of living in the major urban centres of Vancouver and 'Victoria than we've seen in the hinterlands, and speakers from both sides of the House have spoken against this.

I would suggest, Mr. Speaker, that actions of the government since last December, rather than decreasing regional disparities, have in fact aggravated them — in fact, have aggravated them and will continue to do so. If there are higher freight rates on the B.C. Rail, this is something which will indeed happen again.

I would ask whether the government or the B.C. Rail management have really done any projections of what are the benefits of this kind of gargantuan development which will take place in the northwestern corner of British Columbia — the northwestern 25 or 30 per cent of the land mass of British Columbia. I'm not suggesting to this House

[ Page 1111 ]

that I'm opposed to that development. I believe, in general terms, that we're all in favour of that. However, if it means increased problems in the rest of the province, is it desirable to go ahead at this time, before we have thought out some of the existing problems in the existing communities that we have now?

I suggest, Mr. Speaker, that it is better to put our existing house in order before we go around buying new ones and building ones, and perhaps perpetuating some of the same problems and the same mistakes that have been made over the last half to three-quarters of a century along the B.C. Rail route.

The B.C. Railway, ever since it was first conceived and first chartered in the yearly years of this century, has had capital problems: has had trouble raising capital, and it has always needed more capital to do whatever construction was being done at that time. In other words, there have been miscalculations in the amount of capital needed. There have always been construction problems. It didn't matter whether it was owned privately or publicly, or what government was in office or what management was there; there have always been capital and constructions problems. There have always been operational problems, Mr. Speaker, and there have always been management problems.

I suggest, Mr. Speaker, that a lot of these problems have not been resolved. They could be resolved if we just stopped and caught our breath, if we just stopped and thought. Certainly there's no secret in how to run an efficient railroad. It's done in many parts of the world by many public and private corporations and I'm sure that the B.C. Rail's chronic problems could be resolved.

It seems to me that we may well be sending good money after bad. We may well be taking $250 million more, which the taxpayers of this province have to be responsible for in the final analysis, and sending it on to perpetuate problems which have existed and which no government and no management has really set its mind to resolving.

Mr. Speaker, this is our third borrowing bill to come before this Legislature in this session. We had the debt repayment Act of $400 million, we had the B.C. Hydro borrowing Act of $500 million, and now we have a $250 million B.C. Rail borrowing bill. You are saddling this province with another crushing debt load. You're asking us to approve not only this expenditure now, but you're asking us to approve it on an ongoing basis, because this province will have responsibility to see that that $25 million to $30 million annual debt is paid. Whether it's paid by rail revenue or paid by the taxpayers of this province, you are asking us on an ongoing basis. I know someone can say: "Oh, but it's going to be paid off." Mr. Speaker, I would note that there's been no reduction of the B.C. Hydro indebtedness since 1964, and there has been no reduction of the B.C. Rail indebtedness in 50, 60 or 70 years. It seems that though eventually things may be paid off, the fact is that they are never paid off. The debt load gets higher and higher, the interest payments get higher and higher and it gets to be a greater and greater commitment for the taxpayers of this province and for future generations.

Mr. Speaker, I am not opposed to the extension of the B.C. Rail. What I am opposed to is an extension going ahead willy-nilly before the railway itself has solved many of the problems which it has chronically had on much of its existing routes, because those problems are problems of those communities that It serves, those problems are the problems of the business and industry along the line, and those problems are the problems of the people of British Columbia.

I, even though I'm not.in an area which is served by B.C. Rail, am very concerned that these things be resolved in an organized, efficient and competent way. At present, Mr. Speaker, I can honestly say I see no effort being made by the government to resolve those problems.

I detect a feeling that things will sort themselves out eventually: "Let's just sink a lot more money in. Let's just sink a whole bunch more money in and maybe things will sort themselves out." Mr. Speaker, that's been tried before with B.C. Rail and it hasn't worked. I do hope that we will see a different attitude start in this province in the future regarding rail extensions and rail management, rail operational problems and rail construction problems.

MR. SPEAKER: The hon. minister closes the debate.

HON. MR. WOLFE: I think it's fair to say that all members of this House, regardless of what may be said in the debate from time to time, realize the importance of this bill and the need for it. What we are asking for is the extension of the borrowing authority by another $250 million to bring it to a figure of $900 million.

This has been a bill which has been presented to this Legislature and previous legislatures almost annually. It doesn't indicate that the railway will necessarily be borrowing this amount, but they do need the authority to borrow, and obviously will not want to borrow any more than they actually fundamentally need.

During the past fiscal year the railway in fact borrowed something approaching $200 million. At this particular stage there is only $31 million left in this borrowing authority, so they're very much reaching the peak of their present authority of $650 million. A year ago now, the previous government

[ Page 1112 ]

requested an extension in the borrowing authority from $440 million to $650 million, and at this stage, as I say, we are now asking for this authority to be extended to $900 million.

Quite a lot was said about the political interference on the board of the railway. That to me is really very interesting, because who was on the board of the previous government, representing them on the railway, but the Premier as president, the Minister of Economic Development (Mr. Lauk) and the Minister of Labour (Mr. King) . It seems to me that that railway couldn't make a whistle-stop without calling Victoria. That was political interference or influence of the highest order. We are attempting to put people on the board of the railway who will be knowledgeable and capable and can do a job.

MR. LEA: Who?

HON. MR. WOLFE: So I might say that this borrowing authority is obviously needed to carry on the completion of the Dease Lake extension and to continue the upgrading of the present facility, and I am told at this stage that the ongoing cost of completing the Dease Lake extension alone would come to something like $111 million. This is at present-day prices. Mr. Speaker, it's amazing to me that we've had so many suggestions about poor management, et cetera.

The first member opposite who spoke regarding this bill was very critical of our present arrangements for running a railway, and he thinks that we should reorganize this railway, refinance it and just put it on a proper footing. He was asked to do this a year ago and he didn't know what to do. Why didn't he adopt some procedure at that time when he was on the board of the railway? You should tell us now how to refinance the railway.

Interjection.

HON. MR. WOLFE: You certainly didn't, Mr. Member — not as far as I heard. You couldn't do it last year and you couldn't do it this year. That's the fact of the matter.

Mr. Speaker, within the past fiscal period it was necessary to borrow internally something approaching $185 million — this is during the past year. The last borrowing took place on January 15 of this year. All of these were internal borrowings. I'd say that this is a very necessary measure which is obvious to every member of this House: an authority to increase the borrowing of the railway which all members support the need for. So far as providing detailed information, as you are all aware, you can ask these kinds of technical questions under the minister's estimates as we come to them.

Mr. Speaker, I move the bill be now read a second time.

Motion approved on the following division:

YEAS — 46

NAY — 2

Division ordered to be recorded in the, Journals of the House.

Bill 5, British Columbia Railway Company Construction Loan Amendment Act, 1976, read a second time and referred to Committee of the Whole House for consideration at the next sitting after today.

Hon. Mr. Bennett moves adjournment of the House.

Motion approved.

The House adjourned at 5:53 p.m.

[ Page 1113 ]

ERRATA

The following lines should read as shown.

Page 894, line 32:

disparate circumstances, we comfort ourselves

Page 894, line 48 to end of column. Page 895, lines 1 and 2:

"To be born poor is to have the deck stacked against you at birth, to find life an uphill struggle ever after, and to be born poor is unfair to kids.

"Of the 6.76 million kids under the age of 16 in Canada at the time of the 1971 census, 1.66 million were poor. This report (referring to the March, 1975, report of the federal government) is about poor kids. It is about the lives they are living today and the prospects for years that lie ahead of them. It is about growing up without as much food as other kids get, without the toys, the clothes and the outings that other kids get, and it is about growing up marked with the stigma of poverty instead.

Page 895, lines 47 to 52:

"If the middle class is overtaxed, it's not because of the poor but because of the avoidance of tax by the rich and by big corporations. Don't forget, it's primarily the wealthy in Canada and elsewhere who own the big corporations."