[ Page 1155 ]

CONTENTS

Routine proceedings

British Columbia Railway Company Construction Loan Amendment Act, 1976 (Bill 5) Committee stage.

On section 1.

Mr. Lauk — 1155

Hon. Mr. Wolfe — 1155

Mr. King — 1157

Mr. Lloyd — 1157

Mr. Macdonald — 1158

Mr. Chabot — 1159

Mr. King — 1160

Mr. Chabot — 1163

Mr. King — 1163

Mr. Lauk — 1164

Mr. Wallace — 1166

Mr. Stupich — 1167

Mr. Chabot — 1168

Mr. King — 1170

Report and third reading — 1172

Committee of Supply: Department of Finance estimates. On vote 61.

Mr. Stupich — 1172

Hon. Mr. Wolfe — 1174

Mr. Gibson — 1174

Hon. Mr. Wolfe — 1174

Mr. Gibson — 1176

Mr. Lloyd — 1176

Mr. Rogers — 1177

Mr. Nicolson — 1177

Mr. Stupich — 1178

Hon. Mr. Wolfe — 1178

Mr. Stupich — 1179

Mr. Gibson — 1179

Appendix — 1180

TUESDAY, APRIL 27, 1976

The House met at 8:30 p.m.

Orders of the day.

HON. G.M. McCARTHY (Provincial Secretary): Mr. Speaker, by leave I would be pleased to move into committee on Bill 5.

Leave granted.

BRITISH COLUMBIA RAILWAY COMPANY
CONSTRUCTION LOAN AMENDMENT ACT, 1976

The House in committee; Mr. Schroeder in the chair.

On section 1.

MR. G.V. LAUK (Vancouver Centre): Mr. Chairman, there was an opportunity for the Minister of Finance to explain the details of his bill in second reading, when debate on principle was underway. With respect, I say that the Minister of Finance failed to do so. I wonder if the hon. minister has had an opportunity to discuss the matter with the recently deposed director sitting behind him, or the Minister of Economic Development (Hon. Mr. Phillips). When an extension for borrowing power is requested from the House, it seems to me that the House should know some of the details with respect to the expenditures that are expected for the upgrading of the Fort Nelson line, for example, and for the Dease Lake extension.

I'd be very disappointed indeed, as I am sure many British Columbians would be, if those programmes that were initiated by the NDP administration would be continued. And I mean that in this sense, Mr. Chairman, through you to the minister: we did undertake a programme of rehabilitating the Fort Nelson line, a very expensive proposition. But the history of derailments which caused injury to property, and to the person, that hampered that line for so many years has got to be forever put to rest. The only way to do that is accepting the Swan Wooster report and the other engineering studies completed in the past three years, and continuing the upgrading and maintenance of the Fort Nelson line.

Perhaps some figures could be suggested with respect to that — what kind of a programme the corporation intends — because, yes, we voted to increase the borrowing power of the railway, but I would hate to think that that borrowing power, that money may be borrowed, will be used to do something totally different than is expected. So we should know the intentions of the corporation before proceeding — at least, in the committee stage.

HON. E.M. WOLFE (Minister of Finance): Mr. Chairman, as the member is aware, we debated this question of the loan-extension bill extensively under second reading, under principle. In answer to a specific point he raises with regard to the upgrading of the Fort Nelson line, I am given to understand that an estimate of $7 million each year has been provided for upgrading this line in the next three or four years, and that the ongoing authority to borrow also has to cover equipment purchases and manufacture of cars, this type of thing, and, of course, the upgrading of the present system in other respects as well as the Dease Lake extension.

The authority to borrow by no means indicates our intention, or the railway's intention, to use the entire authority, but it is within, I think, $31 million of its authority at the moment, and having used something like $188 million to $190 million of this borrowing authority in the past years, has certainly indicated that a further $200 million of borrowing would be required in the coming year.

MR. LAUK: I thank the hon. minister. With respect to these expenditures, certainly I think that for safety's sake during the operations of the railway in the next year this money will be necessary. I can foresee, Mr. Chairman, that the railway will have to have a lot more money. I wonder if the minister would be prepared to comment on the programme, if any, of refinancing the railway and bringing it on a better footing, because the interest payments that the railway is making currently has brought it to the point of no return,

If their revenues are going to be eaten up annually by these interest payments, what financial plan is there for that railway so we can take it out of this debt burden — a problem that we didn't turn our minds to, in the sense that we didn't have a programme implemented during our administration? But certainly it was our intention to bring about such a programme this year. Is the current administration contemplating a refinancing of the railway?

HON. MR. WOLFE: Mr. Chairman, we are reviewing this possibility or other alternatives to the present method of finance, but at this moment have no alternative to what we are now indicating.

MR. LAUK: Would the Minister of Finance and the government accept the suggestion that the public accounts and economic affairs committee interview the principals of the railway, together with the Department of Finance staff, and perhaps assist the hon. minister and the officials of the railway in developing such a programme?

HON. MR. WOLFE: Well, Mr. Chairman, we'll take this into consideration and, further, I might also

[ Page 1156 ]

indicate to the member that more detailed questions covering the railway could be asked of the Minister of Economic Development (Hon. Mr. Phillips) during his estimates.

MR. LAUK: I thank the hon. minister and I certainly intend to do that. I'll take advantage of his invitation on the Minister of Economic Development's behalf. I'm sure that he's accumulated his own files currently, and he will be able to answer some of the questions.

AN HON. MEMBER: He needs help.

MR. LAUK: I understand he is in my basement now with a flashlight. He wants to beat the provincial archivist. (Laughter.)

Mr. Chairman, I know this is not a committee to examine the Lauk papers, but the other question that I would ask the minister to discuss for the moment is the Dease Lake extension.

The government has come under heavy criticism since January for its not taking advantage of the northwest rail agreement with the federal government. The total figure in terms of the Dease Lake extension, with some opportunity for more federal contributions, was $117 million. It seems to me that the railway is in dire need for this. The money has already been spent to a large extent and the federal government had designed a payment programme so the railway could receive some of this money in the past fiscal year and in the current fiscal year. It seems to me it would be a great advantage to us.

Now let us not quibble, I say, Mr. Chairman, with the details of this agreement. If the federal government will not accept reasonable terms that you may put forward, well, let's hear about that and let's go to town on the federal government. But the people of British Columbia particularly who are affected by the economic life-blood of this railroad are most interested in seeing the Dease Lake extension completed. They are also most interested in seeing that the BCR is more financially viable.

Could the minister indicate whether negotiations are pending, whether they are about to start, if they are not underway? What are the problems? Perhaps the opposition could be of some assistance.

HON. MR. WOLFE: Now, Mr. Chairman, this matter of the railway agreement, of course, is being administered or handled by the Minister of Economic Development (Hon. Mr. Phillips) and his department. I might say that we are equally concerned and anxious to resolve an agreement with the national government covering this subject. It is very important.

I think the member who just spoke is aware that there were limitations placed on their proposed agreement — I forget the end figure proposed, except that they did place the top limit of the extent to which the national government would participate in this railway agreement. Also, I am given to understand that although the former government intended to expedite a quick solution and a quick agreement, it would have been at considerable expense and risk to the long-term effects of this agreement, and also that the former ministers involved were advised against — strongly advised against — pursuing this agreement in too expeditious a manner because it is a very difficult matter to negotiate, and you can be sure this government is anxious to pursue it.

MR. LAUK: That is, of course, a legitimate point of difference between this side of the House and the government. Our point of view was not only the British Columbia Railway, but we wanted to see jobs and economic development more rapidly occurring in the northwest. It has been promised by your administration, by the previous Social Credit administration and by ours. We were not happy with the slow pace at which things were developing, particularly in the throes of a world-wide recession. It seemed to us that it would have been appropriate, Mr. Chairman, for this railway agreement to be proceeded with. There were details that had to be worked out.

I don't agree, however, that the long-term effects of this agreement would negatively affect the total responsibility of government, together with all of its Crown corporations. I also think that this current government is really seriously underestimating the value of originating revenues on the BCR line as a result of this agreement. Remember the agreement called for the carrying of copper from the Stikine and we would get originating revenues from that source. There was also the possibility of originating revenues in the northeast from those lines.

It seems to me appropriate, Mr. Chairman, that that has been underestimated by the government. But let's not worry too much about some of those things. What I am really concerned about is: is the government proceeding with negotiations with the federal government? What is the federal government's point of view? Do you have changes you want in the agreement or are you abandoning the agreement altogether?

It seems to me that this is $117 million. Maybe it should be more. There has been some delay, so maybe there should be more. What is the position of the government? Are you going to negotiate with the federal government and get some of this money?

HON. MR. WOLFE: Mr. Chairman, yes, we are going to negotiate this. The matter is being pursued.

[ Page 1157 ]

MR. NICOLSON: Mr. Chairman, we're discussing borrowing here. The matter was raised during second reading that if you were to go to any financial house and ask for a sum of money 1/1000th of this amount, you would have to file a financial prospectus. There isn't one before us. Is a prospectus being prepared?

Interjections.

MR. NICOLSON: There is no prospectus being prepared,

AN HON. MEMBER: For what — to borrow money? Check with your lawyers. No, better than that, check with Gibson.

MR. NICOLSON: Well, how serious is this problem then, and how urgent is it?

HON. MR. WOLFE: Mr. Chairman, I might remind the member that we are not borrowing this money; we are asking for the authority to borrow it. The matters you refer to, of course, would be a matter of requirements at the time we went to borrowing, particularly if we went to public funds or this type of thing. This is just an authority to borrow which, as you well know, does not require a prospectus.

MR. NICOLSON: Well, Mr. Chairman, I would assume that we are extending the authority to borrow by $250 million, which is an enormous sum, and the minister suggests that we are approaching the limit of the current borrowing power. We are increasing this sum by a fantastic percentage — I guess in excess of 30 per cent in one year, because it was just extended a year ago — yet the minister is saying that there are no plans to actually go forward and borrow at this time. It is not being contemplated? Is that the case?

MR. W.S. KING (Leader of the Opposition): Mr. Chairman, I notice one of the government backbenchers down there desperately trying to catch the attention of the Chair. I am really happy to see that some of the government backbenchers have come to life. I hope that the Chairman keeps his eye on that member, because I'm sure he'll be up again.

There are a number of questions I have for the minister with respect to B.C. Rail. He indicated the other day — and I appreciate his answer — that the bulk of the money that is contemplated will be borrowed would be for the northern development on the railway. I wonder if the minister could give us some indication of what the position of the railcar shop at Squamish is with respect to production at the moment and with respect to the financial position. I wonder if he could give us some information on what extent, if any, the BCR is presently involved in rental or lease agreements with any of the American lines or the car companies for the rental of rolling stock: namely, boxcars, flatcars, gondolas and so on. I wonder what kind of lease agreements are presently underway, what the tenure of those leases are, and whether or not any of the borrowing power to be authorized to the railway — whether any of the funds necessary — would be used for these purposes, either for the car shop or for car rental or lease-to-purchase agreements.

HON. MR. WOLFE: Mr. Chairman, with respect, I do think that type of question might more easily be asked of the minister as a director of the B.C. Railway. But I will refer the question to him with regard to whether the borrowing is intended to accommodate the lease of cars in their forward plans. Is that the question you have?

MR. KING: No, there are two separate questions, through you, Mr. Chairman. One was with respect to lease arrangements for rolling stock from American car companies. The other question related to the financial status of BCR's own car-construction shop at Squamish. I would like some up-to-date data as to what the production capability of that operation is at the moment, and perhaps some indication of what their capital obligations are with respect to the physical plant at Squamish. It may or may not be related to this particular bill; the minister is quite right. But there are things that we don't know by a two-line, one-section bill which simply authorizes an increase in borrowing power to the tune of $250 million. We would just like a bit more precise information as to the purposes that this money might be directed towards.

MR. H.J. LLOYD (Fort George): Mr. Chairman, there are a couple of points which I would like to set the record straight on. First, on the BCR-CNR agreement, I believe the Minister of Economic Development (Hon. Mr. Phillips) in the House the other evening explained the ramifications of the agreement. The vice-president of the railway himself was very much against signing this agreement — a last-ditch effort by the former Premier to try and get his hands on $117 million, when all it really would have resulted in was that the CNR wouldn't have built their connection. They would have had running rights over our railway, over the BCR. Certainly it would have been completely inadvisable to sign that particular agreement at that time, and I am very happy to see that it wasn't formalized but was held off.

Secondly, Mr. Chairman, in speaking in favour of this bill, I can understand some of the opposition's concern on where the money is going and how much of it is going there, but I think if you study the record of construction of the previous Social Credit

[ Page 1158 ]

government, which I outlined in my maiden speech, some 700 miles of railway were built. More railway was built than on any other railway system in North America or, I daresay, possibly the world.

Another point which the Member for Vancouver South stressed quite often was the standard of railway construction. I think we are running into a similar situation in the Forest Service over the last few years. We're demanding highway construction to get our resources out and our stumpage revenue has dropped off to nothing. If we are going to do the same as the NDP has proposed over their term of office on railway construction — going to a mainline construction standard right off the bat — we will never build any more railway than they have, which is practically nil. The construction methods that have been used are very sensible. When you build a highway or a railway you always build a tote road first; you always open the country up first. When you build a light standard railway through you can haul your gravel back both ways. You use a lighter rail and when the freight generation deserves the extra-heavy traffic, you lift these lighter rails and take them up to the end of the line.

MR. J.R. CHABOT (Columbia River): As an old railroader, I say that's true.

MR. LLOYD: Is that true, Jim?

MR. CHAIRMAN: Order, please.

MR. LLOYD: I think it's only common business sense to do things the most economical way, but when you try to go firstclass on dreams and philosophies instead of a practical, common-sense approach, I think all you can expect is just planning and planning and planning. Up in the part of the country I came from we like to see a little action, not so much planning and not so much words.

They also spoke quite a bit about northwest development. Well, all they did do was speak of it. They certainly didn't do anything to get it on the road.

MR. NICOLSON: Get back to your sandbox.

MR. LLOYD: In fact, they discouraged northwest development; they killed all the mining development that had been proposed for the line. When you kill the bulk carries of a line, whether it's chips, forest products or minerals, you also put the ordinary freight up — the freight to the householders and to the taxpayers. The more bulk we can carry over that line, even if we have to subsidize part of it, we certainly open the country up and lower the overall freight rates for everyone.

The former Premier made himself the laughing stock of North America when he suggested they could possibly haul Alaskan oil down by tank cars. My God, they couldn't even haul the forest products out of our area, let alone talk about hauling oil from Alaska down. Someone suggested they'd have to have enough tank cars to put them end to end if they were going to do that, and I certainly agree with it.

I think that with the construction methods the former Social Credit government used and the plans that are underfoot to get the development moving again, all the opposition members can rest quite easily that the additional buying will be well spent.

MR. A.B. MACDONALD (Vancouver East): Mr. Chairman, I didn't intend to ask questions of the minister, but I am concerned that he should listen to the words of the member for Fort George that have just been spoken, because the Minister of Finance knows that when the decision to make the Dease extension was made there was never a decision made by businessmen or politicians or planners anywhere that was more disastrous, in terms of its estimates of quantities of rock to be moved.

HON. A.V. FRASER (Minister of Highways): The railroad doesn't go through the Dease tunnel!

MR. MACDONALD: Don't you know that you are now being sued for deliberately underestimating the costs of the Dease extension, here in the courts of B.C. at the present time? Do you not know — you people who talk about us being inefficient in business methods — that the late Social Credit government that was swept out of office in 1972 and should have been swept out of office long before that canned that Dease extension without even getting an agreement from the Indians with reservations along the line?

SOME HON. MEMBERS: Oh, oh!

MR. MACDONALD: That's right! That was a disastrous mistake of the Social Credit government. We came into office and we had to try to negotiate a way through this impasse where we had a Social Credit government of so-called businessmen who were so lacking in ordinary business sense that they went ahead and built the railway before they had an agreement with the Indians through whose lands the railway was passing.

AN HON. MEMBER: Bulldozing tactics.

Interjection.

MR. MACDONALD: Sure you did!

Interjection.

MR. MACDONALD: And to extend the railway

[ Page 1159 ]

for political advantage. There was no estimate of the costs, and the Minister of Finance knows that perfectly well. He knows what he's facing now in terms of millions of dollars, maybe $200 million to finish that extension, and the costs are away over.

You people think you blundered on the Columbia River! Let me tell you that the Dease extension of the BCR was one of the greatest boondoggles of government wastage and playing politics with the railways that this province has ever seen.

MR. CHABOT: Mr. Chairman, I'm not going to huff and puff like the member for Vancouver East. He has the habit of doing that; he wanders all over the place. He talks about highways, he talks about hydro construction; he's never on the point. As long as he's huffing and puffing, that's about all that's important as far as he's concerned.

Mr. Chairman, I'd like to relate my remarks to the remarks made by the acting Leader of the Opposition, in which he brought up the matter of the railcar plant at Squamish. You know, that's a shameful experience. It's a blemish on the image of this province; it's a blemish on the railway of this province of which I'm very proud. I'm shocked and shamed that the acting leader of the opposition would have the gall and the temerity to raise that issue tonight, because of the dereliction of duty on the part of that government in putting this railcar plant together.

I'll never forget the statements made by the government of the day when the matter had been brought to fruition that we would establish a railcar plant in British Columbia. The former socialist government of this province had established a particular deadline in which the first car would roll off the assembly line of this new plant in Squamish. It was anticipated to cost $4.5 million at the outset. Would you believe that the plant, beyond the period in which the Premier of this province, boss No. 1 of the railway, the president of the railway, had suggested it was going to cost $4.5 million to construct and that it would be operational within a certain period of time...? Lo and behold, that railcar plant did not become functional until two years after the stipulated deadline in which the Premier, the president of the railway, had suggested would take place.

The member for Vancouver East (Mr. Macdonald), the former Attorney-General, who huffs and puffs when he stands in this House, has the gall to mention the Columbia River Treaty — a passing reference to the Columbia River Treaty. I know very well, Mr. Chairman, we're talking about the B.C. Railway, but there is a reason from time to time to make comparisons. Would you believe that the cost of construction of that railcar plant was 90 per cent, in a two-year period, over its projected cost?

There is a reason to compare, because the Columbia River Treaty had an overrun. It took 10 years to construct the Columbia River Treaty, and would you believe the overrun was 33-1/3 per cent? Very shocking — 3-1/3 per cent per year. Oh, but the railcar plant was substantially greater — 45 per cent per year! And these people have the gall to suggest that there were overruns on the Columbia River Treaty when they had no idea what the railcar plant was going to cost in Squamish.

You know, if I were a socialist today in British Columbia....

MS. R. BROWN (Vancouver-Burrard): Heaven forbid!

MR. CHABOT: And heaven forbid! There is no black cloud over my constituency, I'll tell you that, madam member for Vancouver-Burrard.

MR. COCKE: Withdraw!

MR. CHABOT: But, really, I would never mention the Columbia River Treaty if I were those people, when one looks at the kind of overruns that were involved in the construction of the railcar plant in Squamish — not only overruns, but the extreme shortage because of the taxation measures which were imposed by that former government against the B.C. Rail, and which brought retaliation against that railway by the two major lines of this country, the CP and CN. They had no alternative but to retaliate because of the extreme taxation measures which they had imposed. No wonder there were hardships on those people who were trying to get gainful employment along the railway and in the forest industry, because there were no cars because this government had no sympathy and had no consideration for the plight of those people from the north.

No, Mr. Chairman, I'm shocked and dismayed that the leader of the opposition, who is a former director of the BCR, and who knows a little bit about railroads, having been a hoghead for the CPR for many years, would stand in his place....

But I am not going to suggest that he doesn't understand railroading as a functional thing. But I never forget, Mr. Chairman, when we are talking about BCR, the shocking statement made by the former Minister of Economic Development (Mr. Lauk), who for a short period of time was a director of the BCR in which he made a certain projection of when cars were first to roll off the BCR. He stood in this House and suggested it would be about four months until the first car would roll, off the assembly plant.

MR. LAUK: Wrong.

[ Page 1160 ]

MR. CHABOT: Three months.

MR. LAUK: Wrong.

MR. CHABOT: No, that's not wrong. The minister is trying to distract at this time. But would you believe that the minister stood in his place in this Legislature not too many months ago and corrected an erroneous statement he had made to the House and to the members of this House, based not on his knowledge as a director of the railway but based on the newspaper article he had read in the Vancouver Province? For that reason, Mr. Chairman I have never been noted to be extreme in my statements (laughter) or in my requests in this House, but I had to be extreme when I listen to that minister who knew nothing about railroading, who had no rights, really, on the basis of his experience, to be a director of the railway. He stood in this House and on the basis of a newspaper article in the Vancouver Province suggested that he had to make a correction as to when the first rail car was to roll off the assembly plant.

HON. P.L. McGEER (Minister of Education): He should have checked the files in the basement.

MR. CHABOT: He made the suggestion that he should correct his statement because he was quoting from a Vancouver Province article. Can you imagine the director of a company quoting from a newspaper article? (Laughter.) Can you imagine? Can you imagine?

MR. R.L. LOEWEN (Burnaby-Edmonds): I can't imagine him being a director of the railway.

MR. CHAIRMAN: Order, please!

MR. CHABOT: No, neither can I, and I have stated that before.

Interjections.

MR. CHABOT: Mr. Chairman, but on the basis of a newspaper article the minister — former minister, I should say, and a former director as well — indicated to us that the first car had rolled off the assembly plant. He was very proud indeed. He corrected his former statement. It goes to show you the kind of understanding, the kind of knowledge that took place and the kind of correlation that took place in the railway.

At that particular time, Mr. Chairman, I suggested — I have never asked that in the years that I have been in this assembly; I haven't been here that long — that the minister, if he had that serious lack of knowledge of what took place on the B.C. Railway, had no right to be a director. I suggested at the time that he should resign. That's why tonight I am shocked and dismayed that the Leader of the Opposition (Mr. King), a man who has some knowledge about operations of a railway, would raise the issue — would raise the shameful issue — of the financing and the operation of the rail car plant at Squamish and would raise the matter of leasing cars in the United States when he knows full well, if he wants to be honest, that the rail car plant is not in the position today, even, to look after the requirements of the BCR.

MR. KING: Mr. Chairman, we're getting into an interesting railroad discussion. I want to assure the member for Columbia River that I do, indeed, want to be honest. The member for Columbia River is quite wrong when he says I used to be a hoghead. I still am.

Interjection.

MR. KING: That's a traditional term to describe a locomotive engineer, a proud profession, a profession which I am proud to be a member of.

SOME HON. MEMBERS: Hear, hear!

MR. KING: I want to assure that member, too, Mr. Chairman, that I still remember the rules of the railway and the definitions of the various functions that employees perform. I know that the member for Columbia River was a dispatcher on the railway for any years. To prove the point that I am still conversant with definitions and the railway lingo, I am going to provide the House with the definition of train dispatcher. (Laughter.)

AN HON. MEMBER: Shoefly! Shoefly!

MR. KING: That was "a combination of arms and legs coupled together with or without brains and displaying a sun visor." (Laughter.) That is the definition of a dispatcher, Mr. Chairman. He is the guy that casts the running crews off into far-flung musty sidings and maketh them tarry there for untold hours simply because he can't correlate leaks. (Laughter.)

MR. CHAIRMAN: Now back to section 1.

MR. KING: Seriously, Mr. Chairman, talking bout the BCR, I want to remind the member for Fort George (Mr. Lloyd), who is concerned about the eight of steel that is utilized on new trackage and he normal gradient standard that is employed on new railway line, that I indicated earlier in this House

[ Page 1161 ]

that the entire BCR is indeed a resource railway. Perhaps that is one of the problems. It is certainly one of the problems that relates heavily to industrial relations on that railway.

Slow trackage, light steel involve long hours between terminals located many miles apart, and therein lies one of the basic industrial relations problems which this government is facing and the railway is facing. It's not an easy problem to grapple with, I appreciate that, but it's simplistic and incorrect to suggest that it's economically sound to introduce light steel which can then be moved up to a further point as construction takes place. That's just not sound, economic railway planning. I think the trend in all railways, both resource railways and the standard North American railway, which both our transcontinental lines are, indicates that they are going to heavier steel, not only to accommodate heavier tonnage, but to accommodate a longer lifespan.

They are also going to welded rail of one-half mile length. If the member for Fort George (Mr. Lloyd) and the member for Columbia River (Mr. Chabot) are interested in doing a bit of research on the BCR, they will find that the engineering report commissioned by our government when we were in in 1972, utilizing railway personnel from both the transcontinental lines — well-qualified engineers — using independent engineering firms, indicated that the BCR was in abysmal shape. The roadbed had not been properly attended to. It was not even of adequate standard to service the resource line that it is, and there was indeed a strong recommendation that that railway be brought up to North American railway standards.

Similarly, if the members want to dig a little bit deeper, it's true that the BCR has a microwave system for dispatching and running traffic; nevertheless, an investigation by the two senior rules representatives of the CNR and CP Rail indicated great deficiencies in the safety provisions on that railway. Indeed, during the tenure of our government in office, we came to grips with many of those safety problems as recommended by the rules instructors for the two national railways in Canada.

So these are problems that are common. There's nothing political in that as far as I am concerned. I don't necessarily condemn the former Social Credit government, although I think they were partially guilty of failing to appropriate sufficient funds for upgrading of the railway physical plant. I think that's true, and it was indicated and supported by the engineering report we commissioned on it. However, we all want to see the railway running well, whether we're in opposition or whether we're in government. These things are technical matters that are best handled and best analysed by technical people in those fields.

I do think, though, that the government owes this House some explanation, some information, some enlightenment in terms of what the long-term priorities are for that railway, both in terms of upgrading the physical plant, the trackage, the ties, the standard gradient of the roadbed and so on, and the standard gauge of the bed. These were matters that were commented on very unfavourably in engineering reports we had commissioned.

These are all factors that should be dealt with in a continuing way and the House should receive frequent up-to-date reports on these important matters, particularly when the Minister of Finance is standing before the House asking for the authorization to increase the borrowing power of that Crown corporation to the tune of $250 million. I don't doubt for one moment but what this money is required, but I would like to see some more specific information offered on precisely what the priorities are.

I simply cannot leave this subject, Mr. Chairman. Much as I hesitate to stray from the precise subject, I have to return once again to the member for Columbia River (Mr. Chabot) when he comments on the car plant and condemns that as an unsound project, as a project for which the former NDP government should receive some criticism.

MR. CHABOT: Serious overruns.

MR. KING: Mr. Chairman, I want to tell you that comparing that railway car plant with the Columbia River has to take the most fantastic imagination I've ever seen in this House.

AN HON. MEMBER: Right on!

MR. KING: That's a fantastic imagination, Mr. Chairman, which allows the member to make a comparison between those two projects, not only in terms of the finances involved and the capital expenditure, but I would remind the member, Mr. Chairman, that the car plant remains in British Columbia, generating jobs in British Columbia, strengthening the economy of the railway and its independence from foreign car manufacturers. All of these things are for the long-term economic good of the province, whereas contrasted against the Columbia River sell-out....

MR. CHABOT: A lot of jobs!

MR. KING: It was a sell-out which generated a lot of jobs, I agree — all south of the border in the pulp mills and the aluminum plants that were generated, that were processed, and developed south of the border, based on the increased generating capacity of the Columbia River dam south of the border.

I'm going to leave that subject, Mr. Chairman. But

[ Page 1162 ]

finally, I remember that little dispatcher from Columbia River, Mr. Chairman, when he came up to Revelstoke to campaign, and he....

MR. CHABOT: I'm not a dispatcher.

MR. KING: No, that's true. The boys always used to tell me that you were no dispatcher, and I believe them. I believe them.

I remember when he came up to Revelstoke campaigning, and he was talking about railroading — we're talking about railway matters — and he was campaigning on railway matters, Mr. Chairman.... Yes, the Kootenay and Elk Railway. There's a man who knows so much about railway economics that he was willing to build a line from McGillivray to the border of the United States of America...

MR. CHABOT: That's a lie.

MR. KING: ...to ship out the jobs, to ship out the coal from Fording River and Kaiser Resources.

MR. CHABOT: That's a lie.

MR. CHAIRMAN: Order, please. The Leader of the Opposition has the floor.

Interjections.

MR. KING: Mr. Chairman, is it not true that the former Social Credit government granted charter renewals to the Kootenay and Elk Railway 11 different times to construct a railway, not only to construct a new line from McGillivray to the U.S. border but to also grant running rights to that foreign railway partially over C.P. Rail lines? That is certainly true, Mr. Chairman...

MR. CHABOT: Just let him go, Mr. Chairman.

MR. KING: ...and that member supported that government's position although some of his colleagues of that time did not, namely the former Minister of Human Resources, the member for Kamloops at that time, Mr. Gaglardi.

MR. CHAIRMAN: Order, please. Hon. Member, may I interrupt you? I have been waiting patiently to hear you relate this to section 1.

MR. KING: I shall in a moment, Mr. Chairman.

MR. CHAIRMAN: You cannot stray….

MR. KING: I have been interrupted and harrassed. I'm all flustered. I'm really upset, Mr. Chairman. I've had interjections and everyone is picking on me. Us Irishmen are always used to that. Everyone's always picking on us. Shame on you, I say.

MR. CHAIRMAN: And now to section 1.

MR. KING: Mr. Chairman, that member did come to Revelstoke to talk about railway matters, and he should know something about steel after he came up there because he got run out of town on a rail by the angry railroaders of Revelstoke whose jobs he was jeopardizing by advocating the construction of the Kootenay and Elk Railway, and I think he has...

MR. CHABOT: Nonsense! Nonsense!

MR. CHAIRMAN: Order, please.

MR. KING: ...an unprecedented amount of....

MR. CHAIRMAN: Order, please.

MR. KING: Yes, Mr. Chairman.

MR. CHABOT: Let him go, Mr. Chairman. I want to answer.

MR. CHAIRMAN: We are now embarking on a personal attack which, if we allow this to continue, we're going to have to....

MR. KING: Oh, I'm not attacking him personally. I'm simply relating a story, Mr. Chairman, and I wouldn't attack that member personally. I think he's a nice little fellow.

MR. CHAIRMAN: I encourage you to move to section 1, please.

MR. KING: And the record, with respect to the former Social Credit government, is quite clear on what they advocated, and, indeed, what they allowed in terms of legal charters to a foreign rail line. I just find it curious and I find it altogether beyond my comprehension and understanding how that member could attack a B.C. development such as the Squamish rail car plant when his government, a government in which he was a cabinet minister, was prepared to sell out British Columbia railway jobs.

MR. CHABOT: That's a lie.

MR. CHAIRMAN: Order, please.

Interjections.

MR. CHAIRMAN: Order, please.

MR. KING: Mr. Chairman, are you going to do the

[ Page 1163 ]

right thing, or must I request you to have that member withdraw? That's about the fifth time he's said it and he plays upon one tune on that old broken record of his.

MR. CHAIRMAN: Would the member...? Would the Leader of the Opposition just be seated for one moment, please?

I have called the Leader of the Opposition to order on at least three occasions, reminding him that unless he stops the personal attack, we have to allow some rebuttal. And on three occasions I have insisted that he return to the discussion provided for under section 1. The spirit in the room this evening has been good and I'm sorry that it would have to deteriorate because of personal attacks, and since it has done I'm going to have to do this. I'm going to have to ask the member to withdraw the words "It's a lie." Would he do that in this...?

MR. CHABOT: Mr. Chairman, I have great difficulty in doing so because I've found in the last two elections that member in particular, the member for Revelstoke-Slocan, has not told the truth about the Kootenay and Elk and the government's position. The NDP, and in particular that member, has lied...

MR. CHAIRMAN: Order!

MR. CHABOT: ...deliberately lied, about the government's position on the Kootenay and Elk.

MR. CHAIRMAN: Order, please. We cannot allow that kind of an accusation in this House, and the member knows this. It may be an opinion which you hold but it cannot be expressed in this room, and therefore I must ask you to withdraw it.

MR. CHABOT: Mr. Chairman, the member for Revelstoke-Slocan suggests that I was in Revelstoke speaking during a particular election campaign — I think he's referring to 1972 — and he suggested I was run out on the rails out of that community. If he said that, Mr. Chairman, I have to say that is a deliberate lie.

MR. CHAIRMAN: Mr. Member, you've been in this House long enough to understand that we cannot allow that kind of an expression in this room; therefore I must ask you to withdraw.

MR. CHABOT: Mr. Chairman, how can you allow the Leader of the Opposition, or the acting Leader of the Opposition, to make falsehoods, when I'm attempting to correct the inaccuracies of his statement?

I'm suggesting that the statements made by the acting Leader of the Opposition (Mr. King) are inaccurate. I'm doing so in the most genteel way I know, Mr. Chairman, and I'm suggesting that he hasn't been stating the facts as they are.

MR. CHAIRMAN: Hon. member, if you wish to draw the House's attention to some inaccuracies which appear to you, that is fine. However, I must ask you to withdraw the term "it is a lie."

MR. CHABOT: Well, I'll withdraw the term "lie", Mr. Chairman, because I know that I'll have the opportunity to correct the inaccuracies of his statement.

MR. CHAIRMAN: Thank you.

Now the second part which I must ask: I must now ask the Leader of the Opposition to keep his remarks strictly to section 1, or else we will have a repeat of this performance.

The Leader of the Opposition has the floor.

MR. KING: Thank you, Mr. Chairman. I must object, though, to the Chairman's assertion that I had made a personal attack on the member. I don't think that's true. I certainly did not intend any personal attack. I appreciate the member for Columbia River (Mr. Chabot)....

MR. CHAIRMAN: That will close the matter. We are now on section 1.

MR. KING: I appreciate the member for Columbia River's gracious manner of withdrawing. (Laughter.)

I want to correct a statement I made which was made with levity and humour, that the member was run out of the town of Revelstoke on a rail. That's not true, completely, at all. (Laughter.) Mr. Chairman, I think the railroaders in Revelstoke indicated quite clearly to that member their displeasure with his position. It's true, he wasn't literally run out of town on a rail. I withdraw that. It was made in a spirit of humour.

In any event, what I was interested in doing, and what I just want to conclude with, is the analogy which I have drawn and which is a matter of record in this province, between the Social Credit government's willingness to give preference to a foreign rail line over a Canadian line, to allow running rights on CP Rail by a foreign rail line, and to go into it further, Mr. Chairman, to keep a brief, through the Attorney General's department, at railway transport commission hearings in Ottawa supporting the application of that foreign line, Kootenay and Elk Railway, at the expense of the B.C. taxpayers. This is all for the purpose of gaining the legal right for that Kootenay and Elk Railway, which had been chartered 11 times by the former Social Credit government to transport our coal from Fording River and Kaiser

[ Page 1164 ]

Resources to the tidewater through a route running south of the border in the U.S.A., manned by railroad crews of U.S. origin. I question the economic wisdom of anyone who subscribed to that kind of a plan to comment intelligently on the dilemma of the B.C. Railway today, Mr. Chairman.

MR. LAUK: To draw the committee's attention to Bill 5, Mr. Chairman.... Well, the hon. member for Columbia River (Mr. Chabot) is tapping his desk, but it was the member for Fort George (Mr. Lloyd) and the member for Columbia River who encouraged the Leader of the Opposition (Mr. King) and others on this side of the House to give them an education in the history of this railroad.

AN HON. MEMBER: Right on!

MR. LAUK: He shouldn't be tapping his desk.

But I wish to draw the committee's attention back, saying that the hon. member for Columbia River and the member for Fort George have had some education. I don't think that they are helping the Minister of Finance at all, or this committee, to get down to what's facing the railway today and what Bill 5 is all about.

AN HON. MEMBER: Are you going to?

MR. LAUK: But before I get to the point, the member for Fort George did make a couple of statements which disturbed me greatly, and I know the front benches must not agree with this. He said it was a "last-ditch stand," the northwest rail agreement. This directly relates, as you know, to the amount borrowed — a "last-ditch stand."

As I recall, the implementation agreement as understood by Telex between Ottawa and Victoria was stolen from a briefcase and released prior to any press conference or public information being released by the government of the day. How did they describe that as a "last-ditch stand"? That information was stolen and released prior to the government calling a press conference or releasing any information about the implementation agreement.

MR. L.B. KAHL (Esquimalt): Tell us why, Gary.

HON. L.A. WILLIAMS (Minister of Labour): You were so embarrassed you wouldn't talk about that.

MR. CHAIRMAN: Order, please.

AN HON. MEMBER: Sold us out.

AN HON. MEMBER: Sold us out.

MR. CHAIRMAN: Order, please! The member for Vancouver Centre has the floor.

MR, LAUK: Well, you know....

Interjections.

MR. CHAIRMAN: Order, please!

MR. LAUK: I always seem to, when I cover that point, hit a sore spot with the Minister of Labour (Hon. Mr. Williams). I know he's very, very disturbed at the fact that someone would deal in stolen documents who's so close to him.

In any event, the information with respect to that agreement was released by the Leader of the Opposition (Hon. Mr. Bennett), as he then was, and not by the government. Now the member for Fort George (Mr. Lloyd) who has rushed out of the House someplace doesn't want to hear any more of the truth about the railway. That's unfortunate, because he'll probably come wandering back into the House sometime on some other bill, on some other pretext, and delay the proceedings again by his utter nonsense.

SOME HON. MEMBERS: Order!

Interjections.

MR. CHAIRMAN: Section 1, please.

MR. LAUK: Mr. Chairman, may I bring the committee's attention back to the fact that we were dealing with section 1, asking questions of the Minister of Finance, and which he was answering when the member for Fort George (Mr. Lloyd) got up in his place and delayed these proceedings by almost a full hour? Can I draw the committee's attention to that? Every time we are blamed for delaying the proceedings of the House.

HON. K.R. MAIR (Minister of Consumer Services): Nonsense! Nonsense!

MR. LAUK: I say that you get your backbenchers in control.

HON. MR. MAIR: He's got a right to speak.

MR. LAUK: Of course he's got the right to speak; I agree with that, but speak to the point.

He says that it's more economical than to go first-class on the Fort Nelson railway. More economical. Where has he been, Mr. Chairman? He is the member for Fort George. Every week, almost every day, we heard reports of derailments. There was an average, during a critical period of time, of four derailments a week on the Fort Nelson line. A

[ Page 1165 ]

disaster! Even today the speed limit in some areas that have not been upgraded by the previous administration is less than 10 m.p.h., causing labour disputes and delays that are disastrous. Where has he been?

What nerve! What gall he has got to come into this committee and say: "Let's not travel first class." That's more than saying penny wise, pound foolish. That's insane. I'm saying the economics is insane, not the member.

Mr. Chairman, I won't pursue this matter. I think the hon. member should be encouraged to read the documents tabled in this House, the Swan Wooster report. Please, for all of our sakes, member for Fort George, read the Swan Wooster report, and argue about something else. You have a right to speak in this House but don't put your foot in it every time.

The member for Columbia River (Mr. Chabot) talking...well, I won't pursue that.

Mr. Chairman, just before getting back to the last question I have of the Minister of Finance with respect to this bill, I would ask your indulgence. Visiting the House tonight and viewing the committee's proceedings, from the city of Toronto, is Robin McMorris, the niece of our distinguished Deputy Clerk of the House. I would ask the House to welcome her to our Legislature. I had the distinct feeling, Mr. Chairman, that that indulgence would not be ruled out of order — at least the Deputy Clerk would not so advise.

MR. CHAIRMAN: Proceed with section 1.

MR. LAUK: Mr. Chairman, there are a number of questions. First of all, I wonder if the Minister of Finance knows when we can expect the annual report of the British Columbia Railway. It was delayed last year, I know, because we were still waiting for our accountant's final report.

MR. G.S. WALLACE (Oak Bay): He filed it today.

MR. LAUK: No, that's the auditor's report. I'm talking about the annual report.

HON. MR. MAIR: Have you read it yet?

MR. LAUK: Well, I was looking for it in the basement tonight, as I mislaid the copy. (Laughter.)

MR. CHAIRMAN: Order, please. section 1.

MR. LAUK: Yes. As I was saying, I wonder if the Minister of Finance.... I know the secretary of the railway is also the Deputy Minister of Finance, so he might know.

The second question is purely for the information of the House with respect to other aspects of the railway. With respect to the Dease Lake extension, it occurs to me that there are problems with the Stuart-Trembleur and other bands along the line. It should be pointed out — and I think it was accurately pointed out by the member for Vancouver East (Mr. Macdonald) — that no agreement had been reached with those Indian bands prior to the line being surveyed, prior to the line being constructed.

AN HON. MEMBER: What did you do about it?

MR. LAUK: The question is asked what we did about it, Mr. Chairman. Let me describe that briefly.

Interjections.

MR. CHAIRMAN: Order, please. The Member for Vancouver Centre has the floor.

MR. LAUK: It was reported to us that it was the understanding of railway officials that there were some agreements obtained from some of the bands along the line. Upon investigation we found out that was a misassumption, or an assumption that was mistaken. As a result we immediately began negotiations. That's what we did about it. There was nothing more we could do about it.

Interjections.

MR. LAUK: That's not true. Before you open your mouth, Mr. Member, check your facts.

AN HON. MEMBER: You'd better check yours.

MR. LAUK: Really, that's not true.

MR. CHAIRMAN: Order! We have to restore some order to the House. May I ask the hon. members to return to their seats, please? Please remember the standing orders of the House which say that if you wish to speak, you must stand in your place and be recognized by the Chair.

The Member for Vancouver Centre has the floor. Please proceed.

Interjections.

MR. CHAIRMAN: Order!

MR. LAUK: Mr. Chairman, I have two questions to ask, and I know that there are two individuals who could advise the Minister of Finance. First, with respect to the Indian bands, is it expected that we will be able to proceed without interruption with construction along the Dease Lake extension? Secondly, can we expect the annual report soon and in this session?

[ Page 1166 ]

HON. MR. WOLFE: Mr. Chairman, I think the answer to both questions is yes.

MR. WALLACE: Mr. Chairman, it's not difficult to find out which section of this bill we are debating, since there is only one section. That's really my biggest concern with the bill — that in one section of two lines and one word we're extending borrowing capacity by $250 million. Again, I would just very quickly repeat the basic concern I would have about this kind of legislation, which is that it's very short and neat and tidy but that in debate we really haven't had an outline by the minister of how he decided that $250 million was the appropriate amount by which borrowing should be increased.

I spent a lot of time reading various documents — those that were tabled at the last session, and yesterday's auditors' report — and I find it very difficult to relate these various sets of figures. I wonder if the minister perhaps at this stage of the game would give us a breakdown on the $250 million. I have been able to decipher from the Clarkson Gordon report that of the current authorized borrowing permitted of $650 million, $623 million have been utilized by the end of March, 1976, or that borrowing requirements for the remainder of the 1976 year were estimated at $60 million. So in round figures I suppose we need at least $40 million right now or within the near future. But one goes on to these other areas of railway extension where various figures have been presented, some of them not quite in relation to others. The time factor isn't clearly quoted either. Over what period of time is it anticipated that this $250 million borrowing will be required? We have heard from the documents and studies that have been tabled in the House before of inefficiency and band construction and a whole lot of other concerns to both the previous government and the government before that.

So it would take a very naive person to sit on this side of the House, in light of all the evidence that has been brought forward as to mismanagement and bad construction and inadequate estimates of capital expenditure and so on, and just simply stand here and say, well, yes, they need another $250 million. Again, as I said yesterday, this conflicts very much with the tremendously rigid attitude which the government has taken on borrowing for operating expenditures. There seems to be a double standard here that the amount that can be borrowed for capital expenditures can be very flexible and you don't have to give much detail, but as far as balancing the operating annual expenditures of the province, we get our microscope out and count it right down to the last dollar. So there's this double standard.

Over and beyond that, there is the question on section 1 of justification or explanation. I am sure somewhere there is justification, but what is the explanation as to why it's $250 million? Why not $200 million? Why not $500 million? The information that was brought before us in February, 1975, by general counsel to the railway states that the Dease Lake extension total expected costs are $232 million. There is a little asterisk opposite that which says "subject to variance as to results of litigation."

That raises the next question. We used the word "litigation" in the auditor's report yesterday. It states: "No provision has been made in the accounts for any liability which may arise out of this action." Now I am not expecting that the minister or anybody in this House would be able to predict what the litigation might cost if it goes badly for the railway in court, but surely when we are talking about increased borrowing of $250 million, we should at least know whether the government has included a ballpark figure to cover the possible amounts of money for which they might be found liable in civil action. It's clear that the auditor's report tabled in the House yesterday does not take that into account, but what about this $250 million; has the Minister of Finance made some allowance for litigation?

Perhaps he could tell us where the litigation is at. I don't mean to go into the whole issue of the court case, but when is it to be heard? Is the date set? Is there any possibility of settlement out of court? It all involves taxpayers' money in British Columbia, and we as the representatives of the taxpayers are entitled to ask these questions and get some answers.

The other point was raised in regard to land owned by Indian reserves. The previous speaker touched on a different aspect from the one that I would like to ask, although it is, of course, important that we also have some reassurance that there will be peace and stability in these areas so that construction can proceed. But also on this auditor's report, on the final page, it states regarding Indian land claims: "Any payments made in settlement of such claims would not be material and would be accounted for as part of the cost of the total road property." Once again, I have to ask: within this $250 million figure that we're debating in section 1, has there been any approximate amount which the government considers might be reasonably accurate for payment to the Indian bands? Or again is this just a matter that the government cannot define in even ballpark figures.

It keeps coming back, Mr. Chairman, to the very basic point that we're asked to increase borrowing by a very large sum of money. All of us in this House know there are five or six different respects in which money is needed for railway extension, litigation, interest debt, and so on. But they just ask us to say "okay, that's fine; that sounds like a nice round figure," without giving us some breakdown and some period of time over which the $250 million will be borrowed.

[ Page 1167 ]

That latter point is surely important, if only for the fact that if the battle against inflation is likely to be even partially successful, then interest rates will be coming down — we hope. So when we're talking in terms of $250 million worth of borrowing I think it's very important for us to have some idea how soon that might have to be borrowed. Again, I'm not expecting that we can get it on every $5 million amount, but this is a large sum of money.

We know that the past history of the railway, in terms of construction, has not been a very laudable one in terms of many of the mistakes that have been made, and although both sides of the House tonight have tried to blame each other, I'm really not too interested in who is to blame; I'm interested in what we can expect from this point onwards. We need some assurance that in future planning, at least, we will go into more detail on the capital amounts required and that some more intensive engineering studies will be done, so that you choose the right place to put the railway in the first place, and then once you choose the location of the railbed then at least you do the preliminary work efficiently, and then install the actual rail lines efficiently.

These are all questions that are perfectly reasonable when we're talking about such a substantial sum of money. If the minister gets up and tells me that the figures are very approximate and subject to revision with inflation and a lot of other things, I'll accept that, but at the present time, unless I've missed part of the debate, we haven't been given what I consider we're entitled to have as responsible opposition members, and that is some reasonable breakdown as to the aspects of the railway commitments that will spend the money, the time factor over which this $250 million will be borrowed, and particularly that fraction of the $250 million within this current fiscal year that we have entered — 1976-77.

HON. MR. WOLFE: Mr. Chairman, I do believe the member was out when I attempted to answer some of these questions earlier, but I think we should emphasize that last year there was an increase in the borrowing authority from $440 million to $650 million — an increase of $210 million. I'm sure it was intended at that time that the $650 million outside limit of the authority required would be ample to cover more than one year, but in fact it wasn't. Here we are back again having to ask for further authority, so it's important that we authorize an amount which is an outside amount, and which is ample to cover all the departments. It's not intended to borrow up to $900 million; nor would we want to fix a figure which was within a few dollars of what we would anticipate. So it would be hopeful that we might not have to come back another year to ask for a further extension. It is an outside figure and we should always keep this in mind.

I look back at the financial statement for the year end and I see where the long-term debt has increased by $124 million between the two years. I think I mentioned earlier that we borrowed during the year something like $188 million in new borrowings, all of which were internal borrowings.

There was no outside borrowing made within that and, beyond that, I can only once again answer, which you perhaps didn't hear earlier, that for the coming year the Dease Lake extension anticipated expenditure is something like $44 million and there are additional amounts, as I mentioned, covering upgrading the Fort Nelson line and other systems totalling some $51 million. All of these, I realize, don't add up to $250 million, but it is an outside figure and I think that detailed questions then on the lines and immediate progress of capital improvements and expenditures could be asked under the minister's estimates.

MR. D.D. STUPICH (Nanaimo): I just wanted to pursue this $250 million a bit more. I was looking at the same section in the Clarkson Gordon report as was the hon. member for Oak Bay (Mr. Wallace), and reading this it would appear as though the railroad is going to require financing to the extent of roughly $7 million a month. Now unless there's.... As we've established before — and I don't think that there's any quarrel about this, although the Premier may feel differently — Clarkson Gordon merely put together information that was supplied to him by the Minister of Finance from his own sources and from the Crown agencies. Presumably this information must have come from the railroad, and the railroad pointed out that it will need $60 million for the remainder of 1976, for nine months. So at that rate....

Interjection.

MR. STUPICH: Well, not their calendar year — for the remainder, for nine months. Well, okay then, but it does say what has happened in the first three months; for the remainder of this year, $60 million, so for nine months $60 million, which is about $7 million a month. Now at that rate, the $250 million, unless there is new information available that was not available at the time Clarkson Gordon were informed about BCR, unless there's something new available, it would appear as though we were authorizing borrowing that will take care of the railroad's needs for some three years.

Now I'd be surprised if the Minister of Finance wants to record even contingent liabilities that far ahead in view of what is happening with all the other Crown corporations, in view of the fact that we are told we will be establishing a new Crown corporation that will probably be doing borrowing as well. And

[ Page 1168 ]

while they are not direct government liabilities, certainly contingent liabilities will have some effects on the credit of the province as well. So I am surprised, if we are indeed trying to provide the borrowing authority that will carry us three years into the future. We'll pursue that then when we do get to the minister responsible.

Mr. Chairman, I wonder if this would be the appropriate time to raise once again this question of the money that was loaned or granted to B.C. Railway. The minister said this afternoon, when we were considering his estimates, that it was not the intention of the government to recover these grants, and he said that we were standing by the legal position. Mr. Chairman, I don't know whether the minister has had an opportunity to read the minutes of the directors' meetings to which I referred. I think perhaps he hasn't when he's talking about....

Interjection.

MR. STUPICH: I could read from both, but I think the minutes will give the picture as clearly as does the order-in-council, Mr. Chairman. The minister's inviting me to quote the order-in-council, but let's have a look at the minutes:

"The financial effects of the recent strike…." This is the one on January 9, 1975. "The financial effects of the recent strike were discussed in view of the fact that the company has exhausted its borrowing authority. It was duly moved, seconded and carried that the secretary" — that's the secretary of BCR — "ask the Minister of Finance of the province for a grant" — and that's what the order-in-council refers to — "of $15 million, such grant to be repaid to the province prior to March 31, 1975."

The other minutes refer to the same situation, continue to call it a grant, but continue to recognize the liability of the railroad to repay that money by a certain date, to repay it later on simply when the borrowing authority had been increased. So the railroad recognizes that this is money that was going to be repaid to the province, Mr. Chairman.

Now I'm not quarreling with the government giving a handout to BCR. Goodness knows it needs it.

Of course, one of the reasons it needs it is because the cost of the Dease Lake extension is not 3.3 per cent per year over what was estimated, not 50 per cent per year over, but it's 300 per cent of what was originally, incorrectly estimated, deliberately underestimated, 300 per cent of what it was deliberately underestimated to be. So certainly the BCR does need a handout. But the point I want to make, Mr. Chairman, is that if we do determine.... The government has determined that it will be a grant rather than a loan that will be recovered. It is this government that now is deciding that this money will be granted to BCR rather than something that was done by the previous administration, which intended from the beginning that this money would be recovered.

So the decision to make it a grant rather than a loan is a decision made by the present administration. As I say, Mr. Chairman, I'm not quarrelling with that, but for the minister to say that he's hanging his hat on a legal aspect of the order-in-council, in view of the reasons for the order-in-council being done that way, in view of the fact that the directors of BCR recognize why it was done that way and recognize their obligation to repay that money to the government, the government could still call on that $35 million to be repaid.

As I say, I don't quarrel with it being given — they need it — but let's recognize that it is this government, the government of today, that has made the decision to give that rather than the previous government that made that decision.

MR. WALLACE: Just a few words.

MR. CHABOT: Mr. Chairman, just a few words as noted by the member for Oak Bay (Mr. Wallace). A few corrections on statements made by the acting Leader of the Opposition (Mr. King) vis-à-vis the Kootenay and Elk Railway extension.

You know, the member for Revelstoke-Slocan hangs his hat on the basis of the Kootenay and Elk Railway extension line to American railways on the basis that the former government's intention was to move coal over an American railway to seaboard, which is erroneous in fact, which the member full recognizes is erroneous. I am sure if the member will allow his mind to wander back to the necessity of the times, of the government's necessity at that time, to make the Canadian railway involved responsible in its presentation of a freight transportation rate, the movement of coal from the Sparwood area to Roberts Bank, he must realize that the government was using this particular application to make the enterprise of coal development in the East Kootenay a viable enterprise and that without this application never would we have had a responsible, objective and reasonable transportation rate for movement of coal over CP Rail from Fernie-Sparwood to Roberts Bank. That is the prime objective.

I am sure that if the member wants to be responsible he will recognize that fact, that it was necessary for the provincial government of the day to make this application to the board of transport in Ottawa for the purpose of bringing the CP Rail to the reality of the rate necessary to make it possible to develop the coal fields of the East Kootenay.

He fails to realize that — I'm not going to call it a ploy, but the objective — the objective of the

[ Page 1169 ]

government of the day was not only to move coal but was to create jobs in the East Kootenay in the Fernie-Sparwood area for a very seriously depressed area of British Columbia, an area in which when I first campaigned, on the federal trail incidentally, many years ago when people were working only three days a week....

Interjection.

MR. CHABOT: Three days a week, that's all they were working. It was a seriously depressed area. It was the first area designated by the national government as depressed for incentives because of the situation in the coal fields of the Fernie area. The government of British Columbia at that particular time recognized the need to have responsible freight rates to make jobs within the East Kootenay — also, transportation jobs for the railway that was going to transport that coal from the East Kootenay to the Roberts Bank as well. It just so happened that it was the CPR that was the prime carrier in this particular instance, and which the acting Leader of the Opposition happens to be an employee of. So am I, but I am not holding any brief for the CPR. I am just speaking as the member for Columbia River.

There are no particular jobs involved in the movement of coal through my constituency for my people but I felt.... I have always stated without reservations whenever I have spoken in this Legislature or publicly of the necessity of movement of this coal over a Canadian carrier to ensure jobs for British Columbians. I have never deviated from that. The acting Leader of the Opposition can't really hang his hat on any particular statement ever made by any minister of the former government suggesting that coal was going to be moved over an American railway jeopardizing jobs in the transportation field in British Columbia.

It was always the lever on the part of the former government to ensure that jobs were created in the coal fields and jobs would be available for moving the coal on Canadian railways. The government has never deviated from that position at any time, all the years that it attempted to develop this coal market in Japan and tried to establish a reasonable rate so that the coal market would develop in Japan. That's the prime objective, the prime reason, in which the former government attempted to establish an alternate route — the Kootenay and Elk — to the Burlington Northern to the west coast.

I think that the member for Revelstoke-Slocan, Mr. Chairman, in speaking about Bill 5(1) speaking about railways and the financing of railways, has to realize that the government has never deviated from its position of the creation of jobs in British Columbia.

He talked about a particular demonstration that was sponsored in the community of Revelstoke when he was on his feet, Mr. Chairman, and suggested that certain things had taken place.

Now I know there was a demonstration when the cabinet of the day appeared in the community of Revelstoke, primarily a railroad community. I want to suggest to you, Mr. Chairman, that this particular demonstration which took place was sponsored by one particular union, the UTU, of which the acting Leader of the Opposition happens to be a member. It was spearheaded by one Jim Pecora, a fellow hoghead of the acting Leader of the Opposition, and a brother, incidentally, of the candidate who ran against me in the last election, one Orlando Horatious Pecora who ran for the NDP against me last time.

So there appear to be some ulterior motives about Bill 5(1) vis-à-vis the statements made by the Leader of the Opposition and the political position taken by the UTU and Jim Pecora, a locomotive engineer from the community of Revelstoke, a brother of the candidate which I successfully and without any doubt defeated in the last campaign in the constituency of Columbia River.

Now I want to make it abundantly clear, Mr. Chairman, that the member for Revelstoke-Slocan won two successful elections primarily on the issue of the movement of coal over Canadian railways, and he won two successful elections on very erroneous statements and deviations from the facts.

I had the opportunity of speaking in that community of Revelstoke during the campaign of 1972. There was an attendance of approximately 600 people, of which I would venture to guess 250 were carrying New Democratic Party badges. At that particular....

MR. CHAIRMAN: Hon. Member, may I interrupt you?

MR. CHABOT: Yes, Mr. Chairman, you may interrupt me.

MR. CHAIRMAN: I've allowed you quite a bit of leeway in correcting statements which you thought were erroneous. However, I cannot see how the remarks upon which you are now embarking have anything to do with section 1 or with erroneous statements.

MR. CHABOT: I heartily concur with your interpretation. Nevertheless, you allowed a certain leeway to the Leader of the Opposition, the acting Leader of the Opposition (Mr. King), for which I have a responsibility, coming from the same part of the province from which he comes. I have a responsibility to correct the erroneous statements which he made, and they have to do with the Kootenay and Elk Railway.

[ Page 1170 ]

As I stated a little earlier, Mr. Chairman — in all fairness to a backbencher who doesn't have too many opportunities to speak and must take advantage, when he is on his feet, to state the position as it really is, and that's what I'm attempting to do tonight — I'm suggesting to you that when I spoke in Revelstoke we had 250 people, approximately, in that crowd of 600 people who had NDP badges.

I told them at that particular time the absolute position of the former government regarding the movement of coal from the East Kootenays to Roberts Bank, or to Japan if you want. At no time did I have one of those socialist badge-wearers challenge any of my statements.

I told them that the government of British Columbia of the day was interested in jobs in the coal extraction and in the jobs in transportation as well, that at no time were we concerned with the movement of coal over an American railway. I was never challenged by any of those socialist badge-wearers. So I have to come to the conclusion that under those circumstances they accepted the word of the member for Columbia River.

Mr. Chairman, why I stand in my place tonight is to correct the erroneous statements made by the acting Leader of the Opposition, the member for Revelstoke-Slocan, who has won two successful elections on erroneous statements vis-à-vis the position of the former government regarding the movement of coal to Japan. I never want to see any member of this House win any election again on erroneous statements. He must win elections on his own qualifications, on his own rights and on his party platform as well. Never again should that happen in British Columbia.

I listened to the radio programmes from Big R, from Salmon Arm and Revelstoke, in which the member successfully campaigned on this, again, erroneous issue. Never again, Mr. Chairman, should this happen in British Columbia, that a member should win an election on a non-issue.

MR. CHAIRMAN: Order, please. Your point has been well made, Mr. Member. Now would you refrain from making any remarks, other than on section 1?

MR. CHABOT: Mr. Chairman, I think my point has been well made. I have a responsibility in view of the fact that the member for Revelstoke-Slocan has been elected twice on the issue of the erroneous statements of the Kootenay and Elk Railway. I hope that I've corrected these erroneous statements, having gone to Revelstoke to attempt to correct them, been accepted by the people of Revelstoke but never accepted by the member for Revelstoke-Slocan. I hope, once and for all, that issue will be put to bed.

MR. KING: On section 1, I'm concerned, Mr. Chairman, with a bill that just may, if it's granted without full explanation to this House, be used for the purpose of perhaps generating or subsidizing or initiating other railways in this province.

Interjection.

MR. KING: I'm just wondering about the need for these funds which the BCR apparently needs, without any great explanation as to what purposes these funds are to be used for. I'm concerned that perhaps there's a motivation here to reactivate construction of the Kootenay and Elk Railway.

Interjection.

MR. KING: I want to assure you, Mr. Chairman, that I am not the only one from my area who's concerned about construction of the Kootenay and Elk Railway. I want to assure you that the member for Columbia River (Mr. Chabot) has been concerned in the past.

In this House, on March 25, 1971, a headline in The Vancouver Sun of that date carried the headline "Export of Jobs Charged by Socred Backbencher:

Victoria — a Socred backbencher called Wednesday for a clear statement of the government's position on the Kootenay and Elk Railway, which he said amounts to an export of jobs to the U.S.A. Jim Chabot, Columbia River, said he is not really sure whether the provincial government is in favour of the building of the railway, which would run from the East Kootenay coal fields to the U.S. border, to give an alternate route for exports. A link between the Kootenay and Elk and the Burlington Northern has been put forward as a route to Roberts Bank from where shipments of coal are being sent to Japan. Chabot said coal should not be transported by an alternative means until it has been proved Canadian rail lines are being used to capacity. 'If you allow coal over American railroads, it amounts to export of jobs, and this I do not support,' he added.

"Chabot got no answer from Mines and Commercial Transport minister Frank Richter, nor from Premier W.A.C. Bennett, who spoke later in the debate."

He got no answer from them.

"Allan Williams, Liberal, West Vancouver–Howe Sound, told him the provincial government has hired the best lawyer in Ottawa they can to make sure coal goes across the border. This was a reference to the provincial government's intervention in a case in which permission is sought to build the Kootenay and Elk railway. A lawyer for the provincial government, in supporting the

[ Page 1171 ]

application, argued it came under the provincial jurisdiction because the tracks would end a quarter-inch from the border."

A quarter-inch from the border. That's what that member said then. Now he stands up here tonight and says: "Well, it was just a ploy to put the squeeze on CP Rail." That's what he said.

Interjection.

MR. KING: I want to tell you about CP Rail's submission — and I have it here — to the supreme court hearing on this case.

MR. CHAIRMAN: Order, please, Mr. Member. This must be related to section 1 of Bill 5...

MR. KING: It is, Mr. Chairman.

MR. CHAIRMAN: …or else it is clearly out of order and we cannot permit it.

MR. KING: Mr. Chairman, I'm still concerned about that railway. It was active until killed by our government in 1972. We killed that railway by denying Kootenay and Elk permission to cross Crown land until their charter expired. That charter can be reactivated by order-in-council from this government. It was done first in 1966, and it can be done again. I'm concerned about it, particularly when I hear the member for Columbia River get up and attempt to justify it. I want some assurance that funds voted for BCR tonight are in no way related to some subversive attempt to reactivate a foreign line that would export jobs and coal from this province.

Mr. Chairman, at the time this case was being argued CP Rail was already in contract with the Japanese interests for the purchase of 45 million long tons of coal from Kaiser Resources, from 1970 to 1985; with Kaiser Resources again for another six million long tons of coal from 1970 to 1973; and with Fording River Coal for 45 million long tons. They were already hard contracts. That member is absolutely wrong when he gets up and suggests that this was a bargaining ploy to develop an acceptable freight rate. The contracts were already signed and underway.

MR. CHAIRMAN: Order, please, Mr. Member. I do not see how this relates to section 1. This is the British Columbia Railway Company Construction Loan Amendment Act, 1976.

MR. KING: Mr. Chairman, the member has made statements that are completely untrue and improper in this regard. It's a matter of record with the Supreme Court of Canada. and it's a matter of record with CP Rail on the submissions they made to the supreme court that contracts were already in place, so the member's submission is patently false, Mr. Chairman.

MR. WALLACE: Why don't you railroaders go outside and settle this in the hall?

MR. KING: I would point out that when the contracts were signed, the federal minister of....

MR. CHAIRMAN: Shall section 1 pass?

MR. KING: Mr. Chairman, I'm on my feet. Mr. Chairman, I point out that the federal Minister of Transport and Communications at the time these contracts were signed, which was prior to the supreme court hearing, as to whether or not the railway should be chartered, acknowledged the increased economic activity that would accrue to the southeastern area of the province of British Columbia as a result of the new coal contracts, and he stipulated precisely that the transport of all of this coal should be undertaken by an all-Canadian route by Canadian workers and that was a condition under which the federal government had assisted the CPR in developing the hard contracts with the Japanese steel interests for the shipment of Kaiser coal via a Canadian route. So what the member for Columbia River said is a bunch of absolute nonsense and completely at variance with the records, and anyone who wants to check into it can certainly ascertain that fact in short order.

Mr. Chairman, I don't want to belabour this point too long, but I would point out that there is a.... Oh, I'm not going to bother with that. I think the people of Revelstoke and the people of Columbia River know what happened and what was said when that member campaigned in the area. I have the headlines here. I'm not going to belabour the House or stretch the rules or your generosity, Mr. Chairman, in rehashing that. But I don't want it intimated that the government of that day was simply using their granting of a charter to a foreign rail line as a ploy to bargain effectively with CP Rail. That's patently untrue.

Their contracts for freight rates were already intact, had been for some time, and that simply isn't borne out by the facts, nor is it borne out or would it justify the employment of legal counsel by the Attorney-General's department to actively argue the case for the construction of a foreign rail link to export our coal via a foreign line route, and that is a matter of court record also. I have the submissions here, Mr. Chairman, and if the member would like, I am quite prepared to file copies of them with the House for his edification.

Interjection.

[ Page 1172 ]

MR. CHAIRMAN: Is this on section 1?

MR. CHABOT: No, on a point of order.

MR. CHAIRMAN: Because we have allowed cross-statements and I think that matter is closed. Is this on section 1?

MR. CHABOT: What matter is closed, Mr. Chairman?

MR. CHAIRMAN: We have allowed statements and retractions and explanations on both sides, and I believe that we have covered that area. Is this on section 1?

MR. CHABOT: Yes. You have allowed the Leader of the Opposition (Mr. King) or the acting Leader of the Opposition to cover it twice and myself once. But that's not the point, Mr. Chairman. I rise on a point of order. My point of order is: are you going to allow the acting Leader of the Opposition to use the words "patently false, patently untrue"?

MR. CHAIRMAN: These words, are they found to be offensive to the member for Columbia River? You are requesting that they be withdrawn.

MR. CHABOT: I find them to be offensive.

MR. CHAIRMAN: You are requesting them to be withdrawn?

MR. CHABOT: I find them to be offensive and I leave that to your discretion.

MR. CHAIRMAN: Would the hon. member, the Leader of the Opposition (Mr. King), withdraw the words "patently…."

MR. KING: A qualification, Mr. Chairman, I want to assure the Chair that I didn't direct any accusation at the member. I simply asserted it was my intention to say that those facts were incorrect and untrue and I believe that to be the case. But I certainly cast no a reflection on the member for Columbia River.

Section 1 approved.

Title approved.

HON. MR. WOLFE: Mr. Chairman, I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 5, British Columbia Railway Company Construction Loan Amendment Act, 1976, reported complete without amendment, read a third time and passed.

HON. MRS. McCARTHY: Mr. Speaker, by leave, Committee of Supply.

Leave granted.

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

ESTIMATES: DEPARTMENT OF FINANCE
(continued)

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

MR. STUPICH: Mr. Chairman, I have just a few comments on some of the remarks by the Minister of Finance (Hon. Mr. Wolfe) earlier today when we were considering this vote.

One of them was a denial on his part that the government took several steps to maximize the 1975-76 deficit in order to improve the picture for 1976-77. I was surprised, Mr. Chairman, to have him deny this. I thought it was pretty well accepted by now that in paying out to the universities $7.5 million several months earlier than the universities had any reason to expect it and several months ahead of the time when they intended to spend any of this money, and that in paying out a number of municipalities — four, I believe — restructured grants that it had previously agreed with those municipalities would be paid out over a period of three years....

AN HON. MEMBER: Not so! Incorrect!

MR. STUPICH: Well, Mr. Chairman, as far as the city of Nanaimo is concerned, certainly the agreement there was that these payments would be paid over a period of three years. Certainly the agreement with the city of Prince George was that these payments would be paid out over a period of three years.

AN HON. MEMBER: Wait till my turn comes.

MR. STUPICH: Okay, I'll wait till your turn comes, but I was a party to those negotiations and certainly that was the understanding with the Minister of Municipal Affairs, and the member for Nanaimo at the time and the member for Prince George were fully aware that it was the government's intention to pay this money out over a period of three years. That advance payment, paid out ahead of

[ Page 1173 ]

time, contributed to the deficit in the previous period. We don't know just how many other payments might have been paid out ahead of regularly scheduled time.

There was information earlier in a debate that some farm income insurance money was paid out again in the 1975 fiscal period that was scheduled to be paid out in the 1976-77 period, and again the suggestion was that it was paid out in that period to maximize the deficit in 1975-76 and to improve the position for 1976-77. I am surprised that the Minister of Finance is still saying that there was no such attempt to do that. I think there's all kinds of evidence to the effect that there was a deliberate government attempt to maximize the 1975-76 deficit.

In talking about expenditures for this period, the Minister of Finance said that it will be the comptroller who makes the decision as to whether expenditures during the month of April should properly be charged against 1975-76 or 1976-77, and that there is some latitude there — but only some.

Interjection.

MR. STUPICH: Mr. Chairman, the minister expresses some surprise. I could read, to refresh his memory, from the Clarkson Gordon report. We are the ones who like to say the Clarkson Gordon report is fine. I don't think the minister really wants to question it, but reading from page 3 in my copy: "Similarly, if an expenditure is made on March 31, the fiscal year end, it will enter into the calculation of the surplus or deficit. If it is made a day later, it will not. Therefore the timing of expenditures or revenue can have a significant effect on the final result."

They do go on to say: "Finally, it is important to note that revenue and expenditures enter into calculation of an annual surplus or deficit only to the general accounts of the province and do not fully consolidate any special.... I'm sorry, that's not the.... It does go on to say that there is some latitude in deciding whether certain items paid out in April should properly be charged against March. That's true.

But when it comes to government decisions...and the minister did say, with respect to certain grants, that the government did make a decision that these would be paid out prior to March 31, and there the decision was not the comptroller-general's but the government's decision. The Minister of Finance was at least the spokesman for the government in deciding that $175 million or more, since, would be granted to ICBC. He did say that the grant to B.C. Hydro was paid out before March 31. He did say the decision with respect to B.C. Rail was made. He didn't comment on the transit bureau grant of $26 million. He missed that out. My question at this moment is whether or not the grant to the transit bureau was indeed paid out by March 31. That is one question I would like the Minister....

Interjection.

MR. STUPICH: It was paid out. That again then was a deliberate decision, not of the comptroller-general but of the government, for the government did have considerable latitude in deciding just how large that deficit should be.

With respect to B.C. Harbours Board, I asked the question....

HON. MR. WOLFE: You agree with the payment of debts, don't you?

MR, STUPICH: I'm not quarrelling about any of these things, Mr. Chairman, through you, I'm only quarrelling with the minister's statement to the effect that it was the comptroller-general who decided what payments are going to be charged against which period. That's my quarrel with the minister right now — not whether or not these things should have been done.

I don't say that any of these things should not have been done. I have consistently argued, Mr. Chairman, that the government was in a position to make the choice, and the government made a choice. It's my concern that they made their choice purely for partisan political advantage, rather than for economic reasons. Nevertheless, they had the right to make that choice. They established that right by getting more votes than we did on December 11. So be it.

The other question I wanted to ask — which I did ask earlier and I think he didn't answer — is this one: whether or not a decision has been made, and the legislation before the House with respect to B.C. Harbours Board makes me think that the decision has been made, to recover that money from B.C. Harbours Board. But to the best of my knowledge the minister did not answer that question as to whether a decision has been made to recover the $25 million that was advanced by a previous Social Credit administration to B.C. Harbours Board.

The legislation before us provides for a government guarantee for any money that B.C. Harbours Board might borrow, which leads me to believe that B.C. Harbours Board is going to borrow money for some purpose or other. I'm wondering whether or not one of those purposes — if there is more than one purpose — would be so that the B.C. Harbours Board can replay its advances to the government. So I would appreciate it if the minister could answer that question.

I did discuss it earlier, and the minister said he didn't have the answers with respect to specific

[ Page 1174 ]

figures on resource revenue, and I'm not really asking for that right now. I do want to renew my plea, though, that the minister direct more of his attention towards getting more of our government revenue, as time goes on, from development of resources.

I'd like to quote briefly from a news information service from the province of Saskatchewan where the Premier of the province, talking about the possibility of raising money from the development of resources, points out that if you are willing to tax resources, you can have good services, a balanced budget and fair taxation. If you are not willing to tax resources, you have to have a huge deficit — which he has chosen not to do, and this government has chosen not to do — or very heavy taxes on ordinary people, or perhaps both.

Now this government has chosen to go the route of having heavier taxes on ordinary people, whereas they might have chosen to go the route of getting more money from our resources. I did point out several times that we should have looked more at coal; we should be concerned at what is going to happen in mining; and we should be trying to get more money from the sale of our natural gas out of this province.

I think the province of Saskatchewan are getting, roughly, 15 per cent of their total revenue from exploitation of resources — approximately the same percentage as we are getting in the province of British Columbia, where we are so rich in resources compared to the province of Saskatchewan. Certainly they are moving in the direction in which I would like to see us going here in British Columbia.

We were moving in that direction. Under our administration we moved significantly in that direction. The mineral royalties tax was brand new. I pointed out earlier how much more we were getting from the exploitation of coal resources, and we expected that to increase.

The development of natural gas, the sale of natural gas, which was bringing to the province something like $5 million a year when we assumed office, and that in our last year was going to bring in over $200 million — we moved significantly in that direction, but we hadn't reached the end at all, Mr. Chairman. We were simply moving, and there's a long way to go yet. B.C. should be getting a much higher proportion of its total revenue from development of its natural resources.

I'd like to come back for a moment to this order-in-council that did provide for the borrowing of $250 million. The Minister of Finance said that this did not necessarily mean that that was all that was required to cover the bank overdraft at March 31, because he said there would be outstanding cheques. But, Mr. Chairman, we have already established that the significant payments in here, apart from ordinary government expenditures, the extra payments that were not a part of ordinary government expenditures, were all made by March 31, with the exception of the ICBC one, which is included in this, So the amount could well be established by April 9 as much closer than $150 million. So I still feel that the Minister of Finance has in no way at all convinced us that $250 million was inadequate to cover the total deficit position as at March 31, 1976, and we'll have to believe that until he's able to come up with something better in the way of explanation.

Mr. Chairman, I'd like to move on to something that I think no one has touched on to this point in time, and that is a report that was prepared by the credit union movement — under their auspices, at least — with respect to the proposed B.C. Savings....

HON. MR. WOLFE: It was covered earlier.

MR. STUPICH: It was covered earlier? Then I missed it.

HON. MR. WOLFE: The member for Oak Bay (Mr. Wallace) raised the question.

MR. CHAIRMAN: Proceed, please.

MR. STUPICH: I don't want to proceed if I'm really rehashing old ground.

HON. MR. WOLFE: Well, he did raise the question.

MR. STUPICH: Well, I'm not sure. For example, was the question asked: is the report going to be made public? Is it going to be tabled in the House? It will be?

HON. MR. WOLFE: The question was raised and I gave an answer to the question.

MR. STUPICH: You don't want to tell me now what the answer was?

Interjection.

MR. CHAIRMAN: Hon. member, the only way you're going to get an answer is if you are seated.

MR. STUPICH: I'll be guided by you then, Mr. Chairman. I am told that these questions were asked; I am told that the answers were given. Now I didn't hear the answers. I think it's a very simple question. The question is: will the report tabled in the House be made available? Now I think that while I may be repeating it, it's not really too much to ask that that question be answered again. I'll sit and wait and see.

HON. MR. WOLFE: Mr. Chairman, I will repeat

[ Page 1175 ]

the answer I gave earlier. The task force report is tremendously large, about two feet deep. As you are aware personally, we have been debating the authenticity or the authorization for the payment of a substantial bill which has been submitted with the report. I won't go over those matters again. But we are currently negotiating with the credit union people in the meantime, in the interim. I have not read the report. As recently as last week I read one section of it. I cannot indicate at this stage whether, in fact, we will be prepared to file the report because I don't know what's contained within the report.

MR. GIBSON: Mr. Chairman, I will start out by once again reminding the minister that he has not answered my question as to who authorized the issuance of the $181 million NSF cheque. He has not told us the approximate cash position of the Province of British Columbia today and he has not really given a satisfactory answer on whether or not we will have a Clarkson Gordon type report next year.

I'll move on to another phase of his department right now. I want to make some comment, Mr. Chairman, about what I would call the goofy Social Credit attitude on borrowing. The member for Prince Rupert (Mr. Lea) was asking earlier on today about the favourite economist of the minister. This was apparently an economist who was going to give this Legislature a report. I would be very interested when the minister tells us the name of the book to suggest that the sales tax isn't regressive. I think probably the favourite economist of the....

HON. MR. WOLFE: Read us something that tells us it is, will you?

MR. GIBSON: That it is regressive? Oh, my gosh! If you want that, Mr. Minister.... I'll tell you what. I took that file back to my office.

HON. MR. WOLFE: You don't have it with you, eh?

MR. GIBSON: I'll bring it tomorrow, or if there is time before 11 o'clock I'll bring it back.

MR. CHAIRMAN: Order, please! Would the hon. member please address the Chair?

Interjection.

MR. GIBSON: I suggest, Mr. Chairman, the favourite economist of that minister must be Major Douglas. I think he's the last real Social Crediter in this province.

Interjections.

MR. GIBSON: What is the difference — this is the question I want to ask the minister put in its simplest terms — what is the difference, Mr. Minister, between the British Columbia Railway building a bridge and amortizing that bridge over, say, 20 years and borrowing to build that bridge, and the Department of Highways building a bridge and amortizing that bridge over 20 years and borrowing to build that bridge? Mr. Chairman, the government has a definite myopic dogmatic stand that they will not borrow for capital projects. I'd just like to make that simple comparison.

Would the minister stand up and tell us what the difference is between those two bridges except the fact that one was built by the railway which he controls the finances of and which he is going to borrow to build and just passed that bill right now, and the other bridge is built for a public highway by the Department of Highways which is going to last the same amount of time, but which is going to be paid for by gasoline tax instead of railway fees? In every way they are the same thing except that one happens to be within a different kind of public account than the other. Would the minister stand up and tell us why his government approves of debt in Crown corporations and disapproves of debt in capital public works?

HON. MR. WOLFE: Mr. Chairman, I think the real nature of this question is: how much borrowing do you want? Do you want to see us borrow against everything? Are you advocating more borrowing, Mr. Member? I believe that's what you're saying.

MR. CHAIRMAN: Please address the Chair.

HON. MR. WOLFE: If we borrow against railways, Mr. Chairman, he says we should borrow against everything else and continually saddle this province and its people with load upon load of debt. This is the thing we really have to fear the most. Look around the world, my friend, through you, Mr. Chairman, and just see the difficulties other areas are accomplishing. So what you seem to be saying is: if you borrow against one thing, why not borrow against everything? More borrowing, more borrowing.

MR. LOEWEN: Federal Liberal, federal Liberal.

Interjections.

MR. GIBSON: Mr. Chairman, obviously I wasn't saying borrow against everything.

MR. CHAIRMAN: Order, please!

Interjections.

[ Page 1176 ]

MR. GIBSON: What I was saying is, what's the difference between the bridge that the minister wants to borrow against for the railway that we just passed a bill for and the bridge that the Minister of Highways (Hon. Mr. Fraser) might build that is in the public accounts? What is the difference?

HON. MR. MAIR: That's Trudeau's point of view.

MR. GIBSON: What is the difference, Mr. Minister? The minister doesn't know. He kind of shrugs his shoulders.

Interjections.

Mr. GIBSON: He dunno. There is no difference. It is this absolute refusal to go into any kind of debt on capital account, even for one year, which has led us to this 2 per cent sales tax increase. That's what it leads you to.

Interjections.

MR. GIBSON: Don't you realize, Mr. Minister, through you, Mr. Chairman, that these items of capital infrastructure that we have to provide in British Columbia for our 3 per cent per year growth on the long-term trend line aren't all capital structure that are being put in place today for people who are going to use them over the next generation? Yet you want to make all of the current taxpayers pay for them today, so you're subsidizing those future generations. Now will you tell me the logic in that?

If you do see some logic in that, why are you borrowing to complete the Columbia River treaty projects? Why don't you just raise taxes and pay for all of them out of this year's revenue? It makes just about as much sense.

AN HON. MEMBER: What do you suggest?

MR. GIBSON: That is the very clear issue that I'm putting to you. What's the difference between that railway bridge and that highway bridge? It all comes down to that. If you can't explain that, I say it's funny money and that's all it is.

HON. MR. WOLFE: Mr. Chairman, I don't know if that's a question or not.

MR. GIBSON: Of course it is.

HON. MR. WOLFE: It is?

MR. GIBSON: Explain the difference between those two....

HON. MR. WOLFE: Well, there is no difference between borrowing against one thing or another, but the member is suggesting, it seems to me, "why can't we borrow for one thing as well as for another, and have more and more borrowing," which is the philosophy of the federal government and why their debt cost is over 20 per cent of the tax dollar. And in this province it's just a fraction of 1 per cent. That is the reason why the federal government, out of every tax dollar, pays over 20 per cent, my friend.

AN HON. MEMBER: Terrible!

MR. GIBSON: Mr. Chairman, if that minister wants to make comparisons, I want him to explain something else to me. Will he explain to me why the per capita income of British Columbians over the period of 1964 to 1974, according to a Financial Post survey during years where seven out of 10 were under a Social Credit administration, why that per capita British Columbia economic growth was 10th out of 10 among all of the provinces of Canada? When he has satisfactorily explained that, he can then go about making comparisons with other jurisdictions in this country.

SOME HON. MEMBERS: Produce the report.

HON. MR. WOLFE: I would just ask the member to produce the report he's referring to.

AN HON. MEMBER: Table the document.

MR. GIBSON: I certainly will, as soon as I can dig it up.

AN HON. MEMBER: It's a hypothetical argument.

MR. GIBSON: It's absolutely not a hypothetical argument!

MR. CHAIRMAN: Order, please.

MR. GIBSON: Obviously you don't read the Financial Post. What kind of minister is that?

MR. CHAIRMAN: Order, please! The member for Fort George has the floor.

AN HON. MEMBER: Unsubstantiated statements.

MR. LLOYD: There are just a couple of points I'd like to clear up. The member for Nanaimo (Mr. Stupich) stated the amalgamation grants were prepaid, that they were going to be paid over a period of time. As a former member of the council of Prince George and a present member of the council of Prince George, I can tell you that it certainly wasn't the case in Prince George. The Municipal Affairs minister of

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that time, Mr. Lorimer, promised us at the signing of the restructure agreement that the grant would be payable at that time. Since our government chose to honour the original commitment and pay that restructure grant and get us on a current basis, if they really wanted to prepay expenses they could have also honoured some of the blank cheques that the past government issued for recreational grants.

They never told the communities there was a top end on recreational grants: "Go ahead boys. Everybody build all the projects you want. There's no top end on this." That is until such time as all the projects start coming in. Our city of Prince George is still waiting for commitments made by the previous government on recreational grants. If we'd really wanted to prepay, we could have prepaid those too, if you really want to know the truth.

There's one other thing I'd like to straighten out while I'm on my feet, and it's the member for Vancouver South stipulating that I'm wasting the time of this House and that he should maybe decide when I get up and speak. Mr. Chairman, I want to assure him, and the rest of the opposition, that my constituents didn't send me down here for the opposition to tell me when I can speak.

SOME HON. MEMBERS: Hear, hear!

MR. LLOYD: Certainly if we're talking of time wasting and filibustering, I think the member for Vancouver South is a perfect example of wasted time. He's wasted more of the House's time on filibustering and points of order than any of the opposition over there.

Interjections.

MR. LLOYD: I'd also like to comment on the member for North Vancouver–Capilano's (Mr. Gibson's) statement about having another Clarkson Gordon report every year. I'm sure his father, who served in this Legislature for some time, would be quite proud of his son if he could hear him in the House today saying that quarterly statements don't tell him how the province is running. I'm sure he's be very proud of that member over there if he can't tell from a quarterly statement how the province is running.

MR. GIBSON: I want to know how the quarter's running, not how it ends.

Interjections.

MR. C.S. ROGERS (Vancouver South): Mr. Chairman, I would like to ask the member for Fort George which member for Vancouver South he's referring to, whether it's myself as the first member or my esteemed colleague as the second member (Mr. Strongman). Neither of us have had very much to say in this debate. I was going to get involved in the discussion of railway tie weights or something else that was totally irrelevant, as the rest of the discussion has been. Perhaps we could ask the member for Fort George to allow us to know which one of the members for Vancouver South he's referring to. (Laughter.)

MR. LLOYD: Mr. Chairman, I will certainly be pleased to straighten out that statement. I wouldn't want anybody from Vancouver South being under the stigma of what this member, the first member for Vancouver Centre (Mr. Lauk), has been perpetrating on this House. I should be pleased to correct that statement.

AN HON. MEMBER: Hear, hear!

MR. NICOLSON: Mr. Chairman, I'd like to discuss a couple of items of concern — first of all a submission by the Propane Gas Association of Canada. The submission was made, I believe, to cabinet and to the minister, and it's of a great deal of significance for a person like myself, who represents a rural riding where not all of the people can avail themselves of piped-in natural gas, where people that live in rural areas and want to use gas as a method of heating or fuel have to rely upon liquefied gas, propane and butane.

There is a gross injustice alleged in the brief, and I might say that had we continued as government we might have been in a position to do something about it because when we became government we didn't have agencies such as the B.C. Energy Commission to whom we could refer such matters for studying.

Interjections.

MR. CHAIRMAN: Order, please.

MR. NICOLSON: Presently liquid petroleum gas, liquified propane or butane...

Interjections.

MR. CHAIRMAN: Order, please. The member for Nelson-Creston has the floor. Proceed.

MR. NICOLSON: ...is subject to a tax of 7 per cent, whereas the tax levied on fuel oil for the same use is 0.5 cents per gallon. I raise this because it is two completely different types of taxation and, of course, it comes up at this point. Based on a straight gallon charge, the tax on propane amounts presently to about 3.22 cents a gallon and the tax on fuel oil is

[ Page 1178 ]

0.5 cent per gallon — a tremendous difference, a difference of 2.72 cents per gallon.

But it's even more significant when it's compared on a BTU basis, and $42.39 more tax is actually paid for the same amount of heat for an average user, because fuel oil does have more BTUs than a gallon of propane.

So which tax is right? I ask the minister which tax does he think is correct. Is the tax on fuel oil correct at 0.5 cent a gallon, and should the tax on propane then be one-third of a cent per gallon, or is the tax on propane correct at 7 per cent, and should the tax on fuel oil also be 7 per cent? Is the minister giving any consideration to this?

The report also said that it's their understanding that the B.C. Energy Commission supports the contention that there is a tax inequality and that they would recommend the bringing of the two fuels, propane and fuel oil, into a comparative tax structure, either increasing one or lowering the other. The amount that might be considered here is considerable. For instance, with the fuel oil it could be a matter, I believe, of about $4.5 million in revenue, but is the minister giving any consideration...? Has he requested any information from the B.C. Energy Commission? Have they made any recommendations?

HON. MR. WOLFE: Mr. Chairman, in answer to the member, we have very recently received probably the submission he's referring to, and we definitely are giving it consideration. I'm getting some information on this right now.

MR. STUPICH: Mr. Chairman, I would like to have had an opportunity to look at the views before I pursue this business of the B.C. savings and trust report, but I do think we have to have a little bit more on it than we've had from the minister so far, and from what I've been able to find out from others there was not very much discussion of this up to this point.

I understand that the report was made available to the Minister of Finance as early as January 28. Now that's three months ago today. Now the minister tells us he has had time in this three months to read only one small part of a report that is two feet thick. I wonder, Mr. Chairman, whether or not he has referred this report to his own research people.

I know he hasn't had very many, but it would seem to me that, from what we read of the report in the newspaper it would make very interesting reading for some of the people in his own Finance department. I think he would be doing a disservice to them not to at least refer it to them for some reading, some study, and some recommendation — at least to recommend to him which volumes of the report he should be reading.

I am concerned that he tells us that a decision to make the report public has not yet been made and will not be made until — at least that's the way I understand it — he has a better idea what is in this two-foot-thick report. At his present rate of progress it could be a long time before a decision is ever made as to whether this report will be made public. I think that's unfortunate.

Again, the little bit that we read about it in the newspaper makes it sound as though it could be a very interesting report, not only for the members in the House but for the whole community — the business community, the whole community of the province of British Columbia.

The newspaper reports would indicate that other governments are interested in seeing this report. I wonder whether the Commonwealth of Massachusetts has made an official request of the Minister of Finance, or of anyone else in government, that a copy of the report be made available to them. If such a request has been received, has the minister responded in any way, or is he still considering what response he will make?

A couple of questions then, Mr. Chairman. I would hope for some assurance.... I can recall Carruthers report, for example, that for some 20 years remained hidden and only saw the light of day in the garage of an ex-member of the cabinet of the previous Social Credit administration after an election unseated that administration. I'm afraid that it may be that this report, too, will be buried until after an election results in a change of administration. I hope it wouldn't take 20 years to do that, Mr. Chairman. I'm sure you will agree with me on that. But a report such as this should not be buried for 20 years. We should have a change of administration much sooner if that is what is required in order to have this report see the light of day.

So I would like something more in the way of an assurance from the minister that it is not going to take 20 years to review this two-foot-thick report. I would like to know whether or not he has referred it to any of his own staff, or given them an opportunity to read it. I'd like to know whether he's had an official request from the Commonwealth of Massachusetts for the report, whether he's considering an answer, and what has been the answer.

HON. MR. WOLFE: Mr. Chairman, we've been over this matter during the time when the member was out of the House earlier, but I'd be pleased to make a further comment on it.

He asked whether we've had requests for copies of the report. We've received no requests or communications from anyone regarding copies of this report, in spite of what you might read in the newspapers. I read the same article, I think, and I think it's quite inaccurate.

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MR. STUPICH: That's fine. Okay.

HON. MR. WOLFE: The fact of the matter is that we were delivered a copy of the report shortly after taking office, and without having any knowledge of what order or authorization was placed for it. We had communicated with yourself and the former Premier (Mr. Barrett), asking whether there had been authority for it and what the amount was, because we were billed with some $155,000.

Until we were able to receive some indication from the former government where there was written authorization or anything on file approving of the ordering of this report, we were really not in a position to receive it or use it, or take whatever benefit there might be from it. We didn't feel that this was the case. In any event, we have the report now; I will be studying it, and we'll make our decisions from that point on.

MR. STUPICH: What I am wondering at the moment, Mr. Chairman, is whether or not the report is being reviewed by his own staff or whether it's waiting for his personal attention. Would he care to comment on that?

Interjection.

MR. STUPICH: I didn't quite hear the minister's response, or maybe there wasn't one. I looked away for a moment; maybe there wasn't one. Did the minister respond to that question?

Interjections.

MR. STUPICH: Everyone else is responding to that question, I see, Mr. Chairman.

MR. GIBSON: Mr. Chairman, I won't go through the unanswered questions thing again right now. I'll get onto that tomorrow a little bit, maybe.

I wonder if tonight the minister would tell us how his department plans to follow along with the friendly relations which had been developed with credit unions in terms of increasingly working more of the government's banking arrangements or cash arrangements through the credit union — the maintenance of some deposits and so on. Could the minister tell us what percentage of their general deposits they would hope to keep with the credit unions, and whether the past practice will be followed, or what would be the plan there? There's another question I'd like to ask him. Earlier on today, during the question period, there was an allusion to a report, done by Dr. Cragg out at the University of British Columbia, on the impact of the new 2 per cent sales tax on the cost of living. Dr. Cragg, as the minister may recall, was an economist who did an extensive study for the rentalsman last year as to what the proper increase should be for rents under the rent control system. I seem to remember that his general philosophy and manner of proceeding found a good deal of favour with the Social Credit Party at that time.

I would ask the minister what his own figures show as to the impact of that sales tax on the cost of living because, knowing the minister's concern with inflation in this province, I am sure that he wouldn't have raised the tax without having done such a study in advance. So I'd submit that question to him as well.

I'll gladly await the minister's response, Mr. Chairman, or if he would prefer to look these things up overnight, I would be glad to notice the clock — whichever he would prefer.

MR. KING: Mr. Chairman, I would draw your attention to the clock.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. McGeer files answers to questions. (See appendix.)

Hon. Mrs. McCarthy moves adjournment of the House.

Motion approved.

The House adjourned at 10:59 p.m.

[ Page 1180 ]

APPENDIX

32 Mrs. Dailly asked the Hon. the Minister of Education the following questions:

1. Were any bond issues authorized by the Government in 1975 for school construction?

2. If the answer to No. 1 is yes, (a) what was the total amount of those bonds floated, (b) when were they issued, (c) what was the amount of each issue, and (d) what was the interest rate of each issue?

The Hon. P. L. McGeer replied as follows:

"1. In 1975 there were 11 debenture sales authorized for the Government pertaining to school construction.

"2. The following table details School Districts and Colleges Debenture Sales in 1975: