[ Page 5845 ]

CONTENTS

Routine Proceedings

Seating of Mr. Richmond –– 5845

Oral Questions

Green Valley Estates Ltd. land. Mr. Skelly –– 5846

Mrs. Wallace

Mr. Lauk

Mr. Hanson

Removal of land from Delta land reserve. Mrs. Wallace –– 5847

Shutdown of Amax molybdenum mine. Mr. Passarell –– 5847

B.C. borrowing abroad. Mr. Howard –– 5847

Appointment of Douglas Heal. Hon. Mr. Wolfe replies –– 5848

Urea formaldehyde in B.C. schools. Hon. Mr. Smith replies –– 5848

PCBs in B.C. schools. Hon. Mr. Smith replies –– 5849

Health hazards on school grounds. Hon. Mr. Smith replies –– 5849

Committee of Supply: Ministry of Industry and Small Business Development estimates.

(Hon. Mr. Phillips)

On vote 126: minister's office –– 5849

Mr. Barrett

Mr. Kempf

Mr. Lockstead

Mr. Mussallem

Mr. Lea

Mr. Howard

Mr. Macdonald

THURSDAY, MAY 28, 1981

The House met at 2 p.m.

Prayers.

CLERK-ASSISTANT:

Province of British Columbia,
Deputy Provincial Secretary and Deputy
Minister of Government Services.
May 28, 1981

Mr. Ian Horne, QC,
Clerk of the Legislative Assembly,
Parliament Buildings

Dear Sir:

Re: By-election,
Kamloops Electoral District,
May 14, 1981

I enclose herewith certified copy of the certificate of Mr. Harry M. Goldberg, chief electoral officer, respecting the election of Mr. Claude Harry Richmond to represent the Kamloops electoral district in the Legislative Assembly.

Yours very truly,
Ian L. Thomson,
Deputy Provincial Secretary

Province of British Columbia,
Ministry of Provincial Secretary and Government Services,
Chief Electoral Office,
May 28, 1981

Mr. Ian Thomson,
Deputy Provincial Secretary

Dear Mr. Thomson:

Subject:
By-election, May 14, 1981,
Kamloops Electoral District.

The February 1, 1981, resignation of Kenneth Rafe Mair, the member for the Kamloops electoral district, created a vacancy in the membership of the Legislative Assembly. A writ was issued on April 10, 1981, requiring a by-election to fill the vacancy. Accordingly, May 14, 1981, was designated as polling day. The completed writ of election has been returned to me, and I hereby certify the election of Claude Harry Richmond as the member to represent the Kamloops electoral district in the Legislative Assembly.

Yours very truly,
Harry M. Goldberg,
Chief Electoral Officer,
British Columbia

HON. MR. WOLFE: I move that the letter of the Deputy Provincial Secretary and the certificate of the chief electoral officer of the result of the election of the member be entered upon the Journals of the House.

Motion approved.

HON. MR. BENNETT: Mr. Speaker, I present to you Claude Harry Richmond, member of the electoral district of Kamloops, who has taken his oath, signed the parliamentary roll and now claims his right to take his seat.

Now the member will take his seat.

I wish to welcome some visitors to our gallery today, who are very interested in the seating of the new member for the electoral district of Kamloops. Let me introduce Mrs. Pat Richmond, the member's daughter Valerie and his son Jeff, who are sitting in your gallery. Mr. Speaker. With them is the member's mother, Mrs. Olive Richmond, whom I ask you to welcome also.

Mr. Speaker, I would also like to welcome to the chamber an organization that the member for Kamloops has belonged to and led for many years. It has brought much pleasure not only to their own community but to every community, and it is the Kamloops Rube Band. They have come to Victoria in concert with the member for Kamloops.

Let me also say that visiting the Legislature today in the gallery are a number of people from Kamloops: the campaign manager for Mr. Richmond, Bud Smith; alderman Diane Kerr; and a host of supporters who wish him well. I would ask this assembly to welcome all those people I've already introduced who have come to stand in support of Claude Richmond.

MR. BARRETT: In witnessing the acceptance today of the new member for Kamloops. we see renewal in a very important system of democracy, in which the people of this province have the right to determine who shall support them in person. Mr. Richmond joins us in this august body with the best wishes of every member of this House. There are few moments that we can savour together. It is a moment like this when the renewal of parliament is confirmed, and together all members welcome the new member and his supporters who are here today.

HON. MR. VANDER ZALM: Today we have the privilege of having a distinguished visitor with us in the House, His Excellency Mr. Van den Block and also the consul general for Belgium, Mr. Xavier van Migem. His Excellency and the consul-general met yesterday with the Premier and a number of ministers, and I had the privilege of practising a little Dutch. I ask all members to bid them welcome.

MS. SANFORD: Seated in the gallery today are a number of representatives from the United Injured and Disabled Workers Association of British Columbia, who represent some 400 in their organization. I would like to introduce some of them to the Legislature. Merril Turpin is the president, and some of the others up there are Walter Bury and Len Reid — the original organizers of the United Injured and Disabled Workers Association — Cliff Bosper, Ernie Smith and George Pateman; also in the gallery is Barrie Alden, B.C. director for the National Anti-Poverty Organization, which is attempting to help the United Injured and Disabled Workers Association to get satisfaction from the Workers' Compensation Board of British Columbia. I would like everybody to make them welcome.

HON. MR. BENNETT: I also would like to join in welcoming Mr. Turpin and Mr. Reid, who are representing the United Injured and Disabled Workers Association, and inform the House that they have arranged a meeting with me in my office later this afternoon, following question period. I'm looking forward to the opportunity to hear from them.

[ Page 5846 ]

MR. RITCHIE: I too would like to join the member for Comox and the Premier in welcoming the members of the United Injured and Disabled Workers Association. A number of the members here today are from my constituency and had a meeting with me earlier. I'm very pleased to join in welcoming the group.

MR. KING: Mr. Speaker, I would ask the House to join me in welcoming two school groups from my riding that are visiting the Legislature: students from Parkview Elementary School in Sicamous, accompanied by their teacher Mr. Stewart and a number of chaperons; and from the fair village of Falkland a group under the stewardship of Mr. Hlady. I would ask the House to make them all welcome.

HON. MRS. JORDAN: Mr. Speaker, it certainly is visitors' day. I'm pleased to introduce Miss Joana Cheng of Rediffusion Television in Hong Kong. I met Miss Cheng when I was on my trip on behalf of the government to the Far East.

I would also advise you, sir, that we have in the gallery Mrs. Paula Anderson, president of the Port Alberni Chamber of Commerce.

I'd ask all members to give both Miss Cheng and Miss Anderson a very warm welcome.

MR. MITCHELL: Mr. Speaker, I would like the House to join me in welcoming a group of grade 11 students from Esquimalt Senior Secondary School, under the leadership of Mr. Don Taylor. I would like the House to extend a special welcome to two mature students who have returned to the schoolroom to continue their studies.

HON. MR. WATERLAND: Mr. Speaker, I have two guests in the members' gallery today: firstly, Charlie Chilson, a constituent of mine from Hope; and secondly, a very special lady to me, my wife Donnie. Would the House please welcome them.

MR. HOWARD: Mr. Speaker, in the precincts today are representatives from the Western Guides and Outfitters Association: Bob Henderson, executive director; and three others. I'd like the House to join me in welcoming them and wishing that when they meet the Minister of Environment (Hon. Mr. Rogers) later this afternoon, as I understand they will, they come away with an opinion that favourably addresses their concerns.

HON. MR. PHILLIPS: Mr. Speaker, visiting us in the gallery today is Mrs. Marjorie Gray of Victoria, who is the grandmother of my ministerial assistant, Michael Donison. With Mrs. Gray is her niece, Meg Webb, who is visiting from Bournemouth, England. I hope the House will make them welcome.

MR. MUSSALLEM: I ask the House to welcome two fine Canadian citizens who live in New Westminster, Mr. and Mrs. Schaffer.

Oral Questions

GREEN VALLEY ESTATES LTD. LAND

MR. SKELLY: I'd like to ask a question of the Minister of Transportation and Highways. On March 25 the cabinet's Environment and Land Use Committee heard an appeal and overruled the Agricultural Land Commission's decision to keep land owned by Green Valley Estates Ltd. In the Cariboo land reserve. Did the minister, as a member of ELUC, vote to overrule the Land Commission's decision?

HON. MR. FRASER: I was at the meeting. Under the oath I took, I don't think I should divulge how I voted.

MR. SKELLY: We have a darned good idea how the minister voted, but that's not.... I have a supplementary question. Did the minister receive any representation from anyone associated with Green Valley Estates Ltd. prior to that hearing?

HON. MR. FRASER: I talk to my constituents all the time. The people involved in that are my constituents.

MRS. WALLACE: My question is for the Minister of Agriculture and Food. Did the minister receive any representation from Green Valley Estates Ltd. prior to March 25?

HON. MR. HEWITT: Not that I'm aware of.

MRS. WALLACE: To the same minister: did that minister have discussions about the land with the Minister of Transportation and Highways prior to the March 25 meeting?

HON. MR. HEWITT: I have conversations with my colleagues all the time.

MRS. WALLACE: Did the minister vote to overrule the Land Commission decision to remove the land from the reserve?

HON. MR. HEWITT: The decision in ELUC is a decision of the committee. I'm not to disclose which way I vote. However, I would say to the member that every application that goes before ELUC is thoroughly researched and thought out, and a judgment decision made.

MRS. WALLACE: To the same minister: does that minister know or have any personal contact with Mr. Reg Norberg or Mr. John W. Jones?

HON. MR. HEWITT: No, Mr. Speaker.

MR. LAUK: A supplementary to the Minister of Agriculture. On what basis did the Environment and Land Use Committee overrule the decision of the Land Commission in that case?

HON. MR. HEWITT: Under the terms of the legislation that is in place, the Environment and Land Use Committee carries out its investigation and makes its decision.

Interjections.

MR. SPEAKER: Order, please, hon. members. I don't know under which standing order members presume to interrupt those who have the floor. May we have the question.

MRS. WALLACE: The Premier's a little testy today, Mr. Speaker.

Is the Minister of Agriculture aware of any other applications from developers in the same area as the Green Valley Estates who are desirous of getting land out of the reserve?

HON. MR. HEWITT: Not that I'm aware of. However, the member asks a question that would be very difficult to

[ Page 5847 ]

answer on a moment's notice. I'd be quite happy to research it if she'd like me to.

MR. HANSON: My question is to the Minister of Transportation and Highways. Would the minister advise the House whether the Social Credit Party in the Cariboo received any financial contributions from Norberg, Jones, Green Valley Estates, or from any persons associated with Green Valley Estates for the purposes of election campaigns?

MR. SPEAKER: Order, please. Hon. members, the question seems to be beyond the scope of the time provided for in question period. Perhaps the member has a brief question.

MR. HANSON: Mr. Speaker, the question is straightforward: did the Norberg and Green Valley Estates contribute to the Social Credit Party campaign in the Cariboo district?

MR. SPEAKER: Order, please. Hon. members, I don't know on what basis I can accept that question.

MR. LEA: Justice.

MR. SPEAKER: Order! Perhaps the member has a new question.

MR. HANSON: Mr. Speaker, to the Minister of Agriculture: what are the names of the persons that appeared at the ELUC meeting on behalf of Green Valley Estates?

HON. MR. HEWITT: Again, Mr. Speaker, that type of question, I think, should be on the order paper; however, since the member has asked it, I'd be quite happy to take it as notice.

MR. HANSON: To the same minister: what are the names of the persons or organizations who objected to the removal of this land from the ALR?

HON. MR. HEWITT: I imagine, Mr. Speaker, in the application there is a public hearing that is held in the local area, and it's a matter of public record as to who objected at the public hearing.

MR. HANSON: To the same minister: were any persons who objected to the application present at the ELUC meeting, or was it the same as the George Spetifore hearing that you held at an earlier date?

HON. MR. HEWITT: I'll take the question as notice, Mr. Speaker

MR. HANSON: Mr. Speaker, one of the proponents, Reg Norberg, claims there were documents supporting his company's application which were signed by owners of adjacent properties. Would the minister divulge the names of those people on the adjacent properties that submitted?

MR. SPEAKER: Is this a matter of public record?

HON. MR. HEWITT: Thank you, Mr. Speaker. It's a matter of public record.

MR. HANSON: Mr. Speaker, to the same minister again: was a transcript of the appeal hearing prepared, and is that public as well?

HON. MR. HEWITT: No, not to my knowledge. I don't recall a transcript being made.

REMOVAL OF LAND
FROM DELTA LAND RESERVE

MRS. WALLACE: Mr. Speaker, I have a further question for the Minister of Agriculture and Food. Land belonging to Delta Sunshine Chevrolet Oldsmobile, owned by Jim Anderson, the new owner of the Spetifore property, was removed from the land reserve. On what grounds was that land removed?

HON. MR. HEWITT: Mr. Speaker, I am not aware of any application brought forward to the Land Commission or to ELUC by the Sunshine Chevrolet Oldsmobile dealership.

MRS. WALLACE: For the minister's information, that was removed by the Land Commission in 1979. I would like to know on what grounds it was removed. The minister does not have an answer to that question, but can he tell me if the Land Commission received any representation from the member for Delta (Mr. Davidson) to have that land removed?

HON. MR. HEWITT: Mr. Speaker, the member can ask the Land Commission. I can't respond on behalf of the Land Commission. I think her proper direction would be to inquire of the Land Commission if they received any representation.

MRS. WALLACE: I rather thought that the Minister of Agriculture and Food was the minister responsible for the Agricultural Land Commission. Can the minister indicate what other applications are before the Land Commission or the Environment and Land Use Committee to remove land from agricultural land reserves elsewhere in Delta?

HON. MR. HEWITT: None that I'm aware of.

SHUTDOWN OF AMAX MOLYBDENUM MINE

MR. PASSARELL: I have a question for the Minister of Environment. Yesterday the federal fisheries Minister asked the Amax mine at Alice Arm to shut down because of violations of their operating permit. Has the Minister of the Environment decided to take any action in respect of these violations?

HON. MR. ROGERS: The company has acceded to the request made by the federal Ministry of Fisheries and replied to them by telegram, sending a copy to me.

MR. PASSARELL: Mr. Speaker, has the minister decided to revoke pollution control permit No. 4335, issued to Amax in January 1979, after three major spills in that area in one month of operation?

HON. MR. ROGERS: No.

B.C. BORROWING ABROAD

MR. HOWARD: Mr. Speaker, I'd like to direct a question to the Minister of Finance. Early in February — about three and a half months ago — the minister, as fiscal agent for B.C. Rail, took steps to attempt to borrow $100 million in U.S. funds in the Eurodollar market, for what the minister said was not for northeast coal but for the general purposes of B.C. Rail. I wonder if the minister could advise whether since that time he, as fiscal agent, has taken any steps to try to borrow that $100 million.

[ Page 5848 ]

HON. MR. CURTIS: Mr. Speaker, as I think I indicated earlier in this session when the hon. member raised a similar question, and while I may be accused of indulging in semantics, it is not correct to say that we attempted to borrow, because that infers that we attempted and were not successful. We were interested in what appeared to be a possibility to raise capital funds for British Columbia Rail in the European Eurodollar market. However, we did not enter that market. I think there is a very important distinction, not only on this question but in general discussion.

MR. HOWARD: The minister obscured by his answer the question which I asked him. Has he taken any steps, tentative or otherwise, since that time to try to acquire that $100 million?

HON. MR. CURTIS: Mr. Speaker, I think I indicated in debates on legislation quite recently that we have a Canadian management group which has been restructured during my time as Minister of Finance for the Canadian capital market. We have a United States group based in New York for any possible United States issue. And we similarly....

MR. HOWARD: Answer the question.

HON. MR. CURTIS: I'm getting to it right now, Mr. Member. We similarly have a European management group, headed by Deutsche Bank in Frankfurt. At this particular time we have not attempted to move into the Euromarket, although if we hear within the next few hours, days or weeks that market conditions are appropriate, then we would move for one of the Crown corporations.

HON. MR. WOLFE: Mr. Speaker, I would like to respond to a question taken as notice.

MR. SPEAKER: Order, please, hon. members.

HON. MR. CURTIS: On a point of order, I would ask the member for Skeena (Mr. Howard) to withdraw the word "subterfuge," which he used when he took his place a moment ago. It was directed to me and I take offence, sir.

MR. SPEAKER: I'm sorry, I was in the process of recognizing another member. I did not hear the word. If the word was used, would the member, in respect of the....

MR. HOWARD: Mr. Speaker, in respect to you.... I want to say, though, that in my opinion, that attempt in February was subterfuge. They didn't need the money, and if they did, they wanted it for purposes not outlined by the minister.

[Mr. Speaker rose.]

MR. SPEAKER: Order, please. Hon. member, all that was required was simply a withdrawal of any improper motive which may have been imputed to another member while the Chair was engaged in recognizing another member. Would the hon. member please withdraw. We do not need a debate.

[Mr. Speaker resumed his seat.]

MR. HOWARD: I had no intention of imputing improper motives, and if the word "subterfuge" carried that with it then I'll gladly withdraw.

APPOINTMENT OF DOUGLAS HEAL

HON. MR. WOLFE: Last week I took a question on notice directed by the member for Burnaby North (Mrs. Dailly). It related to information regarding a contract between my ministry and the firm represented by Mr. Douglas Heal earlier this year. There were two or three questions involved in her line of questioning. The best way I can respond to that is in the following way.

This contract involved the search for a successor to David Brown, to manage an expanded government information service. This activity took several months. During that period we had input from many individuals and groups about how the government should improve its communications with the public. It was decided that whatever was done should include better two-way communication, so that people would find it easier to talk to their government as well as to get information about programs which benefit or affect them. To assist in that task, my ministry hired the communications consulting firm of Harris, Heal Ltd.

The firm provided Mr. Douglas Heal virtually full-time, with necessary supplier and support services for a concentrated period, including several weekends, from February 9 to March 15, 1981, inclusive. During that period Mr. Heal conducted extensive interviews and evaluations, and then prepared the organization, structure, plans and basic information programs required for presentation to the government. It was a management-consulting job, requiring specialized communications experience. The firm's fee was $600 per day. The total cost of the contract, including fees, support services and travel expenses was $24,131.57. The fee portion of this amount was $16,500.

UREA FORMALDEHYDE IN B.C. SCHOOLS

HON. MR. SMITH: I would like to respond to questions I took as notice on May 12. I was asked by the first member for Vancouver Centre (Mr. Lauk) if I could inform the House as to the number of schools in British Columbia which contain urea formaldehyde in their insulation. There are no schools that contain urea formaldehyde in their insulation. There were, on the other hand, some examples of urea formaldehyde gas attributed to the adhesive used in the particle board, and the glue holding the boards to the studding in certain portables. It's not in the buildings and not in the insulation but in the glue around the studding in the particle board.

That was identified in Richmond school district, and I think, as the member knows, it's well known that those portables were put out of service by the Richmond School Board. They are presently being tested. There are no other districts which have definitely identified urea formaldehyde. But to ensure that there is no threat to the health of students from urea formaldehyde, the facility service branch of my ministry has surveyed all other school districts to determine whether there are any portables of the same make and if there are any problems arising from them. We are providing advice and assistance in testing, and we will continue to take steps to monitor all portables.

[ Page 5849 ]

PCBs IN B.C. SCHOOLS

The second question the member asked me was if I could assure the House that there is no electrical equipment containing PCBs in schools in British Columbia. He also wanted to know what steps had been taken to remove them. There are some examples of transformers or capacitors which were found to contain PCBs in four districts in this province. In Vancouver there is a transformer bank which has already been removed, and three other banks slated for removal in the near future. These banks and the equipment in the other three districts in this province where they did exist are not in a hazardous condition. They are either posted or are sealed according to Environment Canada regulations. These districts have been advised of the situation and encouraged to make use of funding available for replacement. I would repeat that they are not hazardous.

HEALTH HAZARDS ON SCHOOL GROUNDS

The third question he asked me was if I had taken steps to prevent the use of sprays causing deleterious effects on teachers and students in schools, because of an incident which came to the attention of the House. I have advised school districts through my ministry that spraying of insecticides and herbicides in and around schools is not an acceptable practice.

The final question the member asked was whether I had decided to appoint a ministry committee to review all possibilities and probabilities of health hazards in and around schools throughout the province and, if so, if I would make the report public. The answer to that is no, I have not decided, But all these matters are being studied on a general basis.

Orders of the Day

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

ESTIMATES: MINISTRY OF INDUSTRY
AND SMALL BUSINESS DEVELOPMENT
(continued)

On vote 126: minister's office, $204,312.

HON. MR. PHILLIPS: Mr. Chairman, prior to lunch break today, the leader of the socialist opposition (Mr. Barrett) asked a number of questions. Unfortunately, most of those questions were asked on the basis that he is trying to put to the people of British Columbia that the taxpayers of this province will be forking out hundreds of millions of dollars in subsidy to northeast coal. Therefore his questions are irrelevant, because northeast coal is not going to be subsidized by the taxpayers of British Columbia, as the socialist hordes opposite would try and make the people believe. There was a report recently released — not a government report done by government economists, but one done by an independent firm of internationally renowned accountants.

AN HON. MEMBER: For the coal companies.

HON. MR. PHILLIPS: Internationally renowned accountants, my friend, whose reputation in the international world is at stake, and you are doubting their word — not on a cost-benefit analysis but on cold, hard cash flow.

MR. BARRETT: Answer the questions.

HON. MR. PHILLIPS: You wouldn't believe the truth, because you don't want to believe the truth. You'd rather go around trying to mislead the people of this province. Lot me tell you, Mr. Chairman, I don't know how that man over there had the audacity to stand in this House this morning, when in three years while he was leader of the government and president of the railway he blew hundreds of millions of taxpayers' dollars in this province. Not only did he blow it, but he had absolutely nothing to show for it.

Mr. Chairman, I take that back. He had Swan Valley Foods to show for it. He had something else to show for it too. He had a string of ghost towns around the province that Hollywood would be envious of. They wouldn't have to build them. That's what he had to show for it. After wasting hundreds of millions of taxpayers' dollars, he had nothing to show for it.

This government has made a decision to invest in the future. I think that the Leader of the Opposition is hurting. He's got a lot of people after his job. His troops are arguing among themselves. They're disunited. They're not even good opposition. So he seized upon one very positive deal and is trying to mislead the people of this province into thinking it's a mass subsidy. Let me tell you, Mr. Chairman, and the members of this Legislature that had that socialist group over there still been governing this province, there would be no development at all, because they would have given it all to Ottawa, the same as they wanted to give our petroleum industry to Ottawa. They couldn't give it to Ottawa, so they drove it out of the province.

But I'll tell you, we are making a solid investment in the future: a good investment in infrastructure; an investment in a railway system which will be used not only to haul coal but indeed will be used to haul other commodities; and a port that will not just be used to ship coal but will be used to ship other commodities. That is a very positive investment in the future economy of this province.

MR. BARRETT: How much?

HON. MR. PHILLIPS: I'll tell you, ten years from now the economy will be strong. There won't be ghost towns. The mining industry won't be driven out of the province, like you drove it out of the province when you were government. There won't be people leaving the province in droves, like they were doing the third year when you were leading the socialists. They won't be leaving the province. They'll be coming to this province, and they will be sharing with the people of this province the opportunities created by the development of northeast coal.

Mr. Chairman, the leader of the socialist hordes is over there talking about the railway and how $70 million a year goes to subsidize it. The British Columbia Railway is the best economic tool this province has ever had, and it's an investment, my friend. I was surprised how that member could even stand in this Legislature and talk about the British Columbia Railway, which he practically drove into bankruptcy in the three years he was president of the railway. The last year he was president of the railway the loss was $22 million and getting bigger.

MR. BARRETT: Who hid the losses? Social Credit hid losses for years.

[ Page 5850 ]

HON. MR. PHILLIPS: It wasn't only the losses on the railway. The morale on the railway was down because of political interference. What have we done with the railway? We've turned it around. We're making a profit and giving better service.

MR. LEGGATT: Do you still want the $70 million for the debt?

HON. MR. PHILLIPS: Certainly, and we're going to retire the debt. For the first time in the history of the province we're putting money up front, and we're going to retire the debt of that railway. It's up front; it's not hidden. We're not like the member who was speaking before lunch. When he gave the railway some money he didn't know whether he was giving them a grant or a loan. He called it a groan. We're putting it up front and saying yes, we're going to wipe out the historical debt. That historical debt of the railway is still a good investment for the people of British Columbia. Because of that railway the northern part of our province is developing. Every job in the north creates a job in Vancouver and the lower mainland; make no mistake about that.

The first phase alone of northeast coal development shows a $1.5 billion net return to the taxpayers of Canada.

AN HON. MEMBER: In the first year?

HON. MR. PHILLIPS: I didn't say the first year. [Laughter.] You laugh like a bunch of hyenas.

That's a very positive cash return. The socialist hordes opposite don't want to believe the facts. Not only is there a very positive tax return to the taxpayers of Canada, but you have an upgraded railway system on the Canadian National Railways, a new branch line, a new port, a new townsite, new highways, a new powerline and infrastructure. You talk about being up front. We're even putting in the cost of northeast coal $53 million for a highway, which shouldn't be in there. The highway would have to be built someday because of other activity in that area and because of the tourist potential. We're putting it in as one of the costs of northeast coal. It shouldn't be in there.

MR. LEA: Why is it?

HON. MR. PHILLIPS: Because we're being up front, my friend. We're putting all the costs out. You want to know the costs. We've identified the costs. In study after study we've identified the costs. I've laid it out in this Legislature before. You don't even want to read Hansard. You don't want to know the facts, because you want to be able to go out and say: "Oh, it's subsidization." You've tried to mislead the people of this province before. You tried to mislead them in Kamloops, and it didn't work, because they understand the benefits. There is no subsidy to northeast coal.

MR. BARRETT: How much did the tunnels cost? Give us a figure. How much are the tunnels?

HON. MR. PHILLIPS: I'll answer your question about the tunnels in due course.

This is an investment of the taxpayers' money with a profit, and you can't do better than that on the first phase. The first contract, only the first 7.7 million tonnes, which is the first phase of the development, will pay for all the costs we're putting in and still return a profit. You call that a subsidy? I don't understand your thinking, my friend. You don't want to know the facts. You want to be able to distort the facts. You couldn't put northeast coal together. You drove out the coal buyers who came to this province when you were the leader of the government. You couldn't put the deal together. All you could do was go around talking about building a $2 billion railway to Alaska. To haul what? Not a B.C. product. Did you do any studies? No. You go out and say: "I'm going to build a $2 billion railway to Alaska with British Columbia taxpayers' money." Did you do any studies? None whatsoever. Yet the member for Coquitlam-Moody (Mr. Leggatt) is standing in this House and saying: "Oh, this is premature; the minister jumped the gun." After five years of study and negotiations we make the announcement, and you have the audacity to stand in this Legislature and say: "Oh, you jumped the gun." If I jumped the gun on northeast coal, what did you do on December 4, 1975 — seven days before the election — when you tried to hogwash the people of British Columbia into thinking that there was going to be great economic development? You came out with trumpets blaring and you announced: "Oh, northeast coal is going to go ahead; we're going to build highways, townsites and railways." You talk about jumping the gun, my friend!

I know you're a new boy from Ottawa, but these people have to be responsible for their actions. You know, when they were in opposition for 20 or 30 years, they could stand in this Legislature and they could say anything. They had an opportunity as government, and they blew it; they blew the economy of this province right out of the water. They have to be responsible now. But are they more responsible than they were? Not one iota.

This is an investment with a very positive cash return on the first phase. Not only do we get a positive cash return; we are left with a new port, new highways, a new town and a new branch line — all paid for by the Japanese steel industry. And you tell me that isn't a good deal, my friends? It will be there for future generations; it will be there for additional contracts.

Interjection.

HON. MR. PHILLIPS: Well, I hope you keep on saying that, my friend, because the people of this province realize what a good deal it is, and they're a little sick and tired of the negative, harping, carping criticism of the socialists, who have never said anything positive in their lives.

Not only are we putting all the costs up front, having readily identified them through cost study after cost study, and not only did we do it in 1980 dollars, but we've also added inflation and we've gone on so that we'll have total dollars spent. Usually, when a contract is going out and you say how much it's going to cost to build a building, you tell it in that year's dollars. We've gone and said that with inflation and the cost of money it will go above this. Talk about being up front, talk about guarantees! There has never been an economic development deal in the history of this province that has been studied as much and had as much up-front information as there has been on this coal deal.

Not only is there a positive cash flow, but if there is a bonanza in the price of coal, what happens? Just so that we protect the taxpayers, to make sure that some company isn't going to reap a bonanza like some of the companies have done in oil, supposing that the price of coal sky-rockets — which I anticipate it will do — we've got a built-in

[ Page 5851 ]

cost-recovery factor for all the money we spent on infrastructure. And you say it isn't a good deal? There are more guarantees to protect the taxpayers of this province.

What were you going to do? You didn't even have the deal thought out when you went out and said: "Oh, northeast coal is going to go ahead." And how were you going to ship northeast coal? You were going to pay an additional $4 million to $5 million a tonne to ship it down through Squamish. And you paid no attention to the environment — none whatsoever. I want to tell you, it's almost incredible, some of the statements that leader made this morning.

What else did he ask?

MR. BARRETT: Just one question: how much are the tunnels?

HON. MR. PHILLIPS: Mr. Chairman, if we had had the mentality of the socialist hordes opposite years ago.... [Applause.] Oh, clap the desks, yes, go ahead. You just listen to what I'm going to say. There would be no railway to Prince George. Prince George would still be a hick town — log on log, 17,000 people. Did we do cost-benefit studies as to how much the rail line was going to cost and how many pieces of lumber were going to be shipped over that line? No. We said: "Build the railway north." And build the railway north we did, and Prince George today is a thriving, booming city. Did we do a cost-benefit analysis when we built the branch line into Mackenzie? Did we identify how many pulp mills there were going to be and how much lumber they were going to ship out? We said no, the natural resource is there, build the railway, put in the infrastructure, give it access....

AN HON. MEMBER: Vision.

HON. MR. PHILLIPS: Vision, courage and guts, yes.

I just have to think back to the days of the Grizzly Valley pipeline. That's the type of mentality the socialists opposite have. Don't build the pipeline. Don't build the scrubbing plant. Don't invest in that area. There's no gas there.

Interjection.

HON. MR. PHILLIPS: He fell on his sword? Well....

In spite of the negativism which is typical from that group over there.... They're always negative. They've been against everything that ever happened in this province. No vision. No courage. When somebody else does something, all they do is criticize it, trying to mislead the people of this province. Yet they come out with great big announcements, like the one that they're going to build a $2 billion railway to Alaska.

I want to deal with the cost of the rail line. The original rail-line cost, when we we were doing the first studies in 1969, was somewhere in the vicinity of $150 million to $175 million. We did further engineering. We brought in tunnel experts. Canadian National Railways took a run at it. We came up with the figure, in 1980 dollars, of $310 million, which includes an approximately $50 million contingency. In that $310 million, in 1980 dollars, is $150 million for the cost of constructing the tunnels — less than 10 miles of tunnels.

I've told all the engineers and all the specialists that I think they're crazy; $15 million a mile to build a railway tunnel sounds terribly high to me. Why, Alec Fraser can build a highway through solid rock, where he has to blast out the whole top of it, for less than $15 million a mile. But that is the estimate. I personally think it's high. It wasn't too many years ago that we built 400 miles of railway, the Pine Point railway, for $80 million.

The whole point is that the sooner we get on with building the infrastructure, the less it's going to cost us. That's the benefit of having the original contract, phase 1. There will be other coal sold out of the area, no doubt about it. This morning the member wanted to know if I would be asking for additional warrants. Not to my knowledge. We've got all the money we're going to spend this year in the estimates. I told you that the money spent by the railroad will be picked up next year. The railroad will go out and interim-finance the construction of whatever they're building, and we will pick that up next year in purchase of shares.

MR. BARRETT: Where will they get the money?

HON. MR. PHILLIPS: I told you this morning: the money will come out of general revenue.

MR. HANSON: Without a warrant?

HON. MR. PHILLIPS: It will be in the estimates, my friend. Don't you try and mislead this House into thinking here's going to be a lot of hidden....

MR. CHAIRMAN: Order, please. Hon. member, as the member for Skeena (Mr. Howard) quite appropriately pointed out to the Chair, the use of the word "mislead" is both unparliamentary and unacceptable. I would ask the member to withdraw the word "mislead" which he has used now, I believe, on three occasions, and to refrain from further use of it.

HON. MR. PHILLIPS: I certainly withdraw any imputation of improper motive.

Now where was I? The money will be in the estimates, the same as it is this year.

MR. BARRETT: You won't spend any more than that this year.

HON. MR. PHILLIPS: Individual departments may spend some money, but the basic costs in the Minister of Transportation and Highways' (Hon. Mr. Fraser's) budget.... The $22 million in my estimates are going to be paid to Hydro to build the hydro line. What the Minister of Transportation and Highways spends will be in his estimates. I can't foresee any need for warrants this year. The railway will be funding itself this year. We're building a highway. That's in the Minister of Transportation and Highways' estimates. The powerline is in my estimates. That's all they'll spend this year. Moneys for the townsite will be in the Minister of Municipal Affairs' (Hon. Mr. Vander Zalm's) budget. I don't know what else we're going to do this year. That's all we're going to do.

MR. LEGGATT: What about the Anzac line?

HON. MR. PHILLIPS: Do you want me to draw you a picture? I just explained to you that the railway will interim-finance the cost of construction this year. Next year we'll pick

[ Page 5852 ]

up what they've spent, plus interest, and give it back to the railway. Do you understand that now? It's in our budget forecasting.

MR. LEGGATT: They're not getting it from general revenue. They're going to interim-finance now. Just a minute ago you said....

HON. MR. PHILLIPS: I said that we're taking it out of general revenue next year. We're going to run a year behind.

MR. LEGGATT: Where are they getting it now?

HON. MR. PHILLIPS: They will interim-finance this year.

MR. LEGGATT: From where?

HON. MR. PHILLIPS: Well, I don't know. Wherever they borrow money.

MR. LEGGATT: The Minister of Finance said they weren't going to borrow any money for the railroad.

HON. MR. PHILLIPS: Not on a long term-basis.

MR. CHAIRMAN: Order, please. Hon. members, each member will have an opportunity to speak in debate. As we mentioned earlier, it's very difficult — particularly for Hansard — when members speak without being recognized. I would ask all members to wait until they're recognized by the Chair.

HON. MR. PHILLIPS: With regard to the cost of the Anzac route, I think we've hired the best engineering brains that we can hire to do the engineering. That's why they identified that we couldn't go from Bullmoose across that huge ravine. It would have been one of the highest and longest trestles anywhere in the world. We also identified that we couldn't go through the mountain because the mountain is full of coal. At least in the Anzac tunnels, we've got solid rock. We've done our drilling and testing. It's far easier to build a tunnel through solid rock than it is through a soft substance. You know that. At least you've got a base. We've done all our work-flow studies so we know when we have to start this or that. That's all been worked out by groups that have put together major projects like this everywhere in the world. We've done all that.

You talked about a penalty. No, there's no penalty, so far as we're concerned, if we're not ready. I have no doubt that we can be ready, barring disastrous weather and labour strikes, over which I have no control.

What other questions did the member for Coquitlam-Moody ask this morning?

MR. LEGGATT: What big surcharge is there?

HON. MR. PHILLIPS: There is no surcharge escalation until 1989. Then the surcharge will be renegotiated.

With regard to the escalation of the price of coal, 46 percent of it is renegotiable on a cost analysis. But they can look at the base price at any time if the price of coal sky-rockets.

Interjection.

HON. MR. PHILLIPS: No, they're not whipsawing at all. If you think they're whipsawing.... Do you know what will affect the price of coking coal more than anything else? It will be the price of thermal coal and the demand. The two will eventually be very close.

You also talked about markets. We've done all the analysis. I see a market for coking coal. It's not as big as the market for thermal coal, but I predict that a lot of the low-grade coking coal presently coming from Australia will be followed into the thermal coal consumption in Japan. I can see additional sales of good coking coal for us down the road with no problem whatsoever. I guess it depends upon whose eyes you look through, but my theory is that the more coal you sell to a company, the more you have a say in the price. If we're selling 10 percent or 12 percent of the requirements, we don't really have much say in the price, because we're a small player in the game. The larger player you are and the more you supply, certainly the more you have to say with regard to the price.

The member for Coquitlam-Moody has left the House, so I'm going to take my seat. Maybe the Leader of the Opposition or somebody else over there has some more questions.

MR. BARRETT: The minister and I enjoy a few moments of amusement, and I suppose a little political licence is allowed in debate. But for the record, the railroad was convicted of civil fraud just this January. The taxpayers of British Columbia had to pay something over $7 million because of a civil fraud conviction. The civil fraud took place under the previous Social Credit government, at which time the court stated and judged there were deliberate underestimations of costs. The contractors therefore recovered the costs. So it is a matter of record, if the minister wants to exchange opinions about who ran the railroad best. It's far better to deal with court cases rather than opinions, since neither of us is a judge. The taxpayers have to pay anyway. The facts are that civil fraud took place under Social Credit, and the taxpayers of British Columbia had to pay for that civil fraud.

I'm not saying that that minister is responsible for it. I'm saying that the Social Credit government administration of the day was proven guilty in court of underestimating the costs, and the consequences were huge charges back to the taxpayers. That was just this January, and I would commend the minister to read the transcripts of the trial to understand why the taxpayers of this province have some deep suspicion about Social Credit performance that would include building a spur railroad on plywood over muskeg. These are facts proven in court. It's not a matter of opinion for me or for that member.

I don't hold him responsible, but I'd like to point out that the record of Social Credit includes civil fraud, and includes building a spur line over plywood. It builds in the responsibility, during our administration, to spend tens of millions of dollars cleaning up the mess, and putting in proper-grade steel and proper-grade banking on that line, on the advice of the railroad.

It's all a matter of record. It's not going to bring down the government, and I don't think it interests every citizen of British Columbia this afternoon. But just between you and me, Mr. Member, when the courts of British Columbia proved that a Social Credit government was guilty of civil fraud, I'm a little fed up when you say you're looking after

[ Page 5853 ]

the people's money in the same manner. You'd be well advised not to attach your wagon or your star in the future to the railroad and the performance of the previous Social Credit government. That government also deliberately hid $154 million in losses by improper accounting. Since you wanted to bring up the record, I thought it would be best to just gently remind you of those things, which are not your responsibility but are the record of Social Credit in running that railroad: civil fraud, deliberately hiding losses and building a railroad on plywood. It's hardly the kind of record I would think the minister would be proud of.

Having said that, it's all history. It doesn't affect the voters now, except they have to pay the bills for that mismanagement.

Interjection.

MR. BARRETT: It was proven in court, Mr. Member, and if you don't like the way the judges judged the facts of the performance of Social Credit, you can mumble all you want. But it is a matter of fact that the only conviction of civil fraud on that railroad took place under the previous Social Credit government. The taxpayers are still paying for it.

[Mr. Strachan in the chair.]

You go out and tell the working people of this province that kind of big speech you just gave. You go out and tell those people who work for so much an hour, or run a little shop or store — the people who believe in government, those little entrepreneurs who think that things are wonderful. You tell them that kind of speech. Also, tell them the truth about the fact that because of deliberate decisions by politicians the railroad was convicted of civil fraud, and $154 million in losses was hidden for years because of improper bookkeeping.

You stand up in here and talk about the railroad being a nicely run railroad under Social Credit! You didn't make feasibility studies, or cost-benefit studies. The previous Social Credit government said, "That way for the railroad," and they laid it down on plywood. It's interesting in terms of who discovered it was plywood. Was it me? Was it a Socred backbencher? No. The irony was, it was a royal commissioner appointed by this Social Credit government, Mr. Justice Lloyd McKenzie, who had the royal commission financed by this government; and it was that royal commission that said that the railroad, in parts, and the spur line, had been built on plywood. It wasn't the socialist opposition and it wasn't the government back bench; it was the government's own royal commission that condemned the government previously for building a railroad on plywood. The only place in the world — or at least in British Columbia — that railroads are built on plywood is in the basement, for our children. But they took that whole concept of a plywood basis for a railroad and built it on the muskeg. Where did it come out? Not from the opposition and not from the member for North Peace River (Mr. Brummet) — it came out of Lloyd McKenzie's mouth.

Just to respond to those opening statements so that we get the record straight, we don't have anything on our record saying that our government allowed a Crown corporation to be placed in a position of being convicted of civil fraud. That transcript would be good reading for that member for North Peace River, to know what party he's joined and what their legacy was in terms of heavy debt to the people of British Columbia because of mismanagement of that railroad.

To the matter at hand: since the minister wished to raise a little bit of history, I just thought I would comment on the history of Justice Lloyd McKenzie, the court case and the hidden losses — not that they are going to affect people. Most British Columbians will pass this day without knowing the heavy debt charges they have to pay because of the mismanagement of Social Credit.

This morning I clearly asked the minister to tell us the cost of the Anzac tunnels. You've now given us a figure of $310 million in 1980 dollars. Is that correct? Our inflation rate is running at about 12 percent a year. This is 1981; so that figure is already up $24 million. I asked the minister this morning, if there are overruns on those estimates, when will he let us know about the projected overruns, and will he be going for warrants? He gave me an answer today. There will be no warrants this year, to his knowledge; that's a good cover. I appreciate the minister's answer. But it is obvious that if the money is coming out of general revenue and if overruns begin to show up, then there will have to be warrants. You will have to go to Treasury Board, because you have now given the public of British Columbia the first frank and honest statement about financing the railroad — that is, it's coming out of increased tax money, out of this huge increase in taxes in the budget this year. Everybody who shops for a suit of clothes or buys a car, everybody who pays that 50 percent increase in sales tax throughout British Columbia will be paying part of that money directly into northeast coal, from which he Japanese will benefit through subsidies and the low price of coal.

The minister said: "This will all be paid for by the Japanese." I ask the minister when the first cheque will arrive from Tokyo. I ask the minister to tell us how much the first payment will be by the Japanese — in yen, or does he yen for it? You're not fooling anybody with a silly statement that the Japanese are going to pay for this. In opening a new coal project in Australia, the Australians have asked the Japanese to put the money up front for the infrastructure so that they don't have to go into the international market and borrow. Why aren't the Japanese asked to bring money over here, to ensure that any money we borrow is available at an interest rate favourable to us, negotiated between the government and the Japanese? The Japanese have skinned us. They've done it by saying: "You get the money and put it up front, and we'll buy 7.7 million tonnes of coal." The minister admits we have to sell another 11 million tonnes before we even meet the interest charges. "The Japanese are going to pay for all of this." You haven't bargained with the Japanese. You haven't negotiated with the Japanese. They've skinned you alive. You stand up and tell us the Japanese are going to pay for all of it. Tell us when the first cheque is going to arrive; tell us how much it's going to be. Tell us if their sales tax went up in Japan so they can pay their share of this deal in setting up the infrastructure.

Now you talk about hidden reports. You were the people who hired the outside experts who said: "Let's have a separate piece of legislation so all these costs could be broken out." No, no, no, the taxpayers are never going to get a picture of how much this costs. You're already admitting there are overruns in Highways, Municipal Affairs and in other departments. They will have to go for the warrants that the taxpayers will have to cough up the money for. The Japanese won't have to put up one penny. In the contracts, as I

[ Page 5854 ]

understand them, even though there's only 7.7 million tonnes of coal sold, the contracts say up to 7.7 million tonnes. If the Japanese arrive next month and say, "We only want a million tonnes this year," what are you going to do about it? Is the minister aware that the Japanese are now involved in investments in infrastructure in competing coal mines in Alberta? Is the minister aware that the only hope of survival for the BCRIC corporation started by this government is to get those shares the little people of British Columbia invested in on the word of the Premier of the province up from the $4.85 a share they're selling at now? The only hope of getting that share up is expanding the coal market from the southeast without subsidy. What's he saying to the BCRIC shareholders? He's saying the government, politically, will go out and sell as much northeast coal as it can, and for anybody who invested in BCRIC the devil takes the hindmost, and Mr. Edgar Kaiser cleaned out that particular deal.

The people of this province, regardless of how they vote — NDP, Liberal, Conservative or Social Credit — are being asked today to agree with a blank cheque to give away resources that are God-given to every citizen of this province, and you've got the nerve to say the Japanese are going to pay for it. You may go around this province and try to convince a lot of people that this is a wonderful deal, but I for one want to go on record as saying very clearly that we don't have one bit of the correct information. We don't have an admission from the minister about how this is going to be financed, and he will not tell us about the projected cost overruns. You're flying by the seat of your pants purely for political purposes, Mr. Minister. I suppose that's allowed for politicians, but when you involve literally billions of dollars in non-renewable resource giveaways and you stand there and give the kind of answers you did today, then God help the people of British Columbia, for this must be the worst government they've ever had. They've had some bad ones, but this one must be the worst ever in the history of British Columbia.

HON. MR. PHILLIPS: The Leader of the Opposition tried to get up and again snow around and talk about subsidies, misleading information and all of that. I'll tell you about the railway, my friend. You drove the railway into the ground, and you're the guy that was responsible, the last year you had it, for a $22 million loss because of mismanagement. And I'll tell you about the fraud. I'll tell you who changed the specs on the Dease Lake line, and when.

MR. BARRETT: Yes, you tell us.

HON. MR. PHILLIPS: It wasn't the previous Social Credit government; it was when you were president.

MR. BARRETT: That's false.

HON. MR. PHILLIPS: That's a fact, my friend! You changed the specs. Those are the facts. Don't stand here in this Legislature and try and snow me, because I know the facts. It was when you were president of the British Columbia Railway that the specifications on the Dease Lake line were changed. I've said that in this Legislature, and I'll say it again and again, because that's the truth, and you know it. To try and mislead or try and say something else is not suitable. You're not even suitable to be Leader of the Opposition.

MR. COCKE: On a point of order, Mr. Chairman, the minister is not addressing the Chair, which is the custom of this House and is the way everything is done in this House.

MR. CHAIRMAN: That is a very good point of order, and I think all members of the committee should be reminded that debate is in fact directed towards the Chair. Perhaps at this point we also might review some of our other rules that tell us that good temper and moderation are the characteristics of parliamentary language. "Parliamentary language is never more desirable than when a member is canvassing the opinions and conduct of his opponents in debate." Further, from Beauchesne: "It is not unparliamentary temperately to criticize statements made by a member as being contrary to the facts, but no imputation of intentional falsehood is permissible. On rare occasions this may result in the House having to accept two contradictory accounts of the same incident." I'm sure all members are aware of that wisdom from Beauchesne. With that said, I once again recognize the Minister of Industry and Small Business Development.

AN HON. MEMBER: Tell us about the plywood.

HON. MR. PHILLIPS: Yes, I'll tell you about the plywood. I'll tell the members opposite about how the management of the railway was interfered with by the politician on the other side. That's why the railway went from a profit position under the previous government to a $22 million loss. While the Leader of the Opposition was president of the railway, he was going to go back over the books and try to find that we'd been cooking the books. With certain changes in accounting — nothing being hid, just changes in accounting — he didn't find, as the member said, any $140 million. He came up with $52 million over a period of 20 years. That's all you found, not $140 million. Don't try and snow me. Maybe you can go outside the House and say that to the people. You can add $100 million here and lose $100 million there.

I'll have you know, Mr. Chairman, that we built the Fort Nelson extension. It was built as a resource line.

MR. BARRETT: On plywood.

HON. MR. PHILLIPS: And it wasn't built on plywood.

You wonder why I lose my patience, Mr. Chairman. There was one area in the line where, because we had moved a heavy piece of equipment into Fort Nelson.... It was built as a resource line, no doubt about it. Under this administration it's being upgraded. You see, Mr. Chairman, what makes me so impatient is when a supposedly responsible member of the House, the supposed leader of the socialist hordes opposite, gets up and deliberately twists the facts.

Interjection.

HON. MR. PHILLIPS: Oh, you have trouble with that. Let me think of another way to put it. I'm trying to be kind, Mr. Chairman.

MR. CHAIRMAN: So am 1, hon. member. I would advise you that the Chair has told you that we cannot use language that would indicate that another hon. member is intending to bring false evidence to this House or has said....

[ Page 5855 ]

HON. MR. PHILLIPS: I'm trying to find the proper terminology to suit you, Mr. Chairman.

The fact is the railway wasn't built on plywood. The member opposite is trying to impugn improper motives to the railway. He's building his facts. What other question did you ask me?

I know the story of the railway. I know all the facts behind the railway — how you interfered and how the railway is being run very well now. Management morale is up. Management are allowed to run the railway. There is a new board of directors being very well run. It's the pride and joy of all British Columbians again. Morale on the railway is high, and that's more than you could say when that member opposite was president of the railway.

I think I've answered all the the questions that they've asked. But I want to state again that northeast coal has a positive cash flow of over $1.5 billion.

Interjection.

HON. MR. PHILLIPS: Even with that, the positive cash flow — what governments expend and what they get back is $1.5 billion.

Then we have the branch line, the townsite and the highways all built and paid for on the first contract. I tell you again, it's the Japanese steel industry which is paying the bonus. The socialist hordes opposite used to criticize the gas pipeline to the United States. The gas pipeline that we now use to feed the lower mainland was paid for by the export contract. That's just good, smart business. The cost of the infrastructure for northeast coal will be paid for by the first contract. Then, if Canadians ever need the coal, the infrastructure will be in place. If that's not good business, then I leave the Leader of the Opposition to go out and try to sell his theory, which is do nothing and criticize everything that anybody else does. Leave it in the ground, let the lights go out, don't build highways, don't build anything. Just shovel it out the back end of the truck in social welfare and let the people go unemployed. You go around the province and tell the people your theory. I'll go around and talk to them about mine.

MR. KEMPF: I'll diligently try this afternoon to adhere to the very quiet and peaceful debate we've had so far. I stand this afternoon to commend this minister for his initiative, particularly in regard to northeast coal. I stand this afternoon, Mr. Chairman, as you would as a northerner, to speak for northerners with regard to the question of northeast coal and its development.

The northeast coal project is seen in the north as being a very positive vision and an investment in the future of not only northerners but all British Columbians. It's also seen as being the vehicle by which some of our riches will return to the north and which will provide additions to the transportation systems which, had it not been for northeast coal, we would probably not have seen in the north possibly for a couple of decades. Northeast coal will mean for the people of the north more and better highway systems and a far better overall transportation system.

With provincial involvement in this development, we will see in my constituency alone many millions of dollars expended and many hundreds of jobs created just to provide the infrastructure necessary on Highway 16. Do you think those overpasses would have been built by the federal government or by the CNR to accommodate unit grain trains? Not on your life, Mr. Chairman, or in your lifetime. Had it not been for the vision of northeast coal, the citizens along the north line could have put up with the unit grain trains or the province could have spent the taxpayers' money from general revenue to provide that infrastructure.

Northeast coal, as much as the socialists would like to knock it, is a northern project, yet a project which will capture the imagination of all British Columbians. In fact, it will benefit all Canadians. This government's role in northeast coal constitutes what I believe to be the true role of any government. We will provide the seed money. Yes, money has to be provided, but it's seed money.

MR. LAUK: One million dollars of seed money?

MR. KEMPF: Mr. Member for Vancouver Centre, you wouldn't understand the scope of that kind of development. You didn't when you were Minister of Economic Development, and you still don't.

Not only will that seed money be returned twofold and provide the foundation upon which many crops will grow in the future, it will also provide the foundation for many thousands of jobs for British Columbians. What of the socialists? They oppose it, of course. They oppose northeast coal. I want that squarely on the record of this House. Those socialists over there oppose the northeast coal project. Two and a half years down the road we'll tell the people of the north and the people of this province who supported northeast coal and who didn't.

They now oppose a project which history shows they themselves were in favour of.

Interjection.

MR. KEMPF: We'll get to Kemano II — that's another subject, and we'll talk about that again in this House.

Mr. Chairman, this is a project that they themselves five days before a general election in this province — supported. They actually announced the same kind of program five days before announcing a general election, because they were broke. They announced northeast coal — their project, a project without planning and, as you know very well, Mr. Member for Vancouver Centre, without the socio-economic studies that you so proudly philosophize. But we're accustomed to that from over there by now — their socialist attitude of do as I say, not as I do.

Mr. Chairman, history has recorded the words of their leader, the then Premier of this province — and God help us, should he ever become one again. Those words are recorded in Hansard in debate in this very House. Just for the record I would like to read those words uttered here by the then Premier on February 27, 1973. You know, they talk about public input and that the people should know everything, and that we should have all sorts of public hearings, but listen to what the then Premier said about Sukunka coal:

"The question of a public hearing on the economics is absurd, and the member knows it. No government anywhere in Canada, provincial jurisdiction or any federal jurisdiction, takes a basic matter of economic policy to public hearings."

HON. MR. PHILLIPS: Who said that?

MR. KEMPF: The then Premier of this province, the now Leader of the Opposition. I quote further:

[ Page 5856 ]

"And the member suggesting that we take specifics to a public hearing is absurd, in my opinion. It would be a dereliction of the responsibility that we have as a government to start throwing around figures while we are in the midst of negotiations on a deal that may or may not go through."

These are words of the then Premier of this province.

HON. MR. PHILLIPS: He changed his spots.

MR. KEMPF: Never. Maybe they change their suits, Mr. Member, but never their spots and never their philosophy. Mr. Chairman, we know their attitude, we know their philosophy, and we also know their position on northeast coal, and we want that position to be marked squarely on the record, to be read squarely into Hansard of this House. They oppose it. They oppose northeast coal, as do others who really don't know what they're talking about; either they don't know what they're talking about or, heaven forbid, they do it for purely political reasons. They want it to fail; they would like it to fail; they would like to see a deficit from northeast coal. It's the same old story: do anything, say anything — the socialist way to regain power. They're opposed to northeast coal, and we know that.

MR. HOWARD: Say it again.

MR. KEMPF: I'll say it many times, Mr. Member for Skeena. You're opposed to northeast coal — a northern representative. Shame on you! You've never talked to your constituents about it, I'll assure you of that.

MR. LEA: I have.

MR. KEMPF: And you're against it, Mr. Member for Prince Rupert. When have you last been to Ridley Island? When have you last talked to the workers in your constituency about the jobs that will be created because of northeast coal in your constituency? No, Mr. Member, I don't think you know. I don't think you've talked to them. If you've talked to them, you haven't listened.

MR. LEA: You're better as a maverick.

MR. KEMPF: I would suggest you go there, because I've been to see Ridley Island since you have. You better go up there, talk to your constituents, see what they think and come down here and say it.

The critics of northeast coal are a detriment to this province and to this country. They should be ashamed of themselves. They don't know what they're talking about. They oppose for the sake of opposing. They don't look at something for the sake of this province and for the sake of the future of this province.

I'm going to read this into the record this afternoon. I don't think anyone could have put it better than a Mr. Brian Martin, who is editor of the Journal of Commerce, when in February 1981 he wrote the following:

"Some years ago I held a lofty office of assistant Boy Scout troup leader. Much of my time seemed to be spent on interminable camp-outs watching rain slowly dripping its way through the not-so-waterproofed tent we used. A major challenge on days like that, of course, was to think up ways to keep the kids busy and away from each other's throats.

"On one such glorious drippy Vancouver Island afternoon a bunch of boys were sitting around the tent, and they got to wondering what it would be like to earn a million dollars a year.

"'Gosh,' said one of the little urchins, whose father was likely either an accountant or a dentist. 'Just think, if you earned a million dollars, of the income tax you'd have to pay.'

"'Heck, no,' shot back one of his buddies. 'Just think of all of the income.'

"That incident, I thought, rather graphically outlined the opposite directions from which people can view exact same situations.

"I remembered those two young kids the other morning while I was sitting on an airplane and reading the newspapers. The press that day was full of reaction stories to the proposed massive coal development in northeastern British Columbia.

"A spokesman for labour worried that there wouldn't be enough tradesmen in the province to handle the resulting jobs. The New Democratic Party was busily chasing its own tail around in a circle in a desperate search for a ripoff, sellout or boondoggle. Several environmental groups were beginning to make nervous noises, and no end of consultants, advisors and economists on different sides of the issue were lustily shouting conflicting advice back and forth across the columns of the business page.

"The fact is, most of the groups doing the talking weren't thinking about the income at all — they were already fussing about the tax. This approach — so typically British Columbian — completely baffles me. It's like a farmer who refuses to plant a crop because the weeds might come up.

"What the critics of coal development are too short-sighted to see is that this development, like the extension of the B.C. Railway in the 1950s and 1960s — or like the extension of the CPR to the west coast a century earlier — is not an end unto itself. It is a catalyst of dozens of other developments. It is meant to act as a springboard from which will be launched new jobs, new towns and a broadened provincial economic base. It will open up new forestry areas, other mining developments and potential agricultural land.

"History is littered ankle deep with examples of tiny men spreading tiny thoughts while totally missing the bigger pictures. There were those who thought the U.S. had gone crazy in 1867 when it bought Alaska for a few million dollars. Englishmen 150 years ago shook their heads in dismay as a few wayward sons set sail for a frozen wasteland known as Canada. And 50 years after that, central Canadians did the same thing as the next generation boarded the train for the barren wilderness of the west.

"The northeast coal development in B.C. Is sane, sensible and necessary. It is not a one-shot go. It may well require heavy taxpayer support for transportation systems and other facilities. But so what? Every major step forward in this country has required incentives and support. If Sir John A. Macdonald hadn't given bundles of incentives to the CPR, we might still be lining up for the noon stage to Kamloops.

[ Page 5857 ]

"I for one can't think of a better way for government to spend tax dollars. And, unlike my labour friend, I can't think of a better problem to have in these slow-growth, recession-ridden days than more work for our labour force than our labour force can comfortably handle. We should always have such problems."

Mr. Chairman, again I say that I couldn't say it better than Mr. Martin. They are wise, logical words from someone who is fortunately not politically motivated.

Let's look at the facts of northeast coal. The Teck and Denison sales agreements with the Japanese steel mills for 7.7 million tonnes per year for 15 years, extendible to 20 years, represent just a little over 1 percent of the known coal reserves in that area of the province. Four additional new mines in that district are already in serious development planning and sales negotiations. By 1990, it is realistic to expect production to rise to 23 million tonnes annually, using essentially — and get this, Mr. Chairman — the same new transportation network in northern British Columbia that will be put in place and paid for as a result of proceeding with the first stage. The initial phase involves, in addition to the building of two new mines: a new rail line from Anzac to the coalfields; major upgrading of the present BCR line from Anzac to Prince George and of the northern CN line from Prince George to Prince Rupert; ten or eleven new unit coal trains of 100 cars each, plus locomotives and spares; a new coal port at Ridley Island, Mr. Member from Prince Rupert, to be owned by the National Harbours Board, but with loading facilities to be built and operated by the private sector companies; a new townsite at Tumbler Ridge, new roads and a new powerline from the Shrum generating station at the dam site to Tumbler Ridge — all on a construction-completed schedule that will permit commencement of shipments in October, 1983, and deliver full production by 1985.

The capital investment in all this will reach $2.9 billion in these first two contracts by 1984 — $1.6 billion from the private sector in the two mines, townsite and port loading facilities, and $1.3 billion from the public sector in transportation and other infrastructure — for a total of 7.7 million tonnes annually. The prices negotiated include rail rates, surcharges, port charges and royalties, which, combined with the new taxes generated from the mines and related operations, will fully recover the forecast public sector investment and operating cost, plus a substantial overall positive cash flow or surplus or profit — I know you think that's a dirty word, members opposite — to the federal and provincial governments over the life of these contracts.

Further, these first contracts will provide over 10,000 permanent jobs and over 51,000 construction man-years. It will contribute in escalated dollars over the next 20 years about $37 billion to Canada's balance of payments. It's a project for all Canadians, not just northerners and British Columbians. The socialists oppose that. There will be criticism, for whatever devious reasons, but not by northerners. You won't see criticism from the people that live in the area concerned, who can see their future, who can see a future for this province a little beyond their noses, who think positively, looking beyond just today — looking, in fact, to tomorrow and the day after, to the future for their children and their children's children. We have, as northerners, supported and will continue to support northeast coal or any other such visionary project which will benefit not only us but all of the citizens of this province.

Interjection.

MR. KEMPF: You oppose it, Mr. Member for Vancouver Centre. Yes, we know. Let's get it firmly on the record, because we're going to tell it all over this province about two and a half years from now.

There is another item....

Interjections.

MR. KEMPF: Mr. Chairman, would you please keep those members in line, so they can listen to logical debate.

There is another item on which I would like to speak in this minister's estimates. I guess I could wait for vote 166 in which to do so, but while I'm on my feet I might as well say it now.

SOME HON. MEMBERS: Say it now!

MR. KEMPF: In fact, Mr. Chairman, the members opposite seem to think that's a good idea. Maybe I'll repeat it when vote 166 comes on the floor.

The subject I wish to speak about is the British Columbia Railway — in particular, the freight and, more importantly, the passenger service on that railway north of Prince George, particularly between Fort St. James and Driftwood. I've said it in this House before and I'll probably say it again. I will continue to say it until something is done about the service — if that's what you can call it — that the citizens of the area north of Fort St. James on the British Columbia Railway have to put up with. To say the very least, that service is totally unacceptable. In fact, Mr. Chairman, in this day and age it's really difficult for me to comprehend what those people in that area are expected to put up with. They're treated worse than cattle. I've said that before in this House, and I'll repeat it. They're treated worse than cattle. You have to understand....

Interjection.

MR. KEMPF: The members opposite make fun of this particular item. I think that's a shame. I'm going to make sure that the people along the BCR line between Fort St. James and Driftwood know exactly what the members opposite in this House think about the subject of their transportation system and how they're being mistreated by the system that's now in effect.

MR. HOWARD: You'd tell them anything.

MR. KEMPF: How would you know? When was the last time you were in the north, Mr. Member for Skeena? When was the last time you were in Smithers? I have to handle all your problems there. When are you going to represent those people?

MR. CHAIRMAN: Perhaps we could get back to the vote, hon. member.

MR. KEMPF: Yes. Mr. Chairman, we can. As I was saying, the people taking part in the transportation system provided by the British Columbia Railway north of Fort St. James are treated worse than cattle. It's their only mode of transportation. There is no other way, except by air, and that's

[ Page 5858 ]

not only expensive but also, because of weather, very unpredictable. These citizens are expected to put up with two ancient cars which are tagged behind a train hauling logs and lumber. Sometimes it takes 12 hours to travel from Fort St. James to Tatla Landing, a distance of 60 miles on a train which is anywhere from three to seven hours late pulling out of Fort St. James in the first place. That's the rule and not the exception. The cars are dirty, most often cold, and more often than not they aren't even lighted. You know perfectly well, Mr. Chairman, the length of the nights in the north for eight months a year. It's a horror story. It's totally unacceptable, and I'm virtually embarrassed to be any part of that kind of situation in regard to those citizens whom I represent. It must be rectified. That railway, by whatever means necessary, must provide those citizens with a proper, modern Budd car service. It's a service they deserve and are entitled to.

In this House, we speak about the hundreds of millions of dollars of taxpayers' money which is spent on light rapid transit in the lower mainland. Then we see that kind of transportation system provided for those citizens in the north. We also see millions of dollars going to provide the transportation for northeast coal. I have nothing against that, but I have to relate that to the type of service that's provided for my constituents along that line, from Fort St. James to Driftwood.

The people along the BCR north of Fort St. James are citizens of this province. They, too, deserve a transportation system, and one which is better than those used by cattle in other jurisdictions. I want to say to the minister responsible for the BCR that I cannot accept the type of service that's now being given. I'll sum up in just a few seconds. I can't accept the fact that just because they're northerners they should be expected to put up with that kind of transportation system.

I see my time is up. As I said before, I will probably raise this particular subject again under vote 166.

MR. CHAIRMAN: I should point out to the committee that in times past, the committee has established that if a vote is well canvassed during the minister's vote, it is considered canvassed when the appropriate vote comes along. Of course some latitude is allowed when the appropriate vote does come.

HON. MR. PHILLIPS: The last speaker has raised a very legitimate problem in his constituency. I was aware that we didn't have first-class service on that particular end of the line, but he's made me aware of a very severe problem. I would like to go with you to your riding and have a first-hand look at the situation. I'd like to discuss with you and the residents of the area what we can do to improve it. So I will tell you now that shortly after the House rises I will arrange with you to go to your riding with you and take a look at the situation.

MR. LOCKSTEAD: Just to comment on the remarks of the member for Omineca (Mr. Kempf), before I change the topic, I think the problems of that member's constituents would be much better served if that member would convene the Crown corporations reporting committee, as he has been charged to do by this Legislature, for which he receives the sum of $4,000 a year, and which he has ample time to do.

Before that member got up, the Minister of Industry and Small Business Development said that we are opposed to northeast coal in this province. As far as I am aware, this caucus has never been opposed to rational economic development of any kind. But I will tell you what we are opposed to, in terms of northeast coal.

AN HON. MEMBER: Incompetence.

MR. LOCKSTEAD: That as well. We are certainly opposed to massive giveaways, which have been the record of the Social Credit Party since 1952.

The minister has not seen fit to table the figures and cost justification studies. He tabled massive amounts of material, but he has not tabled the documents relating to northeast coal that are relevant to the debate taking place here today. It's been my experience — certainly in my own riding — that people are aware of the northeast coal development, and are aware that we are once again on the brink of what appears to be a massive giveaway of British Columbia's natural resources without adequate compensation. That's the expense of the southeast coal sector as well, and the expense of BCRIC.

The reason I'm on my feet now, Mr. Chairman, is to discuss with the minister an item that I've discussed with him many times. I thought this would be the appropriate place to discuss once again the problems relating to Ocean Falls. To give a bit of background, the minister is well aware that that community was about to close down in 1972. The New Democratic Party came to power and we purchased that community, saving the jobs of approximately 500 people who were directly employed in that community; and the operation showed a profit during the years that the New Democratic Party was the government in this province. In the six-year period the Ocean Falls Corporation achieved export sales in excess of $150 million — part of that was under Social Credit, which became the government in 1975. During the same period more than $55 million was paid in wages, which in turn generated more than $13 million in income tax revenues; another $55 million was added to the economy through purchases of logs, pulp and fuel; interest paid on a loan from the provincial government totalled $2.7 million; capital taxes, stumpage and water rentals returned approximately $1 million to the coffers of this province; an estimated $2.6 million was paid in provincial sales tax; also, the corporation spent approximately $15 million on equipment upgrading and improvement.

Furthermore, the community is equipped with a relatively new high school, a new hospital — the residents of that community contributed generously to its construction — a hotel, bank, post office, elementary school, stores, laundry, liquor store and police facilities — all those things that any modern community has. At the present time approximately 90 percent of the homes and apartment blocks in that community are abandoned. If these homes were in Victoria or on the lower mainland they would be worth from $100,000 to $200,000 apiece. They are boarded up and abandoned at the present time. So that brings you up to date.

As of June last year, the government arbitrarily and quite suddenly decided to shut down that community, as we all know. During the announcement of the closure, they promised that another industry would be moving into that community and that something would happen. At the present time there are approximately 140 residents in Ocean Falls. I think there are nine maintenance people employed by the corporation; they are the only employees in town at the present time. Those people who decided to stay in this

[ Page 5859 ]

community are faced with nothing, because the government has not in effect kept its promise to these people and to the people of this province. I think that's quite deplorable.

I've been in touch with the minister, by correspondence and in official conversation, and with the chairman of the board of directors of the B.C. Cellulose Company. I must say that Mr. Williston is always very optimistic that something is going to happen here or there, but nothing has happened. People up there are unemployed; those who are eligible are living on UIC; some are living on severance pay. How much longer can they hold out? They want an answer from this government.

My purpose in getting up here this afternoon on the floor of this Legislature is to attempt to get a reasonable, sane answer from the Minister of Industry and Small Business Development. I don't want to hear the same old speech that we heard last year — "we're looking at this and we're looking at that." We don't want to hear that stuff any more. I have files and files of your answers out there in my office which are totally meaningless and can't even be taken at their face value.

What I want to hear from that minister this afternoon is a positive.... That's your key word, isn't it — "positive?" Be positive for a change. You're talking about jobs. You say you've created jobs here, there and everywhere. You don't talk about the jobs you've done away with. You don't talk about those jobs, do you? Well, I'm talking about them now. I want that minister to get up in this House calmly....

Interjection.

MR. LOCKSTEAD: We'll get to the Minister of Lands Parks and Housing (Hon. Mr. Chabot) sooner or later, Mr. Chairman. I've got some good stuff for him.

HON. MR. CHABOT: Good, I'm waiting for it.

MR. LOCKSTEAD: I'm ready for you.

In any event the Minister of Industry and Small Business Development said in one of his constituency articles in the Peace River Block News:

"There is presently a three-year experimental logging and timber-use project centred on Ocean Falls. This three-year program will involve the renovation of the wood-preparation mill, and it is anticipated that it will be in operation in the late spring of 1981 and employ 100 people."

Well, Mr. Chairman, it's the late spring of 1981. Where is the mill, where is that experimental project, and where are those 100 employees? I know that the minister has had some opportunity to think about these things, and I would appreciate it if the minister would get up in his place now and answer this one question. Tell us what is happening in Ocean Falls. Are you going to abandon it? Are you going to sell it? Are you going to let it decay? What's going to happen to the people remaining there? Those are simple questions and you should be able to answer without a lot of arm-waving and screaming and carrying on. For once in your life, get up in this House and give us a single answer to a very straightforward question. Get those people up in Ocean Falls off the hook. That's easy to do.

While I'm on my feet, perhaps the minister would be good enough to tell us the status of the lawsuit that is underway between the Los Angeles Times and the Ocean Falls Corporation and the government of this province. Has the government decided to settle out of court? Is that particular item going to court? I don't want to go into a lot of details if the case is before the court. Perhaps the minister could tell us what is happening in that particular instance.

HON. MR. PHILLIPS: I can appreciate the member's concern about Ocean Falls in his riding. But I can't give him a definite date for startup. We're still analyzing the wood supply. It wasn’t as favourable as we first thought it would be. A lot of the timber in the area, when we got in and started looking at it, was more decadent than we had anticipated. We're still doing our studies, and we're still hopeful that we can indeed come up with a viable economic project in the area. I can’t give you a definite date.

I'm not going to comment on the lawsuit between the Los Angeles Times and Ocean Falls at this time.

MR. MUSSALLEM: I'd like to say that we are not debating the issue we should be debating — the job that this ministry has done in all British Columbia, how the whole province is bursting at its seams industrially, and how everywhere there are jobs and employment. Only yesterday I received a letter from the president of the University of British Columbia. Every member of this House received the same letter, I believe. It said that almost every single graduate from the University of British Columbia had found employment within the year. Furthermore, the concern was not enough enrolment at the university. Some concern! Young people today are finding too many jobs, and they don't want a university education. I don't exactly welcome that trend. However, that is the situation. The province is expanding so rapidly, it's bursting at the seams.

The hon. member for Mackenzie was just crying tears over Ocean Falls. The trouble with that member and that party is they have no vision. As a prophet of old said, without vision the people perish. For example, our government, during the W.A.C. Bennett days, found that Ocean Falls was impractical and impossible to operate. In 1972 they were defeated, and in 1973 they resurrected Ocean Falls. But Ocean Falls was not to be resurrected; it was positively not functional. We tried manfully. Mr. Williston, a former member of the executive benches of this government, tried hard to develop Ocean Falls, but it wouldn't work. Instead of trying to resurrect the dead — and Ocean Falls had died; people there recognized that.... This is spoken with respect. They did that, but what did they do with the gas pipeline to Vancouver Island that could have been built for $60 million. They killed that at the same time. That is not said in criticism, but there's a lack of understanding and knowledge — a lack of looking into the future and a lack of vision.

This minister and this ministry have vision. These are the things that count in this day. I never thought I would live to see the day when British Columbia was so prosperous that pages upon pages of jobs go begging for a placement. That is the issue. That is what we should be talking about — not these little nattering, nittering things.

You talk about northeast coal. I don't intend to debate that now. but there'll be plenty of time to debate northeast coal, Mr. Member. That is the mark of the grandeur and imagination of that ministry. This opposition, dealing in nickels and dimes, cannot see the great picture for trying to consider how much per tonne we're receiving from the Japanese. That is not the issue. The issue is whether it will operate, make

[ Page 5860 ]

money for British Columbia, create jobs, a new town, schools, employment and new homes. These are the social problems. These are the important things we must consider. This opposition doesn't see that. I'm not here to teach them.

It leaves that ministry and this government with the responsibility of carrying the full load without the assistance of the opposition. It is their duty not to criticize and knock down, but to build up. The idea of an opposition is not to destroy but to give creative suggestions and encouragement, not to knock down everything in sight. Only a few years ago they said the two-river policy, the Peace River and the Columbia River, was unthinkable. We weren't ready for Columbia River until 1984. The first thing this government did was to connect the PGE to North Vancouver and Prince George. What did they say? "Don't do it. There's no need for a railway there." It was empty, there were no cars, no towns, nothing up there. But the vision of this government said yes, there are mines and forests. There are places where people live. It took vision — vision that was over the heads of the opposition. By the strength of their sinew and their determination, in spite of all the fighting and criticism, the PGE went through, and the two-river policy went through. I ask you, Mr. Chairman, where would British Columbia be today....

MR. KEMPF: In the dark.

MR. MUSSALLEM: No, we wouldn't be in the dark. But still the lower mainland would be everything. We'd still have the B.C. Electric down there with Stave Falls, Buntzen Lake and a few other small power plants creating power for the lower mainland. Victoria would have no pulp mills, no power, nothing. When the first direct-current powerline left the....

Interjection.

MR. MUSSALLEM: You're right, Mr. Member. I'm glad you give me these ideas. I continue on.

If it wasn't for the encouragement and foresight of that government there wouldn't be the direct-current powerline to the Island that went through ten years ago. There'd be no power on the Island, no Victoria, no Duncan, no Nanaimo, no Duke Point, nothing. We could not have had it.

But we could have had an expanding Island today with a gas pipeline which could have been built for $60 million. Instead of that they tried to resurrect Ocean Falls. We could have had a pipeline for $60 million, and now it's going to cost almost triple that amount to put it in. Are they going to stand up and say the people of Vancouver Island are not entitled to this pipeline? They've said it already, but they don't dare say it openly. They say it underhandedly. They say: "You can't afford to spend that money." The only argument is how the pipeline comes down. They don't tell you that they killed that pipeline ten years ago — killed it.

But I want to say that this ministry and that minister represent the future of British Columbia. The people recognize it, and we recognize it. We know that we'll go on and succeed, because our policies are right and our purpose is clear. There never was a minister in this House who's had the foresight of that Minister of Industry and Small Business Development. I knew him well. In the previous government he and I sat back there. Now he's in the stratosphere, and I'm still here. We didn't know the potential then, but it has been developed by knowledge and ability and by building on the foundation that was created. He didn't do it alone, but through power, railways, gas, mines, resources — all developing and creating more things for the people of British Columbia. Then you get a president of a university who writes every member a letter and says: "We've got trouble here. All graduates are finding jobs right away, but we haven't got enough people signing in." What a problem!

That's the way British Columbia has expanded. And that's the minister. This is the government. Let us have your support, not your kicks. Don't tell us about why northeast coal won't work. I'm going to tell you: don't waste your time; it's going to go anyway, like the two-river policy. Five years from now, when there's ten times the demand for our coal, they'll be saying how they helped it. Five years from now with five times the demand, we'll still be using less than 2 percent of our reserves.

Interjection.

MR. MUSSALLEM: Keep it in the ground.

MR. RITCHIE: They want to give it all to Ottawa.

MR. MUSSALLEM: I don't want to open up that subject, Mr. Member. The resources of British Columbia belong to the people of British Columbia. I rue the day when Ottawa gets its fingers on our resources. I hope it never happens.

Mr. Chairman, before you pick up that gavel.... I wish you'd use the other side of the gavel, because I like it when you hit the hammer harder. I want to congratulate the minister on his efforts and what he's done in the ministry, and to say to him that the policies of the past extend to the future. Go on and create a greater British Columbia. Don't listen to these guys.

MR. LEA: First, I'd like to congratulate the hon. member for Kamloops (Mr. Richmond) for joining us here. I knew when I first saw that picture and that beard that he was going to be a winner. People love virility.

I think some of the charges that have been made by the member for Omineca (Mr. Kempf) and the member for Dewdney (Mr. Mussallem) should be answered by our side, because they are indeed serious charges. They charge that we on this side of the House do not want to have any sort of development in this province. These charges, I believe, have some sort of a political basis. I'd like to think of that positively — according to Goldfarb, that's the big word. We have to be positive about everything. What you're supposed to do to win politically these days is call your opposition negative and say that you're positive. It appears that's your big plan for elections these days.

Interjections.

MR. CHAIRMAN: Order, please. I'll ask all members of the committee not to interrupt the member who is speaking.

MR. LEA: I would like to briefly review the historic manner in which we have developed the resources of this province, because with hindsight you would think that we could took back on that history and say: "There are some of the good moves we made" — just looking at it from an historical point of view — "and there are some of the moves

[ Page 5861 ]

we made that aren't quite the kind of moves that we should make today, because, indeed, we have learned from history." We can look at other jurisdictions and also learn from their history in the management of our resources. Basically, the story of resource management in this province has been knee-jerk and non-planned, and then at the moment usually for political purposes. I don't lay the blame on any political party, because it isn't that kind of issue, It's the kind of pressure we as politicians find ourselves under, regardless of the political stripe that we are. What happens, Mr. Chairman, is that in order for us as politicians to appear like we are pushing the economy ahead, we have traditionally underestimated the value of the resources that we're dealing with, in order to get the economic deals of the day that we hoped to make us look good as politicians. That's been the history of this province.

[Mr. Davidson in the chair.]

It's amazing when you start comparing the different kinds of industry. For instance, let's compare manufacturing with resource extraction. One of the things that the resource companies tell us is that it is bad economics if we charge them for the product they're going to deal with. They say: "That just can't be. If you start charging us for the coal, the trees and those resources in this province, then it just doesn't become economical to take them out." The manufacturing business should have it so nice, or the retail business should have it so nice. The member for South Peace River (Hon. Mr. Phillips) should have had it so nice when he was in the car business. It would have been nice if the car manufacturer hadn't charged you for the cars you were going to sell, but it just doesn't work that way — not in the retail business and not in the manufacturing business. But according to Social Credit it only works that way in the resource business. If you start actually charging the resource companies for the resource they are going to exploit and sell, then it's bad economics. In fact they say that it's impossible economics.

What we've done in this province every time — and our government when looking at projects was guilty of the same thing as is Social Credit, in my opinion, although not to the same degree — is that when we start looking at further economic activity in this province we don't add wealth to the resources, but we start looking for investment to further widen and exploit the extraction process. We go in and take more of our resources and ship them out of this country without any secondary application or any tertiary application to speak of. Every time we go for new investment in this province, that's the route we take: further widening the extraction process, adding no or very little wealth, and then shipping them out.

The minister and other members have asked for some positive suggestions in regard to northeast coal. They've mentioned the amount of money — $1.6 billion — that the private sector is going to spend in putting this deal together. I think that's a good deal. When we can get the private sector to invest $1.6 billion in this province, that's nothing to be sneezed at; it's something we should take a look at very seriously. We also note that the private sector is going to take a very serious look at a return on their investment. I suggest to the government that we, the taxpayers, who are going to invest over $1 billion in this project, should also look at a return on their investment, which the government, in my opinion, is not doing.

This is what the minister likes to call profit. He talked about $1.5 billion in profit in the first 15 years of this coal project. I suspect — and the minister can correct me if I'm wrong — that when he's talking about the profit he's hoping to realize, he's talking about the jobs that are going to be created — the money that those workers are going to make and what they purchase; he's looking at the income tax that the federal and the provincial governments are going to make; he's looking at the sales tax revenue that will come in out of this economic activity. Those are the kinds of dollars that he's looking at and calling profit of $1.5 billion over the next 15 years. They are dollars that would accrue to the economy even if we asked for a fair return on our investment in northeast coal.

Almost every economy in the world today, Mr. Chairman, when dealing with the private sector and resource extraction, is going into what is called co-adventuring, where the public sector and the private sector put up some money and share in the profits of that project. It's called co-adventuring. It makes sense. Why should the taxpayers of British Columbia put up almost an equal amount of money but not take a share of the profits of the project itself? Does it not make sense that if we're going to put up half the money as taxpayers, we should realize half the profit? Not just the profit we get from the other areas or the other returns we get in income tax from the workers, but also from the money that the workers pay; and we get sales tax from cigarettes, liquor and gasoline. The minister is using all those revenues from the economic activity of the proposed development and he's calling it profit.

If I'm mistaken, I'd like the minister to stand up and correct me. I don't think I am. Those are the kind of revenues the minister is looking at when he talks about the $1.5 billion profit to the country. Those are moneys that would accrue to the country regardless of whether we, as taxpayers, got a fair return on our investment in the initial money investment going into the project.

The minister wants a positive suggestion. Mine is that if we’re putting up over a billion dollars, and the private sector is putting up over a billion dollars, let's co-adventure. Let's go into business with the private sector. Let's share in the real profits. Then it might be worthwhile for the taxpayers to invest in northeast coal. Otherwise we're getting the short end of the stick. We're investing almost as much as the private sector, and we're not getting anything back except the revenues that would naturally accrue to Canada and British Columbia through taxation and economic activity spinning out of northeast coal.

The member for Dewdney suggests that it is negative for the opposition to look at these kinds of economic factors in the northeast coal deal. I think it's our job. I think it's our job as the opposition to take any proposition that the government puts forward and to go through it with a fine-tooth comb to ensure ourselves, and therefore the people of this province, that the deal is a good one for British Columbians. When we do that, they say it’s negative, and what we should do is positively support the government regardless of what they're going to do, and never mind the details. To do that is negative and unfair, according to them. To do that means you're part of the socialist hordes. I suggest that to do otherwise means you're part of the fascist gang.

Surely to God, if the people of this province are going to be equally sharing in the investment of northeast coal we deserve an equal share of the profit coming out of that

[ Page 5862 ]

investment and economic activity. Surely we deserve that. What does the government say? The government says that's an incentive for the private sector to invest their money; otherwise they wouldn't do it. Surely we can view our investment as taxpayers as more than an incentive for the private sector to put their money in.

MR. KING: It's welfare for people, but incentive for the corporations.

MR. LEA: True, that's what it is.

Surely we deserve the same return on our tax dollars that we're going to invest in northeast coal as the private sector deserves. I'm sure that B.C. Rail would like to get the same return as the CNR or the private sector. Surely we need that kind of return for future capital expansion and for operating costs; surely we need it.

Interjection.

MR. LEA: As my friend to the right points out, the report of the royal commission on the B.C. Railway, page 79, part 2, section 5, says exactly that on northeast coal, and that the BCR feels exactly that way.

It's not a case of the opposition being opposed to the concept of the exploitation and the selling of northeast coal. We are in favour of northeast coal. What we are talking about are the details around northeast coal.

AN HON. MEMBER: That's a flip-flop.

MR. LEA: It is not a flip-flop. We are talking about whether the investment is a good or bad deal for the taxpayers of British Columbia. It is becoming clear and definitive what both sides of the House mean when we talk about that. The government talks about the investment of taxpayers' money as being an incentive. We talk about the investment of the taxpayers of British Columbia being exactly that — an investment. Therefore we should get a direct return into the coffers of British Columbia on behalf of the taxpayers of this province, and not just the spin-off economy that the minister's talking about. That's what we should be getting.

I think it's a positive suggestion. The suggestion is that dollar for dollar that we put up with the private sector, we get exactly the same kind of return as the private sector gets on their investment dollar. Is there anyone in this chamber who can say that that's asking too much? The answer is yes, there is. There's the minister, the hon. member for Omineca (Mr. Kempf) and the hon. member for Dewdney (Mr. Mussallem). Those are the people who I can remember having spoken on this subject who said that the tax dollars we put in, forget it. Use it as an incentive so that private industry can make money and profit. They say: "Oh, you over there think profit is a dirty word." No, we don't. What we think is that if you're going to invest your money as taxpayers, you have the same right to profit. We are not here as taxpayers in this province to subsidize the profit of private enterprise. We are here as people representing the taxpayers of this province, asking that we get a return on the public dollar investment in northeast coal. That's what we're asking.

MR. KEMPF: Is 25 cents on the dollar the return that you're talking about? You think government can do it better than the private sector.

MR. LEA: No. You can co-adventure with the private sector. One of the beautiful things about co-adventuring with the private sector is that the government does not have to get involved in the everyday management of that corporation that is going to be making you money.

MR. KEMPF: Is that what you did with Plateau Mills?

MR. LEA: Oh, shut up, Mr. Half-Maverick Half-wit. Just shut up.

MR. CHAIRMAN: Order, please. Hon. members, firstly, I would ask the member for Omenica (Mr. Kempf) to come to order. Secondly, I would ask the member who is currently recognized by the Chair to....

MR. LEA: I apologize, Mr. Chairman.

MR. KEMPF: I won't accept.

MR. LEA: I didn't think you would.

Let me deal with Mr. Maverick for a while.

MR. CHAIRMAN: Hon. member, we were doing so nicely on vote 126.

MR. LEA: I was doing very nicely until that big mouth went into gear without even looking at the gearshift.

What we are talking about here is a return on the investment dollar. I was saying that the most beautiful thing about co-adventuring with the private sector is that you can draw upon the expertise and experience of the private sector to manage the project, and the public sector can get a return on its invested dollar. I, for one, think that if the government gets into managing everything, it becomes so large that the bureaucracy is inevitable and you can't manage properly. I believe that.

Interjection.

MR. LEA: The minister says that what he's suggesting is that we take our tax dollars, invest them with the private sector, let the private sector manage it and we get a return. That's what I'm suggesting. What the minister is suggesting is that we give the money to the private sector, ask for no return and let them manage it. That's what the minister's suggesting.

HON. MR. PHILLIPS: What did you do with Swan Valley?

MR. LEA: Mr. Chairman, I'm not talking about Swan Valley. I'm not talking about Plateau Mills. If you want to talk about that, I'd be willing to talk with you any time, any place.

MR. CHAIRMAN: Order, please. Hon. members, the member currently recognized is on vote 126. I would ask other members to keep their interjections until they are recognized and can take their place in debate.

MR. LEA: Mr. Chairman, it's all right, because I suggest that what I am putting forward as a positive suggestion to the government is a hard one to rationally not accept. Because I'm putting forward an argument that is rationally hard for

[ Page 5863 ]

them to not accept, they have to resort to going back into their little bag of tricks and try to bring out red herrings to take me off the subject and to stop the flow. That's what they're trying to do. Because the minister is embarrassed in his haste to try to get a deal off the ground for political reasons, it's all stops out: subsidize, ask for no return, and everything's fine.

It's amazing. The government stands up and asks for some positive suggestions: "We may not agree with them, but would you give us some positive suggestions? But when they start getting them, they don't want to hear them, because they can't deal with them. When the minister takes his place again, I would like him to explain to me and the taxpayers of this province why, when we're investing tax dollars in northeast coal, it shouldn't be an investment, but is rather, from his point of view, an incentive to get the project off the ground — a gift.

It's rather interesting that three years ago, when visiting the major financial institutions in England and asking them about investment in this province, one of the organizations that we visited was Rio Tinto-Zinc Corp. I asked one of the vice-presidents whether it made any difference to them if they invested in British Columbia with the NDP in power or Social Credit in power. The answer over and over again in Rio Tinto-Zinc and in every one of those financial institutions was: "Not a bit. We see British Columbia as a good place to invest, whether the New Democratic Party is in power or the Social Credit Party is in power." If the minister doubts my word, I'll give him a list of the people we talked to in those financial institutions, and he can phone them, write them or any darn thing he wants, because it's true.

[Mr. Strachan in the chair.]

The vice-president of Rio Tinto-Zinc also said that more and more throughout the world mining companies are starting to have to understand that when they're going into jurisdictions that have commodities and resources that they want, they have to co-adventure. It's better for them, and it's better for the people who live in that jurisdiction. It's not only better for the people of this province, but also for the firms in the private sector that are going to be doing it. They also like co-adventuring because it brings together two groups who have a vested interest in making sure that that project is a success from every angle that you look at it.

I would like to hear why the minister thinks that it would be a bad idea to treat the taxpayers' investment in northeast coal as an investment rather than an incentive.

MR. MACDONALD: Why not give them some equity?

MR. LEA: That's right. Let's get some equity in northeast coal. That's what I've been saying. We should have a return on our tax dollar. We should take an equity position in northeast coal in conjunction with the private sector, so that we can get a return as taxpayers. Why should we continue to be the historical boobs that we've been and use incentive dollars, which are a gift, as opposed to investment dollars, for a piece of equity that is an investment, especially when the private sector has shown more than willingness — a desire — to be co-adventurers with the government of British Columbia? They have shown it, they will say it, and they will do it.

One of the things that Social Credit accuses us of all the time is being blinded to common sense by our ideology. You know, I think that does happen to us once in a while. But it's amazing to watch the group over there, because, as I see it, nothing points it out better than an ideology blinding a group to common sense. You don't have to agree with them, but you have to respect their belief. Why don't they come right out and say they believe in subsidies to the private sector, as opposed to co-adventuring and investing and getting a return back for your dollar? Why don't they say it? Because they know that the taxpayers of this province don't like it. That's why.

That's why they're busy trying to cover up the taxpayers' investment in northeast coal in all sorts of deals. That's why they won't put it on the table. They don't believe that the taxpayers of this province will put up with an incentive subsidy, but the taxpayers of this province will put up with an investment in northeast coal, to take an equity in northeast coal, and to get a return on those taxpayers' dollars in terms of dividends, the same as the private sector.

It's what every modern, clear-thinking resource economy is doing these days. One of the last holdouts to a group who are blinded to any movement forward, to any progressive thought, to any new thought by their ideology, is the Social Credit government. They cannot see that it isn't necessary. It isn't something you should be proud of, to say: "I'll never change my mind." They think it's a sign of weakness to change your mind, maybe ten years after you've thought of something. They yell at us all the time. Every time we say, "Lookit, we've thought it over and...." they point at us and laugh and scream. They think it's a great joke, because to them it's a sign of weakness to change your mind.

I think it is imperative that the Minister of Industry and Small Business Development in this province take his place in this House and explain to us why Social Credit will not invest money in northeast coal and why they insist on subsidized incentives. Is it because they are blinded by their ideology? Does that ideology circumvent common sense? What is it that makes this government the same as they were in the fifties?

If there's one feeling I get looking at the government benches, it's déjà vu. The attitudes, the words, the programs and the incentives are all reminiscent of the 1950s. I suggest to you that there are many conservatives in this province who have gone far beyond the 1950s mentality that we see opposite. I suggest that's true. I suggest that there are conservatives today who see co-adventuring with the private sector as one of the means of developing a province where everybody benefits and nobody get stung. Everybody benefits.

MR. KEMPF: You'll never win an election in this province.

MR. LEA: No, we may not, but I'll tell you one thing: we will have served the people of this province in trying to get them a fair shake on resource management. If we were only interested in winning elections, then we could hire a Goldfarb who could give us a key word like "positive." But we're not only interested in winning elections. Sure, we'd like to win the election, because we think we have some ideas. We think we have ideas about developing the resources of this province that are sound. You can disagree. but I don't think it's a disagreement to keep yelling across nothing more than "socialist hordes." I could have taken my place in this house and yelled nothing but "fascist pigs," but what would it prove? It wouldn't prove anything.

[ Page 5864 ]

We have put forward, I think, a positive suggestion to the minister — co-adventure and investment, not incentives, and getting a fair deal for the resources. Probably, if we were going to invest our money in northeast coal, as the public sector, the deal as it stands now would make sense. The reason it doesn't make sense as it stands now is because the government insists on using the taxpayer's dollar as an incentive, as opposed to an investment.

HON. MR. PHILLIPS: That was a very interesting performance from the member for Prince Rupert. The member for Prince Rupert is caught on the horns of a dilemma. The member for Coquitlam-Moody (Mr. Leggatt) wants to knock northeast coal and say he's against it, because he thinks it'll gain him votes in his riding. The member for Vancouver East who lives in Victoria wants to knock it and has said it should be closed down. The member from up the coast really doesn't know what to say. He stands and says: "Well, we haven't been against northeast coal." Following the usual pattern, the socialist opposition is all over the map. They don't know whether to oppose it. They don't want to say it's a good deal, and yet the member for Prince Rupert has to support it because he knows that the people in his riding and the city of Prince Rupert would throw him out if he opposed northeast coal. I can understand it. He gets up and makes some great motherhood speech about how it's such a good deal now that we should be putting taxpayers' money into the coal-mines. Well, Mr. Chairman, I prefer sharing the profits, and we'll do it by taxation. We can take up to 65 percent of the profits out of the coal-mines without putting in the taxpayers' money.

It was a very interesting exercise to watch the member for Prince Rupert tippy-toe around. His leader says the project should be stopped now. He says: "Oh, we're not against it. It should go ahead. It's such a good deal, why don't we cough up some more money and put it in northeast coal?" A minute ago they were saying every taxpayer in British Columbia is going to be paying higher taxes every time I do something. Now they want us to spend more money.

I knew they were arguing among themselves over there. I knew they were not united. I know they're not really sure of their leader. Maybe the member for Prince Rupert is going to run for leader now. I'm not really sure, but they're all over. It depends on which one you talk to. You get a different story. Some say yes, some say maybe, some say no. Now the member for Prince Rupert doesn't dare speak out against northeast coal, because he knows his constituents would not be happy with him. What they're really doing is playing politics with northeast coal. It depends on which riding and which area in the province you come from whether the member is for, against or maybe; maybe it's a good deal today and not good tomorrow. They wanted to stop it yesterday, and today one says it should go ahead, the other says it shouldn't. The leader says one thing and the member for Coquitlam-Moody (Mr. Leggatt) says another. It's a very interesting observation from this side of the House to watch you guys. You don't know whether you're for it or against it. You won't accept the fact that it's not being subsidized and that it's a good deal.

AN HON. MEMBER: I'm on the record.

HON. MR. PHILLIPS: You're on the record. I want to tell you, that is very interesting. The member for Prince Rupert got up and said: "Well, we've got to add further value to our resources." The member for Alberni (Mr. Skelly) gets up and says: "Hey, we don't need any more power dams. We don't need any more power. We haven't got any use for the power we've got now." I guess we're supposed to add further value to our natural resources by getting out the old treadmill, putting the horses on it and creating something that way so that we can further process our copper and zinc and have all this industry.

I never saw such a disunited group in my entire life. That is a fact. They have no policy whatsoever. Their policy is harping, negative criticism at every turn of the wheel, depending on which riding they're from and what their voters are hanging on. They're hanging on by the skin of their teeth. Every one of them is afraid he's going to get kicked out next time, because they know their constituents are unhappy with them. They're picking at little straws to try to hang on to satisfy each little individual constituency they represent. That's what it's all about. They don't have a policy. They are not united. They're fighting amongst themselves. I've heard more — what shall I say — disjointed statement coming from that opposition socialist group today than I've ever heard before in my life. What the policy is depends on who speaks and what constituency he's from. It really amazes me. For the member to try and stand up in this Legislature and say, "Oh, the investment dollars will flow to British Columbia regardless of who's government," just doesn't stand up under scrutiny.

I suppose the banks who have guarantees in the company will go. But the banks may invest in a particular company, but the expertise in the company won't come. That's the big difference. I spent many hours and travelled many miles, trying to explain that the socialist hordes were not in government any longer and that their investment dollars would be safe in British Columbia. People used to think this was the Chile of the north. Now the investment dollars are flowing. There is faith in the future of the province. Anyway, I've gone through all that before. They won't believe me, but the people of the province understand. Certainly the people in Kamloops understood. They know the dollars that it takes and they have spoken very well, thank you very much.

But it's really amusing to me to listen to that last exercise from the member for Prince Rupert (Mr. Lea). He couldn't stand up and knock the coal deal because, as I say, it's going to do great things for his constituency. Northeast coal will be the catalyst to make the dream that Prince Rupert has had since 1910, to become a major world port.... How's it going to happen? Why is it going to happen? It's going to happen because of northeast coal. The member for Prince Rupert is really walking a tightrope. He doesn't want to be against it, so he got up and made this great motherhood speech about co-investment.

We saw the results of a few co-investments when they were government. I think they had a coinvestment with Swan Valley Foods, to think of one. I think they had a coinvestment with South Peace Dehy and with Panco Poultry. They had a few co-investments. But the ironic part of it is that they didn't create anything new. They went out and bought up what the private sector had created. They didn't create any new jobs. They just went around and said: "Give me this, and give me that." You know what happened. You've seen it happen, Mr. Chairman, in other jurisdictions when the government gets involved in the private sector.

I have just a few comments on the last speaker. It was really interesting to watch him perform. He should have been

[ Page 5865 ]

in Hollywood, because he really couldn't knock the coal deal. He got up and said: "Well, you know, we're not really against it, but we think you should put more money into it." This morning they were telling us that we're putting too much money into it and that we shouldn't do it. It's an interesting but sorry exercise to watch, because they were a disaster as government, and they're worse in opposition.

MR. HOWARD: The Minister of Industry and Small Business Development must almost be a mind-reader, because I was sitting here listening and watching and the thought went through my head: what an ideal candidate for an Oscar for the act he just put on. What he did do — I don't know if he noticed what he did; maybe he's oblivious to the impression he left — was prove exactly one of the points the member for Prince Rupert was making. The member for Prince Rupert said: "There's a blindness because of their ideology over there, to any new ideas. Social Credit has a preconceived notion about the way things should go." And, as the member for Prince Rupert pointed out, that ideological commitment blinds them to any new ideas.

MR. LEGGATT: Doctrinaire.

MR. HOWARD: If there was ever an application of the word "doctrinaire," it certainly applies to the Social Crediters — not to the government House Leader (Hon. Mr. Gardom), because he is really a doctrinaire Liberal.

What the member for Prince Rupert put forward, Mr. Chairman, in a very serious and very visionary way, was an idea as to how the government might make a good deal for the general public of this province — a worthwhile, visionary suggestion and one that had a lot of merit. But the Minister of Industry and Small Business Development, not the least bit interested in dealing with the merits of that, stood up and in his blindness and inability to perceive that maybe somebody else had a positive idea as well, simply embarked upon a ridiculous discourse attempting to ridicule the member for Prince Rupert and others on this side. That, in my opinion, is not the way a responsible cabinet minister should deal with subject matters in this House. That's not the way to serve the interest of the people of this province. That's negativism on the minister's part, an absolute refusal to accept any ideas except those that he himself has in own mind — blind stubbornness. The only people who are going to lose by that are the people of British Columbia. I submit to you that the member for Prince Rupert put forward a very worthwhile suggestion and a very valuable contribution to what should be taking place in economic development matters in this province.

I want to deal with something else the minister said about B.C. Rail in the very noisy, empty-barrel way he has of dealing with these subjects. The more noise he makes, the greater the level of his voice, the less substance there is to what he is saying — and that was evident when he was talking about B.C. Rail. But let's put a few facts on the record. The minister was talking about B.C. Rail incurring losses. And that's true; they did. He picked a particular year — I think it was 1975, when we were government — and said B.C. Rail lost money when we were government. That's probably right. B.C. Rail also lost money in 1976 when the Social Crediters were government. They lost money in 1976 to the extent of $53 million — $145,000 a day.

HON. MR. FRASER: You weren't even here.

MR. HOWARD: Maybe, as the Minister of Transportation and Highways says, I wasn't here, but I can read the record and the books. That may come as a surprise to the Minister of Transportation and Highways, but I can read. And just in case the minister has trouble reading himself, let me read him something. Let me read something to the Minister of Industry and Small Business Development. This is from the report of the Royal Commission on the British Columbia Railway, volume 2, by Mr. Justice Lloyd G. McKenzie. Sydney Welsh and David Chapman were the other commissioners. Let's talk about losses on B.C. Rail; let's talk about honesty in presenting the case to the public and not presenting a false case. Here is what it says: "Finally, during the Barrett era" — they're talking about when the NDP was the government — "a major restatement of the railway's financial affairs occurred as a result of reviews to which reference has been made. These indicated that the railway had been operating for many years in a loss position" — and this is the important part of this, about Social Credit's chicanery in dealing with the books of public corporations — "despite statements to the contrary of its auditors, its directors and the former Premier." What that says is that all during the time that the late W.A.C. Bennett was the Premier of this province, B.C. Rail was losing money every single year and they covered it up.

AN HON. MEMBER: Cooked the books.

MR. HOWARD: They cooked the books, covered it up; the auditors did it too, an the directors did it as well. That's the record about coverup of losses with B.C. Rail.

Interjection.

MR. HOWARD: Yes, B.C. Rail lost money. It was covered up, because what the late W.A.C. Bennett was doing was exactly what this minister was doing this afternoon — covering up the fact that B.C. Rail is losing money by only presenting an operating side of the books. B.C. Rail lost money last year.

The president of B.C. Rail is in the House today; he can't stand up and speak here. If we were before the Crown corporations committee.... If the member for Omineca (Mr. Kempf) would only do what he's paid to do, and call that committee into session, maybe we could talk with the president of B.C. Rail and get this information from it.

B.C. Rail lost money last year. We in this Legislature voted $70 million of public money. There's one before us in the estimates. Shortly we'll be dealing with another $70 million to come from the taxpayers out of general revenue to B.C. Rail; it's called "debt servicing charges." So the general public is paying the interest on the debt that B.C. Rail has. What's the debt now — $600 million or $700 million? It's something in that area. You'd have to look up the latest report and find out what it is. The taxpayers of the province are putting in the $70 million a year to pay the interest on that debt. In a normal bookkeeping way, if the corporation had to pay that interest out of its own financial structure it would incur a loss; it would lose money. It's losing money this year, but because of the manner in which the books have been set up, it can show a different picture. That's what the late W.A.C. Bennett did, that's what the directors of the board did

[ Page 5866 ]

under Social Credit administration, and that's what the auditors did — covered up the fact that B.C. Rail was losing money in order to paint a different kind of picture for political purposes. It's nothing short of absolute dishonesty on the part of the previous administration. We seem to be heading in the same direction now.

The $70 million that we voted for B.C. Rail last year to pay the interest on the debt wasn't used. I think it was some $53 million of that $70 million that was used to pay debt servicing charges. Where did the balance go, Mr. Chairman? Where did the balance go, Mr. Minister? It went into the coffers of B.C. Rail by way of an avenue called "contributed surplus." So we pay the debt and we give them another — what was it? — $13 million to sock aside, to show on the surface that there's an operating profit. That's absolute nonsense and the minister knows it. His attempt to show a different case — if I were to describe it properly and adequately, I'd run afoul of the rules — is just not in accordance with the facts of the situation.

Dealing with the northeast coal situation, the minister and the government have said on a number of occasions how great this is going to be for our balance of payments; they have said this is helping Canada, altering the balance of payments by bringing foreign money into Canada and giving us a better position. That statement, by itself, is correct.

Interjection.

MR. HOWARD: That's correct. You sell the coal — an unprocessed raw resource. The lowest possible value that could be is put to it because it's an unprocessed raw resource. The only value added to it is the capital labour which has gone into digging it out of the ground and putting it on a train and taking it down to the deep-sea shipping port and shipping it over to Japan. Some money comes in for that, that's true.

To show you, Mr. Chairman, how unprincipled Social Credit has been with this question of the economic development of this province and how we now in this generation are reaping the deficits of that, a few years ago there was a piece of legislation on the statute books that said that copper mining companies in B.C. had to keep 50 percent of their ore reserves in the ground, so that the total of the 50 percent of the ore reserves kept in the ground of the various copper mines in the province would be available at some future time to feed a copper smelter in this province. It's a good idea. But the previous Social Credit administration — short-sighted, unable to have the vision of doing something worthwhile in this province — by secret order-in-council gradually reduced that percentage figure.

HON. MR. BENNETT: Secret?

MR. HOWARD: Yes, secret.

HON. MR. BENNETT: Nonsense.

MR. HOWARD: It was subsequently discovered. But at the time those orders-in-council were made, they were secret.

We get interruptions from this member for Kelowna, who looks as if he may have been doing something this afternoon that perhaps he should not have been doing.

Those reserve requirements were reduced by order-in-council — secretly made — so they could dig the ore out of the ground, run it through a concentrator and ship it to Japan.

That helped our balance of payments. We got money from Japan for the copper concentrates. We're still doing that. When you look at that in isolation, that's all right. But what happens, as we all know, is this: here we've embarked upon shipping out a resource in next to its nearly raw state — concentrated copper — along with all the other minerals that are contained therein — gold, silver and other minerals. We're shipping them to Japan, getting in return the lowest dollar that's possible, because there is very little value added to that. We're now in the process of saying it's a good deal to ship the raw resource called coal. The Japanese — smart, properly done for Japan's interest, I commend them for it — take the metallurgical coal, coke it, put it through a smelting process in a blast furnace along with a copper concentrate, make copper tubing, copper pot bottoms, copper wire for electrical purposes and everything else, and we buy it back again. We lose on that transaction because we spend more in dollars to buy back the finished product than we got in the first place for selling the raw material. We have short-range policies.

We'd be far better off economically — and we have said this consistently, whether it relates to northeast coal or any other raw resource in this province — if we'd spend the time and the effort creating jobs in this province instead of rubbing our hands gleefully at the prospect of seeing jobs created in Japan. That's what we're doing. It's very short-range, very economically immature, highly improper in terms of what we should be doing in this province to create jobs for our people and for our future generations. Where's the vision, Mr. Minister, that you should have in this regard? What's wrong with the idea of saying yes, we have an obligation to future generations to manufacture and to process items? The federal government has been blind to that fact for years. One of the reasons that we are in difficulty in our balance of payments and in terms of foreign ownership in this land is that the shortsighted, blind policies of the federal government — which are identical to the short-sighted, blind policies of this government — have meant that we ship out the raw materials and we buy back the finished product.

MR. BARRETT: They hired Basford to do it for us.

MR. HOWARD: And we're paying him $600 a day to work up the details of the contract to do it.

Mr. Chairman, I'm advancing what I think and what I hope is an idea that the minister is not just going to stand up and pop off about because he doesn't like it. I'm advancing a thought to him that's been expressed many times before. It's expressed now and will continue to be expressed, as it relates to northeast coal, southeast coal, copper concentrates being exported and raw materials — or near raw materials — being exported from this province and in the process exporting job opportunities with them. You could transform this province into something other than just being the — and it's a cliché at this point — hewers of wood and drawers of water for some other nation. Haven't you got a greater vision for British Columbia than that? Can't you expand your imagination, Mr. Minister or members of the government, to perceive that things need to be done in that direction as well? I submit that the member for Prince Rupert (Mr. Lea) was correct when he said the Socred government is blinded by its own obstinacy and its own perception of the way things should run.

It's not a matter of whether one is opposed or not opposed to a specific arrangement or deal. It's a matter of: can we do it

[ Page 5867 ]

better? We submit to you that it can be done better. We submit to the minister that if you'd listen to a little common sense once in a while, things can be done better for this province. There's the giggling of the Premier again. We submit to the minister that we in this province have inherited our problems from short-sighted, politically oriented decisions made by governments in the past. We should not want to visit upon future generations the same sort of thing. Yes, it can be done in a better way. Yes, the interests of British Columbia can be advanced. But it would take an imagination, a vision and a desire to do that, which somehow or other seems to escape the people on the opposite side of this chamber.

The member for Omineca (Mr. Kempf) took the trouble to read an item from some magazine. I'm only putting this forward to say to you, Mr. Chairman, that here's another point of view, or here is a point of view about northeast coal that is not mine. It's contained in a magazine called Commerce B.C., April 1981. There are a number of articles in it about tourism, "Transit Key to New Westminster," Discovery Park things and so on. There's an editorial in it by one Fred Dawkins. I'm not going to read the entire editorial — it would offend the rules, and it's not necessary. There are some figures and statistics he uses that I've heard government members mention with respect to northeast coal. Here's one person's interpretation of it. I take Commerce B.C., a magazine dedicated to dealing with economic and commercial matters in this province, to be a responsible one. The heading of the article is "A Dream We Can't Afford." It says:

"There's nothing wrong with thinking big. A man's reach should exceed his grasp, certainly. But if you mortgage your house and gamble your kids' education fund on something that is beyond your grasp you're talking something else. And that's what Bill Bennett is doing.

"A cold look at the realities" — this is northeast coal — "says it won't work, and we taxpayers are going to be stuck with the tab."

This is this person's interpretation of it,

"The provincial government has committed a minimum of $485 million to creating the transportation system...."

He goes on to talk about a lot of other figures which, as I said, we've heard recited, and they appear to be the figures that are correct as far as government is concerned.

"All in all, the economics of Bennett's dream look very shaky. And that's even without considering such side issues as environmental concerns, etc.

"Dreams are great, but this one looks like it's going to cost somebody a lot of beans. And you just know who's going to be left holding the bag, don't you? Unless, of course" — and he puts a lighthearted windup paragraph in here — "we can get Tourism B.C. to market a luxury sightseeing train for holidaying Japanese steel executives — from Prince Rupert to Chetwynd. Now that's a northern vision."

I want to put that on the record. I have views on northeast coal....

MR. KEMPF: Let's hear them.

MR. HOWARD: I have views about northeast coal that I explained just a moment ago. If the member for Omineca (Mr. Kempf)....

MR. CHAIRMAN: Order, please. The member for Skeena has the floor, and will continue to have the floor during his allotted time. He will continue to have the floor uninterrupted.

MR. HOWARD: Did you get that, Mr. Premier? You would be well advised, Mr. Chairman, as a gentle suggestion, considering the continual interruptions the member for Prince Rupert (Mr. Lea) was subjected to by the same member on that side of the House — he 's doing the same thing now — at some point to draw standing order 20 to that member's attention.

We're talking about a concept of an industrial strategy that will provide this province with something that has just been beyond its grasp for years. That's the idea that we can manufacture things in this province. We can process items in this province, and we can find a market for them. We could have been smelting copper and, yes, even refining it in this province every year for the last 25 years, because in this province we produce 20 percent of the copper being produced in Canada.

We could have been doing that if it hadn't been for the short-sighted, narrow opinion of the late W.A.C. Bennett, who told the copper mining companies to never mind what the act says about keeping 50 percent of the ore in the ground. He was going to give them permission to ship those ore bodies out in the form of concentrates to Japan, and ship out the possibility of creating smelters around that.

We could have done that, and we could do the same thing with any raw resource that we have in our possession. All it takes is a little vision, a little will, a little desire to do something worthwhile for this province and a little commitment to the future — something which the minister with all his noise and fury doesn't seem to be able to grasp. We have an opportunity at this very moment to discard that narrow partisan attitude that exists on the other side of the House and to undo the blinkers and the blinders that keep Social Credit from seeing what the real possibilities are here. If you lose that opportunity now, if once again we embark upon the road and say, "Yes, we are committed to the ideal that we should sell our natural resources for the cheapest dollar possible in order to create jobs in other countries...." If you persist in going in that route you are doing the greatest disservice that you could possibly conceive of doing to this province, to the people in it and to future generations. If you continue that way, nothing but shame should fall upon your head for doing it.

HON. MR. PHILLIPS: Well, we're getting some great positions from the opposition over there this afternoon. I guess the member for Skeena (Mr. Howard) was not in the Legislature a little while ago when I outlined our economic strategy for this province.

MR. HOWARD: I heard it.

HON. MR. PHILLIPS: You might have heard it, but it didn't sink in. Thank heavens, because of the work that we have done since we've been government, there will be further value added to the natural resources of British Columbia. You don't go out and snap your fingers and put a copper smelter in British Columbia. I guess maybe the NDP would do that, but then they might end up with a devil of a lot of copper that they haven't got a market for. That wouldn't matter to them. Yes,

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we're working with the metal-fabricating industries, and indeed you will see some changes in the next decade.

As I've said before, to process a metal takes power. There they are again. All of this high-falutin speech by the member for Skeena: "My gracious, yes, we should have this and we should have that...." Other members are saying: "Oh, my heavens, we can't have any more power in British Columbia, because we don't need it. We don't want any economic development." Every time we try to find a piece of land other members are saying: "Oh, you can't take that land." Their policies just don't add up if you put them together, because one says no, the other says yes, the next one says maybe; one says you can't do this and the other says we should be doing this. I tell you, they're all over the mat. You don't have a policy over there. You do not have a policy. Depending on where the member comes from or how far left he is, you get a different policy. It would be interesting to have that group over there organized so that we could understand exactly what their policy is. We've got so many no-growth people in that particular party that it doesn't matter what you try and do. "No, no, no. Get in the way; obstruct."

I just love talking about the British Columbia Railway. The member got up and made a very pious speech that we didn't know what we were doing. There's a big difference between an operating loss and an operating profit. Based on the bookkeeping you set up, you lost. You had an operating loss the last year. You had the railway $22 million in debt. We have continually reduced that, until today it has an operating profit. The records stand. You can't change them no matter how you try in this Legislature. The reason it changed is because we have an independent board of directors, and we gave management the right to manage the railway, instead of having political interference every time you turned around. That's why the railway is making a profit.

Certainly we're funding the railway. We're picking up their debt and servicing their debt charges. Absolutely. But that's because the railway is running, will run and has an operating profit, my friend. The other reason the railway has an operating profit is because we have improved the economy, and the railway now has something to haul.

MR. SKELLY: After that speech it does.

HON. MR. PHILLIPS: There's the member over there who doesn't want any.... He wants to shut the province down. He says: "We don't need any more power. We haven't any use for the power you're going to use from the existing dams." I'd like to see you two get together, because you're absolutely no-growth. You don't want to touch anything in the province. The member for Skeena wants a little economic development.

The fact of the matter is: we have an economic strategy, and we've had one. We're diversifying our markets, and don't perpetrate on the people of this province that we haven't got a good and growing manufacturing industry in British Columbia. Indeed we have. As I said this morning, if you want to process natural resources I can bring natural resources from other countries in here and process them, and I could do it just like that if we had the power.

We'll talk about the railway operating profit. The first quarter of this year it'll probably make close to $8 million operating profit. If it had continued being run the way you people were running it, today it wouldn't have a $22 million loss each year; it would be $100 million loss. We turned the railway around, got the economy going and gave them something to haul.

Talk about northeast coal. First they're for it; then they're against it. They don't know where they're at. I'll tell you, it was the dream of your party, Mr. Member for Skeena, when they were government, to bring northeast coal to a reality and to do the same thing we're doing. It was your dream; it's our reality.

I've gone over the further processing so much that I'm not going to continue. But I'll tell you, we have many great things on the drawing-board for this great province of British Columbia.

MR. SKELLY: A great drawing-board industry.

HON. MR. PHILLIPS: Will you quit your yacking and pay attention to what I'm saying?

MR. SKELLY: What are you saying?

HON. MR. PHILLIPS: I'm telling you that we have many things on the drawing-board. But if you have your way, Mr. Member for Alberni, none of it will be a reality.

MR. HOWARD: That is not true.

HON. MR. PHILLIPS: All you people over there want is no growth and unemployment. It's great to stand up here and be pious and talk about doing this, but you have to have a market.

AN HON. MEMBER: Why don't you tell the truth?

MR. CHAIRMAN: Order, please.

HON. MR. PHILLIPS: You have to have a market, investment and know-how. That is coming to British Columbia at the present time.

MR. HOWARD: Twist the facts.

MR. CHAIRMAN: Order, please. I'll ask the hon. member for Skeena not to interject, as he was treated with the same courtesy by the Chair. Also, I suspect that some of the comments could be unparliamentary.

HON. MR. PHILLIPS: I want to say again that northeast coal was their dream and it's our reality. I could give you lots of quotes of what they've said. Some of them want it; some of them don't — maybe, if, and or but.... They don't know. They're all over the place. They're disjointed, not united. The point of view depends on who speaks. I'll have to leave them that way.

MR. MACDONALD: The minister who has just taken his seat had one good line in there about how the development of resources in the northeast of the province was an NDP dream. It was. I had something to do with it in those days — not very much.

Interjections.

MR. MACDONALD: Okay. I was not as directly involved as some of my cabinet colleagues.

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The first shipment of Sukunka coal that left the province of British Columbia was merely a test shipment. It went over to British Steel in 1974. They tested it out as a very good metallurgical coal, as good as anywhere in the world in terms of its quality. It was far from tidewater and needing a rail infrastructure — which Mac Norris would know all about — and not sold as easily as, say, in the Australian case; but there was a good case for resource development on a sound foundation.

The member for Prince Rupert (Mr. Lea) made a very positive suggestion. I regret that the minister dismissed it so quickly. He said that the public who are going to invest so much will get it back in taxation. I think of the record of this government in the case of Kaiser coal — I remember very well the figures, and I know how unsuccessful the taxation route is in giving back to the public, whose coal it is, a return on their own resources. I can remember seeing balance sheets towards the end of the Kaiser reign, when they were making $70 million clear after payment of all expenses — sales tax, mineral land tax, royalties, everything — and the public of British Columbia was getting about $3 million or $4 million a year in royalties. That's not a fair break, for an international company to come in and give the people that kind of a pittance, because the people take the risks in these matters.

I don't want to see that repeated with northeast coal. It's not a question of whether the resources should be developed. Everybody in this House knows they should be developed and will be developed in time, but it is how they are being developed that counts. I believe in the kind of positive suggestions being made here today: that you could, with joint venturing, bring that coal onto the international market well below the target dates that the minister has in mind — and could shift so much.

One of the great tragedies in this province occurred in 1976. We had a coal moratorium. We had a moratorium on the issuing of coal licences. Suddenly the new government of Social Credit lifted the coal moratorium, and within three months of that time major international companies had staked, surveyed and obtained licences for coal deposits over 500 square miles of British Columbia — valuable coal rights gone forever, so far as the people of this province were concerned. What a tragedy and what a giveaway that was, and how it helped to retard the development of our coal resources. When Shell, Teck-Brameda and British Petroleum receive the resource rights to a mineral like coal, they decide whether to sit on that coal until the time is right for their exchequer to make the kind of profit they want or they take their licences down to Howe Street in Vancouver or Bay Street in Toronto and sell them.

When British Petroleum got those nine or ten licences in the Sukunka area, they paid Teck-Brameda $30 million for licences — the few they had — which the public had given them for nothing. So a reputable corporation like British Petroleum comes into this province to develop a resource and to create jobs — and we welcome that kind of venturing into this province — but before they could even get off the ground in terms of their test drilling program or any kind of an infrastructure to develop their mineral claims — coal claims, in this case — they had to reach down in their pocket and find $30 million to pay to people who were using those licences for speculative purposes. It is a tragedy the way, under Social Credit, this province has been treated as a goblet to be drained by international companies who get resource rights and then reap a profit through speculation on those resource rights.

If you had a joint venture, as the member for Prince Rupert (Mr. Lea) has suggested, you would have an incentive to bring that coal on stream in the international markets as quickly as it could be done responsibly in a businesslike way, There would not be the tendency which you have — when you give away these rights to private corporations, and put them in charge of the show — to let the development occur when they think it is optimum for their profits. The minister says we'll have this coal at Ridley Island by 1983. I would hope that some coal is flowing out of this province by that date, but I doubt very much that that will be the case.

I doubt very much that it will be the case, because the negotiations which the minister....

Interjection.

MR. MACDONALD: Don't misquote, Mr. Minister, Don't play politics all the time. You always play politics, don't you? And you misquote. You misquoted the member for Alberni (Mr. Skelly) this afternoon. We've been listening.

MR. CHAIRMAN: Order, please. I'll ask all hon. members not to interrupt the member who is speaking, and I'll ask the hon. second member for Vancouver East to speak to vote 126 and address the Chair.

MR. MACDONALD: I do regret that whenever we have a good, serious debate about resource development, as I would hope we're having this afternoon, we get politics, politics, politics, from the minister — not from his colleagues around there, not from the Attorney-General, but from the minister, who is supposed to be giving responsible leadership in this field. Okay, play your politics, but we'll go on and discuss the issue. Misquote people: you've been doing it all along.

I just want to finish with one other thing. The other sad part about the development as proposed under this minister is his absolute failure as a negotiator. The Canadian National Railways are getting a fair rate of return, and insisted upon it. The Japanese are going to get a very good deal from our coal. The federal government, which is already committed to the development of Ridley Island and the causeway because of the new grain terminal there, is going to get its top dollar out, but the negotiations that have occurred on behalf of the people of this province leave an awful lot to be desired. We are the ones who are picking up the major part of the risk and the major part of the investment. The other partners in that enterprise have out-negotiated this minister — that's what has happened. In terms of development of northeast coal you say that we on this side of the House don't know what we're doing. We certainly do. We have a record of resource development which we will debate with you anywhere....

Interjections.

MR. MACDONALD: Well, who started the Afton copper mine? Who started British Columbia Petroleum Corporation, which has brought in a billion dollars? Come on, you guys! You just play politics, politics, politics, because that's all you've got. You're bankrupt of anything positive with the

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people of this province, so it's politics, politics, politics, scare, scare, scare. Come on! Why don't we talk positively about our province where so much could be done? We have a different way of developing northeast resources, and we believe we would bring that development off with a fair return to the people of this province a lot sooner than you ever could.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 5:55 p.m.