[ Page 6495 ]

CONTENTS

Routine Proceedings

Tabling Documents

B.C. Ferry Corporation annual report for the year ending March 31, 1981

Hon. Mr. Fraser –– 6495

Statement respecting Crown Proceeding Act

Hon. Mr. Curtis –– 6495

Financial Administration Act (Bill 27). Second reading.

Hon. Mr. Curtis –– 6495

Mr. Hall –– 6496

Miscellaneous Statutes Amendment Act (No –– 2), 1981 (Bill 31). Committee stage.

On section 4 –– 6496

Mr. Levi

Hon. Mr. Wolfe

Mr. Cocke

Mr. Hall

Division

On section 5 –– 6500

Mr. Leggatt

Hon. Mr. Curtis

On section 6 –– 6500

Mr. Leggatt

Hon. Mr. Phillips

Hon. Mr. McGeer

Mr. Barrett

Mr. Cocke

Mr. Lea

Mr. Nicolson

The House met at 10 a.m.

Hon. Mr. Fraser tabled the annual report of the B.C. Ferry Corporation for the year ending March 31, 1981.

Hon. Mr. Curtis tabled a statement for the fiscal year ending March 31, 1981, recording each certificate served under sections 13 and 14 of the Crown Proceeding Act and the money paid out in respect of those certificates.

Orders of the Day

HON. MR. GARDOM: I ask leave to proceed to public bills and orders, Mr. Speaker.

Leave granted.

HON. MR. GARDOM: I call second reading of Bill 27, Mr. Speaker.

FINANCIAL ADMINISTRATION ACT

HON. MR. CURTIS: Mr. Speaker, under other circumstances I would speak at length with regard to the Financial Administration Act. I assure the House that I will make my remarks as brief as possible. It's been one of my principal objectives to bring forward on behalf of the government modern and comprehensive legislation which would provide for strengthened financial control and accountability in the conduct of the province's financial affairs, and so we have the Financial Administration Act, which I believe will give British Columbia the most modern financial legislation in Canada. As our Auditor-General, Mrs. Morrison, has pointed out, existing legislation governing the financial affairs of this province is archaic by any standard and, frankly, is completely inadequate to meet the requirements of sound fiscal management in the 1980s and beyond.

The two major pieces of existing financial legislation are the Revenue Act, which was enacted in 1879, and the Financial Control Act, formerly the Audit Act, which was passed by this assembly in 1913. While these acts have been modified in minor ways over many years, the fact remains that the financial administration legislation of the province remains much as it was 60 years ago, and to a large extent as it was 100 years.

In 1879, when the Revenue Act was passed by this assembly, the expenditures and revenues of the government were less than $500,000. Today, as the House will know, the province gathers and expends revenues of more than $6.5 billion each year.

The province's financial legislation has not kept pace with changing times, and the need for new and modern legislation has become more critical with each passing year. Again, the Auditor-General has highlighted the urgency for new financial legislation in each of her reports to this assembly. Last year her report contained the following recommendation with respect to the need for modern law in this respect: "Legislation to meet current and anticipated requirements in this critical area is urgently needed, and I recommend that action be taken to provide it without delay."

Mr. Speaker, members will be aware that the act which is now before the House represents the results of a very extensive process of consultation both inside and outside government. Work on this new legislation began almost 18 months ago in the Ministry of Finance with considerable in-Ministry research, including a detailed examination of the shortcomings of existing statutes and an analysis of corresponding legislation in other jurisdictions. In particular special attention was given to recently enacted legislation in province such as Alberta, which introduced totally new legislation approximately three years ago.

Based on that research carried out in the ministry, a discussion paper was prepared and released for public discussion in August of last year. The work of the task force, I think, is well known; submissions were received from well over 200 organizations and individuals. They reflected the very strong interest generated by the discussion paper, particularly among those organizations in receipt of public funds. After that. we reviewed the recommendations and submissions of the task force. From the public discussion with the ' auditor-general and with the Institute of Chartered Accountants, the task force prepared a report which was submitted to me in February of this year. I released the task force report in March, along with a statement confirming acceptance of the major recommendations in that report.

Mr. Speaker, in designing new financial legislation for the province the government has considered very carefully the fundamental objectives which the Financial Administration Act should address, not only for the control of public resources but also for the management of these public resources in an economic and efficient manner. As the members will know, there are a very significant number of consequential amendments contained in the bill which flow from the bill. First of all I should note that three major acts will be repealed with passage of this one. The Revenue Act, the Financial Control Act and the Ministry of Finance Act will all be repealed with passage of this new one, when that occurs. In addition, over one hundred consequential amendments are required to bring other statutes into harmony with the new legislation.

Mr. Speaker, we've had the cooperation of all ministries and.all sectors of government in reviewing the consequential amendments to ensure that none have been omitted and further that none are intruding where they should not or where we do not want them to. I think the six points which best describe the objectives of the government with respect to this legislation are as follows: the consolidation of financial legislation into one comprehensive act, the deletion of archaic provisions, the modernization of revenue, expenditure and investment provisions, the clarification of organizational responsibilities, the reduction of red tape, and the strengthening of control and accountability.

In conclusion I would simply reiterate that the Revenue Act and the Financial Control Act in British Columbia are decades out of date. I'm in favour of heritage but not in financial legislation. They are long overdue for reform, as the Auditor-General has noted and as members of this House, in turn, have noted from time to time. As such, this bill represents a very strong statement to the Legislative Assembly and to the people of British Columbia of this government's continuing commitment to increasing control over the public purse, but more importantly, I think, to improving the effective management of the resources which are held in trust by the government of the day on behalf of the people of this province.

I move second reading of the Financial Administration Act.

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MR. HALL: In rising to support this act and to assure the government of the official opposition's support, I want to say to the minister that the opposition welcomes any improvement at all that's been outlined by the Minister of Finance. As he points out, the chief purpose of the bill is consolidation and modernization of financial control legislation. This bill is well laid out and, in general terms, achieves its goal. We notice that it differs somewhat from the draft sent out originally; I think that in almost all particulars it is an improvement on the draft sent out originally way back whenever it was. I can't read my note here.

HON. MR. CURTIS: Last summer.

MR. HALL: Yes, last summer. That indeed speaks a great deal for the process. The only regret I have about the whole process — and I want to speak a little bit about that — is that the Members of the Legislative Assembly were not involved in an organized way in that process. I don't want to thrash that unmercifully at all with the minister. I feel there is a weakness on the part of the government in not using its standing committees, in not taking the advice and not using the talents of 57 people who are available to this House. It's a grave mistake the government makes. It's got nothing to do with politics; it's got to do with talent. That talent is overlooked. It has been my experience that whenever you get into committee, partisan, political posturing very rapidly leaves the committee room. I think you yourself, Mr. Speaker, will remember that, when you were a chairman of a standing committee that did excellent work.

In continuing on this bill, it is my opinion that this has shown to almost everybody who is of a mind to stop and pause for a second that the method of erecting legislation can be copied and can be a model. This minister can now safely recommend to his colleagues that this should be used again, and embellished upon. Therefore without taking much more time of the House I am going to say that in general terms the act is worthy of support, as is the minister's procedure for bringing it about. The publication of a discussion paper, followed by comments and public hearings is an excellent method of presenting such important legislation.

The input from the Auditor-General, the financial institutions and other financially concerned bodies in the country was, I think, valuable and important. An act has emerged, and it is as well drafted as any that I've seen. It has shown its accessibility, its language is clear and I think it's reasonably laudable. It has moved us a long way towards the target that has been shown to us by our own Auditor-General, and I'm hoping that when I go to the conference next week of legislative accountability people — auditors-general, public accounts people and my colleague from North Vancouver — we will be able to show this piece of legislation and perhaps show that B.C. is in the vanguard of this kind of thing.

MR. NICOLSON: I rise on a point of order, Mr. Speaker, and draw your attention to page 434 of Sir Erskine May, nineteenth edition: "Reading of Books, Etc." Members are not to read books, newspapers or letters in their places...." Or to attempt to solve cubic puzzles. I note that the Minister of Universities, Science and Communications (Hon. Mr. McGeer) is so engrossed.

HON. MR. CURTIS: I greatly appreciate the constructive remarks made by the hon. second member for Surrey (Mr. Hall) with respect to this particular bill, not only as a member of this House, but also as Chairman of the Select Standing Committee on Public Accounts and Economic Affairs. I hear what he said with respect to review by a committee of the House, and I can't argue strenuously with that suggestion, which I think could be employed on some other occasion. With that, I again express appreciation to all who've been concerned with the development of this bill, particularly the Auditor-General, who has appropriately and continually prodded with respect to this legislation. That is her job, and we have responded to that task. Mr. Speaker, I move second reading.

Motion approved.

Bill 27, Financial Administration Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. GARDOM: Committee on Bill 31, Mr. Speaker.

MISCELLANEOUS STATUTES
AMENDMENT ACT (No. 2), 1981

The House in committee on Bill 31; Mr. Davidson in the chair.

Sections 1 to 3 inclusive approved.

On section 4.

MR. LEVI: Is the minister around? There he is. Have you got anything to say on this, Mr. Minister? He obviously hasn't. Do you want to open the debate or...? No, he doesn't. I'm going to ask you something. As I can see, you're well prepared.

I want to refer the committee to the 1980-81 annual report of the B.C. Buildings Corporation. On page 14 in the report it says the following: "Commitments. The corporation estimates that the cost to complete projects under construction will be $44 million, of which $25 million has been committed." I'd like the minister to tell us exactly why he wants to increase the potential debt load of the corporation from $300 million to some $700 million. I can recall that during his estimates we asked the minister what plans B.C. Buildings Corporation had in respect to broadening its services. He made mention of some government buildings that were to be constructed over the next few years, mainly in Victoria. To go from $300 million.... We find in the annual report that the direct long-term debt of the corporation as of March 31, 1981, was some $155 million. There are some notes payable to the province of some $166 million, which are payable sometime in 1992.

If this debt load goes to $700 million, which is about a 140 percent increase over what it is now, what is it going for? What specifically has the corporation got in mind in order to incur this amount of debt? I can only suggest to you, Mr. Chairman, that the purpose of this increase in the debt structure is directly related to that northeast coal project up there. The government is on record as saying that they will develop the Tumbler Ridge area and provide infrastructure. I'd like the minister to confirm for us exactly what the long-range or short-range plans are in respect to the B.C. Buildings Corpo-

[ Page 6497 ]

ration that they would require this amount of leeway to accumulate debt. At the moment they're still below the amount that has been legislated. Here we are going up to $700 million. I'd like the minister to tell us very specifically.

I can only get the impression from the legislation coming down in the past session that the government are behaving like a bunch of Swiss gnomes. They're taking pockets of money, putting it in envelopes and running around under the Douglas Buildings putting it somewhere. What are you using the money for? This is a dramatic increase in the debt structure. I'd like the minister to explain to us particularly whether this debt structure is related to the development of the northeast coal area, particularly the Tumbler Ridge area, and the provision of infrastructure. Is that what we're talking about here? I'd like the minister to give us an answer.

HON. MR. WOLFE: No, the requested increase in the borrowing authority of the Buildings Corporation has to do just with the requirement and future plans, some of which are in the feasibility stage, for provincial government buildings, primarily institutional, but also the potential of office buildings, particularly so in the case of the Victoria precinct here. You have heard of some of those. During my estimates, you requested further information, which we will be tabling in due course, having to do with broader plans for the precinct. I think the Minister of Finance (Hon. Mr. Curtis) has already announced the addition to the Douglas Building and so on. That increase is simply related to plans for buildings. It does not relate to the northeast coal project.

MR. LEVI: Is the minister saying that none of the future debt of that corporation is going to involve any expenditure of money in the northeast coal area? I would remind him that the government is on record as saying that they were participating in the construction of the Tumbler Ridge and the infrastructure. That requires buildings and personnel. He just said that this money is going for a building project. That's over about five or six years or even more. Some of it involves renovating — particularly the Douglas Building. We're not talking about rebuilding there.

We asked him during his estimates if he would provide us with his blueprint that they put together, which he hasn't done. I wrote him a letter and asked him to provide the Coopers Lybrand report, which would give us some idea about the operation of the B.C. Buildings Corporation, and he hasn't even replied to it. I'm not sure that he knows anything more about this operation than he did about the Systems Corporation.

I want it very much on the record. Is the minister saying that none of this money will be billed on the Tumbler Ridge project?

HON. MR. WOLFE: Mr. Chairman, I'd like to be clear and not mislead the committee in terms of that question. It's not intended with this, but I presume that there may be provincial government facilities which would eventually be destined for that community. We have no specifics on that at this stage, but naturally it is a possibility. So I don't want to indicate that that's impossible, but for standard services required by the province, as in any community, from correctional institutions to you name it — but certainly not at this stage.... If the community arrives at the size that is envisioned, there will certainly be provincial government facilities required. This would be the vehicle that, perhaps, would be required to establish those.

MR. LEVI: I'd just refer the minister again to the last annual report, which was recently tabled. This is the report that goes to March 31, 1981. I appreciate that it really covers that previous year's operations, but there is a very specific section in there talking about commitments, and it doesn't talk about any of the things that the minister has talked about. In terms of future development of buildings, it says very specifically: "The corporation estimates the cost to complete projects under construction will be $44 million."

HON. MR. WOLFE: What page are you on?

MR. LEVI: I'm on page 14 of the annual report, "Notes to the Financial Statements," note 14. If you are going to produce an annual report and have a section which deals with commitments, presumably one could extend that definition and say: "Well, what will we be looking at in the future?" You're getting advice from the Minister of Industry and Small Business Development. My God, now you're in trouble, son. Leave him alone. He's doing bad enough as it is.

Interjections.

MR. CHAIRMAN: Order, please. Let's continue on section 4.

MR. LEVI: The minister has the section in front of him: "Commitments." Here is a board of directors that is pointing the direction for the corporation. There's nothing in there that you've said. Frankly, one gets the impression that what is happening to this corporation is really what is happening to the BCR — that the government is really running the thing and it is no longer at arm's length. We have no indication in this report that they have in mind any of the things that you are talking about, or for that matter what your involvement might be in northeast coal. What about the commitment section? There's nothing in there: your board has just recently met to approve this.

HON. MR. WOLFE: Mr. Chairman, there are specific commitments referred to in the report that members have referred to, and there are other commitments which are being made from one month to the next as the corporation meets and considers projects in various communities. Those are specific commitments, as of the year-end of this report, which are specified as a note to the financial statement, and there are many more which are developing at the feasibility stage. In an effort to consolidate various branch staffs of ministries and to make them more efficient, there is a very worthwhile effort going on to consolidate facilities. You have staff here in Victoria distributed in a very uneconomic fashion throughout different buildings. So there are many more commitments coming onstream than those that are referred to in the report. There are also feasibilities being considered in E lot of other ones. It is a case of providing services in the best manner to the people of B.C. That's the main thrust of the Buildings Corporation and the request to the ministries before it. So we have to respond to that in an economic manner.

MR. LEVI: I just have one other point, Mr. Chairman, The minister finished up his statement by saying "in a most economic manner." You are the government that has pay-as you; go or debt-as-you-go. Which is it? You are going to incur some $700 million in debt: that's what you've done with the

[ Page 6498 ]

B.C. Buildings Corporation. You are going to do all sorts of things through this corporation and have a debt that will go up to $700 million, and you may very well be back in this House asking for an extension of that ceiling in order to spend more money. Frankly, Mr. Minister, you have not been candid about what you are doing with the other $400 million. You can't tell us that you're going to be building buildings and integrating staff, and all that's going to take a little.... We're going to spend $400 million on that? You already get $180 million in rents. By next year we might be paying $250 million in rents.

One of the questions I want to ask you is when we are going to be able to get this corporation accountable in front of a committee. Have you given consideration, particularly in view of this increase in the debtload, to putting this Crown corporation on the schedule for the Crown corporations reporting committee? You are the minister responsible, and you can make the recommendation. We can't get anything out of the Minister of Finance (Hon. Mr. Curtis), but I'm asking you if you are prepared to put this on that schedule so that members of this House can examine the operations of that corporation. It is starting to get out of hand. If you are asking us to go up to $700 million, then we're going to have a lot of trouble. We want to be able to understand what's going on. Are you prepared to do that? And don't tell us it's a matter of policy.

Interjections.

MR. CHAIRMAN: Order, please, hon. members. The member is again suggesting a legislative change.

MR. LEVI: It's not a legislative change, Mr. Chairman. Where is the legislative change? It's an order-in-council, one of those famous orders-in-council. Ah, you see, you think that orders-in-council are legislative changes — they do — but no, they're not legislative changes.

Is he prepared to recommend that? Has he decided to recommend that? That's not a legislative change; it's simply an order-in-council adding to the schedule. We want to be able to examine this in a lot closer fashion than we're able to do in this committee.

HON. MR. WOLFE: Mr. Chairman, I think the matter the member just raised was discussed during my estimates, and it would require a legislative alteration to consider whether such a corporation should be considered by the Crown corporations reporting committee. It has, in my view, adequate accountability now through the minister being represented on the board and through the tabling of their annual report. I must say that this corporation has done a responsible job in effecting economies in their own operations in the last two years. Responding to the wishes of Treasury Board and the Minister of Finance (Hon. Mr. Curtis), they have accomplished substantial reductions in staff levels and in the cost of operation, as well as substantial energy efficiency through a very effective program in all government buildings.

So I only want to say that we can, I presume, have confidence in this request by virtue of the fact that all requests for additional borrowings have to go before the executive council. It isn't as if the company has carte blanche to make all of these borrowings; but it has to make forward plans and it has to have enough latitude in its borrowing authority to handle both what are known commitments at the exact moment and also those which are coming on stream.

MR. LEVI: Well, I'm going to try once more, and then I'll leave it. The minister said that representations were made to the cabinet in respect to this $400 million increase. They came to the cabinet and said — I hope they did, because that's what I presume happens; they draw up the plans and then they come to the minister — "We need approval for $400 million." Let me ask the minister one question: apart from new buildings, which are long-term, what significant amount of money is there in those plans which require an increase of $400 million in the debt ceiling? What is the most significant amount there? You say that they laid these plans before you. What significant amount of money is there that you suddenly need $400 million?

HON. MR. WOLFE: Mr. Chairman, this has received cabinet consideration. What I said earlier — just to be clear with the member — was that any individual requests for borrowings within this borrowing authority have to come by way of an individual proposal and presentation to cabinet, as is the case with all of the Crown corporations where their borrowings are guaranteed by the government and so on. I'm just saying that there is astute and careful examination made of the request for each individual borrowing within this borrowing authority request. This is just an overall borrowing authority required under the act.

You asked about individual proposals within that. There is a significant number, all the way from courthouses to correctional institutions throughout the province, some of which would be difficult to elaborate on at this specific stage.

MR. COCKE: Mr. Chairman, what effrontery! We hear that our safeguard is that the executive council will examine all borrowings. We hear that there is safeguard after safeguard after safeguard; but the government's own precious safeguard, the Crown corporations reporting committee, which, incidentally, hasn't met for months anyway — that window-dressing piece of legislation — just isn't working. But anyway, I concur totally with my colleague from Maillardville-Coquitlam (Mr. Levi) that this should be included among the Crown corporations that report to the committee.

Beyond that, we're looking here at an authority for an increase in borrowing from $300 million to $700 million. Mr. Chairman, that minister was once Minister of Finance, and we all recall him getting up and making a splendid assertion — a political statement about debt created by a former government — and going around the province with this particular situation. Here we're talking now about public works, which used to be a part of government and government expenditure. This government moved public works out of the purview of the Legislature. They took it out of the estimates, created an immense debt and said we were debt-free. That is the part that we find the hardest to take. This increased borrowing, along with the increased borrowing for practically every Crown corporation, shows us to be the most debt-ridden province one could ever imagine. So that it's not a direct debt, this government moved it out into the purview of a Crown corporation. The Buildings Corporation was a way that the government could create debt without being criticized for going into a deficit-budgeting situation. Clearly that's precisely where we are. We're in a deficit budgeting situation, to the tune of whatever the debt is there now, up to a maximum of $700 million — pure and simple. I would hope that the minister could give us some kind of explanation of that.

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HON. MR. WOLFE: I would like to comment with regard to that. The member again raises the question of the fact that space costs were formerly recorded in Public Works and that the concept of the Buildings Corporation was developed. I think there is ample reason to support the fact that that has provided a great deal more accountability in the ministries and the real cost of building occupancy. The opportunity for this committee to question anything with regard to the Buildings Corporation occurs through the ministerial votes having to do with space occupancy. I note that the federal government has been very closely watching the progress of the Buildings Corporation concept in British Columbia, and in the past 12 months they have adopted a space occupancy accountability formula in government in using the same approach as the Buildings Corporation in British Columbia.

[Mr. Strachan in the chair.]

MR. HALL: The facts of the matter are that this section asks the committee to approve an increase in borrowing powers of more than double the current $300 million. At the moment, as reported in the budget speech, borrowing to December 31, 1980, is $172 million. That's what has been borrowed up to now. According to the budget speech, the expected borrowing is $76 million. This government has admitted that those are the plans. Those are the plans that you have — $76 million this year. That's what you said in print; that's what we heard from the member for Saanich. If I add the $172 million that you've already borrowed to the expected borrowing of $76 million, it comes to $248 million. There's already enough borrowing power to cover that expectation. You've got more than enough borrowing power to see you through the fiscal year we're dealing with.

Now the minister says he's got a lot of other ideas and a lot of feasibility studies. He wants to look after a lot of people. We're saying okay, we're reasonable. Tell us what they are. Just give us a hint. Give me a name. Tell me of one building. Give me one address. Give me one project. Just give me one piece of a building proposition that I can hang a $400 million hat on. I'm suggesting to you, Mr. Minister, that you can't. You've already got $300 million. You can only tell me, through the speeches of your Minister of Finance, that you want $248 million. Recorded to date, the excess borrowing authority over your requirements is $452 million. For what? What do you want the $452 million for? You're going to get it anyway, because you've got that huge majority over there. You're going to steamroller this section 4 through anyway. On top of that, we've heard the explanation from the minister that the Buildings Corporation has become so efficient that they've done this and they've done that. I'll tell you what they've done. They've raised the rents on every single governmental department from 40 to 70 percent. That's how darned efficient they've got. They're out borrowing money to put the rents up. Now we know what's really happening. It's a mess, Mr. Minister, and we're not going to vote yes on this section until you give us some idea why you want this $452 million to play with.

MR. LEVI: I'm really quite amazed at the minister. In order to illustrate the success of the corporation, he is telling us that his friends in Ottawa are looking at it. They're fascinated with it. Do you know what they're fascinated with? They want to find some new mechanisms for wasting money so they can increase the national debt. Who do they come to? The king of the waste-makers. What are they looking at? You come in here and tell us that because the company has saved $0.5 million on the energy costs.... That's very good, but you don't hang that out as an excuse to come in and say: "They're so good we can give them $400 million to play with." What will they do?

My colleague from Surrey is right. Hang your hat on one project beyond what you talked about and gave us during your estimates. You haven't been able to do that. Don't tell us about accountability in here. We have great difficulty in getting answers from the minister. He is not equipped with the kind of information that could in any way substantiate even $100 million. That's why I said in the beginning that the basic objective of this increase is for something entirely different. The only thing I can hang my hat on is the northeast coal. It's for costs for all sorts of infrastructure up there that your government is going to find a way of putting through. If you can counter that by saying: "Here are the long-range plans...." You've given us nothing in terms of any long-range plans — nothing beyond what you gave us when we had your estimates and when we had the budget speech. All of a sudden you come in and you need another $400 million or $450 million, as my colleague said. Well, hang your hat on it. 'Let's have that kind of discussion. Tell us why. If you want to be accountable, be accountable right here. You've said you're prepared to answer questions. So far you haven't answered any, other than what you answered in the last estimate. We were looking at a $76 million increase, not a $400 million increase. Answer the questions. You said you were prepared to do that. This is the accountability process, so let's get some accountability.

MR. COCKE: The minister is sulking now. He's having difficulty answering forthright questions put in this committee. Now we know beyond a shadow of a doubt that his whole effort to talk to us about accountability was a farce. He is not even accountable in this House. Obviously the only place that minister is accountable is in the cabinet or with the executive committee. That's just not good enough for us. We're here to do the people's business, and we should hear what the people's business is from that minister. He's created a phenomenal amount of debt and will create a lot more. He will not stand up in this House and tell us what it's for. That's not good enough.

Section 4 approved on the following division:

YEAS — 28

NAYS — 18

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An hon. member requested that leave be asked to record the division in the Journals of the House.

MR. REE: On a point of order, Mr. Chairman, I believe Mr. Mitchell's name was called.

MR. CHAIRMAN: The correction is noted.

On section 5.

MR. LEGGATT: I'd like to ask the minister for some clarification of this particular section. This section specifies that the company — we're talking about B.C. Rail now — is for all its purposes an agent of Her Majesty, and the right of the province and its powers may be exercised only as an agent of Her Majesty. At the present time my understanding is that the government of British Columbia owns all of the capital stock of B.C. Rail. Perhaps the Minister of Finance, who I understand is quite familiar with this because I discussed it off the record with him the other day.... The specific question is: given the fact that the government now holds all the capital stock in B.C. Rail, why is it necessary for this declaration to be there given that it's a Crown corporation? As I understand it, a Crown corporation is always deemed to be an agent of Her Majesty the Queen.

HON. MR. CURTIS: The Minister of Industry and Small Business Development (Hon. Mr. Phillips) may want to respond to this section or other sections. Inasmuch as the hon. member opposite directed this question to me, the present legislation does not classify the British Columbia Railway Company as an agent of the Crown, even though the railway is entirely owned by the province of British Columbia. The amendment therefore clearly establishes the relationship of the railway to the province.

Secondly, there has been a requirement on the part of the federal government to further clarify another point with respect to the investment of Canada Pension Plan funds. As the committee will know, federal legislation requires that CPP money may only be loaned to a province or a provincial Crown corporation. Over the years a significant amount of money has been loaned from CPP to the BCR and its predecessor railway. It's only recently that the federal government has questioned the legality of that due to the absence of the point I mentioned a moment ago.

Section 5 approved.

On section 6.

MR. LEGGATT: I have some questions surrounding section 6. This section provides an increase in the capital stock of the BCR to be $1 billion divided into ten million shares of $100 each. The existing legislation provides the capital stock under section 18 of being $25 million divided into 250,000 shares at $100 each. Firstly, what is the existing authorized capital stock of B.C. Rail as of today before this legislation is passed? What's the existing structure? Is the existing capital stock as we read under section 18 of the old act or, as I understand it, was it increased substantially by a previous order-in-council? Perhaps the minister could explain what the present situation is with regard to the capital stock of that company.

HON. MR. PHILLIPS: The authorized capital stock of the company made by the directors' resolution from time to time is $210,572,900, of which $185,572,900 has actually been issued.

MR. LEGGATT: Would the minister explain how the company was able to get to $210 million when the legislation provides only that there be $25 million, divided into 250,000 shares at $100 each? What was the authority for moving up?

HON. MR. PHILLIPS: The authority to move up was really through the British Columbia Railway Finance Act, even though the old British Columbia Railway Act did not allow it. We're really cleaning up the legislation.

MR. LEGGATT: I just want to clarify this, Mr. Chairman. What the minister is telling the House is that B.C. Rail, without authorization, without legal justification, decided to increase its capital stock. Otherwise why are we having to amend this legislation today?

HON. MR. PHILLIPS: Mr. Chairman, as you know, the railway has a difficult time increasing its capital stock until they have the money. They get all their money from this Legislature. Any moneys received to increase their capital stock has been voted on through this Legislature. So it has been done through the British Columbia Railway Finance Act, and we are now changing the British Columbia Railway Act to correspond with the finance act.

MR. LEGGATT: There is no authorization that I can find, unless the minister can point it out. Under the British Columbia Railway Finance Act, which this Legislature has amended to provide the watering of the stock in the BCR. What we have at the present time is legislation within which the BCR must act. That legislation clearly provides under section 18 that the capital stock shall be $25 million divided into 250,000 shares of $100 each. There has never been any amendment to the law that came forward, I am still at a loss to understand how it is that BCR, no matter who did it.... I don't know whether it was the NDP or the Social Credit government. I suspect that the stock was increased subsequently, but there is no legislative authority. The reason I want to make this point is that too often we think we can take an order-in-council and change a law without coming before the Legislature. That's been a habit of this government over and over again. It's not good parliamentary practice. As far as I can see, what we are presumably going to do now, if this section passes, is to clean up something which was done but which did not have legislative authorization. The minister may say that he can show it in estimates or that he can show somewhere else that the Legislature had a cursory look. But that's not what legislation is about. Legislation is taking a law and amending it in the House, not by order-in-council. It's bringing it forward to this House, giving us an opportunity to debate, as we're doing today, section by section. It's just not a satisfactory way to legislate, as far as I'm concerned.

I'd like to ask the minister some other questions surrounding section 6. The proposal would increase the capital stock to a billion dollars from what had been legislated previously at $25 million. That gives the company $975 million, presumably in stock that it can market or sell. Just so that we're not thoroughly confused by this — and I admit I don't entirely understand what's going on.... If you take

[ Page 6501 ]

this additional allocation of capital stock, first of all, who is the purchaser going to be? It's presumably the government. I take it that there are no plans afoot to have the private marketplace purchase any of the capital stock of BCR. So, first of all, would the minister advise us who is the prospective purchaser for the additional stock authorized under this particular section?

HON. MR. PHILLIPS: Mr. Chairman, there will be no shares purchased by anybody but the government. We are the sole shareholder and intend to remain so.

MR. BARBER: Socialist! Commie! Pinko!

MR. CHAIRMAN: Order, please.

HON. MR. PHILLIPS: We're not really going from $25 million to $1 billion. As I said, we are going from $185 million to $1 billion.

MR. LEGGATT: Presumably, since there is no other purchaser in mind, I take it that the government can expect to become a purchaser of the increased stock allocation. In the course of time we can anticipate that the government will be taking these shares into its own name. Is that correct?

HON. MR. PHILLIPS: Yes.

MR. LEGGATT: Could the minister explain to the House how this process is going to take place'? As the shares move into the government's name.... How will the price of the stock be determined? Is this the method by which the minister is seeking to assist the BCR in the construction of the Anzac line?

HON. MR. PHILLIPS: We will be buying the stock at the authorized value set out by the board of directors, naturally. A dollar injected will be a capital investment in the railway. Historically, the government and the people of British Columbia have put very little money into the British Columbia Railway, and that's why it has such a tremendous debt today.

MR. LEGGATT: Try it again.

Interjections.

HON. MR. PHILLIPS: There's a lot of cackling over there, Mr. Chairman, from the members opposite.

MR. SKELLY: That's because you're telling jokes.

HON. MR. PHILLIPS: I don't know what they are cackling about.

As we proceed with the construction of new railway lines.... Instead of historically going and borrowing the money and debt-funding all the capital construction, this will allow the government to purchase shares and capitalize immediately the additional construction. We seem to forget in this Legislature that the British Columbia Railway has really been one of the best economic tools this province has ever had. It has been treated very poorly by all governments because they have been allowed to progress and borrow money to the point that if it were a private corporation it wouldn't be allowed to exist.

[Mr. Davidson in the chair.]

In the not too distant past the federal government had an identical situation with the Canadian National Railway. The St. Lawrence Seaway, which had built up debts of billions of dollars and would never make a profit.... It certainly contributed to the well-being of our country by way of the economy and a transportation system, and the federal government picked up the debt. Now the seaway can function on a normal basis and be competitive and make a profit. We had the same situation, Mr. Chairman, with Air Canada. The taxpayers of Canada picked up the debt and now Air Canada functions as a normal corporation in the normal fashion because they haven't the responsibility or the burden of servicing this horrendous debt which they had.

MR. LEGGATT: Mr. Chairman, I am still a bit unsure on this one. Since the government now holds all the shares in B.C. Rail. why is it of any value to them to have more shares in B.C. Rail? In other words, your assets aren't going to grow because you're getting more stock. You already own the entire corporation. Right? You own everything in it — you've got all the stock. What's this ruse of taking more stock in a company that you already own all the stock in? That's the kind of financial arrangement I can't quite understand.

HON. MR. PHILLIPS: Well, Mr. Chairman, let me explain it to the member this way. You start a business and you either put money into the business — and you usually have to put some in because the bank makes you put some in — and then you go out and borrow. Right? What we're saying here is that instead of having.... The money has to come from somewhere.

MR. LEGGATT: Right.

HON. MR. PHILLIPS: As we put the money into the railroad, we will take it out in shares. You're a lawyer; you understand that. Normal procedure. That's all we're doing. We have to have something in return. Legally we own the company, we'll be buying more stock and injecting more capital into the railway. I don't see as that's so complicated.

MR. LEGGATT: Mr. Chairman, I understand it to this extent....

MR. BARBER: A bunch of worthless paper!

MR. LEGGATT: In my sort of naive, lawyerish. non-business way I understand that if I wanted to lend money to the BCR, I'd want to get some interest on the money. If I wanted to give money to the BCR, I'd buy worthless stock and it wouldn't give me any return. Now isn't that correct, Mr. Minister? What you're really doing is taking the public's money, pumping it into the BCR, and you're not even getting them to sign a note. Instead, you're going to take back shares which will pay the government nothing and give the taxpayers of British Columbia nothing. What you're really doing is pumping tax money into he BCR without even taking a promissory note, a guarantee or any interest back for that particular fund. Admit it! Why don't you say: "Sure, we're going to pump some money.... We're in favour of northeast coal." This little financial device is.... It takes a little time to keep looking at it and looking at it, but we're

[ Page 6502 ]

getting worthless pieces of paper for the taxpayers' money. That's what it is.

HON. MR. McGEER: I think this is an illuminating exercise on the part of our socialist opposition as to their penetrating insights into how enterprise is developed in Canada. Listening to the arguments of the opposition, it becomes pretty obvious that had Canada depended upon the imagination and enterprise of the members opposite, or people who thought like they did, we would be a Third World country today. There is no possibility at all of making use of the abundant resources of this bounteously endowed land unless one is prepared to invest — may I use that term once more — invest in the future of the country by putting in the infrastructure that allows those resources to be utilized.

The problem with underdeveloped countries is that too often they have been guided by the kind of thinking that we heard from the member for Coquitlam-Moody. Investment has made Canada great, and our future will be built upon investment. Investment depends upon supplying capital from savings in order that it can be utilized — not to bring immediate returns, but to bring dividends in the future as the land is developed and the enterprise succeeds. If we were to depend on that man from Port Coquitlam–Moody — I'm sorry if I can't get the exact definition of his riding — we would never have roads, railroads or any other facilities to the resources of this country. What this section of the act does is indicate the faith of this government in the development of the resources of our province in such a way that they will bring dividends to the public in terms of jobs, careers, opportunities and, last but not least, money. Jobs, money and opportunity — that's what an infrastructure is all about.

If we had to depend on the NDP to build the facilities and infrastructure, with their misunderstanding of what's brought the development of Canada to the stage it's at today, it would never happen; we'd never have any resource development in Canada; we'd never have any industry, jobs or opportunities. That's why the members opposite are opposite. That's why they've been defeated in election after election. The people understand the relationship between investment and success. The public, the unions, business people and investors understand that. The only people who don't understand it are the socialists. They don't understand it in Canada, in Europe or in other parts of the world, and wherever their ideas dominate you can depend upon failure. It's the same story everywhere. It's the philosophy of failure, the creed of envy — I think it was Churchill who said that, but it's so true. Here we see it coming up again this morning as the opposition attempts to stall a development in British Columbia. It's against our resources, it's against providing an infrastructure. They don't understand the relationship between investment, faith in the future, risk of capital and all those things that have brought good to Canada and British Columbia and which we want to remain in this country. We want it to remain, and I and the members on this side will be supporting the Minister of Industry and Small Business Development (Hon. Mr. Phillips) to see British Columbia go ahead.

MR. BARRETT: Could I first of all ask leave of the House that the following remarks not be put in Hansard because I do not wish to embarrass the minister who spoke previously. May I have leave that they be struck from Hansard?

AN HON. MEMBER: No.

MR. BARRETT: Somebody said no. The silliness of the argument I've just given is in direct agreement with the silliness of the speech we've just heard. When that member was a Liberal and had principles that were Liberal, he voted against the BCR and fought against the BCR and the Columbia River Treaty. At that time he was a university professor who was leader of the Liberal Party, and he gave a brilliant analysis of how dumb Social Credit was.

What have we found today? We've had a debate on power versus principle, and power won out. That minister lost his principles as he walked across the floor, and now has embraced the orthodoxy of borrowing money to give to corporations so that they can make money. Who used to give the greatest speeches...?

Interjection.

MR. BARRETT: Yes, sir, the section of the act. Who used to give the greatest speeches against the Columbia River Treaty? I used to think that I did, Mr. Chairman, but I didn't. There was one who spoke greater than I did about the folly of the Columbia River Treaty and the debt, and it was that member. There was one even more eloquent than I on the debt of the BCR. I am embarrassed to admit that I'm only number two and trying harder, but the number one critic of the BCR debt was the former Liberal leader, who now sits as a quiet lapdog to the Social Credit Party, who stroke him and pat him when he gets up and makes that fatuous speech abandoning any kind of principle.

HON. MR. HEWITT: He saw the light.

MR. ' BARRETT: Mr. Chairman, he didn't see the light; he went right down the tube. He walked away from his Liberal colleagues, that once great leader of the Liberal Party who changes principles as one would change one's coat.

AN HON. MEMBER: The bill.

MR. BARRETT: This bill is to put British Columbia into debt for years and years and years, and that member is the one who is agreeing with putting it into debt. Mr. Chairman, I can say about the minister of small industry and small things or whatever he is — small things are those he understands — forgive him, for he knows not what he does. After all, if you spend your life kicking used-car tires, what do you know about putting the province into debt? Just roll back the odometer and everything will work out all right, as far as his mind is concerned. But that genius sitting next to him, that brilliant scientific analyst, who was a Liberal spokesperson and used to sit on this side of the House and rail against B.C. Rail, stands up this morning in British Columbia and announces: "The conversion has struck. I'll do anything for power. Just put me in the cabinet, please, old Bill, and let me call you Bill; let me be one of the few who are allowed to call the Premier Bill, and I'll get up and I'll defend any policy."

I read the interview. He's one of the favoured cabinet ministers. He's allowed to say: "Hello, Bill." Do you know what he's done for that privilege? The rest of you guys all have to genuflect and say: "Dear Mr. Premier, sir, can I come into your office?" He doesn't have to do it. He has actually seen him and talked to him for 15 minutes this year. He's had

[ Page 6503 ]

15 minutes this year with Bill alone in his office. He said: "Bill, for this 15 minutes I will get up and forsake every speech I ever made against B.C. Rail; I will get up and do the last thing possible to show that my conversion has taken place; I will embrace the policies of Don Phillips." Can you see that taking place in Bill's office?

Interjections.

MR. BARRETT: "Yes, I will embrace Don Phillips." Now that's going too far; he didn't say he'd embrace Don Phillips; he just embraces ideas.

AN HON. MEMBER: That's going over the deep end.

MR. BARRETT: No, he goes over the deep end when he's on television. They went to Hollywood to tell him how to handle himself. I'm going to see if that 14 grand we spent on Disneyland...

MR. CHAIRMAN: Order, please.

MR. BARRETT:...has any effect on the minister. I'm going to watch him. I'm not talking about you right now, Mr. Chairman, I'm talking about this section of the bill.

MR. CHAIRMAN: section 6.

MR. BARRETT: That's right — section 6. I'm glad we're on section 6.

That brain surgeon over there.... You'll notice they only let him work on ones that are already in formaldehyde; that's the only ones they let him work on, because his mind is always in the past. They let him rip apart these old formaldehyded brains. Sometimes he doesn't wear the gauze over his nose and the formaldehyde goes right up through there, and he gets the formaldehyde fumes. What happened with the formaldehyde fumes? He floated on those fumes across from the Liberal Party right into Social Credit; and the fumes are so bad, he's actually spouting Don Phillips' programs and philosophies. Thank God, the children are no longer in school this year. We would have been burdened with hundreds of young children in the galleries watching politics as it is in British Columbia; young children would be asking their mommies and daddies: "Was Dr. Pat not once a Liberal? " "Oh, children, don't ask that question." "Did he not have principles as a Liberal?" "Oh children, don't ask that question." "How could that man speak that way, Mommy and Daddy, when he spoke against B.C. Rail when he was a Liberal?" "Oh, children, that's politics Pat McGeer style."

Interjections.

MR. CHAIRMAN: Order, please.

MR. BARRETT: Mr. Chairman, I'm glad you called order; there are interruptions. I don't like those interruptions.

MR. CHAIRMAN: Actually, hon. member, the reason we called order is because the Chair has allowed — and I believe the hon. member will agree — considerable latitude under section 6. Also, hon. member, could we refer to members in the House by their proper titles.

MR. BARRETT: Mr. Chairman, I certainly intend to stay in order. I don't enjoy this speech. If anybody thinks I'm having a good time rubbing the minister's nose in his memories, they're wrong. Not me. My heart is full of compassion. I'm attempting to understand how one takes off his principles just like he takes off his jacket, floats across the floor on formaldehyde fumes, ends up as a cabinet minister in Social Credit and then gets up in this House and defends massive debt for B.C. Rail.

It's shocking that this was allowed to take place under this section. There's nothing in this section that allows a minister to shed his principles on a section of an omnibus bill. That's what we saw today. My colleague the member for Nelson-Creston (Mr. Nicolson) has come to me and is considering a motion of privilege and censure on that member for changing his principles right here on the floor of the House. At least it could have been done in the corridor or in a back room, or at least a smoke-filled room. But the embarrassment of seeing that minister abandon his principles right here on the floor of this House in front of innocent, naive legislators is too much for some of us to understand. He was the Leader of the Liberal party. He used to sit back there. He attacked Social Credit's policy of borrowing on B.C. Rail, and today he stood up and said: "They should do more borrowing, because I believe in Social Credit." Aberhart, where are you? Conversion has taken place. I expect that minister to bring in a bill on funny money so we can pay off the New York bankers and the European interests with scrip from UBC. He can write it in the empty hospital beds. "On the a + b theorem, how do we get patients in this hospital that I built as a memory for me?"

Mr. Chairman, if I continued that I would be out of order. So I want to say in conclusion, for those children who are not here today, that their whole life has been saved. They'll still believe there's purity in politics. But for those wizened taxpayers who grace this chamber today, I want you to understand that you've not seen anything new in British Columbia, just a repeat of our history. Every time there's a whiff of power the Liberals cross the floor and go for it. Where are they today? There's the first member for Surrey (Hon. Mr. Vander Zalm) who wanted to be the leader of the Liberal Party. There's the second member for Vancouver–Point Grey (Hon. Mr. McGeer), who was the former leader of the Liberal Party. There's the former Attorney-General, now the minister.... There are so many Liberals over there that Prime Minister Trudeau was jealous. He doesn't have as many Liberals in the west as there are in the cabinet over there. That's a fact.

I ask all those citizens who have seen that minister shed his principles today not to tell their children, not to tell their friends or neighbours, but just to understand that as long as the price is right, Liberals are available. As a matter of fact, Mr. Chairman, that's where that program "The Price is Right" started: Dr. Pat McGeer as the host, principles abandoned. Shame on you! Your uncle, Gerry McGeer, was better than that. I never thought I'd live to see the day. I'm ready to go to heaven and my reward after today's speech. I'm ready. I know that even if I can't make a claim to purity, on a scale of sticking to principles, I'm further ahead than that minister.

In dealing with this section, Mr. Chairman, after I'm through with the preamble, you ask us to put this province into debt and to put our financial fate in the hands of people who would abandon principle to play power politics. Forget it! Go back to sniffing formaldehyde. We don't want any part of putting the people of British Columbia deeper into debt for formaldehyde dreams.

[ Page 6504 ]

MR. CHAIRMAN: Hon. members, prior to recognizing the minister, I think it would be a good time to take a look at the section we are debating, which says: "The capital stock of the company shall be $1 billion divided into ten million shares of $100 each." As hon. members must understand, we are limited in committee to discussing specifically the amendment to the section that is before us.

The member for New Westminster on a point of order.

MR. COCKE: Mr. Chairman, we have a bill that has no principle, by virtue of the fact that it has a number of dissimilar bills within it. So really, what we are discussing here is both the principle and the section-by-section debate. That is why latitude is widened in debate with respect to an omnibus bill. I rather appreciate the fact that you have given that kind of latitude, and hopefully it is going to continue.

MR. CHAIRMAN: The member for New Westminster makes a good point. Nonetheless, hon. members, even under second reading of a bill there are parameters established.

MR. BARRETT: On a point of order, Mr. Chairman, because of your ruling, I withdraw all the remarks I made.

HON. MR. PHILLIPS: Mr. Chairman, I was just going to say that member who just spoke must have had that speech preserved in formaldehyde, because he drags it out. It's well preserved, well used, but I've heard it so many times. But here, while we're debating the great British Columbia Railway, the railway that that man, when he was president of it, just about ran onto the rocks and ruined....

I want to tell you what we're doing here in the Legislature today. We're investing in the future; a dollar put in today will be worth $14 down the road. I want to tell you that's what we're doing. This government has got the courage and the intestinal fortitude to go ahead and finally take that poor country cousin, that great railroad which has done more for the economy of this province than any other single-vehicle.... I want to tell you we're putting some money into it. Yes, and it's an investment in the future. When the city slicker member over there calls it a lemon, I'll tell you I'll go up and down that railway line, and I'll tell those people along that line what the socialists think of the great British Columbia Railway. The man who just spoke was going to spend $2 billion to build a railway to Alaska to haul nothing; it started nowhere and ended nowhere. And he talks about us putting money into this great economic development to open the province up for the future citizens, for the young people. He condemns it.

I want to tell you those are the socialists over there. When you ran the railway it was in debt. When we first took it over it lost $22 million the first year. Now it's making money because we have an independent board and we're running it like a railway should be run. I want to tell you that railway is the best economic development tool this province has ever seen. You talk about subsidies, my friend. Look at the money we're putting into your ferry system. Look at the money we're putting into urban transit. Every dollar you put into the railway brings back hundreds of dollars in investment.

Don't you condemn that great little railway. It's never been better run. It's making a profit, and it's going to make more. It's the best investment this province will ever make, and we've got the fortitude and the money to do it.

MR. LEGGATT: Mr. Chairman, we weren't condemning the railway. We were condemning the minister, not the railroad. That was the difference.

AN HON. MEMBER: You're in favour of it?

MR. LEGGATT: If we could just get back for a minute, I think we've got some answers now out of the exchanges that have taken place. One of the answers seems to be that the funding that will be used to buy this worthless stock in the BCR is going to be from the consolidated revenue. That consolidated revenue and that surplus is being built up by the increase in the sales tax in the province of British Columbia. The plan is in, and it's clear. There's not much doubt what's happening. They're being overtaxed to build the Anzac line. That's the answer we wanted out of this, because it's fine that we finally got some truth.

You're not lending money to the BCR; you're giving them money. You're building the line, not the BCR. The idea that somehow the BCR is going to do this.... It's pretty clear that under this section you're going to take the worthless stock. You're not going to charge a dime in interest for the public's investment, and therefore it's a giveaway. That's why we say that it should have been a co-adventure. We should invest the taxpayers' money in that project. If it's so good for the private companies, why the hell isn't it good for the taxpayers of British Columbia? This should have been a joint-venture project where we got some returns. Instead we had a minister who dashed in prematurely and made a lousy deal with the Japanese. The result is right in this tiny little section. There's the giveaway. He's taken those worthless pieces of paper and exchanged it for the sales tax of the people of British Columbia who have been overtaxed.

HON. MR. PHILLIPS: Mr. Chairman, let it be known to all the people of British Columbia that the socialist party feels that any money invested in the British Columbia Railway is — and he said it — worthless stock. It's an investment in a tool which will keep the economy of this province going. I want to tell you, Mr. Chairman, that group over there, led by Broadbent.... We wouldn't need to invest any money in the British Columbia Railway, because they'd have given all the resources to Ottawa. I want to tell you further that if they had been government we wouldn't be asked to put money into the British Columbia Railway, because there would be no economy. The railway wouldn't have anything to haul anyway.

It's time the people of this great province knew and thoroughly understood what the socialists are all about. They're in bed with Broadbent. The past leader wanted to give all the resources to Ottawa, so they'd take it out of the taxpayers and it would all go back to eastern Canada — to Ontario and Quebec. You stand up here and tell me, when we're investing in one of the best transportation modes this province has ever had, that we're buying worthless stock. I've never heard such stupidity in my life. That's exactly what you socialists stand for.

Sure, we're going to put some money into British Columbia Railway. Then he has the audacity to stand up here and say, "Oh, the deal is no good. You shouldn't even build the railway. But why don't you buy stock in it?" That's a typical socialist deal. They say the coal deal is no good, yet they want us to put the British Columbia taxpayers' money into it. I can't understand them. They condemn the deal, say it's no

[ Page 6505 ]

good, and in the next breath say: "Well, you should put money in it."

I'm telling you, Mr. Chairman, the true old socialists have come out here today. I thought you, young fella, when you came here from Ottawa, had a little bit of hope. But when you stand here on the floor of this Legislature and make a speech like that, you've been brainwashed by the guy who just sat down, who keeps his speeches in formaldehyde. I'm telling you, I really feel sad for you, but you're in bed with all the old group over there — the real socialists, and some of them verging on something a little more that I'm not allowed to say in this House. I really thought that I had a little faith in you.

MR. LEA: Mr. Chairman, I'd like to review briefly what the minister has had to say. He insists on calling a subsidy an investment. We have not said that the coal deal is a bad deal for the coal companies; we've never said that. We're saying that we think it's a good deal for the coal companies; that's why when we put money in we'd rather have it as an investment than as a subsidy. The minister, who has been in business all his life, should understand that nobody can put money in and call it an investment if there is no hope of any return. How can you have an investment if there is no return? You can, but it's called a bad deal. It's a bad business deal for the people who are investing the money.

If the people of the province of British Columbia are being asked to invest in northeast coal, then why can't we share in some of the profits from the selling of the coal? If we're putting up half the money, give us half the profit. Doesn't that make sense? But no, that's not the way this very businesslike government operates. This very businesslike government operates on subsidies as opposed to investment. You can't call it an investment, Mr. Minister. You can call it exactly what it is: a subsidy to the coal companies.

Nobody is knocking the BCR. Nobody is knocking the sale of coal. What we're saying is that you, on behalf of the taxpayers, have made a lousy deal.

HON. MR. PHILLIPS: Mr. Chairman, that last speaker always amazes me with his illogical remarks in this Legislature. Let me tell you that an investment in a transportation system to move goods and services to port is not a subsidy. I think it's a good deal when the original contracts paid for by the Japanese steel industry and the export of coal will go a long way toward paying all the original investment. If we need that coal in the future for British Columbia steel mills or for an energy source, the infrastructure will be there paid for by the first export contract. That is good business, and if that man over there from Prince Rupert (Mr. Lea), who doesn't really want to kick the deal.... His leader says it should be stopped at all costs. They're all over the mat on northeast coal and the British Columbia Railway. It's hard to tell, depending on the speakers, what the point of view is. This is a good solid investment for all the taxpayers of British Columbia. Investments in railways have traditionally opened up this country, and if they had been in government there would be no railway and the country would still be overrun by buffalo.

MR. NICOLSON: What the minister is saying is that a good deal for the people of this province would be if we were to take the natural resource we have.... Let's look at another natural resource. Let's look at the logs that are rotting in the ground for lack of development of proper pulpmills and so on. He's saying that the British Columbia government would create a trucking company and make an offer to some outside company like Louisiana-Pacific of the United States and say: "You come in here, and we'll make this great deal for British Columbia. You go into the woods, cut down the trees and load them onto our trucks. We'll carry them down there and subsidize you. We'll hide costs for you, and we'll make a great deal for you. We'll haul them down to your mill. Don't worry about the impossible terrain or anything like that; we'll punch a new highway through and pay for that as well. We'll punch it through a mountain if we have to, and we'll haul them out to your mill. We'll possibly even help you build a townsite for that new mill, put in schools, hospitals etc., and then once you've created the pulp we'll haul it down to tidewater for you. We'll get more trucks and make sure it gets where it has to go, and we'll absorb those costs, or a good part of them, and just charge a nominal little bit."

What we are saying here is that if British Columbia is going to be part of this action, we want to be part of the action where the profit is; we don't want to be part of the action where the hidden subsidies are. We as taxpayers have a right to see investment all over this province, not simply to serve the needs of one particular area. There are areas of this province that are being neglected — they're being neglected by the inaction of this government and by what the government did in forming BCRIC. We have an area in which we are rich in the natural resources of logs and trees, which are rotting on the ground and making our lumber industry uncompetitive.

We're saying that if we are going to invest in this province, we don't do it by this kind of a flimflam — trading an inflated share value or authorized share value for a company which does not trade on the stock market. You couldn't go out and sell these shares for 10 cents; you couldn't go out and sell these $100 shares on the market. Maybe you could get 10 cents for wallpaper souvenirs or maybe you could get $1 down here during the height of the tourist season — to sell somebody so many hundred shares in the BCR. We are saying that we want to see equity where we are investing. We just don't want to write a blank cheque for subsidies that go on and on and on.

HON. MR. PHILLIPS: Mr. Chairman, I don't know. I was going to say I'm glad that member is here and not back in the classroom, but I must say that I'm sure glad he's on that side of the House and not on this side of the House, because when it comes to logic I have real difficulty in understanding what the last member said, except that he doesn't know what the devil he's talking about.

I'll tell you again, as I've said before, that we're investing in the future of this province through a transportation system. Railroads usually have been built into an area where there are known resources. We don't have contracts; we don't put an impost on the industry we're going to serve. If we had, there would have been no lumber industry in the northern part of this province, because the economics of the lumber industry in the northern part of this province are a far cry from what they are in the south. But here we have a project — contracts, something to haul — we're investing in, and you on the other side of the House are saying that the first two contracts should pay for the entire line. I want to tell you that we're giving a surcharge. Historically, the normal freight rates in this country have been set on what the market will bear — that's what Canadian National Railways have used historically; that's why we have the Crow rate.

[ Page 6506 ]

The movement of goods and services in the province of British Columbia is subsidizing the movement of grain from western Canada. If you want to follow that to the nth degree, the commodities moving in British Columbia, such as potash, coal and lumber, are really subsidizing the feeding of the countries that we sell our wheat to. Normally and historically freight rates have been set at what the market will bear. We are getting full recovery costs for moving the coal, plus a surcharge on every tonne of coal to help pay for the new infrastructure, which will be there for centuries and will haul additional millions and millions of tonnes of coal. And you tell me that isn't a good deal? There has never been such a good deal put together in the history of this country.

I want to tell you that if we had had to have all these guarantees, the railway would never have been extended from Quesnel into the Peace River country; there would never have been a railway to Pine Point; there would never have been a railway across this country. I want to tell you fellows that you'd better smarten up and realize what a good deal we've got before you go around the country knocking it.

MR. COCKE: Mr. Chairman, we've heard a lot of loud dissertation in this House. I want to ask a question: when is a subsidy not a subsidy?

As I see this capitalization, an increase.... You know, this isn't a modest increase in capitalization to satisfy the northeast coal situation. We are seeing a tripling of capitalization. We are seeing a capitalization being taken from $250 million to $1 billion. What does that say about the past? Was there something wrong with the capitalization in the past? Modest increases in capitalization could be supported. But we're seeing a tripling, Mr. Chairman, from $250 million to $1 billion; the end result is a quadrupling. The Minister of Forests (Hon. Mr. Waterland) is laughing over his spilt milk.

The fact is, Mr. Chairman, that what we have here is a subsidy for one of the richest economies in the world: the economy of Japan. We further see that it is a subsidy of two major mining corporations. I ask you what they do in Australia. The mining corporations in Australia are asked to share directly the costs of transportation before the fact, not after — not in the hope that something is going to develop to make everybody happy. Today we are sitting in a committee that has seen a major increase in taxation in this province. We keep asking the question: why this major increase? Well, we see this kind of infusion without any suggestion of infusion coming from the economy that we are going to affect — Japan. There's no infusion coming from the mining corporation, which can sit back and wait until we've punched through the tunnels and created this railroad and enhanced the CNR. That's what we're really talking about. We're just saying: since the people have to invest this huge amount, why couldn't they have a share in what comes back, other than what the minister optimistically talks about as future benefits? If there's any place where we're going to get future benefits, it's in the place where we now have all the infrastructure — that's in southeast coal. They have the capacity to serve at least double or triple of what they are doing now. We're dealing here with the people's money. For any minister to stand up on any grounds and criticize our politics as a means of getting around some very logical questions.... It's pure and simple. This section of the bill is unsupportable, as far as I'm concerned.

HON. MR. PHILLIPS: I just want to straighten out the member for New Westminster, who just sat down, on a couple of things. We have not got the capacity in the southeast rail system today to handle the contracts being signed. I said that before in the House. The Canadian Pacific Railway has to spend an additional $500 million to upgrade the tunnel through the Rogers Pass in order to handle the capacity. At the present time we can't sell any more coal out of the southeast because we can't handle the capacity. You would far sooner give the jobs to Australia than open up the northern part of the province. That's exactly what you're saying. I know what they do in Australia. You also ought to realize that our coal happens to be three times farther from tidewater than it is in Australia. I know what they do. I sat down with the boys in Australia. Sure, they do the same thing we do when it's necessary; they put in the infrastructure.

AN HON. MEMBER: No, they don't.

HON. MR. PHILLIPS: Oh, yes, they do, and they have in the past, my friend. I sat there and I argued with them for four hours. I know exactly what they do. When all the chips are down, they do the same thing that we do. You're a great expert. If infrastructure is needed to develop the great country of Australia, they put it up front. Make no mistake about that.

With the way the province is going, we have to invest money in our transportation system. As I said a little earlier — you weren't in the House, Mr. Member for New Westminster (Mr. Cocke) — the province has historically not put any money into the British Columbia Railway. That's why it has that huge debt load out there. What we're saying now is that instead of allowing the railway to continue to accumulate this huge debt, we're going to inject some capital into it. That's the difference. We are going to invest in the future of this province. We spent $310 million building the Anzac line. By 1990 it will be worth $2 billion. I say that is good business and an investment in the future. That's the kind of business we stand for.

MR. LEA: I can't let the Australian bit pass, because the minister knows that that isn't the way it happened in Australia. The Japanese steel interests offered to put up front money for Australia. They offered to put in the infrastructure money. Australia turned it down. Do you know why they turned it down, Mr. Chairman? They said: "Here we are as a supplier of coal to a limited market." What Japan wants to do — and it makes sense from where they sit — is to go into the coal suppliers and split it off. They'll never sign that they'll take the tonnage. They never take the tonnage that they contract for. What they've been doing systematically around the world is going to the suppliers of coal and trying to split up each country that supplies that coal to get an advantage for Japan. Australia sent them packing with their money. The Conservative government in Australia said: "Do you think we're stupid? We're not going for that." What the Japanese wanted to do in Australia was to get two suppliers in Japan so that they could play one off against the other. Australia said: "We would have to be absolutely nuts. Take your money and leave." They turned down the money from Australia, and the government knows it. They do have some advantages over us, you're right. Their coal is a lot closer to tidewater. The transportation distances and transportation problems are not the same as we have. What the minister can't seem to under-

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stand is that we're not against the coal deal. We're saying that we want not only a coal deal, but a good deal. The minister is right too. There would have to be money put into southeast transportation systems to increase the capacity. So we aren't in quite the same position as Australia.

Australia does not have to do that, so they could send the Japanese packing. We're not in quite the same position; we can open up northeast coal without harming ourself in the province in terms of a supplier of coal. But to do it on a political whim instead of a good, sound economic footing is folly. The government knows it, but that's been our history in this province. It's been our history that every time we go for an export deal we look at the quick-term results in terms of jobs and economy, but it's always based on political need of the governing party. That's the way it goes every time and we're doing it again. Do you know something? It wouldn't have mattered what the figures on northeast coal were. This government would approve it. They need that sort of economic activity at any cost because in their six years in office they haven't done anything economically worthwhile. Nothing! Name one thing that you've done.

Interjections.

HON. MR. HEWITT: We defeated you twice.

MR. LEA: Oh, you've defeated us twice. That's right. That's what it's all about, Mr. Chairman. They don't give a damn about the economy of this province; all they care about is whether they're sitting on that side of the House in government and the province be damned.

MR. COCKE: Mr. Chairman, I move the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; Mr. Speaker in the chair.

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

Divisions ordered to be recorded in the Journals of the House.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 12:01 p.m.