[ Page 753 ]

CONTENTS

Routine Proceedings

Motions and Adjourned Debates on Motions

Motion 2 (Hon. Alex Fraser) –– 753

Mr. Lea –– 756

Mr. Davis –– 757

Mrs. Wallace –– 760

Hon. Mr. Phillips –– 762

The House met at 10:05 a.m.

MR. REE: In the gallery today we have a number of visitors from La Belle Province. They have been visiting the North Shore, and I would ask this House to welcome this group of young gentlemen and ladies from Quebec. They are under the guidance of Rob Robinson of the Optimist Club from the North Shore, and Mr. Bruce Chartier, who has come with them all the way from Quebec. The Optimists Club have an exchange going on in Canada. I'd ask the House to welcome them.

Orders of the Day

HON. MR. GARDOM: I call Committee of Supply, and on behalf of my colleague, the Minister of Consumer and Corporate Affairs (Hon. Mr. Hewitt), I adjourn debate until later today.

Motion approved.

HON. MR. GARDOM: Mr. Speaker, I would call Motion 1, standing in my name on the order paper, and adjourn debate until the next sitting.

Motion approved.

HON. MR. GARDOM: Mr. Speaker, I would call Motion 2, standing on the order paper in the name of my colleague, the Hon. Alex Fraser.

HON. A. FRASER: The motion reads as follows:

"This House is of the opinion that changes in the historic Crowsnest Pass grain freight rate will substantially benefit the economic development and employment opportunities of Canada and British Columbia, and,

"This House, accordingly, expresses its support for action by the Parliament of Canada to deal expeditiously with the issue of the statutory freight rate for export grain by passing the required legislation."

And I so move.

Premier Bennett, at the first ministers' conference on the economy in Ottawa in February 1982, made a statement to his colleagues at that table calling for action in meeting the challenges in the western Canadian transportation system. These challenges continue to exist. The expansion plans of Canadian railways continue to be held back because the revenues of the railways are below what they should be, because export grain is transported below cost. If nothing is done, the railways will put off their investments even further, and our economic development may be slowed as we, once again, face rationing on a rail capacity.

The first step in meeting the challenge is simple to state: change the Crowsnest Pass freight rate for export grain. We're closer now than at any time in the past ten years to getting on with this change, but we're not there yet. The motion before you today calls on the Parliament of Canada to deal with this issue and to deal with it now.

The day after Premier Bennett made his statement at the first ministers' conference, the Minister of Transport for Canada, the Hon. Jean-Luc Pepin, announced the beginning of this latest attempt to change the rate. Mr. Pepin recognized that the Crow rate was holding back the development of the whole transportation system in western Canada. His approach to the problem was to try to develop a comprehensive solution. The February 1982 statement contained a statement of guarantees to the farmers and the railways.

The hon. minister also named the Winnipeg farm economist, Clay Gilson, to lead all the interests in the prairie provinces — the grain farmers, the wheat pools, the livestock farmers and the railways — in a series of consultations and negotiations to iron out some of the details. The Gilson report was presented to the minister in June 1982 after an intensive time of study and meetings. The Gilson process was open and fair, and every part of the agricultural industry on the prairies had its chance to take part in this exercise. The Gilson report led eventually to the western transportation initiative announced by Mr. Pepin in Winnipeg in February 1983.

Between the announcement in February and today, Mr. Pepin has introduced the legislation he promised into the House of Commons and has, after that, announced the amendments he has proposed to satisfy continuing concerns. The bill recently passed second reading and was referred to the standing committee of the House of Commons on transport. As it now stands, if this bill passes without any further amendment, the railways will receive an annual payment of $651.6 million to compensate them for their losses in carrying export grain. In addition, the government will buy up to 3,840 hopper cars, and will also spend another $670 million to rehabilitate railway branch-lines on the prairies. So the people of Canada will continue to support the grain industry. These contributions are substantial.

The grain farmer will have to participate in paying the increased costs of moving his products to market. In addition to the Crowsnest Rate he now pays, he will have to pay the first 6 percent of increase caused by inflation after 1986. The prairie grain farmer is not without protection, however. The most recent amendments proposed by Mr. Pepin contained a provision that limits the freight rate to be paid on export grain to no more than 10 percent of the price at which the grain is sold. You can see what this kind of protection means. Transport Canada has estimated that other bulk shippers pay substantially higher freight rates as a proportion of the selling price of their product. A few examples: potash pays 28 percent of the cost of their product; sulphur, 23 percent; coal, 28 percent; and lumber, 38 percent. So the grain farmer has a substantial safety net.

Let me tell you a little bit about the rates for export grains so that we will all have an understanding of this business. There is a shipping point called Scott, Saskatchewan, which is famous in the grain trade. Scott is about 100 miles west of Saskatoon and is famous because it costs the same to send a bushel of wheat from there to Vancouver as it does to send it to Thunder Bay. It costs about 14 cents. Just in case you've forgotten, a bushel of wheat weighs 60 pounds. So it costs 14 cents to ship a bushel of wheat from Scott to Vancouver. If you are closer than that to Vancouver it must cost less. So from Calgary it would cost approximately 12 cents; from Winnipeg to Thunder Bay it's about 8 1/2 cents. How should we compare that to other transportation costs? The easiest way is to compare it to a letter which today costs 32 cents from any place to Vancouver or Thunder Bay. That rate has been allowed to rise in an attempt to cover the costs of moving it. That hasn't been the case with the bushel of wheat since 1925.

[ Page 754 ]

[10:15]

Another way is to compare the cost of handling and storing wheat in the prairie grain elevators. The average cost of that was estimated by the Canadian Grains Commission to be 35 cents a bushel. So it costs two and a half times as much to unload the farm truck and lift the bushel up into storage bins as it does to move it over 900 miles to Vancouver. When we compare the rates for wheat and other export grains we have to do it by the tonne. The average freight rate paid to export grain from the whole prairie gathering region to any port is $4.89 per tonne. The coal moved from southeast British Columbia to Roberts Bank pays a rate of about $20 per tonne. This comparison is especially important to look at because it shows so well why shippers other than those in the grain business are calling for change. The coal moves in unit trains, and the Canadian railways have responded in an excellent way to help our coal reach world markets at a price at which we can compete. Those 100-car trains never stop moving. They are loaded and unloaded without being uncoupled.

The coal transportation system from southeast British Columbia is the best in the world. It is also the lowest-cost. There is no more efficient rail system in the world, so there is no lower-cost system, but the rate per tonne is over five times as great as that paid by the farmer. The coal rate includes the cost of maintaining all the track and the cost of the rolling stock.

When a coal shipper hears about the government of Canada buying some more covered hopper cars to carry grain, or when he hears about continued prairie branch line rehabilitation, his belief that the time has come for change certainly grows. When the coal shipper hears that those hopper cars may be competing with his unit train for a rationed track capacity, he starts to call for a change. Only 15 months ago we were talking about the probability of rationing of track capacity before 1990. The worldwide recession has given us some breathing space to avoid this catastrophe, but if the government of Canada does not deal with the Crow rate problem now, the railways won't have the money, nor will they have the time, to build the added track they need to move our exports.

The recognition that we are facing a crisis in railway capacity was brought about by a paper prepared by Westac and published in 1981. Westac is the Western Transportation Advisory Council, and the province of British Columbia is a sustaining member, along with the other three western provinces. Westac has strong industry sustaining members as well as government: Saskatchewan Wheat Pool, Alberta Wheat Pool, Sultran, Potash Corporation of Saskatchewan, as well as CN Rail, CP Rail and many others. When Westac publishes a paper, you can be sure it is factual, or some members would quickly stop it. In October 1981, Westac showed a chart which predicted that by 1990 western Canada would be shipping 88 million tonnes westbound. Since then we have had a worldwide recession and some think our forecast would be down a great deal. In July 1983, Westac published another chart showing this year's forecast, and it predicts 76 million tonnes by 1990. Our shippers believe that their marketing is delayed two years. Our exports still need the added track that our railways want to build.

In recent months Roberts Banks has shipped record tonnage of coal; more capacity is being added there to increase these records. The last crop year, which ended July 31, saw a new export record for grain for the second consecutive year.

The 29.5 million tonnes of grain and grain products were exported from western Canada. The forecast numbers are based on reality: the railway capacity is needed.

In February 1983 Canadian National and CP Rail announced that they planned to spend $16.5 billion in the decade between 1983 and 1992. That is, they plan to spend it if the Crowsnest Pass rate is reformed. Of that $16.5 billion, Mr. Speaker, $5.5 billion will be spent in British Columbia and will provide over 6,000 jobs in the province. A little of that work is going on, but we want the real work — railway construction — to begin. Rock-crushing for ballast, building railroad grade and all of these will put people to work.

By far the largest project in British Columbia and, in fact, in Canada in the railway plans is the CP Rail Rogers Pass tunnel project. The project will include driving two tunnels for a total length of about 10 miles, building 11 bridges and laying 21 miles of new mainline track through the Rogers Pass area of the Selkirk Mountains in British Columbia. It will take four years to complete at a cost of $800 million, and it will employ up to 800 workers.

[Mr. Strachan in the chair.]

The present Connaught tunnels are the major bottlenecks in the CP Rail system. Only 15 westbound trains per day can be moved through this piece of track. The Rogers Pass tunnel project will raise the capacity to far beyond that number, and the line between Golden and Vancouver will then be able to handle 19 westbound trains. CP Rail has plans to raise that capacity as well, but there is no need to start until the Rogers Pass tunnel is complete. That won't start until the railway feels it is fully compensated for moving export grain. With the announcement of the western transportation initiatives in February, the Hon. Pepin announced that interim payments of $313 million would be made to the railways for losses on grain transportation in the fiscal year 1982-83 –– I think some of those payments have already been made.

These payments gave the railways some confidence with which to go ahead with some spending and increased track capacity. CP Rail is spending $20 million on some work at Rogers Pass. They hope to make an $8 million start on yard expansion and a car repair shop at Golden. That will provide over 100 full-time jobs in Golden. CP Rail will be building an engine- and train-crew resthouse in Sparwood, as well as starting on a new terminal operating building in Coquitlam. Microwave installations and siding extensions are also going ahead this year, but CP Rail will not go ahead with the Rogers Pass tunnel until some action is taken on the Crow rate.

Speaking to the Standing Committee on Transport in Ottawa on July 27 this year, Bill Stinson, president of CP Rail, confirmed that position and committed the company to start as soon as the federal bill is passed.

Canadian National is continually ahead in both of its major projects. They are moving ahead on their plan to doubletrack their main line between Edmonton and Vancouver, and they are going full steam ahead on the improvements to their north line from Prince George to Prince Rupert.

Interjection.

HON. A. FRASER: Yes, they are.

That work on the north line is CN's rail participation in the northeast coal project. It is worth looking at. The port of Prince Rupert is at the west end of the rail line. The member

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for Prince Rupert (Mr. Lea) agrees with that, I think. The construction is now going on on world-scale development there. The grain terminal will have a 200,000 tonne storage capacity. The $275 million being invested there will provide a facility that will increase export potential from the Pacific coast by 20 percent. Also under construction at Prince Rupert is a terminal for coal from the northeast. Coal will be shipped out of that terminal early next year. The $220 million project is now over 60 percent complete. Between 900 and 1,000 construction workers are now building these terminals; the port will have 700 to 900 full-time workers after completion.

CN Rail plans to spend $700 million to upgrade the north line over the next ten years. This year they are spending $92 million on the line between Red Pass and Prince Rupert. These expenditures will improve the track by replacing bridges, lengthening sidings and upgrading terminals at Prince George, Smithers, Terrace, Endako and Ridley Island. All this work west of Prince George is now going ahead because CN Rail has the assurance that the traffic will be there and that the cost of improvements can be paid from revenues from that traffic.

If the government in Ottawa is able to take action on the Crow rate, CN Rail will receive full compensation, and the grain traffic on the north line will pay its share of the upgrading.

There are 300 cars of lumber a day moving east from Prince George on the CN north line. That lumber comes from mills on the north line as well as on the British Columbia Railway. Mr. Norris of B.C. Rail was quoted in the Globe and Mail, in June of this year, as saying that B.C. Rail had a lumber car shortage earlier this year. Our lumber needs railway capacity, and our lumber pays its way. Already this year CN and CP have negotiated a 5 percent rate increase with the Council of Forest Industries.

CN Rail would increase its rate of investment on capacity improvements on its main line from Valemount to Vancouver. They would spend almost a billion dollars in the 1983 to 1987 period if full compensation for grain transport were arranged: $700 million would go to double-tracking; $75 million for the signal system; $250 million at major terminals, and another $38 million at intermediate terminals; $18 million for equipment facilities. All of this would be in addition to the continuing maintenance and track renewal work. So the railways would create jobs during these huge construction projects. More importantly, these jobs would create and maintain our opportunities to deliver our export products.

In Ottawa, in February 1982, Premier Bennett said: "Canada's ability to market aggressively in world markets is heavily dependent on the cost and efficiency of our transportation system and our reputation as a reliable supplier, which is directly linked to a transportation system that can deliver the goods when and where they are needed. Railway capacity and port development must be in place when needed. Canada needs the railways to be ready. The railways have to be adequately compensated for all their traffic. This will come closer when the House of Commons' Parliament of Canada acts.

The motion before this House calls on the Parliament of Canada to deal with the issue of the Crow rate by passing the necessary legislation now. Members are aware that the House of Commons standing committee on transport is holding public hearings on Bill C-155, the Western Grain Transportation Act, which would make a start on addressing the situation. This bill contains two aspects which require special comment from the province of British Columbia. The first is the dominion coal block.

On May 20, 1983, my colleague Hon. Brian Smith, the then Minister of Energy, Mines and Petroleum Resources, sent the following message to the Minister of Transport for Canada:

"Your proposals to amend the grain rate established by the Crowsnest Pass Act have received support from this province. We continue to hope for an early resolution of this issue. Although we have concerns with recent changes you have made to the subsidy arrangement, we believe it desirable to pay the subsidy to the farmers and not to the railways directly.

"We are troubled, moreover, by the language employed in section 62 of Bill C-155. The province of British Columbia has always maintained an ownership claim on the subject coal lands; moreover, it has regular requirements and land-use priorities which must be met by all explorers and developers of coal. Accordingly, we trust that the federal government will never attempt to dispose of these coal lands unilaterally.

[10:30]

"I believe it is possible for our governments to take a cooperative approach to resolve these outstanding issues in order to facilitate the orderly development of the coal resources for the benefit of British Columbia and all of Canada. I suggest we meet at an early date, prior to any disposition of the lands, to hold discussions on ownership, management and regulatory policy."

The response from the federal Minister of Energy, Mines and Resources claimed the coal blocks as a legal federal responsibility. British Columbia has no desire to see the issue of ownership of these coal blocks tied up in legal proceedings in the courts for years. Agreements between governments in which our mandated responsibilities are respected would solve this problem. This we have offered to discuss. British Columbia must seek proper recognition of its policies and programs regarding leases, taxation arrangements, environmental impact management, project proposal review, mines regulations and planning and financing of road and municipal services. We should all remember, however, that the development of the dominion coal blocks for export would require railway capacity which will not be available if the government of Canada cannot make sure that the railways are paid enough for moving grain.

The other aspect of the bill presently before Parliament is dealing with the British Columbia Railway. The BCR made presentation to Dr. Clay Gilson during his consultations and will be making its statement to the standing committee during the public hearing in Vancouver. No doubt my colleague, the Minister of Industry and Small Business Development (Hon. Mr. Phillips) and the MLA for part of the great and growing Peace River, may add some words to this debate, but for my part let me say that Bill C-155 does not allow the BCR to participate in the transport of export grain on an equal basis with CN Rail and CP Rail, and that will have to be changed. If BCR cannot participate on an equal basis, then grain producers who ship on BCR cannot be treated equally, and the government of Canada has a responsibility to those shippers who hold the same federal permit as shippers on the CN Rail and CP Rail. These two British Columbia aspects do not override our desire to see the bill pass and action begin on

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building the needed railway capacity, This present bill before the House of Commons is just the beginning, and we must start now. As I said at the beginning, I take pleasure in moving this motion and hearing the remarks that will follow.

MR. LEA: It's interesting to note that over the course of time the Social Credit and Conservative parties always accuse the NDP of being in bed with the federal Liberals. There's only one other time in the last eight years that I can remember this government being in bed with the Liberals, and that was over wanting to keep the interest rates high in their industrial strategy paper in 1978. That was the first time in the last eight years that the Social Credit has agreed with the federal Liberals, to my knowledge. This is the second, and isn't it interesting that the second time that they're in bed with the federal Liberals is when they're going to have a handout to the CPR? I suspect that it's two down and one to go, and if we ever get to the motion on testing the cruise missile in this country, that will be the third time in the last eight years that this party agrees with the federal Liberals. I think it's interesting to note a great deal of what this motion doesn't talk about. This motion was on the order paper yesterday also, and it's different than the one today. Yesterday the motion read:

"This House is of the opinion that changes in the historic Crowsnest Pass grain freight rate will substantially benefit the economic development and employment opportunities of Canada and British Columbia. Investments planned by the railway will dwarf expenditures on northeast coal infrastructure and are crucial to the future of southeastern British Columbia and to job creation in our province. This House expresses its support for action by the Parliament of Canada to deal expeditiously with the issue of the statutory freight rate for export grain by passing the required legislation."

It's interesting to note that that was yesterday's. Today it's not exactly the same. What did they take out of today's? They took out what Mr. Minister says is the most important part. They took out: "Investments planned by the railway will dwarf expenditures on northeast coal infrastructure and are crucial to the future of southeastern British Columbia and to job creation in our province." That's out of the one we're talking about today.

Interjection.

MR. LEA: We all know that it is.

First of all, there is a guarantee that the federal government makes sure that money goes to the CPR, but there is no guarantee that the CPR is going to spend that money as they have promised. The minister is talking about the CNR and expenditures on the northern line. If the minister will check, he'll find that the CNR has taken that money out of this year's budget. It's no longer there. The work has not started, and the budget money is gone. This is the first time that I've known that a British Columbia government has believed the CPR about what they're going to do for this province. There is no guarantee that the CPR — or the CNR, for that matter — are going to spend the funds here.

Also interesting is what this motion does not say. One of the most crucial issues surrounding transportation in western Canada, as it relates to central Canada, is the freight rate on shipping the other way — to eastern Canada. Mr. Speaker.

I'm sure that everyone in this House knows — and if they don't, they should — that the freight rate for shipping goods from western Canada to central Canada is not based on weight or volume; it's based on whether the product is finished or unfinished. If you ship an unfinished product from western Canada to central Canada, it's cheaper than sending a finished product. What we do by that kind of freight rate system is ship jobs out of western Canada to central Canada.

AN HON. MEMBER: Is that going to be changed?

MR. LEA: They don't even mention that. That kind of crazy freight rate system stops economic development in western Canada dead in its tracks. The government wants to give the CPR a handout, but they do not take on the federal government about a freight rate structure that ships jobs and economic development out of western Canada to central Canada. I find that more than passing strange, Mr. Speaker.

Here we are in Canada talking about trying to compete in the world market to sell our goods. When you look at the ludicrous freight rate system.... You take the energy resource, and you transport it from western Canada to central Canada. Then you take the raw resource and transport it from western Canada to central Canada. The energy resource and the raw product meet in central Canada, and then they produce goods for the world market. How can that be a competitive system of production? It cannot be.

We would much rather have a motion which deals with the kind of crazy freight rate system that stops economic development in western Canada. That's what it does. But there has not been one mention of that freight rate system, during either the constitutional talks with the federal government or the talks that are currently going on about freight rates and the Crowsnest Pass changes. We can't support this motion. We can't support it, because it's a handout to the CPR, with no guarantees that the CPR is going to spend that money in British Columbia. There are no guarantees that the CNR is going to spend the money, and it's even worse in the case of the CNR: they've already taken the money out of the budget for this year.

AN HON. MEMBER: They're a bunch of rubes.

MR. LEA: That's true. When this government deals with the federal government, time and time again they get taken. This time they are willing to be taken because it means a handout to the CPR. It's incredible that this government would actually go along with that.

Mr. Speaker, as long as the freight rate system for finished and unfinished products is in place, in terms of economic development we're doomed.

Now the kinds of things that the CPR and the CNR say they'd like to do, or are willing to do, would be good for British Columbia. There's no doubt about that. We'd have the original construction money, construction jobs and the economic activity surrounding that. That would be good for British Columbia. But with no guarantee that it's going to be spent, we on this side of the House are not going to support giving the money to the CPR.

The other thing is that in the original deal made by the federal government and the CPR, we gave them land as a federal Canadian entity. Now what they're doing is what's called the old shuffle-duffle on the bookkeeping system. The

[ Page 757 ]

CPR has broken their operation down into different components. Land is a different component than their mining operations. Mining operations are a different component than their transportation system. They will show losses on the transportation system, but big profits on their land holdings and mining holdings. There's no cross-subsidization within that company, and they always show us the losses on their transportation system, while on the other side of the ledger they're making oodles of money. Does the CPR not owe the people of British Columbia, and the people of Canada, something for the original gifts? Surely they do. Surely the CPR, who was handed big chunks of land and wealth by the federal government years ago, has some obligation from that gift to participate with their profits from the entire operation in economic development for western Canada. But they've gone along....

In conclusion, Mr. Speaker, if you take a look at the freight rate system in Canada, it is such a deck of cards that if you pull one out you never know where anything will land. It's a hodgepodge of policy built up over the years. There's very little rationale to it — in fact, it's hard to find any. And that's why western Canada, and the federal government, are always loath to touch any one part of it, because they don't really know what's going to happen. If you take out one card, the whole thing is liable to collapse, because, first of all, it doesn't make any sense. We would much rather support a resolution asking for a complete revamping of the freight rate system as it affects western Canada.

When we were in government we suggested to the federal government that we would like to see a western Canada transportation authority, with the four western provinces having representation on that authority, along with a single member from the federal government. If we're ever going to have a rational transportation system that serves economic development in western Canada, we in western Canada have to decide our own transportation system. We're going to have to decide whether a rail line is going to be abandoned or whether it isn't, and where and when we're going to have expansion.

We cannot rely on Ottawa to lay out a transportation policy for us, because we know dam well that the past has proved that they just aren't capable of putting a transportation system policy in that will benefit us. Really, we know why: it's called federal politics. As long as the major population in this country lives in central Canada, all political parties at the federal level, for political reasons, are going to curry favour with that majority population where the votes are. If we ever want to take our place in the sun in terms of putting a transportation and an economic policy into place in western Canada, the first thing that we should be concerned about is that unfinished-finished freight rate system. That's what we need, because as we build up economic development in western Canada, the population will grow. As the population grows, we will have more votes. And as we have more votes, we will take our place in Canada, because for the first time we will have the number of votes that federal political parties will have to listen to.

[10:45]

So to deal with this resolution asking for a gift to the CPR, with no guarantee from the CPR that they're going to spend the money in western Canada, is absolute folly. We would have been pleased to support a motion out of this Legislature calling for a change in the finished-unfinished freight rate system which ships resources and jobs to central Canada, not only to the detriment of western Canada and our economic development but to the detriment of Canada as a whole, because that policy means that we are putting goods on the international marketplace uncompetitively because of artificial impediments to economic development through the federal transportation system. We cannot support this motion, because of the gift to the CPR with no guarantees, and for not taking on that freight rate system that stops the goods, the jobs and economic development happening in western Canada. We cannot support it, and we would not be doing our duty to the citizens of this province or to the citizens of Canada if we were to support this resolution. I ask that the provincial government take a second look at this, because in the long run it will not be good for western Canada and in the short run the provincial government thinks it will be good for Social Credit. I ask you: are you here to support Social Credit or British Columbia and Canada?

Interjection.

MR. LEA: Yes, we on this side of the House have been in bed with the federal Liberals, but isn't it interesting that we are in bed with the federal Liberals when it comes to protecting human rights; we are in bed with the federal Liberals when it comes to protecting medicare; but they're in bed with the federal Liberals when it comes to handouts to the CPR. That's exactly what this is all about.

MR. DAVIS: I well remember a few years ago when the Hon. Jean Marchand was the newly appointed Minister of Transport for Canada. He said that the freight rate policy in Canada was a mess. I think he went even further and said transportation policy in Canada was a mess. It is a mess. It's in less of a mess than transportation policy in many other parts of the world, but still it's very difficult to understand. It's difficult to understand largely because transportation has been used as one of the principal vehicles for industrial development across Canada. It's been used as a way of favouring one region as opposed to other regions of the country. Freight rates, in other words, have been a political plaything. They certainly were a century ago, they were at the time of Confederation and they were even more so in the 1880s when the CPR and other railways were extended throughout the length and breadth of the country.

The Crow rate is one of those special considerations. Often rates — at the time, high rates — were agreed to if a railway company would extend its lines into another, often undeveloped, part of the country. The Crow rate was set before the turn of the century in order to encourage the CPR to build the railway line through the Crowsnest Pass and through the southern part of British Columbia to the coast. The Crow rate was embedded in legislation in 1925 and it's been in effect ever since. The Crow rate was set at prices which prevailed at the turn of the century, and obviously inflation has made nonsense of that rate; it's now more than 80 years old. The economy, generally speaking, has moved with the times. It's had to move with the times, and therefore that rate is nonsensical today. The Crow rate applies to several qualities of grain which are exported from Canada — not grain used in Canada but grain leaving the country. It's a rate applied to exports. Naturally the wheat farmer who grows grain for export likes the Crow rate and wants it retained. As late as 1960 the Crow rate was equal to about 10 percent of the price of a bushel of grain. Today the Crow rate

[ Page 758 ]

is equivalent to about 2 percent of the value of the grain. Naturally, if you or I, Mr. Speaker, were a farmer on the Prairies and we were exporting most of our grain we'd want to retain the Crow rate as is. Only 2 percent of the cost of delivering our grain to world markets would be the rate paid to move that grain by rail across Canada, either way, to the markets of the world.

So for a large segment of the prairie population — certainly for political parties on the Prairies as well who attempt to represent the prairie farmer — the Crow rate has become, if anything, sacred; it's an advantage to the prairie farmer which has grown with time. As costs generally have risen and prices have risen, this fixed, old-fashioned rate has become more and more valuable, and naturally there's a great resistance to changing the Crow rate.

[Mr. Pelton in the chair.]

The NDP, as I understand it, in Ottawa certainly has taken the view that the Crow rate, though anomalous, really mustn't be changed until everything is changed; until all the rates are changed, and the rate-setting problems involved in the transportation side are somehow made perfect. Perfection or the Crow rate — nothing in between, and really, that's what we heard from the last speaker this morning: until you can produce a perfect policy, please stand firm on the Crow rate as it is.

Let's look at the interests of Canadians generally, and particularly the interests of British Columbians. The Crow rate is of no help or advantage to the people of British Columbia. What it does, essentially, is require the products of British Columbia industries — indeed the products of other industries across the country — to bear more than their share of railway costs. The railways lose money on the Crow rate and make it up by charging more on lumber and minerals being exported, petrochemicals being moved by tank car, manufactured goods or whatever. Indeed products not only moving for export but all products moving on the CNR and the CPR help to subsidize the prairie farmer, and that is the length and breadth of it. There has been no taxpayer subsidy to the railways directly to offset the Crow rate. The Crow rate has been low and has become lower relative to other costs, and therefore rates have had to go up on all other commodities moving in Canada to compensate for the railway losses on the Crow rate.

Why has the federal government had to build hopper cars? Why do the railways not build the hopper cars? Because the CNR didn't want to carry grain and always tried to push it onto the CPR; the CPR didn't want to carry grain and always pushed it toward the CNR. Nobody wanted to move grain, at least in the railway business. The equipment was not improved to move grain, and consequently the government of Canada, beginning around 1970, got into the business of building new, modern hopper cars for carrying grain and giving them to the railways. So we've had lash-up methods like this evolving in order to help offset an incredibly low rate which doesn't in any way cover costs; indeed, the rate covers about 20 percent or one-fifth of costs today, and that's wrong.

If one assumes or argues that the prairie farmer must continue to be supported, there are other ways of supporting him than having a freight rate system whereby the railways are not compensated, so they take the deficit on wheat, for example, being exported, and recover by charging more on everything else. The present legislation, which has received second reading in Ottawa — the legislation which is now being discussed by a committee of the House of Commons which will be in Vancouver tomorrow, listening to submissions from B.C. — says: "We will release the railways from their problem by making a grant to the railways." For the first time Canadian federal taxpayers' money will be paid to the railways in order to benefit....

MR. LAUK: The first time? Are you out of your mind?

MR. DAVIS: For the first time in relation to the movement of wheat. The hon. member knows there are many other situations in which taxpayers' money has been involved.

For the first time, Canadian taxpayers' money will be used to help move export grain, and the amount of money is considerable. In the first few years in the order of $600 million a year will be paid to the railways in order to maintain a low rate for the farmers, but a rate which over time will rise. The farmers will have protection in that the rate will never be allowed to be more than 10 percent of the price of grain. I said that right now the Crow rate only uses 2 percent of the price of grain, so prospectively the farmer will be paying more over time.

The money to go to the railway is money that is earmarked: policed moneys which will go into construction of new facilities, doubletracking, better equipment, better grain handling from one end to the other. As those facilities are completed in B.C. and elsewhere, the railways will become more efficient and their costs will go down. Somewhere, with the falling costs on the one hand, and rationalization of this whole situation on the other, the better interests of the whole of the country will be met. The farmers will in some measure continue to be protected, but they will not be subsidized to the same extent, and certainly not in the same way, as they've been subsidized in the past.

British Columbia is taking a narrower view. We have to welcome this new construction that is in the order of a northeast coal development investment every year for the next six or eight years. In other words, the big investments in northeast coal that are financed by the provincial government will continue, at least in monetary terms, but moneys essentially spent by the transcontinental railways, principally the CNR and the CPR in this province.... I'm not talking about other moneys spent elsewhere in Canada, but in the order of $6 billion over the next six years, $1 billion a year, to tunnel through the Rockies, for example; lowering the grades, improving the efficiency of our transcontinental railway.

AN HON. MEMBER: Those are all real jobs.

MR. DAVIS: These are jobs for the next half dozen years, year after year; not just for a year or two but for a considerable period, continuing to employ many of the same people who are working on the northeast coal development this year, and out through the rest of the 1980s. That's certainly to be welcomed. More importantly and certainly more important for the longer term, we will have a more efficient railway system through the west and certainly through British Columbia, not only to Vancouver and Vancouver area ports but also to the Prince Rupert area. Two windows on the Pacific rather than one; two very efficient railways. Two railway companies with a real incentive to move from the old-fashioned hopper-car system to unit trains, to highly efficient

[ Page 759 ]

scheduled operations which will effectively reduce the cost of moving everything through British Columbia, and indeed from B.C. sources to the coast and elsewhere. We'll have a more efficient transportation system not just for grain but for all commodities: for forest products, mineral products and manufactured goods coming and going or passing through the province. We benefit in terms of construction jobs and a more efficient transportation system through this province to our ports for products originating in British Columbia, the Prairies, eastern Canada; indeed, from around the world. So we're benefiting several ways, in both the short and long terms.

[11:00]

We have to vote for this resolution, which is for our advantage. I would argue that it's also a resolution.... Certainly the bill before the House of Commons is to the advantage of Canadians generally. Where we may well be divided is on the consideration as to whether the subsidy should be paid to the railways or in another form to the farmers. That's where the remaining debate really rests. The hon. members opposite have to agree that the jobs are to our advantage, that a more efficient railway system has to be to our advantage. They can't vote against that. They surely won't stick with the idea that you've got to stick with the old Crow rate because no one has yet thought up perfection. Where I would respect their differing is on how the subsidy is paid, and to whom.

Twelve months ago the government in Ottawa, the federal Liberal government, set up their legislation to pay the farmers. Opposition developed, principally in eastern Canada — largely in Quebec — to paying the prairie farmer the $600 million a year, and changes were made. Eventually the federal cabinet did a flip-flop and made a major change. It decided that instead of paying the prairie farmers the $600 million a year, which is a declining amount over time, they would pay it to the railways and require the railways to meet a certain construction schedule. Why did they make that change? They made the change largely, if not entirely, because the processors, the users of grain in the east — whether they used it for milling and making bread and other wheat products, or whether they were feeding it to animals and building up their livestock industry — wanted low-cost grain transported at a low, subsidized rate: i.e., subsidize the railways. They didn't want the benefit to go to the farmer. The farmer, if he or she got the benefit, would then use more of the grain on the prairies — processing it, feeding livestock and so on. So those who would generate more industry on the prairies lost; those who would maintain the wheat and other grain-using industries in eastern Canada won. That battle, I'm sure, will be revived. But at the moment the legislation in Ottawa, Bill C-155, says the subsidy will be paid to the railways. The railways will be relieved of a very low rate, which has meant they've had to squeeze other industries. The railways will have an incentive from now on to modernize their lines and upgrade their equipment. So the railways will get on with it. But the battle, which for the moment has apparently been lost, means that the processors on the prairies won't have an advantage, if you like, and the advantage the processors have had in the wings of Canada, particularly in eastern Canada, will be maintained. To put it in the crudest political terms, Quebec won and the Prairies lost.

In British Columbia we can't look at that issue without some concern, but it doesn't impact anything like as directly on us as it does on the prairie farmer. It certainly doesn't as long as the subsidies, etc., don't apply to the B.C. Railway. As many of you know, B.C. Rail has not benefited from the Crow rate. "Benefited from" is a questionable term because the Crow rate certainly hurt the railways, not helped them. But the subsidy now designed to go to the CNR and CPR will not also be going to B.C. Rail to carry export or other grain. And that has to be of particular concern to us here. But it's not the big issue, not the major issue.

I understand that the province will be, if not formally filing, otherwise presenting a brief to the House of Commons committee on transportation appearing in Vancouver tomorrow. I understand that the brief will essentially say: "Get on with it. Pass Bill C-155. We would have preferred that the subsidy go to the farmers and not the railways, but so be it. We want to see this thing resolved, at least in stages."

I'd like to back off and take a more general run at this whole issue. First, the geography. The lowest-cost transportation anywhere is water-borne transport. Transport by sea is far cheaper, far more efficient than transport by land. It's a fraction of the cost of moving a commodity by rail. Therefore land-locked areas are at a disadvantage, have always been at a big disadvantage. Saskatchewan has been at a big disadvantage relative to B.C. or Nova Scotia, particularly B.C. because we've got year-round ports. So we've always had a transportation advantage over the Prairies. The prairie farmer has naturally wanted subsidies in one form or another to overcome the fact that they're in the centre of the continent, that they're land-locked, that they have to move their products over creaky old railways that are not very efficient — certainly not as efficient as they could be. And so they have wanted to retain the Crow rate, even if it meant sucking out the substance of other industries in other parts of the country.

Traditionally, British Columbia, without thinking its way through this matter — I'll include the W.A.C. Bennett government; certainly the NDP — has always joined forces with the Prairies and said: "Oh, what's in their interest is in our interest." That's nonsense from a transportation point of view, and British Columbia should always have taken a different tack. Therefore we should have said in the past, as well as be saying now: "The Crow must go. The Crow rate is not to our advantage. The Crow rate is not helpful to British Columbia. And we're glad to see it go even if it has to go by subsidizing the railways — the railways under strict supervision — as opposed to subsidizing the farmers."

I'll say one thing in favour of subsidizing the railways as opposed to subsidizing the farmers. Anyone who's been in politics any length of time knows that it's easier to withdraw a subsidy to the railways than it is to withdraw a subsidy to the farmer. It's easier to phase out a subsidy to the railways once their construction period is over than to withdraw a subsidy to the farmer. So if one wants to take a cynical, political approach to this whole question and take a view looking into the 1990s, one can say: "Maybe this, after all, is the best way to go. Pay the railways who, under strict supervision, will build what they say they're going to build, will equip in the manner they should equip the railway, and once that's all done, the subsidy ends." To go the other route, which the prairie people certainly want — that is, pay the $600 million a year to the farmers ad infinitum, probably escalating as the price of everything else goes up....

Again, the Crow rate has to he seen in the context of protectionism. The conventional wisdom has always been

[ Page 760 ]

that the prairie people got some help from the federal government. Manufacturing industry in central Canada was defended from foreign competition by high tariffs, the prairie people got help through a reduced rate for the export of their grain. The reduced rate for the export of grain has become ridiculously low. It's being eliminated. There have to be other quid pro quos against protectionism in the east, and hopefully the protectionism will be reduced. Those are old battles and considerations. We've moved decades away from a time when protectionism was all that important in manufacturing and in the Canadian economy. So the bias in favour of the east is perhaps not as great as it used to be, and surely we can find other ways of helping the western provinces than continuing to charge a ridiculously low rate: 2 percent of the price of a bushel of wheat to move grain all the way from the prairies to our ports east and west. The railways will become more efficient, the costs of carrying will go down. If they get above 5 percent of the price of a bushel of wheat I'll be surprised. At worst, the prairie farmer has to give up 2 or 3 cents on every dollar in order for this to happen. Surely the federal government will think up some other ways of offsetting the advantages of central Canada through transportation or other kinds of assistance out here in the west.

To sum up, B.C. narrowly has everything to gain and very little to lose by seeing Bill C-155 pass in Ottawa, the railways committed to a major construction program over most of the next decade, a program which will benefit us in terms of jobs — tens of thousands of jobs each year — and benefit us with more efficient transportation systems which will carry our products more cheaply from place to place for export throughout the world.

In 1967 the federal Parliament passed the new transportation act, which basically removed regulation from most forms of transport in Canda, including the railways. The railways were free to set their own rates, bargaining with the shippers whose products they carried. The only exceptions were where there was no alternative transportation anywhere around to act in a competitive way and set a competitive price. So the railways in large measure since 1967 have been deregulated in Canada. They've been the envy of American railways until very recently. If you talked to American railroaders anytime in the last 15 years they'd say: "My God, I wish we had something like you have up in Canada with deregulated rates." But there was always one rate that was there. It was the Crow rate, and it was basically established in contract in 1897. So we've got a rate still in effect today which was set some 85 years ago. The prices have gone up ten and twenty fold in that time along with everything else, salaries and wages included. Yet that rate has remained there, and it's now 2 percent of the price of a bushel. It could go up to five cents. That's the worst that could happen for the prairie farmer.

In this chamber we don't need to be playing prairie politics. We don't need to be fighting the battle for the prairie farmer. The prairie farmer will look after himself. We have to be fighting for our own interest, which I happen to think is coincidental with that of most Canadians in the rest of the country anyway. We should support this resolution. I can't see how the NDP can possibly say: "Let's stay with the old Crow rate because you haven't thought up anything better, Ottawa hasn't thought up anything better. There isn't a consensus in the country on something better, so let's stick with the old Crow rate." They're certainly not being British Columbians if they say that, and they're not being good Canadians. They may be trying to win or hold on to a couple of federal NDP seats on the prairies, but that's what it's all about. I urge them to vote for this resolution as good Canadians and good British Columbians.

[Mr. Strachan in the chair.]

MRS. WALLACE: It's interesting to note that the government members have finally found their tongues. We have sat here through one bill after the other, drafted by that government, without one person getting up and speaking in support of it, and now suddenly we've got a motion for support of a piece of federal Liberal legislation and the government has finally found its tongue. That's very interesting.

I just cannot believe that the member who has just taken his seat could get up and tell this House that there had never been any subsidies paid to the railway companies in relation to grain transport. Did he never read the Snavely report, for goodness' sake? In the year that report was put out, the railways were claiming that they had lost $335 million in hauling grain. Well, the facts were that the actual costs according to Snavely were $540 million, less the rates of $131 million that the farmers paid, less the branchline subsidies of $131 million, which were paid in relation to transportation of grain, less pure subsidies paid to the railways, and also less branchline rehabilitation of $70 million, which was not carried out. We have no more assurance now than we had then that it will be carried out.

The railway companies refused to supply hopper cars. This was their way of attempting to avoid transporting grain. We had backups in the elevators — bushels and bushels of grain. The taxpayers went out and bought their own hopper cars, which was a saving in interest alone to the railway companies of $127 million. In addition to that they paid subsidies of $4 million to the railway companies for hopper cars that they didn't even provide — which really amounted on both CNR and CPR to a shortfall of $15 million instead of $335 million. That's the kind of statistics that the government has come up with in their studies and reports, and that indicates to me the kind of statistics and the kind of misinformation that the railway companies are feeding this government, this province and the federal government, which has talked them into the idea of getting rid of the Crow rate.

We have continually seen the railway company siphoning its resources and its returns out of its transportation system. In 1980, for example, 21 percent of all of CPR's enterprises and profits were realized on their transportation system, but what did they put back into that railway? Only 15 percent. They haven't been doing their job. They've been creaming us, and this move of the federal government, which this province is prepared to support, is doing nothing but allowing that creaming to continue.

We as taxpayers have continually been subsidizing the railway companies. When we think back to what those companies, in particular CPR, received in return for a promise that they were going to provide a continuing service: $25 million to the CPR for the main line, which doesn't sound like much to us in today's dollars but was a fair bit at the time it was given; 25 million acres of land, which didn't sound like much in those days but at today's prices represents a horrendous return. When we think of the timber that was on that land

[ Page 761 ]

here in British Columbia and the value of the timber alone, we as taxpayers have given away our heritage to the CPR. We've given them land for rights-of-way and stations, and we've given them sections and sections of land across the whole prairie.

HON. MR. CHABOT: I've given them my life.

MRS. WALLACE: Yes, that's right.

When the Crowsnest itself was built, they got 3.8 million acres of land from the B.C. government and acquired, of course, the smelter and the nucleus of the Cominco subsidiary, plus dividends to CPR.

The story goes on. We have been continually subsidizing the railway, and now we are going to subsidize them even more. We are going to remove from them an obligation which they undertook at the time that Crowsnest line was built. That obligation — almost in the terms of Confederation — was that that would continue to exist. They attempt to tell us that they are losing all this money because of the transportation of grain. In fact the grain hauling represents something like 20 percent of the total freight load, and that is expected to be reduced within a few years to less than 14 percent. At the same time that CP and CN are trying to tell us that they have lost $335 million in grain transport — and I think the figures I have given you indicate that in reality that loss was more like $15 million between the two railways — that same year CP netted a profit, according to their books, of $583 million on all their enterprises. They had a $15 million loss on their railways at the same time that they are making a profit of $583 million. Twenty-one percent of that $583 million was contributed by CP Rail, and that was paid out as dividends to the shareholders, rather than being reinvested to ensure that we had branch lines, double tracking and the required hopper cars.

There is no assurance that by increasing the subsidy anything different is going to happen. Anybody who will take at face value what the railways tell us must have not been following what has happened in history in this country and in this province. Certainly when that Crowsnest went in, with all those grants of $25 million and the $25 million acres of land — all those things they got for putting in the main line — the condition was that the company "shall thereafter and forever efficiently maintain, work and run the Canadian Pacific Railway." It is not efficient to return your profits to your shareholders as dividends at the same time that you are forcing the taxpayers to buy their own hopper cars, at the same time that you are closing branch lines and at the same time that you are refusing to double track when that double track is so badly needed. That is not in the terms of the contract that we as Canadian people have with the CPR. That was a commitment thereafter and forever to efficiently maintain, work and run the Canadian Pacific Railway. I submit that they have not done that. To simply give them a greater subsidy and say "go to it, boys" is absolutely ridiculous.

They agreed to maintain those freight rates. It was in 1881 that they agreed to the Crowsnest rate; almost immediately they tried to renege and get out of it. Finally, in 1925, the Crow rate was enshrined in legislation, and now we want to get rid of it. What will happen? Exactly the same thing. There is absolutely no assurance in any of the verbiage we've seen that those branch lines will be rehabilitated or maintained. The CPR will continue to do exactly what it has done in the past: it will do as it pleases.

Because of the clever operations of that company, we're left in a position where even if we were to take over the operation of the railway, which is a major undertaking, we would have no access to Marathon Realty, Pacific Logging and all those subsidiaries that have been set up and into which all the lucrative assets have been transferred — assets which that company received from us in return for that promise to maintain and operate forever an efficient rail service in Canada.

Instead of dishing out further subsidies, what we should be doing is ensuring that any tax dollars that go into getting the railway built up go in as equity capital, so that we have something to say about what happens with that railway, not leave it to the whim of the directorate of CPR.

The point has been made that the only people affected are the prairie farmers. The Premier tried to make that point a year ago. In February he was quoted as saying that the Crow rate discriminates against B.C. farmers because they've never enjoyed the subsidy. Well, it just showed all the things he didn't know about what's been happening in British Columbia. Certainly the farmers in the northern part of British Columbia who transport their grain — or in the southern part — over CN-CP, did enjoy the Crow rate. It's true, B.C. Rail was not bound by law to the Crow rate. It was a decision of the former Premier that he didn't want that under federal control; he wanted to be able to set his own rate on that particular railway. But grain was always transported on B.C. Rail at a rate equivalent to the Crow rate. Also, because of the Crow rate there is a feed-grain subsidy for bringing feed into B.C. If the Crow rate grows, there is no assurance that either of those things will be maintained. In fact, there is almost absolute assurance that they won't be maintained. The B.C. Rail rate will go up, and that's going to affect the farmers in the northern part of B.C. very drastically. Those farmers have suffered a drop in income of something like 22 percent over the last year, and they believe quite honestly that if they are faced with this kind of increase.... You should know something about this, Mr. Speaker, coming from the part of the province which you come from; certainly the Minister of Industry and Small Business Development (Hon. Mr. Phillips) should know about this, and the Minister of Lands, Parks and Housing and Minister of Environment (Hon. Mr. Brummet) — he's not in his place.... They must be aware of the kind of effect the loss of the Crow rate is going to have on the people who live in their constituencies.

MR. LAUK: The Peace River area.

MRS. WALLACE: That's right. The farmers in the Peace River area are facing a great number of bankruptcies if they're forced to pay this additional cost of transporting the grain. It's a very difficult situation for those people and a very unknowing or uncaring Premier who would say that the Crow rate was working a disadvantage on B.C. farmers; it's a very callous attitude toward a great number of people who are going to be in the economic crunch if this piece of federal Liberal legislation is passed.

[11:30]

It seems strange to me that this House and these members are suddenly finding their tongues to support this, because they think that somehow it's politically popular out there, that mining companies and manufacturers are somehow going to find this very important to them. They somehow think that

[ Page 762 ]

their transportation costs are going to be reduced. The member for North Vancouver–Seymour (Mr. Davis) said it; we have an unregulated system here. The railways will set their own price. They've done it in the past and they will continue to do it in the future, and that price will be all the traffic can bear. Anybody who thinks that reducing the Crow rate on a commodity that represents something like 14 percent of the total freight handled by those companies is going to do anything to help the mining, forest or any other industry certainly doesn't have a very great knowledge of how the railway transportation system, and the CPR in particular, operate in this country.

This is the most unusual thing — that we are here in this Legislature trying to give some kind of support to a piece of legislation that, according to the member for North Vancouver–Seymour, is only relevant to prairie farmers. Here we are debating this piece of legislation, and suddenly all the government members want to speak on it, because they think it's politically popular and because they've been on the hotseat for so long that they want to get off it. Without any notice and without going in the order of the motions on the book, this motion is called this morning. We don't even know what’s coming up until we get into the House. We're told that something else is coming up.

It shows the desperation of that government, Mr. Speaker. It shows what they'll stoop to to try and gain a few political points at the long-term expense of no one but the farmers — but everyone, really. It's an immediate expense to the farmers of British Columbia, and in the long run it's a disaster for transportation generally, because whatever little vestige of control.... The last vestige of control that we have on the CPR is that Crow rate. It's down the tube when it's gone, and the subsidies will be poured in and we'll get exactly what we got before.

HON. MR. PHILLIPS: I rise to lend support to this motion. Before I do, I just have to say that I find it practically very difficult to understand the position of the opposition, who, as you know, Mr. Speaker, have continually stated that this government hasn't done anything for jobs, that we're not interested in the working people, that we're not doing things to improve the economy in the long run — when, if the truth were known, if the Crow rate stays the way it has, it will mean basically the demise of the Canadian transportation system in western Canada. It's impossible to have industry, to provide jobs, or to get our goods and services to the export market without a transportation system.

I happen to be very proud of the transportation system that we have built up in Canada. The very fact that we can indeed, with one of the largest countries in the world, develop a transportation system which is effective and can get our goods and services from central and eastern Canada to the ports on the west coast in such a manner and at such a price that they can compete in the world markets.... The very fact that our coal-mines in the southeast part of the province are about three times — some more, some less — further away from tidewater than are those in Australia and yet are still able to compete is certainly a tribute to the transportation system that we have built up in western Canada.

However, that system cannot continue to function and lose money hauling one commodity, because what we have seen happen is that the railways are not interested in hauling that product. They were not providing the grain cars, so the Canadian Wheat Board and the governments of Saskatchewan and Alberta had to go out and purchase the wheat cars in order to assist the railway with the transportation of grain. That has been an ad hoc system. Without the transportation system the farmers in the northeast part of British Columbia and in all parts of western Canada will indeed suffer.

I listened with a great deal of interest to the socialist agricultural critic talk about the farmers in the Peace River country. I talk to the farmers in my constituency. The majority of them realize that they're going to have to pay more to get their grain to market one way or another, that if we don't have an efficient transportation system they will indeed not be able to get their grain to market, and that therefore it's better to have the changes made now than to have the system fail. They also realize that it has cost Canada, and the western grain farmers, literally hundreds and hundreds of millions of dollars over the past decade to pay demurrage on ships sitting in the port of Vancouver. The NDP fail to take that into consideration. Not having the capacity on our railway and not being able to get our grain to market has cost us customers. With the changes that are proposed under the western Canadian transportation act, which is before the federal House, that will indeed change.

The only opposition that I've listened to from the farmers' union in my own riding seems to be some gut feeling, a great hate for the Canadian Pacific Railway. I have stood in my constituency — and will continue to do so — and said: "Listen, you know, up here in the great Peace River country you're not even affected by the....

MR. LEA: What about Oberle? What did Oberle say?

HON. MR. PHILLIPS: I'll talk about Oberle in just a moment. I'm glad you brought that up.

Interjection.

HON. MR. PHILLIPS: If you want to yack, young member — I know you're new in the House — get in your own seat and heckle from there. You don't do it from somebody else's seat. You think you're so smart; you should learn the rules of the House, and you might as well do it in the beginning.

I listened to the Agriculture critic from the opposite side talk about the CPR. The grain farmers in the great Peace River country are not affected by the Canadian Pacific Railway. They've got this great NDP socialist theory going that we should buy up the CPR and that the Canadian people should own it — that's in their craw. Yet they like everything the CPR has done. One minute they don't like the CPR, yet they wanted to keep the Marguerite. That was an old CPR boat; they're in love with it and they've got it here to preserve the history. They bought up the Royal Hudson, which is an old CPR train, and they restored that; they're in love with that. They love the old CPR hotels. As a matter of fact, so do I. I love all the old railway hotels. I think they're part of our heritage and I think they should be preserved forever. They also love the Crow rate because they want to keep it. They don't want to change it. So they're in love with the CPR. Although they may stand on the floor of this Legislature and condemn the CPR, deep down in their hearts they really love it.

The problem is, you see, that they want to stay in bed with the socialists in Saskatchewan and Manitoba because their numbers are dwindling, and their popularity in Canada is

[ Page 763 ]

dwindling. They have now united and said: "We must stick together whether it's right or wrong. Whether or not it's good for British Columbians or for future generations in British Columbia matters not to them, because they're tied to the philosophy of hating the CPR. I guess that's why they're so much in love with all the things they've tried to preserve.

[Mr. Speaker in the chair.]

The last speaker — the official agricultural critic in the opposition — stated that we were supporting this just because it's politically popular to do so. As early as 1976, in Winnipeg — and I remember attending on behalf of the government, as Minister of Agriculture — this government stated the position that we wanted to see the Crow rate changed. The position of this government has not changed. It didn't change in 1977, 1978, 1979, 1980, 1981 or 1982, and indeed, it hasn't changed in 1983. How they can stand up here and say that we're just taking a political position.... Do you know why it hasn't changed? Because it's right and it's good for future generations and for the workers in this province; because the investment that will come from this will provide long-term jobs. That's what we're all about and that's why we're government and they're opposition.

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

HON. MR. PHILLIPS: Well, if you have any indication, young fellow — and get back to your own seat — that I'm not telling the truth, I would suggest that you put your mouth in gear and stand up to a microphone and tell me where I'm not telling the truth, instead of sitting over there yacking from somebody else's seat.

MR. SPEAKER: Order, please. I would ask the second member for Victoria (Mr. Blencoe) to return to his chair, from where he can make the odd interjection, or to remain absolutely silent, or he will be asked to leave the chamber. I will ask the minister to address the Chair, so we can continue with a parliamentary debate in this chamber.

HON. MR. PHILLIPS: I was making the point, Mr. Speaker, that the position of this government with regard to the Crow rate has not changed since 1976. We recognized early that changes must be made in the Crow rate to preserve the transportation system of western Canada. We have heard a lot said about the number of dollars that are going to be spent by the railways in upgrading their system and their plant. Those are great construction jobs. But this investment in the future of Canada through upgrading the plant of the major railway systems is not the most important part. The most important part is that a modern, up-to-date transportation system will ensure the long-term viability of the other industries. That's where the long-term benefits from these changes come into being. That is why I cannot possibly understand the position of the socialists opposite.

[11:45]

I remember when we were talking with the Alberta government about building additional facilities at Prince Rupert for the grain companies so that we would upgrade that portion of our transportation facilities — mainly port and storage facilities — which would ensure the long-term viability of the western Canadian farmer; because I have seen the projections of increased production of grain in western Canada, and we didn't have the facilities. Without the construction of those new facilities at Prince Rupert, we would be suffering a similar problem in not having the facilities on the west coast to hold our production. So this forward-thinking government got together with the province of Alberta and said: "Look, we would like to see that facility built at Prince Rupert. We recognize that down in the port of Vancouver there is such a maze of railways and bridges and interchanges that it is hindering and harming the operation and the efficiency of our grain transportation operation." So we got together with the Alberta government and we said, "Look, we want to ensure that these facilities are built on Ridley Island," knowing full well that if the grain facilities went on Ridley Island it would, at a future date — and I'm taking you back in history now — facilitate that great coal port on Ridley Island. So we made an offer to assist, because we knew what was going to happen.

This government had the foresight, courage and vision to see how the total plan for that great port of Prince Rupert would fit together. That's why this government went out and started building a road access to Ridley Island under our great Minister of Highways. That is why the highway was almost complete when the port started.

MR. LEA: Who paid for it?

HON. MR. PHILLIPS: Sure, it was paid for partly by the federal government. Yes, and that member for Prince Rupert stood on the floor of the Legislature yesterday and said: "Oh, they have never negotiated anything with the federal government. The federal government takes them every time." I want to tell you that we had the federal government's commitment and we were building that road even before the decisions on either one were going to go ahead. I'll tell you, that's why we're government and they are opposition.

I am disappointed that we have not been able to make a deal with the federal government with regard to the great British Columbia Railway, but that does not preclude the fact that we will continue to try, and someday we will probably make a deal with them. Whether you know it or not, in my constituency we have the second-largest grain shipping area in western Canada. Out of Dawson Creek there were 171.8 million tonnes of coal shipped last year. That is second only to Weyburn, Saskatchewan, who shipped more.

I am very proud of my great constituency. Dawson Creek at one time was the largest grain shipping point in the British Empire. It still would have been today had it not been for the British Columbia Railway extending a branch line into Fort St. John. Fort St. John today is the eighth largest grain shipping point in western Canada.

I am pointing this out because that great Peace River area, which supplies power, coal, grain, lumber, gas and oil to the rest of the province, is a very very important agricultural area in this great province. I want to tell you that the combined land available for the growing of grains in the Peace River block of British Columbia and Alberta combined is twice the size of that available in the province of Manitoba.

You know, Mr. Speaker, people don't think of the great Peace River area as being a great grain producing area, but when the land is cleared and that land is under production,

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that great Peace River area of British Columbia and Alberta will produce twice as much grain as is presently produced in the province of Manitoba. I want to tell you that the great British Columbia Railway, then known as the Pacific Great Eastern Railway, was built by the Social Credit government, under W.A.C. Bennett, into the great Peace River country in 1958 to open up that great area, to tap those resources for the benefit of the rest of the people in British Columbia and, indeed, for all of Canada and to provide opportunities and jobs for our young and growing population. It is continuing to play that role, as more sawmills and pulp mills are in the planning stages — coal, oil and gas, and the rest of it. It certainly has fulfilled its function and its role in opening up that last great hinterland of western Canada.

The reason I bring up this point is that the railway was also built in the Peace River area to serve the fanning community in that area. It was through the British Columbia Railway that our farmers in that area were the best off of any farmer in western Canada in the early sixties. The British Columbia Railway opened up to the farmers the internal markets of British Columbia without going through the Wheat Board. My friend Mr. Ritchie could speak at great length on that, because he was certainly one of the buyers who purchased wheat in the great Peace River country and brought it down to the lower mainland for processing and sale to other agricultural communities. The point I'm making is that the British Columbia Railway has in the past played a great role in facilitating the agricultural community in British Columbia and indeed in the great Peace River area.

If you draw a line from the Peace River country to the new huge grain storage and loading facilities being built at Prince Rupert, you will notice that the British Columbia Railway, in terms of efficiency, should move that grain from Dawson Creek to Chetwynd, and through to Prince Rupert where it will connect with the Canadian National Railway, which is being upgraded to haul coal. Grain will move over those new facilities. The upgrading is really being paid for by the coal companies. That will certainly facilitate the farmers in the Peace River area. That's the way grain should move across the northern part of the province.

Without the federal government looking at that situation and assisting the British Columbia Railway to upgrade its line from Chetwynd to Dawson Creek, they will continue to move grain inefficiently on what is now the CN line, but used to be the Northern Alberta Railway, which was 50 percent owned by Canadian Pacific and 50 percent by Canadian National. They will move that in a longer area over other lines down through Grande Prairie, and connect up with the Red Pass line from Edmonton to Prince George and back again. That's a very long, inefficient way of moving the grain from the great Peace River area. That's why....

MR. LAUK: On a point of order, I hesitate to interrupt the hon. minister's little lecture, showing us how much he knows about these matters he is speaking of, but it has nothing to do with the resolution. His speech has not, in the past 12 or 15 minutes, touched upon the Crow rate or the resolution, and I have hesitated to interrupt for that length of time. I think he should be drawn to order and asked to speak to the issue involved in the resolution.

MR. SPEAKER: Hon. members, the Chair has some difficulty in determining that the comments are not in keeping with the resolution. However, I would ask all members, when addressing a particular motion, to bear in mind that they must be relevant.

HON. MR. PHILLIPS: I was pointing out, when I was so rudely interrupted by the second member for Vancouver Centre — who stood up and didn't make a point at all — how the Crow rate and the great Peace River area and the British Columbia Railway will all be affected by the decisions made by the new transportation act in western Canada.

I have a number of other points which I wish to make; therefore I would like to move adjournment of this debate until the next sitting of the House.

Motion approved.

HON. MR. PHILLIPS: Mr. Speaker, I rise on a point of personal privilege. This is the first opportunity I've had to do so. Yesterday afternoon, when the leader of the opposition was speaking in the debate on the bill to do away with the British Columbia Harbours Board, he got somewhat carried away and made the following statement referring to me. He said this: "He's turned back more odometers than anyone else I know in the business."

Mr. Speaker, I value very highly my reputation as a businessman. I have a very good reputation as an honest automobile dealer. I do not appreciate the Leader of the Opposition making an untrue statement in this Legislature which is against my character and reflects on my past reputation as an automobile dealer. I am going to ask you to have the Leader of the Opposition either apologize to me or withdraw that statement.

MR. NICOLSON: Mr. Speaker, on that point of order, Speakers have ruled numerous times that such matters must be brought up immediately. This is not a question of personal privilege, but the member was in the House at the time, and he had the opportunity at that time. He's had opportunity all this day. Even if it were a question of privilege, the first opportunity must be taken. That has been so interpreted as even to interrupt His Majesty King George III, I believe, when he was giving the Speech from the Throne. It was given precedence because it was the first opportunity. Mr. Speaker, I could give you the citation from the ninth edition of Sir Erskine May, if you'd like.

MR. SPEAKER: Thank you, hon. member, we're familiar with it.

HON. MR. PHILLIPS: On the same point of order, Mr. Speaker, I heard partially what the Leader of the Opposition said yesterday afternoon. There was a lot of bantering, if you will recall, and that's why I didn't at the time fully understand what.... However, if the member for Nelson-Creston wishes to condone what his lame-duck leader has said, then no action will be taken.

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MR. SPEAKER: The Chair will take the matter under advisement.

MR. LAUK: On the point of order, Mr. Speaker, in considering this matter it should be pointed out that there are no grounds for a point of privilege. If there is a dispute between one hon. member and another, there is a way in which to resolve that dispute in the course of debate. Under standing order 42 the minister can stand up. He's already done so; he's corrected the record.

MR. SPEAKER: Hon. members, clearly at this stage we're entering into a debate. The Chair has undertaken to take the matter under advisement and will report back.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 11:59 a.m.