[ Page 6659 ]

CONTENTS

Routine Proceedings

Committee of Supply: Ministry of Municipal Affairs, Recreation and Culture

(Hon. Mrs. Johnston)

On vote 44: minister's office –– 6659

Mr. Williams

Ms. A. Hagen

Mr. Rabbitt

Mr. Sihota

The House met at 10:04 a.m.

[Mr. Pelton in the chair.]

Prayers.

MR. JACOBSEN: Visiting this morning are two very good friends from Tacoma: Herm and Mary Lou Sommers. They are in Victoria to celebrate their anniversary, and I'd like the House to join me in giving them a warm welcome.

HON. MR. HUBERTS: On behalf of the Minister of Finance (Hon. Mr. Couvelier) and me, it is my pleasure to introduce to the House today 16 grade 11 social studies students visiting the buildings today on a general study on government. They are from Claremont Senior Secondary School located in the great constituency of Saanich and the Islands. They are accompanied by their teacher, Mr. Ruffles, who is a long-time teacher at Claremont, and a student teacher, Mr. Eric Stringer. Would the House please give these students and their teachers a great welcome.

Orders of the Day

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

ESTIMATES: MINISTRY OF MUNICIPAL

AFFAIRS, RECREATION AND CULTURE

On vote 44: minister's office, $311, 570 (continued).

MR. WILLIAMS: I inquired of the minister yesterday regarding the questions on conflict of interest with respect to property acquisition and B.C. Transit. The minister said she had the material on her desk but it was not yet available. Is that still the case?

HON. MRS. JOHNSTON: I just haven't had an opportunity to send a copy over to the member for Vancouver East. Assuming that in the next couple of days we will be through with my estimates, I will be pleased to attend to that and ensure that you get a copy.

MR. WILLIAMS: We were advised that Mr. Macdonald had been a private appraiser for B.C. Transit, previously on contract. Would that have been the case with Mr. Danny Grant and Mr. Mario Pavlakovic as well?

HON. MRS. JOHNSTON: Mr. Chairman, to the first member for Vancouver East. I am sorry I don't recognize those names, but I can get that information for you. If the member has any other specific questions, if he just wants to pass them along to me, I would be pleased to get the responses.

MR. WILLIAMS: Maybe we could have it clarified. Interwest Property is the company that Mr. Macdonald was part of. Is that so?

HON. MRS. JOHNSTON: 1 didn't understand the question.

MR. WILLIAMS: In terms of the contract with respect to acquisition of the right-of-way for SkyTrain, was the company Mr. Macdonald was with Interwest Property?

HON. MRS. JOHNSTON: I'm not sure of the name of the company, but I can check that out.

MR. WILLIAMS: The minister has had staff here that could provide these answers. Is there nobody available directly from Transit?

HON. MRS. JOHNSTON: I see by the report here that Bruce Macdonald was an employee of Interwest Property Services Ltd.

Mr. Chairman, I apologize. It was my understanding from comments made on the opposition side of the House yesterday that the B.C. Transit portion of the budget was complete, and I did not ask the transit people to come back today.

MR. WILLIAMS: That wasn't my understanding at all, Mr. Chairman. That's unfortunate. Maybe these matters could be stood down, because I think there are detailed questions that deserve some detailed discussion.

[Mr. R. Fraser in the chair.]

MR. CHAIRMAN: Shall vote 44 pass?

MR. WILLIAMS: Well, then we can carry on, and maybe the minister can ask the staff to be here. I think it's unfortunate if that was the understanding - or misunderstanding.

The question is an intriguing one, Mr. Chairman, because the question of the SkyTrain right-of-way is very significant; it's a major acquisition exercise. It was all done, at least in the New Westminster area, on a contract basis. I guess it was done on a contract basis throughout. In the normal course of events in most jurisdictions, these things are handled by the Crown agents directly - the civil service.

It's interesting to reflect on this question, in terms of the privatization initiatives of government. There are more difficulties in areas like this when you use contract or privatized agencies for that purpose.

So we have established that Mr. Macdonald was with Interwest Property and in fact, he was the lead person in terms of acquisition after... Previously, I think Lionel Mercier had been responsible. Mr. Mercier, at an earlier stage, was the mayor of Vernon, if my memory serves me right.

I think the question of the guidelines is extremely important. It would have been useful if those guide-

[ Page 6660 ]

lines for conflict of interest had been provided to us right now.

[10:15]

There was this matter of acquisitions carried out by Interwest by Mr. Macdonald, Mr. Pavlakovic and Mr. Grant. They negotiated with the people in the C-4 neighbourhood for the right-of-way for SkyTrain through downtown New Westminster. Would the minister confirm that they also carried out an overall study in New Westminster called the Clarkson corridor study?

HON. MRS. JOHNSTON: I can't confirm or deny that there was a study under that heading, but surely if it is a question of identifying who handled property acquisitions or disposals, and whether the contracts with private property-acquisition firms had termination or conflict-of -interest conditions contained, surely we can get you those responses quickly in writing. I apologize for the misunderstanding. I was left with the impression that I don't even recall who it was on your side of the House who said: "We're finished with transit; we'll go back into municipal affairs." I just let it go at that. So if you have some specific concerns that you would like to have me address for you in writing, I would be pleased to do that.

MR. WILLIAMS: As I recall, there were questions about transit at the end last night when I was here, and I had no reason to think that that wouldn't continue this morning, so where the misunderstanding came I accept what the minister says.

AN HON. MEMBER: Ask the officials to come back this afternoon.

MR. WILLIAMS: Well, it would make more sense if this could be pursued in some detail with the help of officials. I don't expect the minister to know all the answers to the detailed questions. No, and fair enough.

I think that downtown New Westminster is a fascinating place. I used to work there when I was a junior planner in the fifties - or something like that. I worked for the Lower Mainland Regional Planning Board when I was there. Historically, we've had these two central business districts, downtown and New West. New West has gone through difficult times in its downtown, relative to Vancouver. I've been fascinated at the rebuilding in New West, because I think it's important. I think the government can be commended for a lot of those initiatives for rebuilding downtown New Westminster.

At the same time, these are thorny questions of public policy in terms of how one achieves one's goals and whether there are problems and difficulties along the way. I think there have been problems and difficulties along the way in New Westminster, There's a lot of money to be made there. That gives good incentives and bad incentives sometimes, and you can't always control that, but to some extent, government can at least control its own players and activities as much as possible.

The question of right-of-way acquisition is critical, because we're talking about some 50 properties or more in the C-4 neighbourhood, the old downtown of New Westminster, that had to be acquired for SkyTrain. I'm sure the minister is getting excellent advice from the Attorney-General (Hon. S.D. Smith).

The question of this overall study is significant, because you were basically contracting out the appraisal job, the negotiating job and the whole analysis of the downtown as well. Those are extremely heavy responsibilities for the people you contracted out to, for the people who had that job in the private sector. Mr. Macdonald was the lead person, and Mr. Pavlakovic and Mr. Grant were significant players as well.

We might as well carry on. It would be extremely useful to have the transit staff here. If the minister thinks that the transit staff could be here this afternoon, we have enough subjects to canvass that we could do so. Regardless, the transit staff should be here this afternoon. Maybe I should just carry on.

HON. MRS. JOHNSTON: What I am finding very difficult in this discussion is I guess there are two or three areas. I'm wondering if the first member for Vancouver East is suggesting that there were some improprieties in the acquisition or disposal of property. If that is not what has been suggested, is there something wrong with getting written questions? I'll get you written responses rather than just a verbal response. I could, without question, make arrangements to have the staff of B.C. Transit come over from Vancouver for whenever the two House Leaders agree is appropriate, but in the last week or so we seem to have had a problem with agreements being kept between the two parties. In the last ten days the staff of not only my Municipal Affairs ministry but my transit ministry have been on call to me above and beyond what would be normal duty, because arrangements that had been made between the two House Leaders were, for whatever reason, not kept by the members of the NDP. If the two House Leaders and the caucuses agree on a time-frame for continuing to hear the estimates on B.C. Transit, I have no problem at all with ensuring that the staff will be here.

I apologize again, Mr. Member for Vancouver East (Mr. Williams), because someone on your side of the House gave me the impression yesterday that B.C. Transit was finished and there were just some Municipal Affairs responsibilities to clean up. If you want staff, we will get them here. Otherwise, if you want to put your questions to me in writing, I will ensure and undertake that you have a proper written response.

MR. WILLIAMS: I appreciate what the minister says, and I have no reason to doubt her understanding. It's unfortunate, because I really think the matter is more than written questions; that's the problem. However, we might as well proceed and look at these

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matters. The minister might, on her own account, think about whether the staff should be here so that we can visit the question again. I'll leave it with the minister's judgment as we proceed.

I wanted to make the point that Interwest Property was doing the job for government that's normally done in the civil service, and there's probably a good reason. These are questions of confidence. These are questions such that the kind of civil service milieu is required more than in other cases. That's not what we had. We had a private company on contract with B.C. Transit - a government agency - doing the acquisition. That's clear.

The mandate these contractors had was acquisition, negotiation and disposition of the lands of Transit, and in the New Westminster area they also had a mandate to carry out a broader study called the Clarkson corridor study. Clarkson is a small street up the hill from Columbia Street. They were having a major impact on the old C-4 zone of New Westminster. When you buy 50-odd properties through as small a downtown as New Westminster's, then you're creating shifts and difficulties within that property owning and tenant milieu. Those people have to go out and look for places to relocate and for other properties. It's very tough on the owner-occupiers; it's very tough on the tenants. Those problems are best handled by the civil service, but they weren't.

Let's reflect a little on New Westminster again Not only was SkyTrain coming through, there had been all the other work as well. There was the work on Westminster Quay and the public market, work on Esplanade and building of condominiums. There was the building of Douglas College, the hotel and so on It was a town where a lot was happening, without any question, and SkyTrain was a $1 billion expenditure by the provincial government, which would have a growing impact on downtown land values in New Westminster more so than any of the stations outside the downtown area of Vancouver.

In New Westminster two stations were being built at 4th and at 8th within half a mile of each other Nowhere else on the system outside downtown Vancouver was there going to be such an impact by SkyTrain. It was likely also a junction of the SkyTrain system, with the linkages to Coquitlam and Surrey Downtown New Westminster would become a major transfer point in the whole transit system of the lower mainland, so it was extremely important in terms of land values and what happens in the future.

The appraisers are extremely important. They are the first contact with the affected party. They have to build up confidence with that person as the representative of government and carry on discussions about the value. They're experts in the field. Generally, most people who own property - especially in New Westminster - are long-term owners. They don't really have a thorough understanding of the property market. The appraisers are the experts. To a great extent, they rely on them. Most of them don't want to go into the arbitration process, getting lawyers and so on. So the citizens who are impacted by the expropriation power of the state rely on the person who comes to their door saying: "I represent the state." In this case they were from Interwest Property, but they were representing the community at large.

Some 50 parcels were either wholly or partially needed by Transit just to get through the C-4 zone of downtown New Westminster, We already would have had a very wide interest in the property market in downtown New Westminster because of all the other things happening. In addition, we would have had this additional interest of the 50 impacted properties then looking out into the marketplace themselves. That was a real impact on the property market in downtown New Westminster; it was directly impacted by these acquisition agents or appraisers going out on behalf of the public.

If there was new competition in the downtown area for properties, that would be even tougher again. New Westminster is a tight little island downtown. Those buyers for Transit had a huge impact as buyers for the Crown - a Transit agency. They had a very important responsibility - a position of trust with the Crown and the Transit agency with respect to acquiring that public right-of-way.

I've prepared a rough map of downtown New Westminster, and the area outlined in red is the C-4 zone. The blue hatched area is all within the C-4 zoning. It's extremely generous zoning. It allows a wide range of activities, as you would expect in a downtown area. It allows the highest density in New Westminster, which isn't surprising either, Everything in the pink band is the acquisition corridor - the Clarkson corridor - for SkyTrain right-of-way, which moves over the river down here at this eastern end.

[10:30]

The problem is that the three above-mentioned people in Interwest at the same time became significant buyers of land in downtown New Westminster themselves. That's the core problem. That's very difficult to accept as a way that representatives of the Crown should do business. Clearly, in my view, there was an exclusive obligation to perform for the Crown - period - in the C-4 zone of New Westminster.

There should not have been any acquisition considered whatsoever by any of the parties in Interwest performing for the Crown. In fact, they were major buyers in the downtown area throughout that period in the name of a company called Pro-Western Management Ltd., which moved into the property market as a new player in what was already a constricted market, where the people who were impacted by SkyTrain - some 50 properties - were out in the marketplace themselves or were going to become tenants instead of landowners in the downtown area. That's the kind of problem that occurred in New Westminster in that period.

The properties that were acquired by Pro-Western Management were a range. There was a site parcel A of lot 1 of block 5 on Columbia Street acquired by Pro-Western Management from Alfred Dong. It was acquired for $150, 000, 1 believe, and was subsequently mortgaged for $250, 000. The old Army and Navy site - the Trapp block for those that remember old New Westminster - was also acquired. That's lot

[ Page 6662 ]

2 and lot 3 of block 5, part of block 4, block 5, the east half of lot 3 and block 5. They acquired that for $550, 000. It was subsequently mortgaged for $650, 000 some time later, I believe.

There's an interesting situation where a numbered company - 2828 Investments Ltd. - actually acquired one of the adjacent properties near the Army and Navy. That's parcel A of lot 6 of block 5. That would appear to be related.

The other interesting acquisition was from BCEC itself. Trump Holdings was the name of that company. Trump Holdings acquired lot 13, block 24 further up the street on Carnarvon, I believe. That was acquired for $210, 000 from BCEC. It was subsequently resold to Dance City Ltd. for $240, 000. In addition, lots 6 and 7 in block 5 were acquired from the Toronto-Dominion Bank by Pro-Western Management Ltd. for $250, 000. It was subsequently mortgaged for $325, 000 by Citizens Trust Co.

The names that pop up in a lot of the documents that you review with respect to these acquisitions are: Mr. Danny R. Grant, senior appraiser; Mr. Mario Pavlakovic, senior appraiser; and Mr. Bruce J. Macdonald, senior appraiser. That's the documentation that jumps out from a review of those properties.

The question, then, of those conflict-of-interest guidelines becomes significant. Are the guidelines such that if the company or the people from the company were carrying out a Clarkson area corridor study, which would clearly be the impact on the C-4 zone of downtown New Westminster, there would appear to be a conflict of interest? Or if it didn't include things like that, one would expect at the very least that the conflict guidelines would not allow acquisition in the impacted station site areas along the SkyTrain system.

Those are certainly significant questions on what conflict guidelines Transit and the ministry have. When you talk to some of the owners in downtown New Westminster privately, they say they really went through the wringer for this exercise. In a historical city, it would be like that for someone who had been there for maybe generations, as was the case with some of them. Bang, their roots are gone; their building is going, and so on.

So they are put out there into a property market that they don't know the first thing about, and we shouldn't expect them to know that. That's why the representatives of government really should be there to extensively help them in the relocation process, if we are going to do a thorough job. But you've got a very real problem if those very representatives of government are out there in that property market themselves and are potential renters, as they obviously are, to tenants who are looking for space in downtown New Westminster.

It was an extremely tough period for the impacted people in downtown New Westminster, and it was made doubly difficult. Of the property on the market in downtown New Westminster through the time period we're talking about, one-third was acquired by Pro-Western Management Ltd. So a third of everything that was on the market was, in fact, picked up by people who were actually carrying out the acquisition program for the Crown.

The whole thing doesn't make government look very good. We should have had guidelines that would prevent acquisition officers from acquiring in the station area. In fact, the officers representing the Crown should have been totally neutral agents ready to help as much as they could in the relocation exercise, because we tend to do that in other circumstances when we are expropriating, or at least where we have the right to expropriate for something as significant as a right-of-way for SkyTrain, a highway or anything else.

The situation there is pretty clear. A pattern of acquisition took place during the same time period as the right-of-way acquisition was being acquired.

Interjection.

MR. WILLIAMS: I note the time, Mr. Chairman, and I appreciate the Minister of Environment (Hon. Mr. Strachan) advising the House of that important issue. Maybe at this point the minister might respond to some extent.

HON. MRS. JOHNSTON: It took a while for me to finally understand what it was you were attempting to develop. On the surface, I would have to agree and tell you that I feel rather uncomfortable with some of the allegations or innuendoes that you have brought forward. There almost seems to be a slight odour to some of the dealings that you are suggesting.

I would not be any more comfortable than the first member for Vancouver East appears to be if there was hanky-panky or some underhanded dealings. Having said that, I would very much appreciate it if the first member for Vancouver East would provide me with whatever information he has, and I will undertake to obtain the very fullest possible response with all of the information required in order that we feel very comfortable and satisfied with the way the business was conducted in that area. If we're not entirely satisfied and comfortable, then I think we would have to review the way the matter was handled and take whatever action is deemed necessary and appropriate.

MR. WILLIAMS: I appreciate the minister's response. The words she used are her words. Clearly, though, there's a legitimate concern in terms of the various acquisitions that have taken place. One of them is from Alfred Dong of Roseberry Avenue in Burnaby: parcel A of lot 1, block 5, plan 2620. Also acquired by Pro-Western Management Ltd., B.C. incorporation number 269770, were the easterly 20 feet of lot 2 and part 6 inches by 66 feet, plan 2019 of lot 2, and the westerly 33 feet of lot 3, all of block 5, plan 2620, to the easterly 20 feet of lot 2 - annexed part of wall agreement, etc. - and to part of lot 2, annexed agreements; secondly, part of lot 4, block 5, plan 2620; thirdly, the easterly half of lot 3, having a frontage of 33 feet on Columbia Street and the westerly 11 feet of lot 4, block 5, plan 2620. That's the old Army and

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Navy Department Store; prior to that it was the Trapp block on Columbia Street in downtown New Westminster.

Another acquisition by a numbered company in which full information on directors is not available is 2828 Investments Ltd. with respect to The legal description is parcel A of lot 6, block 5. That's on Columbia Street in downtown New Westminster near the Army and Navy store. Directors of Trump Holdings Ltd. that I checked include Mr. Macdonald, Mr. Pavlakovic and Mr. Grant; incorporation number 317978 acquired lot 13, block 24 on Carnarvon Street, and lot 12. They acquired that from the Enterprise Corporation for $210, 000. From the records that I have, they sold it for $240, 000 to Dance City.

Pro-Western Management Ltd. also acquired from the Toronto-Dominion Bank lot 6, parcel A, block 5, plan 2620 and lot 7, block 5, plan 2620. We've covered the Trapp building site. They in turn became major landlords in downtown New Westminster - to my mind, very costly and expensive landlords. One of their leases, for example, was to a bingo group: the largest bingo hall in downtown New Westminster, and a building that the bingo group only occupied about one-quarter of, if my memory serves me right They rented it out to what was then the Burnaby Purpose Youth Society for a four-year period from May 1, 1985, to April 1989. It's a lease to the main bingo group in downtown New Westminster. The rent over the four years was $325, 000, plus 50 percent of all taxes and external costs as determined by the city in terms of bylaw improvements. In four years they would pay $325, 000 in rent for one-quarter of a building bought for $550, 000 and mortgaged for $650, 000, an extremely profitable exercise.

[10:45]

There's an interesting related story to this. ProWestern Management subsequently wanted the bingo licence, The member for New Westminster (Ms. A Hagen) and I were concerned about that and followed it up at an earlier stage. They have not been successful to this point, as I understand it. Paying that very significant rent, which, with all the tax costs and everything, would have been about $10, 000 a month for a quarter of that building, and then deciding that they should probably have bought a building because they're paying so much in rent - they could buy a building more cheaply than the rent they were paying to Pro-Western Management Ltd. They actually acquired the Kresge building across the street - for those who know downtown New Westminster. That was a minor change then, and it impacted the bingo licence question of Burnaby Purpose Youth, which is now Lower Mainland Purpose Society.

It's interesting that in this case, they just wanted to move across the street. I hadn't understood that side of bingo, just seeing the front end. The Canadian Commission then considered both as equal applicants, i.e. Pro-Western Management Ltd. and Burnaby Purpose Youth, which had been doing it for some years as the main group working with charities in downtown New Westminster. What was interesting, subsequently, was that the very building that Burnaby Purpose Youth acquired somehow got torched later.

Interjection.

MR. WILLIAMS: It is an aside indeed, but it's interesting to reflect on. The point is that the C-4 neighbourhood in New Westminster was impacted tremendously by SkyTrain and other decisions, and we didn't have full-fledged civil servants carrying them out for us. Now the minister advises us that the decision was made March 1 to employ Mr. Macdonald as a full-time civil servant. I presume that at that time he might have done something about his other interests. Maybe the minister could review that whole question both before and after March.

HON. MRS. JOHNSTON: I'm pleased that all this information will be available to us on the record, because on the surface, it appears that it's worthy of follow-up. I guess if I have a concern I'm not attempting to diminish the suggestion made by the member that there may have been some manner of conflict, because certainly we'll be following up on that very promptly, but a number of the buildings that the first member for Vancouver East has referred to are in the city of New Westminster but not directly connected to the SkyTrain acquisition or property disposals.

The suggestion by the member, I would assume, is the fact that acquisitions for SkyTrain were being made which somehow improved the viability and the value of properties in proximity to SkyTrain. Well, I can tell you that that's one of my selling points when I talk to people about the value and benefit of the SkyTrain systems right from downtown Vancouver through to Surrey. We're looking at more than $5 billion worth of economic activity that has taken place along the SkyTrain route. With the spinoffs, we're looking at $15 billion worth. I hope that this will continue around our stations, because the stations are an attempt to determine town centres and business locations that will be advantageous to the community that SkyTrain passes through. Hopefully these increased values will continue.

Are we to assume, then, that the increased value isn't of concern to the Vancouver East member; it's the fact that somebody involved with the appraisal firm ended up buying some of these properties? The first member for Vancouver East is suggesting that they should not be in a position to buy property anywhere in close proximity to the SkyTrain line if they're somehow involved in acquiring properties for transit along that line. Is that the suggestion? Could we also hear when these properties were purchased by these firms, if you have that information?

MR. WILLIAMS: I think the minister appreciates the point being made, that these people had a trust and responsibility with the Crown or the Crown's agency, B.C. Transit. As such, I would argue that surely your conflict-of-interest guidelines should have said: "You can't buy land in the areas where you

[ Page 6664 ]

are acquiring land for SkyTrain." What would we say - a thousand feet? Surely a thousand feet would be reasonable, and that would eliminate downtown New Westminster.

I've said that they bought a third of the land that was on the market through the period of acquisition and studies. They were gobbling it up whenever they could. They've done extremely well by it. You can't walk both sides of the street. You're either working for the Crown or you're working for yourself; you can't do both. If your conflict-of-interest guidelines are worth anything, they will make it abundantly clear that if you're acquiring in downtown New Westminster for SkyTrain - and we're talking about a tight, constricted area - then you should not be in the market, buying land there for yourself or your group. It isn't just one; it's the trio. The main players in acquisition in downtown New Westminster were the buyers for themselves, through Pro-Western and Trump Holdings and, presumably, other corporate names as well. It's very significant. The dates when they acquired are the same period when the studies and acquisition for SkyTrain were going on; they overlap. I think that's clear.

Insofar as the other question is concerned, that's another policy area, in terms of benefiting groups near SkyTrain stations. We visited that a few days ago, and the minister indicated some interest in the possibility of enabling legislation that would allow tax levies in that area. I think that would be beneficial for New Westminster and the other SkyTrain station areas. I commend the minister for being as open-minded about it as she's been, and I commend her for being as open-minded about these issues as she's been today as well. But if you and your deputy minister have scanned those guidelines, maybe you can tell me: do they exclude the right to acquire property in impacted areas within a certain distance of the right of-way that they themselves were acquiring? Obviously they should. These impacted areas are very clear.

The other thing is, nobody else out there in the public is as informed as the appraiser who's going out on behalf of Transit or the Crown. Nobody else really understands what the impact on the market is going to be, exactly where the route is, where the station is, what elevation it is, how it relates to adjoining property - a myriad of things - or the way a property market moves. Nobody in private life understands all those things. But the appraisers understand them, so they operate with special information, special privilege and special training. Their own professional associations and institutes should prohibit this kind of thing. That's another question, and not necessarily our responsibility; that's elsewhere. But the one with the Crown is clear, I think.

Maybe the minister could advise us, on scanning that information in terms of conflict-of-interest requirements, whether indeed there's such an obvious limitation in terms of conflict.

HON. MRS. JOHNSTON: Mr. Chairman, on scanning you're right, it is just scanning - there appear to be no prohibitions on acquiring nearby property. But the contract does forbid using privileged information for private gain. Now I guess that can be determined In whatever way a person wants to accept it and understand it. But on the surface it appears that we do not have stringent enough conflict-of-interest regulations when we're dealing with the acquisition and disposition of property in this Crown corporation. I imagine it applies more to outside contractors, because no property can be acquired or disposed of without some type of board of director connection or approval, or having dealt with it. But that, of course, doesn't deal with the Army and Navy type of situation or those properties that are not directly on the SkyTrain route.

There seems to be a suggestion that there's something wrong somewhere - and I guess that's the symptom, it's not the proof. But I would suggest, Mr. Chairman, that the member for Vancouver East has brought forward this morning enough reason that I believe the issue should be properly examined. This should be done promptly and thoroughly, and I undertake to do that.

MR. WILLIAMS: I'd like to thank the minister for her response. I think it's commendable. But let's understand that this question is a current responsibility of the minister. The minister primarily responsible throughout most of this exercise was the member from Little Mountain. Those guidelines that you've just scanned - that we have a picture of now, at least - were guidelines you could drive a SkyTrain through. To limit it to what it appears to be limited to, and not to limit acquisition by these players in the impacted station site areas is

MR. CHAIRMAN: Hon. member, the subject for discussion is the estimates of the minister's office today.

MR. WILLIAMS: Yes, you bet it is, Mr. Chairman. And what the minister is saying is that she has to revisit these guidelines. I think it's abundantly clear that they're totally inadequate; they're abysmally inadequate, and allow advantage to be taken. Clearly the impacted areas around the station sites should not be areas where the acquisition officers for the Crown or Transit should be free to purchase property. TO limit it to the right-of-way is nonsense, and to limit it to just detailed inside knowledge is absolute nonsense. We're talking about having a grasp on the whole impact on the property market in an impacted area. If they've got that trust relationship with the Crown or Transit, they should have no rights to acquire in the impacted areas. Pure and simple, clear and simple. It should have been abundantly clear to the former minister that that was a necessary part of the whole exercise in acquiring the SkyTrain right-of way. You leave these people open to too much temptation. I've given you the rental numbers on the Trapp building. Rental income from one-quarter of the building is more than one-half of the acquisition cost of the building, in terms of rental income, in four

[ Page 6665 ]

years alone. It's too tempting. This stuff is simply too tempting. This minister, I think, understands it, and the former minister should have understood it.

[11:00]

MS. A. HAGEN: I wanted to add a few comments to the remarks of the first member for Vancouver East about this matter of property acquisition. I particularly want to do it from the perspective of some of the affected businesses. I think the minister, first of all, is well aware that the Clarkson Street corridor is .within spitting distance" of Columbia Street. It is a very small street in terms of the number of businesses that are there.

The businesses that were forced to relocate because of SkyTrain going through that corridor virtually are a part of the Columbia Street business sector The obvious place for them to relocate would be as close as possible within that stretch between 8th Street and 6th Street. We should not even entertain a thought that this is not an essential part of that corridor, especially when we note that the original alignment of SkyTrain, one which was approved by the business community in New Westminster, was actually Clarkson Street.

When it was moved, I think like some 20 feet or 30 feet to the south, all of a sudden, a whole range of businesses that would not have been affected in terms of a relocation - although perhaps affected by some of the alienation of air rights and some construction aspects - were going to be forced out of that location. I've talked to a number of these business people about the process that was involved when they were informed that their businesses were to be raised and they would have to relocate.

I might say that every single one of those people are local business people. They are people who have longtime roots in the city not only in terms of the businesses that they operate in the city but in their roles in community organizations. These are citizens of New Westminster in every real sense of the word Every single one of those people spoke highly of the first person who was responsible for land acquisition, Mr. Mercier. In the course of his work he became ill and was no longer able to continue. The perspective that they had from this person involved with the acquisition and with taking responsibility for the appraisals was that they trusted his approach: that is that they would be fairly treated not only in the price that they were offered for their properties but in assistance to relocate.

When Mr. Mercier departed from the scene with one short interlude, the people who became involved are the people who are principals in Interwest Property and Pro-Western Management: specifically, Mr. Bruce Macdonald, who is now on the staff of B.C. Transit as of, I understand, March of this year; and Mr. Mario Pavlakovic, who was responsible specifically for the appraisals for these properties.

In a nutshell, the people with whom these people - in particular, Mr. Pavlakovic - had dealings with have no sense of fair or due process. Some of them described it as "a gun to a head, " "a price on the table, take it or leave it." You can image their feelings when they find that these very people are involved in the marketplace where they were looking to relocate. In fact, a number of them have relocated in that area and are still not happy with that relocation. Some of that is in fact the disruption that comes with any change. We all recognize that, but they were competing in the same marketplace as these firms. The principals in these firms had a responsibility as a part of their B.C. Transit mandate to assist in the relocation. There is a clear conflict of interest with respect to their duty to assist these people in relocating as fairly and quickly as possible in the same community where they had done business for many years and the acquisition of property along that same corridor by these very people.

It's very interesting when one looks at the outcome of some of these property acquisitions. When people are dissatisfied, they always have the right to go to arbitration. Two of the four particular owners that I have spent some time with did go to arbitration. One of them went to arbitration and received in a unanimous decision - including the appointee from B.C. Transit - everything they had sought in their first negotiations and costs.

The second operation in fact had their arbitration scheduled.... I'm not sure whether it was two or four times. I don't have a note of the number of times. It was a minimum of two and possibly four times. Suddenly, recently that arbitration was pulled and was settled without the arbitration procedure and with significant improvement of the price to the affected operation.

It's interesting that one of the principals we have been talking about was involved with property acquisitions that eventually were a part of the total package for this particular New Westminster operation. Had it gone to arbitration, I believe some of this information before this House would have been in the public domain as well. That appraiser, Mr. Pavlakovic, was directly involved with properties that were eventually purchased by one of the operations in New Westminster that was displaced by SkyTrain.

The city and its business people have indeed welcomed SkyTrain, but the minister's comment that people should benefit from that should surely have been available to the business people of New Westminster in a fair competition for properties they wished to acquire. We must remember that these are people who owned properties; they are not people who rented - the people whose businesses were significantly affected by the requirement to relocate. Many of them lost business opportunity during the time of relocation, because some of the lag between losing their building and relocating meant that business was gone for a significant period of time. Some of them lost significant rental business. One of them lost his home of many years. These people were very significantly affected in their personal and business lives. There is still a very deep sense in that downtown community of unfairness and conflict as a re-

[ Page 6666 ]

sult of how this particular set of acquisitions and dispositions was carried out.

It's regrettable that the minister, since she first promised to table the conflict-of-interest policy last Thursday, has been unable to do that. She has clearly indicated in her comments today that although she noted yesterday that conflict-of-interest policy applies to consultants as well as employees - those were her words in her first skimming of the conflict of-interest guidelines she received yesterday - it does not appear that there was any limitation on this activity.

However, I join with the first member for Vancouver East in welcoming her interest and concern about this particular issue, and I look forward to her early response. Many people in the downtown area of New Westminster have been directly affected by this whole acquisition process, and their sense of fairness and correct, proper and reasonable treatment.... Many others know that these activities do not stand up to the highest standards we might expect. We look forward to those responses at the earliest opportunity.

MR. CHAIRMAN: The second member for Nanaimo seeks leave to make an introduction.

Leave granted.

MS. PULLINGER: Mr. Chairman, in the House with us today I'm pleased to say we have 26 adults from the Chemainus Native Education Centre in Ladysmith and their instructor, Mr. Maddin. Would the House please make them welcome.

MR. WILLIAMS: I talked about a lot of these historic companies in downtown New Westminster, one of which was Nixon's Books, which has been there for some 80 years, I believe. It's traditional, with a long family involvement. Mr. Ernie Ramsey, the owner of Nixon's, had a range of things to say about this at one stage. He said that he first noticed a possible conflict of interest with Pro-Western, which was represented by Pavlakovic, when they purchased the old Sally's shop at the corner of McKenzie. It was an area he would have liked to relocate to on Columbia Street, but many were unable to do so because of the increasing land values. So they get a price established in terms of when they're being bought out, then the market moves up on them, and these appraisers, who are in the market and impacting the thing themselves....

So a former landowner could very well end up being a tenant in a property owned by Pro-Western, who were the appraisers for B.C. Transit. It's true of other employees as well.

Lloyd Reyklin, of Reyklin Office Equipment, was forced to relocate his business in a different commercial zone in the city~ He couldn't stay downtown so he moved up to 6th Street. That's a loss for downtown New Westminster in terms of their history and all the rest of it, and it shouldn't have happened. He should have had more elbow-room and freedom in the downtown in terms of relocating, and he didn't because of these additional buyers.

Dick Vink, owner of Westminster Rubber Stamp, sold his Clarkson Street premises to a Surrey lawyer prior to B.C. Transit negotiations. That is worthy of investigation just in itself. How many sites were acquired prior to Transit acquiring them? How much did the price get ratcheted up along the corridor? How many times were they lawyers or various different players, who then sold to Transit at a subsequent and higher price? So he sold to a lawyer prior to B.C. Transit. Today this same Mr. Reyklin rents office space on Columbia Street from Pro-Western Management Ltd. Where does it end? It's clearly quite improper and should not be tolerated.

Staff people have been quizzed about these things. Mr. Sweeney, who is an appointee, another patronage appointee of the member from Little Mountain.... We all remember Ed Sweeney when he was an alderman and nice friend of the member from Little Mountain. When he was quizzed about all this stuff, good old Ed, the sunshine man, said: "We're clean and we have nothing to be concerned about." That doesn't calm my nerves at all, and I am sure it doesn't calm the minister's either.

When the owner of Nixon's Books says that there was a site on Columbia Street that would have suited him well and the price was right, but it was bought out by Pro-Western, then it's pretty clear what the problem is. He was closed out by somebody who was a smarter player in the marketplace. In the normal course of events you can accept that, but this was a smarter player because of all of his know-how and his professional background and the fact that he worked for Transit. So in a sense, these small-scale business people become victimized, and government shouldn't tolerate that in any manner or form.

[11:15]

HON. MRS. JOHNSTON: I just want to make a couple of comments, and they will be very brief. I want to commend my predecessor for retaining the services of Mr. Sweeney, who is a valued employee in our Surrey information office. As has been pointed out here this morning, the impact of SkyTrain into a community can sometimes be overwhelming, and there was concern that this would be the case when SkyTrain was introduced to Surrey. I think it was a very wise move and very beneficial to the community and the constituency of Surrey-Guildford-Whalley that my predecessor had the foresight to initiate an office in Whalley and staff it with Mr. Sweeney. Any Surrey citizen who had any questions was very free and able, without any great inconvenience, to go into that office and determine exactly what the future was for SkyTrain in Surrey.

I would hope that when we are looking into going into Coquitlam and Richmond, we will establish similar information-type offices in those two communities, so that it will be very convenient for those citizens to also have access to all the information they should have.

[ Page 6667 ]

The first member for Vancouver East has been drifting in and out of innuendo and suggestions of possible wrongdoings or probable wrongdoings and mistreatment of some of the local business community in New Westminster. I can tell the member that I worked in downtown New Westminster at 6th and Columbia for more than ten years, so I know a good number of the businesses that he is referring to, and they certainly are long- and well-established business operations.

Whenever you have a major transit installation such as SkyTrain, there is going to be an interruption to the business community. But when all is said and done, it is hoped that it will also be proved to be very beneficial. When we look at what New Westminster looked like even just seven or eight years ago and what it looks like now, nobody can argue that it is a very great improvement and that the business community is benefiting because of that improvement and the installation.

MR. RABBITT: I know the minister would probably like to get to an early lunch, but there are a few points I would like to clarify. First of all, I would like to commend the minister on the past year in the dealings that she has had with the eight municipalities and four regional districts in my area. Rural ridings have a tendency to come up with more problems in different ways and they have to be dealt with in special ways. I wish to commend the minister.

One of the things I want to point out in particular is the special problem we had at Logan Lake, a problem that has been there for years. I actually sat on a special task force that was created by one of your predecessors which was given the task of going forward and trying to find the solution. The solution was very similar to the one you came up with. The only thing is that you implemented it and your predecessor didn't, and Logan Lake and myself are very thankful for that.

There are some other good programs which we find are being used quite effectively in the riding. The municipal capital programs through Go B.C. and the increase in transfer payments have been very well received.

Yesterday we heard at some length in debate about the potential housing emergency existing in the lower mainland and also in the Victoria area. I have a solution. I suggest that maybe it's about time we put a freeze on government hiring in the lower mainland and Victoria. I think we should look at relocating government agencies that don't have to operate out of Victoria to the balance of the province. There are all sorts of government offices, ministries and Crown corporations that could be moved out of Victoria and into the interior or the north.

MR. SIHOTA: Name just one.

MR. RABBITT: I don't think it's enough that we sit here through three and a half days of debate and hear all the things that the budget is not doing right, because I think that your budget and the leadership you're offering in that ministry have been excellent, and I wish to commend you for it.

The member for Esquimalt-Port Renfrew says: "Name one." I could probably name half a dozen, but then he would be on his feet running around his riding telling the people: "Social Credit want to move you out of this Victoria area." I could name one business we could move out of there in a moment, and that's that sawmill. We could move it up the Island where they really need some more jobs. We could do that tomorrow. I think possibly we could talk to the feds too. Maybe they'll move some of the shipbuilding facilities back over into North Vancouver.

I do have a question that I would like to direct to you, Madam Minister. I have had a particular matter brought to my attention by a mayor in my constituency. The mayor has had information brought to her that an alderman in that community is not a Canadian citizen. As we all know, the requirements of the act state that to be an elected official you have to be a Canadian citizen. In my efforts to clarify this for that mayor, through both the provincial and federal ministries, I was not able to get a reply on the status of the citizenship of that alderman because of the Privacy Act. How can this loophole, through which people can hide behind the Privacy Act to possibly hold elected office illegally, be plugged?

HON. MRS. JOHNSTON: I don't really have an answer to the query. I have just talked to my deputy. We will look at it and get back to you. I am not sure how we can address it. It seems to be a legitimate request. You must be a Canadian citizen in order to run for office and to hold office in British Columbia. There must be some way of ensuring that Canadian citizenship can be verified.

MS. A. HAGEN: I have two brief questions. I regret that these were not part of the earlier sequence, but I will make them brief.

I wonder if the minister would inform us when she plans to table the conflict-of-interest guidelines in respect to B.C. Transit employees and consultants. Secondly, I want to ask the minister whether she will entertain inquiries about other land acquisitions in the New Westminster area in respect to B.C. Transit. I don't have full information at this stage of the game, but I am advised that there are some land acquisitions where the price in relation to the property seems very out of line, especially when one compares it to the prices received by businesses operating within New Westminster. I want to be assured that answers regarding such land acquisitions and the prices that were paid by B.C. Transit could be available if specific inquiries were made.

HON. MRS. JOHNSTON: If there are any particular acquisitions on which the member would like us to follow up and obtain information for her, we would be pleased to do that.

MS. A. HAGEN: When might we expect to have a copy of the conflict-of-interest guidelines?

[ Page 6668 ]

HON. MRS. JOHNSTON: I have them here, and assuming that I'm going to be through In the next day... When I'm through with my estimates I'll have an opportunity to review them and get copies over to the members.

MR. WILLIAMS: Can't they be photocopied now and made available, if one of your staff is available?

HON. MRS. JOHNSTON: Yes, they can, but it's just not something that I've had an opportunity to address.

MR. WILLIAMS: You turn to your employees behind you and you pull out of your folder the conflict of-interest guidelines, you hand it to them, they take it to a photocopying machine in any of the offices around here, and they bring it back in a few minutes.

HON. MRS. JOHNSTON: You sound like my son.

MR. WILLIAMS: I've got to say that's a compliment. What else can I say? I thought it sounded a little bit like you responding to the second member for Victoria (Mr. Blencoe) on occasion.

[Mr. Rabbitt in the chair.]

It's reasonable that we should review them and discuss them a little. I accept what the minister has said in terms of her own overview of what they represent, but it's critical to the discussion or debate we've had this morning. It would seem the reasonable thing to do. Maybe the member for Vancouver South, now that he's not busy in the chair, could perform a gofer function or something. It would be a very useful role for the member.

I do recall that at the end of our meeting last night, towards 6 o'clock, I raised questions about a couple of sites on Transit, and the minister indicated that they would be reviewed and she would get back on those. One of those was the 16th and Cambie site, the old repair barns, and the other was Dunsmuir and Richards, where there's a vent for the SkyTrain tunnel. When I reflect on that, I'm a bit at a loss to understand why those guys went home, since at the end of the day yesterday, there were these unanswered questions.

HON. MRS. JOHNSTON: Mr. Chairman, it was my understanding when I responded that I would get you that information in writing. I didn't understand that you wanted us to bring the information back here and then have me stand up and repeat it all. You'll have that in writing, and I may even have it back today.

MR. WILLIAMS: I fully accept the explanation, and I appreciate the minister's helpfulness and candour.

MR. SIHOTA: I want to canvass with the minister the matter of Kerkhoff-Hyundai and their participation in the SkyTrain project - the construction work they were awarded in 1986 and the progress costs, as a consequence of that, that were additional to any the province may have incurred, which might be a part of the minister's considerations. I want to first ask the minister just this: have there been significant delays in the Kerkhoff-Hyundai portion of the contract? I say that because I remember reading at the time of the ribbon-cutting a few months ago that the minister said the project had been completed on budget and on time. With respect to time, was the work actually completed by Kerkhoff-Hyundai in keeping with their original commitments?

[11:30]

HON. MRS. JOHNSTON: It's my understanding that the Kerkhoff-Hyundai portion of the work was completed on time and on budget.

MR. SIHOTA: I want to deal with the omime portion of it. Rather than asking questions, maybe I'll just make a number of points.

The minister is aware, as I'm sure all of us are -it's a matter of public record - that in May 1986 tenders were received by various firms. Hyundai was the lowest bidder; it came in at about $28 million for cement work and $28.2 million for steel work. Other companies that were unionized - Kerkhoff being the only one that was non-unionized - came within shot of Hyundai. In fact, W.A. Stephenson came in at a bid of $28.8 million on steel and $30.8 million on cement, so it really wasn't that far off.

The original tender documents, if one reviews them - in particular clause 18.3 - obviously envisioned that there would be unionized work on the project and unionized contractors. I would expect, then, that it came as somewhat of a surprise to B.C. Transit that the successful bidder was a non-union company. That clearly wasn't envisioned, if you take a look at section 18.3 of the original agreement. I don't have it here with me, but I can easily reproduce it.

That being the case, B.C. Transit must have made a conscious decision to proceed, in a very controversial project, with a non-union company. That was obviously a position that B.C. Transit arrived at. I don't know, and I'm not going to suggest, that it was something that was blessed by the government. But let's face the fact that there was a lot of acrimony and concern at the time that that company had secured the contract; so much so that B.C. Transit went out of its way to seek certain assurances from Kerkhoff Hyundai that they could perform the work on a non-unionized basis.

In fact, they secured a letter from Kerkhoff Hyundai in June and July 1986 with respect to assurances that they would be able to perform the work on time and would not have any difficulties in being able to do it on a non-unionized basis. The assurance provided was by way of letter: one from Mr. Dirk Kerkhoff and two by the law firm of Jordan and Gall. I have read most of those assurances, and I will, I guess, time permitting, ask the minister some ques-

[ Page 6669 ]

tions with respect to them. It seems to me peculiar that one would have relied on letters that were submitted at that time. In any event, it is my information that in the summer of '87 there were some concerns expressed at the board level of B.C. Transit with respect to delays which might be caused by Kerkhoff Hyundai.

In the original tender documents it was said that the project would be completed by August 31, 1988. That was supposedly the completion date for the whole project. By the summer of 1987 it was evident, I would suggest - if the minister wants to say I am wrong, I'd like to see where the evidence is - that they were aware the project was going to be at least two weeks behind schedule, and Kerkhoff-Hyundai gave assurances that they would be able to perform by August 31, 1988.

By February 1988 it was also evident, if one examines the minutes of the board of directors of B.C. Transit, that there were to be delays beyond the expected completion of the project. The minutes at that point start to speak of a bout of efforts by B.C. Transit to ensure that there was a fair bit of overlap done; in other words, that unionized companies as well as non-unionized companies would be working side by side. It was a violation of non-affiliation clauses, but that was the strategy that was employed by B.C. Transit at the time, with a view that there would be overlap work done on the project.

Keep in mind that by this time the B.C. Transit board had been advised by several people, including major employers in the industry, that there was a hot edict and they did not think that they could work side by side. A question arises - which, of course, I want the minister to explain - as to why it was that the Transit board then took the view they could somehow manage to get non-unionized and unionized contractors working side by side, that decision taken in February 1988. By April 1988, it was clear that there were significant delays in the projects. In fact, there are notations in the minutes that the float period, which had been built into the contract with respect to components of the work, had expired. In a letter to SkyTrain dated August 31, 1988, a number of the unionized contractors approached the Transit board and indicated that they did not think the project was going to be completed on time, and they reminded them of the hot edict. It's interesting that again at this point the question arises as to why B.C. Transit chose not to review its terms with Kerkhoff Hyundai and not to deal at that time with the matter of the edict. On September 20, 1988, there were warnings from the management of BCT that the float periods had totally expired.

Shortly after September 20, 1988, Kerkhoff Hyundai gave assurances to B.C. Transit that the project would be completed by the end of October. Later on in that same month, Kerkhoff-Hyundai was requested by B.C. Transit to provide an updated schedule as to when they expected it to be completed. In October 1988, Kerkhoff-Hyundai had submitted its proposal in terms of expected completion and said that the work would be completed by November 7, 1988. However, B.C. Transit noted at the time that only 25 percent of the deficiency work had been completed.

The minutes of the B.C. Transit meeting of October 18, 1988, indicate that Kerkhoff-Hyundai confirmed they did not expect to be off the site until sometime in January or February of 1989. That obviously caused some panic at B.C. Transit, because the evidence I have referred to would suggest that on October 21, 1988, the board realized there were going to be problems. Interestingly, they also finally realized at that time that they could not proceed by way of overlap with respect to engaging unionized versus non-unionized trades. That, of course, omits the larger issue as to whether or not, with the hot edict in place, they could secure unionized labour on the site.

On November 25, 1988, the minutes of B.C. Transit reflect that access to the project by other trades would be available by January 1989. Kerkhoff Hyundai had been told that they had to be off the site by midnight January 2, 1989, which they of course complied with.

Other delays in the project resulted. One, for example, is the cable project, which then started three weeks behind schedule, on January 20, 1989. Throughout this period B.C. Transit and the government had been warned repeatedly - first by the trade unions, second by unionized contractors, third by the management end of the construction industry - that this project could not have been completed on time. Indeed ' if you take a look at the original tender documents in terms of when they said they would complete and when we now know they completed, it's obvious that the project had run behind schedule.

I want to ask the minister at this juncture what penalties are provided for in the contract in light of the fact that Kerkhoff -Hyundai completed the project later than they stated they would. They completed sometime in January 1989, as best as 1 can ascertain from the information I've got, when they had said clearly from the beginning that August 31, 1988, would be the completion date. What penalties, if any, have been levied or allowed for under the contract?

HON. MRS. JOHNSTON: The letting of the contract and the terms and conditions in the contract are dealt with by the board of B.C. Transit, so it's not something I'm able to respond to at this time.

I'm not sure that I agree with the member for Esquimalt-Port Renfrew's scenario as to just what has taken place, and the suggestion that it was a surprise - I'm not just sure how it was phrased - that the contract was let to non-union. In this province we still believe that employees of non-union firms should have equal opportunity to the jobs available, particularly through a government agency; those should not be restricted to union firms only. We are at all times concerned about the proper expenditure of taxpayers' money and not whether the employment contract is union or non-union. Of course, that could lead into another discussion.

The information I have with regard to the SkyTrain extension is that the second New Westminster

[ Page 6670 ]

station opened for revenue service on February 14, 1989, as scheduled - that's the Columbia Street station. Work on the remainder of the extension to Scott Road is essentially proceeding on schedule, with the exception of the installation of the power rail, the reactor rail and the ATC cabling on the bridge section. Work on these components is currently somewhat delayed due to the hot edict on the bridge dating back to the awarding of the bridge contract to a non-union contractor. This delay, however, will not affect the opening date for revenue service, providing that the issue is resolved within the next four to six weeks. The contractor for the work on the bridge is expected to address and resolve the hot edict in the near future.

The project continues to be completed within the budget of $179 million. The total net commitment to March 31, 1989, was $147.8 million.

MR. SIHOTA: I have read the same progress summary sheets as well, but that doesn't address the issues I've raised. The first point is this. The minister says that it is government policy to, of course, save money for the taxpayer and hence award this project to non-unionized firms. I went out of the way at the beginning to outline just how competitive the unionized firms were. My suggestion to the minister is that a conscious decision was made to award this to a non-union firm. If that's not the case - the minister says no - then it seems to me that an uneconomical decision was made to award the contract to a nonunion firm. The government was forewarned that there would be inevitable conflict due to awarding this contract to a non-union firm. The bids from the unionized sector were incredibly competitive. They were within range.

I want to remind the minister what those figures were. Kerkhoff had secured the bid for cement for $28 million and for steel for $28.2 million; the numbers of the next unionized contractors were respectively $30.8 million and $28.8 million. They were very much within range.

[11:45]

On top of that, the government, if it was mindful of economics, ought to have been mindful that by awarding it to non-union companies and having the hot edict in place, there were going to be interruptions in implementing the project. Those happened. You didn't need a crystal ball to be able to see that. You didn't need to be a rocket scientist to figure out that it was going to happen. You didn't have to be an industrial relations expert to know that it was inevitable.

HON. MR. STRACHAN: You've got to be a union expert.

MR. SIHOTA: You were forewarned by the industry as much as you were forewarned by trade union officials that this was going to happen.

Given the fact that the bids were as close as they were, clearly a factor in the government's considerations with respect to the cost of this project at the end of the day had to be the cost of those delays, delays which the government was told were going to happen, delays which I have now documented by going through the minutes of B.C. Transit and which obviously occurred.

If you want to take a look at economics you must, of course, also be mindful of the wages that are being paid to those who are working; and, of course, there's an economic advantage to have those people paid unionized rates.

The delays - the minister is correct - have been caused by two factors primarily. One is the fact that you've got a non-unionized firm that could not complete the project on time. That's well documented. They said August 31; they completed some time in January 1989. They didn't have the skills to do it.

Second, as the minister says in a reply, there was a hot edict in place. I'd be most curious to find out how the minister expects B.C. Transit to work around that hot edict. That hot edict's been in place for quite some time. There have been quite a number of hearings at the IRC on this issue. The common thread to all of this is that you can't force someone to work on that project against their will. So you're not going to be able to secure the employment of unionized workers on that project against their will, and you're not going to be able to work around that hot edict. If I had said this in May 1986, the minister could have said: "Well, we'll wait and see what happens." Saying it in 1989, when we know what transpired over the past few months, there is.... If the minister believes that they can by law compel people to work on that project, she's kidding herself. I think the record is very clear on that in terms of the lack of success B.C. Transit has had in front of the IRC. I invite you to tell me how your board at B.C. Transit intends to get around it in the future. I know there are applications coming up because, as you say, as long as it happens in the next four to six weeks, you're okay. You haven't been successful to date, and I would suggest that you are not going to be successful in the future.

On top of that, if you take a look at the difficulties that some unionized firms have had, such as Mott Electric.... The frustrations with respect to that company have been well documented in the minutes, which are available to the minister. That lends further credence to the fact that you're not going to be able to secure unionized people to work on that contract. In light of these difficulties of delay and of the hot edict; in light of the solidarity that the labour movement has shown in terms of its unwillingness to work on this project; in light of what I'm sure is the minister's agreement with me that people ought to be free to decide where they want to work and not be compelled by law to show up at a project under these circumstances, which you haven't succeeded to date.... In light of these considerations, is the minister prepared to admit now that it was an error on the part of the government to have awarded this contract to Kerkhoff-Hyundai?

HON. MRS. JOHNSTON: We should correct something right away. The contract was not awarded by

[ Page 6671 ]

the government; it was awarded by B.C. Transit. Heaven help us if we ever come to the day when because of threats from any group, whether it be union or non-union - trade unions, union leaders, legislators, whoever - we start worrying about whom we award a contract to. That would be a sorry day in British Columbia if we ever arrived at that point. I hope that we would never even consider that, and I am surprised that a member sitting in this House would suggest that because of threats from the labour movement, the board of B.C. Transit should have somehow awarded the contract for the SkyTrain extension into Surrey in a different way.

I would like to ask the member for Esquimalt-Port Renfrew if, when he requires a plumber, electrician or carpenter for his own personal use, he asks them if they have a union card in their pocket. I would really be interested in knowing that. I suspect that I already know the answer. I think it would be very interesting to hear from the member for Esquimalt-Port Renfrew whether he always has union mechanics working on his vehicle, union plumbers and union electricians. The province is open to anyone who is ready, willing and able to do a job. I hope that will never change, because that is really one of the valuable freedoms we enjoy.

MR. CHAIRMAN: Madam Minister, although it may be interesting to know what the member for Esquimalt-Port Renfrew's personal choices are in hiring his sub trades, I don't think it's relevant to vote 44.

MR. SIHOTA: It's the purview of the opposition to ask questions, and it's peculiar that the minister would ask questions in this instance. The suggestion I'd make to the minister is that if she'd like to ask questions, let's call an election. She can sit in opposition and place as many questions as she wants.

MR. CHAIRMAN: The Chair doesn't consider that remark very relevant, either.

MR. SIHOTA: Fair enough, Mr. Chairman. The point, I think, has been made, and I look forward to the minister's agreeing to call an election.

We're not talking about threats in this instance. I think the minister knows that, and that's an exaggeration of a position. We are arguing in terms of prudence and sense about how a government engages in major work of this nature, and whether wisdom or prudence were applied in this case in the decision -not based on threats, but on representations of people in the industry who ought to know.... In her response the minister carefully avoids the fact that the construction industry itself warned the government repeatedly of the nature of the problem. I'm quickly trying to find the letter - one of several - that was written to B.C. Transit, with a copy to the then minister explaining exactly what was going to happen and what transpired.

In her opening remarks the minister indicated that the project had been completed on time. I'm sure that she is now prepared to admit that that wasn't the case, because the record is very clear in terms of what I've laid out to the minister. If she finds anything wrong with the record, I would sure like to know where she believes it's in error.

B.C. Transit was warned on July 2, 1986, by the union and on July 10, 1986, by the construction industry, so it came from all quarters, Madam Minister. I'll give you a copy of the letters that were sent, because they're here in the material that I have with me in the House.

I'll ask this question at noon; hopefully your officials will be here after question period so I can get an answer to this. There is, of course, a requirement in the contract as it relates to performance and performance bond warranties for a year after the work is completed by a company such as Kerkhoff-Hyundai. They still have to warrant their work for that year, and it is expected that they would come back onto site and complete that work if there is a deficiency or inadequacy with the nature of the work that's done. Typically in these types of large contracts, bonds are put in place with respect to ensuring the work is done. Could the minister tell me, first of all, whether a bond was put in place this time by Kerkhoff Hyundai with respect to this project? What was the quantum of that bond?

HON. MRS. JOHNSTON: I don't have those numbers at this point in time, but I would be pleased to get them for you and provide you with them at the earliest possible time.

MR. SIHOTA: Would the minister care to also investigate whether for this $30 million project the assurance provided by way of bond was really no more than $100, 000?

Perhaps, Mr. Speaker, now is a good time to rise, report progress and ask leave to sit again.

The House resumed; Mr. Pelton in the chair.

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

Hon. Mr. Strachan moved adjournment of the House.

Motion approved.

The House adjourned at 11:58 a.m.