The house has heard the decision of the Chair from which the hon. member for Inverness-Richmond has appealed to the house. All those in favour of sustaining the decision of the Chair will please say yea.
Topic: ATLANTIC DEVELOPMENT BOARD
Subtopic: PROVISION FOR DEFINITION OF DUTIES, APPOINTMENT OF MEMBERS, ETC.
The question is an appeal to the house from a ruling of the Chair which is as follows: To the motion for third reading of Bill No. C-94, an act to provide for the establishment of an Atlantic development hoard, the hon. member for Inverness-Richmond (Mr. MacEachen) moved an amendment as follows:
"that the following be added as paragraph (e) to section (1) of clause 9:
(e) Prepare annually for the consideration of the minister a program of capital projects designed to enlarge the basic economy of the Atlantic provinces."
The Chair ruled that the proposed amendment purported to deal with a matter not contained in the bill and was not in keeping with citation 418 in Beauchesne's fourth edition, whereupon the hon. member for Inverness-Richmond appealed to the house from the decision of the Chair.
Topic: ATLANTIC DEVELOPMENT BOARD
Subtopic: PROVISION FOR DEFINITION OF DUTIES, APPOINTMENT OF MEMBERS, ETC.
Resolved, that a sum not exceeding $330,089,511.93 being the aggregate of-
(a) one twelfth of the total of the amounts of the items set forth in the revised estimates for the fiscal year ending March 31, 1963, laid before the House of Commons at the present session of parliament, except atomic energy item 5, Canadian Broadcasting Corporation item 5, finance items 45 and 50, forestry item 11, labour item 40, legislation items 30 and 35, mines and technical surveys items 30, 35, 40, 70, 80, 125 and 130, national defence item 70, national health and welfare item 25, northern affairs and national resources items 10, 45 and 90, public works items 5, 45, 70, 100, 105, 125, 145, 168, 170, 180, 190 and 200, Royal Canadian Mounted Police items 5, 15 and 25, transport items 35, 40, 60, 80, 85, 100, 125, 222 and 225, loans investments and advances item L20, $292,175,958;
(b) an additional one twelfth of the amounts of defence production item 25, external affairs item 5, northern affairs and national resources item 105, of the said revised estimates, $1,842,041.67;
(c) one twelfth of the total of the amounts of the items set forth in the supplementary estimates
(A) for the fiscal year ending March 31, 1963, except external affairs item 112a, transport items 213a and 222a, $8,738,178.92;
(d) ten twelfths of the total of the amounts of the items set forth in the supplementary estimates
(B) for the fiscal year ending March 31, 1963, $27,333,333.34,
be granted to Her Majesty on account of the present fiscal year ending March 31, 1963.
He said: Mr. Chairman, you have just concluded reading the various items which are set forth in this interim supply motion that I am proposing to the committee at this time. The proportions requested in this bill are intended
to provide for all necessary expenditures up till January 31 next. In other words, we are asking for a further 30-day supply to carry us through the month of January. In no instance is the amount of any item being released by this bill. The form of the bill which will be submitted if the committee approves the resolution will be the usual form of interim supply bill which has been customarily adopted in this house for many many years.
Mr. Chairman, I can give the usual assurance which all ministers of finance give at this time, that the passing of this bill will not prejudice the rights and privileges of hon. members to criticize any item of the estimates when it comes up for consideration in committee of supply, and the usual undertaking that such rights and privileges will be respected and will not be curtailed or restricted in any way as a result of the passing of this measure. I should also point out that in the bill when it comes down-it is not before us at the moment-there will be a provision for further borrowing power. Mr. Chairman, I had one once before and I forgot to mention it, and I want to mention it at this time so the committee will be advised of that. That is all I propose to say at this time except to say that this resolution covers all the various items of the departments. The items are, with one exception-which is for ten twelfths-for one twelfth, and we are maintaining each item uncurtailed so that there will have to be further votes and an opportunity to discuss them at a later date.
Mr. Chairman, it is of course the historic right of the commons to discuss any matter of expenditure of moneys before granting supply. I propose in the time available to me today to talk about the Columbia river treaty, in that it involves over the current 12-month period an expenditure approximating $250,000. However, before doing so I would like to make a few general remarks.
On the two previous occasions my party has not engaged in an extensive debate when the government requested another 30-day interim supply of funds with which to carry out its commitments to the nation. But it should be pointed out that this house is now being asked for the tenth instalment of what in total will amount to an outlay in the current fiscal year in excess of $6 billion. This is indeed a unique situation. We are being asked to approve the tenth instalment of a total of 12 monthly instalments without a single item of the estimates having been passed after a full scale debate in this house. True, ithe first item in respect of agriculture has been introduced and some discussion has been: held, but it has not been passed. The
estimates in respect of this and indeed all other departments of government remain to be discussed. Opportunities early in the new year will also be limited. For this reason, Mr. Chairman, you should expect that some hon. members will want to discuss matters of general concern and of particular concern to various parts of the country.
I would like to stress that the Columbia river treaty in western Canada, and more particularly in British Columbia, is a subject of very considerable concern. It also involves very substantial expenditures in respect of the development of not only hydroelectric power but other resources as well. The Columbia river is a river after which British Columbia takes its name. It is important. It is the third largest river on this continent in terms of the volume of water flowing. It is the largest source of hydroelectric power in North America. It is eight times larger, in terms of its water power capability, than the St. Lawrence. This is a tremendous resource. It is also a resource which spans the international boundary. It rises in large part in Canada and it descends into the United States. It is important not only in respect of power but also in respect of flood control, navigation, irrigation and the consumptive uses of water. As hon. members know, the states to the south, notably California and the southern parts of Oregon, are arid or semi-arid. Water is vital to their development; consequently great sums of money are being invested in those states in order to bring water to those areas. These great schemes are reaching northward to Columbia and eventually, I have no doubt, they will be affecting Canada as well. We have a golden opportunity in this great nation of ours to develop our resources in conjunction with those of the United States. We can help to hold back the flood waters of the Columbia river as they descend into the United States.
At present, ten times as much water flows into the United States during the freshet period of the summer as in the winter, flooding over the dams, flooding real estate and diminishing land values in that country. The intent of man is to iron out that pattern and eventually, I have no doubt, the flow in the summer will be sufficiently reduced to make it less than in wintertime.
Canada has been pressed to enter into agreements to hold back the headwaters, and the terms of such agreements are important because those terms could reduce our resource potential. The works immediately to the south of Canada today, in the United States, total in value approximately $3 billion. There is more hydroelectric power developed on the Columbia in the United States than there is
actually developed in the whole of the province of Quebec. There are investments running into hundreds of millions of dollars in irrigation schemes, flood control and navigation measures. Consequently, the United States is very interested in how we manage our resources to the north, and particularly interested in the expenditure we incur in developing those resources. They would like us to develop them in such a way as to maximize their development as well. I know, as do other hon. members, that through a co-operative development the increase in benefits which must follow will be to the advantage of both our countries.
In the early days, the United States approached us essentially with the view that these waters rising high in Canada and flowing into the United States would inevitably be available to the United States and that sooner or later, as we put works in the upper reaches to hold back the flow for our own purposes, they would be able to reap advantages. So, they thought, they need only wait. But beginning around 1944 and, to an increasing extent, more recently, they did press on us certain developments which they felt could be accelerated to their advantage. They argued at first that they should only buy the land-that they need only compensate the land owners for flooding occurring in Canada. This was resisted. They certainly were against giving us any part of the downstream benefits-the great improvements and savings resulting in their country. But it is to the eternal credit of that great Canadian, General McNaughton, that the idea that a sharing of these downstream benefits might take place and that Canada might gain some of these additional advantages in terms not only of more power produced but of flood control, began to take root. The argument advanced by the Americans in the most summary way was: The water may originate in your country but it has to flow down our hill. General McNaughton's answer to that was: Yes, it originates in our country but it does not necessarily have to flow down your hill.
We can, under the boundary waters treaty signed by our two countries in 1909, divert these waters in Canada so that they flow into other watersheds, perhaps into the Fraser, or perhaps, eventually be diverted through the Rocky mountains to irrigate the more arid areas of the prairies. These are great and imaginative schemes. We must have this flexibility-this freedom to develop the resources of our country which, under the boundary waters treaty, is ours. We have the sovereign right to develop those resources
as we choose and, indeed, the United States has insisted that this be the case with respect to its own resources in the past.
But there are many problems connected with the development of the Columbia and, certainly, the negotiators of the existing Columbia river treaty have run into them. One of these problems is that it is we who have to put up the dams, and the dams are very expensive. The United States, on the other hand would be concerned on the other side of the international boundary with the construction of relatively inexpensive works to capture these effects. We find under the terms of the present draft treaty that the capital outlays to be made by Canada will be of the order of four times those to be made by the United States. To complicate matters further, the United States Pacific northwest -and I believe Alaska will share in this treatment-is most fortunate in that it is in a preferred position in the eyes of the United States government. It receives funds for the development of these great river resources at an interest rate of 2J per cent. It has been doing so for several decades and there is no indication that the United States federal government will, in the immediate future at least, make money more expensive in this connection. They do not have to borrow at the current interest rates in the United States, of between 3 and 4 per cent. They receive this special subsidy. So not only are the projects in the United States cheaper to build, but the money itself is cheaper. Consequently, the rates for power, the annual charges and so on will be only a fraction of the cost on the Canadian side. We are putting up four times as much money for the works, and our money may cost 5 per cent as compared to 2J per cent. The result is we have a more expensive product on our side of the line. There has to be more give and take in this so as to balance out the situation.
There is another difficulty. This project, when completed, would have immense consequences in terms of production. It would make available, all of a sudden, more power than is at present generated by all the utilities in British Columbia. Many Canadians would have us bring back as fast as we could absorb it the extra power produced in the United States as a result of pur controlling these flows. Thus we have the problem of markets as well as capital costs.
Finally, in entering upon any arrangement of this kind we do lose some of our sovereignty. We must make sure in respect to treaties of this kind that we do not agree to conditions or set precedents which tie our hands with respect to the use of water in our own territory. As to whether the present treaty, signed nearly two years ago, is a good
treaty or not, let me say this: I personally believe that the treaty must be renegotiated. I believe many hon. members hold the same view. It must be renegotiated for several reasons, reasons about which I shall be more explicit. One is the cost of the power we shall receive as a result of this treaty. The cost of power coming back from the United States, is approximately four mills per kilowatt hour. We have many other sources in British Columbia which can produce power at or about this price. The net advantage to this country is approximately zero, so we have no considerable incentive to go ahead with these works at the present time under the terms of the treaty. The United States, on the other hand, because they do not have to build great dams, reservoirs, and so on, but merely put in the occasional generating machine, get their energy for less than one mill per kilowatt hour, which is less than one quarter of the cost to Canada. Their alternatives are of the order of three or four mills. They have the great net advantage of a great saving with respect to power. They have a real incentive to pursue this treaty in its present form in terms of the cost of power. This is one of the reasons why the senate of the United States passed that treaty with a vote of 99 to 1, and in record time.
There is also the matter of what happens to the amount of power we get under this treaty as the years go by. Under the formula which is built into the treaty, this is bound to diminish and eventually be extinguished over the 60-year life, or at least be substantially reduced during that period, under any possible operating conditions. While this is strictly policed, under the treaty we are prepared, apparently, to make a lump sum, all-out and forever settlement with respect to flood control.
Flood control clearly grows more important as the population of the United States grows in the Pacific-northwest area due to the development of industries. So why make a flat, all-out, lump-sum settlement, even if it is $64 million when this great advantage increases with time? Why not do the same as is done with respect to power, and police that advantage year after year into the indefinite future? Because this is the way the treaty is drawn, and we are obliged to make this service available to the United States forever.
I heard one hon. member ask why not, when I mentioned $64 million. In the evidence given before the United States senate, it was claimed by one of the officials who helped negotiate the United States treaty on the American side that the cost of alternative works to provide flood control for the United
States would be in the order of $500 million. Consequently one can see that $64 million, while it is a substantial sum in the eyes of people who look only a few years ahead, is a very low price for the United States to pay for this service in perpetuity; forever, holding back these billions of tons of water each year and letting it down in an orderly fashion so as to protect real estate in the United States and to generate more electrical energy, provide better navigation control, and so on.
In this treaty we are up against certain penalties. We have to complete three immense projects totalling $350 million at a minimum by definite points in time. On the other hand, the United States, with respect to one project of similar character, has no definite deadline to meet. It may or may not build this project; and if it does decide to build it, it may do so within a considerable time span and with considerable latitude. I contend that we should have similar latitude with respect to the completion of our much more expensive projects.
I should like to skim very briefly through the bill and list a few more points. One of them is with respect to the over-all operation. This is a tremendous investment and expense, yet the general orientation of the treaty is towards producing the greatest benefit for both countries. Throughout the treaty the criterion of maximization applies to both countries-not maximization of benefit for Canada, but on the greatest benefit for Canada and the United States. Consequently, I myself have reservations and I should like to hear many learned people, both from the engineering and legal fraternities, tell me how Canada can be sure in each instance of its own maximum advantage in this connection, while also sharing in the great gains made by the United States. With regard to these works which the Americans are putting in downstream, the term referring to them is "useful life". It is not the life of the treaty, but the useful life. The useful life means the life of a dam or any other works downstream of Canada providing there is adequate maintenance; and adequate maintenance can be such as would keep those particular works in being forever. This is the real reason why the United States will be forever able to take advantage of those routines which we are required to set up under the treaty. Admittedly the treaty runs for 60 years: our obligation, I fear, will run on forever.
Under the treaty we are called upon, with respect to flood control, to operate according to calls made by entities named by the United States. We must respond to these calls not only until the expiration of the life
of the treaty, but beyond. I should like simply to quote from the treaty. It says:
For the purpose of flood control until the expiration of sixty years from the ratification date, Canada shall
The named projects under the treaty. In addition it shall-
(b) operate any additional storage in the Columbia river basin in Canada, when called upon by an entity designated by the United States of America for that purpose-
Then beyond that:
(3) For the purpose of flood control after the expiration of sixty years from the ratification date, and for so long as the flows in the Columbia river in Canada continue to contribute to potential flood hazard in the United States of America, Canada shall, when called upon by an entity designated by the United States of America for that purpose, operate within the limits of existing facilities any storage in the Columbia river basin in Canada-
I think that is quite definite with respect to Canada's long term and continuing obligations.
A great deal has been made of the fifty-fifty sharing arrangement. I might mention in passing that Canada gets approximately 40 per cent of the additional firm, reliable power produced in the United States as a result of the treaty.
Finally-and on this point alone I certainly want to see the treaty renegotiated-there is the disposal of surplus power produced in the United States. I mentioned that there was an amount comparable to the present total utility production in Canada. We will have a surplus in the early years. Terms and conditions of sale in the United States must be established. The price and the time over which it is sold in the United States must be determined. Yet the treaty clearly says that while we are obliged to build these projects costing hundreds of millions of dollars, the price at which we can sell these surplus benefits can be determined only after the treaty is ratified. In other words, we have to sign the treaty and go through with a tremendous investment and then go back, cap in hand and say to the United States: "Please, what will you pay us for what is demonstrably surplus to our relatively small economy in the west? One day we need it, but we cannot absorb it at the moment. It is going over your dams; what will you give us for it?" They will give us next to nothing and we will have this tremendous investment with a high interest rate and carrying charges to contend with. I suggest that this is not a provident arrangement for a country like Canada to enter into, particularly in a period of austerity like this when our balance of
payments is in need of a shot in the arm in the form of larger payments from the United States.
As to a solution which will enable us to turn around and take a more positive approach to this whole program, there are certain projects which are contentious. Certainly the Libby project, which captures part of the Canadian flow, I contend forever, should be postponed, if not eliminated entirely. Certain projects involving flooding in Canada are contentious. These should be postponed. Then we should get back to the principles which were agreed upon under the international joint commission when it advocated the principles for the negotiation of such a treaty. I believe that the treaty should be renegotiated in the matter of principles only, naming the entities responsible for the development on each side of the border, and naming the procedures, the sequences and the principles under which the results can be divided. But no more than that, and not naming projects, because we are getting into difficulties over the individual projects.
With a treaty expressed in terms of principles already laid down and agreed to between Canada and the United States, we would then be able to proceed in a more leisurely, certainly a more circumspect, way as far as Canada is concerned. I would advocate our immediate start, once such a treaty had been ratified, on the largest single project which is not contested by any principal interest in this country, the Mica creek project. This would provide all of the flood control which the United States wants at this time, and two thirds, perhaps three quarters, of all the additional power the United States wants at this time. For a much smaller investment than that to which we are obligated under the treaty, we can proceed with this project, yield the results the United States needs and fit into existing programs in the province of British Columbia. In other words, there would be less contention in Canada. The United States would get largely what it wants and certainly we would be spending less money to achieve the downstream results of the present treaty.
I would leave the Libby project out at the present time. I would want to name the amounts of water that we would send down to the United States over a period of years and would not want to be tied up specifically to any individual development in any particular place after the Mica creek project was advanced. I would certainly want our hands to be free at the end of the life of a 60 year treaty, so that we could bargain, as we would at that time and in the light of the circumstances in that day, in order to improve the situation in which we find ourselves then.
There are many advantages to this more flexible approach in terms of principle, and then the taking of one project at a time. We could in a matter of months renegotiate the treaty. Such a treaty permitting us to proceed with agreed projects would fit in much better with the requirements for power and other advantages in British Columbia. The Mica creek project, for example, would not in the early stages be a direct competitor with the Peace river project or any other power project in British Columbia. For that reason I would imagine the government of the province of British Columbia would be more amenable to that suggestion or that arrangement than it is to the present treaty which faces us with a great surplus of power within the province as well as outside. I would certainly want to see this come about.
Let me briefly run down several other advantages which I see to a general treaty expressed in terms of principles followed by step by step development. Another advantage is that the benefits to each country can be more accurately forecast if the major projects are undertaken one at a time. Certainly the alternatives open to us under those circumstances and at a later date would be much better known than they are today.
Second, most advantageous projects could be undertaken first. Rather than being obligated to build three big projects, as we are now obligated, we could put in the first one which attracts the greatest benefits under the calculation of benefits recognized by both countries. We would get the greatest yield on our investment, and this is to our greatest economic advantage.
Third, the construction of individual projects can be timed in such a way as to fit much more properly into our needs in western Canada and into the sequence of other projects which are also under there or which can be initiated in a proper integrated sequence with the development of the upper Columbia.
Fourth, it certainly permits the bargaining process to take place in stages. We need to learn a great deal about the United States side of the line, the power systems and the developing economy there, in order to bargain intelligently, to improve our position and to gain our share of a larger pie to be divided between our two countries.
Fifth, I believe this general approach which I have suggested improves the chances of immediate action by putting off until a subsequent stage decisions on such controversial projects as the High Arrow dam where there is considerable flooding in Canada and the Libby dam with its implications of the United States being able to hold on forever to the flows of the upper Kootenay orginating in Canada.
Sixth, some loss of sovereignty is implicit in any international undertaking. However, by proceeding a step at a time this loss may be minimized. At least its consequences for Canada will be more easily understood both by the experts in the power industry and by others who are concerned with the general development of the western part of this country.
I realize that we have a great opportunity in that the United States is looking to us for a very valuable service. If we do not move reasonably quickly, and certainly if we do not move in a predictable way and do not honour our agreements, they will perhaps make unduly expensive arrangements in order to provide some of these services for themselves. We can provide them more cheaply. If we can provide them more cheaply, I suggest that we do so, but that we share in the savings which accrue to the United States. This is the intent of the present treaty and certainly I would not criticize in any way that aspect of the treaty. However, we must move quickly.
I also believe that we should bring this subject perhaps to a committee of the house. Certainly we should focus on it now in terms of removing numerous difficulties. Some I have mentioned. About some of them I am not entirely certain myself. However, I have heard other people whose opinions I respect express great concern about them, including General McNaughton, various engineers and economists in eastern Canada, and others in western Canada including members of the Vancouver board of trade, engineering consultants and so on. These people should be heard.
I believe that one of the problems or one of the great failures of recent years has been our inability to bring issues of this character before the Canadian public and to have full public disclosure of all the aspects of them. The pipe line debate was unfortunate in many ways. It should have been preceded by hearings before various boards, certainly by hearings before a national energy board of the character of the one we have today. In respect of the Columbia treaty may I say that I believe this matter should have been before one or several boards for the purpose of the production of evidence on alternative plans for carrying out an immense development which has tremendous long term consequences for the country. This has not happened. I therefore believe that all members of this house should join in an understanding whereby we could, through some committee, explore all these alternatives, possibilities or projects and produce an alternative for action. I believe we have an opportunity-