Hon. Lionel Chevrier (Minister of Transport) moved
the second reading of Bill No. 192, an act respecting the construction of a line of railway by Canadian National Railway Company from Terrace to Kitimat, in the province of British Columbia.
He said: Yesterday during the resolution stage of this measure I dealt with a number of questions, but I think the house will expect me to say something on the bill which is now before the house.
As I indicated on the resolution, the bill has to do first with the authority to construct the line; next, with the authority to issue securities and also to make temporary loans. By this bill the governor in council is authorized to provide for the construction and completion by the Canadian National Railways before November 1, 1954, of a line of railway approximately 46 miles in length from Terrace to Kitimat in the province of British Columbia. The cost of the line is estimated at $10 million which will be financed by the government.
The financial provisions of the bill authorize the railway company to issue securities not exceeding $10 million which may be guaranteed by the government. Provision is also made for temporary loans not exceeding $10 million to be made by the Minister of Finance to the railway company to enable the construction to proceed without the delay attending the borrowing of the necessary funds from other sources.
Clause 8 of the bill authorizes, and in fact requires, the Minister of Transport to make a report to parliament annually in the same manner as reports are made under the other legislation concerning branch lines passed previously by parliament.
The Canadian National Railway Company has entered into an agreement with the Aluminum Company of Canada under which the Canadian National Railway agrees, subject to the provisions of enabling legislation, to complete the railway, and the Aluminum company is to provide traffic amounting to $1 million a year for a period of ten years or, in the alternative, make payments to the railway company of one-third of any deficiency below the $1 million. If the Aluminum company is required to make any payments to the railway company, refunds will be made to the Aluminum company on the basis of one-third of any excess of gross revenue earned by the railway company over the $1 million in any year. This refunding provision may be extended for a further period
of ten years, but in any case the amount refunded by the railway company to the Aluminum company shall not exceed the total payments made by the Aluminum company to the railway.
The Aluminum company has also agreed to make available a substantial amount of electric power to other industries locating in that region.
I should like to mention that in addition to the rail traffic to be secured in connection with the Aluminum company project, Kitimat valley has about 2J billion feet of accessible timber estimated to be capable of yielding 22,500 tons of rail traffic annually with gross earnings in the second five years of operation of the line of over $342,000 per year. There is also an expected fisheries development in the processing of chilled and frozen fish which would yield about 650 tons of freight per year, or an annual revenue of about $32,000.
The estimates of rail traffic indicate that average annual gross revenue for the first five years will amount to $1,854,800, and average annual operating expenses will be $1,503,700, resulting in average annual net operating revenue of $351,100. Interest on cost of construction is estimated at $350,000, leaving a net revenue for the first five years of $1,100.