The Legislature Raids

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How Libs Made BC Rail's True Value a Fake Train Wreck

By Will McMartin
TheTyee.ca - May 24, 2010
Read Will McMartin's full story HERE.
http://thetyee.ca/Opinion/2010/05/24/LibsBCRailSale/

... the Campbell government -- and its hand-picked board of directors -- made decisions that resulted in the sale or abandonment of many of the Crown corporation's operations, thereby drastically slashing revenues.

Plus, under the BC Liberals, BC Rail's management and board introduced a series of special charges, restructuring costs and write-downs that altered operating profits into net losses.

The biggest contribution of the premier and his MLAs was to drastically distort and misrepresent BC Rail's financial health, and so convince many British Columbians -- including nearly everyone in the legislative press gallery -- that the Crown corporation was an unaffordable burden on provincial taxpayers.

Much of that disinformation campaign is found in Hansard, the official report of debates in the British Columbia Legislature.

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By the end of 2002, BC Rail's revenues had fallen to just $313.3 million, largely due to the discontinuation of numerous operations, such as the Whistler Northwind luxury tour train, the Pacific Starlight Dinner Train and the Cariboo Prospector passenger service. The company also sold assets and operations (Casco Terminals and Canadian Stevedoring) in the Marine Division, and quit Intermodal Trailer on Flatcar services.

Still, continuing operations showed an operating profit of $71.3 million -- a 103 per cent increase over the previous year.

That was wiped-out, however, by the decision to record a $140.2 million charge for "discontinued operations," which transformed the operating profit into a net loss of $84.2 million.

Campbell's unbelievable assertion

The BC Liberal disinformation campaign got seriously underway in February 2003, when Campbell appeared on province-wide television to make the unfounded assertion that BC Rail had cost provincial taxpayers a billion dollars in subsidies.

Days later, on February 25, when Reid rose in the legislature to participate in the budget debate, she reiterated the premier's unbelievable assertion. "BC Rail has cost taxpayers more than a billion dollars over the past 15 years," she sputtered.

The BC Liberal message-track went slightly off-the-rails at the beginning of April, when Pat Bell, then a back-bench MLA from Prince George North, engaged Reid in the House during her budget estimates. "I just wanted to say briefly that I have had some wonderful reports on the improvements of service by BC Rail, particularly in the last five or six months," he said.

"I've had a number of unsolicited phone calls from different shippers saying that things are actually going very well, and they're pleased with the progress that BC Rail has made."

Campbell got things going in the right direction the next day, April 2, resuming his campaign of distortion. "The facts on BC Rail are clear," he declared. "Over the last 15 years the taxpayers have subsidized BC Rail to the tune of $1 billion. The fact is that customers are leaving BC Rail."

Both of those assertions -- that BC Rail needed subsidies from provincial taxpayers, and that railway customers were abandoning the service -- were at odds with previous declarations by his own backbenchers.

Remember, a year earlier Walt Cobb had bemoaned the fact that BC Rail, instead of receiving subsidies, actually had paid sizeable dividends in the 1990s to the provincial treasury. And just one day prior to Campbell speaking to the House, Bell had stated that "different shippers" had telephoned him, not to say they were quitting BC Rail, but with compliments on the railway's improved operations.

{Snip} ...

In late November and early December, during second-reading debate on legislation to privatize BC Rail, BC Liberal cabinet ministers and backbenchers fell over themselves to denigrate the publicly-owned railway and distort the non-cash write-offs.

Shirley Bond declared that $857 million was the amount British Columbians "have paid to write down the debts of BC Rail over the past 15 years." Brian Kerr put the write-offs at $836 million. John Les said that "the $860 million worth of BC Rail debt that was written off will be paid for by our grandchildren for a long, long time to come."

Val Roddick went in a slightly different direction, blaming "these socialists" (the NDP) for write-downs of $800 million. Rick Thorpe tried to top her, saying, "It was those folks that sit over there who ran up debt of $860 million that had to be written off." (Recall that it was the Social Credit governments of W.A.C. and Bill Bennett that actually directed BC Rail to expend monies constructing the Dease Lake and Tumbler Ridge extensions in the early 1970s and early 1980s.)

The award for dumbest comment of all went to Rich Coleman, who somehow thought it would be neat to combine the Crown corporation's write-offs of $850 million with the company's debt of $500 million. "In my math, that's $1.3 billion in debt -- money that's got to come out of the pockets of B.C. taxpayers."

Sheeesh.

A rhetorical trainwreck

The bill to privatize BC Rail received royal assent on Dec. 2, 2003. Twenty-six days later, on December 28, police conducted a raid on the legislature, and specifically the office of David Basi, assistant to Finance Minister Gary Collins.

Currently, Basi and Bob Virk, a former assistant to Judith Reid, are on trial in B.C. Supreme Court on charges that include breach of trust and fraud in relation to the Campbell government's sale of BC Rail to CN.

It's unlikely the trial will determine if, as defence counsel McCullough has stated, Gordon Campbell and his BC Liberals deliberately attempted to drive BC Rail "into the ground" after breaking an election promise.

But as Hansard clearly shows, the evidence is that's exactly what the Campbell Liberals rhetorically attempted to do in the legislature.