August 1, 1904

LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

It estimate of the engineer.

all turns on the

Topic:   RAILWAY SUBSIDIES.
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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

I should think it would be the fairest way to let the matter be controlled in the end by the actual cost of the road.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

The advantage gained is, to some extent, the purpose of the Bill- certainty. It will be an advantage to the railway man. If we aid a railway it is because we believe it will benefit the country, and we want, within reasonable limits, to help the contractor. Of course he is certain of his $3,200 a mile, but he desires also, within reasonable limits, to know what surplus subsidy he is entitled to. If he goes to the bank and says: This railway is going toi cost a sum which will entitle me to $(>,-400 a mile, and I want you to finance accordingly, the bank may say : It may be

that you will be entitled to that subsidy, but what guarantee have we of that 7 We have the guarantee of the $3,200, and you ask us to advance large sums on the theory that this road is to be a costly one, but we have no guarantee. So, the contractor says to the government: Make an estimate of

the cost and put me in such a position that 1 can tell the bank how much I am to get. That is a legitimate request. The engineer who is called upon to make bis estimate will bo aware that his estimate will be subject to comparison and examination when the road is finished, and that if it proves to be seriously wrong, he will be discredited. His natural tendency therefore, will be, in the first instance, to make a careful, safe, conservative estimate, for his own reputation

unless we assume that he is a man who wants to be dishonest. But, going on the fair assumption that he is a man who wants to do his duty, his tendency

will be to make a careful, safe, conservative estimate. Taking that, you then allow a margin by paying only 70 per cent of the estimated surplus subsidy. You have two checks which give a reasonable assurance that there will be no abuse. Abuse can follow from only one of two assumptions-either that the engineer is incompetent I'll making his estimate and that his errors more than counterbalance the margin of safety, and the other-which we need not assume-that he is dishonest and wishes to deceive the government. I think it will be found in practice that the engineer, for his own reputation, will make a moderate and careful estimate,, iuid I think that no cases will be found where the actual cost will be less than the engineer's estimate.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

What is the exper-if nee of the roads generally subsidized as to earning this $6,400 of a bonus ? I imagine there are only a few cases.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

Perhaps the minister has the figures on that point. When I was in the department my attention was called to the fact that there were several. They did not ail get that amount by any means, but there have been several that have got it.

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LIB

Henry Robert Emmerson (Minister of Railways and Canals)

Liberal

Mr. EMMERSON.

There have been cases where parliament has fixed the bonus at

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

The contractor takes a certain risk, because it may turn out that the road cost more than the estimate made by the chief engineer.

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LIB

Henry Robert Emmerson (Minister of Railways and Canals)

Liberal

Mr. EMMERSON.

He forfeits his right to the additional amount.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

I appreciate that.

I do not know whether or not there would be anything in the experience of the government to indicate that possibly the contractor might in that case come along with a claim.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

It does not take much ground for that.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

It might possibly work out that, whenever the cost had been overestimated the government would recover nothing, and when under estimated the contractor would put in a claim and say that, though he had no legal claim, yet, in all fairness he ought to be paid. .

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LIB

Henry Robert Emmerson (Minister of Railways and Canals)

Liberal

Mr. EMMERSON.

The word 'may' is there.

Mr. R, L. BORDEN. I must say that I have not yet known of a contractor who was afraid of the word ' may ' or of any other. There is this to be observed also -that the surveys, plans, and profiles, I suppose, will not be made by the chief engineer, but will be furnished by the contractor.

Mr. FIELDING, in under this Act.

They would not come

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

He will not do it personally, but he will have to send his engineers.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

The language is :

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CON

James Clancy

Conservative (1867-1942)

Mr. CLANCY.

If I understand the Bill, the effect will be that all roads costing less than $15,000 a mile will get an additional subsidy.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

No, not an additional subsidy.

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CON

James Clancy

Conservative (1867-1942)

Mr. CLANCY.

They get 70 per cent or 50 per cent of the additional cost and to that extent, it does mean an additional subsidy to the road.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

It does not mean an additional subsidy to what they would otherwise receive. If they do not receive it now, they would receive it at the end of the | undertaking. But, if the road cost the sum fixed they would have no assurance in the meantime that they would receive it. They would have to speculate on the engineer's ultimate report. The effect is to reach a conclusion, with a margin for safety, at an earlier stage and to give the company the assurance at once.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

The government is taking the risk of the correctness of the estimates instead of the person who is to advance the money.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

Except, that the contractor takes the risk of the road costing more.

Mr. FIELDING

Upon the report of the chief engineer of government railways, and his certificate that he has made careful examination of the surveys, plans and profiles of the whole line so contracted for.

I do not know what is intended ; but would there not be some little risk in taking the surveys, plans and profiles submitted by those who are to -build the road ? And does it not mean that?

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August 1, 1904