Twenty or thirty years from now an economic historian might be able to get enough data together to provide some insight into the sale of BC Rail. It is a lot more difficult to find insight in the heat of the debate over what is clearly the biggest broken promise yet from the Campbell government. Attempts to deny that a 60 year lease, with an option to renew for another 30 years, is anything but a sale damages the government's credibility and calls into question other attempts to misuse language. The government website hosts a document that belongs on the BC Liberal party's website. Titled "New Era Review" (http://www.gov.bc.ca/bcgov/down/new_review.pdf) it is full of the kind of tricky language that allows government to say that the sale is not a sale.

CN Rail is a publicly traded company listed on the Toronto exchange under the symbol CNR and on the New York exchange under the symbol CNI. It must comply with US Security and Exchange Commission regulations with respect to financial disclosure. As much as the SEC rules may be in turmoil, they are far better than the kind of disclosure one finds in documents from the Campbell government.

CN's website contains the presentation made to financial analysts on November 25th. Slide 7 in the presentation declares that CN will finance the $1 billion cash deal through debt. It is ironic that Premier Campbell is trying to sell the deal on the basis of eliminating BC Rail's $500 million debt, but CN doesn't blink about incurring twice that much debt in order to finance the purchase. The Campbell government claims that it wants to work just like business, but it doesn't appear to understand much about business.

Another frequent claim by Campbell is that taxpayers have had to bear the burden of debt right downs over the years in order to bail out BC Rail. He drags that argument out when opponents point out that BC Rail is profitable (CN figures it will add $100 million a year in earnings to its bottom line) and that it pays its debt servicing cost out of those earnings before returning a dividend to the province. It is true that governments have written down BC Rail debt, but that results from governments (mostly Social Credit) having used BC Rail as a tool of economic development. The thinking at the time was that BC Rail may have incurred large debt in order to develop spurs for projects like northeast coal, but the province reaped economic benefits that made it worth while. It was only logical that the province would eventually repay BC Rail out of those returns so as to restore the commercial viability of the railroad. That is fundamentally different from the private sector's way of writing off debt - bankruptcy. When Air Canada emerges from bankruptcy, few will say that the restructured company is uneconomic because it offloaded debt. They will simply say that some folks made bad investments and took a loss; once again there is evidence of twisted words and double standards when it comes to trying to understand what drives public policy in the New Era.

A short history on BC Rail's website says "The company was incorporated originally as the Pacific Great Eastern Railway under Provincial Charter on February 27, 1912, to construct and operate a railway along Howe Sound and northeasterly to a junction with the Grand Trunk Pacific at Prince George, a distance of 470 miles." The British investors quickly ran into trouble and had to be bailed out by the provincial government in 1918. Under Premier John Oliver the province took over all of the rights of the private company. It was 1956 before the line connected North Vancouver and Squamish. Until then freight traveled by ship up and down Howe Sound connecting with the railroad in Squamish. In 1972 the PGE was renamed British Columbia Railroad.

There are actually two BC Rails - British Columbia Railway Company which exists by virtue of provincial statue, the statue that the Campbell government amended so as to allow the sale, and BC Rail Ltd., the operating company. The Campbell sale keeps the shell company and sells BC Rail Ltd. That is a broken campaign promise.

The major impact from the sale of BC Rail to CN has yet to be discussed. Maps on the CN website show how freight traffic will be expedited to the US heartland, Chicago. How does that reconcile with Campbell's desire to diversify BC's markets with increased emphasis on China and India? The CN proposal will shift some freight traffic to Prince Rupert and some to the US while bypassing most of BC. No one has said what the economic impact will be on the Port of Vancouver. It is clear that some traffic that currently flows to that port will be diverted elsewhere; that is not new economic activity, but merely reshuffling existing business. The past 91 years of BC Rail's history opened up the province with north-south trade; the new deal will fundamentally change trading patterns. In his November 25th column, Vancouver Sun columnist Vaughn Palmer revealed that the promised 5 year freeze on freight rates only applies to the Prince George to North Vancouver portion of the line. It may require a rate break in view of CN's focus on a new route to markets. After five years, and after the next election, the economic impacts of the sale may deal the Port of Vancouver a second blow.

According to the interim report of the "fairness advisor", many analyses were prepared for cabinet as part of the decision making process. It is time to make those analyses public.