[ Page 3485 ]

CONTENTS

Night sitting

Routine proceedings

Assessment Authority of British Columbia Act (Bill 147).

Hon. Mr. Barrett.

Introduction and first reading — 3485

British Columbia Ombudsman Act (Bill 150). Mr. Gardom.

Introduction and first reading — 3485

Mineral Royalties Act (Bill 3 1). Second reading.

Hon. Mr. Nimsick — 3485

Amendment to postpone second reading.

Mr. Bennett — 3490

Mr. Gibson — 3501

TUESDAY, MAY 28, 1974

The House met at 8:30 p.m.

Introduction of bills.

ASSESSMENT AUTHORITY OF
BRITISH COLUMBIA ACT

Hon. Mr. Barrett presents a message from His Honour the Lieutenant-Governor: a bill intituled Assessment Authority of British Columbia Act.

Bill 147 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

BRITISH COLUMBIA OMBUDSMAN ACT

On a motion by Mr. Gardom, Bill 150, British Columbia Ombudsman Act, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Orders of the day.

HON. D. BARRETT (Premier): Mr. Speaker, I move that we proceed to public bills and orders.

Motion approved.

HON. MR. BARRETT: Adjourned debate on second reading of Bill 31.

MINERAL ROYALTIES ACT

(continued)

HON. L.T. NIMSICK (Minister of Mines and Petroleum Resources): Mr. Speaker, first I'd like to know what's in that box over there. Are they tomatoes or eggs?

Interjections.

HON. MR. NIMSICK: Before that delightful time we had up in the De Beck Lounge I had to adjourn the debate.

interjection.

HON. MR. NIMSICK: Well, I'm going to say a couple of words that I didn't last time.

This was that picture of that ad that was in the paper. "Will he be the last of a vanishing breed?" After I had spoken about it, I brought up the question of employment in the mining industry and showed you how every year the miner is working, in order to make his wages and in order to hold his job he's got to dig out more of the resources out of the earth. And if this keeps up, eventually with automation he would be a vanishing breed.

Now we come to government revenues and expenses. How much has the province received from the depletion of these mineral resources of the province over the previous years? Some people talk about the immense amount of money that is spent by the mining industry and how much money the people of British Columbia are receiving from the mining industry, and how much taxes they've got to pay to the country.

Now there was a meeting down in Montreal and they say there: "The mining industry in Canada is thought to be among the most favorably taxed in any country in the world. Frank R. Jobin, a geologist…." This is out of The Globe and Mail, March 12, 1974.

"Frank R. Jobin, a geologist and consultant to the administrators of the United Nations development programme, provided a most optimistic ray of light in what was a mostly gloomy evaluation of Canada's mineral exploration climate during a symposium at the Prospector's and Development Association annual convention.

"Mr. Jobin, speaking to the topic, 'Canada: Is the Exploration Environment Competitive?' had no doubt at all, despite all protestations to the contrary, that the Canadian mining sector, like its sister extractive industry oil and gas production, enjoys the lowest average income tax rates of all industrial sectors of our economy.

"He contrasted Canadian average tax rates which, according to Statistics Canada in 1969, were 12 per cent of the book profits of mining companies and 34 to 43 per cent for all other industrial sectors to foreign taxation practices. "Our mining industry is clearly a tax-favored industry. The profits tax treatment for mining abroad is very uncertain and subject to drastic change, and almost certainly is never more generous than in Canada."

So we look to British Columbia, and we know how much of this resource has been depleted over the years. We check to see how much revenue the Province of British Columbia has enjoyed from the mining industry. In 1967 and 1968 with a total value of $383 million, the direct revenue to the province — that includes the mining tax — was $4.6 million. We expended during that year by the department to the service of the industry $5.02 million.

We spent more in servicing the industry than we received in direct revenue from the industry.

The same situation in 1972-1973….

[ Page 3486 ]

MR. D.E. SMITH (North Peace River): Where did you get those figures? You don't even believe them yourself.

HON. MR. NIMSICK: You look in the annual report of the Mines department and you'll find them if you would read it. In 1972-1973 it was $637 million in value. We had a direct revenue of $6.5 million and we spent $6.5 million in servicing the industry. The very argument that I just read out to you a few minutes ago bears that out.

I haven't got the returns from the 1973-1974 figures, but the results over the years….if you go back over the years you will find that in many of the years we haven't taken in in direct revenue from the mining industry as much as we have spent in servicing the industry.

Now if you call that good business! Being MLAs, each and every one of you, it's your job to look after the resources of the province. We are stewards of the resources that belong to the people of British Columbia.

Interjection.

HON. MR. NIMSICK: I'll come to that too, and I'll show how wrong you are there also.

I want you to understand that the purpose of the royalties is to bring to the people a share of this non-renewable resource. One thing we must remember, if you are running a business — and I heard some people talking about a popcorn stand some time ago — you've got to pay for every ingredient you put into that business. In regard to the mining industry in British Columbia we have said over the years to the operators that they don't have to pay anything for the product unless they make a profit.

Interjection.

HON. MR. NIMSICK: It was never lost; it was always there. (Laughter.)

The minerals are not lost; they are like money in the bank. Thank God they are not that easily found because if they were, they would have cleaned it up years ago.

You say that it costs money to find them. If we were to find the minerals and have it all ready for production, don't think that you would get off at 2.5 per cent or 5 per cent royalty. You would have to pay a lot more for it. The only reason that you can get off with a small royalty is the fact that you may put up some money in order to develop a mine.

At present we collect the mining tax on the profit.

AN HON. MEMBER: On the profit?

HON. MR. NIMSICK: On any company that shows a profit we collect the mining tax. But if you don't show a profit on your books we will give you the ore for nothing. Now is that good business? That's what has been happening over the years.

Industry doesn't do that. When a mining industry like the Canadian Pacific have mineral properties and they want to sublet them to someone else to develop and produce, they charge a royalty; they charge so much for the ore that comes out of the ground. Other companies do the same. If an individual owns a mine and he is going to make a deal with a company to develop it, one of the first things he talks about is how much he is going to get out of it. Usually there is a royalty, not a share of the profit. He gets it off the top.

MR. J.R. CHABOT (Columbia River): Just like ICBC.

HON. MR. NIMSICK: Cominco does the same thing. Cominco takes it right off the top. I would say that if it is good enough for these companies to collect a royalty which is a payment for the product that comes out of the ground, then it should be good enough for the government.

What is so morally wrong about a government asking for payment for the product that comes out of the ground that they own? The companies say that it is a terrible situation to collect a royalty off the top and they are going to leave ore in the ground, but they don't say the same thing when they do it to some other company. They've got no worry about that at all. That's what you call a business enterprise.

Don't forget that a royalty is a payment for the product. It is not a tax; it is a payment for the product.

Interjections.

MR. SPEAKER: Order, please.

HON. MR. NIMSICK: We collect royalties on oil and gas; we collect something from the timber industry.

There is the same situation in all other resources. Why shouldn't we be paid for the ore that comes out of the ground?

Interjection.

HON. MR. NIMSICK: I don't know whether I should answer that question or not. It's not the same as stumpage. A portion of the resource should go back to the people — that's what the royalty bill is doing. It is bringing to the people a portion of that depleted non-renewable resource.

The basic royalties we have in the bill are 2.5 per cent and 5 per cent — 2.5 per cent this year, 5 per

[ Page 3487 ]

cent next year. Now this is pretty small when you figure that copper is worth $1 a pound, the net smelter return is maybe 80 cents a pound. When you take 2.5 per cent of that, that is 2 cents a pound going back to the people. When we get to 5 per cent, 4 cents a pound will be going back to the people — 4 cents a pound out of $1 copper.

The mining industry tells me that they are satisfied with this. They can live with 2.5 per cent this year and 5 per cent next year. Then they say in their ads about leaving their minerals in the ground. The only time that you might cut down the amount that you've got reserved is when your price drops down to the cut-off price.

When a company makes a feasibility study of a mine, they are at the cut-off price. If it's copper, we will say that 45 cents a pound is the cut-off price they can make a profit on. The only time you may have to leave ore in the ground is if the price of copper comes down around that figure.

The 2.5 per cent and 5 per cent are the only figures that could leave a little bit more ore in the ground. But don't think that ore is situated like a big egg, and in the middle there is a yolk and that they can go into the middle and take all of the good stuff. The finds they have — many times it is practically the same average all the way through.

The incremental royalty is the one that has bothered these people. When you take a feasibility of a mine and you come up with a cut-off price, the companies are not thinking that the price is going to escalate away out of sight. They are not thinking of that at that time.

Don't forget that the price of metals is not governed by our country; they are usually governed by the world markets. When they rise quickly it's a bonanza for the companies that are operating. All we're asking is that we should share in that bonanza.

AN HON. MEMBER: What has happened to corporate income tax?

HON. MR. NIMSICK: The people should share in the bonanza they will be receiving.

AN HON. MEMBER: What about corporate taxes?

HON. MR. NIMSICK: At the present time copper is up around $1.29 a pound.

AN HON. MEMBER: What about corporate taxes?

HON. MR. NIMSICK: Now, that shows how much business acumen you've got…. Do you mean to tell me that you say to a company, "If you don't show a profit, you should get the ore for nothing"?

Interjections.

HON. MR. NIMSICK: And don't forget that when you take a royalty….

AN HON. MEMBER: It's better than no employment from that mine.

HON. MR. NIMSICK: The incremental royalty was never figured in the original. When we set a basic price…. The mining industry says there's too much discretionary powers for this Minister.

SOME HON, MEMBERS: Hear, hear! Hear, hear!

HON. MR. NIMSICK: "Too much discretionary power. He can set the basic price at any figure he wants any figure he wants."

Interjections.

HON. MR. NIMSICK: I'd like you to name one Act that is more detailed than this Act is in regard to prices.

We say there will be a five-year average and there will be other conditions taken into the picture. If you haven't got any flexibility in setting your price, then you'd be boxed in by a figure that's set by the Legislature. This wouldn't be good because you wouldn't have any flexibility and you'd be stymied altogether. What better individual than the Mining Minister whom you've got at the present time to set the price? (Laughter.)

Interjections.

MR. SPEAKER: Order, please! Would you kindly save some of your remarks for your own speeches.

Interjections.

HON. MR. NIMSICK: They sure don't want the government to operate on business-like basis, I can tell that.

Interjections.

HON. MR. NIMSICK: We say that we own the resources in British Columbia. We shouldn't be giving our extra money or profit tax down to Ottawa; we should be keeping it here in British Columbia. But we're not taking it as a profit tax; we're taking it as a royalty.

AN HON. MEMBER: But you'll still get a share of the corporate income tax.

HON. MR. NIMSICK: We're taking it as a royalty, and a royalty is not a tax.

[ Page 3488 ]

AN HON. MEMBER: Aren't you going to discount that against corporate income tax?

MR. SPEAKER: Order, please!

Interjections.

HON. MR. NIMSICK: In describing the effect of Bill 31 we estimate that the smelter return for copper would average approximately 70 cents a pound in 1974. When I brought the bill down I figured that we may average the same price for copper as we did last year, which is around 70 cents a pound. There are some of the mines which made tremendous profits at that price.

AN HON. MEMBER: It has corporate taxes on it.

HON. MR. NIMSICK: Say the average is at 70 cents a pound for 1974 as well. The net smelter returns are usually the equivalent of the gross value under the bill, being the money paid to producers after deducting the cost of smelting. This is the net smelter return.

There will be an amendment to clarify that so that some of you people can get it through your head what it means. (Laughter.)

Interjections.

HON. MR. NIMSICK: Net value under the bill equals net smelter returns less the cost of transporting the concentrate. At 70 cents copper, a net smelter return of 69 cents would result in a net value of approximately 66 cents.

At the time I brought the bill in, I took a basic price of 55 cents. If the price escalates high enough….

AN HON. MEMBER: You get more corporate taxes.

HON. MR. NIMSICK: …when the net smelter returns are, 120 per cent of 55 cents, that's 66 cents. If he net smelter returns of …

Interjections.

HON. MR. NIMSICK: …69 cents would be 1.5 cents, we would receive 1.7 per cent and 1.5 per cent. This latter rate is made up by half the difference between the net smelter returns and 120 per cent of the basic value. The basic value will be set by order-in-council, calculated as near as possible to the average of gross value received by the producers in the province as a whole in the last five years and considering other factors such as inflation. The combination of basic and incremental royalties would yield 3.2 cents on the net smelter returns of approximately 70 cents per pound on a production of 460 million pounds of copper.

The companies immediately said my figures were way out. Don't forget that only 460 million pounds of copper will be produced under this bill because this bill only applies to Crown-owned mineral claims. This would generate a revenue of about $15 million in 1974 and about $22 million in 1975. Added to this would be royalty and other minerals with a net approximate total of $8 million.

Interjections.

HON. MR. NIMSICK: Total revenue in 1974: approximately $23 million. Total revenue in 1975: $30 million.

But metal prices are determined outside of our province and country and the mining industry has little control over what they receive. This is the reason why metal prices often fluctuate without any relationship to production cost. Sometimes the prices escalate considerably, and they did for copper and precious metals, giving the producers the opportunity of enjoying very high profits. It is our opinion that the people of British Columbia should share in these escalating prices by way of an incremental royalty rate.

Where metal prices drop and result in diminished profit, the people in British Columbia will also receive less from this royalty. There is provision in the bill for the reduction of up to 1 per cent in the basic royalty. If the price goes down below that basic price, the royalty would go down a half of 1 per cent for the first 10 per cent and the second 10 per cent. If the price went down far enough below the basic price, we would only be receiving 4 per cent royalty rather than 5 per cent in future years.

Moreover, there is a provision for further reduction of 1 per cent in the basic royalty applicable when the concentrate is shipped to a smelter in the province. That's 1 per cent they would get for smelting it within the province.

It must not be forgotten that mineral production is a one-shot deal. Once the ore leaves the ground it is gone forever, not only for ourselves but for all future generations.

MR. D.A. ANDERSON (Victoria): What about recycling?

HON. MR. NIMSICK: That's right. We always lose some on the recycling.

While the companies advocate that we should deplete these resources as quickly as possible, it is our opinion that they should be produced for need by this generation. I think we're correct in this assumption. If the price is high enough, the industry

[ Page 3489 ]

would mine all the ore out as quickly as possible because they want to make as much money as possible.

I'm not questioning them on this proposition because this is the way of private business — make as much money as you can as fast as you can and forget about it.

I've got a good indication of a mine right up near my area. Placid Ore — it has been in operation three years; they get a three-year tax-free period from the federal government….

AN HON. MEMBER: No more.

HON. MR. NIMSICK: But the ore is all gone; there's no more left there. They have to close down.

MR. CHABOT: Very little to start off with.

HON. MR. NIMSICK: Well, we should have got something out of it then, even with the little bit that was there. It is our opinion that we should produce for need for this generation, yet conserve as much as possible for future generations.

In the conservation of minerals, the real conservation of course….as some people say, why leave them in the ground? We don't say leave it in the ground. We say that we want the wise and intelligent use of that mineral by the people and for the people.

Our living standards today depend to a great extent on the use of the minerals, and since these minerals are limited, we must place a great deal of importance on them with the idea that we and future generations may continue to enjoy the benefits derived from their use.

The mining associations advance two basic arguments against Bill 31: They claim that the incremental royalty rate is prohibitive and that the entire royalty would lead to a serious loss of ore reserves.

With regard to the incremental royalty, it was claimed that the prevailing copper price of about $1 per pound would result in a combined royalty of 21 cents per pound. Applied to the total provincial production of $700 million — this is where they got their figures — this royalty would generate about $150 million on copper alone. This is where you got your figures. And this is exactly where….

Interjections.

HON. MR. NIMSICK: I know that you've got it ready there and I hope I'm not stealing some of your speech. (Laughter.) In fact, an average copper price of $1 per pound would result in a revenue under Bill 31 of $42 million in 1974 and $51 million in 1975 and subsequent years. Not the $150 million that they were talking about.

To this would be added $8 million in revenue from other minerals.

The total provincial copper production would result in the following revenue: $63 million in 1974 and $77 million in 1975. That is for all the minerals that are mined from both Crown-granted mineral claims, and from Crown-owned mineral claims.

Assuming that no change is made in the basic value due to inflation and rising labour costs, the prices would remain at the dollars. Your net smelter return is 80 cents; net value, alter adjust your transportation cost, will bring it down to 77 cents; basic value, that's the assumed price, of 55 cents.

Well, 120 per cent of 55 equals 66 cents, being 14 cents less than the 80 cents which was your net smelter returns, half of which equals seven cents, that's the 50 per cent over and above the 120.

[Mr. Dent in the chair.]

Then 2.5 per cent of 77 cents equals 2 cents; 5 per cent of 77 cents equals 4 cents. Now if I had a blackboard, I'd write it down so that I would be able to get it through to you because I know it's a little difficult.

MR. G.B. GARDOM (Vancouver–Point Grey): Go through that again.

HON. MR. NIMSICK: Two cents plus seven cents, times 460 million, equals $42 million. Four cents plus seven cents, times 460 million, equals $51 million, approximately.

MR. GARDOM: Bingo. (Laughter.)

HON. MR. NIMSICK: With respect to the loss of ore, as your price goes up, your ore reserves go up. So when the mining industry says that the incremental royalties are a thing they don't like, they are defeating their own argument because the high-priced ore reserves go up. It's when the price goes down that the reserves go down because you've got to mine a higher grade ore in order to take a profit.

Interjections.

HON. MR. NIMSICK: Now, so we wouldn't bankrupt anybody, we even got a deferral scheme in the Act. If you have trouble paying your royalties this year, you can defer the royalties until next year or maybe the year after. But we are not going to give it to you. You are going to have to pay royalties on that ore you take out of the ground.

AN HON. MEMBER: And corporation tax.

HON. MR. NIMSICK: I can see the day coming

[ Page 3490 ]

when a mine gets down to the cut-off price, and rather than close them down, let the government buy up the ore.

SOME HON. MEMBERS: Oh, oh! Oh, oh!

MR. GARDOM: There it is, right down the line — the Waffle manifesto, you've spread it out.

HON. MR. NIMSICK: No, now wait a minute….

Interjections.

DEPUTY SPEAKER: Order!

HON. MR. NIMSICK: Just get a little order. Now, wouldn't it be common sense, if a mine was….

MR. GARDOM: First the insurance industry, now the mining industry.

HON. MR. NIMSICK: Now just a minute. If a mine was operating and prices of the mineral they were producing went down in price to where they couldn't make a profit and they were going to close down, and they had 200 or 300 men living near the mine that was responsible for a job, wouldn't it be better for the government to buy the ore at a price they could carry on at, then when the price goes up the government could sell the ore.

We're not going into the mining business. But this is a possibility sometime in the future; this could happen. In order to keep a community alive and going, because you know that the price of metals go up and down…. When Cominco shut down their mine up here on the coast, they didn't know the price of copper was going to go up like it did or they wouldn't have shut it down, you see. And a mine like that could have been kept alive until the price went up. It's only two years ago since the price of copper was around 45 cents, and a lot of them were crying, a lot of them were crying.

MR. CHABOT: Have you got enough money to do that?

HON. MR. NIMSICK: Well, if the people haven't got enough money, then nobody's got enough money. The people are the backbone of any country.

Interjections.

HON. MR. NIMSICK: I'd say store it. I remember in the Depression years in Trail we had sheds miles long loaded with lead and zinc that the company produced when the price was low. They stocked it and they made a fortune on it when the price went up. Why can't we do the same thing if it was necessary?

Interjections.

HON. MR. NIMSICK: We do it in regard to the incremental royalty. The federal government did it in the case of oil; they put an export tax on because the price of oil in the United States went to such a height that in order to protect the Canadian individual, the Canadian price, and to share in the bonanza that the oil companies were receiving, they put a tax on that oil. Now what difference is that tax on the oil than the incremental royalty in regard to minerals? No difference.

Interjections.

HON. MR. NIMSICK: Mr. Speaker, I think this bill is one of the most important bills to hit the floor of this House for a long time. It's going to change the whole course of the mining history in the Province of British Columbia.

AN HON. MEMBER: It will do that!

HON. MR. NIMSICK: It is going to return the management of the mineral resources to the people. And the people are going to decide how you are going to deplete that resource, how fast you will do it and how much benefit they are going to receive from it.

When you look ahead — or look back even — you will find out how necessary these minerals are, because they are all limited. In one decade — I want to quote from the March 2 Sun: "In one decade, 1959 to 1968, the United States alone used more resources than all the world's people in all the previous history."

Perhaps you noticed in the paper that inverted pyramid of the population increase. When you think that the population will increase between now and the year 2000 from 3.7 billion to 7.4 billion, I believe it is, it makes you realize that if we are going to keep the standard of living that we've got, we've got to cherish and protect and look after the things that we've got and the resources — not only for our benefit but for the benefit of the rest of the world and our children as well.

I take great pleasure in moving second reading of Bill 31.

Interjections.

DEPUTY SPEAKER: Order, order! I haven't even recognized the next speaker yet.

MR. W.R. BENNETT (Leader of the Opposition): Thank you, Mr. Speaker.

[ Page 3491 ]

Interjections.

MR. BENNETT: First of all, Mr. Speaker, it is a pleasure to get up and speak on Bill 31. It has been a long time coming. I would like to say that I recognize the Minister's argument and I believe that everybody in this House and in British Columbia wants to see the maximum revenue from our minerals and our resources on behalf of the people.

They also want to see the continuing development of these important resources, because it is incumbent upon governments to maintain that economic base of development and have an economy such that future governments who take over from this one will have the revenues from the resource base to continue those social programmes B.C. has always led the nation in, and indeed has been innovative in — such as your government has done by inheriting a healthy economy, an economy created with government supervising and collecting through taxation of resources, and creating a healthy economy.

I don't believe that any one party has any more good intentions or any more right to say that they represent a more holy attitude on preserving the resources than any other. I believe that we all have the same attitude and the same concerns for our province.

I would say that our party has a history of…. In 1956 we tried to get more money from the resource in bringing in a tax on minerals, on 50 per cent of minerals in the ground. I would like to say that it was unworkable. We lost the development and that economic base for almost 10 years. It wasn't a matter of backing out; it was a matter of government recognizing its responsibilities in its attempt to get revenue — in recognizing that they also have a responsibility for continuing the healthy economic development of that resource base for the benefit of the people.

There is no benefit to the people if there is no development at all, if there is no money generated. You are not doing anything for the people of today. And in saving the resource for the people of tomorrow by leaving it in the ground, if they continue the same policy that you have and leave it in the ground, there will never be any benefit from minerals for anybody. That is foolish; and this Minister has said that he would rather leave the minerals in the ground.

Interjections.

MR. BENNETT: You certainly did. I would say too that governments in Canada have faced different economic markets in the sale of resources and minerals. The Minister well knows that there have been times of poor markets when indeed mines have closed down, and times when you couldn't initiate any mining exploration or activity. There have been incentives…and part of the cloud of this whole debate up until today has been the mixing up of the federal tax holiday in incentives with provincial revenues.

I think, in dealing with the provincial jurisdiction, the Minister must admit that that three-year holiday that the federal government has had to encourage mining — and, indeed, was responsible for bringing many mines in in Canada — cannot be confused with the provinces giving away their resources or their revenues.

I would like to take a look at and compare this province and its history with the other provinces. I take Manitoba, where we have had an NDP government for some time. Up until just yesterday their revenue on resources was based on profits. It was at 15 per cent of profit, similar to B.C. B.C. collected 15 per cent of profit over $10,000.

But that government today is moving — as is Ontario; as it is the responsibility of any government in Canada, indeed in the world — to recognize the sudden change in world prices and to increase government revenue. Whether those governments are Conservative or NDP or Liberal, they are all moving in the same direction — some with more responsibility than others in how they are going to derive more government revenue.

Now we have seen and we have heard from that Minister that he used to call for a royal commission. But once he has got the power he isn't interested in anybody else's opinion. He is not interested in technical advice. He is not interested in experts, which this government claims. He says that now he knows best.

I contrast this with Ontario who, in recognition of this market, has turned out quite an intensive study. This is the report of their advisory committee on some of the steps they took in establishing how they would collect more money for resources.

Manitoba, instead of counting on just the Minister's requests over the years for some sort of increase in revenue, based their increases on some sort of study.

But in both cases what did these governments do? Ontario has based their returns on profits. Manitoba, the great NDP province in the middle part of Canada…. Here's the synopsis of their legislation brought down yesterday.

The statute law amendment Act proposes an increase in royalties on mines that produce $50,000 or more of income a year to 23 per cent from the present 15 per cent. This is in Manitoba. That is an increase in the type of system we've been advocating here, the type of system this Minister says he disagrees with. This Minister is talking about a royalty on base. I'm saying that other jurisdictions of all political stripes are attacking this problem and

[ Page 3492 ]

meeting their responsibilities to their people with sound economic research, and on the basis that they want to see the industry continue.

Now I would question then this Minister's and his government's motives in bringing in a tax of this type at this time, contrasting with the type of taxes that other jurisdictions of all political stripes have brought in and are bringing in in Canada, because….

HON. MR. NIMSICK: They didn't ask for my advice, Billy.

MR. BENNETT: That's what I've said.

AN HON. MEMBER: It's a good thing they didn't.

MR. BENNETT: These people — and I'm referring to Ontario — have a list of experts, non-political related people from all aspects of mining and resource development, from ecological studies, from government, engineering. They took a broadly based cross-section of people who would advise on a technical…and on a basis of where they want to see their province go.

This isn't based on a seat-of-the-pants decision of a Minister who bases his whole experience…that he comes from a constituency that counts on mining. This isn't the Act of a government who time after time claims that their decisions will be based on research and study and development.

So I question the Minister's motives. What truly are the motives of this Minister and this government? They're highly suspect. I have to go to reports and questions that are raised in the press by other people. I refer to a letter to the Sun of Martin Kiernans, because it is the government's intention to depress the industry to take it over.

Now I know we're in favour of resources, you're in favour of resources, we believe in a commitment to the public to develop them, but you're a socialist and I believe in private enterprise. And if you're a socialist and you want to take over the mines, stand up and say so. Be proud of it!

HON. W.L. HARTLEY (Minister of Public Works): You're a corporate enterpriser.

MR. BENNETT: I'm not a corporate enterpriser.

And if you're a socialist, and if you want the government to own and operate the mines, then say so. Don't hide behind it. Don't pretend you're doing something else. Come out into the open. Be proud of what you believe. But don't start out to depress the market just to get a kick.

I'd like to read from a letter where this is seriously questioned, because if the Minister won't come out and tell us his true intentions, and certainly he hasn't shown any research in developing his royalties — incidentally royalties that were leaked to the press, into the multi-national economic corporations who leaked these this far in advance of this bill being introduced in this House, this 5 per cent and this 2.5 per cent…. It is a question that was raised last January and has never been answered: how did that information get out?

Interjections.

MR. BENNETT: Never any answers. Never any answers. I'd like to quote from a letter to the Sun of Martin D. Kiernans, a consulting geologist. And his letter says:

"Dear Sir: The present interest in the politics of mining in B.C. seems to be basically related to the intentions of the government. The recent super-royalty mining taxation must be related directly to the purposes and policies of this democratic socialist government. What are those policies?

"I have investigated published newspaper interviews and statements by the Premier and various Minister to determine their intentions., As a member of the NDP I had access to The Democrat and various NDP annual convention resolutions and papers.

"The most important statement of resource policy of the NDP that I have encountered so far is a background and point paper 'Natural Resources,' attributed to Robert Williams, the present Minister of Lands, Forests, Water Resources and what-have-you in this government, who is now a provincial Minister. This paper was submitted to the 1971 NDP convention. That paper was not adopted by the party.

"As for other stated policy resolutions of the NDP itself in conventional mining, the situation is simple. According to The Democrat, no policy on mining has been adopted by the party since 1961 when records began. The last 1973 provincial convention adopted no resolutions on mining.

"However, because the background paper which has been attributed to Mr. Williams does contain some specific statements on mining policy, it would appear that this might be the logical source from which to define just exactly what the government intends to do with the mining industry in British Columbia."

And he goes on, and here is where he comes to the point. He says:

"There's a very revealing statement in the background paper which is clearly relevant to the Nimsick bill, Bill 31 on mining royalties now before the Legislature. 'The acquisition of privately owned corporations in the resource

[ Page 3493 ]

field prior to major resource tax changes would be a mistake because the market price for those companies would be grossly inflated because of the wide range of tax holidays they presently enjoy. Any acquisition of corporations prior to substantial tax change would be a misallocation of public funds.

"There are a number of pertinent resolutions in this paper listed under "Points — Natural Resources." Point D says that an NDP government would take over and operate firms unwilling and unable to function adequately — whatever is the government's description of 'adequately' — under the above conditions, and that the NDP would place major industries such as pulp, paper, lumber, mining, manufacturing, transportation, communications and finance under public ownership."

It goes on and on to point out specific companies, but the final thing that I see is that this background paper was turned down. It says:

"Motion of referral. Referral back to the committee on natural resources, with instructions to remove from the report paper those sections which refer to co-ownership and co-participation of an NDP government with private firms currently controlling forest resources and natural resources on the ground that it is inconsistent with the policy already established by this convention, which is total ownership."

Now if this is your intent, then share it with the House. Share it with the people of British Columbia. Let us know if this is the intent, and then we can argue on philosophical grounds, but why bring in a royalty system that other jurisdictions, some of them NDP right now, have turned down because they've studied it in trying to meet the responsibility to the people of their province in not only collecting resource revenues but continuing the industry, realizing that as the government they set the conditions? They will collect money, not only through their profit but through their share of the corporation tax and if they are in most provinces in….

AN HON. MEMBER: Why not be a leader and lead the way, instead of following?

MR. BENNETT: I'm saying there is no sense being a leader down to destruction and ruin. Be a leader for building the economy, and you're not being that sort of leader. The very fact that you admit and you've stated to this House you've done no study and no research, no royal commission, and you said that your opinion was good enough — you said it earlier and you said it again tonight — would indicate that you're not going to be a leader any more….

Why would the Minister bring in a bill that in other jurisdictions has been discarded? Here we have Manitoba, here we have Ontario — two very important mining provinces in Canada. Ontario has had a more sophisticated mining economy and mining market than British Columbia. They have high-grade. They've had more accessibility. B.C. has matured late because they've had to establish the technology and the know-how to mine the large, low-grade deposits that we have on what is basically a copper industry.

These jurisdictions, indeed, are trying to extract as much money as they can from industry, but they recognize something this Minister fails to realize and that is that the industry must continue, not for the sake of the major mining companies but for the sake of the province, and for the prosperity of the people. There'll be no tax if there is no industry. There'll be no employment if there is no industry, Leaving the minerals in the ground does nothing for the present generation, provides no services. To leave that in the ground will do nothing for people in the future.

We have seen minerals that have been in demand at certain times in our history become obsolete, and there's no further use for them.

HON. MR. NIMSICK: Name one!

MR. BENNETT: Tungsten.

HON. MR. NIMSICK: Tungsten's not obsolete.

MR. BENNETT: Tungsten doesn't receive anywhere near the profitability to the people where it's mined. It would be better to their advantage to have mined it at a time of prosperity and received the benefits. The interest and the accrual to the people in those areas would provide more social benefits and more purchasing power and more for those people than leaving that in the ground to mine it today at what may be a marginal….and it is a marginal time for tungsten.

I disagree with this Minister's and this government's whole argument because they basically have several points that they talk about. First, natural resources belong to the people. This seems to be an incontestable motherhood statement, but when you take a look at really what resources are and what minerals are, what belongs to the people of British Columbia is the entire natural endowment of the province, excepting, of course, those portions which have already been transferred into private hands. Minerals, however, are not resources, because resources are only those minerals which have economic value to man.

Minerals become a resource only when man has found a way of using the mineral which gives it a potential value to man and when man has found the means to produce the mineral to fill that potential to

[ Page 3494 ]

man at an economic cost. Thus, while nature creates the mineral endowment, man creates resources by finding a means whereby the mineral can be made useful. Once it is recognized that man creates the economic value which turns the minerals into resources, it can no longer be meaningfully argued that value belongs only to those who own the mineral but to those who not only seek it out but who develop the use and who develop the technology for use. All that the state provides is the opportunity to create economic value.

This opportunity is worth very little to the mining industry or to the economy of B.C. For example, if a prospector finds an indication of minerals that is just interesting enough so that a mining group or company is willing to investigate it further, the most the prospector can expect to get from the company in the short run is a down payment of a few thousand dollars and the company's commitment to spend an agreed additional minimum amount to try to develop the mine into an economically viable ore body.

If fortune smiles and the property becomes a mine, the most the prospector can hope for is 10 to 15 per cent of the profit after the debt has been repaid unless he contributes an important share of the ongoing costs of exploring and developing the mine after his initial discovery.

It is important to note that the company is willing to give the prospector that equity share because it costs the company a good deal of money to find prospects which are worth investigating and which offer a good chance for discovery. Such prospects are relatively few and far between. The owners of the minerals do not even provide the companies with an interest in the property; all they offer is the opportunity to spend money — to go out and look for a situation in which this economic value can be created.

Who then creates the resource? Not the province Not all the people of the province. Resources are created not by people in general but by specific people like technologists, the people who work to seek out and find and develop the technology, who create a use, who go out and create a market, mining the resource or the mineral economically.

The other misconception is that mining companies earn an excessive return on investment. I believe the government of this province and of this country have the best possible position under private enterprise. They can set the conditions, they can set the taxation rates. As long as they encourage the development of an industry, they participate only in the profits and never in the losses. In normal business that's good, but it is even better in the high-risk business of mining. The public, through their general taxation, do not face periods of debts when they have to absorb huge losses which the mining industry does every day.

The government is a shareholder on behalf of the people only in the profitable mines. The millions and millions that are lost in unfavourable ventures are not borne by the people of British Columbia. Yet, when there are favourable returns, we share as British Columbians and as Canadians.

If the federal government is cut off from all revenue on taxation by the implementation of resources — I'll come to that later — then, of course, they are going to have to seek further ways to tax our people. The province won't be any further ahead. When we believe in Confederation we believe in some sharing of taxation. I believe that we should have some cooperation rather than conflict between the senior government and the provincial government.

"Mining companies are an excessive return on investment." I don't think so. Take the Canada Development Corporation and Gulf and Western Industries, both of which are highly diversified. They are reported to require a 15 per cent after-tax rate of return on investment because of the high risk.

By comparison, the average profit figure for the British Columbia mining period over the seven-year period from 1967 to 1973 was a return of slightly under 12 per cent, according to figures prepared by a major auditing firm for the British Columbia Mining Association. That these profits have not been unfairly understated may be deduced from Mineral Bulletin 118, published by the federal Department of Energy, Mines and Resources, which shows the average rate of return on the shareholder's investment for the entire Canadian mineral industry over the eight years from 1962 through 1969 was only slightly over 11 per cent. For only the mining segment of the mineral industry it was 13 per cent. These profit levels, for the risk of the business, are not excessive.

Where there is profit, our province will benefit, through a quasi-royalty tax on profit. Again, we will benefit from our share of the corporate income tax.

I'll go on further in discussion to talk about mine life which the Minister brought up. Your argument that there have been unduly high profits in the industry is not valid, nor is it a valid reason for the type of action you are taking now. I do admit to all British Columbians and to all people here that this province, as others, must move more strongly into the taxation field because of the world high prices we face now.

Interjection.

M R. BENNETT: The Minister has talked arguments where he said that resources should be kept in the ground. Here I would like to refer to that.

HON. MR. NIMSICK: I said the intelligent use of them.

MR. BENNETT: Yes, you have said that. Mr.

[ Page 3495 ]

Minister, you said that in debate on your estimates.

DEPUTY SPEAKER: Order, please. Would the Hon. Member address the Chair, please?

MR. BENNETT: Certainly, Mr. Speaker. Thank you for calling order.

We have found through preceding discussion that the value of resources results from the technology developed by the people of the industry. The profits earned by the industry act as the incentive for the development of technology and the discovery of new ore bodies.

If you leave these minerals in the ground, you are not providing one iota of benefit for the people of British Columbia. If that policy is continued by succeeding governments, if you are correct, then those minerals will never be harvested for the benefit of the people.

I believe this is the basic premise. You may deny it now but I have been in this House when you have stated it. I would correct the Minister. If he wishes to withdraw the statement now he will, but I was here when the Minister made that statement.

Another argument that has been attributed to this Minister and this government is that ore bodies which companies are unwilling to develop within a reasonable time should revert to the people.

HON. MR. NIMSICK: You're not going to get anything out of them.

MR. BENNETT: I believe we will get benefit out of our mines. Over and above the basic taxation that we will collect through a taxation royalty, over and above the multiplier effect of people servicing the people who work in mines, as Canadians and as a country these resources help Canada solve its balance of payments problem. They are important in our exports and in the balancing of our trade. They are important because Canada is not an isolated economic community.

We have certain products which we sell and there are certain products we have to buy. The fact is these minerals you talk about can't be left in the ground even on a no-taxation basis. They are important to the total economy of our country and our province. These ore bodies and these minerals are important to the people of British Columbia.

Your party has said that minerals are a one-shot resource so it is essential that the government act now to obtain its share of the revenue. We have already seen that the supply of mineral resources is not non-renewable. It can be extended indefinitely so long as the incentive is provided to develop the technology to turn minerals into economic resources.

The key decision to be made, therefore, is not the maximum quantity of taxes which may be possibly collected from each unit of the resource produced. It is very clear that the rate of taxation, through its impact on the incentives to explore for and develop resources, directly determines the amount of mining activity which will take place in British Columbia at any given time.

Higher tax rates discourage resource production and reduce the amount of tax which the government is able to collect from the industry both in the short and in the long run. On the other hand, a tax rate which is too low will permit lots of mining activity which may well reduce the total taxes which the government is able to collect.

It is obvious that the level of taxation at which government tax revenues will be the largest and will benefit the people the most will be in the middle range of tax rates — say between one-third and one-half of pre-tax income for the federal and provincial governments combined.

Mr. Minister, I would like you to take a look at your taxes again and contrast them to what Manitoba has done. Again, they have talked about a move from 15 per cent to 23 per cent on profits.

Interjection.

MR. BENNETT: That's right. They are the province that has had advice from Mr. Eric Kierans, another Mr. Kierans, on how they could take over the mining industry, but they apparently have rejected his report and rejected his advice. After all the consultation they did in fairness and in meeting their commitment to their people, they've gone to the only type of taxation that will benefit their people by continuing the industry and maximizing the revenue.

There have been studies done by many, many people. We've had letters to Ministers; you've probably read them, a very complete analysis of the industry and what your taxation and your royalty taxation will do.

I don't know, Mr. Minister, if we have to continue to read these to you, but it's apparent that you haven't bothered to read these analyses. They're not all from major mining companies — they are from consultants and from engineers, they are from people who are concerned about this province and the continuance of the development of one of its major resources.

Interjection.

MR. BENNETT: Have you paid any attention to them?

Interjection.

MR. BENNETT: Let's talk of an example of the effect of your royalties. Here's an example that was

[ Page 3496 ]

included in a copy of a letter that was sent to me; it was sent to the Minister of Industrial Development, Trade and Commerce (Hon. Mr. Lauk). Within this highly detailed letter, a very well written letter and a well presented series of views, we have an example of the effect of the royalties. I'll have to read it because it shows schedules and it shows figures that would indicate that your new royalties in many cases, with your royalty on base, and your new super royalties, will put them in a deficit position with the profit and the market increasing. So let's take it:

"The attached schedule shows the value per ton of zinc concentrate that would be realized by a mine located near Houston, B.C., selling concentrates on the Japanese market. Similar smelting charges would apply at either a Canadian or European smelter when involved, but the freight and handling charges would probably be lower and higher, respectively, than those for sale to Japan.

"The average zinc price in the 1969-1973 period was approximately 17.5 cents per pound plus any price in excess of 120 per cent of this average, i.e. 21 cents per pound, would trigger the super royalty. At the present time, the zinc price is approximately 36 cents a pound. The 15 cents per pound price increase results in an increase in gross value of $156 per ton of zinc concentrate, The increase in net value before royalties is $79.20 per ton."

HON. MR. NIMSICK: I had that letter. If you figure it out according to the Act, it's all wrong.

MR. BENNETT: "The distribution of the benefits from the increased metal price would be as follows:

"Increase in net value to miner before royalties, $79.20 — less super royalty of 50 per cent of gross value, which was $156, so that's $78, and the five per cent royalty at 5 per cent of net value increase is $3.96, and the increase in net value to the miner after royalties is a loss of $2.75 on the price going from 17.5 cents to 21 cents."

I'll point out further, but you couple the detrimental effect you're going to have on this industry, as it stands now, with your royalties on base — an unworkable way to collect taxation — something that would harm the industry, and ultimately the revenue of the government and your services and our services to people, couple with that the federal government's move to putting taxes on this area and you have an almost intolerable situation for this industry in British Columbia.

Now, this has added a further dimension of uncertainly to an already faltering industry. I'll quote further where the industry, the exploration and the interest in investment is declining, when in all other jurisdictions, social and responsibility, investment is increasing and so are revenues to people because their governments are meeting this situation with responsibility.

But over and above, when I consider your wrong attempts, we have the federal government now moving into this area in concert with you. This creates a situation in which only the citizens of B.C. will be the losers, because if this industry falters, even that industry that we have developing now, if some of it closes down, we will lose revenue and employment. It will be a disaster. Programmes that you and I would like to see continued, some of them that you've taken over, some of them that you've improved upon since you became government, will no longer be financially within the means of the people of British Columbia.

I believe, Mr. Minister, that you have a responsibility in assessing the situation at this time, and instead of having conflict with the federal government, even though there's an election on now, instead of a period of conflict, you should be prepared to discuss with the new government that will be elected after July 8, whether it be the government that introduced those charges or any new government, and have a complete re-examination of how much the governments can take from the industry.

I believe there should be time to do this and from over the head of the resource industry of this province, the mineral industry, you should remove this threat of immediate implementation of Bill 31.

I believe that we should delay this bill for six months. Because of this, I move, seconded by the Hon. Member for Boundary Similkameen (Mr. Richter), that the motion should be amended by deleting the word "now" and substituting therefore the words "six months hence".

In speaking to my motion, Mr. Speaker, it's because I believe that it's more important to bring in a proper taxation method with proper cooperation between both levels of government rather than this continuing period of uncertainty and this period of loss of investment and revenue for the Province of British Columbia. We have the uncertainty of the industry. It's important now more than ever, Mr. Speaker, that this government pause in its efforts to push Bill 31 through, that it hold this bill over for six months, that this bill in fact then be discussed in concert with the federal government, whoever is the new government — discuss plans for taxation on resources, and get to that spirit of cooperation that I saw, instead of, as the Minister has said tonight, take all the money for British Columbia.

I would like to see the cooperation that the Premier said when he was sharing Alberta's and Saskatchewan's oil revenues. He went back to the Federal-Provincial conference and he said: "We'll give

[ Page 3497 ]

you all the oil if you'll take them over and nationalize them." The fact that B.C. had very little in oil revenue, and it all belonged to Alberta and Saskatchewan, what a magnanimous gesture it was. A great Canadian, and yet here we have the old double standard. This Minister saying tonight: "No money for Ottawa, all the money for British Columbia. No cooperation. No consultation. Nothing." What rubbish! What a double standard.

Interjections.

MR. BENNETT: Here we have a study done by Price-Waterhouse on the British Columbia mining industry — effective royalty and tax rates. This study was done taking into consideration both the new provincial proposals and the federal proposals. And I will read it to this House and read it into Hansard because it clearly shows that if this government goes ahead and if the present government in Ottawa is returned, our resource industry, our mineral industry will be in chaos; it will decline; there will be fewer benefits for the people of British Columbia. In fact, this industry will die.

Let's take a look at what Price Waterhouse said, an independently commissioned study to establish the figures on where our resources…and where the position will be. All studies have to be done, Mr. Minister — you're a great advocate of studies — on some sort of basis. You have to arrive at figures. But by your own Minister's admission, no major study was done in arriving at these figures that he's introduced as part of the basic royalty. No consideration for the continuation of the industry was done, no major study at all.

HON. MR. NIMSICK: When did I say that?.

MR. BENNETT: Not like Ontario, not like Manitoba — two other jurisdictions showing the sophistication and responsibility of managing their resources. They haven't resorted to revenge on an industry that they've hated and tried to drive under with the sole intent of trying to depress the stock to take them over. Because that's this Minister's true intent: to take over the industry. And it's not honest enough to state its true intent.

MR. CHABOT: Hear, hear!

MR. BENNETT: It does so in bits and pieces, a bite at a time. It's not being honest with this House; they're not being honest with the people of this province.

Interjection.

MR. BENNETT: Instead of saying, "Trust us," why not trust the people to develop their own province? Trust the communities to have self-determination such as against your Islands Trust Act. Trust the individual. Trust the individual to work for the benefit of their province and claim their benefits on behalf of all people through taxation. Trust the people; don't say, "Trust us." Trust the people.

[Mr. Speaker in the chair.]

Mr. Speaker, back to the Price Waterhouse report that I was discussing.

"We attach two exhibits which are prepared on an identical basis, with the sole exception that exhibit I assumes that no earned depletion is available where exhibit 2 assumed a maximum earned depletion of 25 per cent. Both exhibits are concerned with copper. We also attach an appendix which describes the method of computing the royalties and taxes in more detail.

"The exhibit clearly shows that on the facts assumed and at current copper prices the combined federal-provincial royalty and tax load is so high as to reach an overall effective rate of almost 100 per cent, even where maximum earned depletion is available " — even where maximum earned depletion is available!

"Where no earned depletion is available the overall effective rate exceeds 100 per cent when copper prices reach a point between 100 cents and $1.25 per pound, and continues to rise the higher the price of the metal climbs.

"The exhibits, in fact, demonstrate that the lowest tax rate applied when the metal is being sold at the threshold level before the super royalty begins to apply, which is 120 per cent of the basic price of 62 cents per pound, and that the overall cost involved, including royalties and taxes in selling prices in excess of this threshold, exceeds the sale price."

MR. A.V. FRASER (Cariboo): The Liberals and NDP are both bandits.

MR. BENNETT: No, no.

"In fact, even if transportation, smelting and operating costs remain fixed, as selling prices increase each price rise of I per cent beyond the threshold amount would increase taxes and royalties combined by 1.0475 cents."

HON. MR. NIMSICK: I had that and corrected it.

Interjections.

[ Page 3498 ]

MR. BENNETT: "Thus the industry faces the anomalous position that increased prices mean lower profits, or increased losses."

HON. MR. BARRETT: Speak for the big companies.

MR. BENNETT: I'm not; I'm trying to speak for the economy of this province and for the people of this province. If you're going to administer the resources of this province by conducting a vendetta, rather than the studies you talk about, rather than the studies that Ontario ran, then you do so. But just remember that the government that succeeds you will not be able to continue to deliver the benefits to the people with the type of economy that you inherited. They won't have the right to innovate on those benefits as you were given; and rather than going down in history as a benevolent Premier, you'll go down as the biggest fiasco that ever hit British Columbia.

HON. MR. BARRETT: Did you bring in Mincome?

MR. BENNETT: The great little jokes you tell today will long be gone when people remember David Barrett, the rugby-playing Premier who leaves the session to go to Japan — who goes down on his ego trip. He takes a week to go down and get a diploma because they attacked him on the chicken and the egg. He was so small and felt so badly he had to go down and get a diploma to get puffed back up. Puffed back up!

Now going back to the royalties, Mr. Speaker….

AN HON. MEMBER: Doctor Spock.

HON. MR. NIMSICK: Why don't you check those figures?

HON. MR. BARRETT: His daddy wrote his notes.

MR. BENNETT: Somebody should write yours. I noticed you came in with a written statement yesterday. I noticed the Premier had a written statement yesterday. They don't trust him. Mr. Williams doesn't trust him. The Hon. Minister of Lands, Forests and Water Resources doesn't trust him to speak extemporaneously any more because the last time he got up he announced that he was going to put up electrical rates. That's what he did.

Interjections.

MR. BENNETT: Now I, was discussing the Price Waterhouse before some noise developed on the other side of the House, Mr. Speaker — which has been absent most of this session. And I was dealing with royalties and a study done by Price Waterhouse on the….

HON. MR. BARRETT: Where will you be next week?

MR. BENNETT: I'll be in British Columbia talking to the people of British Columbia. I will be in the constituency of British Columbia to represent the people of British Columbia. It's not the United States. It's not in Japan. It's not in Hong Kong. It's in British Columbia.

Interjections.

MR. BENNETT: I'll tell you that my responsibility is to meet with the constituents of this province and discuss their problems with them. Some of their concerns are with Bill 31. If this Premier won't listen, perhaps the Minister will listen, because we're not out to save the big companies. We're out to save the resource for the taxation benefits for the people.

If I could continue, Mr. Speaker, without the sloganeering from across the floor, I'd like to talk about this study that was done — an independent study by Price Waterhouse — on the side effect of the federal legislation and the provincial legislation on basic royalties, and why we're concerned that this legislation should be hoisted for six months so that a rational, consultative approach between two levels of government recognizes that to get the revenues they seek they must maintain the industries. They must maintain the continuation of this industry.

Now basic royalties:

"A rate of 5 per cent on the net smelter return has been assumed in the rate that is proposed to take effect on January 1, 1975. These are the basic presumptions in computing royalties and taxes for exhibits 1 and 2.

"It has been assumed that the super royalty will be computed by reference to the gross sales price. In computing this royalty a basic value of 62 cents per pound has been used, being the approximate average London Metal Exchange price for the five years from 1969 to 1973.

"On introducing Bill 31 into the Legislature Mr. Nimsick, the British Columbia Minister of Mines, indicated that the basic value for 1974 might be 55 cents a pound. Since the determination of the basic value for 1974 and any adjustment to that value for 1975 and subsequent years would be wholly at the discretion of the Minister, there is no certainty at this time that 55 cents per pound will be the basic value for 1974 or that any increase in sale prices during 1974 would be taken into account

[ Page 3499 ]

by the Minister in establishing this basic value for 1975.

"Provincial mining taxes: (a) processing allowance. A basic processing allowance of 15 per cent of mining income has been assumed which results in an effective mining tax rate of 12.75 per cent.

"(b) Royalties deductions. If the federal budget proposals which effectively increase federal taxable income by the amount of any royalties paid are enacted in their present form, the effect would be that royalties would not be deductible for British Columbia mining tax purposes either. Therefore, the assumed rate of 12.75 per cent has been applied to income before royalties.

"(c) Income taxes. Royalties. The provisions in the federal budget combined with existing tax legislation as it may relate to royalties could be interpreted as resulting both in the enforced inclusion of royalties paid in income and the possible non-deducibility of the same royalties. If this doubling up effect does in fact result, federal and provincial income taxes would be higher than indicated in the attached exhibits.

"Federal resource profit abatement. It has been assumed that the 15 per cent federal resource profit abatement would be available in respect of the increase in income accessible to federal tax.

"Income tax: rising from the inclusion is income royalties paid. However, it is not entirely clear from the wording of the provisions if this result comes about. If it does not, federal income tax payable, as detailed in the attached exhibit, would be increased by 15 per cent of the total royalties payable."

Now here are their examples: copper at $ 1.00 or $1.25 or $1.50 a pound. You go to the gross sale price, you take out smelting and transportation costs, smelter returns, operating costs, income before royalties, mining and income taxes, royalties; you take off the basic royalties, the super royalties, then you have a total. Then you take off provincial mining taxes, income taxes, federal and provincial corporate taxes, and then we take off total royalties and taxes. The income or loss after royalties and taxes — we have, at $1.50 a pound, a loss of 4.3; at $1.25 we have a loss of $1.76. Indeed as the price goes up, which should be a benefit to the economy and an encouragement to the company or the individual or, collectively, the industry to participate in those increases, they in fact take a loss.

The industry then in taking a loss cannot share with its workers, the people who work in the industry, any of the increased benefits. In fact, the extra hands at the bargaining table are those of the federal and provincial governments.

You might have a vendetta against the mining industry, but if they are in this loss position, there will be no money for increased wages. Those people who try to participate on wage level in equality with other wage groups and other workers in this province would be penalized by this Minister.

What we are asking is that this Minister reappraise the situation in the light of his commitment to being a good Minister, reappraise the situation in light of the federal government's move and proposal on federal intervention in the taxes, reappraise the situation in light of what his sister province of Manitoba has done just yesterday in bringing down their tax recommendation.

I wonder if the Minister has had consultation with that government and the officials of those departments when they were both making proposals related to the same resources. I wonder, Mr. Speaker, if he had consultation with Ontario, who signalled very clearly that they had this study going and were bringing down new proposals, or whether, as he suggests, he just blew right in because he knew what was needed. He didn't need a royal commission.

I ask him now to reconsider in light of the desire of other Ministers of this government; in fact, the repeated refrain from over there is that they believe in reports, studies, environmental studies, consultative studies and task forces in establishing positions to administer and run this province.

HON. MR. NIMSICK: You criticize all the other task forces, why…?

MR. BENNETT: When did I criticize a task force? Mr. Speaker, the Minister asked me if I criticized the task force. I don't recollect it. I congratulated the Hon. Minister of Lands, Forests and Water Resources (Hon. R.A. Williams) on the environmental study that was done on the new run-of-the-river dam that is being brought into being on the Peace River as part of the project that was established by engineering and part of the initial study in developing that great river for hydro-electric purposes back in 1961. I believe in studies, but you can't have it all ways; you can't believe in them here but not there.

Mr. Speaker, this Minister did not present any background of definitive material or statistics or figures on a meaningful basis which would show that this industry and this province could benefit from the proposals he presented to this House. The only statements we got were the rhetoric and the oft-repeated slogans that we have been ripped off by the giant corporations.

HON. MR. NIMSICK: I never used that.

MR. BENNETT: I'm using a little poetic licence in

[ Page 3500 ]

saying "ripped off." I can't remember the exact phrase you used, but in general that is what you said. It would be easy if I was driving a train that was on two tracks. I would always get there; someone else would make sure.

We noticed how inaccurate the Minister of Labour was yesterday running for a fly in the softball game — he even ran into one of his own players, Mr. Speaker. He caused us to lose the game — a very important game, a very important game.

But back to this study, and this very important subject.

Interjections.

MR. BENNETT: No. As a matter of fact I thought it was the Minister of Housing. He has been blind to the problems of B.C. for so long that I thought he needed help.

Mr. Speaker, what I'm saying is: in light of the developments of the last little while — Ontario's new proposals, Manitoba's new proposals and the federal government's proposals — would the Minister be willing rather than stubborn, in the interests of British Columbia, in the interests of the future economy and in the interest of not upsetting one of our major resource industries, in hoisting the bill for six months? Hold the bill back so we can have the type of consultant studies not only with the federal government but with those other provinces in Canada that, indeed, have made an extensive study in providing new taxation rates so that their people can benefit from the new world prices on minerals.

Even without the federal proposals we have certain mining ventures in B.C. When you talk about the average, it is easy but there are always specific proposals that would have a hardship worked on them with just the basic proposals of the Minister. In fact, they would have a difficult time even under realistic taxation levels.

Because it is the only mine in my own constituency, I refer to the Brenda mine, and to the report to the shareholders by the president of which I obtained a copy, May 1, 1974. In this report the president goes through the difficulties which this mine has experienced even under former taxation levels and former markets. This major expenditure of a mine, if it hadn't been financed by a large backing of Noranda, it would have had to close or go bankrupt in 1972. It explains the difficulties.

I might read excerpts if I could, Mr. Speaker because, indeed, here is a specific case where you could drive the particular mine to the wall. It's just one of many who have the same problem. Maybe it is what you intend — to create the closure or the bankruptcy or the financial disadvantage so that indeed you could take it over, if that is your intent. I believe, Mr. Speaker, that what we are trying to find out tonight is whether the Minister is being financially responsible or whether he is intending to take over the industry. Indeed, we haven't had those answers.

I'm hoping against hope that he is concerned with the future of the province and the continuation of this resource for the benefit of the people. I would like to tell him what would happen to Brenda Mines, and the difficulty they are having.

MR. C. LIDEN (Delta): Did you lose your place? Who wrote your speech?

MR. BENNETT: No. I don't want to bore you with a lot of inter-company….

HON. MR. NIMSICK: Inter-company!

MR. BENNETT: I want to get to the relevant parts. I want to get beyond to the fuller material. This is a report from the address to the shareholders from the president of Brenda Mines, excepting that the audited figures he would present in the annual meeting to a company that must meet the audit requirements — the reporting requirements that these figures and his report are accurate.

Interjection.

MR. BENNETT: No, I said I only use this because it is the only mine in my constituency. If I had another….

Interjection.

MR. BENNETT: You don't listen. I said that there is no benefit to the people if the industry fails.

There is the type of attitude that I fear, Mr. Speaker — the concern only for the taxing of a few of the large corporations rather than meeting the requirement of continuing the resource base for British Columbia.

I would like to go back. Brenda's net earning of $15.5 million in 1973 was the result of strong demand and higher middle prices. This compares with a net loss of $1.5 million in 1972 when prices were badly depressed.

Inflation, devaluation of North American currency and non-recurring inventory gain due to the rise in prices throughout the year gave 1973 earnings an artificial boost. The failure to recognize the impact of inflation on the cost of replacing plant and equipment will distort the economic meaning of the reported earnings.

The Minister earlier touched on the valuation of inventory, piling it up during poor times and selling in better times, the cost of maintaining that inventory and when to sell, and the reported market

[ Page 3501 ]

fluctuations from year to year. You must realize that as it costs you money to sell you must have a higher and higher market just to stay even, because of the interest costs and the storage costs and the inflation, the penetration against inflation, just to maintain the penetration of that economic market. This company goes on to state and to summarize after its long report:

"To summarize, the federal tax reform ended the three-year exemption in 1973. The automatic depletion ends in 1976 for 1977 and forward. Depletion must be earned — $1 for each $3 of the eligible expenditure. No deductions for provincial mining taxes after 1976 though compensated by abatement of 15 points of tax, but at present there is uncertainty as to whether the provinces will pick up any of the abatement.

"The new royalties based on revenue and prices as proposed by the British Columbia government in Bill 31, Mineral Royalties Act, have very obvious defects, since they do not recognize the ability-to-pay concept inherent in tax in the province. They reduce the known economic oil reserves by increasing the cut-off grades, thus shortening the mine's life. They reduce return on investment, therefore deterring the future development of resources in the province. They reduce the ability to pay off debts to meet increased operating costs, particularly when metal prices are at cyclical lows.

"The corollary, of course, hits the shareholder hard. Dividends are either impossible or restricted, and the date at which dividends could commence is deferred. It discriminates between producing mines, as royalties give no consideration to the cost factor of underground mines versus open pit, and remote versus accessible location. It provides excessive discretionary powers to the Minister which work again the decision-making process due to uncertainties as to present and future taxes.

"Some $62.5 million was provided to build Brenda initially, and included financing and money to operate for the period 1968 to 1970. The total reached $77 million. The funds were used mainly for: fixed assets, $45.5 million; pre-production expenses, $17.5 million; financing expenses and working capital, $12 million; cash generated from operations 1971 to 1973, $42.6 million, which was used for reduction of long-term debts, $28.5 million; additions to fixed assets, $3.2 million; and addition to working capital, $10.9 million.

"After six years the original investors are still waiting for a return on their investments, despite the fact that Brenda had the benefit of the federal three-year tax exemption — nothing to do with this province and something that will not be continuing in this country. What is the position today for developing an ore body with grades similar to Brenda's? Graph I shows that with capital investment escalated 20 per cent, and imposition of the proposed royalties, there is insufficient cash flow to return the initial investment over the expected life of the mine. Obviously this results in a no-go decision.

"Graph 2 depicts the unrealistic low-grade mine and shows that a royalty based on revenue alone fails to place any weight on production costs and ore grade which directly affects the cash flow and hence the life of the mine."

This goes on to show that mines of this nature cannot continue under this royalty imposition and will not be brought in in the future.

What we're concerned about here in British Columbia, Mr. Speaker, and through this Minister, is the maintenance of this important revenue base for employment and for revenue for benefits. As we stated, your proposal directly against any information that I can get either from Ontario or other jurisdiction studies or consulting engineers on a royalty base, is not acceptable to any government in meeting its commitment to continue the industry, not for the sake of the companies, but for the sake of the people.

Your responsibility, Mr. Minister, is to maintain the industry so that we can get revenue for the people. I would expect you to tax it to the limit that you can, which would continue the industry, but these studies and all correspondence that I have show that your proposals are unworkable and in fact will destroy the industry in British Columbia.

There will be no benefit for this government, for the people, or for Canada, which also British Columbia is a part of. Because of your proposals, coupled with the federal proposals, I move this motion tonight and I strongly urge its a that this bill be hoisted for six months.

MR. G.F. GIBSON (North Vancouver-Capilano): When this bill was first introduced in this House a couple of months ago the day became known across the country, as the Minister knows, as Black Tuesday. Now we are back to another Black Tuesday.

I could hardly believe my ears, Mr. Speaker, when the Premier and House Leader stood up and moved second reading of Bill 31, because I've been hoping against hope that in the intervening time….

HON. MR. NIMSICK: I moved the second reading.

MR. GIBSON: Well, when he called the debate, Mr. Speaker, because I've been hoping against hope

[ Page 3502 ]

with the many representations that have come to this House and the many wise letters of advice and meetings with people employed in the mining industry, and the B.C. and Yukon Chamber of Mines, and all kinds of groups associated with the mining industry, all of the free advice the government's been getting over the last few months….

HON. MR. NIMSICK: It was your Dad who gave me the idea. (Laughter.)

MR. GIBSON: Mr. Speaker, the Minister said my Dad gave him this idea. I've had a chance to talk to my Dad about this bill. He doesn't think much of it. The Minister's gotten confused again, as usual.

Interjection.

MR. GIBSON: I appreciated it, Mr. Premier, and I hope I learned something. But you know, when this bill is called up before this House you have to be kind of sad and you have to be, if you're in the opposition, kind of frustrated, and you have to be kind of outraged too. You have to be sad because of what is going to happen to the mining industry in British Columbia and the gradual decline that's going to set in. And you have to be frustrated because it's based on a socialistic dogma that's not going to change. That's the frustration of the thing, no matter what kind of advice you get. They're going to push this thing through. And you have to be outraged because, Mr. Premier, you had a 40 per cent vote last time. You didn't have a mandate to wreak this kind of injury on the basic industry of British Columbia.

Interjections.

MR. GIBSON: My vote was a little bit lower than yours, Mr. Premier, and it's going to be a little bit higher next time. In the meantime I'm not proposing to destroy a lot of jobs in this province.

Mr. Premier, if you want to talk about elections, call an election on Bill 31. I challenge you to do that.

HON. MR. BARRETT: You'd never do it. Bye-bye, friend; bye-bye, Bill.

MR. GIBSON: It would be bye-bye to a lot of people over on that side of the House from a lot of people from around this province.

I'm going to be pointing out, Mr. Speaker, later on in this debate just where the jobs are around this province in the mining industry — the jobs that the Minister didn't seem to think very much of.

The Minister talked about a vanishing breed. Mr. Speaker, that's a caretaker government right now. If they could see the letters coming in from around this province they wouldn't get 33 per cent of the vote right now. They wouldn't get their historic 33 per cent.

Interjections.

MR. GIBSON: They've done that much already. I spoke up in that Minister's riding, Mr. Speaker, and that wasn't Howe Street, and that wasn't Bay Street, and there was a crowd that turned out there that didn't think very much of Bill 31, I can tell you that. And then we got petitions down from Ashcroft, with hundreds of signatures against the bill that that Minister stands for.

Mr. Speaker, this bill is already, in effect, implemented through the Mineral Land Tax Act. They've done exactly the thing that they're asking us to debate on in this House right now, as I mentioned in the Minister's estimates. Half of the mining land in this province is already covered, and that's a disgrace and it's contempt of this House to promulgate that order-in-council before this debate took place.

Interjection.

MR. GIBSON: It's contempt of this House, Mr. Minister.

Interjections.

HON. MR. BARRETT: Was it 67 votes or 57?

MR. GIBSON: Fifty-seven, Mr. Premier. But if you had come into the riding another day it would have been more.

We heard a speech from the Minister tonight. I could agree with some things, Mr. Speaker. He wanted a greater return to the citizens of British Columbia. I agree with that 100 per cent, Mr. Speaker. I can only imagine that is because I read a marvellous history of the Minister in the newspaper the other night. It was a heart- warming history. The Minister started out as a Liberal. I think maybe he has maintained some of those sound principles over the years and he wants to do the right thing and get a greater return for the people of British Columbia. I'm all for that.

But I have to disagree with some of the other things that the Minister says. He is a one-man royal commission. That's what he told us. He said no advice is necessary on this bill. But a lot of advice is necessary on this bill. Then he gave us some readings from "Mineral Policy Objectives for Canada" — that's another bit of his Liberalism surfacing again.

Interjection.

MR. GIBSON: Oh, I'm sorry, Mr. Minister, but the

[ Page 3503 ]

language is the same; maybe it was a leak. Then he gave us readings from the Hon. Member for West Vancouver–Howe Sound (Mr. L.A. Williams), some very wise words — words for the protection of the position of British Columbia in resource taxation. It is tremendously important and I'm glad that the Minister quoted that in his speech.

But then he said a lot of things. He said how did that industry reach $1 billion? He said it reached $1 billion because all of the other countries of the world had had their resources depleted and raped by the miners and now they had to come to British Columbia to get what little bit of resource there was left in the world, and that's why the industry has gone to $1 billion.

The Minister doesn't know what he is talking about, Mr. Speaker. He just does not know what he is talking about. The industry went to $1 billion last year in British Columbia because of raised prices and because over the last generation in this province, there has been created the most skilful and dedicated group of mine finders and mine employees anywhere in the world.

That's why we are able to work the lowest grade deposits in the world in British Columbia. Let me give the Minister a few figures about all of those depleted resources he sees in other parts of the world. Let's just talk about copper, which is half of our product.

We will start out with British Columbia which has proven reserves of 3.2 billion tons averaging .44 per cent copper — the lowest in the world, Mr. Minister, as you know. But our skilful miners are able to take out and make a profit to pay taxes on too, and pay more taxes if you levy them the right way.

Now let's look at some of the other parts of the world. Southwestern USA: 6.7 billion tons averaging 0.61 per cent — not. 0.44. Mexico: 3.4 billion tons averaging 0.64. Panama: 0.9 billion tons averaging 0.7. I am working down the continent. Columbia: I billion tons averaging 0.8. Peru: 3 billion tons averaging 0.85. Chile: 10 billion tons averaging 0.9. Moving to the other side of the Pacific, the Philippines: 1.7 billion tons averaging 0.55. Western Siberia: details unknown. Indonesia: several massive deposits being explored, all exceeding 0.65 per cent copper. Papua and New Guinea: 1.2 billion tons averaging 0.73.

It doesn't sound to me like that means people are coming to British Columbia because we are the last refuge in the world.

MR. SPEAKER: Hon. Member, I haven't interrupted, but perhaps I should to indicate that the debate must be centred around the advisability of a six-month hoist. I'll explain it further. If we're still here six months from now it won't matter — we can still debate it. (Laughter.)

MR. GIBSON: Thank you, Mr. Speaker. As my colleague, the second Member for Vancouver–Point Grey (Mr. Gardom) says, I am indeed trying to describe why the bill is so bad that it should be suspended six months. And indeed I'm going to have a little bit more to say about that six-month motion towards the end of my remarks as well.

Interjections.

MR. SPEAKER: I must point out that the idea of this debate is not to deal with the principles of the principle motion, or the idea of the principle motion, but to deal with the question which is a six-month hoist — whether it should be done or not.

MR. GIBSON: I am talking about the advisability of the bill, Mr. Speaker, and the importance of delaying it as the amendment suggests.

MR. SPEAKER: The latter part of it would be the area of emphasis I would hope.

Interjections.

MR. GIBSON: Well, I don't know when we're going to get to the main motion. I think we ought to suspend it for six months, Mr. Minister, through you Mr. Speaker.

But I want to tell you why. Because I don't think you're convinced yet, Mr. Minister. Are you for it? There, you see, he's not convinced, Mr. Speaker. He's not convinced so he needs some more convincing.

One of the things that the Minister didn't do in order to convince us that this bill ought to be read today, this week, this month, he didn't give us very good revenue figures. Not very good revenue figures at all. He didn't even know the difference in his own bill between gross value and net value. And he implied to us that some time he might explain that to us. But, his bill tells us what gross and net value is, and yet he says that what the bill says is not what he means.

HON. MR. NIMSICK: I said I'd clear it up.

MR. GIBSON: Oh. No, indeed the bill is very clear in its reading. It says what gross value means, and then it says what net value means, net value being, briefly put, "gross value with certain deductions taken away from it." But what did you say that he said?

HON. MR. LEA: "That I said, that he said."

MR. SPEAKER: I'd say get on with it. (Laughter.)

MR. GIBSON: So the Minister, in the figures he

[ Page 3504 ]

was giving this House, Mr. Speaker, was using a net value to calculate the incremental royalties when the bill says that the gross value shall be used. And furthermore, the Minister, in comparing the figures he was giving the House with the industry figures, was referring only to that 420 million pounds which are non-Crown-granted claims and not referring to the other 300 or so million pounds of production which are on Crown-granted claims but are producing revenue for the Crown on exactly the principles of Bill 31, on exactly the royalty and super-royalty principles through order-in-council 1086 as has been earlier described.

So, the Minister's figures to the House have been, I would say, misleading.

AN HON. MEMBER: Hear, hear!

MR. GIBSON: He gave some other very fallacious arguments which must be canvassed.

MR. SPEAKER: May I point out to the Hon. Member that canvassing the main principle of the Minister's speech has nothing to do with the amendment. If you are debating the main motion, which is on second reading, then of course all this would be relevant.

But basically, you must identify your remarks with the advisability of, at this stage, changing the time at which the bill will be considered. You're not really doing that, and it's not enough to argue the main motion.

MR. GIBSON: Mr. Speaker, you'll have to pardon me if I seem a little confused in this regard. I was following the lead of the Leader of the Opposition (Mr. Bennett) who was talking about absolutely anything under the sun once he had moved the amendment…. Once he had moved the amendment, I would presume, Mr. Premier, through you, Mr. Speaker, you should talk to the amendment.

HON. MR. BARRETT: Point of order. Therefore, in moving that amendment he is free to speak to the main motion put by the Minister because that, in effect, is his one chance to speak. But when anyone speaks subsequent to that amendment they do not lose their place in the main debate. However, the mover does. That explains the leeway for the Official Leader of the Opposition.

Now, if you want a further explanation there is no one more alerted on this kind of protocol than your own current leader. I would suggest you consult him on the hourly basis while he is in that position. (Laughter.)

MR. GIBSON: Mr. Speaker, I think the Leader of the Opposition is very fortunate, indeed, to have such distinguished counsel as the Premier to plead his case for him there. I would have thought that the precedent was set once the amendment had been moved and from that point the kind of debate that ensued was exactly the kind which related to the amendment.

Without really wishing to argue that further, it does seem to me that a motion to put off the reading of the bill by six months amounts to a motion to say that this bill has such grave defects that it requires further consideration. Mr. Minister, I'd be glad to vote on the motion right now if everybody would guarantee they would vote on the motion right now. But I believe there is a great deal of talking yet to be done before we get off this motion.

Interjections.

MR. GIBSON: On the amendment, pardon me.

Mr. Speaker, there is a real problem of procedure here, I think. (Laughter.)

HON. G.R. LEA (Minister of Highways): That's a Harvard man for you.

MR. GIBSON: We have here a piece of legislation that is so complex in its ramifications on the second major industry of our province that it really should have been, and I hope still might be, referred if not to the royal commission the Minister spoke of earlier, then at least to a standing committee of this House for the receipt of expert testimony. Since that is clearly not the intention of the government, Mr. Speaker ….

Interjection.

MR. GIBSON: The Minister suggests you gave them a chance for years for a royal commission. Mr. Minister, you didn't give this party a chance for years. We'll get our chance in a little while.

Given the fact that the government apparently has no intention of providing for that kind of expert input, it seems to me that it's incumbent upon MLAs to make more extensive remarks in the provision of that kind of what I would call expert testimony that should otherwise come forward in committee. That kind of extensive remark must perforce apply as well to the question of whether the bill should be hoisted for six months. In other words, if it's a bill with very questionable policy proposals in it, then that bill has to be studied. I'm making the case that the policy proposals are very questionable.

AN HON. MEMBER: Yours is suddenly becoming the old party.

MR. GIBSON: I hope, Mr. Speaker, that will strike

[ Page 3505 ]

you as an acceptable line of argument.

MR. SPEAKER: May I point out to the Hon. Member that this in effect is a dilatory motion, the purpose of which is to delay a decision. We're debating the question of whether to delay that decision. If one is opposed to a bill, you can debate it in the main motion. It is as simple as that. So the real question here is what is advisable, so far as the House is concerned, on a dilatory motion such as this.

MR. D.A. ANDERSON: Point of order, Mr. Speaker. For this motion to delay for six months to be properly debated, we're going to have to know what the defects of the bill would be if implemented now and thus in running for the next six months.

For the amending motion for the six-month hoist to be properly understood we're going to have to look at the effects of putting this legislation in now as opposed to putting this legislation in six months hence. Now the only way to do that is to point out the defects of the legislation, and how wrong it would be, how improper it would be and how unwise it would be for us in the Legislature to now accept a bill which would lead to, we think, hardship upon the people of British Columbia and damage the mining industry within the next six months.

MR. SPEAKER: May I point out….

MR. D.A. ANDERSON: The only way to do that is to examine it and examine its merits and defects.

MR. SPEAKER: May I advise the House the problem here is that the Hon. Member has not been directing his argument at all to the question of delay but really to an attack upon the bill itself without any qualifications. Therefore, what I'm suggesting to the Hon. Member is that he direct his mind either to the first proposition or the second proposition. But he has not directed himself to the second proposition at all — that there should be reasons for delay.

MR. D.A. ANDERSON: Mr. Speaker, that's simply an absurd suggestion. The Member has been addressing himself to the defects in the bill, as presented by the Hon. Minister of Mines, and how these defects work hardship upon the people of British Columbia and damage the economy of British Columbia in the next six months if that bill were to be implemented at the present time. You know that.

MR. SPEAKER: I'd just point out one other thing: we all know that the reason for a delay motion, or a six-month hoist, is to kill the bill. In other words, there are two ways of dealing with the question. But the amendment has been made and under the rules you direct your attention to, and your words to, the advisability. That's the way it works. This has not happened so far, that I have noticed, in the debate.

Interjection.

MR, SPEAKER: Well I'm not asking the Hon. Member to desist. I would like him to get on with the advisability or otherwise of his argument. I'm asking him to direct his attention to that aspect.

MR. GARDOM: Point of order. He was doing just that, notwithstanding a multitude of objections from the government side which seems to have certainly received a welcome ear tonight. In order for him to substantiate his reasons and arguments, Mr. Speaker, for the six-month hoist he obviously has to talk about the tenor of the bill. Because if it was a good bill, how could he possibly support the six months amendment?

MR. SPEAKER: Well, the Hon. Member who spoke is an expert in this in that he always strayed back to the subject whenever he got away from it, but the Hon. Member who was speaking did not. Would the Hon. Member resume his speech and please direct it to the advisability?

MR. GIBSON: Thank you, Mr. Speaker, I was attempting, and shall continue to attempt, to lay a solid foundation.

Now, one of the main reasons the bill should be delayed, and this seems to me very obvious, is the way in which the mining industry at the moment is being ground between two millstones. It's being ground between the millstone of Bill 31 on the one hand, which has technical defects, which I'll talk about later, which would have the effect of a high rate of numerative tax on the mining industry, and between the millstones of the proposed federal government budget.

This is one of the reasons I hoped against hope that he wouldn't call the debate on this bill. And this is why I asked the Premier in the House the other day if he had received a telegram from the president of the British Columbia and Yukon Chamber of Mines, Mr. E.A. Schultz, saying as follows — and this telegram, incidentally, Mr. Speaker, was sent not only to our Premier but to the Prime Minister of Canada:

THE BRITISH COLUMBIA AND YUKON CHAMBER OF MINES STRONGLY RECOMMENDS THAT THE FEDERAL GOVERNMENT AND THE GOVERNMENT OF BRITISH COLUMBIA, IN COOPERATION WITH REPRESENTATIVES OF THE MINING INDUSTRY, PROMPTLY INITIATE ACTION TO CREATE A COMMISSION TO STUDY VARIOUS TAX PROPOSALS NOW FACING THIS INDUSTRY WITH THE OBJECTIVE OF

[ Page 3506 ]

FORMULATING A TAX POLICY THAT PROVIDES A FAIR DISTRIBUTION OF MINING TAX REVENUES BETWEEN THE TWO GOVERNMENTS AND ALLOWS THE MINING INDUSTRY TO MEET INTERNATIONAL COMPETITION. WE BELIEVE SUCH ACTION WOULD BE MOST TIMELY AND BE IN THE BEST LONG-TERM INTERESTS OF THE PEOPLE OF BRITISH COLUMBIA AND CANADA.

THE NEED FOR IMMEDIATE ACTION IS CLEARLY EVIDENT IN THIS PROVINCE WHERE UNFAVOURABLE TAX LEGISLATION HAS CAUSED A SERIOUS DROP IN EXPLORATION ACTIVITY AND NEW MINING DEVELOPMENTS.

That's the end of the telegram. Believe me, it has caused that serious drop, Mr. Speaker. There can be just no question about that factual statement.

Have you seen the latest record of drilling in the Province of British Columbia? Does that Minister understand that most of the 4,000 or 5,000 people involved in exploration in this province are gone? Does he understand that in 1972 there were $38 million spent in off-property exploration in this province, in 1973 people got a bit scared and it dropped back to $28 million and in 1974 it looks like it's going to be only $14 million?

And I see the Minister's looking at me with a quizzical expression.

Interjection.

MR. GIBSON: The Minister says it would have been worse if it wasn't for him.

HON. MR. NIMSICK: It sure would have.

MR. GIBSON: The Minister says it would have been worse if it wasn't for him. You know, I've got a clipping with a picture of the Minister the other day and it was a big smile, a nice smile, and the subtitle was: "Mining Man of the Month." That had been struck out and written across was: "Mining Man of the Century." Mr. Minister, you're the mining man of the century, there's no question about it. But I don't know why you are applauding. I don't know how anyone else could have achieved the combination of the lowest exploration in this province for many, many years in the time of the highest mineral prices. How could you do that? How could he do that?

Interjection.

MR. GIBSON: That's what made you the mining man of the century, Mr. Minister. There's no question about that.

So to get back to this squeeze, this tax warfare between governments that hasn't been sorted out…and I guess, Mr. Speaker, it can't be sorted out for two or three months, at least until this federal election's over. I don't know how it can be sorted out. What's to be done? The Premier has obviously taken the route that the best thing for him to do is to try and pre-empt the field, to jump in and say: "We're gonna take it over and they won't dare take it back."

Mr. Speaker, God bless him, and I wish him luck because I think that the major return from these resource revenues should be for British Columbians. But I'm going to suggest that what he really should do, and what the federal government really should have done, is to get together and talk before warfare destroys an industry.

Interjections.

HON. MR. BARRETT: Now, the Liberals have shown a record of non-consultation.

MR. GIBSON: I asked the Premier the other day….

Interjections.

HON. MR. BARRETT: They took Peter Lougheed down the garden path.

MR. SPEAKER: Order, please! Would you kindly get on to the advisability of delaying the legislation?

Interjections.

MR. SPEAKER: We must get on with it.

MR. GIBSON: I asked the Premier the other day if he would take this good advice from the president of the B.C. and Yukon Chamber of Mines, and enter into this consultation. All he'd have to do is pick up the telephone, Mr. Speaker.

HON. MR. BARRETT: Who's going to be the new Prime Minister?

MR. GIBSON: You could talk to the existing Prime Minister (Hon. Mr. Trudeau), Mr. Premier, or you could take a six-month hoist. That would do it, because in the meantime….

HON. MR. HARTLEY: Are you going to vote Liberal federally? (Laughter.)

MR. GIBSON: The Minister doesn't understand, Mr. Speaker, that Bill 31, independent of what is happening in Ottawa, is a bad bill.

AN HON. MEMBER: Oh, oh!

[ Page 3507 ]

MR. GIBSON: It came in a long time before the federal budget. The Minister tried to imply in his remarks earlier on that the federal budget had been the cause of Bill 31. That wasn't the cause of Bill 31. That was introduced months ago. Bill 31 is a bad bill. It's a bad bill simply on its own rights, and that's why it should be hoisted, among other reasons.

Interjection.

MR. GIBSON: One of the Ministers is jealous of my suspenders. I'll send him a pair at a reasonable price — the Minister of Industrial Development, Trade and Commerce (Hon. Mr. Lauk).

HON. MR. BARRETT: The Liberals will need all the help they can get.

MR. GIBSON: Another reason for the suspension of this bill is the wide degree of public misunderstanding of what it's all about, because the government hasn't been very good at getting this on the record. They've allowed a lot of preconceptions to creep into this.

Instead of royalties they should say: "The right to a greater public return in time of high prices." Instead of royalties: "The right to maximize public benefits." I think we could find common Liberal grounds, Mr. Minister, if you said that instead of royalties. We could find some kind of excess profits tax. I'm not going to make any mystery out of the solution I see that fits the answer — in times of high prices,

And instead of misleading the public, I believe, by saying we will leave it in the ground, you should say: "What is the best use of resources?"

Interjection.

MR, GIBSON: Then why do you spend so much time talking about leaving it in the ground? The same as stumpage, one of the Hon. Members says, Mr. Speaker. And the Minister earlier on compared it to stumpage. Of course it isn't, because stumpage relates to costs and it relates to revenues, and in other words stumpage is related to profits.

Interjections.

MR. GIBSON: Did the Premier say: "Leave it in the ground"? I'm surprised and disappointed in him then.

And then, Mr. Speaker…. I gather there's a disposition to accept a motion for adjournment, so I adjourn this debate until the next sitting.

Motion approved.

Hon. Mr. Barrett moves adjournment of the House.

Motion approved.

The House adjourned at 10:53 p.m.