[ Page 4819 ]

CONTENTS

Afternoon sitting Routine proceedings Oral questions Resignation of BCR comptroller. Mr. Bennett — 4819

Mining programme advertisement. Mr. Gibson — 4819

Return to B.C. of private insurance companies.

Mr. Wallace — 4820

Ferry staff negotiations. Mr. Lockstead — 4820

Deliveries and warranties on Flyer buses. Mrs. Jordan — 4820

Sale of parity bonds. Hon. Mr. Stupich replies — 4821

Approval of — Wheeler,, and Dealers" publication.

Mr. L.A. Williams — 4822

Timber Products Stabilization Act (Bill 171). Second reading.

Hon. R.A. Williams — 4822

Mr. Bennett — 4828

Mr. Gibson — 4831

Mr. Rolston — 4838

Mr. Fraser — 4839

Mr. Dent — 4844

Mr. L.A. Williams — 4844

Mr. Wallace — 4846

The House met at 2 p.m.

Prayers.

Mr. G.S. Wallace (Oak Bay): I'd like the House to welcome a class of Grade 10 students from Glenlyon School in Oak Bay, accompanied by yet another Mr. Bennett — no relation to the Leader of the Official Opposition — Mr. David Bennett, their teacher.

Introduction of bills.

Oral questions.

RESIGNATION OF BCR COMPTROLLER

Mr. W.R. Bennett (Leader of the Opposition): In the absence of the Minister Without Portfolio (Hon. Mr. Nunweiler) I direct my question to the Minister of Labour as a director of B.C. Rail.

Yesterday I asked the question which the new Minister took as notice regarding the resignation of the auditors from B.C. Rail. My question today is, if that Minister is prepared to comment: are you aware that on Saturday, September 7, Mr. Robert Miller, Comptroller of the railway, also resigned for personal reasons? If so, why, and why an unusual resignation of a comptroller on a Saturday?

Hon. W.S. King (Minister Of Labour): Mr. Speaker, as the leader of the Liberal Party (Mr. D.A. Anderson) would say: "I find the question curious." The Leader of the Opposition asked the question: "Why the resignation?" Then he proceeded to answer his own question by saying that "the cause was personal reasons."

Now yesterday, Mr. Speaker, he came to conclusions which apparently were subsequently proved to be incorrect, and I can only refer him to his own answer.

Mr. Speaker: May I point out to you, Hon. Members, that question period is not a time for expressions of opinion or inferences or imputations or arguments or opinions?

Mr. Bennett: Then rather than give an opinion that they were personal reasons, I will ask the Minister if he, as a director for the B.C. Rail, will comment on the resignation of the comptroller to this House.

Hon. Mr. King: Mr. Speaker, the Member asked if I was aware of the resignation. The answer is yes. I have no other comments to make. As he himself explained, the reasons were given as personal, which does not require any further comment by me.

Interjections.

MINING PROGRAMME FULL-PAGE AD

Mr. G.F. Gibson (North Vancouver-Capilano): Mr. Speaker, a question to the Minister of Mines. Now that the Minister has embarked on another series of full-page propaganda paid for by the public of British Columbia, and in view of the fact that the prospectors assistance programme advertising was estimated to cost something like $150,000 to $200,000, could the Minister tell us under what estimate or vote he's finding this money?

Hon. L.T. Nimsick (Minister Of Mines): I don't know what he's really asking. I just can't figure it out.

Mr. Gibson: I'm asking the Minister, Mr. Speaker, where his legislative authority is for this propaganda campaign.

Hon. MR. Nimsick: Well, there's advertising allowed in the Mines department, I hope…(Laughter.)

An Hon. Member: He'll need it.

Hon. MR. Nimsick: …to answer the propaganda that was put out in regard to this. This is just an explanation of some of the legislation….

An Hon. Member: To let the public know.

Hon. MR. Nimsick: …to keep the public informed; that's all it is.

Mr. Gibson: On a supplementary then, Mr. Speaker, will the Minister provide funds to the opposition to rebut some of the spurious arguments he's used?

Mr. Speaker: I've just finished pointing out to you the rules in question period. It obviously only reached a certain distance down the row.

Mr. J.R. Chabot (Columbia River): Supplementary to the full-page ad. On October 10 – 11 of this year, Hart Horn, the former executive assistant to the Minister of Mines, delivered a speech to a Minister of Mines conference. The message contained in this ad is Hart Horn's speech in Moncton. I'm wondering if this is new government policy — to advertise, to publish through full-page ads, the speeches of party hacks.

[ Page 4820 ]

Some Hon. Members: Oh, oh!

Hon. Mr. Nimsick: Mr. Speaker, in reply to that, the information that's in the ad, a lot of that was in…. I'll admit that maybe it was in a speech. I've spoken many times too, and I use the same material. We're proud of the material and we're willing to let everybody know what's in it.

Mr. Chabot: A supplementary question. Will this same ad appear in the weeklies in the province? If so, would you correct the name down below? Could you put Hart Horn down below instead of your name, Mr. Minister?

Interjections.

Mr. Chabot: What will be the cost? What is the budget for this advertising of Hart Horn's speeches?

Mr. Speaker: Are you referring to the future costs in the weeklies, or in the past?

Mr. Chabot: No, we know what this one cost — approximately $10,000 for the four coast dailies. We are wondering what you are budgeting. The Minister must have some amount budgeted, Mr. Speaker, on the question of advertising. He must have some money budgeted.

Interjections.

Mr. Speaker: Yes, I think it's true that we have already got that in the estimates; therefore it's public knowledge the Hon. Member is asking for, I think.

Are you saying that it's different?

Mr. Chabot: I'm saying that this is specific. They must have come to some conclusion as to what the cost of this ad would be across the province. Could the Minister of Mines elaborate on that, what the anticipated cost will be on this publishing of Hart Horn's speeches?

Hon. MR. Nimsick: If you place that question on the order paper next spring, I'll answer it.

RETURN TO BRITISH COLUMBIA

OF PRIVATE INSURANCE COMPANIES

Mr. Wallace: Mr. Speaker, a question for the Minister of Transport and Communications. Is ICBC or the department, or anyone on behalf of the department, currently involved in discussions with any private insurance company to sound out the insurance companies to see if they are willing to come back into the automobile business in British Columbia?

Hon. R.M. Strachan (Minister Of Transport And Communications): To the best of my knowledge, and a pretty fair knowledge, no one I know of is approaching the private insurance industry in New York or Hartford or Toronto or London or Australia, or anywhere else, asking them if they want to come back into the automobile business in the Province of British Columbia.

Now there may be people in the opposition who are sounding them out about coming back in as part of their future-election and their past-election promises.

Mr. Wallace: A supplementary, Mr. Speaker. Could I just ask for clarification? Has any private insurer or representative requested discussions with the provincial government on the basis that they might come back into the automobile insurance business in B.C.?

Hon. Mr. Strachan: No, I have received no communication of any kind from any private insurers to that effect.

FERRY STAFF NEGOTIATIONS

Mr. D.F. Lockstead (Mackenzie): I address my question to the Hon. Provincial Secretary. Since my constituency is almost completely dependent on the B.C. Ferries for communications, could the Minister advise this House on the negotiations which are presently taking place with the licensed personnel?

Interjection.

Mr. Speaker: Would the Hon. Member for Columbia River (Mr. Chabot) wish to answer? (Laughter)

Hon. E. Hall (Provincial Secretary): Mr. Speaker, I'd be in a position to answer more questions about labour matters than that Minister ever could do when he was Minister of Labour, I'll tell you that. (Laughter.) And he knows that.

Meetings and talks about the negotiations commenced yesterday. They are still going on. Talks and discussions flowing from yesterday's meetings are still going on today and I don't think it would be appropriate if I comment any further on that. We should all wish the parties well in their negotiations today.

DELIVERIES AND WARRANTIES

ON FLYER BUSES

Mrs. P.J. Jordan (North Okanagan): Mr. Speaker, I'd like to address my question to the Hon. Minister of Municipal Affairs. In view of the fact that

[ Page 4821 ]

British Columbia Hydro and other B.C. government interested agencies purchased a rather large number of buses without tender from Flyer Coach Industries Limited, and that Flyer Industries, that socialist experiment in the private business world is now virtually defunct, would the Minister now tell the House how many buses of the original orders have been delivered and how many buses are still on order and have not been delivered?

Hon. J.G. Lorimer (Minister Of Municipal Affairs): Well, first of all, your question has a faulty basis. Tenders were put out for all buses. At the present time, none that were supposed to have come by the fall of this year have been delivered. There are 50 coaches ordered, and 50 electric buses and 50 transit buses.

Mrs. Jordan: Am I to understand from the Minister's reply that none of these Flyer Industries buses have been delivered?

Mr. Speaker: I think the question has already been answered.

Mrs. Jordan: I'm just clarifying his answer. I don't understand….

Mr. Speaker: Well, I think it's certainly clear to everyone else that he said that none have been delivered.

Mrs. Jordan: Not one Flyer Industry bus is in operation or is in British Columbia or has been…?

Hon. Mr. Lorimer: I think you are referring to the last order placed, I presume. All of the other ones have been delivered.

Mrs. Jordan: No. I said the original order.

Hon. Mr. Lorimer: All have been delivered.

Mrs. Jordan: Then what is the Minister doing about the warranties and the servicing of these buses in view of the fact that the company has not been operating for the last three months and is not likely to open again? I assume that the buses carried warranties. What are you doing? Is the Minister prepared to ask or has the Minister asked the Manitoba government and the Flyer Industries to post each bond …

Mr. Speaker: How many questions do you wish answered?

Mrs. Jordan: …in lieu of these warranty services?

Hon. Mr. Lorimer: I don't know which question you want answered. If it's in regard to the closing of the factory, it's because of a labour dispute, as you probably know. My understanding is that the labour dispute will be settled very shortly.

Mrs. Jordan: …obviously you don't want to talk about the subject. What are you doing about the warranties that came with these buses? What assurance have you that they will be honoured?

Hon. Mr. Lorimer: The same assurance that I have from any other company that gives a warranty: that they will carry on with the warranty, I presume.

SALE OF PARITY BONDS

Mr. Speaker: The Hon. Minister of Agriculture. Do you wish to reply to a previous question? I think we've carried this pretty far. Could we go on to other business now?

Hon. D.D. Stupich (Minister Of Agriculture): Mr. Speaker, notice was taken of a question asked by the Hon. Member for Columbia River (Mr. Chabot) about the sale of parity bonds and about the sale of $100 million worth of bonds to the U.S.A.

With respect to the parity bonds, these went on the market at a time when the interest rate was calculated to be about 9.5. It was a government decision to offer them at 8.5 to see how the market would respond.

In answer to the second part of your question about the extent to which pension funds have picked these up, the total issue of $25 million was picked up by small investors in the community. You'll recall also that this is a demand loan, in effect. This has to be paid out at any time, which is one reason that it bears the lower rate of interest.

With respect to the $100 million, it went on the market at a later date — that was negotiated in American funds and the payback is in American funds at an interest rate of 10.25 — at a time when the market was calculated to be between 10.5 and 10.75.

It went on the market as a test to see whether or not our financial standing is as high as it ever was. By getting it at 10.5 we were very pleased to be able to negotiate that rate on a 25-year loan — quite a different situation from the demand loan.

Mr. Chabot: Since the new issue of Canada savings bonds at 9.75, how many of these parity bonds have been turned in to the government?

I don't want to get into a debate on the thing, but I know for a fact that Nova Scotia Hydro and Ontario Hydro have floated substantial long-term bond issues at interest rates substantially lower than what the

[ Page 4822 ]

B.C. government was able to get in Boston.

Hon. Mr. Stupich: I'm sure the Hon. Member will realize that rates change from day to day, and it's as conditions change. At the time when we negotiated that, it was generally recognized as an exceptionally good rate. With respect to the parity bonds and the way in which these are cashed and sold from time to time, I'm sure the Member would not expect me to have that information at my fingertips. I'll get it if you like.

APPROVAL OF

"WHEELERS AND DEALERS"

Mr. L.A. Williams (West Vancouver–Howe Sound): To the Minister of Transport and Communications. I wonder if the Minister vetted the comic book, "Wheelers and Dealers, " which is being distributed to the young people of this province, before its publication?

Hon. Mr. Strachan: No, I didn't.

Mr. L.A. Williams: Has the Minister received a copy of the publication and has he read it?

Hon. Mr. Strachan: I have received a copy of it. I haven't read every single word of it, no.

Mr. L.A. Williams: Well, Mr. Speaker, has the Minister read a portion which is obviously a slander on repair shops, referring to them as "sleazy pit stops?" Do you approve of that publication going into the hands of children?

Some Hon. Members: Oh, oh!

Mr. Speaker: I don't know whether that's rhetorical or not.

Orders of the day.

Hon. E. Hall (Provincial Secretary): Public bills and orders. Second reading of Bill 17 1.

TIMBER PRODUCTS STABILIZATION ACT

Hon. R.A. Williams (Minister Of Lands, Forests And Water Resources): Mr. Speaker, the bill that is receiving second reading this afternoon is certainly one of the most important before this session, this long session of the Legislature. The Timber Products Stabilization Act proposes methods for dealing with a crisis in the basic industry of this province, one I suspect that would not in fact be grappled with by the Members on the opposition side of the House in any kind of adequate way, recognizing the economic realities and the complexities of both the sawmill and the pulp mill economies of this province.

We face a major decline in the lumber market in this province and in the world since March of this year. The reasons for the decline can probably mainly be tied to the development of housing in the United States. A halving in the construction programme of the Americans has wreaked havoc for our basic industry in British Columbia. So the problems of British Columbia have roots in the politics of the United States. It's clear that until the Americans start building houses again, many of our problems in this industry will not be resolved.

This bill is a move toward resolving some of the basic problems that we face in the foreseeable future in an area that we ourselves in the province can deal with.

It's ironic and fortunate, Mr. Speaker, that there has not been a concomitant decline in the pulp and paper market along with the lumber market. We have, in fact, a volatile lumber market that seems to be tied to American political cycles as much as any business cycle in the United States and a pulp economy that relates to a much different business cycle indeed. We're fortunate. The pulp sector of the economy of British Columbia has never been as healthy as it is today and has been in the past year or year and a half.

For the integrated companies, Mr. Speaker, the problems have not been so severe. You need only to look at the profit pictures even in the latest quarterly reports, for MacMillan Bloedel, for any of the major companies, indeed for Can-Cel, to see that the integrated companies are doing well and continue to do well.

They do have these problems in the lumber market but they have the advantages of their unique position in the local market in terms of raw materials and their whole integration. The integrated companies have this distinct advantage of having a pulp sector and a sawmill sector, with the pulp sector doing extremely well.

To date, these companies in the pulp sector had a very special advantage indeed. They have had an extremely low cost of raw material for pulp, particularly in the form of wood chips. And that's very important indeed.

In times of high lumber markets for the independent sector of the industry this didn't matter as much. The fact that the residuals, the chips, were being received at the pulp mills at low prices wasn't a major concern for the independent sawmill sector, particularly in the better lumber markets, because they could well survive with the better lumber prices. But now the situation for the independents is critical.

The nature of the industry is unique in a sense. The pulp sector, especially in the interior, has a locational quasi-monopoly advantage in relation to

[ Page 4823 ]

independent sawmills of the interior. And the former government strengthened the quasi-monopoly position of these pulp mills by regulatory and administrative means. We see it in the form of pulp harvesting agreements and the like — a range of other regulations in relation of cutting permits that continue to give a special advantage to the pulp sector of the economy at the expense, I suggest, of the independent sector.

The independent sawmills face a very special problem, because frequently they have only one buyer for the residuals, the chips, they are selling. It's what's generally known as an oligopoly in which there are many sellers and generally only one or a very few buyers. So it's not a free market at all, Mr. Speaker. It is not a free market situation at all. A free market with many buyers and many sellers is not the situation we face in the forest industry of British Columbia today.

As a result of policies of the past and of the natural aspect of the industry, the independent sector is in jeopardy today as it has never been before. It's really like Tommy Douglas said: "This kind of market is really not the kind of market of equals," which Members of the opposition so frequently want to refer to — the markets of the old. It's not a market of equals, of many free buyers and many free sellers. It's like Tommy Douglas said about the chickens and the elephant: "'Each man for himself,' as he danced among the chickens." It's that kind of free market that we have in the pulp and sawmill sector of the Province of British Columbia. Only the elephants win in that kind of dance, there's no question about that.

It's clear that the rules have to be changed.

Let's look at the history under the old rules in this province, Mr. Speaker. What about our indigenous, independent sawmilling part of the woods industry of British Columbia? What in fact has been the history? — especially under the years of Social Credit, the so-called champions of free enterprise.

Let's look at the numbers. The number of operating sawmills in British Columbia in 1956, for starters — that was the year that Mr. Sommers left office — the numbers then: 2,435 sawmills in British Columbia; 2,255 the next year; 2,010 the next year; 2,005 in the next year; 1,938 in 1960; 1,700-odd, 1,600-odd in 1962; 1,500 in '63; 1,400-odd in 1964; 1,191 in 1965; 1,016 in 1966. In 1967 there were 931 sawmills in the province. In 1968 there were 902; in 1969, 974; in 1970, 881. And in 1971, the last year of the Social Credit administration, there were 627 sawmills in the province. In 1972 it dropped to 603, and in 1973, 810. With the change of government the decline ended.

We faced a cycle in the market throughout the decade. Two decades of Social Credit; a continuous cycle in the market. But consistently through those years, a decline in the independent sector, a buildup of the multinationals, and a decline in the independent, indigenous, basic industry of this province.

There it is: in 1952, when Social Credit came in, 2,223 sawmills in the province; in 1971, 627. And it picked up after the new government came to British Columbia.

The history is clear. The history of the last government is clear; it was a move to integration, to consolidation, to regional monopoly by multinational corporations at the expense of the genuine private sector in the province.

We are determined to see that the independent sector in the sawmill industry survives, unlike the last government. We are convinced, Mr. Speaker, that the local ownership does in fact make a great difference in terms of attitude and values.

It's easier to make decisions in Toronto, or San Francisco, or Tokyo, or New York that have immense social consequences in British Columbia — just looking at the balance sheet. You don't have to look at the people who work in those mills on the main street of the local towns; you don't have to face them in Giscome, as you do today, when you know there will not be jobs for them there next month.

It's easy for the big, integrated companies to make those decisions in Toronto. It is not easy for the independent owner here in British Columbia to make that kind of decision. It is not easy either for the public owner in British Columbia to make that kind of decision.

Look at the figures. Have there been lay-offs in Can-Cel sawmills? Has the ledger been the No. I factor in Can-Cel? The answer is no! There have been no lay-offs in Canadian Cellulose mills.

Have there been lay-offs at Kootenay Forest Products, despite high costs, despite losses in Nelson? The answer is no! The owner is an owner with conscience, unlike some of the owners in some of the sectors of the industry in the province.

Giscome is a classic example. Giscome-east at Eagle Lake, to the east of Prince George, was to have been closed next summer, but as a phasing operation as part of expansion at Houston, so that the people used to sawmilling, workers for 25 years at Giscome, in that small community, could at least have the opportunity of moving to Houston and remaining in the industry they know, In fact, the decision was made in Toronto — "close Giscome." That's where the decision was made. And that kind of decision would not be made even in Vancouver by many, but the distance makes the difference.

Let's remember who that owner is — Northwood Mills, Noranda — with a classic history in Quebec. It's worth a book. What's happened with them? They've been expanding in United States; they've been moving their capital into a major expansion in the

[ Page 4824 ]

United States and elsewhere, like so many of the multinationals.

We believe that the independents operate with greater conscience and concern regarding their employees here at home.

We regard the locally owned sawmills as an important part of the fabric of our society in British Columbia. In an age of bigness we regard this sector as an important economic and social balance wheel in the communities of this province. So it's an important economic and social balance wheel for the province as a whole.

It might be worthwhile to review some of the steps we've taken to date in terms of improving the situation administratively in areas of our direct control; for example, in areas of stumpage. We've helped both the integrated and the independent producers in recent months by our steps so far in stumpage.

For example: the three-month average market-value system was replaced by a one-month average market-value system in the interior, effective September 1. The lumber price collection was expedited to cut the time lag by a month. Normally we would have had April, May, June figures, for example, reflecting in the fall. And that's not the case. Using the one-month AMVs has led to substantial decreases in stumpage rates in the interior. By this month an estimated 90 per cent of the volume appraised under the new appraisal system will be on the minimum rates.

We've also changed the base of our cost-trend factors in the industry from five years, which was the pattern under the former government, to two years, which has lead to increases of from 6 to 9 per cent for logging costs, and from 6.5 to 9.5 per cent for milling costs in the trend. We are currently doing additional work in this area as well.

We have also introduced updated milling costs, effective November 1, and have been continuously updating our logging cost allowances. There is further work going on in this area.

We have also undertaken studies of lumber recovery factors, and expect to be able to introduce refinements in the small-log category and for dry-belt fir, white and yellow pine in the near future. That's most important, particularly in the central interior of the province.

In addition, there will be further announcements later this week regarding additional steps in the stumpage sector and in Forestry administration policies as well that will be beneficial for the entire industry.

But the critical question at this stage, Mr. Speaker, really is chip price — the price received for the residuals after the production of lumber. This is a critical question mainly in the interior and the north of the province.

It is worthwhile noting a range of prices as of November 1 as checked by the Forest Service in the interior of the province. There have been some modifications since then, but I think the base level established then is probably comparable on a ratio basis at this time.

Crestbrook, in the interior, for group A spruce, balsam and pine, was $12.25 to $16 per BDU. Fir and pine was .$9 to $16 BDU, and cedar, $7.14. Weyerhaeuser was $14 for cedar and $16 for other species, and that has since changed. Cariboo: spruce, pine and balsam were $11 to $19. Prince George Pulp was $17 to $17.50. Northwood was $18.50 to $25. B.C. Forest Products was $18.12 to $30. Eurocan was $19. Can-Cel was $19.25 for hemlock, balsam and cedar, and $17.25 in the northern district. That gives us an idea of the range.

There have been, as I said, some changes since then, Mr. Speaker, but that is the basic pattern, and with special prices, of course, for second chips and special agreements. There are a number of those now, many of them — especially with Weyerhaeuser.

But the real question, Mr. Speaker, is: would a free market situation produce different prices? There can be no question; the answer is yes. The real question is: can the pulp mills afford to pay more? The answer again is clearly yes, they can afford to pay more. The answer, in fact, should be a resounding yes from this whole Legislature at this stage in our history. It's clear, from some statements from the opposition so far, that that won't be the case. The so-called champions of free enterprise will abandon, I am sure, by the stands they take in this debate, the indigenous industrialists of this province in this vote.

We should look, just say, for example, Mr. Speaker, at pulp prices over the last couple of years. If we look at the incredible acceleration of pulp prices over the last two years, it will become abundantly clear that the pulp mills can indeed afford to pay more, much, much more, for the basic raw material that goes into the production of pulp.

Let's look at the price for bleached kraft since 1968. In 1968 the price for bleached kraft was $133 a ton in January. It hung at $125, $130 until July, 1969. In 1970 it was $145; July, 1970, $145. In January 1071, $145; July, 1971, $150; January, 1972, $154; July, 1972, $160; January, 1973, $164. So it was clear that it was hanging around the $150 level throughout that period.

But in July of 1973 the price was $210 a ton. In January, 1974, the price was $235 a ton, and in July of 1974, this year, the price was $325 to $330 a ton; and currently it is $330 to $340 a ton.

So, Mr. Speaker, between January, 1968, and January, 1973, there were increments from $133 to $164. But the major change, January, 1973, to January, 1974, was from $164 a ton to $235 a ton. That was a $70-a-ton increase in that year, a 42 per

[ Page 4825 ]

cent increase in that one year alone.

From January, 1974, to the present the figure per ton for bleached kraft went from $235 to $340 — a $100-a-ton increase in one year alone in this industry. That's another 43 per cent increase.

So the difference in less than two years was from $164 a ton to $340 a ton. In less than two years that is an increase of $170 a ton; that is 100 per cent in less than two years.

Now surely, Mr. Speaker, it has to be abundantly clear just from that information alone that these mills can afford to pay far, far more for their raw material than they presently do.

But just to be sure that what seems so obvious to us was in fact, the case, we brought in independent researchers to look at the question, These were brought in many months ago — last winter, in fact. The people we asked to look at the question were the management people at the British Columbia Research Council on the university campus.

Those people carried out a study, initially in two volumes, dealing with the interior and the coast. Those were dated December, 1973. In addition we asked them to review the whole material earlier this fall, and a further revision of chip value calculations by the B.C. Research Council was complete in October of 1974. So there has been an ongoing review and analysis by the Research Council staff over the past year, with a full updating.

Well, the council staff looked at a range of questions that are relevant. They looked at the value of the mills' end products. They looked at the operating costs of mills. They looked at the cost of capital investment. They looked at wood consumption per unit of end product. They looked at the before-tax rate of return on capital investment. Mathematical formulas using detailed information were developed information were developed to determine the amount a mill, in fact, could pay for chips.

The volume on the interior mills uses comparative dollar values available for wood. It notes that the interior mills by and large, while not identical, are more homogeneous than the coast, and all mills except…. I don't think that detail is of concern.

The main point regarding this — and I'll table the reports with the House, Mr. Speaker — is that they established a conservative evaluation of ability to pay on the part of the pulp mill sector. Their conclusion was that $60 per bone-dry unit, f.o.b. the pulp mill, for chips in the immediate future could be paid by the pulp industry of the province; $60 per BDU was in fact what the industry could pay.

They also relate varying rates of return on capital in relation to the kind of chip prices that might be faced. In the interior, if chip prices were in the $74 to $93 range, there would be a 13 per cent return on capital. If chip prices were in the $69 to $89 range, there would be a 16 per cent return on capital. If prices for chips were in the $60 to $80 range there would be a 20 per cent return on capital. These are very significant rates of return indeed.

Historically the coast mills have paid more than interior mills. There are differences, and there is a freer market on the coast. But in answer to the basic question that was put to the staff on the Research Council on October, 1974: "What can pulp mills afford to pay for wood chips?" the answer was: "In the immediate short term most pulp mills in the province can afford to pay at least $60 per bone-dry unit, f.o.b. the pulp mills, for wood chips." They state themselves:

"This estimate is considered conservative, since it is somewhat lower than the price that could be afforded by the least profitable mill when a 20 per cent before-tax rate of return is allowed on the total capital investment."

That's the kind of conclusion by the staff of the Research Council. The conclusion, and they deemed it a conservative conclusion in favour of the pulp mills in its conservatism, was that their ability to pay was $60, using the least profitable mill and allowing a 20 per cent rate of return on capital in that case.

Mr. L.A. Williams (West Vancouver–Howe Sound): That's before taxes?

Hon. R.A. Williams: Yes, that's correct.

What in fact is being paid? Well, we've covered the range. It's clear. Basically the pattern is around the $20 level in the interior of the province. So there is a huge gap between the ability to pay, even with significant rates of return on capital, and what, in fact, is being paid to the independent sector of the industry, and using the least efficient mills, in fact, to come up with the figures.

We had hoped, Mr. Speaker, that there would be a quick response from the pulp industry in this period of crisis for the independent sawmill sector. Some have agreed to higher prices, particularly for supplemental chips for utility-grade lumber that in fact, is now being put into chips. That's an improvement, but only a marginal improvement, for the independent sector. There has not been a basic move by the pulp industry in the base price for residual chips. We expected that, in fact, there would be movement over this past month or two in that area, and it's unfortunate that the movement has not materialized.

In this situation, Mr. Speaker, with the facts as they are, I suggest that no government could idly stand by watching the severe decline of the independent sawmillers while the pulp mills have never been fatter. The moves by the pulp mills in British Columbia unfortunately have been too little and too late.

[ Page 4826 ]

It's cleat that a floor price must be established for this basic commodity, Mr. Speaker. Some 60 per cent of the material going into the pulp mills of the Interior; in fact, comes from the independent sawmilling sector of the industry. We're determined, Mr. Speaker, to see that the independents get a better price. This bill is the means of seeing to it — that the independent sector, in fact, gets a better price.

But the bill, Mr. Speaker, also has fundamental meaning in terms of forest management throughout the province, and it's one that is profound. We are great wasters — we are great wasters — profligate wasters of this basic wealth of this province, Mr. Speaker, and we presently have an economic structure that, in fact, because of the oligopoly, because of the price system, encourages that waste. The low prices paid for woodchips around the province makes it "uneconomic" to move material from the forest floor, because chips, at the prices that have been paid to date, are so much cheaper than moving the material that remains on the forest floor.

The pulp mills can get low-priced — unreasonably low-priced chips — from the independent sawmills. They're not inclined to move the material that's remaining on the forest floor because of the gross distortions that have resulted from a non-free market.

So we have in the province this tremendous slash and slash-burning problem, prevalent throughout the province. Much of the material that goes up in smoke in slash-burning and waste, in fact, could be used by the pulp mills. If the price for chips were increased, then the "economics" of the whole situation would be radically reversed.

Interjections.

Hon. R.A. Williams: I thought you should have the benefit of the real thing in the Legislature.

Clearly, there are these profound implications. Outside of the economics, of the independence and the survival of the independence, there are profound implications in terms of better forest management by raising the price of chips in the province.

Mr. D.E. Lewis (Shuswap): Hear, hear!

Hon. R.A. Williams: The need to move in this direction was clearly shown in an article that was reported in yesterday's Province in the business section, page 24: "The World Shortage of Wood: Is That Next?" It's again done by researchers on the campus of UBC at the Federal Forest Products Research Lab, with J.L. Kieze and J.V. Hatten of the federal service on the campus.

They predicted that there would be an annual shortfall of 260 million cubic yards in the world's wood supply by the end of the century. They pointed out in their study that the requirement for chips for the pulp industry offers industry the means of increasing production by attempting greater utilization:

"'Instead of just taking out tree trunks, forest companies could chip branches and crowns which are presently discarded and oftentimes burned', said Hatten. 'Besides recovering tops and branches, forest companies should remove and salvage dead and diseased trees and undesirable species, such as alder, for chips,' Hatten suggested."

We're proceeding in that particular area in the province now.

"Just by raking the tops, branches and foliage of merchantable trees, companies could recover 30 per cent more bio-mass in softwood plantations, and 35 per cent more material in hardwood stands."

So, clearly, we are losing on a considerable scale throughout the province by our present methods, by our present administrative means, and by a considerably distorted market that, in fact, is preventing the collection of material that should be put to economic use throughout the province.

Just to give an example of the considerable value that we have in this forest resource. The world energy demands — just if we considered wood, Mr. Speaker — 10 per cent of the annual growth of wood on the planet would meet all of the world's energy needs today. It's abundantly clear that waste in this area is one of the most critical wastes on the planet.

The move, through this statute, Mr. Speaker, will enable us to move toward better utilization of the forests of British Columbia, more than anything we've done, in fact, in recent years, because the economic incentives will be there at last.

This bill, Mr. Speaker, is a good reflection of the recommendations of the forest task force, which was chaired by Dr. Peter Pearse, of the University of British Columbia. The task force, after extremely careful examination, found the present system wanting. The task force concluded there was not evidence that we have as open or as free a market as we should have in this industry. They concluded this in particular with respect to the lower coast and the operations of the log market on the lower coast.

This is extremely critical, the question of the adequacy of the log market on the lower coast. The chip question in the interior is critical, but the question of the log market on the lower coast is critical because the Crown's revenues rest in the richest forests of this province on that market system that prevails on the lower coast. That is the means for determining the revenue to the people of British Columbia from the best trees of the province.

It's critical because it's the basis for stumpage charges in the richest forests of the province. Any flaws in the system, any inadequacies of that kind of

[ Page 4827 ]

market, automatically divert legitimate public revenue from the public sector basically to the multi-national corporation.

It's also desirable, Mr. Speaker, to have a freer market on the lower coast from the independent sawmiller's point of view, again the remaining unintegrated sector of the lower coast of British Columbia.

Ironically, there's not the availability of logs or material on the lower coast for the independent sawmiller. Even in times such as this, with a bad lumber market, there is, in fact, not the availability of logs for independent sawmillers that are willing to produce when the majors are shutting down. We have that kind of distortion again, by a flawed market system.

The whole question is dealt with very clearly in the report of the task force on forest policy, and I hope that most Members of the House have read the second major report of the task force.

Appendix C deals entirely with the Vancouver log-market question, and I think some of the points made by Dr. Pearse and his colleagues are worth putting on the record. They state:

"Prior to the end of World War II, the few large integrated firms with sawmills or pulp mills depended largely on their own logging operations for raw material supply, but the industry was dominated by a large number of independent logging enterprises which sold their logs to log buyers, through brokers, to un-integrated sawmilling firms. By the early '50s, there were well over 1,000 such enterprises on the coast, most of which, including some of the largest, disposed of their logs in this way. In such a market, the price was clearly a good indication of the value of the logs being traded.

" However, by the end of that decade, the forest service carried out a survey in 1961 and it showed that the fraction of the coastal harvest that was not tied to any integrated converting enterprise, through tenure arrangements or contractual commitments of some kind, had shrunk to approximately 9 per cent of some kind, had shrunk to approximately 9 per cent of the total.

"Today, some 200 independent logging firms remain on the coast, but most of them are small and they account now for less than 5 per cent of the total harvest."

That's the pattern of the last couple of decades under the former government.

They cite further:

"There has been a concomitant change in the market process itself. Only a few small independent log brokers and buyers remain of the several dozen that played a central role in the industry a few decades ago. They have been replaced by dealers representing the integrated companies, The transactions that now dominate the log market are not those between independent sellers and buyers, but rather trades between the large integrated companies." They state further:

"These reciprocal sale or swap arrangements so dominate the log market today that it is generally acknowledged that significant volumes of timber cannot be acquired by buyers who have nothing to trade."

So the independent mills on this island are not able to enter into that market at all, or are on a very limited scale. Few milling firms without linked logging operations are able to survive as a result. The inaccessibility of the market to independent buyers is particularly acute in periods of strong demand.

It's true, Mr. Speaker, but it's even true now in periods of low demand. It's the classic quasi-monopoly situation. They state further in the task force report:

"These tendencies toward integration and decline in log marketing are self-aggravated. Vertical integration supported by tenure policies diminishes dependence upon the open market for wood supplies, and as the market becomes narrower, it fails to be a reliable source of supply to independent millers who are then also forced to integrate into logging.

"Such trends raise serious questions about the continuing effectiveness of the log market, both as a mechanism for efficiently allocating timber to its highest use an ' d for generating prices that accurately reflect log value.

In summary, the task force concludes:

"Having considered the number of participants in the market, the lack of independence of their roles as buyers and sellers, the restrictions on access to a market that some purchasers face, and a non-homogeneity of the material in the categories for which prices are reported, we're led to the conclusion that the Vancouver log market fails to meet several of the criteria for freely competitive markets. In particular, it appears that the reported prices will fall short of the full value of the timber in conversion, and that this downward bias will be most pronounced in periods of strong markets and for log rates in the strongest demand."

So even in times like this there is not the availability of material on the lower coast for the independent. We are determined again that the independents on the lower coast of British Columbia should not face the kind of pattern that they faced through the previous two decades of government in this province.

[ Page 4828 ]

The purposes of this bill, Mr. Speaker, are to see that the independent sector of our basic industry, both in the interior, through fair prices for chip material, and on the coast, by a more competitive log market with ease of access for independent operators, will in fact be the pattern — and to see that there is a fair return received by the Crown for the trees that we all own.

What would the opposition do, Mr. Speaker, for the independents in the interior or the coast? The opposition suggests that we should dip into current revenues and work on some kind of right-wing welfare scheme for companies. Or would they face the giants of the industry, as this government is prepared to do? Would they look at the incredible profits that are being reaped in the pulp sector with Northwood, Canfor, Weldwood, Weyerhaeuser, and even Can-Cel? Would they look at the raw material prices they're paid? Would they look at the unfair chip prices being received by the independents? In so doing, would they have the courage to do the right thing to intervene and help those in this distorted market who, in fact, are weaker? I think not.

We have at the moment, Mr. Speaker, an independent sector in the woods industry of this province that is struggling to survive. It's a sector that by and large does not feel it can speak out against the views of the major pulp companies. What we have is a situation where there are official meetings between government and the organization representing the wood industry, organizations that include the pulp sector — groups like the ILMA, the CLMA and others — but then in addition we get plaintive requests from the independents for separate meetings with government. We get plaintive wires or confidential requests for action in this sector, and there are many of those.

We only have to look at our past history, Mr. Speaker, to see the decline of the independent sawmillers in this province, both in the interior and on the coast. That's a decline that can and should be reversed. This bill is a major beginning in that process.

The pattern, in terms of responsibility close at home, is now all too clear now that we're in the low part of the lumber market. A good case in point might be Northwood Mill and how Northwood Mill has maintained employment in the mills they control in the interior of the province. Now you all remember Northwood, sure, because they've embarked on a massive television advertising campaign that is unequalled in the wood sector. It even outdoes MacMillan Bloedel and their production of Heidi of a year or two ago.

There was an hour-long, prime time, 7 p.m. to 8 p.m. programme on CTV a while back prepared by Northwood, out of Toronto. It was beautiful colour stuff. But now we get it through the prime time period in little shots of minute commercials. You know how it ends? They say: "Remember, this is Northwood." They say: "We care, because we live here." That's the slogan. "We care because we live here."

Mr. G.S. Wallace (Oak Bay): You deserve a break today.

Hon. R.A. Williams: But they live in Toronto, and they make the decisions in Toronto, and the decisions are different than the decisions made at home.

Let's look at what Northwood in the interior has done in the past month. Let's look at Okanagan Falls in the Socred heartland. Okanagan Falls on October 11 — at the big new mill at Okanagan Falls, two shifts, 190 men, 242 cunits per shift — closed down. No shifts operating at all in Okanagan Falls.

Still in the heartland: Penticton, the old mill in Penticton, two-shift basis, 75 men, 110 cunits; it was shut down October 11 — no shifts at all. Princeton mill, the old mill at Princeton — 35 employees, 109 cunits — shut down October 11. The new sawmill at Princeton — 125 men, normal cut, 204 cunits — shut down October 11.

Mr. W.R. Bennett (Leader. Of The Opposition): Are you taking the responsibility, or are you blaming it on the MLA?

Hon. R.A. Williams: Eagle Lake up in the Prince George area was closed completely November 30. That involved two shifts, 150 men, 200,000 board feet.

Clearly the "We live here, we care" slogan on television rings a little hollow in relation to the facts.

It's different in the independent sector, we maintain, Mr. Speaker. We know most of them live here and most of them do care about the people they work with daily.

This bill, Mr. Speaker, will assure their survival, and I challenge the opposition to support it.

Mr. W.R. Bennett (Leader of the Opposition): For a long time there I was wondering if the Minister was going to speak on the bill at all. I heard him make reference to wood chips and continue his vendetta against the major companies, but I never heard any discussion of the major part of the bill that talks about the new marketing board, or Forest Marketing Board. There was very little discussion of it except the continuing hatred against the big companies, and the fact that he was bringing in this bill to protect the independents, those independent operators.

He gave some very interesting statistics to indicate why sawmills, in his conclusions, had declined in this province, and why they had increased since he'd become forest Minister. But he left out some very

[ Page 4829 ]

interesting facts, and he left out one very interesting year, which was 1974.

I was surprised that he mentioned the unemployment that was in a part of the industry, because it's something we've been talking about all summer — not just the last month, when this Minister finally seems to have become interested. The fact that we have 31 per cent unemployment in the Cariboo forest district and in the Kootenays, and that this unemployment is spreading and increasing and is affecting all of British Columbia…. Today we have over 70,000 unemployed in this province, the only province in Canada where the unemployment is increasing — the only place.

Rather than try and blame it on the Americans…. I heard him say that the Americans stopped buying our wood, as though all of a sudden there was some gigantic plot to embarrass us. Well, everyone that's been involved in British Columbia is aware of the cyclical nature of this industry.

Everybody knows. This Minister has been a part of government; he's been able to watch the industry. We've had dips and we've had peaks before, but it's always been the responsibility of the Minister in the Forest Service, not necessarily with big-stick legislation, but with negotiation within the industry and directly with how government participates to bring aid and continue and to guarantee the continuation of those facilities to maintain employment….

You don't need legislation to get out and lead the discussion on increasing wood chip prices.

The Minister talked about saving the independent. In fact the Premier, as he had one foot on the airplane for his extended trip to China, Hawaii and points south, challenged the opposition about this legislation, and said that it was to save the independents, and challenged them to oppose it.

I don't know where he's been when we…well, I do know where he's been when we've been talking about the independents, because last year when we were concerned about chip prices. I think he was off campaigning in the Maritimes.

Then the Premier took a trip to Japan to play rugby. Then he went to St. Louis to get an honorary degree, and then he holidayed in California during the summer while he was recovering from the results of the federal election. Now he's in China. But if he'd stayed in British Columbia long enough to know, and if that woods Minister had been listening, he'd know that this problem of wood chips and the problems of the independent in the interior has been of major concern to myself and this party.

We called long ago for action by the Minister, not just wait till the eleventh hour of the eleventh month when unemployment is rampant in this province, but take action — action that he is empowered and, in fact, has the responsibility to take, not now but earlier this year when the problem was apparent, when the people of this province first expressed their concern.

The people who are employed in the industry made the problem obvious, yet this Minister acts now — acts in a very unsatisfactory manner; acts in a manner that really won't deal with the problem of wood chips.

You know, he went and took a lot of pains to talk about the problem being related to the stumpage formula that was created by the former administration. He talked a lot about the decline of sawmills in this province.

Well, let's take a look, because this Minister always talks about: "integration of the industry; full utilization; no waste." The very decline in sawmills was the approach of the Forest Service of this province in encouraging mills for better utilization.

[Mr. Liden in the chair.]

The old, rough mills in the bush with the bull-edger blade that used to create about 25 per cent sawdust are, thank goodness, no longer part of the forest economy in this province. There were a number of mills…and those mills were constructed in my own home town. There were many of them in the Okanagan area. These mills were not efficient. They were single-family mills; they could not meet the standards of utilization that this province wanted, that the Forest Service wanted, that all parties wanted in the better utilization of our resources.

Is that to be the fault of a government, that this Minister will say: "Shame on you for bringing efficiency to the industry and doing away with the inefficient mills that were butchering the woods."? A most unrealistic and very, very obvious snow-job to keep us from discussing the real intent of the bill.

The Minister then goes on to say that there was a dramatic decrease in mills. Now you notice he went to 1971, and said that was the last year of the former government. Well, I'm not here to protect them, but I am here to give that extra year that they stayed, because I was under the impression that they stayed until '72.

The acceleration of sawmill construction from '71 to '72, '73 to '74 was because of the close utilization policy that was brought in throughout the province in conjunction with the pulp harvesting and the expansion of pulp mills in the interior of this province. It was to get better usage of our products. It was to develop more use that these pulp mills that were created in the interior at all. They did increase the sawmilling capacity; they attracted sawmills. They came together; they were compatible. It developed unemployment. It developed utilization of our resources. It was good for British Columbia.

Those mills, pulp mills and sawmills, were brought

[ Page 4830 ]

into this province at a time when the world pulp market and newsprint market was not at an all-time low. But the buoyant market that is apparent today — a market that's been created because of a global situation.

This province didn't create the market for newsprint and pulp that is here now, but the people of the province can take pride that there was a government which did, at one time, have the foresight to create the expansion so that this economy and our people could take advantage of this market situation.

If we'd had the negative policies of that Minister, and the attacks on all capital and all business, we would have the declining economy then that we have today in this province under your stewardship Mr. Minister.

Everybody knows and understands the stumpage formula in this province, that the difficulty with wood chips started in 1973 with the change of the stumpage formula in this province. The close-utilization policy encouraged the construction of pulp mills and sawmills in the interior and increased them from '71 to 173. It had encouraged capital, and they developed a formula for chips and a formula for close utilization.

The chip price and the close utilization went together. This was part of an integrated economic formula that gave guarantee of supply to the pulp mill because the mill had, in fact, a subsidy on the 55-cent wood from the government to encourage them to come in a time when the market was bad, to supply these pulp mills, they, in fact, could compete and exist in the interior of British Columbia.

But this all changed in '73 when the Minister doubled the rate of the stumpage, went to final appraisal, and the small interior mills — these independents that this Minister has suddenly discovered and is championing — were penalized by his policy. It was only then that the wood chips became a major factor in the economics of the independent mills, and of all mills in the province.

You changed the rules; you changed the game. And when the economy changed, you didn't have the foresight to move in advance of that change. You have created this problem. You've authored this problem, Mr. Minister, and today you must hang your head in shame because you are the wrong person to pretend to be the champion of the independent in this province.

You bring in a bill that says you are championing the independent. Who can be independent when you take away their very independence?

They'll no longer be independents, Mr. Speaker, when they feel the full effect of the new board — the board that this Minister is setting up with his commitment to take over through the backdoor when he couldn't take over through the front door in British Columbia. They'll know that if they fall for the snow-job that this is just a bill to help them six months down the road they'll realize what the miners realized, what other sectors…what the insurance agents realized in this province, that this isn't Santa Claus. This is Mr. Take-over speaking and this is the start of their commitment of bringing about a complete state-controlled forest industry in this province.

Make no bones about it, this isn't a harmless little chip bill. Clause (2) might deal with chips, but what about the other nine pages of granting the board and the cabinet and the Minister extreme policies. Is that going to save the independents? Is that going to guarantee their independence, Mr. Speaker?

An Hon. Member: Takes them right into limbo.

Mr. Bennett: That's right.

Mr. Speaker, we didn't need a chip board. We didn't need to develop nine pages of legislation five months late. We didn't need to extend the suffering of the independent sawmills so that the Minister could use their plight to bring in his other legislation while the industry was suffering, because we had those traditional forms of the Forest Service — a service that British Columbians can be proud of.

Who could have taken the initiative in negotiating? Government has more of a commitment not just to wield the big stick, not just to use the authority of legislation giving the cabinet and boards complete power.

This Minister knows that the newsprint market has changed. The very change in the pulp market between 1966 and now is tremendous. The pricing, the economics of the industry, are different. Today the industry is healthy.

As I pointed out earlier, we could have achieved a higher price for chips. We don't need him to wait five months beyond the time it takes to meet the needs of the independents. If you weren't listening before, Mr. Minister, I'll tell you, why didn't you do something about it five months ago? The industry itself has doubled the price it's paid for chips. And you are right; that's not good enough. These independents, because of the formula, need more money for chips. But it is not through your actions that anything has happened.

The very fact that they've stopped negotiating under threat of this legislation is the reason that many contracts haven't increased. In fact, one of the first offenders, right up until September, was Can-Cel — that company you are so proud of — that made its profit because it had until that time the lowest price. If they had paid last year what they are trying for now, they would not be making a profit. If they had paid last year the rates they pay for chips today, they would not have made a profit.

I notice that they have finally signed a new

[ Page 4831 ]

contract for $47.50 for roundwood. Well after the rest of the pulp mills moved up their price for chips to their suppliers; the last to act, the last to react, the last to have a conscience was the company that this Minister talks about and is so proud of — the company that everybody suspects was one of the major reasons why no action was taken on chips before in an attempt to help subsidize and make that company look good so the Minister could sneer across the floor that Can-Cel made money.

Why didn't you take action earlier?

As I said, the real intent of this bill is not chips. That was the excuse the government has used to bring in all of the excessive powers contained within the other eight pages of this bill. This bill was the excuse the Minister was waiting for; this is why he delayed for five months. This is why he didn't assume his responsibility of Minister to do anything earlier for the independents of this province.

This is why he did nothing to solve unemployment long before it got out of hand in the province. If there are people unemployed in the forest industry today, let them come to you and let them place the responsibility where it belongs, on the shoulders of this Minister.

Accept your responsibility for your inaction over this last year. When the economy of the forest industry was pointed out, that there was going to be difficulty with markets, when the first discussion of chips was brought up in this House during estimates earlier this year, I didn't hear the defence of the independents then or the fact that they needed help with their chips. We didn't hear any solutions then when the trouble was developing.

But now that they are on their knees, now that the independent can go on no longer financially, the Minister, under the guise of riding in on his horse as the saviour of the industry, uses their plight that he helped to create as an excuse to bring in a bill with powers excessive to the needs of any government.

An Hon. Member: Right on!

Interjections.

An Hon. Member: Why did you change it then? Let's not have that gobbledygook.

Mr. Bennett: This explanatory note on the back of this bill that says this is a wood chip bill is the biggest political lie attached to a bill I've ever seen in this province or in any province. If you want to take over the industry, Mr. Minister, come clean with the people of British Columbia. If you want, Mr. Minister, to bring in your radical, left-wing socialism that you were committed to back in the 1930s, tell the people of the province.

An Hon. Member: Your eyes in the back of your head are bigger than the ones in the front of your head. Quit looking back.

Mr. Bennett: Here is the Minister bringing in an Act that practices deceit because this Act isn't what it is purported to be. It is a deceitful Act. It's an Act that has no relation to solving the problems for the independent sawmills in this province. It is an Act to bring to this government and to this Minister powers they couldn't ask for under any other set of circumstances. And any government and any Minister that would allow the situation to deteriorate, both in unemployment and the economy, so they could use it as a guise to bring in their authoritarian legislation has no place as government in this province or in any province.

This Minister and this government do not have the mandate to seek these excessive powers. These excessive powers threaten our Legislature; they take powers from us. They threaten our economic base — and it has been as witness of that today with the release from Cariboo Pulp — and they destroy confidence in investment in this province. These policies and these actions will ruin this province.

At one time in all of B.C., whether you were a socialist from Vancouver East or an enterpriser from the Cariboo, one thing you had was a confidence in the future of this province. At that time I never heard anyone ever suggest that the future of British Columbia was in doubt. But today, after two and a half years of this government, and today with the results of the presentation of, the bill by this Minister, we have heard and are hearing of people taking capital out of the province.

Not just corporate but individual citizens for the first time are questioning the very future of our province, bragging about taking out capital, bragging about leaving — something I thought I would never hear in British Columbia. And yet this Minister sits there and smirks while unemployment rises and while the economic fabric deteriorates.

I ask this Minister to withdraw this bill. Bring back some confidence to British Columbia. It is bad for British Columbia.

Interjection.

Mr. G.F. Gibson (North Vancouver-Capilano): You stand up and I'll make it three.

Mr. Speaker, this is the big bill of the session, without any question.

Interjection.

Mr. Gibson: That was the little Bill just speaking. I was referring to the Act in front of me. (Laughter.)

[ Page 4832 ]

We had an Act introduced to ruin the rental housing economy of this province and then another Act introduced to give all power to the Minister of Agriculture (Hon. Mr. Stupich), but this is the big one.

When I see that Minister of Lands, Forests and Water Resources (Hon. R.A. Williams) stand up there, Mr. Speaker, and show such solicitude for the independent businessmen in British Columbia — for the "indigenous industrialists," he called them — when I see that man who wants nothing more than to take over the forest industry cry those kind of crocodile tears, it makes me just a little bit sick.

This is a thoroughly deceitful bill, Mr. Speaker. It is a far more vicious bill than Bill 31. I wish the Minister of Mines and Petroleum Resources (Hon. Mr. Nimsick) was here because he at least had the honesty to bring before this House a bill that said what it was going to do. He brought forward a bill that said, "I'm going to hit you over the head and take all your money." That was very simple. But this is a bill, Mr. Speaker, that masquerades as being one thing and is, in fact, another.

It is deceitful in the timing of its introduction. It is far too late and it is introduced too late in this session. It is a bill of such consequence. I believe this bill was draughted two months ago, Mr. Minister. Why wasn't it introduced on the first day of this session? It should have been for this House to give it study.

And then why are we having the kind of rush to give it passage without, again, time for the proper study? Why is the situation a smokescreen of a non-issue?

We all agree, Mr. Minister, that the companies should pay more for chips. There is no question about that. It's a phony issue; it's a smokescreen. You can get around that one easily in other ways, and I'll tell you just how in a few minutes. It's a pure smokescreen. That's Part I of the bill. It's a non-issue.

Part II of the bill, Mr. Speaker, is jobs for the boys. Section 4(7): jobs for the boys.

Part III of the bill is the takeover legislation for the forest industry of the Province of British Columbia.

Let's start with Part I that the Minister spent almost all of his time on. Yet it is really only one part of the bill and not the most important one. That's chips. The Minister didn't give us any indication of how large the chip market is in British Columbia or what the interior market is. But if there are around 6 million tons of pulp produced there must be around something like 12 million bone dry units of chips, I would think. No, 12 million volumetric, maybe; 9 million bone dry. So he's obviously talking about an important injection into the sawmill economy of this province.

If the price of chips can be raised $10 a unit, for example, in the interior — and let's say that that's about half of it — then we're talking about around $50 million a year. If it can be $20, then it's $100 million a year, and so on. This is a very important issue.

The Minister spent all of his time, or almost all of his time, talking about the interior market for chips. He didn't discuss the coastal market, which is a very different market. It has freedom of movement of the chip product. It has low-cost water transport. It has at least seven major buyers, and it has around 60 sellers.

Mr. Lewis: It has competition.

Mr. Gibson: : As the Hon. Member for Shuswap says — he put it better than I could: "It has competition." That coast market has competition. The Minister applauded that. That's a wonderful thing — competition. We're for competition.

The interior market is entirely different, because there is directed movement of chips. The Minister directs the movement of chips; those old pulp-harvesting licences he referred to direct the movement of chips. I question whether that's necessary, Mr. Minister. It would make a good debate for the estimates perhaps.

There's a high cost of transporting the chips and a high cost of transporting the pulp product that comes out of it. And there's a monopoly buyer situation. That's the worse part of all.

Mr. R.T. Cummings (Vancouver–Little Mountain): Money talks. Tell them that money talks.

Mr. Gibson: That was a good speech too, Mr. Member for Vancouver–Little Mountain. You stand up and give it again. I'll be proud of you.

What has brought us to the present situation we're in, and who has been most instrumental in doing it? Mr. Speaker, Can-Cel has been most instrumental in doing it — the company controlled by the Minister of Lands, Forests and Water Resources.

What has been the leading company in the interior of this province in Castlegar in paying the lowest prices for chips anywhere in this province? What has been the company that a few weeks ago suddenly raised their prices so that the Minister could come to this debate with ostensibly clean hands and say: "Look, Can-Cel is paying more than the rest of the province."?

But what in fact has been the worst one? It has been Can-Cel. The Minister has orchestrated this thing so that there have been cries of pain from the independent producers because of the outrageously low prices that his company was paying them. Then he comes before this House and says: "Look, they forced me into bringing this bill to you. We just have

[ Page 4833 ]

to have it for the sake of the little man."

Such solicitude! Look at Can-Cel. Look at what Can-Cel did to Rim Forest Products. You can strike one mill off your list of new mills in British Columbia, Mr. Minister. Such solicitude!

The other pulp mills in this province, many of them, were even afraid to raise their own prices of chips for fear of attracting the government's wrath, because the government wanted to keep those chip prices low so that their pet Can-Cel would look good. It's just that simple. You manufactured a crisis and then brought in this legislation to supposedly help the independents.

Mr. Minister, through you, Mr. Speaker, I'll tell you what the solution is. You agree that there is a reasonably competitive market on the coast. Tie your interior prices to the coastal market with due allowance for the transportation index. It's a simple solution, You don't need this bill to do that, Mr. Minister. No sirree, you don't need this bill at all. You just need a simple little bill; and I'll help you draft it if you like. It would be a lot better than this one.

So that's the chip-screen, or the smoke-screen.

Now let's get on to the main problem of this bill and the problem that's facing this Legislature in this province. It is the unemployment in the forest industry that this bill is not coping with — and that the marketing suggestion proposed in this bill is not going to cope with. There are something like 14,000 people out of work today in British Columbia, and the Minister admits himself that this bill isn't going to cope with it.

Here's a quote from an article in the Province of October 29, quoting the Minister:

"Williams admitted that the government-controlled Canadian Cellulose Company Limited is as much to blame for the low prices as any other firm in the interior. Like the private companies it is paying less for its chips than the sawmills deserve to receive for them.

" 'But,' he said, 'Can-Cel isn't in the welfare business. So it is playing by the rules of the game laid down by private industry, and playing very successfully too."'

Good for you, Mr. Minister. How about Rim Forest Products? You told us earlier on in this debate that Can-Cel was in the welfare business. You told us about the men that Can-Cel hasn't laid off. Of course it hasn't laid people off; it's in the pulp business, and the pulp business is making money. And you gave us the prices, so don't compare apples and oranges.

So the problem is unemployment.

The Minister made a proper point in suggesting that governments have to stop using residential construction as an economic lever, particularly the United States government. We have no control over that. But it does such damage to their economy as well as ours that we have to hope that governments are going to start seeing sense in this regard.

U.S. housing starts are down from something like an annual rate of 2.2 million a year ago to 1.4 million now. And of our total shipments, something like 2 billion board feet out of 4.2 billion board feet in 1973 went to the continental United States. So there's the impact of the U.S. market on our lumber economy. The need that we have to grapple with in this House is to try and somehow stabilize the lumber industry in times of that kind.

This bill, Mr. Speaker, is entitled the Timber Products Stabilization Act. But it's not apparent what it's going to do for stabilization, which is the need. Maybe the Minister will enlighten us on this when he closes second reading. But I don't think he will. He spoke for 40 minutes before and didn't enlighten us very much.

Even out the cycle — that's what's got to be done. The way we're coping with instability in the industry now is through unemployment insurance. It's a lot better than nothing. It maintains incomes. But it's an unproductive way of maintaining incomes, and we have to find better ways of doing it than that.

Interjection.

Mr. Gibson: The Minister says: "This is a better way." But what's a better way? Nothing in this bill that I can see, Mr. Minister.

There are various things you can look at. I can look, for example, at the possibility of having an inventory-accumulation plan. Probably the Minister has looked at that too. There are a lot of difficulties in it, as nearly as I can see — the possibility of a huge inventory overhanging the market on a long-term basis, depressing the returns to British Columbians of their resources to even lower levels than they otherwise would have been. So there are problems there, but there are things that can be done.

The needs are as follows: there has to be a boost in the chip price, no question about it. I suggested the way to do that.

The appraisal system, which is a tremendously complicated subject, has to be reformed to cover real costs. The Minister gave some welcome indications that that is being worked on. I hope it's worked on quickly, because it's hard to open a mill once it's closed down. A lot of these close-downs could have been avoided had this kind of programme been undertaken six months ago.

Mr. Minister, there has to be a relaxation of the logging guidelines in tough times — not in ways that will adversely affect the environment, but rather in ways which will allow lower cost logging in tough times, lower cost road access. Problems of waste removal that the Minister mentioned are considerable.

[ Page 4834 ]

But these things have got to be traded off sometimes with keeping up employment. The government can't just have a single-minded concentration on its forestries or its revenue. It has to be concerned with jobs. They're better to have a percentage of something than 100 per cent of nothing.

The government should be looking right now very seriously at a major publicly funded programme of rehabilitation of the so-called NSR, or not sufficiently restocked, land. There are something like 10 million acres of that land in British Columbia. To understand the employment impact that could have, you have to realize that we only log about 0.5 million acres a year. That could provide a tremendous amount of work to the very type of man and equipment that have been idled by this current downturn in the market — those 14,000 people.

Road building, at a time of depressed markets like this, is something that companies, if they have to do it themselves, would like to cut out. But this is exactly the time when road building should not only be sustained, but should be increased — once again, to give employment to the very men and equipment that are idled by the shutdown of the logging shows.

The way to do this, Mr. Minister, is to change the current system around. Rather than booking your road building costs on a ledger basis, and crediting them against stumpage payments, the thing that needs to be done is for the government to advance the cash for the building of those roads, and then accumulate it back through the full stumpage payments later on out of production.

That's the only way the companies or the government acting itself can afford to maintain employment in road building in 1974. It has to be maintained, and it has to be increased, because that's our basic problem — those 14,000 unemployed people. The Minister has to do minor things, but terribly important, like speeding up the approval of cutting permits to allow for more flexibility of logging of different species in lower-cost areas.

Interjection.

Mr. Gibson: The Minister says, "We need more biologists too," and I guess we do. We need a lot more people.

Interjection.

Mr. Gibson: But we particularly need action from the Minister to help the logging firms cut their costs during a time like this so that we can remain competitive on world markets and maintain our employment. That's the whole issue.

In tough times the government has to take some of the risks and help the industry. In good times the government creams a lot right off the top. That should be the quid pro quo. But, unfortunately, this is a government concerned with revenue for its own coffers and for its own Crown corporations, not for jobs for British Columbians.

Mr. Rolston: Take a look at section 7.

Mr. Gibson: Take a look at subsection 7 of section 4 which is jobs for the boys. That's a different thing. I'm talking about jobs for British Columbians in the forest industry.

The Minister of Finance has $250 million in his budget for stumpage revenue this year. He isn't going to get it, but he just wants every last million that he can squeeze out irrespective of what this will do to the jobs in British Columbia.

Now, having given those suggestions, I want to move on to the next portion, which shall be very brief but very important. That is subsection 7 of section 4, which says:

"A director who is a Member of the Legislative Assembly may, notwithstanding the Constitution Act…."

Isn't that quite a phrase, Mr. Speaker? It kinds of rolls off the tongue.

"…notwithstanding the Constitution Act, accept payments made to him under subsection (6), and is not thereby ineligible as a Member of the Legislative Assembly and is not disqualified to sit and vote as such."

That's a disgusting, venal provision in this bill, Mr. Speaker. It's jobs for the boys, for those NDP backbenchers who couldn't quite make the cabinet. The government wants to give them a little reward to keep them in line. It's bad, bad practice. It's the kind of thing that has gone on in Ontario for many years and resulted in a lot of corruption and a lot of exposé articles there. It's the kind of thing we should not consider importing into British Columbia, not for one minute.

An Hon. Member: They have a much bigger backing.

Mr. D.A. Anderson (Victoria): Are you promising an amendment?

Mr. Gibson: There better be an amendment to that; it's a disgusting section.

An Hon. Member: Don't you trust the backbenchers?

Mr. Gibson: The amendment had better provide that no Member of the Legislative Assembly can sit there. The only acceptable amendment to that subsection 1s its complete deletion. If there's going to be an amendment to it, why is it in there in the first

[ Page 4835 ]

place?

This whole bill has the evidence of being very carefully calculated and very carefully draughted. I can't believe this section there is a mistake, Mr. Minister.

So that's jobs for the boys.

Now we come to the next section, which is the important section of the bill: the takeover and forest-industry-control sections of the bill.

Interjections.

Mr. Gibson: I don't know, Mr. Speaker, if the Minister is laughing or if he's chortling. I think he's chortling because he's thinking of the takeover of the lumber industry, and he enjoys the thought. He enjoys being in charge of Can-Cel, and MacMillan Bloedel will be even better. Buy maybe he'll pick up some small companies en route. MacMillan Bloedel, I would think, would be particularly enjoyable to him because of the CPR ownership.

Interjection.

Mr. Gibson: That's right. He might go for poor little companies first, I would ask you to name the names, Mr. Minister.

The forest industry has been controlled for years on the raw material side and has been controlled very tightly. It's the kind of thing which has led to exactly that kind of concentration in the industry and the kind of bigness in the integrated firms that the Minister so much deplored in his opening remarks.

There's a tremendous control on the raw material side. It has forced the little man out over the years; it led to corruption of a very serious nature. It's the kind of absolute power of which Lord Acton said "corrupts absolutely." Now the Minister is proposing to add to that kind of power because that's what this does.

He's now moving to control the market side as well. In section 7:

"Without limiting the generality of section 6(1), the objects of the board are and it has the power to improve the performance of markets for forest products, and to encourage the utilization of timber, in the province." I don't know if he's going to control the markets outside of the province. There's a comma in an interesting place there that we can deal with when we get to that specific clause. But clearly, inside-the-province markets are available to be controlled under this bill because we find that the Lieutenant-Governor-in-Council has certain powers under this bill to make rules and regulations.

It's a very simple little clause; it says: "The Lieutenant-Governor-in-Council may make regulations." "May make regulations," Mr. Speaker.

Any kind of regulations, I suppose. They may make regulations about you, Mr. Speaker, under this Act, I don't know. (Laughter.)

[Mr. Speaker in the chair.]

I'm against that kind of control, Mr. Speaker, because it leads to economic inefficiency in an industry in a world that is becoming increasingly competitive in the wood sector.

The Minister read out some figures earlier on about the foreseeable shortfall in wood products by the year 2000. I suggest to the Minister that that is unlikely to occur because many nations of the world are moving very quickly to remedy that deficit. Unfortunately, they start with natural resources in some ways much less expensive than those of British Columbia.

The fibre may not be as good; the wood may not be as good. But it grows much more quickly; the reproductive cycle is a lot quicker. We have to look to countries like New Zealand and Brazil as being the sources of significant competition to our industry in years to come, not to mention the southern United States and the increasing development of those timber stands.

This poses a real problem for British Columbia. We're going to have to stay efficient and on top of it to stay even. An industry that is owned or completely controlled as to market by the government isn't going to be able to do that.

The other philosophical reason I'm against this kind of control is the decline of independence of people who gain their living from this economic sector. In a state where everyone is subject to the arbitrary turn of the economic screws by the government, no one can be free. And that's exactly the kind of machine that's being designed here. It is attacking the basis of our freedom by making all the citizens subject to the government. I suggest that those who have any doubt about this long-term objective might look at a paper on resources which was prepared for the 1971 NDP policy convention, I think, and attributed to the current Minister of Lands, Forests and Water Resources, setting out in extensive and adequate terms his philosophy in this regard.

Now, Mr. Speaker, how will these controls and takeovers work? The Minister said to us, "Well, now, this is really just the Pearse report. Nothing more than that; just the Pearse report."

I'd like to read something on the log marketing section, just in passing, that the Minister didn't read. The final conclusion on page 185:

"Our analyses of log marketing and of the log price data presently used in coastal appraisals, summarized in this appendix, lead us to three general conclusions.

[ Page 4836 ]

"First, the data available on log transactions are inadequate to provide conclusive measures of the deviation of reported log prices from their true value in manufacturing."

The Minister didn't note the uncertainty of conclusions like that.

"Second, log prices are sufficiently sensitive to register fluctuations in the value of products recoverable from them.

"And third, notwithstanding both of these other conclusions, there are strong grounds for suspecting that log prices generally underestimate the value of timber transactions, and as such provide an unreliable base for estimating the value of standing timber."

But the Minister didn't indicate the uncertainty that was tacked to those conclusions.

Now the Minister says: "Dr. Pearse concluded that a board was needed." At page 134 of his report he summarizes the functions of this board:

"(1) Purchasing, sorting, transporting and reselling logs, chips and other intermediate forest products for the purpose of enhancing competition in markets and increasing product values, and maintaining facilities for these activities.

"(2) Co-ordinating and administering provincial controls governing the export of forest products.

"(3) Acting as a clearing house for the marketing of intermediate forest products and stimulating competition by advertising and other measures that will enhance market information and participation in the markets.

"(4) Assisting the Forest Service in such matters as compilation of market statistics and revision of log grading procedures.

"(5) Advising the Minister on matters relating to marketing and export controls, including chip direction policies, chip prices and export charges."

He also suggested that directors be appointed for fixed terms rather than at pleasure, as provided in this Act.

Now, none of these proposals in the Pearse report are coercive, none of them at all. They are what I would call voluntary kinds of proposals; intervention in the market but not marketing control.

The unfortunate thing about this bill is that it gives powers for any kind of control whatsoever. It gives the powers for the complete setup of a marketing board. So what can happen is that companies can be squeezed at the bottom, at the raw material supply, and squeezed on the top, on the market side, or squeezed somewhere in the middle by a, let's call it a log marketing board, through which all persons cutting logs would have to invoice them before having them sent on to conversion, thereby taking a lot of the profit right out of the middle.

In other words, the marketing powers in this bill would make it possible to squeeze the companies to any degree the Minister might wish to do. The board might have the power to direct the sale of lumber — when, to whom, and at what price. The board might have the power to put a cash squeeze on any company by fiddling around with its marketing requirements.

When this is read in conjunction with section 15(3):

"The board may, upon acquiring shares, debentures, or other securities of a company, appoint such persons as it considers advisable to be the representative of the board at any meeting of the company, or any meeting of the directors of the company…. ."

It makes it very clear that the concept of this bill includes the possibility of squeezing a company down in a cash position to a point where it has to accept sale and virtually confiscatory prices to the government or face bankruptcy as an alternative.

This technique, I suggest, is not unknown to this government. This is the sort of thing that happened to Rim Forest Products. I suggest that it's not unknown to this Minister to have the concept of squeezing companies down to the value he thinks they should be at before acquiring them.

I quote once again from that policy piece:

"The acquisition of privately owned corporations in the resource fields prior to major resource tax changes would be a mistake because the market value of those companies would be grossly inflated because of the wide range of tax holidays they presently enjoy. Any acquisition of those corporations prior to a substantial tax change would be a misallocation of public funds."

Mr. Speaker, that's a Minister giving a blueprint for how you take over companies in the resource field, and then telling us that that's not the intention of this bill. That's what this bill is all about.

There are miscellaneous venal provisions that the Minister didn't draw attention to. There's a section dealing with disclosure, which is meaningless, especially with a Minister who still isn't willing to tell us anything about Ocean Falls, who still isn't prepared to table the contract they have with Gottesman, who's declined to table the feasibility study that was received back in March. Are we to believe that we're going to get any disclosure out of this Minister?

There's no legislative control of borrowings in this bill. The full faith and credit of the province can be charged upon by this agency, with no provision for review by this Legislature.

The timber board would be exempt from the Companies Act. Why would it be exempt from the

[ Page 4837 ]

Companies Act? Those disclosure provisions and other controls on directors are written into the Companies Act because it's thought necessary in the conduct of private business. To how much higher a standard should public business be held accountable?

There's an interesting item, section 8(3)(b), which notes that the forest products board may advise the Lieutenant-Governor-in-Council on what conditions and payment of charges forest products should be exported from the province.

Now, this has been quite a small item, up to now, in the revenue of the province, the so-called timber tax. Does the Minister have in mind here, by this section, something much more substantial, something on lumber like an export tax on oil? Is that what he has in mind? If that is what he has in mind, will he suggest to us what opinions he has as to the constitutionality? We don't know what's in his mind on this point, so I'll defer further comment on that until we get to that section and we can properly ask the Minister questions on it, but I hope he will be thinking on that because it's an important point.

Another nasty little section is section 20(2). I think your Honour might be interested in this section because it provides that: "In the absence of an appropriation therefore subsection (1) also applies on the fiscal year of the Government ending on March 31, 1976."

Mr. Speaker, that says "in the absence of any appropriation" of this Legislature. The basic power of this Legislature and every British democratic Legislature over governments from the days of Magna Carta has been the power of the purse and the power to review expenditures. Here this government proposes to remove that power for an entire year by this subsection.

Another cute little provision is the size of the board.

Mr. Speaker: Excuse me, Hon. Member. I hope that you will deal more in general terms with your opposition, if you're expressing that, to the bill rather than deal with specific sections.

Mr. Gibson: Certainly, Mr. Speaker. Indeed, I'm at the end of my list of particular nasty little provisions.

The board of directors can be as few as three, and a quorum is two, so the Minister and his Deputy, let's say, just for example, could completely control this board.

This is a bill that almost defies belief and defies the finding of words to grapple with it. It is a bill of a Minister who wants to destroy a system. It is a bill of a Minister who thinks he makes himself stand taller by tearing others down.

This pretense of being for the independent is nonsense. This is a bill which will more completely and more surely and more rapidly complete the destruction of the independent operators in this province than any other legislation I could contemplate.

Mr. Lewis: How can you say a thing like that?

Mr. Gibson: I can say it, Mr. Member, because it's true. Mr. Member, did you know that there is fear in this province?

Did you know, Mr. Minister, that there are people who are afraid to come and see you and tell you what they think about your legislation and about how you administer your department because they're afraid of what's going to happen to them? They're even afraid to come over here to Victoria and see you. They're afraid to be seen in that delegation.

An Hon. Member: Some of them are afraid to cross the border.

Interjection.

Mr. Gibson: : The Minister says, "nonsense." I know of cases, because the independent operators in this province know just how ruthless this Minister and this government is prepared to be with them.

An Hon. Member: Name them and he'll get even.

Mr. Gibson: That's right. If we name them, he'll get them.

The operators know that the Minister has the power to set stumpages, to cancel licences which he passed in that last forest Act without any appeal, to assign quotas. He's got the power to nudge British Columbia Railway to have high chip-carrying prices. He's got the power to direct Can-Cel. He's got the power to take over other businesses. He's got the power to refuse the assignment of cutting permits.

Hon. R.A. Williams: Most of that was Social Credit legislation.

Mr. D.A. Anderson: That doesn't make it any better.

Mr. Gibson: Mr. Speaker, the Minister said that most of it is Social Credit legislation. This party fought the Social Credit legislation, too, when that came in. A lot of it is bad legislation, Mr. Minister, and I hope you'll change it, but instead, you're going in the other direction.

This government has no mandate to change the basic economic fabric of this province. It was elected with only 40 per cent of the votes in this province in the last election. It couldn't get 30 per cent today, not

[ Page 4838 ]

30 per cent. No way.

You have no mandate to make these kind of basic social changes. You are a caretaker government, and you should resign right now, which would, among other things, have the effect of withdrawing this very bad bill.

Hon. W.L. Hartley (Minister of Public Works): You're an undertaker.

Mr. P.C. Rolston (Dewdney): As I listened to the Member for North Vancouver–Capilano (Mr. Gibson) about the anxiety that he claims the independents have to meet the Minister, I couldn't help but think of the anxiety the Minister might have had to meet some of the independents who have come over quite regularly during my 28 months as an MLA for Dewdney riding, a riding with 20 mills — one very large one, one middle size, and 18 smaller mills. I can remember several times the Minister coming to my office to meet these very small truck loggers, small mill operators, and in behind the door there would be some of these people to meet him.

Maybe the anxiety was on his part, as these people were very desperate to get tenure. They still don't have tenure, but I think there is a greater hope that they will have some tenure. Indeed, Mr. Speaker, I can only think of three companies in my riding but, by George, they have the tenure. Of the three, there is really only one large one that's milling in my riding and using the logs from the forests in my riding to produce the jobs that the Member for North Vancouver–Capilano (Mr. Gibson) is so anxious they are leaving. I think basic to this bill is the whole stabilization of the wood chip thing, but also the hope that I have, and I think I have a reasonable hope, that there will be a greater sense of tenure, I can think of many mills that have operated for many, many years.

The Minister met a chap who really pioneered the cedar business. In Mission we like to boast that "we shake the world," and there's a fellow who 35 years ago, developed a market, in the United States mainly, and somewhat of a market locally for shakes. He developed the equipment that never under Social Credit had a chance of tenure — never under Social Credit had even the slightest chance of some kind of stability in that industry. Here we have a chance to give some stability. These people, even in the cedar business — the shingle business — do chip as much residual as they can. They put it into barges, and in some cases they even truck it, Mr. Speaker, down to the six or seven large, vertically-integrated wood products companies to be mixed in various ways to produce pulp.

In fact, the vice president of one of the medium sized companies told me two weeks ago — that they were so desperate, the price was so desperate, even at the Fraser River — and at least with the price on the coast there's somewhat of a free market; it's certainly better than the Interior — but this company was so desperate that they were getting permits from the cabinet to export their chips down to Everett, Washington. Now that is no situation that I am happy about. We don't want to see that raw material leaving the province.

I am most anxious…. I think long before I was even in the campaign in 1972 I was anxious that there be stability, in my case, for the 20 indigenous mills. But I'm sure there are many, many hundreds of other mills where the people do have a sense of hope that they can have, first of all, tenure; and secondly, once they get tenure or even if they have very little tenure, that they can get some kind of a guarantee of a decent price for the residual.

I am told, Mr. Speaker, that right now they're lucky if they get 10 per cent of their revenue from the residual. We are told that it should be 30 per cent. There's no reason why it couldn't be 30 per cent. This would tie them over when, as the vice president of Canadian Forest Products told us in the Canadian Forest Products magazine, about three weeks ago we're in a very difficult patch in the world lumber markets and there should be a chance for a much better return to these small companies.

It's my hope that this can be taken quite on face value, that section 2 of the Act can be a chance where there can be possibly even a domestic and a world price for chips; that a formula can be worked out to determine the prices and prescribe various ways of getting a much better return; that as we move on to section 7, in a very general way debating the bill, that the board can improve the performance of the markets in the forest industry. I think that can be taken at face value, that there is a great deal that needs to be done, certainly in the chip…. But I think in many other parts of the diversified lumber, plywood, press board, and pulp and paper and craft industry, we must see as a government that there is a maximum kind of return, that there is a reasonable hope for people who invest in mills. It must be remembered that this government is requiring much higher pollution control standards; that by the end of this year most of the beehive burners that we used to know in the Fraser Valley must have high. heat equipment on them — and we're talking a minimum of $35,000 per unit. We have to guarantee that there is a much fairer return to these people, that $60 for a bone-dried unit is a reasonable price to drive at.

I have been told, by talking over the last few weeks — and especially on the last weekend with some of the small operators in my riding, I've heard of their desperation to get a reasonable price, to pay the towing. I've heard of the desperation these people have to really continue in sawmilling at all. In the old days, Mr. Speaker, the return in sawmilling was

[ Page 4839 ]

substantially better than the return for simply putting logs in the water. There was often a $50 incentive to mill, $50 from lumber including what you could get from selling hog and selling chips. Today, there isn't that kind of distinction between the prices of logs that you can put in the water and milling those logs.

Indeed, Mr. Speaker, I'm sure you realize that sometimes, where there might be only a $10 difference between the price that that mill operator, let's say in Wannock, or Mission or Maple Ridge, would have to pay for the log, including stumpage of course and towing, to the finished product…. Of course, these people have had long-term commitments, and often these commitments were at a much cheaper lumber price. There were times when they were just barely breaking even. So this is a real anxiety that I have.

I would like to see that there's a much greater return in the residual. I would like to think, Mr. Speaker, that it isn't necessary for the Minister to drop stumpage rates without a lot of testing, a lot of worrying this through, because during a year of difficult lumber markets, arbitrarily to drop stumpage prices as the Member for North Vancouver–Capilano (Mr. Gibson) suggests, we might regret that kind of knee-jerk reaction.

I agree with the Member for North Vancouver–Capilano that maybe there should be a better write-off, mind you, on the roads, and certainly much more of the main rock work on main haul roads should be encouraged. There should be some way, and I don't know if it's through simply advancing money, but certainly if we fear a whole year of bad lumber prices, maybe we can spend a year in getting the roads built which we know, Mr. Speaker, must be built. Engineers know three years in advance where their settings will be, and they certainly know where the haul roads and the little feeder roads will be. They can order the equipment.

It's fair to give credit where credit's due, and last night the Minister of Finance in Ottawa (Hon. Mr. Turner) said there would be a much better write-off on this equipment. That's encouraging, and maybe we can see that that is translated into employment programmes and incentive programmes to see the small, and the medium and larger companies, getting more done in road building. In my riding, I've made speeches before about the need for better roads. Of course, the fact is the roads are opening up into recreation and many other things.

Mr. Speaker, the Premier has said very emphatically that we are entering into a world shortage on many raw materials — presumably the price of $340 per ton for bleach kraft reflects a world shortage there. From all the newspapers that flood this building, I don't see newsprint demand decreasing. We seem to be saturated with print. It seems we could economize there. But there is still going to be tremendous demand.

We need to get that return as a government, and we certainly need to see that the small — especially the small — and the larger companies get a better return.

I would like to be very critical of the Leader of the Opposition (Mr. Bennett) when he seems to condone the 55 per cent unit price that the Crown received for the interior chips. I think that might have been passable in the first few years but it certainly wasn't passable. It was long overdue that this government change that most unrealistic assessment.

I would certainly appeal to the Minister, when we're talking in general terms…. It's not just chips. I read here that it's to, "improve the performance of markets for the forest products, and to encourage the utilization of timber, in the province." That's pretty general and sweeping in the sense of encouraging the industry. A great deal needs to be done to see that he small people, who are desperate, get raw material.

It is a fact that historically there were nearly blackmail tactics in the past to get raw material to keep mills going. Certain people who had quota were very, very influential and were given this quota. This often caused great anxiety among the independents.

I think there are many truck-loggers, many small mill operators who really are, I think, breathing a sigh of relief. Maybe they won't be so vocal and demonstrative in showing this hope, but I believe they see in this government on face value that this is simply to encourage the growth of the industry and, of course, employment.

The Member for North Vancouver-Capilano (Mr. Gibson) ought to remind the House that 55 per cent of the manufacturing in this country is in Ontario. That's a much higher percentage than the population; 55 per cent of the population is certainly not in Ontario. With that kind of diversity, of course unemployment is going to be less there. Our government, the New Democratic government, is encouraging employment, not just the warehousing but encouraging employment, employment in manufacturing.

How many times have I gone to that Member for Economic Development? We need to have employment; we need to have manufacturing and high labour-intensive industries. I believe that this is coming; I believe that this bill, in general terms, is an incentive in that way.

I strongly support it, and I know all Members will.

Mr. A.V. Fraser (Cariboo): Mr. Speaker, I would like to say a few words on Bill 171. I consider it the most important bill at this session — maybe since this government took office in October, 1972. It's important for other reasons than I'm getting the hand for, as far as I'm concerned.

The Minister of Lands, Forests and Water

[ Page 4840 ]

Resources who has this bill is really the boss of this administration, and this bill certainly points that out. It's my opinion and has been for some time, Mr. Speaker, that when this Minister says to the Premier of this province (Hon. Mr. Barrett): "You had better jump," all the Premier says is, "Please tell me how high." In other words, if we had a replacement for the Premier today, this man who is the Minister of Lands, Forests and Water Resources now, with this bill, would certainly be Premier of British Columbia.

I would like to also point out something that I didn't think I'd see happen during the NDP regime. Anyway, a large article in The Province newspaper this morning shows they're really starting to believe that maybe some of the takeover bills. are, in fact, just this. They point out that Bill 171 could well be justified by crying wolf about it because, in fact, it will certainly have full control and probably take over great sections of the forest industry.

Interjection.

Mr. Fraser: Mr. Speaker, I hear "Cluck, cluck" from the other end of the House. At least I never even had to leave this House because of an issue that was before it. I've never declined or put my running shoes on for a vote that has been taken in this House. I can't say the same for some Members who are here now.

This Bill 171 certainly confirms the authority of this Minister that he has in this government. And, of course, the other disturbing thing, Mr. Minister, is the fact that the forest economy which is affected by this legislation represents over 50 per cent of the economy of British Columbia. We all fully realize, I think, its very importance, its high importance, here.

This Minister, in my opinion ever since he has been a Minister, wants to defy and has no respect for this Legislature. It is where all public business should be conducted. Right at this moment there are 28 questions on the order paper that have been asked back to February by this Minister and he has the big percentage of zero in replying to questions which have been asked by various Members of this House. So he absolutely defies this Legislature in any way he can see fit.

I'd like to make a few comments on this bill itself, Mr. Speaker. It actually breaks down to two parts.

First, it would control all the prices, contracts and arrangements relating to the sale of wood chips. That's one section. It would retroactively void wood chip sale contracts which are in conflict with the Act. In other words, it would destroy any contracts that exist and completely control the wood chips.

That is one section of this bill. But the other part which I notice the prior speaker didn't refer to too much is, in my opinion, a far more important section of this bill. It creates a Crown agency, I believe, called the B.C. Forest Products Board which would have all the powers of a profit-making company, and possibly more. It would have vague and uncertain powers to "improve the performance of markets for forest products, and to encourage the utilization of timber…."

It also could act as a royal commission of inquiry under the Public Inquiries Act. This would require the disclosures of all documents, papers, financial statements, et cetera, of any person in the industry, whether related to forest resources or markets. Hence, the Minister can direct the corporation to inquire into the affairs and finances of public and private companies and individuals.

The general uncertainty created by the retroactivity of this bill; the regulation of wood chips, prices and contracts; the scope of the term "wood chips;" the right of inquiry; the evident purpose of creating a corporation with these broad objects and powers must all create an uncertain financial climate for the private sector in the Province of British Columbia.

There are problems and certainly differences between the coast forest industry and the interior. A great deal of my remarks will relate to the interior, which I think is under more debate in the province today than the coast industry. Certainly it is in more difficulties it would appear to me.

I would like to go back a way. When the Minister spoke earlier, he referred to the fact of the expansion of the pulp industry. I'm well aware of what happened when close utilization was established as a policy by the prior administration. This was to conserve wood that at that time was going up in smoke through burners or being left on the forest ground. Encouragement was put in to have an expansion of the forest industry of the interior into the pulp sector.

I might say, Mr. Speaker, prior to the 1960s, there was no pulp industry in the interior of British Columbia. It all existed on the Gulf of Georgia and the lower coast here. Nothing existed in any part north of that section of the Province of British Columbia.

So with the expansion taking place, at least seven pulp mills were established in the interior. One was established at Kitimat, three at Prince George, one at Mackenzie, one at Quesnel and one at Kamloops. Over $600 million was invested by this pulp industry and approximately 5,000 new jobs were created to develop the pulp industry in the interior. The last mill in this process went on stream, I believe, in November or December, 1972.

The idea behind close utilization was to make more use of the forest product and, as I said earlier, the waste. Now almost all these mills in the interior operate from waste of the sawmill industry. The sawmill industry had to change.

[ Page 4841 ]

The Minister referred to the decline in the forest industry. Well, with the policy of close utilization, certainly things had to change. We couldn't have the 2,000 or so, as the Minister mentioned, cut-and-get-out operators that we had because there was far too much waste. Close utilization brought that to a halt and there was amalgamation and phasing out of a lot of mills all over British Columbia because of this policy.

But something the Minister didn't mention when he spoke was that after all this consolidating and so on was done, until we had the recent slump, there was more jobs created by the forest industry than we ever had under the small operators.

But today, really we haven't got a small sawmill operator, I don't think we even have a small logger, Mr. Speaker, as such. It's I think a nice political phrase, but in fact I don't know how anybody could be a "small logger" today when a bulldozer costs $100,000 that he requires for logging. I don't really think you can refer to them as small. But in any case, with the advent of the pulp industry in the interior, the sawmills all had to build new and modern units that would get more out of the wood and also put barker chippers on to develop a chip supply for the pulp companies, as well as hog fuel. That hasn't been mentioned here; I'll have something to say about that shortly.

The other observation that has been made, we've talked about the terrific prices of the pulp market today. It is quite true that they've doubled in price in a short period of time on the world markets, but I would like to point out, Mr. Speaker, that the pulp mills that went into the interior didn't make any money from 1965, they practically operated at a loss until about 12 months ago. Some of them are only experiencing their first profit on operation since they invested, and on the average, each one invested $75 million or $80 million.

But during 1974, Mr. Speaker, the lumber and plywood market collapsed. As the Minister said, the cause of that is a world or probably the U.S. — certainly the U.S. market mainly. But not only the U.S. market as the Minister reported earlier, every phase of the world market for lumber and plywood for the first time in many, many years, all collapsed at once.

They couldn't ship to Japan, there was no market there, no market in Europe and so on. So we have the sudden decline in the lumber and plywood market. It certainly has worked a severe hardship, and is working a severe hardship on all the sawmill operations probably throughout British Columbia, in the area that I'm acquainted with, certainly all over the interior of British Columbia.

I might say that throughout the interior some mills have closed entirely, some of them are on 50 per cent operation and some of them are on 70 per cent operation. But we have high unemployment in the industry in the interior and the total in B.C. is probably at about 15,000 people. I don't know how many are indirectly affected, but thousands more, and it would appear that this is going to continue.

I might make an observation here on the part of this bill that refers to price of chips. I'm very skeptical, Mr. Speaker, that the mills particularly that are closed down, that any increase in the chip price will encourage them to open up. I might say on the price of chips, they averaged we'll say $10 up till 12 months ago. The Minister indicates that they aren't much higher than that now. It's my information that chips now average from $25 to $40. You know, that's not what the Minister stated. I think he said around $20. Yes, the supplementary part is some $40 odd, so I think if you average that with the lower price, you find a higher price.

I might say again that on this subject of wood chips, Mr. Speaker, that I am sure that the wood chip price would have advanced further by now if the industry had have known what the government was going to do through the Minister on the price of stumpage on these chips. If he had signified in any way, like he did in some material, that he would relax the price of stumpage as it applied to chip materials, I think you'd have found the pulp industry would have advanced higher prices long ago for chips.

But what I think they were afraid of, and I think everyone was afraid of, is as they advanced the price of chips for the sawmill operators at least 80 cents of every advanced dollar would be taken back in the form of stumpage by the government and in that way would not help in any way the sawmill operator create any new jobs and so we have the impasse that we have arrived at today.

This bill provides for a board of directors for this new Crown corporation, and again of course it will be friends of this government that are appointed there. I think, Mr. Speaker, I should announce now we're pretty sure who the new chairman will be, it will be Frank Howard, the defeated NDP MP from Skeena.

Interjection.

Mr. Fraser: No, we never said that and I'd like to point out to the Minister also that there's another MP that is available and was just recently defeated in my area of Cariboo-Chilcotin. I refer to Harry Olaussen, the defeated NDP MP for Cariboo-Chilcotin. That would help the employment in the Cariboo by getting him employed. This is what we're faced with again, I said earlier that this new board, over and above the authority for wood chips, have complete market control. The other thing that hasn't been said, Mr. Speaker, is that this new board is going to be the superior of the forest service. I am one person who

[ Page 4842 ]

has had a lot to do with the forest service in this province over the years, and I feel that they are second-to-none in their service that they've provided for the province and many parts of the free world have followed the leads that they have laid down. Now they are going to be subservient to these party hacks that will be on this forest board and I see the deterioration of the B.C. Forest Service, which I very much regret.

I would like to bring out here — we've been talking wood chips and other products of the lumber industry — I would like to refer to hog fuel. The Minister never referred to it, and I would like to ask of him why he continues as Minister to let hog fuel go to landfill in this province day and night, and be covered with landfill and not be put to the proper usage it should be put.

We're all so excited about waste and so on. I think we all are. This Minister has known since he took office that hog fuel is produced in this province by our sawmills. Again, they're getting nothing for it and the pulp mills are paying to have this product hauled away to sanitary landfill and covered up. It not only is hazardous, where it's been dumped, but it's a complete waste.

Mr. Speaker, the industry has asked for help from B.C. Hydro — which this Minister is the senior director of — for assistance. Couldn't B.C. Hydro buy the electricity that could be produced from this surplus hog fuel? I might say, Mr. Speaker, that the pulp mill at Kamloops and the pulp mill at Quesnel are both generating all their own electricity from hog fuel, but after they do that, there is a terrific surplus from the production of the sawmill that is taken to landfill and dumped.

Approaches have been made by industry individually and collectively to B.C. Hydro — which this Minister is a member of — for help. Certainly we should be able to put this into our power system, but they just get the off-hand answer from the Hydro board of directors, and the general manager, that it isn't economic.

I suggest, Mr. Speaker, that this is not the case any more at all, that with the terrific advances in Hydro rates that have now come into effect — 20 per cent to residential consumers, 70 per cent to industry for power — that they should be looking at this new source of power, which is hog fuel, a by-product of the sawmill industry.

This Minister has everything at his command. He is the senior director of Hydro. He's done nothing about it in over two years, and now when it continues to grow, and when he spoke earlier on this bill, all he wanted to talk about was chips.

But if you want to help the sawmill industry, I can assure you, Mr. Speaker, that you can supply him with revenue from the hog fuel which is going to waste, and in turn put that byproduct to good use, and that is into the manufacture of power which is badly needed here and everywhere else.

This board that they are setting up can take over any forest firm without reference to the Legislature. As a matter of fact I think there is a clause in there that shows that they don't have to report any of their activities until, I think it is, the spring of 1976 at the earliest. By that time they could have spent $1 billion outside the walls of this Legislature, and I don't think we should stand for that.

Really that is the point of this bill, to establish this board to go in and control the price of plywood, lumber, so on and so forth — all the products of the forest industry. The one section dealing with chips is just the window-dressing part of the bill and it is getting the most attention. But there are far more serious consequences in here than just that.

I also think that apart from the fact of the stumpage, that this Minister never told the industry that he would relax it so that they could increase their price to the sawmills. I'm sure if that had been done, and I want to repeat this, they would have advanced before now if they had known the government wasn't going to grab it all in increased stumpage.

But the biggest one of all on low prices has been Can-Cel, and, of course the others were watching their moves. It is only recently, very recently, in the last 30 days that Can-Cel have advanced their price of chips up to something that is half reasonable.

The industry, whether it be the sawmill industry or the pulp industry, didn't ask for this government interference. Certainly they had meetings with the government, and they asked for help. Certainly they did. But they didn't ask for government interference which this bill certainly is, if nothing else.

The industry asked for restrictions of logging regulations by the forestry to cut down on their costs of building roads, and so on, while the market was in this depressed state. I might say, Mr. Speaker, that in the last two years to get a cutting permit from the Forest Service now it takes an average of two years. This is absolutely ridiculous. It's just red tape, one after another. As a matter of fact, even after timber has been allocated it takes a year or so before they know whether they can go and log or not.

Right at the present time, Mr. Minister, I know of many outstanding applications for cutting permits even at the decreased cost and poor market for lumber. At least they could log in the wintertime when it is the best time to log, and then gamble on the market increasing in the spring. But at least they would log in the wintertime when things are frozen up. But they can't get their permits untangled from the Forest Service.

Another thing that hasn't been mentioned here today is that because of the lack of policy by this government Indian land claims are involved in here as

[ Page 4843 ]

well. I refer to my own riding where one is held up and has been for a year. I'm not saying that…but the Forestry did award the timber. This Minister stepped in because the natives of the area complained. But the environment study — in my opinion it should have been made in 1973 not 1974, but the Minister stepped in. As for an environment study, we have thousands out of work and that environment study is complete and it is my information is still sitting on this Minister's desk, when we have people out of work.

Why can't we get these sort of things through? These are the things the industry asked for and, as of now, still haven't got any answers on, which would help immensely to create work for people who are sitting idle tonight.

It was mentioned earlier, Mr. Speaker, the estimate of revenue of the largest industry for this fiscal year was $250 million. The government is going to be very fortunate if they come up with half that amount because of the decline in sawmills and lumber and plywood markets.

The other thing is that on the price of chips, I understood — the Minister didn't say it earlier when he spoke on the bill — but I believe I read or heard in the press that the stumpage rates on these chips are going to stay at a low level until July 1975. Well, after all, Mr. Speaker, that is only eight months away.

What's going to happen after that? Is the Minister going to put a floor price on chips that he indicated earlier of $60 a bone-dry unit, and then increase the stumpage beyond July 1975? I think it is time the Minister leveled with this House and the people of British Columbia.

We always hear about long-term planning and that by this government but how can you do any long-term planning on eight months' notice? In other words the stumpage could increase materially in the next eight months and then they will all have to shut down again, unless the lumber and plywood market has advanced.

There are indications in this legislation, Mr. Speaker, that the larger companies — and I will say this much about them, that MacMillan Bloedel is one; it's a worldwide organization that I think has done a good job in selling our B.C. products throughout the world, finding markets for them, and it is B.C. based. For that reason I am proud of them. They have certainly done their marketing job, along with a lot of other companies I can mention — Weldwood of Canada, B.C. Forest Products, and so on.

Is it the intention of the Minister under this bill to make them public utilities? There is every indication that that's what there is — legislation along the same lines as there was under the Energy Act, where Westcoast Transmission, I believe, now are given 8 or 9 per cent return on their investment and the rest is taken by the government.

It appears that could happen under this legislation, Mr. Speaker, and for that reason…and I might say that since 1972 there has been no major investment in this province in our major industry, the forest industry. Believe me, now because of this legislation, there certainly won't be any more from the private sector. There certainly might be by the government, but there won't be by the private sector.

It is no wonder that the Minister could boast about the profits of Can-Cel earlier, in view of the fact that they have been stealing the chips, and only recently decided to move upwards, so now I imagine that will certainly give a different look to the profit picture for Can-Cel.

Interjection.

Mr. Fraser: The profit that he's boasting about, yes. But it has really come off the backs of the independent sawmill operators, and this is most unfortunate.

The high unemployment in the forest industry is probably the highest we've ever seen. I really can't see that a sawmill — and I know lots of them that have been locked up today in the province, how they can, even if chips go to $60, how they can find it economic to open up unless there is some other things given them, logging guidelines relaxed, and so on.

I only hope that this is not the case but I really think that the time of year being what it is, Mr. Speaker, that the Minister should consider giving a floor price on chips and making it definite in the very near future because a lot of people are going to have a sad Christmas unless they know where they're at. The quicker they know what's happening, what those prices are going to be, decisions can be made to get the people back to work.

Interjection.

Mr. Fraser: Oh, no, no, that's just section 2. That's all it is.

Otherwise the unemployment is going to increase far beyond what we have in front of us today.

But I would just like to say in summary that this really has put our whole forest industry into what they expected they would find, a threat for takeover. While the Minister denies it, Mr. Speaker, the authority is there and while that club is over the industry's head, we aren't going to see very much happen in the way of increased employment and so on.

As far as the price of chips is concerned, I say to the Minister there that this should have been looked into long ago.

It was mentioned earlier that this was brought up as a bone of contention in the industry in the spring.

[ Page 4844 ]

In the interval some of the independents, the ones not integrated, had to close up. It's most unfortunate that this has happened. I don't know whether they can get open again and get their logging crews organized. I only hope that is the case. But still, there is so much uncertainty here, it's very doubtful that they will.

There are far too many takeover provisions or threats of takeover in here to convince me to support this legislation.

Mr. H.D. Dent (Skeena): I just want to make two points in support of this bill, both of them very brief.

The first one is that there will be a little more rejoicing, I think, in Hazelton now. There's a very good chance, I think, and I'm very optimistic about Rim Forest Products getting back into operation shortly.

Can-Cel is now paying more for their chips. Under an improved chip price for the province, they will even pay more. This will make it possible for Rim to be economically viable, even despite their very heavy carrying charges.

Mrs. P.J. Jordan (North Okanagan): You saved them after you shoved their head under the water.

Mr. Dent: The second point I want to make is that the difference between the official opposition and the government has been very clearly revealed today. When it comes to the independents, if either the government or the big companies had to be a loser in order to make it possible for the independents to survive, well, we choose that the international pulp companies' will be the ones that lose a little bit. The other side decides that the people are going to lose. That's the difference between the two.

For 20 years, probably for 100 years, the big companies, especially as they gained more economic power, have been able to pretty well decide who survived and who didn't survive in this province, who succeeded and who didn't. They pretty well wrote their own rules when it came to operating the forest industry.

There's now going to be a change, and I for one am very pleased about this. I think this is one of the best things that's happened in the Province of British Columbia economically in its whole history. Finally, the people are going to make some decisions about the shape of the industry in the future. I support this bill 100 percent.

Mr. L.A. Williams: I'm glad that the Member for Skeena supports this bill and made reference to the difficulties of Rim Forest Products. If anyone contributed to the problems of Rim Forest Products and prevented it from being rescued, I suspect that the Member for Skeena along with this Hon. Minister can take the credit for that exercise in economic futility.

Interjection.

Mr. L.A. Williams: The Minister of Economic Development (Hon. Mr. Lauk) has been very quiet during this whole debate. I think that probably a large portion of the problems that face the forest industry in this province today can be laid directly at the feet of the former Minister of Industrial Development, Trade and Commerce (Hon. Mr. Lauk) and now called the Department of Economic Development. I'm certain that this legislation will make it absolutely beyond doubt that the Minister of Economic Development will have no success in his portfolio because economic development for the province of British Columbia in fact of Bill 171 is D-E-D — dead.

Hon. G.V. Lauk (Minister Of Economic Development): You can't even spell.

Mr. L.A. Williams: That's the way you spell your departmental title, Mr. Minister, and you should recognize the implications for your department and the future of that department in this legislation.

It has been suggested from time to time that there's a crisis in the forest industry, a crisis in this province. The crisis that faced the forest industry was nothing like the crisis which faces them since this Bill 171 has been introduced.

The Minister spoke of how he would change the methods of cleaning our woods and of utilizing what heretofore has been considered to be waste in the woods. He would clean the forest floor and pick up from the forest floor that which has been left before.

Mr. Speaker, there's one thing that we'll have to face. The next government of the Province of British Columbia will be picking up from the forest floor the forest industry which is being driven to the forest floor by this Minister by this legislation.

How fortunate it is for this Minister that he was able to have this market crisis in the lumber industry so that he could seize upon chip prices as one way of speaking in support of this legislation. It is obvious to anyone who reads this bill that this bill has been under consideration by that Minister for a long, long time. The only section of the legislation which deals with the current problem of chip prices, section 2, was very conveniently inserted just before the bill was introduced to this House.

This bill is clearly the end not only of the forest industry in British Columbia but at the end of that Minister's personal vendetta against the forest industry and the companies that are engaged in the

[ Page 4845 ]

forest industry of this province.

He suggested in his remarks — and his remarks were almost entirely related to one aspect of this legislation — that by this legislation this government was going to support the independents in the industry. What independents will there be left for any of the companies in the forest industry in British Columbia when they are completely controlled by the cabinet and by that Minister?

That Minister has brought changes into the Forest Service which gave him with one hand a stranglehold on the producing segment of the forest economy. And with this legislation he is clearly taking it by the throat with the other hand, giving him complete control over that industry.

The Minister has been accused in the past of being guilty of terror tactics in his performance. I didn't agree with the remarks when they were made before, but he's certainly living up to his advance billing with Bill 171.

It is clear that implicit in this legislation is to give that Minister powers which are even superior to that of the cabinet. If the Members will consider very carefully the wording in section 5, they will see that the board of directors and this new board which is being created is being given a veto over regulations passed by the Lieutenant-Governor-in-Council. When one considers that this board need only have three directors, and that when those directors may be Members of this assembly, including the Hon. Minister of Lands, Forests and Water Resources, it is clear that this board under the direction of the Minister of Lands, Forests and Water Resources can exercise a veto over decisions made by cabinet.

The Hon. Leader of the Opposition (Mr. Bennett) suggested that if the present Premier were to disappear, the Minister of Lands, Forests and Water Resources would take his place. By this legislation, the Minister of Lands, Forests and Water Resources is already stepping above the Premier and his cabinet.

Why does he want these powers? Well, he said in his opening remarks that because of the cyclical nature of the industry and because of the fact that American politics had changed the American economy, therefore they were using less of our wood products than had heretofore been the case. As a consequence, there was a slump in our lumber industry and we had to do something.

What does the Minister plan to do? Is he going to use this new board to change the politics and policies of the United States of America? Is that how he's going to promote and stimulate new markets for our products from British Columbia, recognizing as he does that if the Americans don't buy, our market situation is desperate? He admitted that, and yet he's going to establish this board which is somehow or other going to solve that problem. This board doesn't solve that problem at all, and the Minister knows perfectly well that that is the case.

What needs to happen is that that Minister, with the regulations that he has under his control, must anticipate problems as they develop in international markets affecting the forest industry in British Columbia. In that regard he should be able to call upon the assistance of the Minister of Economic Development. Only he's out to lunch.

The Minister should recognize what is happening in the international markets as they affect the forest industry in British Columbia. He should be moving in advance of the downturn in the market in order to assist this industry in continuing to survive, not coming in as he does now when we have thousands of men in the forest industry out of work and trying somehow or another, by the establishment of another board or commission, to stimulate a market over which such board or commission has absolutely no control.

The true threat of this legislation is to be recognized when you consider the extent to which this board — and through it, this Minister — is being given the keys to the Treasury. The demands that they can make upon the Minister of Finance (Hon. Mr. Barrett) and upon the consolidated revenues and the guarantee powers of the Government of British Columbia to finance the operations of this board quite clearly indicate how far this Minister is prepared to go.

Nowhere does it indicate in any specific way what this board would do with the kind of money that they have at their disposal, except in one clause — and that is to use its revenues to defray firstly the costs of doing business.

Mr. Speaker, why did the Minister not tell us in his opening remarks what business they are going to do? What costs are they going to incur in doing that business? It would seem at cursory reading of this legislation that somehow or other this board is going to be engaged in conducting certain examinations into markets at the behest of the Minister or the cabinet — purely an examination, a sort of super Pearse task force on a continuing basis. That's what it would appear to be.

But hidden in the depths of this legislation are things that would indicate that this board is going to do business. What business, Mr. Minister? You very carefully avoided indicating to us what business this board was going to do that would require the access to the Treasury of this province that you are being given in this legislation.

What business? When one considers the size of the marketing organization presently existing in the forest industry necessary to market internationally the billions of board feet of forest products produced in this province every year, and the nature and extent of long-term business associations internationally between the forest industry companies and their

[ Page 4846 ]

customers throughout the world, I wonder how this board is going to fulfill the job already being conducted by a vast number of highly skilled men and women of long experience in this field.

How is this board going to do that business? Where will its expertise come from?

I suppose we can look at some other examples of what this government has attempted to do. The one that most easily comes to mind is the Insurance Corporation of British Columbia. It certainly engaged a great deal of expertise. It hired people who were dispossessed from the pre-existing insurance industry. Maybe the Minister would like to indicate the extent to which this board, under his direction and control, will be reaching into the forest industry to hire those people that it may require in order to do its business, whatever it might be.

Speaking of ICBC also brings to mind what the Minister said about supporting the independence in the forest industry. When I consider how this government has supported the independence in the insurance industry, I would think that the independent forest companies would quake in their boots at the thought that this government, under the control of that Minister, would be supporting them in their independent position in the industry. Some independence!

The Minister mentioned a comment of Tommy Douglas of the elephants dancing with the chickens. Well, in this province we're only going to have one elephant dancing with the chickens, and that elephant will be this board. That's right. For the purposes of the forest industry in British Columbia, it will be a white elephant as far as the people of this province are concerned.

Mr. G.S. Wallace (Oak Bay): Mr. Speaker, this bill is very interesting inasmuch as it is titled Timber Products Stabilization Act. It was introduced by the Minister, who talked about only one theme in the bill. The theme was the sad situation in regard to the low price being paid for chips. Unfortunately, I wasn't able to keep up with the Minister quoting prices and explaining how low they were and how they should be and so on, and his speech is not yet available in transcript form.

I think the argument in itself, as provided by the Minister on that part of this bill, I would support.

I haven't seen the report which he mentions, from the research council, which came up with a figure of $60 per BDU, when many of the figures he quoted varied at the lowest from $9 to $16 at Crestbrook — the figures which he's kindly sent across the floor to me — and the highest reaching to $30 for B.C. Forest Products.

I don't for a moment claim to have the expertise or the knowledge to question the precision on these figures. But to present this bill solely on the basis, as the Minister did, that all this bill is intended to do is to give the independent sawmills a better price for chips at a time when the pulp market is flourishing, I think, was something less than complete and fair of the Minister in introducing the bill.

When he went a little bit away from the subject of chips he quoted extensively from the Pearse report. It seemed to me that the Minister in his whole introduction contradicted himself. First of all, he made great play on the fact that there is not really a free market — as though for once in his life this Minister believes that there should be a battle over supply and demand, and that competition is a good thing. There is not a free market, which our side of the House supports as a basic concept. In our non-socialist thinking a free market is always a good principle. If you have competition, then you get the better service and you get the better price.

In the earlier part of his remarks the Minister said that there is no free market. He quoted the Pearse report as saying — and, incidentally, let me finish that sentence: there was not a free market. He quoted the Pearse report. But the Pearse report said that there was some reason to suspect that there might not be a free market. The Pearse report did not specifically and in strong and unequivocal terms come to the same conclusion that the Minister did today. However, at one time he's telling us there isn't a free market, as though he believed that that was a good principle, and in the next voice he's telling us that he wants to assist the independent sawmills in getting a better price for their chips.

[Mr. Dent in the chair.]

Instead of simply assisting them, as is suggested in section 2 of the bill, he sets up a board with powers and objects as stated in the bill which go far beyond the earlier provisions stated in section 2 with specific reference to chips.

It's very interesting, Mr. Speaker, that later on in the bill the definitions widen and widen. In one part of the bill we're talking about the forest products and, later on, forest resources — which is a pretty wide definition. Of course, when we get to the point where the actual object of this board is described the language is positively…. I wouldn't say that it was poetic, Mr. Minister.

I used the phrase earlier on that it seems to me like it was Maoist in terminology, that the board would have the power to improve the performance of markets. What a delightful, endless definition of the objects of this board: just to improve the performance of markets for forest products — not just chips, forest products — and to encourage the utilization of timber. That, I guess, is the motherhood resolution for the timber industry.

To encourage the utilization of timber is such a

[ Page 4847 ]

high-sounding, noble, idealistic, all-embracing definition of the object of this board. There's nothing wrong with that as long as you don't come into this House and tell us that the bill is only supposed to deal with the price of chips. If you want a chip bill, let's entitle it the 1974 Chip Price Bill. But don't come in here and give us this line for 40 minutes that that's all this bill is intended to do, when in point of fact it has the capacity in the terms of this bill completely and totally to change the whole picture in the forest industry of this province.

Yes, Mr. Minister, you smiled or maybe you guffawed when I started off by quoting the title. All I was saying was that the title is comprehensive, but the manner in which you, Mr. Minister, chose to introduce this bill this afternoon clearly was trying to give this House and the public of the province the clear impression that that was all this bill was really intended to do. I'm trying to make the point very clear that I do indeed agree with the Minister on the points that he happened to choose to discuss this afternoon — namely that when the pulp market is flourishing and earning the profits which the Minister described, it is only fair and just that the sawmills producing the chips should be given a better price. I don't think we're in any doubt about that.

We're not questioning either the very worthwhile objective of obtaining the most efficient use of every tree that's cut in this province. That makes sound common sense, and I agree with the Minister that perhaps in the way that we suddenly have found the world to have a fuel shortage, maybe we're not too far away from the day when we do have a wood shortage.

Therefore once again, as so often happens in this House, the two sides are in a great deal of agreement as to what the problem is. What we debate is the method and the vehicle by which the problem is approached. It becomes tedious and repetitious, I'm sure, that almost every bill we debate in this House ends up by the two sides of the House dividing on the degree to which centralized state control, or the potential for that state control, is used by this government.

Before leaving the basic matter of chip prices, I wonder if the Minister in winding up the debate…. I'd like to ask him two questions. If this board is set up as it will be by legislation, has he decided on the formula for deciding what the realistic price for chips should be? I haven't seen the report of the B.C. Research Council which he quoted from. Maybe he could tell us if he plans to follow the recommendations of that research work.

Perhaps the Minister could also mention, in winding up the debate, whether he has already decided on a minimum price. He said in the statements in his opening remarks that $60 was an approximate figure which research had shown to be not unrealistic. Perhaps the Minister could answer these two questions: what will be the formula used in calculating the minimum price, and what is that price going to be today, let us say, using that kind of formula?

Mr. L.A. Williams: What alternatives may have been adopted otherwise?

Mr. Wallace: The interjection from the Member for West Vancouver–Howe Sound (Mr. L.A. Williams) raises the question of what alternatives might have been adopted other than this rather extensive bill with so much change of direction towards the forest industry and the provision of so much power to this board. I wonder again if this Minister doesn't contradict himself.

Unfortunately I can't find the specific newspaper clipping, but I remember when this bill was tabled in the House he was asked: if this government is so altruistic and so sympathetic towards the sawmill companies producing the chips, who were being underpaid, why at least could not Can-Cel from a moral position take an initiative and set an example by at least paying more than all the other companies were prepared to do, or paying a more realistic price for the chips? After all, the Minister has said on repeated occasions how well Can-Cel is flourishing since the government takeover.

But here again I think the Minister rather contradicted himself. On the one hand he derides the free enterprise system and the competitive system as being soulless and heartless, that all it tries to do is rip every dollar off the consumer it can, that it has no conscience. But here we had an ideal opportunity for Can-Cel to show that it could rise above all the evils of the free enterprise system. But oh, no, the Minister replied — and I paraphrase his comment — "Oh, no, we have to play the game the way it is played," or words to that effect.

His reply clearly was that on the one hand he decries the system within which Can-Cel is functioning. "It is immoral, it is wrong, it is unjust to the producer of chips, and we are in that game as a member of the game as one of the components, namely Can-Cel. But don't ask us to show a better example or take a more realistic or fair position, because we are in the game and we'll play it according to their rules."

I think that that really is a contradictory position to take. I think, if the Minister truly feels as he said he did in introducing this bill, that the situation was thoroughly unjust and unfair, and that the pulp companies were making large profits and not giving a fair return to the source of the chips, then I think that Can-Cel might well have shown the kind of example that the Minister was capable of advising them to do.

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Another point: I wonder why the Minister — and I consulted with people in the industry — would tell me that if an increased price had been arranged for chips, 80 per cent of that increased price would have gone back to the government in the form of stumpage. I'm not sufficiently knowledgeable to know whether that 80 per cent figure is accurate. But I am told that a large percentage of any increased price which had been agreed upon for the chip producers would have gone back as stumpage.

Now at least there are two alternatives the government had within its command. It could have found an alternative instead of this bill which brings in a board with a great deal of power and a whole increase in bureaucracy.

One cannot talk about the principle of this bill without talking somewhat about this board. Regardless of whether the board is a good concept or not, to have the gall to come into this House and say that the board could be as few as three people, one of whom represents the Forest Service…. Incidentally, what particular qualifications do members in the Forest Service have upon marketing?

I thought the Forest Service were the professionals who produced the best kind of management of trees. I was unaware that people in the forest service were at all skilled or knowledgeable in the much more complicated business of marketing the timber once it's been grown and developed and cut. It seems to me that it's another potential for empire building within this board, empire building by the Forest Service.

Regardless of that, the Forest Service, as represented, would certainly be a civil servant. We've also got in the legislation the incredible provision that an MLA can also serve on the board. I wouldn't be surprised at all if maybe the Minister made himself the chairman, and we would finish up with the delightful trio of the Minister, a civil servant and a backbench MLA from the NDP. Now wouldn't that just be cozy?

Mrs. Jordan: All at $40,000 a year.

Mr. Wallace: So regardless of the board, and one could question the concept of such….

Interjection.

Mr. Wallace: Mr. Speaker, someone has interjected that Scott Wallace might be on the board. It's very nice and very generous to think of me in these terms, because there is only one of us in here and it would really cramp my style if I took a position, so with the greatest of respect, just in case the Minister's thinking about inviting me, I very humbly, and with the greatest of respect, decline.

Mr. L.A. Williams: You could use your skills as a doctor to tell us if the forest industry is really dead.

Mr. Wallace: Well, that's another suggestion, of course. If I did serve on this board, it's not the first time I've carried out an autopsy, Mr. Speaker. I would certainly be in an excellent professional position to supervise the decease of the private sector of the forest industry.

At any rate, the board can have as few as three members. The terms under which it might be set up, might be composed, I think is really stretching the credulity of this side of the House, and the credulity of the public of British Columbia to read into this bill, into that particular part of the bill and that particular principle of the bill anything other than a very strong desire on the part of the Minister to have centralized control in the hands of a few appointed individuals so that the potential and capacity for extensive control of the industry as a whole would reside within that structure.

I suppose we're a little biased on this side of the House, but even allowing for that little bit of bias, I think someone coming in from another country and reading this bill could only come to that conclusion. I don't think it's perhaps fair to….

Interjection.

Mr. Wallace: Well, let's just get that point clear. The academic from the university…I suppose the implication is Dr. Pearse, but Dr. Pearse didn't write this bill. Dr. Pearse brought you recommendations suggesting that certain proposals be considered. But Dr. Pearse certainly didn't suggest that the three people on the board could comprise: one, a member of the Forest Service; one, an MLA; one, somebody else. Or for that matter, I suppose there could be two MLAs on the board — or three. No, I guess if you have at least three, it would be two MLAs and somebody from the Forest Service who depends for his income livelihood and professional future on remaining in the good graces of the Minister. Right on.

Interjection.

Mr. Wallace: I don't know what Dr. Pearse's politics were. I never asked him what his politics were. After all, this government always asks skilled, experienced people, and I don't think that their political background is considered good or bad.

Moving on from the objections which we have to the composition of the board, Mr. Speaker, I think that the way in which this bill delegates power, for example, to the general manager of the board…. It delegates the power to exercise any part of the Act by that one person who is the general manager.

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Later on in the bill we have the wide definition of the objects of the board. Then in section 8 we have the most wide definition of what the Minister may direct the board to inquire into and to make recommendations respecting. There again, without going. through all the details, which I'm sure we'll do in committee stage, such generalized, grandiose phrases as inspecting "the structure of markets…for forest products and remedial action required to improve the performance of such markets…."

Again, I think any objective person reading this bill could not fail but be impressed by the tremendous scope of the action which will be permissible to this board. Then, of course, it seems to all of us, from what I've listened to in the debate, and certainly it seems to myself, that this board the government in trying to protest the innocence of this bill as a bill to support chip prices, has carefully overlooked the capacity which this board has to buy up lumber and enter into the actual process of marketing with all the resources the government has at its command.

It recalls to me so tragically the debate we had in setting up ICBC. I haven't got Hansard in front of me, but I'm sure the Minister — I think he's bowed in prayer at the moment — was asked about the question of whether the price in this case, or in that case the price of automobile insurance, would be clearly reassured more than once by the Minister that: "Oh, yes, all the costs of doing business on the part of ICBC would be paid only out of premiums." There never would be such a thought given to subsidies from any other form of general revenue. Oh, shudder, perish the thought!

Well, I think history and events since that debate have shown that this government has absolutely the greatest gall, perhaps, of any government that sits in power in this country right now, to not only quickly forget that kind of commitment but, in fact, takes it from the consumer with one hand at the gas pump and gives the consumer back about 5 per cent on his premium and expects….

Deputy Speaker: Order, please. Would the Hon. Member return to the principle of this bill?

Mr. Wallace: Yes, Mr. Speaker. I'm just trying to make the principle that to be constructive in debate in this House one has to refer back to certain examples which exactly demonstrate the kind of principle which is involved in this bill. The principle is that the setting up of this board with the capacity to buy lumber, sell lumber and store lumber, in fact, manipulate the whole market is what is in this bill — the power and the capacity and the legislation to manipulate the whole lumber market.

The Minister says he believes in a free market and competition. I just ask the question: does it seem fair that the government with all its financial resources and with all the capacity in section 10, for example, to borrow money, section 12 to raise money by about every method you can raise money — is that fair competition, that this board should compete as it wants to do?

Not only that, we also have in the principle of this bill complete and total access to all the otherwise or previously confidential data and financial information of private companies. This board amounts to a royal commission, with all the powers of the Public Inquiries Act, yet the Minister wants to leave the impression that this is just competition, and that this board would simply be trying to create a fairer market in the matter of logs. The Minister shakes his head in agreement.

Well, all I'm saying to you, Mr. Minister, through you, Mr. Speaker, is that we would have to be awfully dumb on this side of the House to suggest that this benign suggestions that all the government wants to do through the vehicle of the British Columbia forest products board is simply provide a more appropriate method of marketing logs which will be to the benefit of everybody in the province. Just a simple little chip bill.

Well, that's not the way we read the basic contents on this bill. We think that it leaves the board with tremendous authority to manipulate prices. It gives the government, through the board, access to confidential financial information in other companies, and it was always my impression that that hardly perpetuates fair competition.

[Mr. Speaker in the chair.]

We've got the capacity of the board to favour some companies and penalize others. Is that fair competition? To play favourites? We've already seen that as soon as the government took over Plateau Mills, the ground rules were such that they don't pay any federal income tax. Is that fair competition?

I would love to go into the marketplace in some business as long as all my competitors were paying income tax but I wasn't paying any. That would be just great.

So with all these facts and the fact that the principle of the bill allows the board to set different prices for different suppliers, what it amounts to is that this board holds the power of life and death over any or all private forest companies for the various reasons I've mentioned. To bring a bill into this House and present it as a bill to defend the injustices being done to the independent sawmill operators, who are just unfortunate people in the marketplace who are not getting a fair price for the chips, when in fact the bill so totally empowers this Minister and the proposed board to change the whole structure of the

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industry, to play favourites, to manipulate prices, to exert control through three patronage appointments, and for him to expect that we can support that kind of bill is certainly stretching the credulity of all the Members of the opposition.

So in summary, we agree that the chip-price situation should be corrected, but we disagree with the method being used. I've outlined one or two alternatives whereby the chip situation could have been corrected without such an extensive, all-embracing bill of such serious ramifications for the industry as a whole. I feel from discussions I've had with people in the industry, whether this is a direct intent of the bill or not, there is a great sense of insecurity in the private sector in the forest industry which can only result in continuing decline in the value of the shares.

This may well be the purpose of the government as a secondary effect of this bill. When the time comes along to take over the next private company, the price will be lower than it would have been X months ago or a year ago. If we wait another X months or 12 months down the road, the price may be even lower.

That approach is usury in my opinion. If the government is utilizing its power in various ways, directly and indirectly, to depreciate the true value of shares in the forest industry so that the takeover price will be that much less, I think that's a very dishonest way in which to follow one's political philosophy.

This may not be the case, but I think from comments that have appeared in the press, the reactions generally to this bill and the concern of the forest industry which has been expressed, I suppose, to all of us in the opposition, this would appear to be one very likely consequence of this piece of legislation.

It seems to me that if the Minister's goals are as he has pointed out — that he would like to see the maximum efficiency of all our forest resources — it is tragic that he has to bring it about on a basis of fear and threat and the writing of legislation which gives the government power to completely manipulate prices in the forest industry with the ultimate likelihood of the complete takeover of the forest industry.

It seems to me that if this government, as it has stated many times, believes in the control of the important sectors of the community, whether they be communication or transportation or forest or mines, I think the honest and straightforward and open thing to do is for the state to buy out the industry at a fair, market price.

I'm no supporter of socialism, but I would say this: at least in Britain, when attempts were made and carried out, let us say, to take over the coal industry, the socialist government in the United Kingdom took over the coal industry and paid the private investor fair market value for shares. It was Clement Attlee who was the Prime Minister of Britain. If anything, he paid more perhaps than the shares were worth.

The principle I'm making is that if this government is aiming to takeover, whether it be the mining industry or the forest industry or any other sector of the economy, let's have a fair approach to the idea and not over a period of one, two, three or four years depreciate the industry and try and take it over at fire-sale prices. In the ensuing months and years after this debate, I'm sure there's going to be a great deal of instability as far as investment is concerned in the private sector of this province. If that's the case, then we all suffer.

One last point in that regard is that this government also espouses great concern for the little man on a pension. There are a lot of individuals in this province whose pension funds involve investment in the forest industry. It should be of some serious consideration to this government that if, in fact, this legislation results in further lowering of share values in the forest industry, they are indirectly doing serious damage to many of the pensioners in this province.

I certainly feel that the chip situation can and should be improved. But don't try and bring in a bill with one purpose which is 10 per cent of the total purpose, and that total purpose is to gain, now or in the future, complete and total control of the forest industry in British Columbia.

Mr. Smith moves adjournment of the debate.

Motion approved.

Hon. Mr. Hall moves adjournment of the House.

Motion approved.

The House adjourned at 5:59 p.m.