[ Page 3241 ]

CONTENTS

Routine proceedings

Oral questions

Ferries advertising campaign. Mr. Lea –– 3241

Guidelines on high-speed pursuit. Mr. Wallace –– 3241

Farm-to-retail chicken price gap. Mr. Gibson –– 3242

Travel assistance for canoe club. Mrs. Wallace –– 3243

Closure of Richmond private hospital. Mr. Wallace –– 3243

Propane gas sales tax. Ms. Sanford –– 3243

Field price of natural gas. Mr. Macdonald –– 3243

Statement

Move of PWA head office to Alberta. Hon. Mr. Gardom –– 3244

Mr. Gibson –– 3245

Routine proceedings

Committee of Supply: Department of Transport and Communications estimates.

On vote 198.

Mr. Macdonald –– 3245

Hon. Mr. Davis –– 3245

Mr. Gibson –– 3247

Hon. Mr. Davis –– 3250

Mr. Lockstead –– 3251

Mr. Skelly –– 3252

Mr. Wallace –– 3255

Mrs. Wallace –– 3259

Ms. Sanford –– 3261

Mr. Gibson –– 3263

Mr. King –– 3265

Mr. Lea –– 3270

Mr. Barber –– 3271

Hon. Mr. Davis –– 3273

TUESDAY, JUNE 29, 1976

The House met at 2 p.m.

MS. K.E. SANFORD (Comox): Mr. Speaker, I would like to introduce to the House this afternoon my daughter, Donna Sanford, who, now that school has adjourned, has come to see the House in session before it adjourns. I'd like the House to join me in welcoming her.

HON. H.A. CURTIS (Minister of Municipal Affairs): Mr. Speaker, a constituent from Saanich and the Islands in the House this afternoon is Mr. Mel Knudsen of Sidney who has two claims to fame. He was the founding conductor of the Victoria Symphony Orchestra from 1940 to 1948 and he is also Scott Dixon's uncle. Would the House welcome him today?

Oral questions.

FERRIES ADVERTISING CAMPAIGN

MR. G.R. LEA (Prince Rupert): Mr. Speaker, a question to the hon. Provincial Secretary. In regard to the advertising campaign to get customers for the B.C. Ferries, could the Provincial Secretary tell me which firm has the contract or has been awarded the job for government in doing that advertising campaign?

HON. G.M. McCARTHY (Provincial Secretary): Mr. Speaker, there were three advertising agencies that a week ago Friday were invited to give presentations to a selection panel including the Vancouver Island Publicity Bureau representative, an industry representative, a representative from Travel Industry and a representative from B.C. Ferries. Three people were asked to make presentations. One of them was James Lovick, the others were Ehrig Corp. and Truman Glover. The selection committee chose the Lovick firm and the Lovick firm was granted the contract.

MR. LEA: Supplementary. Could the minister inform me, in either the civil service or by order-in-council, who represented the government in selecting and recommending to government which firm got that job?

HON. MRS. McCARTHY: I mentioned the ones who did the actual choosing, and David Livingstone, the Assistant Deputy Minister of my Department of Travel Industry, was one of them from our department of government. One was Mr. Balderson, who is manager of the Empress Hotel, representing the travel industry and the private sector. I'm sorry for...memory but I can get for you the name of the representative of the provincial travel industry publicity bureau for Vancouver Island. I'm sorry, the name escapes me at the moment. There was one of the officials from the ferry service. Again I don't know the name but I'd be pleased to make that available to you. Those were the ones who voted on the actual selection.

MR. LEA: Supplementary. At the time the proposals were presented to the selection committee, was Dave Brown present?

HON. MRS. McCARTHY: Yes, Mr. Speaker. David Brown was there as a representative of my department in terms of communication. He did not cast a vote on the selection committee. He was simply there in his role as communications for the government and in reporting to government on communications.

MR. LEA: Supplementary. I would like to ask the Provincial Secretary if the firm that received the job is the same firm that Dave Brown worked for prior to coming to government.

HON. MRS. McCARTHY: No, the firm that David Brown worked for prior to coming into making the study on communications for government was his own firm. Prior to that time, after he was a year and a half to two years on a freelance basis, on his own, he was employed by the firm. That is true.

GUIDELINES ON HIGH-SPEED PURSUIT

MR. G.S. WALLACE (Oak Bay): Mr. Speaker, to the Attorney-General, with respect to the death of an 80-year-old man in Port Coquitlam on June 14 who was killed when an unmarked RCMP police car taking part in pursuit of another vehicle collided with the vehicle in which the elderly gentleman was riding, can the minister tell the House what guidelines the RCMP are following in determining the procedures that can be used in pursuing a vehicle where there is clearly great danger to other motorists and pedestrians?

HON. G.B. GARDOM (Attorney-General): Well, I assume the hon. member wishes a specific answer to his specific question, so I shall check with the RCMP. But I would anticipate, Mr. Member, that they would be following the normal and accepted guidelines to do their level best to catch the person they intended to apprehend and also do whatever they can along the line to protect the interest of citizens and drive safely and as carefully as possible.

MR. WALLACE: Supplementary, Mr. Speaker, I wonder, since the offence of the person being

[ Page 3242 ]

pursued often appears to be less than serious compared to the great danger to the public from high-speed pursuit, will the Attorney-General undertake to initiate an inquiry and review the present basic rules and regulations under which all police forces operate with regard to the pursuit of vehicles in areas of high traffic density.

HON. MR. GARDOM: It's a terribly regretful thing that happened, Mr. Member, but I'm not convinced that an inquiry per se is required. But I shall look into the matter and report further to you, and if the House is not in session I'll be happy to give you the information.

MR. WALLACE: A quick follow-up, Mr. Speaker. I wasn't asking for a specific inquiry into just this case; there's evidence that police cars often go through red lights and break other laws in pursuit of other vehicles, and sometimes the offender being pursued is of much less significance in terms of his crime than the innocent third parties who may be killed. We've had numerous incidents in the last few years. I'm just wondering if the Attorney-General isn't prepared to make a general inquiry as to the basic procedures followed by the RCMP.

HON. MR. GARDOM: As I've said, Hon. Member, I'll look into it.

FARM-TO-RETAIL CHICKEN PRICE GAP

MR. G.F. GIBSON (North Vancouver–Capilano): Mr. Speaker, I have a question for the Minister of Agriculture. In the June 21 edition of Viewpoint, a publication of the B.C. Federation of Agriculture, it states that B.C. had the largest gap between the farm price of chickens and the retail price of all the provinces in Canada. I wonder if the minister could tell us what he's proposing to do about that.

HON. D.M. PHILLIPS (Minister of Agriculture): Mr. Speaker, in answer to the member's question, which I know he voiced in all sincerity, I haven't noticed the particular article, but I have stated that there are many excessive costs to doing business in British Columbia. I outlined to the House during the throne speech or the budget speech — either one — the costs of producing products in British Columbia, but I'd be quite happy to look into it for the member.

But when we talk about the costs and what I can do about them, Mr. Member, we have the same situation in many industries in British Columbia. As a matter of fact, today now, Mr. Member, as you well know, in the United States of America, just a hop and a skip and a jump away from us, old teapots that were retired years ago that used to produce pulp and paper and lumber products are now being brought on stream again...

Interjections.

MR. SPEAKER: Order, please.

HON. MR. PHILLIPS: ...because of the difference in the labour rate. Therefore we are unable to compete in our industry...

Interjections.

MR. SPEAKER: Order, please!

HON. MR. PHILLIPS: ...and this may be the same with the poultry industry, Mr. Speaker.

Interjections.

MR. SPEAKER: Order!

HON. MR. PHILLIPS: And the sooner that all of us in British Columbia come to grips with this problem, the sooner we are...

Interjections.

MR. SPEAKER: Order, please!

HON. MR. PHILLIPS: ...going to prevent this economy going down the drain, Mr. Speaker. I'd like all members on all sides of the House to join together to....

AN HON. MEMBER: It's already gone down the drain.

MR. SPEAKER: Hon. Minister, I believe the question had something to do with the price of poultry.

MR. GIBSON: Mr. Speaker, would you give him his "yes" or "no" cards back? He did better with them.

Mr. Speaker, this is supplementary. The minister said that he'd be glad to look into it. In view of the fact that, additional to this, we learned in a recent survey that British Columbia still has the highest food prices in North America, will the minister now finally appoint a royal commission into agriculture and food prices in this province?

HON. MR. PHILLIPS: Mr. Speaker, the member knows that this is a matter of policy. I've stated very clearly and emphatically in this House that we will take a look at certain regulations and certain legislation which exist with regard to food prices and

[ Page 3243 ]

marketing boards. Certainly we're going to take a look at it; the member knows we're going to take a look at it. Certainly we're going to take a look at it because we realize the problem exists and we want the people of British Columbia to know the facts, and that's why we're here to point out to the people of British Columbia so they'll all know the facts.

MR. GIBSON: Answer the question!

MR. SPEAKER: Order, please.

TRAVEL ASSISTANCE FOR CANOE CLUB

MRS. B.B. WALLACE (Cowichan-Malahat): Mr Speaker, my question is for the Provincial Secretary. There is in my area a group of young people who are connected with the White Raven Canoe Club. I think the Provincial Secretary is aware that through her department canoes have been made available to these people for a championship competition.

I have been contacted by these people, and the one particular team from the Ladysmith-Chemainus area tells me that in order to take their canoe and their crew to White Rock to compete in the championships on July 4 it's going to cost them $190 to travel by B.C. ferry. They are just not able to afford this, Madam Minister, through you, Mr. Speaker.

I'm wondering whether the minister has any funds at her disposal that she can assist them, or, failing that, would she be willing to work through the Minister of Transport and Communications (Hon. Mr. Davis) in an attempt to find some solution so these young people can participate?

HON. MRS. McCARTHY: Mr. Speaker, I thank the member for bringing it to my attention, and I'll be pleased to look into it this afternoon. If she would like to meet with me this afternoon we'll see what we can do to assist.

CLOSURE OF RICHMOND PRIVATE HOSPITAL

MR. WALLACE: Mr. Speaker, to the Minister of Human Resources with reference to the pending closure of Richmond Private Hospital: in view of the minister's earlier answer on June 17 that the government was considering purchasing the hospital, could I ask the minister if he has received from the owners of Richmond Private Hospital a figure at which they would consider selling the hospital?

HON. W.N. VANDER ZALM (Minister of Human Resources): Mr. Speaker, the answer is no, we've not received a figure from the owner of the hospital. He did ask us to make an offer, and we've simply asked him to give us his figure.

PROPANE GAS SALES TAX

MS. SANFORD: My question is to the Minister of Finance. There are about 100,000 residents in B.C. who use propane gas as their prime source of heating and cooking fuel and they are now paying some 600 per cent more in sales tax than are the users of fuel oil. I'm wondering what the Minister of Finance is prepared to do in order to relieve these people of this inequitable tax.

HON. E.M. WOLFE (Minister of Finance): Mr. Speaker, through you to the member, I'm not aware that the sales tax increase involved in a product of that kind would be 100 per cent.

MS. SANFORD: For the information of the Minister of Finance, the sales tax on fuel oil is now set at 0.5 cents, whereas the full sales tax of 7 per cent — gone up from 5 to 7 per cent — is applied to the propane gas. The users of this particular product are very unhappy, and I'm wondering what the minister is prepared to do in order to relieve the situation for the users of propane gas.

HON. MR. WOLFE: Mr. Speaker, through you to the member, we'll be happy to review the matter. I wasn't aware that there was any discrepancy where propane tax was concerned.

ANSWERS TO QUESTIONS
ON THE ORDER PAPER

MR. W.S. KING (Revelstoke-Slocan): Mr. Speaker, in the Premier's absence, I wonder if the House Leader would draw to the Premier's attention that he has failed to answer questions 26 and 27 on the order paper, which have been there since the start of the session. I wonder if the Provincial Secretary would ask the Premier to kindly answer the questions.

MR. SPEAKER: Order! That is not a question to be posed in question period.

Interjections.

FIELD PRICE OF NATURAL GAS

MR. A.B. MACDONALD (Vancouver East): Mr. Speaker, this is a question to the Minister of Mines, who's in charge of the B.C. Petroleum Corp. and sits on the board.

Did the minister agree with the decision whereby the B.C. Petroleum Corp., which is the buyer of natural gas and represents the public interest, made no recommendation whatsoever on the field price of natural gas at the current energy commission hearings? Did the minister make that

[ Page 3244 ]

recommendation? Does the minister know that the B.C. Petroleum Corp. took no position as to what the field price of natural gas should be when it made its representations to the energy commission the other day?

HON. T.M. WATERLAND (Minister of Mines and Petroleum Resources): Yes, I am aware, Mr. Speaker, but I don't believe it's the function of the B.C. Petroleum Corp. to recommend prices. They sat in on the meetings to hear the advice granted at the meeting by many people involved in the petroleum and natural gas business, and recommendations for price increases will be forthcoming from the government to be implemented by the B.C. Petroleum Corp.

MR. MACDONALD: A supplementary, Mr. Speaker.

MR. SPEAKER: I'm sorry, Hon. Member. The bell terminated the question period.

AN HON. MEMBER: It ran out of gas.

MR. MACDONALD: You're turning it into a tabby cat for the industry.

Interjections.

MR. SPEAKER: Order, please!

MR. D.G. COCKE (New Westminster): Mr. Speaker, on a point of order, I feel that the question period should be extended today because of the disgraceful performance of the Minister of Agriculture (Hon. Mr. Phillips) who every time he stands up in this House wrecks question period.

MR. SPEAKER: Order, please. I think there are sometimes....

MR. COCKE: That wasn't an answer, and there never has been an answer from that man — ever.

Interjections.

MR. COCKE: Well, Mr. Speaker, on my point of order?

MR. SPEAKER: On your point of order, Hon. Member, it's the duty of the Speaker of the House to recognize people who asks questions and ministers who answer them. It's been the experience of the Chair that often we listen to statement rather than questions; we listen to an explanation rather than a question. On the other side of the House, there is a tendency on behalf of the ministers and members answering questions to extend the answer sometimes longer than it should be. What I try to do as the Speaker of the House is to control the question period by bringing the members to order as quickly as I see that it's apparent.

I would hope that members on all sides of the House will appreciate the fact that in this House there is no advance warning of the question that will be asked, and I have to listen to it as well as the answer before I can ascertain whether the question or the answer is out of order.

MR. COCKE: Mr. Speaker, the one thing I would like to draw to your attention, however, is that there hasn't been criticism of the other government members. It's been that one minister who has totally and completely fouled up every question period that he ever gets involved in.

SOME HON. MEMBERS: Oh, oh!

Interjections.

MR. SPEAKER: Order, please.

MS. SANFORD: Mr. Speaker, on that same point of order raised by the member for New Westminster who asked for an extension of the question period time today, I would like to point out to you, Mr. Speaker, that you did your job in trying to call that member to order, but that member went on for at least a minute after you had drawn to his attention that he was out of order. It seems to me that the opposition today should be granted at least a minute extension of question period.

MR. SPEAKER: Hon. members, the Speaker tries to determine what is fair and just for everyone. I am sure there have been abuses, as I have seen, from all sides of the House in question period, which I try to keep to a minimum.

HON. MR. GARDOM: I'm not too sure I will get it, Mr. Speaker, but, with leave, I would like to make a statement.

Leave granted.

MOVE OF PWA HEAD OFFICE TO ALBERTA

HON. MR. GARDOM: I thought the hon. members would like to be brought up to date concerning B.C.'s application to the Canadian Transport Commission for an order restraining the move of PWA operations from the province to Alberta, pending the ultimate determination by CTC on the question of whether or not the acquisition of the majority of the airline's shares by Alberta was

[ Page 3245 ]

prejudicial to the public interest.

Some three weeks ago we received information to the effect that the CTC might not deal with our application before September 1 of this year, which was the date that Pacific Western had set for the conclusion of the move of its executive head office from Vancouver to Calgary. That was a totally unsatisfactory state of affairs for this province. As a result, we initiated proceedings in the federal court to compel a decision from the Air Transport Committee of the Canadian Transport Commission on the question of restraining this move.

Within a day of commencing these proceedings in the federal court, we were advised by the Air Transport Committee that they would deal with our application at a meeting to be held in Ottawa on Thursday, June 24. Our application to the federal court was therefore dismissed on the basis that the CTC was proceeding to consider the matter.

On Wednesday last, June 23, Pacific Western, which had not previously replied to our application for the restraining order filed on March 23, asked the CTC for leave to file a reply and put forward arguments against B.C.'s application. British Columbia was given a further 24 hours to respond to the Pacific Western Airline's reply, which we did.

With B.C.'s response, therefore, Mr. Speaker, the case before the Air Transport Committee of the Canadian Transport Commission is closed. We've been advised that it is the intention of the committee to proceed with its deliberations on British Columbia's application for the restraining order tomorrow, Wednesday, June 30.

We have on numerous occasions, Mr. Speaker, reiterated to the commission our very serious concern that the matter be dealt with expeditiously in light of the September 1 target date which PWA says it set for the conclusion of its move, and we are therefore most hopeful that the Air Transport Committee will very quickly reach a determination on our application.

MR. GIBSON: The Attorney-General brings us interim good news. This has been a very vigorous prosecution on the part of the government, for which I commend them. If by any chance the ATC should rule against British Columbia's application, I would ask that the Attorney-General immediately take the case back to the federal court or the supreme court, as may be, with an attempt to receive an injunction to preserve the status quo until a final ruling is made which is essential to B.C.'s interests.

Presenting reports.

Hon. Mr. Waterland presents the British Columbia Petroleum Corp. financial statement for the year ending March 31, 1976.

Orders of the day.

The House in Committee of Supply; Mr. Schroeder in the chair.

ESTIMATES: DEPARTMENT OF
TRANSPORT AND COMMUNICATIONS

(continued)

On vote 198: minister's office, $153,642 — continued.

MR. A.B. MACDONALD (Vancouver East): Mr. Chairman, I want to ask the minister whether when he and the Premier went to the energy conference about two months ago, and he was reported in the paper as taking the position that the national price for a barrel of crude oil should go up from its present roughly $8 by at least $2 and in the long run it should go up to the world price, he was serious in making that representation. Did he realize what the effect would be on the consumers of the province of British Columbia? In addition to answering that question, do they still believe that the price of crude oil produced in British Columbia...?

We have about 40,000 barrels to 50,000 barrels a day of old oil. Is the minister serious about having that priced for the sake of the oil companies, particularly Imperial Oil, that produce that oil at the Arab price, and having the consumers of Canada pay the Arab price for the B.C.-produced old oil, without any guarantee whatsoever that they'll put the surplus funds which they will have, which will be very significant — at least $100,000 a day — back into exploration and drilling?

I suggest that the government, when they went along with the province of Alberta and supported...without any guarantee that the money would be put into an investment fund for future development and conservation of supplies, was selling short the consumers not only of British Columbia but of Canada.

Another question I'd like to ask the minister is whether he supported the alternate plan from Saskatchewan, which was, if the oil companies should get an additional price per barrel, that a large portion of that increased sum should go into a national conservation fund for reinvestment back into oil-producing properties in Canada through a public agency.

So I would ask the minister: was he really serious in proposing that the oil companies that produce in B.C. should receive the Arab price — in effect, the world price — for their oil, even though their costs and expenses have not risen? It's old oil.

HON. J. DAVIS (Minister of Transport and Communications): Mr. Chairman, in answer to the

[ Page 3246 ]

first member for Vancouver East, Canada's basic problem is that it's not self-sufficient any longer in oil. Exploration and development in this country isn't sufficient to ensure that we can meet our own requirements. So to an increasing degree we're having to pay the world price. We're certainly having to pay the world price for oil imported into eastern Canada. The basic approach of the Canadian government — and to this extent, certainly the British Columbia government supports it — was therefore to provide sufficient incentive to look for additional supplies of oil in this country by increasing the wellhead price — increasing it in steps from $8 to $10 and on towards $12 or $13, the world price.

The British Columbia position, however, included another stipulation, which was not accepted by the federal government. The difference between the Canadian price and the world price of imported oil is diluted by a tax on all Canadians. It amounts to 10 cents at the pump. We're all paying 10 cents additional per gallon for gasoline in British Columbia, across the Prairies, Ontario, Quebec and so on, to buy this expensive foreign oil and lay it down to the refiners at this low average Canadian price.

British Columbia proposed that Ottawa eliminate that 10-cent tax. This would cushion the increase, which would otherwise flow to the consumer, of a rise in the wellhead price of Canadian oil. So we were attempting — taking a two-step approach — first, to make Canada more self-sufficient in oil and, secondly, reduce the impact on the consumer to the extent of at least 10 cents a gallon by eliminating the federal tax which, as I said before, simply goes to reduce the price of foreign oil which Canadians, in effect, pay so it's equal to the refiners to the low price of Canadian oil.

Before sitting down, Mr. Chairman, I would like to comment further on a question raised by the same member. He is concerned about the return to shareholders of Westcoast Transmission. The return to shareholders of Westcoast Transmission — according to his statements of this morning — more than trebled when the NDP were the government. Last year the return to shareholders amounted to roughly 15 per cent on equity. In arriving at the overall 10.5 per cent rate of return which we recommended this April, we were working on the assumption that shareholders would get not 15 per cent but 14 per cent before income tax.

MR. MACDONALD: Mr. Chairman, on the question of the price of oil, the minister's made it very clear that British Columbia is supporting a move whereby Canadians will pay the world price for oil, first $10 and then on toward the world price. Presumably this is because we — and not so much in British Columbia where we import practically nothing — import some in eastern Canada, which doesn't affect us at all.

The effect of that, Mr. Chairman, is simply that the consumer in Canada is going to pay in the next few years about another 25 cents per gallon of gas in the tank of his car. We know the effects of it — about 5 cents for every dollar increase on the barrel of crude. Some people say 4.5, but it's around in that area. The government of British Columbia is telling us this bad news, eh? The price of gasoline is going to go up — and they're supporting it — by about 25 cents for the consumers of Canada. The question I want to raise is whether this is necessary.

AN HON. MEMBER: Hear, hear!

MR. MACDONALD: This government has given no thought whatsoever to a two-price system. The crude oil that we produce in Canada doesn't justify the increase to the world price whatsoever in terms of costs. Why shouldn't we have a two-price system in Canada instead of loading onto the consumer another 25 cents in the next few years in the cost of a gallon of gas in the tank of his car? That's what we're facing.

I want to say without any hesitation, Mr. Chairman, that an NDP government in British Columbia and an NDP government nationally would protect against the international off companies the consumers of Canada and the industries of Canada. This is simply a sellout — the idea that because, say, the Arab states have increased the price of oil to their immense richness to levels of $14 and $15 we in Canada should jump on that bandwagon and give that money to the international oil companies, even though over a period of time their exploration and drilling costs have gone down and their profits have gone up at the same time over the last three or four years in every case of the big companies. I say that's absolutely disastrous so far as the welfare, the economy and the consumers of Canada and British Columbia are concerned.

MR. D. BARRETT (Leader of the Opposition): The profits leave Canada and cause unemployment.

MR. MACDONALD: We have no guarantee whatsoever, Mr. Chairman, that when you give these large additional sums to the international oil companies they will be spent in Canada, in the Arctic or elsewhere in exploration or drilling. There is no incentive plan such as we introduced as an NDP government in British Columbia for natural gas whereby if they got an increase it had to be reinvested to restore the stocks that were being depleted. I don't know how we can argue any more on this, Mr. Chairman; I guess we can go back and forth. But there is a real philosophical, political and economic difference between this side of the House and the government.

[ Page 3247 ]

MR. BARRETT: You're causing unemployment.

MR. MACDONALD: What energy do we produce now? Maybe 95 per cent of our needs; maybe that will decline, until the Arctic comes in, to 80 or 85 per cent. We still produce our basic crude and natural gas supplies in this country. To jack those costs up to Arab prices, I think, is absolutely fatal for the economy of Canada and British Columbia and is a terrible imposition on the consumers of this country. I say that you've just become a tabbycat for the international oil companies. You've bought everything they say. They're very plausible and persuasive; they're very ready with their campaign funds. Those campaign funds from Imperial Oil, as we know, have flowed into the Social Credit Party. With that kind of money in your till as a political party you sell out and say to the oil companies: "You want the Arab price? We'll give you the Arab price." I say that's a complete sellout. It's very black news for the Canadian economy and the Canadian consumer.

MR. G.F. GIBSON (North Vancouver-Capilano): Mr. Chairman, I hadn't intended to talk about that particular issue just raised by the hon. member for Vancouver East, but I do have to point out to him that our energy resources in Canada are part of the birthright of every Canadian.

MR. MACDONALD: Hear, hear!

MR. GIBSON: To the extent that the birthright of every Canadian is sold at a rate well under the going rate to the largest user, that means that the ordinary Canadian is subsidizing the person with the largest car and the biggest air conditioner and so on. I don't think that that is a part of the society that the hon. first member for Vancouver East (Mr. Macdonald) wants to see. I don't know, but I don't think somehow that that quite fits in with at least my idea of social justice. It seems to me that that, being a part of the birthright of every Canadian, should adhere to every Canadian, which is best done by the owners of the wealth through their government recapturing every bit of economic rent that is available out of it and then processing it through the regular governmental systems. So there's just a little bit of a difference of opinion there.

MR. BARRETT: Like BCPC?

MR. GIBSON: BCPC is an excellent move — no question about it.

MR. BARRETT: They fought against it.

MR. GIBSON: Mr. Chairman, the point that I particularly wanted to raise at this time was the question of the Alcan pipeline — what it means to British Columbia and how we in British Columbia can advance that cause if it is a good one. I think before that action is taken too formally and vigorously by the government they have to give all British Columbians a chance to put forward their views through some form of public hearing, but I can tell the government that at this point I support it. I think the Alcan pipeline is the right way to get the Alaskan gas down to the United States — the right way for just about everybody concerned. I hope that our government of the province of British Columbia, once they have held the hearings that I think are essential, will take the most vigorous action possible before the National Energy Board to support that concept for the benefit of the people of this province and for the benefit of others.

I want to say why it solves everybody's problems. We should always think of our customers. For our U.S. customers it solves their problems because they get their own gas — that Alaska gas — in a lower-cost way and sooner by going the Alcan route than by the much more expensive and complex Mackenzie Valley route. As far as Canada is concerned, it doesn't force the Mackenzie issue.

The Mackenzie issue is a very touchy question in our country, and properly so — bound up with many complex social and economic issues. It doesn't disturb the Canadian capital markets to anything except a very minor fraction of what the Mackenzie Valley pipeline would do. It retains Canadian ownership of the various pipelining systems in a far better way. It leaves the so-called maple-leaf option open, which is a very largely Canadian-owned pipeline to bring the delta gas down the Mackenzie Valley at the time when that is necessary — whenever that may be — under Canadian ownership and at a time, some years removed, when our capital markets can stand it. In the meantime it's demonstrable — it's been proven many times — that the reserves of gas in Alberta are quite sufficient for Canadian use for some years to come.

The Alcan route also, Mr. Chairman, makes it possible for Canadian suppliers to get a real piece of this action. The Alcan route is 42-inch pipe. The Canadian Arctic gas pipe route is 48-inch pipe. The Alcan route is 1,250 lbs. pressure. The Mackenzie Valley CAGPL route is 1,680 lbs. pressure with really unproven technology, in other words, and technology that Canadian suppliers would have very great difficulty getting a piece of — let alone British Columbia suppliers.

As far as solving British Columbia's problems is concerned, it increases the security of our own natural gas supplies because to the extent that Alaska gas is brought down through that route, and through British Columbia, it makes it feasible to the extent we wish to do so — to displace existing contracts with

[ Page 3248 ]

United States. Naturally we would negotiate, I would think, with our American customer on that. It would increase, to some extent, economic activity in this province and it would generate tax revenues in this province — not only property tax revenues, Mr. Chairman, but revenues that a lot of people wouldn't think of, like the gas that's used in the compressor stations to speed the natural gas along its route, which would be worth something like $10 million a year to our revenues in terms of the coloured Gasoline Tax Act under which it would be taxed. It would reduce the pipelining costs to British Columbians of our own gas brought from our northern regions down to our southern markets, because naturally when you have a greater throughput through an existing piping system, you've got a lower unit cost.

MR. MACDONALD: You'd have to loop and you'd have to expand there.

MR. GIBSON: You'd have to loop up a good deal, that's right. But it would still lower the unit cost of the throughput, I think. It would as well provide an incentive to upgrade the Alaska Highway; it would provide access to exploration possibilities and tie-ins to exploration possibilities. All things of very great merit.

Mr. Chairman, the expenditures in British Columbia on this particular project would be slightly over $1 billion at today's predictions — expenditures in Alberta about $700 million, almost $800 million; Yukon, $1.1 billion; Alaska, $2.3 billion — which is one of the reasons that it solves the Alaskans' problems, too, because they naturally want the route out for their natural gas to have as much Alaskan economic input into it as possible. And they've been very concerned about taking it out over their wildlife reserve which lies east of Prudhoe Bay as you move down towards the Canadian delta. This Alcan route solves that problem for them, too. To me, Mr. Chairman, it is a natural.

I mentioned the Canadian equity required. The Canadian equity on the Canadian Arctic gas pipeline proposal would be something like $700 million out of our capital markets for the so-called maple-leaf line, which would in any case be later; it would be only half of that. And as far as the Alcan route is concerned, there would be very little direct charge on the capital markets because most of it would come out of the cash flow of partners which are Westcoast Transmission and Alberta Gas Trunk — companies with very substantial cash flows.

I mentioned the ownership. The ownership of the Canadian Arctic gas pipe route is largely U.S. companies or Canadian companies controlled by U.S. companies, with the exception of Union Consumers, Northern Central Gas in Ontario and Trans Canada Pipe Line. The ownership of the other route...of course AGTL (Alberta Gas Trunk Line) is virtually 100 per cent Canadian.

Westcoast Transmission has an ownership pattern a little more complicated to figure out. By some figures it's 90 per cent Canadian, but you certainly have to deduct from that the 35 per cent that's owned by Pacific Pete, which in turn is 48 per cent owned by Phillips Petroleum for a beneficial further U.S. ownership there of 17 per cent. But Westcoast has a good strong Canadian component in it — over 50 per cent beneficial ownership of the equity, I would say, and to that extent also better from that point of view than the Canadian Arctic Gas pipeline route.

So for all of these reasons, Mr. Chairman, I hope that our provincial government, which to its credit has already expressed support of this concept, will, after the holding of public hearings and if justified thereby, vigorously prosecute this British Columbia route before the National Energy Board. I think that by so doing they can be doing the right thing, not just for British Columbians, but for Canadians and for our American neighbours both to the north and to the south.

There are a few problems to be solved along this route. We must appreciate that the land claims in the Yukon territory are not entirely settled, but they are further advanced than in the Mackenzie Valley route, and this is another example of how it buys time to work with these exceedingly difficult problems with which, for example, Mr. Justice Berger is seized in his inquiry.

I want to move on from that topic, Mr. Chairman, to the question of the forecast energy needs of our province. There is an extraordinary difference between the needed electrical energy as forecast by B.C. Hydro — and we had an opportunity in the public accounts committee to examine Mr. Bonner on this question — and the figures released by the B.C. Energy Commission a couple of weeks ago. Now when we examined Mr. Bonner, he said, quite properly, that it was his job to plan in a way that makes sure that whatever the load was — the highest reasonably expectable load — B.C. Hydro would be geared up to meet it. Dr. Thompson has a rather different job. He has to make the best estimate of what British Columbia is likely to need, in his view.

The minister doesn't have that luxury of taking one view or the other, because both of these men report to him, and the minister is the man who, in the end, has to say, "we think the B.C. electrical load is going to go up at something closer to 9.2 per cent annum," which is what B.C. Hydro says, or something closer to 5.4 per cent per annum, which is the way that the B.C. Energy Commission views the situation for the next 15 years.

Mr. Chairman, this is not a small question. At the end of 15 years the higher growth projection would

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produce a system which is more than 70 per cent larger than the smaller growth projection. Another way of putting it is that the larger growth projection would require investment in electrical generation facilities of more than double what the smaller projection would require. I hope that the minister, at this point, has done sufficient of his homework to be able to stand up and say, "I am tending one way or the other," or at least "this is how I am going to get the answer."

Now, Mr. Chairman, British Columbia Hydro, a year ago — in May of 1975 — produced a document called "Alternatives, 1975 to 1990." I've no doubt the minister is familiar with the publication. In order that the public debate can best be carried on in the fields of required Hydro power, I wonder if the minister could tell us if we can still use this as a basic reference. It was produced, of course, under the last government, but can we still use this as the basic plan of B.C. Hydro, which of course implies Revelstoke Dam and Hat Creek and so on? There are all kinds of options set out here, but there's a preferred schedule that's set out. Is that preferred schedule still the one that we should be thinking about when we are looking down the road, appreciating that the timing might be varied depending upon what growth rate the minister comes up with as the appropriate one?

I would next ask him if he has had, or proposes to have, or proposes to ask British Columbia Hydro to enter into any discussions with Atomic Energy of Canada or the federal government with respect to the installation of a heavy-water plant anywhere in British Columbia, perhaps in connection with the Hat Creek deposits. This is one of the possibilities that has been noised about. Perhaps the minister could tell us today whether or not there is any reality to that.

Finally, at this particular stage, I would like to urge upon the minister and receive his opinions on the need for a change in the fundamental way in which we price our electrical energy in this province. The minister will be familiar with the institute in the United States known as Resources for the Future, a group which over the years has done some of the most excellent studies on energy and the environment of any body anywhere in the world.

In their winter regular publication they canvassed the situation around the country and around the world of what they call "time-of-day" electricity rates. They point out that most of our systems — and that includes B.C. Hydro — have the so-called "declining block-rate structure." In other words, the more energy you use the less you pay for it per unit.

They advocate — and I would advocate — what you call marginal cost pricing. In other words, at the moment, bills are technically based on total consumption and no account is taken of the time of day at which that consumption is incurred. But we all know that B.C. Hydro has to have a large reserve in place for peaking loads, and that means, if you're going to be using power at the busiest time of day, in fact you should be paying more for that power than at a slack time of day. The same thing's true on the B.C. Ferries, incidentally, but we'll get to that later. You should be paying more at a busy time of day because that's when the extra capital cost has to be there to provide that standby power that's only required at that time of day.

Now if we had some means of saying during the busiest hours — let's say it's 4 to 6 in the afternoon or 5 to 7 or whenever it might be — that people wouldn't use dishwashers or they wouldn't use electric dryers, that might be one way round it. But in our society people would probably prefer to go through the market mechanism and say that you can use your appliances any time you like but at some times they will be cheaper and at other times they will be more expensive.

I'll just quote Resources for the Future here:

"The marginal cost rule demands that all customers be charged for the marginal or additional costs they impose on society and that no customer willing to pay the full marginal cost of his or her consumption be turned away."

In a practical sense what that gets you into is more sophisticated metering whereby, depending on the time of day, an electrical impulse is sent down the system. The meter clicks over and a different rate structure goes into effect for electricity used during that period.

I think that's the kind of thing we should be getting into. The same article quotes regulatory commission decisions recently in Michigan, Wisconsin and California, and they quote California specifically:

"We desire that progress be made in implementing the concept of peak-load pricing. In furtherance of that end the respondent electric utilities should file specific proposed peak-load tariffs by applications or advice letters for review by our staff and interested parties."

Mr. Chairman, we do not have the same shortage or relative scarcity of electrical energy as does California, but at the same time it is very costly for us. We have a system that already has to be larger than one would expect because of our rather unpredictable water availability for our hydro installations. We have a wide variation in our streamflow available to go through our dams. To add to that unpredictability the very high additional peaking capacity we require is a great charge on society. In my opinion, Mr. Chairman, that charge on society should be explicitly recognized in the rate structure and — I would venture to predict — therefore be moderated to a considerable degree by the rate structure as well, and I would make that

[ Page 3250 ]

submission to the minister.

HON. MR. DAVIS: Mr. Chairman, the hon. member for North Vancouver–Capilano raised five different points, and I'll attempt to deal with them briefly.

First, the Alcan or Alaska Highway gas project — it has attracted increasing attention in the United States for several reasons. First, environmentally it's much cleaner than the Gas Arctic project coming down the Mackenzie or the gas tanker project which would take Alaskan gas by sea down the west coast.

It's also less expensive to build — in other words, economically more attractive — and being economically more attractive will pay a better return for the gas at the source in Alaska. This has attractions as far as the state of Alaska is concerned.

I think another aspect of this project which should appeal to Canadians as well as Americans is that it could be built more rapidly. It could come on stream much earlier. It could be built, in effect, in stages rather than having to be built full scale all at once. Because of its earlier timing it would mean that Alaskan gas could be available, for example, in the U.S. Pacific Northwest several years earlier than via the other projects. This could take pressure off us, pressure off British Columbia to continue to deliver very large volumes of difficult-to-get B.C. gas to consumers in Washington state, Oregon and so on. So it has these advantages to British Columbia over and above the jobs, over and above the possibilities of encouraging exploration in the northeastern corner of this province.

As to the several different forecasts of power demand — one, B.C. Hydro's forecast of higher than 9 per cent a year compounded and the other the B.C. Energy Commission's forecast of less than 6 per cent. One's more than 9, the other less than 6 per cent. One certainly has to agree that projected out over a time, especially out over 10 or IS years, this results in very different orders of magnitude of development, very great differences in the amount of capital needed, for example, to develop the plants to supply those needs.

B.C. Hydro's job, as the hon. member said, is to be ahead of the needs so we don't have brownouts or blackouts. The B.C. Energy Commission's job is to be as objective as possible and try and call the shot right on the nose. It doesn't have to make sure that supplies are always there, merely to choose the most probable outcome.

One fundamental difference between the two forecasts is the population projection. The B.C. Hydro projection rests essentially on a continuation of our historic roughly 3 per cent a year population growth rate. The B.C. Energy Commission, on the other hand, sees a big drop in our population growth rate to less than 2 per cent. Those different projections of population growth rate in this province explain in very large part the difference in the projections of power demand. One is, if you like, optimistic about continued population growth in the province, and the other sees a sharp decline in the growth rate, the Energy Commission projecting a growth rate of the order of 2 per cent, which is roughly, in line with Canada's population projections — at least the official population projections for Canada.

Assuming that B.C. Hydro proceeds and build the plants which are related to the higher growth rate, it won't continue to build this additional plant — a plant which, in the short run at least, would be surplus. It won't continue to do that indefinitely. It may do this for a year or two or three, but then it slows down its construction programme or postpones a second or third power project. It corrects itself. If the growth rate turned out to be less than 6 per cent rather than 9 per cent, the correction would occur. The point can still be made that there would be some overbuilding in the short run, unnecessary raising of capital at high interest rates — unnecessary cost.

I think the Revelstoke project, which is large, would be the next project to go ahead regardless of which projection one used, whether it was a 6 per cent compounded or a better than 9 per cent compounded growth rate, because it's the next most logical development. It'll be fully utilized in the early 1980s in any case, and if the projection is one or two years out, there is also the aspect of it being a Hydro project. If it comes on early we'll simply use running water — water that's going to the ocean anyway — rather than burning natural gas which is in short supply at our thermal plants.

B.C. Hydro is arguing that it should proceed at a reasonable pace to build the Revelstoke project and complete other Hydro projects generally in the Columbia basin on its present projections. If it's right, then less gas will be burned at the thermal plants. If it's wrong, those Hydro facilities will be useful in the long run in any case.

We're not forced, at this moment in time, to say one forecast is right for planning purposes and the other is definitely wrong and that our planning in terms of constructing plants must be altered accordingly. I think the decision to go ahead with the Revelstoke project is correct and that its timing of completion can be adjusted to look after events regardless of whether the growth rate is 6 per cent or 9 per cent.

As for the heavy-water plant, there have been no discussions, not even any inquiries, about the possibility of a heavy-water plant being built in British Columbia. It's a possible user of energy. Our position, in the short run in any case, is that we're not really long on energy; we're not long on electricity. We have a tight corner to get around as far

[ Page 3251 ]

as natural gas is concerned, so we're not really looking for large power-consuming industries such as the manufacture of heavy water.

The member for North Vancouver–Capilano also mentioned marginal pricing. He's right, I think, that North American consumers have to live with systems which ration their demands more in the future, meter their demands. The best way to do this is through price, and pricing systems should involve, at some point in time, a sharp rise in price. Historically, and the member alluded to this, rate structures were such that the price dropped as consumption increased. The curve trended always downward. The assumption always was that if you consumed more, the system was bigger, and if the system was bigger, on the average the cost of production, transmission and distribution was less.

This is no longer true, especially with inflation, especially with more distant sources involved, and at some point in time the cost of increased consumption rises. The rate curves in the future should have a hook in them; they should be rising after some optimum point of consumption. The consumer, facing that increased price, should feel the results and will tailor his demands accordingly.

MR. GIBSON: Just to follow that up very briefly, then, since the minister seems to agree in theory with the marginal pricing concept, will he issue instructions to B.C. Hydro to do something about it?

HON. MR. DAVIS: Mr. Chairman, this matter is under active investigation in B.C. Hydro, and I think it will apply eventually also to gas and electricity in other systems in the province.

MR. D.F. LOCKSTEAD (Mackenzie): Mr. Chairman, I think that we would be remiss in not discussing under this vote the minister's administration of the B.C. ferry system and the effects of the most recent and horrendous fare increases that have been put onto the users of the service by the government starting June 1 of this year — the effects on the users, Mr. Chairman, the effects to the ordinary people of this province.

These horrendous fare increases on top of huge 200 or 300 per cent ICBC rates, increase in sales tax and the other punitive and unnecessary measures inflicted on the people of this province and these huge, tremendous fare increases on top of all of that, taking money out of the economy — money that will not be recirculated and fares that people can't afford....

I know that some concessions have been made by the minister and we appreciate the small concessions that were made in some areas — the Gulf Islands, the Sunshine Coast — but I want to tell you that the people are not happy with these concessions. Even to residents fare increases have been doubled. To non-residents in those areas the fares at the moment are tripled, but to residents they are still doubled. The usage of the ferry service and the traffic volumes are down by, in some areas, 60 per cent in spite of the fact that we hear that the traffic is picking up. I am sure it will because we are in the summer months. But the effects on the economy of this coastal area have been disastrous.

Interjection.

MR. LOCKSTEAD: No other word will do but disastrous. We have many articles. I won't read them but here are a couple of headlines. In The Victorian of June 16: "Tourist Trade Facing Disaster." Here's a clipping from the Powell River News, June 9: "Business Lost for Local Motel Owners." From the Victoria Times, June 15: "Forty Per Cent Fall Off in Tourists. Ferries' Fault." Here is one from the Victoria Times, as well June 3: "New Rates Whack Farmers." I suppose we could go on and on, Mr. Chairman, but I hope the minister, when he is answering questions, will perhaps give us some indication of how he intends to proceed in this matter.

I would also be interested in knowing, Mr. Chairman.... We do know that the two large ferries will be placed in service some time this month, and perhaps the minister could tell us exactly when and on what routes, but because these two new ferries will be placed in service in the near future and because of the reduced volume, will the minister be decreasing the hourly service that people on Vancouver Island now enjoy — the presently hourly service, which I think is a necessity? The ferries are, as a matter of fact, running at perhaps 40 to 50 per cent capacity on an average, if that. I doubt that they are running at that rate. I would be interested to know if these horrendous fare increases are going to affect the scheduling on those two routes, Mr. Chairman.

I would like to explain briefly to you some of the effects that the fare increases are having in my area. Higher ferry fares have reduced the number of visitors to the Sunshine Coast and Powell River region thereby depressing the economy and adding to the already high rate of unemployment and imperiling the investment of small businesses in the area. Small businesses, Mr. Chairman, are suffering in my area, as I have just explained, and some of them are suffering terribly. I have never seen so many small businesses up for sale on the Sunshine Coast and in the Powell River area, and I have heard about areas on Vancouver Island where there are literally hundreds of small businesses up for sale at this point in time.

[Mr. Veitch in the chair.]

[ Page 3252 ]

Employers who have been able to attract high calibre employees in my riding, in part because of the region's relative accessibility to the facilities of the lower mainland, will lose some of their competitive edge. Many specialized services, medical, educational and governmental as well as commercial, are not available in the areas I represent. Residents, for example, who must visit a medical specialist or attend college classes on the lower mainland at regular intervals are severely penalized by the fare increases, Mr. Chairman.

Oh, we have a new Chairman. The alternative of moving to a new home on the lower mainland is no alternative at all, since reasonably priced housing is virtually unobtainable there. Moreover such migration to urban centres is directly contrary to established federal government policy of encouraging decentralization of populated areas.

There appears to be recognition in the community that an increase in ferry fares is justified. The introduction of the increases of this magnitude in a single step is having serious ramifications in the region. Ferry fares have been constant for many years and people have made decisions concerning location, investment, employment and commitments based on lower fares, Mr.Chairman.

When all the criticism of the changes in fares are examined, it becomes apparent that there are many important aspects to consider in establishing a ferry policy. It is also apparent that the existing policy has not led to a satisfactory service. It is most unfortunate that the establishment of a new fare structure for our ferries was not used as an opportunity for a thorough review, rationalization and improvement of all ferry services in British Columbia, with references to other public transport in the province. Instead, considerations appear to have been limited to recovering a certain amount of extra revenue from the users of the service, without reference to the true potential of a new fare, a new fare structure for implementing valuable social and economic change, Mr. Chairman.

I think that a general reconsideration should be given to the social goals being pursued through a provision of ferry service and the ways in which the fare structure chosen can be effectively used to achieve these goals.

You know, Mr. Chairman, the other day the first member for Victoria (Mr. Bawlf) suggested that perhaps the Queen of Surrey should be utilized on the Victoria-Seattle route. But I don't think that was the reason the vessel was purchased in the first place. Some time ago, the former Minister of Transport and Communications (Mr. Strachan), because there was no forward-looking planning by the former Socred government, had to purchase a ship immediately to relieve the traffic pressures from the lower mainland to Vancouver Island, and the vessel he chose was the Queen of Surrey.

Interjection.

MR. LOCKSTEAD: But there were two good reasons for choosing that vessel. It was big enough to handle the traffic volume from Departure Bay to Horseshoe Bay and relieve the pressures on that route. But thinking ahead, we were looking at the possibility of placing that vessel on the northern coastal route.

I would suggest to you, Mr. Chairman, that the Queen of Surrey should be replaced. The present Queen of Prince Rupert is on the Kelsey Bay to Prince Rupert route, and the present Queen of Prince Rupert should be placed on a route from Vancouver serving northern Vancouver Island, the central coast and the northern coast of this province.

I believe as well that the Comox Queen, which is a 28-car vessel, should be placed on a route from Bella Coola, Ocean Falls and Bella Bella, connecting with the Queen of Prince Rupert on that route to give those people some access too. That area is very isolated and I believe that a daily ferry service into that area would also help the area economically, because at the moment those areas are virtually isolated and it's presumed that the community of Ocean Falls will expand in future times.

As well I would like to see a direct route from Saltery Bay, which is the terminal at Powell River, to Horseshoe Bay. I would like to see a direct route which would accomplish a number of things. People using the present service.... I believe the present Queen of Powell River should remain on its present route between Saltery Bay and Earls Cove, but I think it should accomplish a number of things. First of all, people wouldn't have to make that horrendous drive down the Sunshine Coast. It would relieve the necessity of putting a second vessel on that route in the summertime or at peak periods, although with the new fare increases, I don't think there's been a lineup there for almost a month, Mr. Chairman. And it would be a faster and more convenient way for the 30,000 people living in the Powell River regional area to get to Vancouver.

So I would hope that the minister would look at some of these items, and I think we'll probably have more to say under this vote in a short while.

MR. R.E. SKELLY (Alberni): I also have something I would like to say about the ferries before the Premier attempts to ram this vote through — I heard him say "aye" there. (Laughter.)

But we on central Vancouver Island are also concerned about the exorbitant increases in the ferry rates and the impact these increases have had on the hospitality industry and the retail industry on central Vancouver Island.

[ Page 3253 ]

I had a call from one of my constituents, who's a motel owner in Parksville, just a few days ago when I was up on the weekend. He said that his revenue for the month of June was down something like 50 per cent. From $2,600 last year in the month of June, under the NDP government which had a favourable attitude towards small business, it was down 50 per cent to $1,000 revenue — not even enough to pay the mortgage on his motel. In fact, this person is being driven out of business; he attributes it directly to the increase in ferry rates and the fact that there's resistance by tourists to going on the ferries as a result of those exorbitant increases in ferry rates.

Most of these people in the hospitality industry on central Vancouver Island did vote Social Credit last time, and a lot of them are calling me up and saying "Never again!" They voted for Social Credit on the assumption that this was the party of small business. No way! No way is it the party of small business. The New Democratic Party, when it was in office, reduced corporate taxes on small business, assisted small business by maintaining ferry rates at a lower rate and encouraging people to use the ferries.

Never before, never under the New Democratic Party did you see signs on the ferries: "Don't blame the catering staff for the crummy service." Only under Social Credit. People are staying away from the ferries in droves in spite of the fact that border crossings into British Columbia from the United States are at roughly the same level as last year, and in spite of the fact that when you listen to the radio they advise you that there's a half-hour wait at the border crossing into British Columbia from Blaine, Washington.

Last year they used to say there was a three- or four-hour lineup on the ferry system. Not this year — no more lineups. That's what the Socreds promised, no more lineups on the ferry system — and they certainly delivered that. But not only have they eliminated lineups on the ferry system, they've also eliminated lineups for motel accommodation on Vancouver Island, for hotel accommodation, campsite accommodation — and they've driven people in the hospitality industry on central Vancouver Island to the verge of bankruptcy as a result of their change and their increases in the ferry rates.

MR. C. D'ARCY (Rossland-Trail): They're doing fine in Spokane and Calgary, though.

MR. SKELLY: And I'm sure they're doing fine in the Okanagan, and maybe that's the reason. And this is....

MR. D'ARCY: Spokane and Calgary — they are all going to Calgary.

MR. SKELLY: Again, this has taken place. Even though estimates of border crossings are up, people are coming in from the United States. In fact, there was an article recently in the newspaper that....

Interjection.

MR. SKELLY: I'll send you a copy. I'll table it after we're out of committee.

HON. L.A. WILLIAMS (Minister of Labour): Table the report. Don't make these speeches out of thin air.

MR. SKELLY: Okay, I'll table the report. Doesn't Mr. Tozer get this information for you? Or are you paying him under the In-laws Act?

Interjections.

MR. CHAIRMAN: The hon. member for Alberni has the floor. Order, please.

MR. SKELLY: Okay, Daily Colonist, Victoria, B.C., Sunday, June 27, 1976: "Almost 20,000 passengers have stomped the hardwood floors of the Marguerite so far this month, compared to just more than 15,000 last year."

So traffic is increasing from the United States, increasing on the Marguerite, which your party was going to scuttle. But traffic is off on the B.C. ferry system because of a decline in service....

HON. W.R. BENNETT (Premier): We've got lifeboats this year.

MR. SKELLY: Lifeboats but no passengers to use them.

A decline in service on the B.C. ferry routes, and a decline in patronage by tourists. This wouldn't be so bad, but the motel owners on Vancouver Island are facing bankruptcy — restaurateurs, people in the hospitality industry...retail trade has dropped back. Even Woodward's stores reported that the government has taken something like $500 million out of regional economies in this province, centralized it in Vancouver and, as a result, retail business is down, tourist business is down and a lot of this is directly attributable to government policy, and particularly on central Vancouver Island, to the exorbitant increase in ferry rates and a cutback in service.

What is worse is that these people are being forced to pay their taxpayers' money — money they pay out in taxes, even though they can't afford to pay their mortgages now — to advertise in the United States for tourists to come to Vancouver Island. Last year you didn't have to advertise; there were lineups at all the

[ Page 3254 ]

ferry terminals. People couldn't wait to get to Vancouver Island, couldn't wait to enjoy the beauties of Pacific Rim National Park, the central Vancouver Island area — a lot of the hiking, fishing and recreation opportunities in that area. Now they are not coming. Now they are not patronizing those motels and those restaurants. It's directly attributable to the increase in ferry rates under this government.

It was reported in one of the newspapers recently — I see the Premier's left the room, so he won't ask me to table a copy of that, but I have it in front of me — that the tourist industry in southern Vancouver Island is losing something in the neighbourhood of $250,000 a week. Or is that a day? Yes, $250,000 a day the tourist industry in southern Vancouver Island is losing.

MS. K.E. SANFORD (Comox): Shocking!

MR. SKELLY: Yes, $250,000 a day. In the first 20 days of June, the first three weeks of June — a loss of $5 million to the tourist industry in southern Vancouver Island, and, again, directly attributable to the increase in ferry fares.

Many summer students who would have been employed in the tourist industry in the Victoria area, in the central Vancouver Island area.... And I'm sure the member for Comox and the member for Mackenzie (Mr. Lockstead) will concur that in those areas as well many summer students, people requiring money to go to university, will now not be employed in the tourist industry because of the increase in fares and the cutback in the industry on central Vancouver Island.

It's typical of the Socred concern, this coalition concern for the bottom line in the government operations — an attempt to get into the black on the ferry service. They admit that they're not going to get into the black on the ferry service...but while they're attempting to get into the black on that service, to produce a profit on it.

There's just no vision at all, no understanding at all as to what is happening to the people on central Vancouver Island and southern Vancouver Island who rely on a 120-day tourist season to make their income and to make their profit for the whole year.

They don't understand the full cost-benefit analysis of what the total impact is going to be on the province. That's not only on the ferry system alone but in other areas as well. They are destroying a major tourist industry on Vancouver Island, and they don't seem to have any understanding, any compassion, any concern for the fact that they are destroying that industry.

MR. W.S. KING (Revelstoke-Slocan): They've only got one small businessman over there.

MR. SKELLY: The member for Kootenay (Mr. Haddad) chuckles about this. He can chuckle about this because he lacks concern as well for the tourist industry on Vancouver Island.

Mr Chairman, they used to accuse us a government, when we passed mineral royalties legislation imposing a 5 per cent sales tax on minerals, of killing the goose that lays the golden egg. They said we were driving the mining industry out of the province. This is precisely what they are doing to the tourist industry on Vancouver Island. They are driving those people to the verge of bankruptcy; they are killing the goose that lays the golden egg as far as the tourist industry is concerned on central Vancouver Island. You're discriminating against one of the finest parts of the province, a part of the province that I am very proud of.

I am asking the Minister of Transport and Communications to reconsider an increase in ferry rates, to lower the fares to a more reasonable level and to conduct a study of the impact of the increase in those ferry rates before any change takes place or any increase takes place. I am asking for a rollback in those ferry rates and a complete detailed study of the economic impact on small businesses on Vancouver Island before those ferry rates are tampered with again. What he's done is to drive the retail and the tourist industry on Vancouver Island to the verge of bankruptcy.

A second thing that I would like to discuss — again, I have brought this up under another minister's estimates, the Minister of Forests and Mines and a few other things (Hon. Mr. Waterland) — is the McGregor River diversion. This minister is particularly responsible as the minister who has jurisdiction over B.C. Hydro and Power Authority. He was also at one time, when he was a Liberal, the minister responsible for fisheries for the whole of Canada.

I realize that the McGregor diversion is an attractive project from the point of view of B.C. Hydro because it involves no installation of generating capacity. The W.A.C. Bennett Dam on Williston Lake has already installed the generating capacity that would be derived from the McGregor River diversion. So it's a very attractive project from the point of view of B.C. Hydro in that the capital outlay for power production would be a lot less than, for example, the Hat Creek power project. I can understand that 292,000 kilowatts with a minimal capital outlay would be attractive to B.C. Hydro; 488,000 kilowatts when other dams are constructed on the Peace River.

A report has recently been issued by the Fraser River ecology committee on the ecological and other consequences of the proposed system E dams on the Fraser River basin. The kind of blase statements in that report about the impact of particularly the

[ Page 3255 ]

McGregor diversion on the fisheries in the Fraser River system are frightening. I would just like to read for the benefit of the record and for the benefit of the House some of the statements made in that ecological subcommittee report concerning the impact on the Fraser River salmon industry. That industry is valued, according to the report, at roughly $40 million wholesale net value to this province each year in 1972 dollars. I'll start with page 57 of the report.

"Attempts to remove squawfish population from existing reservoirs have proved ineffective to date. Squawfish are distributed throughout the Fraser River system. The improved environment that would be created for these fish in reservoirs would probably encourage increases in existing populations and in predation of salmon fry. Thus it may be assumed that the increased number of predators, the increased travel time through the reservoir and the reduced turbidity should cause downstream-migrating juvenile chinook to experience high losses due to reservoir predation."

On parasites and disease transfer from the Arctic drainage into the Fraser River system that ecology subcommittee report states on page 125:

"Northern pike, which are host to a tapeworm, could possibly swim from the Arctic drainage into the McGregor reservoir if the McGregor were diverted. If such transfer of pike did occur, the tapeworm would infest salmon stocks. This would cause mortality to juvenile salmon. In addition, the appearance of the encysted larval form of the tapeworm in the muscles of the adult salmon would drastically reduce the marketability and possibly completely eliminate the commercial fishery in the Fraser River."

This is a fishery that has an annual net value to this province of $40 million a year.

"It has not been possible to estimate the probability of pike parasite transfer. The effects of this development have not been included in the calculation of survival reductions.

"No assessment was carried out on the possibility of other parasites, disease organisms or fish transferring from the Arctic drainage into the Pacific drainage. Such transfers may include the introduction of northern pike strictly as a predator fish. As they are particularly voracious predators, juvenile salmon losses in the Fraser would be increased if northern pike became established throughout the Fraser River system.

"No assessment was made of the effects of the transfer of disease or parasites from the Pacific drainage into the Arctic drainage which could have a detrimental effect on future recreational potential of the Peace River and the Mackenzie River system."

No work had been done at all on that type of assessment. Yet that Fraser River fishery alone is worth $40 million net value. It's not simply the $40 million that concerns us but the fishing industry as a whole way of life in this province — a fishing industry that creates employment, that provides subsistence for Indian communities, and that provides industry for communities on the west coast of Vancouver Island in my riding that rely directly on the salmon production in the Fraser River system.

Since no adequate assessment has yet been done on the possible impact of the McGregor River diversion and since the McGregor River diversion appears to be such an attractive project for B.C. Hydro in that the capital outlay required per kilowatt produced is less than a few other projects he has on stream, I'd like to ask the minister if Hydro has commissioned any impact studies, environmental or economic, on the McGregor diversion. Have contracts been awarded for those studies and, if so, to whom? Is it true that the McGregor diversion project will be advanced from the target date of 1985 to a target date of 1981? Thirdly, is it true, as reported by B.C. Hydro officials to the Fraser-Fort George regional district, that the environmental impact studies will not be complete until after construction has been started on the McGregor River dams?

MR. G.S. WALLACE (Oak Bay): I just want to enlarge a little bit on some of the comments that have already been made with regard to the increased ferry rates and perhaps to mention two of the other factors, one of which is safety on the ferries.

I think, Mr Chairman, some of the statements that were made at the time the ferry rates were increased — such as comparing the rates to those on the English Channel — were an insult to the intelligence of the citizens of this province. When one travels from England to France one does so for a holiday or a luxury. When one travels from Vancouver Island to the mainland — most of the time for those of us who live on the Island — it is very much a matter of business or carrying on some economic activity, not a holiday going to the south of France. I think it was less than fair to try and justify ferry rate increases in British Columbia by drawing this kind of completely unsuitable comparison with the cost of travelling across the English Channel.

The fact is that the ferry fare increases in British Columbia, though some increase was necessary, were done in a very cold, calculating fashion, the consequences of which many members have related this afternoon. I've got all kinds of letters that I've received from citizens in this province involved in businesses of one kind or another — and the tourist

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industry, as one of the other members has pointed out.

I think it is time to take that famous second look at the structure of new ferry rates. I just want quickly to quote a typical one of the many letters I have received. This person says:

"I am not a confirmed letter writer — in fact, this letter is my first — but the announcement yesterday by Mr. Davis of the changes in the ferry rates was just too much.

"I belong to that group of citizens who own and operate over-height recreational vehicles. I have been forced to sit at the ferry terminal and watch vehicles that arrived long after I did go merrily on their way while I stayed behind.

"Now to add insult to injury, my transportation fee is to be tripled, while the driver of an ordinary car has his cost doubled. To me this is very unfair. Would you be so kind as to add your voice and protest? Indeed, your voice may be only a voice crying in the wilderness, but it may have some effect on Mr. Davis."

And if the hon. minister would like, I have probably got 50 letters on the same theme. We've got columnists in the local newspapers pointing out the price of a bale of hay on the Island compared to the lower mainland. We've got the problems of recreation and sport.

I have great documentation here from the sports council of greater Victoria who point out very fairly, I think, that a group of 25 is a substantial number of people going to the mainland on a sports endeavour and that surely the rates might be reviewed to reduce that number to 12, giving them some preferential rates. The minister has been in receipt of a letter from the mayor of Victoria supporting that kind of concept.

There are just so many letters, Mr. Chairman, pointing out the individual hardship to people on the Island who depend very much for their livelihood in being able to travel back and forth. I think it is absolutely incredible that even if the rates had to go up — and I acknowledge that there had to be an increase — that there is no particular consideration given to the permanent residents of Vancouver Island who depend on travelling back and forth to the mainland for their business and their livelihood. It seems to me that the least that might have been done would have been to give some particular consideration to the permanent residents of the Island.

I also want to touch on the ferry subject, Mr. Chairman, in regard to the question of safety. The crews on the ferry have been reduced quite drastically. The minister has pointed out in question period in response to some of my questions that he's merely emulating the Washington state ferries which have a much smaller crew than B.C. ferries and that the category of vessel or the classification to be used would be that of coastal waters rather than seagoing vessels.

Well, the point is, Mr. Chairman, that there is some real concern on the part of ferry staff as a result of the reduction in crews to what I believe to be a number of 31 on the large vessels, on routes 1 and 2. I have been made aware, for example, of one of the reports by a captain, which I would like to read into the record:

"I, the undersigned master, do not hereby indicate any agreement on my part that the vessel is adequately manned to care for any major emergency situation that might arise. Present manning representations, in my opinion, only the barest possible minimum of competent staff to cover normal operation and circumstances only, but does not appear, in my opinion, to be sufficient to properly cope with a major emergency."

Now, Mr. Chairman, we know that there have been at least two major disasters or near-disasters on the ferry system, one when the Russian freighter hit a ship in Active Pass and a year or two ago when there was a fire on the Queen of Victoria. I doubt very much, on the evidence I've been able to put together, that the present reduced crews on these large ferries will be able to deal with any major emergency.

It is not really adequate, in my view, to say that most of the time the ship is within sight of land and that actually, for all intents and purposes, they should not be regarded in the same light as ocean-going vessels. The fact is that when there is a fire on a ship or when there is a collision, I don't think it matters that much whether you're 500 yards or five miles away from the shore if the crew are not in a position, because of their numbers, to cope with the needs of the moment.

I've just been made aware of some of the experiences that have been encountered during emergency drills since the crews were reduced in number. One of the reports that I have here states that two catering attendants, one male and one female, cleared the liferaft station, moved the cover from the liferaft box but were unable to remove the liferaft from the box, to the designated position. The crew of liferaft station No. 1 is made up of the chief engineer and two catering attendants, the chief engineer not being available, as he is required in the engine room.

I am of the opinion that with the reduced number of crew members it is doubtful that we would be able to cope with a major emergency situation unless some stations are eliminated or more crew members are made available.

I notice the minister is smiling during my comments. I just hope he is not smiling at the content

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of these reports regarding emergency drill on the B.C. ferries, in which case he must have a very unusual sense of humour.

The fact is that these ships have had drastic reductions in crew, and it is apparent from the emergency drills that have taken place that some of the women serving on the ship in the ordinary capacity of serving in the cafeteria are crucial to the adequate mobilization of liferafts in the case of an emergency.

Another report states:

"A female cleaner — not a young lady — and two diminutive male crewmen were unable to drag, much less carry, the 330-lb liferaft. Full boat drill was carried out at station No. 2. The regular boat's crew lowered the boat to the water using the most expeditious method. It took 15 minutes to reach the water."

Now these are official documents that have been submitted to ferry management as a result of tests carried out on the ferries. I think that this kind of evidence suggests that if the crew has to be reduced to 31 for the sake of economics and the finances involved, at least a larger number of the 31 should be able-bodied men who can lift and drag liferafts from their position on the ship to their successful launching onto the water in the case of an emergency. But it's quite obvious that small-sized persons and certain female members of the crew are called upon at times of emergency to carry out a physical function which they are simply not able to do.

Another report here that's been made to the marine superintendent states:

"I felt that three people were insufficient to adequately launch a boat in an emergency. Due to weight and strength, some female crew members are very inefficient at the work. I was particularly concerned about the second officer's beat as there is only he and two others. Traditionally, I feel that in the event of a catastrophe the chief officer would be in charge of evacuation of one side and the second officer in charge of the other side, which would leave only two people at the boat. It would be a great advantage to have additional seamen as they truly are the backbone of assistance to the officers in this type of situation."

This report goes on to state instances where there have been people overboard. Under the new circumstances where the crew is reduced this particular officer has some doubt as to whether the matter could be handled adequately, and lives which have been saved on past such occasions may not be so fortunate in the future.

I would like to touch on one or two other areas of the minister's portfolio, which I recognize is enormous. In particular, I wish to refer to the Columbia River Treaty. Before the minister was elected to the provincial House, he wrote a letter to the Victoria Times on March 31, 1975. He started off the letter by saying that Premier Dave Barrett is missing the boat on the Columbia River Treaty:

"Instead of trying to change the treaty, he should change the price. He should up the charges for downstream power which is consumed in the United States."

He goes on in the letter to say several things which I think are worth mentioning, and I'd like to know if the minister, since he has now the opportunity to do what he was asking the former government to do...whether in fact this has been implemented.

In his letter to the Victoria Times on that date, Mr. Davis stated:

"The price of alternate forms of energy has trebled since the Columbia treaty was signed in the early 1960s and the United States has followed different construction schedules and different operating procedures from those on which the treaty estimates were based."

He states:

"Now we have facts instead of forecast, hard data in place of plans which weren't followed by the American utilities. Whatever the reasons, things worked out differently, and the value of downstream benefits from Canadian storage is greater than it was thought to be in 1961."

Then Mr. Davis in this letter goes on to say:

"B.C. Hydro should calculate what these downstream benefits really are and what they're worth to the United States and take that information to Ottawa."

The point that seems to be central to the letter is not that the treaty itself need to renegotiated, but that there should be a renegotiation of the power-sale agreement which is appended to the treaty.

I wonder, since the minister now has the opportunity in his very responsible position of Minister of Transport and Communications and responsible for Hydro, whether in fact, in accordance with the suggestion that he was making to the former Premier, he has put B.C. Hydro to work in calculating what the downstream benefits are proving to be to the United States. Has his department made an approach to our federal government hoping that changes can be negotiated to the power-sale agreement which is appended to the Columbia River treaty?

The minister's letter read very logically back in March, 1975, and now we're into June, 1976, and he has the power as a cabinet minister to initiate some of these moves. I wonder if he could tell us whether that has been done.

I was also very interested in another statement which the minister made soon after taking office with regard to B.C. Telephone in the area of communications. He was interviewed back in

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February and he said the first project which he would want to tackle in the area of his communications responsibilities would be in regard to B.C. Telephone. At that time he said that the first single thing is to get B.C. Tel under provincial regulations rather than federal. He said that the rates are determined in Ottawa and this doesn't mean that they're based necessarily on a B.C. view, but rather on a detached national view.

I know that this whole area of communications is a very sensitive national/provincial problem of jurisdiction, and I suppose it's some of the same kind of sensitivity as we've discussed in relation to the federal-provincial financing and resource management and many other similar issues.

I wonder, since the minister made this as a very clear goal, namely that at least B.C. Telephone should come under provincial rather than federal regulation, whether he has made any approach to the federal government to seek to achieve that goal.

One of the final points I'd like to raise, Mr Chairman, relates to the recent annual report of B.C. Hydro which shows that our debt ratio to paid-up capital is 96 to 4. The chairman of B.C. Hydro pointed out at about the same time that these figures were released that in places such as Ontario the debt ratio to paid-up capital is 80 to 20.

As I mentioned in earlier debates, every time we sit in this House we seem to be increasing the borrowing capacity of B.C. Hydro by a few hundred million dollars. I think this relates very clearly and closely to one of the other issues that's been raised already in this debate this afternoon, and that is the predicting of the most appropriate rate of expansion of facilities to generate electricity. The minister has already acknowledged this afternoon that one estimate says they're just over 9 per cent, and the B.C. Energy Commission says just a little under.

While these figures on their own don't seem to be that far apart, when you read the annual report of Hydro and look at the percentage of B.C. Hydro costs that represent interest on debt — something like 28.9 cents out of every dollar — if we're continuing to expand at the higher rate of 9 per cent, then the incredible cost of further borrowing for Hydro just leaves me wondering whether or not it can be justified.

The minister said earlier on this afternoon that he doesn't want brownouts and he doesn't want blackouts, and I agree with that. But surely when our debt ratio is 96 to 4, it will be increasingly difficult to borrow money anywhere, and if you can borrow it presumably the lender looking at the enormous amount of outstanding debt already incurred by Hydro will want a correspondingly higher interest rate to lend the money in these circumstances. If not I stand to be corrected. But it would seem to me that if I was a lender I would tend to give the better rate to what appeared to be the better risk which is a very obvious part of the whole rule of economics in the marketplace.

The chairman of B.C. Hydro has said: "Last year at times we weren't even covering interest on loans in terms of earnings. If this rate of deficit were to continue for two or three years we would wipe out the balance of our equity and working capital. It's just about as thin as you dare get." That was the quote by Mr. Bonner.

In fact, he went on to say further: "Frankly, if we didn't have a provincial government, it is very questionable what we could borrow." The fact is obvious, Mr. Chairman, that if a private company were in the marketplace trying to borrow money when its debt ratio to paid-up capital were 96 to 4 we probably wouldn't have a hope in you-know-where of getting any funds at all. Because this particular B.C. Hydro has the guarantee and backing of the provincial government, then, of course, borrowing apparently can be carried out.

I think it isn't just a question of whether it's possible or not to go on borrowing under these circumstances. It's a question of asking whether the amount of borrowing is justified in order to, let us say, expand at the rate of 9.2 per cent, which was the upper figure quoted.

It's all very well for Mr Bonner to say, "Well, we like to go over the higher figure and then three or four years down the road, we can always cut back," but in the meantime to proceed at the highest projected figure means borrowing more and more money, and with the financial picture of B.C. Hydro paying very substantial interest rates on the borrowing, this can only be reflected, as far as the consumer is concerned, in a continuing increase in rates, one of which we have just had — around 16 per cent, and even that followed a rate increase not too long ago in the latter part of last year.

I think it is about time there was some clear statement from either this minister or from the government that while our expectations might be that we always want all the electricity we need just at the moment that we need it, that government has to show some leadership and suggest that this is just costing too much to put the province in that position.

Already the annual financial statement of B.C. Hydro gives some clear indication of the fact that we are borrowing at a level and a rate far in excess of the generally accepted ratio of 80 to 20 in relation, let us say, to Ontario Hydro. Under these circumstances we should certainly be taking a very long look at such enormous projects as the Revelstoke dam and the Hat Creek coal project and many others which I'm not convinced are being studied in a completely integrated way.

It seems to me that there's some very substantial difference of opinion between the B.C. Energy

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Commission and the B.C. Hydro. While I am always quite willing to listen to differing opinions, when the mistakes that might be made involve hundreds of millions of borrowed money at high interest rate, then, indeed, I am sure the Premier, for example, who is listening very intently and who was elected because of his sharp business sense and his willingness to give this province a businesslike government.... I'm just wondering where the business sense is in relation to the enormous sums of money which are being borrowed year by year for Hydro at such substantial cost.

This isn't just some citizen like myself who is concerned about his Hydro rates which come in every two months in the form of a bill. I'm quoting from the very real concern expressed by the chairman of Hydro himself whose statistics, I think, in comparison with utility costs of development in other jurisdictions, are quite impressive. I would hope that it isn't just a guessing game of trying to decide whether 9.2 or 5.8 are the correct figures, but it's to try and put that in context in relation to the cost of borrowing.

MRS. B.B. WALLACE (Cowichan-Malahat): I want to take the minister back for a moment to the B.C. Ferries fleet. I would suggest to the minister, through you, Mr. Chairman, that the increases which he has initiated are not only having a financial effect on Vancouver Island that is without precedent, but I am concerned about the effect that those rate increases are having on the very employees of the B.C. Ferries.

Some of the instances that have come to my attention relate to the very first day that the new rates were introduced, and I think that will show you the kind of abuse that the ferry workers are being faced with. This particular incident occurred on a trip from Nanaimo to Horseshoe Bay. There were 14 vehicles aboard that ferry on the morning of June 1, Mr. Chairman — 14 vehicles. I think that itself is indicative of what is happening to the B.C. Ferries. But in this particular case, one of those 14 passengers happened to be a tourist.

It took something like 15 minutes for the staff unfamiliar with the new regulations to measure him up, his height, his length, his overweight to come to a conclusion as to how much to charge him. After this was finally completed and he got on board, this tourist saw fit to pin against the wall some poor little one-stripe member of the fleet and tell him what he thought of Vancouver Island and its ferry system.

He said that it had cost him $10 to bring his outfit onto the Island. He was not aware of any changes in the offing, and it had cost him $38 to get off the Island. The language which the man used I would not repeat in this House, but I would suggest, Mr. Chairman, that he would be a very poor ambassador as far as the tourist business on Vancouver Island is concerned.

That's the kind of thing that's been happening with the ferry fleet and that's the kind of abuse the ferry workers are taking. It's no wonder their morale is low, Mr. Chairman. And we know that when morale gets low — because it's been proven over and over — service slips, safety precautions slip and it becomes a very dangerous business. I would urge the minister to have a good look at the situation on the ferries with respect to the staffing, not only to the safety and the service, and I would suggest that the very layoffs that are contemplated and have been undergone by the ferry system are adding to the very regressive circle of employment that we are facing here on the Island.

Each employee laid off means just that much more load on our support services that are required, that much less job opportunity available in an already very low job-opportunity area. I am concerned about what's happening to those ferry employees when they are off for a period of time and their unemployment insurance is used up, Mr. Chairman. Because when that happens, according to the rules now introduced by the Minister of Human Resources (Hon. Mr. Vander Zalm), they will not be eligible for social assistance in this area. I am wondering what happens to those ferry workers at that point. I would urge the minister responsible for these layoffs to reconsider that staffing on the ferries and the needs of those ferries.

As far as the rates go, Mr. Chairman, naturally I am concerned. I am concerned about what it's doing to Vancouver Island; I am concerned about what it is doing to my constituency. The member for Oak Bay (Mr. Wallace) has mentioned the situation with the farmers. This is the headline: "New Rates Whack Farmers."

Bill Cameron is a well-known Vancouver Island farmer. He is the president of the Arabian Horse Association. He says that in his opinion the increased ferry rates are going to be directly responsible for putting about 80 per cent of the small farmers on Vancouver Island out of business. I know for a fact, Mr. Chairman, that the cost of hay has gone up by $1 a bale at one feed store in Duncan as a direct result of the increased ferry rates. This is the kind of thing that the farmers are being faced with here on Vancouver Island where they have always had that sort of detriment to work against because they are on an island. There is no way they can continue to compete with these ferry rates being introduced.

One of my constituents wrote me about an occasion that they had recently to take their truck-camper for a holiday. They were half an inch overlength — half an inch! As a result they were charged the next step, which amounted to something like $30.

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MR. GIBSON: That's $60 an inch.

MRS. WALLACE: Yes, for half an inch overlength! I am drawing this to the attention of the minister because I think he should realize the effect his regulations are having on the people of Vancouver Island and on the way they are being interpreted. I know that an employee out on the job has to follow the letter of the law unless he is otherwise ordered. But I would suggest that that sort of thing like half an inch extra length should surely be looked at.

I have written the minister regarding the Brentwood–Mill Bay ferry. I know he is a very busy man; I have not had an answer. But I just want to raise this particular ferry again. The Mill Bay–Brentwood ferry, as you probably are aware, goes across the end of Finlayson Arm joining Mill Bay, which is in the Cowichan-Malahat constituency, with Brentwood, which is on the Saanich peninsula.

There are quite a number of people, both teachers and manual workers, who live on the Saanich peninsula and work in the Cobble Hill–Duncan area. As a result of the increase in the ferry fares, those people are finding it more economical to drive rather than use the ferry, or if they are using the ferry, it's simple doubling the cost of their transportation. Of course, to drive around is also increasing their costs. I would suggest that they are driving because, for example, yesterday morning coming from Brentwood to Mill Bay there were five cars and one commercial vehicle on that ferry. Going back from Mill Bay to Brentwood — there are some people who commute that way — there was one passenger and a bicycle. That was the total load on that ferry.

Now if you are talking economics, Mr. Chairman, then certainly you are not running a paying operation when you have that kind of a passenger load. I would suggest that these rates are really curtailing the returns from the ferry rather than increasing them.

On the Brentwood ferry, Mr. Minister, through you, Mr. Chairman, there are no commuter rates. We do have commuter rates on the Gulf Islands but this privilege has not been extended to the Brentwood–Mill Bay ferry. I find that very strange because the tickets that are used on the Brentwood–Mill Bay ferry read "Gulf Island ferry receipt." Now if we use the same tickets, surely we could also have commuter tickets for that ferry, Mr Chairman. I would ask the minister to check into that.

I want to talk now more generally about ferries — something that has happened as far as the senior citizens are concerned with the ferries. I have here a copy of a news release from the Department of Transport and Communications, dated May 3, 1976. The fourth paragraph reads: "Senior citizens will travel free on the ferries, though those who are driving will still have to pay for their cars."

Senior citizens will travel free on the ferries — put out by the Department of Transport and Communications. Again, on May 27 a release, and to this release was attached the rates schedule. It said, on the May 27 release:

"Senior citizens, B.C. residents over the age of 65, will be able to travel free on individual ferry runs, Monday through Thursday, but must disembark at the terminal. As proof of age and residence they will, however, have to show B.C. Medical, Pharmacare and so on and so forth. That was May 27.

Attached to that, Mr. Chairman, was a series of rate schedules. Among those, I think it was the second page down, was the Queen of Prince Rupert: passenger vehicles, summer season, adult — $30 up to $45. Off-season was $22.50 up to $30. The Queen of Prince Rupert — B.C. Ferries. These are the brochures put out by that department: "British Columbia Ferries, serving the sheltered waters of Canada's Pacific coast — Motor-vehicle, Queen of Prince Rupert, British Columbia Ferries."

Now I would say that the Queen of Prince Rupert was a B.C. ferry, according to that. I would say, according to that, that this rate applied and I would say that this news release on May 27 and May 3, indicating that senior citizens would be able to travel free, certainly includes the Queen of Prince Rupert.

Fortunately, one of my constituents who has a brother at Prince Rupert, and who had decided to go and visit that brother, had decided to drive up-Island, leave his car and have a free ferry trip over to Prince Rupert to visit his brother. Fortunately, Mr. Chairman, that person, that constituent, mentioned it to me and said: "Is it really true?"

I said: "Well, I think it's true, but I'll check." I checked, and it's not true, Mr. Chairman. It's not true, Mr. Minister. The people who are working in your department tell me that the Queen of Prince Rupert is not free to the senior citizens of this province. Now either, Mr. Minister, this is false advertising at it's very worst or else your staff doesn't know what it's doing.

One or the other, Mr. Minister. It's got to be one way or the other. If it's false advertising, I wish the Minister of Consumer Services (Hon. Mr. Mair) were here — I'd like him to have a look at it. He is, as usual, not in the House. He's out consuming and consuming, as the member for Burrard says.

MS. SANFORD: Tell the Premier.

MRS. WALLACE: The Premier's there, maybe he could stop speaking long enough to hear what I'm saying. This is false advertising. This is a serious charge, Mr. Chairman. It's either false advertising or else the employees don't know the answers. I have checked with two or three different depots, different

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areas, to check on this and they all tell me, no, it is not free to senior citizens. Yet, the advertising certainly says that, Mr. Chairman.

MR. KING: He's got $1 million. He's not worrying about the senior citizens.

MRS. WALLACE: I'm worried about senior citizens, Mr. Member for Revelstoke (Mr. King), and I'm sure you are too. I suggest that this is a very unfair thing to do to the senior citizens, to give this form of advertising that indicates that they can travel free on B.C. ferries, and then if they were to go there and try to get on that ferry at Kelsey Bay, they would find that they would have to pay, not $5 or $10 or $15, but $45, and that is a disgrace, Mr. Chairman.

I want to leave B.C. Ferries at that, and I hope the minister will reply to those questions and points I have raised. But while I'm on my feet I want to move on and talk a bit about B.C. Hydro, since this seems to be the way we're approaching this particular estimate, by dealing with the various companies and corporations under the purview of the minister.

I want to talk about B.C. Hydro and the increases in the rates. Now when those rates were increased, as we all know, they went up by about 12 or 14 per cent to the residential users. The excuse or the reason that was used — one of the main reasons — was that for the first time in history we were in bad trouble with the electrical returns from Hydro, that for the first time in history we suffered a loss on our returns from electrical customers.

I mentioned in my budget speech that I had some suspicions about how those losses accrued. Now that I have the report from the minister on B.C. Hydro, my suspicions are confirmed. I note on page 6 of the report that it talks about the groups of customers. Residential customers were increased, Mr. Chairman. The sales were increased this year by 8 per cent. General customers increased by 3.7 per cent. The bulk sales customers, Mr. Chairman, decreased 11.7 per cent.

I would suggest that that is where that portion of loss from Hydro accrued. It accrued because we had labour unrest in the province last summer, some fairly extensive labour unrest. Now for those of you who may not know, those bulk sale customers are on a demand-billing basis. Every month they pay according to their maximum net demand, and not only that, but for the year preceding.

But those contracts have strike clauses and lockout clauses included in them, and when we had the labour unrest for that extensive period that we had last summer, the bulk-sales customers were not paying their share. That's why the sales were down.

But who did we penalize, Mr. Chairman? We penalized the residential customers. We penalized them because we couldn't penalize the bulk-sales people. Their contracts run for two, or three, or four, or five years. They were locked into a rate. There was no way those could be increased.

So we used the loss that accrued from the bulk sales, like MacMillan Bloedel, B.C. Forest Products — those big industrial consumers. That's where the loss accrued and we made up for that loss by penalizing the residential consumers in the province.

I suggest that that is a very unfair approach to use. Once again it is a repetition of what this government has done over and over and over. It hits the little guy every time and lets the big guy go free. I would certainly urge on the minister to move to reduce those residential rates, because that's not a continuing thing, Mr. Chairman; we're not going to be faced with that kind of industrial upset — I hope we're not.

I might have some reservations about that as a result of some of the labour legislation before this House. But I would hope that we're not going to be in that kind of a position continuously.

Yes, we have penalized the residential users to make up to a loss accrued by reduction in the bulk sales contracts on that electrical power supply, and we have penalized them very highly, very heavily and very continuously to bring about a solution to something that is not a continuing problem. I would certainly ask the minister to make some comments on that.

MS. SANFORD: I would just like to add to the comments made by various colleagues with respect to the increases in ferry rates.

People who have spoken ahead of me in this discussion on the estimates, Mr. Chairman, have indicated that the effects of these increases are going to be disastrous and ruinous to a large number of people within our constituencies.

You know, I don't think this government understands, Mr. Chairman, what effect that particular policy has had on the residents of Vancouver Island. You know, when you have flags flying at half mast on some of the motels on Vancouver Island, that should give you some indication, Mr. Minister, what effect that particular decision has had. Again, it represents the heartless approach that this government has used time and time again — completely heartless. They lack understanding, and once the deed has been done, Mr. Chairman, they are not even interested in finding out what sort of impact their decision has had on the people in the areas affected.

I've asked on several occasions the Minister of Consumer Services (Hon. Mr. Mair) to carry out impact studies with respect to increases in food costs on Vancouver Island as a result of these ferry increases. "No," says the Minister of Consumer Services.

[ Page 3262 ]

I asked the Premier of the province if, at least, they won't investigate to try to find out, to try to understand what their actions have done to the small businesses and the people on Vancouver Island. "No," says the Premier, a flat no.

I'm wondering if this minister has any concept about the particular actions that he has taken of doubling the ferry rates overnight.

AN HON. MEMBER: He tripled them.

MS. SANFORD: Or tripling them, you're quite right — or tripling them in some areas. I don't think they have any concept about what their actions have done to those areas affected. I'd be really interested to hear from the minister with respect to his understanding and his appreciation of what these actions might have on the residents and the small businesses in these various areas.

I think, Mr. Chairman, that the only thing they understand is money, and if it's the black ink at the bottom of the balance sheet, as my colleague from Alberni (Mr. Skelly) said, that's all that counts. Never mind about the small motel owners and the increase in the cost of food to the people of my riding.

I've mentioned several times about the cost to someone living at Alert Bay or Sointula to travel from there to Vancouver. One trip for car and driver, this is not even a vehicle which is above the allowable height — $80 return. Now working people in those places want to take their families to the lower mainland for a holiday during the summer. They will be facing costs which they simply will not be able to meet — they can't. I don't know if they have done any work in terms of trying to find out or trying to understand, but based on the answers that I'm getting in the House, I would think not.

I have had a lot of correspondence, Mr Minister, through you, Mr. Chairman, on the vehicle size — that is, charging triple the rate for those vehicles which are slightly above the 6-ft. 5-in. allowable limit. I know that the minister has written back and said, "Well, they have to fit under the ramps and therefore we have to charge more," but it seems to me that particularly now the ferries are to underused, the minister might reconsider that particular decision.

I have a letter, for instance, from someone who owns a Volkswagen camper. The points that he makes in this letter are very valid, Mr. Minister. He indicates that it makes far more sense to charge additional sums for vehicles which take up more space on the ferry — that is, charge by length rather than by height. He talks about all of the vehicles that are bigger than his particular Volkswagen camper in terms of length or width: a Chrysler Newport, a Cadillac, a Ford Stationwagon, a Chevy pickup, a Ford pickup, a Chrysler stationwagon, a Suburban...

MR. SKELLY: Sounds like the Socred fleet.

MS.SANFORD: ...all of these take up much more room on the ferry and yet they are allowed to cross at Nanaimo for $10 rather than the $15 that he's required to pay for his Volkswagen camper.

MR. GIBSON: The minister claimed in question period that a Volkswagen camper got on for the regular rate.

MS. SANFORD: Well, this Volkswagen camper that he's talking about apparently is above the allowable height and he has to pay this extra amount. But what really worries him when he writes to me about this and complains about it is that the minister, or the government, might tell him back: "Well, sell your Volkswagen and buy a Cadillac." That's what worries him, because that's the kind of response that that government has been giving to people who are facing these exorbitant increases.

AN HON. MEMBER: Right on.

MR. KING: Let them eat cake.

AN HON. MEMBER: They fly over anyway.

AN HON. MEMBER: Why six feet, six inches?

MS. SANFORD: Because they have to fit under the ramps. The minister has said that they have to fit under the ramps and that's the reason he's brought in this regulation. A lot of people are very hostile about it, Mr. Minister, and I think that's one point you might well consider because of the fact that the ferries are so underutilized now anyway. That's the least you could consider.

AN HON. MEMBER: Park them on their sides.

[Mr. Schroeder in the chair.]

MS. SANFORD: I have more correspondence. This comes from the Comox District Consumers' Group, an organization representing over 1,000 families in our area right now — largely those who are involved in the agricultural industry — and they write complaining about the very thing that the member for Cowichan-Malahat (Mrs. Wallace) raised: the increase in cost to agricultural products as a result of this overnight decision to double the ferry rates.

Then I'm getting correspondence from teachers saying: "Look, over the years we have attempted to take our students on educational trips to the lower mainland and we find that we are no longer able to do this." Teachers from various schools in the district have written to me on this and asked me please to

[ Page 3263 ]

"raise it with the minister to see whether or not you can do something about group rates for these students so that they will be able to take these trips," and they've been most beneficial. I've talked to students who have been allowed to travel, or have had the opportunity to travel to the lower mainland for three or four days. It's beneficial for them — one of the best things they can do during their educational years.

There's one specific ferry that I would like to refer to, Mr. Minister, and that's the ferry which operates between Beaver Cove and Kelsey Bay where it now costs $15 for the car and $6 for the driver. This, you may be aware, Mr. Minister, is the ferry that services the people in the north end of the Island who, as yet, do not have a public road. According to the Minister of Highways (Hon. Mr. Fraser), there is no money available this year in order to award the two remaining contracts in order to complete the road, and I'm wondering if some special consideration could be given to the rates there in view of the fact that those highway contracts are not being awarded and the people are going to have to rely on the ferry for some time to come.

The other point that I would like to raise, Mr. Minister, has to do with free ferries. As you will recall, there was quite a ruckus from the residents in the Gulf Islands that are serviced by the B.C. Ferry fleet, and, as a result, the residents of those islands are now able to travel free back and forth between the islands.

You're shaking your head, Mr. Minister. I hope I'm not incorrect in this. My understanding is that residents on the various islands can now travel back and forth between the islands without charge — without cost for either the car or the driver or the passengers?

HON. MR. DAVIS: That was all part of the original scheme.

MS. SANFORD: Oh. Well, if it's part of the original scheme, I'm wondering, then, Mr. Minister, through you, Mr. Chairman, whether or not you might have taken the time to discuss with the colleague who sits next to you in the House the possibility of a free ferry service between the islands serviced by the Department of Highways ferries. Within my riding there are many ferries that are under the Department of Highways, but they must pay to travel between the islands. In order to make it an equitable system, I would hope that you have taken the opportunity to discuss with the Minister of Highways the possibility of freeing up those ferries so people can travel back and forth between the islands without charge.

There is one other point that I would like to raise. Mr. Chairman, Vancouver Island is now an economically depressed area, and I think that any motel owner, any small business operator, will tell you this. I'm wondering, in view of the fact that the Premier has agreed to discuss the possibility of some DREE funding for contracts to complete the road to the north end of the Island, whether or not you, Mr. Minister, through you, Mr. Chairman, might approach the federal government in order to get some DREE funding which might act as a subsidy for the operation of the ferries. In that way hopefully we could cut the rates back to where they were before and you would be able to obtain the additional amount of money that you are now seeking.

I state this very seriously. It seems to me that the whole DREE programme is drawn up in order to assist areas that are economically depressed. I'm wondering if you would take the initiative, Mr. Minister, through you, Mr. Chairman, to discuss that possibility with the federal government in order to obtain DREE funding.

It seems to me, Mr Chairman, that this government, instead of spending $100,000 to advertise to bring tourists down to Vancouver Island, should save that money, put it on the ferry system so you can reduce the costs. If you do that and collect the royalties that should be coming in on coal, for instance, and add that to the cost of the operation of the ferries, then Vancouver Island and the other areas affected by these astronomical increases would not be economically depressed areas as they now are, as a result of the policies of this government. I would appreciate your comments.

MR. GIBSON: I just want to say a few brief words on the ferry system. I won't repeat the many excellent arguments that have been made here this afternoon. I'll just say that in principle the jump was far too quick. There was no question that there had to be an increase in the rates on the ferries, but the loss....

Interjection.

MR. GIBSON: I do think there had to be some increase, but I think that the loss would have been far less if it had been done over two or three years, rather than try and double it in one year. It shouldn't have been doubled to start with, because, Mr. Member, it is correct that they are, to some extent, an extension of the highway system. It shouldn't have been doubled; that was too high. It should have been done over two or three years, and then we would not have lost all of that revenue that we see so clearly now, revenue not just for the ferry system but for the whole tourist operation on Vancouver Island, caused by people not coming here because of the bad publicity and that because of the way the fares were increased.

[ Page 3264 ]

MR. BARRETT: He's a Liberal!

MR. GIBSON: Ex. Ex, former. He's found his proper home, Mr. Member.

MR. BARRETT: Now is that a nice thing to say?

MR. GIBSON: That's right. I have some other nice things to say before I sit down right now, because I don't think much of what's been done on the ferries.

Interjections.

MR. GIBSON: You know, Mr. Chairman, the minister had a lot of good advice on this. He had good advice on, for example, peak-period pricing, which is something we were talking about on B.C. Hydro a little bit ago. He accepted that principle that it's a good thing to have marginal cost pricing or peak-period pricing, which is really what we are talking about on the ferry system.

And he had a detailed study done by the British Columbia Institute for Economic Policy Analysis. I don't agree with all of their conclusions, because they recommend fare increases that in some instances were even higher than those the minister suggested, but they did have the basic principle that there is a time of year when the very high demand gives rise to capacity double what would be required if there was the same load all year, and that the people that make the demand in that particular time of year should pay for the excess capacity — in other words, higher rates in the summer.

If you do that, then the people who travel back and forth all year round, who are basically the people who live on Vancouver Island...

MR. CHAIRMAN: Hon. members, let's hear the member for North Vancouver–Capilano.

MR. GIBSON: ...then those people on the average would pay a good deal less for the ferries than those people who had simply come to the Island on a one-shot basis. That seems to me a fair kind of thing, Mr. Chairman.

The minister also ignored good advice out of that report in terms of passenger prices. Now we're trying to encourage the person who rides the bus in British Columbia rather than take the car, or the person who parks their car at one end of the ferry system or the other.

The way to encourage people like that isn't to double their rates on the ferry system from $2 to $4. Even that Institute for Economic Policy Analysis study, which I referred to, and that suggested such high fares; even that on the foot traffic only recommended $3 during the peak season and $2 the rest of the year. I think the minister was very wrong in making that jump to $4 for passengers.

MR. G.R. LEA (Prince Rupert): The Premier ordered him to do it.

MR. GIBSON: You know, Mr. Chairman, the rates that are charged....

Interjection.

MR. GIBSON: Not only the fact that the ferry system is an extension of the highway system, as hon. members to my right said, but the fact that our growth patterns in British Columbia are such that we should be encouraging some settlement on Vancouver Island rather than on the lower mainland where there's very, very high-cost land, high-cost housing and congestion of all kinds. So these kinds of growth patterns — if the government is really going to grapple with them — require that ferry charges be such as to encourage that kind of development — and that means keeping the ferry rates low; there can be no question about that. In my opinion, therefore, the minister has both increased the charges far too fast and increased them far too high.

But the thing that's the real crunch on the ferry system, as far as I'm concerned, the thing that says more about the Social Credit Party than anything else, is what they did to the senior citizens. Remember the joy-ride statement?

MR. BARRETT: If they carry the bus off the ferry, they can get on free.

MR. GIBSON: Listen to this out of the Vancouver Sun; then I want to read you something that I think will entertain you. Here's what the minister is quoted as saying in the Sun:

"Senior citizens taking advantage of the free rides available to them on B.C. ferries during the week will not be allowed to joyride, Transport Minister Jack Davis said Thursday. Davis told reporters senior citizens will have to disembark from the ship at the end of the line. They could then reboard on the next trip."

MR. BARRETT: You have to pay for a free trip.

MR. GIBSON: Now this did not escape editorial writers in some parts of this province, and I want to read to you an editorial from the Peninsula Times which is one of the finest editorials written in the province this year.

MR. BARRETT: What constituency is that?

MR. GIBSON: That's in Mackenzie, I believe. The date of this editorial...well, I didn't write down the

[ Page 3265 ]

date, I'm sorry. But it's titled: "Saving Us." It's a short editorial:

"We are totally in agreement with the Minister of Transport; senior citizens should not joyride on the ferries. There is nothing so distracting as trying to enjoy a peaceable ferry ride, and along comes a gang of rowdy senior citizens laughing and engaging in horseplay and upsetting the passengers. (Laughter.) The next thing you know they would be forming into gangs and terrorizing passengers on all major ferry routes. (Laughter.) Thank you, Mr. Davis, for saving us from this social menace."

Mr. Chairman, the social menace is the party which he represents, and nothing could represent that party better than that editorial.

MR. W.S. KING (Revelstoke-Slocan): Mr. Chairman, I was hoping that perhaps the minister would want to get up and explain to the House just how and why he felt it necessary to protect ferry patrons from the ravages of senior citizens in this province. I see him there smirking, caught in his dilemma of jetlag which seems to render him with great inertia and his current inability to respond in any way to the real problems and the real concerns of people in this province.

I'm not going to deal with the ferry problem, Mr. Chairman; I want to deal with the problem of the hydro-electric dam which is planned for the Columbia River just on the outskirts of the city of Revelstoke, and I did speak briefly about this at an earlier point.

I want to say that I'm pleased that the controller of water rights has granted a delay in the hearing wherein Hydro has applied for a water licence to build the dam. I want to thank the minister and his branch officials who are at least sensitive enough to the community interest to agree to that delay in the final hearing until September of this year.

Mr. Chairman, the main concern I have — and I think it's the primary concern that is being expressed in the community and in the whole area south of Revelstoke — relates to safety of the dam. I'm quite aware that despite the best engineering technology, it is impossible, from an engineering technology, it is impossible, from an engineering standpoint, to give absolute guarantee with respect to the safety of hydro-electric dams, but I think we can learn from some of the things that have occurred over the past period of time.

It was significant that we had a major collapse of a major dam in Idaho just a short time before the hearings were to be held in Revelstoke — at least the initial hearings on June 21. The Victoria Colonist of Sunday, June 6, dealt with the bursting of the Teton Dam at Idaho Falls in the state of Idaho. Six people were killed in that collapse and a 15-ft.-high wave of muddy water came roaring downstream engulfing several communities and forcing the evacuation of thousands of people.

Mr. Chairman, in that case the engineering authorities in the state of Washington had given every assurance that it was possible to give from a technical and engineering point of view that the Teton dam structure was a secure and a safe one. I understand it's an earth-filled dam similar to the one that is proposed just a couple of miles out of the city of Revelstoke.

There's a matter regarding the whole preparation and the whole planning for the Revelstoke Canyon dam which concerns me. I want to draw that matter to the attention of the minister and to the attention of this House because I feel it's of paramount importance and I think it's a matter that should be fully understood and discussed so that there might be a better understanding of Hydro's approach in this regard.

I think members, Mr. Chairman, will recall that under the Columbia River treaty which our nation and our province signed with the United States government in the '60s, the initial plan called for two dams rather than one at Revelstoke Canyon. It called for a dam at Downie Creek, 40 miles upstream from Revelstoke, and a dam on the outskirts of Revelstoke. These were to be low-level dams. For some reason Hydro has changed its plan and is proposing now to build only one dam, which is a higher level dam in the Revelstoke Canyon just four miles from Revelstoke. This means abandoning the Downie Creek proposition.

To understand my concern one has to go back a bit and recall that when the Mica Creek Dam was constructed, it resulted in the reconstruction of 86 miles of highway between the city of Revelstoke and Mica Creek at a cost, I would suspect, of somewhere in the area of $50 million to $60 million. That was a replacement road that was incident to the Columbia River agreement and the construction of the Mica Dam. That road was supposed to be the avenue of access to Mica Creek Dam on a continuing basis.

Mr. Chairman, now we find that the one high dam at Revelstoke, rather than the two initially planned, will again result in the flooding of that road that was reconstructed at tremendous cost to the province of British Columbia. The new plan will result in the flooding of about 56 miles of that Big Bend Highway to Mica Creek. I can only estimate that the cost of this reconstruction, will be again about $40 million to $50 million. I want to pose the question, Mr. Chairman, to the minister: how is it possible to justify the expenditure of another $40 million or $50 million to construct the road for the third time and yet say that the difference between the construction costs of the one Revelstoke dam as opposed to the two lower ones is marginal economically?

If the construction costs are marginal

[ Page 3266 ]

economically — the comparison of construction costs between the one dam proposal and two — and you're confronted with, by construction of the higher dam, a highway reconstruction bill of another $40 million or $50 million, then I say to the minister that on the face of it it would appear that there is some extremely compelling reason for only building the one dam in the Revelstoke Canyon and staying away completely from the dam at Downie Creek, 40 miles upstream.

There are those people in my constituency, Mr. Chairman, who are cynical enough to believe that perhaps this profound and compelling reason has something to do with safety. There are some people who conclude that because of the danger of the Downie Creek slide, a slide of tremendous proportion and tremendous volume which has been identified for many years, that is moving a discernible amount — a matter of some inches or up to a foot each year, I understand, down the mountainside — by building a dam almost adjacent to that slide the danger of a huge slide taking place by the higher level of the reservoir saturating the toe of the slide and precipitating quicker movement would result in a major avalanche into the reservoir, of such proportions that it would, in fact, top the dam at Downie Creek. Therefore the government and Hydro, rather than doing the necessary engineering to secure that slide, or at least to determine through adequate engineering studies whether it can even be secured, are taking the cheap way out and saying: "Look, we won't take a chance on building a dam in such close proximity to this dangerous slide; we'll move it 40 miles downstream to Revelstoke Canyon, build a higher dam and hope that if the slide does come plunging into the reservoir that perhaps the tidal wave that results will be so dissipated by the time it travels 40 miles downstream that the dam might be secure enough to stand.

I say, Mr. Chairman, that's a frightening prospect! And if that is not the case, Mr. Minister, I want you to explain to this House how you can justify the one-dam proposition when it means fairly equivalent construction costs but it means an additional construction cost for highway relocation of $40 million to $50 million.

Now either we have to come to the conclusion that I have outlined or we have to conclude, conversely, that Hydro's initial engineering with respect to road construction between the city of Revelstoke and Mica Creek was so deficient and so sloppy and incompetent that it resulted in a loss to the taxpayers of this province through rebuilding that highway no less than three times. I want to say that if that is the level of competence that we can expect from the engineering branch of the British Columbia Hydro and the minister's office, then God help us in terms of feeling any security regarding the safety of the physical structure of the dam that is being built on the immediate perimeter of that city of Revelstoke.

We have to come to one of the two conclusions — either the engineering planning, or where the dams were going to be and what the reservoir levels were going to be and hence where the permanent highway would reside, was deficient in that regard or there's some other reason, and I hope it's not the one that I outlined — just the desire to move the dam construction to a distance far enough away from the Downie Creek slide that the hope will be that any catastrophe that occurs will dissipate and subside by the time it reaches the dam structure at the Revelstoke canyon.

These are frightening prospects. When we look at the results of the Teton dam in the state of Idaho and the devastation created and when we recognize that this new dam with the tremendous reservoir behind it is located just four miles from the core of the city of Revelstoke, a city of about 9,000 people, we are talking about frightening prospects. I say that it is absolutely essential that this government — not only B.C. Hydro, but the minister responsible for that corporation and the minister responsible for energy in this province — be in a position to give absolutely firm assurances to this Legislature and to my constituency, Mr. Chairman, that all of these facts are on the table, that they are all under study and that adequate engineering is being done to give assurances to the people who dwell on the lee side of this formidable structure that is possible and capable of wreaking great destruction on the terrain and the villages and the towns downstream from the physical structure itself.

Mr. Chairman, there are a number of other matters incident to this dam. I want to say that I don't think the people of Revelstoke are basically opposed to the dam per se, if they can be given adequate assurance regarding the primary concern, which is the safety factor. They understand that the river is already harnessed, albeit in a sellout, a sellout to our neighbours to the south which the present Minister of Transport and Communications (Hon. Mr. Davis) participated in as a then federal minister — or not minister, perhaps, but assistant to the Prime Minister, I believe, or parliamentary secretary to the Prime Minister at that time. They appreciate that it's a fait accompli in many ways.

But the citizens of my area and those ridings to the south, the member for Rossland-Trail (Mr. D'Arcy) and the member for Nelson-Creston (Mr. Nicolson), are not prepared to accept this dam at any price or just for the economic boom that it would provide on a short-term basis or for the short-term boom employment opportunity that will accrue. We want some hard, firm guarantees with respect to upsetting the primary safety factor that I talked

[ Page 3267 ]

about.

Secondly, we want some protection, some firm guarantees in terms of mitigating the impact on the fish and the fisheries of the Columbia River chain. The Downie Creek area and Goldstream are some of the less-major spawning streams on that chain that have not been destroyed by previous dam construction. I don't want to see that area become a wasteland where all recreational opportunity is lost, where a valuable fisheries resource is lost for all time because the minister and his Crown corporation want to pinch pennies. We are not prepared to stand for that. We want firm guarantees in terms of what is going to be done to provide alternate spawning grounds. That can be accomplished. But we must have firm undertakings.

We recognize as a local community that we are going to be called upon to provide tremendously increased social services to that community. As the result of the influx of a large work force to construct the dam, we are going to be required to provide tremendously increased educational facilities, expanded health care services and largely expanded recreational opportunities and services to the area.

Mr. Chairman, the city of Revelstoke is not prepared to undertake and stand alone in providing these kinds of services to a transient work force which is being visited upon the community by the policies of this government. We want firm guarantees from this minister and Hydro; I demand both. I demand both because in the past B.C. Hydro has given undertakings up in the Columbia and the Arrow Lakes chain which they did not keep.

They are not part of the political process; they are not answerable to this Legislature. So I expect those commitments from British Columbia Hydro and Power Authority. I expect them to be validated in a straightforward, forthright way — in a political way — by this minister, who periodically, I am told, suffers from jet-lag.

I expect this minister to validate and stand behind and affirm those commitments to my area of the province, an area which is being called upon to face a vastly changed lifestyle to provide energy and power for the rest of this province. So we demand protection. We demand indemnification from the social, the environmental and the economic impacts to our community.

I think it is fair, Mr. Chairman, that our senior citizens' groups and other groups in the community who are undoubtedly going to suffer from a high inflation rate because of a boom economy created by this large influx of workers and high wages — I think it is inevitable that those groups are going to feel the economic pinch of inflation. Higher rental costs, higher land prices, higher food costs — I want to know what the minister and his Crown agency propose in terms of protecting the fixed-income groups in our community — because they are going to be affected drastically. The result will be, unless there is mitigation offered by the government, that many of them will be forced out of their own homes; they won't be able to afford to live in them.

Finally, Mr. Chairman, I want to talk a little bit about the lifestyle that is going to be altered, perhaps for all eternity. Revelstoke is a comparatively small city — about 9,000 people. It is a close-knit community, a very fortunate one in terms of facilities for the population that it has, a very fortunate one in terms of year-round recreational opportunity; first-class organized sport for the young people; all summer long good swimming, baseball; tennis courts; a beautiful golf course in which the whole community participates.

In the wintertime we have one of the most beautiful ski developments only five minutes from the city — all close at hand — first-class curling and skating facilities, hockey, the No. 1 snowmobiling area in the province of British Columbia, which is recognized by the fact that the provincial races are held there each year.

But all of these facilities were designed to serve a community of about 9,000 people. All of a sudden we are confronted with a prospect of having our population virtually doubled for at least a period of four years. In addition to that, and the tremendous change it is going to make in terms of the availability of these facilities which the local people have always enjoyed, we are confronted with permanent scars, if Hydro sticks true to form, which will change the face and the character and the lifestyle and the quality of life in that community for all time.

I am speaking now, Mr. Chairman, about the powerline that it is planned to channel into Revelstoke to carry the power generated from the Columbia River dams to the lower mainland area of this province. It is my understanding at the moment that there are no less than six high-tension powerlines planned for construction into the heart of Revelstoke. Anyone who has driven our highways and viewed these grotesque lines with the big wide slash running over the face of our mountains knows what it does to the face and the character of an area.

Mr. Chairman, I say that there is no way that the community I live in, and I as their elected MLA, are going to stand still for this kind of devastation which, in my view, is completely unnecessary — completely unnecessary.

We have a corridor running into the city of Revelstoke, a corridor which carries the transportation facilities, the railway and the highway. I want to suggest to the minister that it may be more costly, but there's no reason on earth why the powerlines carrying the power from this development should not ultimately be carried in the same corridor, and perhaps undergrounded for the last few miles

[ Page 3268 ]

into town so the mountains and the scenery and the character of that community are not destroyed and marred for all time.

I don't know what the engineering and technological problems are incident to putting those powerlines underground, but I think it's about time we departed from the tremendous and devastating effect of building powerlines — the tremendous land waste, the tremendous devastation of beautiful land areas all across the front doorsteps of communities and villages in this province.

I think this is a first-class place to start, because, as I pointed out, that city is going to be confronted with enough disruption. There are burdens they are going to have to bear which they can't be compensated for, because they're obliged to carry the energy can, as it were, for the rest of this province.

By golly, Mr. Chairman, I'm not going to be satisfied. And I can tell you this: if the minister wants cooperation, he'll find it in Revelstoke and he'll find it through the member who represents Revelstoke, provided he and Hydro are prepared to deal in an open way and to give the kind of guarantees that the people up there need and deserve. If he is not prepared to deal openly and fairly and give guarantees that he is prepared to stand behind, then, Mr. Chairman, I can tell you that that minister has a fight on his hands. I guarantee it.

Mr. Chairman, I have some reason for concern, some reason for a bit of cynicism regarding the performance of Hydro over the years, and regarding the performance and the credibility of the minister. I've had a lot to do with British Columbia Hydro and the Columbia River Treaty over the years before I arrived in this House.

I'm not going to read too much of this, but perhaps the best resume of the dilemma we find ourselves in today is an article which appeared in Engineering and Contract Record, a Southam business publication, in April of 1964. This is incorporating roads and engineering construction, and it's entitled: "The Columbia River Scandal."

I want to read into the record of this House, Mr. Chairman, a few things that are going to punctuate, dramatize and emphasize the points I've made here and the concerns I've expressed, and to remind that minister that he has an obligation to change the image and the record insofar as his personal participation in this whole dilemma is concerned. And there's no better time to start than now.

On page 6 of this article I mentioned, it's talking about the Liberal government's performance with respect to the Columbia River treaty — the federal Liberal government's performance under the leadership of the Rt. Honourable Lester B. Pearson. It gives this account from Mr. Pearson:

"Liberal leader L.B. Pearson has described the government's handling of the Columbia River Treaty as sheer bad management. In a statement issued earlier from his office in Ottawa, following General McNaughton's charges Friday night, Mr. Pearson said the treaty should be renegotiated at once by a Canadian government which would pay sufficient regard to Canada's interests. General McNaughton would have been a most effective person to act for Canada in the renegotiation of the treaty, which is now more necessary than ever, Mr. Pearson's statement said."

That's reported in the Toronto Globe and Mail of April 9, 1962.

"Your letter of April 12, 1963, has just arrived and I would like to assure you that I agree with you that it is imperative to renegotiate the Columbia River Treaty." That was a letter sent to Donald Waterfield of the village of Nakusp in the same year — Donald Waterfield, the author of the book Continental Waterboy.

Then there are some excerpts from Dr. Jack Davis, head of the Liberal power committee:

"The Columbia River Treaty, as interpreted publicly by the present government, must be characterized as nothing short of a fiasco. It is inconceivable that the government of this country should ever enter into any agreement, let alone a comprehensive treaty with another country to last at least 50 years, which failed to procure any demonstrable advantage for the people of Canada. No man, no government, no party, can be proud of this achievement."

That's a record from the House of Commons, October 4, 1962.

"The present Columbia River Treaty is not good enough; it amounts to a sellout of our Canadian resources. This embarrassing treaty must therefore be renegotiated. There can be no doubt that the present version ties Canada's hands. Economically speaking, it is a poor deal for Canada. Whether Canadians are bold enough to grasp this opportunity to amend the treaty for our purpose remains to be seen."

Mr. Chairman, that was reported in the Vancouver Sun, October 28,1962. And that was the present minister's opinion.

MR. CHAIRMAN: Two minutes, Hon. Member.

MR. KING: That was the present minister's opinion of the Columbia River treaty in that day, a treaty under which the present proposed dam at Revelstoke is being constructed, Mr. Chairman.

I want to go on to show that the minister at that time was tremendously concerned about a treaty that he is now defending because he finds himself in a new political situation. That must be a sensitive one and a difficult one for the minister to rationalize. I don't

[ Page 3269 ]

want to be mean, but I want to remind the minister of what he thought when he was a Liberal and when he was actually involved in the negotiation of that treaty.

"The treaty has been sharply criticized by Hydro experts. Mr. Pearson obviously shares these misgivings since his intentions are to renegotiate, not just modify the present treaty. But public suspicion was growing and two press reports within the next six weeks began to indicate what had really happened. B.C. Liberal leader, Ray Perrault, among others..."

You know Ray Perrault — he's now the senator, Mr. Chairman.

"B.C. Liberal Leader Ray Perrault, among others, will be embarrassed if Mr. Pearson does not seek to renegotiate the treaty. Mr. Perrault has been attacking Mr. Bennett for months on the grounds the current treaty is a second-best one. The provincial Liberal chief has been consistently supported by his four colleagues in the B.C. Legislature and also by several federal Liberal members, including the party's acknowledged power expert, Jack Davis, who once described the treaty as nothing short of a fiasco."

MR. CHAIRMAN: Order, please! The member's time has expired.

MR. KING: Oh, Mr. Chairman — all right. I'll continue after a brief period.

MR. D.G. COCKE (New Westminster): I've been sitting in the House for some time, and I'd hoped that the minister would have answered some questions, particularly with respect to the ferry system.

I stood in my place to give the member for Revelstoke-Slocan (Mr. King) an opportunity, because there has been an intervening speaker, to get up again and just finish his little story.

MR. KING: Thank you, my colleague, for yielding the floor to me in such a gentlemanly fashion.

MR. WALLACE: Tremendous teamwork!

MR. KING: The main point I wanted to make is the dilemma the minister finds himself in with the departure from the position that he and former Liberals in this House took with respect to what was the great Columbia River sellout. Liberal members are sitting as cabinet ministers in the new coalition government, his colleagues now — the member for West Vancouver–Howe Sound (Hon. Mr. Williams) and both members for Vancouver–Point Grey (Hon. Mr. Gardom and Hon. Mr. McGeer).

Mr. Chairman, finally I want to draw to the House's attention something that, as I said, gives me grave cause for concern with respect to any undertakings. To quote the same article again, the headline says:

"Who to believe? The most bizarre incident of all occurred early this year and led to some revealing reactions from officials in both Canada and the United States. A Cominco engineer had written to Jack Davis to ask why the government kept changing its publicly announced cost estimates for High Arrow.

"He got a most astonishing reply. A letter was postdated Office of the Prime Minister, February 5, 1964: 'High figures have purposely been leaked out by the Canadian and B.C. governments with a view to influencing our negotiations with the United States. Now that the lump sum price settlement has been arrived at, we are in a position to produce more realistic figures insofar as the High Arrow project is concerned.'

(signed)

Jack Davis, MP,

Parliamentary Assistant to the Prime Minister.' "

The column goes on, Mr. Chairman:

"The public reaction was equally surprising. No one seemed to be concerned that the government had admitted lying. Instead, Davis was given credit for outwitting the Yankees. It didn't seem to occur to most people that if the government was issuing false figures, the Canadian public was the biggest loser as far as any attempt to judge the treaty was concerned.

"The reason Davis gave for government lying was preposterous, as both American and B.C. officials were quick to point out. Their replies, with direct reference to the calibre of the Canadian negotiators, were the most sensational items to come out of the affair. Actual benefits were worked out on U.S. computers, Mr. Williston said."

Worked out on U.S. computers — they knew more about the situation than we did. That was the British Columbia government's chief negotiator, Ray Williston, the man that's now been appointed to head up British Columbia Cellulose.

"They knew more about the situation than we did. They had been working on the Columbia for 20 years. You can't leak figures to engineers of the stature of the U.S. team." That's what Williston said, reported in the Victoria Times of January 27, 1964.

"Elmer Bennett, former chief U.S. negotiator on the Columbia River Treaty, says his delegation was at no time fooled or deceived by Canadian figures. 'We worked from our own figures and from our own engineers, ' Bennett said.

[ Page 3270 ]

"A source close to Bennett said the American negotiators concluded during early discussion that the Canadians had neither sufficient background nor the engineering experience to provide clear-cut figures at the time of the negotiations."

That's the sorry record of that minister, Mr. Chairman.

In a letter from the Prime Minister of Canada's office he admitted feeding out faulty information, erroneous information, to the people of this nation, as well as the government south of the border, in a clumsy ruse apparently to make the Canadian people think that we had a sharp negotiator on our team. What a failure! What a hoax!

Mr. Chairman, the article refers to that as "lying," but I would not do that, because it's unparliamentary. But I have great respect for the authors of this article.

So I want to say to the minister in closing, Mr. Chairman, that I want firm commitments from him with respect to the Plans in Revelstoke, and I want to serve notice on him that we want to be absolutely assured regarding the engineering safety of the dam. We want to be given absolute firm commitments, both technical and political, with respect to the mitigation against the social, environmental and economic impact on the community. Finally I want to serve notice on the minister once again that we do not intend to sit silently by and watch a beautiful city and its landscape marred by unnecessary construction of wide swaths of power lines carrying power from that area to the lower mainland. I look forward to the minister giving me that kind of assurance, Mr. Chairman.

MR. LEA: Mr. Chairman, I guess it would be kind of nice if we did have some answers. But obviously it's going to be summed up in a few minutes at the end, I would think.

I'd like to talk a little bit about the proposed pipeline from the north coast of British Columbia — Kitimat looking now to be the spot that the Trans Mountain people are looking at more favourably than Prince Rupert, to Tete Jaune Cache to Edmonton.

I admit that the knowledge I have is somewhat sketchy, and the reason I raise it in the House is so the minister, if he is able, can clear up some points that I would like to have cleared, because I think they're important points.

It's my understanding that it is the desire of Governor Evans in the state of Washington to put up facilities at Port Angeles in order that there can be environmental problems solved. The shipping people are now taking large tankers into those refineries on the mainland north coast of Washington. In order to move that facility to Port Angeles and build a pipeline going south and into the markets in the midwestern United States, there has to be a certain volume of oil handled in order to make it economic and therefore do away with what could be a very dangerous situation — in other words, those tankers plying those very difficult navigable waters into those refineries and unloading spots on the mainland of the northwest coast of Washington.

In order to do that, as I understand it, so it's economic, Governor Evans would like that Alaskan oil to come down by tanker plying a wide skirt to the Queen Charlotte Islands and also to Vancouver Island and down to Port Angeles, doing away with what Governor Evans considers to be — and I would assume he's correct — a possible oil spill which would be very difficult to clean up if one of those tankers crashed going through those hard-to-navigate waters into the mainland of Washington.

Now as I understand it, if that happened it would clear up a possible environmental danger in those waters. If the Trans Mountain people are successful and they manage to have a pipeline constructed from either Kitimat or Prince Rupert, to Tete Jaune Cache up to Edmonton, it would leave the State of Washington in the position of not being in an economic spot to move out to Port Angeles and therefore clean up that environmental danger in these waters down here.

If the Trans Mountain pipeline goes ahead, we create on the north coast of British Columbia a possible danger that doesn't exist now. So if we allow that pipeline to be built, we create an environmental danger on the north coast of British Columbia; and by doing that we won't allow the State of Washington to move out to Port Angeles, because it doesn't become economic. Now that's as I understand it. So instead of bring that oil down to Port Angeles and creating an economic viability of that Port Angeles facility, if we go to the north coast we create a problem there and we leave one in northern Washington. In other words, we create an environmental problem, or possible environmental problem, and we leave one in Washington.

Now I don't believe, if that is the situation, that that makes good sense and I don't think it makes good sense from an economic point of view, at any rate.

Now to construct that pipeline through northern British Columbia would, of course, bring dollars into the province. But they would be short-term dollars. The number of jobs that would be generated by that construction wouldn't be very large, possibly 50 at the unloading station and a few at pumping stations along the way.

As I understand it, there would be no benefit to the province or to Canada. It would be American oil coming by tanker, unloading on the north coast of British Columbia, travelling through a pipeline through British Columbia, through Alberta, through

[ Page 3271 ]

Canada to feed an American market.

As I understand it also, Mr. Minister, not even federal legislation there to allow the province of British Columbia to even put a tax on that would be meaningful in revenue to the province. So the only benefit I see to the province is a short-term benefit during the construction of the pipeline itself, and a few jobs, possibly 50 to 100 jobs in the province. Plus we do Dan Evans and Washington out of the opportunity of solving an environmental problem there, and we create an environmental problem on the north coast of British Columbia.

Now that is as I understand it. If the minister has a different understanding of the situation, I think this is the time that the minister can state what the case is as he understands it. Because if it is as I have laid out today, then it would be a disaster for British Columbia and for the northern part of Washington. So I can't understand why the Minister, Mr. Chairman, has come out in favour of it — or it appears he has come out in favour of letting Trans Mountain build that pipeline through the northern part of British Columbia, and Trans Mountain is nothing more than a consortium of big oil companies. It isn't really a pipeline outfit. It's just a consortium of huge, multinational oil companies. That's all it is.

I would like to know what would be, No. 1, the long-range benefit to British Columbia if that pipeline were constructed, in terms of the construction jobs that would be created and the economy, the long-range economy. How many jobs would be created of a permanent nature, and what would that mean? Is there a possibility that if it were to go ahead, that there are some means of the province of British Columbia having an ecological tax where they could charge so much a gallon for the oil going through there, so that we would at least have some money to clean up possible spills both in fresh water and in salt water? As I understand it, that possibility isn't there. The federal government took care of that. No opportunity for British Columbia to charge any meaningful tax to get revenue.

If it is as I have laid out today, then it is complete folly, and I would like to know what the minister's views are, what information he has. I believe it is about time. If he does have information, it should be shared with the other members of this House and with the people in this province. Because the Premier came into this House and said: "Well, isn't it great? Possibly we're going to have this pipeline. It's going to mean a lot of money to British Columbia." As I read it, it may look like that, but in reality it wouldn't be.

We're doing the State of Washington a disservice, we're doing the north coast of British Columbia a disservice on an environmental basis, and I would really like to hear the minister lay out in the Legislature this afternoon everything he knows about that proposal from Trans Mountain and the economics, the environment, and the social aspects of building this pipeline, because I can't see any advantage whatsoever, except a very short-term advantage of the construction itself.

I would like to have the minister this afternoon put that out on the table so that we can all take a look at it, because I believe it is too important to the State of Washington and to the province of British Columbia not to have people in this province understand what the facts are on those three aspects so they can make a judgment based on reason instead of emotionalism as the Premier has tried to make it.

MR. C. BARBER (Victoria): Did the minister care to reply now? I will yield if he wishes.

MR. CHAIRMAN: I have recognized the member for Victoria.

MR. BARBER: Okay. I rise on two matters and will deal with them briefly. The first of them is the question of the Princess Marguerite, of which the minister is well aware.

Mr. McCaffey, the former manager, or the then-manager of the Princess Marguerite, resigned at the beginning of June of this year. Mr. McCaffey, a past-president of the Victoria Chamber of Commerce, is a respected businessman of the city of Victoria.

In his letter of resignation Mr. McCaffey noted:

"I have for some considerable time been distressed by the adverse effects on the company of the negative attitude and total indifference of its board of directors towards company affairs."

He goes on to say:

"But for your periodic personal encouragement I would have resigned several weeks ago. Lately...."

I'm sorry, that's on to another topic.

"But for your personal encouragement I would have resigned several weeks ago."

Now it disturbs me very much, Mr. Chairman, that the B.C. Steamship Co., for which this minister is responsible, and the Princess Marguerite, which is worth some $13 million to $14 million a year in Victoria tourist income, as estimated by the chamber of commerce, has seen the resignation of one of the most able and one of the most competent businessmen who has ever served this community, a man who has felt it necessary to put in writing the statement that he has been distressed by the adverse effects on the company of the negative attitude and total indifference of its board of directors to company affairs.

My first set of questions is concerned about the B.C. Steamship Company and the effect Mr. McCaffey — hardly a member of our party, hardly a recipient of political patronage of the NDP — has on

[ Page 3272 ]

the proper conduct and good business management of that company. It disturbs me very much that a man like Mr. McCaffey should feel compelled to make such a statement. It disturbs me equally as much that the minister has yet to reply in any thoughtful, in any serious, or in any comprehensive way to the charges Mr. McCaffey has made about the board of directors appointed by that coalition government.

The coalition is in charge, Mr. Chairman. The minister on behalf of the coalition is responsible, and I think it's most important and most necessary that the people of Victoria understand how it is that a man like Mr. McCaffey could resign in such a fashion, and how it is that the minister could respond as silently as he did.

He did note, and I would repeat, that the minister personally has offered encouragement, and I commend the minister for that. I think that's excellent. I'm very glad of that.

AN HON. MEMBER: You can't live on encouragement.

MR. BARBER: That's right, you can't live on encouragement. You can't run a company on that basis, and when you report to a board of directors which is at best indifferent and at worst hostile, it's very, very difficult for any manager to remain in that position.

There is the question as well of Mr. McClary — a loyal agent in Seattle, as he was described by Mr. McCaffey — and his very sudden and arbitrary dismissal which was another factor that led to the demoralization of Mr. McCaffey and that led to the demoralization of many of his staff.

The first questions I would ask are concerned about the Princess Marguerite, the significance of Mr. McCaffey's resignation, and whether or not the minister on behalf of the coalition is willing to undertake any changes at all in the composition of the board of directors. It's clear that that composition is not satisfactory to one of the most respected businessmen in Victoria and, in fact, as we've been able to determine it, to many of the members of the company and the employees on the ship.

The second matter that I'd like to raise today to the minister, through you Mr. Chairman, is the question of the clear discrepancy in taxation policy and the clear inequity in taxation treatment of persons who use oil for home heating purposes and persons who use propane for home heating purposes. I'm speaking to the minister in his capacity as that man responsible for the B.C. Energy Commission.

There are some 100,000 persons who heat their homes in British Columbia by propane. Persons who heat their homes by oil pay a flat tax of one-half a cent a gallon, a tax which has not increased for over a decade. Persons who heat their homes by propane pay a 7 per cent sales tax.

AN HON. MEMBER; What did you do in three and a half years?

MR. BARBER: We formed the B.C. Energy Commission to look into it, and the Energy Commission is shortly to present a report to the minister. The report will be available in a week or two.

The B.C. Energy Commission which we created has studied the problem since 1974 when it began holding public hearings in British Columbia. This is a problem which was in place during the previous Social Credit government.

Natural gas and electricity and propane are all subject to the sales tax. Home heating oil, grade No. 2, is not subject to the sales tax, but again rather there is a flat one-half cent tax per gallon. This is a very substantial difference in taxation. The difference is compounded when you examine the relative efficiency of the two means of heating, and I'll get to that in a moment.

At half a cent a gallon the oil users in British Columbia pay no more in taxation than that half-cent a gallon. There are no additional fees; there are no additional charges. People who burn propane pay 7 per cent. At 48 cents a gallon, which is the current price of propane, that amounts to 3.4 cents a gallon versus 0.5 cent a gallon for persons who choose to burn No. 2 heating oil.

What we see here is that on the basis of that inequity in taxation alone, the 100,000 persons who heat their homes with propane in British Columbia are paying seven times the rate of taxation that a person who burns oil does — 0.5 cents a gallon for oil burners as opposed to 3.4 cents a gallon for propane burners.

There is a further inequity and it is this one. The British thermal units present in propane are inferior to those present in an equal amount of oil. When you calculate the additional amounts of propane required to achieve the same value as a smaller amount of oil would provide, you find that in fact persons who burn propane are paying nine times the taxation that oil burners are required when they choose to heat their homes.

This is an historic inequity. It has been worsened by inflation over the last several years; it has been worsened by neglect of successive government.

My question to the minister is whether or not he, in the first place, recognizes that this is an inequity; secondly, will he table in the House if we should be sitting then, or make available to the public if we're not, the report when it is presented by the B.C. Energy Commission? Thirdly, will he take to task the Minister of Consumer Services (Hon. Mr. Mair) who

[ Page 3273 ]

said there would be "no action for at least a year or two," according to the Victoria Times of June 24? The Minister of Consumer Services, recognizing the inequity, chooses once again to go to sleep in the face of it and informs us that there will be no action for a year or two.

One hundred thousand homes in British Columbia are heated by propane — 100,000 taxpayers are paying nine times the tax that oil burners must pay in order to heat their homes. This really can't be justified, Mr. Minister.

The B.C. Energy Commission, having studied the matter, will be making recommendations. I hope myself that the minister takes them most seriously. We'll be looking on this side of the House for action. We'll be looking on this side of the House for a positive commitment to end an historic inequity between the taxation levels paid by persons who burn oil and persons who burn propane in their homes. I wonder if the minister would care to answer at this point.

HON. MR. DAVIS: I've been listening attentively to a large number of questions and I hope I can answer them in a summary way. First, the member for Mackenzie (Mr. Lockstead) asked about new ferries. Three new ferries are going to be introduced into the B.C. Ferry system during July. Two will be withdrawn from the run to the Sunshine Coast. The old Langdale Queen that was built in 1903 will be retired and the Sunshine Coast Queen, which was bought in eastern Canada, will also be retired. The stretch ferries will take on that run and much better service will be available to the Sunshine Coast. The Queen of Surrey cost the B.C. Ferries approximately $18 million. It's tied up at the moment. It's a very expensive vessel to run. The new vessels with much larger capacity which are being introduced cost $17 million or less. Obviously the Queen of Surrey wasn't a very wise purchase because of its great expense of operation, and that's the main reason it is not operating currently.

The member for Alberni (Mr. Skelly) asked about the McGregor diversion and its effect on the environment in the northern end of the Fraser River basin. He asked specifically whether B.C. Hydro had commissioned any environmental impact studies. The answer is yes. Certainly the intention is to publish those studies before any substantial construction begins and before any commitment to undertake a major development on the McGregor for hydro-electric purposes gets underway.

The member for Oak Bay (Mr. Wallace) said that no consideration was given to those who travel very frequently backward and forward across the Gulf of Georgia to the mainland. I might point out to him that even at the new high ferry rates, the extent of the public subsidy to B.C. Ferries is of the order of 30 to 40 per cent, so every time anyone takes a trip on the B.C. Ferries...

MR. WALLACE: What's wrong with that?

Interjections.

MR. CHAIRMAN: Order, please.

HON. MR. DAVIS: ...on the average, he or she is supported to the extent of that amount of subsidy — $25 million or $30 million a year annual equivalent.

MR. WALLACE: Why not?

HON. MR. DAVIS: I am told by the....

MR. WALLACE: You subsidize highways.

MR. CHAIRMAN: Order, please.

HON. MR. DAVIS: I really don't think there's much wrong with it, to the hon. member through you, Mr. Chairman. The $25 million to $30 million subsidy which will be required this year would build and maintain several hundred miles of two-lane highway, and the ferry system is, in a number of ways — financial included — an extension of the B.C. highway system and, at least to that extent, several hundred miles of very high-standard highway. That's the equivalent of the subsidy to B.C. Ferries. Users of the ferry system are getting some assistance from taxpayers in the rest of the province, many of whom never ever use B.C. ferries.

There is the question of safety on the ferries. The hon. member for Oak Bay raised the question of numbers of the crew on B.C. ferries. The very large new ferries, the jumbo ferries which will come into service in July, will carry twice as many cars as our stretch ferries. They're a close carbon copy of the ferries running from downtown Seattle to Bainbridge Island. Those ferries are manned by a crew of 14 and they meet international safety standards for protected waters, so anyone who tries to say that a crew of 31 on our ferries is incapable of manning our ferries from a safety point of view is simply not using international safety standards. It may suit their case to revise the number of employees on board vessels, but it certainly doesn't deal directly with the safety issue.

MR. WALLACE: Your captains are saying that.

HON. MR. DAVIS: Well, yes, there is an inquiry currently going on before an industrial inquiry commissioner and one of the issues is layoffs. Naturally aspects such as safety and the numbers of crew, especially their capability to lift heavy weights

[ Page 3274 ]

and so on, is a matter of some concern, but obviously those very large ferries — the largest ferries operating in these waters — are manned by much smaller crews.

The question of discussions with Ottawa relative to B.C. Telephone: I have had one lengthy discussion with the Minister of Communications (Hon. Mme Sauve) in Ottawa about the regulation of B.C. Telephone by the provincial government, by the provincial authorities, by a regulatory board based in British Columbia. There is a great reticence on Ottawa's part to give up in total the regulation of B.C. Telephone. I think it is partly because of the precedent it would create relative to Bell Telephone, because Bell Telephone is by far the biggest telephone company in Canada.

It, too, has a federal charter. It serves both Ontario and Quebec, and to give up regulation of B.C. Telephone might set wheels in motion to break up Bell Telephone and have it regulated, but separately, by Ontario and Quebec. What the federal people have offered is something akin to arrangements in the United States whereby local or intra-provincial phone calls were regulated by the province and long distance calls were regulated by the federal government. But the money is all in the long-distance calls, so you really have to get the whole package or you've got a very difficult situation from a financial point of view. I am summarizing the essence of the federal discussion, but we obviously didn't get very far in our first meeting in that respect.

MR. WALLACE: When will you meet again?

MR. LEA: By telephone. (Laughter.)

HON. MR. DAVIS: Sometime in the next six weeks, Mr. Chairman.

The member for Cowichan-Malahat (Mrs. Wallace) mentioned one of our problems, over-height vehicles, and also went into the question of rates to considerable extent, as did other members. There has been at least suggestion that the government should have listened to the advice of competent authorities, of people who had been studying ferries, studying different transportation systems.

I would like to read very briefly the recommendations of the British Columbia Institute for Economic Policy Analysis, a report that was published late last year. It was commissioned by the previous government. This is what the B.C. Institute of Economic Policy Analysis said: "The recommended automobile fares are $9 for the winter period, $10 for the spring and fall period and $13 for the summer months." That's what they recommended. They also recommended that the catering operations be substantially curtailed, the crew size reduced and the passenger licence lowered.

It went on relative to length of vehicles and height of vehicles:

"Ideally, every vehicle should be charged on the basis of the space it occupies. However, this approach cannot be undertaken vigorously without the electronic measuring devices at the toll booths. Until such time as these devices are available at reasonable cost, there are some simple improvements that can be made in the price structure. Over-height vehicles that is, vehicles over 6 ft. 6 in. in height which cannot occupy the space beneath the overhead ramps should be charged at double rate because they are occupying the space of two regular-sized vehicles. If over-height vehicles were not admitted, then the upper cardeck could be extended the entire width of the ship. Therefore the over-height vehicle is occupying one space on the main cardeck plus one potential space on the upper deck."

So that was the argument used by the B.C. Institute of Economic Policy Analysis relative to over-height vehicles. We did not, obviously, follow their recommendation of a double rate. The present rate is a 50 per cent rate — 50 per cent above the rate for ordinary cars.

The Brentwood–Mill Bay ferry question: we are looking into the possibility of using a commuter-ticket system there, similar to that which has been introduced both for the Gulf Islands and with respect to the crossing over Howe Sound to the Sunshine Coast. This would reduce rates — certainly effectively reduce rates — for those who daily want to cross that body of water to their place of employment.

The member for Comox (Ms. Sanford) asked about the impact of increased ferry rates on the cost of food and other supplies. Most of the supplies sold in bulk on Vancouver Island and up the Sunshine Coast travel on commercial rates; they don't travel in ordinary passenger vehicles. The commercial rate was not doubled; it was increased 30 per cent to be in line with that charged by other commercial carriers like the CPR and the towboat industry. This added, say, one-quarter of a cent to a can of fruit, for example. It doesn't add a cent; it doesn't add a multiple of that figure. I'm afraid that some retailers and some wholesalers in those areas are using the increase in the ferry rate simply as an excuse for increasing their prices.

Interjections.

MR. CHAIRMAN: Order, please.

HON. MR. DAVIS: The question of a change in rate for the Beaver Cove–Kelsey Bay ferry run: there we are looking at a resident rate, a rate similar to that granted on the Sunshine Coast and for the Gulf Islands, which would be lower than, and distinct

[ Page 3275 ]

from, the rate charged to others who only occasionally visit that area or occasionally use that ferry run.

The member for Revelstoke-Slocan (Mr. King) dealt at some length with the proposed power project at Revelstoke. He expressed concern about certain environmental aspects of that project. Those will be very carefully examined in the upcoming hearings this summer. There must be answers provided to a member of the questions he raised, which I think are valid ones.

I can conceive of an answer to the question he posed about rebuilding a highway for the third time. If it does cost several tens of millions to rebuild the highway, it still has to be seen in the context of a $1 billion or $1 million project. The cost of relocating the highway, then, is only a matter of several per cent of the cost of the total project, and conceivably there are other considerations, such as building one dam instead of two, and the one dam near Revelstoke being much cheaper than the cost of two separate dams.

The question of the Downie slide has been studied very extensively by some of the best soil mechanics in the world and B.C. Hydro has certainly had their assurance that there is no serious threat of a slide that would cause what he described as a tidal wave that could overtop the dam at Revelstoke.

Nevertheless, these are considerations which are very important and must be questioned very seriously at the upcoming hearings. There will be a good deal of expert testimony given and I'm sure that there will be experts cross-questioning the evidence given by these consultants to B.C. Hydro.

The member for Revelstoke-Slocan also made several references to a document which described, or purported to describe, some of the history of the Columbia River treaty and a minor role that I played in the development — not of the treaty, because I wasn't around in Ottawa when the treaty was developed, but of the protocols of the treaty. The protocols of the treaty really only got at the question of price, the value received for the sale of the downstream benefits.

The NDP, however, had a very interesting position in those years. The NDP's position was identical with that of General McNaughton. General McNaughton would have built a number of dams in Canada — a number of dams, more than have been built under the Columbia River Treaty — which would have flooded a great deal more of Canada than is flooded by the Columbia treaty project.

A vital part of the McNaughton plan was also the diversion of waters from above Revelstoke into the Okanagan and Fraser River systems. I can tell the hon. member, through you, Mr. Chairman, that Environment Canada, for example, subsequently looking at General McNaughton's proposals, which were really NDP proposals of those days, found it undesirable from an environmental point of view on 17 different counts. It was by far the worst alternative from an environmental point of view.

Now the recent conversion to concern about the environment by the NDP, and especially in relation to the Columbia River basin, is certainly welcome. But the history of that whole development is such that the best project went ahead from an environmental point of view. I think, broadly speaking, they were also the best projects from an economic point of view.

Finally, the member for Victoria expressed concern about Mr. McCaffey's departure from B.C. Steamships. Mr. McCaffey had limited experience in business. He was a naval architect. Mr. McCaffey did not feel very happy about his initial decision to agree to expensive labour settlements which were subsequently renegotiated at a considerable saving to B.C. Steamships, and he didn't take too kindly to some of the suggestions that were made by gentlemen who are now members of the board of directors of B.C. Steamships.

I merely would say this: we should let the record of B.C. Steamships this year be the test. The traffic is up, the revenue is away up and the costs are down. I think the B.C. Steamships is currently being well-managed. It's present management is firstclass.

Finally, in respect to taxation, as the hon. member for Victoria said, the B.C. Energy Commission is looking at taxation of propane versus oil, and I certainly agree that they should be put on the same basis as soon as possible.

Vote 198 approved.

Vote 199: general administration, $735,379 — approved.

Vote 2 00: engineering branch, $542,243 — approved.

Vote 201: weighscale branch, $2,447,844 — approved.

Vote 202: motor-vehicle branch, $23,886,533 — approved.

Vote 203: motor carrier branch, $848,420 — approved.

Vote 204: computer and consulting service, $7,346,632 — approved.

Vote 205: telecommunications services branch, $11,764, 280 — approved.

Vote 206: communications systems development and regulation branch, $1,019,860 — approved.

[ Page 3276 ]

Vote 207: Motor Carrier Commission, $299,138 approved.

Vote 208: air services, $1,832,354 — approved.

Vote 209: transport research and planning branch, $619,290 — approved.

Vote 210: British Columbia Energy Commission, $989,072 — approved.

Vote 211: British Columbia Ferries, $59,000,000 — approved.

HON. MRS. McCARTHY: Mr. Chairman, I move the committee rise, report resolution and ask leave to sit again.

Motion approved.

The House resumed; Mr. Speaker in the chair.

The committee, having reported resolution, was granted leave to sit again.

Presenting reports.

Mr. Stupich from the Select Standing Committee on Public Accounts and Economic Affairs presented the committee's second report, which was taken as read and received. (See appendix.)

Hon. Mr. Nielsen presents the annual report of the Environment and Land Use Committee secretariat for the year ending December 31, 1975.

Hon. Mrs. McCarthy moves adjournment of the House.

Motion approved.

The House adjourned at 5:57 p.m.

APPENDIX

LEGISLATIVE COMMITTEE Room,
June 29, 1976

Mr. Speaker,

Your Select Standing Committee on Public Accounts and Economic Affairs begs leave to report as follows:

Your Committee chaired by D. D. Stupich, had 19 meetings. Officials of B.C. Development Corporation, Dunhill Development Corporation, B.C. Hydro, B.C. Railway, B.C. Harbours Board, Ocean Falls Corporation, and of the Liquor Administration Branch appeared before the Committee as did representatives from B.C. Telephone Company. There were opportunities to examine vouchers supplied by the office of the Comptroller-General, Jack W. Minty.

Your Committee summoned Alan R. Turner, Chairman of the Public Accounts Committee established under the Public Documents Disposal Act, Revised Statutes of British Columbia 1960, chapter 314, and having heard the submission on behalf of the Public Documents Committee, recommends that in accordance with the provisions of the Public Documents Disposal Act approval be given for destruction of various public documents as listed in the submission to the Public Accounts Committee for 1976 in so far as the Department of the Attorney General is concerned, in addition to those departments referred to in this Committee's Report No. 1, dated June 24,1976.

All of which is respectfully submitted.

DAVID D. STUPICH, Chairman