[ Page 1317 ]

CONTENTS

Routine proceedings

Islands Trust Amendment Act, 1977 (Bill 25) Bon. Mr. Curtis.

Introduction and first reading –– 1317

An Act to Amend the Vital Statistics Act (Bill M 206) Mr. Macdonald.

Introduction and first reading –– 1317

Corporation Capital Tax Amendment Act, 1977 (Bill 8) Second reading.

Bon. Mr. Wolfe –– 1317

British Columbia Payment to Canada of Federal Income Tax on Behalf of Natural

Gas Producers Repeal Act (Bill 10) Second reading.

Bon. MR. Wolfe –– 1318

Mr. Macdonald –– 1318

Bon. Mr. Davis –– 1320

Mr. Gibson –– 1322

Mr. Lauk –– 1324

Mr. Cocke –– 1326

Mr. Barrett –– 1327

Bon. Mr. Wolfe –– 1331

Division on second reading –– 1332

British Columbia Hydro and Power Authority (1964) Amendment Act, 1977 (Bill

4) Second reading.

Mrs. Wallace –– 1332

Ms. Sanford –– 1334

Mr."Barnes –– 1336

The House met at 10 a.m.

Prayers.

MR. D.F. LOCKSTEAD (Mackenzie): We have with us in the gallery today, Mr. Speaker, 32 students from Brooks Elementary School in Powell River, accompanied by their teacher, Mr. Dennis Brenner, and Mr. and Mrs. Dan Inkster. I ask the House to join me in welcoming them.

HON. H.A. CURTIS (Minister of Municipal Affairs and Housing): Mr. Speaker, another group of students which will be with us during the course of today's sitting is from Mount Douglas Secondary School, accompanied by their teacher, Mr. Hooker.

Introduction of bills.

ISLANDS TRUST AMENDMENT ACT, 1977

Hon. Mr. Curtis presents a message from His Honour the Lieutenant-Governor: a bill intituled Islands Trust Amendment Act, 1977.

Bill 25 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

AN ACT TO AMEND

THE VITAL STATISTICS ACT

On a motion by Mr. Macdonald, Bill M206, An Act to Amend the Vital Statistics Act, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Orders of the day.

HON. G.B. GARDOM (Attorney-General): I would ask leave of the House to proceed to public bills and orders.

Leave granted.

HON. MR. GARDOM: Second reading of Bill 8, Mr. Speaker.

CORPORATION CAPITAL TAX

AMENDMENT ACT, 1977

HON. E.M. WOLFE (Minister of Finance): Bill 8 is the Corporation Capital Tax Amendment Act. The corporation capital tax imposes a tax of 0.2 per cent on capital used by a company to carry on its business in British Columbia. An exemption is provided for companies whose capital is less than $100,000.

To date this Act has not allowed mining exploration companies to reduce their capital subject to tax by writing off their exploration expense reserve. An exploration expenditure is any expense incurred by a taxpayer for the purpose of determining the existence, location, extent or quality of a mineral resource. It includes such items as prospecting costs and geological, geophysical or geometrical surveys. It includes test drilling, trenching, test pits and preliminary sampling.

Mr. Speaker, these are expenditures usually associated with the process of evaluating the prospect to determine whether there is sufficient ore for a commercially viable mine. The accounting treatment afforded exploration corporations under the Canadian Income Tax Act and the British Columbia Corporation Capital Tax Act differs from generally accepted accounting principles.

It results in a tax inequity for these companies under current corporation capital tax legislation. Under the Canadian Income Tax Act, a mineral exploration corporation can only deduct exploration expenditures from mineral income. If it does not have any mineral income, it has to defer the write-off of the mineral exploration expenditures until it has the acceptable income. This situation happens whether the exploration expenditures reveal a valuable commercial asset or not.

For generally accepted accounting purposes, when the mineral prospect has been shown to be uneconomical, the expenditures associated with the same should be charged to shareholders' equity. However, as these expenditures are not deductible under income tax legislation due to the lack of mineral revenue, the write-off is added back for capital tax purposes, as the Corporation Capital Tax Act does not allow a deduction which is not deductible under the Canadian Income Tax Act.

MR. G.S. Wallace (Oak Bay): Say that again.

HON. MR. WOLFE: I'd be happy to. However, as these expenditures are not deductible - aren't you sorry you asked? - under income tax legislation due to lack of mineral revenue, the write-off is added back for capital tax purposes, since the Corporation Capital Tax Act does not allow a deduction which is not deductible under the Canadian Income Tax Act.

MR. WALLACE: Thank you.

HON. MR. WOLFE: Once more? As an example, take a commercial enterprise and a mineral exploration corporation, both with share capital of $5 million. Suppose the commercial firm has a loss of $2 million, and the mining firm has exploration costs

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of $2 million to be written off. Since the commercial enterprise could write off this loss to shareholders' equity, the resultant capital subject to tax would be $3 million with a tax due of $6,000.

However, the mineral exploration company is not permitted to write off the exploration costs of $2 million, so it has capital subject to tax of $5 million and tax due of $10,000. As can be seen, the mineral exploration corporation in a comparative position to a commercial business pays a higher corporation capital tax.

The amendment will allow a mineral exploration corporation to write off the exploration expenditures to shareholders' equity and to claim the write-off as a deduction under the Corporation Capital Tax Act, even though there has not been a corresponding deduction under the Canadian Income Tax Act. If the corporation does not choose to charge the exploration expenditures to shareholders' equity, there is no deduction for capital tax purposes.

It should be noted that if these expenditures are charged to shareholders' equity, the amounts are still available for write-off under the Canadian Income Tax Act. An amendment is also proposed to allow the interest rate for overdue taxes to be set by regulation. This will mean that the rate can be readily adjusted to reflect current interest rates so that it does not either excessively penalize or bonus the non-payment of tax.

The proposed amendments to this Act are to be effective January 1,1977, and so the Act is made retroactive to that date. I might say, Mr. Speaker, that the message amendment introduced a day or two ago simply was to clarify the fact that the Act has effect on the calendar year of 1977 in the case of a corporation having a year-end which was at some other date.

Mr. Speaker, I move second reading.

On behalf of Mr. Lea, Mr. Cocke moves adjournment of the debate.

Motion approved.

HON. MR. GARDOM: Second reading of Bill 10, Mr. Speaker.

BRITISH COLUMBIA PAYMENT TO CANADA OF

FEDERAL INCOME TAX ON BEHALF OF

NATURAL GAS PRODUCERS REPEAL ACT

HON. MR. WOLFE: What did you say, Mr. Speaker? I think what you said was Bill 10, the British Columbia Payment to Canada of Federal Income Tax on Behalf of Natural Gas Producers Repeal Act, et cetera.

Mr. Speaker, now that we all clearly understand the bill before us, before I move second reading I might just make a comment or two. The British Columbia Payment to Canada of Federal Income Tax on Behalf of Natural Gas Producers Act was introduced in 1975 to pay the federal income tax of gas producers which resulted from the deemed income provisions of the federal Income Tax Act. Deemed income is the difference between fair market value of natural gas and the price actually received by the producer from the British Columbia Petroleum Corporation.

Mr. Speaker, a recent report of the British Columbia Energy Commission recommended that an extra payment be made for gas and the British Columbia Payment to Canada of Federal Income Tax on Behalf of Natural Gas Producers Act be rescinded. This was a recommendation of the Energy Commission report. This recommendation was adopted by the government and, as a result, the field price paid for British Columbia natural gas by the British Columbia Petroleum Corporation was raised 30 cents per thousand cubic feet on January 30,1977, and this bill repeals the Act, effective December 31,1976.

Mr. Speaker, provision is retained to pay the federal income tax for gas companies who have not yet been assessed on the full amount of federal income tax on their deemed income for the period covered by the Act, May 6,1974, to December 31,1976.

Mr. Speaker, I move second reading.

MR. A.B. MACDONALD (Vancouver East): Mr. Speaker, the Energy Commission has recommended that the Act be repealed. So be it. But I want to discuss this bill for a moment because if anything illustrates the give-away attitude of the Social Credit government, it is this bill.

Now the Minister of Finance has just got up, and you'd think it was Alice in Wonderland that we were in. He says that we increased the field prices to the producers by 30 cents, which indeed they did, because they were then going to be paying this tax themselves, not the government of the province of British Columbia. You'd never suspect from that remark that the amount that represents the tax is about 6 cents and that the producers have been given an extra 24 cents with no.change in the incentive grant, which I'll come to in a minute.

The kind of figures that we've heard on this natural gas business from the government are absolutely incredible. If old Andy was still around he'd straighten them out in no time. I want to pay tribute to Dr. Andrew Thompson. I shouldn't call him old Andy, although he's getting on. But wasn't he a fine public servant and a tiger in establishing a strong, independent Energy Commission, which I'm afraid is no longer the case? I don't want to run down the new people, but it's not a tiger and they are not

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supplying you people with the true facts, information or figures.

Let's take just the sequence of what has happened; let's just take a few things - some of the mythology that's been spread about the natural gas tax and the price by the Social Credit Party.

First, start with May, 1974, when John Turner brought down his famous Turner budget and declared that the earnings of the producing companies in natural gas and mining should be deemed to be so much even though they didn't make the money, and they had to pay tax on that. That was the origin of this bill. While that budget hit the resource industries of the province of British Columbia very severely -natural gas, petroleum, minerals and copper - the then opposition was running around the country and blaming everything that was happening in the mining industry and the resource industries upon our 5 per cent sales tax on mineral royalties. The mineral royalties tax came to 5 per cent; the super-royalty was never a factor. The super-royalty was debated at great length by the member for North Vancouver and so forth, but it was never a factor unless the prices went up so much that the companies were making a lot of money.

Mythology - that was a deliberate misrepresentation of what was happening in the resource field. The opposition didn't help us one little bit and they're not helping us today in fighting the kind of encroachments on resource revenue that have been made continuously by the federal government.

AN HON. MEMBER: Hear, hear!

MR. MACDONALD: They're still silent about that and blaming everything upon our little 5 per cent tax on mineral royalties. You know, they're not fighting for the province of B.C.

Now what's the second thing that happened? The second thing was that the same policy of the old Social Credit government has been inherited by the new coalition. Do you know what we found when we came into office? You mentioned a few little things last night, Mr. Minister of Mines and Petroleum Resources (Hon. Mr. Chabot) . We found this: that the government of which that minister had been a cabinet member had sewn up on the export market the natural gas reserves of the province of British Columbia to the extent of 809 million cubic feet per day, on a long-term contract, to El Paso at 32 cents per thousand feet until 1989.

MR. D. BARRETT (Leader of the Opposition): Fifteen years.

MR. MACDONALD: We found that, and that contract is still in effect, but we did legally and properly break it in the sense that we were able to push the price up. We were able to get a price adjustment by fighting hard through the National Energy Board and by using some imagination here in the province of British Columbia, but if there ever was a giveaway gang.... They're repeating it now when they're increasing these field prices and throwing money at the natural gas producers in the hope and expectation that maybe some of it will trickle back into the gas fields. What a way to develop the natural resources of the province of British Columbia.

Now the third point was mentioned last night, and it's been mentioned by the Leader of the Opposition several times, that on their figures it is obvious that the government doesn't know what the figures are telling them. What's the history of it? Clarkson Gordon - $55 million had to be paid out under this tax, eh? Then the budget comes down with the Minister of Finance (Hon. Mr. Wolfe) - $44 million. Then the prospectus of the B.C. Hydro in November, 1976, came out at $29 million. Surely, Mr. Speaker, if there is any meaning to the word "incompetence" in financial management, it hangs all over the government there. Your figures can't be trusted. Your figures that the Minister of Finance just gave, that we had to increase the field price of natural gas by 30 cents because this tax was going to be paid by the producing companies, are wrong. As I said, the amount that they will pay in tax is roughly 5 or 6 cents. The rest of it was given to the natural gas producers without any increase in the incentive grant.

Mr. Speaker, I see the Minister of Energy, Transport and Communications (Hon. Mr. Davis) over there making notes. I read one of his speeches the other day where he said, "well, we're increasing the prices up to replacement value - give the oil companies what they'd get for their old oil, " as if they were mining new oil out of the arctic or out of the tar sands. Or compare it with the Arab price. Send all the prices up provided the companies are required - he used that word - to put their money back into the province of British Columbia. But that's the very thing they're not doing. They're throwing money lavishly at the natural gas producers and the oil companies with old oil up at Fort St. John, but they haven't - and this is contrary to the Energy Commission's recommendation - increased the incentive grant.

That is the locked-in provision that the NDP government had the foresight to do with natural resources whereby when we , gave them an increase of IS cents in natural gas, we required that 20 cents be reinvested, either by that company or anyone they sold the certificate to, in the producing fields of the province of British Columbia. That worked. That was a highly successful policy which safeguarded.... The Minister of Mines and Petroleum Resources smiles, but in 1975-1976 we had the best producing season,

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exploration and drilling, that we had had for years in the province of British Columbia. The rigs were coming back, and the interest of the consumer was being safeguarded, and conservation was being safeguarded, and there was orderly development of our natural resources. Through the B.C. Petroleum Corporation, in our short term in office, we brought into the public treasury $302 million.

AN HON. MEMBER: That was up to November.

MR. MACDONALD: Yes, up to November, 1975, as I recall.

Mr. Speaker, in this bill we're seeing a return to the old giveaway policies - the idea that you throw money at the resource companies and then hold your finger up to the wind and hope that the wind will blow on the right side and something will be reinvested in the province. Now that was the great thinking of the 1920s in economic matters, and maybe the early 1930s, but it's not modern thinking.

In terms of resource management, the province of British Columbia is living in a bygone age, economically speaking. We're living in the age where what's good for Exxon is good for the province of British Columbia, but everybody knows it is not good for the province of British Columbia. You're living under the theory that if you give it to Exxon, or you give it to Imperial Oil, or you give it to General Motors, it will trickle back down through the whole economy of the province of British Columbia. But that trickle-down theory is like trying to trickle up a rope - it doesn't happen.

That trickle-down theory has been discarded. It's old economics and poor resource management, and here in natural gas already, what have you done? You've sucked out of the consuming public of the province of British Columbia in increased natural gas prices, in your short term in office, about $6 million in extra charges per year.

Oh, that's small in terms of what you did to the public in sales tax, or maybe small even in terms of ferry rates, but it's another $6 million of purchasing power that was in the hands of the public to create jobs and spread spending power that has gone into the hands of the international oil companies. It may never come back into the province of British Columbia.

So you've increased those field prices but you left the incentive grant where it was, and that's the return to the old days - the bad old days, the giveaway days - when British Columbia, although it had the rich resources, was like Guatemala - dependent upon the international companies to be good to it. Those days are not good enough.

Now the final thing I want to say about this bill, Mr. Speaker, is.... Reverting back for a moment to that earlier point, when we became government it was 32 cents per 1,000 cubic feet for that gas flowing over the border, all tied up. The price now, I think, is $1.94 at the border. We worked it up to that under agreement. Part of the agreement was this little tax thing whereby we paid the tax for a period of time under the bill that is now being repealed. The price of $1.94 is not good enough for the natural gas of British Columbia on the international market, because the ratio is about one to five in terms of natural gas and a barrel of oil. That barrel of oil has been up pressing $13 in terms of either replacement or in terms of the Arab price. I say, Mr. Speaker, that the province of British Columbia should be increasing that price of natural gas that is exported at Huntingdon into the United States to at least $2.50 -today! That's the revenue that is being allowed to flow over the borders.

AN HON. MEMBER: Trickle out.

MR. MACDONALD: That's no trickle, that's a flood! You know, we're talking here about another 50 cents on our natural gas. That's a lot of money coming back into public coffers, part of which should be used for exploration and development.

Whatever I may have said about Grizzly Valley, I did not say that the principle of advancing money to a company for exploration and drilling, provided there was good security, was a bad principle. BCPC should have reserves as a public partner to work with the private industry in new exploration and development.

But there is a lot of money there that could be developed. It's additional money that we are losing because we're not fighting, as we should be fighting, for a proper price for our non-renewable natural gas on the world market. It has fallen behind again and we should be having that money back in the coffers of BCPC, partly for new development and exploration and partly into the public treasury of the province of B.C. So I say it should be at least $2.50.

The tigers have gone and we have giveaway gangs and an old philosophy of economics. I hope that the province of B.C. does not pay too dearly, too long, for that kind of old giveaway economics and old-fashioned resource management.

Interjections.

HON. J. DAVIS (Minister of Energy, Transport and Communications): Mr. Speaker, I listened with a good deal of interest to the member for Vancouver East (Mr. Macdonald) . It's true that his party were tigers when it came to getting higher prices for natural gas. They weren't as good in their performance when it came to providing more supplies of natural gas. They were able to take advantage, as everyone else did on this continent, of the fact that

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the world oil price quadrupled beginning in 1973. Natural gas prices naturally followed up in lock-step with oil prices, so there was an opportunity. But certainly the B.C. government did press hard for a higher border price and did get it at a time when the National Energy Board seemed reluctant to go for higher prices. , I certainly will give them credit for that.

But at the same time, they did not pass back enough of the enhanced border price to the producers to encourage exploration and development in the manner that is necessary to encourage development. As a result, in this province we moved from a situation of a demonstrable gas surplus to a very serious natural gas deficiency during the period in which the NDP was in power. This is very serious from several points of view.

There has been a debate in this House in the last few days about the fact that B.C. Hydro had to go to the market for billions of dollars over the next few years in order to build electricity-generating plant and equipment, transmission equipment and distribution lines. If we had a large, proven natural gas reserve and if we were able to push gas rather than electricity in the province in the next few years, B.C. Hydro wouldn't have to be going to the market in terms of billions of dollars. It wouldn't have to be going to the market for capital borrowing at rates of upwards of 8 per cent a year. This is a very large burden that the power consumers of this province are having to pay because of the shortsightedness of the previous government.

Canada is in trouble when it comes to oil and natural gas, not just British Columbia. This country is in trouble under circumstances that are difficult to understand. We have a fantastic potential for production of oil and gas in this country. We do not have it on tap because we haven't had the kind of exploration and development activity in this country that we should have had. That applies to British Columbia as well as to Alberta and the northern territories of this country. It is because of the shortsightedness and the greed of government in this country - and certainly the previous government in British Columbia bears responsibility for that kind of thing.

MR. MACDONALD: Ever hear of Exxon Corporation and their misleading statistics?

HON. MR. DAVIS: Yes, the price at the border for B.C. gas was increased from 32 cents progressively to $1.65. It was increased to $1.94 last year under this government. It will go up again next year. It has to, however, receive the approval of the National Energy Board at each stage. I agree with the hon. member that that gas is worth more than $2 now. It's probably worth more like $2.50 now, and certainly we're going to go after that price because that's its true worth on the international market.

The Americans will have to import foreign oil if they don't get our gas, and foreign oil at Cherry Point is worth at least $2.50 or equivalent. So we should be going for this higher price at the border. But some sizeable part of that increase in price should be flowing back to the producer. There should be a price incentive to look for more oil and gas in this country and in northeastern British Columbia.

The sad fact is that whereas we had a gas surplus in 1972 when the previous government took over, and we could push the sale of natural gas - which is much cheaper, more efficient fuel than electricity for space heating - we can't push it now. We tend to go all-electric because we don't have enough proven gas reserves to look after our basic export commitments, the requirements of B.C. Hydro for gas retail and the requirements of Inland Natural Gas and the other gas distribution companies in British Columbia. There has to be an incentive.

The hon. member also paid tribute to Dr. Andy Thompson who was chairman of the B.C. Energy Commission for quite a period. He resigned last July to go back to his duties at the University of British Columbia. Dr. Thompson continued in an advisory capacity through to October of last year. He was a co-author of the report put out by the B.C. Energy Commission entitled "1976 Petroleum and Natural Gas Price Incentives." They held hearings. He was a signatory of the document that recommended prices to be given to the producers in northern British Columbia, prices that would encourage a revival in the discovery of gas in the northeastern corner of this province. The price recommended for new gas by that commission, of which Dr. Thompson continued to be a participating member, was adopted without change.

So the price that the gas producers are receiving for new gas is precisely the price recommended by Dr. Thompson. The price for old gas was raised by the government by 5 cents - that's from 60 cents to 65 cents. But the 60 cent price was recommended also by the commission, and Dr. Thompson was a signatory of those recommendations. So it's wrong to say that the government in some offhand way has been giving price incentives - especially for new gas - which is other than that recommended by a commission which included the chairman who was appointed by the previous government throughout the whole period of deliberations of that commission related to gas price incentives for the present time.

This bill we're discussing has to do with taxation, with income tax, with the manner in which income tax is paid by the gas-producing companies to the federal and provincial governments.

In 1973, when the federal government brought down a budget which increased substantially the corporate taxes levied on the oil and gas companies,

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the increase levied by the federal government was substantial. The provinces responded by increasing their taxation on the oil and gas companies. Alberta responded in one manner, British Columbia in a different manner. British Columbia, in order to protect B.C. consumers, among other things, set up the B.C. Petroleum Corporation. The Petroleum Corporation took the difference between the border price and the field price into the corporation and hence, essentially, into the coffers of this province.

The federal government, seeing a province move in, using a Crown corporation to strip off the difference between the border price and the field price, deemed a field price to exist which was higher than the price , actually received by the corporations.

This would have killed exploration and development in British Columbia altogether. The provincial government rightly arranged to compensate the producers for this artificial - if I can put it that way - or deemed income tax.

The bill today wipes out that arrangement, puts the oil and gas companies looking for gas in northeastern B.C. in the same position, as far as tax paying arrangements are concerned, as oil and gas companies in Alberta and in other parts of the country. But basically the dollar flow, both to Ottawa and to the province, remains unchanged. It is simply an arrangement whereby the companies are back to using a system for tax purposes which they really understand.

If we hope to attract foreign capital to British Columbia to help us find more gas reserves to get us back into a surplus position or at least a comfortable position in respect to natural gas reserves once more, we should be using a tax regime which is common to all of Canada and readily understood by investors in other parts of Canada and, indeed, investors in British Columbia. That is all that is involved in this bill. It does not increase prices, for example, to the producers. It is simply a tax arrangement, a tax regime which is common to the rest of Canada.

Now the hon. member for Vancouver East (Mr. Macdonald) referred also to an incentive scheme whereby profits made in the exploration, development and production of natural gas in British Columbia were locked into British Columbia where there was an incentive for the firm to plough back those profits in further exploration in this province. That incentive scheme has been retained. The Energy Commission recommended that the locking-in of profits made in this province on natural gas continue. There are arguments for relieving the companies of that kind of arrangement, as outside investors don't like to invest in any country or any province where any profits they might make are locked in forever, but we have continued that arrangement, at least for the time being.

Mr. Speaker, before I sit down I would like to underline a fact which I was endeavouring to highlight at the opening of my remarks, and it is this. Supply is far more important than price. We need the supplies of gas. Gas is a bargain in this province. Natural gas is available in the lower mainland for space heating at two-thirds of the price of oil, half of the price of electricity, even now with higher field prices. It's a bargain. The capital cost of installing more pipes and pumping stations is very small as compared to the capital cost of building big power dams, power transmission lines and power distribution systems.

If we had more gas proven, more gas deliverable in the Peace River district we would be able to keep our energy bill down to all the consumers in this province. We have to find more oil and gas in northeastern British Columbia. We have to provide incentives to producers to drill for more gas, to explore, to develop those resources which are undoubtedly there.

Mr. Speaker, I think this bill is appropriate in that it makes the oil and gas industry more understandable to the investor, will help to attract more'money to this province and will not relieve those who have found gas in the past from the obligation to reinvest their profits in this province. I think it's good legislation and I certainly would support it.

MR. G.F. GIBSON (North Vancouver-Capilano): I intend to support this bill, but I certainly can't support that minister who just spoke, because he made an uncharacteristically partisan talk that, I fear, distorts history a little. I have further evidence that adherence to the Social Credit philosophy eventually addles the brain.

HON. MR. WOLFE: Not so, Senator.

MR. GIBSON: Listen to what he said, Mr. Minister of Finance. This is your bill. He said that there was a sad fact that we had a gas surplus in 1972 and that it has disappeared since then. Mr. Speaker, that minister knows perfectly well that the Pointed Mountain field was flooded out in the interval, which immensely distressed and turned down the amount of supply available to Westcoast Transmission. He knows that there were reservoir difficulties in other parts of northeastern British Columbia.

Interjection.

MR. GIBSON: It was since 1972 when you said there was a surplus. That's right. And there have been difficulties in reservoir conditions in the meantime which by no interpretation of the debilitating effect of the NDP on the province can be attributed to them. It had something to do with the creator. I don't think it had anything to do with the NDP. It's

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not their fault.

You know, I think you have to pay a little respect to history, Mr. Speaker. I think it's only fair to admit that the former government did a first-rate job of getting returns to the public on the appreciation of the price of natural gas.

Interjection.

MR. GIBSON: You didn't give them very much credit, Mr. Minister. You said everybody was doing all around the world. I want to tell you that very few jurisdictions did it as promptly or as thoroughly as British Columbia did. I don't think that you do much to add to the dialogue by suggesting otherwise. I think you might have added as well that the incentives on drilling and the new Prices that were introduced in August, 1975, had a good deal to do with the pickup in the drilling season in the winter of 1976. Those happen to be the facts of life and your speech certainly doesn't reflect it.

Then, Mr. Speaker, I couldn't believe my ears to hear that minister over there suggesting that we're better off using natural gas to generate electricity in order to save us capital requirements in this province. You said that we wouldn't be having to go to the market for these enormous capital requirements for B.C. Hydro if we could use gas instead. The fact of the matter is that gas happens to be a very precious natural resource, and it is complete insanity to use it for the generation of electricity. It's complete insanity that Burrard Thermal Plant is, even in theory, considered for that any more.

HON. MR. DAVIS: I agree with everything you say, but I didn't say that.

MR. GIBSON: What did you say to use it for then?

Interjection.

MR. GIBSON: Wouldn't you say, Mr. Minister, that even the use for space heating is a little bit of a waste for such an excellent petrochemical feed stock?~

HON. MR. DAVIS: Nonsense, nonsense!

MR. GIBSON: If we were able to reserve it to those purposes, it would much upgrade the use of that natural resource in British Columbia. We are kind of short of natural gas around here. We only have a few trillion feet left.

HON. MR. DAVIS: What petrochemical do we have in B.C.?

MR. GIBSON: I don't think that you should be advocating its transferability with Hydro in quite that way.

Mr. Speaker, the reason I support this bill is because I voted against the motion when it was first brought in by the former government. It was a ghastly mistake in federal-provincial relations. It admitted, in effect, that a provincial Crown corporation would pay tax to the federal government. That was a very bad admission for any province to make. Therefore I am delighted to see that that adverse constitutional move is being withdrawn.

The question of the rates - the proper compensation - as raised by the hon. first member for Vancouver East is another question. I haven't heard his 6-cent figure before. It may or may not be right, I don't know. I hope the minister will comment on that when he closes debate on second reading or at committee stage. The minister should give us the facts on that. But that is a matter for the regulatory agency ...

MR. G.V. LAUK (Vancouver Centre): Have you got the facts on that?

MR. GIBSON: ... and for other kinds of oversight by this Legislature.

This bill, to me, is to be decided on a different question. That is the constitutional question: whether or not the government of the province of British Columbia and one of its agencies should be paying tax to the federal government. I say it should not and therefore, I simply support this bill.

That d o e s n't e n d the question of intergovernmental taxation, Mr. Minister. There are all kinds of areas of difficulty. In the long run, as more and more sectors of enterprise in this country are drawn into the public orbit, there has to be a way of treating private and public reasonably alike when you get into commercial areas. I think that this is something that the minister should be actively negotiating with the other jurisdictions in this country.

The Crown corporations that act as if they were commercial corporations should not have a particular advantage. We have to realize that if they do, this can work to the detriment of British Columbia in the long run. Other provinces may choose to socialize a good deal of their economy with a good deal more under provincial Crown corporations. To the extent those don't pay federal taxes, the British Columbia companies will be paying more federal tax. So we have to worry about that. It's something the minister should be actively working on.

On the question of how much of the natural gas price increase is passed on for the purpose of paying tax, how much is there for an incentive? What should these ratios be? I think there's a forum for proper debate on this, Mr. Member for Vancouver East,

[ Page 1324 ]

which I hope you might agree with. That would be the activation of the legislative committee on natural resources to call people from the industry, to call people from consumer groups, to call people from the B.C. Energy Commission, and say: What exactly is going on here? What are the incentives? Are they good enough or are they more than what is necessary?

Interjection.

MR. GIBSON: There should be, Mr. Member, and I would call on the minister to avoid this part of the debate by saying that he would be delighted to refer that kind of question to the parliamentary committee on natural resources. That's just another one of these things that this chamber should be doing, and it can't properly do it without calling expert witnesses, as we can't in a debate like this.

Mr. Speaker, with that said, I will support this bill when it comes up for a vote on second reading.

MR. LAUK: I'll just be very brief in discussing this bill, but there's a serious question that has been raised that should be commented on. I feel it is rather important. The comments of the Minister of Energy also have caused me some serious concern. They've been covered off by the member for North Vancouver-Capilano.

Well, I think we understood this much, Mr. Speaker, through you to the Minister of Energy, that last day when he was talking about the Hydro bill, he talked about the need to use cheaply produced, renewable power - such as hydro-electric energy. Then today, approbating and reprobating, he says the reason why we're making these extravagant investments into hydro-electric energy is because there's a shortage of natural gas. This is opposed to last day when he said this is a good thing; we can conserve natural gas by hydro-electric energy. It is a Catch-22, sort of Lewis Carroll kind of argument -tautological, I think, is the expression. The Minister of Energy seems to be going in circles.

I don't agree that natural gas should be used for space heating or for any kind of alternative energy use where other renewable resources should be used. I associate myself with the Liberal leader's (Mr. Gibson's) remarks. There is a real opportunity here, certainly with more planning and more investment incentive, to create a petrochemical industry out of natural gas. Certain prospects were available a year or two ago, and if it wasn't for the 1975 recession they might have proceeded in places like Prince Rupert where certain rudimentary petrochemical prospects out of natural gas could have been achieved. This would create countless jobs and much greater wealth for the province of British Columbia than the simple export of the raw material.

I think this is the contrasting philosophy between the two sides, Mr. Speaker. On the one hand, the NDP was actively seeking new opportunities and adding value to our resources. On the other, the interest of the Social Credit administration is not in adding value to our resources but the simple dollars and cents export of natural resources.

They are rather foolish, it seems to me, to think in terms of the pennies that we can have returned for the export of our resources rather than the long-term investment - the dollars or the pounds, if you like -that we get back from added value and increased wealth to the province within our borders. It seems to me, Mr. Speaker, that that's the kind of shortsightedness that is stalking this administration.

I would point out, Mr. Speaker, as has been pointed out before, that when the hon. minister talks about exploration he talks about creating incentives. He should be reminded that it's clear that the multinational oil companies, for example, whose profits went up something. . . . I think Exxon went up 200 per cent between 1972 and 1975, with the same constant 1972 dollar investment in exploration from 1972 to 1975. In other words, there was no increase - none - with a profit increase of 200 per cent.

Without some further regulation or control by the government, Mr. Speaker, these companies are not inclined to reinvest these profits into our jurisdiction. No amount of attestations of faith or prayers or black magic is going to encourage these companies to reinvest the tremendous profits they take out of our resources without some sort of incentive or disincentive for taking the money out of the province and not reinvesting it.

I don't think any considerable thought, Mr. Speaker, has gone into that.

The deemed field price, Mr. Speaker, is still going to be there after the repeal. I wonder what thought has been going through the minds of the Ministers of Finance and Energy and the Attorney-General (Hon. Mr. Gardom) with respect to this encroachment onto provincial power.

On the one hand, we have the Premier trotting around talking to Ottawa and talking to the world about more rights for the provincial government. On the other hand, this is an apparent white flag. There is no real argument. The deemed price is the worst encroachment on the provincial rights that I can think of, the worst possible encroachment on provincial rights, because that's encroachment upon the traditional rights of the provinces to own and tax their own resources.

The deemed price factor in the Income Tax Act, linked with the non-deducibility of royalties and other provincial taxation on resource companies, is a deliberate and concerted federal attack on the provincial treasury. Nothing attacks Confederation

[ Page 1325 ]

more seriously than attacks on provincial treasuries, Mr. Speaker, because the people in every province throughout this country realize that this federal monolith, this locomotive of overspending and impossible bureaucracy, has got to be curbed. It's not being curbed by the present administration here in the province of British Columbia. They have no interest in confronting Ottawa because they are hand holding right now, and Ottawa just loves that.

It's a virtual surrender. The Premier reminds me of Candide. He's a naive pilgrim going to Ottawa in the real sophisticated resource taxation world and game played in Ottawa, Mr. Speaker. His pocket was picked, and he doesn't even know that his pocket was picked - probably because the wallet contained the public's money and not his own. It seems to me that he should really become more wise to what Ottawa is doing to us and to provincial rights. It is one thing to use homilies and cliches about more provincial rights; it is another to do nothing about it because of this tremendous encroachment by the federal government into provincial rights.

One other thing that should be pointed out is that by this Act, and many others, this government is placing more of a taxation burden on the ordinary people of the province ... pardon me, not this Act. I'm just pointing out that less regulation and control over resource companies is creating a greater burden on people in this province. It should be pointed out, as it should be pointed out in the Corporation Capital Tax Act and other Acts coming before this House.

In the last budget of the New Democratic Party administration, 30 per cent of the tax burden of this province was on resource companies and 70 per cent was on income taxes, sales taxes and so on. In the first Social Credit budget, only 25 per cent of the total budget tax burden was on resource companies. In this year's budget, only 20 per cent of the burden of the total provincial budget is on resource companies. That's 5 per cent less per year that resource companies have to pay to support the provincial budget. At 5 per cent a year we've only got four more years before the entire provincial budget is paid for by the people and resource companies get off scot-free.

People do not realize these percentage changes are taking place, but to me it's an insidious approach. It lends support and credibility to the first member for Vancouver East's (Mr. Macdonald's) argument that this is a giveaway administration and they're designed, put in power and supported by the people whom they're giving things away to - the large multinational resource companies and big business. They ignore the plight of the ordinary working family whose tax burden increases and increases and increases, while at the same time the federal and provincial administrations are forcing their own income expansion down to a minimum. On the one hand, their wages are controlled; on the other hand, they're paying an ever-increasing burden of the provincial budget. That's a sad thing. That's a very sad thing, and no thought has gone into reversing that situation.

The contrasting philosophy, Mr. Speaker, rises once again. The New Democratic Party is of the view that we should take two Points of view. The first would be fiscally, through our taxation policies. That one would be to put more of the taxation burden -not all, but more of the taxation burden - on resource companies in this province, and through disincentives and incentives create the reinvestment climate so that we can relieve the ordinary working family. The ordinary working family spends its disposable income. They're the ones who create activity in the retail trade and in the domestic economy.

The second approach we take is the added-value approach to our resources. We create incentives and disincentives to those people who are producing and exploring in our mineral and in our other resource areas. We insist to them that if they want to continue to operate within the jurisdiction of the province of British Columbia they have to provide us with a programme of added value to the resource. This is why, when I was negotiating with Afton Mines, Mr. Speaker, controlled by Teck Corporation, an entirely Canadian company, we talked about the incentives and disincentives to a copper smelter which was promised in this province since 1896. Through this process of negotiation and discussion we proved that the NDP administration was interested in adding value to the resource and creating that 350 jobs up in Kamloops - which has a multiplier effect, as you know - in creating more wealth, and not just in exporting the copper at any price, with no jobs to the province of British Columbia, with no mineral royalties back to increase the province's wealth. Therefore....

MR. SPEAKER: Hon. member, could I just remind you that the bill that's before the House has nothing to do with royalties on copper?

MR. LAUK: Yes, it does, Mr. Speaker. You see, the bill that's being repealed is relieving the government from paying the taxes of the producers of oil to the federal government. That was caused, in the first place, by the federal encroachment on provincial rights over its natural resources.

I'm glad the Premier is back in his seat, because I said earlier that the Premier is really being duped by Ottawa, DREE has very little money. They have less money this year than they had before. There's going to be very little benefit from dealing with these direct-grant situations with the federal government. Oh, it's political and it's glossy, and Ron Basford and

[ Page 1326 ]

the Premier can go and put up a sign, and have a band, and shoot an arrow, but, Mr. Speaker, the real value in negotiating with Ottawa is to get them out of our back yard, get them away from our provincial resources. The non-deducibility of royalties and the encroachment upon our natural resources taxation power is the most serious attack on Confederation I can think of. The Premier's pocket, as I say, was picked and he doesn't even know it yet.

I would like to repeat, Mr. Speaker: move more of the burden on resource companies and relieve the ordinary people of this province. They're overtaxed. You have cut them deeply. Don't think that in an election year you can give out the goodies and they're not going to remember those wounds, because the wounds are too deep. They know they're being unfairly taxed in relation to the resource companies of this province. They don't mind taking up the burden but they want to know that others are as well, others who should rightfully be doing so.

Well, this statute, I hope, does not wave the white flag to Ottawa. I hope that the Premier really develops a policy to confront Ottawa on this encroachment. In 1974 Mr. Turner brought in a budget that really declared war on the provinces. That's what he did. Okay, maybe it's not correct to have the Crown pay federal taxes. The constitutional question escapes me as being of any vital importance in this issue.

I think the real issue is dollars and cents and the powers of the province to tax its own resources without federal encroachment, because the federal government, if they've proven anything, have proven that they over spend and that they are out of control over their very expensive bureaucracy. The closer the government is to the people, the best kind of government it is, Mr. Speaker, and the more relevant it becomes and the more efficient it is. I think that with that philosophy, the government should pass this Act, but go on further and confront that Turner budget. That's the real enemy of the province of British Columbia.

MR. D.G. COCKE (New Westminster): Mr. Speaker, certainly we are brought to this position today by virtue of the fact that there was one response to the Turner decision with respect to taking a share of the provinces' revenue from resources. Alberta and other provinces did it one way, and the province of British Columbia did it another way. At the time, I think, the province of British Columbia had no choice. They had to respond given their own tax structure at the time and their own direction at the time, and given the fact that there was a confrontation in British Columbia with the large petroleum companies particularly and to some extent with the mining companies. That was the reason that the type of remission that we gave was brought into law in 1975.

Mr. Speaker, the present government has decided to go the Alberta route. I'm not going to particularly oppose that piece of legislation, vis-à-vis what we did. -I believe that what we did was sound, but it's a new , government and let them do it their own way. But I want to talk about something else about the new government and their direction.

It strikes me that what the new government is telling us is that the gas producers need help, that the multinational corporations that rule the western world need help from the little province of British Columbia. Mr. Speaker, if you doubt that - the Minister of Finance smiles - you can go down and have a look at their Washington lobby. When their Washington lobby walk into the senate, when they walk into the halls of power in the United States, the legislators quake. That's how powerful these people are. When they decide to turn down the tap, they just turn down the tap. All of the encouragement, the motivation for exploration doesn't even touch their conscience. All they're interested in is the power that they have and their insatiable desire to make exorbitant profits.

[Mr. Veitch in the chair.]

Mr. Speaker, we are, as usual, that poor little old branch plant, but we have something that they badly need. It strikes me that we have to be just a little bit more firm in our approach to these multinationals. It strikes me now that what we've done with this piece of legislation is telegraph the position to the world that British Columbia is prepared to capitulate to those multinational corporations whom they so love.

I listened yesterday in this House to the Minister of Consumer and Corporate Affairs (Hon. Mr. Mair) . That minister idolizes what he calls success. He tries to twist his phrasing around so that he can point his fingers at us and say we idolize failure. That's not the case at all, Mr. Speaker. What we idolize is the success of the people.

Interjection.

MR. COCKE: Not at all, but we do think that the success of the people is all-important. That minister and his colleagues feel that the success of the multinationals, the success of their own business dealings from time to time, really makes them superb. I really don't agree with that at all.

I believe, Mr. Speaker, that when the Minister of Energy stands in this House and, as part of his rhetoric, argues that we were doing some wrong things back in 1973,1974 and 1975, and that we were able to increase our prices because world prices of oil at the time were increasing, he makes a mis-statement. I suggest to you that our prices increased a full year

[ Page 1327 ]

before the Arab prices went up; our prices for natural gas started to increase a year before the prices of energy went up. We saw British Columbia ripped off; we saw us selling our natural gas to the United States for 32 cents per thousand cubic feet when in the United States they were buying their own gas from Louisiana and Texas fields for something in the order of $1.65 to $2 per thousand cubic feet. It had nothing to do with the increases in the price of energy.

So, Mr. Speaker, when using arguments, I would hope that we don't listen to that kind of argument. As I say, we're not particularly concerned about this government's approach to how they're going to tax or make tax adjustments. But we are terribly concerned about their attitude toward the multinationals who do the developing and who, I suggest to you, Mr. Speaker, use exploration as their method of blackmail. They have blackmailed this province-, they've blackmailed practically every jurisdiction. I don't think any jurisdiction would submit to those kinds of tactics.

They say: "Give us what we want or we won't explore. Do what we ask you to do or we don't explore!" And the Minister of Energy says we're in a critical position because they won't explore. We have to put ourselves in their hands - safe in the hands of whom? Mr. Speaker, look at their record all over the world. All you have to do is go back to the turn of the century and read "Age of the Moguls" and you find out from whence they came.

Mr. Speaker, you don't have to have a large intellect, you don't even have to do a lot of reading to know precisely what's going on around us. The then Premier of this province asked the federal government to get in there: "Don't take it any longer from these large companies. Let's set up our own exploration. Let's set up a Crown corporation, if necessary, an oil and gas exploration company and do our own, if in fact we have to put ourselves in their hands." Mr. Speaker, that's the difference between this new government and the opposition. We don't submit to the tough tactics of those multinational corporations.

What we had in this province - and everybody Who took any interest at all was witness to it - was a strike by Exxon. Exxon in 1974 said: "We're not going to explore." At that time there were some pretty tough negotiations, and they knew it was a pretty tough government, Mr. Speaker. That's why they worked so hard against us in the subsequent election.

I suggest to you, Mr. Speaker, and I suggest to all Canadians that if we ever want integrity in the development of our resources, and particularly with respect to our energy resources, it strikes me, looking at the record, that the only possible way we can go is with a national oil and gas exploration company.

Failing that, at least British Columbia can have its own integrity by going in that same route with our own provincial oil and gas exploration company.

If we have to bow to the demands of corporations that have absolutely no concern about anything other than getting in and getting out, getting our resources and taking them and their profits with them, then, Mr. Speaker, it strikes me that does not enhance the economy of our province, not by any stretch of the imagination. So let's not hide our heads in the sand. Let's not continually look at what we can do to take care of the needs of these people. Let's think of ~what we can do to take care of the needs of our own.

Sometimes I get very angry when I sit and I think and contemplate upon a government whose attitude toward the ordinary people in British Columbia is in terms of what this government can do to the ordinary people in their taxing system, in their rate structure. Even Hydro never pulls back from increasing a rate whenever they get that feeling, that itch. ICBC - the whole works! We are able to tax the people to beat the band, but, Mr. Speaker, when it comes to the large corporations that we seem to fear, then we stroke their backs. We say: "Well, we have to encourage them to explore. We have to do everything that they tell us to do. I suggest to you that we're not safe in the hands of Exxon. We have to develop some integrity, and the only integrity we can develop, in my view, is to warn them that if they do not reflect the needs of our province and of our country, then we will set up our own national oil and gas exploration company.

MR. BARRETT: I won't be too long. There are a number of things I wish to say. I'll try to be as brief as I can and try not to be too repetitive. But this is a very important debate that's taking place this morning. This is one of the very few times that I regret that there is no television or direct radio coverage from the Legislature because, in a nutshell, this bill really deals with a basic philosophical difference between the government and the official opposition. I think in moments of rational debate which, on occasion, are frequent or infrequent, depending on one's point of view in this House, this kind of debate could serve the public well so that arguments on both sides could be heard and people would be more informed and, after hearing our particular opinions, make up their own minds either for or against the particular approach.

I find, Mr. Speaker, that the best way to sum up this bill, from the outset, is that it is a $6 million gift to the international oil companies. That's really what it is. It's a $6 million tax forgiveness at a time when everybody else in the province is being asked to use restraint and to cut back. All of the catalogue of increases of costs of living, both within government control and outside of government control, are

[ Page 1328 ]

hurting the ordinary people and the small business communities in this province. We are giving a $6 million gift to large multinational corporations to take out of British Columbia.

The $6 million itself is not a super amount of money in relative terms of the total budget but it's symbolic. It's symbolic, along with forgiveness of mineral royalty tax; it's symbolic, along with the forgiveness of the $1-a-ton coal royalty that has not been collected above the $1.50 imposed. It's symbolic of a soft approach to big business -multinational corporations - in any approach to get revenue directly to the Crown. But what makes it even more dramatic in this case is that we're dealing with non-renewable resources. We are dealing with natural gas that, once leaving this province, is never recovered and, as a consequence, we are really selling some of the natural treasure of this province, never to be recovered again.

It's not a question of mortgaging. It's not a question of building for the future. It is a question, purely and simply, of selling an asset that is here in this great province by the grace of God. It has absolutely nothing to do with Social Credit, absolutely nothing to do with the New Democratic Party and absolutely, for sure, nothing to do with the oil companies. God, in His wisdom, endowed resources throughout the world on a non-partisan basis. What may seem like a whim to others, those of us who are chauvinists in British Columbia in our 100-year sovereignty, feel that we were blessed because we are a special kind of people. But I am prone to accept the argument, Mr. Speaker, that it is really j just dumb luck.

Having in our arsenal of arguments that least attractive asset - that is, dumb luck - on our side, what have we done with that dumb luck? We have squandered the luck by being very dumb. What are we talking about here? We're talking about the natural gas of this province that, as my very good friend the former Attorney-General (Mr. Macdonald) said, was being sold by Social Credit - not this administration, but the one preceding it.

MR. MACDONALD: The future Attorney General.

MR. BARRETT: And the future Attorney-General, yes - thank you, Mr. Attorney-General.

MR. MACDONALD: You make me nervous. You keep saying "former."

MR. BARRETT: And the future Attorney-General. Say, how did you get that out of me? I'm supposed to bargain on those things!

We had a situation where we came into office and 109 million cubic feet of natural gas a day was leaving this province as a consequence of our dumb luck. The, dumb part of it was that we had signed a 15-year contract.

I recall when we first came into office and we discussed this contract there were editorials in the newspapers saying "you have a moral obligation around a contract" and "socialists must not break contracts." That doesn't seem to be the appropriate definition of responsibility of contract under the present government. But let that stand.

The fact is, Mr. Speaker, that that gas was going to the United States at 32 cents per thousand cubic feet. The Attorney-General of the day came to this Legislature and in a careful, thoughtful and rational explanation pointed out that we were not receiving a good and adequate return from the sale of our treasure.

During the time of the establishment of the British Columbia Petroleum Corporation a debate took place in this House that has left a shameless scar on the Social Credit party which has to be viewed publicly on occasion for people to understand the point that I was making at the outset on the difference of philosophy. That shameless scar, Mr. Speaker, was the bitter, hysterical, wild, vicious, name-calling, gutter-sniping opposition to the former Attorney-General - and hopefully the future Attorney-General - when he brought in legislation to establish the Petroleum Corporation.

I was witness, Mr. Speaker, to an accumulative 14-hour performance by the now Minister of - for a short time - Economic Development (Hon. Mr. Phillips) , who attacked the Attorney-General of the day personally, attacked the government, made scandalous statements throughout the province of British Columbia attacking the British Columbia Petroleum Corporation. They said it was socialist; they said it would destroy the natural gas industry; they said it was Moscow-inspired; they claimed it would destroy the freedom and initiative of those competitive oil companies to find natural gas in British Columbia. Not only did they rail against it, Mr. Speaker, not only did they behave irrationally and badly, but the final assault on it, Mr. Speaker, was that they actually stood in their place in this Legislature and voted against the establishment of the Petroleum Corporation.

It was a vicious, socialist tool. It was the heavy hand of state socialism. It was called every possible name that they could think of, plus new ones that had never been heard before. It is not common for politicians, I suppose, to say even a kind word in hindsight about a decision they may have been opposed to but future events prove correct, but in this instance, Mr. Speaker, we have not heard one kind word about the concept of the Petroleum Corporation. There has not been one slight lift of a

[ Page 1329 ]

hand in acceptance of the fact that the Petroleum Corporation was a good idea, or that perhaps it was a vehicle or device to return to the people of this province a fair share of their economy, not a slight whisper.

But my, Mr. Speaker, how money produces hypocrisy! This corporation they fought, this corporation they damned and they attacked the f o r m c r Attorney-General - the future Attorney-General - personally over.... We saw the vilification against my particular political party, the calumny against cabinet, the volume of hypocritical attack against the backbenchers during that debate, and what do we find, Mr. Speaker? There was not one kind word saying: "You know, the corporation was a good idea after all, even if it was socialist." No, Mr. Speaker, there was none of that.

In the hypocritical column, there has not been a single move by this government to do away with the Petroleum Corporation that they hated, they damned, they vilified, they scandalized. On the contrary, Mr. Speaker, much to, 1 am sure, your embarrassment, they are now in a position, having cast aside any thought of memory, of boasting about the very corporation, the very child they had damned for political purposes.

Of all the very successful things that the former government had initiated, this has to rank as the most successful government-initiated enterprise in the history of the province of British Columbia in its 105-year record. There has never been at any time a comparable revenue producer to the people of this province based directly on non-renewable resources that did not cost the people of British Columbia one penny out of their pockets. There is no other corporation, I venture to say, that has had the relative success, in all Crown corporation history in Canada, that has produced money like this corporation. Never once has there been recognition for the people of British Columbia, on a non-partisan basis, by this government that the British Columbia Petroleum Corporation is a good idea.

By their own admission, Mr. Speaker, as up to the fall of 1976 - November 3,1976 - a total of $302 million had been turned over to the public treasury, to the people of British Columbia, by the 27 staff members of the Petroleum Corporation administering the marketing concept brought in by my colleague. It's okay to call it socialism, when you want to abandon any rational debate but it sickens me a bit now that the hysteria is over and the record has been proven. It sickens me a bit that this government would take credit for the corporation, and still attack the very concept that brought it into being.

If you are against socialism, through you, Mr. Speaker, the question that has to be raised is: why have you kept the corporation? If you said and believed at the time that this was an example of socialism that would destroy private initiative, if you believed what you said at that time - and I was one who believed that you believed it because I couldn't conceive that anyone would state lies in this House on their basis of fervent argument - if you believed that, why have you kept this socialist corporation?

You have scandalized yourselves by. asking for the vote of the people of this province against socialism, and the most socialist enterprise of all is here and functioning and providing money to the people, and not a peep out of you to get rid of it. Do you know what it proves to me, Mr. Speaker? It proves that regardless of their so-called attack on socialism, the one thing that transcends anything - morality, principles, truth or falsehood - with the Social Credit Party is dollars. If it makes money, it must be all right after all.

You don't like socialist ideas such as aid to the handicapped because that costs money, but a socialist idea that makes money is now okay. That's sheer hypocrisy, Mr. Speaker, and an illustration of why the people of this province, in my opinion, should have had the opportunity to witness this very debate on television, or at least on radio. Someday perhaps, in the future, that great opportunity for myself and the Premier to discuss these issues before the people of British Columbia will come about. During the last election, when I was Premier, I was willing to go on television in front of all the people of British Columbia and discuss these things, but he wasn't.

Before the next election agenda is made out, I give two years' notice to you, Mr. Speaker, that I am ready to adjust my agenda to go on television with the Premier when the next election comes. Since I don't think he's arranged his schedule at this point, perhaps he could nod and show that he's not fearful of coming on television with me at that time.

MR. MACDONALD: He's pretty busy with Jaycee meetings.

MR. BARRETT: He's pretty busy with Jaycee meetings?

Mr. Speaker, the thing that has to be discussed, the thing that has to be shared with all the people of this province is the very discussion around what we must do and what we must say and how we must act towards the natural resources of this province.

I'm proud of what the member for Vancouver East accomplished. I'm pleased with the amount of money. But I want to tell you this, Mr. Speaker: it has all been a mistake from the very beginning. We have only made the best out of a very bad concept. Even though we've made this money, even though the socialist concept of returning this money to the people is now applauded by Social Credit, the main argument has been lost on the people of this province - that is, we should have never sold the gas to the

[ Page 1330 ]

Americans in the first place, never!

Once having committed ourselves to a 15-year contract on non-renewable natural gas and producing 809 million cubic feet a day, we committed ourselves, like the person on the edge of poverty, to selling life-blood at a hospital, only hoping that it will be renewing.

Interjection.

MR. BARRETT: In effect, it's a 25-year contract.

At least the person who sells a pint of blood has a chance of renewing that blood, but this life-blood will never be renewed. The loss of this life-blood to the United States will prove to our American friends in the long-run to be a detriment to them too. Every single day we fulfil this contract, we're allowing our American friends to avoid the responsibility of finding alternate sources of power. Having made that commitment, we have delayed the responsibility of this province of developing an integrated petrochemical, coal-gas and other established secondary industries that should be in this province, that absolutely must come from the initiative of the private sector.

We also own, as a direct result of the moves by the member for Vancouver East, 13.5 per cent of Westcoast Transmission - a deal attacked by the then Leader of the Opposition (Hon. Mr. Bennett) as a bad business deal. Scandalous speeches, damning statements!

We bought that 13.5 per cent of Westcoast Transmission from the first profits we made in our sales of this gas to the Americans. For years in this country, foreign investors have come to Canada and to British Columbia, used Canadian funds for initial investment, and then used the profits to buy up Canadian corporations. We reversed the trend. We became the owner, out of the first American profits, of 13.5 per cent. We bought Westcoast shares at $22.50, approximately, and they're now selling at $27 a share. We have made supplementary millions of dollars for the ordinary people of this province through the purchase of those shares. You attacked it; you have not sold one single share off because you know, even with your hypocrisy, that it was a good deal. It made sense, and it was of benefit to the people of this province.

It would be a kind thing to do, for one's own inner peace, if the government could stand up and even give a gentle gesture by saying: "Yes, it now appears that it was a good idea." But they are not big enough to do that, Mr. Speaker. There is the rub! The biggest failure that this group has, more than an absence of philosophy, more than an absence of reason, is a lack of maturity and grace to be able to say: "Yes, this was good for our wonderful province." That, in the long run, will be its failing - that lack of grace and maturity. That day is yet to come, and the people will make that measure when it does come.

Mr. Speaker, i must correct the Minister of Energy, who was wrong. He's not frequently wrong, but he was wrong in his statement that production was actually lost and reserves were diminished. Your own accounts - the financial and economic review put out by your colleague - prove you wrong. Perhaps you are not aware of these figures. I assume that to be the case.

HON. MR. DAVIS: I didn't say that production was lost.

MR. BARRETT: No, you said we lost the reserves. In actual fact, the only year that that reserve factor diminished was when there was a loss of capacity to produce because of technical problems, through you, Mr. Speaker, at the gas field.

HON. MR. DAVIS: It was 1973.

MR. BARRETT: That's right, it was 1973 -you're absolutely correct. That year there were, as the member knows very well, technical difficulties in the fields. Those potential reserves are now back on stream, and the figures are available on page 70 in the minister's own economic review.

As to the statements by Clarkson Gordon, we've already gone through the falseness of the government's position on that. It is worth reviewing, since we're not on television. I'm sure that those thousands of people who are in the galleries today will take the message out to all the people of British Columbia and expose the fact again that Clarkson Gordon was given false figures, that we did not leave an obligation of the federal government of $52 million, as first announced by this government through Clarkson Gordon. We did not leave a debt of $44 million as announced by that Minister of Finance (Hon. Mr. Wolfe) in his budget speech.

Interjection.

MR. BARRETT: By March, 1976. By November, reason and responsibility had prevailed and it had shrunk from $52 million down to $29 million. Don't be jumpy, Mr. Minister. Don't be nervous.

HON. MR. WOLFE: Tell the truth.

MR. BARRETT: Just get up and say that it's a good idea to have this money coming in, even though it is a socialist idea, or are you opposed to this money being counted because it's a socialist idea? Do you think the idea to set up the Petroleum Corporation is wrong? Do you? Your silence is overwhelming. Are you going to destroy the Petroleum Corporation? Not

[ Page 1331 ]

on your life. The hypocrisy, the silliness and the pettiness of that group in opposition will be its downfall, as it is in government.

Mr. Speaker, we're giving $6 million of tax money as a gift to the producers - back to them for nothing. This government has already raised the producer price for old gas above what was recommended by the Energy Corporation. It is like this for all of us to understand. If you own a grocery store and you've got cans of gas on the shelf, and you bought those cans of gas at 10 cents a can and your storage price has been absolutely zero because there's no storage price for gas, your profit margin has been allowed to go up to 20 and 25 cents without any further investment whatsoever. It's a straight gift by this government to the international oil companies. Why do we have to give the international oil companies the money? Do they need it more than the handicapped? Do they need it more than the people who don't have housing?

AN HON. MEMBER: Jobs.

MR. BARRETT: Do they need it more than those young people in this province who don't have jobs? Is the need of the international oil monopoly structure so great that they are overwhelmed to the point of exhaustion unless they get the $6 million handout that they're given today? Welfare bill No. XXX -Exxon, Exxon, Exxon gets their bundle today. Their subsidiaries will be given a gift.

You go back out to the suburbs and tell them that you voted for this. You go back into Kelowna with 20 per cent unemployment and tell them that you voted for this. You go into Terrace and Prince George. You go into the Kootenays, where the people of this province have suffered under stupid fiscal policies, and explain why $6 million has to be given back to the poor little oil companies. I'd like to be there when you announce the public meetings. I'd like to be there when you stand up in a public audience and say: "We felt it necessary to give the oil companies a $6 million gift at this time."

Even my good friend, the Conservative leader (Mr. Wallace) , wouldn't agree with that; even my good friend, the Liberal leader (Mr. Gibson) , who came back with a bag of peanuts from his recent visit, wouldn't agree with that. Because that's symbolic of all we ever got out of America before - peanuts. Mr. Speaker, we've got $302 million out of this corporation up to November.

MR. J.J. KEMPF (Omineca): You couldn't even run a peanut stand.

MR. BARRETT: We have a half-billion dollars coming by the end of this fiscal year from that corporation, according to that finance minister's own figures. They won't do away with this socialist corporation, but throughout it all they find it necessary to give $6 million back to the oil companies through this bill today. I want my voice recorded here, Mr. Speaker, in front of all of British Columbia on television, because I know the Premier will go on television to debate this with me, or on radio to debate this with me. In this preliminary argument that we'll carry on in front of all the people of British Columbia because I know the Premier's not afraid to go on television with me to discuss.... Or is he? I know that this record will be here, and at least my conscience is clear.

I'm opposed to a S6 million gift to international oil companies. I'm proud of the Petroleum Corporation. I'm proud of the minister who brought it in, and the proof of its necessity is the hypocritical position of this government this very day, endorsing the Petroleum Corporation quietly. Money has turned them into socialists, Mr. Speaker. Money, money, money is the only thing they understand, and now they want to give money to those who have most of it anyway. Stupid, absolutely stupid!

HON. MR. WOLFE: You know, it strikes me that all the arm-waving rhetoric in the world won't change the simple philosophical fact that the word "profit" seems to make the party opposite - to make their blood - boil. Anything that suggests profit just gets them all steamed up, Mr. Speaker. The mere fact that we try to provide an incentive recommended by the Energy Commission to provide a greater price for petroleum and gas reserves at the wellhead, or at the field price, in order that we can provide more activity to establish these reserves, seems to be some kind of a sickness that they can't appreciate.

[Mr. Speaker in the chair. ]

I think we should get back to the point of this bill which is, simply, the two prime recommendations involved in the B.C. Energy Commission report. An important aspect of the natural gas price recommendations is the fact that the price increase includes compensation for termination as of January 1,1977, of the province's programme by which producers are indemnified against federal income tax payable on phantom income.

T , he report says: "Legislation will be required in order to terminate this programme." Mr. Speaker, the member for Vancouver East (Mr. Macdonald) , who first spoke, referred to the chairman of that commission, who is no longer there, as not supporting his proposal. Well, Andy Thompson, who was the chairman, their appointment to that commission, resigned in July. But he participated in this report which he signed. It was submitted in October and it's a very valid recommendation. Dr. Andrew Thompson

[ Page 1332 ]

was the chairman of that commission. It's his report. He's a part of this report and he signed it.

In any event, their recommendations included two prime aspects having to do with providing more incentive for the exploration and production of natural gas. The results are very clear, Mr. Speaker. There has been an immediate pickup in activity and exploration. Right now there are 41 rigs in the field up in the Peace River area, plus 12 service rigs, that were actually dormant, actually doing nothing prior to this point in time.

AN HON. MEMBER: Oh, jobs for people!

HON. MR. WOLFE: That's right. The member for Vancouver East referred to this as giveaway economics. I wouldn't classify it as a giveaway when we can encourage the reactivity in the drilling field to establish these reserves that are so important to our energy resource.

AN HON. MEMBER: And create jobs.

HON. MR. WOLFE: Furthermore, Mr. Speaker, as pointed out repeatedly in this report, it's just vital to this province in the establishment of these reserves to be competitive with our neighbouring province, Alberta. This is just vital to the development of our energy policy. So the bill is very simple. It's part of the recommendations of that report to rescind a piece of legislation, a taxation based on deemed prices which was proving to be extremely complicated and difficult to administer and, in view of the increased prices at the field, was no longer considered to be valid. As I said, it's a part of the recommendations in the report as submitted by the B.C. Energy Commission. All of the considerations that the opposition may have with regard to the fact that there's some incentive there for companies to come in and do this job, are strictly a matter of philosophical difference. So, Mr. Speaker, I move second reading.

- Motion approved on the following division.

YEAS - 23

NAYS - 12

Bill 10, British Columbia Payment to Canada of Federal Income Tax on Behalf of Natural Gas Producers Repeal Act, read a second time.

HON. MR. GARDOM: Adjourned debate on second reading of Bill 4, Mr. Speaker.

BRITISH COLUMBIA HYDRO AND POWER

AUTHORITY (1964) AMENDMENT ACT, 1977

(continued)

MRS. B.B. WALLACE (Cowichan-Malahat):, Mr Speaker, when I was speaking on this debate the other evening I had dealt at some length with my contention that the direction of B.C. Hydro is not necessarily the same direction as that of this Legislature, assuming that the direction of this Legislature is in the best interests of all British Columbians and taking into consideration the very many and varied problems that confront this province. I pointed out and had quoted Mr. Bonner to support my argument that the sole concern of Hydro and their terms of reference directed them in one direction only, and that was the provision of energy. They were not concerned primarily about the cost or the type of energy that would be in the best interests of all the citizens but, rather, they were concerned only with the provision of energy.

MR. SPEAKER: Could I just interrupt for one moment, hon. member, to advise you that when you were last on your feet you spoke for 27 minutes. So when you started today, you had 13 minutes left.

MRS. WALLACE: Thank you, Mr. Speaker.

I had also discussed briefly - and I was just discussing that question when I adjourned the debate - the question of the amount of land that is being consumed by B.C. Hydro with their projects of damming rivers. I pointed out that, to date, there was something in the vicinity of an area of one million acres that had been flooded in this province or used for transmission lines. Now I had also mentioned that that was, in the main, flat land.

I think that when we look at the three areas that are coming under development at the direction of Hydro, and which this funding will be used for, we're looking at something like another 120,000 acres. Now in that, there are at least 10,000 acres of extremely good arable land in the Peace River area that will be under the water behind the site C dam. I suggest that in the interests of the people of British Columbia, who certainly can't eat electricity and are in future years going to need food, we should take a long, hard look at that particular site. I hesitate to

[ Page 1333 ]

consider supporting a bill which will grant money to build that dam to flood that area.

When we look at the McGregor diversion we're looking at another loss of another food resource, and that is the fish, a protein resource. Again, 1 cannot see my way to supporting a bill to grant money to build that particular dam. In the instance of the Revelstoke Dam, the extreme hazards involved have been pointed out many times in this House in many debates. Again, I cannot give my support to a bill that will grant borrowing power to B.C. Hydro to proceed with the building of that dam.

It's an interesting thing to note that despite the extreme amounts of money Hydro seems able to spend, in some instances they have some really very rare bargains. I noted two orders-in-council just recently that granted to Hydro nearly 400 acres of land and all they were being charged was $80 an acre. Now I'm sure that if you or 1 were to go out to buy land, we would pay a great deal more than $80 an acre. Yet this government and the taxpayers of British Columbia are subsidizing Hydro in yet another way by making available to them land at $80 an acre when you and 1 go out and pay thousands of dollars an acre for that same land.

1 want to deal in my last few minutes with another factor of Hydro that has been of extreme concern to me for a great many years, Mr. Speaker. When the former Social Credit administration saw fit for political reasons to take over B.C. Electric some few months after they had campaigned on a platform opposing such a takeover, it was done with a political motive in mind. It was not done in a way or in a manner that was designed to create a public utility that would operate in the best interests of British Columbians generally.

What was created, Mr. Speaker, was a two-headed monster. Not only were there two heads to that particular authority, but that pattern went right down the line. Every division had two heads. As a result of that kind of administrative set-up, the B.C. Hydro and Power Authority became involved in a terrific inner power struggle, and the interests of British Columbia and the provision of electric power became a secondary consideration. That power struggle went on until it was a duel in each department and in each division, until one or the other of those two named heads won that duel. That duel was won usually on the basis of how large the budget was for that specific section and how many employees reported to that particular division manager.

1 would think that it would not take a very astute administrator to figure out what that would do to the operation and to the staffing of any company or corporation. 1 suggest that what happened in B.C. Hydro was no exception to the rule. We had instances in B.C. Hydro where we had efficiency experts called in to review departments and divisions. Those experts made their recommendations, Mr. Speaker, and the recommendations never left the bottom drawer of the manager of that department. Those recommendations called for and advised means of staff cutting, suggested how staff could be cut and proposed new lines of administration. But because those reports were made first to the division managers and because those reports would have cut the number of people reporting to that manager and reduced his responsibility, they never left the bottom drawer of the manager.

Those are the kinds of costs that the people of British Columbia are being called upon to pay for now with the S3 surcharge. It was a built-in extravagance. The criteria as to whether or not you had one or two windows in your office, whether or not you had a corner office, how deep your carpet was and how large your desk was related to how much money was included in your budget and how many people reported to you. That is what happened when we had the merger between the B.C. Power Commission and the B.C. Electric. It was a built-in disaster, Mr. Speaker, and it's gone right down the line, so today we are paying for those kinds of mistakes.

The Minister of Labour (Hon. Mr. Williams) mentioned that the government is considering a review of management of Hydro. I would urge that that management review be undertaken. I'm also not suggesting that there aren't a lot of good and dedicated employees in B.C. Hydro - there are. In many instances, administrative problems and roadblocks are frustrating the people who are knowledgeable and capable and competent. In many instances many of those suggestions and ideas never reach the level where they can be implemented.

I have seen on three occasions a substation site allocated, and the local people, who were familiar with the terrain in the area, made impassioned pleas to upper management to change those sites. But they were not changed, Mr. Speaker. As a result, the costs to Hydro to fill in swamps and to rebuild stations because a whole hillside split and fell down into the town were phenomenal. Those costs are the costs that are being passed on to the people of British Columbia in the form of payment for their hydro. Now we're being faced with another increase and a $3 assessment, the legality of which may be under question as to whether or not a corporation can lay on a $3 surcharge.

MR. SPEAKER: You are in your final three minutes, hon. member.

MRS. WALLACE: Thank you, Mr. Speaker.

In conclusion, I would urge this government not to pass another carte blanche bill giving Hydro another

[ Page 1334 ]

$650 million, increasing their debt to $4.5 billion, which has been said is more than the annual budget of this entire province. The time has come to say no, to call a halt, to have an investigation and decide what is going to become of Hydro, how it is going to operate, how we can change its directions and how we can bring it back under the control of the elected representatives of this province.

MS. K.E. SANFORD (Comox): This bill, which calls for Hydro to borrow another $650 million, is indicative, 1 think, of the octopus-like growth of that corporation. I think we are all concerned, Mr. Speaker, about the fact that there seems to be no control, that Hydro seems to be an authority and a power unto itself. Even the Premier of the province has expressed his concerns about the fact that Hydro seems to be out of control.

Now the other night when the Minister of Labour (Hon. Mr. Williams) got up to speak - he said he hadn't intended to speak, but he got up and made a few remarks - he said a couple of things. One was that we must get into conservation. Certainly the Energy Commission had been asked to do a study into how we can conserve energy in this province, but, Mr. Speaker, Hydro is overestimating the needs of the province right now. Even if we don't get into any more conservation programmes than we are currently engaged in, Hydro is overestimating its needs at 9.2 per cent growth. The chairman of the Energy Commission - Mr. Thompson, at the time -indicated that he had argued with Hydro about how much power they were going to need. If Hydro had accepted the recommendations of the B.C. Energy Commission, this bill in front of us could be half of what Hydro is currently asking for.

Now Mr. Thompson said that there has been a disagreement with Hydro in terms of how much power is going to be required in this province. In a clipping from The Vancouver Sun, in April of last year, Mr. Thompson said: "One of the major reasons for differences between the forecasts of Hydro and the commission is population figures. Hydro is assuming far greater immigration to B.C. than the commission is, but the commission" - and I hope that the Minister of Finance (Hon. Mr. Wolfe) notices this - "uses figures from Statistics Canada."

In other words, Hydro is projecting an increase in population which even Statistics Canada is saying is not going to happen in this province. They are overestimating. A 9.2 per cent increase is too high. The previous government had at least three independent reports which indicated that the estimates of Hydro were too high in terms of the kind of power we're going to need in this province in the next few years. It's ridiculous. If we continue to project at this rate we're going to have to dam every major river in the province, including the Fraser - and Hydro certainly hasn't ruled out that possibility. We should worry about that, Mr. Speaker, because Hydro is a power unto itself, and what Hydro thinks seems to happen in this province.

For instance, if they overestimate the amount of power that they are going to need, they then make sure - it's a self-fulfilling prophecy - that the power is used. I recall ad after ad on television some years ago when Hydro was encouraging the homeowners, the people of the province, to buy every possible electrical gadget which would consume more energy. So I assume that if they get this $650 million and they proceed with their 9.2 per cent increase in capacity, they will again go ahead and advertise so that people will consume more energy. They are empire builders. They want to grow. They want to remain the authority in the province, and they're not likely to accept the recommendations of the B.C. Energy Commission, or any other group that has indicated that what they are asking for is too much.

The Minister of Labour (Hon. Mr. Williams) also talked about the brownouts and blackouts, as did the Minister of Energy (Hon. Mr. Davis) the other night. You know, I think that this particular letter which comes from the Financial Post is so typical of attitudes towards Hydro that exist in this province. This letter, Mr. Speaker, comes from a Mr. Kenneth Voss, who is chairman of the Association of Major Power Consumers in Ontario. These are the great industries that are utilizing all that power in Ontario.

What he is saying is that Hydro is again asking for more authority and more production in the province of Ontario. And Hydro is saying in Ontario that if they don't get it they're going to have blackouts and brownouts. It's exactly the same kind of thing that Hydro's saying here, and that spokesmen like the Minister of Energy, Transport and Communications are saying in this province.

Mr. Voss says this:

"We in the industry must take issue with these gloom-and-doom forecasts. They come from Hydro with increasing frequency after its having been faced for the first time in its 69-year history with concerted opposition from all sectors of society to their earlier costly growth and capital expansion plans."

Mr. Speaker, that letter could very well have been written in this province today. The same thing is happening in Ontario. "Our position continues to be that all of us have to face the fact that the golden days of cheap energy, and specifically cheap hydro-electric power, are over, " says Mr. Voss. Then he goes on to say: "However, the demand growth rate can be adjusted from 7 per cent to 5 or 6 per cent over the next five years without seriously affecting the quality of service."

In other words, Mr. Speaker, what this man is saying in this letter is that Hydro in Ontario is

[ Page 1335 ]

predicting gloom and doom, trying to recapture some of its credibility in Ontario. Yet at the same time, Mr. Voss, who is chairman of the Association of the Major Power Consumers in Ontario, says: "No, Hydro is not right, We don't have to have doom and gloom simply because we cut down on the rate at which our consumption of energy increases. We don't have to do that." He is saying that we can have our same standard of living, and yet cut down on the amount of power that these giants like Hydro are asking for.

The Science Council of Canada said that a 50 per cent drop in energy use would not result in a drop in the standard of living for the people of this country. That's borne out by what's happening in Sweden. In Sweden the per capita consumption of power is 50 per cent less than what it is in this province. Yet their standard of living, Mr. Speaker, is higher than ours.

The member for Alberni (Mr. Skelly) the other day outlined, in what 1 thought was an excellent speech, a list of suggestions of alternatives that could be used in terms of producing energy in this province. He cited one example of a hospital in the United States that is now being heated entirely by alternate sources of energy. Those are the kinds of things that we have to look at in this province and have to follow up on now so that we don't again have from Hydro a request for a 9.2 per cent increase in the power that they require.

Mr. Speaker, the other night the Minister of Labour as well spoke about nuclear power. He said he was surprised to hear from this side of the House anyone discussing nuclear power under this particular piece of legislation because he said: "There's nothing in this bill that talks about nuclear power, that suggests that nuclear power is going to come." He also criticizes us because he's wondering what the research staff in the opposition is doing with their time. Then he says that the prospectus that's used by Hydro is exactly the same that was used when the NDP was in government.

But, Mr. Speaker, 1 would like to suggest that there is a major difference at this time. That is that that all-powerful Hydro is headed by Mr. Bonner, who is saying that we will have nuclear power in this province. Mr. Speaker, it's urgent that we speak about nuclear power when the chairman of Hydro, who holds that powerful position, is talking about the introduction of nuclear power plants in this province. We don't want them. 1 hope that the Minister of Finance (Hon. Mr. Wolfe) , when he gets up today, will indicate to us that Hydro will be brought under control and that no matter what Bonner says about the introduction of nuclear power in this province, it's not going to happen. When Mr. Bonnet, in his present position, talks about nuclear power in the province, 1 worry; and 1 think it must be discussed here in this House.

The general arguments in favour of nuclear power are that it will be cheaper. But there's nothing to indicate that nuclear power is going to be cheaper to the people of the province. Again, there was a recent study by the B.C. Energy Commission which shows that nuclear power is not going to be cheaper. The cost of nuclear power in Canada is estimated at $670 per kilowatt.

Another report prepared for Habitat by Barbara Rogers, who is a consultant to the United Nations development programme, compares the cost of U.S. light-water reactors to other electrical generating systems. Here are the figures that she produced. She talks about U.S. light-water reactors costing $544 per kilowatt; coal-fired plants, with sulphur dioxide pollution controls, cost $456 per kilowatt; and an oil-fired plant with similar controls costs $411 per kilowatt. So the $670 per kilowatt figure for nuclear power is much more expensive than sources that are already available.

The other aspect of all of this, when people are talking about nuclear power being cheaper, is that they don't take into consideration the costs of disposing of the waste materials. There's no known safe way yet, Mr. Speaker, to dispose of these nuclear waste materials from these power plants. I would like to point out to you that right now New Jersey Central Power and Light is planning to raise $100 million towards the cost of entombing, as it's called, a worn-out nuclear plant at Oyster Creek and guarding it for the next 100 years. These are additional costs that are involved in nuclear power.

The other thing, Mr. Speaker, is that the costs involved with the dangers of nuclear power are really difficult to estimate in terms of the health of the nation and the health of the world. The U.S. Environmental Protection Agency predicts that there could be 6,500 extra deaths as a result of the use of nuclear power over the next 46 years. Now this kind of cost we're just not able to calculate. I hope that this government will make its position very, very clear, that it will bring Hydro under control, and that people like Bonner, who now have all of that authority, when they speak about nuclear power will be ruled out of order.

Mr. Speaker, I would like to recommend that the government~ at this time look at those independent reports which say that Hydro is out of line in asking for a 9.2 per cent increase. I would like them to at this time withdraw this bill, look again at what projections are more feasible - like about half of 9.2 - and come back in with a bill that calls for about half of what this bill calls for.

One of the other things that I would like the Minister of Finance to do at this stage is to ensure that industry uses its hydro power efficiently. I would suggest that they increase the charges to industry for the hydro used. In that way there would be some incentive for them to improve their

[ Page 1336 ]

machinery and ensure that it is operating at maximum levels of efficiency.

Why doesn't Hydro engage inspectors for the purpose of checking into industry and the way in which it is consuming energy at the moment? After all, industry is our biggest consumer of hydro power. Why couldn't we have inspectors, the same as we have mine inspectors at the moment who look into the safety of the operation of the mines? They could have a series of inspectors who travel the province in order to check into the efficiency of the operation of the machines which are producing in this province. If you increase the charges to them, they themselves will make some effort to ensure that there is efficient use. Secondly, if you then have inspectors go out to check on the efficiency of that machinery in terms of energy consumption right there, Mr. Minister of Finance, we could reduce that 9.2 per cent increase that Hydro is looking for.

Certainly we must begin an educational programme about the conservation of energy. I would like to suggest that perhaps the Minister of Education (Hon. Mr. McGeer) could include in the core curriculum a section that would deal with the conservation of energy in this province.

Bring back accountability to Hydro. Ensure that it doesn't have that overwhelming authority that it now has - operating throughout the province without reference to anybody, it seems. Cut down on the requests that Hydro is making, in terms of the amount of power that we're going to need. Increase the cost to industry for the use of Hydro power, and through Hydro or some other agency establish inspectors who could go out into the province to ensure that the hydro that is being used by the greatest consumer is used efficiently.

MR. E.O. BARNES (Vancouver Centre): I'll take a little different tack on the debate this afternoon. I'd just ask the minister if, when he is closing debate, he will recapitulate a little bit on the government philosophy respecting the operation of Crown corporations, and perhaps more particularly explain to the House how the operation of Crown corporations fits in with their philosophy of balancing accounts, paying as you go and not operating in a deficit position. It seems to be that this $650 million represents close to a $4 billion deficit that the Hydro corporation will be faced with. Trying to put together the thinking, I don't know what direction the Crown corporation intends to go when it bails itself out, or if it ever intends to bail itself out.

This is the first part of 1977. We're talking about extending the borrowing capacity another $650 million. What's going to happen in 1978 and 1979 and so forth? The rates are going up to consumers in all categories, to individuals and businesses, small and large. Hydro has announced ambitious projects to enlarge and expand even more its facilities. It appears as though this publicly owned corporation is becoming so huge and immense that the officials are suggesting that the average Joe Citizen has no way of understanding its complexity, and therefore, attempting to involve them in the decision making is not of much value.

This seems to be contrary to the concept of participatory democracy, of publicly owned resources and facilities which should encourage good management and support. The shareholders, being the public, would naturally have an interest in the good operation of their Crown corporations. I'm just wondering about the direction in which B.C. Hydro and Power Authority is headed.

We recall a little while ago that the Premier himself expressed concern that Hydro was becoming unwieldy and something like an iceberg afloat, drifting off on its own. However, I find it rather curious that the Premier would express this concern when, in fact, Hydro must ultimately come back to cabinet to have any decisions it may arrive at ratified and approved. It's true that the government would have people believe that Crown corporations operate independently and without any political motivation; but the fact is that under our system, all Crown corporations ultimately must be subjected to final approval by the Lieutenant-Governor-in-Council on any serious decisions - or any decisions at all, in fact.

I think the government should be answering these serious questions. It has attempted to pull the wool over the public's eyes by suggesting that it will balance its operating budget on an annual fiscal basis and that it does not intend to overextend itself. It accused the last administration of having overextended the public purse by expending funds that it did not have and had no means of achieving, mainly because of lack of imagination and understanding about how to tap the resources, how to stimulate the economy and so forth. All it seems to be doing is shifting the responsibility from government control and putting it into the hands of Crown corporations - or, to phrase it a different way, to have it appear as though the Crown corporations are independently operated without government influence or control. It has very methodically proceeded to give new and greater borrowing capacities to all of its Crown corporations, which seem to be growing and growing, ad infinitum, with no prospect of levelling off.

I wonder about the responsible, good business techniques and procedures used by a government -that is, of this philosophy - that made great pronouncements about its intention of co-operating with the federal government in fighting inflation, saying that it would subject itself to the federal guidelines in order to demonstrate its willingness to take a leadership role in restraint.

[ Page 1337 ]

Curiously enough, it did not sign the agreement until it had violated all of the intentions of those guidelines by raising the rates in just about every conceivable category that the public relied upon and needed in order to survive. It raised the costs, certainly, in many categories of Hydro services, but then it went on to raise the rates in most taxation fields. After all of this was done it suggested that the government should be subjected to the guidelines in the future. Who knows what expectations will be made when the crunch comes again?

My whole point is: when does the spiral stop? What programme has the government to stop the spiral? The average Joe Citizen doesn't need - as was remarked in one article - to have a great deal of experience to understand that a snowball will gain weight, momentum and speed as it's rolling down the hill unless there is some means of curbing that momentum. This is what we're faced with, Mr. Speaker. B.C. Hydro is being given further authority to get deeper in debt.

Interjection.

MR. BARNES: We're not talking about the previous government. We're talking about the present government, the present responsibilities. When you campaigned in the last election you said that you had the answers. You said "work with Bill, " and "we have the answers. Stop now before it's too late. The direction this province is heading in is a crash course, but we can stop it. We have the answers, we have the business expertise, we know what we're talking about. We're the analysts; we understand. We don't have to guess; we have a blueprint. Give us a chance."

Since you've been in power you've been talking about getting co-operation from the citizens, telling everybody that it's everybody's responsibility but the government's, and that the government has no money of its own. You've been going right down the line telling everybody that they have to pitch in now and help you find a solution. But you had the solution prior to December 11,1975. You had the solution then. There was no talk about our not knowing what the answers are. You're saying that you're going to go around that curve and everything is going to be rosy; you're going to resolve these problems. It looks to me like all you're doing is feeding inflation. Most of your fiscal decisions have increased the burden on the taxpayer. I'm sure that your actuaries can substantiate my suggestion that most working people today take home less disposable income under your administration than they were taking home prior to the election in 1975. While they may be getting anywhere from 8 to 15 per cent increase, I'm sure that their cost of living has increased about 100 per cent, in many cases, and it's still going up.

On the other hand, you have kept some campaign promises because you have allowed such things as succession duties and the gift tax to be removed, taxes that were yielding sufficient funds....

MR. SPEAKER: Order, hon. member. You're aware of the fact that there are bills on the order paper, and that is not part of the principle of this particular bill.

MR. BARNES: Thank you, Mr. Speaker. I appreciate what you're saying, but I am sure that you would agree that the purpose of this bill is to provide means whereby the Hydro Authority can gain more income for its projects by borrowing. We're talking about anywhere from $25 million to $30 million under the gift tax and succession duty taxes alone. That would have helped. Maybe we would only be talking about S625 million instead of $650 million. We could pick up another $20 million or so from coal royalties if they would raise the royalty to $2.50 a ton instead of $1.50. Why doesn't the government do these things?

It's going to go out and borrow more money to pay off debts that are continuing to grow. You can barely get enough to keep up with the interest on these loans. Where is it all going to end? What is your blueprint for terminating this situation? What about the exponential effects of these costs? Are they going to grow and grow and grow with no end? Can't you give us any encouragement or hope that one day there will be some solutions, some new directions? What about really demonstrating your ability to sacrifice? You talk about restraint. Let's demonstrate what restraint is all about. Where are your new directions? Where's your imagination and your willingness to take the leadership? These are the things we should be talking about instead of borrowing more money.

The Minister of Consumer and Corporate Affairs (Hon. Mr. Mair) , I'm sure, would be willing to agree that if you just give everybody credit cards and tell them that they never have to go and pay, we're going to be in trouble. This is why we're having bankruptcies today - people are getting deeper in debt. They don't realize that some day they have to pay.

MR. GIBSON: This government has a debt wish.

MR. BARNES: Some day you have to pay. B.C. Hydro is going to have to pay, but we are afraid to think what that day is going to be like when we do have to pay. Maybe your plan is to get the government deep enough in debt that we'll just sell everything - sell the province, the resources, and try to get the best deal we can get for it.

Interjection.

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MR. BARNES: Well, I don't know. Maybe your friends who are saving all that money that they're being able to accumulate because of the removal of the gift tax and the succession duties will be in a position to buy it for $1 - you never know.

MR. GIBSON: Maybe Wenner-Gren's still interested.

MR. BARNES: You never know. Well, there's greater truth in jest, Mr. Premier. Quite often you can get a little edge on something. You may have a master plan. After all, you're talking about regionalism and you want to see the provinces work together but separately. It's an interesting approach, and maybe you have a little plan going for a unity deal out here in the lower part of the Okanagan.

Interjection.

MR. BARNES: You know, it's a pretty sad situation when you have to have people sending in petitions to the B.C. Hydro. A petition was sent in to you, Mr. Premier, and to Mr. Bonner. I think we received one in the opposition from.... Well, this is up in your riding.

MS. R. BROWN (Vancouver-Burrard): Vernon.

MR. BARNES: You haven't stood up in the House and read this yet, Mr. Minister of Finance. I'm sure you should read this. This was printed in the Victoria Times on February 11,1977. The number is significant, considering Vernon's voting population is only 9,000. Anyway, the petition reads: "Take notice that we the owners of the Crown corporation known as B.C. Hydro take strong exception to the recent proposed rate increases. As owners of this corporation, we hereby instruct you to immediately take the following action: remove the $3 surcharge." Imagine that, having to pay to have your bill sent to you from your own company - incredible! "Roll back the latest increase to Anti-Inflation Board limits." Well, you never intended to do that because you exempted all Crown corporations until after the fact, when you reconsidered.

But you know, you didn't show any leadership there. You told the individuals that they had to pay up, but that the government should be exempted. That's not very encouraging for people who are asked to restrain themselves.

I tell you too, Mr. Minister, you haven't shown very much confidence in the citizens of British Columbia. You don't really believe that people are prepared to restrain themselves and to live within limited budgets. But I tell you, you're wrong. Most people are. You are taking advantage of them by not setting a very good example. But people are prepared to tighten their belts and are prepared to do without, as long as it's equal, as long as there's some equitable programme so that they know that when they do without, their neighbour is doing without, the government is doing without and we are all doing without.

It's not very impressive when they find that partiality is the order of the day, that it's okay to impose on those people who are not in a position to defend themselves or who, in fact, don't have a voice in the operations of something as important as the B.C. Hydro and Power Authority. I think that, while they are not able to participate under the structure that we have, they will be participating when their day comes. You have to call that day pretty soon. It's a very....

AN HON. MEMBER: Aye.

MR. BARNES: Pardon me, Mr. Speaker, did I hear someone say "aye"?

SOME HON. MEMBERS: Aye!

MR. BARNES: Does that mean that you are going to try and pull the same thing the Premier did when I was speaking on his estimates the other day? I asked him a question. He says, "okay, you sit down, I'll stand up, " indicating that he was going to answer the question, and he pulled his vote. That's the kind of trust you have. When you say "aye, " what does that mean? That means you don't want to debate. You want to get out of here because it's Friday afternoon.

Look at the Attorney-General (Hon. Mr. Gardom) . You're running it; you're running the show.

Interjections.

MR. BARNES: I have the floor. Order, Mr. Speaker! (Laughter.) Mr. Speaker, that man is speaking from his seat. I know the standing orders don't permit that. I tell you what I will do. In respect to all of these hon. members, I will offer to stay with the Attorney-General privately. The two of us will sit in these chambers and discuss these matters this afternoon. The time is growing to a close for the normal proceedings, unless the government intends to stay longer.

Mr. Barnes moves adjournment of the debate.

Motion approved.

HON. MR. WOLFE: Mr. Speaker, I move that Bill 10 be referred to a Committee of the Whole House to be considered at the next sitting after today.

Motion approved.

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Hon. Mr. Gardom moves adjournment of the House.

Motion approved, The House adjourned at 12:59 p.m.