[ Page 2207 ]

CONTENTS

Routine proceedings

Oral questions.

Directorships held by Robert Bonner. Mr. King –– 2207

Child Abuse Team at Vancouver General Hospital. Mr. Wallace –– 2208

Application of Public Officials and Employees Disclosure Act to Chairman of

B.C. Hydro. Mr. Macdonald –– 2208

Wage and price controls. Ms. Sanford –– 2209

Application for fiat. Mr. Macdonald –– 2209

B.C. Hydro borrowing. Mr. Stupich –– 2209

Agricultural aid to developing countries. Mr. Wallace –– 2209

Medical coverage of senior citizen. Ms. Brown –– 2209

B.C. Hydro borrowing. Mr. Stupich –– 2210

Universal pharmacare programme. Mr. Levi –– 2210

Committee of Supply: Ministry of Mines and Petroleum Resources estimates.

On vote 116.

Mr. Lea –– 2211

Hon. Mr. Chabot –– 2212

Mr. Lockstead –– 2214

Hon. Mr. Chabot –– 2216

Mr. D'Arcy –– 2218

Hon. Mr. Chabot –– 2220

Mr. Macdonald –– 2224

Hon. Mr. Chabot –– 2224

Mr. D'Arcy –– 2225

Mr. Lea –– 2225

On vote 125.

Mr. Nicolson –– 2226

Hon. Mr. Chabot –– 2226

Mr. D'Arcy –– 2226

On vote 127.

Ms. Sanford –– 2226

Hon. Mr. Chabot –– 2226

Committee of Supply: Ministry of Energy, Transport and Communications estimates.

On vote 102.

Hon. Mr. Davis –– 2227

Mr. Lockstead –– 2230

Hon. Mr. Davis –– 2234

Mr. Lockstead –– 2235

Hon. Mr. Davis –– 2236

Ms. Sanford –– 2236

Hon. Mr. Mair –– 2237

Mr. Wallace –– 2237

Tabling reports

Third annual report of the Ministry of Energy, Transport and Communications for fiscal year ending March 31,1976. Hon. Mr. Davis –– 2241

The House met at 2 p.m.

Prayers.

MR. W.S. KING (Revelstoke-Slocan): Mr. Speaker, I'm pleased to announce to the House that in the gallery today we have a guest from the great riding of Revelstoke-Slocan, Mrs. Phyllis Margolin. I would ask the House to join me in extending a warm welcome.

MR. L.B. KAHL (Esquimalt): Mr. Speaker, in the gallery today we have a guest, Margaret Cardy. Margaret was born in Birkenhead, England, and she attended Birkenhead High School there. She has recently been in Colorado studying in Bible school. She is currently in Victoria with some relatives and staying with Warrant Officer and Mrs. George Dunn. In 1977 she will be commencing a course in journalism in England. I would like the House to bid her a warm welcome.

MRS. P.J. JORDAN (North Okanagan): Mr. Speaker, it's not often we boondock MLAs have the privilege of having students here. I thought you would like to know that this afternoon at 4 o'clock we will have students from George Elliot Jr.-Sr. High School in Winfield with their principal, Mr. David Aspinall, and parent chaperones.

Also, Mr. Speaker, some of these trips are made possible through the generosity of Crown Zellerbach. It would, no doubt, interest you to know that we have Mr. and Mrs. George Stanner from management of Crown Zellerbach division in Armstrong with them. I would ask the House to give them a warm welcome now and acknowledge them when they come in.

MS. R. BROWN (Vancouver-Burrard): Mr. Speaker, as you know, the hon. member for Cowichan-Malahat (Mrs. Wallace) is a firm believer in killing two birds with one stone. Thirty-seven years ago on this day she did just that: she got married on her birthday. I wonder if the House would like to join me in wishing her "happy birthday" and "happy wedding anniversary" today.

MR. C.S. ROGERS (Vancouver South): From the sophisticated urban riding of Vancouver South we have a group of 18 school students from the OKE School accompanied by four teachers and Mrs. Graham. Among that group of students is Pamela Stickle, who was awarded the Governor-General's gold medal for heroism in saving the lives of seven of her fellow students. I would ask the House to bid them a special welcome.

MR. L. BAWTREE (Shuswap): In the gallery this afternoon we have Jean and John Davidson from Mara in that great constituency of Shuswap. We have Elsie and Jim Davidson from Sicamous and we also have Mr. Hank Wessell from Monte Creek. Some of you may recognize his name - Mr. Wessell is the father of Jack Wessell, who is the manager of the Federation of Agriculture. I ask the House to make them welcome.

MR. H.W. SCHROEDER (Chilliwack): Mr. Speaker, Little Red is here today. (Laughter.) I want you to know that. I've bragged to her about every member of this House and I certainly would not expect anyone to disappoint her.

MRS. B.B. WALLACE (Cowichan-Malahat): I thought perhaps I should report that there may be a division within the New Democratic caucus very shortly. But I would like to take this opportunity to introduce to the House my husband, who is in the gallery today together with two friends from Nanaimo, Bob and Connie Hirst. I would like the House to welcome them.

MR. W. DAVIDSON (Delta): In the members' gallery this afternoon is a very close personal friend of mine, Mrs. Elsie Hager, from the municipality of Surrey. I would ask this House to make her welcome.

MR. G. MUSSALLEM (Dewdney): My wife is not here today but I will try and bring her tomorrow. (Laughter.)

Oral questions.

DIRECTORSHIPS HELD BY

ROBERT BONNER

MR. KING: A question to the hon. Minister of Energy, Transport and Communications. The minister indicated yesterday that he was aware of the fact that the chairman of B.C. Hydro was a director of several private corporations and that he found that acceptable, despite the potential of conflict-of-interest in the provision of extremely low rates for companies such as MacMillan Bloedel.

Is the minister aware that the chairman of B.C. Hydro has continued to maintain a private law practice? If he is aware, does he find that acceptable as well?

HON. J. DAVIS (Minister of Energy, Transport and Communications): Mr. Speaker, several facts have been alleged by the hon. member. I'm not aware of them.

MR. KING: A supplementary, Mr. Speaker: The

[ Page 2208 ]

minister indicated yesterday he was aware. Could the minister then advise the House what additional remuneration Mr. Bonner receives as a director of either Montreal Trust, International Nickel, Canadian Cablesystems, and the J. Henry Schroeder Co. of New York?

MR. SPEAKER: Before the hon. minister replies, may I just suggest to the hon. member who has asked the question that that's really the type of question that would more properly be put on the order paper. As you know, you're asking a specific detail.

HON. MR. DAVIS: Mr. Speaker, I'm not aware of the nature or extent of the remuneration to which the hon. member refers.

MR. KING: A supplementary: I would think the minister would be concerned about remuneration because it involves the time the individual could devote to the Crown corporation. Is the minister able to advise the House how much of Mr. Bonner's time is taken up by International Nickel, Montreal Trust, Canadian Cablesystems, J. Henry Schroeder Co., Bonner and Fouks law firm, or the Trilateral Commission?

HON. MR. DAVIS: No, I'm not, Mr. Speaker. But I would like to assure the hon. member that, in my experience, Mr. Bonner has not only been a very able chairman of B.C. Hydro, but he has also devoted a great deal of time over and beyond the normal working hours for a commitment of that kind.

MR. KING: As a supplementary, Mr. Speaker, I appreciate the minister's general answer but I wish he could be more specific with the House. Perhaps he could tell me how much time, precisely, Mr. Bonner has for B.C. Hydro if in fact he is attending regular board meetings in New York of the Schroeder Company, INCO and the Trilateral Commission, and if he's attending regular board meetings of Montreal Trust in Montreal, regular board meetings of Cablesystems in Toronto, and looking after his own law firm of Bonner and Fouks. How much time is left to devote to Hydro affairs?

HON. MR. DAVIS; Mr. Speaker, specifically, a great deal of time, but I'll take the basic question as notice.

AN HON. MEMBER: Supplementary.

MR. SPEAKER: The question has been taken as notice, hon. member,

CHILD ABUSE TEAM AT

VANCOUVER GENERAL HOSPITAL

MR. G.S. WALLACE (Oak Bay): Mr. Speaker, since there seems to be a fair bit of levity today, I wonder if I might ask a question on behalf of the Liberal leader (Mr. Gibson) in his absence. But perhaps that would be indulging in the House a little.

HON. P.L., McGEER (Minister of Education): Where is he this week?

AN HON. MEMBER: Toronto.

MR. WALLACE: This is to the Minister of Human Resources, Mr. Speaker, regarding the child-abuse team of the Vancouver General Hospital and in view of the fact that the minister said during his estimates that the private foundation that had funded the unit previously would be funding it again. Since the Vancouver Foundation funding will only last until the end of June, has the minister decided to fund this child-abuse unit at the Vancouver General after the end of June?

HON. W.N. VANDER ZALM (Minister of Human Resources): Mr. Speaker, the matter is presently being discussed between the Vancouver Resources Board and the hospital and the abuse team, or the people involved. But I would say the answer is probably yes, because the information so far would appear to indicate that we could use the extra services.

MR. WALLACE: On a supplementary, Mr. Speaker, I wonder if the minister is aware that the federal government has been included with the family allowance cheques brochures which ask concerned people to contact their provincial child-abuse committee if they are aware of any instances of child abuse. Can the minister assure the House that a provincial government-sponsored unit will be continued, or is he unaware of the federal initiative regarding the notice sent to parents with family allowance cheques?

HON. MR. VANDER ZALM: Yes, Mr. Speaker. We're aware of that and certainly we can comply.

APPLICATION OF PUBLIC OFFICIALS AND

EMPLOYEES DISCLOSURE ACT TO

CHAIRMAN OF B.C. HYDRO

MR. A.B. MACDONALD (Vancouver East): Mr. Speaker, this is to the Minister of Energy, Transport and Communications. Is the minister aware that although we have a public officials' disclosure Act and the order-in-council was there in December but

[ Page 2209 ]

not passed, the chairman of B.C. Hydro has not been brought under the Act as a public official pursuant to section 2 as he should be?

HON. MR. DAVIS: I'm not aware of that specifically. I'll make inquiries.

MR. MACDONALD: On a supplementary, the minister has been good enough to say he'll make inquiries. Will he report back to the House at question period? I've asked a question: is he covered or not?

HON. MR. DAVIS: I'll get the answer and make an appropriate report, I think, to the House.

MR. MACDONALD: To the House. Mr. Speaker, I don't understand the answer. Will the minister report back to the House whether or not Robert Bonner has been brought under the Public Officials and Employees Disclosure Act?

MR. SPEAKER: Would the hon. minister like to clarify for the benefit of the hon. first member for Vancouver East?

HON. MR. DAVIS: Yes, Mr. Speaker.

WAGE AND PRICE CONTROLS

MS. K.E. SANFORD (Comox): My question is to the Premier, and I would like to advise him that I don't need a speech. My question is very specific and a yes or no will do. News coverage of last week's $100-a-plate dinner included a report that you had stated that legislation was already prepared for a B.C.-only controls programme. Were you misquoted?

MR. SPEAKER: Hon. member, may I point out to you that it is irregular to inquire whether statements made in a newspaper are true.

Interjections.

MR. SPEAKER: Beauchesne, fourth edition, .1958. The question was out of order, hon. member.

HON. W.R. BENNETT (Premier): Mr. Speaker, I'd be quite willing to reply in the manner the member asked. If that was the statement, yes, I was misquoted.

MS. SANFORD: Did the Premier state at the dinner that legislation was being prepared for a B.C. controls programme?

MR. ROGERS: You should have bought a ticket. (Laughter.)

HON. MR. BENNETT: Mr. Speaker, no.

APPLICATION FOR FIAT

MR. MACDONALD: This is to the acting Attorney-General. I think he has taken acting lessons. I would ask the acting Attorney-General whether or not he refused to grant a fiat under the old Petition of Right Act to Dennis Lee, who was in the elderly rest home. He and his wife applied for a fiat under that Act approximately three weeks ago.

HON. L.A. WILLIAMS (Minister of Labour): Mr. Speaker, I wasn't the acting Attorney-General then, and I have not refused. If the hon. member would like to have specific details about it, I'll be happy to take the question as notice and provide him with the answer.

B.C. HYDRO BORROWING

MR. D.D. STUPICH (Nanaimo): Mr. Speaker, this is a question to the Premier. In view of Tuesday's statement by the Premier to the effect that tighter controls of B.C. Hydro borrowing are being considered, is the Premier suggesting that the Authority's future demand estimates are excessive? Alternatively, is he suggesting that there will be more and much larger increases in rates to obviate the need for increased borrowing?

HON. MR. BENNETT: Mr. Speaker, I'm suggesting neither.

AGRICULTURAL AID

TO DEVELOPING COUNTRIES

MR. J.J. KEMPF (Omineca): Is this your own question?

MR. WALLACE: Oh, yes - lots of questions.

Mr. Speaker, to the Minister of Agriculture with regard to funds available for agricultural aid to developing countries, can the minister tell the House when the freeze on the allocation of funding was applied earlier this year? Can the minister give the House a statement of the sum of money which was still in the fund at the time the freeze was applied?

HON. J.J. HEWITT (Minister of Agriculture): Mr. Speaker, I will take the question as notice.

MEDICAL COVERAGE

OF SENIOR CITIZEN

MS. BROWN: This is to the Minister of Human Resources, Mr. Speaker. A senior citizen renting space on an Indian reserve in Kamloops who is in receipt of

[ Page 2210 ]

GAIN was refused medical coverage on the grounds that she was living on an Indian reserve. Is this the regulation of the Ministry of Human Resources?

HON. MR. VANDER ZALM: Mr. Speaker, I will take the question and the information as notice.

Interjection.

MR. SPEAKER: The minister has taken the question as notice, hon. member.

Interjections.

MR. SPEAKER: Hon. member, the hon. minister took the question on notice.

B.C. HYDRO BORROWING

MR. STUPICH: Mr. Speaker, I'll try again. The Premier has suggested that B.C. Hydro's demands for capital are too high.

SOME HON. MEMBERS: That's inferred.

MR. SPEAKER: Order, please.

MR. STUPICH: Mr. Speaker, I'll try it again when I've got the Blues in front of me.

UNIVERSAL PHARMACARE PROGRAMME

MR. N. LEVI (Vancouver-Burrard): This is to the Minister of Human Resources, Mr. Speaker. The minister has made reference in the House on a number of occasions to bringing in legislation regarding the universal Pharmacare programme. Can the minister confirm that the legislation will be forthcoming, or is it going to be done by regulation?

HON. MR. VANDER ZALM: Well, Mr. Speaker, I'm surprised at that question from the member who was previously the minister of this particular ministry and who should be aware of the fact that it does not require any legislation. In effect, the programme was so designed by the previous administration that it can be done by regulation.

MR. LEVI: I'm also surprised, Mr. Speaker, that the minister doesn't listen. He has indicated to this House that he was going to bring in the programme by legislation. Now is this still his intention? You've said this in the House. Is it still your intention to bring in legislation, or are you going to stay with it by regulation? That's all I asked.

HON. MR. VANDER ZALM: Mr. Speaker, I don't recall making a statement to say it would be brought in by legislation. I've continually said that it might be dealt with by regulation.

MR. MACDONALD: Without debate.

MR. SPEAKER: Order, please.

On a supplementary question on the same subject, the hon, member for Oak Bay.

MR. WALLACE: Mr. Speaker, since this issue that's been raised is causing such concern among the elderly in British Columbia, can the minister tell us when it can be anticipated that the elderly will be told exactly what the plan is, or is not, going to do?

HON. MR. VANDER ZALM: Mr. Speaker, I'm terribly sorry for the misinformation which has been given by so many people, groups and individuals in the papers with respect to what the programme might be, because certainly this has created a lot of mental anguish for those people who might be affected by any change. I can assure those people right now that we will be devising a programme, as was promised, to serve the chronically ill and those people who previously had no help available to them, but that there is no intent by this government to place a further burden of cost on the handicapped or the elderly.

MR. MACDONALD: Bypass the legislation.

MR. SPEAKER: Order, please. Hon. members, in case you haven't heard, the bell terminated the question period.

MR. MACDONALD: I'm interjecting now. (Laughter.)

On a point of order, the Minister of Mines and Petroleum Resources (Hon. Mr. Chabot) indicated he would file certain documents in committee the other day - table them with the House in a very generous spirit. They related to advance payments made to Quasar Petroleum, Atkinson Petroleum and other companies by BCPC. Will the minister now table those documents?

MR. SPEAKER: Order, please. The hon. first member for Vancouver East is incorrect in raising that matter as a point of order at the present time. The House is not in committee at the present time. I would suggest to the hon. minister and to the member that if such a thing happened in committee the House has no knowledge of it, or at least the Speaker has no knowledge of it.

HON. J.R. CHABOT (Minister of Mines and Petroleum Resources): I ask leave to table certain documents which I referred to in my estimates.

[ Page 2211 ]

Leave granted.

Orders of the day,

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

ESTIMATES: MINISTRY OF

MINES AND PETROLEUM RESOURCES

(continued)

On vote 116: minister's office, $86,016 -

continued.

MR. G.R. LEA (Prince Rupert): Mr. Chairman, we spent some time yesterday going over the feasibility of developing northeastern coal in the province. I would like to make it very, very clear, not only to the members of this Legislature but to the people of the province that the development of northeastern coal and the marketing of that coal would be desirable to the official opposition. It is an economic venture that we desire to see go ahead and be successful, but we have our doubts as to whether the government is letting us in on the negotiations in any way whatsoever.

As a matter of fact, Mr. Chairman, we're a little in the dark as to who is negotiating with whom about what. Yesterday I pointed out that information had been brought to my attention, which I brought to the minister's attention, that the price of coal would have to be considerably higher than it is now in order to make that project a viable project, an economic project, and there are some further problems that have been related to me. Southeastern coal and the companies involved there say that they can meet the projected demands for a few years to come with private investment - with no subsidy from government, either federal or provincial, but with private investment by private companies.

The minister has beaten all around the bush but never really answered the questions. Then after yesterday's session of the Legislature the minister was interviewed in the corridor by members of the press gallery. In a question by the Canadian Press the minister stated that if the provincial government didn't have an indication in a few months, then the project wouldn't be going ahead. Those aren't the exact words that the minister said but I believe it describes the situation.

Well, an indication from whom? Who is the provincial government waiting to hear from before the decision can be made? In other words, we're back to the same question that we dealt with yesterday: who is involved? Are the Japanese talking with the provincial government? Are they telling the provincial government what they feel their metallurgical coal demands will be over the next few years? How much of that coal do they expect to be coming from British Columbia and, indeed, are they interested in northeastern coal at this moment? When would the Japanese be looking forward to their first order of coal? How much?

The minister also stated that Denison and Quintette had been over to Japan recently to talk about getting the first order of five million tons. He wasn't sure yesterday whether they had been successful or not; possibly the minister has more information today.

Interjection.

MR. LEA: Well, not really. The minister said he gave me further information on that last night. He repeated that he still didn't know, which I guess is further information. But last night was last night and today is today, and possibly the minister has some information on whether or not Denison and Quintette were successful in Japan. We sure hope they were. I hope that the minister has good news for us today; I hope he doesn't announce that they have a tentative agreement to reach another agreement later on. We already have that tentative agreement; I think we have to have some details.

I have a number of questions. No. 1, who in Japan is interested in purchasing northeastern coal? When would they expect that first order to arrive in Japan? How much? Will it be phased in - five million tons now, five million tons later? What's the time schedule for that? How much would it cost to get a ton of coal from the northeastern sector to tidewater?

What does the minister feel is going to be happening in the world market for coal? What does he expect it to be possibly a year from now or five years from now? I don't expect the minister to have a crystal ball, but does he have any indication from research that the price is going to change and change upward drastically in the next few years?

Does he see the coal from the northeastern sector going through the port of Prince Rupert and utilizing BCR and CNR to get those coal shipments to tidewater?

What does the minister see in terms of domestic usage of metallurgical coal? He answered that partially last night to the hon. Liberal leader (Mr. Gibson) , but I'd like to have a few more specifics in what he sees as the domestic market and the continental market. Is there a continental market that we can be looking at? We know that eastern Canada gets some coal from Pennsylvania. Is there any area in the western United States that could look forward to buying coal from us in western Canada?

In other words, we would like to have a detailed report from the minister on exactly where the government is in its negotiations and with whom. Are those negotiations being carried out, and, specifically,

[ Page 2212 ]

what indication is the minister waiting for that he says he has to have in the next few months or the project doesn't go ahead?

HON. MR. CHABOT: It's nice to discuss coal again. The member for Prince Rupert (Mr. Lea) brought up the question of involvement in market attractions which I answered the first night of my estimates a few days ago. I indicated that the Ministry of Economic Development is in the process of discussing the Japanese steel interests. A percentage commitment of the coal purchases in Japan is to come from British Columbia. We have now in the vicinity of, I would say, 20 per cent or 22 per cent of the coal consumption in Japan coming from Canada. We would like to increase that on an increasing consumption base to a 30 per cent ratio, and we're attempting to convince the Japanese interest that it's in the best interest of the Japanese steel industry. It's in the best interest of British Columbia as well that there be a fairer division of the purchase of coal.

Their purchases, as I indicated before, were primarily from Australia, which has the lion's share of the sales to Japan. The United States is second and Canada ranks third. We would like to see the Japanese purchases on a 30-30-30 division between those three countries, and 10 per cent on a float basis. So that's what the Ministry of Economic Development is occupying itself with. They are urging the Japanese to purchase more British Columbia coal, be it from northeast or southeast.

The Quintette operations are presently negotiating with the Japanese the sale of five million tons of coal from their proposed operations from northeastern British Columbia. It's not a question of Denison Mines going to Japan and saying, "Here's a contract. Sign here. And here's the price we want." There are a lot of considerations that must take place. So they are in the process of negotiating a contract arrangement with the Japanese. Whether they'll be successful or not, I don't know. But they must have a contract. They must have a commitment from the Japanese interests before they can determine whether they are going to press on with their present feasibility studies. There are many uncertainties at this time: transportation costs, port charges, and whether there will be national and provincial participation in infrastructures.

Until some of those improbables are resolved it is difficult to say whether this coal mine will go or not. The quality of the coal will determine the value of it on the market in relationship to other coal purchases in Japan. It will be a few months yet before some firm decisions are made as to whether it will go. I apologize to the member that I didn't have time yesterday to outline my views on the possibility of the go or no-go of northeast coal. If the northeast doesn't go at this time, the capital costs will escalate to such a degree that it won't be viable for the northeast to be developed on the large-scale basis. It could be developed on a small-scale basis.

As far as metallurgical coal sales in Canada are concerned, we don't appear in the foreseeable future to be competitive in the areas where metallurgical coal is purchased. We are looking at other areas at this time. There are markets that exist for metallurgical coal in Brazil, Mexico, South Korea and Germany, Those are the markets we are looking at as far as the development of northeast coal, plus southeast coal as well. There is market potential in Germany; that's where Elco Mining - if it ever gets off the ground in southeastern British Columbia - will have the bulk of their market. There are expanding markets for metallurgical. coal around the world and, of course, that's determined by the degree of, economic activity that takes place in the world, whether it's an upturn or a downturn. It's difficult to say just what kind of a demand there will be. It depends on what happens in the economics of the world. So it's hard to sit down and project and say that in the next five years we'll increase the consumption of coal and steel manufacturing by 25 or 30 per cent. It all depends very much on what takes place and the economics of the various nations around the world.

HON. K.R. MAIR (Minister of Consumer and Corporate Affairs): With the committee's indulgence, I would like very much, if I may at this moment, to introduce some special guests from a very special school in Kamloops.

MR. CHAIRMAN: Shall leave be granted?

Leave granted.

HON. MR. MAIR: Thank you very much, Mr. Chairman. There are 30 students from Brocklehurst Junior Secondary School here today with their teachers, Mr. Graham and Mr. Strachan. The reason they are so special to me, apart from the fact that they do come from my constituency, is that all four of my children have attended this school and one of them is currently in attendance. I would ask the House to make them welcome.

MR. LEA: Mr. Chairman, I think that the minister has outlined the problem that we all face in British Columbia as to the development of that northeastern coal deposit very well. I appreciate what the minister has had to say. I agree with everything he said and it should be done. The thing is, we don't know exactly where we are now. I think that it would be beneficial to a great many people, not just from a curiosity point by the House or by the opposition, if we did. There are people with money invested who are looking towards that coal development.

[ Page 2213 ]

Small-business persons - as I mentioned yesterday -

in Prince Rupert are wondering whether they should hang on and maybe borrow some money to hang on another year or another two years, anticipating port growth because of the coal development.

I think that it's very important that the trade unions involved and the small business people involved in the economic life of our province have some idea, because it's hard for them to know which direction to go - whether they should pack it in and say, "I guess I'll go for bankruptcy, " or whether they should hang on, or whether they should invest some money now so they can be prepared in two or five years if port development picks up in Prince Rupert and the coal is actually coming through.

But there is a persistent rumour - not idle chatter, but persistent rumours - around the industry that the Japanese, in fact, are not negotiating at this moment for more coal from British Columbia but rather, because their steel industry is not operating to its maximum because of the world economy, they're actually negotiating to take less coal out of British Columbia in the next couple of years. I wonder if the minister could assure this House that there are no negotiations going on at the present moment to cut coal orders going to Japan from British Columbia.

Could the minister assure us not that he doesn't know that they're going on, but that there are not negotiations going on now to cut back on coal orders and the price of coal being paid by Japanese markets?

Could he assure us of that? -

HON. MR. CHABOT: Mr. Chairman, I have no information that has come to my attention indicating that there is a desire on the part of the Japanese interests to cut back on the orders of coal originating in British Columbia. I have no information of that nature.

The member talked about the question of coal requirements in the world. I have some figures here

I'd like to quote to him. Unfortunately I don't have the figures of what's presently being consumed readily at hand, but this will give you some indication of the uncertainty, depending on world economy.

These are projections. It's projected that in 1985 the Japanese will require between 70 million: and 97 million tons of coal per year. You can see the uncertainty that exists in there. Nevertheless at this time they are consuming 60 million tons of coal per year. This is a projection to 1985. The European Economic Community will need between 22 million and 30 million tons of coal per year. Latin America, which is a new market developing, will need 22 million tons. Others will need 15 million tons. Our projection of needs around the world is between 147 million and 185 million tons per year of metallurgical coal. We think that we can share in a lot of this new market that's developing with the growth of the steel industry around the world.

I'm not aware of any negotiations regarding possible cutback of existing orders of coal from British Columbia. I'm not even aware of whether here's a possibility of negotiating because of the devaluation of the Canadian dollar. Whether that's asking place or whether there's any consideration in hat respect, I don't know. But it hasn't come to my attention that there's a potential decrease in existing orders. I know that the principals in northeastern British Columbia are pressing on with the possibility of securing orders in Japan for metallurgical coal. The information that comes to my attention is that negotiations are proceeding well, as far as Denison is concerned, in securing a firm market for the production of five million tons of coal from northeastern British Columbia.

MR. LEA: I have one final question. The minister says he isn't aware of any negotiations that are going on to cut down on coal orders from British Columbia o Japan. If there were negotiations going on, does he minister feel, or can he assure us, that he would know about them? It's one thing to say: "I'm not aware of any negotiations going on." It's quite another to tell me: "There are no negotiations going on." If there were negotiations going on, would the minister be aware of those negotiations because of his portfolio? Would he be aware of them if they were going on?

HON. MR. CHABOT: Not necessarily immediately.

SOME HON. MEMBERS: Oh, oh!

Interjections.

HON. MR. CHABOT: My name's not Edgar Kaiser.

MR. LEA: But it is the Minister of Mines, and it seems rather strange to me, Mr. Chairman, that the Minister of Mines would not know immediately whether there were negotiations going on with the Japanese to cut down on coal.

HON. MR. CHABOT: I would expect to know.

MR. LEA: He would expect to know, the minister says. But he cannot assure this House that those negotiations are not going on between the Japanese steel industry and British Columbia coal suppliers. I think the question was asked two or three days ago in the House. There have been two or three days for the minister to check and find out whether, indeed, those negotiations are going on, yet here we are today -two days after the original question was asked - and

[ Page 2214 ]

the minister still says he cannot assure this House and he may not be aware if these negotiations are going on.

May I ask another question, Mr. Chairman? Since I first asked the minister whether or not there were negotiations going on to cut down the coal orders, has he checked with the industry directly to find out the answer to my question?

Mr. Chairman, would the minister care to answer that? Since I asked the question two days ago, has the minister checked directly with the industry to find out whether in fact those negotiations are going on?

HON. MR. CHABOT: No, I haven't.

MR. KING: Irresponsible!

MR. LEA: The minister says he hasn't checked. I find it very strange, Mr. Chairman, that two days ago I told the House at that time that I was being told by certain people that those negotiations were going on. I find it indeed strange that the minister responsible for mines in this province wouldn't have at least checked it out to see whether or not those negotiations were going on. He says he hasn't. Does he mean that he hasn't done it personally? Possibly the minister asked someone on his staff to check that out after I asked the question.

Did the minister get someone on his staff to check or someone in government at any level to check with the industry to see whether in fact those negotiations were going on?

MR. D.F. LOCKSTEAD (Mackenzie): I would defer if the minister would like to answer the member for Prince Rupert.

I have a few comments myself, Mr. Chairman, to make on coal. In 1972 when the NDP came into office, the two main coal producers in the province were only paying 10 to 25 cents per ton for the depletion of that resource. Our government proceeded to increase the royalties to $1.50 per ton, which provided the people of this province with millions of dollars of additional revenue that has gone to provide services to our people.

The point I wish to make under this topic, Mr. Chairman, is that this government should not be collecting $1.50 per ton right now, but should be collecting $2.50 per ton, as was agreed to by our government and by the resource companies in late 1975, which would have come into effect in 1976. These millions and millions of additional dollars could have gone to help our people in this province -our handicapped and our senior citizens and all of the other programmes that are currently being cut back.

With the exception of perhaps one or two of the East Kootenay operations, virtually all metallurgical coal mining operations are and will be subject to control in Japan, Mr. Chairman. Their output is generally defined to feed Japanese steel mills. Exploration capital is generally provided by these end users. But development capital - present requirements in excess of $200 million for most major mines, both surface and underground - will likely be raised in Canada with Japanese backing. The grant of exploration money and the backing of development money, plus the built-in marketing controls exerted by the Japanese steel mills, places the operating control of these mines fully into Japanese hands, Mr. Chairman, irrespective of the actual size of the shareholdings of any venture. I hope the minister is making notes.

Provincial revenue from the present coal mining operations has been low in relation to the possibility of the mines versus environmental damage and the public infrastructure requirements connected to these operations. Unlike mining in the early days of the province, the industry depends heavily on government at all levels to provide a wide range of costly services for small populations.... These are some notes I made this morning, Mr. Minister. We're getting to Texada Mines shortly, too. You'll be pleased to hear about that.

Interjection.

MR. LOCKSTEAD: The minister interjects, Mr. Chairman. Call him to order!

While coal-producing companies are operating at such high levels of possibility as after-tax returns of 50 per cent or more, the province's direct income is restricted to a royalty of $1.50 per ton. Shocking! Licence rentals account for a small additional revenue as huge tracts of valuable coal lands in the sector of private ownership like Kaiser or Weldwood are claimed by the federal government - dominion coal blocks, which we were discussing earlier, Mr. Chairman.

Thus at a time when coal is produced at a cost of less than $20 per ton and sold at more than $56 per ton, the main benefits from British Columbia's production accrued to the end user - owners overseas and the producer-owners. The Coal Task Force of British Columbia indicates a potential demand for provincial coking coal of 35 million tons per year by 1995. This means that without government intervention or other interference, production and export of coking coal will total approximately 600 million tons by the end of the century.

The same report indicates present availability of such coal to be less than 470 million tons, Mr. Chairman. I'm sure that the minister has read that report.

"It must be understood, however, that all presently available coking coal capable of relatively cheap production by virtue of being

[ Page 2215 ]

readily accessible will be mined out by the end of the century.

"Preliminary projections concerning Hat Creek reserves indicate that potential requirements of thermal coal will see exhaustion of that deposit soon after the turn of the century."

HON. MR. CHABOT: What are you reading from?

MR. LOCKSTEAD: I'm quoting in part from the report of the coal committee, Mr. Minister.

They're expected to be mined out by the turn of the century, I believe, Mr. Chairman. Maybe the minister could answer the question. Ask your deputy.

"In the interim, total coal mining employment is expected to rise from the present 2,000 to some 12,000 workers. This alone will call for major government expenditure in the provision of services, and environmental damage will surely grow as a result of mining coal in ever-remoter and less-accessible areas.

"It is clear that the present expansion activities of the coal mining companies make a lot of sense in terms of short- and medium-term corporate profitability but make little sense from the point of view of maximizing short and long-term benefits to the people of British Columbia by way of energy and revenues."

The point I'm making, Mr. Chairman, backed up by figures from that minister's own department, is that we're not getting the revenues from our coal resource that we should be. I would hope that government would reverse its position in this matter. Mr. Chairman, I want to spend a couple of minutes talking about Texada Mines, located in my riding, which closed and terminated operations on December 17,1976. 1 know that all the discussion in this House will not reopen that mine or get the 172 jobs back that were lost in that mine; but when they close an operation like that in the way they did close it, it really prompts me to ask some questions that the minister may be interested in. I'm not sure. He should be.

A mining group some time ago estimated some wealth could be acquired from that operation by an extraction-and-shipping operation from the Texada iron ore deposit by spending quite a modest sum at that time. How true this turned out to be, Mr. Chairman, was shown by the short time it took for one of the multinationals - one of the many bearing roam the world - to discover what was going on and to move in on this operation. This operation was a wholly owned subsidiary of Kaiser, as you well know. How did British Columbia benefit in this instance from the extraction and sale of that basic wealth? The answer has a vaguely familiar ring, Mr. Chairman.

Employment, yes. Some jobs for a few years - some 22 or 23 years. Also, there was a plowing back of proceeds from the production for a very short period of time, in which the operation grew out of itself, as you well know.

But then the real picture began to emerge: the squeezing out of the operation down to the last cent of profitability, and the depositing in the coffers of one of the multinationals - one of these people who allegiance to no flag, whose only loyalty is to the dollar sign. Mr. Chairman, I resent that. Over $100 million is estimated to ' have left this province, never to return - not reinvested in the community, not reinvested in this province, not reinvested in Canada. It left this country out of the operation of that mine. And what have the people of that island got left now? No jobs, a hole in the ground, and heartache. Where can they go? Where can they find jobs? I know some of them have been placed elsewhere. Families were split. That's what we're faced with in those situations.

What, if any, revenue did British Columbia get from the extraction and sale of that non-renewable resource - or, for that matter, any other level of government than the provincial?

Questions on the floor of the Legislature about this question bring the usual reactions: embarrassed silence, the uneasy shuffling of feet, but no answers. Then the old refrain - "a favourable climate for investment." What happened to the millions of dollars taken in profit from that operation, Mr. Chairman? I'd really like to know. I've got a pretty good hunch. I made some notes to myself on this subject. It's a very important subject to me; it may not be to you.

Local residents can recall when books were seized at that mine, Mr. Chairman, by the federal government in an attempt to extract some revenues from that operation. It went to the Supreme Court of Canada. The federal government lost the case. Texada Mines continued to be allowed to take this revenue out of the country.

Well, what's the present situation? A benevolent government allowed the operation to be shut down and cannibalized of productive equipment without asking too many embarrassing questions.

Interjection.

MR. LOCKSTEAD: Cannibalized, yes. Has all the ore been removed? There's some doubt about that, Mr. Chairman. Sometimes the public wonders: has the mining operation that acquired the ground originally to mine, for example, and for that reason alone, the right to hang on to property indefinitely? Texada Mines - Kaiser - gained hundreds and hundreds of acres and are speculating in real estate right now on Texada Island. Not only that, Mr. Chairman, they're crying because some of this real

[ Page 2216 ]

estate is in the ALR and they can't get it out to cut it into little chunks. They could care less about the future of the agricultural industry in this province.

They ultimately said, through a subsidy, "Wheel and deal." That's what they're doing. They have no regard for the people in that community whatsoever. That mine is really only a microcosm of what is happening in British Columbia today, Mr. Chairman.

We have another fine example, and I'll be very brief, Mr. Chairman. In the fall of 1974, a Vancouver-area-based mine was closed with less than one week's notice to employees and to the public. Owned and operated by an American company, the mine and large surrounding service area had been purchased eight years before for approximately $2 million. Payment of heavy management fees to the American parent company prevented that mine from showing a profit throughout the period in question. As a result, no taxes were paid in Canada or British Columbia.

Since the closure of that mine - you well know what mine that is; that was Britannia Beach - the American owners still hold the land surface, which increases rapidly in value each year, and they still collect substantial royalties from sand and gravel production operations on that property. Well, this may constitute one of the more crass cases of mining right-off in the province but it nevertheless demonstrates, Mr. Chairman, just how questionable the benefits to the province from mining may be. I really question it.

I question the policies of this government too, Mr. Chairman.

One final subject, Mr. Chairman. I have received a personal letter from a constituent of mine who's quite a prominent prospector in the area. I'd like to bring to the minister's attention a couple of points related in this correspondence.

Interjections.

MR. LOCKSTEAD: Well, there are some personal items in it, although I will.

He may be interested to know that just 15 miles north of Powell River, Golden Granite Mines holds the option to purchase a property that has a zone of 0.02 copper plus molybdenum. This property is estimated to have about 2.2 billion tons of ore. I'm serious, Mr. Chairman.

Interjection.

MR. LOCKSTEAD: The letter doesn't say.

The reason I raise this point, Mr. Chairman, is, first of all, I wondered if the minister or his deputy are aware of this operation and if there have been any approaches by the mining company to develop that particular property, which appears to have quite a good chance of proceeding. We have about 20 to 22 per cent unemployment rate in my riding, Mr. Chairman, and with the closure of Texada Mines, a new venture of this sort would greatly ease the employment situation in that area.

Golden Granite and the Redonda Syndicate - the Redonda Syndicate, by the way, is actually Home Oil - hold about 20 square miles of claims near Lois Lake, which is about 15 miles east of Powell River. I wonder if the minister is aware of this property. I understand that some development work done on the one zone by the prospector and Rio Tinto have indicated a large, well-mineralized zone with considerable visible copper. Rio Tinto will work on the property this year, I understand, but I just wanted to know whether the minister was aware of this exploration property and if he had been approached. What is happening on that particular property?

Interjection.

MR. LOCKSTEAD: Rio Tinto? This is also, I think, associated with Golden Granite, but has a Rio Tinto connection. Rio Tinto is connected with the operation.

I think I'll leave it at that, Mr. Chairman. I wouldn't mind passing a copy of this correspondence on to the minister for his information, and he may be able to answer some of those questions.

HON. MR. CHABOT: I'll await the correspondence from the member on Golden Granite. It's a matter that I'd have to check out. It appears to be massive tonnages of ore reserves. The percentage of ore appears to be extremely low. Whether it could ever be an economic mine is a matter of examination, but nevertheless I'd be glad to check that information out and get it for you.

Early in your talk, you mentioned your concern about some of the coal mines being in the control of Japanese hands. You don't appear to share the same kind of view that the member for Prince Rupert has. He doesn't seem to care where investment capital comes from, providing it comes here and abides by the rules and regulations of British Columbia. You express alarm that there's massive control by the Japanese, which is really erroneous because there is no majority position of any coal field in British Columbia controlled by any Japanese company. So there is no majority-interest control there.

You talked about royalty being $1.50. It's escalated, and certainly it's escalated from its low a few years ago when there was no market for coal and when coal was inexpensive. The royalties increased along with the price of coal.

It's now $1.50 royalty but the member doesn't recognize, probably, the fact that it is indirect revenue

[ Page 2217 ]

to government as well. I indicated yesterday that the return in 1976 from the coalfields of the East Kootenay was approximately $4.42 a ton.

As I indicated, we're examining the question of taxation on coal and the question of royalties on coal at this time. We'll be making the decision pretty soon. We're taking into consideration as well the benefits that accrue to British Columbians from coal beyond the realm of direct royalties and direct revenues.

Texada is an old iron mine that was first worked at the turn of the century. It started operation on Texada in genuine mining in 1952, which was a very eventful year. That was the first year of Social Credit government in British Columbia.

It has consistently continued to operate until December, 1976.

MR. MACDONALD: Until the Social Credit coalition.

HON. MR. CHABOT: We're concerned, as well as the member, that it was necessary for this operation to shut down. The Ministry of Labour has taken a keen and active role in conjunction with Manpower to try to find jobs for the employees who were disrupted because of this closure. I think they've done a first-class job in attempting to relocate these miners in other areas. I have the statistics here - I'd be glad to make them available to the member any time - of the kind of efforts that have been made by the Ministry of Labour which I have here, and the kind of contacts that have been made with the union concerned.

[Mr. Rogers in the chair.]

The member, of course, is worried about the population decrease on Texada, and I am too. The member, of course, was a resident of Texada Island at one time and he is no longer. He has left the island too.

MR. LOCKSTEAD: Nonsense! Order, Mr. Chairman!

HON. MR. CHABOT: But he was concerned about the profit that Kaiser Resources made from this mining operation. I must say that some of the profit which he suggested was sent on to other foreign lands to help those underprivileged people in Chile to be gainfully employed. I don't know what you've got against the Chileans, but they've also invested large sums of that so-called profit in British Columbia in an active exploration programme, attempting to find new economic ore bodies that would generate employment for British Columbians and revenue for government so we can give social programmes to people.

The reason the mine closed down in December, 1976, was that there was no recoverable economic ore remaining at that mine. Certainly there were some additional problems. The additional problem was the fact that their contract with the Japanese expired in December, 1976. They weren't able to renew a contract unless the contract was for a longer period of time than the marginal ore that remained. The contract was one that would have had to negotiate between two and five years. The information I have is that they could have mined that low-grade iron ore for possibly six more months.

Interjection.

HON. MR. CHABOT: Well, that's the information that was conveyed back to me by mining inspectors and officials of my ministry in their reports. At the rate of extraction of 1976, there's still sufficient known and developed rock containing magnetite and calco-pyrite - not ore in the strictest sense of the word - to provide mill feed for about six months. There's no established market for the material. In fact, they weren't able to guarantee a smelter in Japan an order for a minimum of two years, so that six months of low-grade iron ore had to stay in the ground. It's unfortunate that it wasn't all extracted.

But I'm surprised that the socialists would raise the question of removing uneconomic ore because when they were government, Mr. Chairman, they turned good ore into waste rock by their legislation. They forced mines in this province to high-grade. They destroyed the lifetime expectation of mining communities in this province. I'm shocked and scandalized that that member would have the gall to bring up that suggestion in this House.

AN HON. MEMBER: Hear, hear!

MR. LOCKSTEAD: Well, I am surprised and shocked at that minister's crass attitude to the working people of the province when by a simple stroke of the pen that mining company changed mineable ore into marginal or waste rock. The ore in the ground didn't change; the ore didn't change one bit. I don't think that ore in the ground changed. What they changed was governments and accountants. The accountant moved those figures over and mineable ore suddenly became unmineable. As a result, they laid off all those people.

He's talking about investing in Chile! The country to be investing in is this country - Canada - not foreign countries. They've got capital and they can look after themselves. But I think we should be Canadians first, Mr. Chairman!

I want to tell you something else while I'm on my feet: that member accuses me of not living in my riding. While I'm here in Victoria at the moment, I

[ Page 2218 ]

have my home on Texada Island. I live in my riding, I'm proud of my riding and I'm going to die in my riding!

MR. C. D'ARCY (Rossland-Trail): Thank you, Mr. Chairman. I'm glad to see Vancouver South in the chair. Sometimes I think Elliott Gould is paying us a visit but somebody said: "No, that's Stephen Rogers; it's not Elliott Gould." (Laughter.)

MR. CHAIRMAN: Order, please. You know hon. members are referred to by their constituency.

MR. D'ARCY: Mr. Chairman, I'm going to talk to the Minister of Mines and Petroleum Resources rather briefly about a company that does invest in British Columbia - a mining company. It's the only mining company, in fact, which has put some of its earnings from mines over a period of years back into British Columbia. And I'm going to talk about other things as well because I'm rather concerned about the proposals to develop coal in northeastern B.C., if those proposals are going to cost the taxpayers of British Columbia a subsidy - not just for the production of coal after those mines are developed, but in the initial stages of developing those mines and the transportation and social infrastructure which are necessary to develop those properties. Being a member from southeastern British Columbia, I'm rather concerned that, if we take the spokesmen from the industry at their word - and I think that they probably know something more about it than the government does - we know that the international coal market is finite and we know that the existing mines in B.C. can supply that market for the foreseeable future. The existing region of B.C. which is developed for coal mining can certainly supply that market.

There seems to be some question in this House whether, when we speak of northeast coal, we're talking about $65-a-ton coal or $75-a-ton coal or $95-a-ton coal. But one thing which we can be sure of is that right now the price is $55 a ton. We can also be sure that the mines in southeastern B.C. - Kaiser and Fording Coal - have costs of around $45 a ton and they expect those costs to go closer to $50 in the near future.

The minister suggested last night and earlier today that those who questioned the viability of northeast coal were asking the government to discriminate against certain parts of British Columbia and in favour of others. I'm not asking that, Mr. Chairman. What I'm asking is that the ministry and the government do not discriminate against all of B.C. by supporting an uneconomical operation. This is presumably the party and the government of free enterprise - the government of "pay as you 9q:, , it's not the kind of a government which would support uneconomical operations with taxpayers' dollars to the tune of hundreds of millions of dollars. But that's what has been suggested. I'm happy to hear today that the minister is speaking of perhaps backing off and maybe it's not as viable as he thought it was, because I'm terribly concerned, as a taxpayer of British Columbia, that we could be committing ourselves for years and years, not just to the initial cost, but to a continuing subsidy for an uneconomical operation.

I'm noting remarks made by the regional vice-president of CP Rail. These comments were made back on February 18. I've consulted with this individual to make sure that he was not misquoted. He was very happy to hear from us; he said he didn't hear from government too often. I said I wasn't in the government. I was in the Legislature but not in the government. He said, "Well, that's fine; they don't talk to us in the transportation business very often, " which I thought was significant. But he said in his speech to a Vancouver seminar sponsored by the Employers Council of British Columbia that "millions of dollars of tax revenue should not be spent on developing coal resources in northeastern B.C." That was Mr. Leslie Smith, CP Rail vice-president.

You should know something about that. You did before they sent you a note one day that they were going to tear down your station in Invermere and ask you to turn in your brass key. I think you knew something about CP Rail. Of course you do. The minister smiles. I know he knows something about CP Rail.

Interjection.

MR. D'ARCY: I bet they're jumping up and down to have you back, too.

MR. CHAIRMAN: Order, please. The member for Rossland-Trail has the floor.

MR. D'ARCY: Mr. Smith went on to say that the forecast demand for coal can be met by existing and new mines in southern B.C., mines which have been developed and can be expanded by private capital. You know right now that Kaiser and Fording are under producing somewhat. They could produce more than they are and certainly, with expansion of existing, known resources by them and other companies in southeastern B.C., there could be a quantum jump in the amount of coal produced in southeastern B.C.

Mr. Smith went on to say that there is a suggestion that half a billion dollars or more of tax money could be spent on support facilities to bring the northern coal deposits into production.

Mr. Chairman, it's $500 million. I suspect that Mr. Smith was only talking about the physical and

[ Page 2219 ]

technical support facilities. He was talking about transportation facilities and the mining facilities themselves. I don't think he was talking about schools, hospitals, shopping facilities or airports. He was merely talking about the facilities to mine and to get the coal to seaports themselves.

He goes on:

"There is nothing in the current outlook to the mid '80s that would suggest that increased coal tonnage required cannot be supplied by existing and planned mines in southeastern British Columbia. All of this production can be brought on stream by private capital as the market builds without requirements for special government assistance."

Who's talking about giving out welfare? I don't hear it from this side of the House, but the government certainly is talking in that direction. He goes on:

"New mines in the northeast will not increase B.C.'s share of the coal market. The market is going to take only so much coal in the next decade, regardless of where it comes from."

"Regardless of where it comes from" - the market, in other words, is finite.

"The development plans for mines and the labour and growing pains for mines and transportation were a costly experience" - a costly experience, Mr. Chairman - "and have only recently been profitable. Although some people expect coal shipments through B.C. ports to be about the same as 1976, when 12.3 million tons were handled, Smith said CP Rail anticipates the drop to just over I I million tons. He noted that inventories of metallurgical coal in Japan are high."

The minister said that he's not aware of any falling of demand. The people who haul the coal are saying that they're anticipating a drop-off of demand in 1977 from B.C. mines.

I think that those statements are very, very significant. They have not been retracted. As I said earlier, Mr. Chairman, on checking with the individual involved, he confirmed that they were indeed made, and he still stands by them. In fact, he said we could go a little bit further because it appears that there is definitely a softening of the market. It's also possible that there could be a lowering of the price from the $55-a-ton level. So certainly the economy of British Columbia cannot afford to be subsidizing other mines to develop when we have mines which are apparently currently not fully producing and whose economic viability - should there be sharply increasing costs of production through fuel costs or transport costs or labour costs - could become somewhat marginal. Certainly any production from northeastern B.C. would have to be taken off the mines in southeastern B.C., because I am firmly convinced that the market is very, very finite.

I would also note that while the government may think it knows something about getting into the mining business, or subsidizing the business of mining coal, we would note that the mines in southeastern B.C., and the people who own the mines, have considerable experience in production. There has been mining in the Crowsnest Pass for about 85 years. Canadian Pacific Railway probably knows more about hauling freight on railways and making money out of it than any other railway company in the world. Also, by association, they're in the port business.

If we develop northeast coal, we have to develop a port and we have to go into the hundreds of millions of dollars of upgrading railway facilities. I'm sure the Minister of Mines knows how much CP Rail had to spend on upgrading its facilities, and is still spending. Virtually the entire line of what used to be called the Kootenay Central Line, between Coal Valley and Golden - Fort Steele and Golden now - had to be completely re-railed.

Interjection.

MR. D'ARCY: That's right, it's a good line, but it wasn't always. It used to have light rail, rotten ties and no ballast; now it's got heavy rail, good ties and lots of ballast, but it cost the company lots of money. They had to do it or they couldn't haul coal over it. They couldn't haul 150-ton cars over it. They've upgraded the mainline, they've upgraded parts of the Kettle Valley, and they've re-laid lines which had been abandoned in the Elk Valley. The minister knows that. How long is the haul from Prince George to Prince Rupert alone? I believe it's well over 400 miles, and we have to get the coal out of the Peace River.

Interjection.

MR. D'ARCY: It may be, but it's going to cost a lot of money. There has been increasing evidence that parts of the B.C. Rail are considerably substandard, and if that line was to be used for exporting the coal there would again be a substantial cost to the taxpayer of British Columbia.

Mr. Chairman, I don't think the economy of B.C. can stand this kind of uncertainty. I think it's the sort of thing which is leading to a reticence on the part of investors to come into B.C. Some people over there have said one of the reasons investment isn't flowing into the province is that people are afraid the NDP is going to get re-elected. I'm beginning to wonder, Mr. Chairman, if people aren't afraid that Social Credit may get re-elected and they want to see what happens in the next election before they make any investment

[ Page 2220 ]

decisions. We really have an uncertainty in this province right now. Nobody really knows if we're going to have viable enterprises -tax-revenue-producing enterprises - or whether we're going to be taxing all the rest of the industry and business in British Columbia, and all the rest of the taxpayers, to support an enterprise which simply cannot be supported on any sort of economic yardstick, as has been demonstrated by the member for Prince Rupert (Mr. Lea) and the member for North Vancouver-Capilano (Mr. Gibson) .

Mr. Chairman, I would hope the minister is telling the truth when he says he's going to back off from northeast coal development if it does not prove economically attractive. I think the evidence is substantial on this point - that it is not economically attractive. I think the whole exercise has been a bit of an embarrassment to the minister and the government. I certainly am in favour of development in the north, or in any other part of this province. I'm in favour of developing another resource. But the fact is that if the rest of the province is going to have to subsidize that development, if development that already exists - private development, revenue-producing development - is going to have to be curtailed to support that, then we are really in trouble.

I would note - and the point has been made in this House many times - that there aren't that many jobs or that many people directly involved in mining. I think it is perhaps significant that the one company which does invest in refining and smelting in B.C., Cominco Limited, has more people working in refining and smelting than all of the rest of the mining industry put together.

Now just look at some of the population figures put out recently by the Minister of Municipal Affairs and Housing (Hon. Mr. Curtis) . He's gone; he has moved up to the Attorney-General's chair. I notice that in the community of Elkford there are only 1,795 people. There is full employment there but there are only 1,795 people. In the support community of Fernie, which relies on skiing and tourism and lumbering as well as coal mining, we have 4,500 people listed. The minister knows these figures, of course; I am just reminding him of them. If we go down to Sparwood, I believe we have 3,975 people. We're talking 10,000 or 11,000 people - not workers, Mr. Chairman - living in the southeastern B.C. coal belt. There are 10,000 or 11,000 people, and the minister wants to cut down on that.

How many people are we going to see living in the communities of the north? I think it's a very expensive experiment. Unless we get into refining, smelting, and fertilizer production in other areas of the province, our mining industry which has been and continues to be extremely important to B.C., is going to become less and less of a significant factor. As the basic economy of my riding depends on 'mining, smelting and refining, I view that as a very, very serious development.

I hope that the minister is considering in his policies.... I realize he's a new minister. By the way, I congratulate you on your appointment; I am glad to see you back in the cabinet. The fact is that unless the minister takes some serious action to produce a policy involving an incentive or disincentive for value-added taxation for the industry to make it economically - viable for the industry and economically desirable for them to get into smelting and refining rather than simply digging up our resources and getting them out of the province, I have a feeling that the total job decline, which has been going on in B.C. ever since December, 1975, is going to proceed still further. That job decline has been accelerating since August and September of 1976. 1 hope the minister in charge of B.C.'s No. 2 resource industry - and I hope it stays that way - is going to take some serious initiatives and not just huff and bluster about things that may or may not have happened in the past, and is going to see that that industry not only becomes more viable but becomes much, much more job-intensive.

HON. MR. CHABOT: I was rather flabbergasted there for a moment when I listened to a socialist member espouse the CPR line. Les Smith is the vice-president of CP Rail, and logically he wants all the coal to move CP Rail. But I never thought I'd see the day when a socialist would stand up and use the CPR position. I recall when they were government how viciously they used to attack what they called the self-interested CP Rail. Now the member for Rossland-Trail (Mr. D'Arcy) is suggesting that what CP Rail was saying is right.

AN HON. MEMBER: They can do it cheaper.

HON. MR. CHABOT: He seems to be opposed to is the establishment of a new port for Prince Rupert. We think that there is a need for a port in Prince Rupert, not only for the potential coal development in northeastern British Columbia but for an alternate port for potash and wheat from the Prairies and potash from those confiscated potash mines in Saskatchewan. We're prepared to ensure that the potash can move from a port in northeastern British Columbia, and that's part of the package in the development of northeast British Columbia.

I want to tell that member there that any development that will take place in northeastern British Columbia will not be, as he suggested, at the expense of southeastern coal development because we foresee additional development and additional growth in southeastern British Columbia.

[ Page 2221 ]

MR. D'ARCY: Where's your market?

HON. MR. CHABOT: For southeastern coal?

AN HON. MEMBER: For any coal. Where's your market?

MR. CHAIRMAN: Order, please. The Minister of Mines has the floor.

HON. MR. CHABOT: The market potential, as I have outlined before when you were out of the House, is in Germany. There is some market in Britain, of all places. There's market in Brazil, Mexico, South Korea and Japan. Those are where the market locations are. Mexico is developing a steel industry. Those are where the coal markets are.

We see an increase in coal extraction in southeastern British Columbia, which will mean additional growth there. There's no trade-off between northeast and southeast; we can see both of them being compatible with each other in vying for the markets that exist around the world. Our projections are that there will be a tremendous growth in southeastern British Columbia coal output between now and 1985.

But the member brings up the question of unemployment. When his party came to power on September 15,1972, there were approximately 74,000 people unemployed in British Columbia. When we took office in December, 1975....

MR. LEA: What percentage was that?

HON. MR. CHABOT: It was substantially less than the percentage that existed in December, 1975, when the Social Credit Party became government. There were 108,000 people unemployed. We've been struggling ever since trying to reverse those negative attitudes, those negative policies that were instituted by that government, in order that people can be gainfully employed again. It takes some time to overcome the tragedy of three and a half years of socialist government in British Columbia.

Now I want to dispel the rumour that has been bantered around this chamber by the member for Prince Rupert (Mr. Lea) because I'm told that there are negotiations and discussions going on regarding coal, regarding supply, demand and price, but there are no talks going on regarding reductions in present long-term contracts.

MR. LEA: Short-term.

HON. MR., CHABOT: Well, they are long-term contracts that we have.

Interjection.

HON. MR. CHABOT: Well, that's what they are.

Interjection.

HON. MR. CHABOT: There are no talks going on regarding reduction in present contracts. Is that clear enough? There is reason to believe that in the near future the world steel markets will increase, which will increase the coal needs. Japan is still continuing their investments in steel-making productive capacity. Japan is therefore in a buyer's market and they're negotiating shrewdly to get the best deals possible. There is no consideration to reducing the present volumes that come from British Columbia.

MR. D'ARCY: I do find the minister can be rather delightful and entertaining.

I'm still concerned, though, that he's suggesting.... As I said in my remarks, I'm not opposed to development of the northeast coal industry or the development of Prince Rupert. He chose to disregard those statements. I'm not opposed to those things at all. What I am opposed to is a lame-duck industry anywhere in this province -anywhere, producing anything. If the minister was sincere he would know that the price, not just of developing, but even of operating after it's developed, at the present prices and the present outlook, is simply not viable. I don't think the people of Prince Rupert, or the people of Prince George or anywhere in the northeast, want to be involved on a continuing welfare basis, with the rest of the taxpayers of B.C. paying the shot.

Mr. Chairman, the fact is that coal produced in southeastern B.C. costs $45 to $48 a ton to mine and to get out of the province. Unless the minister seems to think that Kaiser and Fording are misrepresenting the cost, we have to accept that at its face value. Certainly I am satisfied with the details I've been given on it by people working for those companies. It's $45 to $48 a ton, and prices do go up; costs do go up. Labour costs go up; transport costs go up; maintenance costs go up; fuel costs go up. The price does not appear as though it's going to move past $55 a ton. Indeed, there is a possibility it could be reduced.

I don't think there's any question that the amount of coal moving through B.C. ports in 1977 is going to be down in 1977 - not substantially, but it's going to go down because the inventories are high and because some of the Japanese steel mills are not operating at capacity. The minister and his deputy know all that.

MR. R.E. SKELLY (Alberni): The Bank of Tokyo.

MR. D'ARCY: Yes, the Bank of Tokyo says that, as the member for Alberni says. The minister says: "Oh, no. We're not going -to cut back on any

[ Page 2222 ]

production that may happen, or any expansion, or any new mines that may be developed in southeastern B.C." The fact is, though, that the mines that are there now are underproducing, not substantially, Mr. Chairman, but 20 to 25 per cent.

Interjection.

MR. D'ARCY: Well, they're underproducing right now. CP Rail \facilities are being underutilized; Roberts Bank is being underutilized. The minister's saying that he's going to have this massive coal development. I don't care where it is - Vancouver Island, northeast, anywhere else, even a massive new development in southeastern B.C. - you can't bring on new mines unless you have a market.

The minister has not given us any information in this House. He has not said anything outside the House. The industry doesn't have any knowledge of any new markets developing. CP Rail doesn't. The minister can find some spokesman somewhere who can substantiate his contention that there are great new markets going to be developing in the immediate future. I would be delighted to hear it and I would certainly support him in his development proposals, but that is simply not existent.

Mr. Chairman, I can't let this go without making some reply to the minister's.... I'd like to say he was arm-waving, but he wasn't. He had his hands in his pockets like this. About unemployment in British Columbia, the fact is, Mr. Chairman, that, as I mentioned during the estimates of the Minister of Human Resources (Hon. Mr. Vander Zalm) , during the three years the NDP was in office the number of jobs in B.C. grew by its greatest single amount in 1974....

AN HON. MEMBER: The civil service!

MR. CHAIRMAN: Order, please. The member for Rossland-Trail has the floor.

MR. D'ARCY: No, it didn't, my dear Munchkin friend from up there in Smithers.

MR. SKELLY: Sam Goosly.

MR. D'ARCY: Sam Goosly, yes.

The fact is that the number of government employees in B.C. is around 30,000 to 35,000. We're talking about a million people. The number of government employees in B.C. may have increased by 5,000 when the NDP was in office, but the fact is that the number of jobs in B.C. provided by the private sector was increasing by more than 50,000 a year in 1973 and 1974. Even in 1975, a recession year....

MR. CHAIRMAN: Order, please! Hon. member, I'm having a little difficulty relating your current remarks to the minister's office estimates. Would the other members kindly respect the fact that the member for Rossland-Trail has the floor.

MR. D'ARCY:, Mr. Chairman, I would have that difficulty, too, if I was in the chair' But I know you don't really have that difficulty because when the minister was talking about the same thing you had no difficulty relating to it. So I'm just asking for the same kind of indulgence and latitude that you gave the minister.

The member for Kamloops is questioning Statistics Canada. I didn't produce these figures; they were produced by Statistics Canada. Even in 1975, when Canada as a whole had a negative growth rate and B.C. was the only province which had a slightly positive growth rate, there were 32,000 new jobs in British Columbia. The best that the former Socred government could do, when they were supposed to be managing the economy very well, according to their own spokesmen, was 34,000 jobs a year. When the NDP was in, it was 49,000 jobs a year, each and every year for three years. Last year, it fell off to 29,000, and so far this year we have a negative growth rate in the number of jobs. The adjusted figures for the month of February show 12,000 fewer jobs in British Columbia than the average for 1976.

Mr. Chairman, it's absolutely no wonder that government revenues were down. When the New Democrats were in office, government revenues went up but taxes didn't go up. Since they've been in office, they put taxes up and government revenues are holding steady, because there aren't that many people holding jobs. There aren't as many people in business as there used to be because of their policies.

I know that's a new minister and I know he hasn't had time to turn the mining industry around. But, Mr. Chairman, before you call me to order, I'm going to talk about mining for a minute. I know the minister is going to try to improve the amount of exploration and drilling activity in British Columbia. I know that he's going to be encouraging the industry to develop new properties and to possibly consider reactivating some old ones. I know the minister is going to be talking to the industry about smelting and refining in B.C. I hope he talks to them seriously. I hope he wields a big stick, as a matter of fact.

Recently, the Mining Association of British Columbia put out a little thing that they send to us all. They print 55 copies of these and they send them out. This one's dated March 18,1977. It says:

"Drilling activity is a reliable indicator of interest in, and development of, new mines. In B.C., interest in drilling is increasing, but there is no great upsurge in activity over the last year.

Members of the Canadian Diamond Drilling

[ Page 2223 ]

Association say that all activity right now is in coal and uranium prospects. Most of the drilling is taking place in northeastern B.C.

"Some operating companies are drilling at existing mine sites, trying to extend existing ore bodies. Examples are Bethlehem Copper in the Highland Valley and Utah Mines on Vancouver

Island."

The interesting thing, however, is that members of the Drillers Association in B.C. drilled 199,000 feet in 1975 and 226,000 in 1976, an increase of 13 per cent. That's almost equal to the rate of inflation. Is that a tremendous turnaround in the amount of activity in B.C. in 1976 over 1975? 1 don't see any significant change. In fact, if we take away the drilling that took place for northeast coal, which has been shown in this House, I think, to have been a rather trumped-up promotion scheme, we see that the amount of drilling in 1976 probably did not increase in all over what it was in 1975. However, I know he's probably trying to improve it. I would agree with him that the amount of exploration that's been happening in B.C. over the last several years is certainly not what it should have been and what we would like to see. However, we certainly didn't see any significant change in 1976 over 1975.

I would hope the minister is thinking about 'providing some kind of encouragement or even, perhaps, some kind of incentive, for the private Canadian Diamond Drilling Association, which includes mostly small operators. They're not major mining companies. They are mostly small operators in British Columbia; prospectors who happen to own a little bit of their own equipment. They usually work under contract for major mining companies. Let's get some of them back to work. The fact is that many of them, and some of them who are resident in my constituency, are not seeing much change. For them, in fact, the real dropoff in drilling activity in contract work and development took place in 1970-1971, exactly as the Price Waterhouse report indicated that it would. It had absolutely nothing to do with legislation or political happenings in British Columbia. It happened as predicted by the Price Waterhouse Company. I would hope that now, after a five- or six-year lull, the minister will be taking significant steps to change that around and get things moving.

HON. MR. CHABOT: I just have a couple of words. There's a separation in the ministry between hardrock exploration and exploration as far as coal is concerned. Last year, the figures as far as hardrock ores exploration is concerned, show that $18 million was expended, which is an increase over the previous year. I don't have the percentage at hand....

Interjection.

HON. MR. CHABOT: I'm talking dollars, yes -$18 million in expenditure on exploration for hardrock ore. There was a dramatic increase in coal exploration, from $3 million worth of expenditures....

Interjection.

HON. MR. CHABOT: Coal.

MR. D'ARCY: Did you say 13 per cent?

HON. MR. CHABOT: Thirteen per cent, yes.

MR. D'ARCY: Overall?

HON. MR. CHABOT: Oh, no.

MR. CHAIRMAN: Order, please. One at a time.

HON. MR. CHABOT: Mr. Chairman, that's a problem, you see. The member is misinterpreting. They don't lump coal in with the other type of exploration. Coal increased very dramatically, from approximately $3 million in 1975 to approximately $45 million in expenditures in 1976, so it's a very dramatic increase in the amount of activity as far as coal is concerned.

Also in the region, of course, the number of mineral claims that were staked increased very dramatically. I'm not going to go into 1972,1973,1974, and 1975, and the low level we reached in 1975. I'm not going to tell you why because I'm not sure you know. We reached down to approximately 11,000 claims staked in 1975. This last year, 1976, it increased to approximately 28,000, so activity and interest are coming back as far as exploration is concerned because the climate is right. The political climate is right. The political climate has changed. That's why we see the growth and interest in the mining industry in doing exploration in British Columbia.

In your particular area, the Ministry of Mines has generated some interest in exploration as well. In the Grand Forks area, there was the joint federal-provincial uranium reconnaissance programme. I understand the information from that study will be available in the month of May of this year, hopefully, which again might, depending upon the contents of the information, spur on more activity. This would not necessarily all be in the Grand Forks area, but could extend up into the Atlin region as well. So we're helping. We're doing what we can to encourage exploration in British Columbia and, as I said before, it's coming back.

MR. D'ARCY: Very briefly, Mr. Chairman, I have a friend in the mining industry. He's in exploration in

[ Page 2224 ]

the area. He's not of my particular political persuasion but I asked him how things were going in the uranium drilling programme, and he said: "Well, we've had some interesting results but we won't know if we've really got something until we see Arthur

Weeks get off a Pacific Western plane at the Castlegar airport." (Laughter.)

MR. MACDONALD: Mr. Chairman ' I want to thank the minister for filing - they're not contracts - notes about these advances. I'm not going to argue too much about them with the minister. He had great fun yesterday saying we didn't get interest, but you might notice the Atkinson advance where we tied down the price to 35 cents, eh? You know, the price was going up for the early advance. It was tied down at a fixed price. The BCPC made a lot of money on that and it was secured by flowing gas - well secured - and when we took a mortgage on the Atkinson advance, we took it in all the interests of the developer. Why is it only a quarter in the Quasar case,

Mr. Chairman? You'd think when you're advancing $2 million you wouldn't say mortgage of an undivided quarter of the right, particularly when it's a real flyer, eh? The field may never be developed, let alone the particular wells of Quasar Petroleum Limited.

I notice in there, Mr. Chairman, that they're to repay - you know, it might be years and years; heaven knows when it will be repaid - at the current premium price. May I ask the minister a specific question? Is this new gas price or old gas price - 85 cents or 65 cents? That's a specific question I'm asking. Which one is it - new gas? The wells have been there quite a while. Are you giving them a new 85-cent price? Okay, that's one question.

The other one I asked the minister - and I don't want to hold up his estimates - was to table the departmental reserve figures on the Grizzly Valley.

I'd like the minister to nod his head if he's going to do that.

Interjection.

MR. MACDONALD: Yes, I brought it up yesterday and you've forgotten - the figures of the

Ministry of Mines and Petroleum Resources on the reserves in the Grizzly Valley - Sukunka area as of last August and as of today. Is the minister prepared to give those figures to the committee?

HON. MR. CHABOT: Mr. Chairman, I can't answer the one on the price. I would have to assume that the gas is paid on the basis of it coming on stream and, in view of the fact that it hasn't come on stream, it would have to be classified as new gas.

MR. MACDONALD: You know, that's a very a generous price considering the wells have been there since about 1956 to 1961 - somewhere in that area. The gas is classified as new gas at your fancy new price of 85 cents - that's very generous.

Interjection.

MR. MACDONALD: Yes, I know. The Minister of Forests (Hon. Mr. Waterland) interrupts there. I've never seen such a giveaway government and a government that's so.... You know, you're so hard on ordinary people, but when it comes to the oil companies you say you'll give Quasar Petroleum the new 85-cent price even though the wells have been drilled some time before. You're a giveaway government.

Interjection.

MR. MACDONALD: Yes, I have looked at the formula. That's old gas, and you've just said you're going to give them the new gas price. But it's part of the giveaway gang that's operating in this province at the present time. Lavish giveaways in the industrial and financial area, and very hard on people. But that's something to say outside of the House as well as in it. But I ask the minister also: is he going to give us the reserve figures on Sukunka and Grizzly - the department figures? Those are the ones....

I remind the minister that if you read the description of your petroleum resources branch, it says: "Comprehensive records of all drilling and producing operations are maintained by the branch." You have those figures. In view of the figures that have been tossed around, I think it would be wise to have the authentic information here in the committee. Is the minister prepared to give those figures?

MR. DAVIDSON: Mr. Chairman, I'll be very brief.

just have a short question for the minister. I was concerned of late that Kaiser Resources have made application and received subsequent federal approval o import 100 miners from Britain. With the employment rate we have here in British Columbia, was wondering if the minister could explain why we o not have an ongoing programme here in British Columbia that would afford some of the people who, in sure, would welcome the opportunity for such jobs, and be available for positions that could be offered.

HON. MR. CHABOT: Well, certainly we're all concerned about unemployment. My ministry, Manpower and the Ministry of Labour are taking an active part in setting up a programme for the training for coal miners in British Columbia. Kaiser Resources at this time has a training programme for

[ Page 2225 ]

underground coal miners. The problem that they've experienced is one of retention - their ability to keep people on their training programme. However, we're looking at.... We're concerned, in view of the fact that they haven't been able to keep people on their training programme for underground coal mining. They've searched Canada the eastern provinces, have been unable to find some coal miners and have found it necessary to approach the federal government for permission to bring 100 miners from England into the coal mines of southeastern British Columbia.

We're taking positive steps to encourage people to take part in the programme that we're establishing for the training of underground coal miners. We haven't reached the point of where they will be trained. Will they be trained at the Rossland School of Mining or should they be on the job-site - actually in the coal fields, be it in the coal fields of southeastern British Columbia.

Nevertheless, we're concerned with the necessity of the provision of jobs and we're taking an active interest in pursuing this objective to ensure that British Columbia people are trained to fill these jobs in the coal mines of British Columbia.

MR. D'ARCY: I'm very pleased to hear the minister's response to the marshmallow lob from Delta, but I think it was a sincere question on his part. I would like to point out that as the minister knows, the Rossland mining school has been training people for both open-pit mining and hardrock underground. I appreciate that there is a gap for underground coal mining. However, the real gap.... I'm glad the Minister of Education (Hon. Mr. McGeer) is in the House. The air must be clear, because we're really straying on a separate portfolio here.

Mr. Chairman, the real gap is for heavy-duty mechanics to be trained in B.C. The real demand by the mining industry is a tremendous shortage of heavy-duty mechanics, not just in the mining industry, but heavy-duty mechanics as a trade for the construction industry and for the logging industry as well. I would hope that the Minister of Mines would be working with his colleague, the Minister of Education, to improve and expand our facilities in B.C.

I would hope that there would be.... People from my constituency made a proposal to the Minister of Education some time ago that this sort of work be done in conjunction with the mining school - this kind of training at Genelle, near Trail.

I would hope that the Minister of Mines is holding consultations from time to time with the Minister of Education (Hon. Mr. McGeer) in this regard because there is a shortage of people for occupational training to actually mine. As we know, the industry itself is getting so increasingly mechanized and equipment is getting so complex, it's really practically a specialized field in itself simply maintaining and repairing the equipment used in mining both on the surface and underground. At a time when we have very, very high unemployment in British Columbia and in western Canada as'a whole, it's certainly a shame that industry cannot find the number of people in particular trades and with particular operational skills.

MR. MACDONALD: Mr. Chairman, I'm asking the minister specifically whether he'll release the departmental figures on Grizzly reserves. The minister understands perfectly well what I'm talking about -the departmental figures on Grizzly reserves. Will you release them?

HON. MR. CHABOT: As of February, 1977, the established reserves allowable and deliverability -raw gas in the Grizzly-Sukunka region: 814 billion cubic feet. That doesn't take into consideration the tremendous potential that that area holds for further development.

MR. MACDONALD: Is the minister prepared to table some detail of that? Is this taking well by well and adding it up as to what has been monitored by the department.

HON. MR. CHABOT: Mr. Chairman, I believe in openness and I'm certainly prepared to table this information ...

MR. MACDONALD: You've got it broken down?

HON. MR. CHABOT: ... and make it available. Certainly, it's all broken down - the different fields....

MR. CHAIRMAN: Hon. members, we can only have one member on his feet at a time.

HON. MR. CHABOT: Grizzly north, south and....

MR. MACDONALD: And you'll table it as of when we come back into the House, is that right?

HON. MR. CHABOT: I said I will table it. I'll make it available to you as I made the other material available to you. I'll do this too.

MR. WALLACE: He's a man of honour.

MR. LEA: We have no further questions on the minister's vote.

MR. CHAIRMAN: Pardon?

[ Page 2226 ]

MR. LEA: We have no further questions on the minister's vote. I would like to congratulate the minister for his good humour. I think he is a man who takes his job seriously but not himself. It's a pleasure to deal with him and I think other new ministers in this Legislature could take note of the minister's attitude and follow his example.

Interjection.

MR. CHAIRMAN: Thank you, hon. member.

Vote 116 approved.

Vote 117: deputy minister's office, $1,061, 418 -approved.

Vote 118: mineral resources branch, $4,127, 990 -approved.

Vote 1 19: petroleum resources branch, $1,405, 616 - approved.

Vote 120: grants and subsidies programme, $54,000 - approved.

Vote 121: mineral road programme, $1 million -approved.

Vote 122: prospectors' assistance programme, $215,000 - approved.

MR. WALLACE: Bet you're glad Gibson isn't here. (Laughter.)

Vote 123: mineral research programme, $82,000 - approved.

Vote 124: mineral data programme, $200,000 -approved.

On vote 125: mineral employment programme, $60,000.

MR. L. NICOLSON (Nelson-Creston): I note that the purpose of this vote is to continue and expand the Rossland mining school. With all that's been said, why has this vote been reduced by $15,000, in excess of 20 per cent?

HON. MR. CHABOT: Mr. Chairman, while it appears that there is a decrease here, actually the expenditures last year were substantially less than what is being allocated here. But we are in effect going to provide assistance and bursaries to virtually the same number of students at this mining school; however we're increasing the assistance per student to $175 this year versus last year's figure of $155. So while it appears that we're not doing as much, in fact we're doing more.

MR. D'ARCY: Mr. Chairman, last year the Minister of Mines, who at that time was the member for Yale-Lillooet (Hon. Mr. Waterland) , told the House that they intended to replace some or all of the temporary facilities with permanent facilities in terms of structures in the Rossland mining school. Then he was replaced and we didn't see too much activity in that regard. In fact, the minister has just told us: "Well, we managed to spend a good deal less than the $75,000 that was allotted." We were told that that was one of the things which it was allotted for. Can the minister assure us that he is going to proceed with the commitment given last year by his .predecessor?

HON. MR. CHABOT: The vote last year included certain programmes that have now been assumed by the Ministry of Labour. So it wasn't a pure vote for the Rossland mining school before; it is now. Our anticipated expenditures here are increasing because of our increased allocation of bursaries from $155 to $175. This vote clearly reflects the expenditures of the Rossland mining school, while in the past, in previous allocations, it didn't. There were programmes that were assumed by the Ministry of Labour.

Vote 125 approved.

Vote 126: energy resource evaluation programme, $325,000 - approved.

On vote 127: building occupancy charges, $538,614.

MS. SANFORD: I would just like to know under this vote, Mr. Chairman, how many square feet are being rented by the Department of Mines, and what the rent per square foot is.

Interjection.

HON. MR. CHABOT: I don't have the actual square footage as far as this charge is concerned. It would vary from location to location. We have offices scattered throughout the province. I can't give you a precise figure. Maybe that information could be sought from the Minister of Public Works when his estimates come up.

Vote 127 approved.

Vote 128: computer and consulting charges, $118,000 - approved.

[ Page 2227 ]

ESTIMATES: MINISTRY OF ENERGY,

TRANSPORT AND COMMUNICATIONS

On vote 102: minister's office, $134,140.

HON. MR. WILLIAMS: If I could ask the indulgence of the Chairman, Mr. Chairman, and the House, I wonder if we could have a very brief recess. I've sent for the Minister of Energy, Transport and Communications. He'll be right here. Perhaps we should stay here? Okay, with leave, we'll return at the call of the division bell.

The Committee took recess at 4:16 p.m.

The Committee resumed at 4:20 p.m.

MR. CHAIRMAN: Hon. members, it would appear that we have a quorum. Will the committee kindly come to order.

MR. MUSSALLEM: On a point of order, when was there not a quorum?

MR. CHAIRMAN: The quorum wasn't challenged. The House merely recessed for a few minutes after the Minister of Mines' estimates were over.

MR. MUSSALLEM: I want the record clearly to show that at no time was this House without a quorum.

ESTIMATES: MINISTRY OF ENERGY,

TRANSPORT AND COMMUNICATIONS

On vote 102: minister's office, $134,140.

HON. MR. DAVIS: Mr. Chairman, I would like first to say a few words about people, a few of the people who make our Ministry of Energy, Transport and Communications go. We have a fine staff, a dedicated work force, It's doing a great job not only for us as members of the Legislature, but for all of the people of British Columbia. It's performing its 1 task in the face of budget cutbacks and mounting work load. For their outstanding contribution, I'd like to thank all of the public-servants in my ministry at this time.

Mr. Chairman, I would also like to single out several of their number for special attention. I'd like to pay a tribute especially to my associate deputy minister, Mr. Fraser MacLean. He's doing the work three deputies did under the previous administration. i He's risked his health and yet he comes in here smiling. I have to admire the resilience, energy and dedication of a public servant like that.

Charles Gallagher has almost single-handedly managed B.C. Ferries over the past 12 months. He has helped us through a difficult period of reorganization. Now B.C. Ferries is a Crown corporation, as hon. members know; it has its own board of directors. Mr. Gallagher, as its general manager, is responsible for an even larger operation than he was before.

In the B.C. Energy Commission, I'd like to single out Mr. John Ludgate. John was acting chairman of the commission through much of 1976. For a time he was almost alone. Now with the new chairman and several other commissioners, he brings experience, good judgment and a keen sense of what is right to an agency which is responsible not only for regulating a number of our gas and electrical utilities, but also for advising the government on policy in the field of energy as a whole.

[Mr. Schroeder in the chair.]

Finally I'd like to thank my secretary, Mrs. Margaret Sheppard, for looking after my office in the parliament buildings. The fact that hon. members have been getting the information they need from my ministry in good shape and on time is due mainly to the efforts of Mrs. Sheppard and the dedicated young women who work for her there.

Mr. Chairman, as to reorganization, you will be aware of the fact that my ministry was reorganized in the fall of 1976. Its title changed from Transport, ' and Communications to the Ministry of Energy, Transport and Communications. This is the first time that the word "energy" has appeared in the masthead of a ministry or department in this province - this, even though different cabinet minister's have been designated in the past as minister responsible for energy. While other provinces have departments of energy, or departments in which the energy segment figures prominently in their titles, none has linked energy and transportation as we have done.

Out in the real world they are related intimately, one with the other, but in government policy a gap has often developed in these two important areas. They've developed along separate lines and this is wrong. It should be interrelated; energy and transport should be related. They should form part of an even larger process of policy-making which is economically oriented on the one hand and socially responsible on the other.

What is the point of a transportation policy which deals only with vehicles like cars, trains and aircraft, without at the same time concerning itself with the amount of energy they consume? And what is the point of a policy that relates to highways, railways and shipping lines but which doesn't also concern itself with pipeline and power transmission lines? They compete at times. Often they complement each other; they are often intermodal. They are each part of a larger picture. This is why they should all be considered, at times at least, as one, and in an integrated way by a single department, such as we

[ Page 2228 ]

have in my new ministry today.

I'm arguing, then, Mr. Chairman, for an overview department. It's a sectoral overview, which links energy, transport and communications, like telephone companies and our radio and TV networks together. It looks at our big utility companies, as well as our truckers and gasoline retailing stations.

My ministry doesn't cover the entire economic waterfront; the Ministry of Economic Development does. But it helps to make policy by putting many of these things together, and it stands part way between more specialized departments, like Mines and Petroleum Resources or Highways and Public Works on the one hand, and the Ministries of Economic Development and Finance on the other.

We have three main branches or sectors in the Ministry of Energy, Transport and Communications. One has to do with energy, another with transportation and the third with communications. Communications in this case means not only the provision of communication services in the physical sense for government but it also means the regulation of communications companies in this province and the provision of communication services for people in all parts of B.C.

In the energy sector we have B.C. Hydro and Power Authority. As the minister responsible for energy, I am on its board of directors. There is the B.C. Energy Commission, and it reports through this ministry to the Legislature. There is the B.C. Petroleum Corporation. The Minister of Mines and Petroleum Resources (Hon. Mr. Chabot) is the responsible minister in this case, but I am one of its directors.

In the transportation sector, we have the B.C. Ferry Corporation. We have the B.C. Steamship company, which operates the Princess Marguerite on the Victoria-Seattle run. We have the B.C. Harbours Board which works closely with the federal and local port authorities here on the coast. I am a director of all three of these provincial transportation agencies.

We have the B.C. Motor Carrier Commission which regulates trucking in this province; and we have a motor vehicle branch, an engineering branch and a weigh-scale branch in the ministry. They are concerned with such diverse and yet interrelated matters as vehicle registration, vehicle inspection, driver licensing and driver safety programmes. They clear plans for the construction of oil and natural gas pipelines, railways, aerial tramways and the operation of industrial roads in B.C.

Our communications systems development and regulation branch is concerned not only with rates charged by the B.C. Telephone Company and the Okanagan Telephone Company Ltd. but also with modern communications technology. It is looking into the possibility, for example, of installing small television receiving dishes - those capable of receiving signals from satellites in small communities in the north. Low-cost earth receiving stations such as these could be a boon to communities which otherwise are cut off from the outside world not only by large distances but also by mountainous terrain of the kind that we have in British Columbia.

This branch is also working closely with the CBC and CTV with a view to getting radio and television signals into towns, villages and other communities of less than 500 people who do not have access to these public services in the province today.

Our telecommunications branch, Mr. Chairman, is responsible for a number of things, more particularly a change in our telephone system - at least, that available to members and to the public service in this province. The proposal which they're now carrying out consists of two parts: all intercity telephone facilities in future will be incorporated into the public long-distance network instead of, as now, the present government system. And all government intercity calls using the public network will be charged a special bulk rate, the cost of which will be roughly equivalent to present costs using private-line services.

This system over time will give members not only of this Legislature but also of the public service access to anyone with a telephone anywhere in the province. Beginning three or four years from now, it will be more economical in the sense that it will cost the treasury of this province less to operate through the public system for telephone purposes rather than the private system which developed within the government in the past.

Mr. Chairman, under the general heading of research and planning, I want to list a number of studies and investigations which are being carried out at the present time, beginning with the B.C. Energy Commission.

First - an annual forecast of the province's demand for and supply of energy in B.C. This annual outlook review covers oil, natural gas, coal and hydroelectric power. It provides policy makers with a backdrop against which to assess individual projects in the province.

Second, the B.C. Energy Commission is carrying out an assessment of the preparation of recommendations concerning the export price of natural gas produced in British Columbia and sold in the U.S. Pacific northwest.

Third, it's preparing recommendations as to the future field price of natural gas - prices for old gas and new gas - which will encourage exploration and development and make the province self-sufficient with respect to this important source of energy in the future.

Fourth, the Energy Commission is preparing recommendations as to an appropriate city-gates price for natural gas sold to consumers here in B.C.

Fifth, an analysis of oil pipeline transportation

[ Page 2229 ]

costs, including an analytical appraisal of the proposed Kitimat pipeline and the reversal of the Trans Mountain pipeline. This information is being assembled by an interdepartmental task force chaired by the B.C. Energy Commission. The information which it obtains will provide the basis for a provincial intervention for the National Energy Board, which I now understand will begin its hearings in August of this year.

Other studies leading to recommendations as to the appropriate price of Canadian oil at the wellhead are being prepared by the Energy Commission. Reports on gasoline marketing and the marketing of propane in B.C. have been prepared by the commission. Further advice is being supplied by the commission to the government.

Finally, the Energy Commission is collecting information and making recommendations concerning the regulation, not only of investor-owned utilities concerned with the production and distribution of energy in the province, but also arrangements whereby the development plans and rate recommendations of B.C. Hydro may be evaluated in the future.

That's an indication, Mr. Chairman, of the kind of thing that the B.C. Energy Commission is doing.

Meanwhile, the planning and research branch of Transport and Communications is carrying out other inquiries. They currently include:

Joint studies, along with other ministries, of the economics of moving B.C. coal to markets in Canada and overseas.

An assessment of navigational hazards involved in moving crude oil by tanker along B.C.'s coast.

A review of the economics of transporting grain to and through B.C. ports.

A review of the economics of the Ashcroft-Clinton rail link.

Preparation of financial, traffic and other information required by the province in its various interventions before the Canadian Transport Commission re rail line abandonment on Vancouver Island and in the interior of B.C.

An analysis of new federal legislation with respect to coastal shipping.

Changes in the Maritime Code of Canada.

A new Federal Ports Act.

A major overhaul of the Canadian Transportation Act, the existing version of which was passed in 1967.

And finally, a series of studies which will form the basis for a third-level air carrier policy in the province.

I could add reference to studies relative to a new floating drydock in Vancouver and an analysis of the success, or otherwise, of the hydrofoil operation last fall between Seattle and Victoria.

There are a number of special projects underway in the Ministry of Energy, Transport and

Communications. Studies making recommendations to other ministries, for example, have resulted in the extension of restricted route permits for trucks operated by the logging industry on a trial basis. These vehicles can now bypass our highway scales as long as the industry continues to make weight information available to our inspectors on a regular basis. Before this voluntary scheme was introduced last year, half of all the loads hauled by logging trucks were overloads. Industry monitoring has reduced this figure voluntarily to roughly 25 per cent in the last six months of 1976. We expect this figure to drop further as this voluntary scheme develops in more parts of the province.

Beginning January 4,1977, the maximum width of loads carried on our highways was increased to 14 feet, 6 inches. Essentially, this was to permit the movement on our highways of the larger-sized mobile and modular homes manufactured in this country now. Lengths were also extended from 64 feet to 66 feet so that the prospective purchaser could qualify for low-cost CMHC financing. Regulations as to pilot cars, hours of travel and sections of the highway which can be used in the different seasons to carry these wider loads have been issued. Some changes may be necessary but significant movements are already taking place.

The hon. members may have noticed that the air services branch, which was formerly in the Ministry of Energy, Transport and Communications, has been transferred to the office of the Provincial Secretary. However, we in this ministry are providing consulting services to the office of the Provincial Secretary in this connection and, as I mentioned earlier, we are developing a policy relative to third-level carriers operating in British Columbia.

In conclusion, at this stage at least, Mr. Chairman, I would like to refer to the current estimates of the ministry. The hon. members will no doubt have noted that the expenses of the ministry, in total, have declined for the third year in a row. The estimate for the fiscal year 1975-76 was $134.6 million; for the current fiscal year which is now nearing completion, 1976-77, it was $100.4 million. The corresponding estimate for next year, 1977-78, is $64.3 million. In other words, it dropped from $134.6 million two years ago to $100 million last year, to an estimate of $64.3 million for the coming fiscal year.

The main reason for this drop is a reduction in losses attributed to B.C. Ferries. A projected deficit on operations of some $59 million prepared last year has now been turned into a deficit on the order of $15 million for the last 12 months. Staff limitations through the ministry - transfers which have seen a 20 per cent reduction in departmental personnel - have also been an important factor in the reduction of the estimates of this ministry.

Its work force has been revised downward from

[ Page 2230 ]

1,401 positions a year ago to 1,097 today - actually from 1,188 permanent positions and 213 temporary positions down to 964 permanent positions and 133 temporary positions. Further, in line with government policy, the hiring level of the Ministry of Energy, Transport and Communications has been reduced from 1,097 positions to 954 positions at the present time.

MR. LOCKSTEAD: I appreciate the remarks of the minister to give us some idea of what his department is doing at the moment. His remarks were a bit sketchy, so I think we should proceed with estimates and have a look at some of the activities in that department.

The department, Mr. Chairman, is a huge department which covers many fields and a vast area. It really is a very important department of government and it would be impossible to cover all of the topics the minister mentioned within the 30-minute time period. Mr. Chairman, I planned to start on energy, but because of some of the constraints I personally face this afternoon I think I'll discuss matters relating to B.C. Ferries, and to coast transportation if time permits.

Before I do, Mr. Chairman, I received yesterday a telegram from Otto Lang in response to my Telex of March 9. 1 think this telegram may be of interest to the minister and to all of the people in British Columbia who use our ferry system, and certainly to the crews manning those ferries. As you know, Mr. Chairman, there were questions posed to the minister during the course of this session of the Legislature regarding the reclassification of our inland waters as "protected" and/or "inland.- There was quite a bit of concern, particularly among the seagoing personnel of the B.C. Ferry Corporation and Highways ferry people, about this proposed reclassification. The minister said that his department was negotiating with the federal people. Then he said they were exploratory talks and/or discussions.

Anyway, I would like to read into the record the text of the telegram from the Hon. Otto Lang, Mr. Chairman. The telegram reads:

this is to acknowledge your telex of march 9,1977 concerning manning of B.C. ferries and classification of voyages in the gulf of Georgia. at the present time, manning regulations applying to B.C. ferries are not being reviewed and no changes are contemplated. No request has been received in transport Canada to classify the gulf of Georgia as inland waters. Should such a proposal be received, your representation will certainly receive every consideration. So, Mr. Chairman, it appears that Otto Lang is not familiar with the negotiations or exploratory talks that are going on. I'm sure the people working on B.C. Ferries, all able seamen - some of the finest seamen in the world are working for B.C. Ferries, Mr. Chairman - will be pleased to hear that crews will not be cut in half or passenger loads doubled. I would appreciate the minister's comment on that when he has the opportunity.

I suppose if we're going to be discussing ferries and the B.C. Ferry Corporation, any discussion would start with fares. Ferry fares have been much in the news again lately because of the recent resignation of Mr. Graeme Roberts, who resigned and made a lot of statements about ferry fares being too high and how they affect the economy. Then, of course, he went back. I don't know why. It may well be that the Premier told Mr. Roberts that if he didn't go back on the board he was going to take away his Social Credit card. I'm not sure how he got him back, but he did get him back.

But Mr. Roberts did make a number of statements and those statements really vindicate the position I've taken, Mr. Chairman, in regard to the horrendous increase in ferry fares last year. We all know the traffic is down. Although revenues are up, I understand, traffic went down. The present policy of fares on B.C. Ferries, Mr. Chairman, quite frankly, is a farce. The latest fare reduction, which will only be good this year.... I think full fares go back in effect the end of March. Then we will have....

MR. CHAIRMAN: May I interrupt the hon. member?

MR. LOCKSTEAD: You certainly may, Mr. Chairman.

MR. CHAIRMAN: The vote for British Columbia Ferries is vote 11.3 and perhaps the member could elect now.... Do you wish to discuss it in general terms now, because the House can't provide two opportunities?

MR. LOCKSTEAD: Mr. Chairman, I'll discuss it now and refer to it a little later, just a little bit perhaps. Thank you very much for that advice, Mr. Chairman, but I think that it's traditional in this House that we're able to discuss under the minister's salary all aspects of his department. I think I should accept that courtesy as have ministers and other members of this House. I thank you very much for your advice.

MR. CHAIRMAN: So ordered. As long as we don't take the same opportunity again under the vote.

MR. LOCKSTEAD: Oh, no, Mr. Chairman.

Well, we've now had almost a year to examine the impact of these horrendous fare increases, Mr. Chairman, and the impact has been tremendous. Motel owners are switching their motels to

[ Page 2231 ]

condominiums just up here on the Gorge Road because of the lack of tourist trade. Mr. Roberts agrees with the view this party has taken over the past months that it was as a direct result of the increase in ferry fares that the tourist trade on Vancouver Island, the Sunshine Coast and Powell River dropped so dramatically.

I wonder if the minister would care to comment about a further reduction in fares - a meaningful reduction. The reduction that was announced recently of half fares Mondays to Thursdays and Saturdays really will do nothing. Besides, at the end of March, Mr. Chairman, the full fares go back into effect anyway. I expect the fares will do very little to increase the number of users of B.C. Ferries. I really don't think that they will do much. Besides, in the Sunshine Coast-Powell River area there was no fare reduction at all anywhere, or in the Gulf Islands.

The Premier did say on one occasion and perhaps the minister would care to comment, at if Ottawa contributed in the form of a subsidy to the provincial government they would reduce fares. The minister has never said that, so I'm wondering if the minister would care to comment on that issue. Who's the boss in that department - the Premier or the minister? I'd like to know who's running that department. Maybe it's Graeme Roberts - I don't know.

Mr. Chairman, one further comment. Not everybody in my riding agrees that we should be catering to the tourist trade so much. I'm neither for it or against it, but the fact of the matter is that those people particularly in the Sunshine Coast area of my riding who do not live or own homes there but come up occasionally to visit the riding, if they move up there and build a home, are no longer tourists. They're residents, and once they become residents they've got theirs and they don't want anybody else in. It's a two-headed monster, the tourist business, Mr. Chairman.

I'm not so sure about the value of the tourist trade, but I do know that many thousands of people in British Columbia and many hundreds of people in my riding depend for jobs on the tourist trade - the motel industry, the sports fishing industry and all the other things that we can do in the riding such as mine. So in a way the tourist trade is very important to the riding. I hope, Mr. Minister, that you will consider a fare reduction so that people will start using our vessels again and we'll have visitors from the lower mainland back up into our beautiful riding.

Some time ago - I raised this before in the House so I'll be very brief on this topic, Mr. Chairman - I questioned the minister about a representative from somewhere in the mainland coast, an area of some 50,000 people. I know that there are three vacancies on the board of directors of the B.C. Ferry Corporation. I asked that we have a representative from the mainland coast of British Columbia on that board of directors as well, of course, as the two union representatives that the minister said he would appoint to that board, or that presumably the unions would elect to that board. Maybe the minister would comment on that.

I was told by some senior ferry management people, and I think the minister commented on this, if I remember correctly, that the board did not consist of people because of regional representation, but more precisely of people who had an overview of certain aspects of operating a corporation of that nature. But then Mr. Graeme Roberts in his statements to the press just a day or two ago takes quite a different view. He spoke as the member for Nanaimo - not as the member from Vancouver Island, or as a member from British Columbia, but as a member from Nanaimo.

MR. D.G. COCKE (New Westminster): Hear, hear, Don!

MR. WALLACE: One from Oak Bay too!

MR. LOCKSTEAD: Oh, and one from Oak Bay.

I might point out that the Premier did say in this House at one point that he agrees there should be a member from the mainland coast on that board. So once again there's a conflict there between the Premier and the minister. I wonder if the minister would clarify those statements for this House.

Another item - and I'll be very brief on this because hopefully my colleague from Nanaimo will expand on this particular topic - is that I did want to read it into the record or at least have it on record that the sale and lease-back deal of the three B.C. ferries - the Alberni, the Cowichan and the Coquitlam - was not a good deal for British Columbia. It's going to cost British Columbians essentially.... I have the figures here somewhere. The total lease-back deal for 18 years, as I understand it, is going to cost British Columbia $94.9 million. The original cost of those vessels was approximately $48 million. So British Columbia is going to be losing somewhere in the neighbourhood - and I thought I had the figure here, but I don't - of $42 million or $43 million. It's somewhere in that area that it's going to be costing the taxpayers and the people of this province and Canada.

This was accomplished by utilizing a loophole in the federal statutes which the federal government recognized and closed just shortly after that particular transaction. But I'm very concerned that we should be selling these vessels out of the province, then leasing them back from Toronto or wherever. It doesn't make sense, and in the process it's costing us all of these millions of dollars. I don't understand that thinking and why we should be doing that. These ferries were constructed in British Columbia for

[ Page 2232 ]

British Columbians, they are used by British Columbians and they should be owned by British Columbians, Mr. Chairman.

Just looking at my notes.... It's a little bit messy, but here we are. Oh, yes - $48 million. Right.

I'm going to get into another couple of matters, Mr. Chairman. I'm concerned about something that seems to be taking place on route 3. I'll be very brief on this; I'm sure you're familiar with it. The Ferry Corporation is instituting a schedule change on that route. There should be a schedule change. I asked for a schedule change on that route some time ago and pointed out to the minister and to the government what was wrong with the old schedule. People were racing up the highway, getting tickets, unable to make connections and the whole thing. Now I understand that there's a schedule change in process and that's good. I've seen a tentative copy of the schedule and on the face of it, it looks quite good.

Thank you, Mr. Minister. The minister just sent a copy of the remarks to me and I very much appreciate that.

Why I'm concerned about this proposed schedule change is that it's going to be a triangular run. They're going to be removing one vessel from that route, the Queen of Tsawwassen, entirely. I don't know what they plan to do with that vessel, but it will be coming off the route entirely. The Queen of New Westminster will remain on that route - that's the Gibsons to Langdale route. The Queen of Nanaimo and the Queen of Burnaby will be calling at Langdale on their journeys from Horseshoe Bay to Nanaimo.

As I said, the schedule looks quite good to me. What I'm concerned about is that when the Queen of Tsawwassen is taken off that route, there will be 28 fewer jobs in an already economically depressed area, on top of all the other jobs that have been lost in the B.C. ferry fleet over the last year. I think somewhere in the neighbourhood of 450 jobs in the last year have been dispensed with in B.C. Ferries, as I recall from figures we previously received in this House.

But these 28 jobs will be lost. Now I know that they're not going to lay anybody off, Mr. Chairman; they're not going to fire anybody. People can be relocated. They may be people on a spareboard -whatever they are - but there are going to be 28 fewer jobs.

I'm very concerned about that, Mr. Chairman, in an area that is already economically depressed. As I said in this House before, there is somewhere between 18 and 20 per cent unemployment. Some people say there's about 24 per cent in that area. I'm not sure, but the official figures are between 18 and 20 per cent unemployment on the Sunshine Coast at the moment. If the minister would care to comment on that issue, I'd be very pleased.

Another matter on the B.C. Ferries, Mr. Chairman, is the matter of the reclassification on some vessels. I'm a little bit concerned about this. I understand that the Queen of Powell River and the Bowen Queen have, under federal statute, been reclassified so that it's no longer necessary for them to have a minimum of eight crew members on board but a minimum of six - two less people. I'm a bit concerned that if there was a full passenger load on that vessel, they would then not have enough people to even man the lifeboats. I'm a bit concerned about that aspect.

I will, in all fairness, tell the minister - and I do happen to know because I checked this out yesterday afternoon - that on neither of those vessels has anyone as yet been laid off. They're still operating with the eight people that were formerly required to serve in those vessels. But I would like the minister's assurances that they won't man those vessels with less people than they are at the present moment.

While we are discussing this topic, Mr. Chairman, I have another matter, and this is a serious matter. It's serious to all the employees of B.C. Ferries because as far as I'm aware, never in the history of this province has morale on the B.C. Ferries been so low. People working on licensed crews are discouraged because of the conditions in which they have to, or are expected to, work. They're uncertain about their future. There are vessels being sold, or that they're trying to sell. People are saying that we should lease out these vessels, or do all kinds of things. Their jobs, their livelihoods are at stake. Morale is low on these ferries.

I would like to read into the record this very interesting bit of correspondence. This letter is from a Mr. G.A. Wright, chief steward. This involves the food services, and I want to discuss briefly the food on some of the B.C. Ferries as well - or the lack of it.

AN HON. MEMBER: It's not edible.

MR. LOCKSTEAD: Well, Mr. Chairman, quite frankly I think part of the reason people are not using the ferries is because they're no longer nice to ride on. That's part of the problem. They're just no longer nice to ride on. To spend an hour and 40 minutes crossing from Vancouver to Victoria or Nanaimo, or 50 minutes or an hour from Gibsons to Langdale, or an hour from Saltery Bay to Earls Cove to get to Powell River, or from Powell River to Comox should be a pleasant trip. You should be able to purchase reasonable, decent food. People don't mind paying a little more if it's good and they can enjoy the trip. Ferries should be a joy to ride on, but they're not. People stay huddled in their cars or up in a corner reading a book. They're just waiting for the end of the trip to get to where they're going. And I'm not blaming the people; I'm not blaming the staffs on these vessels. It's policy.

I'm going to read into the record, Mr. Chairman, a memo from a Mr. G.A. Wright, chief steward, F

[ Page 2233 ]

watch, Queen of Coquitlam, to Captain E.P. de Cunha, catering superintendent. This correspondence, I should tell you, was not sent to me; it was sent to the Leader of the Opposition (Mr. Barrett) , who forwarded it to me for my information. The memorandum goes: "Sir:

"Please take this letter as my resignation, effective March 25, at 15 hours, 1977.

"Reasons: I personally feel that the chaotic situation which now exists within the catering department operation is primarily due to mismanagement, thus causing great hardships for supervisors and crew alike. It appears that management is not dealing with humans any longer, and perhaps programmed robots might be more fitting. Our little authority that we once had is long gone, without recognition for any input toward the company. I am sure that many supervisors have a great deal to contribute if given the chance.

"Several years ago we had classic motivation, but one can only put up with just so much of this nonsense and disorganization that we have had on our ferries this year. Anyone with a small amount of knowledge could better the organization, build morale, create motivation, improve employee relations and many other aspects of forming a working and consistent operating contingent within the catering department for the travelling public."

Interjection.

MR. LOCKSTEAD: That's all right, Mr. Chairman; I can hear them fine. Not only the people working on the ferries but the travelling public feel very much the same way as this gentleman whom I'm quoting, Mr. G.A. Wright, chief steward.

"It is with regret that one should have to give up what was a very fine position that I enjoyed very much . . . "

Yes, Mr. Chairman, I'm just about finished.

MR. CHAIRMAN: Please proceed.

MR. LOCKSTEAD:

" . . . and gave a lot of effort and time to. Perhaps in the future, catering on board will improve, but as things are going now the road is downhill, and, if so, I'm sure our neighbours to the south and thousands of Canadians who have travelled with us will have an image that they will never forget, and repairs will take some time, indeed if they can be repaired.

"In closing, I only hope that the parties who receive this letter will take note that my feelings are felt by many, many officers and crew who are now trying ever so hard to put in an honest day's work without being stripped of their dignity and whatever motivation they may have had." "Signed, J.A. Wright."

A copy of this letter did go out to the Premier as well, Mr. Chairman. Does the minister have a copy of this correspondence? I'd be pleased to pass it over. You do? Thank you,

So I would very much like the minister to comment on that. Before I get off the food topic, I should tell you as well that one of your senior staff people, Mr. Stratford, has had consultation with a transportation group on the Sunshine Coast-Powell River area. Those talks seem to be going reasonably well - not too productive. I hope it's not just a PR job and I hope that the minister and his department are taking those discussions seriously.

But I was disturbed by a recent article in a newspaper, which I won't quote here. I have it here: the Coast News-March 15. That's only 10 days ago. This food matter was discussed. I have Mr. Gallagher's reply letter as well. But the point is that there seems to be very little hope, based on the remarks that I read in this news article that quotes the minister and Mr. C. Gallagher on this issue.

It's not a big thing, you know....

MR. CHAIRMAN: Order, please. I'd like to remind the member for Omineca (Mr. Kempf) that we do not read newspapers in the House.

SOME HON. MEMBERS: Oh, oh!

MR. LOCKSTEAD: Mr. Chairman, as soon as I find my notes, I'll continue. I buried them under a bunch of clippings. Here they are. All right. I know time is running out, Mr. Chairman, and I have quite a few other topics I want to discuss. So I'll just be very quick.

There are a couple of other items I would like to touch, though. I would like to know, for example, Mr. Minister, how your discussions are proceeding with Dixie Lee Ray over the sale of the Sunshine Coast Queen - Oh! I see Mr. Gallagher - to the state of Washington? I hope that Dixie Lee Ray is not thinking of purchasing this vessel and turning it into an oil tanker. We've got enough problems that way already.

MR. WALLACE: Sell the Brooklyn Bridge while you're at it!

MR. LOCKSTEAD: I would very much like the minister to comment on that and on how much they expect to get for that vessel. I'd suggest to the minister that they do not sell that vessel, as a matter of fact, because one of these days the New Democratic Party is going to be the government

[ Page 2234 ]

again, and we intend to provide, as a government, services to people. We do. I would like to be able to know that the Sunshine Coast Queen, the Langdale Queen and the Queen of Surrey are all here to serve the people of this province, and put to the use that they should be.

One other item very quickly: I know the Brentwood-Mill Bay ferry is tentatively scheduled for termination of service some time this year. I want to point out to the minister that a remark was made - I have the clippings here; I won't bother reading them - that they're going to terminate the service on that particular route because nobody's using it.

But when you double and triple the fares, people quit using it. Mr. Minister, I suggest that you cut those fares on that vessel by half - right now - for an experimental period, and see if people will use that vessel. I suspect they will. Cut fares on that route by half immediately and keep those people who are presently on that vessel employed. It provides a useful service and even the tourists like it. Sometimes all of us are not that great on the tourist thing, but fair enough. Tourists are going to come whether we like it or not. So let's provide some services for them and let's reduce fares on that small route and that little ferry by half for, say, a six-month period. How's that? Let's try an experimental six-month ferry reduction this summer and let's keep that vessel operating. I'm sure it will be successful.

Another item, Mr. Chairman: I wonder if the minister would care to comment on this ridiculous surcharge for vehicles over the 6-ft. 6-in. height? It's my personal feeling, Mr. Minister, that if we're going to put a charge on vehicles on that basis, it should be on length rather than on height. I'm not sure there should be any extra charge for it at all. But if we're going to do it on that basis, then I suspect....

MR. CHAIRMAN: One minute.

MR. LOCKSTEAD: Oh, you're kidding! I've barely got going. All right. Well, I hope the minister has made a list of all the questions. I have one minute to go, and I'm hoping to use that.... I can't believe it!

Because of an unavoidable commitment which I simply cannot break, I must leave here very shortly. I can stay for another 10 or 15 minutes. I will not be here this evening, but I do have a great number of questions to ask the minister regarding B.C. Ferries, Northcoast Transportation and all the other aspects of the ministry. I look forward to further debate on Monday.

HON. MR. DAVIS: Mr. Chairman, very briefly, in an attempt to accommodate the hon. member for Mackenzie, first I would like to say that we do have a first-class ferry system, that things have shaken down, that employees from now on can really count on their jobs and that we'll be adding to our services and to our routes and, over time, to our vessel capacity. We're not going to be in a continuing situation of layoffs; quite the opposite, in fact - we'll be employing more people over time. It's a growth situation from here on in.

Fare reductions. Minimal fare reductions were announced recently. They apply to passengers and not to cars. They continue until May 1. They will be in operation for seven months of the year but not during the summer months when traffic tends to be heavy. There are half fares Monday through Thursday and on Saturday - for passengers in automobiles and buses.

There is a limit to the extent of fare reductions. Hon. members will recall that last year we passed a bill which set up the Ferry Corporation. The Ferry Corporation now has a subsidy each year of the order of $25 million. In addition to that $25 million there is, of course, the income from tolls and the income from the sale of food. The total income is of the order of $90 million. The directors of the Ferry Corporation must operate the ferries within that income. If they reduce the income by reducing fares they would have to cut services; that follows automatically from the legislation. While the total income forecast for the next year is of the order of $65 million, other than the subsidy - and the subsidy would add $25 million for a total of $90 million -our expenses in the form of salaries, wages, fuel and so on also add up to approximately $90 million. To cut fares, in other words, we would have to rewrite the Act we passed last year.

So the directors of the corporation would have to look at those realities in advocating any change in the fares, particularly a downward reduction. But at the same time, I don't see a problem in the next several years. We can, at least according to projections, live with the present level of fares for several years. We are fortunate in that most of the vessels we require are already property of the corporation. They already exist, so we don't have massive capital expenditures looming up in the next short while. We can get by with the vessels we have. We can pay increasing wage rates and so on on some reasonable ascending scale, pay increased fuel prices and then balance our books. So I am not forecasting an increase in fares but nor am I indicating any marked drop in fares either.

Special rates for tourists have been advocated. As a very broad generalization, it costs $15 to move a car across the Strait of Georgia. The toll is $ 10, so every car crossing the Strait of Georgia is subsidized by the people of British Columbia to the extent of $5. 1 personally think that's a big enough subsidy for users, particularly tourists. I don't think it should be subsidized to any greater extent in summer or winter or whenever they come; nor do I believe they should

[ Page 2235 ]

be treated any differently from anyone else. So I wouldn't advocate any reduction in fares for tourists.

The hon. member mentioned overheight vehicles and asked about the overheight rate. The overheight rate relates mostly to commercial vehicles or recreational vehicles - trailers operated by people for the purpose of carrying out business or individuals who are travelling, many of them from outside the province, around the province as tourists. They are charged $15, not $10, to cross the Strait of Georgia. The bare cost is $15 to move the vehicle across the Strait of Georgia, and I personally do not think the people of this province should subsidize people who are engaged in business crossing the Strait of Georgia with an overheight truck; nor do I believe the people of this province should subsidize tourists from outside the province, for example - those who are travelling for pleasure.

It's the people of British Columbia who should be subsidized by their own dollars - people who are not engaged in business, people who are not tourists with oversized vehicles. We do have an additional charge for length over 20 feet and we're making investigations as to the measurement of automobiles. It could happen in the future that a tariff related to vehicle length is introduced. But, as I say, we do increase the rate beyond the 20-foot length.

The Sunshine Coast Queen is up for sale. It was built in the United States; it's ice-strengthened; it's got 600 tons of ballast in it; and it's expensive to operate. We would like to get some money for it because basically our fleet is a modern, up-to-date fleet. In contrast to Washington State Ferries, which has a very few modern vessels - the great majority are 20, 30, 40 years old - we have a first-class modern fleet operating across the Strait of Georgia, around the Gulf Islands, up the Sunshine Coast, and we have a well-manned fleet. Broadly speaking, we employ twice as many people as they do on Washington State Ferries. We give better service. Anyone who has travelled on Washington State Ferries, immediately to the south of us, knows that there is a distinct difference in the quality of service. It's much better in British Columbia. It costs, across the whole of the two systems, roughly the same to travel on the two services and I don't think there is any comparison in the quality of the service between B.C. Ferries and Washington State Ferries.

Mill Bay ferry. We're looking at alternatives in that case. Our immediate problem in respect to the Mill Bay ferry is that both terminals are in bad shape. The cost of rebuilding the two terminals has been estimated to be of the order of $600,000. We have a problem there relative to the terminals and their repair or reconstruction or indeed the moving of a terminal, or terminals, in that case. That's under review.

Board of directors. There are six directors now on the board of B.C. Ferries. There are three vacancies. Certainly we would like to have directors who are knowledgeable about the Sunshine Coast, the middle and upper coast, and later on representatives also from among the officers and the crews. I think those suggestions are valuable ones and I trust that some or all of those suggestions will be acted upon in the not-too-distant future.

The lease-bank arrangement. Perhaps I could characterize it in this fashion: had the New Democratic Party been returned to power by some accident, it would have borrowed money to pay for those ferries. It was advocating deficit financing. To finance the deficit it would have had to borrow. It would have had to borrow at going interest rates in order to pay for those ferries. In effect, we have borrowed to finance those ferries but not at the normal interest rate, which is on the order of 9 or 10 per cent, but at a rate around 7 per cent. We were only able to borrow at the lower rate because there was an incentive in federal law in Canada - an incentive to build new vessels. This incentive was available to any profit-making corporation which built a new vessel in Canada; they got special treatment under Canada's income tax laws.

So the people of British Columbia, for a change, have been able to get something out of the federal government in respect to B.C. ferries - they got 7 per cent money rather than having to go to the banks for 10 per cent. 1, personally, would rather see us take advantage of national legislation in this country designed to encourage the construction of new vessels. We're talking about new vessels built in Canada. We happen to have financed these ferries at 7 per cent rather than 10 per cent and 1, personally, can't imagine that as being bad business. It certainly is the best thing to do. It reduces the costs of B.C. ferries and it reduces the need to change rates -certainly to revise them upward. I think it was a reasonable arrangement. Under the circumstances, I don't think anyone who is trying to look after the income and outgo of B.C. ferries would have made any other decision.

The hon. member - and this is my final comment - referred to new schedules, new vessels on route No. 3. Some changes may be made; however, they will have to be negotiated with the union and no change will be made unless it's mutually acceptable in that case.

MR. LOCKSTEAD: Mr. Chairman, I would thank the minister for those answers. I'll be very brief because I do have time constraint.

I'm concerned about the minister's remarks in not decreasing the fares on the B.C. Ferries. It would seem to me, Mr. Chairman, that more people would use the vessels if we had a fare reduction - it just seems to make good sense. By more people using

[ Page 2236 ]

those vessels, at least it would help stimulate the economies of the Sunshine Coast, Powell River, and Vancouver Island, Mr. Chairman. People will not pay those horrendous fares if they can possibly avoid it, or unless there is a special occasion, or they have pressing business.

While I have the floor I have one other question which I failed to ask the Minister, Mr. Chairman. What plans, if any, do you have for the Queen of Surrey? Will that vessel eventually be placed on another route or is it going to be leased out to Ottawa?

While I have a minute or two, Mr. Chairman, I would like to ask the minister as well: exactly what is the function of Mr. Chestnut and his office? Is he a deputy minister? Was he hired by the civil service commission? What's he being paid. Is he a consultant? What does he consult on? It would seem that this person, Mr. Chestnut, who works in the minister's office.... I'd like to know if he's the man who....

MR. MACDONALD: Is he edible?

MR. LOCKSTEAD: The first member for Vancouver East asks if he's edible!

Mr. Chairman, this is the same person who was dismissed from the MacMillan Bloedel company for the year he was responsible for MacMillan Bloedel shipping interests, mainly on the east coast. They are sailing their vessels under the flag of convenience out of the Bahamas.

But the fact is MacMillan Bloedel lost $46 million that year, which they attributed to their shipping problems with that fleet. Mr. Chestnut apparently was responsible for that whole fiasco. I think it's the only year ever.... Also a number of prominent people lost their jobs with MacMillan Bloedel, as you well remember. Some of them now are....

MR. KING: Nearly all of them have lost their jobs - Bonner and Chestnut and....

MR. LOCKSTEAD: I understand that once Mr. Chestnut went to work for a company called RivTow, which subsequently moved in after the termination of Northland's subsidy. They moved in to attempt to provide passenger and freight service to the north and central coast. There seems to be some kind of a tie-up with this RivTow company and Mr. Chestnut, and I'd like to know what that whole relationship is.

You know, this RivTow company said they would provide the same service as Northland or even better for the same cost as Northland. Yet they've raised their freight rates considerably and they're applying for another freight rate increase, and the service is so bad you wouldn't believe it. But I don't think I'll dwell on that; I'll leave that topic for a moment. But I would like the minister to answer these two or three questions.

HON. MR. DAVIS: Very briefly, Mr. Chairman, first, the Queen of Surrey is an expensive type of day-cruise liner. It was built in Sweden; it's one of a class. A large number were built. It was bought by the previous government for $18 million; it's present market value is around $7 million. Basically it wouldn't make sense, at least at this time, to sell it for the purpose for which it was designed. It's a good vessel,

It may be possible to use it in respect to middle and upper-coast operations if in fact they are developed over the next year or two. But it is expensive to run as well as its initial capital cost. It's hard on fuel; it is difficult of entry, at least at the front. It only has one lane rather than the double lane, as our standard ferries do. It isn't a ferry; it's a cruise ship. It's not an overnight cruise ship; it has no overnight accommodation. So it has a number of limitations which don't fit our coast.

However, we haven't sold it and we hope to have some plans for it. The federal government made inquiries because they've a number of vessels on the east coast - two, at least - bought from Sweden. This is a similar vessel. They might have leased it. They've decided to cut back on some of their east-coast operations and have dropped their option to lease. So there is no federal interest at this moment in that vessel.

Mr. Glenn Chestnut for a long time was one of the senior economists with the CNR in Montreal, so he has a good deal of rail experience. He came back to the coast. He's a graduate engineer from UBC. He operated the first tug-barge operations on this coast. More recently he worked for Macmillan Bloedel and became vice-president in charge of transport - that's shipping essentially. He ran the biggest single shipping company in Canada - MacMillan Bloedel's Canadian Transport Company was the biggest in Canada. It made many tens of millions of dollars over a couple of years and has lost a similar amount more recently. There was a general expression of displeasure among the shareholders and board of directors, and a number of prominent people who have done well in previous years left that company at the same time. Mr. Chestnut is helping me in respect to some shipping and other matters as a consultant at the present time.

MS. SANFORD: The Minister of Energy, Transport and Communications has a nickname in the House. He's often referred to as Jet Lag, Mr. Chairman.

MR. CHAIRMAN: Hon. member, in this House he's referred to only as "the minister."

[ Page 2237 ]

MS. SANFORD: Yes, I realize that; I'm sorry. Outside the House - I should clarify that.

The minister stated in his response to the member for Mackenzie (Mr. Lockstead) that we have a first-class ferry system. The only thing that I can surmise is that the nickname fits him very well. He must fly across all the time and not use this ferry service. Any time I'm on board that ferry, all I hear is grumbling from all sides about the service, about the food, and about the general unpleasant conditions on the ferries compared to what they used to be a few years ago.

I'm not blaming the staff involved. The morale on the ferries is very, very low. It's the policy and the administration by that minister of the B.C. ferry system to date. I think he should ride the ferries more often and listen to what the people are saying on board. They are very unhappy. I think that the minister should make that effort in order to find out what kind of improvements can be made, because it could be a first-class ferry system. It's not at this time.

The other thing that the minister mentioned was that the B.C. Ferry Corporation can live with the current level fares for a few years. Maybe the corporation can live with them, but I'm not sure that the people can, or that the economy of Vancouver Island can stand that level of fares which the B.C. Ferry Corporation can live with. The hardships that are caused to families living in the northern part of Vancouver Island, for instance - at places like Alert Bay and Sointula where they must first of all take a ferry to Vancouver Island, then take the North Island Princess down to Kelsey Bay, and then finally take the B.C. ferries across from Nanaimo - make it prohibitively expensive for them to travel to the lower mainland in order to visit relatives for friends.

Every time I'm up in the north end of the Island, people point out to me that they are no longer able to make that trip. What I'm saying is that the B.C. Ferry Corporation might be able to live with that present level of fares, but he people can't. This is what the minister should be concerned about and, I assume, the directors under the new legislation that was set up last year. It's had a crippling effect on the economy of Vancouver Island. The tourist industry is hurting. You know it, Mr. Minister - through you, Mr. Chairman - as does everybody else on Vancouver Island.

I have a couple of very specific questions. One relates to the North Island Princess. I wonder if the minister could give me the reasons why the North Island Princess has been removed from the B.C. Ferry Authority - now the B.C. Ferry Corporation - to the Ministry of Highways. What's the reason for it? What's the rationale for making that move? The other thing is whether or not the move to the Ministry of Highways will mean that the residential cards which were formerly issued by the B.C. Ferry Authority will still remain in effect and that those people who are living in the north end of the Island will have special preferential rates,

HON. MR. MAIR: Mr. Chairman, I can't sit in committee here and listen to the remarks made about the ferry system which my colleague runs without bringing to the attention of the committee the ferry system in that great socialist paradise, the United Kingdom, which runs a ferry system under the name of Caledonian McBrayne. I had the experience last year of travelling on that ferry system.

Interjections.

HON. MR. MAIR: This ferry system, Mr. Chairman - through you to the noisy members across - runs to the outer Hebrides and back. It is probably the worst system ever anywhere in the world, and I think that my Scottish friend would agree with me.

MS. BROWN: Is that under this estimate?

MR. WALLACE: Did you wear your kilt?

HON. MR. MAIR: The service is atrocious. The ships themselves are filthy.

AN HON. MEMBER: How about the food?

HON. MR. MAIR: The food is non-existent. The docking facilities are so out of date that they have to lower the vehicles on by list.

I say this, Mr. Chairman, because the members across keep comparing this system to others as if it compared badly. I want to say that in my experience, it compares very favourably indeed. It is a fine service that no doubt needs improvement. Nevertheless ' as compared ' to other services, particularly in areas where that party has had the opportunity to bring their influence to bear, it compares very favourably indeed.

MR. WALLACE: Well, Mr. Chairman, that was a shocking anti-Scottish speech. (Laughter.) I never thought I would hear my native land reviled in such economic terms.

Interjection.

MR. WALLACE: What I want to know, if I can ask a supplementary of the Minister of Services, is: (1) Did he wear his kilt? and (2) Did he ever reach the Outer Hebrides?

MR. CHAIRMAN: Perhaps the minister would like to take that question as notice. (Laughter.)

[ Page 2238 ]

HON. MR. MAIR: The answer to the first question is no, Mr. Chairman. The answer to the second question is, regrettably, yes.

MR. CHAIRMAN: Order, please. And now the member for Oak Bay on vote 102.

Interjections.

MR. WALLACE: Oh, it's all anti-climax.

Mr. Chairman, surprisingly enough, I do want to talk a little bit about the ferry system. I think all politicians on both sides of the House always fall into that trap of making comparisons, but they' always compare downwards. It's always comparing yourself with the worst that exists. The Minister for Consumer and Corporate Affairs - I got it right, you see - has, as usual, chosen to compare the B.C. ferry system with another system and another jurisdiction, which happens to operate under extremely different circumstances with different numbers of people. In fact, you're lucky if you get across there at all in winter. So I respect the minister's involvement in this debate. So few ministers get involved in the debates in this House that it's nice to hear from the Minister of Consumer and Corporate Affairs.

But it really doesn't help this debate on B.C. Ferries to compare it to the ferry system to the Outer Hebrides - or Outer Mongolia, for that matter. This happens to be B.C. that we're talking about and maybe the comparison that should be made is the comparison already referred to - namely the quality and the standard of service which pertained up until a few years ago. This is unrelated to whichever government's in power. It's related to inflation and the fact that rates were not raised when they should have been raised and a variety of other factors. It wouldn't have mattered which government was in power. The cost of fuel, the inflationary effect on wages and all these other factors would have operated in the last few years and seriously challenged the management of the ferry system, no matter who, was running it.

But I do feel that this government, in trying to correct 4 situation which had to be corrected - and I accept the minister's statement in that regard - has overreacted. Now I listened to the minister's introductory statement. Again, Mr. Chairman, I want to commend this minister for his introductory statement that set certain elements in his ministry in perspective and gave the opposition some information, which helps us to do a better job. I wish each minister would make that kind of effort prior to embarking on the debate on their estimates.

But the minister mentioned - I hope I got the figures correctly - that there was for the past year, which I presume was the 1975-1976 fiscal year - a deficit of $59 million. Anyway, he quoted two figures that a deficit of $59 million had been anticipated for a certain period of a year. I thought it was the '75276 fiscal year. Then he stated that for the last 12 months ... and I hope he'll elaborate a little bit as to which 12 months precisely. Does he mean up to the end of February this year, or when? The deficit had been reduced to $15 million - as I recall, listening to his introductory statement, these were the figures.

In other words, the deficit would appear to have. been reduced by about $44 million. He also referred to a subsidy of $25 million from the B.C. government. Is that a reaffirmation of an ongoing $25 million subsidy? He mentioned that under the new legislation the Ferry Corporation has an obligation to balance its books. I'd like to come back to that in a moment, but that apparently is the basic criterion. I wish you could tell B.C. Hydro the same thing, and maybe we wouldn't be imposing such hardship on their consumers.

At any rate, am I to understand that there is an ongoing commitment by the government to provide $25 million a year as a subsidy to the B.C. ferry system, and that we can anticipate a subsidy from the federal government which will be added to the $25 million provincial subsidy, and that these subsidies, plus the new rates which the minister hopes will be unchanged for two to three years, will balance the books, to use the minister's phrase?

Now if that is the case, I really just want to ask the minister if he thinks it makes good sense to take in another $45 million from direct fares on the ferries -in other words, by the figures, to take much more money from far fewer travellers. The net effect of that is twofold. I'm quoting the latest figures that were published the other day for the month of February: that vehicle traffic was down by 26.7 per cent and foot traffic by 21.6 per cent.

So this net effect of taking in more money directly from fares means that you have fewer people travelling back and forth - even in the middle of winter, when really the tourist element of the dispute is minimal! The arguments that have been presented so often in this House, Mr. Chairman ...

Interjections.

MR. WALLACE: If I could hear my own voice it might help.

MR. CHAIRMAN: Order, please, committee. The noise level of the committee is intolerable. If conferences are necessary, perhaps they should be conducted outside of the chambers. The member for Oak Bay has the floor.

AN HON. MEMBER: Don't frown, Mr. Chairman. You're intimidating.

[ Page 2239 ]

AN HON. MEMBER: You're drunk with power. (Laughter.)

MR. WALLACE: Thank you, Mr. Chairman.

While the deficit has been reduced, let us say, by $45 million in a 12-month period, does the minister have any way of computing the number of persons who would otherwise have travelled to the Island in that 12-month period? On the basis of previous records, what consumer spending has been calculated, or can be calculated, from that reduction in the number of people?

I know that a lot of figures have been thrown around, and the tourist industry talked about $200 million in the course of the tourist season. I think we could spend a long time arguing whether $200 million is accurate, or inaccurate, or whatever, but there's no question that the reduction in the number of people coming to the island inevitably resulted in a great reduction in their spending or the spending that would otherwise have taken place. Since tourist and resident alike pay 7 per cent sales tax on purchases, and the tourists pay a room-rate tax, and there are many other ways in which they make employment available and spend dollars, does the minister really think that it makes sense to take in another $45 million in ferry fares, and lose, perhaps, - even taking a modest figure - $100 million in revenue from the sale of gasoline and sales tax and purchases of services, not to mention the payroll which is created by the employment of more people such as our summer students? In the absence of tourism, we have to have the government put out more money in other directions by enlarging the budget in the Minister of Labour's (Hon. Mr. Williams') department to create jobs. While I commend the government for trying to create summer jobs, why create them on one side and destroy them on the other? On the one hand, the government is giving the Minister of Labour a programme and general revenue - and I forget the exact figure for the upcoming season - of $10 million or something of that order. Why do that on one hand, and put up ferry rates to such a degree that you vastly reduce the number of people coming to the Island who would otherwise be using services, particularly in the tourist sector?

Again, Mr. Chairman, it is not just the tourist sector by any means that has cut back on its utilization of the ferries and a number of trips back and forward between the Island and the mainland, particularly at weekends.

I can speak with very direct personal experience. I have young daughters, one of whom has a motor car, if you can call it that - it in some way resembles a motor car but it doesn't always move - which she used~ to take to Vancouver on the weekends. She can no longer do so for the sheer cost of doing so. At the same time, we have Mr. Roberts saying that the ships are travelling half empty. Now does it not make sense that it's better to have the ships fully occupied, paying a slightly reduced fare, than rigidly adhere to a government policy which has been shown by anybody who has any objective and fair approach to the statistics. . ?

I am not prepared to waste the House's time going all through those statistics because during the summer, and as recently as January and February of this year, there has been a dramatic reduction in utilization. Even although the doubling of the rates has brought in more income, I think it can be fairly said that the increased income from the ferry fares directly has more than been neutralized by the reduction in consumer spending, the loss of jobs, and the requirement for the government to bail out the unemployment situation by putting more money from general revenue into student employment programmes. It seems to me that student employment programmes are an excellent idea, but surely it would make much more sense if we could attack the problem in both directions by sustaining as much tourist traffic to the Island and, at the same time, taking some money from general revenue to provide summer employment for our students.

I think it is particularly distressing that these figures quoted as recently as last week in relation to the February utilization of the ferries showed a 26 per cent drop compared to February of 1976, which I think very clearly proves that the impact of doubling the rates did not just affect tourism, important as that is. It affected the ongoing regular use of the ferries by B.C. residents.

The minister made a comment about the cost of moving a vehicle. Again, I hope I have his figures correct but, as I heard it, the minister said that the cost of moving a vehicle was $15 across the Strait of Georgia, and he felt that since the driver pays $ 10 and, in effect, receives a $5 subsidy, this was quite enough for a tourist. But again I have to wonder, has the minister not got the whole thing backward? Is it not important to sustain an optimum utilization of the ferries and then choose what the rates would be to sustain that kind of utilization? Don't set a rate which might on paper appear to be realistic or fair and then, when you find that it has this drastic reduction in utilization, rigidly refuse to modify that position. I really feel, Mr. Chairman, that things were done on the basis of figures which seem to indicate justifying a doubling of the rates.

I'm saying that the experience since then and the ongoing figures suggest that it would still in the net effect make much more sense to roll back part of the increase and try to have the ferries running fully occupied, for the reasons that I've mentioned.

It may seem reasonable to subsidize each tourist to the extent of $5 on his vehicle, for that makes a lot more sense if that person will come and spend even

[ Page 2240 ]

one night in the empty motel and hotel rooms on Vancouver Island. That makes much more sense than having him get to the west coast and then decide that he's not going to make the trip anyway.

I take exception to one of the statements that one of the other ministers made when I raised this the other day. The Provincial Secretary said people couldn't come from the United States, get up to Vancouver, and then, because the ferry fares have doubled, turn back and not come to Vancouver Island. Well, there's an article that was published back in August from the newspaper in Portland, called the Portland Oregonian. The writer's name is Leveret Richards. He states.... Or maybe it's a lady; I don't understand the first name "Leveret." The writer says:

"The word 'ferry' is a fighting word in British Columbia this summer. The reason is a sudden, more or less unexpected doubling of the rates on all British Columbia ferries June 1.

"To the 100,000 or so captive customers who live on Vancouver Island, the raise came as a shock but not a surprise. The newspapers had warned, and the halls of parliament had been ringing with protests and protestations for a month.

"But to thousands of American tourists, it came without warning. Tourists who had paid $11 per car to ride the Washington state ferry from Port Angeles to Victoria were suddenly confronted with a $23 fare on Canadian ferries from Nanaimo to Vancouver. A camper with a family of four paid $27.

"Many tourists indignantly protested they would never have made the trip if they had known the fares had been doubled. Some startled travellers, taking a look at budgets and realizing that they faced double fares on one or more ferries along the route, reluctantly turned around and changed their vacation plans."

There's the answer. You don't even have to suggest that I'm using biased British Columbia newspapers. This was written in a Portland newspaper, based on the experience of American tourists who had in fact turned around and didn't come across to the Island because the rates had been doubled.

Now to what degree it was the fact that they had not been told ahead of time, I don't know. But one irate tourist in the same article is quoted as saying,

"I got the official ferry schedule issued this spring by the Department of Travel Industry of British Columbia. I checked with the Washington state tourist information offices at Vancouver and Port Angeles and they're still handing out these fare schedules. Nobody warned us of the doubled fares and changed time schedules until they got to the ticket window at Nanaimo."

Maybe another department should share the blame for that, but the earlier point I think is worth making: some tourists did turn around when they discovered the doubled rates for the vehicle and for the passengers.

All I'm trying to say to the minister is that there is a great deal of solid evidence and figures, even now, for the government or the B.C. Ferry Corporation to roll back at least part of the very abrupt and sudden increase. I thought that all good businessmen realized - and this is supposed to be a very businesslike government - the old premise that 5 per cent of something is better than 7 per cent of nothing. Surely it's a lot better to carry ferry passengers on full loads at a slightly reduced rate rather than have an excessive rate and the ships half empty. In fact, I thought that was the philosophy behind $1.49 day: you sold the goods on a certain day at $1.49 to get the customers on board so that they would spend money on other purchases.

I think the $1.49 approach to the ferry fares would make a lot of sense in getting people on Vancouver Island to spend their dollars on other purchases on the Island. To look at the ferry rate in isolation, as seems to be the case, really doesn't make much sense in the much wider economic picture for employment and economic success on Vancouver Island.

Now I know more about the greater Victoria area than I do about the rest of the Island, but I think the members from up Island have made the point also. I've certainly received letters from motel operators who state that they had built up a certain amount of year-round business by B.C. residents who would travel over to the Island for weekends, for recreational pursuits, whether it be skiing or fishing or whatever, and that element of the economy on the Island has quite clearly suffered also.

Even if we were only talking about tourism, that would be important enough, crowded into a few months in the summer. But we really are talking about a year-round reduction of overall net income to the economy rather than simply the net income on the ferries.

It's one thing for the minister to point out that the deficit has been decreased by $45 million. But one thing the minister either does not tell us or cannot tell us is the number of dollars that would have gone into the general economy of Vancouver Island over the same period of time and what that would have meant in terms of revenue through various types of taxation to the provincial government.

If you cut your losses by $45 million, that's one thing; and maybe there was good reason to try to bring the fare closer to the actual cost of providing the service. I don't argue with that general principle. But we've now had eight or nine months since June 1 to evaluate the overall impact, not just the impact per se in isolation on the balance sheets of the ferry

[ Page 2241 ]

system. It's the balance sheets of the economy of the whole province, particularly the balance sheet in regard to the economy of Vancouver Island, that this government should be concerned about.

I think it's very significant that a man whom the Premier has praised as being of an independent mind and who has looked at the ferry-rate structure and utilization very carefully - namely, Mr. Graeme Roberts - has suggested that a rollback of the increase by about 50 per cent would seem to make a very reasonable compromise to the very contentious debate about the exaggerated increase which the government imposed on June 1.

I respect the Premier for having persuaded Mr. Roberts, under the circumstances of public difference of opinion with some of his own colleagues, to take the step he did. I hope that events prove that independent minds will be allowed to function within the administration of Crown corporations.

I don't think it's only a matter of independent minds but it's also the willingness of an individual to try to persuade a rather rigid government to review a decision. A decision like this that has had such a serious effect on the economy of Vancouver Island should be reviewed.

One of the things that this Premier and this government might do for our system as a whole.... We've heard the Premier talk a lot about changes in the system and how we function and so on. I wish the Premier and the government would realize, Mr.

Chairman, that people as a whole don't think that government loses face when it does redirect an earlier decision. I just don't buy this stupid concept that because a government makes a decision which doesn't Work out, to turn around and change its original decision somehow is loss of face in the public view. Yet I hear it in so many quarters. The fact is that a government gains in its public image and gains more faith from the public when it is quite willing to recognize that it did make a mistake or that it over-reacted and it takes some steps to correct it.

The House resumed, Mr. Speaker in the chair.

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

Hon. Mr. Chabot tables documents.

Hon. Mr. Davis presents the third annual report of the Ministry of Energy, Transport and Communications for the fiscal year ending March 3 1,1976.

Hon. Mr. Williams moves adjournment of the House.

Motion approved.

The House adjourned at 6 p.m.