[ Page 2423 ]

CONTENTS

Routine proceedings

Mobile Home Act (Bill 34) Hon. Mr. Curtis.

Introduction and first reading –– 2423

Oral questions

Grizzly Valley Gas Reserves. Mr. Macdonald –– 2424

Removal of Lieuwen Farm from ALR. Mrs. Wallace –– 2424

Stipend to Ralph Gillen. Mr. Wallace –– 2425

B.C. Development Corporation advertisement. Mr. Cocke –– 2425

Storage of fill at McDonald farm. Mr. Skelly –– 2426

Mitsukishi contractual commitments. Mr. Lockstead –– 2426

Contribution of opposition members to government document. Mr. Gibson –– 2426

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

On vote 102.

Mr. Lockstead –– 2428

Mr. Stupich –– 2430

Mr. Shelford –– 2431

Hon. Mr. Davis –– 2433

Mr. Gibson –– 2434

Hon. Mr. Davis –– 2435

Mr. Shelford –– 2435

Mr. Kahl –– 2435

Hon. Mr. Davis –– 2436

Mr. King –– 2436

Hon. Mr. Davis –– 2437

Mr. Gibson –– 2438

Mr. Barrett –– 2440

Mr. D'Arcy –– 2441

Hon. Mr. Davis –– 2444

Mr. Wallace –– 2445

Hon. Mr. Davis –– 2448

Mr. Nicolson –– 2450

Hon. Mr. Davis –– 2451

Mr. D'Arcy –– 2451

Hon. Mr. Davis –– 2452

Mr. Cocke –– 2452

Hon. Mr. Davis –– 2452

Mr. Wallace –– 2453

Hon. Mr. Davis –– 2453

Mr. Barber –– 2454

The House met at 2 p.m.

Prayers.

MR. L.B. KAHL (Esquimalt): Mr. Speaker, I would like the House to join me in bidding a very warm welcome to Pastor Herman Bickel, who led us in the prayer this afternoon. He's from Redeemer Lutheran Church in my constituency.

MR. D. BARRETT (Leader of the Opposition): Mr. Speaker, over the years many people come and go from this Legislative Assembly as members and fewer people come and go as observers of the daily debates. One or two citizens of this province spend a great deal of time in the legislative galleries absorbing the information or lack of it that takes place to be absorbed in this House from day to day over the years. One of those citizens is a woman who has attended, when her health is good, almost daily when the House is sitting. Recently her health failed a bit but now she's on the mend and back with us today. I would ask the House to welcome our most faithful observer, Mrs. Ruth Johnson.

HON. H.A. CURTIS (Minister of Municipal Affairs and Housing): Mr. Speaker, most members of the House will realize that today and tomorrow we will have members of the Union of B.C. Municipalities executive meeting in Victoria. I'm sure that a number of members will have meetings with those executive members from their own constituencies. I note Mayor Ferguson of Abbotsford and Mayor Evers of New Westminster in the gallery at the present time, but I would like at this point to express a tribute to the local government elected persons who serve on the UBCM executive and contribute a great deal of time and effort and talent to matters relative to local government as a whole in the province. They will be with us for two days.

MR. H.J. LLOYD (Fort George): Mr. Speaker, in the galleries today are Mr. and Mrs. Bob Beard and their family. Mr. Beard is an alderman for the district of Mackenzie, and he is down attending the meeting of the UBCM executive. I would ask the House to bid them welcome.

HON. R.S. BAWLF (Minister of Recreation and Conservation): Mr. Speaker, I would ask the House to join me in issuing a warm welcome to Mr. and Mrs. Jones and their two daughters from Burnaby North.

MR. G. HADDAD (Kootenay): Mr. Speaker, in the gallery today is a good friend of mine who is visiting in Victoria, Mr. Gerry Kambeitz. I would appreciate it if the House would extend a good welcome to him.

MR. D.F. LOCKSTEAD (Mackenzie): Mr. Speaker, visiting with us in the galleries today we have Mr. Robert Geldart, his sons Jamie and Cary and my favourite nephew from Texada Island, Mr. Terry Fretts.

MS. R. BROWN (Vancouver-Burrard): Mr. Speaker, in the gallery today is an inter-church group visiting us to remind us that the violation of human rights is still continuing in the Republic of Chile. I would like the House to join me in bidding them welcome.

MR. H.W. SCHROEDER (Chilliwack): Mr. Speaker, I was privileged last evening to attend the concert of the International Mennonite Children's Choir. They are with us today in the gallery - or will be at 3 o'clock. This choir, in competition with other children's choirs and adult choirs, won first prize in the world competition in Switzerland. We're proud to have them here with us. Please make them welcome.

HON. R.H. McCLELLAND (Minister of Health): Mr. Speaker, we're very fortunate today in this House to have visiting with us, unfortunately only for the afternoon, but visiting Canada today and as part of his trip to Victoria, the Minister of Public Health for Cuba, Dr. Gutierrez Muniz. I ask you to make him welcome.

I'd like also, Mr. Speaker, to welcome among his party visiting us today two colleagues: Dr. Aldereguia, the Vice-Minister of Public Health for Cuba; and Dr. Galego, of the International Relations Office, who has a professional relationship with a close friend of ours in British Columbia, George Mussallem's sister, Dr. Mussallem. I'd like you to welcome them as well.

Introduction of bills.

MOBILE HOME ACT

Hon. Mr. Curtis presents a message from His Honour the Lieutenant-Governor: a bill intituled Mobile Home Act.

Bill 34 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Hon. Mr. Phillips tables the audited financial report of the British Columbia Railway for the year ended December 31,1976.

Oral questions.

[ Page 2424 ]

GRIZZLY VALLEY GAS RESERVES

MR. A.B. MACDONALD (Vancouver East): Mr. Speaker, I've got an oral question for the Minister of Mines and Petroleum Resources, who told the House in his estimates that there were 814 billion cubic feet of established reserves in the Grizzly Valley and later tabled a document saying: "Established equals proved plus half of possible." Would the minister not agree that as late as February, 1977, the proven reserves in the Grizzly Valley were no more than 425 billion cubic feet?

HON. J.R. CHABOT (Minister of Mines and Petroleum Resources): No, Mr. Speaker ...

MR. MACDONALD: No?

HON. MR. CHABOT: ... I tabled the estimates of deliverability as far as reserves of natural gas in the Grizzly Valley and the figures speak for themselves.

MR. MACDONALD: Did the minister say that the proved reserves were more than 425 billion cubic feet, according to his own chart - proved reserves, not half of possible?

HON. MR. CHABOT: Mr. Speaker, I don't have the figures before me, but the figure was stated as 814 billion cubic feet, if I recall.

MR. MACDONALD: A supplementary, Mr. Speaker: how do you define that 814 billion? What is it?

MR. BARRETT: I can't recall.

Interjections.

REMOVAL OF LIEUWEN FARM

FROM ALR

MRS. B.B. WALLACE (Cowichan-Malahat): My question is to the Minister of Agriculture. I would like to ask the minister whether or not he is in favour of removing the 300-acre Lieuwen farm in Houston from the agricultural land reserve?

HON. J.J. HEWITT (Minister of Agriculture): Mr. Speaker, that question is really a matter of policy; however, I assume that the question is sparked by the comments that I made in Cloverdale yesterday at a meeting.

Really what I said, Mr. Speaker, was on the basis of farmland not being treated in isolation. Agricultural land cannot be treated in isolation. We must consider the economic development in this province in all aspects in order that we can provide a better life for the people of British Columbia.

MRS. WALLACE (Cowichan-Malahat): Is the minister aware that since the Land Commission refused to take that Lieuwen farm out of the agricultural land reserve, the hon. member for Omineca (Mr. Kempf) has now found a suitable alternative site for the industry?

MR. G.F. GIBSON (North Vancouver-Capilano): Supplementary to the minister, Mr. Speaker.

MRS. WALLACE: Is the minister going to answer? Is the minister aware?

Interjections.

MR. SPEAKER: Hon. member, I did not see the minister rising to his feet, so I move on.

Interjections.

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

MR. GIBSON: Mr. Speaker, I have a supplementary to the minister about that same speech where he ...

MR. BARRETT: Give him time to get his instructions from the Premier.

MR. SPEAKER: Order, please. The hon. member for North Vancouver-Capilano has the floor.

MR. GIBSON: ... says that British Columbia simply has to increase its food production, and then he was talking about land being removed from the land reserve. In referring to the decision to release eight acres from the reserve for the Brett motorcar lot, the minister states that it was a matter of economics.

Mr. Speaker, what I want to know is: whose economics - the economics of British Columbia or Brett Motors or the Social Credit Party?

MR. SPEAKER: The question is hypothetical, hon. member.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: The hon. member for Oak Bay.

Interjections.

MR. SPEAKER: The hon. member for Oak Bay has the floor.

Interjections.

[ Page 2425 ]

STIPEND TO RALPH GILLEN

MR. G.S. WALLACE (Oak Bay): Yes, I heard you, Mr. Speaker, but I don't think they did.

This is to the Minister of Education with regard to the six-month extension of Mr. Gillen's assignment to ICBC. Since the spokesman from MacMillan Bloedel has stated that his firm will be requiring more of Mr. Gillen's time for special studies, can the minister tell the House whether Mr. Gillen's stipend of $3,750 per month will be reduced in proportion to the increased hours that Mr. Gillen devotes to MacMillan Bloedel?

I HON. P.L. McGEER (Minister of Education): Mr. Speaker, in the event that the amount of time that Mr. Gillen was spending at ICBC would be such that the normal directors' fees of $250 a day would be less than the monthly amount that he's being paid, of course an adjustment would be made to reduce the amount chargeable to ICBC.

MR. WALLACE: Has the minister been involved in discussions with MacMillan Bloedel about their request that Mr. Gillen allocate more of his time to MacMillan Bloedel affairs to the extent that Mr. Gillen, a senior government servant, may end up working a three-day week?

HON. MR. McGEER: Mr. Speaker, I can assure the member that Mr. Gillen is the type of executive who works a seven-day week. But no, there have been no discussions with MacMillan Bloedel.

MR. BARRETT: He gets paid for a 10-day week.

MR. WALLACE: I was wanting to know how many days in the week he worked for ICBC. While the minister didn't answer that question, I wonder if I could follow it up by asking him what initiatives he's taken to recruit a permanent full-time vice-president for ICBC. What initiatives have you taken?

MR. GIBSON: It's a new president I want.

HON. MR. McGEER: Mr. Speaker, as I've explained before to the House, ICBC at the present time is offering non-competitive salaries in the insurance field. While we've been out hunting executives for almost a year, we've located only one, who is Mr. Tom Holmes, our senior vice-president in charge of Autoplan. The corporation is attempting to recruit executives now.

MR. WALLACE: Since the minister has repeatedly talked about the poor pay in ICBC, has he given any consideration to making the payments equivalent to executive positions in other organizations in order to find a permanent vice-president for ICBC?

HON. MR. McGEER: Mr. Speaker, in my view, all of the Crown corporations should be offering competitive salaries. I didn't say that ICBC salaries were poor; I said they were non-competitive.

B.C. DEVELOPMENT

CORPORATION ADVERTISEMENT

MR. D.G. COCKE (New Westminster): Mr. Speaker, this is a question to the Minister of Economic Development. A media advertisement placed by the B.C. Development Corporation has the following quotation in it: "The winds of change are blowing throughout British Columbia as free-enterprise government opens up fresh new opportunities to locate development and prosper in one of Canada's richest provinces."

My question to the minister is: in view of the economic crisis, including 103,000 people unemployed and 397 bankrupt companies this year, can the minister tell us what the fresh new opportunities are?

HON. D.M. PHILLIPS (Minister of Economic Development): Mr. Speaker, could I have half an hour of the question period to explain that things are happening in British Columbia?

MR. BARRETT: He can't recall.

HON. MR. PHILLIPS: I know that it bothers that opposition. With regard to these companies that are going broke, I'll have the member know that in December, 1976, there were only 16 companies that went broke, leaving a total of $2.71 million, as compared to 24 in December, 1975, to a total of $4.26 million. In other words, Mr. Speaker, under the great Social Credit government the decline in failures is 41 per cent.

MR. COCKE: What was the cost of this misleading political advertisement, and was it drafted by Mr. Stan Jobb?

SOME HON. MEMBERS: Order!

MR. COCKE: What do you mean: "Order"?

I'll ask it again, Mr. Speaker.

MR. SPEAKER: Will you ask it, then, in terms that are parliamentary?

MR. COCKE: Yes, Mr. Speaker. What was the cost of this misleading political advertisement?

AN HON. MEMBER: Order.

MR. SPEAKER: The idea that you should frame it

[ Page 2426 ]

in that term, hon. member, is out of order, really. It is not a proper method of framing a supplemental. It's supposition on your part. Would you state it in a parliamentary manner, and then I'll allow it to stand as a supplemental question.

MR. COCKE: What was the cost of that blank advertisement that appeared in the papers entitled: "The Winds of Change?" "The future belongs . . ." et cetera.

HON. MR. PHILLIPS: Mr. Speaker, I'll endeavour to obtain the answer for the member.

STORAGE OF FILL

AT McDONALD FARM

MR. R.E. SKELLY (Alberni): This is a question to the Minister of the Environment: has the minister requested or received an environmental impact statement from Transport Canada covering storage of fill at the McDonald farm on Sea Island in preparation for the third runway at Vancouver International Airport?

HON. J.A. NIELSEN (Minister of the Environment): To the best of my knowledge, no, we have not.

MR. SKELLY: Has the minister approached the federal Minister of Transport or Environment Canada to request that the filling be stopped until an environmental impact statement is filed or until the Land Commission has had an opportunity to examine the operation there?

HON. MR. NIELSEN: The Land Commission requested that Transport Canada cease operations until such time as it could be examined. Transport Canada responded by advising the Land Commission or reminding the Land Commission that the Land Commission Act has no power over federal Crown properties, and that they had planned on this action for some time and that the action will continue.

MR. SKELLY: Will the minister approach the federal Minister of the Environment (Hon. Mr. LeBlanc) to ask that the operation on the McDonald farm be stopped until adequate environmental impact statements are filed or until the Land Commission has had an opportunity to look into the matter?

HON. MR. NIELSEN: Yes, we definitely will be in contact with the federal ministries who would have some involvement in this.

MITSUBISHI CONTRACTUAL COMMITMENTS

MR. LOCKSTEAD: This is a question to the hon. Premier. I wonder if the Premier could tell this House what steps are being taken in response to the recent arbitrary actions of the Mitsubishi Corporation who, contrary to their contractual commitments, have cut back on their purchases of Ocean Falls newsprint resulting in major layoffs in Ocean Falls?

HON. W.R. BENNETT (Premier): Mr. Speaker, I have been advised by B.C. Cellulose, on behalf of Ocean Falls, that those contractual obligations that are being abused are under study and opposed by legal counsel for the corporation. The corporation will be taking legal steps.

MR. LOCKSTEAD: Mr. Premier, I really appreciate that answer. The last time you answered a question in this House it was so long it took up the whole question period.

MR. SPEAKER: Order, please.

CONTRIBUTION OF OPPOSITION

MEMBERS TO GOVERNMENT

DOCUMENT

MR. GIBSON: This is a question for the Minister of Municipal Affairs and Housing. A couple of days ago there landed on my desk a. lovely, glossy, flossy document called the "Quarterly Review of the Ministry of Municipal Affairs and Housing, " presumably paid for by legislative funds. What I want to know, Mr. Speaker, is: will the minister make available a little teensy-teensy bit of space for opposition members to put out their views on municipal affairs and housing in that publication?

HON. MR. CURTIS: Mr. Speaker, we applied the Ottawa test and found that it succeeded, but I would say to the hon. member that representatives of the news media who have seen it felt that, particularly with respect to housing matters, it was a rather fair document. I'm quite pleased with the manner in which it was produced. I thank the member for his interest. I'm pleased that he at least read that.

Interjection.

MR. SPEAKER: It would be acceptable other than the fact that the bell terminated the question period, hon. member.

HON. MR. McGEER: Mr. Speaker, two or three days ago I indicated to the House that I would file the internal auditor's report from ICBC with respect to allegations made by Mr. Fotheringham. I will table

[ Page 2427 ]

that report but I'm going to table an interim document today, if I may. I have a letter from Mr. Hyman, the general solicitor for ICBC, and I'd just like to take the House's time to read one paragraph which explains why the internal auditor's report will be delayed for a time:

"I've come to the conclusion, from reading the report and from discussions with members of the corporation who have been called upon to attend current investigation proceedings under the Combines Investigation Act, that it would be imprudent and perhaps improper to table the report until such time as the investigation is completed and such charges as may arise there from have been disposed of."

Now this has to do with another towing contract which had nothing to do with Mr. Dickison.

MR. SPEAKER: The hon. Leader of the Opposition on a point of order.

MR. BARRETT: Mr. Speaker, it would be appreciated if the minister would ask leave to make a statement or to file a document rather than to launch into a discussion.

MR. SPEAKER: Hon. member, I think if you'll recall a discussion which took place in the House, I pointed out to the House that it's not really necessary for the minister to ask leave of the House to make a statement. It's quite permissible for a minister, at the proper time, to make a statement to the House without leave. It's been born out in many other jurisdictions.

MR. BARRETT: What section?

Interjections.

MR. SPEAKER: Yes, I think if you read the Votes and Proceedings, and a statement that I made to the House, you'll see that that was correct.

MR. BARRETT: What section?

HON. MR. McGEER: Mr. Speaker, if the Leader of the Opposition wishes, I can respond to oral questions during question period.

MR. BARRETT: That's not the point!

HON. MR. McGEER: I did this at the end of question period to save time for questions from the other members. If the Leader of the Opposition would attend the question period, I think that he'd be party to these discussions.

Interjections.

MR. SPEAKER: Proceed, hon. minister.

HON. MR. McGEER: Mr. Speaker, may I file this letter from the solicitor of ICBC, give my pledge to the House to file the internal auditor's report when it's available, and in the meantime file a specific document with respect to Fotheringham's charges, which are without substance?

SOME HON. MEMBERS: Aye!

MR. BARRETT: On a point of order, I raised the point of order to avoid a situation where there'll be a response to a debate initiated by a minister who has not clearly stated whether he wants to file or make a statement. How were we to determine whether there is to be a response by the opposition to such a request?

Traditionally in the House, when a minister stands to make a statement, there has always been permission to respond to a statement. However, traditionally in this House, when a minister stands to file a document, there has been no response to the permission to file that document. That is the order that I'm seeking to clarify. If there is no direction from the House and the minister makes a statement, the opposition will, by tradition, ask for a matter of time to respond.

MR. SPEAKER: Well, hon. Leader of the Opposition, it would appear to me that the minister rose immediately following question period in response to things that had been asked in question period and indicated to this House that he would be filing certain documents with the House as they become available. It certainly is the minister's prerogative to stand up and explain what he's going to do. I think that's what he's done. As far as a statement is concerned, it's only necessary for the minister, when standing in his place and when recognized, to indicate to the House that he is making a statement.

In a case like that, then, I would accord the opposition the privilege of replying to the statement if they so desired.

MR. BARRETT: That's exactly the point I'm making. Therefore, it is necessary for the minister to clearly identify what he is proceeding to do - file a document or make a statement on those documents as the minister proceeded to do.

MR. SPEAKER: I think perhaps we could clarify the whole matter, hon. member, if I were to ask the Minister of Education what his intent was when he sought to gain the floor.

HON. MR. McGEER: Mr. Speaker, it was merely

[ Page 2428 ]

to respond to a question that had been asked during question period and to give an indication of what I intended to do about it. It's very difficult, Mr. Speaker, to explain on another day to another member who attends so irregularly. But if the House prefers, we can take the time of question period to deal with this matter, and then explanations for erratic members won't be necessary.

MR. SPEAKER: Thank you, hon. minister.

Orders of the day.

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

ESTIMATES: MINISTRY OF ENERGY,

TRANSPORT AND COMMUNICATIONS

(continued)

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

continued.

MR. LOCKSTEAD: Under this vote we've discussed ferries, coast transportation and transportation problems at some length.

I thought this afternoon, Mr. Chairman, that there are a number of energy items and other matters relating to that minister's office that we haven't discussed in this House yet. So I would like to start off this afternoon by discussing some of the energy problems, and specifically B.C. Hydro.

Recently in this House, Mr. Chairman, we passed a bill to further increase Hydro borrowing by $650 million. B.C. Hydro's government-oriented debt now equals the provincial budget, Mr. Chairman, and is likely to double by 1981 if Hydro does not rethink its priorities or alternatives.

So, Mr. Chairman, Hydro pays its debt out of current revenues and, as interest rates and borrowing have gone up, so has Hydro's rate to customers. That's three rate increases in the space of IS months. These rate increases, Hydro says, have been necessary to a large extent primarily because of Hydro's vast charges and the cost of building these new dams. Hydro's debt is now eating up 41 to 45 per cent of the corporation's revenues. I couldn't believe that, when I found it out - 41 to 45 per cent of every dollar that Hydro takes in is going to pay interest.

Hydro says B.C.'s electrical energy demands will grow by 9.2 per cent by 1991; that means doubling the number of dams, generating stations and power line systems every 10 years. The B.C. Energy Commission estimate of growth in demand is only 3 to 4 per cent. Who is right - the B.C. Energy Commission or B.C. Hydro?

Mr. Chairman, not too long ago, in a publication called B.C. Today, there was a very excellent analysis of some of the problems plaguing B.C. Hydro. I won't quote the whole article but I would like to quote three paragraphs out of this article because I think this should be on the record and I think they are significant. The best source for information - believe this or not - does not come from British Columbia; it comes from the United States. It does not come in the annual reports from Hydro, but it comes instead from the offices of the U.S. Securities and Exchange Commission. I'm quoting now from B.C. Today:

"It comes instead from the offices of the Securities and Exchange Commission where Hydro is required to file detailed financial statements every time it wants to borrow money on the open market."

I continue to quote:

"The reports Hydro releases for domestic consumption are insulting in their lack of detail, but when the company wants New York to buy another $150 million bond issue, it goes out of its way to comply with the tough United States regulations.

"Hydro's last prospectus was issued in November, 1976, and it offers a good look at the corporation's current financial position as well as future plans.

"According to the prospectus, Hydro needs $5.267 billion in cash over the next five years. If the government increases bus service subsidies to Hydro during this period, the cash requirements could be reduced up to 23 per cent. But this would still mean that the corporation would have to borrow about $4 billion.

"Clearly inflation is driving up the cost of borrowing, and therefore the Hydro bills we all must pay. For example, the corporation's construction projects cost $1.8 billion during the last five years, less than half of what they're going to cost in 198 L"

The article goes on - and I won't quote it -- to point out how all these multi-millions and billions of dollars are spent. But it is significant, Mr. Chairman. One of the most significant points to me is that Hydro is not in any way really responsible to the people of this province.

Yesterday, I attended a hearing of the CRTC held in Vancouver. It is now hearing briefs presented by people opposing the proposed increase by B.C. Tel. The point I'm making is that even B.C. Tel is regulated federally - not as perhaps it should be, but it is regulated and they do have to appear before a commission in order to get a rate increase. But B.C. Hydro doesn't have to do that. They can arbitrarily increase rates without going through anybody. Perhaps they discuss it at their board meeting but they're not responsible to anybody in this House and, as far as I can see, in this province. To my mind, it's a

[ Page 2429 ]

case of the tail wagging the dog. B.C. Hydro is its own government and they're doing their own thing. I think, Mr. Chairman, that they should be responsible in some way to this Legislature.

I would like to briefly discuss one alternate source of energy that we should, perhaps, be considering. There is a need to increase the rates of the big consumers and perhaps leave the little guys alone, and perhaps in the process develop wood as an energy source in British Columbia.

I have some notes because some of this is a bit technical, Mr. Chairman, so I'll be referring to these notes in terms of power usage at some length.

The main argument that might be put forward is that Hydro's rate structure is loaded against the little guy. That's the argument I want to make in this discussion, Mr. Chairman.

The big consumers - the major companies - buy at bulk rates. They are far, far lower than what the small residential consumer pays in terms of rates. Our government started to correct that. We had increased the industrial and bulk rates by 70 per cent when we were the government, but there was still a long way to go. In addition, under various contracts many of the bulk and industrial rates could only be raised with two years' notice. Those increases of ours are only now coming into force.

The overall question these days is the question of conservation and alternate sources of energy. If we're to tackle energy conservation, then clearly we have to tackle the major consumers, in my opinion. The major consumers are relatively few in number. The bulk consumers take up to 40 per cent of the current electrical production - that is, 25 firms alone consume almost 40 per cent of the energy produced by our publicly owned electrical utility. Of those 25, 12 were major forest companies. These companies, in turn, have access to wood waste, which is an alternate energy source that we haven't looked at seriously in this province. These 12 companies consume almost four billion kilowatt hours a year.

So 60 per cent of the bulk consumers are companies in the forest product business who should be encouraged to use the wood waste as an energy source. The best way to discourage use of something is higher prices. Mr. Chairman, as an aside, the minister should have found that out as a result of doubling and tripling ferry fares. It works very well -we certainly discourage the use of our ferries by doubling and tripling fares.

We should argue that the time has come to leave the small electricity consumer alone and double the rates for the bulk user. If Hydro and the minister have any intention of being serious about energy conservation, then the thing is to increase the rates of the big energy consumers. Roughly, at the moment, the residential consumer consumes about 20 to 25 per cent of the electricity produced, but pays 40 per cent of the cost. At the same time, the industrial and bulk consumers use about half of the total energy produced by the electric utility, but produce only about 28 per cent of the revenue. Imagine that: 28 per cent of the revenue but using half of the total energy supplied!

The minister has argued for a user-pay system, but still hasn't given us a user-pay system on B.C. Hydro, Mr. Chairman. If we check into who the big users in British Columbia are, the reason becomes fairly clear, I think. The major resource companies of this province get the bargain-basement rates for electricity.

Mr. Chairman, I think I should read into the record who these major users are because I think it's important that we know. These major users, these people who use the 40 per cent of the electrical energy generated in this province are: B.C. Forest Products Ltd., Crofton; MacMillan Bloedel Ltd., Alberni; Elk Falls Ltd.; Canadian Occidental Petroleum Ltd.; MacMillan Bloedel Ltd., Powell River; Lornex Mining Corporation Ltd.; Utah Mines Ltd.; Erco Industries Ltd.; Eurocan Pulp and Paper Company Ltd.; FMC Chemicals of Canada Ltd.; Prince George Pulp and Paper Ltd.; Brenda Mines Ltd.; Similkameen Mining Co. Ltd.; Gibraltar Mines Ltd.; B.C. Forest Products Ltd.; Intercontinental Pulp Ltd.; Tahsis Co. Ltd.; Canex Ltd.; Bethlehem Copper Corp. Ltd.; Kamloops Pulp and Paper Ltd.; Kaiser Resources Ltd.; Canadian Cellulose Co. Ltd.; Hooker Chemicals Ltd.; Finlay Forest Industries Ltd.; and, finally, B.C. Chemicals Ltd.

It's ironic that those very healthy companies which are quite able to pay their bills should pay less than half of what the average homeowner pays. It's really ironic. Many of these companies should be encouraged to use their own waste materials -particularly the forest industry. These companies have chips and hog fuel lying in waste at the moment, and we all know that. They should be used, not burned.

Again, who are these companies? Almost four billion kilowatt hours a year are being sold to the major forest companies at bargain-basement prices. I don't think I'll go through the names, but I have a list of 11 companies which are in fact using about four billion kilowatt hours a year at the present time.

Of the bulk consumers of electricity, then, 60 per cent of the bulk sales were consumed by forest companies which have their own alternate energy in the form of wood waste. We generally don't think of wood as an energy source, but obviously it is. Wood was a major source of energy in the past, especially for heat. Even 20 years ago it was a fairly significant energy source in British Columbia.

The graph on page 42 of the May, 1975, B.C. Hydro report of the task force of future generation and transmission requirements indicates that the

[ Page 2430 ]

pattern since 1955 is very clear. We have shifted away from wood and coal over to hydro and natural gas.

In 1955, Mr. Chairman, the energy demand in B.C. totalled 210 trillion Btus. Surprisingly, of that total 30 trillion Btus were produced by wood, only 20 trillion Btus were by hydro, and Almost 40 trillion Btus were produced by coal. Thus wood, coal and hydro are comparable as energy producers as recently as 20 years ago. The balance of about 120 billion Btus was produced by petroleum. On a percentage basis it would follow, then, in 1955, that hydro produced 9.5 per cent of the total energy; wood, 14 per cent of the total energy; coal, 19 per cent of the total energy; and petroleum, 67.5 per cent of the total energy produced.

The situation now is roughly as follows for 1975, Mr. Chairman: hydro, 115 trillion Btus; wood, 50 trillion Btus; coal, 10 trillion Btus; petroleum, 325 trillion Btus; natural gas, 155 trillion Btus.

On a percentage basis, that again works out, Mr. Chairman, to: hydro, 18 per cent; wood, 8 per cent; coal, 2 per cent; petroleum, down to 47 per cent; and natural gas, 24 per cent. This means, on a relative basis, we're twice as dependent on hydro now as we were 20 years ago. Surprisingly, our dependence on a relative basis on petroleum has declined, as I just said, from 67 to 47 per cent. Natural gas, however, meets a quarter of our energy needs at the present time when it met none 20 years ago, Mr. Chairman. Coal has declined dramatically: 20 years ago it supplied 19 per cent of our energy; now it meets only 2 per cent of our needs. Would you believe that? Wood, too, has declined, from 14 per cent of the total to 8 per cent.

It is in the area of industrial and bulk consumption of hydro that we could probably have the greatest impact on demand, Mr. Chairman. These major consumers are consuming publicly developed energy on a huge scale and need an incentive to shift and develop alternate sources of energy. It must be recalled that 40 per cent of Hydro's demand is from industrial and bulk users. If that demand is cut, then the seemingly endless demands of Hydro for more dams and more projects are cut as well.

The means of halting the growth of this corporation that frequently seems out of control is to get control over demand. Increasing the rates to huge consumers is the way to do it, in my opinion, Mr. Chairman. This heavy demand, of course, means annual injections like the recent statute to increase their borrowing by half a billion or more. If demand is curtailed, then Hydro's borrowing will go down and the capital could be used for far more socially desirable purposes. Increasing the rates for the huge consumers might well have other very significant benefits, Mr. Chairman. It might push industry to improve their technology in terms of using wood for energy. In a province that is wealthy in wood, that could mean a lot for our future.

Presently on this planet, 10 per cent of the annual growth of trees could supply our current global energy needs. That was a surprising figure to me, Mr. Chairman, when I was researching this subject. In this regard, Brazil has seen the potential of some of their plant materials as an energy source, Mr. Chairman. In The Vancouver Sun of March 14, they've printed a story from the Manchester Guardian entitled: "Brazil To Grow Its Energy." It indicates that by 1985, Brazil plans to be producing 20 per cent of her requirements of notive fuels such as ethanol by the fermentation of sugar cane and the root crop manioc. Their initial investment is $340 million for greatly expanded crop areas. Distillery construction is progressing so fast that it seems probably Brazil will be producing enough fuel to replace all imported oil before the end of the century.

Their own studies indicate that less than 2 per cent of the country's land area will be needed to produce fuel equal to present consumption, which presently includes imports that cost over $2.55 billion a year. There are 70 new or proposed industrial alcohol distillers already operating in Brazil. They presently expect this to reach the market at 1.2 cents per gallon, compared to the 1.53 cents per gallon they're currently paying, Mr. Chairman.

The point of all this is that there may be a long-term future for what is an energy source. I hope the minister would comment on it when he answers. New Hydro rates for industry and bulk users would be an incentive to the industry to use their present waste and to develop the technology.

Mr. Chairman, as I said before, this minister's responsibilities with regard to energy are vast. I haven't discussed the proposed McGregor diversion; I haven't discussed as yet the proposed Dean River diversion. I haven't discussed the many statements that were made in the Legislature and outside this Legislature regarding further proposed price increases and cost increases to the consumer regarding B.C. Hydro. But I know the minister may want to comment on some of these remarks, so I'll await the minister's comments, Mr. Chairman.

MR. D.D. STUPICH (Nanaimo): I'm kind of holding back, Mr. Chairman, just in case the minister did want to respond.

I have a short issue, a different one, but one that's very specific and perhaps could come under a vote. But I'm not sure just what vote it should come under, Mr. Chairman, so I'm going to raise it now. It's certainly under the heading of communication.

Some time ago I raised a question on behalf of some constituents who are concerned about the fact that they don't have access to cablevision, very limited access to television, and little prospect of getting it in the foreseeable future. We wondered whether or not there was some possibility of doing

[ Page 2431 ]

something through the telephone system. I did raise this with my Member of Parliament, Mr. T.C. Douglas, and he raised it with the Canadian Radio-Television and Telecommunication

Commission, specifically a Mr. RX Oxner, cable TV branch, wondering whether something could be done about using the standard telephone system to carry cablevision programming. Of course, he replied to the effect that it's difficult and there are some technical and economic problems and all that.

We appreciate, Mr. Chairman, that there are all of these problems. And yet the province of Saskatchewan has moved to solve some of these problems and I'm wondering whether the province of B.C. would do anything along the same lines. In the province of Saskatchewan it's different in that the telephone system itself is publicly owned and the cablevision system as well is publicly owned. They are moving in Saskatchewan to use the telephone lines for carrying the television programming available on the cablevision service. I'm just wondering whether the minister would take this up with the federal government to see whether there is some possibility of using that same system to give better TV service to at least the rural areas of the province where the possibilities of getting cablevision are just too far in the future to be practical.

Mr. Chairman, if you can direct me to a vote I'll raise that question again, but I'm just not sure what vote it would come under. I'm quite prepared to wait. If the minister would care to bring it up later on, that's fine; but I would like some kind of response.

MR. C.M. SHELFORD (Skeena): Mr. Chairman, there has been a great deal of discussion on this issue in the last number of days. I would like to ask a few questions, especially on the tanker traffic going into Kitimat. Can the people who ship the oil be held completely responsible under federal regulations?

A second question: I would like to hear a little bit about the modern communications system which I understand is being used or will be used in the very near future on the coast of British Columbia.

I see in a copy of Marine Review that:

"One of the most sophisticated navigational systems in the world has recently gone into use along the British Columbia coast. Known as the Loran C, the $3 million system will be operated by the Canadian Coast Guard, western region, as part of a series of electronic navigation chains on the Pacific coast. A formal agreement was concluded between the Canadian and the U.S. governments last year providing the establishment and maintenance of the operation of the Loran C transmitting station and its associated monitor control systems in British Columbia."

It appears to be quite interesting, and I was wondering whether the minister could fill us in on whether in fact this is as effective as this report maintains. This is one of the great concerns of people, certainly up and down the coast of British Columbia.

Another question - the most important of all as far as the people of British Columbia are concerned -is can we in fact charge a throughput charge on the oil going through British Columbia similar to what they were doing in Syria back as far as 1945? In 1966 they were charging 14.6 cents. I would say that if we are going to take the risk on oil passing through the port of Kitimat, certainly we should have the revenue.

I am, however, concerned with the federal legislation or agreement they reached with the U.S. government. It appears there that no charge would be possible. However, there are certainly many other areas that should be looked at because, after all, it does cross our land.

Another minister is working very hard on a transportation system up to the north coast and I would hope that there will be a report in the very near future on whether the B.C. Ferry system will run a ship from Tsawwassen to Kitimat with an improved road from Kitwanga to Alaska. I'm quite sure this would be one of the best things to build up the whole economy of northwest British Columbia. SON would hope that the minister will be able to indicate how these negotiations are going on so that we will know whether there is any possibility for an improved economic situation in the northwest of this province.

There simply has to be a solution to this coast communication system which, there's no question, is worse now than it was in 1905 when my dad went up from Vancouver to the Queen Charlotte Islands when he thought he might start farming on the Queen Charlotte Islands. The coastal steamship service in 1905 was certainly far superior to the system which we find ourselves with today. I just can't imagine how the federal government got themselves into the mess they did by doing away with the Northland Navigation subsidy before they ever studied the problem. It's just unbelievable as far as I am concerned, and the people all up and down this coast are extremely annoyed that the system today is so inadequate for the development of the whole northwest of this province.

One thing I found very interesting, in doing research on the Alaska pipeline and the possibility of the line coming into Kitimat, was an article recently in an exclusive issue of Energy, a U.S. publication. In this article, they point out that Exxon is financing all of the environmental groups in the United States to try and stop the Alaskan oil deliveries. They're certainly strange bedfellows. I would have to say our friends across the way had better sit up and take notice or someone will be suggesting that they must be receiving payments to buck it also. But in this

[ Page 2432 ]

article it points out:

"From its inception the work of the Alaska oil pipeline faced bitter resistance from the Rockefeller off and financial interests, led by Exxon and the then chairman, John Kenneth Jamieson. The pipeline, which promises to make available new oil supplies in greater daffy volume than the production of the OPEC member countries and Alberta, was completed despite challenges from Rockefeller-funded environmental groups, pro-Rockefeller government officials and such Rockefeller legislators as Walter Mondale and Senator Bird of Indiana."

This article is well worth reading. It's interesting that they would want to stop the pipeline. According to this article, the reason they want to cut off British Petroleum and Atlantic Richfield is so that they can make a little more money bringing their own oil in from the rich Arab states, where they largely control the sources in that area. It is also interesting to note that when the Arabian countries wanted to increase their price of oil, Exxon and others insisted it go up a further $2 so they could do better on the Arabian oil than bringing oil out of Alaska.

There's no question that no matter what happens in the future, we will be short of energy, and I guess it's just a matter of when. The more nations that advance and require more energy, the more that conservation of energy will be extremely essential. As time goes on, the world simply couldn't afford another wasteful society such as we see in North America. When the environmental concerns jumped into the forefront in the early 1970s, conservation of energy was pushed to the background in the name of curbing pollution, and one of the best examples is the auto industry. It was pushed by the environmental groups, and the government also, to build pollution control devices on cars with absolutely no concern for energy conservation whatsoever, with the result that gas mileage - and we all know this very well -was reduced on many models to a low of around 10 miles to the gallon. On pickup trucks, it even went down as low as 5. Of course, before that time, most of these vehicles would do 20 and 25 miles to the gallon.

It was interesting to listen to a professor speak to the Truck Loggers' Association convention two years ago. He was from the University of Washington and, according to him, the pollution devices on automobiles accounted for over five billion gallons of extra gasoline being used in the United States alone. Of course, if you take the total world population and its use of autos, then you can multiply it a great deal more. What this simple means is that it took 10 of the largest refineries, running 24 hours a day, 365 days in the year, just to feed the pollution control devices. I think this is a good example of panic in trying to do something before we really know what we're doing. A realistic policy, of course, should have been that no car or light truck would be allowed on the highway that couldn't do 20 miles to the gallon, and each model coming in would be required to do five miles per gallon better - or better still, if it could do 10. Then, of course, you would bring the pollution control standard as high as you could to keep clean air but never reduce the mileage that a car will run. There is no question modem science can do this if required by legislation before any new model auto can come onto the market. In the past, it has been accepted practice that any model car or truck can come on the market as long as, first of all, it looks nice, , regardless of the energy it uses just to take one person from point A to point B.

I would like to ask the government to consider setting up an energy research fund of $100 million a year - this would be the governments of Canada and the provinces - 50 per cent federal and 50 per cent provincial. This would mean $5 million for each province. Only the interest should be used each year so that the fund would keep growing by an annual beef-up of $100 million. In that way, adequate research could be conducted into all types of energy. In the past, research has been done in years when revenue was plentiful, but in years of restraint research funds have been cut back. This has been very general all over. In fact, this is true in all forms of research, whether it be energy, agriculture, forest or mining technology.

It's interesting to note that British Columbia was very dominant in the production of strawberries 20 or 25 years ago. Then strawberry production moved to the U.S., and then it moved to Mexico. The really interesting thing, I think, is that the U.S. is now coming back into the domination of strawberry production simply because of research. Canada has always been behind in research and it's time, I think, we did something about it.

MR. BARRETT: You've got the votes mixed up, Cyril.

MR. SHELFORD: This is one of the reasons, of course, why many of our top research people have had to leave Canada to find steady employment elsewhere. We are falling behind in research in all fields, which is greatly reducing our ability as a nation to keep up with our competitors in other countries.

At this time, water power really is the only renewable major source of energy. It, of course, faces massive resistance from all environmental and wildlife groups. This is greatly reducing our ability, again, to keep up with other nations. Petroleum will be scarce. It's only a question of when.

One thing I think the government should also take a very close look at - and this includes all

[ Page 2433 ]

governments - is that no government knows for sure how many oil and gas wells have been drilled and then capped to keep surplus supplies off the market to maintain high world prices. In the book I quoted from earlier in this session, "Making Democracy Safe for Oil, " it mentions there the efforts of the various large companies to plug up wells to keep them from putting too much on the markets. One thing that's quite interesting is an exchange between an Exxon geologist, who said, "I'm sure there are 10 billion oil fields in the Alaska area, " and Howard Page, Exxon's Middle East production manager, who said, "well, then, I'm absolutely sure if there is we don't want to find it." I think it's essential that governments take more interest in how many oil wells are drilled and then capped purely to keep energy off the market to maintain a high price.

Coal energy use must be considered very carefully as it may well be needed for gas in the future. Atomic power certainly is a major source if it can be kept for peaceful use. It still has many problems for research to solve. Fusion power, wind power, tidal power and solar energy all require major research and will not likely be here for at least 20 years.

I guess the Chinese actually lead the world in tidal power. They irrigate thousands and thousands of acres along the coast of China with tide power. Of course, that's very easy because the tide comes in often enough to pump water onto the fields.

So again I want to urge this government to move now and lead the way in getting the federal government and the other provinces immediately into setting up the needed research programmes that we simply have to have if we're to keep ahead of the energy needs in the future. We certainly don't want to finish using petroleum and not have any alternative.

I'm convinced that such a fund of $100 million being put in each year is really not too much: $5 million a year for each province and $40 million from the federal government. The interest could be used each year so that as time goes by more and more research can be done. If revenues are hard come by, well then, the research can carry on, which is very necessary if we're to survive in a country such as Canada.

HON. J. DAVIS (Minister of Energy, Transport and Communications): Mr. Chairman, I have a few brief remarks to answer the member for Skeena's questions.

He asks about a tanker-tracking system. The government of Canada some years ago instituted a levy on off imported; this has built up to something in excess of $50 million. Some part of that money has been invested in tanker tracking systems, notably in the Strait of Canso where tankers are now arriving from the Middle East and South America. In Nova

Scotia there is an investment in tanker-tracking systems in various locations of the order of $20 million.

A similar system is being established on the west coast. The central unit is located in West Vancouver. It can locate all vessels, not just tankers but any vessel operating within a radius of at least 500 miles. It can locate then within 50 yards at any time. This system is superior to one that exists immediately to the south of us in the United States. There has been close liaison now for four or five years in respect to all kinds of shipping into the Strait of Juan de Fuca and more particularly into the Puget Sound and the Strait of Georgia areas. A similar system is being planned for the middle and upper coast of British Columbia. It also uses the Loran C technology that would be essential were there to be tanker traffic off our middle and upper coast.

I'm simply saying that not only does the technology exist but already on this coast there is a substantial investment in manpower and equipment. It is modem equipment and it can be effective. It should be immediately effective now in respect to the lower coast.

The hon. member asks whether British Columbia can make a throughput charge on oil moving from the Pacific Ocean across this province to destinations in the U.S. midwest. The answer really is no. It's to be found in a new treaty which has now been signed within the last few weeks by Canada and the United States.

MR. BARRETT: It has not yet been ratified!

HON. MR. DAVIS: It's signed by both countries, ratified by Canada . . .

MR. BARRETT: Not ratified.

HON. MR. DAVIS: ... and not yet ratified by the U.S. Congress. But it is signed by Canada, and perhaps I should read part of the text of that treaty as to its intent.

The text of the treaty reads in part:

" . . . convinced that measures to ensure the uninterrupted transmission by pipeline through the territory of one party" - that is, one country - "of hydrocarbons not originating in the territory of that party for delivery to the territory of the other party, the two governments have agreed:

" (1) No public authority in the territory of either party shall institute any measure or measures which are intended to or which would have the effect of impeding, diverting, redirecting, or interfering with in any way the transmission of hydrocarbons in transit; and

" (2) No public authority in the territory of

[ Page 2434 ]

either party shall impose upon hydrocarbons in transit any import-export or transit fee, duty, tax, or other monetary charge."

Canada as a whole, of course, is vitally interested in clauses to this effect in an international agreement, because virtually all of the oil consumed in Ontario and Quebec comes in by pipeline which traverses the United States. Even Alberta oil going to Ontario and Quebec goes south to the Great Lakes. Therefore it transits the United States. Eastern Canada - certainly central Canada - is very concerned about any possibility of individual states in the U.S. union imposing unilateral charges on that oil in transit for Canadian destination. So there is at least a central and eastern Canadian interest in clauses of that kind standing up and standing above the powers of individual states in the U.S. or provincial governments in Canada.

The hon. member refers to the possibility of using vessels now owned by B.C. Ferries on a run or runs north from the lower mainland and Vancouver Island to Kitimat. This is indeed a possibility. We're looking at the use of the Queen of Prince Rupert in the wintertime running from Tsawwassen north alternately to Kitimat and Prince Rupert and the Queen of Surrey on a run from the north end of Vancouver Island to both those northern ports.

If a roll-on, roll-off vessel or vessels were available, for example, to run from Tsawwassen to Kitimat, this would complete a low-cost route from the 49th parallel at Tsawwassen north to the Yukon. The route would see roll-on, roll-off operations up half of the coast, say terminating in Kitimat, and commercial vehicles - trucks, for example - then moving on north from Kitimat through Terrace, up through Dease Lake to Watson Lake in the Yukon. That route would be close to 1,000 miles shorter than the alternate all-road route involving the Fraser Canyon, Prince George, Fort St. John and the Alaska Highway. The government is presently investing substantial sums of money in the completion of the highway north from Kitwanga up through Meziadin and on to the Cassiar highway. When it's completed -and assuming a vessel like the Queen of Prince Rupert were operating out of Tsawwassen - we would have a relatively low-cost modern route for trucks to move north, up coastal B.C., and across northwestern British Columbia into the Yukon and on to Alaska.

The hon. member refers to conservation. Conservation is probably the best way of dealing with our energy problem in the future. There is a great deal of waste. The B.C. Energy Commission, working with other bodies across Canada and the National Energy Board, has a large programme underway. Reductions in house usage, for example, could at least be 30 per cent. In many instances in the lower mainland, energy consumption in homes could be cut as much as 50 per cent with proper insulation, double-glazed windows and that kind of thing.

Relative to his last point, an energy research fund, I agree that the fund idea would certainly provide greater continuity in respect to this kind of thrust. However, I would like to point out that the~ federal government and the provinces jointly are spending many millions of dollars now on conservation programmes. They're beginning to show, for example, in the form of the very recently announced home insulation programme that B.C. Hydro is advertising in the newspapers.

MR. GIBSON: Just before I embark upon this particular line of questioning, I was away for a day or so, and I wonder if the minister could indicate to me whether or not the matter of the Kootenay-Columbia diversion has been raised. I've diligently searched the Blues and I haven't found anything on it. Thank you, Mr. Minister.

As the minister is aware, this is something that B.C. Hydro has been studying for some time. I have here a press release dated July, 1976, that notes that the first phase of the study is well underway and into its second year, and so it continues. They have done a certain amount of work in engineering and all of the things that you study when you look at a potential hydro project.

As the minister is aware, this diversion is something that is permitted under the Columbia River Treaty in the mid 1980s if the government elects to go ahead with it. What I am concerned with is obtaining from the minister a reassurance for the people of the valley that the government has no intention of going ahead with this particular diversion.

In this, I think he could be assured that he is following the thoughts of his Premier. I have here a clipping of November 26 that is datelined Cranbrook from the Canadian Press. It says:

"Premier Bill Bennett expressed his concern Thursday about B.C. Hydro's proposal to divert the Kootenay River into the Columbia. "Speaking to a youth conference here, Bennett said he is personally against the project and intends to fight it, because it would result in major flooding from Golden to Windermere."

Well now, Mr. Chairman, I compliment the Premier for that statement. I'm against the project too, and I intend to fight it. Yet British Columbia Hydro, to the best of our knowledge, and to the best that the public can find out, is going ahead with its studies.

We know that Hydro considers this a very low-cost project. As a matter of fact, in one of their studies published a couple of years ago, I think that at most rates of usages and discount rates, this was about the lowest-cost project they had anywhere on their books. But some things are more important than that.

[ Page 2435 ]

It would produce relatively little power and it would flood a very beautiful area.

So to put to rest the minds of the residents of the areas who have been having meetings and writing upset letters to the editor and who have been trying to find out what they can from the government, I wish that the minister would just stand up in the House and tell us, on behalf of B.C. Hydro, that he supports his Premier. I know that as a minister he supports his Premier, but -will he assure us that B.C. Hydro will go along with the statement made by the Premier up in Kamloops and that there will be no development of the Kootenay-Columbia diversion?

HON. MR. DAVIS: Mr. Chairman, in answer to the member for North Vancouver-Capilano, I don't have the slightest hesitation in saying I agree with the Premier. I personally agree that this would be an undesirable project.

Let me comment, however, on the fact that B.C. Hydro is completing its investigations as to the cost of a possible diversion there. We have several unresolved issues ' along the 49th parallel, along the boundary between British Columbia and the United States. One of these is the Skagit River problem. Before we can resolve that and several other problems, we really need to know what our alternatives are. The flooding of the Skagit River back into Canada as a result of raising the Ross Dam would hurt British Columbia. Certainly the great majority of British Columbians are opposed to it. This government is opposed to it. As in most negotiations, you have to have some offset. In this case, the Skagit River flooding, British Columbia would be hurt. In the case of the Kootenay diversion into the upper Columbia, the United States would be hurt. We really need to know the particulars of our alternatives.

The former Minister of Lands and Forests was quite outspoken on this matter at the opening of the Libby Dam project on the Kootenay. He announced, or substantially announced, that British Columbia would be proceeding to divert the upper Kootenay into the upper Columbia across Canal Flats. This is always a possibility under some future government. Certainly the Columbia River Treaty permits it. B.C. Hydro is collecting all the necessary data for engineering and economic purposes, but I can assure the hon. member that it is unlikely during the term of this present government that any diversion of the waters of the upper Kootenay into the Columbia will take place.

MR. SHELFORD: Mr. Chairman, I'd like to thank the minister for his remarks. He's certainly very helpful and encouraging. The only thing I would say in regard to the throughput charge is that if the answer is no - and I don't really agree it has to be no - then I would say our answer also has to be no.

Otherwise, we'd be further behind than the Third World country of Syria. I don't see any reason why we should take the risk of oil coming through Kitimat unless the province of British Columbia gets some revenue out of it.

It certainly wouldn't impede the movement of oil, it wouldn't be diverting oil, it wouldn't be redirecting oil in it wouldn't be interfering. So as I read Article 2 - I'm not sure what the lawyers would do with it -we could, in fact, charge a throughput. I still think that they do have to have our approval somewhere, because after all, British Columbia has jurisdiction over land. I don't think for one minute we should be trying to hold up any project, because we do bring in oil across the U.S. on the east coast. I say in that case we should likely be paying them for the risks involved for coming across their territory, but I would again say that if the answer is no to any throughput charge, then our answer has to be no too.

MR. KAHL: Mr. Chairman, my remarks will be fairly brief. I just want to add my comments to those expressed somewhat by the member for Skeena in regard to oil tanker traffic.

A constituent of mine, Mr. MacLeeming, has been very much interested in this problem of oil tanker traffic on the west coast over the years. He has kept a fair bit of documentation and newspaper clippings that will be of assistance to me in making this presentation.

I don't think, frankly, that it's a question of not allowing the huge oil tankers on the west coast. I think they are coming and, indeed, they ply our waters even now. I think what we have to concentrate on is the navigational controls and assistance to those tankers when they are in the straits and when they are close to the shores. Certainly the information that I have goes back far enough - 1970-71-72 - when many proposals were made to both the federal and provincial governments in regard to some things that could be done.

I just want to take a moment to talk about some of the navigational controls. Foremost, I think, would probably be the use of radar tracking stations that could be used on land to mark the journey of each of the vessels when they come close to the shores. These could be scattered along the west coast and manned on a continual basis and would be in contact with the tankers which are enroute. Along with that, ' I think that it would also be very worthwhile to have a group of smaller boats which could be used by the coast guard or a patrol service on the west coast and which could be of assistance to the tankers. I think they could guide them as they approach various channels. It would not only provide that service but it would also provide an opportunity on the west coast for an increase in the shipbuilding industry, which is in dire straits, not only on the west coast but throughout the

[ Page 2436 ]

world.

Along with that, I can't help but believe that the suggestion put forth by this gentleman in letters to the federal ministries in October or December, 1970 and 1971, indicates that, perhaps, it would be very worthwhile that each of the boats that would take oil down our west coast should have helicopter pads, whereby expert navigational people could be located on the boat and used in the narrow channels and tricky waters here on the west coast. They would be our very own people, trained specifically for that job and they would do it as an everyday part of their work. At the same time, they could check the communications systems of the boat. They could check to see if they are adequately equipped with charts and they could make sure they are very safe before they ever enter any of the more hazardous channels which they might encounter.

I don't think it would take very much convincing for major shippers of oil if one or two of their boats were refused entry into a port because they were not well enough equipped . with charts or communications. Just simply tell them that they're not allowed to enter the port. You wouldn't have to do that very many times, I can assure you, before you would find that the shipping companies would make adequate assurances that, when their boats are hauling oil to the ports on the west coast, they would come well prepared. It's possible, I believe, even in some places on the west coast where there are smaller islands very close to these shipping lanes, to have stations set up. The staff could embark from that particular station and they could be checked at that particular point with all the necessary things they would require to ensure the safety of our waters.

I have a question, Mr. Minister. Since this dialogue has gone on between this particular gentleman and me - and I'd be happy to provide you with some of this correspondence if you would like to see it - I would be interested to know what part the provincial governments, past and present, have taken since 1970 in discussing this with both the United States and the federal government of Canada, to ensure that these things will be placed somewhere on the west coast and, indeed, implemented when the oil tankers use. our port facilities much more than they do at present.

HON. MR. DAVIS: To answer several of the questions raised by the member, I mentioned earlier the loran sea system which is being established by the federal Ministry of Transport on the west coast. Part of that system involves a large tower at Williams Lake, which will ultimately be the central location receiving electronic messages from all over the coast and will be able to pinpoint all vessels - not only those entering Juan de Fuca but also traversing the middle and upper coasts. In the Juan de Fuca Strait, visual aids and fixes are also possible. Lanes have been established: the incoming traffic stays on the U.S. side and the outgoing traffic stays on the Canadian side. Arrangements such as that, of course, are possible in other waters as well.

The federal pilotage authority - it is equivalent to B.C. pilotage authority - operates helicopters. They go out to meet vessels. Pollution control officers can also board any vessel which is suspected of having inadequate control or, more particularly, inadequate means or ways of managing its cargo. They can not only land on any vessel in Canadian waters or approaching Canadian waters but they can stop the vessel, they can turn it around. Several tankers which were offering to come into Vancouver harbour and pick up crude oil and take it to the east coast via the Panama several years ago were stopped and turned around. They were refused entry into Canadian waters because they were deemed to be unsafe by either the pilots under the B.C. pilotage authority or pollution control officers under the Canada Shipping Act.

The hon. member asked what British Columbia specifically had done since 1970 in this area. I really can't say too much about what may have been done in the intervening years up to 1976, but latterly my ministry has employed Captain Adlem. He was the captain on the Prince George, operated by the CNR up and down our coast for many years, and is now the captain of the Marguerite. In the Marguerite off season he has been engaged full-time looking at shipping routes, navigational aids and navigational practices not only on this coast but elsewhere, such as the Strait of Canso off Nova Scotia, the U.S. coast, both east and west, and in Europe.

We do have a special task force in the government, chaired by Mr. Bob Green of the B.C. Energy Commission, which has been looking at these offshore problems. Obviously that task force includes representatives of a number of departments, including the Department of the Environment. They, for example, are now firmly of the view that if Kitimat is to be a tanker port, the tankers should approach Douglas Channel by coming in south of the Queen Charlotte Islands rather than around the north end. And at this point in time, I think our own task force in British Columbia is probably better informed than any group, including the federal people, on this issue.

MR. W.S. KING (Revelstoke-Slocan): I have a number of questions for the minister related to B.C. Hydro and pertaining to local matters in my own riding that I wish he would give me some information on.

One of the more startling things, Mr. Chairman, is an article contained in the Arrow Lakes News but I would like the minister to dissipate that rumour for the House. I'll just quote the article; it's by the editor

[ Page 2437 ]

of the Arrow Lakes News, one Dennis Stanley:

"I had the most astounding rumour passed along to me last week, and after talking to several people from the general area involved I found out that they also have heard the rumour. It goes something like this:

"B.C. Hydro has plans of installing a dam on the Slocan River in the vicinity of Vallican which would raise the waters of the upper Slocan River between 400 and 600 feet. Not only the upper river but the lake as well, inundating the towns of Slocan, Silverton, New Denver, Rosebery, and the resorts and farms at the end of the Slocan Lake.

"Wow, that's a pretty heavy shock when I first heard it."

And indeed it is, Mr. Chairman. It's the first intimation I have had that any potential development was pending in that area. I was not aware nor am I aware of any study by British Columbia Hydro and Power Authority which has been undertaken to determine whether or not the Slocan River would be a possibility in terms of creating another hydro-electric generating plant, or a dam for storage purposes even.

Certainly I want the minister to comment on that, because this is a rather frightening proposition in terms not only of the considerable number of people living in that area but the tremendous recreational potential of the area. That's the last kind of spectre we need looming on the horizon which could have the effect of creating further lack of confidence in the area as a potential employment and employment creation area for the future.

I spoke~ previously on the minister's estimates, and I queried him about B.C. Hydro's commitment to compensate landholders immediately south of Revelstoke, in the area known as Five Mile, for damage which had occurred to their property as a result of the Hydro dams and the reservoirs increasing the level of the water table to the extent that ground surface water occurred, rotting crops and creating actual ground-level ponds in fields, and so on, which interfered with the value for grazing.

I pointed out, Mr. Chairman, that one of the lawyers for B.C. Hydro, at the public hearing in Revelstoke, gave a public undertaking to compensate these people. I read for the minister a copy of a subsequent letter which was received by one of my constituents involved from the land manager of B.C. Hydro, Mr. Glenn A. Schnarr, absolutely refusing to accept any responsibility for the condition created or to provide any compensation. I would like the minister to comment on that.

[Mr. Veitch in the chair.]

I think perhaps I'll give the minister a chance to answer these two very important points, Mr. Chairman. I do have some other matters pertaining to the policy of B.C. Hydro relative to rural electrification - the extension of power for those people in isolated areas who lack the amenities that most people in British Columbia take for granted. I would like to give the minister the chance to answer the first two questions.

HON. MR. DAVIS: Mr. Chairman, in answer to the hon. member for Revelstoke-Slocan, I would be surprised if there were plans for a 400-ft. high dam on the Slocan River. I've sent out for a definitive yes or no word from the planning people with B.C. Hydro and later this afternoon I'll let him know what they tell me. If there's anything going there at all, other than a rumour, I haven't heard about it. I would imagine that a 400-ft. high dam would involve a very considerable capital expenditure. Under normal circumstances, an item of that magnitude would have come to the board of directors at least once by now if there was anything to the rumour.

Secondly, in respect to compensation, I'm making inquiries specifically about the property in the Five Mile area to which he refers. I thought I should, however, use, this opportunity to briefly outline - it's of the nature of a single paragraph - the expropriation procedure of B.C. Hydro, which does shed some light on questions which the hon. member asked previously. The expropriation procedure of B.C. Hydro goes as follows:

"When a property is required by Hydro in connection with power supply, the negotiation is carried on between Hydro and the owner. If agreement cannot be reached, Hydro requests authority to expropriate. Such authority may be granted by the Lieutenant-Governor-in-Council."

In other words, this is by the cabinet.

"If the authority is given by cabinet, the avenue to settle by negotiation is still open. If settlement by negotiation is impossible, either party may request the Lieutenant-Governor-in-Council to appoint an independent valuator." The valuator is appointed by the government, not by B.C. Hydro.

"The valuator's report will make a recommendation to both parties on the value of the settlement. The valuator's findings are subject to appeal by either party. Such appeal is handled by a judge of the court whose decision is binding."

In most instances, I'm informed, Mr. Chairman, the valuations tend to be market value and not historic values.

MR. KING: Well, I want to thank the minister for his answers. I want to say, though, that being

[ Page 2438 ]

surprised by the possibility of a dam on the Slocan River is understating the reaction. I'd be absolutely appalled and shocked, and certainly furious if any such plan were underway, particularly without any indication to the public. However, the minister has undertaken to provide an answer later on, and I appreciate that.

With respect to the expropriation proceedings of .B.C. Hydro, Mr. Chairman, I want to assure the minister and the House that I'm very, very intimately familiar with the procedure. However, the theory of the approach laid down upon paper and what takes place in reality are very starkly different in many cases. It's true that the government will provide an evaluator when the difference of opinion perhaps as to the need for expropriation in the first instance, and the price that should be paid, is not able to be negotiated satisfactorily. But it's not only a matter of an evaluator, Mr. Chairman. There are a whole variety of dimensions that surround property value. The evaluator appointed by the government quite frequently works for the government and there is some question, at least in terms of appearance, as to his impartiality.

There's also the other question that in terms of all of the factors that go into land appraisal - soil content, a whole variety of sciences that may well be required to gain a fair evaluation - these are not provided by the government, whereas Hydro does have access to those things, to those kinds of opinions, and it tends to weigh heavily in favour of B.C. Hydro's appraisal. It's a discrepancy, I believe, and an injustice that should be looked at and cleared up.

Mr. Chairman, to get on with some of the other questions I have for the minister, I want to ask him whether or not any investigation has been conducted recently, or any decision has been made, with respect to applications which have been received for the extension of power lines into the Trout Lake area, which is north of Nakusp and south of Revelstoke -halfway in between. It's basically a mining area, with a good deal of logging, and certainly one of growing tourist potential, in the Trout Lake area and the Beaton area. We find that a great number of people are moving into these spots that had declined in population to almost nothing following the development of Hydro dams and the flooding of much of the land in that area a few years ago. There seems to be a back-to-the-land trend now, and many people from the city are moving into these more isolated areas.

Unquestionably there is a growth that will continue. I wonder if the minister has anything new to announce in terms of the many requests that are being received both in my office, at B.C. Hydro, and in the minister's office for some acceleration of rural electrification, and perhaps some more generous formula of sharing of the initial stages, at least -with respect to the extension of these services.

If the minister could provide me with some response in this regard I'd appreciate it, Mr. Chairman.

HON. MR. DAVIS: Mr. Chairman, I'm not able to give the hon. member a specific answer relative to a recent application, as he puts it, for power line extensions into the Trout Lake area. I know that the demand for moneys in the rural electrification fund certainly exceeds the amount of the fund by a good margin. As he also knows, we have just introduced legislation to extend that fund to the investor-owned utilities as well. I'll make inquiries as to the Trout Lake extension and let him know later.

MR. GIBSON: Mr. Chairman, I would like to take a few moments to express some sympathy for the minister, because we've been talking about B.C. Hydro and I'd like to know how he gets along with Mr. Robert Bonner. Mr. Bonner runs B.C. Hydro, as we all know. This is a question of real sympathy, because I know the minister didn't appoint Mr. Bonner. I like to be constructive; the most constructive suggestion I can make for B.C. Hydro is that Robert Bonner should be fired. I wonder how the minister gets along with this kind of man, Mr. Chairman.

Mr. Bonner's name and history have been intertwined with that of British Columbia for some years. There are a few things on the record that the minister ought to know as he attempts to go about his daily business, because we learned something new about Mr. Bonner last fall when a reporter in the press gallery by the name of Scott Dixon obtained a copy of the once famous and once again famous Butler report for the province of British Columbia. That told us a lot about Mr. Bonner. It told us that he is the kind of man who in performance of his public office will not necessarily see that justice is done, and may from time to time act to see that justice is obstructed.

Sometimes you have to ask these questions. I won't go into the case in any detail, but hon. members will recall that back in December, 1957 -some hon. member were in this House at that time -a lawyer by the name of David Sturdy went to see Mr. Robert Bonner and laid before him a body of evidence. Mr. Bonner was not hearing any of that, but he was obviously concerned about it because in actions that later came out at the trial he called in Mr. Sommers and evinced a good deal of concern. In due course, the body of evidence became public because Mr. Sturdy, on December 16 of that year, took the allegations before the Sloan commission, which refused to hear them.

Mr. Bonner was obviously a little bit concerned,

[ Page 2439 ]

because he commissioned Inspector Butler of the RCMP to look into this so-called body of evidence. On March 14,1956, Inspector Butler reported - the first of two reports made public by Mr. Scott Dixon - and he gives a good deal of evidence of transactions of cheques in and out which later turned out to be bribes.

Section 13 of that report reads as follows:

"Having spent a considerable number of hours questioning Eversfield and checking his story against the documents, the writer feels that there is definite indication of wrongdoing on the part of Pacific Coast Services Ltd., R.E. Sommers, C.D. Shultz, and B.C. Forest Products Ltd., but as to how far this can be proved remains for further investigation."

Further investigation was undertaken, and Inspector Butler reported further on March 20. Mr. Chairman, I have shown this report to competent prosecutorial counsel, and they say that one of two things should have happened: criminal charges should have been launched immediately, or police raids should have been made immediately to seize the evidence that had been unearthed.

MR. BARRETT: Shelford voted against Bonner's salary.

MR. GIBSON: In fact, what happened was that Mr. Sommers, with the encouragement of Mr. Bonner, launched a civil trial and Mr. Bonner hid behind that civil trial for 707 days - from the time that the body of evidence was first given to him until he was finally forced by the pressure of public events to launch a prosecution, and thereby successfully carried the Social Credit Party through an election in 1956 which this scandal would certainly destroy.

This sorry case in our history has been well known to the public, but what has never been known until last fall was the fact that evidence was available on Mr. Bonner's desk that gave a clear case that criminal prosecution should have been launched against his cabinet colleague right at that time, and it was not done.

So I want to ask the minister how he feels about associating with that kind of man day after day. I want to ask him how he feels as an old B.C. Electric man - which the minister is - about the piece of legislation that was brought in that took over the B.C. Electric and said there shall be no recourse to the courts in any event. That was one of the most shameful bills that was ever brought before this Legislature, and who was the Attorney-General? Robert Bonner!

Now he's sitting in charge of that corporation. I want to ask the minister who was Attorney-General of this province on that shameful day when there was brought into this Legislature a bill to expropriate a property on Deas Island for substantially less than a court of proper expropriation had decided should be paid. The Attorney-General was Robert Bonner. Once again, the cause of justice was not well served.

Now the story continues. As I say, this name is intertwined throughout British Columbia history. Another piece of evidence comes before us, and that is the Pearse commission report. The Pearse commission report makes reference to certain favours that were granted to MacMillan Bloedel in 1968.

MR. BARRETT: How about some of those old Liberal speeches - before they joined that crowd?

MR. GIBSON: Mr. Chairman, on May 27,1968, Mr. Robert Bonner resigned from the cabinet. He became senior vice-president of MacMillan Bloedel effective June 1,1968. At page 99 of the Pearse report, the commissioner refers to certain things that happened during 1968 - acts done by the then Minister of Lands and Forests, whose name is Williston.

I am quoting now from the Pearse report:

"There was another inconsistency in the treatment of these tenures about that time. Nearly half of the timber and pulp licences are held by one of the large coastal companies, and. these were renewed in 1968 for various periods extending until the year 2013, corresponding to a harvesting schedule proposed by the company. All of the company's licences were afforded this treatment - both inside and outside its tree farm licences - and many of those contained within the company's perpetual tree farm licences extend beyond 1972, in contrast to those held by other such tree farm licences.

"No formal agreement binds the company to adhere to its cutting schedule, and each licence provides that it may be renewed by the minister upon expiry of its revised term. No other licencees were offered extended terms for tenures lying outside their tree farm licences." That's all a little complicated to the layman, Mr. Chairman, but how does Mr. Pearse assess this? At page 103 he makes it very clear:

"At the outset, I feel it is necessary to say that the government's action in these cases was highly irregular and, in my opinion, improper. It is grossly inequitable that some licencees were given privileges that were not offered to others. By proferring special treatment to certain licencees, the government inevitably exposes itself to charges of favouritism and undermines public confidence in resource administration. Moreover, by reissuing certain annual licences for period of up to 45 years, the Crown's valuable option to periodically

[ Page 2440 ]

renegotiate their terms and conditions was forfeited."

Mr. Chairman, this happened in 1968, the year that Mr. Robert Bonner joined MacMillan Bloedel as a senior vice-president of that company. Amendments to licences of that kind were not given or afforded to any other company in this province - only to the one that Mr. Robert Bonner joined in that year.

Time goes by. Elections happen. It turns out that Mr. Bonner is no longer useful to M and B because there's a change of government. He returns to private law practice. And then there's another change of government and he's back. This time he's head of B.C. Hydro, the corporation that was created by that disgraceful bill that he, as Attorney-General and the chief law officer of this Crown, should have stopped and did not. Now he's chief officer of that public company. What an irony!

In that capacity, as was outlined by the hon. member for Revelstoke-Slocan (Mr. King) the other day, he is holding multiple directorships in other companies all around this province. You have to wonder if that's right. I don't think he has done a good job there, Mr. Chairman; I think he's the basic cause of Hydro's problems. I have sympathy for this minister because he's the basic cause of that minister's problems.

He has been running around the province, releasing the kind of information he chooses to release. One day he says: "You've got to have Revelstoke because you're going to run out of power in such and such a year if you don't." And then: "You've got to have Hat Creek, and if you don't have Hat Creek you're going to have nuclear power." It's the same old blackmail game through the withholding of information in some cases and the release of information in other cases, just as Hydro wants. And Mr. Robert Bonner is behind that.

So, Mr. Chairman, I just want to know how the minister gets along with him. There's more to be said, there's a lot more detail, but I think the minister can fill in the blanks. I think a year from now, when these estimates come up again, Mr. Bonner should no longer be with B.C. Hydro. I don't think Mr. Robert Bonner should hold high public office.

MR. BARRETT: I don't know what the intention of the member was in terms of raising this issue. I don't believe that the member raised it other than perhaps to go over a ghost that was long dead that was raised by none other than W.A.C. Bennett himself last fall. We can only begin to wonder about the psychological reasons why the former Premier (Hon. W.A.C. Bennett) decided to discuss this and make a statement to The Vancouver Sun. It was a ghost that was dead, but it was a ghost. It reappeared in visions - perhaps in guilt visions to some and righteous indignation to others; perhaps just related to long memories for other people.

This House usually goes through a dreary process of events that are catalogued as debates during the estimates. But once in a while a voice based on a continuum of the sordid history of politics in this province calls from the past that just cannot be let go by without some other words. And we are at one of those moments now. These are not the moments that are recorded in depth in the public newspapers or on television or on radio because they are so complex, so involved, and involve so many things that have long since gone by and facts that perhaps to some people are best forgotten.

What we're talking about today is British Columbia's Watergate that was never cleaned up. It was never cleaned up! It was a stinking mess then and that mess still lingers with a stench in the nostrils of any decent citizen in this province who at that time saw the unfolding of overpowering political Juggernauts and ruthless power by Social Credit to subvert the truth and subvert justice from taking place in this House.

How ironic it is that it's the son of the father who raised this first in this House and who was cast out of this House in the form of a villain because of the hostility raised when he used the words: "Money talks." We're not talking about peanuts; we're not talking about piddly parliamentary arguments. We're talking about vast fortunes that were made in this province out of resources, resources that obviously were given away for bribes, as proven in court. We're not making accusations that were not tested in court.

A minister of the Crown went to jail for five years, and the man who protected him for two years in this House sailed on, unprotected by those ill winds, to one success level after another, only to have this member again raise in the name of common decency and establishment of history the fact that that person who did sail on from that stinking mess into situations of comfort and security and political favour is none other than Robert Bonner.

Some people say: "Why should these things be raised?" Some people wonder: "Let it all lie; it's past, it's dead." Who was it who raised it in a voice perhaps tinged with psychological overtones of guilt and apprehension? None other than W.A.C. Bennett himself. Perhaps after this day passes and as memory fades, people in this province will say: "Oh, well, tut, tut. A little bit of a mess was discussed in the House and hopefully will be forgotten so they can get on with their business."

This kind of thing must never be forgotten because it stinks and it messes up the business of this province from the day it came to this House and until the day it's finally put to rest. It must be put to rest by not having people like Mr. Bonner in public positions.

A cabinet minister went to jail. Another hon. member of this House had his good career besmirched

[ Page 2441 ]

for two years before he finally regained his place in this House by the voters of this House. Another actor in the whole scene who is still left here is none other than the member for Omineca (Mr. Shelford) . He is from Skeena now, but he was from Omineca then. Very few are left of the players of that time. But as I recall the events prior to my arrival here, participating as a spectator in the events that unfolded during the early '60s, that member, when he was a member for Omineca, stood up - the lone Social Crediter, along with Mel Bryan - and had the guts to vote against Robert Bonner's salary at that time. He did! The ghosts are still here!

Although the smell is a little bit musty because of history, it stinks just as bad. It's a question of morality. It's a question of decency. By not doing anything about it this government has absorbed the past Social Credit responsibility. And those Liberals who crossed the floor and now sit as Minister of Labour (Hon. Mr. Williams) and Attorney-General (Hon. Mr. Gardom) piously avoid this debate, piously avoid any single statement related to Mr. Bonner when they stood in their places in this House as Liberals and condemned Social Credit. Now they've become part of that same government that protects that stink, that mess that reeks in the nostrils of any decent citizen in this province to know that it was Social Credit that had a cabinet minister go to jail for five years.

MR. CHAIRMAN: Hon. member, you are....

MR. BARRETT: Yes, I'm addressing myself to the vote, because the man who is responsible is responsible to that minister and that man is Robert Bonner. He subverted justice in this province and now he sits as the head of a Crown corporation as a reward from Social Credit.

Maybe there are not votes in what my friend the member for North Vancouver-Capilano (Mr. Gibson) did. Maybe it's uncomfortable for some people in public office, but I give him credit for having the guts to get up and talk about a mess that still stinks in this province. You tell us how you justify hiring Robert Bonner for the Crown corporation.

You mutter over there, Mr. Minister of Agriculture (Hon. Mr. Hewitt) . Don't you get....

Interjection.

MR. BARRETT: Dirty politics? The most filthy politics that ever took place in this House took place when Robert Bonner was the Attorney-General and hid for 707 days behind the Butler report. If you're justifying that, then, my dear friend, you have no perspective of your responsibility in acquiring the history of this place.

The statements made in the Pearse report were bad enough. My friend, the member for North Vancouver-Capilano, has not made any connection between the Pearse statements, only recited Pearse's statements and the facts in the sequence of events. Let the public judge that! But my friend has asked a very straightforward question with a brief review of the history of this whole situation. I think my friend has a right to ask that question.

How does it sit with you, Mr. Minister? How does it sit with you, knowing all those things, to have Mr. Bonner the head of that corporation? Was it your choice? Was he foisted on you? Do you feel comfortable with the knowledge?

It's not nice. It may appear to be smart. It may appear to be good politics to the good old boys of British Columbia - the Huey Long rewards - but it's not nice; it's not decent. The most honourable thing to do is to ask Mr. Bonner to please fade from any public role with a Crown corporation.

I agree with the member for North Vancouver-Capilano. You want to make hard party lines? Remember what you used to say as Liberals. How do you justify keeping that man as the head of that Crown corporation? I'd like to know the answer to that. Your silence condemns him.

MR. C. D'ARCY (Rossland-Trail): Mr. Chairman, I'm going to speak about the British Columbia Hydro and Power Authority fairly briefly, because I don't want to recanvass material which has been covered by previous speakers in this minister's estimates or in previous bills or estimates discussed in this House.

However, I would like to reiterate the position I have taken for a number of years - before I was even in this House - that British Columbia Hydro should not be making decisions about energy. They should not be making those decisions about energy, not because they're irresponsible people, but because they have a vested interest in seeing that the energy demand and the power demand in this province stays high. I believe that the Energy Commission should be making those decisions because the Energy Commission is a public body, a responsible body. They make public decisions with public responsibility and, most important of all, public accessibility and public input.

We have a great deal of construction activity by B.C. Hydro going on. We have this going on in the face of a borrowing increase by that corporation that's in the neighbourhood of 60 per cent a year. This is what the Authority has told the public; this is what they've told the press. They publicly stated that over the next five years they intend to increase the ceiling on their borrowings - not just the amount of their borrowings, because they're going to be repaying some old debt along the way there - by 60 per cent a year.

This is at a time when, even though we're going

[ Page 2442 ]

through a seven-month drought in British Columbia, we have seen a situation where there is enough flexibility and enough excess capacity by B.C. Hydro to sell water to Bonneville Power. They sell water for their power production and irrigation down there, as well as for recreational purposes and domestic water consumption. They still have that kind of flexibility. The projects under construction in B.C. will increase that capacity of power by 55 per cent. I'm referring to the non-completely machined Mica Dam project, the Seven Mile project near Trail and the Kootenay Canal, which is not complete as yet. I don't suppose a final decision has been made on Hat creek as yet, but I think it's becoming more and more evident that we are going to see a thermal plant developed at Hat Creek. It would appear more and more as though the Revelstoke Canyon project is going ahead as well.

Mr. Chairman, in a situation such as we are in in B.C., where we need industrial growth and a greater capacity for employment, I would challenge the minister to show this House that it is good business to tie up that kind of borrowing power and that kind of capitalization when there can be no evidence shown that, in fact, that power is needed. In fact, the Energy Commission and some other experts in this province would indicate that we have overbuilt right now and we certainly should be slowing down in what we're doing.

I note that the corporation in three years has seen its profits fall to one-twentieth of what they were. In 1973, B.C. Hydro had a profit of $21 million; last year it was down to $1.3 million. At the same time, we have seen its annual growth rate of indebtedness go from 8 per cent a year to 60 per cent a year. We have seen. its indebtedness go from $1.8 billion to nearly double that. Mr. Chairman, I think that is a debt growth rate which is completely out of control. For the government or the minister or the Premier to say, "Oh, we can't control B.C. Hydro, " is, I think, utter nonsense. It is a Crown corporation; it is responsible to the government. The government appointed Mr. Bonner, the Minister of Energy is the minister responsible, and they can control the British Columbia Hydro any time they want. But to stand back and say - "Oh, it's out of control; we don't understand why they're doing some of the nasty things they're doing; we can't understand why their debt is growing the way it is." - is simply side-stepping the issue and pretending that they don't have the control over it. They certainly do.

Mr. Chairman, we have a situation, just to underscore what I am saying, where the interest payments last year alone are in excess of the gross revenue of a year as recent as 1968. The interest payments of 1981 will once again be greater than the gross revenue of 1976. That is the kind of geometric projection which we're seeing in the public responsibility, and which we will will to our children and their children in terms of dollars with the borrowings of this corporation. I suppose, if it could be shown that this was absolutely and totally necessary, I would be a little more sympathetic to the needs.

Less than two years ago, notice was served to the major industrial power consumers of B.C. Hydro that they were going to begin paying 70 per cent more for bulk power. I note that the rates that they're presently paying are approximately one-third of the rates the authority charges to residential, commercial and minor industrial users. Even though their rates are going up by 70 per cent, there is no question that if the rates were equalized in this province, British Columbia Hydro, assuming it sold the same amount of power, could have the same amount of revenue and reduce the rates to residential, commercial and small industrial consumers by probably 50 per cent, and possibly more than that.

We see the spectacle in B.C. of the Hydro Authority charging everyone in this province $3 a month, $36 a year, just for the privilege of getting a bill, before they even begin buying any power - a $3 surcharge - and yet we look at the fact of our major industrial consumers paying substantially less. I'm not talking about just 10 or 15 or 20 per cent less, but 60 or 70 per cent less than commercial, residential and small industrial users. Mr. Chairman, I think that is an absolutely gross inequity. I think it's quite logical that some of our major industrial consumers could find it in their interest to generate power from other sources - possibly internally, possibly in some other way, possibly lessen their power consumption as a part of their productivity - if they didn't have this ready, cheap supply of power.

You yourself, and senior officials of Hydro, have stated several times recently that the era of cheap power is over in B.C., yet we see that major industrial users, who consume almost 50 per cent of the total sales of B.C. Hydro, are still getting power at very, very cheap rates. Maybe the minister is intending to do something about this over the next few years, but we haven't seen any indication of it as yet. Certainly the cost of power, as a percentage of net sales of our major industrial consumers, is a very, very minor factor. I don't think we could countenance the argument that if they paid their fair share - if they paid anywhere near, say, the cost of natural gas, or anywhere near the cost of purchasing bunker C in terms of energy units - they would be put out of business. I don't think that's true at all. I think that industry can afford to pay more as long as the manufacturing consumer can afford to pay substantially more and as long as the commercial consumer and the residential consumer can afford to pay two or three times as much. Then I believe our major industrial consumers can afford to pay the same amount.

[ Page 2443 ]

Mr. Chairman, I would like to throw a few questions at the minister which he may consider minor, but I think they're fairly important to people living in the southern part of the province. The first is a question which I've raised before. This is the matter of the British Columbia Hydro and Power Authority not paying property taxes on its generating units, and the minister knows that. He also knows that when he was with British Columbia Electric, they did pay property taxes on their generating units. British Columbia Hydro never has. It's true they pay on substations, and occasionally on powerline easements, but they don't pay on their generating units. I think this is inequitable.

We expect industry to pay its taxes; we expect private power projects to pay their taxes. I believe that British Columbia Hydro can pay its taxes, too, and particularly, Mr. Chairman, when we consider the fact that most of B.C. Hydro's major generating plants are not in areas which benefit at all from the power generated there. They get absolutely no benefit whatsoever. The power is, in fact, exported to provide jobs in business and industry and a good standard of living in other parts of the province. In fact, the Peace River area, the Kootenays, and the Revelstoke area receive absolutely no tax benefits at all. I hope the minister is seriously considering that.

Dealing with taxes a bit more, Mr. Chairman, I believe when the Minister of Energy held a seat in Ottawa - he may even have had something to do with it as a cabinet minister - the federal government began rebating corporation taxes paid by private electrical utilities to the province of origin. We have seen, under that programme, that the federal government has been paying as much as $600,000 a year into the British Columbia general revenue of corporation taxes paid by private utilities - in British Columbia's case, principally West Kootenay Power and Light and Cominco Ltd. These moneys are not to be returned directly to the companies involved; rather the idea is that they be returned directly to the consumers as a credit on their bill. We see an example of this in Calgary Power which does exactly that. The money is channelled from Ottawa, through the provincial government in Edmonton, and shows up directly as a credit on the bills of customers of Calgary Power.

I think, Mr. Chairman, this is one more discrimination that this government, and previous Finance ministers as well - two or three of them, because I believe this plan came into effect around 1969 or 1970 - make in favour of British Columbia Hydro and against those areas of the province which have been buying power from other power utilities. I would hope that the minister - I realize he's not the Minister of Finance - would be using his clout in cabinet to influence his colleagues to see that this direct credit to the consumer - a social credit, if you like - which was designed in that manner by the federal government in Ottawa when he was a member of that government, will be passed on to consumers of power who are purchasing it from private utilities in British Columbia.

Mr. Chairman, returning briefly to the question of taxation, I said earlier in debates that my questions from the provincial Assessment Authority, and from the companies involved themselves, indicate that in my constituency we have a power project which pays $800,000 a year in property and machinery taxation and in land and improvements. It pays that $800,000 a year to the regional district, school district and to the provincial government as far as the general 10-mill levy. That's a very valuable source of revenue for amenities and facilities in the West Kootenay.

Very near to that project we have another one being built by British Columbia Hydro which, unless the government makes a major change in its taxation policy, will pay absolutely nothing, even though such a change was recommended in the McMath report. And we have the same anomaly in Castlegar where we have a power project paying $600,000 in general revenue, in school revenue and in regional district revenue for hospitals, primarily in recreation, and we have another project that would probably be assessed at, I would estimate, two and one-half times.", I'm speaking of the Arrow Dam. I believe with its lock facilities and its control gates and the fact that it is much newer, they probably will be assessed at two and one-half to three times the Brilliant Dam, which is strictly a power project and is about 30 years old.

So I think that we could reasonably estimate that if the one produces $600,000 a year, we're perhaps looking at $1.5 million to $2 million a year. The Regional District of Central Kootenay and the city of Castlegar are being denied this, and this is in the face of a project which the minister well knows in many ways seriously altered the quality of life in West Kootenay.

We had all the costs and all the problems, and we got none of the benefits of that particular project. I hope the minister is sympathetic. Obviously the Finance Minister (Hon. Mr. Wolfe) isn't or we would have seen the change by now. But certainly this is something which we should have dealt with a long time ago because this is an economic problem.

There is no question that when land is flooded behind the Arrow Dam, behind the Duncan Dam or behind the Mica Dam we suffer a direct economic loss to this province. Only look at the forest industry; forget about the agricultural values, forget about property taxation, forget about the quality of life, forget about the recreational values. If we only considered the loss in. average allowable cut in the appropriate PSYU, we'd see a tremendous loss of employment, we'd see a tremendous loss of a renewable resource.

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I hope the minister will agree that our most productive areas of forest growth in this province are not on steep mountain slopes and in higher elevations; they are at lower elevations on relatively flat land. These are precisely the kinds of lands -thousands of acres, tens of thousand of acres, in fact hundreds of square miles - that were flooded by these projects. So we suffered a permanent economic loss not only for the province but certainly specifically for the region.

As I stated earlier, the power generated from these projects and the downstream benefits from these areas accrue to other parts of the province and directly to the provincial government. There has been no industry accruing from these projects and there has been no lower power costs for the area - indeed no benefits. In fact, we have not even had the benefits of property taxation which private developments would have had.

I think it's totally anomalous that when B.C. Hydro has to build a substation in the lower mainland or on Vancouver Island or in some other part of British Columbia to break down the power made in the Kootenays and received under downstream benefits to distribute to consumers and industry in those parts of the province, they pay taxes in those areas. But where the power is actually generated originally they pay not a penny. Looking at revenue of B.C. Hydro for this year of 1977, I think the projection we're looking at is revenue of $600 million. It seems strange to me that the Power Authority cannot afford $1.5 to $2 million, which comes to perhaps one-third of 1 per cent of that money for power projects, for taxation in areas where private industry and private corporations would be paying taxes and where they themselves have a very poor image.

I believe it would go a long way in changing and improving the image that British Columbia Hydro has in the southeastern parts of the province. I know the minister was not responsible for some of the things that went on in the mid-Sixties, but I'm sure he is aware of them. I'm sure he is aware of the enmity and the animosity which many people in southeastern B.C. feel toward British Columbia Hydro for the sorts of things and the sorts of goings-on and expropriations that went on when the projects that were constructed under the Columbia River Treaty were proceeding.

Mr. Chairman, I would hope that the minister will slow down the rate of borrowing by the British Columbia Hydro. I would hope that he will not necessarily stop construction but certainly reconsider the rate of construction in B.C. I sincerely hope that the responsibility for deciding what power is needed in British Columbia, what our energy requirements are, and what sort of power projects should be built, and when and where to meet those requirements - whatever they are - will be taken away from British Columbia Hydro and- given to a public body under government control, such as the British Columbia Energy Commission. Thank you, Mr. Chairman.

HON. MR. DAVIS: The hon. member has raised several questions and I'll endeavour to answer them.

I personally believe that government-owned utilities and investor-owned utilities should be treated on the same basis. Their customers should certainly receive the same treatment from the state. In other words, I'm agreeing with him that the rebate of corporation income tax should flow through to the consumers in areas served by the investor-owned utilities. I'm wondering why previous governments haven't done this; it's done in other provinces and I think it's desirable here.

I agree also that they should be required to pay the same property taxes. For example, looking at a breakdown of B.C. Hydro's costs in the past year, I notice that all payments - grants, school taxes, water rentals - account for something like 7 per cent of the gross income of B.C. Hydro. I'd be surprised if the additional property taxes, which the hon. member from Rossland-Trail (Mr. D'Arcy) is talking about, would be in excess of 1 or 2 per cent, so it is not a major item of cost. It would indeed add to the total income requirement of B.C. Hydro, but not in a formidable way.

At the outset, he referred to the desirability of building the Revelstoke project. It's similar in size to the Hat Creek project, , which the previous government appeared to be committed to - namely, on the order of two million kilowatts. It is required, according to the B.C. Energy Commission. It is required for several reasons - load growth and so on, but also because we need hydro power soon so that we won't have to burn precious natural gas in the Burrard Thermal plant near Vancouver. We've had to bum gas, which is irreplaceable, in the past. We shouldn't have to do this in the immediate future and we'll not have to do it if the Revelstoke project proceeds. Assuming that the Revelstoke project is a year or two ahead of time, which the Energy Commission did not say it was, it will ultimately be needed anyway.

I think the basic problem that Hydro faces is that nowhere on this continent have governments limited the energy usage of consumers. It's the consumers who've essentially called the tune, and with the quadrupling of world oil prices and the trebling of oil prices on this continent, people have tended to use electricity more than they would have done otherwise. It's this kind of pressure on the demand side which is causing utilities, such as Ontario Hydro, Quebec Hydro and the big utilities in the United States, to go on building at much the same rate as in the past. Their problem is similar to the problem of

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people financing a new home nowadays. The new home costs two to three times what it would have cost in 1968 and the interest rate might be double as well. So there's a compounding effect. Not only is the cost of the new facility much higher than it was a few years ago, but the interest rate is also perhaps 10 per cent rather than 6 or 7 per cent. These are the basic reasons why power of all kinds is costing a great deal more.

Obviously we have to cut the rate of growth of demand down and there we're talking about requiring people out there to do something different than they've been accustomed to doing in the past.

MR. WALLACE: Mr. Chairman, I'd just like to follow on with some comments on Hydro, since the minister has been on the subject.

I think the public find it very confusing to read, from day to day and week to week and month to month, about the often confusing, if not contradictory, statements about our overall energy policy, particularly the means and the locations for generating electricity and the various reasons that are given as to preferring one form of generation over another.

I wonder if the minister could make some response to this whole question of the Hat Creek coal project and its relationship to other projects such as Site C, the McGregor diversion and the Kootenay diversion. There was a very detailed review of this particular part of energy policy by the government in the Province on Wednesday, March 9. One of the very interesting statements which I would like the minister either to confirm or correct is that, if the Hat Creek project were to go ahead, the same amount of electricity would require not one, but three new hydroelectric projects - namely Site C, the McGregor diversion and the Kootenay diversion.

Now we've heard this afternoon that the minister and the Premier are not at all happy with the concept of the Kootenay diversion. We had the report, which appeared in the press just the other day, carried out at the federal level by Environment Canada, outlining the very serious damage to the salmon industry which will result from the ongoing development of Hydro projects on our rivers. In fact, that federal report quite clearly states that it strongly recommends against any interference with the McGregor River. I can't recall offhand the exact kind of money that would be involved annually in terms of loss to the fishing industry, but it's certainly very considerable.

That study was held in 17 different communities last November, Mr. Chairman, and it received close to 250 presentations. That report said quite clearly that in particular there should be no dam construction on any portion of the Fraser, Skeena or Nass systems, and planning for the McGregor diversion should be terminated immediately.

I'd say that these are pretty strong words which don't leave any doubt that the west coast salmon fishery stock would be in very serious trouble. Now I've no wish to go into this in great detail, because the member for Alberni (Mr. Skelly) has covered this in previous debates, but I don't recall any particular reference in previous debates to this federal report which was commissioned by Environment Canada and supervised by Mr. Glen Sinclair.

So we have two particular river projects, the Kootenay diversion and the McGregor River diversion, which already have strong reasons to be, if not seriously reconsidered, perhaps even abandoned. I gather the only advantage of the McGregor diversion would be flood control. There has, of course, been quite a bit of public reaction suggesting that the flood-control argument is a scare tactic by which B.C. Hydro would find it easier to gain some measure of public approval for going ahead with the diversion of the McGregor River.

So these are the equivalent of the Hat Creek coal project. They would require three other projects to provide the same amount of electricity - namely the Site C, the McGregor diversion and the Kootenay diversion. We already know that two of these three have some very solid reasons for being unattractive and causing some very unfortunate consequences, which really only leaves the Site C and the Peace River.

So I wonder if the minister can confirm that the Hat Creek coal project is all but certain to go ahead, not only because of the inherent positive values that it has in itself, but because of the great amount of electricity that it would generate, and the fact that these other options that are being considered -particularly the Kootenay diversion and the McGregor diversion - have many reasons for being unattractive and avoidable if possible.

The Hat Creek coal project, I believe, has other possible side benefits. We talked on this in an earlier debate. The ash contains a high percentage of alumina, and this might be a very attractive boost to our aluminium industry, and avoid - the importing of bauxite - which, I gather, is the way in which the alumina is obtained by Alcan at the present time.

I understand there's also the potential to develop concrete manufacture of some type also using some of the by-products. So the more one reads about the Hat Creek coal project, the more it seems that this will go ahead in much the same way that we have had a lot of hearings on the Revelstoke Dam. But I think we all know or we all sense that that Revelstoke Dam will go ahead, regardless of all the reasons that have been put forward against the project.

But what many people react to in letters to their MLAs and in the press and publicity in many ways is the apparent ongoing array of options without anything in the way of a clear-cut decision by Hydro

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as to which direction it's really going. When the chairman of Hydro comes out and talks about the inevitability of nuclear power, when the minister is obviously, by his statements, much more interested in exploring just about every other option than nuclear power, it's small wonder that the people of the province are somewhat confused.

I want to refer to the management of Hydro in a minute, but I believe most definitely that B.C. Hydro has lost public confidence. It has lost confidence in the management from the top down. There then follow the questions by the public as to whether Hydro's efficiency in looking at these options and coming to the right decision is any more likely to be correct than, for example, the chairman's rather unilateral position regarding nuclear power.

I notice the report on Hat Creek coal is to be in the hands of the directors of B.C. Hydro in October of this year and that it is anticipated, according to this report, that Hydro and government must make the crunch decision on the Hat Creek project this October. I would like to ask the minister if that is a valid statement. If it is not correct, when will the decision on the Hat Creek project be made? If the Hat Creek project proceeds or if the decision is made to proceed, does that more or less confirm that the Kootenay diversion and the McGregor River diversion will not go ahead but will be abandoned? How soon is it likely that the minister will be in a position to make that kind of announcement?

Again, I just want to make the point that the Hydro rates and the service charge are certainly causing real hardship to senior citizens and other citizens on fixed incomes or citizens who have little capacity to bargain for a higher income. I wonder if the minister has given any further consideration or if there have been discussions as to some way in which he might at least soften the blow of these recent further 14 to IS per cent increases in the Hydro rates. I think that while they are undesirable, obviously, to every consumer, they are particularly hard on the groups that I have mentioned. The minister earlier on suggested that the administration of a discount for a particular group or groups would be difficult to implement. I would ask whether or not the will is there to give them some relief. Or are we just seeking an excuse by saying that it is administratively difficult?

I notice in tonight's newspaper that the Premier of the province has announced that B.C. Hydro will be getting three new directors. The Premier, I might say, seems to choose to make more policy statements outside this House than he does inside the House, and yet when we ask legitimate questions in question period, we are often told the minister can't answer it because he would be revealing government policy. I wish we could get some kind of standard as to what is policy and what isn't policy. At any rate, Mr.

Chairman ' I wonder if I could ask this minister if these three new directors have been chosen. Have the individuals who will fill these three new slots accepted positions in the administration on the board of B.C. Hydro?

He has said that the reason that these three new persons will be on the board of B.C. Hydro is that it will make B.C. Hydro more accountable to the consumer. He has also said that "innovative new ways will be introduced to make Hydro more representative of the people of British Columbia." I wonder if the minister, since this is where the public business is supposed to be done and not at a speech at the Empress Hotel, could tell us, the elected representatives in B.C., what these innovative new ways are and how they will make B.C. Hydro more representative of the people of British Columbia.

The Premier also said that there is "depth of viewpoint needed on the board of directors." I wonder if the minister would tell us just exactly what viewpoints we are talking about. Is it the initial question I raised? Is it more depth of viewpoint on our whole energy policy - which particular sources of energy we should be concentrating on and which options we should be exercising? Too often, as I have already said, we seem to be going on and on and on looking at options, but there seems a real lack of decision as to which of the options we are going to exercise.

The Premier also said today that Hydro has a major communications problem. We've already heard the Minister of Municipal Affairs and Housing (Hon. Mr. Curtis) responding in question period to questions that were raised from this side of the House about the breakdown or, if it isn't a breakdown, certainly an unsatisfactory kind of communication between transit and the Minister of Municipal Affairs and Housing - that part of transit which is operated by Hydro.

We get a whole lot of information on one of the pages of tonight's Victoria Times from a speech that the Premier made today in the Empress Hotel to the B.C. Association of Broadcasters. I think it would be very interesting to have the minister responsible for Hydro give us some additional information, both to explain what the problems are and what these new innovative ideas are, and describe the more accountable way in which B.C. Hydro will be represented as a result of these three appointments.

One part of the energy discussion that has been overlooked, it seems to me, or at least treated very lightly, is the conservation of energy. We're all talking at great length about how we should drill more wells and find more oil and all the various options we should be exercising. One critic I've been reading is from the Massachusetts Institute of Technology, Mr. Amory Lovins, who is an energy consultant and also a consultant to the Organization for Economic

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Co-operation and Development in Paris. In talking about B.C. Hydro he says:

"Very few utilities in the world are talking about a 9 per cent growth rate, except Western Australia where they have a real cowboy attitude. If B.C. Hydro keeps on with this kind of growth it will drag itself, if not the whole province, into insolvency."

I imagine if Mr. Lovins is a consultant of that calibre, working for MIT and the Organization for Economic Co-operation and Development in Paris, he must be a highly knowledgeable expert. Once again, we come back to public confidence in Hydro when they are predicting figures of Hydro increases which international consultants apparently feel is something of a "cowboy" approach. I'm not sure what that word means. I've no intent to insult the cowboys in British Columbia, but it would suggest a rough-and-ready approach, perhaps, to a very complicated scientific area which should only be assessed and predicted on an equally scientific basis or on studies that are scientifically reliable.

The area of conservation of energy certainly seems to have been touched on very lightly. I want to ask the minister specifically: how is that if you happen to live in Nova Scotia the government there is getting federal money to allow householders to insulate their homes with an outright grant of $500, but if you want to insulate your home in British Columbia, you can borrow from B.C. Hydro at 10 per cent? Here again, Mr. Chairman, is just a typical example of why Confederation is falling apart. We are not having an equitable application of the principle of Confederation in all the provinces that make up Canada.

I've referred on previous occasions to the ferry subsidy and we won't go into all that again. As far as the subsidies for insulation are concerned, we are already paying equalization payments to the Maritime provinces, and I agree with that. We are already paying a 10-cent subsidy on a gallon of gas. We're subsidizing heating oil because of the particular hardship to the Maritime provinces where in one of them - I just can't remember the province....

AN HON. MEMBER: P.E.I.

MR. WALLACE: Is it Prince Edward Island? ... I think all their electricity is generated from the burning of oil.

I'm not, in any way, against these general agreements that are worked out at the federal-provincial level on such matters as equalization payments and the federal subsidy which creates a two-price system for oil. But when it comes to incentives to the individual to conserve energy, which I think is a great deal more important than any kind of incentive always to go looking for additional supplies of non-renewable resources, then I think it should be applied equally across Canada. I don't see why homeowners in Nova Scotia should get $500 to insulate their homes but if you or I want to do that in British Columbia, we have to borrow the money at 10 per cent interest. Why 10 per cent? You can get money at the bank for 10.5 per cent. I checked that out today. So for a project of this kind....

Interjection.

MR. WALLACE: No, I've got my figures right. The Canadian Imperial Bank of Commerce in Victoria confirmed to my office today that they would lend money for this kind of project at 10.6. Oh, I beg your pardon - not 10.5, 10.6 per cent. This means that Hydro in British Columbia is not making any big deal to the benefit of the consumer when they're saying: "We'll lend you money at 10 per cent to insulate your home." It's particularly galling when we have the direct subsidy being provided in the eastern provinces.

There is an interesting article in our newspaper back in February entitled: "The Provinces Are Boiling Over Subsidies." P.E.I. gets all its electricity by burning oil, Nova Scotia depends on oil for two-thirds of its electricity, and New Brunswick for one-third. Ottawa's argument for the programme of insulation grants is that it will save householders money year after year, but that argument can just as easily be used by other provinces in their bids for federal assistance.

I'll just say before I ask that question that in January of this year Prince Edward Island got $12 million from the federal government, and there's a programme for Nova Scotia worth $63 million Could the minister tell us if B.C. Hydro has - or has this minister - made a direct approach to the federal government, suggesting that once again we are being discriminated against because we're always called a "have" province? There's a limit to which the "have" provinces should always be doling out for the "have-not" provinces.

Until there's a more equitable application of a federal formula to all provinces, then no wonder a lot of people are starting to talk about western separatism. I for one still feel that the faults of Confederation can be corrected, for instance by having this government do a bit of screaming to Ottawa in this kind of example. That's the route I prefer to go. I'm not in the least bit interested in separatism of Quebec or B.C. or any other part of Canada. I think it's a tragic recognition of our human inadequacies if we have to talk that way when the world is becoming a smaller place and communications should be so very much simpler than they ever were before. So I'm not suggesting that separatism is any kind of answer to our problems. I'm

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saying that I can understand why these thoughts are aroused in the people in our part of the world. I wonder if the minister has asked Ottawa for financial support for insulating homes.

I just want to touch very briefly on two other points. The question of natural gas. Back in February the minister reported that in the United States natural gas is worth $2.50 a thousand cubic feet. We are now receiving $1.94 a thousand cubic feet for the natural gas that we export to the United States. I know that any price increase requires the approval of the National Energy Board. I just have two questions. Have we gone to the National Energy Board to ask for a further increase? If so, for what increase did we ask over and above the $1.94? My second question would be: what are states such as California paying for natural gas which they receive from the southern United States - Louisiana, Texas and others?

We've heard the argument presented many times in this House that there's no reason the United States should be receiving natural gas from British Columbia at a price cheaper than they pay for their home-produced gas. I just wonder if the minister can bring us up to date as to whether we've asked for an increase from the National Energy Board. If so, how much?

Thirdly, what is the maximum price that any single state in the union is paying for American-produced gas?

Before I leave natural gas, can the minister tell us if there are ongoing plans with the very aged project of bringing a natural gas pipeline to Vancouver Island? If I had more time I would recall for the House some of the debates that have gone on in this House before. I do have an interesting clipping here from the Victoria Times of February 24,1971. The Premier Bennett of the day - that was another Premier Bennett - announced that: "Engineering studies for a natural gas pipeline on Vancouver Island are being conducted." The pipeline was to run from Powell River to an undetermined point on Vancouver Island. It's mentioned, and it's rather amusing, Mr. Chairman, that the government's throne speech in 1969 noted that planning for a gas pipeline to the Island was well advanced. We're eight years down the road and I haven't heard very much about it. I just wonder if the minister could bring us up to date on that.

The last point I want to raise on this occasion is a statement at the federal level yesterday by Alastair Gillespie, a federal minister, that Mexico and Canada are involved in important discussions in the light of Mexico's change of policy in regard to export of oil, and the fact that Mexico is keen to develop its own steel industry, for which it would need coal. The statement I heard on CBC Radio news last evening left the clear impression that the federal government is very optimistic that this kind of trade-off can be arranged. Specifically, the coal deposits in British Columbia were mentioned by the federal minister.

I wonder if this minister in our provincial House could just tell us to what degree the British Columbia government is involved specifically in any negotiations with Mexico by way of our federal government in which we would perhaps be able to acquire another source of crude oil in return for us being able to justify the feasibility and the economic possibility of developing British Columbia coal.

HON. MR. DAVIS: The hon. member for Oak Bay has asked a number of questions. I'll endeavour to answer them as briefly as I can.

He lamented the lack of energy policy in British Columbia. I think that basically our policy on the energy front must be one which places a maximum emphasis on conservation. Nevertheless oil is the fuel we use most extensively. We import in the main. We must rely for as long and as much as we can on Alberta, rather than having to bring oil in from other sources.

Gas is the cheapest source of energy we have available to us. We haven't been able to prove up enough gas to look after our own requirements as well as honour a very large export contract. Arrangements are being made to reduce that export obligation somewhat and to remove the ceiling from the contract availabilities to B.C. Hydro, Inland Natural Gas, and so on.

In that context, and because we still don't use coal very much, Hydro has to step in and supply demands. This is one of the reasons why the projected demands of Hydro are still relatively high. We have to import oil into this province from Alberta, the price of which is in the process of quadrupling, and we don't have enough gas to look after our own projected needs as yet. So Hydro is, in a sense, our last resort. I trust that this will not always be the situation and that we'll be able to find more gas in northern B.C., and that the oil supply situation will clarify.

The Energy Commission and Hydro have met on a number of occasions and endeavoured to remove some of the difference they've had in forecasting future electricity requirements. Hydro has come down from rates of 9 and 10 per cent per annum. The energy Commission has come up from rates of 4 and 5 per cent, and they've met somewhere in the middle. Assuming, however, that this middle projection of, say, 7 per cent per annum - or even 8 - obtains.... A project like the Revelstoke Dam is required to begin operation in the early 1980s. I say "like the Revelstoke project, " because in many ways the Hat Creek coal project is similar in scale. So in a very general way they could replace one another.

But assuming that we proceed with the Revelstoke project and that there is also a beginning in the Hat Creek project, a final decision would be made in, say,

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18 months' time - after a certain amount of data is in, hearings have been held and all licences have been obtained. Eighteen months is certainly a minimum period. Assuming that Hat Creek is cleared to proceed, we have enough power generation lined up so that we don't have to make another decision about another source of power for five or six years. I say "if Revelstoke proceeds and if Hat Creek proceeds" -then we're not forced to make a decision short of 1983,1984 or 1985, on the McGregor diversion, on Site C, or on the Kootenay diversion.

Now the Kootenay diversion keeps cropping up because it's by far the cheapest incremental source of power. It's merely a matter of digging a short canal from the upper Kootenay into the upper Columbia. But there are many environmental objections and I doubt very much whether that project will ever proceed. Nevertheless, it is one of the possible options.

If we were able to state categorically right now that the Revelstoke Dam would be built and the Hat Creek project would proceed, then we wouldn't have to consider all of these other alternatives on rivers that we have around the province. The uncertainty arises out of the fact that we have these alternatives, that Hydro has done some drillings, some engineering and other studies on these various sites, and continues to do so in several cases. But it's a reflection of our abundance of choice, if I can put it that way, rather than a lack of policy. I think the cheapest route for us to proceed on is, following Revelstoke, to build Hat Creek. Hat Creek gives us a great deal of flexibility that Hydro projects do not, and in conjunction with our existing Hydro projects, it can give us a degree of security that we wouldn't have under an all-Hydro system. The basic reason for that, really, is that an all-Hydro system always has to plan for the worst possible rainfall year. If you have a big coal-burning plant you can run it flat out if you have a poor water year. Therefore, you could run your hydro normally at maximum all the time; if you have a poor water year, then you bring on the coal plant. So you have a flexibility there.

I'm really saying that these other projects like the McGregor project, while they're interesting, are not likely to be projects requiring a decision for a period of something like five or six years, well beyond the life of this present Legislature.

Environment Canada has done two studies on the Fraser - one so-called Sinclair report which is, I would say, almost exclusively fisheries-oriented and, naturally, is against any development on tributaries and the main stem of the Fraser involving Salmon. The other report, which was published a few months back, was more balanced. It did look at the flood control aspects of development as well, and it tended to be rather schizophrenic about the McGregor diversion because it does have a flood control aspect to it.

British Columbia has a number of other possibilities for the production of power. Kemano 2 is certainly a rather low-cost source. There's a large amount of energy available there if the aluminium company project were to be doubled. There's coal in some quantity on Vancouver Island, and some recent drilling has been encouraging in respect to low-cost, open pit possibilities. There's a great deal of waste coal in the interior - waste as a result of selecting the high grade metallurgical coal and leaving waste behind. That could be converted into heat energy, and on into electricity.

At Hat Creek itself there's a second large resource, a little more difficult to obtain in that it's somewhat deeper, but much larger than the originally discovered deposit. So a second Hat Creek is a possibility, although the Energy Commission tends to look on that as a resource for gasification and replacement or backup for natural gas rather than a source of electricity.

Then, of course, there's always the nuclear option, but nuclear energy is relatively expensive - certainly far more expensive than a development at Hat Creek. If I can just recite for a moment my first assignment with B.C. Electric, it was to look around the province for an alternate source of fuel energy. They ended up by burning natural gas at the Burrard terminal plant, but they were looking for coal. Some $5,000 was set aside, and we went up and started to drill on Hat Creek. We knew there was coal because the coal outcrop had been exposed in the bottom of the creek for come distance. We went several hundred yards up on the side hill, in the sagebrush, and started to drill. We went down in gravel and clay, and 1,200 feet in solid coal.

Hat Creek is an immense deposit - two deposits. The first one is several miles across and perhaps twice as long and 1,200 feet to 1,500 feet deep, and is at least 50 per cent coal if it's dug out as a great big pit. Well, there's just no fuel energy anywhere in the world cheaper than that. It can be taken out with normal earthmoving equipment. It is relatively high in ash, but the ash may be useful for byproduct purposes. It can be set aside and stored. It's got to be cheap -it's $7 or $8 coal compared to $50 or $60 coal mined in other ways in this province. So we have a vast resource there, and this is one of the basic reasons why nuclear energy really isn't in the picture for a good long time in British Columbia.

As I said at the outset, if we had lots of natural gas, we'd have another big option to electricity. Gas is much cheaper, at least in terms of capital. If you look at B.C. Hydro's capital budget, 90 per cent plus is providing for future electrical requirements, and less than 5 per cent for natural gas.

Gas doesn't cost anything like as much to move, to distribute or to burn as electricity does. If, as I say, we had all sorts of natural gas in this province, we

[ Page 2450 ]

should be pushing gas at least in the next decade or two and going easy on electricity. This would keep our capital requirements way down.

The hon. member asks about new directors for B.C. Hydro. Several new directors will be appointed. Who they are and when they're appointed will be up to the government. The government will make that announcement shortly.

MR. BARRETT: Are there any by-elections coming up?

HON. MR. DAVIS: I haven't been told about them, hon. member.

It's certainly true that large corporations have communications problems. I trust that these new directors will help the corporation in that way.

The hon. member made reference to Nova Scotia and Prince Edward Island receiving direct federal grants for insulation of homes. Yes, we've asked Ottawa about that. We've tried to insist on equal treatment but, like other provinces, so far we haven't succeeded.

I would like to mention another problem we have with Ottawa. It's discriminatory in this case -discriminatory specifically against British Columbia. The basic Canadian oil pricing policy at the moment is that of a single price for crude oil.

MR. BARRETT: There's no quorum, Mr. Chairman. It's all Liberals! There's no quorum of Socreds over there!

MR. CHAIRMAN: Order, please, hon. member. There's a quorum in the House. Would the Minister of Energy and Transport please continue?

MR. BARRETT: They're all Liberals!

HON. MR. DAVIS: The basic federal policy in respect to oil pricing is a single price across Canada.

If I can characterize it, it's a single price of $10 at the moment per barrel in Edmonton.

Interjections.

MR. CHAIRMAN: Hon. members, the regular chairman is absent and I know you're taking advantage of the situation. I trust you will allow the hon. minister to continue.

HON. MR. DAVIS: There is alleged to be a single price for crude oil across Canada. It's nominally $10 a barrel at Edmonton. There is a transportation differential. As the oil moves out from Edmonton, the price rises to the extent of the transportation cost. Now the cost of moving a $10 barrel of oil from Edmonton to Toronto presently is 60 cents. So the price in Toronto is 60 cents. The federal government in its wisdom has decided to make all points east of Toronto $10.60 - that is, it brings Montreal to Toronto; it brings St. John's, Newfoundland, to Toronto; it brings Halifax to Toronto.

Looking westward from Edmonton, the price is $10 Edmonton plus the transportation cost down the TransMountain line. That cost, when the TransMountain line was running full, was 30 cents, so the cost delivered to Vancouver was $10.30. TransMountain right now is applying for a 70 cent rate, so it shortly will be $10.70. Reflecting through what's expected in the fall, it may be $10.80 or $10.90. So B.C. users will be paying $10.80 or $10.90, whereas everyone east of Toronto will be paying $10.60. They're much farther away, but as a result of federal policies. they'll be paying a lower price.

The shift eastward of the oil that used to go out through the TransMountain line into the Pacific northwest - that oil is now moving on to Montreal -is further bringing down the transportation costs to eastern Canada, so it could drop, say, to $10.50. The pipeline on from Toronto to Montreal is a brand new line. It’s total costs are being paid by the federal taxpayers.

Interjection.

HON. MR. DAVIS: The line's from Sarnia, but the carrying charge for the whole line of approximately $50 million this year will be paid by the federal taxpayer. Our beef in British Columbia has to be (1) that federal policy has swung Alberta oil eastward on to Montreal, and (2) that we're not getting equality of treatment when it comes to transportation tariffs. I think this is something which requires a concerted effort on our part. I'm mentioning that because that involves many more dollars and it's annual dollars, recurring every year. It's a much bigger, long-term programme even than the insulation programme which the hon. member is concerned about.

MR. L. NICOLSON (Nelson-Creston): I won't be too long. I'd just like to bring a few things rather quickly to the minister's attention.

The first is that I had a report last Sunday from a person who lives in the Peace River country that clearing is taking place at Site C. I'd like the minister to explain, if he is aware of this, the nature and the purposes of the clearing which is taking place.

The other aspect that does concern me is the activities of contractors which are hired by B.C. Hydro and the tendency of B.C. Hydro to hide behind the contractors in terms of liability. I think probably the legal position is that if a contractor does something while undertaking a contract with B.C. Hydro, B.C. Hydro is not liable but the contractors

[ Page 2451 ]

are.

But I'd like to bring to the minister's attention that in my dealings with private utilities such as West Kootenay Power and Light or Inland Natural Gas, they have a much better social conscience at the present time than would seem to be the case with B.C. Hydro. One could go back to the Northwest Electric disaster where they lost their staff in a plane crash which happened in the previous Social Credit government's time. Small motel owners and subcontractors and others were, to a large extent, left holding the bag.

The Mechanics' Lien Act and the various legalistic approaches were taken. Many unsecured debtors were left in a very bad position. I would say that in contrast to this, it's been my experience that private utilities such as Inland and such as West Kootenay Power have taken a more responsible attitude and have gone a little bit farther in terms of trying to project a good corporate image. I'm very much concerned with actions taken by contractors being hired to do spraying on rights-of-way and doing things such as using excessive amounts of spray and perhaps cleaning out spray equipment and such in streams and so on. These things are coming to the attention of the public, and yet by the time one catches up, it's the contractor.

What I'm asking for is prevention. Let's not worry about what has happened in the past but have a more rigorous supervision of contractors. Another case has recently come up, and I must say I'm getting some co-operation from middle management in B.C. Hydro in this specific case. It arose just as an example - and now we're talking after the fact. I'm more concerned about preventing these things from happening in the future.

The incident that occurred involved a contractor who went in to build an access road to the new powerline which goes from the Kootenay Canal down southward toward Trail. There was no check made with the gold commissioner or government agent as to mineral claims in the area. There was also no check made with the water rights branch as to water rights in the area. As a consequence, bulldozing affected two water-right springs, affecting two users on just this short little piece of road, just in this one little area of glade. Further back in the mountains a problem has been created with the owner of a mineral claim in terms of preventing him from doing exploration work. That is not that particular problem; the other one is more specifically, I guess, with B.C. Hydro.

They located powerlines so close to his claim that it will impair him from doing exploration work, blasting and such, because he would be in danger if he was to do normal type of work and road-building to get into his claim. He has the right to do it, the perfect legal right, but he could endanger insulators and such on the powerlines.

I would like some response from the minister if he is aware of the purpose so that I might be able to respond to persons in the Peace River who noted this and reported it to me for the clearing on Site C. Does the minister think it could be possible to take a little bit more preventive action? Obviously there should be a checklist of things when construction is going to take place over Crown land. Have the water rights checked out; have the mineral rights checked out; have the various other types of property rights, whether they be grazing rights or whatever, checked out with the government offices.

These two water rights were affected just this year. I think that at least a checklist of procedures should be adhered to before works of this type are embarked upon. I also think that contractors should be supervised very heavily in terms of their practices and not just left to leave spraying equipment, or clean it in creeks, and various other things.

HON. MR. DAVIS: Mr. Chairman, briefly, I wasn't aware of any clearing at Site C. If there is, this would simply be done by B.C. Hydro or their consultants relative to environmental studies that are underway there. It's not preparatory to any construction.

MR. D'ARCY: Mr. Chairman, I must say that I certainly appreciate the straightforward way that the minister is discussing the items brought up this afternoon. I was extremely interested in his sympathetic remarks on the question of taxation in B.C. Hydro. I realize that the power corporation tax issue does not really fall under his office at all. It's not a tax that B.C. Hydro pays. It's certainly not one whereby any benefits would accrue to that corporation if in fact they were distributed. It's probably out of order, Mr. Chairman, and you and your predecessor have been very conciliatory in letting me discuss it.

What I did want to talk about is the area of taxation that is under the minister's responsibility, and that's the question of property taxes. I believe he said, in his opinion, that B.C. Hydro should pay taxes on all of its real property holdings - land, machinery and equipment. I would like to get a confirmation from the minister if he is prepared to make that his policy in his capacity of being responsible for that corporation in this Legislature. It has been stated by the Premier, and other members on the treasury benches, that the politicians do have ultimate responsibility for the Crown corporations and the Crown corporations must, indeed, report to the House. I would like to know if the minister is just being nice in here and saying, "yes, they should pay, " or is he prepared to make that a policy of the corporation for which he is responsible in this House? If he is, I think it would be a great day for British

[ Page 2452 ]

Columbia.

As has been stated earlier during the introduction period by the Minister of Municipal Affairs and Housing (Hon. Mr. Curtis) , the UBCM is meeting in Victoria right now. In fact the mayor of Trail is the vice-president of that organization. He is here in Victoria, either in the galleries here or in the Harbour Towers, at this moment. I think it is tremendously important if the minister could indicate in a serious way whether he was merely giving us a personal opinion of what should happen in the future or whether he was telling us something that he, as a member of the executive council, is prepared to do.

HON. MR. DAVIS: Mr. Chairman, yes, I am prepared to pursue the matter seriously, both as a director of B.C. Hydro and as a minister in this government.

MR. D'ARCY: Mr. Chairman, I must congratulate the minister on that. If he's prepared to do that, it's a tremendous day for British Columbia. I dearly hope that he will use his authority and his power as the responsible minister to see that that comes into effect this year - the 1977 taxation year.

Mr. Chairman, rather quickly, in 1974 when Mr. Howard deBeck, the comptroller, issued the British Columbia Hydro water licence, conditional at that time, to build a dam on the Pend-d'Oreille River near Trail, he made as one of the conditions of that water licence that British Columbia Hydro would pay $1.8 million to the fish and wildlife branch of the Department of Recreation and Conservation in mitigation for loss of class I wild ungulate range which was going to be partly flooded and partly lost due to the fact that installations would be built on it and highways would be built on it. That money has yet to be paid. I wonder if the minister could let -us know whether the Authority is indeed going to fulfil what I believe to be a legal obligation put on it in the issuing of that water licence by the comptroller of water rights, and, if it's a matter of due process, if the Environment and Land Use Committee secretariat has been instructed to come up with a proposal for the receipt and disbursement of those funds. That's a specific question, Mr. Chairman.

The other specific question I have, Mr. Chairman, is that the minister said that he appreciated there were, a number of environmental and other considerations involved with the construction of the Kootenay Canal, which I believe would divert roughly one-third of the average annual flow of the Kootenay River at Canal Flats into the Columbia River system. I think it's an average of 2,700 cfs or something of that nature. He stated that he does not think that that will go ahead, certainly not in the foreseeable future. Can the minister indicate to us whether or not the Environment and Land Use Committee or the secretariat have done or are doing any work on that particular proposal?

HON. MR. DAVIS: Mr. Chairman, I'll make inquiries about the $1.8 million that Mr. deBeck, the water comptroller, required B.C. Hydro to pay over to fish and wildlife. I don't happen to know the answer to that question. I can let the hon. member know.

I don't know, either, whether the Environment and Land Use Committee secretariat is presently involved in any environmental studies relative to the diversion of the upper Kootenay into the upper Columbia. I don't think they are, but I'll make inquiries of that department.

MR. COCKE: A very short question, Mr. Chairman. The minister promised me on Monday that he would look into the question I raised regarding the pensioners at B.C. Hydro who, I felt, had been bilked out of amounts up to $20 a month on their pensions. I wonder if the minister can make a report on that situation at the present time.

HON. MR. DAVIS: Mr. Chairman, I have made inquiries. Substantially the situation, as reported by the hon. member for New Westminster, is correct. I might run over a few notes I made at the time I talked to the responsible official in B.C. Hydro.

Employees of the former B.C. Power Commission and the British Columbia Electric Company contributed, as he said, to group annuity plans at a time prior to the establishment by B.C. Hydro of a proper pension scheme. These annuity plans were continued in respect to those particular employees and Hydro supplemented those plans in order that all employees would receive an equal pension.

At the present time there are approximately 2,100 ex-employees receiving pensions. Of these, 1,200 receive pensions involving annuity payments from the federal government. There are still 550 employees working in Hydro who when they retire will receive annuity plan payments as well.

In February, 1976, the federal government told employers that the annuity plan payments were to be raised by varying amounts between 14 and 22 per cent, depending on the interest rate of the particular plan. The actual monthly increase amounted to between $15 and $22 per month. The increase was first paid in April, 1976, and was made retroactive to April, 1975.

When Hydro found out that the annuity payments were increased, it had to decide whether or not its supplementary payments made to keep all pensioners equivalent should be reduced by the amount of the additional annuity payment. Since the total pension payments had been indexed with the consumer price index since July, 1975, and Hydro has supplemented

[ Page 2453 ]

the payments to provide the equivalent pensions to all employees, it was decided that the supplementary payment should be reduced by the equivalent amount of the increase of the annuity payment. Of the 1,200 pensioners receiving annuity payments, 400 had retired before the formation of B.C. Hydro, et cetera.

Substantially, Mr. Chairman, B.C. Hydro management has decided to treat all former employees equally and in effect has reduced its payments to retired employees who are now in receipt of this additional annuity payment by an amount equal to that annuity payment to keep all employees equal.

MR. COCKE: Mr. Chairman, I recognize that the minister has been given this advice, and I know that advice to be quite right, and I understand Hydro's attitude. No, wait a minute. I understand what Hydro is getting at, but it strikes me that Hydro's attitude is quite wrong in this particular situation.

This is an unexpected bonanza. The formula that they used to begin with to establish the amount that is payable to the pensioner is a formula that depended on the fact that the annuity plan would be providing what they thought it would be providing. Now a bonanza. The federal government, in a moment of conscience, decided that they should let the annuity plans reflect the true interest rather than the artificially low interest that was actually being paid.

Now I say that while quite right from a legal standpoint, morally and ethically in my view the money should not go to the Hydro pension plan but to those pensioners who paid for that pension plan with their hard work.

Many of them are very low-rate pensions. To a low-rate pensioner, $20 is a very significant sum. A lot of those pensioners are old. I want to draw to the minister's attention the fact that while some of the people who are now employed by Hydro have some of the government annuity programme, it would be a very, very small amount because those people would have been at the end of the government annuity programme. They're younger people. The ones who are significantly hurt are the older ones who had a great deal of their input through that government annuity programme. They're the ones who are losing the $20. The ones who are losing the $3, $4 and $5 are the newer pensioners.

Now let me bring one particular example to your attention. I know of a person now - one of that committee which has been meeting with Hydro -whose loss is only $3.88, and yet he's already retired. That means that any of those who are on the verge of retiring now or who will retire in the next few years will not be significantly affected because they came in later. It's the ones who were in very early - the ones who contributed all through the years, largely on that programme - who are being significantly affected. That's why I feel it's morally and ethically wrong to withhold that money. I believe that Hydro can well afford to pass the bonanza on to the employees and to not be selfish and keep it in their coffer. I hope that the minister will take that. I really think it's significant. I know it's well within the rules of the contract. I've read the trusteed contract and I know - at least I'm pretty sure - that you can hang on to it. But I don't think it's fair.

HON. MR. DAVIS: I have just a brief comment to the hon. member for New Westminster, Mr. Chairman. The University of British Columbia also had the annuity pension system in effect. Because it indexed its pensions with the cost-of-living index, it has also moved to adjust its payments to keep pensions equal across all former employees. So UBC, at least, has treated its former employees in the same manner as B.C. Hydro. Certain private employers, on the other hand, who did not and have not indexed their pensions - such as Rayonier, MacMillan Bloedel, Finning Tractor, et cetera - have permitted the annuity increase to be passed through.

It is largely a question of indexing. I think they're saying that where the pension has been indexed up by the federal government, they needn't index it as well. It relates to indexing.

MR. CHAIRMAN: Hon. members, at this time of the evening it seems to be a usual practice of the House to get involved in extracurricular conversations. I wonder if for the next 12 minutes we could keep it down.

MR. WALLACE: I think the minister just overlooked two or three questions. I really would like an answer, because I'm sure I saw him writing answers while I was speaking.

The natural gas pipeline to Vancouver Island - is anything being done? The price of our natural gas going to the U.S. - are we seeking a higher price from the National Energy Board? If so, what is it? The third question: are we involved in trying to trade off B.C. coal for Mexican oil?

HON. MR. DAVIS: The natural gas export price currently, beginning January I of this year, is $1.94 for a thousand cubic feet. That applies all across the international boundary line from the Pacific coast to Toronto.

This government has recently decided to ask the National Energy Board for a $2.20 price. It has, however, been advised by the B.C. Energy Commission experts who looked into the U.S. Pacific northwest market that we would in the process lose some large industrial, interruptible customers in the process. Volume may go down while the price went

[ Page 2454 ]

up.

The National Energy Board will be looking at those aspects of the export arrangement as well, and will come up with its own figure. It may be recalled that last year we asked for a $2 price and received a two-stage price of $1.80 and $1.94 instead.

Gas moving in interstate trade in the United States moves at a variety of prices: old gas for prices around 60 or 70 cents, and newly found gas for over $2. Gas brought out of storage in emergency circumstances during the recent cold spell in the east moved for as much as $2.50. In any case, the crude oil equivalent price in the Puget Sound area is of the order of $2.50 at the moment, and I think we should be pretending to price our energy in relation to the crude oil availability in the immediate area rather than U.S. gas prices under other circumstances.

Gas for Vancouver Island depends on our proving up large additional supplies. If we're able to phase our export contract down over the next decade or so and find a lot more gas in the Peace River area, we'll be in a much better position to push the idea of natural gas for Vancouver Island.

Finally, Mexican oil. The federal government is interested in competitive supplies of surplus oil, and especially new oil found in Mexico. I believe this oil would move up the east coast of North America for consumption in eastern Canada.

The Minister of Energy, Mines and Resources (Hon. Mr. Gillespie) in Ottawa called me yesterday on this. The idea is that perhaps some swap arrangement might be worked out with Mexico whereby metallurgical coal from British Columbia went south to Mexico to steel developments there, in return for Mexican crude oil moving up to eastern Canada.

MR. C. BARBER (Victoria): As we are aware, the government has claimed repeatedly that doubling of the ferry fares was not the principal reason for the failure of tourism last summer, especially on Vancouver Island. Indeed, we have been told on repeated occasions that now the Olympics are over and the Bicentennial has ended, we can expect that a proper and economic return to the previous prosperity of that industry is just around the corner. Well, the Olympics are over and the Bicentennial has ended. Indeed, we are faced, happily enough, with the mildest winter any of us can remember. I was born here, and so was my father, and neither of us can remember a winter like the one we have just enjoyed.

I would like to document today, Mr. Chairman, further proof that the claims of the government that the ferry fares are not principally responsible simply cannot be believed. This proof came this morning in the form of a document provided by four businesses in Victoria who have opened their books. They have provided confidential business information, which was previously unavailable to the public, which demonstrates that even though it's the mildest winter on record, even though the Bicentennial celebrations are over and the Olympics have ended, - the comparative figures for January, February, and the first 15 days of March in this year, related to those figures for the same period in 1976, demonstrate further losses in tourism in greater Victoria.

I would like to demonstrate, if I may, Mr. Chairman, that these figures are not mine but rather presented by the businesses which I shall name. If the minister has any question about it, I would be happy to table the document. The document itself is prepared for me by Oak Bay Marina Ltd., 1327 Beach Drive in Victoria. It is signed by Mr. Wayne E. Wagner, the general manager. I have his permission to use it and I shall do so now:

"Dear Mr. Barber:

"Thank you for your interest expressed in your letter of March 23, regarding the high ferry rates. As requested, I am forwarding indisputable documentation that verifies my claims."

They were published in a Victorian article.

"I have received the co-operation of four attraction businesses in Victoria who have released this confidential financial material so that our position cannot be questioned. I believe when you review this information you will concur the high ferry rates are the major factor for our depressing business climate. Listed are the percentages of decreased volume for the comparative period of 1976.

"The first business which has opened its books is Sealand of the Pacific Ltd. In January of 1977, compared to January of 1976, their business is down 22 per cent. In February of 1977, compared to February of 1976, their business is down 24 per cent. In the first 15 days of March, 1977, as compared to the same period in 1976, their business is down 31 per cent. "

MR. KAHL: Are they changing the same rate now as they were last year?

MR. BARBER: I don't have that information here.

Interjections.

MR. BARBER: Let me continue:

"Pacific Undersea Gardens - January of 1977, their business is down 37 per cent compared to the same month in 1976. In February of 1977, for Pacific Undersea Gardens, their business is down 44 per cent, compared to the same month in 1976. In the first 15 days of March, 1977, their business is

[ Page 2455 ]

down 27 per cent, compared with the same period in 1976. The fourth business"

- I don't imagine they've all changed their rates and all improved them identically -

"is Miniature World. In January of 1977, their business was 25 per cent below that level reached in January 1976. In February of 1977, Miniature World found its business down 23 per cent, compared with the same period in 1976. In the first 15 days of March, 1977, their business is down comparatively by 19 per cent.

"The fourth business to release this confidential financial material was the Classic Car Museum, whose president happens to be the immediate past president of the Victoria Visitors' Bureau, Mr. Al Frame. In January 1977, their business was down 19 per cent in comparison with the same month in 1976. In February of 1977, their business was down 28 per cent in comparison with the same month in the previous year. In the first 15 days of March, 1977, their business has dropped 23 per cent." The letter goes on to say:

"Please note that all businesses show considerable decreases. Further, I have included the substantial decreases in the volume of the Pacific Undersea Gardens and Sealand of the Pacific for the period June 1,1976, the effective date of the new ferry rates, to December 31,1976."

Mr. Chairman, Sealand of the Pacific documents that, from the day the ferries doubled their rates to December 31,1976, they lost 30 per cent of their business, compared with the period previous. Pacific Undersea Gardens lost 31 per cent of their business compared with the previous period. That comparison is for the exact period of time in the previous year. It goes on to say: "For the period January I to May 31,1976, in the six months prior to the ferry rates being doubled" - when business was ordinary, when the Bicentennial was on and when the Olympics were coming up - "both companies had shown healthy increases in the area of 20 per cent."

Suddenly, in the middle of the Bicentennial and in the face of the Olympics, they're confronted with the doubling of the ferry rates. What other factors are there that apply? They've demonstrated that in the first six months of 1976, before the rates were doubled, their business had increased comparatively by 20 per cent; in the six months thereafter, there was a decline of 30 to 31 per cent. It was growing, it was booming, it was a good business, and it was successful. Thanks to this minister, and that most primitive economic decision, they're now losing business - 30 and 31 per cent in the comparative period.

I will continue:

"I believe the above statistics are conclusive evidence of the detrimental effects that the new rates are having. If, and I believe it to be true, other businesses are in a similar position, it does not take a mental giant to understand the complications and hardships that will be facing many local businessmen this year. Please feel free to use any of the above information in the crusade for revised lower ferry rates and the re-establishment of Vancouver Island as its proper economic position."

Do you think the message is clear, Mr. Chairman? Is it acknowledged by the government that these figures are not the products of the NDP research office or the Chamber of Commerce or any other Commie front?

I've heard attacks against the chamber of commerce in this House from that side, Mr. Chairman. I've heard them say that they are pawns of the NDP, that the figures they've produced, the information they've documented, is all a trick of the socialists and cannot be believed. Today, Mr. Chairman, once more business in greater Victoria has made it clear that they speak for themselves, and they speak honestly and accurately and comprehensively. Sealand of the Pacific: down 22, 24 and 31 per cent in the first two and one-half months of this year. Pacific Undersea Gardens: down 37, 44 and 27 per cent in the first two and one-half months of this year. Miniature World: down 25 per cent, 23 per cent and 19 per cent in the same period. The Classic Car Museum: down 19 per cent, 28 per cent and 23 per cent.

This is a government that has done harm to business and is yet to have the honesty and the integrity to admit it, and the willingness to realize that this kind of information provided by their former supporters is more powerful a condemnation of their policies than anything this opposition could ever put forward.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Vander Zalm presented the third annual report of the Burns Lake Community Development Association.

Hon. Mr. Gardom moves adjournment of the House.

Motion approved.

The House adjourned at 6:01 p.m.