[ Page 725 ]

CONTENTS

Routine proceedings

Committee of Supply; Ministry of Finance estimates.

On vote 92

Mr. Levi –– 725

Hon. Mr. Wolfe –– 730

Mr. Levi –– 731

Hon. Mr. Wolfe –– 734

Mr. Stupich –– 736

Hon. Mr. Wolfe –– 737

Mr. Macdonald –– 741

Hon. Mr. Wolfe –– 742

Mr. Stupich –– 742

Hon. Mr. Wolfe –– 742

Mr. Macdonald –– 743

Mr. Barber –– 743

Hon. Mr. Wolfe –– 743

Mr. Mussallem, 744

Mr. Stephens –– 746

Mr. Stupich –– 747

The House met at 8:30 p.m.

Orders of the day.

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

ESTIMATES: MINISTRY OF FINANCE

(continued)

On vote 92: minister's office, $105,330 -continued.

MR. LEVI: I have a number of questions I want to ask the minister. The first one is in relation to GERB. The other day in reply to a question from the hon. member for North Vancouver-Capilano (Mr. Gibson) , the Minister of Health (Hon. Mr. McClelland) was attempting to not answer a question that was put to him about the heroin treatment programme. He did say on Thursday I'd like to quote and then put a question to the minister. The issue is about a letter that the minister said he had received from GERB - the Government Employees Relations Bureau.

AN HON. MEMBER: Can you say "Consumer and Corporate Affairs"?

MR. LEVI: I can say "Consumer and Corporate Affairs" and I can also say "Crown corporations reporting committee, " but I won't say that right now, because I know you have just had your dinner and you had a rather rough afternoon.

The Minister of Health made reference to a letter he had received from GERB and he said -he wouldn't table the letter - that it was a letter outlining how the plans were developing for the treatment programme and what would be required of the staff as the programme developed. On the advice of the Government Employee Relations Bureau, the offer was made to any member of the staff who was philosophically opposed to the programme to assist them, if they wished, to find employment in other parts of the public service. He went on to say it was not an unusual move, but it was one designed to make sure that no employee suffered any hardship because of some disagreement they might have had with the government policy, and as such it was a good move and was done on the advice of the Government Employee Relations Bureau.

Perhaps the minister would tell us just what the policy is and if he can specifically relate it to the policy as quoted by the minister in respect to the heroin treatment programme. We tried on a number of occasions to get him to table his letter. I would like the minister to tell us in more specific detail just what the Minister of Health was getting at when he paraphrased the letter. I don't think he quoted from it as much as he paraphrased it.

What is the policy, or was there a specific policy in relation to the heroin treatment programme? The suggestion by the member for North Vancouver-Capilano was that certain people had been asked directly. Now the information I have was that they also had to sign a document. This was denied by the minister, and I, frankly, have not heard of such an arrangement in government where employees are called in and told that if they don't agree with the policy of the government they go somewhere else. Perhaps the minister would be in a position to be more specific about that.

So while he is writing his notes, I would like now to move to the Systems Corporation. Last year, during the debate in August, 1977, the minister was asked a number of questions, particularly in regard to the cost of the Systems Corporation. The minister, in the committee stage of the bill, said as follows: "I would like to deal with the subject of cost. Various allegations were raised." There's that word again - "allegations." We didn't make any allegations. We just made some statements.

AN HON. MEMBER: What are you quoting from?

MR. LEVI: I'm quoting from Hansard, August 4,1977, and it's the Minister of Finance (Hon. Mr. Wolfe) answering questions, on page 4304. He says, and I'll repeat it:

"I would like to deal with the subject of cost. Various allegations were raised about the cost for consultants in the preparation of the study and the preparation of the setting up the computer corporation, the ongoing costs of some $22 million suggested in the current year's budget. I think what you first must do is, of course, relate this to the importance of the improved information system and relate it to a total budget of the province of $3.8 billion, so that the budget for this operation of $22 million is something aver one half of 1 per cent of that budget. I think you could look at any related commercial concern and be looking at a substantially greater share of cost related to their total budget operation."

[ Page 726 ]

Mr. Chairman, we don't have before us a specific budget from the Systems Corporation. But what we do have if one goes through the estimate book - you have to take out from the estimate book - is that section that deals with computer and consulting services, and it's not really possible to break out the consulting part.

I'm informed the cost of computer services for this fiscal year that we're in now is going to be in the order of $30 million. Last year during the debate I suggested to the minister that he was understating the cost, and that the industry itself was suggesting that the cost would run somewhere between $35 million and $40 million - which is almost twice what the operation was costing before the government decided to put everything together under one roof.

The minister said in the quotation that I've just given that he was "relating to the importance of improved information systems." So he was talking there about an improved system, presumably a more efficient system, a more responsive system.

I've maintained contact with people in the industry. I've also been in touch with the minister's manager of the programme. I spent a very interesting two hours with him discussing what was happening in the programme, and I think that one can characterize what's happening in the Systems Corporation as something that is highly secretive and very speculative about what is going on. I say this based partly on the discussions I had with his staff and partly on information that I have received from the industry.

I would just like to refer back to January and February of this year. Now, early in January, the industry's association asked to meet with the managing director of the Systems Corporation. They met on January 20, at a luncheon that was sponsored by the association. It was held at the Hyatt Regency, between Don Alexander, the chief executive of the B.C. Systems Corporation, and 25 representatives of the private sector of Vancouver's data-processing industry. The purpose of the meeting was to initiate and maintain a dialogue with BCSC, which will be a major employer and influence on computing in British Columbia.

Mr. Chairman, it's. worth pointing out that, during the debate last year, we time and again pointed out to the minister that the development of this corporation, at the size and the rate that the minister was going at. was going to create some serious problems in the private industry. We reminded the government that they are the supposed saviours of the private industry, and we indicated to him that there were no guarantees in the legislation or the future planning that indicated that the private sector would, in any way, get to retain its share of the work that it did for the government, or what the future plans were.

after the luncheon, a number of questions were posed to Mr. Alexander, because from September I to October 31, the Systems Corporation just had one employee, Mr. Alexander. On November 1,256 employees were transferred to the Systems Corporation from other government departments - staff of BCSC and members of the B.C. Government Employees Union. And it was indicated according to the notes and the correspondence I have, and I'll quote it:

"A point that Mr. Alexander implied could be to their (BCSC's) disadvantage. On April 1,1978, BCSC will begin charging government departments for their services. The charges will be set to cover all of the Systems Corporation's costs, and it will be a full costing system. It was not known at that time, in January, how any losses would be handled. On April 1,1978, rates and charge-out structures will be released.

"Initially BCSC will not be competitive with other data processing services, and government users will probably complain at the beginning for charged services that were previously free."

Now I hope the minister is making some notes because I'm going to be asking a series of questions. The first question is: has the government published by order-in-council the rates that are going to be charged? The minister indicates yes.

"Further in the discussion it was indicated for the next two or three years the government ministries contracting data processing services must go to BCSC." This doesn't apply on items of less than $1,000. "BCSC will not do all things for all people; that is, it will not try to do everything." Okay, that's commendable and that leaves the door open a little bit, Mr. Chairman, for the private sector.

"BCSC will get into sectors of work presently done by the private industry for government departments. However, enough notice will be given in order to minimize the impact of those involved."

I have a second question. We had some indications of guarantees by the minister. Well, guarantees is perhaps not the right word. He indicated that there would not really be an invasion into the private sector so that

[ Page 727 ]

it would be to the detriment of the private sector. These are not his words. This is how I characterize what he says.

The industry is still saying, even to this day, that the rates charged by the government are not competitive; they're very high, higher than any rates that exist, and only a government with the backing of a very large treasury could get away with that. And there is some impact on the private sector. I'd like the minister to comment on his perception of whether, in fact, the industry is getting a break in this area. We're already up to $30 million of cost from the point of view of the government.

The other day, under orders-in-council, there were some $15 million - one item of $5 million, another item of $10 million -relating to the....

Interjection.

MR. LEVI: It was just $10 million, was it? Just $10 million, one part of it, I think, for long range.

HON. MR. WOLFE: Approval of $10 million, with an advance of $5 million against long range.

MR. LEVI: Now perhaps the minister would tell us what that is. Is that purchase of equipment? Are we looking at something like that? Would he also tell us whether the figure that I've mentioned, the $30 million figure, is the figure that they're expecting the departments to pay? That's what I've taken out of the estimate book.

Would he also tell us why it is that the cost of computer services for the Ministry of Human Resources has gone from around $600,000 to an increase of more than $3 million? That's in the book. He may tell us, and I'd be interested in knowing, whether this is part of the impact of the Vancouver Resources Board being absorbed into the department. I'd be rather surprised about that, because he said this afternoon there are only 17 staff, but if the minister....

HON. MR. WOLFE: Repeat that question.

MR. LEVI: Human Resources computer and consulting services is $3,816, 414. 1 don't know what the consulting part of that is, but from my own experience I'd hazard a guess that we're not talking more - to be very generous -than $150,000 for consulting, if we're doing that, so that the bulk of this is for computing services. This is almost $3 million more than they had last year. Now what is the reason for that very large increase?

Further to the discussion that was had at the luncheon in January, there was an indication by Mr. Alexander that $2 million had been allocated for spending in the private sector. Perhaps the minister would comment on that and give us an idea. In answering a question, he indicated that $2 million would be allocated for spending in the private sector. "Tendering for services is not always the best alternative; plans to use business problem solutions." I'm afraid I don't really have a translation of that, Mr. Minister, so we'll go on to something else.

Further discussion related to the hiring of staff - the corporation was looking for some 85 staff. One of the complaints of the industry is that the rates of pay that are being offered by the government far outweigh the rates that can be paid by the industry. Therefore the industry is being diluted of its staff - its experienced and expert staff.

Then there are some general comments which were made by Mr. Alexander, and I do have some question and answer comments which were made. A number of questions were asked of Mr. Alexander: "Does the two-year period during which departments must go to BCSC constitute a freezeout of the private sector from selling to the government?"

The answer he gave was:

"No, it's not a freeze-out. It simply means the department must deal with the BCSC for all data processing services. BCSC will decide what can be purchased outside. Also, private industry should not make BCSC's job more difficult by selling , to government departments. If this persists, then they would have to get out the hammer." But I don't quite know - there are all sorts of hammers.

What we've got here is, as was suggested last year in the debate, a highly centralized operation where it's felt that the central operation must dole out the business of who gets the contracts. Now I would like the minister to indicate to the House whether he has information on what is happening as a result of the highly centralized operation of computer services. Previously, a number of departments sort their own services. One of the points to be made last year was that if you're going to put everything together, make it highly centralized, then you would have that committee which ums dealing with the doling out of time. Would this really make the system more responsive? What we really want to get from the minister is his opinion of what's

[ Page 728 ]

happening in the system at the moment. I appreciate that the formalized part of the system didn't start till the 1st of April.

There was a question about tendering. The answer was that tendering is a very expensive thing to do, and is not always the best way to go. We had rather mixed responses from the minister last year. The last one that I was left with was that there would be a form of tendering. I'd like the minister to comment as to what is happening in respect to tendering. Now I can appreciate the arguments about going to companies that have compatible equipment. I recall that that was an item last year we dealt with, but at the same time what is happening is that the people who previously were normally circularized about tenders are not being circularized. They're being left out in the cold.

There was another question requesting clarification of "buy B.C. and Canadian, " if that applied to the ownership of the company involved. And the answer was no specific reply. I asked Mr. Norman Song, president of the Boeing Computer Services, if he had seen anything in his contract in respect to this. Boeing Computer is a subsidiary of the Boeing Computer people in Seattle.

There was a question relating to the makeup of the BCSC board of directors, and if private industry or someone other than the provincial cabinet would be added. Perhaps the minister would give us an indication, now that the board has been operating, whether it is the intention of the cabinet to look to appointing someone from the private sector. Apparently in January there was one vacancy on the board as of January 30. I'm not aware of what the situation is. Perhaps the minister would comment. If there is a vacancy, is the government thinking possibly of appointing somebody from the private sector - that is, outside of the ministers that are already on it?

HON. MR. WOLFE: Who, would you suggest?

MR. LEVI: Somebody from the industry. Go to the association and discuss it with them. They have an association. I would suggest that if you are thinking of putting somebody other than a government person on, go talk to the association. My friend, the Minister of Consumer and Corporate Affairs (Hon. Mr. Mair) , has a couple of public governors on the stock exchange. I know that sometime during this session the Attorney-General (Hon. Mr. Gardom) is going to tell us that he's going to put at least three people on the Law Society board who are not lawyers. lie's chewing his gum and I don't think he's prepared to commit himself right now.

I think, Mr. Minister, that if there is a vacancy, if you are prepared to give consideration to appointing somebody from the private sector.... There is a great deal of dissatisfaction in the private industry sector of the computer industry simply because they don't know what's going on. If you've got somebody on the board who knows what's going on, I'm sure you're going to put down a lot of this restlessness that's going on out there. It certainly may not satisfy them about the fact that they're going to lose a larger portion of what was their share in the market from the government, but it would seem to me that it would make good sense for you to do that.

I would urge you to get in touch with the association and ask them to recommend two or three people whom you can appoint. I wouldn't advise you to look for somebody who paid $5,000 to take the Premier to his ski lodge, but there are people in there who are knowledgeable and who are interested in being co-operative. The minister must remember that the private sector has not been in the position where it has been consulted on anything in relation to the development of this corporation. McMinn didn't do it, Alexander hasn't done it.

HON. MR. WOLFE: That's not true.

MR. LEVI: Well, my information - and I think, Mr. Minister, I speak with these people more than you do - is that they are dissatisfied with the lack of consultation, completely dissatisfied. I think it would be in the interest of the government, if it's looking to have a little peace in this area, to do exactly what I suggest and that is to go to the association and ask for somebody.

I know that some of the cabinet ministers received letters from a number of people regarding their concerns about the System

Corporation when it was being developed. As a matter of fact, the Minister of Labour received a letter from a friend who was in the field. I do not think I should quote from the letter unless the minister.... loll talk to him later on about the letter. Have you forgotten, Mr. Minister? I'll show you the letter and then maybe we'll deal with it afterward.

That letter indicated that the government was heading towards another classic disaster in interfering in the private sector. It seem to me that when we were government, that's the accusation we used to get. Generally speaking,

[ Page 729 ]

we didn't get involved in interfering with the private sector. We certainly wouldn't be silly enough to put people in the computer industry out of business. After all, they are really small business people, if we exclude Honeywell and IBM, of course. Most of the people in the business in Vancouver are small operations and they have suffered as a result of this computer system.

If the minister wants, I'll quote a letter that I did receive the other day from Urban Computers, in which they say:

"Mr. Levi, as far as we're concerned at Urban, we have never had any provincial government business, although we did minor work for municipalities and hospitals, so that we're really not well informed. However, as far as I can ascertain, the formal protest we made in December, 1976, and the publicity aroused by yourself and the press in the months thereafter has had no effect whatsoever and the government has simply gone ahead with the plan."

Earlier the minister seemed to indicate that there was some consultation and satisfaction in terms of what was going on. This is not the case.

after the meeting that Mr. Alexander had with the association, he did write to Mr. Wilson Baker, the president of Tetrad Computer. Applications on February 20,1978. 1 want to read the letter because presumably this represents an enunciation of government policy:

"Thank you for your letter of January 3 and your suggestions contained therein.

"As I indicated at the luncheon, British Columbia Systems Corporation is currently establishing procedures to notify potential suppliers of its procurements by verbal contact with vendors who periodically call upon our procurements section. Yet I do not consider the above approaches totally adequate. We do need better mechanisms to improve communications concerning current and future procurement activities...."

That would be invaluable, Mr. Minister, if you had somebody on the board who could interpret for you just how to communicate with the people in the industry. I'll just go back on that:

"We do need better mechanisms to improve communications concerning current and future procurement activities and potential business opportunities for the private sector data processing industry. We plan to discuss this and other matters at future meetings with the business community at large. The key problem is, of course, lead time between receiving project approval to proceed and project award and start dates. These are normally very short time periods."

This one needs to be answered by the minister, because it does seem a little ludicrous. "Regarding your suggestions to publish awards, we consider such a publication to be a costly overhead that our corporation cannot undertake due to the massive distribution and maintenance costs associated with such an exercise. We do offer to debrief all bidders in a competition so that even those who were unsuccessful get some return on the investment they expended."

Now in respect to the suggestion to publish awards - and you consider it to be a costly overhead - the industry informs me that they would only require it to be circulated among some 50 corporations. Surely we're not talking about a great deal of money if it only requires some 50 letters to circulate the information - the request for tenders and the specs and that kind of thing. Surely, Mr. Minister, that's not a large amount of money. We're talking about a $30 million budget. We're talking about better communication, as Mr. Alexander has indicated in the letter. He wants to improve it, and yet, in the same breath, he says that it's too costly. There are only 50-odd firms in the industry, so why should it be that costly? We're not dealing with a large amount of money and the public relations value will be well worth the expenditure.

He goes on to say: "As I mentioned at the luncheon meeting, British Columbia Systems Corporation must deliver an effective, cost-efficient service, utilizing private sector costing techniques and therefore must rationalize and minimize all overhead costs. I'm sure that you support this basic premise and will consider such mailing as not being a cost-effective expenditure by the corporation." They disagree with that.

MR. SPEAKER: Three minutes.

MR. LEVI: Well, I guess we'll have to alert my colleague, the former Minister of Finance, to greet the minister and then perhaps I'll have an opportunity to get up again.

Interjection.

MR. LEVI: Well, he might ask a question. I had to greet him in order to get the Leader of the Opposition (Mr. Barrett) to continue this afternoon.

[ Page 730 ]

Interjection.

MR. CHAIRMAN: Please address the Chair.

MR. LEVI: So I've asked the minister a number of questions. Can he tell us, with any degree of accuracy - and he says he's a very accurate accountant, he knows haw to hit the bottom line - just what the cost of the whole operation is going to be? He's given us the high sign which indicates that he's going to be right on the nose - somewhere between $35 million and $40 million, which is what the industry said it would cost last year. That's a long way f rom the amount of money that it originally cost, and very much in keeping with the opinion that some of us shared on this side of the House that the government was going too fast and too far in putting this thing together all in one go. It would have been far better to have taken a small bite of this so that you could have worked out exactly the proper use of all of the computers. Sometime later on this evening I'd like to discuss with the minister the use, the disuse and the abuse of the famous Honeywell that's splitting in half. One half is here, another half is there, costing a large amount of money. It's a direct loss to the taxpayer, I understand, of about $70,000 a month.

We don't know what the recommendations of Mr. McMinn were, but certainly the mere fact that this budget has increased by 30 per cent already indicates that something is out of hand in terms of the corporation, and that the money is being spent at an incredible rate. We have no indication whatsoever of the cost-benefit analysis of such a project.

Well, Mr. Chairman, I'll sit down now and hope that the minister will-11 get up and rattle off eight to ten replies.

HON. MR. WOLFE: I must say that we're very pleased to see the member for Nanaimo (Mr. Stupich) , the Finance critic, back this evening. We missed him this afternoon, because the debate raged on on one question for about three hours because he wasn't in attendance.

AN RON. MEMBER: Did you get any answers?

HON. MR. WOLFE: Oh, we got several answers to one question, repeatedly.

MR. SPEAKER: Order, please. Please address the Chair, Mr. Minister.

HON. MR. WOLFE: I'll certainly address the Chair.

But I'm pleased to receive the questions on the Systems Corporation from the member for Vancouver-Burrard (Mr. Levi) and I have a number of them noted here. I'm not sure I've got them all accurately, but perhaps the most important one he asked originally was related to the expenditures or budget of this corporation.

He's quite right. The estimated expenditures for the upcoming year are in the area of $32.8 million. This has not been finally approved by the board of that corporation, because we're still receiving some explanatory word on that figure. But last year's figure has to take into consideration not only that which was visible in the estimates, but the indirect non-computing costs associated with data processing information. When you break that down, Mr. Chairman, last year the total amount expended was $29.6 million, including $9.5 million in indirect costs.

This is one of the great values of completely separating an operation of this kind from departments, so you now have the true costs of data processing providing this kind of information to departments. For the first time they are realizing the real cost of this kind of financial information. We have repeatedly said that there is a great need to upgrade data processing services in all of the financial systems. This has been indicated repeatedly through the consulting reports that were received in this connection in the past.

The budget expenditures for the past year were $29.6 million, including indirect costs -not shown visibly in the estimates, you might say - of $9.5 million previously.

MR. LEVI: What are indirect costs?

HON. MR. WOLFE: Only the direct data processing expenditures appeared in the votes for last year entitled "Computer and Consulting Charges." In addition, ministries in their other votes budgeted data processing personnel and related expenditures. Since all data processing equipment and personnel have been transferred to the Systems Corporation, with the exception of interface and data conversion personnel, the computer and consulting charges vote represents the total data processing costs pertaining to Systems Corporation-related activities.

Y you asked a series of small questions related to the published rates. These have been published through order-in-council some 30 days ago. I can well imagine that certain people in the industry might feel that some of the rates associated on a per-hour basis would be on the high side, but I think it is true to say that this is compared to private industry

[ Page 731 ]

rates, which are really not published. On a per them basis, it's only fair to show the true cost of what this service represents.

You referred to an advance to the corporation and asked what it was for. This is really the startup costs of the corporation: $5 million, representing working capital - new systems which are not chargeable to departments associated with the backup or administrative side of the Systems Corporation, not chargeable to individual departments, and other startup costs of this nature. Basically it's startup working capital costs of the corporation.

You asked about the lack of spending in the private sector, the concern over whether the corporation was corralling all of the work. There has been an ongoing debate on this question. I can assure the member that the members of the board of that corporation are trying to encourage it to deal with the private sector to the utmost. We have problems associated with the corporation being organized, but we are entirely in agreement with your concern that there is as much as possible. I think we indicated in the last debate on this question that, in fact, the private sector would not suffer in the advent of this corporation, but would enjoy more business than they had heretofore.

You referred to the salary rates paid, that they encroached on the private sector and it was losing people. We've heard some complaints of this nature, but I can assure you - through you) Mr. Chairman - that these rates have been vetted by our salary people and the Government Employee Relations Bureau. I think they relate well to the civil service rates in that connection.

You referred to the fact that there is a vacancy on the board of the corporation. I believe this is so. Your suggestion is very interesting - that we have a member from the industry on that board. As long as we could be sure that there would be no conflict of interest, I think we could meet that suggestion with favour. As a matter of fact, we'd be pleased to have your suggestions about who it might be.

Once again you have referred to the fact that there has been no consultation with the private sector. I can only repeat what we said the last time we went over this issue: there were many meetings held with the private sector. There may be some in the private sector whom you have heard from - and I have heard from - who disagree with the concept and who have, I think, unnecessary fears in this connection. But I think it is not true to say that there was not adequate consultation. Many meetings were held to attempt to get their opinions and make them familiar with the intent of the corporation.

I think that primarily deals with the questions you asked.

MR. LEVI: I would like the minister to comment on the issue of tendering. I'll talk to him off-stage about some suggestions about who might be appointed, but I would urge him to get in touch with the association.

On April 17, 1 received a letter from the National Data Centre Corporation. I wrote to all of them last year and again this year to find out if they had concerns. Let me just quote the third paragraph, and I'm quite prepared to make the letters available to the minister:

"The B.C. Systems Corporation continues to pay lip service to the private sector. While stating it does not intend to compete, it refuses to identify the areas where it might, such as municipalities, school boards, hospitals, and agencies which might receive government grants. These areas are and have been serviced by the private sector for some years in the competitive market. Some computer-service companies who have specialized in these areas are extremely vulnerable to government intrusion.

"BCSC also fails to establish the rules of tendering for government work on an unbiased basis, seeking to select preferred companies without offering opportunities to others that can also adequately process the work."

I covered that in my remarks earlier.

"BCSC seems to be favouring Parkinson's law by hiring a substantial number of workers to handle government work, denying the private sector the opportunity to quote on such work, while drawing on workers from the private sector at higher salaries. This is difficult to justify in an extremely low unemployment area, since it robs the private sector of trained personnel while forcing salaries up and, of course, resulting job costs."

Now here I think we have an example of a feeling by the person who wrote the letter, Mr. Bartlett, who also said at the beginning of the letter: "However, in the event that the subject is still current, I have written to ask his opinions. I might add the following comments on behalf of both this company and CADPSO, for which I am vice-president." That's the Canadian Association of Data Processing people.

The minister has raised his answer in some

[ Page 732 ]

progressive way. The suggestion is that they put a person from the industry on the board. Fine, and I'm sure that they'll be able to find someone who is not in a conflict of interest.

But I must go back over what the minister has said about the consultation. I really don't think he's fully aware of the concern that the industry had in not really being consulted. Let's understand that what the industry was faced with was a report that was done that was never shared with the industry by Mr. McMinn. In fact it was never even shared with this House. We did not know the contents of the McMinn report. Once the government had decided to go the BCSC route, then Mr. McMinn went around telling people how it was going to be. Now contrary to what the minister might think, that's not the consultative process.

The consultative process is what some of his colleagues are doing, where they table pieces of legislation as White Papers, and then they go around. There would have been great value in doing this in respect to this legislation, because then you could have got input, as is happening now with the Co-operatives Act, with the Commodities Act, with that obscure White Paper called the Partnership Act, of which my f friend the former Attorney-General (Mr. Macdonald) has a much better understanding than I have.

The other thing is that you would have got one word of caution from the industry which was absolutely invaluable, and that word of caution would have been along the lines of: "Don't try and hog it all up in the beginning." Because, Mr. Minister, you've told us tonight that last year's costs were $29.6 million, of which $9.5 million were indirect costs. Now I don't understand what you mean by indirect costs. Perhaps you would be good enough to outline for us.... Now is the indirect cost an ongoing cost, or is it something related to what happens in the beginning, and I'm not talking now about startup costs? Because I have a feeling that the cost of this operation is escalating at an enormous rate. The minister readily admitted just before that we have no indication of what the true cost will be even now. You've budgeted $32.8 million, but it could come in at $35 million to $40 million.

HON. MR. WOLFE: I didn't say that.

MR. LEVI: No, you didn't. You said $32.8 million as of what you know now. You may f find out other things. Yes, let me not put words in his mouth. But what that indicated to me was that there could be other costs which have not been discovered, which could drive this up to $35 million.

HON. MR. WOLFE: I never said that.

MR. LEVI: Now last Year the industry, remote as they were from this whole proposition, was skilled enough to say - and they said it publicly - that the government is underestimating the cost; that they are in fact looking at $35 million to $40 million. And that's exactly what we are looking at now. I would suggest that that's a direct result of trying to put the whole thing into operation all at once. In terms of the hiring of staff, it's almost an act of desperation. It's all very well for you to tell us that you've gone to the civil service salary committee and said: "Well, these are the salary rates we want to pay." I'm quite sure that if the minister wants to get a project going and his senior staff are saying to him: "We've got to get the staff, and staff are at a premium. We've got to pay the money...." Consequently, what has happened has caused an incredible dislocation in some of the small businesses in the province. It shows an undue amount of callousness in respect to the attitude towards the private sector.

I might perhaps put in parentheses my remarks that I made last year, that I don't f find anybody on that side of the House, Mr. Chairman, who's prepared to get up and offer some kind of defence or speak on behalf of the private sector. It's left to the socialists over here to do it. It's a very serious problem. Of course it's serious. You're talking, as you've done in your budget.... In the budget this year the minister makes a big thing out of the fact that the Development Corporation is going to get involved in assisting small business. That's very nice. They're going to piece them off with $1 million, and they're going rap it to the private sector in the computer industry to the tune of $5 million to $7 million. That's how much these people stand to lose. The fact that you're going to put in $1 million to train people is something we will cover under another minister's debate.

I would like the minister to tell us what the $9.5 million indirect costs are. I don't want him to make any guesses about what he thinks the year will come in at.

He did not answer the question I asked about GERB. The Minister of Health is in here now and perhaps he can help him because he was the one who raised the issue in the beginning. Maybe the Minister of Health in a moment of

[ Page 733 ]

extreme generosity might pop up and table the letter. Then we'll be much better informed than we were. But it doesn't look like it. No, he's not indicating anything so I guess we're not going to get that.

We're just dying to get to your estimates. Wait until we get to that heroin treatment programme. Oh, boy, I'm just dying for that one. I'm already getting withdrawal symptoms just thinking about it.

Just to go back over some questions, Mr. Minister, I would like to get a response on the question of GERB, whether it is in fact part of the policy of the department to enunciate in a general way, as the Minister of health suggested, or whether this was done specifically at the request of the minister. Perhaps you would be good enough to table the letter. If he won't, maybe you can because the letter came from you, from your department for which you are responsible. You may get round it that way.

What are the $9.5 million indirect costs? I think that's an important one for us to know. Perhaps the minister will now also tell us what is happening with the famous Honeywell computer? Just where is it at - the two-part Honeywell computer, one part over here, another part somewhere on Renfrew Street? What's happening? Is it being used? My last information is that we're paying out about $70,000 a month on rental fees and the thing is sitting there. Now I understand that the thing is on the telephone lines from Victoria. In fact it is being operated from Victoria by the telephone lines. Perhaps the minister might tell us why it was necessary to move the thing in the f first place if that's what is happening. I understand that this is what's happening with this other half of the Honeywell. I never understood, frankly, why it was necessary to move it there in the f first place. The other thing is, what discussions ... ?

HON. MR. WOLFE: More utilization.

MR. LEVI: What was it he said, Mr. Chairman, because I don't hear very well?

Has the minister's staff at the BCSC had discussions with the universities about the rationalizations of their computer tie? What is happening there? Are they still autonomous? Are they plugging into the central operation? What is happening with Health? Is that part of the central operation? Perhaps one very hairy or hoary question: what is happening with the Assessment Authority? The Assessment Authority recently did a lot of tendering. Now perhaps the minister would be good enough to explain it to me. The B.C. Assessment Authority, on January 11,1978, sent out a letter to all of the companies. The letter reads as follow:

"The British Columbia Assessment Authority will be developing and implementing an improved property assessment system. The system will incorporate IMS data base on on-line transaction processing in a province-wide teleprocessing network."

Now my question to you is this. There is a whole amount of specs they ask for.

"The organization selected to assist the British Columbia Assessment Authority must possess demonstrated expertise in in-depth experience in the following areas: project management, project standards, IMS, DB and DC, data communication, performance measurements, systems design and programming, financial stability and staffing.

"If, in our judgment, your organization meets the criteria as laid out herein, further details will be supplied to you in order that you may propose your specific services on this project. Mr. David Williams, director, computer services division, may be contacted for any required clarification. Please return your submission to B.C. Assessment Authority care of the purchasing officer by 4 p.m., January 20.

"Signed, C.R. Flint, purchasing officer.

Now what happened? What happened to the B.C. Systems Corporation? We were told that they were going to do all this. What happened? How come the Assessment Authority is doing its own thing? I'm not suggesting for one minute that's a bad thing. The information I have is that if they didn't do their own thing, we may have some very serious trouble. The point is, what happened? We were told very specifically that the function of the BCSC was to see that all of this ums rationalized in such a way that it would go through them. Here we have a government department, an operation of government - it's not quite a Crown corporation; I guess it's an authority - going off on its own, seeking its own tendering in the way it has always done.

Now, Mr. Minister, perhaps you could tell us why this is happening. What kind of problems are going to flow f rom this kind of thing? After all, you've got an operation the size of the Assessment Authority taking on the somewhat new and small BCSC that wants to become a giant overnight. Why is this happening? Has there been some battle raging and the battle was lost by the BCSC? This is a

[ Page 734 ]

serious departure from the policy that you enunciated. It was implicit in the legislation that was passed in this House.

So those are some of the questions I'd like the minister to respond to.

HON. MR. WOLFE: Perhaps I can come back to that last question when I get a little information here.

You asked also about the explanation for the additional $9.5 million indirect costs. These include, basically, an allowance for hidden overhead normally funded by other non-computing votes, or other ministries: provision for salary contingency, superannuation, space rental, space maintenance, leasehold improvements, power, heat, telephone, clerical support, supplies, publications, payroll-personnel services, purchasing services, administration within the ministry, legal advisory, mail services, insurance, out-of-town meetings, conferences, recruitment and relocation costs where appropriate and not included in the regular direct charges. So there is a whole host of what we would term to be indirect costs, which previously were not recorded as a part of the estimates under the heading of data processing.

Interjection.

HON. MR. WOLFE: Pay close attention.

You were also interested in the Honeywell situation. As you remember, the last time we debated this question, I believe the Honeywell, which proved to be unsuitable for most applications within the computer services, was only being utilized about 15 to 25 per cent. The current situation is that, having divided it in half and located half of it within Vancouver for particular applications and the remaining half in Victoria, the utilization is much more effective. And, as well, the contract has been rewritten extending it about two years at a reduced price. In other words, the monthly rental does not escalate as had been originally provided for in the seven-year contract. It was originally leased, and was split into two separate units. Now one is installed in Vancouver on Renfrew Street and the other on the Blanshard site of the Ministry of Health.

The original contract was renegotiated at the end of 1977. In addition to changing the computer configuration, a new contract was negotiated eliminating the price-escalation clauses and $1.6 million of committed upgrades, which were in that contract. These are now eliminated. Expiry date of the new contract is December 31,1982. So the old contract value amounted to $6,799, 000 million and the new contract, extended over a longer period, amounts to $6,488, 000, which is a cash savings, notwithstanding it's extended over an additional two-year period, of some $311,000. Eighteen months is the extension of the contract.

With regard to the utilization, the Blanshard Street unit is based on the current computer configuration. The computer is fully utilized for one and a half shifts per day at a maximum capacity. Projections are that continuing with the current configuration, full capability will be utilized on three shifts before the end of the year. In Vancouver, based on the current computer application, the computer is fully utilized for two shifts per day at maximum capacity and one-quarter utilized on the remaining shift. This installation currently has 200 customers from 12 educational institutions and ministries.

[Mr. Kahl in the chair.]

MR. LEVI: He's missed the GERB. Maybe you could sit down, Mr. Minister, and I'll ask you a couple more questions. Because he was so quick to get to his feet, I've forgotten what they were.

Yes, I asked about the discussions with the universities. I might add to that B.C. Hydro, because they are very large consumers and operators of data processing. He did not discuss the Assessment Authority; I'd appreciate hearing about that. So if the minister would like to get up.... Well, he's still getting briefed. I'll just carry on with it.

If the minister is making his notes, Mr. Chairman.... I just want to go back to his explanation of $9.5 million, which, as I understand it, really is most of the items which would probably be classified or characterized as overheads in most businesses. He talked about space. He talked about salary contingency and that kind of thing. I will presume from the explanation that we got from the minister that that is an ongoing cost, that all of those contingency fundings and space and that kind of thing will be part of the budget every year. I'm not too clear on the space. Perhaps the minister would comment to us about what the relationship is between the corporation and the Buildings Corporation, whether in fact they're in a lease arrangement. He also might tell us when we might expect .... I guess we don't get a

[ Page 735 ]

report. Well, we probably can get some report, presumably, up to March 31 this year; then we'll have to wait until next year for the full report.

I have one other statement that I do want to make. I have raised this with the members of the Crown corporations reporting committee, and have suggested to them that we get the minister or the government to recommend to cabinet that the British Columbia Systems Corporation be included in the schedule of the Crown corporations reporting committee. It would be worthwhile for a number of reasons. One is that the corporation is new, and we might be able to get in.... It would be useful for the committee to be meeting with the various people from the corporation, so that we won't suddenly have to go through what we go through particularly with Hydro, where suddenly we're expected to absorb 70 years of accumulated whatever it is. This way, if the government is prepared to give consideration to putting that on the schedule, we can go kind of hand in hand. We're also a beginning process. That's a beginning process, and we'd have a much better understanding when it came to the business of examining their operations. It's a somewhat unique opportunity for us.

HON. MR. WOLFE: Could you repeat the question on the B.C. Assessment Authority?

MR. LEVI: On January 11, they circularized all of the corporations in which they were requesting.... The letter said:

"The B.C. Assessment Authority will be developing and implementing an improved property assessment system. The system will incorporate IMS data bases, on-line transaction processing, and province-wide teleprocessing network. For this project the Authority requires outside expertise."

Now the import of my question is that this is an arm of government which is not going via the Systems Corporation. It's. going directly to the industry itself. I think that Mr. Alexander, when he met with the industry in January, indicated that he wants people to go through his operation. Now this one didn't. Perhaps we could have a comment as to why this didn't happen.

HON. MR. WOLFE: If I understand your question, through you, Mr. Chairman, the B.C. Systems were asked to approve their new proposed system - that is the proposed system of the Assessment Authority. As I understand it, the systems were not able to supply the people or facilities to accommodate this, so they're simply going to industry for tender -tendering proposals. Is that ... ?

MR. LEVI: Well, it's an answer. But there are other questions to answer - GERB, the universities.

HON. MR. WOLFE: Mr. Chairman, with relation to his question on the heroin addiction programme and the Government Employee Relations Bureau, loll have to refer him to the Ministry of Health.

MR. LEVI: You-'Il have to refer me to who?

HON. MR. WOLFE: I said you would probably have to ask this question of the Minister of Health (Hon. Mr. McClelland) at some other opportunity.

MR. LEVI: Well, no. With respect, Mr. Minister, the minister cited a letter that he got from GERB, and that's under your operation - that's as I understood it. I read through the Blues and he did say, I think it was.... Let me just quote it and see if I've got it right.

This is the second time around, I think, when the member for North Vancouver got up to ask the question, and the minister, in his usual generous, provocative self, said: "Well, Mr. Speaker, it would have helped if the member had been in the House %ten I answered this question before, and he would have had the answer. Obviously he didn't read the Blues and I repeat it for him at this point." The letter really had basically nothing to do with the question which he raises. It was a letter outlining how the plans were developing for the treatment programme, and what would be required of staff as the programme developed. On the advice of the Government Employee Relations Bureau the offer was made to any member of this staff who were opposed, philosophically, to the programme.

Now some advice was tendered by GERB to the minister. He didn't really tell us what it was; he just made some vague reference to a letter. The question I put to you before was: "Was the heroin treatment programme staff issue a unique one, or is this something that GERB does all the time?" I'm not aware that in government, where you say to people.... People know in government that if you can't live with a program, you've got to go. You either resign or you live with it. The minister indicated that here some kind of special provision was made. People were cold: "If you can't live with the programme, we'll move you somewhere else."

[ Page 736 ]

Now is this a general policy in government? Is this a new policy? Is this what GERB has enunciated, or is this the minister's opinion of what GERB said? We have no knowledge, because we couldn't get the letter. Perhaps the minister would undertake to find out for us just what GERB is talking about in respect to this issue. Is it unique? Is it something just for that particular issue? Because we will raise it again under the minister's....

Really, GERB, I submit, Mr. Chairman, is under the minister's direct jurisdiction. It's part of his responsibility, and he should be able to tell us what kind of policies, particularly in relation to this one, because it was raised in the House already.... Just what is it they're doing? And why was the heroin treatment programme singled out? Was it singled out because of what the minister requested, or is it part and parcel of an ongoing piece of policy? I'd very much appreciate it if we can get an answer from the minister on this, even to the extent where he might table some correspondence. There must have been correspondence between the Ministry of Health and GERB. I fear that we will not get any further with the Minister of Health than we got with him the other day.

HON. MR. WOLFE: Mr. Chairman the member is alluding to some vague piece of information relating to the heroin addiction programme that I am really not aware of. I'm not aware of any policy that he has indicated that GERB would have enunciated. I think, really, it is more appropriate for him to bring this up in the estimates of the Minister of Health.

MR. LEVI: The vagueness comes out of the Ministry of Health. He answered a question in this House and I just quoted....

HON. MR. McCLELLAND: On a point of order, the member is on the wrong minister's estimates. I've said clearly that the letter came from the Alcohol and Drug Commission, and that jurisdiction is the Ministry of Health. The question should be raised under the Ministry of Health's estimates.

MR. CHAIRMAN: I think your point is well taken.

MR. LEVI: He really guards his territory, this guy.

HON. MR. McCLELLAND: I'm just trying to keep you out of trouble.

MR. CHAIRMAN: Order, please.

MR. LEVI: I've been around long enough to know how to take care of myself. You're completely wrong, Mr. Minister, as you always are. I'm talking about a GERB policy and that's not under your jurisdiction; it's under the Minister of Finance's jurisdiction.

HON. MR. McCLELLAND: It's not a GERB policy. What makes you think it's a GERB policy?

MR. LEVI: Yes, quite clearly it is. You made reference to consulting with them. Now what I would like to know - and we're not going to find out from the Minister of Health, Mr. Chairman; he's already indicated how far he's going to go with it - from the pleasant little Minister of Finance (Hon. Mr. Wolfe) is just what GERB did in respect of this piece of policy. It's very simple; we're not encroaching on somebody else's territory.

HON. MR. WOLFE: I gave you an answer.

MR. LEVI: Oh, you didn't. Your answer was as vague as his answer. My God, we've got an atmosphere of vagueness in this House. That's another word to add to your vocabulary. You started off this afternoon with some adjectives. You now have a seventh adjective. I'm only pointing so that I can differentiate between yourself and the staff that is sitting alongside you. It's you I'm pointing to, Mr. Minister.

I don't know how else we're going to be able to find out this information. After all, the minister is responsible for GERB. We know very little about the operation of GERB, and I'd like to know just what the policy is in respect to what appears to be a special kind of situation in which GERB made certain recommendations. Now what were those recommendations? That's from GERB - not from the Minister of Health, from GERB. GERB is under your ministry. What were they? Why is it so difficult to get this information?

I can see that the minister is not going to reply. My colleague, the former Minister of Finance, is just dying to get up to get at you, so I'll sit down.

MR. STUPICH: Well, Mr. Chairman, on the contrary, I was rather enjoying the.... I almost said "exchange, " but there wasn't much exchange. It was all one way.

I would like to start by asking a few questions about revenue. Perhaps the minister has his estimated revenue in front of him. I'm interested in knowing just what is meant by certain figures and how some of then are arrived at.

[ Page 737 ]

The first one I'd like to ask him about is under "natural resources revenue - coal, minerals and metals royalty." I notice last year's estimate was $5.3 million, this year's estimate is $3.6 million, and the actual collections in the year ended March 31,1977, were $12.6 million. Now I know there have been some changes in mineral royalties, apart from coal, but it's my recollection that the average royalty on a ton of coal is something like $1.44, and that's taking into account the coal on which there is no royalty at all. I thought the production was in the neighbourhood of 10 million tons right now. So I don't understand why that figure is lower than it was last year and why it is as low as it is.

The next question I'd like to ask is on page H6 of the estimates: "interest from investments - $32 million." I wonder just what is the nature of those 'investments - probably term deposits in the bank, short-term - but I'd like some comment from the minister.

On page H7: "recovery from B.C. Hydro for highway relocation costs - $11.75 million." My question there is whether or not there is some obligation on the government to actually spend that money in the year that it is intending to receive it from B.C. Hydro.

HON. MR. WOLFE: What's the item again, Dave?

MR. STUPICH: On page H7: "recovery from B.C. Hydro for highway relocation costs - $11.75 million. And the question is whether or not there is an obligation on the part of the government to spend that money in this fiscal period or whether they might save it and spend it some time in the future.

Under "Contributions from other governments" - if the Minister has it - the established programmes financing that are going from $310.3 million up to $470.8 million. I just wonder if we could have some details on that. It was quite a significant increase in that figure.

"Canada Assistance Plan and social services block funding" I notice is broken down into two items in the fiscal year coming, but the two added together of $200 million are some $23 million less than the figure for last year. Now it could be that last year was wrong or it could be that there is some change in financing of some of these programmes. Stop me if you lose track of me.

Under the Ministry of Economic Development, the estimate is $14 million to be received from the government of Canada for economic development, compared to $2.3 million last year. Transportation and highways is going from $7.5 million to $16.5 million, and "other federal payments" from $17 million up to $50.8 million.

The "municipal share of joint-service programmes" at $24 million - I assume that is the municipalities share of Human Resources expenses but I'm not sure. There may be something else in there.

I don't know whether the minister needs some time to catch his breath, but perhaps he can comment on some of these. Then I'll come back on some of them.

HON. MR. WOLFE: I can pick up some of these, Mr. Chairman.

The first question is related to the revenue f rom coal royalties. This is primarily associated with revenue from coal mined on freehold land - in other words, revenue developed from the Mineral Land Tax Act as different from the royalty itself.

MR. STUPICH: Where does the royalty come in?

HON. MR. WOLFE: It's the second item down from that: "Coal, minerals and metals royalties" -$3.6 million.

Then I believe you referred to interest on investments....

MR. STUPICH: That's the one I was asking about: - the $3.6 million.

HON. MR. WOLFE: I'll have to come back to that one, Mr. Chairman.

The second one was interest on investments. The answer is: primarily in term deposits and other investments, interest at 8.25 per cent on the estimated investment total, for an amount of $30 million, and an additional $2 million to be realized from sundry investments and interest sources.

You mentioned the recovery from Hydro - page H7. I think you asked whether that had to be spent within the fiscal year. Yes, you do have to spend that within the fiscal year.

You wanted an explanation of established program financing, which has increased from $310.3 million to $470.8 million. First of all, the extended health-care programme was introduced after the budget for last year was prepared. This amounts to $56.1 million in the 1978-79 year.

Secondly, the adjustment required to bring British Columbia's share up to the national average is being phased in over three years, which means a higher year-over-year increase for B.C. than for the national average. In other words, there is a phase-in period to the so-called national average which we enjoy for

[ Page 738 ]

the first three-year period.

Thirdly, lower than expected values for the income tax portion of the programme resulted in a higher cash contribution under the established programmes financing arrangement. That would reflect itself in this increase as well, as opposed to an increase in income tax revenues. As a result of the less than average share of the income tax portion, primarily due to indexing and the adjustment up to the national average, the portion for the three established programmes has increased by 34 per cent aver the earlier year estimate.

MR. STUPICH: What are the three established programmes?

HON. MR. WOLFE: Post-secondary education. hospital insurance and medicare. If you would like a breakdown of the $470 million, hospital insurance represents $207 million, medicare represents $73.4 million, post-secondary education represents $134.2 million. And, as I mentioned earlier, the receipt from the extended health care programme would be $56.2 million. That's a total of $470.8 million.

You asked about the Canada Assistance Plan -$132.5 million. That is compensating for reduction due to the switch in the long-term care revenue into the established programme financing. That's merely reflected in the figure above it in part.

I forget your other questions, Mr. Member, but I think you asked a question about "Transportation and highways." Were you asking the reason for the increase? I'll have to come back to that.

Included in this amount of $16.5 million are amounts of $8.6 million for the ferry subsidy and $7.9 million for highways programmes, including the Northlands highway programme and the railway grade separation contribution. So those two amounts are $8.6 million for the ferry subsidy and $7.9 million for so-called highways programmes, including the Northlands highway programme and the railway grade separation programme.

I have other explanations for these breakdowns, if you would like to have them.

MR. STUPICH: Mr. Chairman, I did ask whether the municipal share of joint service programmes was the municipalities' share of Human Resources payments, or was that something else? The $24 million....

I did ask for a breakdown of the item "other federal payments" in the amount of $50.8 million, and of the economic development figure of $14 million. Do you want to have a go at those now, or shall I keep on going?

HON. MR. WOLFE: Mr. Chairman, I can answer the first question. The municipal share of joint service programmes does relate to the welfare contribution. I'll have to come back to the others, I think.

MR. STUPICH: Okay, that's the federal payment of $50.8 million, the detail on that, and the detail on the $14 million on economic development.

HON. MR. WOLFE: With relation to the $14 million on the economic development, that includes $6 million under the ARDA programme, and recoveries under the coal agreement and the industrial incentives agreement, IDSA of $8 million.

MR. STUPICH: Well, we're getting some answers anyway, Mr. Chairman. I'm not sure, have you got another one?

HON. MR. WOLFE: Yes.

MR. STUPICH: Do you have one on the $50.8 million?

MR. CHAIRMAN: Please address the Chair.

MR. STUPICH: I'm sorry, Mr. Chairman.

HON. MR. WOLFE: What was the other question?

MR. STUPICH: Mr. Chairman, the other question is on the $50.8 million, "other federal payments, " which is up from $17 million to $50.8 million.

[Mr. Rogers in the chair.]

HON. MR. WOLFE: The "other federal payments" indicated in the revenues at $50.8 million is made up of post-secondary education adjustment payments for reclassification of grade 12, post-secondary $34.8 million; hospital Insurance and Diagnostic Services Act, final payment for 1974, and 75 per cent of the final payment for 1975, a total of $10 million. Then there are education programmes; civilian teachers, Department of National Defence; courses for new Canadians, training improvement programmes - $2,255, 000. Under the heading of "health, professional training and vocational rehabilitation, " a total of $1,161, 000; salmonoid and Pacific Rim National Park recreation and conservation programmes bring the total up to $50.8 million.

So the primary explanation of that increase in other programmes lies in the post-secondary education and in the Hospital Insurance and

[ Page 739 ]

Diagnostic Services Act settlements.

MR. STUPICH: Okay, Mr. Chairman, we'll go back to the first page of estimated revenue with a couple of questions. One of them is a repeat, and that is the question with respect to coal, minerals and metals royalties. I pointed out that it is $3.6 million estimated for the year ending March 31,1979. 1 believe that is where the $1.44 or some such figure a ton on a production of something in the neighbourhood of 10 million tons should-be. I note that the actual receipts in the year ended March 31,1977, under this same item, were $12.6 million. I know we've done away with royalties on some minerals, but certainly not on coal, and I'm just wondering where all the coal royalty money shows in the estimates, if not on that item. Or are we going to quit mining coal this year?

I've another question with respect to personal income tax. It's my understanding, Mr. Chairman, that the federal government has told B.C. that the estimated amount to be returned to B.C. of personal income tax will be $169 million less than was originally estimated. Now that doesn't necessarily mean less than the figure in our estimates for March 31,1978, but I understand the shortfall is expected to be $169 million. Now Iove nothing to work on other than the figures before me.

If we reduce the estimated revenue for the year ended March 31,1978, by $169 million, we bring it down to $54 million less than $1 billion, and it shows the increase expected this year ought to be $236 million. Now do we really expect that our personal income tax is going to be $236 million higher than last year? I'm not sure if the minister followed my calculation. Anyway, I'll try it again.

The estimated revenue for the year ended March 31,1978, $1,115, 500,000. Ottawa has said there will be a shortfall of $169 million, which means that if this is the figure that we'll be shorted, our revenue is expected to be $946 million. We're projecting revenue in the year ahead of $1,182, 000,000, which is $236 million higher than last year. That's an increase of $236 million, an increase of about 24 per cent in one year. Is that really the increase we expect in personal income tax? Those two questions.

HON. MR. WOLFE: Mr. Chairman, if I could refer the member back to his earlier question to which I didn't give an answer, on the mineral land tax, the reduction in the revenue forecast is due to the anticipated effect of a work stoppage in the coal industry in 1977.

MR. STUPICH: Did you say "mineral land tax"?

MR. CHAIRMAN: I'm trying to follow it too.

HON. MR. WOLFE: I thought that was included in what you were asking - coal, minerals and metal royalties. No, this is mineral land tax, that's correct.

You asked about personal income tax. The difference between the estimate for the current year of $1,182, 000,000 and $1,115, 000,000 is represented in the decreased estimates of the federal government for the upcoming year. If you recall, they reduced our estimates for 1977-78 after the mid-year by a total of $120 million, including corporate and income tax, making up a total of $120 million, so that the total for the previous year is really not going to be $1,115, 000,000, but will be under $1 billion, I would presume. Then, of course, you have to add into this figure the transfer of roughly five tax points represented in the federal government's new sales tax proposal.

In other words, we could perhaps come to this on another question, if you wish, but the nature of the federal government proposal, which gives to the province the equivalent of two sales tax points for six months only, is being transferred to the province by way of income tax abatement, and that is therefore reflected in our income tax revenues for the coming year. So you have both a reduction in the income tax figure due to indexing which is ongoing each year, and then you have an inflation in that figure due to the transfer or abatement of income tax offsetting the sales tax proposal. I could give you a more detailed breakdown of those figures, but that's the real reason why it's where it is.

MR. STUPICH: Well, Mr. Chairman, I think we've lost everybody else in the House, but the answer did come out there. It's the sales tax. I didn't realize that the sales tax abatement is included in that particular item in the estimates. We're still stuck on the coal royalties. We don't seem to be able to find out why coal royalties, coal minerals .... The Minister of Mines (Ron. Mr. Chabot) seems to be very little help in this.

HON. MR. WOLFE: I'll have to get that later, Dave.

MR. STUPICH: Yes. You'll need somebody more than the Minister of Mines, obviously. Someone in your own ministry, I think, would be more use than the Minister of Mines, obviously.

[ Page 740 ]

HON. MR. CHABOT: Cheap shot! Withdraw!

Shocking attack!

MR. STUPICH: I could come back to page H6: "Interest from investments." We have established that $32 million is going to be received by the government mainly from interest on term deposits - interest on cash, in effect, Mr. Chairman. The minister did reply to that. There's $32 million revenue coming from interest on cash that is available or will be available during the year.

I note that under the expenditures for the Ministry of Finance, vote 100 - and I don't intend to deal with the vote at this particular point in time other than to relate it to this figure - $32 million is the revenue expected. The expenditures for the interest on public debt are $21.8 million. So in other words it would appear that there's substantially more than enough cash on hand to pay off the public debt. That's the point I wanted to make. The interest income of $32 million as opposed to the expenditures of $21.8 million.... With respect to that, they'll probably wait until we get to the vote, Mr. Chairman. But I notice that the interest on public debt is going to increase by 50 per cent of the provision and we spent roughly the amount that was estimated last year. At the moment I'm not so much asking a question as making a comment.

The other comment I'd like to make is that with respect to the recovery from B.C. Hydro for highway relocation costs, this year we'll be collecting $11.75 million from B.C. Hydro for relocating highways. The estimate for highway construction this year is $22 million less than it was last year. To that figure we have to add another $11.75 million that we're going to get from Hydro, so it would appear as though the government is providing $33.75 million less for highway construction this year when we're supposed to be creating jobs, until you add in the special fund of $28 million. So in effect, the government....

HON. MR. WOLFE: Twenty-six million dollars.

MR. STUPICH: Twenty-six million on that programme? Thank you, that makes it worse. There's $26 million out of the sales of the ferries to provide jobs on highways, yet the estimates are being reduced by $34 million. So we're actually spending $8 million less on highway construction this year than last year, forgetting whatever effect inflation might have.

Those were a couple of comments, Mr. Chairman; now a question. British Columbia

Buildings Corporation - the estimate for revenue is down. I'm just wondering whether last year's was too high or whether we're going to be renting less buildings from B.C. Buildings or what. I wonder if the minister could explain why that figure should be down this year.

MR. CHAIRMAN: That's on 86, is it?

MR. STUPICH: On 87 now. Sorry, Mr. Chairman.

That's 87 - under Contributions from Government Enterprises, British Columbia Buildings Corporation was estimated to produce $33 million in the year ending March 31,1978. This year it's expected to produce $29.5 million.

HON. MR. WOLFE: With reference to the B.C. Buildings Corporation, although the estimate declines from $33 million in 1977-1978 to $29.5 million in the current year's estimates, the actual revenue in the prior year period is expected to be $15 million, so there will be an increase in the actual revenue received in 1977-1978.

MR. STUPICH: If I could get a couple of other points in, which are not in the estimates as such.... You may recall, Mr. Chairman, that the Minister of Health (Hon. Mr. McClelland) , in speaking during the budget debate - I don't recall whether it was on the main motion, or on the amendment, or the amendment to the amendment, or whatever -announced with some pleasure to the House a $700 million hospital building programme over the next five years. I just wonder whether any other ministers have five-year plans that have been submitted to Treasury Board for consideration; whether Treasury Board has considered all of these plans, or whether Treasury Board has looked only at the five-year plan for the Ministry of Health; whether other ministries are being invited to submit similar five-year plans; and just exactly what has been going on in Treasury Board with respect to this five-year planning.

HON. MR. WOLFE: I think, primarily in the larger-spending departments, they do have long-range spending programmes, as you said. The Ministry of Health have alluded to a construction programme for hospitals of some $707 million, I believe. Mind you, most of this is borrowed outside of government - at least it's provided for through hospital districts.

Certainly the Ministry of Education, in their planning, have long-range planning for

[ Page 741 ]

school construction; and also Highways plan much further than one year ahead in terms of their programmes, which have to be , committed for far in advance. I think that, primarily in those three cases you have long-range forecasting. But I think it's about all I could allude to at the present moment in terms of that question.

MR. STUPICH: If I understand the answer then, Mr. Chairman, the Minister of Health has not submitted any five-year plan to Treasury Board for approval. The Ministry of Health has plans that they would like to proceed with over the next five years, as has every other ministry; but they all have to come to Treasury Board yet, and put their case year-by-year, and fight for the available dollar. And it's quite conceivable that he would get none of that $700 million because, even though it's going to be financed under the hospital financing authority, it still has to be approved by Treasury Board before it goes ahead. Now that's my understanding of the reply.

HON. MR. WOLFE: Mr. Chairman, I'd like to correct the member. The Minister of Health has approached Treasury Board and had approval for....

MR. STUPICH: Five years?

HON. MR. WOLFE: Yes, he has, and has had a commitment and approval from Treasury Board for that expenditure.

MR. STUPICH: And that is the only minister that has approached Treasury Board and had approval for a five-year plan? Is that right? You said other ministries are planning, but is it right that the Minister of Health is the only one that has five years of approval in advance?

HON. MR. WOLFE: Mr. Chairman, there would be other forward commitments required by the ministries, but none would parallel exactly that of the Ministry of Health, which has to programme these hospital construction projects so far ahead.

MR. STUPICH: In the minister's capacity as Minister of Finance, and as the minister responsible for Hydro, we note this year that there was no transit subsidy paid to B.C. Hydro, as was the case in 1976 and 1977. 1 wonder whether B.C. Hydro made an approach to the Minister of Finance and made a case for a transit subsidy, or whether B.C. Hydro felt that it could carry that on its own; whether it intends to cover the transit subsidy within its own operations, in other words, through levying increased rates for electricity and whatever else B.C. hydro sells; and whether this is to be policy from now on - that B.C. Hydro will meet the costs of subsidizing public transportation in Victoria and Vancouver. Was a case made, was a pitch made, and if so, did the minister say: "Go and do it yourself."? Or did B.C. Hydro decide, without making any approach to the minister, that they would cover that cost?

HON. MR. WOLFE: Mr. Chairman, I think the projections of Hydro would be that they are projecting a profit for the current year, which would be in excess of the content of the transit losses within that, so I don't think we need to anticipate that there will be a net loss on Hydro operation after absorbing their transit loss.

To quite a large degree in the immediate past current fiscal year of Hydro, this has been due to the substantial increase in the sale of power outside of British Columbia, and this has been a new revenue source which has favoured their operations substantially for the year.

MR. MACDONALD: Mr. Chairman, to the minister: B.C. Hydro told the Crown corporations committee that they wanted a subsidy for the transit operations. They estimated the deficit for the last fiscal year at $65 million roughly and presumed it will be at least that much again in the coming year. Now is the minister saying that even the $2 million - the old urban transit thing - is not in the budget. There is nothing else in the budget, nothing at all for urban transit that I can see.

HON. MR. WOLFE: Rural electrification.

MR. MACDONALD: Yes, but I'm talking about the urban transit subsidy. That's urban transportation. I don't think it's in there.

MR. CHAIRMAN: I would just caution the hon. member that we really can't reflect on things that took place in the committee, but your question is in order.

MR. MACDONALD: Well, I learned it. A little bird told me that Hydro wanted to get some help from the government because they were going to incur an urban transportation deficit of about $65 million in the coming year, and members from ridings like Columbia River will

[ Page 742 ]

be paying for that urban transportation loss if it has to come from electric rates and gas rates.

HON. MR. CHABOT: Are you suggesting that we pay as we go?

MR. CHAIRMAN: Order, please.

MR. MACDONALD: I ask the Minister of Mines whether he likes that situation.

MR. CHAIRMAN: Order, please.

HON. MR. CHABOT: Pay as you go - is that your suggestion?

MR. MACDONALD: No, there is no pay as you go; it's a deficit. I'm asking the Minister of Finance - seriously, though - does this mean, as he seemed to state a few minutes ago, that government policy is that there will not be an additional grant made to B.C. Hydro for urban transportation, which is the lower mainland of British Columbia? Is that government policy? That's what I understood him to say a minute ago. It surprises me, I must admit.

HON. MR. WOLFE: Mr. Chairman, I don't recall saying anything like the member just recalled me saying. In any event, to answer his question, there is nothing in the estimates for the current year covering Hydro or transit, but as you well know, the Minister of Municipal Affairs and Housing (Hon. Mr. Curtis) has indicated that a policy will be forthcoming in terms of urban transportation which will probably answer the question that you're interested in.

MR. MACDONALD: Does this mean the government's announcing there'll be legislation in terms of a transit authority at this session of the Legislature or at session before the end of this year? Is that why there is a big question mark over this subject, that legislation is coming and the legislation will carry the authority to appropriate additional funds from the revenues of the province? Is that the position?

HON. MR. WOLFE: Mr. Chairman, I can't predict or pre-empt what another minister may want to bring forward in terms of legislation.

MR. STUPICH: I don't think I got an answer to the first part of that Hydro question, which was: whether or not B.C. Hydro asked the Minister of Finance to make a contribution toward the deficit in the transit operations which, I understand, are in the neighbourhood of some $60 million. I know B.C. Hydro asked last year and the year before and received subsidies in the neighbourhood, I believe, of $32.6 million each year. And it had to have that in order to break even in total. I know they don't need it this year; they've made enough by hiking the rates, the minister said, by selling Hydro outside of the province. Whatever. They made enough from their electrical and gas sales that they don't need that subsidy to break even. But my question still remains whether B.C. Hydro felt that it was proper to approach the government, the Minister of Finance specifically, and ask him to continue making a contribution out of the public treasury toward meeting the cost of the transit deficit, or whether Hydro decided on its own that if it could boost electrical and gas rates enough to completely cover the cost of operating the transit system, then it was not proper to approach the government for help. Did they ask?

HON. MR. WOLFE: Mr. Chairman, yes, they did ask.

MR. STUPICH: Good for Hydro.

I'd like to come back just a little bit to the approval. I'm still surprised at this. It's my understanding from the minister that the Minister of Health has approval for a five-year programme. Now, Mr. Chairman, my surprise is in part because we're covering a period that could encompass two provincial elections. Just how does Treasury go about approving a programme that's going to involve government expenditures over five years?

HON. MR. WOLFE: Because we're going to win.

MR. STUPICH: And, Mr. Chairman, the minister says: "Because we're going to win." But this government has been known to change its mind on occasion. You'll recall they put forward the case for having to increase sales tax two years ago and this year they're putting forward a case for reducing it. So this government does change its mind.

Even if, in the unfortunate circumstance that the government does get re-elected, not only this coming time but one time after that, it's still no guarantee.... What is the guarantee that the Ministry of Health has?

HON. MR. WOLFE: Mr. Chairman, I think what the member should understand is that what we have approved is a borrowing programme. It's not an expenditure but a borrowing programme.

[ Page 743 ]

MR. STUPICH: Mr. Chairman, they have to prove the expenditure as well. It's not just the borrowing. When they're going to build a hospital or build a school ....

Mr. Chairman, I would like to pursue another line of questioning. I wonder what the status of the B.C. Resources Investment Corporation is now - whether or not the assets have been transferred to the B.C. Resources Investment Corporation or whether that is still in process. What was the basis of valuation of the assets? Who did the valuation, if you like? What was the value placed on each asset transferred to B.C. Resources Investment Corporation?

HON. MR. WOLFE: Mr. Chairman, with regard to the B.C. Resources Investment Corporation, yes, the assets which were planned to be transferred have been transferred. I believe the date was March 9,1978. The total valuation on that transaction was $151.5 million in government assets. You asked for the breakdown of these. It is as follows: Canadian Cellulose Company was transferred at $6.50 per share for a total of $64.2 million; Plateau Mills, $1,000 per share for a total of $9 million; Kootenay Forest Products, a total valuation of $1.25, keeping in mind that this transaction assumed that the resources corporation assumes the bank loans of $3.1 million and also the transfer of the surplus land within the Kootenay to the government; Westcoast Transmission, $32.29 per share, a total of $37.3 million; petroleum and natural gas exploration rights, $40.89 million. Thus the aggregate transfer price was $151.5 mil 1 ion.

These valuations were established by officials in the Ministries of Finance and Mines and Petroleum Resources with the advice of independent advisors and had been agreed to by the Resources Investment Corporation's interim board of directors.

MR. MACDONALD: Mr. Chairman, the minister has referred to the very substantial assets to be transferred to the new public company. Naturally, insofar as the public are concerned, the valuation of those assets is of paramount concern, the total evaluated being $151 million. Now I think that the House is entitled to see the appraisals, because surely that kind of public business involving $151 million in assets would not be done without appraisal reports. You take Can-Cel now. Where do you get the $64 million? So I'm asking the minister if he would table for the information of the House and during his estimates an appraisal of the Can--Cel operations - tree-

farm licences, retained earnings and so forth - indicating on what basis they arrived at that valuation, which, quite frankly, Mr. Chairman, to my mind se very, very low in terms of the assets of that corporation. Would the minister table the appraisal?

HON. MR. WOLFE: Mr. Chairman, keeping in mind that this important transaction is yet to be placed in the way of an underwriting to the people of British Columbia, and should not be prejudiced in any way in the disclosures, et cetera, which would be embodied in that underwriting - it's very important that we adhere to this - I would be pleased to undertake to make available the valuation report which entered into this. I don't have it with me just now but I will make it available.

MR. MACDONALD: Will the minister make it available tomorrow afternoon by 2 o'clock so it will be available to members? If there is to be a future sale of shares in the investment corporation, I can't see that public information in the form of appraisals would in any way be prejudicial to the public.

HON. MR. WOLFE: Mr. Chairman, I can't indicate the exact moment when I could do this because I have to take under advice the question of the underwriting, which would have full disclosure of all of these matters involved in it. I can say that I can undertake to make that available at an appropriate occasion.

MR. MACDONALD: As soon as your vote goes through?

MR. BARBER: My questions are on the same subject. Could you inform the House who did the evaluation of those assets, listed in total at $151.5 million, that are now in the process of being transferred to the B.C. Resources Investment Corporation? Which firm or group of firms actually conducted that analysis upon which that figure is based?

HON. MR. WOLFE: As I indicated earlier, it is established by officials in the Ministries of Finance and Mines and Petroleum Resources, with the advice of independent financial advisers, who consisted of A.E. Ames and Company; McLeod Young Weir; Pemberton; and Richardson. I might say that the member for Vancouver East (Mr. Macdonald) referred to Canadian Cellulose as sounding a low valuation at $6.50 per share. I believe that was right around the market value, as it happened, at

[ Page 744 ]

that particular time.

MR. BARBER: I want to make sure I understand this correctly. Four reputable financial houses - Ames, McLeod, Pemberton, and Richardson - together with senior officials f rom the Ministries of Finance and Mines and Petroleum Resources, were instructed by the minister to prepare this analysis. Is that correct?

HON. MR. WOLFE. No, the firms I mentioned and the officials in the departments I referred to were instructed to offer their opinions on the valuations and to satisfy the directors of the Resources Investment Corporation, so they arrived at an understanding of an appropriate price. But the prices arrived at were the recommendation of the group I am referring to.

MR. BARBER: Which included those four private firms, I take it. From what you have told us about the in-house analysis that took place regarding the Ministry of Mines and Petroleum Resources, one presumes that their specific instruction was to look at the petroleum licences and other assets which are granted under the legislation. Is that correct?

HON. MR. WOLFE: Naturally, that department participated in the valuation of those lands and the tenure arrangement surrounding them.

MR. BARBER: So, narrowing the field, we are to understand that the four private houses, together with officials from your own department, exclusive of the Ministry of Mines and Petroleum Resources, looked at all of the other assets transferred to the B.C. Resources Corporation, and that specifically the Minister of Mines' department looked at those resources in the field of petroleum and natural gas that were transferred, also exclusively.

HON. MR. WOLFE: Mr. Chairman, I should have explained that with regard to the petroleum lands, independent opinion was obtained on those particular valuations.

MR. BARBER: Would the minister inform the House of the source of that independent valuation, regarding just the petroleum and natural gas lands the minister has referred to?

MR. CHAIRMAN: The member for Dewdney.

MR. BARBER: Pardon me, Mr. Chairman, I was waiting for the minister to reply.

MR. CHAIRMAN: I appreciate the fact you were waiting for the minister to reply, but if all members are seated and the member for Dewdney stands up, I must recognize the member for Dewdney.

MR. BARBER: I'll be back, Mr. Chairman.

MR. MUSSALLEM: I draw to the minister's attention a matter not so great in millions, but equally important to the public of British Columbia. I draw his attention to the fact that one of the very important food supplements which is supplied through many stores is taxed in this province, whereas food generally is not taxed. I submit to him that vitamins are taxed in British Columbia but they are not taxed in our sister province of Ontario. Chocolate bars are taxed in the province of Ontario and chocolate bars are not taxed here. Chocolate is very bad for children's teeth and it is very bad for adults' teeth; it's a thing that should be avoided. Yet we supply these substances without tax on the assumption they are a substantial food requirement for people. They are not.

I bring to his attention that junk food such as puffed rice.... I won't use any trade names, but I use the words "puffed rice" because it can be any manufacturer. That's not taxed.

I would remind him of an experiment at the University of British Columbia some years ago where cattle were fed puffed wheat and such substances without any additives, and the cattle nearly died, and would have died had they not been given some nutritious food. That product is supplied without tax by this government. Yet a food supplement such as vitamins is taxed. I can't understand the reason behind this.

I must compliment the hon. minister for taking off the excess tax and bringing it down from 7 per cent to 5 per cent. It already has had a marked effect on business. So I give him high marks for very wise and thoughtful judgment with respect to this. However, I want to add to his laurels. If he would make this move it would be appreciated by great numbers of people. The amount of money the government is receiving in taxation is minuscule. It is not fair to tax food but not to tax junk food. It's not fair to tax vitamins but not to tax candy.

I bring it to his attention that that is wrong. I've written him about this subject and

[ Page 745 ]

he's already said no. But on the floor of this House, in this austere chamber, I bring to his attention the fact that he could serve a great many people, and serve them well ....

AN HON. MEMBER: We should have a junk tax.

MR. MUSSALLEM: Yes, a junk-food tax is okay. Make it 10 per cent. You should have raised the junk-food tax the same as you raised the tax on tobacco. Why leave the junk foods out? Tobacco is a dangerous, deleterious substance. We've raised the tax on that, and rightfully so. Now how about raising the tax on puffed wheat and all this junk food at the same time?

AN HUN. MEMBER: Puffed rice.

MR. MUSSALLEM: Rice is junk food too. But I'm just bringing up a very serious matter. I think the minister should take this under advisement and consideration, which, up to the present time, I say with the deepest regret, he has not done. May I bring it to his attention again in the hope that he will take some action, as it is only fair and proper to do so.

MR. BARBER: Would the minister care to reply to the member for Dewdney? No? Okay. It's not fair, I guess. Take it up in caucus.

Returning to the subject of the evaluation of the assets which have now been transferred to the B.C. Resources Investment Corporation, I understand from the minister that within the Ministry of Mines and Petroleum Resources, and as well from outside opinion, an evaluation was made of petroleum and natural gas rights and leases, tenure, and land associated with the transfer of those resources to the corporation. I wonder if the minister would now care to tell us which private companies were involved in making that determination in the field of petroleum and natural gas rights.

HON. MR. WOLFE: Mr. Chairman, if you are asking for the firm who advised on the petroleum rights and so on, I do not have that name with me, but it will be, of course, disclosed in the the information material I will make available later.

MR. BARBER: Do I understand, then, given that you don't have the name with you at present? It is not included in the list of Ames, McLeod, Pemberton, and Richardson that you gave to me a few minutes ago? So we're talking about five firms then - the four you have named, and a fifth which you will shortly name, when you find out which it is.

HON. MR. WOLFE: Just to explain, Mr. Chairman, I'm not referring to another investment firm, but a consulting firm on mining properties and so on - an expert in that field.

MR. BARBER: Would it be asking too much to ask the minister to table with the House the report of that consulting firm, as well as the various reports of the four private agencies -the investment houses, the counselling houses - that he's already received? Would you agree to table that report as well?

HON. MR. WOLFE: Mr. Chairman, the reason I am hesitating is that I'm not sure it's any different from the one I first referred to. It may be a body that I would have to go and ask.

MR. BARBER: Given that the minister is an honourable member, can we take it that we will receive all of the reports in one or several bodies as they may appear in the minister's folder when he finds out what they are? Is that okay? Can we do that?

Regarding now the four firms, the public and quite reputable investment houses involved in assessing the non-petroleum and natural gas properties and assets that were transferred to the resources corporation, referring then specifically to the firms of Ames, McLeod, Pemberton and Richardson, could the minister tell us whether or not these firms were engaged on a contractual basis?

Surely, Mr. Chairman, you would agree this is a reasonable question. We're talking about transferring assets worth at least $151.5 million, if not more, to a new corporation, over which clearly this House has little control, if any, judging by the Premier's non-answers recently. It's an important question and I hope the minister answers.

HON. MR. WOLFE: Mr. Chairman, I am not aware of any contractual arrangement. I would remind the member that the group I am referring to are Canadian managers for our investments in Canada, for our government's borrowings through Hydro in Canada. So they are investment representatives for the government in that respect.

MR. BARBER: So we are given to presume, then, that whatever benefit they might obtain from this, if it doesn't derive from a contract signed between those houses and your department, will derive in some future sense from commissions. Is that correct?

HON. MR. WOLFE: No.

[ Page 746 ]

MR. BARBER: Well then, the question is obvious. Why would they do the work if there are no commissions and there is no contract? Why would they undertake this?

HON. MR. WOLFE: Mr. Chairman, they are managers for investments and probably would feel obligation to contribute their services in this respect.

MR. BARBER: Is the minister telling this House that these four companies did their work for the government as a kind of charity case, that no fees were paid, no contract Was signed and no commissions will be obtained? Is the minister actually telling this House that an assessment of assets in excess of $150 million was performed by four major and reputable companies for free?

HON. MR. WOLFE: Mr. Chairman, as I said before, these firms are financial advisers in terms of government borrowings and Hydro borrowings and so on. Naturally, when there is a bond issue, they participate in the way of commissions at that time. But I'm not aware of any contractual arrangement in this regard.

MR. BARBER: Which of these companies, if any, will be involved in the authorship of the prospectus that will be issued at the time when the corporation goes public and its sales are made available?

HON. MR. WOLFE: Mr. Chairman, that will be the responsibility of the Resources Investment Corporation.

MR. BARBER: And you yourself have no knowledge of which, if any, of these companies will be involved.

Continuing back then on the question of the arrangement between the government and these companies in assessing the worth of these assets, were any instructions given by you or, to your knowledge, by the corporation through its interim board of directors to the four companies regarding the framework upon which will be based, or was based, the actual assessment that they performed on the worth of the non-petroleum and non-natural gas assets now transferred to the corporation? What instructions or directions were provided by you or by the corporation, to your knowledge, regarding assessing these assets?

HON. MR. WOLFE: Mr. Chairman, they were simply told the assets to be transferred and were asked for their opinion on the valuations.

MR. BARBER: Was this done by letter or any other from of written correspondence - a cablegram, Telex, telegram of any sort? How was this actually communicated?

It is an important matter of public policy to this opposition to understand upon what basis the evaluation has been made of these considerable public assets in order that we can further understand, as comes the time of their disposal, whether or not they've been disposed of properly. The minister tells us that four houses - which are, I repeat, reputable houses, and I'm not questioning that for a moment - were involved in assessing at least part of the worth of those Crown assets which have now been transferred to the corporation. What I'm trying to explore is the nature of the relationship between your department and those houses and, in particular, what instructions, if any, were given, and how they were given to the four houses involved.

Let me try and make it a little more plain, if I might, Mr. Chairman. Kootenay Forest Products has, according to the minister and information received previously, a value of $1.25. Is that not correct? That's what the corporation told us. Now this is, to say the least, somewhat extraordinary. There are, no doubt, reasons for it. Shortly we propose to explore those reasons, but before we do so in that detail, what I would appreciate from the minister is a more general statement of the nature of the instructions, if any, given by you or, to your knowledge, by the corporation to these four houses. What form did these instructions take? Did you write them a letter? Did you send a memo? Did you send a telegram? Or was it done verbally? These are, to us, Mr. Chairman, extremely important questions. We would appreciate an answer.

MR. STEPHENS: Mr. Chairman, I'd like to just ask the minister very short questions. First of all, is there a federal contribution to legal aid? Secondly, if so, how much is that contribution? Thirdly, where does it appear in the estimates?

MR. BARBER: I would be happy to yield to the minister if he wishes to reply to the member for Oak Bay. Do you care to reply, Mr. Minister, to the member?

MR. CHAIRMAN: I would suggest you continue.

MR. BARBER: Well, assuming I have the minister's attention, if the minister cannot answer at present as to the question of the instructions, if any, given by him to the

[ Page 747 ]

investment houses, would the minister be willing to table with the House, when he tables the report or reports of those houses, the accompanying instructions that were provided at the time the reports were initiated? Would the minister be willing to table that material with the committee when he tables the other documents?

HON. MR. WOLFE: As the member knows, an underwriting will be placed before the public with complete disclosures as required by the securities law and so on, which will answer all of the questions that are being directed in this connection. That is the appropriate time, in my view, when many of these questions can be answered.

MR. BARBER: With respect, Mr. Chairman, it's not very appropriate to us, because today and tomorrow and days to come are your estimates, and not in the weeks and months to come when we see the prospectus. In any case, we've discovered that no one over there will answer for the corporation. So unless we buy shares ourselves, it's going to be somewhat difficult to ask, much less have answered, these questions.

Let me continue then, if I may, with other questions in relation to the same matter. We will, later on, be examining in detail, one by one, the assessment that was made of the value of these individual enterprises that are now being transferred to the corporation. This evening, what we're trying to assess is the means whereby the assessments were instructed in the f first place, and how they work. Could the minister tell us - if he won't tell us about the instructions, if any, that were given - when these companies were asked and by whom, specifically, to perform the evaluation that the minister tells us they have performed. When - roughly, within a week or two - and by whom?

MR. STUPICH: Mr. Chairman, I understand that it was one of the principles of the resources corporation that the government was going to hold an interest, 10 per cent or 20 per cent. Was it the announced intention of the government to hold a 10 per cent or 20 per cent share?

HON. MR. WOLFE: Under 50 per cent.

MR. STUPICH: Something under 50 per cent. So one of the ministers will be reporting to the House regularly, as the shareholder.

AN HON. MEMBER: No, No.

MR. STUPICH: Will w- not get reports in the Legislature from the minister who is responsible for holding that?

HON. MR. WOLFE: If I understand your question, you're asking whether, in the capacity of a Crown corporation, there would be a government representative who would report to this House. The answer is no, because this is not....

Interjection.

MR. CHAIRMAN: Order, please. For the sake of the Chairman and for the sake of Hansard, we must stick to the formalities. The minister has the floor.

MR. STUPICH: Mr. Chairman, I appreciate it will not be a Crown corporation. I understood the minister's response, that the government will own less than 50 per cent, but nevertheless there will be some holding in it. And I would expect that the members in the House will be able to ask some minister questions about how the government is voting its shares, or something. Some information should be available, I would think.

If I could pursue this question of the B.C. Resources Investment Corporation a little more.... B.C. Cellulose Company has sold a number of its assets to the Resources Investment Corporation, including its share in Canadian Cellulose, which was, I think, 78.8 per cent of the outstanding shares of Canadian Cellulose. These were owned by B.C. Cellulose and, presumably, sold to the new corporation. But apart from that 78.8 per cent, the government had somewhere in the neighbourhood of 3 to 4 per cent. Have those shares been sold to the Resources Investment Corporation as well?

HON. MR. WOLFE: Yes.

MR. STUPICH: I'm a little concerned about the evaluation of Plateau, because I understand that after the government had reached agreement with the shareholders of Plateau to buy it for somewhere in the neighbourhood of $7 million, there was an offer from someone else, or a group, to buy it at $10 million. I believe that the government has spent money on that plant since, and I am concerned about the evaluation of $9 million.

With respect to Kootenay, I notice in the Public Accounts for March 31,1976 - B.C. Cellulose Company - that the investment in it has a negative value, but then there are substantial advances to Kootenay Forest

[ Page 748 ]

Products, in the neighbourhood of $11.6 million. I am wondering whether the $1.25 represents just the shares - the value placed on the shares - and whether B.C. Cellulose still has advances to Kootenay Forest Products in the neighbourhood of $11 million - that figure may be different by now. Does B.C. Cellulose still have an asset - advances to Kootenay - or was that included in the sale at $1.25?

HON. MR. WOLFE: Involved in the transaction, as I mentioned earlier, the bank loans -three-point-something million dollars - were assumed by the investment corporation, the lands held by Kootenay Forest Products were agreed to be transferred to the Crown, and I believe the advance you referred to was written off.

MR. STUPICH: I did want to come to that question of land. It would seem to me that some value must have been placed on the land that was an asset on the books of Kootenay Forest Products and is now an asset in the name of the Crown. I wonder what value was placed on the land that was transferred from Kootenay Forest Products to the Crown. I'll let the minister think about that one for a little while.

HON. MR. WOLFE: I believe that valuation is still being arrived at.

MR. STUPICH: I don't quite know how we can arrive at a value for Kootenay Forest Products of $1.25 if we still haven't valued the land. Do you have an approximate figure? What I'm thinking of is that we, the Grown, have sold certain assets at a price of $151.5 million to the B.C. Resources Investment Corporation. We have held back land. That could be a very significant figure. But perhaps the minister doesn't have it now, and we can get that later.

MR. BARBER: The minister has indicated that the Crown in right of the province intends to hold no more than, say, 49.9 per cent in assets of the new corporation. Does the minister have a specific target figure to which the government is aiming? Do you expect to hold, say, 20 per cent or 30 per cent or 10 per cent or 5 per cent? Do you have any target figure at all, and, if so, will you name it?

HON. MR. WOLFE. The Premier has given a declared indication that the government will, as its objective, hold less than 50 per cent. I think until the underwriting takes place and we know the total evaluation of the assets which have been purchased, it will be difficult to answer that question. The objective is to not have the government hold the majority of the holding.

MR. BARBER: The Act establishing the B.C. Resources Investment Corporation was brought into this House, somewhat unusually, by the Premier himself. The Act, in section 3, as I recall it, specifies that a minister shall be named by order-in-council to be responsible for its administration. Now I'm informed that the minister so named was the Premier. Can the Minister of Finance confirm this? Did the minister hear my question?

HON. MR. WOLFE: Could you ask it again?

MR. BARBER: Yes. The Act itself was brought into this House by the Premier. The Act, if I recall it properly, in section 3 specifies that a minister of the Crown shall be named as administrator of the Act and so named by an order-in-council. Mr. Bryson will maybe tell you about that. I'm informed that the Premier himself has been so named as the member of the executive council responsible for its administration. If this is correct, can the minister confirm that?

MR. CHAIRMAN: The member for Victoria continues.

MR. BARBER: I would be happy to sit down if the minister would answer. Do you have the answer, Mr. Minister?

Interjections.

MR. BARBER: Mr. Chairman, this is increasingly a very peculiar situation.

AN HON. MEMBER: Hear, hear!

MR. BARBER: Tonight the minister has informed the House that on the basis of a number of independent reports - and internal ones as well, a total assessment in the area of $151.5 million was granted to the several assets now accorded to the B.C. Resources Investment Corporation.

He told us that the private firms involved did it for free, treating the province as a charity case, that there was no fee, no contract, and apparently no letter of instructions. The minister further tells us there will be no direct commission. We are further informed that we have to wait until the publication of the prospectus and that, in

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any case, the minister isn't altogether sure of the value of some of those assets. We questioned particularly Plateau Mills and Kootenay Forest Products. Now the minister seems not even to know which minister within the terms of the Act is charged with its administration.

I wish, on behalf of the opposition, to inform the minister - it being close to 11 this evening - that we intend to raise these questions again and again until we have answers. We are talking about the transfer of public assets worth more than $150 million, and this minister doesn't appear to know what they're worth, how whatever worth they may have was arrived at, or what minister is responsible for them.

HON. MR. WOLFE: You make me sick -

absolutely ill, right up to here.

MR. BARBER: If you have the answers, we would like them tabled. If you're not able to table them this evening, that's fine. We'll accept your commitment to table them tomorrow. We want the letter of instruction .....

Interjections.

MR. CHAIRMAN: Order, please.

HON. MR. WOLFE: Mr. Chairman, I'm trying to understand the nature of the last question raised by the member: who is in charge of administering the Act. There is a minister associated named in every Act which would, of course, in this case introduce the B.C. Resources Investment Corporation. There's no order-in-council to my knowledge naming an administrator of the Act. Once this transaction takes place, this ceases to become a Crown entity, except to the extent of the investment it will hold in the corporation. That's the objective, Mr. Chairman: to divest ourselves of these Crown-owned properties to the extent that the Resources Investment Corporation was formed.

MR. BARBER: I apologize for the fact that I don't have at immediate hand a copy of the Act itself, but we'll be raising the questions again tomorrow.

The House resumed; Mr. Speaker in the chair.

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

Ron. Mr. Williams moves adjournment of the House.

Motion approved.

The House adjourned at 10:58 p.m.