[ Page 727 ]

CONTENTS

Night sitting

Petition

An Act to Amend the Cultus Lake Park Act.

Mr. Ritchie –– 727

Routine Proceedings

Committee of Supply: Ministry of Forests estimates.

On vote 117.

Mr. King –– 727

Hon. Mr. Waterland –– 730

Mr. Kin F –– 732

Mr. Lorimer –– 736

Hon. Mr. Waterland –– 737

Mr. Mitchell –– 738

Mr. Nicolson –– 739

Hon. Mr. Waterland –– 741

Presenting Reports

B.C. Systems Corp. annual report as at March 31, 1979.

Hon. Mr. Wolfe –– 741

THURSDAY, JULY 12, 1979

The House met at 8:30 p.m.

MRS. JORDAN: Mr. Speaker, it may come as news to the members of this House, but over the last month they've been observed many days by a young lady, Necol Kelly, 10 years old, who has been visiting our country from Clearwater, Florida. Necol is in the gallery this evening with her grandmother, Mrs. Evelyn Allen from Victoria. I'd ask the full benches on the Social Credit side of the House and the smattering of members on the NDP side of the House to give this young lady a very warm welcome.

HON. MR. WATERLAND: Mr. Speaker, I see in the gallery tonight the former member for Yale-Lillooet, Mr. Bill Hartley. I would ask the House to make him welcome.

Presenting Petitions

MR. RITCHIE: Mr. Speaker, I beg leave to present a petition.

Leave granted.

MR. RITCHIE: The petition is an Act to Amend the Cultus Lake Park Act.

MR. SPEAKER: Is there an attending motion, hon. member?

MR. RITCHIE: With leave, I move that the petition be received.

Motion approved.

Orders of the Day

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

ESTIMATES: MINISTRY OF FORESTS

(continued)

On vote 117: minister's office, $115,544 — continued.

MR. KING: Mr. Chairman, before adjournment I had just a brief opportunity to say a few words. To capsulize my remarks on that occasion, I would like to say that the predictions of many people on this side of the House and the predictions of many people in the forest industry all over the province have come to pass after viewing the operation of the new Forest Act and the administration of the Ministry of Forests for the year since the new Forest Act was passed. The concerns expressed, Mr. Chairman, were with respect to the increased monopolization of the forest resource in British Columbia, basically by the eight large integrated licence-holders in the province of British Columbia, all of which are foreign multinationals, with the exception of one. The new Act, we predicted, would intensify and complete the monopoly control of those corporations to the exclusion of British Columbia entrepreneurs; that, in the view of most independent people in the industry today, seems to be the case.

Mr. Chairman, if I were politically motivated in this debate today, I wouldn't enter the debate at all. I'd remain aloof from it and probably just let the minister stew in his own juices. I can predict that we are going to witness increasing failures of small entrepreneurs of the kinds of specialty mills in British Columbia which are employment-intensive and which contribute greatly to the economic fabric of many of the communities of the province. If we were politically motivated, we would sit back and probably let all that fall on the minister's head, secure in the knowledge that we'd win the next election by default. But, Mr. Chairman, at the risk of forfeiting the next election, we will fight from this day on for a proper forest policy, and for an administration that does not pamper and favour foreign-controlled monopoly.

We will fight to assist the dispossessed British Columbia citizen to gain a role in the life of the forest industry in British Columbia. Mr. Chairman, I want to detail why this side of the House will not be prepared to grant this minister his supply without a full accounting from him in terms of coming to grips with the rather scandalous direction his ministry has taken over the past year. We are not going to be anxious to grant supply to this minister, not because we don't support funding to the Ministry of Forests, but because we stand for policies and procedures that are going to break up the pampering and the monopolization of the forest industry. We are going to oppose the policies this minister has so far pursued which, as the one letter I read out earlier indicated, have made the small entrepreneur in British Columbia a foreigner in his own land.

For the benefit of the minister I want to outline the issues on this occasion that I propose to deal with. It's mainly in the coastal section at this particular time. I do intend at a later date, along with some of my colleagues, to outline similar circumstances that are taking place in the Interior. The coastal industry is basically divided into three sectors: pulp and paper companies, independent or non-integrated companies, and manufacturing companies.

The pulp and paper group comprises eight companies, all dominated by foreign investment. They control all the tree-farm licences at the present time, except the odd small one, such as the one at Mission, which is controlled by the district municipality. Under the tender auspices of this ministry, they control all the old temporary tenures, now made continuous under the new Forest Act. They substantially control all the forest land not now in the Esquimalt and Nanaimo Railway grant. They control about 50 percent of the annual allowable cut within public sustained yield units; this was the area that was presumably going to provide the supply for the small independents, and, as I understand, it was originally set up for groups 2 and 3 of the small-business program.

They also control bidder reserves — and here is where we start to get into what I believe is the major scandal in the resource sector of British Columbia today. These are undeclared and not accounted for in Forest Service records, and arise mainly from their ability to block access by others by understating timber inventories, and by depreciating growth rate and elongated rotation age — another deliberate manipulation, causing grossly and flagrantly understated annual allowable cut.

There is also wastage of annual allowable cut by leaving log volumes unscaled in the slash of the forest and allowing

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sinkage of logs in transit and in storage, coupled with replacement of this wastage by cutting of additional logs of higher quality, which are then scaled in place of the logs lost to sinkage and left in the slash. And they undercut with impunity the allowable cut allocated for current usage, thus distorting the supply for the future. These methods are allowed by the ministry and used by the large companies to manipulate the huge tracts of Crown timber on which they have perpetual tenure, and it is nothing short of a scandal.

Excluding these hidden reserves, this group already controls 80 percent of all committed and allocated allowable cut. They have a surplus to their needs. This is not just my allegation. This same data was contained in the report of the Royal Commission on Forest Resources by Dr. Peter Pearse. I understand that it's being viewed from the Forests ministry's own records.

I asked the minister the other day if he was prepared to release the Thomson report, which, I understand, was commissioned by the Truck Loggers' Association; but I also understand that there were certain conditions that the minister imposed on allowing the truck loggers' independent consultants access to the minister's files. I understand that there were certain restrictions which the minister insisted upon before opening up those files to this independent appraisal. I believe that it is incumbent upon the minister to indicate publicly that he is prepared to release that information, and to authorize the Truck Loggers' Association of British Columbia to release their findings — the report that was compiled for them by the Thomson consulting firm.

I have talked about the control and the vast area that the large, integrated foreign-dominated firms have unto themselves. The second group, of course, are locally owned and managed citizen-entrepreneurs. They occupy the vacuums and the corners which the oligopoly does not choose to operate in. They fit into the corners and the vacuums which are left by the almost total allocation to the major firms. They are the people who eke out an existence in the forest industry by being highly efficient, by developing high utilization, by using material that in most circumstances would be wasted or ground up for pulp by the large firms. They have to be efficient. This is the group which is being shafted by this minister, by his ministry and by this government. They are being completely shafted because there is no firm future for them. They have been waiting now for a year, with all kinds of expressions of sympathy from the minister and his staff, and with all kinds of undertakings that, yes, timber will be made available. But they can't go to the bank with sympathy. They cannot continue to operate day by day not knowing whether next week they are going to have a timber supply to maintain their milling operation and to maintain secure employment for their work force.

No business can operate in that fashion, and that is the kind of situation that obtains in all parts of this province. I have talked to and received submissions from the East Kootenay. I've received similar submissions from the Prince George area in the north, and from Vancouver Island. I want to tell you it's a general problem of major proportion.

The third group, also locally owned, there's really no provision for. They operate as contractors, basically, and they are completely subservient to the big multinationals. They operate as contractors to the multinationals who have tenure on the forests. They can't rock the boat too much, because they are indeed subservient and reliant upon the majors for their supply.

The first issue is that we have an oligopoly here in British Columbia — a monopoly — and they have far too great control of the resource supply. There is absolutely no justification for this kind of monopoly control; it is directly contrary to the public interest. It is contrary to the stated objectives and philosophy which the minister enunciated when he introduced the new Forest Act a year ago.

Mr. Chairman, the second issue is that despite the slogans and claims to the contrary, the new Forest Act does not deal with correcting this monopoly situation. On the contrary, it moves to commit to longer term and perpetual tenure the monopoly control of those very companies that created major problems in the industry in the past in terms of failing to properly reforest, failing to apply adequate silviculture, and certainly by playing games in many cases with the inventory that was assigned to them on the annual allowable cut.

The third issue is that the administrative procedures initiated under the new Forest Act are reducing allowable cuts and cutting back supply from the public sustained yield units. This is the only supply available to support companies other than the large monopoly group. Concurrent with that, priority is being given to reissuing to further entrench the monopoly control of the allowable cut in the public sector by the large monopoly companies.

There have been charges from people in the industry that there has been deliberate falsification of the allocation of the inventories — deliberate falsification. There has been the charge similarly that the ministry as it stands lacks both the staff to adequately supervise and check these kinds of procedures that are open to the monopolies in controlling their own bookkeeping, and also that there is inadequate expertise to do the job adequately and thus protect the public interest.

I'm not sure that we lack the expertise. I think what we do lack is the political direction and the financial allocation from the ministry to make sure that there is an adequate check of inventory control on the procedures for setting the allowable cut and for ensuring that there's an adequate return to the public coffers. That's where the failure is, in my view, Mr. Chairman.

Access to the allowable cut is the fuel that really supports the economy of British Columbia. If there is going to be activity, if there is going to be a continuing expansion with job creation in the forest industry, then there has to be access for entrepreneurial competition, if you will, to the annual allowable cut.

MR. KEMPF: You should use smaller words, Bill.

MR. KING: Well, sometimes I get hung up in the jargon that the minister and his staff uses. If I stumble over the odd one, I don't feel too bad, because I would rather see some frank discussion and some frank debate about the forest resource that the public can understand than get hung up on cliches and phrases.

Under the new Act, it is the chief forester who calculates and allocates the allowable cut. The industry relies on him to give effect to the policy of the statute. The only innovation in the new Act is a program of set-asides for the small business program. That's the only innovation and

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the only hope that was held out so that small business would have an area in which to compete for access to public timber without being undercut by the large multinationals. In other words, they'd have a niche with some protection in which they could bid on a fairly equal basis.

This has been going on in the United States for some time. The U.S. has a small business set-aside program, and they've been effectively utilizing it to establish a role for locally based community businesses for quite a number of years. It's not a new and unique brainchild of this minister, but it was the only hope, in my view, for some rational control and some much-needed competition in the forest industry.

As I understand it, in the States they set aside, within a number of categories like the minister's proposing to do here, a much larger proportion of the resource than the minister proposed to do in his new Forest Act. Only the companies designated as small business can compete for it. But I believe in some of the states it's something like 30 percent that is available to the small business program.

In B.C., in spite of all the experience in the U.S., the Forests ministry has not yet defined small business, and every application for timber so far submitted under the small business program has been given the brush-off by the minister and his staff. The minister has stated for a year that he's developing the program. One would think that by this time he would be prepared to deal with some of those applications. But he gives them the brush-off, basically with the excuse that allowable cuts in the public sustained yield units are being reduced, so there is nothing available.

The other excuse that is used by the minister and his staff is that even if it is available, money to develop the timber and service is not budgeted in the ministry. If other money is used, other programs must be reduced. In other words, the ministry must rob Peter to pay Paul, as it were.

Mr. Speaker, the truth is that this government and the Forests minister both have no intention whatsoever, in my view, of initiating a genuine small business set-aside program, because all licences and contracts issued under the old Act are terminated and replaced with the same amount of annual allowable cut, whether needed or not, for the monopoly boys, for the large integrated companies. They are not called upon to justify utilization, efficiency,  job-intensive programs, which the Act itself calls for. None of those things was scrutinized by the minister's department in the turnover of existing tree farm licences. They were provided without even a public hearing, Mr. Chairman. Everything was available on the day the new Act was proclaimed to the existing licence holders, the people holding the monopoly. But for a whole year now the independent people seeking some access to timber have been waiting for administrative procedures so that they can get some timber to sustain their plants.

The minister says on the one hand there's going to be a reduction in the allowable cut, and the public sustained yield unit, or there's not enough money budgeted for in the department to deal with your application. Why the indecent haste on the one hand, when it came to renewing and securing the monopoly of the Big Eight. and the complete brush-off, the excuses and the delay in providing any administrative mechanism to deal with the needs of the small business, the independents, for the past year? That's a question the minister has to answer in this House.

In all cases, when it's dealing with the large monopolies, the Act provides that the minister shall replace the tree farm licence now in force in the same area, subject to the existing licence. The minister is compelled by the Act; he shall replace it. The manager shall replace existing timber sale harvesting licences, forest licences, et cetera. But when it comes to the small business program, the set-aside program, the mandatory language disappears. There are two different philosophies: one for the big boys, and quite another for the small independents. When it comes to the small one there is no mandatory language in the Act; the minister "may" and the regional manager "may." The independents have been waiting for a year, and that discretionary authority of the minister and his staff has brought precious little to them thus far.

Mr. Chairman, there are major problems I am going to deal with at a little later time. I would like the minister to answer some specific questions, though. He put forward the proposition to small independents that he could do nothing in terms of fulfilling the small business program until he had amended the Forest Act, and until he had developed the regulations setting up an administrative procedure.

I have viewed the amendments to the Forest Act which are now on the floor of the Legislature, and they will be debated later. I see nothing in there that really prevented the minister from acting to set up the administrative procedure, at least, and nothing to prevent him from starting to allocate timber, from starting to set aside and make available a firm source of timber supply to the small independents. Nothing has been done to develop an inventory of acceptable timber for the independents in British Columbia. The minister didn't need an amendment to the Act to accomplish that. He didn't even need the regulations to accomplish that. That could have been an internal strategy of the ministry prior to giving effect to and initiating the administrative apparatus for the actual applications.

I defy the minister to identify timber in British Columbia that he has, in any volume, set aside for the small business program to date. I want to ask him where it is. I want to ask him to identify it. Mr. Chairman, there's been more timber wasted in many areas through sloppy logging practices, through inadequate logging of rights-of-way on transmission lines, and so on, than would have been required to keep many of the small mills going for a couple of years. This is the kind of thing that is so frustrating to the people who are trying to make a go of their enterprise, and who want to maintain some employment security in the province.

There are a whole variety of other issues I'm going to bring up, but I'm going to pause now, because I think I'm just about at the end of my time anyway, Mr. Chairman, and let the minister respond to some of the issues I've raised. I've made some really fairly serious charges, and used some fairly strong language. I would like the minister to respond to those complaints that have been brought to me by people in the industry. I would like him to say if, in fact, he feels his ministry is adequately monitoring the proper inventory procedures in the province. I would like him to assure this House that he is prepared to provide the statistical data to the public and to this Legislature, to either confirm or to repudiate the claims that are being made by independent people in this province. These are very serious matters because they have much more wide-reaching implications, which I propose to deal with a little bit later

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on. Suffice it at this point to give the minister a chance to respond and see whether or not he is concerned about these particular issues, to see whether he is aware of the implications that are inherent in the kind of charges that are being made.

HON. MR. WATERLAND: Thank you, to the member for Shuswap-Revelstoke, for your comments this evening and this afternoon. You have covered a rather wide range of subject matter, and quite frankly I am a little bit surprised that you are not more aware of what is really going on within the Ministry of Forests. You have had a short, two-day crash course in forestry matters from the former minister, I understand, and he has provided you with a number of notes together with a number which you have accumulated yourself over the last year. But many of the things you say are being handled and done within the ministry, or are things which you are misinformed about.

For the first time in the history of forestry in British Columbia there are very specific provisions in the Forest Act, in forest policy and in forest regulations to assure the so-called small business sector in the forest industry that they will have access to Crown timber, and that they will have access to Crown timber without having to compete with these terrible multinational companies which you seem to despise so. You mentioned EugeneSchmidt , who has been carrying on quite a lobby. I don't blame him for doing that, because he is one of the many small operators who are somewhat frustrated at what they see as the slowness of getting the small business program underway. The small business program is a fact of life, and it does require the amendments which are proposed in the Forest Amendment Act before it can be fully operational.

Yes, the staff of the Forests ministry have identified areas to be used as sales in the small business program. The administrative procedures are in place. The staff of the Forest Service have been working very long hours in order to make sure that this program will get underway immediately these amendments are passed. But, you know, within the small business sector there are various types of small business, and there can be unfair competition among the various sectors of that small business community as well. That is why before we get fully operational on that program, we want to have this amendment in place so that we will not have cut-throat bidding between, perhaps, very large logging contractors, who are in fact large companies, and the small, independent sawmill owners who can't compete fiscally with them. But that program is well established and will be underway and operational in a very short time indeed.

Mr. Member, there will never be enough wood available in British Columbia to satisfy all the demands put upon it. If we believe in sustained yield forestry, then we must limit the amount of timber which is harvested each year. I could be a hero and make timber available over the short term to anyone in British Columbia who might want it. Anyone and everyone who wanted to have his timber supply for, perhaps, a period of 10 or 15 years could be accommodated, if we wanted to abandon the concept of sustained yield. But we cannot do that, because there are many future generations of British Columbians who will depend upon a continuing flow of raw material. So we must be very careful in the amount of timber we commit.

I have inherited a large problem. Some areas of our province are over committed right now. Some areas still have unallocated timber to be made available. Even those areas which are over committed right now will have provision made for the small business sector. But I don't see any sense in taking away from a sawmilling company, a pulp mill company or a large integrated company the raw material they need to provide the employment for their many thousands of employees. There is room for both; both are accommodated and provided for in the Forest Act, and both will be accommodated in the future administration of the forest resources.

You mentioned complete disarray within the forest ministry, and the fact that everybody is saying there is a terrible administrative inefficiency, that nobody is happy with what's going on in the Forest Service. Yes, there has been some uncertainty over this last year, as we have been studying the organization. But if everybody in the Forests ministry is unhappy with what's going on, and is disillusioned, how can you explain the fact that in the competitions for the new positions that are being created we have, in many cases, more than 300 applications from within the Forests ministry itself for these jobs? The people in the Forests ministry can see that tremendous career opportunities are before them in our restructured Forests ministry. There are going to be more career opportunities for professionals and technical and administrative people than there have ever been before. They're going to have the responsibility, the accountability and the authority to do their job as they would like to see it done. There's great excitement within the Forest Service, and, yes, there is some uncertainty. We're doing what we can to dismiss that.

Mr. Chairman, the member for Shuswap-Revelstoke (Mr. King) mentioned the fact that everybody in British Columbia is dead against the Forest Act, that it's a terrible piece of legislation. Well, I have letters on file from all the different associations within the forest industry, including the labour unions, which recognize the great things in that legislation and what it means to the future of forest management in B.C. I have correspondence from the unions. I have correspondence from the Council of Forest Industries. I have correspondence from the Truck Loggers' Association, the B.C. Independent Loggers' Association, the CLMA — all these associations — and particularly from the Registered Professional Foresters' Association, who, above all, understand that this Act is a Forestry Act and that it demands good forestry in B.C. And that is what we must have.

That member said that all the timber cut, all the tree farm licences on the coast, all the prime timber is in the hands of eight foreign-controlled, multinational companies. Well, that is absolute nonsense. Sure, large companies are necessary on the coast, and large companies have perhaps more than their fair share of timber allocations at this time. But they're not all foreign-controlled companies. Canadian Forest Products, MacMillan Bloedel, BCFP, B.C. Resources Investment Corporation, Pacific Logging — these are not foreign-controlled companies; they're Canadian companies, and they all have timber allocations. I don't say that in the forest industry the big company is necessarily bad, or that a small company is necessarily good, because there are good and bad operators in both small and large companies. We have some bad small companies and some good small companies, and similarly in the large sector.

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What we want are companies that are responsible and will manage the forests in a responsible manner. According to Dr. Pearse, the control of our forest resources by foreign companies is not at this time a matter for concern. He said that in his report, Mr. Member. If you've read the report, you know that's true. But he says it's something that must be monitored, and, indeed, it is being monitored.

The same degree of control in the forest industry exists, roughly, now as existed in the years when your party was the government. You took no steps to change that.

Interjection.

HON. MR. WATERLAND: You're saying, Mr. Member, that these companies are holding massive amounts of hidden reserves. If you are right — and I hope you are — that cut will not be left in their hands. I hope you are right — because if you are — then there is a great deal of room for expansion in the forest industry in British Columbia. Now there aren't massive undercut situations, there aren't massive hidden reserves, but perhaps there are some. I have said, and I'm very sincere when I say it, that cuts which are underestimated, these hidden reserves that you talk about — and probably there are some there.... When we identify them, they'll be returned to the Crown. That is part of the wood we're going to be making available to the small companies. Determining the real allowable cut of a large tree farm licence is no simple matter. There's a lot of room in there for professional judgment as to what the cut is; and, yes, our professionals in the forest ministry are equally, and in some cases more competent and much more objective than those foresters in the private sector. We will be making these calculations ourselves, but they're not simple matters.

The difference between a yield of half a cunit per acre per year up to one and a half — which is perhaps what the range is in our coastal forest — is something that takes a lot of judgment to determine. We will be doing that. We can identify this cut you're talking about, and that's what we will have in addition to unallocated wood and increased growth through intensive management. That wood will be available to the small sector. I hope you're right when you say there are massive amounts of cut not being used; I really do.

You talked about the perpetual tenure provided under the new Forest Act for these terrible, large companies. There is no such thing as perpetual tenure in the new Forest Act. There has been a replacement of tree farm licences after their first 15 years. Yes, a new tree farm licence will be offered under the terms and conditions as set down by the government. If the licensee does not wish to accept the terms and conditions which we dictate, then it can allow its 25-year licence to run out and then it's finished. But, Mr. Member, you say that Dr. Pearse was going to end all of this perpetual tenure right now. Well, if you'll read the Pearse royal commission report, you'll see that under the terms in which he was going to change the tenure of tree farm licences, some of those licences would run on for another 80 years without change before they would expire. He had them being replaced once, replaced twice and then they would run out. Mr. Chairman, we were much more severe in ending the old type of forest licence than was Dr. Pearse.

MR. COCKE: How come you're blushing?

HON. MR. WATERLAND: Because you embarrassed me, my friend.

MR. CHAIRMAN: Order, please.

HON. MR. WATERLAND: The Thomson report was commissioned by the Truck Loggers Association with access to information in the Forest Service files. I have no objection to that report being released now or at any other time. In fact, we have been doing a great deal of soul-searching within the ministry as to what our position is going to be as far as access by anyone and everyone to the records we have. Our policy is very clear. Any information dealing with Crown timber, which is owned by the people of British Columbia, should and will be available to them. The only information that we must be somewhat selective with is that information which is sensitive to a corporation's financial affairs. But that information won't deal with the allocations or use of Crown timber, and that information will not be made available from one company to its competitor, because it is a very competitive industry indeed.

The constant theme of the member's discussion this evening was big versus small, bad multinationals versus Canadian companies. I say that any company which is operating in British Columbia which is a good corporate citizen, is giving good value to the province for its wood and is providing employment opportunities for the people of British Columbia, can invest here and is investing here. In fact, right now the forest industry as a whole, including these terrible multinational companies, have commitments of well over $2 billion of investment in this province, and it's growing every day.

But the "use it or lose it" statement which I have made many times is one of the basic philosophies upon which the Forest Service will be administrating Crown timber. We don't want to shut down a company just because it happens to be large. We're not going to shut it down because it's large. We will be very severe with them if they're not making good use of the wood, and we've been doing many investigations and studies as to the best possible use of logs. I mentioned at the truck loggers' conference last fall that these flying squads we've been dropping in on the various companies were quite concerned about the amount of good round wood that's been chipped in some areas and we have taken action on this, and there's been a lot of cleaning up of that. But we have to recognize the realities of the industry as it exists.

You say that the contractors are afraid to rock the boat; they're subservient to the large companies. Well, Mr. Chairman, a short time ago — it was just after the election, I guess, when the regulations for the contractor clause and the small business program were passed — I had a call from senior people in the Truck Loggers' Association, and they said: "Gee, thanks for the regulation, Mr. Minister. We sat down with you many times and tried to tell you what we needed in order that we could be independent of the control of the large companies, and you've fulfilled our wishes."

They have tenure, and rightfully so. The regulations require that a contractor, if he wishes, can demand a five-year term contract from a licensee — more than they had really thought they would get — and it's sufficient for the types of financing they have to do. A subcontractor and even the major contractors can demand a two-year term

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contract. We're in the process now of setting up a committee manned by those in the contracting business and licensees, contractors of all sizes and licensees, to constantly monitor the performance under the tree-farm licence requirement for a contractor. These things and many others are feasible. They recognize the fact that it does take time, that we're not dealing with a very simple fact of going out and counting trees and dividing them by a number — and saying that's what will be cut. Allowable cut is a constantly fluctuating, fluid thing. It's changing all the time because of alienation of land, because of ways and means of using lower quality and smaller wood and ways of harvesting it. There are many factors that go into determining allowable cut. These are the things we're working on constantly. Yield calculation is not a simple matter.

It would be unwise of us to all of a sudden try to commit vast quantities of wood to any sector of the industry before we have a good handle on what we have to work with. I have said that we will be having a minimum of 15 percent of the allowable cut in all our public units available to the small sector, and even that's going to take some time to arrive at.

You mentioned the programs in the United States where, you say, some of them have up to 30 percent. Well, some of our areas will have up to 30 percent too. But the Americans do have problems with their small-business program. As a matter of fact, when we were devising our program during the days of the Forest Policy Advisory Committee and the study of the Pearse report, we visited those jurisdictions in the United States. They told us about their program, and they cautioned us about some of the mistakes they had made. We took their advice, with their cautioning, and adapted to our circumstances here in B.C. what they had done in timber tenure situations. We have a good program, and it's just now beginning to get underway; so don't condemn it until you see it working.

Interjections.

MR. CHAIRMAN: Order, please.

HON. MR. WATERLAND: The member said that under the legislation all timber presently held by large companies will be automatically replaced; that's not true. He knows that.

In the Interior of British Columbia, for example, their main tenure forms are timber sale licences and timber sale harvesting licences, and probably the larger percentage is in the form of timber sale licences. There's no guarantee that the volume under timber sale licences will be automatically rolled over; there's no guarantee at all. Under the tree-farm licensing program, we roll over area for area. Then, as we have time, we determine what the real cut should be, and we can adjust that after those determinations.

The member mentioned waste of wood on rights-of-way and waste of wood on harvesting sites. Yes, he's right; this happens. It can't be allowed to happen any longer. Right now I have the Forest Service trying to determine the best way, administratively, of making sure that any of this so-called waste timber — and there is some — is not wasted. It can be put into the hands of various operators.

First of all, I don't think the small operators should be left with the guts and the feathers and the leavings of the large companies. Our small-business program is to allow the small operators an equal chance on the average timber stand. They will be required to do as good job of utilization as has been, and will be, the case in most areas with the larger operators. There is opportunity for the very small salvagers to go in there and get wood that can't be economically used by even those under the small-business program. It's administratively difficult and it takes a lot of man-time, but I think it's worthwhile to do. We're trying to develop an efficient administrative process for doing this.

These are some of the points raised by the member. The last one he mentioned was access to data; I've covered that.

We want to run as open a Forest Service as possible. Any information that member has requested from the ministry he has received, except that which is corporately confidential and relates to the finance of the company. Neither you, nor I, nor anybody else should have that particular information. We're running an open Forest Service; this is one of our basic policies. We sent the member a binder with the regulations, the Acts, and so on. We'll be adding our policy positions on all of the administrative problems we have, the things which require judgment in guiding the administration of the Forest Service. It will be the first time there's ever been a clear policy position on all these subjects provided by the ministry. When it's available, the member will receive a copy of that as well.

We want the public, all sectors of industry and everyone to understand very clearly what we're trying to do. We will not be keeping secrets.

I thank the member for his comments. I don't think that we are very far apart on what we'd like to see happen in the forest industry. I happen to be charged with the responsibility of making it happen. We're working as quickly as we can, but we must be responsible. It's not as easy as turning a switch. We must be sure what we are doing is right, and we'll make every effort to do it correctly.

MR. CHAIRMAN: Prior to recognizing the next member, the Chair has a slight difficulty. In Sir Erskine May's eighteenth edition, on page 725, it covers the general restrictions on debate of Supply. It mentions the fact that we mustn't discuss items that require legislation, nor legislation that's before the House. Bill 22, which is an amendment bill, is so all-encompassing that it becomes very difficult for the Chair to allow the debate without constantly hearing violations on both sides of the House. I caution all members: if we can possibly try to keep the debate relevant and not deal with matters involving legislation — which is applicable to all ministries, I might add — then it would be appropriate.

MR. KING: My one reference to that bill was just a passing one, Basically, I'm talking about the administration of the Forests ministry, and that's what I intend to discuss.

The minister shouldn't come on with his rather smart-alec remarks. I would be very proud to have the counsel of the former Minister of Forests or indeed anyone else who has had experience in the forest industry, in terms of helping me prepare for a discussion on forest policy in this House. But a rather neophyte minister gets up with that kind of smug allegation when that just happens not to be true. So if the minister intended to score points....

Interjection.

[ Page 733 ]

MR. KING: Bob Williams was over here the other day but he was meeting with someone else, not me, quite frankly. I wish I had an opportunity to sit down and talk some forest policy with Bob Williams. I might even discuss it with Ray Williston on occasion. One must have an open mind, and there's nothing wrong with that.

Mr. Chairman, the problem that the minister doesn't seem to either recognize or want to discuss is the fact that I'm not opposed to the major foreign controlled monopolies having a role in British Columbia. What I am opposed to is them maintaining monopoly control over the industry. What I am opposed to is this minister pampering and tending to the major multinationals while completely brushing aside the small, B.C.-based entrepreneurs in this province. That's what it's all about. I'm not trying to do the major integrated companies out of business. That would be sheer madness. So why does the minister indulge in that kind of rather asinine nonsense?

What I'm saying is that they do not need a monopoly. They do not need 100 percent of their resource supply assured to them. They certainly don't need an excess over their annual allowable cut, which in many cases they have. The minister has just acknowledged that is probably true. The minister and his government talk about free competitive enterprise. Where is the competition when eight major integrated firms in British Columbia have their total timber resource supply guaranteed to them the day after the new Act is passed? They didn't have to worry about a continuing timber supply. They had access to the automatic right to renew their licence.

The minister says that's not perpetual. Well, if I had an opportunity to renew my $10 bill every once in a while, I'd think that I had a fairly perpetual supply of money. I think the minister would too. But he has some euphemism for this called an "evergreen clause." In effect, in my view and in the view certainly of the independents in British Columbia, that is perpetuity control, as someone in this House once observed. That's the issue.

The minister can't seem to get it through his head that he's using two standards. He's using the one standard of guaranteeing absolute supply — in fact, excess to the needs of the major integrated — while saying to the small independents: "Well, okay, after a while we're going to come up with a small business set-aside. You're going to get it. It's difficult. We haven't got it available." Or "we haven't got a budget to provide it." Or: "we haven't identified it yet."

Mr. Chairman, how long does he expect people to hang on the brink? By next June, which is the first opportunity that some of that timber is going to be available, we are going to lose a lot of the existing small businesses in the forest industry in British Columbia. Is the minister content with that? The minister hasn't told them definitively that there's no role for them here. The other thing the minister won't recognize and tries to glibly turn aside is the fact that he's not going to transfer timber from one company just to give it to another. But the minister has an Act here, and section 14 of that Act says the chief forester shall evaluate each application including its potential for: " (a) creating or maintaining employment opportunities and other social benefits in the province, (b) providing for the management and utilization of Crown timber, (c) furthering the development objectives of the Crown, (d) meeting objectives of the Crown in respect of environmental quality and the management of water, fisheries and wildlife resources, and (e) contributing to Crown revenues."

Now if that is the test, what has the minister done to compare the performance records of the independents to that of the large tenure holders? Has he applied this standard? When that tree-farm licence is up for renewal that he considers in secrecy without a public hearing, has he asked if this firm in its management of this tree-farm licence over the past five years has really met this criterion better than the small mill in the Okanagan or the small mill in the East Kootenay, which perhaps is more efficient because it has no secure supply?

The minister is applying two standards. The standard for the major multinationals is luck, it's a blank cheque — here it is, boys. There's no real examination of their inventory, no real examination to make sure that they are maintaining their annual allowable cut, no proper scrutiny of their management policy and their cutting plan, and so on, over the past five years — automatic renewal. But for the little guy, well, hang on and wait for next year, fellows, we're getting our small-business program in shape; pretty soon we'll have the administrative capacity to deliver it to you. But by the time you do that, it's going to be fall, perhaps October or November. Much of the supply will be at a high elevation; it's in terrain that can't be logged in winter. What are these people going to do then for a supply of timber to sustain them over the winter? They can't wait until next June or July. How is it that the minister considers it even-handed to automatically deliver to the big multinationals in excess of their inventory requirements and keep stringing the independents along, saying: "Well, we're not going to transfer timber to you from someone else."? You know, that's a con game. The minister cannot get away with putting that ruse before the House. These are the kinds of things he has to answer for.

The other concept that the minister always relied on heavily and talked about a great deal was the idea of "use it or lose it." I want to ask the minister if he has taken away any timber from a tree-farm licence held by a private corporation in this province. Dr. Peter Pearse in his royal commission report identified faulty inventory, excess inventory. On the books of the minister's own ministry now are figures indicating and displaying excessive inventory. That information is available to the minister and to me. He knows where it is. He knows where there's timber available, and he hasn't had the fortitude to take one stick of timber away from the multinationals.

I ask this question: with that kind of questionable credibility, what hope is there for the small business person to have a role in the future? The minister already knows where there's an excess; he knows there are small businessmen going under for lack of supply. All of those shrewd businessmen over there must surely understand that you cannot stay in business without a firm supply of your raw material. You can't go to the bank with that. You can't enter into contracts with that. You can't develop markets and compete with that kind of shaky future.

Who is the minister conning? To hold out the hope that at some future time down the road there is somehow going to be some tough action by that minister, and some timber taken away from the people that he has granted increased monopoly control to, is in my view a sham and an empty promise. The independents of British Columbia have listened to that promise for over a year, and nothing has

[ Page 734 ]

happened. I want some more serious and firm commitments from the minister with respect to precisely what he's going to do — the amounts of timber involved, and some identification of them — before his estimates are going through this House, Mr. Chairman.

AN HON. MEMBER: Is that a threat?

MR. KING: No, it's not a threat; it's a promise. I think I have that obligation to people out there, to the workers who are relying on jobs in the forest industry to sustain them and their families. It's not a threat at all; it's just common sense, and every member of this House should be getting up and supporting that demand.

Mr. Chairman, I want to proceed along a little bit further, and I want to outline some of the things that have been reported to me. As I say, this information has come to me from people in the industry in general. They're not NDPers; they're not sending this material down to me to try to embarrass Social Credit. Some of them are Social Crediters themselves. They're people who say: "Hey, we're not getting through to the minister; he's not listening; and we're frustrated and intimidated and afraid that we're going to lose our role in the forest industry. " They are willing to seek help anywhere they can get it. I've certainly been listening to them, and I'm trying to make some of their concerns apparent in the House.

In September 1977 a saw log appraisal project was done by the Forest Service scalers and graders, which showed that pulp mills as a group were putting through over 30 percent of sawlogs for their pulp operations. I don't know whether this is true; I never checked it out for myself. This is a report I get from people in the industry. Rayonier was the company involved. They claim that this information is available in the ministry records. Rayonier was using 30 percent sawlogs for pulping and over 50 percent sawlogs in the supply of all its pulp mills — over 50 percent of the pulp supply was logs appropriate for sawmilling. Pulping, of course, is a lower use. That represents a tremendous loss in revenue to the Crown. It represents the transfer of good sawlogs, which should be going through the mills, to a lower use — waste logs and decadent stuff should be used for pulping. First-class sawlogs are being underutilized, yet the minister says that his whole Act is predicated on high utilization, great efficiency, job intensity and return to the Crown. This information was available to people in the industry, and they've identified the firm — Rayonier. What I'm criticizing is less Rayonier than the minister. He is the man who is responsible for administering the forests of this province. He is the man who is responsible for ensuring that the companies — be they large or small — are following sound management practices, that they are obtaining proper utilization, and that, yes, they are maintaining their plant in modern condition so that the utilization and efficiency can remain high.

Those sawlogs were denied to the small independent sawmills. They were scratching for logs when these first-class sawlogs were being reamed through pulp mills in British Columbia. And the minister just sat there; he never did anything about that. A minister who will allow a pulp mill to operate 50 percent on choice sawlogs at a great loss of revenue to the Crown is trying to tell us that he is going to tackle that same company and free up some of their resource and give it to the independents. I don't believe that, and the small businessmen of British Columbia don't believe it either. That is why I am trying to highlight this deficiency in this particular estimate, Mr. Chairman.

In 1978 another professional analysis was set up, with data from the files of the ministry showing that eight companies controlling all tree-farm licences on the coast have undercut the annual allowable cut allocated to them by an average of 947,267 cunits. I want members of the House to listen to this. I am going to read again this allegation that came to me from people in the industry. The allegation is that in 1978 professional analysis extracted data from the files of the ministry showing that the eight major controlling licensees on the coast of British Columbia undercut the allowable cut allocated to them by an average of 947,267 cunits per year for the six years ending 1977.

While small entrepreneurs were going out of business because they had no access to a firm timber supply, here was a major integrated company — foreign-controlled, which is all right if it's treated fairly and made to compete like everyone else — receiving preferential treatment from this minister and his staff, and allowed to undercut its allocation in those major dimensions. Now that in itself is a scandal. If the minister doesn't understand that the small independents feel discriminated against and feel outraged when they have access to this kind of data, then that minister is bereft of any sense at all.

The loss represented by that kind of situation is just fantastic. It represents a loss of production for 9 good-sized sawmills and 15 logging operators, and a loss of employment within the industry, related sectors and so on of about 12,000 jobs in all. That loss of production, which the minister has allowed to happen while the small independents were starved, has created those kinds of losses in Crown revenue, in social benefits to the work force of the province and so on. In direct revenue and stumpage up to $38 million was lost annually because this company was allowed to sit there on excess supply, which they couldn't use, while other companies were starving for material and while there were record unemployment levels in the province of British Columbia.

Surely no one who calls himself a British Columbian or a businessman can associate himself with this kind of maladministration. It is a scandal of the first order. It's a scandal from the point of view of lost revenue to the Crown. The minister who used to have Human Resources could have used another $38 million to provide human services, and that guy sits there and tells us that the whole philosophy of his Act and his administration is "use it or lose it."

I ask the minister: is this acceptable performance? If this allegation is wrong — an allegation which, I am told, is directly from the records of the ministry — then I hope the minister will get up and challenge it. But I hope above all that the minister will open those files to the public for scrutiny, because that's what's needed — a major debate regarding forest policy in the province of British Columbia. He hasn't done anything about it. He waited and vacillated for a year when it came to providing anything for independent business. But the licence-holders who had 100 percent of their supply needs locked up, and who, as demonstrated by this revelation, had far in excess of their required annual allowable cut, were guaranteed automatic renewal of their licences behind closed doors, without a public hearing.

[ Page 735 ]

That's another issue that the minister has a lot to answer for — the lack of public hearings in the rollover of tree-farm licences. The minister told this House that there was nothing in the Act that prevented a public hearing on those rollovers. But once the Act was passed and some citizen wrote to him asking him for a public hearing, he said: "There's no provision in the Act for a public hearing." I asked the question before. I don't know whether or not the minister was telling the truth on that issue, whether there is a provision or there is not. But you can't have it both ways, Mr. Minister. And that's the public you're talking to. You're accountable to the public whether or not you're a minister of the Crown or not, whether you've become a bit lofty in your position and have started to treat all public business as just a political interference that inconveniences you — and you will remain accountable to the public of British Columbia.

People in the industry tell me that these problems with inventory are just the tip of the iceberg. They tell me that over the years the TFL holders have been allowed to determine their own allowable cuts and to raise or lower their annual allowable cuts to suit their particular needs, to manipulate them at any time so that they are never faced with having to justify performance or with the possibility of relinquishing some of their timber supply. The royal commission report at page 86 showed the TFLs issued for a particular allowable cut in support of a designated manufacturing capacity turning out to have mature inventory 400 percent greater than that intended to be issued by the original calculation for the licence. That was contained in the Pearse report, and I'm sure the minister read that.

You know, this is just a major scandal. The thing that bothers me is that last year, when the Forest Act was being debated, we devoted a great deal of time to questioning the minister and to delving into some of our concerns regarding this new Act. Gordon Gibson, who was then in the House, did an excellent job, in my view, because he had a background and experience in forestry. The reaction he got from the minister was to make some rather insulting remarks about Gordon Gibson's father and his role in the industry 50 years ago. You know, that's not a very statesmanlike posture for the minister to take.

I criticized the media on that occasion because they didn't cover that debate. We spoke for hours in this Legislature on that new Act, which is probably the most significant for the public life of British Columbia for the next 25 or 30 years, and there was very little coverage. I know that part of the problem is that forest policy and forest terms are very difficult, very technical. A lot of the public feel intimidated by any participation in the debate. But it's about time that something major was done to change that approach.

I was referring to the manipulation of annual allowable cut that is allowed by the firms themselves. The holder has been able to do his own calculations. The study that I referred to reveals instances in which companies have had trouble utilizing all their allocations and the annual allowable cut has been dropped substantially. Conversely, when the licensee wanted to cut, he simply reworked the technical data and, of course, changed the figures again to manipulate his own needs — and this is a serious charge. Has the ministry not got the capacity, or the will, to intervene and to monitor in an effective way the large integrateds that seem to be writing their own ticket in British Columbia? It's clear to most of the people in the industry that, to a great extent, the books have been cooked. And the minister approves of it by accepting anything and everything presented, and by failing to set standard classification, and so on, in annual allowable cut — methodology and ways of ensuring that there's some standard procedure and some accountability in the process.

These are very serious charges, and when the minister can get up and demonstrate to me that he is really addressing himself to some reform in these areas, and do more than just make glib statements that they've got to manage it, use it, or lose it.... When he can demonstrate to me that he has actually got tough with somebody, then he'll start to gain some credibility in British Columbia. Somebody will start to believe him, and perhaps somebody will feel there is hope that there will be a major reallocation and some fair competition injected into the industry once again. It's not happening now.

The same companies I referred to are accused of deliberately understating their inventory. There is a chronic undercutting of approved allowable cut and flagrant understatement of the undercut that has been approved by the ministry. What's the minister doing about all these things? What's the minister going to do about them? Has he got a plan? Has he hired new staff? Has he called these companies to account in any way? What procedure is he going to use for making the public aware of a procedure to deal with these kinds of problems? It's not enough to make promises, Mr. Minister. You'll have to come up with something more than that, and your pandering to those large multinationals gives me little confidence in any move by you to come to grips with these major problems and these major abuses that are taking place.

The same eight companies undercut their quota in the public sustained yield unit by 22 percent in the six years ending 1977. That's another piece of advice I've received from the industry: 22 percent undercut in the public sustained yield area. How is it that the large multinationals are allowed to have their TFLs, their various forms of tenure, and still get into that public sustained yield unit and abuse their rights in the fashion that are apparently revealed by the minister's own ministry data? How is it that's allowed, Mr. Minister? I want to tell you that if that kind of performance were indulged in by a small firm bidding for timber in the public sector, they'd be drummed out in a hurry. I want to ask the minister when the last time was that one of the majors was fined for trespass in the province of British Columbia. Has that ever happened, Mr. Minister, under your jurisdiction? It's certainly happening to the small guys. They're being fined for trespass, because they're so desperate for timber to keep their plant going they are straying beyond the rigid guidelines set out for them by the ministry.

But here is complete abuse of annual allowable cut by the majors, documented by the ministry's own data and there has not been one step taken — no punitive action, no charges laid, and certainly no trespass charges. Is it that the minister is afraid of the foreign multinationals? Or is there some other reason why he heaps such favour on them over our own British Columbia enterprises? These are the things the minister has to start to answer. I'm not finished yet, Mr. Chairman, but I'll let the minister have a crack at it now.

MR. CHAIRMAN: The standing orders on Committee of Supply call for 30 minutes.

[ Page 736 ]

MR COCKE: The member for Shuswap-Revelstoke requires an intervening speaker, at which point he has another 30 minutes. The minister thought he might beat him out, and I'm the intervening speaker. But I'd like to say that the minister is showing his incompetence in the House just as he does in the bush.

MR. KING: Mr. Chairman, I'm not going to be up very much longer anyway at this point. I'm dealing in one particular area, and the area and the data I'm talking about relate mainly to the coast area. I've got a bit more to say on this area, and then I'm going to leave that. I hope the minister will not get up and give a philosophical response but instead will tell me some specifics in terms of what he proposes to do.

These, as I say, are very, very serious allegations. When the charge is levelled that $38 million is being lost to the public treasury because of abuse of the rules by a company under that minister's administrative responsibility, it is a major and serious allegation. When the charge is made that we are losing 12,000 jobs because of the abuse of the standards and rules which are supposed to be administered and enforced by that minister, that is a scandal. I think all members should take it very seriously, and I don't think the minister should answer in an offhand fashion. I think he has a very strong responsibility to treat this in a serious fashion, as it is being presented to him.

What is he doing? Is he reissuing this quota under urgent priority and ignoring the failure of these people to perform? Why the automatic provision for the renewal of licences to these very people who are accused of major violations and major abuses? There is no waiting to set up a small business program and to corral some timber that may be available to them. They're automatically renewed. Their tenure is tightened up and extended. We can avoid the. debate altogether as to whether it's perpetual or not, but certainly 35 years firm supply is nothing to be sneezed at.

There's no question that it's at least that much with the option to renew after 10 or 15 years. You know, if the minister really believed in his own slogan, "use it or lose it," since these companies have not used it, they would already have lost it. The minister's statistics document their underutilization — they've undercut.

He's the guy who set up and said: "We've got a great Act. We've got to manage it. Use it or lose it." From his own files in his ministry, the small independents of British Columbia are establishing. But that's just an empty threat. In fact, the company knows that the major integrated companies have been failing to use it since 1971, and he's taken no action.

The minister made the point that the NDP didn't do anything about it when they were in. That's true. We've been in three years out of the last 25 — out of the last 100 years, for that matter, in British Columbia. But Bob Williams did set up the Pearse royal commission to provide the data on which new legislation would be based. Of course, this government inherited that report, and this minister brought in legislation based on the Pearse report. He certainly interpreted the Pearse report differently than we would have, and he certainly designed legislation based on that report very differently than our party would have.

It's not good enough for him to say: "Well, you didn't do anything in three years." Everything he has accomplished has basically been based on the report of Dr. Peter Pearse. There were additional committees and task forces put to work, but the bulk of the data and information flowed from the Peter Pearse report. That's not an adequate excuse, Mr. Minister. And even if it were that the NDP were guilty of not doing enough, does that in some way relieve you of your responsibility to do an adequate job on behalf of the public in British Columbia? I don't think so.

As I say, if he believed in his own slogan of "manage it, use it or lose it," a lot of the big licensees would be a little lighter today in terms of their supply, and his deputies know that. I think the deputies in the Ministry of Forests have become a bit embarrassed by hearing the minister go around to conventions and so on in the province and face angry people from the industry and say: "I'm going to get tough. You're going to manage it or you're going to lose it. " And all the time his staff knows, and it's documented right in his office, that they haven't been using it for the last six or ten years. He's got the same information. There's enough underutilized material there to support and supply 15 additional medium-sized sawmills, and the minister still goes around echoing empty threats. They must be a bit amused and a bit disillusioned, I would think, Mr. Chairman.

Before any of the TFLs and any of the quotas are reissued to anyone, the TFL holders should be obliged to undergo a full, open examination. There should be full, open public hearings. There should be a complete appraisal of their performance, and a report available to the public as to whether or not they've met the minister's criteria of high utilization, of high job creation, of a high return to the Crown. Those are your criteria contained in the Act. How is it that there's automatic renewal on the one hand for the big boys, without any of those tests of the criteria and the rationale you've set up, but when it comes to the small independents, they're treated as second-class citizens? As one of them puts it, they're treated as aliens in their own country. That's not good enough; that's a disgrace, Mr. Minister.

I'm going to let it go at that for the moment. I have many other areas to deal with, and so do some of my colleagues. We're going to be here a while, because this is a major issue in British Columbia. This is the very underpinning of the economy of B.C. Whether we agree or not, we do have an obligation to debate this in a serious fashion. We do have an obligation to try and apprise the public of what the issues are and what our concerns are. I ask the minister to take it very seriously and to recognize that he is going to have to give some serious accounting and some very serious answers to the opposition before we're prepared to dispense with his estimates before this Legislature.

[Mr. Rogers in the chair.]

MR. LORIMER: I'm somewhat like the minister, in that I know very little about this subject either. We haven't had too many timber sales in my particular riding in the last few years, but certainly a number of people who live there are very interested in the forestry of this province. I want to say just a few words about the problem of the disappearing breed of people who were the backbone of this province through its history — those loggers and mill operators who basically looked after the development and progress of this province in the years gone by. As has been mentioned earlier tonight, those groups are disappearing, and they are

[ Page 737 ]

disappearing because they have been given, or can obtain, a very limited amount of the logging resource.

They were the major payroll in the small communities throughout the province, and these people had a basic interest in the area and in the villages and so on for which their employees worked. This has now gone; the larger forest giants that are here at the present time do not have that basic interest in the people of the province or the province itself. They're interested in the timber, and they're interested in the profits that can be obtained from the timber. Some may give token benefits to certain communities, and so on, but basically they are not the local people that we have seen in the past. We still do have some small operators, small businessmen in the timber business, but I'm very much afraid that these people are disappearing, and they could well be gone within a very few years unless the minister does something to help them out.

I would suggest that in most cases the efficiency of the small operator is much greater than that of the large multinational corporations in their operations. They're even more efficient when the dice are weighed against them — the fact that the write-off for roads in the larger forest areas can be written off against the price to the province, and the fact that the small operator doesn't have those benefits. I would guess that in some cases the net amount paid per cunit might well be as low as $2 for some of these operations, and for the small operator it could be $60 to $100. I would ask the minister to give us some indication and I'd like to hear him tell us tonight — that the plight of the small operator is over, that he's going to open the woods, that he's going to give these people their right to carry on their livelihood and to have the timber and the right to use the woods in the areas they have had in the past. There's certainly enough timber in those areas for this to come about. All it needs is the signal from the minister. I hope he will rise in his place and tell me that I can tell my mini-loggers and operators in Burnaby-Willingdon that this is going to be done and they can now rest easy.

HON. MR. WATERLAND: I have a few very brief comments on the most recent presentation from the member for Shuswap-Revelstoke (Mr. King). He seemed to take offence at the fact that I mentioned that the former, former.... Well, I guess the former Minister of Forests had been counselling him; all I mentioned was that he probably had. I drew no conclusions. If he has, perhaps he should; there's nothing wrong with that at all.

He referred to me as the neophyte minister. Yes, I'm a neophyte minister, but I would point out that I've been the minister longer than the former minister, and longer than that member was, too, as a matter of fact.

The member continually refers to the automatic renewal, and in excess of 100 percent, of the timber supply needs of large companies. I don't really know where he gets his information. Tree-farm licences are rolled over, area for area and on a continuing basis, after which the cut performance of the licensee is assessed; if there is more wood than they need, it will be removed. All I can do is tell that to the member. He doesn't seem willing to believe me, but I will tell him again. As I mentioned before, with TFLs and the forest licences there are no automatic guarantees at all.

The member referred to section 11(4) of the Forest Act and related that somehow to the rollovers of the various forms of licence. That provision is for the issuance of new forest licences, but the general principles apply to existing licences as well. There must be a demonstration of these various criteria to benefit the province of British Columbia where licences won't be kept intact.

The member was using various numbers and percentages and cut figures to demonstrate that there had been a terrible lack of performance by tree-farm licence holders. He mentioned, I believe, some 900,000 units of wood undercut per year over a six-year period. That isn't really too far off. Ten percent is the allowable cut for these tree-farm licences. The licences in the past, and all types of licences, have required that the cut be within 10 percent over a five-year period. Admittedly this is a little over 10 percent. We have begun to take action. Can-Cel was the first licence we reduced; I can't recall the number of units we removed from their cut, but it's quite substantial and could very well bring this into line.

I think the member will recognize the fact that there has to be some flexibility in allowable cut year by year and over a period of time to adjust to market conditions. A per-year average of 900,000 units is too much. I think the allowable cut for tree-farm licences on the coast is about seven million units — something on that order. This is over ten percent of that. As I say, we have taken action. We are addressing other obvious cases of undercutting.

The fact that a tree-farm licence is rolled over — and that requires that you roll over area for area — does not remove our right to remove cut if it's not being used; the Act is very specific about that. All I can say to the member is that is our intention and our policy and that we will do it.

On the requirement for hearings on TFL rollovers, TFL rollovers are very specifically explained in the legislation: they shall be rolled over area for area, after which time a five-year working plan must be developed. It is during this very significant time in planning for the five-year plan that we invite public input. As a matter of fact, various organizations say that we should have hearings that roll over. The hearings really wouldn't mean very much, because the rollover requirement is very specific.

For example, there was even controversy over the IWA TFL 24 on Moresby Island. The IWA said they would rather not see hearings on that particular TFL rollover, as have many people who actually live on the island; but that's a difference of opinion. The most important time for input is during the development of working plans.

The member mentioned a 20 percent undercut in public sustained yield units. I don't know where that figure came from. Perhaps there are units over a one-year period which could be undercut by that much. Again, our licence documents generally provide as much as 50 percent undercut or overcut in a one-year period as long as it is brought into balance within 10 percent over the five-year cut control period.

It requires some flexibility on behalf of the government so that the industry can react to market conditions. We can't remove all that flexibility. Perhaps it can be tightened up somewhat. Twenty percent over a five-year period would be unreasonable and wouldn't be permitted. Over a one-year period, if markets happen to be that, it is permissible. Last year, for example, I am sure there was overcutting, if anything, and this overcutting last year would make up for perhaps some of the previous undercutting.

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The member mentioned trespassers. Well, all trespassers are treated in a similar manner, regardless of whether they are a small or large company, and I can't be specific as to which large company we have charged. It only goes to court in the very extreme cases. Normally what happens is that if a company is trespassing, if they're cutting out of the limits of their cut blocks that have been delineated by the Forest Service, then we have to determine whether it is an innocent trespass — and this can happen. If they accidentally go outside of the line, or the line was not properly placed, we charge them either single or double stumpage and then that cut block is adjusted elsewhere. There are cases, though, of deliberate trespass, and it really amounts to theft of Crown timber. Because a person happens to be desperate for timber is no excuse to break the law. We have charged people occasionally, but it is not a charge; it is an appeal to the courts over the charging for stumpage, which we have done. We must enforce the cut control, the cut block sizes and the way harvesting is done. At times, if the law is broken, we must enforce the law.

I thank the member for New Westminster (Mr. Cocke) for his delightful speech — it was very short. The member for Burnaby-Willingdon (Mr. Lorimer), who isn't in the House now, was lamenting the small operators in his constituency. He mentioned that they are a dying breed. Well, small operators in the last number of years have decreased in number. For example, when the Okanagan public sustained yield unit was first set up there were 82 licensees, all of which were fairly small. At the present time there are only two of those original licensees left. There are still a number of small licensees but only two of the originals are left. The others sold out to other operators — some to larger and some to smaller companies — over the intervening years.

When a person spends the better part of his lifetime operating a small plant in the logging business and there comes a time when he wishes to retire, I find it very difficult to deny him the right to sell his operation as a going concern to the highest bidder. I've had many cases of this happening. Someone who perhaps is now in his 70s has a small timber allocation and has been harvesting it and running a small sawmill, and now he wants to get out of business and doesn't have any family to pass it on to. He really hasn't accumulated much in the way of savings but he has a growing concern and he wishes to sell it. I've tried very hard at times to say: "No, you can't." But then I think of the individual. I go out and meet him and see his operation and try to talk him out of it, and he says: "Look, I want to retire now. I have no other assets. Please let me sell to this guy so I can have something to show for my years of work." All these sales by the small operators, including that example of the Okanagan public sustained yield unit, have been voluntary sales. The people who have sold have taken the proceeds of the sale and either retired or, in some cases, gone into another business.

As this gradual redistribution has taken place in the private sector over time there are those who come back later and say: "I want back in now." Unfortunately, if there's a total commitment to the unit there is no room to get back in. They would have to buy back in, just as they sold out. So it's an ongoing problem of trying to be fair to individuals and yet trying to slow down and halt this concentration into fewer and fewer hands. It is a difficult problem and something we have to continue to deal with.

The member for Burnaby-Willingdon mentioned the difference in allowance for road costs under the forest licences and the timber sale licences of the small business program. Under the small business program the Forest Service will either be doing the major road development itself or else the sales will be set up on existing developed areas, so there is no need there to have them have a credit under section 88 for road building, because we will provide the roads for them. The small spur roads they build will be allowed for in the appraisal, just as has been the case in the past.

Forest licences, on the other hand, are responsible for building their own main access roads. The cost of doing that in the past has been allowed in the stumpage appraisal; in future it will be allowed as a credit against stumpage, and that is the reason for the difference there.

MR. MITCHELL: I am not going to be long, Mr. Minister, but there are a few things that I feel are important to keep repeating to this House. One is the guarantee that I know that you, as the Minister of Forests, can give to the companies that are established in areas where the economic base is based on the mills that are in operation now. There are areas where homes, schools, industry and commerce are established, and the whole economy is based on that mill. As you all know, as I've said before in this House, Sooke Forest Products is an efficient mill in my riding. It has one of the top records of production for its size. You as the minister can guarantee success if you give the leadership that is needed from your ministry to the forest industry and to the people who control the timber resources of this province. I feel it is vitally important, not only for my area but for the whole province. It's not that I'm trying to give your government ways of getting re-elected. But as I said before, when I spoke out for the need for timber for mills established in this province — and I'm just one little candidate in the western end of this province — I received phone calls from all over this province from people who are running mills. They are being denied timber when all around them there are large corporations who have control of the resources of this province.

I know it's easy for people to throw out condemnation of large multinational corporations. I am not intending to do that, Mr. Minister. One of the things I really feel is important — and the member for Shuswap-Revelstoke (Mr. King) said this too — is that we must properly utilize the timber resources that we have.

In my area — and when I say "my area," I mean Vancouver Island — we have the IWA, which is a responsible trade union and has members working in all sections of this island. When members of that same union tell me of the large merchantable sawed timber that is being used in Crofton to make pulp, when mills in my area have to import small skinny hemlock logs from Washington, I say it's a disgrace on the minister and on the forestry industry that is utilizing our timber wasting it. To allow merchantable timber to be ground up at the lower rate when other industries, other businesses, other economies and other districts are in fear that they may lose the base that keeps that town going is a disgrace. It is a disgrace to all of us.

I don't think this is something new to Canada, when you study the economy of the Maritime provinces. They used their resources, their timber, to go into pulp. It was wasted in pulp; it was not harvested. The forestry methods of those

[ Page 739 ]

provinces were not planned; they are not producing timber today. They were wasted. I feel that we in this province, with your leadership, can guarantee a far greater return of our resources than we are receiving to date.

It is important that when we study the various other provinces, we should use a little bit of the industrial democracy that we talk about. We have many people within the forest industry. We have many people within the IWA and the trade unions, people who work in the industry. I feel that there should be some consultation between these groups and the industry. The leadership should come from the province, and it should come from the ministry so that we are going to properly and more fully utilize our timber. When we go out to the province, to areas that are depending on mills, the minister can say that he's going to guarantee that needed economy and the needed logs.

I say, Mr. Minister, in all sincerity, the leadership has to come from your ministry, and it has to come now. We can't keep putting it off.

MR. NICOLSON: Mr. Chairman, I have a fairly simple request of this minister, and I'm sure he'll disagree with me. I know there has been an overcommitment in the Nelson timber supply area, particularly in the region that was formerly the Creston PSYU. I've been listening to both sides of this question since about 1972, or maybe going back to 1969. That simple request of mine is that the minister simply make timber available to the few small, independent operators who are active in that former Creston PSYU area. These are people with whom the minister has met, people with whom the deputy minister has met, and people to whom certain promises have been made.

Mr. Chairman, it's a desperate situation. It's fine to worry about the larger mills, but they're not all giants — some of them are just moderate-sized independents who have quota in the area. Something is certainly wrong when in 1977 there were 12 salvage sales in that area, in 1978 it was reduced to something like 8 to 10 sales, and in 1979 there were 2 sales that I know of. I'd like to talk a little bit about the nature of these sales.

One of the reasons the minister and his deputy have met with the small independents in the Creston area was as a result of something which is an absolute disgrace and a scandal — the mishandling of the tree cutting in a Hydro right-of-way which involved some 700 acres. It was an area which the independents estimated would have provided sufficient supply to keep six small business operations going for about seven years.

I think the deputy has inspected at first hand the timber which was not harvested. I have here some rather conflicting evidence — letters from B.C. Hydro and the ministry as to what they felt was done and what they felt was a good job of pre-logging before the clearing operation went ahead. Anyone who has seen pictures.... Of course, CBC did, I think, give time to it on about six different occasions. They came into the area and took photographs of this. I certainly don't have any answers for these people in terms of how a government can justify refusing to give them the small amount of timber that they need to continue, when it is obvious that the big- and middle-sized quota holders in the area were able to allow such tremendous waste of a very precious natural resource.

Mr. Chairman, as a result of one of these meetings an encouraging letter was sent out to one of the spokesmen of the small, independent sawmill operators. It was to Mr. Eugene Schmidt from Mr. Apsey, the deputy minister. He said:

"Further to the meeting in my office on February 9, I would like to report that I've taken the following action to date: I've instructed the Forest Service staff to proceed with the processing of one or more timber sales in your area. I'm informed by the Nelson regional office that preparation of a number of sales is proceeding.

"I also met with B.C. Hydro officials regarding policies on clearing rights-of-way and to discuss the comments put forward at the meeting and began planning of a field trip to your area so that I may review your concerns on the ground. An official from B.C. Hydro will accompany me together with members of my staff."

Mr. Chairman, on point number three the deputy minister kept his word. He did come into the area and he did get an opportunity to look at it first hand. I trust that he reported to the minister. And I would certainly like to see if the report given to the minister coincides with the reports I have had from people who have viewed it first hand.

I am sure the minister has viewed the photographs of the area which I have had the opportunity to look at. There was a meeting with B.C. Hydro officials, and I don't see how one can agree with the comments from B.C. Hydro that they were pleased with the manner in which the pre-logging was carried on, or, indeed, with comments from the regional manager's office that they also were satisfied that no appreciable volume of economically accessible merchantable timber had been burned or buried in the clearing of the right-of-way, as was contained in the letter of September 20, 1978, which I'm sure the minister and his deputy have also had an opportunity to look at.

[Mr. Strachan in the chair.]

We had the destruction of a good portion of 700 acres. Some of it, indeed, was harvested and decked and will be taken out. But at an estimate of the carrying capacity of that land, it is estimated there could be 14,000 units, which would be a considerable percentage of the 1977 annual allowable cut. As I say, it would have been enough to produce, also by estimate, a log value of about $1.4 million, and, in terms of a finished product, a lumber value of about $5.4 million. So that's a tremendous loss.

When we start talking about losing appreciable amounts of that timber, we're talking about losing millions of dollars and a tremendous number of jobs. But what we're really talking about is what has been going on between the Forest Service and the major quota holders, when they had years of warning about going ahead with the clearing of this. In a B.C. Hydro and Power Authority letter to Mr. Elvin Mossouk of the public advisory committee, the organizational meeting of which I attended with the minister at the invitation of the minister, the letter said:

"A review of their records showed that on August 19, 1976, Hydro formally advised the B.C. Forest Service of their desire to have all merchantable wood removed from the right-of-way, and the scheduled clearing to commence April 1, 1977. Considerable pre-logging was initiated during the fall of 1976, notably in the Boundary Creek area.

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"On February 10, 1977, Hydro advised the B.C. Forest Service that clearing would not commence before April 1, 1978, with surveying completed in the fall of 1977.

"On March 8, 1977, B.C. Forest Service, with the advice of local logging operators in the Creston area, informed us that this was not enough time. They suggested that we have priority lines flagged by early June 1977 or delay the issuance of clearing contracts until September 1978. As far as we are aware, we have operated within these lines.

"The above briefly outlines the development of pre-logging arrangements which are administered by the B.C. Forest Service.

"Incidentally, you will recall that our Mr. Barker reviewed the project with your committee in Creston on June 7, 1977, and at that time project scheduling as an essential need to maintain schedules was discussed."

HON. MR. PHILLIPS: Aye.

MR. NICOLSON: The Minister of Economic Development takes these comments as being facetious. Well, I'd like that minister to know that you can produce one hell of a lot more jobs through small, independent sawmill operations than you can through the highly integrated multinationals. That's something that minister should know. He's been minister in this area and he hasn't produced a single job in this province. All he produces in this province are jobs for travel agents getting him tickets to travel all over the world.

MR. CHAIRMAN: Order, please. Could we carry on with vote 117?

MR. NICOLSON: Well, Mr. Chairman, I just think it's shocking that, when someone is trying to come up with something positive in terms of employment and getting some kind of utilization out of wood that is being bulldozed.... I'm sure the member sitting next to him doesn't think that this is funny, because some of this timber is in that member's riding.

Mr. Chairman, we're talking about waste which amounts to over $5 million in terms of what that raw material could have been turned into in finished product. What is more, if it were turned over as raw material to some of these small, independent foresters, they could produce two or three times as many jobs from that material as are being presently produced by the large integrated companies. If we don't recognize this thing, if we don't do something about it and if there isn't some action taken immediately to help the small, independent forest operators in this area, they are going to go out of business. If we don't bring this up in this House, it will be tantamount to being involved in a coverup of major proportions. We're talking about undertakings that were given by the deputy minister. As I said in part number three, he did go ahead and visit the site. I would like the minister to report his impressions of the extent of the waste there. Was there waste or was there not waste in the area?

On the number two part, I'm sure the deputy minister did discuss this with officials of B.C. Hydro. But on the first part, he instructed Forest Service staff to proceed with the processing of one or more timber sales in the area. Well, he did go ahead. There were two timber sales announced in the area. I'd like to talk about those.

Number one was a timber sale for timber that was cut four years ago. There were mixed species of spruce and hemlock. It was on an old trespass, and the person who had cut it didn't take it out. It was dead and down for four years. It was pushed aside by a Cat from the Crestbrook Forest Industries road-building operation. It was broken up during the construction of a road, and it was advertised at current stumpage prices which would be suitable for green timber. In fact, there were only about six cedars and three white pine in that total sale that were of any commercial value. The balance was broken and destroyed, and they were asking for $1,300 up front, plus a bonus.

Now, Mr. Chairman, asking a bonus on this very questionable sale which would take about a day to haul the stuff away — it would take more time to get some equipment in there than it would to get it out — is just an absolute slap in the face to the small operators.

In the second case, I have the details all here. Again, it was dead and down. It amounted to 594 cubic metres mixed, and the upset price was $1,071.88. Mr. Chairman, again this thing amounted to almost nothing and was of no real consequence in terms of fulfilling the requests. One would think, when one read the letter from the deputy minister — which, of course, was forthcoming with a lot of talk about an election in the wind; in fact it was dated March 19, 1979 — that he had instructed forest staff to proceed with the processing of one or more timber sales in the area. One would have expected a little bit more than this kind of a slap in the face. To the credit of the minister and the deputy, they have spent some time on this, but we have evidence in our area of some major waste, and there are many other examples.

The minister and the deputy minister could have been taken up into the Coffee Creek area and shown the waste that went on up there at the hands of what was then a company owned by Eddy Match — Kootenay Forest Products at that time. This type of thing has been going on for years and years.

I want the minister to consider what it is we are trying to get out of our land-based resource. I submit that we should be trying to get revenues for the Crown; we should be trying to produce jobs. You can produce more jobs by allowing small independent operators to take out timber — and don't worry if they only turn it into ties. They are also producing more revenue to the Crown. What else do we want from the resource'?

If we allow this very last remaining almost token free enterprise to remain in the forest industry, we will at least have some kind of a benchmark for competitive bidding. In that old Creston PSYU part of the Nelson timber supply area, the total quota was 49 or, let's say, 50 cunits out the annual allowable cut of about 103,000 cunits, leaving the balance of more than half as TSHLs. In the last couple of years the minister has turned over some of the old reserve to one of the intermediate companies, already a quota holder.

Sometime before the minister's estimates are concluded I would like to have a commitment that timber will be made available to these people forthwith, so that they can continue to provide employment in a very high unemployment area. I think that this is the best way to go, and I am convinced that we will get better utilization.

[ Page 741 ]

I have met with the Council of Forest Industries, and I have even heard people within that organization have enough nerve to get up and say much the same things that are being said here today. It is not a myth that the large integrated companies go in and deliberately break up material because they just don't want the competition. They don't want those competitive little outfits to get in there and go after their specialized timber supply. I hope that before your estimates are over, other members will get up here and speak out in favour of retaining some real free enterprise in the forest industry in this province.

HON. MR. WATERLAND: I have some response to the previous two speakers. The member for Esquimalt–Port Renfrew (Mr. Mitchell) spoke of the timber supply problems at Sooke Forest Products and suggested that I guarantee a timber supply to Sooke Forest Products. I don't know quite how to go about making such a guarantee. I hope that member is not suggesting that I make a special issue of timber to that company outside the terms of the Forest Act, or, indeed, outside the terms of the former Forest Act. Sooke Forest Products has been free for many years to bid on quite a number of timber sales which have come up. They have chosen, rather than doing that, to purchase timber on the log market and to acquire private timber sales. If I were to say to you that I would guarantee Sooke Forest Products' timber supply I would be breaking the law. I think if we look at Sooke Forest Products, we will recognize the fact that they are owned 49 percent by Pacific Logging, which, of course, is 100 percent owned by CPR. Pacific Logging has a great deal of private wood and I am sure that Sooke Forest Products should be able to deal with Pacific Logging. I am not going to tell them there is a special timber allocation for you, because I can't be selective like that; I would be breaking the law. I am sure that if I did that the hon. member for Shuswap-Revelstoke (Mr. King) would be hammering me in this House and publicly as well, because you can't make direct timber allocations like that.

The member mentioned the time during the election when there was a flap about a shortage of wood for Sooke. I wasn't in the area, but I asked my deputy minister if he would go and look at the problem. He went to their mill and their log yard was quite adequately stocked. There was a lot of wood in their water storage areas, and the management there said: ''No, we don't have an immediate timber supply problem. We're concerned about the future." As I say, they've always had the opportunity, as they will in the future, to bid for any Crown forest sales which come up.

The member for Nelson-Creston (Mr. Nicolson) says: "I'll disagree with everything he says.'' Of course, I won't disagree with him, not at all. As a matter of fact, he mentioned Mr. Schmidt, as did the member for Shuswap Revelstoke. As you mentioned, my deputy met with Mr. Schmidt, reviewed the sites with him; Mr. Schmidt was in my office. And we did attempt, in order to have a stop-gap timber supply for them before we could make these small business sales available without competition from the larger companies or even the large logging companies, to try to find them some, even though inadequate, timber supply to tide them over. We were scrambling around doing our best. The wood that we could make available to them without a lot of competition from big operators was not the best wood, admittedly.

I will agree with the member that there has been, and quite recently, a waste of good wood on Hydro rights-of-way and other places. We try to monitor this to the best of our ability. Since my deputy came back from his trip with Mr. Schmidt, I have had discussion with my colleague, the Minister of Energy, Mines, and Petroleum Resources and Agriculture (Hon. Mr. Hewitt), on ways of trying to do a bit better pre-planning with Hydro.

Mr. Chairman, I think that covers most of the items mentioned. I will say and reconfirm once again that we will be making timber available for small operators.

The House resumed. Mr. Speaker in the chair.

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

Presenting Reports

Hon. Mr. Wolfe presented the annual report of the B.C. Systems Corporation for the year ending March 31, 1979.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 10:59 p.m.