[ Page 2685 ]

CONTENTS

Tabling Reports

Garibaldi advisory panel report. Hon. Mr. Fraser –– 2685

Oral Questions.

Victoria trade and convention centre. Mr. Barber –– 2685

Stikine-Iskut and Liard dam projects. Mr. Passarell –– 2687

Orders of the Day

Committee of Supply; Ministry of Forests estimates. Hon. Mr. Waterland

On vote 103 –– 2687

Mr. King

Mr. Howard

Mr. Lockstead

Mr. Macdonald

Ms. Brown

Mr. Levi

Appendix

Appendix –– 2709

THURSDAY, MAY 29, 1980

The House met at 2 p.m.

[Mr. Davidson in the chair.]

Prayers.

HON. MRS. McCARTHY: I would like the House to welcome a good friend who is in the gallery, Mrs. Helen McIntosh. It is nice to see her with us today.

HON. MR. NIELSEN: There are a number of municipal officers, who are members of the Municipal Officers Association of B.C., visiting the precincts today. I would like the House to welcome six people who are with us. From the municipality of Richmond are: Mr. Jack Brooks, Mr. Andy Inglis and Mrs. Inglis, and Paul Kendrick. Visiting us from Dewdney is Lila Cresewell. The wife of the deputy director of financial services for North Vancouver, Mrs. Hoskins, is also in the gallery.

MR. LOCKSTEAD: We have in the gallery the administrator for the municipality of Gibsons, Mr. Jack Copland, who is attending that same meeting. I ask the House to join me in welcoming him.

HON. MR. PHILLIPS: In the gallery today from the great riding of South Peace River is Harald Hansen, clerk of the city of Dawson Creek, his wife Janice, his son Trevor, his baby daughter Inga Jean, who is only four months old, and his mother Inga Hansen. I hope the House will join me in giving them a good welcome.

MR. KING: Also visiting in the gallery today is a young gentleman whose parents are old friends of mine from the city of Kamloops. Mr. Kenton Robinson, a student at the University of Victoria, is visiting today. I would ask the House to join me in welcoming him.

HON. MR. SMITH: This week being more or less education week, I have great pleasure in introducing the president of the B.C. School Trustees Association, Mr. Gary Begin, who is here in the gallery. He is also the chairman of the Burnaby board.

Hon. Mr. Fraser tabled a report of the Garibaldi advisory panel.

Oral Questions

VICTORIA TRADE AND CONVENTION CENTRE

MR. BARBER: Mr. Speaker, I have a question for the Minister of Finance in his capacity as minister responsible for the Provincial Capital Commission. It is a question concerning apparent conflict of interest.

It has been revealed this morning that Mr. Arnie Lane, president of the Pan Pacific Society, owned for some four months a 25 percent interest in Hartwig Court, which is a building located immediately adjacent to and north of the convention centre site on Wharf Street. During these four months Pan Pacific was promoting the Wharf Street site over all other possible sites for a convention centre. It now appears that Mr. Lane owned this interest through a company called Shadee-Lane Ltd. [Laughter.] That's what it's called, Mr. Speaker. That's what the registrar of companies tells us. A very odd sense of humour there.

On May 20 this year Mr. Lane concluded sale of his interest in Hartwig Court. Two days later the city of Victoria voted to accept the Pan Pacific and Capital Commission proposal to locate the convention centre at Wharf Street. My first question is: what steps did the minister take, if any, to ascertain whether or not any director of Pan Pacific owned a beneficial interest in land or buildings adjoining the proposed convention centre site at Wharf Street?

HON. MR. CURTIS: Mr. Speaker, the member has referred to an organization by the name of Pan Pacific which was in fact mentioned in debate in committee stage of a bill just two or three weeks weeks ago. It is important in answering any question on this topic to make it very clear that there is no contractual arrangement between an organization known as Pan Pacific or some derivation of Pan Pacific and this government or the Provincial Capital Commission..

MR. BARBER: Yet.

HON. MR. CURTIS: The member interjects: "Yet." I would hope the member will realize that this government will act to the very best of its ability to ensure that anyone who is involved in the operation of that centre has no conflict of interest whatsoever.

MR. BARBER: Mr. Speaker, the problem is the minister didn't answer my question. What I asked was whether or not the minister himself — as minister responsible for the Capital Commission, which has been negotiating with Pan Pacific for months as to the locale and design of a convention centre — himself took any steps to determine whether or not any member of the board of Pan Pacific, the proposed operating authority for the convention centre, was himself or herself in ownership of a beneficial interest in land or buildings adjacent to the convention centre site. That's all. Did you do that?

HON. MR. CURTIS: When that report first reached my desk, I expressed very grave concern for the reason given to the member just at the conclusion of the earlier answer. I asked that this matter be investigated and I was informed that the individual under discussion today had in fact divested himself of any interest in an adjacent piece of property.

However, this matter continues to unfold, and I reiterate the statement made to the member at the end of the first question this afternoon to the effect that…. I must correct him; he has indicated Pan Pacific has been alone in promoting that particular site for a conference centre — to be operated for the benefit of the people of Greater Victoria and British Columbia as a whole. I think that the record will show that many others, other than a very small group known as Pan Pacific Society, have in fact been promoting that site and the idea that we should have a conference centre at all. The member has drawn certain points into the questions thus far, Mr. Speaker, which would appear to take the situation further than it actually has gone in terms of contractual arrangements, if any are in fact to be negotiated.

MR. BARBER: Did the minister, or anyone acting on his behalf, at any point request a statutory declaration from any

[ Page 2686 ]

member of the board of Pan Pacific as to their interests, if any, in land or buildings immediately adjacent? As part of the same question, could the minister inform the House when he learned of the beneficial interest owned by the president of Pan Pacific in land immediately adjacent to the convention centre?

HON. MR. CURTIS: Mr. Speaker, I am unable to assist the member today in terms of the second part of his question — that is, the precise date on which I learned of a reported interest on the part of a member of Pan Pacific in adjacent property. My notes will show that. I don't have it available in this House today and would not want to guess and therefore perhaps create difficulties for members of the House. But, you see, the first part of the question assumes that there is an agreement in place which would require or suggest to any responsible minister that such a statutory declaration be sought. Clearly, if, when and as any agreement is entered into with a society now known as Pan Pacific regarding the operation of a conference centre, then I think such statutory declaration would be most appropriate for consideration. The member, by the very fact that he has raised the questions today — and the press have raised the matter for public interest — suggests that the thing is already locked in place. That is not the case. Among the many people in greater Victoria who have been working for a conference centre in this area — and, admittedly, the government of British Columbia has a significant investment in that conference centre — are those who for one reason or another have attracted a great deal of interest on the part of some members of the opposition and the press.

MR. BARBER: There has been, therefore, no statutory declaration. I appreciate the minister hasn't taken that as notice. I take it you will take as notice my question as to when precisely you learned of Mr. Lane's ownership, and I thank you for that. I wonder if the minister is familiar with the minutes of the Capital Commission dated October 3, 1979, which I'd like to quote from briefly, because they appear to contradict the minister's previous answer.

DEPUTY SPEAKER: Order please, hon. member.

MR. BARBER: I have a question. I'm asking if he's familiar with the minutes, and I have another question as well. That's in order, I believe.

At page 4, under "recommendations," it says — and I quote very briefly: "The commission recommends to the minister" three items not related, and then item 4: "that the commission be authorized to lease the completed facility to the operating agency Pan Pacific Conference and Trade Centre Society for the sum of $1 with appropriate safeguards to protect the interest of the province." Is the minister familiar with that recommendation of the Capital Commission dated October 3, 1979?

HON. MR. CURTIS: Mr. Speaker, yes. I think the member, having served as a member of the predecessor commission, the Capital Improvement District Commission, would know that the commission indeed recommends, and the minister in most cases — infrequently the Lieutenant Governor-in-Council — would either endorse or reject any particular recommendation.

MR. BARBER: Did the minister responsible for the Capital Commission reject this particular recommendation, or has no decision been made yet as to it since it was put forward on October 3 of last year?

HON. MR. CURTIS: Mr. Speaker, I indicated earlier that there is no statutory agreement or any agreement with respect to the Pan Pacific Society and the government of British Columbia. I've assisted the member to the best of my ability at this point.

MR. BARBER: So that I understand perfectly clearly, the minister himself is saying that he personally has not approved any operating agreement, at this stage, between the Capital Commission and Pan Pacific for management of the convention centre. Is that the minister's personal position on the matter?

HON. MR. CURTIS: Earlier this week in the course of routine discussion with the solicitor for the Provincial Capital Commission, I put precisely the same question. Not "have I…?" Because my records obviously would show what I would or would not have done. My question to the solicitor was: is there any legal agreement between the organization known as Pan Pacific and the government of the province of British Columbia? The answer, I was informed at that time, is no.

MR. BARBER: Unfortunately the Capital Commission reports otherwise. I quote from its minutes of February 5, 1980, page 2: "Mr. Giles" — George Giles — "reported that the recommendations made to the minister under the date of October 3, 1979" — which I just quoted in part — "have been approved and will be confirmed in writing by the minister. Mr. Holmes requested that the appointment of the Pan Pacific Society and the budget be considered at the next meeting," Mr. Holmes being a member of the Capital Commission. There's a contradiction here.

AN HON. MEMBER: The question!

MR. BARBER: I'll get to the question. I appreciate the government's discomfiture with this. It's perfectly clear why. There is a contradiction here between the minutes of the Capital Commission of October and the minutes of the Capital Commission of January. I wonder if the minister can explain the conflict between Mr. Giles' report to the Capital Commission, dated February 5, 1980, which says that the minister did approve an agreement with Pan Pacific, and the answer the minister just gave a moment ago. There is a contradiction. How does he explain the contradiction?

HON. MR. CURTIS: Mr. Speaker, I stand by the answers I gave earlier, particularly the last answer I gave the member with respect to a legal agreement between the government of the province of British Columbia and the group known as Pan Pacific. So that's about all I can do to assist the member this afternoon on that point.

MR. BARBER: As of this date, has the minister requested the resignation of any member of the board of Pan Pacific?

HON. MR. CURTIS: No, I have not.

[ Page 2687 ]

MR. BARBER: Has the minister now decided to dismiss the Pan Pacific Society, to thank them for their efforts and to create instead an open and community-based public operating authority, representing the whole of the community, to manage the convention centre?

HON. MR. CURTIS: While the question would impinge on future policy of government, I would refer the member to the debate in which he and I participated some two to two and a half weeks ago, which dealt with that very point, when I indicated that I believed that the operating organization for the conference centre — Hansard will assist the member if he wishes to be reminded of that — should be much more broadly based than had been proposed.

MR. BARBER: I have a final question to the same minister. Is the minister familiar with a prospectus issued by the owner of the new condominium now under construction north of the convention centre at the Reid site?

HON. MR. CURTIS: No, I don't believe that I'm aware of any such prospectus.

STIKINE-ISKUT AND
LIARD DAM PROJECTS

MR. PASSARELL: I have a question for the Minister of Energy, Mines and Petroleum Resources. Yesterday I asked the minister whether B.C. Hydro had commissioned any northern transmission studies which, by design, excluded consultation with affected groups. The minister refused to answer.

Can the minister now assure the House that the native people of the north will be consulted in all the critical background studies?

HON. MR. McCLELLAND: I wonder if the member would like to tell me which background studies he is concerned about, and particularly if he'd like to send a letter to my office and express the concerns that they have. I said in this House yesterday that no energy projects will be approved in this province until full public hearings are held. I've also said that there will be legislation before this House in a couple of weeks which will develop that prospect. If the member has some serious concerns, I think he has an obligation — not only to this House but to his constituents — to come to my office and tell me what those concerns are. He hasn't done that to this point, and I have the feeling that perhaps he's not serving his constituents as well as he might. I would be happy to have him in my office at any time to express those concerns.

Orders of the Day

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

ESTIMATES: MINISTRY OF FORESTS

(continued)

On vote 103: minister's office, $123,272.

MR. KING: I have a few more comments to make on the minister's vote before we allow it go through. The minister will recall that last year….

Mr. Chairman, perhaps I should wait until I have the attention of the House; it's fairly difficult to make oneself heard.

MR. CHAIRMAN: Perhaps all hon. members will remember that while one member has the floor it is impolite and against our standing orders to impede his progress or his speech.

MR. KING: It's not only impolite, Mr. Chairman, it's very difficult to hear.

I think the minister will recall that last year I questioned him in a fairly detailed fashion about a report into the forest industry commissioned by the British Columbia Truck Loggers Association, commonly referred to as the Thompson report. I am sure the minister will recall some of the contents of that report, but just to refresh his memory and the memories of all members of the House regarding the basis of that report, I want to quote briefly from it as it pertains to the alleged manipulation in the forest industry of the annual allowable cut, and consequently the inventory of fibre assigned to the major integrated forest companies in the province of British Columbia. I quote from the first page — it's an analysis of cut control.

"This report was prepared for the Truck Loggers Association to provide information on selected tree-farm licensees' performances with respect to cut control, contractor clauses, calculation of annual allowable cuts. This report is divided into three sections as noted above. The report is not intended to be an exhaustive, definitive analysis of the subjects covered; to have prepared such a report would have taken an excessive amount of time and money. It was intended this report present background data collected from Forest Service administration division files with summaries and analyses of the various aspects of the three subject areas.

"The report serves four purposes: a) it highlights problems inherent in the three subject areas as they relate to small independent loggers and manufacturers as well as to the coastal timber supply; b) it provides direction and focus for the further studies that should clarify and standardize annual allowable cut calculation procedures and that should review specific TFLs with extraordinary deductions built into their annual allowable cut calculations. The TFLs with obviously poor contractor clauses and cut control performance records are pointed out."

Further on in the same introduction it points out that a very large amount of variation takes place in meeting the annual allowable cut, which allows some of the major integrated companies to in fact bank the resource — hold it in the bank — without utilizing it at the same time small loggers and small entrepreneurs throughout the province are being denied a supply of timber.

That report is available — it's a public document — for all to see. The minister's response was that this was not a major problem, that really it was overemphasized by Thompson, who is an independent professional who had no reason to try to doctor the figures in any way. Indeed, the figures were taken from the ministry's own files. However, the minister discounted the very serious revelations that were

[ Page 2688 ]

brought forward in the Thompson report. This is not a factor and the ministry has a good handle on inventory and on the annual allowable cut in the forest industry.

My colleague, the member for Skeena (Mr. Howard), referred yesterday to an article in the Vancouver Sun on May 9 which outlines how a forestry firm planned overcutting. Now that's in conflict with the allegations contained in the Thompson report. One the one hand there was undercutting, and in the case referred to by Moira Farrow in the Vancouver Sun there was overcutting. But the principle is the same, Mr. Chairman; in both cases there was an attempt to manipulate the utilization of the resource by a large integrated forest company in the province of British Columbia. To refresh the minister's memory, let me read just briefly from the article that my colleague referred to yesterday:

"Canadian Forest Products Ltd. made plans to overcut part of Vancouver Island forests to prove to the government that a controversial logging ban would result in lost jobs, according to a partial internal company report obtained by the Vancouver Sun. The cutting was to be as much as 15 percent over the company's annual allowable cut. The document is a typed but not photocopied duplicate of one page of an internal report prepared by Canadian Forest Products Ltd. staff.

"CFP spokesman Doug Rickson confirmed that the report was prepared by one of the company's divisional engineers, Jim Mitchell, on the subject of a five-year logging plan. Rickson released the entire report, which was prepared in 1976, several years after the provincial government placed a logging moratorium on the Tsitika-Schoen watershed on northern Vancouver Island. Several forest companies, including CFP, wanted to log this area.

"The page obtained by the Sun lists five logging objectives for the company, including overcutting on some parts of the Island."

"It concludes with this paragraph."

And I want all members of the House to pay attention to this particular paragraph because I think it's highly significant.

"'The obvious objectives will allow the company to indicate to the government, through their overcutting, that the Tsitika-Schoen area indefinitely required for logging and that removing its quota from the tree-farm licence would reduce the available quota to such an extent that labour reduction would occur.'"

In other words, here is a major integrated firm in the province contriving, through deliberately overcutting and violating the regulations of the ministry and through breaching of the regulations, to show that this area of the province could not be released to serve the policy of the government. On the one hand, as I say, in the Thompson report evidence is produced to show undercutting so that the allocation to those large, integrated, mainly foreign firms can be manipulated and controlled to the exclusion of the small entrepreneur in the province of British Columbia.

Mr. Chairman, yesterday in the Vancouver Sun we have an article appearing on page A-11: "Ex-MacMillan Bloedel Official Convicted in Log Trading Case. The former manager of MacMillan Bloedel's log trading division was convicted in assize court late Tuesday of corruptly accepting benefits of more than $180,000 for favouring certain buyers."

Mr. Chairman, what we have here is a pattern of conduct by the large operators in the province of British Columbia of flaunting the regulations that the minister is duty-bound, legally and morally, to enforce. Apparently, as is evident in the Thompson report, they are ignoring and violating and breaching those regulations with impunity, free from any charge, free from any penalty, free from the initiation of any sanctions by the Ministry of Forests. If the minister can demonstrate one case in which such conduct has brought a sanction such as the reduction of quota, the reduction of a tree-farm licence or inventory against a large integrated firm in the province of British Columbia, I'd be very happy to hear about it. I challenge him in the Legislature today to reveal such penalties against people who have obviously been in violation of the regulations that the minister is sworn to uphold. The minister answers blithely: "Everything's fine in the forest industry."

We have evidence that the large, integrated firms are indeed manipulating their annual allowable cut, that they are hoarding more inventory than that to which they are entitled, to the exclusion of small, homogeneous firms in the province of British Columbia — Canadian operators. We have evidence that there is manipulation and kickbacks and payoffs on the Vancouver log market, which is the basis for the stumpage system for most coastal operators. And the minister tells us that everything is rosy in the forest industry.

I say that it is a disaster area presided over by a disaster. Not since the fifties have we had the kind of serious concentration and centralization of control with all of the propensity for the kind of thing that the person in the Vancouver log market was convicted for. And that minister seems to feel that he can blithely ignore all of these things and assure the Legislature, without any basis of fact or documentation, that everything is rosy in the forest industry.

What has the minister done? What steps has he taken to come to grips with these abuses? I would like to hear more than clichés from the minister, more than pale, anemic assurances. I would like some evidence that that minister has taken strong and decisive action to ensure that this kind of tampering with the public interest, this kind of discrimination against the Canadian entrepreneur, is not going to occur again. I am going to give the minister a chance to respond to that question which is at the root of the problems I have enumerated. I look forward to a positive response from the minister.

MR. CHAIRMAN: Shall vote 103 pass?

MR. KING: Come on, Mr. Minister, get on your feet.

MR. HOWARD: Noticing that the minister was gradually getting to his feet, I didn't want the vote to pass before he had an opportunity to reply. I was just rising to give the minister that opportunity, if he so desires.

MR. BARRETT: What are you covering up?

MS. BROWN: Are you covering up his incompetence? Is that it?

HON. MR. WATERLAND: Mr. Chairman, that vicious attack from the lady member opposite — goodness gracious! I think the present tack the member for Shuswap-Revelstoke (Mr. King) is on is on the same lines as that raised

[ Page 2689 ]

by the member for Skeena (Mr. Howard) yesterday. A few specific points have been raised. I will try to respond to them. First of all, on the matter of the Thompson report, as the member discovered last year, it was commissioned by the Truck Loggers Association. He asked me for a copy of it at that time. Of course, it was not my report. I understand that he has since received a copy from the Truck Loggers Association.

We have no argument with the statistical data presented in that report. It is the same data that we have within our files. As a matter of fact, that is where the information came from, because we as a ministry are running an open forest service. Any information related to the public timber resource and the use of it is freely available to anyone who may wish it.

We did have some disagreements with the Thompson report in the interpretation of some of the data. This disagreement centred primarily around periods of time which were used by Thompson consultants in placing a certain interpretation on the information. Since that time we have invited the Truck Loggers Association and their consultant to meet with my ministry staff. This has been done. Any discrepancies in interpretation, I think, have been largely resolved.

The truck loggers, the consultants and we are in agreement as to the way the information should be interpreted and that it is accurate information. Anything, of course, can be done with data, depending upon what you may wish to prove. When we sat down together these differences were, by and large, resolved. One of the things that we pointed out to them, as I believe I mentioned in the Legislature, is the material; the methods of gathering material, the format of inventory and interpretation are slightly different from TFL to TFL. That leads to some of the problems in interpretation which we have had. We as a ministry are now almost at a point of agreement with all TFL holders, that there will be a compatibility of information. We're not insisting that exactly the same techniques and procedures be used by each TFL holder. All we are wanting to be assured of is that the information, the method of gathering the information and the interpretation of it is compatible with that used by the ministry — on Crown land — and that the same computerization system can be used to interpret the information. That information is, by and large, in place now.

As a result of meeting with the Truck Loggers Association, and their concern with tree-farm licence cuts and so on — at the last meeting we had, which was about six weeks ago — it was agreed by them that it is not the interpretation of the information they are concerned about; it is the accuracy of the base data. As a result of that we have agreed…. Actually, a few days ago, we announced that we will now begin to move into the tree-farm licences, as we have staff time, as we continue with our timber supply area analyses, and that we will ourselves begin assessments of the data they use to make sure that it is in fact compatible with the guidelines we have established.

I announced a few days ago that we will be beginning with the older tree-farm licences. The first one we will start with is tree-farm licence No. 6, which is held by ITT-Rayonier. I am satisfied that we are working in the right direction. Once we have been through all the tree-farm licences, if we in fact determine that anyone has made any attempt to — as the member puts it — hide or horde allowable cut, then the Forest Act is very clear as to what our options are. The member seems to be under the misconception that a tree-farm licence allowable cut, once established, is firm for all time — at least that is what he implied, and I'm sure that's what most members here assumed from his discussion. The member, I think, does realize that the allowable cut is determined for each five-year cut-control period. The large companies which have tree-farm licences — ten years in taxation tree farms, ten years in the Crown units, the public sustained yield units and, in the future, in timber supply areas — must plan their timber flow to try to sustain as uniform a level of economic activity and employment as possible. We try to do that in our timber production forecast, which we now are doing in public units as well. Some stability of employment and uniformity, I think, is in the best interest of all British Columbians.

The member mentioned a CFP memo which was discussed in newspaper articles. According to the article I read — the same one the member read from today — an attempt was made by them to demonstrate to the Forest Service that they really can't block up that timber in the Tsitika-Schoen areas. The member knows that the resolution of those studies and that moratorium was that there will be a multi-use resource plan in place. Certain areas have been tied up indefinitely, and a multi-use resource plan is established for the balance.

One of the points we brought up in our discussion on Bill 7 was that the forest land base is important and must be maintained. As long as we approach it with a multi-use concept in mind we can ensure this stability for our most important industry.

I'm sure that the member for Skeena will realize that, yes, large companies in British Columbia are very important to us. We like to try to maintain a balance between the large and small companies. That is why we have very specific programs brought forward as a result of the new Forest Act, which will provide assurance that these small companies will continue. Our policy, based upon these programs, is that there will be a significant portion of the cut in all public units available to the small independent operator. There are two classes, of course: one for those with sawmills, one for those without sawmills. People who hold a "quota" in public units will not be eligible, so these independent companies will not have to compete with the larger companies for their wood supply.

I think we're turning towards a reasonable balance with size and degree of integration of companies. Members, I think, imply that all the cut should be in the hands of smaller companies. I'm sure that members of the IWA would not agree with you. Their Jack Munro, who we all know, certainly doesn't agree with that. The members realize that security and stability of employment does depend to a certain extent on the very stable, larger companies, who must be large to compete in the very competitive international marketplace they deal in.

There is the constant suggestion that companies are constantly flouting the regulations and manipulating regulations with impunity to achieve their own ends. We in the ministry have good control procedures. The member asked for an example of anyone who ever lost cut as a result of being undercut. The one example that comes first to my mind is Can-Cel, where their TFL was reduced by roughly 50 percent because they had not kept up their cut commitment. But there is a variation allowed in annual cut — as much as 50 percent in any one year — because the industry does have to adjust to external factors, such as market conditions. As long as the cut is within a certain limit in the five-year cut-control period, that's quite acceptable and I think necessary. We

[ Page 2690 ]

have enunciated very clearly the use-it-or-lose-it policy: if it's not being used, it will be made available to others. We have done a rather detailed study of people in public units who have not used their cut. Strangely enough, the greatest violators of the cut control are not the large companies at all, but the smaller companies. A lot of this is due perhaps to inadequate financing and the fact that some of their cuts are so small that it's difficult for them to keep them in exact balance. These things we have to consider.

I think that covers the points raised by the member for Skeena and the member for Shuswap-Revelstoke.

MR. KING: I think my colleague from Skeena is going to have something to say with respect to the minister's understanding of his presentation yesterday. I was interested in listening to the minister's response. Once again, everything is okay; they're reviewing the TFLs and are started on the first one, TFL 6. He said that basically, despite evidence to the contrary, they really have a handle on what's going on in the industry; there's no basic manipulation. He said that there's a change in the annual allowable cut on the basis of every five-year plan; I appreciate that — changing conditions.

But I don't think the minister has a handle on what's going on. I think that nice little cliché he uses, "use it or lose it," is just that — a cliché. It's interesting that the only TFL that has been reduced at all was a public one — Can-Cel's TFL 23. I understand the reduction was voluntarily negotiated. I'm not aware of any other.

If the minister feels he has a handle on what's going on, that there's no room for manipulation, I wonder if he's aware of an interoffice memo with the letterhead of MacMillan Bloedel Ltd., dated just last fall, September 16, 1979 — not very long ago, Mr. Minister. It relates to TFL 39 renewal coming up for one of those famous rollovers — the evergreen rollover that the minister parroted. This is an interoffice memo to R.V. Ennis from D.N. Ratcliff at Woodland Services, copies to Marlow, Dent, Peterson, Johnson, Richardson, Waatainin, and Williams. The reference is: RVE, memo to DNR, and the numbers of the file. I hope the members of the House listen very carefully to this interoffice memo by this small firm which is living up the the minister's regulations — as he tells it.

Interjections.

MR. KING: The member for Kamloops (Hon. Mr. Mair) usually gets highly exercised, Mr. Chairman. I understand that the Minister of Health has a bit of a blood pressure problem, but I can tolerate his intervention.

The memo states:

"In general the steps outlined in your memo to handle public participation are sound." This is talking about the rollover renewal of TFL 39. "As I see it, our job here is to coordinate the overall effort to satisfy public involvement in the TFL renewal in the several communities that must be involved. I would rank the intensity of public interest and involvement in this order: BK 6, Queen Charlotte Islands; BK 4, Port McNeill, Port Hardy; BK 2, Sayward; BK 1, Powell River. We may have some surprises in the other non-community blocks, but public involvement at Namu and Phillips Arm, etc., should not be too brisk.

"Above all else, we must be consistent in our approach to the public in each community presentation, and it will be a part of my job to ensure a free flow of information between divisions involved" — not to the public, but between divisions of the company. "Some comments on specific items:

"1) Develop an operability plan.

"2) Recalculate annual allowable cut based on operability plan. A word of caution here: in our last annual allowable cut calculation we withdrew some 650 million cubic feet of low-volume timber from inventory" — and the acres are listed. "This was done to reduce the annual allowable cut. This time around, though, we will have to include it. Otherwise the Forest Service may well be inclined to classify it as unused inventory suitable for small business opportunities."

What's that, 39,000 acres of land that they're all of a sudden going to have to put back into their annual allowable cut? Did you know about that, Mr. Minister, if you're on top of it? If you knew about it, and they arbitrarily withdrew it from their inventory, why did not your famous "manage it, use it, or lose it" theory come into play? Why did you not take it away from them, Mr. Minister? Why didn't you give it to that much-vaunted small-business program of yours, which you say you were going to use to keep the small independent Canadian operator in business in this province, when in fact they're going down like dominoes for lack of timber supply and because of arbitrarily and discriminatorily high stumpage rates as compared to the large ones?

Mr. Chairman, what we have here is a major scandal in the administration of the forest industry. We have manipulation with impunity from any sanction or regulation by the ministry, if indeed that minister is competent enough to know what's going on. Whether it be ignorance or design, it is equally unacceptable to the public interest and to the interest of our private sector.

I'm going to go on and read some more of this memo.

"This time around we will have to include it. Otherwise the Forest Service may well be inclined to classify it as unused inventory suitable for small business opportunities. Therefore, uneconomic and sensitive site exclusions must be site-specific and substantiated.

"3) Training session to review all aspects of annual allowable cut calculations. Woodland services will certainly run sessions on annual allowable cut calculations, Forest Act and regulations and whatever else is needed."

On and on it goes, telling all of the things that have to be done basically to dupe the public, to minimize public participation and debate, and also to dupe the ministry so that they can hang on to timber that they apparently don't need and that should be utilized by other operators in the private sector.

This interoffice memo ends with this classic, immortal line. It's not quite as good as W.C. Fields, but it's similar to old Texas Guinan, who said: "Hello, suckers." It reads thus: "Ernie Waatainin and I will get up to the Charlottes to see you people just as soon as the dust settles from the 1980 plan." It's signed D.N. Radcliffe.

Isn't that lovely, Mr. Chairman. This chronicles the maladministration, abuse, manipulation and discrimination that is rampant throughout the Ministry of Forests, and that pathetic little minister stands there and tells us that everything is peaches and cream.

[ Page 2691 ]

MR. CHAIRMAN: Hon. member, I can't accept the personal attack on the minister. Would the member please….

MR. KING: I wasn't attacking him personally; I was attacking him intellectually. However, I withdraw the remark.

Mr. Chairman, I have absolutely no confidence in the minister in his direction. I don't think he knows what's going on. I think this is an absolute scandal in terms of the public evidence that the large integrated forest companies of this province, and not the minister, are running the forest industry in the province of British Columbia.

I and my colleagues are receiving literally dozens and dozens of letters from small operators all over this province complaining about the very things that I've articulated here.

MR. KEMPF: Name names.

MR. KING: Sure, I have files on them. I'd be happy to read some of the letters-many from that member's riding.

MR. CHAIRMAN: Mr. Member, I wonder if I might just have the attention of the committee for a minute. There's an awful lot of discussion going on on both sides of the House — discussion which is entirely out of order. The member for Shuswap-Revelstoke has the floor and I will ask the member to continue.

MR. KING: I want to thank you, Mr. Chairman, and I agree that there's a good deal of bad order around this institution, but there's more bad order in the Ministry of Forests. That's where the bad order really exists. I don't know what we do about it — I really don't.

What we have is a government and a minister that are so recalcitrant and so stubborn that they will not accept a case which is founded on fact and evidence available for everyone to see. They stick myopically and stubbornly to their direction, which as everyone knows is delivering control of the forest industry into fewer and fewer hands, most of those being foreign hands. This is the issue. I could go on and chronicle the discrimination that exists against the small independent operators in the province of British Columbia while the large integrated boys have carte blanche. They name their own ticket, they control and manipulate their own inventory, they enjoy preferred stumpage rates. I chronicled those in the House a couple of weeks ago and Ftll do so again for that minister's edification, Mr. Chairman.

Here is a foreign firm — not a U.S. one, a different one; this one happens to be Japanese — and two independent British Columbia operators in the coastal forest area, and here are the stumpage rates that apply to the species which they log. For balsam, per cubic metre, the Japanese firm pays $2.69; operator A, British Columbia firm, $2.69; operator B, British Columbia firm, $11.77 stumpage. For hemlock, the Japanese firm pays $2.69; operator A, the British Columbia independent operator, $10.00; operator B, $8.36. For cedar the Japanese firm pays $7.00; operator A pays $17.00; operator B pays $22.25 stumpage. For spruce the Japanese firm pays $48.60 stumpage; operator A, the only B.C. one that logs that species, $86.00. How do you explain that disparity? How do you explain the discrimination?

This is not the only case I have. I have here literally dozens of work sheets mailed out by the ministry which chronicle the fact that many small independent operators in British Columbia cannot possibly log at a profit when their operating costs and the discriminatory stumpage rates applied against them are considered. Hence they're going out of business. They're shutting down. I had two more in my office this morning. They're closing down — they're laying off 30 men here, 50 men there,100 men there. And we wonder why we have an unemployment crisis. We wonder why we have a crisis in the forest industry today.

I don't know what more I can say about the rank discrimination and the incompetence that characterizes that minister's administration. I don't know what more I can say about it, but you cannot refute the facts. These working plans are from your own ministry. The evidence is here. Either it's ignorance and incompetence or it's some conspiracy to ensure, for consideration, that the large integrated, mostly foreign firms in the province of British Columbia gain a complete and absolute stranglehold over all fibre in the province of British Columbia. Either one is, in my view, equally evil.

HON. MR. WATERLAND: The member's discussion about discriminatory stumpage rates, bringing out examples where foreign companies, Japanese companies, apparently get a break in stumpage when Canadian companies — and it's always the poor, small Canadian operator — don't get a break and are discriminated against…. I think his dialogue is typical of that member and that party taking in for….

MR. KING: You're darned right! I hate to see B.C. sold out.

HON. MR. WATERLAND: Mr. Member, I did you the courtesy of listening when you were talking. If you would return it, it would be very nice.

The member took numbers, which in themselves are meaningless, and used them as proof of discrimination against Canadian companies. It is typical of his attempts to take information and manipulate it to make some fallacious point. The member knows full well that the determination of stumpage depends upon a large number of factors, including the quality and species of the wood that is being charged for, its location and the cost of harvesting and transporting it. All of these things work into the formula. It may well be that the lower stumpage figures that the member mentioned — he shakes his head and I can hear the rattling as he does that — may have been more discriminatory than the higher one, depending on what all the costs were. The member will never admit that, but I'm sure those who think beyond the statements he made and understand the stumpage system and what it means will realize that the price is determined by all these factors. The bottom-line figure does not mean that the person who paid the lesser stumpage got the best deal, because they are all based on the same criteria.

The member will make a comeback, probably with additional examples. I could give him at least as many examples where the terrible, foreign, multinational companies paid higher stumpage than the poor, small, Canadian operators. It depends on the location, the species, the grade, the operating costs and many other factors.

The memo he read from Mr. Radcliff to Mr. Ennis, re

[ Page 2692 ]

TFL 39, points out that Mr. Radcliff stated that at this time we must include that; otherwise the Forest Service may well consider it as unused inventory, suitable for small business opportunities. If, in the review of the five-year plan, when this TFL is rolled over, wood has been hidden for that purpose, it may well be made available for other types of tenure. The determination of what is allowable cut, again, depends on many, many factors, which are constantly changing. The operability of an area changes as economics change, as harvesting techniques change and as other factors change. The statement here by Mr. Radcliff that the Forest Service may well be inclined to classify it as unused cut is quite a true statement. If ever it is demonstrated to us that people are hiding wood, that the means they use to determine cut are not in keeping with ours, the cut may well be removed. I'm not privy to what other discussions took place within MacMillan Bloedel regarding TFL 39, but as far as I know at this time that TFL is not renewed. The working plan will be subject to public discussion and scrutiny before it's presented for approval by the ministry.

MR. KING: Public hearing?

HON. MR. WATERLAND: The working plans have public discussion. They are ongoing.

MR. KING: Public hearing?

HON. MR. WATERLAND: Yes. Mr. Chairman, the procedure that has been followed and is being followed on the rollover of TFL is that before the working plan can be approved, it is presented for public scrutiny.

MR. KING: No, public hearing, and you know it.

AN HON. MEMBER: Public scrutiny — what's wrong with that?

HON. MR. WATERLAND: For public hearing and discussion. The member is playing with words. The public has input and discussion. The ultimate responsibility for approving the working plan and the rollover of TFL lies with the ministry, the elected government.

The working plan for TFL 39, which expired some time ago, was renewed during the term of office of that socialist government. I didn't see them at that time taking any large volume of wood away from MacMillan Bloedel, so they must have agreed that their determination of allowable cut was quite adequate. Probably the cut was quite adequate.

Mr. Chairman, the tenures which were laid down in tree-farm licences, when they were issued years ago, were not changed by that government; that government knew full well what the terms were. The tenures for tree-farm licences now are 25 years and they are renewable with compliance with the Forest Act and with criteria which we, as a government, established, and renewable only under those conditions — with whatever new terms and conditions we might wish to impose at the time of renewal. So there is nothing sinister about stumpage rate, as the member puts it, "discrimination," because the calculations are very straightforward — rather complex, but straightforward.

What the final dollar figure per cunit of whatever species of wood is, does not reflect discrimination but rather reflects the conditions of harvest, transportation and quality, grade and species of wood which are being harvested.

MR. HOWARD: Mr. Chairman, that was an incredible performance by the minister that we just listened to. I wouldn't be a bit surprised if the president of Mac-Blo, Calvin Knudson, writes you a letter of thanks in appreciation for standing up so valiantly to support Mac-Blo and the other large integrated companies in the forest industry.

[Mr. Hyndman in the chair.]

He took this question of public scrutiny, the public hearing. We had on the southern portion of the Queen Charlotte Islands, on Moresby Island, not too long ago a renewal of a TFL, and there was no public hearing, even though there was a clamour and a demand for it; no public input, no public concern except that which suited the convenience of, I believe it was Crown Zellerbach. And the people in the Queen Charlottes are still up in arms about that decision — never mind all this guff about public input and public hearing.

In any event, Mr. Chairman, to the minister, the memo from MacMillan Bloedel, which the member for Shuswap-Revelstoke, just read, points out clearly in it that it's the intention of MacMillan Bloedel in that memo so to influence public opinion on the side of Mac-Blo that they'll get their way with the ministry. It clearly states that, steps are outlined: "Our job here," says MacMillan Bloedel, "is to coordinate the overall effort to satisfy public involvement in the TFL renewal in the several communities that must be involved." In other words, MacMillan Bloedel is going out on a PR job to convince the communities affected-and they identify some of them — that Mac-Blo has got the answer and Mac-Blo's TFL renewal should not be questioned. To juggle and adjust the allowable cut figures, the inventory figures, and pulling it in or out as suits MacMillan Bloedel…. The minister has the unmitigated gall, in the face of that, to stand up here and give that kind of defence on behalf of corporations that do that sort of thing. By doing that they deny the position of the small logger or the small operator in the whole scheme of things in the forest industry.

Nothing has changed over the years so long as Social Credit has been the government, except the faces and the names of the ministers. Corporations get larger, become more manipulative and find their support in Ministers of Forests. The current minister is no different that his predecessors in that party were either.

I raised this yesterday not knowing at the time that something else was involved. Another memo by Canadian Forest Products saying that they wanted to manipulate appeared in the Vancouver Sun. It was their intention to adjust and juggle the situation to suit that company's convenience. The document that is referred to in this Vancouver Sun article, written by Moira Farrow, quotes a concluding paragraph. This was quoted earlier and needs to be quoted again, obviously. It says: "'The above objectives will allow the company to indicate to the government through their overcutting that the Tsitika-Schoen area is definitely required for logging and that removing its quota from the TFL would reduce the available quota to such an extent that labour reduction would occur.'"

Now that's Canadian Forest Products saying that they want to manipulate the situation in order to convince the Forest Service or the government that a certain course of action should be followed that is convenient for Canadian Forest Products.

We have an internal memo today by MacMillan Bloedel

[ Page 2693 ]

saying it's their intention and purpose to adjust the figures to pull stuff in or out of inventory to change the allowable annual cut figures, in order to manipulate a situation and convince the Forest Service and the people in those communities that the interest of Macmillan Bloedel should be served.

Why do these companies do that, Mr. Chairman? Why do they do that, Mr. Minister? Do you think they do this sort of thing as an exercise, just to keep their hand in at writing memos? Do you think they do this knowing full well that they're going to be defeated by the ministry and the Forest Service? No way. They do this sort of manipulation and juggling because they have hopes, based upon their past experience, that a compliant minister and ministry will agree with their position. They wouldn't bother with this sort of juggling of facts and figures if they didn't expect that somewhere in the ministry, and maybe from the minister himself, they were going to get favourable treatment. Why go through the exercise if they don't have an expectation that what they are trying to do will be satisfied?

The minister distorted what I said yesterday. He attempted to give to my comments a connotation which was not there, and attempted to leave an impression other than that which I enunciated and set forth. That, of course, is not an activity confined exclusively to that member of the cabinet. Other ministers in this House have done similar things with other statements that people have made. I just want to put on the record that the minister really does not advance his stature very much when he engages in that type of distortion.

Interjection.

MR. HOWARD: Well, he laughs about it, but it's factual.

Yes, I have a concern about the big getting bigger. Yes, I have a concern about the information that I read yesterday from the article by Eli Sopow, which I can't put my hands on immediately, but which showed that over a 20-year period, from 1954 to 1974, control and concentration in the industry moved from a little more than a third of control of the cut in the industry in 1954 to over half in 1974. I have a concern about that and about the small operator and the opportunity that he might have to get into the field, operation or business. I have a concern based upon two things: 1) a genuine interest in it; and 2) a knowledge about what went on in the past — that with ministerial policies in effect, the small operator hasn't got much of a chance to make a go of it. That does not give the minister licence to twist that kind of concern and attempt to identify it as wanting everything removed from the hands of large corporations.

We know that there is a need — and it developed that way — for integrated companies. We also know in that context that the only agency that can place a compression against the excesses of large integrated companies…. The only tranquilizer to them is the tranquilizer offered by government, and it is statutory, legislative and administrative. From what little I've been able to hear this afternoon, and have read on earlier occasions, of things that have taken place in the ministry, there doesn't appear to be that sort of dedication necessary to ensure that the small entrepreneur has got a chance. That's what concerns me. No amount of twisting or adjusting of that, to suit whatever obscure intention the minister may have had, can deter that.

Mr. Chairman, the minister may want to comment about that. In my view he did not adequately put forward any public policy statement to deal with the substance and the essence of what the member for Shuswap-Revelstoke (Mr. King) was saying, namely that there is evidence — and that evidence must exist within the ministry — that large, integrated — many of them foreign-dominated — corporations manipulate the situation to suit their own convenience and their own ends; otherwise they wouldn't waste their time doing it. The minister has not responded to that, to identify to the public what is public policy within his department to curtail and eliminate those excesses and make sure that there's fair play and decent and honourable activity in the forest industry; that's what he's failed to address himself to.

MR. LOCKSTEAD: I'm surprised the minister didn't wish to take the time to reply to the member for Skeena on the many questions he posed.

I was going to change the topic and discuss a new topic that's of great concern in my riding. I had the opportunity of going through the Blues and perusing the answers the minister gave to my questions yesterday, in terms of the plight of the small, independent loggers in my riding and, I would suspect, throughout the coast of British Columbia if not all of British Columbia.

Interjection.

MR. LOCKSTEAD: I hear the member for Omineca (Mr. Kempf) mumbling away in his seat, but he doesn't get out of his chair to speak. I wish he'd get on his best behaviour, because I happen to know his wife is on the premises today.

The minister replied to one of my questions yesterday, and he said, to quote the Blues: "The plight of the small logger is not the result of stumpage rates at all; it's the result of the climbing lumber market." Yet hardly a day goes by that I don't receive a phone call or correspondence from constituents who are being directly affected by layoffs or small loggers who have to shut down because of stumpage rates. I've taken the intervening time since yesterday to document some of these cases for the minister's interest.

I'm sure that the minister has this information. I've got so many examples here, I don't know which one to start with. Let's start with the one on top. This particular independent happens to be working on Texada Island, and on this particular boom of logs the stumpage rate was 50 percent of the total value; this is what the government took right off the top, before interest charges, towing expenses, cruising fees and all of these other expenses that the small independent must face. We're not taking into account his logging expenses.

By the way, at this time I might point out to the minister that the ministry has a habit, after an application has gone in and the ministry has cruised the proposed timber sale, of sending out a form to the logger — not by registered mail, by the way — a long list detailing what in their view logging costs are going to be in a certain location for a certain species. If the logger does not reply to this missive within ten days, then they proceed on the basis that this is what the logging costs of that independent are going to be.

I have a case here where the logger never received, for whatever reason — maybe it's the mails; put the blame where you wish — this forestry assessment of logging costs for that

[ Page 2694 ]

particular timber sale. For the interest of the minister, that particular timber sale number is A10626, cutting permit C; so the minister should have no problem finding that one. The point is that that particular independent, with an extremely small quota — just barely surviving, in any case — didn't have the opportunity even to reply and contest the ministry's estimates of logging costs for that particular operation. They told him arbitrarily: that's just too darned bad you didn't get it; too bad about the mail service, or whatever the reason may have been — we don't know. But the fact is, we do know he didn't receive this until sometime later. So he was assessed at this rate. The fact is that by the time he paid the stumpage interest fees that the ministry charges, all these other costs, that left this logger $26.36 per ccf, including the payment of wages, to log this timber. Of course, he was losing a great deal of money and obviously shut down and laid off nine people in his own operation because of this type of attitude by that incompetent minister.

Talking about interest rates as well, the minister must know that under the Forest Act the Crown owns that timber until it's actually sold. What happens to these guys after those logs are scaled but not sold, particularly if it's small junk, saw and chip material — a lot of which is being left in the bush because of your policies at the present time — is that your ministry charges interest. Even though the logs are sitting there in the water — or wherever they may be — unsold, you're charging these independents interest on their unsold logs while they're waiting and looking for a buyer. You know as well as I do, Mr. Minister, what the situation on the log market is today in British Columbia. Do you call that fair? Do you call that sticking up for the independents? I don't. We document case after case.

I wasn't very happy with your answers yesterday, Mr. Minister, because in a way you misled the House. You misled me, in my view, and I wasn't very happy about that. We went over the Blues in detail with some of the independents in my riding this morning. When you answer questions in this House I think you ought to be a bit more direct and fair. Do you want this documentation? I can send it to you — every inch of it, every bit of it, every sheet of it, and a sack for it.

MR. CHAIRMAN: Order, for a moment. The Chair heard the member for Mackenzie suggest that the minister had misled the House yesterday.

MR. LOCKSTEAD: I didn't say he did it on purpose — he just did it.

MR. CHAIRMAN: You're not suggesting any form of deliberate or conscious…?

MR. LOCKSTEAD: No, he didn't do it deliberately. I'm assuming he just didn't know.

While I have the attention of the minister I'd like to list a few of the complaints regarding this matter in terms of the independent logger. The appraisal system doesn't work accurately, and I've listed a few of these things. While I could have been watching the news last night I wrote a few notes to myself. So I missed the news — I hope I didn't miss much. In any event I'm going to read this list of items out to the minister. I hope that he'll make a few notes and when he gets up to reply I presume that perhaps we'll get more, better and direct answers from the minister on this occasion.

The appraisal system doesn't work accurately because number 3 log scale is not broken down into categories. The minister knows better than I do — at least he should — that there are about five categories in the number 3 log category situation. The minister knows exactly what I'm talking about. This is not taken into account when the people in your ministry are looking at any particular stand of timber anywhere within a PSYU. The cruising system doesn't break down these categories. The camps work only when higher priced logs are selling. At the present time, as I mentioned earlier, the logger is, under certain circumstances, compelled to take out the junk. You know you can't sell that junk. You know very well that the loggers nowadays, under today's market, can't sell that stuff, so they're leaving it in the woods. If they're compelled to bring it in for some reason or other, do you know what they're doing? They're shoving it out of the booming grounds into the straits. This is another topic which we'll get into later. But they're shoving the junk out into the straits. They're logging it; they're bringing it down the hill, all right; but they're shoving it out into the chuck because they can't sell it. The atrocious stumpage rates that you charge on some of this junk at the present time…. This is one of the reasons some of them are going broke, by the way. Loggers are not even given enough time to argue the stumpage appraisal and don't keep all the information that's needed. This is what I was referring to earlier — this ten-day unregistered type of document that they are supposed to receive so that they can have the opportunity to contest the ministry's appraisals.

Talking about interest rates, interest is not considered an expense in logging: interest on deposits to the independent; interest on prelogging activities, which is moneys borrowed from the bank or other sources, perhaps from a broker or wherever; interest on cruising and preplanning, not taken into account; interest while logging — expenses, the purchase of equipment, outlay of these funds; interest on the time the logs are being towed and stored, usually in the lower mainland somewhere or whatever storage ground there may be; and interest, of course, while logs are sold and in storage, which I've just mentioned. But interest is charged on stumpage and royalty accounts, even when the boom is still at camp, while towing, while mills are inspecting booms, as booms are turned down and, once again, while logs are in storage. Storage charges and interest should be logging expenses. They really should be charged, but it doesn't appear on your sheet; it doesn't appear on these sheets that came out from your ministry to the logger, if and when they receive them — particularly for those fellows who go out to the bush for ten days and are home for four — if you give them ten days to reply and contest this documentation you send to them. It is pretty difficult to do that when you're out trying to make a living, ten days on and four days off.

All other businesses deduct interest charges, etc., as part of their operating expenses Yet you and your ministry don't allow even this little bit of leeway to our small independents on the coast of British Columbia. I suspect — although I'm not quite sure, honestly — that this takes place in the interior as well. I'm not sure about that, because I don't have that documentation.

The government does not take the following into its estimate of log costs: storage, interest, moving to protect logs from weather, bugs, stealing, extra inspection, log losses, weather deterioration when logs are sitting around for months unsold while you're charging them interest which

[ Page 2695 ]

they can't pay and have to borrow money from the bank to pay, brokerage fees, etc.

Interest charges on stumpage and royalty accounts should be after two months. Then loggers should be able to apply for release of interest, if not okay and logs are not able to be sold. The loggers should have that right, in my view, Mr. Chairman.

While I am not a lawyer and I am not that familiar with the Forest Act — though familiar enough with it to know what I'm talking about now — I am beginning to wonder if what the ministry is doing is legal, and if the government can charge interest rates on logs legally in their name. Legally, under the Forest Act, the logs belong to the Crown until they are sold. Interest is charged on these logs, to the independent, while the independent is waiting to sell these logs, which can sometimes take months, particularly if it's a poor grade of timber.

In the meantime, we have another topic. We're getting off the beam a bit here, but the minister is very much aware of instances where good sawlogs are being shipped to certain locations at the present time. This accusation will be documented in this House under this debate at a later date. In the meantime I think I've given the minister something to think about for a few minutes, and I would be pleased to forward all this information, and more, to the minister if he's at all interested in the plight and the difficulties that the independent logger in British Columbia is facing today.

HON. MR. WATERLAND: Most of the discussion upon which the member for Mackenzie's arguments were based was built on a false premise. He says that the government owns the logs until they are sold. In fact, this question has come to me a number of times and I've had several legal opinions on the matter. The title to the logs passes to the licensee when the timber is felled, not when it is sold. Usually immediately after it is felled, it is scaled, and the scale determines the bill.

Here's a good parallel, I think. The member suggests that titles only pass when it is sold and that that is the point in time when he should become liable for the cost of it. Take the corner-store operator. Wouldn't it be nice if he could get his inventory into his store and not have to pay for it until such time as he sells his groceries? We as the Crown are selling standing timber. When it is felled the title passes.

However, the member brought up a number of questions related to the appraisal system. Strangely, the member is saying we are charging too much stumpage to the small operator. In fact, the small operator's stumpage is based upon basically the same criteria other people's stumpage is based on — with the various factors, which may be different, taken into account in the appraisal system. The member is suggesting we are charging too much stumpage. I don't know how many times I've read and heard members of that party say that the government should be getting four or five times as much revenue from the sale of Crown timber as we are getting now.

MR. LOCKSTEAD: Why are those guys going broke and laying off people if you're not charging too much?

HON. MR. WATERLAND: Mr. Member, many companies, large and small, within the forest sector, are currently adjusting to market conditions. There is no way we can insulate the small operator, any more than we can the large operator, from the market he has to deal with. If the small operator cannot sell his wood, he is best to not hire until such time as a market is available. To blindly continue harvesting when you can't sell a product doesn't make much economic sense to the small or the large operator. That is one of the reasons we're having adjustments in the industry right now.

On the appraisal system, the member says that the grades are not accurate and don't really reflect the value of the logs. I'm sure that as a result of that member's discussion with my deputy today, together with some of the loggers he was talking about, he understands that we're at the point now of approving that new grading system. I think this will help overcome the problem somewhat. Again, grading and establishing categories of grades of logs is quite a complex undertaking; grades are not easily and clearly defined for all species of timber. This has been an ongoing process. It's been over a year now that we've been attempting to solve these things, and I think we're fairly close to it.

The member says that the appraisals are inadequate because the small logger can't sell the junk, and he should be leaving it in the bush.

MR. LOCKSTEAD: I didn't say that he should be leaving it out in the bush. You're encouraging that practice.

HON. MR. WATERLAND: We're encouraging that? Well, then you're suggesting that the stuff perhaps should be left there rather than being pushed out in the saltchuck. I hope he is not suggesting that we have a different set of utilization standards for the small operator than the large one, because everybody works under the same conditions. If a person doesn't bring out material to the utilization standards which we insist upon, he's billed for it anyway. If he brings it out, he can recover value for it. But utilization standards are set down, and the tightening of these over the years to come will be one of the factors which will help us to alleviate future potential wood shortages.

He says that interest rates are not allowed for in the appraisal. Well, they are not, directly. If we were to allow the interest on the money borrowed from the bank by a small or large operator as an expense allowance directly, the person who has borrowed the most money would get the most advantage from it. The person who manages his business well and doesn't have to carry as large a debt load would have a disadvantage. But these factors are considered in profit and risk and overhead allowances in the appraisal. We can't possibly recognize the borrowings of each individual operator in determining stumpage. It would be, first of all, administratively impossible and it would be very unfair to the better operators who have managed their business without having to carry a large debt load. But they are allowed the general allowances for profit, risk and overhead.

Now the member mentioned the problem of the time period allowed by the Forests ministry to agree or disagree to a particular appraisal or a determination of stumpage. The reason we have to do that is the very reason the member for Shuswap-Revelstoke talked about yesterday when he talked about the large amounts of unbilled accounts which we were carrying a year or two years ago. They're up close to $100 million. We were allowing too much time for discussion between operators of all sizes to what the actual allowances should be for a specific site. So we stopped issuing the individual cost items and we presented a final figure and said: "If you can demonstrate to us that this is not right within a

[ Page 2696 ]

certain period of time, we will accept it." And if he doesn't, then we'll use the figure that we had and then we have a rate for that account so that account can be billed as the timber is harvested. If we don't do that sort of thing, then the amount of unbilled accounts that we have will grow again, We're always willing to listen to operators who have disagreements — and perhaps the technical staff of the Forests ministry have erred in determining what a cost allowance should be. For this reason if they can demonstrate to us that we're wrong in the final figure by going through the various allowances, we can negotiate. We can negotiate that with the small operator, with the large operator, and with all licensees that are working in Crown timber.

Now I think that fairly well covers the particular items the member raised. If there is other information there that he hasn't presented, I'd be very happy to look at it.

But just one final comment on the market logger. As I mentioned yesterday, we did put the market logger on a separate appraisal system as of April 1. This was to be determined by the actual selling price that they have for logs. Now there are still problems there, and as a result of our ongoing and continuous discussions with operators in that classification of market loggers, perhaps there are additional things we can do. But we have to make sure what we do is to his advantage. I mentioned yesterday that we looked very closely at going to a one-month average, thinking that this might help him as well. But as it turned out, currently that would be a disadvantage to him, so we could not do that. Perhaps there are other moves that we can make to help him specifically, but we're not going to help him sell his logs unless there is a market for them. If there is no market, he should perhaps reduce his logging until such time as there is or accept the fact he's going to have to carry the cost of maintaining that inventory until such time as he can sell it. I can't insulate the market logger any more than I can insulate a company in Fort Nelson or in the Kootenays or Revelstoke or anywhere else from the realities of the marketplace in which he must deal. That's not within the ability of any government.

MR. LOCKSTEAD: Just very briefly, I want to point out to the minister his own scaling form No. 149756. It says right on it: "Terms. Net payable upon receipt. Simple interest is charged at prescribed rates to previous month's balance and on overdue accounts." This indicates to me that the ministry knows very well that the logger, under their act, does not own the tree when it is felled, but that the ministry is in complete control of that until the log is actually sold. Should they sell that boom of logs some eight months after it's been put in the water, for example — but it's been scaled eight months prior to the sale of that timber — an interest rate is being charged to that independent during that eight-month period, or whatever the period of time may be. That's just to clarify that point very briefly.

I've got another meeting at 4 o'clock so I won't be too long. But I'll be back.

Interjections.

MR. LOCKSTEAD: Oh, there is the Minister of Health (Hon. Mr. Mair) chirping up again. Why doesn't he go to the meeting of the doctors and leave us be here, instead of chirping from his seat? Why doesn't he go over and meet with those guys? I'm sure they'd like to meet with him.

Just very briefly, I want to put this on record. In the case of this particular sale, after all expenses and deductions — computed by the ministry, not by the logger — this particular individual is left with $26.36 at current prices, to cover the cost of towing, insurance, brokerage, interest and logging. He scrawled across the bottom of this when he sent it to me: "Simply cannot do it." He can't make it. There's no human way on God's green earth that he can possibly make a profit at this kind of rate that you're charging him. As a consequence he shut down. The reality at this moment, in spite of what you stand there and tell us, Mr. Minister, is that this guy, this logger, has shut down operations and laid people off. That's the reality, and what you're telling us in this House today, with all your fancy finagling and footwork, doesn't cover that fact. That reality applies to many loggers on the coast of British Columbia. I will be back to talk to you further about this in the near future — in half an hour, I hope.

MR. MACDONALD: I'm not posing as an expert in this field, but I read paragraph 2 of the internal memorandum from MacMillan Bloedel, which was already read to the minister. I want the minister to comment upon it, because it seems to me to have very serious implications. I'm going to read it fairly slowly for the minister. See if my interpretation is correct.

The recommendation is that they should recalculate annual allowable cut, based on operability plan. Then the memo goes on: "A word of caution here. In our last annual allowable cut calculation, we withdrew some 650 million cubic feet of low-volume timber from inventory."

I'll wait for that conversation to finish down there. The committee has lots of time.

I take that to mean, Mr. Chairman, that MacMillan Bloedel, in the last calculation of inventory for the purpose of AAC, withdrew 650 million cubic feet. In other words, they falsified their inventory for the purpose of setting the annual allowable cut. It seems to me, Mr. Minister, that you should comment in detail upon that. I would think they were hoodwinking the minister in terms of that last annual allowable cut, to the extent of 650 million cubic feet. They then said: "Well, we'll keep that hidden from the Forestry Service and from the ministry. It's in our bank." The paragraph goes on to say: "But this time around, because the TFL is coming up for renewal, we will have to include it, otherwise the Forest Service may well be inclined to classify it as unused inventory suitable for small business opportunities." In other words: "If we don't put it in now, when they're going to check us and our licence is up for renewal, we may lose the timber to small business."

But if annual allowable cut calculations are to be made annually, surely they should be made on the same inventory figures year after year. What about the next time around, Mr. Minister? They say: "This time around we're going to give you the true figures." Whether they're really true or not, I have no way of knowing. "But the year before we hoodwinked you," and the next time around, who knows! They may hoodwink the Ministry of Forests and the minister again. I think that's a very serious matter. I'm looking at it and listening to the debate as a layman, and I think the minister should go through paragraph 2 of that memorandum and tell us just what it means and whether my interpretation is correct — that this was an attempt, by happenstance revealed, by one large company to hoodwink the minister. What about it, Mr. Minister? Am I correct or not?

[ Page 2697 ]

Mr. Chairman, surely the committee is entitled to his explanation.

HON. MR. WATERLAND: The member for Mackenzie (Mr. Lockstead) has left, but I have just one final comment on what he said. He said that the reality is that the loggers can't sell their logs and people are being laid off. Indeed, that is true. No amount of talking, screaming or theatrics on his part will change that fact. It is a fact that we are in very serious market conditions right now. Lumber sales are down. But there are recent indications that they may be coming back slightly. The industry, including the small loggers, is adjusting by modifying their rate of harvest, and I think that is being reasonably responsible. Unfortunately, it does lead to people being laid off. Most of the layoffs that have been planned and which are underway now are relatively short-term. I hope they will remain that way. I hope the recovery that was indicated in the last week or so is a real recovery, or the beginning of a recovery, and the worst is behind us. I'm not sure of that, because it's too early to say yet.

I will agree with the second member for Vancouver East when he says he is not an expert in these matters. He said that inventory was falsified. Well, I don't think inventory was falsified. Inventory changes, because the operability of areas changes constantly. Areas are brought into inventory, and as the economic conditions dictate areas go out.

MR. MACDONALD: They say they withdrew it.

HON. MR. WATERLAND: If the member will listen for a moment instead of flapping his jaws, he might become an expert.

A good example of this is the mid-coast area where we have put a large area of timber outside of the allowable cut because it's not operable. If it can be demonstrated that the technology, the conditions or the value of the wood has changed, that material can be brought back into inventory. What MacMillan Bloedel is saying, as I interpret it…. I have had and am continuing to have extensive discussions with the company about this memo, because in reading it, four particular words disturb me immensely. Those words are "to reduce the AAC," which imply some clandestine reduction.

What we are trying to determine is this. They said that they should include that now, because they fear that the Forest Service, in its interpretation of what is operable wood, will include it. Indeed, if we find wood that is not within an allowable cut, in a reasonable interpretation of what is operable, then we will say: "That should have been in the allowable cut. You didn't include it. Unless you can give us a factual reason why not, that allowable cut can well be removed from your tree-farm licence to be made available for others." But the interpretation of what is operable by the Forest Service may be slightly different from the interpretation of the operator who would have to use it. So it's not a matter of willy-nilly putting material into an allowable cut and taking it out. It does change, and the interpretation of what is operable and what is not is also changing. At the last time their inventory was done, they had determined, through the means at their disposal, that it wasn't operable, and therefore it should not be in the cut.

MR. MACDONALD: That's not what they say.

HON. MR. WATERLAND: Conditions have changed. That's exactly what the memo says, Mr. Member.

MR. MACDONALD: No, it says they did it to change their cut.

HON. MR. WATERLAND: Conditions have changed and they are saying now: "Perhaps we should put it back in because last time it reduced our cut. Maybe we should put it back in now," fearing that perhaps the Forest Service's interpretation will be different, knowing that if the Forest Service determines it is operable, then they have a good chance of losing it. That is the interpretation I put on that section. As I mentioned, my staff and I are continuing to have discussions with MacMillan Bloedel on this subject and their other tree-farm licences as well. Keep in mind, members, that annual allowable cut is not a static thing, either in tree-farm licences or in public units.

The member for Skeena is back. He was commenting again on tree-farm licences. I'm afraid that through things said in this Legislature and in public, tree-farm licences in British Columbia haat we have in the province. I am an advocate of tree-farm licences and I want to see many more tree-farm licences. There is also the equation of treefarm licences with large companies, and various people would like to imply that big is bad. It's not necessarily so. We have good large companies, bad large companies; good small companies and bad small companies. But tree-farm licences have undeniably given us the best level of forest management that we have had in British Columbia, because, I think, of the area-based tenure. I would like to see more of them and I would like to see a lot of small tree-farm licences in the hands of individual groups.

This gets back to what the member for Skeena was talking about yesterday. Some of the native Indian bands have been approaching us for tenures, and we are discussing very seriously with one or two bands the possibility of them getting into a tree-farm licence tenure. But we do have the problem of a very close relationship between the allowable cut available and the manufacturing capacity in place in the industry, which employs people in plants now in existence. I think it's very possible and would be a good idea to have smaller tree-farm licences manageable by, say, Indian bands or other groups that will provide market logs for the existing manufacturing plants. If, in disposing of a tenure in the way of a tree-farm licence, we remove that cut from the industry which needs it, we could have a bad dislocating effect on employment and opportunities within the manufacturing sector that now exists. I don't think we should make moves that will disrupt employment opportunities in established communities and also disrupt communities.

But that type of tenure, I think, has tremendous opportunity, and another reason that it does is that new tree-farm licences are not simply based upon a bid dollar amount. New tree-farm licences do require public hearings and public input under the Forest Act, just as new pulpwood harvesting agreements do. It's a good opportunity for, say, an Indian band, to present a plan to us — and some of them are doing excellent work working with consultants — together with a management program, of what the economic, social and other benefits would be. Others can still come in and compete with them, but through the process of public hearing we don't

[ Page 2698 ]

necessarily have to take the highest bonus bid. If managing the tree-farm licence is going to give a band a good opportunity to improve their employment base — and many native people have a tremendous aptitude for that outdoor type of life and managing forests…. Some of them are doing excellent work now in forest stand-tending work, and their lifestyles adapt to it and their aptitudes adapt to it.

But please, let's not say that tree-farm licences are bad, even if you think big companies are bad, because tree-farm licences give us a good level of forest management. It's something that I want to try to encourage in the future, and perhaps even during this year we'll get into our first tree-farm licence hearings. Hopefully it will be with either smaller companies or smaller organizations, such as Indian bands. We can see greater opportunities for these smaller operators in the very intensive management that benefits all of us by increasing the cut that would be available from a given area.

MR. MACDONALD: Mr. Chairman, that minister, with all respect, really frightens me if he is the custodian of the forest resources of British Columbia. Of course, annual allowable cut may vary depending upon other factors; but MacMillan Bloedel has spelled it right out very clearly to the minister. They've said the reason they withdrew 650 million cubic feet from their inventory was to reduce the AAC. There's nothing ambiguous about that. They did it not for the factors of profitability or terrain or quality of wood; they did it to reduce the AAC, and now they're going to put it back in. The minister then gets up before this committee and says: "Well, in spite of that very plain language which tells us exactly why they did it" — in other words, to reduce their AAC, which they shouldn't have done; the wood was there…. He places a strained interpretation upon those words and says: "Oh, their motives were pretty good and I don't believe that they really mean what their plain words say." Mr. Minister, you're being hoodwinked by the large companies of this province.

I'm not going to speak at any length on this, Mr. Chairman. But when you have a Minister of Forests who is this careless as custodian of the forest resources of the province and can allow the large companies, as evidenced by this memorandum — and there may be other cases; one would think there would be — to manipulate the AAC to suit themselves, then we have a very serious situation in forestry in British Columbia.

I find it very unfortunate that the Minister of Forests, rather than saying that this has revealed a very serious situation and he is going to take immediate action, puts on these words that are very plain…. A lawyer for Mac-Blo might be able to make the interpretation, but it would never be upheld by any kind of a judge or tribunal. The words are very clear. They reduced their inventory figures to manipulate their AAC. They spell it out in the plainest words possible. When it is read to this House, who is the defender for Mac-Blo? It's the Minister of Forests. We need a Minister of Forests who will defend the public interests.

[Mr. Strachan in the chair.]

MR. KING: Mr. Chairman, we've been treated to an absolutely amazing performance by the Minister of Forests this afternoon on a number of points. He said in response to my colleague, the member for Mackenzie (Mr. Lockstead), that as far as he is concerned the small independent operators in the province of British Columbia, despite documentation that their stumpage rates are in many cases higher than that of the large companies and are discriminatory for the same species and for the same relative grade of material…. "If they can't make a profit, let them go out of business. Let them close down." That's what the minister said. He said: "If they can't afford to log it, quit logging."

MR. HOWARD: That's what McGeer said about car ownership.

MR. KING: That's right. The Minister of Universities, Science and Technology (Hon. Mr. McGeer) said: "Let them eat cake. Let them walk if they can't afford the car insurance."

Now the Minister of Forests says to the small people in the industry in British Columbia: "If they can't afford our stumpage, let them close down." We only have about 12,000 or 14,000 unemployed people in the forest industry today. The minister is apparently not content with that; he wants to add to it. In fact, I guess his recent statement in Prince George proves that. He said they'd just have to ride out the slump and claim unemployment insurance. I believe that's absolutely irresponsible and it's a dismal position for the Minister of Forests in British Columbia to take.

The fact of the matter is that the majors in the province of British Columbia who hold the choice tree-farm licences are fortunate enough to control the high-quality timber in the province. Most of the small operators who are having trouble with the stumpage 1n the period of market decline, as the minister outlined, do not have the choice material to log. They haven't got the flexibility of the large company. They haven't got the capital of the large company.

I'm getting a little tired of the minister saying: "Oh, well, you're anti-big business. You're just against them because they're large." That's not true. The opposition recognizes that we need the large integrated forest companies in the province of British Columbia. We need a good mix of companies operating in the forest sector. What we do not need is a monopoly stranglehold by those large integrated companies to the exclusion of competition. That's what we object to. The minister responds: "Well, let them close down. Let them quit logging for a period of time." I guess there are not yet enough people unemployed in the forest industry. I would think that the minister would be trying to find ways to stimulate the industry, rather than watching it go down the tube and sitting there fiddling and presiding over a sinking ship. This is not the Social Credit Party you're running, Mr. Minister. It's the forest industry of the province of British Columbia.

The minister gets up and defends MacMillan Bloedel on their interoffice memo whereby they are clearly going to manipulate their inventory. That's documented in the Thompson report. It's documented in an article in the Vancouver Sun on another interoffice memo by Canadian Forest Products. Their objective was a little bit different, but it was just as clearly and just as surely manipulation with impunity, assured that there would be no reaction from that passive ministry.

This guy wants to tell us that everything's hunky-dory in the industry. Then he gets up and speaks glowingly about how there are going to be public hearings on new tree-farm licences. Isn't that a wonderful thing. Why, Mr. Minister, did you not allow for public hearings on the rollover renewal

[ Page 2699 ]

of the existing tree-farm licences? That's where the bulk of the timber is in the province of British Columbia.

Interjection.

MR. KING: Yes, he did. He said it would be an emotional thing if they held public hearings on the renewals of the tree-farm licences for MacMillan Bloedel, Crown Zellerbach, Canadian Forest Products, Rayonier, ITT — that struggling little free enterprise corporation that has such great difficulty. He said there might be public emotionalism if there was an open public hearing into the question of their tree-farm licence renewal. He granted them an evergreen clause, so there was an automatic renewal, virtually, of their licence, without public hearing. He now stands up and pats himself on the back because, in the future, he may carve out some smaller tree-farm licences that would be available to smaller industries in the province.

What a sorry performance. What a shambles. The minister justifies the stumpage rates. He says they're equitable. What the minister is doing is forcing the small operators, as he says, either to close down or to cream the forest; because all the small guy can afford to do today is cut the solid trees, the prime trees, the ones that won't make prime sawlogs, and leave the sound chip material in the forest. What happens then, Mr. Minister? Who can afford to come back and log a forest that has been creamed in the fashion that you are forcing the small operators to do today?

It's a shambles from one end to the other. As I pointed out earlier, we've had criminal manipulation on the Vancouver log market to the point where a person is now being convicted for taking kickbacks on the log market. The small guy can probably only get a sale for the boom of logs on which he is being charged interest rates by your ministry if he arranges to have those logs exported. I suspect, and I have some reason to suspect, that there is manipulation of the log market in Vancouver to the extent that corporations are scratching each other's backs. They are trading logs on the basis of the species they require; they are declining to bid for booms that could be sawn and utilized in British Columbia. Once three offers have been declined, those logs are available for export out of this province. That happens to be a bit more profitable at this time. So it's taking place through manipulation, as well, at the expense of lost jobs and lost revenue to the Crown and to the province of British Columbia. The best that minister can do is to get up and justify the kind of manipulation that has been documented for him, try to apologize for it and try to excuse the corporations that are in a position to strangle competition in the industry today.

I don't know; I have no confidence in the direction of the ministry or the commitment of the minister to try to bring about some fair play and some competition in the industry in B.C. He doesn't want to answer any questions in a rational way and come to grips with the real meat that's contained in this memo, which in any reasonable person's language and mind certainly indicates impropriety in terms of manipulating the inventory they've been holding in the bank. I have no confidence whatsoever in a minister who would do that. He doesn't want to address himself in any substantive way to those issues.

I move the committee rise, report progress and ask leave to sit again.

[Mr. Davidson in the chair.]

Motion negatived on the following division:

YEAS — 19

NAYS — 28

Mr. King requested that leave be asked to record the division in the Journals of the House.

MR. KING: Mr. Chairman, I'm waiting until the decibels die to a point where I can hear myself. Hope springs eternal from the human breast, and I know that eventually you shall bring the House to order so that everyone can hear what I'm saying.

MR. SEGARTY: On a point of order. Mr. Chairman, there is a lot of noise coming from the opposition side, and I would like to listen to the member. Could you please bring them to order?

MR. KING: I want to give my thanks to the magic leprechaun from Kootenay for protecting my interest, Mr. Chairman. He finally silenced the Premier. He doesn't sparkle in debate, as the Minister of Universities, Science and Communications used to say.

MR. CHAIRMAN: Hon. member, we're on vote 103.

MR. KING: Mr. Chairman, we have gone through some very, very serious material this afternoon, and I think in all good conscience presented a really very valid and well-documented case of abuse in the forest industry. I don't know what else to do at this point, Mr. Chairman, but to express my disappointment and the disappointment of the opposition that the minister has responded in such a very superficial way to the very serious charges that have been levelled against certain firms in the forest industry and against the maladministration of his ministry.

I had really hoped that he would view the evidence which we presented much more seriously and indicate in very, very strong terms that corrective action will be taken. He has not done that, he has attempted rather to simply justify the abuse that has been documented and say: "Well, things are going to improve in the future."

[ Page 2700 ]

[Mr. Strachan in the chair.]

I have a submission from a person in the forest industry that I'd like to deal with just a little bit, because it too makes some very serious charges against the current administration, and it comes not from me in terms of political reaction, but rather from one in the industry who, I think, should be in a position to know. I'm going to read some of the quotes and follow up on some of the points that my colleague from Mackenzie made in the approach that is taken to the stumpage system in the province of British Columbia and how that militates against the small independent operator, as opposed to the larger company who is in a position to absorb some short-term costs when the market is in decline and perhaps in a position to pay the kind of interest on timber which has been logged but which is being held either in booms or on dry land until a market is found for it.

That kind of interest cost, coupled with the stumpage rates that we indicated earlier, makes it virtually impossible for a small operator to survive. The large, public firm with a large capital flow can absorb these costs. What I really had hoped to get from the minister was a recognition that the two sectors of the industry have to be handled in a little bit different way.

The minister says: "Look, it's sink or swim in the market. If they can't hang on and meet the interest payments imposed by the ministry, so be it. Let them close down; let them quit logging." That's like the old Tommy Douglas line about the elephant dancing in the chicken coop and shouting: "Every man for himself." It just guarantees that a lot of the small guys are going to have to go out of operation and quit logging. That which the minister so blithely suggests, that they simply close down for a period of time until the market becomes better, is not a realistic proposal at all, because many of these small operators are in hock up to their necks in terms of their plant and equipment. They have very large payments, and if they're not operating they can't maintain those payments.

They simply cannot survive for that kind of time frame. What happens then? If you are suggesting to them that they close down, they have to surrender their plant and get out of the business, which will, I imagine, result in their quota and their timber sales being taken over by the larger companies that can survive from a capital point of view. I guess if that's what we want, as a matter of public policy, then the minister is heading down the right road. If he is really serious about developing a viable small business sector in the industry and providing it with the opportunity to survive and maintain some balance in the industry, I think he has to look at them in a different way. He has given no indication here today that he is prepared to do that.

I found his remarks that they just better quit logging particularly cavalier. The minister must know that many of them can't afford to close down. If they do, they will forfeit a great deal of their equipment. I would appreciate it if the minister would deal with that aspect of the problem the industry is facing at the moment. If you would deal with that a bit more I would certainly appreciate it.

MR. CHAIRMAN: Shall vote 103 pass?

MR. KING: No, Mr. Chairman. I would hope that the minister would respond to the point that I made. It is an important one for the small sector of the industry. They are coming to me and asking what can be done. I have indicated that I would do my best to voice their concerns to the minister. Quite frankly, I had hoped for some kind of sensitivity and sympathetic understanding. The minister just responds: "Let them close down; let them quit operations." If that is the response the minister wants me to carry back, so be it. I sincerely ask him to give me some indication of whether he plans any particular special approach to this problem.

HON. MR. WATERLAND: Mr. Chairman, I mentioned earlier this afternoon that my ministry staff and I are discussing with all sectors of the industry what things we may or may not do as far as providing some encouragement in these difficult market times. I also mentioned that very recently we put the market logger on a special stumpage rate which gave him considerable advantage. It is impossible for any government to completely insulate anyone in any sector of business from the realities of the marketplace. I recognize the fact that many small operators have payments to meet. I am sure that the financiers, banks or institutions which they borrow from are doing what they can, because it is to no one's advantage to see people go broke.

However, blind continuation of production by all sectors of an industry in the face of markets in which you cannot sell your product is not in the best interests of anyone. I think we had a very good example of that in socialist Sweden a few years ago, when there was a rather serious reduction in world demand for pulp and paper. That country continued to produce pulp and almost ruined their own economy as a result. It certainly had far-reaching, very serious effects on the economy of that commodity throughout the world.

Adjustments have to take place. We are trying to make it as easy as possible, and perhaps we can make additional moves — which are under discussion now — to help particularly the small sector. We do, for the first time ever in British Columbia, have a number of programs specifically directed to the small sector. The member is aware of them, and the small sector has more opportunities now than they have had in the past, including the period of time when the socialists were in government in British Columbia. I recognize the seriousness of the problem and we will continue to work with that sector to try to relieve some of those problems. This discussion is ongoing, and perhaps there are moves which can be made; but I'm not prepared at this moment to say just what they will be.

MS. BROWN: My colleague has allowed me to take his place since I will not be here tomorrow. I just wanted to raise with the minister the business of logging in the Brandywine area.

I think the minister has received some correspondence from me on this and he has responded to it. However, the issue is that it is part of the area that was being used by the school system in terms of the environmental education program. Does the minister now remember? The decision was made by the ministry to allow logging in this area, and a number of schools — certainly School District 41 in Burnaby…. Mr. Dick of that school district contacted the minister and me about the fact that the area was going to be logged at a time when it still was very necessary in terms of the environmental education program. The minister responded saying that all the schools had been contacted and were told to establish committees, which were to work with

[ Page 2701 ]

the Ministry of Forests and each forest district in terms of protecting the area.

That, in fact, has not happened. Since then I have received another letter from Mr. Dick, saying that since 1974 the Burnaby school board has been using this area for its environmental education program. He has sent me copies of a whole file of letters between the department and himself, dealing with the school system using this area in terms of this program. He talks about the loss to the students who use it in a number of different ways and wonders why the decision was made to permit logging in that area without taking this into account, and about why, once it was brought to the minister's attention by the school system, the logging permit was not withdrawn.

Mr. Dick, the principal, who is the coordinator for this particular program, talks about the resource-land and field experience which their students have had — outdoor camping and work experience training. All of this has been going on in the Brandywine Creek area not just for Burnaby but for all of the lower mainland school districts. So it's an area that has been used very extensively by students throughout the entire lower mainland. He says that, of course, they will now have to be more selective about areas as future development proceeds.

He specifically brought to my attention, and asked me to bring to yours, three areas. One area is the western Pemberton Valley, on both the north and south sides of the valley. Currently Meager Creek valley is being sited for exploitation by B.C. Hydro for thermal power, so they're probably going to lose that. He talks about the old Fort Douglas to Pemberton section of the Lillooet Valley, and he says logging there will obliterate the remnants of the park. Again, students are going to be denied the use of that particular area. He talks about Callaghan valley, west of Whistler on Highway 99, and he says this valley provides access to hiking, cross-country skiing and some very spectacular volcanic remnants. Maybe we don't need it in terms of the volcanic remnants now, since St. Helens; but for what it's worth, the schools have been using it. He talks about the lakes which were available for the students in terms of canoeing. Now he says there's some suggestion that private interests are going to be permitted to build a lodge on Callaghan Lake and the students are going to be denied access to that. So the whole program in terms of environmental education seems to be in jeopardy simply because the ministry is not more aggressive in terms of protecting the areas which the students have been using, as he points out, certainly since 1974.

I am wondering whether in responding, the minister would be willing to give some kind of commitment through me to Mr. Dick of School District 41 in Burnaby, who is the coordinator of this particular program, which is done in conjunction with the Ministry of Education, that that area will be protected and that, in fact, the permit which permits logging will be withdrawn now that it has been brought to his attention that the area is not used by just one school and not by just one group of students, but in fact is used by students throughout the lower mainland area.

If the minister has lost his file on this and does not have the updated correspondence or the various reports that were done, I would be very willing to share the information in my file with him. I could probably give him the originals and he would be able to Xerox them for his own use. I would like to have a response on that particular thing.

The second issue which I would like to deal with is the whole business of employment of women in the forest industry. I want to quote directly from a study that was done, and an interview that was done on jobs and the forest industry in British Columbia. This is a Mr. Reg Ginn:

"The employment of women in the industry is just tokenism, despite the pictures of women working in sawmills and logging operations which have appeared everywhere from company annual reports to the Lifestyle section of the Vancouver Sun. Women constitute only a tiny percentage of workers in the industry."

In fact, I know that Kate Braid, funded in terms of her master's thesis by the Ministry of Labour to do research on women in non-traditional occupations, certainly brought to our attention some very incredible statistics about the very low percentage of women. It said that 2 percent of the workforce in the industry were women. Logging operations accounted for less than that, and in sawmills and plywood mills and pulp and paper operations it was less than 5 percent. The only section of the industry where women represent more than a token part of the workforce is in the processing paper industry, such as in corrugated container plants, where women make up 16.4 percent of the workforce. Of course, in the offices of these plants, as in offices everywhere, they are probably 85 to 90 percent of the people doing the clerical work.

I don't know whether the minister has a copy of the report which was done, as I said, for her master's thesis, and funded by the Ministry of Labour, but I would be very willing to share my copy of the report with the minister. It certainly locks into all the studies on women and poverty which are surfacing at the federal and provincial level. In every instance there is a link between the kind of employment that women have, the source of jobs that they have, the very low salaries that they work for and, of course, the poor pensions they get when they do retire, if they get any pension at all, and the fact that a large number of them end up living below the poverty line.

One of the ways in which women are trying to deal with this, now that the information has surfaced, is by trying to break into non-traditional jobs. Certainly one of the areas of non-traditional work where we are told by both the trade union movement and the employers themselves that women can find employment is in the forestry industry. Yet the statistics remain disgracefully low.

I just want to make a suggestion to the minister. That is to present to him the idea of encouraging an affirmative action program in terms of hiring in this particular industry. There was a resolution submitted to the NDP convention — I know the minister is not interested in resolutions submitted to the NDP convention, and the only reason I raise it is that I'm quite sure that poverty among women is an issue which interests everyone, regardless of political affiliation. No one party corners the market in terms of their concern about poverty among women. That's the only reason I'm suggesting to the minister that maybe there are some ideas which he would be interested in, in terms of trying to put into place, in conjunction with the Ministry of Labour and the Ministry of Education, an affirmative action program in the forestry industry. Plans would have to be worked out, certainly, in conjunction with the trade unions involved, as well as with the Ministry of Education and the Ministry of Labour, but there should be target dates and there should be a timetable and there should be a goal which the employer should be encouraged to achieve.

[ Page 2702 ]

I'm not speaking about coercion and I'm not saying that, in fact, they should have their forest licence revoked or any of these things, or that they should even have penalties to begin with, if they fail to meet these goals. I am suggesting it to the minister in terms of encouraging the industry to design a plan which takes into account these very critical statistics which I pointed out to him. Less than 2 percent in logging is just not good enough. Less than 5 percent in sawmills and plywood mills is not good enough. The fact that the concentration is in the corrugated container plants or paper-bag plants and these kinds of things…. Maybe he could start out initially by suggesting the increase of those percentages and then gradually working towards the goal, because a number of things have to happen at the same time. There has to be training. There have to be support services put into place. Obviously it's not going to happen all at once. But what would be a major kind of step in the correct direction would be a statement on the part of this minister that he would encourage the forest industry and the trade union movement, in cooperation with the Ministry of Education and the Ministry of Labour, to set certain specific goals to increase that percentage over a number of years and try, even as a pilot project, to realize those goals, set that plan into place and generally see whether or not that works.

I'm quite sure that the minister is in total agreement that it is not going to be possible to deal with the issue of poverty through welfare. Welfare does not actually touch poverty. You cannot deal with poverty by just handouts. That is not the way in which it's going to be solved. We're never going to have a solution to the fact that most of the people in our country, and certainly most of the people in this province, who are living below the poverty line are poor, and in particular that they are old and poor and women. We're not going to deal with that until we can deal with getting women into the kinds of employment where the jobs pay decent salaries, certainly where they'll be paid better salaries than are being earned in the kind of traditional female job ghettos that women find themselves in at this time. I'm going to be appealing to other ministries, Mr. Chairman, not just to forestry.

Specifically, since we're dealing with the Minister of Forests' estimates, I am beginning my appeal to him in terms of making a public statement, following it up with a commitment to look at the whole area of the very small percentage of women employed in this particular sector of the job market and a commitment to encourage the forest industry to start doing something about this. Affirmative action is as good a way as any to start.

HON. MR. WATERLAND: There were a couple of points mentioned by the member for Burnaby-Edmonds. First of all, regarding Brandywine Falls and Mr. Dick, I believe it was, I vaguely recall correspondence from some time ago and have not had any correspondence from Mr. Dick or the school board since. I would have assumed that the concerns he expressed were being dealt with by the ministry because that is where we make these kinds of decisions as to protection of areas and the multi-use concept. If Mr. Dick has further concerns, maybe the member could suggest that he contact me directly, or the regional manager of my ministry responsible for that area. We in the ministry are always sensitive to other needs of the forest base. However, we're also sensitive to the need to protect the productive forest land base. We can mesh the two in many instances. However, it does require some give and take on both sides. But if Mr. Dick has further concerns he can contact me directly, or my regional manager for Vancouver would probably be more convenient for him for starters at least. I'm sure that his needs and desires will be given every consideration.

Regarding women in the industry, Madam Member, I would like to encourage career opportunities for women in every possible way. I have a bit of a personal interest in the matter, as I happen to have three daughters, two of whom are pursuing careers at the present time, and one of whom is still in high school. I can't dictate to the industry. It's really beyond my jurisdiction, but I'd be more than happy to discuss it with the Minister of Education (Hon. Mr. Smith), the Minister of Labour (Hon. Mr. Heinrich) and others to see if some encouragement can't be given. As far as my ministry is concerned, I would estimate that at least 30 percent of the employees in the Ministry of Forests are women in various capacities. Probably the largest part are in the more traditional roles that women play, but we have a number of lady foresters in the ministry, professional foresters, technicians, research scientists. We have women on, of course, planting programs. Women are being employed more and more on stand-tending work which is under the direct supervision and administration of the ministry. We accept applications from women if they're qualified for particular jobs. No preference is shown between men or women. As long as they have equal qualifications the opportunities are there.

AN HON. MEMBER: A lot of ladies are taking it in university now.

HON. MR. WATERLAND: Yes, and they are increasing enrolments right now at universities and at BCIT in technical courses. There are definitely clear opportunities there that are open to women equally as they are to men. So I would sympathize with the member, and perhaps the Minister of Labour, the Minister of Education, the Minister of Human Resources and myself can explore ways of encouraging more employment in the industry itself, although it's not my direct responsibility.

MS. BROWN: Thank you very much. I appreciate it.

MR. LOCKSTEAD: I might say, Mr. Chairman, that I'm still not too happy with the answers I received over my previous questions to the minister regarding the small and independent loggers and the plight of those people on the coast.

But I'm going to change topics for a short while anyway. We will be getting back to the matter of the independent loggers and the problems they are facing in terms of stumpage and other problems with the ministry at the present time.

What I wish to discuss at this time is the matter of the ministry's White Paper No. 8 dealing with log salvage on the coast of British Columbia. I know the minister is very familiar with this topic. I've received somewhere in the neighbourhood of 50 or 60 pieces of correspondence from people in the log salvage industry on the coast of British Columbia. I have forwarded copies of most of this correspondence to the minister or to the ministry, in one way or the other. At this time I have no intention of going through all of that correspondence in detail. I must say that when I contacted the minister sometime way back in early March, I believe,

[ Page 2703 ]

regarding the dissatisfaction expressed by log salvers on the coast with the contents of a White Paper produced by the ministry in January of this year, the minister was good enough to reply to my suggestion that he arrange meetings along the coast of British Columbia, and that officials from his ministry meet with log salvers from all over to discuss the contents, suggestions and recommendations of this paper. As a result of that, I do know that a number of meetings were held on the coast of British Columbia. While my information is that some of the meetings were not too satisfactory from the point of view of the log salvers, at least the meetings were held.

I could go on at length and in detail, paragraph by paragraph and section by section, on the dissatisfaction of the majority of log salvers regarding this proposed White Paper.

AN HON. MEMBER: Hit the high points.

MR. LOCKSTEAD: Hit the high points. What I would like the minister to do at this time is to assure us in this House and to assure people currently in the industry, that certainly what I consider to be their rights and obligations, and their proposals and suggestions which have been forwarded to the minister and to the ministry in writing, usually — some of it is done very, very well, I must say…. For example, in the correspondence I have here from Mr. Wheeler, who is in the business and who happens to live in my riding, he has done an excellent job of documenting the case for the log salvers in terms of the White Paper.

I might remind the minister, while I've got the floor, that I have compared the recommendations in White Paper No. 8, dealing with log salvage from the Vancouver salvage district…. Dr. Pearse, in the Pearse commission report of 1976, dealt extensively with this matter of log salvage on the coast of British Columbia. If the minister would take the time to peruse the Pearse commission report, starting on page 210, Dr. Pearse goes to considerable trouble to deal at length with the problems in the industry: disposal of salvage logs, etc., etc. On pages 214-215, Dr. Pearse outlines a number of recommendations to the minister on how he feels the situation could be solved or at least improved to the satisfaction of the industry, the people in the industry and the people of the province in terms of a better deal for the people of the province. I'm sure that the minister has read the Pearse report, and he would be familiar with these. I won't document them at this time. We'll see how the minister replies. But at this time I don't intend to read and quote extensively from the Pearse report or from the reams and reams of correspondence I have received from log salvers throughout the coast of British Columbia.

I wonder if the minister would be good enough to assure this House that he is going to seriously consider the suggestions and changes that the people in the industry have proposed, and what those changes may be. I think it's about time you let the people in the industry know what you're going to do. I can't think of a better time, Mr. Minister, than right now, particularly when you've got all that fine help sitting right behind you to help you with the answers.

[Mr. Hyndman in the chair.]

HON. MR. WATERLAND: The member for Mackenzie is referring to the White Paper which we produced on recommendations for overhauling and modernizing the log salvage regulations. As he is aware, when the regulations were brought down for the new Forest Act, the old regulations for log salvage remained in place because we were having considerable difficulty in trying to rationalize some of the regulations which were no longer appropriate to the needs of the log salvers, water users, and the industry as a whole.

Our approach in many of these areas has been through the White Paper discussion route. I believe you mentioned that this was No. 8.

MR. LOCKSTEAD: White Paper No. 8.

HON. MR. WATERLAND: Yes, that was one of eight or nine produced by the ministry. The purpose of the White Paper is to stimulate discussion to try to come to a resolution of problems which need input from various sectors. We had extensive discussion with various people in the log salvage industry prior to producing the White Paper. We had a report from the B.C. Research Council, Dr. Pearse's report, written briefs from salvers and briefs from the RCMP, yachtsmen and other users of the water. The objective is to salvage material, recover values, provide safer waterways and provide opportunities for the salvers to make a reasonable living in doing that.

We did have meetings after the White Paper was produced with the log salvers in various areas. Some of them, admittedly, got quite heated. Log salvers, in many cases, are not the gentlest people in the world. Nevertheless, they perform a good function and they are real individualists. We had written briefs from log salvers as well. We had written briefs from the people whom we had originally received information from. The White Paper route works in that respect, because we got a lot of input.

Right now we are trying to assimilate all of this information to come up with the best possible log salvage regulations, so as not to detract from the position of the log salvers and yet to perhaps accomplish more in the way of cleanup. One of the areas we broke into was attempting to find some way of providing an incentive for picking up the small junkwood which had less value and was really not worth the log salver's time. Perhaps we went too far one way in that; we are modifying that approach.

I can't tell the member what the regulations will specifically contain, because we are just pulling it together. It should be finalized, I would think, in the not too distant future. I am sure that the salvers and others will realize at that time that the input we received from them was listened to and that considerable modification to our original paper will be the result of it. I cannot give the member additional details now, except to say that, indeed, the input was good. It was rather emotional at times. I understand that one of my ministry staff had the windows of his car beaten in or kicked in or whatever during one of these hearings.

MR. LOCKSTEAD: I only did one window. [Laughter.]

HON. MR. WATERLAND: I don't know anything about that. [Laughter.] That incident demonstrates that emotion was one of the other factors which were involved in these discussions.

The final regulations are nearing completion now. They may not satisfy everyone, but they will be, I think, much more acceptable to the salvers than the original White Paper discussions would have indicated.

[ Page 2704 ]

MR. LOCKSTEAD: Mr. Chairman, I would like to just follow up a bit on that. I appreciate the minister's answer. The minister, for example, did not specify when the final regulations will be coming down. Perhaps he can't do that okay.

HON. MR. WATERLAND: Probably by July.

MR. LOCKSTEAD: I appreciate that answer. I do hope that before those regulations are passed by cabinet or the Lieutenant-Governor-in-Council or whatever process is required, and prior to those regulations going into effect, the minister or ministry will check back with the people in the industry, primarily the log salvers.

If there is one accusation that I have heard from all log salvers who have taken the trouble to write, phone or visit me personally in the riding, it is that the ministry talked primarily with the people such as the Council of Forest Industries and Gulf Log Salvage; but the people actually out doing the dirty work, out in all kinds of weather, working hard in all kinds of miserable conditions, risking their lives, boats and funds, were consulted very little. I would very much like to receive today the assurances of the minister that they will be consulted prior to these regulations being put into effect.

AN HON. MEMBER: How about a miracle?

MR. LOCKSTEAD: Well, could you nod your head, indicating that I will receive assurance that these people will be consulted prior to these regulations going into effect?

HON. MR. WATERLAND: Mr. Chairman, as I mentioned to the member, we had a great deal of input prior to the White Paper. We had the White Paper produced and a great deal of input again. We are going to produce regulations. At some point, my friend, the consultation and discussion has to end and we have to make decisions. I cannot assure the member that all the regulations will be taken back for further discussion. It could go on and on forever. Perhaps if there are specific areas of the regulations which we are not quite certain about, we may go back and discuss specific areas. But at some point the dialogue has to end and decisions have to be made; we are reaching that point now.

MR. LOCKSTEAD: I won't be too much longer, but I am concerned that the minister will bring in regulations arbitrarily that will not satisfy the people actually engaged in this industry. I'm deeply concerned, particularly because the original edition of this White Paper deviated so greatly from the Pearse report recommendations. I would hope that before those regulations go into effect the minister will consult — at least a little bit — with the people directly involved in the industry. I don't think it would hurt the ministry, and it probably would not hurt the government, to bend a little and consult with people once in a while.

MR. LEVI: Mr. Chairman, some of us were privileged in having a forum to get some information on two aspects of the industry that I want to ask the minister about. One of them was in relation to his remarks yesterday when he talked about the section 88 options, which are for the silviculture projects and anything else that fits into that category where some offsets will be made. There was a discussion in the other forum of just how that kind of section 88 work would be monitored and whether in fact the ministry had enough staff to really do it; that a great deal of monitoring would have to be done and evaluation of what was taking place.

The reason I raise this is that last year before Public Accounts the issue was raised regarding some of the problems with billing in relation to various companies. The minister said this afternoon, as I understood it, that the reason for that — if I quote him properly — was that there was too much discussion going on between the people who were being billed and the ministry in respect to what arrangements were being made and what was going to be charged. That was a little different than we heard from a gentleman from the Ministry of Forests, Mr. Long, who came before the committee last year and told us that there were some very serious problems. He didn't mention the discussion at all; he mentioned some of the problems related to the operation in respect to the Systems Corporation in terms of losing one of the senior analysts attached to the ministry, who was moved to another ministry. Now perhaps when he gets up to respond the minister will tell us whether those problems are sorted out, because Mr. Long indicated that they thought it might take some three or four years; till as late as 1982-83 before they really had everything on line in terms of being able to deal with computers and with the billing. If that is going to take that long, now that the minister has made the statement about the section 88 options, that's going to require more staff as well. The question is: is the ministry going to get into some problem, or is the minister assured that he's going to get the staff? That is one part of what I wanted to ask you.

The second part relates to discussions that took place in another forum regarding the log market. This afternoon I tried to find some statement that the minister has made in the House about the log market. I don't think he's actually discussed it in the House; from time to time he has made some reference to stumpage, but not particularly the Vancouver log market which looms so large in the whole business of setting stumpage rates, because in terms of coast logging that's where you go to get the price.

Now I am sure the minister is aware that this particular issue was dealt with in the Pearse commission report. He did deal with the coastal log market, and he has a very interesting quote. Although the commission report came down in 1977, he was dealing with a report done by the Forest Service that went before the 1965 standing committee on forestry, which said:

"The tendency towards integration of what were originally separate and distinct logging and sawmilling industries has weakened the Vancouver log market. The log market is still functioning to establish the market value of logs in individual transactions, but it is questionable whether it can now properly be referred to as an open or freely competitive log market."

That was said some 15 or 16 years ago.

The other forum had an interesting discussion about how the prices are set on the coast and in the interior. We were informed that there will be — and perhaps the minister would indicate this — a White Paper coming down in respect to some alternative mechanism of arriving at pricing. We had an interesting observation by the member for Cariboo (Hon. Mr. Fraser) in that committee, in which he was taking a position because he represents an interior riding and was looking at what might be an option for the government. He

[ Page 2705 ]

had something to say about the desirability of really having one market as opposed to two and being able to set some prices which are accurate, current and which perhaps deal from a more international perspective than they do from a local perspective. There were some other discussions as to whether in fact, because of the way that the Vancouver log market operates — and perhaps the minister might want to make an observation about this — there is a considerable loss of revenue to the Crown as a result of what is accepted as a very antiquated….

I see the Premier is clowning it up a little bit. He's threatening me and making eyes at me. My god, you're out of control, man. Get hold of yourself. Yesterday you said that beer makes you light, and now you're floating all over the place.

Perhaps the minister would tell us whether, because of this antiquated system that's been in existence from the word go…. I noticed in the report in 1965 that they observated about the development of this market, that the log market originated at a time when logging and sawmilling on the coast were separate industries, with the sawmilling industries concentrated around the railroad and port facilities of the lower mainland area. That's the system we've stayed with. Later on in his report Pearse was concerned that the transactions that now dominate the log market are not those between independent sellers and buyers, but rather are trades between the large integrated companies. Again, we begin to wonder about the kind of influence that exists in this particular market, the way in which pricing is done, and on the basis of that price, the way in which stumpage rates are set. This is the underlying basis to the stumpage rates. It doesn't deal, as I understand, with a great deal of the market itself. Something like 15 percent of the logs are the only ones going through that market.

I'd appreciate hearing from the minister — and I'd rather he didn't tell us that there's going to be a White Paper down and we should wait for it — his feeling, his philosophy about how you go about getting a good solid underpinning towards the business of setting stumpage rates. That is: what is the best price mechanism one can use, as opposed to the one that exists today, which is generally, I think, in disrepute? So I'd be interested if the minister would like to comment about it.

HON. MR. WATERLAND: Mr. Chairman, I won't disappoint the member for Maillardville-Coquitlam. Indeed, another White Paper is coming very shortly — it should be at the printers by the end of next month — dealing with the stumpage appraisal system. I have concerns about the accuracy of the log market system. Only a small percentage of coastal logs go through that system; but until we can find something more accurate and reliable to replace it with, I'm afraid we're stuck with it. We have the end-value appraisal system in the interior, which is rather complex, but really, I think, reflects the true value in Crown wood. That's the system which was modified during the term of government of the members opposite. They modified the previous system at that time to bring in the full end-value appraisal system. One complaint we have about it is its complexity. I don't know how you can have a completely simple system which really reflects all the varying conditions to be found in logging — chance and manufacturing costs and so on. If it's complicated in the interior, such a system would be even more complex on the coast because of the great variations of grades, species and quality of logs. However, my personal thinking at the present time is that we should try to find a simplified end-value appraisal system which can be applied to the coast. If it can work, it's much more accurate and will reflect, really, the total timber flow rather than having the total price set on a rather small volume.

As to manipulation of the log market, I know this accusation comes up from time to time. I have received no solid evidence that it's happening. I can't say that manipulation is completely absent; I just have not received any evidence. But I'm sure that as a result of the recommendations which will be made in our White Paper, we will be going to a different and hopefully more accurate system. As we do that on the coast, I think we still have to separate the market logger, because he is in a different situation. We have recently, as I mentioned, separated him from the log market prices. If we go to the end-value system, the market logger will still be in a different situation and will probably require a special appraisal system. As market logging in the interior builds up, I'm sure that eventually we will have to have a market logging system for the interior market logger as well.

These are the thoughts at the present time, and I will look forward to feedback from the members opposite on that White Paper when it comes out. It's going to be quite a complex subject and will require a lot of discussion. I hope that we get suggestions back from the NDP as well.

[Mr, Strachan in the chair.]

MR. LEVI: I did ask in the other forum as to whether there was a representative or some input from the department in the operation of that log market. The answer wasn't too specific, so I might put it to the minister as to whether in fact, apart from monitoring it — or is it simply receiving reports? I did ask the minister another set of questions which related to the availability of people in his ministry to do the kind of monitoring that is going to be needed under the section 88 advantages and also, of course, some of the general problems he's had in billing. Is this something that he's now been able to…? In bringing in section 88 will he not be getting into further problems in terms of billing, staffing and this kind of thing? That's what has been a problem for the ministry, and not just over the last three or four years. I gather it's been a problem for seven or eight years, but it's building up. Partly, I think, the amounts look greater because in some respects the stumpage rates have doubled. That's something that's happened.

HON. MR. WATERLAND: I'm sorry, Mr. Chairman, I missed that point.

As we have discussed at length during my spending estimates, we have done a fairly major reorganization of the ministry which is coming into place now. With this new organizational structure in place we're undertaking a complete staffing review of the various areas of operation of the ministry. Whether or not this will indicate that additional staff will be required in various areas, I don't know. We haven't completed it yet. We will be adding people into various sectors this year, one of which is the small business program sector. We are much more confident now. Our problems with changing over to the B.C. Systems Corporation have been largely overcome now and it is running quite smoothly. I think that is indicated by the reduction in our unbilled accounts. As I mentioned yesterday, it went from some $88 million a year ago down to about $13 million now. So I think that is largely in hand.

[ Page 2706 ]

Our monitoring of the section 88 expenses or offsets…. Our ministry is quite capable, at the present time, of monitoring and auditing it. As more and more of it takes place there may be requirements for staff changes, but that will be determined by our staffing review which is taking place at the present time.

MR. LEVI: I did ask the minister how they observe the log market, or are they simply receiving results back? Is that just reports they get or do they have somebody down there monitoring it? Are they able to test out? Have they got some way of testing out the pricing? Have they got bench-mark historical studies that they can rely on? Do they, in fact, do an evaluation of what the log market pricing is?

HON. MR. WATERLAND: Yes, the figures we get are provided for us through the Council of Forest Industries, which keeps an accounting to all the different sectors of the industry that trade in the log market. We do audit those. We don't compile them ourselves, but we do audit those figures. We are reasonably satisfied at the present time that they reflect the trades that take place in the log market. But as for the accuracy of the market itself, that's one of the subjects we'll be discussing in the White Paper, and possible changes to an end-value system.

MR. LEVI: As I understand it, then, you get the figures from the log market; you do some sampling to see whether they are accurate. Perhaps the minister might tell us what else they do in respect to that. After all, they really only deal with 15 percent of the logs being sold, so there has to be some weighting. How do they go about that process, which really reflects…? I realize that it may be primarily accounting, but what kind of system do they use, then, to weight it so that they can get a broader view of the market? Or are they in fact doing some of their own sampling of the market?

HON. MR. WATERLAND: I can't enlighten the member any further, Mr. Chairman. We get figures from the market, through the Council of Forest Industries; we audit the accuracy of those figures. From those we calculate what the stumpage is. We don't determine prices outside the log market except now for the market loggers. We get figures directly from the market loggers as to what they're receiving, on a sample basis.

MR. LEVI: Then let me ask the philosophical or the historical question. Has there been some reluctance on the part of the Ministry of Forests to get into this whole area where there might be an operation…? Don't get excited now. You've got a chip marketing board; now we should look at a log marketing board. The government appears to have stayed out of this. They are basically relying on the private sector to do this very important job. After all, the revenue from stumpage is based on figures that come from the private sector. As we've heard from Mr. Pearse's report, there is considerable interest by the integrated part of the industry, the integrated companies. Does the minister know? He's been in the portfolio for four years now. Surely one would suspect that here we have a small group of people in Vancouver setting the price for logs which are only 15 percent of what's being traded, and yet it really becomes the basis of the way the whole department makes its revenue. If the minister has stayed with the chip board, if the government has stayed with the B.C. Petroleum Corporation, have they not seriously looked at a log marketing board of their own? After all, they're dealing primarily in this respect with Crown land. That's what we're talking about at the moment in terms of stumpage. Is this not something that has been examined? It would be consistent with the way the government is behaving in respect to at least two parts of our resource industry — chip marketing and one of the aspects of the energy field. Is this something the government has examined?

HON. MR. WATERLAND: We have no intention of establishing either a government chip marketing board or a log marketing board. We are moving toward changes in the coastal appraisal system. Our responsibility is to ensure that the Crown's interest in a resource is extracted in an equitable manner, as required by the Ministry of Forests and the Forest Act. That's what we intend to do. But the philosophy of this government is that we will not get in and start having marketing boards be the buyer and the seller of the commodities in the industry. I guess, philosophically, that member's party and our government are not on the same wave length.

MR. LEVI: Well, now that we're down to a little bit of talking about philosophy, you are a member of a government that has maintained the B.C. Petroleum Corporation, which, as somebody pointed out, is a revenue-gathering operation, which is in fact….

AN HON. MEMBER: It's also a different vote.

MR. CHAIRMAN: Order! The member for Maillardville-Coquitlam has the floor on vote 103.

MR. LEVI: You have retained several socialist aspects of the previous government, particularly the B.C. Petroleum Corporation. That is a very interesting way for the government to have a considerable amount of control over revenue. It's part of the resource industry. We're dealing now with the other part of the resource industry. Apparently the schizophrenic attitude of the government is: "It's okay to do it this way, but when it comes to the most significant part of the resource industry we're not going to do it, because that's not our philosophy." Well, we're not sure what your philosophy is. You haven't dismantled ICBC; you haven't dismantled the B.C. Petroleum Corporation. And now you say it's not your philosophy. Yet this is the industry that makes this province tick. It seems to me that that's not a very sound business practice. After all, you're quite happy to sit back and take all the revenues from the B.C. Petroleum Corporation. Revenues in terms of that resource are well over a billion dollars.

I don't think we're going to get much further, Mr. Chairman. The minister has indicated that his philosophies differ from mine and, by gosh, he's right in that. However, we're not schizophrenic about how we feel about our philosophy. You not only talk about free enterprise, but you also want a mixed kind of quasi-socialism, so you retain ICBC and B.C. Petroleum Corporation. Why don't you get rid of them? They are socialist concepts and it would seem to me that it would make a lot of sense to adapt that particular socialist concept of the BCPC to the forestry industry, if the fact is that the government wasn't scared to death of the large integrated companies. Obviously that's what it's all about. That's why

[ Page 2707 ]

we've persisted all these years with this two-bit log market, which is, in fact, manipulated by the integrated companies.

MR. KING: Mr. Chairman, I've been frustrated all afternoon by the silent minister. I've been trying to elicit intelligent responses from him, and now he's biting the microphone. I've outlined for him terrible things that are happening in the forest industry and I haven't received at all satisfactory responses.

Now I'm reduced to having to provide pictures for the minister. That, Mr. Minister, is a log, a very large, round log. I have quite a number of pictures here which I'm going to send over for the minister to view. Would the page take these over to the minister? First of all, I want him to recognize them for what they are. They are logs, and his ministry is in charge of logs in the province. I guess there's nothing so unusual about those logs, except that they are very large prime sawlogs and they should be sawn for lumber. That's where the jobs are created; through the secondary manufacture of the logs in the province of British Columbia.

If the minister will go through that sequence of photographs when they arrive, he will note that they are going through the chipper. They are being pulped, Mr. Minister. That is a sequence of pictures taken in a mill. You go through the sequence of pictures, Mr. Minister. You don't have to count them; I don't want to make it complicated for you. But if you go through them seriatim, you will see that there is a chipper involved at the end. That's what's happening to those prime sawlogs. They are being put through the chipper and they are being used for pulp material.

That does two things. It deprives the province of the full employment that we might expect from the proper sawing of those prime logs. It reduces the employment potential in the industry significantly. In the second instance, the logs, of course, are going to a lower value than as prime lumber. Therefore the Crown is experiencing a loss in revenue return.

I want to tell the minister that that is not an isolated case. That is going on on a regular basis today in many of the mills of the lower mainland. Those pictures were taken at random. The interesting thing is that the operators know that it's wrong. They are in a bit of a bind too. Their main concern was that the location of that chipping of prime sawlogs not be revealed, because they didn't want to get into any trouble; they didn't want to get into a bind. They suggest that the whole industry is in a mess, that this kind of thing is commonplace; but there will be retaliation if they rock the boat and blow the whistle.

I wonder what the minister is doing. Does he have anyone going around to the mills? Does he have anyone monitoring the pulpmills in the province to ensure that what they are using is third-grade stuff, chip material, rather than prime sawlogs?

The other question I wanted to raise…. That's one of them and it's a major problem. The particular firm, as I say, that was the location of that series of photographs requested: "Please don't let anybody know where it was done, because there will be repercussions and retaliation from some of the big people who control the industry if we rock the boat." That, in itself, indicates that something is seriously wrong with the industry. Somebody is in control in a way that they should not be.

Interjections.

MR. KING: No, they're not afraid of the ministry; they're afraid of repercussions from the large firms in the industry.

The other thing I wanted to raise was the whole question of stumpage. I have a rather detailed submission from an individual in the private sector which I want to read into the record of the Legislature.

Interjections.

MR. KING: Perhaps I had better wait and….

MR. CHAIRMAN: Hon. member, there does appear to be a buzz of conversation from all over the room. Perhaps if the members would come to order we could continue to listen to the debate from the member for Shuswap-Revelstoke, who has the floor. Please carry on.

MR. KING: Thank you, Mr. Chairman. The member over there who says that he was not duped, he was stunned, is at it again. The stunned member is interfering.

MR. CHAIRMAN: On vote 103, hon. member.

MR. KING: I was advising the minister that tomorrow I will be reading into the record a very detailed submission I have had on the coastal stumpage system.

HON. MR. BENNETT: Who did it?

MR. KING: Oh, it's no use threatening the individual who did it, Mr. Premier. He did it in good faith, and quite frankly I think he would be afraid to allow his name to stand for fear of retaliation, either from elements in the industry or from the government. That's the kind of climate that exists in the forest industry today, and that's regrettable.

The junior Mr. Bennett, Premier of the province at the moment, maybe doesn't appreciate my remarks, but I want to tell him that there are many small operators in his own riding and in the North Okanagan that are really suffering….

HON. MR. BENNETT: Right! The smallest sawmill in the province….

MR. KING: The man's extremely fidgety today, Mr. Chairman.

Interjections.

MR. CHAIRMAN: Hon. members, order. The member for Shuswap-Revelstoke has the floor on vote 103. I would remind all members that it is contrary to our standing orders to impede a member who has the floor and is speaking to the committee.

MR. KING: They never impeded me, Mr. Chairman. They just disgusted me, that's all. The comic twins there don't bother me too much.

There are a large number of small operators going down the tube in the Premier's riding, in the Okanagan-Shuswap area, as well as on the coast. The Minister of Forests made it very clear today that they are the victims of the vagaries of the market. The problem is that the market is not very….

[ Page 2708 ]

Interjection.

MR. CHAIRMAN: Hon. Premier, the member for Shuswap-Revelstoke has the floor.

Interjection.

MR. KING: The best thing you can do to help them, Mr. Premier, is to resign, because you're no good where you are. You're indecisive, weak and incompetent; you contribute to the monopolization of the forest industry and you stifle competition. The best thing you can do is resign if you really want to help them. That's what you should do instead of running away on every occasion. When anything happens you run away.

Interjections.

[Mr. Chairman rose.]

MR. CHAIRMAN: Order! Will you please take your seat, hon. member.

Hon. members, we are in the estimates of the Minister of Forests. We are discussing vote 103, and it is in our standing orders, both in the House and in committee, that when a member is speaking to the Chair or to Mr. Speaker all other members will remain in their place, listen to the member who has the floor and not impede the progress of that member.

[Mr. Chairman resumed his seat.]

MR. KING: My point is that the minister does not appear to want to listen very attentively to the presentations that the opposition has made. So tomorrow I will, without any editorializing, read verbatim into the record an appraisal of the stumpage system, which we have alleged and which the small entrepreneurs in the private sector allege is today driving them out of business in an unfair and discriminatory way.

The House resumed; Mr. Davidson in the chair.

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

Division ordered to be recorded in the Journals of the House.

HON. MR. CURTIS: Mr. Speaker, I rise on a point of order. In question period today the hon. first member for Victoria (Mr. Barber), who is not in his seat, in developing a series of questions, alleged that the minutes of the Provincial Capital Commission, October 3, 1979, contained certain information. Reference was made to page 4 of those minutes. I will in a moment, with leave, table a photocopy of the minutes of the 141st meeting of the Provincial Capital Commission held on October 3, 1979, at 2 p.m. in the Malahat Building.

Mr. Speaker, there is no page 4. There is no reference on page 1, 2 or 3 of the minutes — and that is the full set of minutes — to the matter on which the member built his questions and his case. I feel aggrieved by that fact. I am sorry the member is not here to apologize to the House.

I ask leave to table the document which tells it as it was.

Leave granted.

Hon. Mr. Chabot tabled an answer to a question on the order paper from the member for Alberni (Mr. Skelly).

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 5:52 p.m.

[ Page 2709 ]

APPENDIX

35 Mr. Skelly asked the Hon. the Minister of Lands, Parks and Housing the following questions:

1. When was Tom Toynbee appointed a director of the Housing Corporation of British Columbia?

2. When did Tom Toynbee cease to be a director of the Housing Corporation of British Columbia?

3. Since February 1977, how many housing units were (a) initiated by the Housing Corporation of British Columbia and (b) completed by the Housing Corporation of British Columbia?

4. How many directors' meetings did Mr. Toynbee attend?

5. During Mr. Toynbee's term as a director and as chairman of the board of the Housing Corporation of British Columbia, what salaries, expenses, or other remuneration did he receive?

The Hon. J. R. Chabot replied as follows:

"1. February 4, 1976, appointed director; June 1977, appointed chairman of the board; May 1978, appointed chief executive officer; December 1978, appointed president; August 1979, resigned as president, remained chairman.

"2. Is chairman of the board of directors at the present time.

"3. (a) 194 and (b) 684.

"4. 26 out of 30.

"5.