[ Page 5489 ]

CONTENTS

Routine Proceedings

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

(Hon. Mr. McClelland)

On vote 65: minister's office –– 5489

Mr. D'Arcy

Mr. Davis

Mr. Skelly

Mr. Passarell

FRIDAY, MAY 8, 1981

The House met at 10 a.m.

Prayers.

HON. MR. GARDOM: I'd like all members of the assembly to bid a special welcome to a number of grade 7 students from Burquitlam Elementary School. They are accompanied by their teacher — my good friend and nephew
Mr. Stephen MacKenzie.

MR. LEGGATT: I'd like to join with the House Leader in welcoming Mr. Brent Robertson from Burquitlam Elementary School. It might be the same class, so they get two welcomes for the price of one this morning.

HON. MR. WOLFE: Soon to be in the gallery are the 12 students who have joined the tour guide staff for the summer season. We expect some 100,000 visitors to tour the buildings this summer. As every member of this House knows from personal experience, the guides do a tremendous job. This year about 40 tours a day — in ten languages, including sign language — will be given by the guides. I would ask the House to join me in welcoming Janice Dumont of Vernon, Michael Doherty of Saltspring Island, Stuart Fyles of Victoria, Dora Nipp of Vancouver, Terry Barnett of Victoria, Colin Stewart of Victoria, Shannon Windlow of Nanaimo, Carolyne Glover, Sylvia Louwman, Alison Peake and Sonya Taft — all of Victoria — and Nancy Cook from Kelowna. Would the members join me in welcoming the guides and tour coordinator Lynn McCaughey. We offer our best wishes for the summer tour season.

HON. MR. BENNETT: In the precincts today is a group of elementary students from Quigley Elementary School in my city of Kelowna, from the district of Rutland contained within the city. They're bright and enthusiastic, and will be visiting the Legislature after their tour. I would ask members to welcome them in advance of their visit, and I ask all members to be on their best behaviour to set a good example for these young students.

HON. MRS. McCARTHY: Mr. Speaker, we've been privileged to hear from Rev. Crowie this morning. I would like to ask the House to also welcome Rev. Crowie's husband and son, who are in the gallery.

MRS. WALLACE: Mr. Speaker, I just want to make a quick introduction of constituents of mine who are visiting today, Mrs. Pat Hocker and her son, and welcome them to the gallery.

Orders of the Day

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

ESTIMATES: MINISTRY OF ENERGY,
MINES AND PETROLEUM RESOURCES

(continued)

On vote 65: minister's office, $194,679.

HON. MR. McCLELLAND: Mr. Chairman, I just wish to finish up the opening statements that I began last evening. I had forgotten a couple of important items that I wanted to bring forward regarding opportunities in the mining industry which are available at the present time. I don't wish to go into much more of the commentary than I did yesterday, but I thought it was extremely important that the House and the people of British Columbia know exactly what is happening in the mining industry and how many jobs are being created by the booming mining activity that is happening in British Columbia at the present time.

Mr. Chairman, so that we won't make any mistakes, I'd just like to list some of the new mines which are, first of all, under production at the present time or about to go into production, and then some of the mines which will probably come onstream in the next four or five years because of the policies of this government. I don't want any mistakes, so I've asked my colleague here to use this little calculator and add these numbers up for me, so we can really see exactly what's happening. We've even got two bookkeepers, one acting as an auditor — he's going to do it by hand, and I have a feeling he'll beat the calculator.

Mr. Chairman, mines which are now being prepared for production and about to come into production in 1981-82 are: the Venus of United Keno Hill Mines Ltd., a gold and silver mine with 45 new employees in northern B.C.; the Kitsault Mine at Alice Arm with 500 new employees; the Carolin mine, gold and silver, at Hope with 102 new employees; the Baker mine, gold and silver, with 38 new employees; Summit Lake, gold and silver, at Stewart with 65 new employees; the Vollaug mine, gold and silver, at Cassiar with 40 new employees; Line Creek coal-mine at Sparwood with 440 new employees; Greenhills coal-mine at Sparwood with 600 new employees; Highmont, copper and molybdenum mine, at Logan Lake with 350 new employees; Granduc at Stewart, which happened to be closed down and is now reopening as a result of the policies of this government, 350 new employees; Taurus gold-mine at Cassiar with 40 new employees; Dolly Varden silver mine at Alice Arm with 54 new employees; Silence Lake tungsten mine at Clearwater, 14 new employees; Brusilov magnesite mine at Canal Flats, 42 new employees; French Peak silver mine — we don't have the number of employees for that one; Skomak silver and gold mine at Greenwood, 18 new jobs; and Table Mountain goldmine at Cassiar, 10 new jobs. How much have we got so far? That's 2,708 new jobs in the mining industry coming on stream this year, with those mines being prepared. I don't want to go back in history too much, but I think the people should know. Don't stop there, because we're just starting.

What was happening during the NDP years? I'd like to put out a list of mines here during the NDP years. Granduc, Britannia, Grand Massett, Bradina, Jordan River, Reeves Macdonald, Canex, Pinchi Lake, and Churchill Copper were the mines that we were talking about during the NDP years. Those were the mines that closed. Every one of them closed because of the disastrous NDP mining policies of the seventies. How many new ones came in? There were no new mines between 1972 and 1974. There was not one. The mines closed, jobs were lost, money was gone and personal incomes were destroyed.

What about those mines which have now seen that good, progressive mining policy can allow them either to modernize their mines or to reopen old ones which had been closed? Let's keep going. We've got 2,708 new jobs so far. Others

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include Sullivan lead and zinc at Kimberley — I haven't got an employment figure for that one; Lornex copper molybdenum at Ashcroft, 350 new jobs; and Highland Valley, Logan Lake, 50 new jobs. Other mines which will be expanding and for which we don't have firm figures at the present time are B.C. Coal at Sparwood, Boss Mountain at Logan Lake, Fording at Elkford, and Parson at Parson, B.C., which created another 400 jobs.

What was happening between 1972 and 1975? Were there new jobs being created? Mine spending was down from 1971 in the amount of $271 million and was down in 1975 to $20 million. It was a disastrous blow to the British Columbia economy.

[Mr. Strachan in the chair.]

Don't forget that you can't have mines unless you have claim staking, because you don't find....

MR. MACDONALD: They were the best three years for mining in the history of British Columbia. Read the papers.

HON. MR. McCLELLAND: Were they?

MR. CHAIRMAN: Hon. member, one moment, please. I ask the Minister of Industry and Small Business Development (Hon. Mr. Phillips), the Leader of the Opposition and all other members who are interrupting to not interrupt. The Minister of Energy, Mines and Petroleum Resources has the floor. He will continue to speak uninterrupted.

HON. MR. McCLELLAND: The tragedy is that the NDP actually believes that they didn't hurt the mining industry. As I said yesterday, it doesn't really matter what the NDP believes, because the people know; the workers in Logan Lake, in the Highland Valley, Merritt, Ashcroft and Kamloops know. They won't forget. They won't take the chance of losing their personal incomes and the lifestyle to which they've become accustomed. They won't forget. They remember what happened to the mining industry in the 1970s.

Interjections.

MR. KEMPF: On a point of order, I'm rising under standing order 61. Mr. Chairman, I wonder if you'd control the Leader of the Opposition. He's talking about heroin treatment. He doesn't want to hear what happened in this province from 1972. He doesn't want to hear about the "Yukon development act" or about what happened to mining in this province in those three and a half disastrous years.

Interjections.

MR. CHAIRMAN: Order, please.

MR. BARRETT: On the same point of order....

MR. CHAIRMAN: Just one moment, please. I must rule on the other member first. He spoke of standing order 61 — relevancy — and actually got into a debate on that, which is out of order.

MR. BARRETT: I'd like to know, Mr. Chairman, how a member can get up under standing order 61 and criticize another member who hasn't even got the floor. He's asking whether or not my interjections are relevant. I thought my interjections were out of order. If we're going to have a debate on this and if the member is questioning whether or not my interjections are in order, there's no question about it: I'm out of order. If he's questioning the validity of them, there's no question about it: they're absolutely valid. He wasted $9 million on a heroin treatment program that had absolutely no effect whatsoever.

MR. CHAIRMAN: Order, please.

Interjections.

MR. BARRETT: Other than that, everything is okay.

[Mr. Chairman rose.]

MR. CHAIRMAN: Order, please.

[Mr. Chairman resumed his seat.]

MR. CHAIRMAN: Will all members please come to order. I think the Chair anticipated your point of order, hon. member, and commented on the point of order that the member for Omineca (Mr. Kempf) raised. Now that we have the attention of the committee, we will return to the estimates of the Minister of Energy, Mines and Petroleum Resources, vote 65.

HON. MR. McCLELLAND: Mr. Chairman, I just want to continue with the list of new employees who will be gainfully employed and looking after their families with very high personal incomes in the mining industry presently and during the next few years. So far we're up to 3,508 new jobs created by a buoyant mining industry in this fiscal year.

Let's move on to the mines which are going to come onstream in the next three to four years: first of all, Valley Copper in Logan Lake, 900 new jobs, the largest copper mine in North America; Goldstream copper, zinc and gold at Revelstoke, 185 new jobs; Adanac mine in Atlin, 300 new jobs; Bullmoose coal-mine in northeastern British Columbia, 450 new jobs; Quintette coal-mine in northeastern B.C., 1,300 new jobs; Bowron coal-mine in central British Columbia, 600 new jobs; Sukunka coal in Chetwynd, 1,160 new jobs; Elco in Elkford, 1,300 new jobs; Monkman coal-mine in northeastern B.C., 800 new jobs; Babe coal-mine at Port Clements, 267 new jobs; Kutcho copper and zinc mines in northwestern British Columbia, 500 new jobs.

Interjections.

MR. CHAIRMAN: Order, please. Hon. members, standing orders indicate that a member must be allowed to speak uninterrupted. Would the committee please come to order. The minister continues.

HON. MR. McCLELLAND: Mr. Chairman, I get some gratification from the way the debate goes. You can always tell when the members opposite are nervous and are ashamed of the policies they had in the past, because they attempt to disrupt the House, they chatter back and forth, and they make rude and snide comments. They again have the feeling that if they can somehow get your mind off what happened between

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1972 and 1975, if they can get you to ignore what happened between 1972 and 1975, it will go away.

I wouldn't ask the member over there to withdraw it because it's unparliamentary language. But it's the kind of thing I was just talking about. They have no defence, so they make personal attacks. He calls me a phony. I wouldn't ask him to withdraw it, because coming from that member, it doesn't make any difference.

It won't go away. The facts are that from 1972 to 1975 major mines were closing down in this province. The mining industry was going to the Yukon Territory and other places. We were losing skilled people, who had developed the best mining skills in the world right here in British Columbia. They were going to the Yukon and all over the world to get away from British Columbia, where there was no more work. We saw the tragedy of the brother of one of the ministers in that government having to write a full-page article in the Vancouver Sun, in which he said in effect — and I'm paraphrasing a bit here: "I'll be happy when the day comes that I can get back to the mining industry, and my brother can go back to being a lawyer!'

The fact is that under the current policies, which encourage environmentally sound development of the mining industry, we will be creating 11,265 new jobs; that doesn't count the mines I've mentioned for which we don't have total job figures at this time. There will be over 11,000 new jobs in the next five years, compared to the policies that destroyed an industry and that destroyed the economy of this province. Those jobs could be in jeopardy unless the policies allow the orderly development of one of our most important industries to continue. I say to those people who want us to forget: we won't forget; the workers won't forget; the investors won't forget; the small businessmen of this province won't forget.

MR. D'ARCY: I contemplated asking that the members show me the same courtesy which they showed the minister, but I realize that — if it occurred — that could leave the House in a total uproar.

I want to touch on a number of issues, hopefully with some sort of sweet reason. I notice the minister neither last night nor today dealt particularly with energy and petroleum matters, so I'm going to be making some comments in those areas. I hope that after consultation with his staff he may be able to respond in a positive way.

I want to deal briefly with the segment of the minister's responsibility that is very healthy, as he's outlined: the mining industry. I note that it's not the first time that the mining industry in this province has been healthy. Some of the government's own statistics published over the last few years indicate that in the first five years of the present administration the value of mineral production in this province has increased by between 110 and 115 percent. I think that's excellent for the first five years. We don't have any definite information for 1981 as yet. That 110 to 115 percent is very nearly as much as the value of mineral production increased in the three years from 1972 to 1975. I hope that the mining industry in this province....

Interjections.

MR. CHAIRMAN: Hon. members, permit me for a moment to cite Sir Erskine May, who says: "Good temper and moderation are the characteristics of parliamentary language. Parliamentary language is never more desirable than when a member is canvassing the opinions and conduct of his opponents in debate." I would commend that not to the member who is speaking but to other members who are attempting to participate in debate.

MR. D'ARCY: Thank you, Mr. Chairman. In any event, I suppose the point needs to be made that the mining investors I know of, within this province and outside it, would be quite surprised to hear that it is the government which is making their executive and investment decisions; because the minister talks about all the numbers of jobs that "we," to quote him, have created. I would be quite interested to hear anyone out there who actually thinks that the government is making investment decisions. In fact, the mining people I talked to tell me — to a man, and occasionally to a woman — that the sooner this government has no capacity any more to make any decisions on anything, the happier they will be. It's interesting that last night and again this morning the minister seemed to love — at least in the amount of verbiage he used — to refer to the area in the central part of the southern interior, which has a lot of mining activity. It's most favourable to see that. He seemed to be referring a great deal to the Kamloops and the Highland Valley area. I can't imagine why.

It's interesting that the other day I was speaking to some mining people who were actually — maybe this is neither here nor there, Mr. Chairman — from the management side. They lived in Kamloops. Their operations, of course, were in the Highland Valley. We were talking mining and development matters, and they said to me: "How are things going in Kamloops?" I said: "How do I know? You live there." "No, that's not what we mean, D’Arcy. We want to know how things are going in the by-election. You know what we mean." I said: "I really couldn't say. I understand from the press that it's a horse-race. Who knows?" They said: "That's not our assessment. Our assessment is that it's a one-way street. It's no contest." I said: "That's very interesting." And they said: "Yeah, the issue in Kamloops is that people in our industry and people in the neighbourhoods want to kick the government."

The minister is talking effusively about the way people feel. I don't pretend to have any idea what the electorate of the Kamloops area is going to do in a by-election or in a general election. I don't pretend to know or have any idea, and I don't want to attempt to know. I suppose the results will show. In the event that the candidate for the party of that government over there does not win the election — that's possible; some people win, and some people lose.... In the event that the candidate for the ruling Socreds is thrashed at the polls, I suppose the minister is going to say that the mining community let him down. I don't know what he's going to say. He pretends to know what people are thinking in Kamloops. I certainly don't pretend to know. I merely quote this little anecdote from people who happen to be engaged in the mining community and who just happen to be on management's side.

The minister spoke in great detail about what he alleged was a rash of closures, decreased production and downturn of investment in the year 1975. If that sort of thing was going on in 1975, we can only assume from the minister's remarks that it had nothing to do with world metal prices or with federal and provincial government policies in Canada. There was indeed a downturn in 1975; there's no question about it. It struck the province of Ontario very hard, which had and has a

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Conservative government. It struck the province of Alberta very hard, which had and has a Conservative government. It struck the province of Quebec, and indeed every mining region in Canada. If the minister can demonstrate that the effect of the downturn in metal prices in 1975 was more severe in B.C. than elsewhere in Canada, I'd be interested to see that sort of demonstration. Neither he nor any of his colleagues has been able to produce such documentation. As we know — I suppose this is true of any government — when things are rough in a particular industry, they say world conditions are at fault. When things are good, it's because of the policies which they claim to have.

Mr. Chairman, I want to talk briefly about an interest I have. I suppose it would come initially from my own constituency, but it does affect the South Okanagan in particular, the Similkameen area and the boundary country, as well as the southwest Kootenays. This is what I hope will be a governmental decision which will guarantee a supply of industrial power to those parts of the province that I have indicated, as well as guaranteeing a supply of utility power at reasonable rates. As we know, after many years of discussions and negotiations and a great deal of expenditure by both Cominco Ltd. and the government through the old Energy Commission, a proposal was put to the government last year for the transfer of certain power-generating facilities from Cominco Ltd. to its wholly owned subsidiary, West Kootenay Power. Even though it had been approved by the Energy Commission, that proposal was turned back by the government with no reasons given. I gather that under the minister's new Utilities Commission there are continuing negotiations. I want to wish the minister and the government well in consummating those negotiations so that the uncertainty regarding industrial and utility power for commercial and residential operations that presently rests over the southeastern part of the province is resolved.

One of the proposals bouncing around which the minister did not mention is Cominco's proposal for a ferrosilicon magnesium plant in Kimberley in the riding of Columbia River. There's no question that that proposal, along with all the other Cominco manufacturing operations in the southern part of the province, is based on a supply of low-cost industrial power in the same way that the existence of the aluminum company in Kitimat is based on low-cost industrial power. The major difference there, of course, is that Alcan is not required to provide utility power whereas Cominco and West Kootenay Power are.

I want to briefly touch upon the Vancouver Island pipeline proposal. It is my personal view that governments of the past — Social Credit and New Democrat — have not pursued this proposal with the kind of vigour which I personally believe they should have. This government has had six years to get on with it, and now they are getting on with it. But I have asked in the House before, and I ask again, why the minister, if he's so sure — and he may be right — that the B.C. Hydro proposal for a crossing is the best alternative, is so afraid to have public scrutiny and cross-examination of that proposal by expert witnesses on environmental, economic, energy-use and load-management grounds. I don't believe the process would take very long. I believe that if the minister is correct in his decision, he would be justified. At the present time there is a cloud hanging over that decision, because it arbitrarily gave to a Crown corporation something which was desired to be bid on in an open field by the private sector.

I also have criticism for the minister and government for not clearly defining the market area that is to be served. I believe that the supply of natural gas to all reasonably densely settled areas of the province is a right of the people and the industries located there, and it's a responsibility of government to supply them with this fossil fuel in the same way that the government of B.C. supplies different parts of the province with schools, hospitals, roads and ferry service where needed. I believe the marketing franchise area should be clearly defined. It should include the Howe Sound area, theSunshine Coast, the Powell River area, the Gold River area and the northern part of Vancouver Island. For a long time it has been the responsibility and mandate of the government that it give its major energy to B.C. Hydro to provide electricity to all parts of the province at a postage-stamp rate. I believe that natural gas, whether through public agencies or the private sector, should be supplied to all parts of the province, and that industry, businesses and individuals with homes should not be put at a cost-of-living or competitive disadvantage with other parts of the province. I welcome the decision to proceed, but I would say that the minister has been politically bananas in the way he's gone about it.

Perhaps one of the concerns the minister and the government had was not the concern that has been speculated on in the press about the relationship of West Coast Transmission to the federal government and Petro-Canada and the whole issue of the federal government's heinous actions, in my view, in taxing our supplies of natural gas both domestically and for export purposes. Maybe this wasn't so important in the minister's decision as the press has speculated. Perhaps the minister and his major energy arm were concerned about opening to public scrutiny the whole issue of delivering energy to Vancouver Island. There had been some suggestions that there could be major technical problems with the Cheekye-Dunsmuir transmission line. There has been speculation — not denied — that there may be severe cost over-runs. There has been speculation that the government and its energy arm have seriously miscalculated on the basis of load management of supplying energy to Vancouver Island. Perhaps the reason is that if there was clear examination or public scrutiny of the arbitrary decision to award the Vancouver Island line to B.C. Hydro it may open up a number of other issues which the government has not done well on, and simply does not want opened up to public scrutiny. I personally think that, when government has made a mistake, they should be up-front about it and should level with the public. I think that the public would respect them more. All of us — government politicians and opposition politicians — would respect them more.

I would also like to mention to the minister that the Utilities Commission, which the minister had such great hopes for when he set it up last year, has been bypassed on a number of these issues. The Utilities Commission, for instance, is given the right to decide on the details — nuts and bolts, the size of the pipe and that sort of thing — after the major decision has been made.

We saw the same thing on the question of the water rental increases that affected every energy user in the province. It took place in the first quarter of this year. I realize that they weren't strictly the domain of this particular minister. The fact is that the people who felt those increases were the users of electrical energy from B.C. Hydro, West Kootenay Power and Light, and Cominco Ltd. Once again, the Utilities Commission was given the right to discuss the application and

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how these water rental increases would be passed on to consumers in this province — whether they be industrial, residential or commercial — but the Utilities Commission was not even asked about the decision to raise the water rates. That was an arbitrary action of government. It was a straight tax increase. Perhaps the minister was outvoted in cabinet on that issue. Perhaps he thought that should have gone to the energy commission. I will point out again, though, that having a Utilities Commission in this province is really kind of pointless if all they get to rule on are the little left-over nuts and bolts, after the government itself has made all the major decisions politically.

I want to express once again the objections I have, and objections that have been expressed to me by the Employers Council and industries in B.C., over the special pricing arrangement that the minister has made with Ocelot Industries. We on this side welcome the kind of industrial development that Ocelot is proposing, but we deplore the action of the government in making a special pricing deal for one particular company or industry that they're not prepared to make for other industries. I would point out that the forest petrochemical manufacturing industries in this province, taken as a whole, are far more important than what we're likely to get from the proposals put forward by Ocelot and other companies such as Carter Petroleum.

I don't believe in special deals. I think that a public resource is a public resource. The price that is available on a wholesale basis should be available to each and every one. There should be equal opportunity all over the province to each and every company and industry. I don't believe in special deals regarding hydroelectric power for certain industries or companies, depending on where they're located in the province, any more than I believe in special taxation arrangements for individual operations because they may or may not be special friends of the government. That sort of thing is a relic of the last century and we shouldn't see it in B.C. An industrial development should be justified on the bottom line; it should be able to stand on its own two feet. We should not be expecting the rest of the economy to subsidize that development. This province is rich. The economy is healthy. We don't need special deals.

I hope that the minister will talk in his remarks about his ministry's involvement in the government's coal development policy — assuming that the government has one and that the Minister of Industry and Small Business Development (Hon. Mr. Phillips) has told him about the policy. As we know, coal development in this province is not just involving the major discussions which are taking place concerning development in the northeastern part of the province. Coal development involves the Crowsnest area, the Quinsam proposal near Campbell River and, of course, the liquefaction and thermal power proposals in the Hat Creek area. Perhaps the minister could tell us if he is having his staff or consultants — within or without his ministry — examine the whole question of a coal royalty policy. I'm not suggesting here that the royalties are too high or too low. I'm simply saying that in my discussions with other provinces, Alberta and Saskatchewan in particular, that examination of the question of how coal royalties should be computed and applied is an ongoing thing. It has been my impression that the B.C. government and the ministry that the member for Langley (Hon. Mr. McClelland) represents has been singularly uninterested in this question.

I would like to hear the minister's comments on whether or not he has approved, endorsed or supported the additional motor-fuel taxes being applied to propane, and going in before the member for Saanich (Hon. Mr. Curtis) brought down his budget this spring. While any motor-vehicle conversion from gasoline to propane might have cost the individual, depending on the kind of vehicle, anywhere from $1,000 to $1,500 — or the company, if it was a fleet operation — the fact is that a substantial saving could be made in the cost of fuel consumption by a conversion to propane — I'm not talking about natural gas but about propane, Mr. Chairman. Evidently the government — or at least the Finance minister — thought that this must have been a bit of a loophole. We had thought that this was an encouragement — up to that point, because there was a price advantage for the use of propane in motor vehicles — and that the government was, in fact, encouraging people to move away from gasoline and into a product which is manufactured partly from petroleum and partly from natural gas. We find that the government raised the propane motor-fuel tax to the point where it's no longer price-advantageous to convert from gasoline. Maybe the minister wasn't even aware of this, maybe it just happened, but I would like to hear his comments on that.

Mr. Chairman, I'm going to be going into greater detail at a later time on the question of real property taxation policy for the minister's energy arm, B.C. Hydro, of which he sits on the board of directors. I realize real property taxation, once again, comes under the Minister of Finance. However, several years ago, when the member for North Vancouver–Seymour (Mr. Davis) was responsible for B.C. Hydro, I raised the question of real property taxation of Hydro installations, and he replied in the House that he fundamentally agreed with my point of view. The point of view I expressed, and one expressed by a great many municipal and school board officials throughout the southeastern part of the province — in the West Kootenays and in the Revelstoke area, as well as in the Peace River — was that B.C. Hydro — or the government, I should say — has an inconsistent policy as far as real property taxation is concerned, and that is that projects built under the two-river policy pay no property taxes at all, unlike projects which B.C. Hydro has inherited from its predecessor, the B.C. Electric Co. Because of some strange government decision made along the way, projects not built by Hydro under the two-river policy pay school taxes only, but don't pay real property taxes; on the other hand, the government has traditionally charged private sector power producers full taxation.

It has been my opinion and the opinion of municipal and school board officials from the West Kootenays, the Revelstoke–Mica Creek area and from the Peace River that there should be a consistent policy for real property taxation for all property owned by B.C. Hydro. It's unfair that the city of Vancouver, the city of Victoria and all of the communities with office buildings, substations, works depots and so forth should be receiving grants in lieu of property taxes at the regular rate in the same way that the provincial government pays property taxes as grants in lieu of the regular rate, as though the property were privately owned. There is absolutely no reason whatsoever why Hydro, as a Crown corporation owned by all the people of the province, shouldn't do the same thing.

It's totally inconsistent that some areas with hydroelectric or thermal generating facilities should receive revenue from the school tax and general-purpose taxation rate and others

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shouldn't. It's totally unfair and unrealistic. So I would hope that if the minister agrees with me, he will go to his colleagues on Treasury Board and make that rather simple change. I believe that, as a percentage of B.C. Hydro's operating cost, we're talking about a very small amount of money, but that amount of money would be of great significance to the property tax payers in certain parts of the province.

Mr. Chairman, before relinquishing the floor, I would like to talk briefly about the concerns I have about the proposals to develop the coal deposits in the Hat Creek area. I'm not here to say that either the liquefaction proposal or the thermal generation proposal should never go ahead. I do say quite emphatically, though, that I would like this minister, perhaps in consultation with his colleague the Environment minister (Hon. Mr. Rogers) to be prepared to reassure the public of the province — and not just those who live in the Ashcroft–Hat Creek–Salmon Arm–Kamloops area, Clinton, Lillooet and so forth — that these developments are not going to be economical and environmental disasters.

Mr. Chairman, if you were a traffic cop, I'd say that green light was the right thing, but you're suggesting that you want me to cool it for a little while. I will conclude my remarks for the time being. But I want to indicate that I live in an area which until 1945 suffered from a great deal of environmental damage due to the lack of knowledge of the day, in terms of a smelting operation in Trail. Since 1945 there have been vast improvements in atmospheric control. Today we are down to about 35 tonnes of sulphur emissions a day from about 350 tonnes in 1945. There are virtually no heavy-metal discharges. But while there's nothing in the air to retard the natural growth of vegetation in the Trail area today, we still have problems with soils that were contaminated three-quarters of a century ago in some cases. That's how long this kind of environmental damage can take to be rectified.

The B.C. Research Council, which is not a political organization, has said that the emissions from the thermal generating plant, let alone the liquefaction plant, will greatly exceed those emissions which came from the Trail operations in the bad old days.

We are dealing with the agricultural, beef, and fish-spawning industries in the Thompson and its tributaries and, of course, with the question of the health of human beings. Personally I do not want to be told: "Well, it's all right with scrubbers. There's not going to be 600 tonnes of sulphur a day; there's only going to be 200." The fact is, that's far too much.

I don't say that these problems can't be overcome. I say that the minister in consultation should assure the public of B.C. that the agricultural industry and the quality of life will not be harmed and that the land is not going to be poisoned and people injured. That price is simply too much to pay for energy development.

HON. MR. McCLELLAND: So we don't get behind, I'd like to respond to some of the comments the member made in his opening statement. I'll try to be brief and deal with them in the order he presented them.

I'm a bit concerned over the comments about mining. I still believe that the members opposite don't quite understand what happened in the mining industry in the seventies and what could happen again if the same kinds of policies were ever reintroduced.

He said that this is not the first time that mining has been healthy in the province. That's true. Mining was very healthy for many years. But the period 1972-75 was one of the first times that mining was ever completely unhealthy and about to die. The policies during that period destroyed what was effectively a decade of growth and development in the mining industry, so that it had to begin all over again.

The member said that revenue was at its highest level ever. I wouldn't argue with that; the figures show it. I think you could talk about almost any industry, commodity or wage over a ten-year period, and because of inflationary pressure you would see that all those things were probably at record levels in terms of dollar amounts. But those dollar amounts don't really tell the story. Dollar amounts, particularly in the mining industry, are no good without new mines coming on stream. Unless those new mines come on stream and unless prospectors get out and get new claims and develop new finds, those revenues will not continue, because sooner or later there'll be no mines to bring you those revenues. New mining spending plummeting to almost nothing, claim-staking plummeting to almost nothing, and no new mines coming on production over those years are the sorts of thing that affect the mining industry; revenue alone isn't enough.

The member asked me why yesterday I talked about the Highland Valley and used it and the Kamloops area as examples for some of the figures I quoted, particularly about jobs. I think we produce in the Highland Valley about 5 percent of all the copper in the world. It's a very significant area of development. Right now there are about 2,000 employees working actively in the mines in that little valley. There are a number of new mines coming on, which will effectively double or maybe triple the number of workers employed in those mines. That's why I chose one of the most important mining areas in the province in talking about what's happening in the whole of North America — and it has world significance as well.

The member talked about why there was a slump in mining — if indeed it happened — during those times. He questioned whether or not it did happen. I only say again that it did. If it didn't happen here, or happened here because of world prices, as the member attempted to say, why was the Yukon booming during that same period? The Yukon, during those three and a half years, had the greatest increases in interest and development and work in the history of that territory, mainly because we were closing down and investment was moving to the Yukon.

Some people called Bill 31 "the Yukon development bill, and that's exactly what happened. If world prices went down here, why did they go up in the Yukon?

MR. SKELLY: For what metals?

HON. MR. McCLELLAND: He says the same thing was all over the world. How come the Yukon was a different world?

MR. SKELLY: Selective facts.

HON. MR. McCLELLAND: I wouldn't have responded if the members didn't keep tossing things across the floor. I don't have a selective memory about what happened to the mining industry in this province. I could read you the names of mines which closed down again, and ask those members

[ Page 5495 ]

opposite if they deny those mines closed down. Can you deny that? No, you can't, because it happened. Can you deny that those jobs were lost? Can you deny that many of those jobs went to the Yukon Territory? You can't deny it, Mr. Chairman, because it happened.

The member was concerned about a guaranteed supply of power first of all for his own constituency, and secondly for the province. We share that concern that there be a guaranteed supply of power for both the short term and long term for all British Columbians — industrial consumers and domestic consumers as well. That's what we're working towards in attempting to develop a long-term plan for the supply of electrical energy for this province. I can tell you that it's not going to be easy to make sure that all of the energy which could be used in this province is made available. It gets harder and harder, as the member pointed out, to develop energy sources, but it has to be done.

I can tell you now as well that in terms of attempting to guarantee a secure supply of industrial power, we have two problems: making sure that those people who are already in business in the province have a secure supply, and attempting to develop a supply for some other industrial developments which may want to come to British Columbia. We have today, over the desks of my ministry, the Ministry of Small Business Development, and B.C. Hydro, requests for power which exceed the total amount of electrical power being produced in the province today — 9,000 megawatts of requests for industrial power for this province.

MR. SKELLY: Publish them.

HON. MR. McCLELLAND: Mr. Chairman, it's not my business to publish them, but I think they will be published during the course of the B.C. Utilities Commission hearing which will start this year into the Site C dam question. So those figures will be made available, probably by the companies themselves, some of whom may wish to appear, and by British Columbia Hydro and others.

The member says why don't I give somebody permission; I don't give anybody permission to publish these things, but I can tell you that some of them are inquiries on a confidential basis of companies who don't wish other companies to know their business. That member not being a businessman, and not knowing much about business, probably doesn't understand why an industrial concern may not want to give out all its company plans to a rival company. That would happen all the time.

Basically we're working for the same things, I hope. That is a guaranteed supply of power for all our citizens and those who come to the province. The Cominco situation concerns the member, and I was pleased to see he wishes us well in coming to some resolve in that situation. He's right: the B.C. Utilities Commission is presently working very closely with Cominco and West Kootenay Power and Light to attempt to resolve that situation in a way which will do two things: make sure Cominco has power to secure its industrial strategy, and that the people served by West Kootenay Power and Light are given a guaranteed supply and a reasonable price for the power they need to develop for their own lifestyles.

The next item raised by the member was the Vancouver Island pipeline. I won't go into it in too much detail right now. A little later I'm sure there will be more questions asked about the Vancouver Island pipeline. I was pleased to see the member say that he welcomed the decision to provide natural gas to Vancouver Island, because it is a decision which has been a long time in coming, and I believe it's long overdue.

The member asked me why we're afraid of public hearings. We're not afraid of public hearings. The member raised some questions about the economic and environmental aspects of this pipeline. There will be a full public hearing into all of those aspects. That public hearing will be conducted by the British Columbia Utilities Commission and it will make recommendations to the government which the government will consider at that time.

I'd just like to remind the members, though, that there were public hearings into the Vancouver Island natural gas pipeline in 1972. A vast amount of information was given to those hearings about the same two routes that we were considering this year: the route from the north, coming down from Williams Lake and over to Vancouver Island near Comox; and the southern route, which will come from the Tsawwassen area over to a point near Ladysmith. We had available all that 1972 public hearing testimony. Except for dollar figures, much of it was exactly the same information which would have been made available today. So it's not fair to say that the matter of location has not been subjected to public scrutiny. It has been subjected to a great deal of public scrutiny.

In making a political decision, which I believe governments have a responsibility to do, we took advantage of all of that evidence, plus further evidence which has been given to us since that time. I sometimes get a little confused about how the opposition thinks and feels about certain things like this. I know the member wasn't here — nor was I, as a matter of fact — in 1972, but we had the chance to supply natural gas to Vancouver Island at that time. Public hearings were held. I think five applicants put forward their positions at the time. Shortly after those public hearings, the government changed and the New Democratic Party became the government of this province. I don't know why the New Democratic Party decided to scrap the idea for a natural gas pipeline to Vancouver Island, but the fact is that that government had the full opportunity at that time to make a decision based on the public hearings which were held then. They did make a decision: to deny the people of Vancouver Island the right to natural gas. I don't know why they did that, but those are the facts.

I guess the member for Rossland-Trail (Mr. D'Arcy) is speaking for the opposition when he talks about public hearings into the location of this pipeline. I can only assume that, since he is the opposition spokesman for Energy. Again, there is some confusion about how the NDP feels on this matter. During the course of those public hearings into the natural gas pipeline, the NDP of that day — and they still have the same leader — made some interesting comments about the public hearings. I refer you to a headline in the Province of Tuesday, February 22, 1972: "Dump Hearings and Give the Pipeline Job to Hydro." Dump the hearings; don't have any public hearings. I'll just read a couple of sentences from this: "Opposition MLAs" — that's the NDP — "urged the government Monday to abandon the proposed public hearings commission on a natural gas pipeline to Vancouver Island and award the project to B.C. Hydro."

One of the people who spoke in that debate was Alex Macdonald, the NDP member for Vancouver East.

Interjection.

[ Page 5496 ]

HON. MR. McCLELLAND: He sure did. He mentioned a lot of things. What he said was: "Dump the public hearings and award the project to B.C. Hydro."

I just happen, by some strange coincidence, to have a few other newspaper clippings about that. "NDP Wants Hydro." That's a Vancouver Sun headline, April 30, 1971. "Opposition Leader Dave Barrett called on Premier W.A.C. Bennett today to develop a natural gas pipeline to Vancouver Island as a public enterprise, instead of leaving it up to private industry. He suggested that there be no public hearings." No public hearings. "Private Bid Will Cheat Us — NDP." Mr. Barrett, Mr. Macdonald and others had some nasty things to say about Westcoast Transmission.

So I guess it's not much wonder that some people would get confused about the flip-flop of the policy between now and then, then and now, tomorrow and yesterday and the next day. The facts are that the NDP wanted the government to award the pipeline project to British Columbia Hydro and they didn't want public hearings on it. But those public hearings were held — I wish to say that clearly — and a lot of evidence was given regarding the routes for that pipeline. I don't want to reflect on a past vote or ruling from the Chair, but sometimes I do wish we were allowed to bring charts in here, because I have some I'd like to show you. But darn it, I can't bring them in. I'll have to try and get along without them.

Again I want to re-emphasize, Mr. Chairman, that there will be full public hearings into all of those environmental concerns, into all of the economic concerns and into all other aspects except location for the Vancouver Island natural gas pipeline. Those hearings will get underway this year.

The other question from the member was that there wasn't any clearly defined market area. I've asked the member to get hold of the B.C. Hydro route nomination report, because the market area is defined in there. The market area is from a landing point near Ladysmith. The line will go north to serve Nanaimo and Campbell River. It will come south to serve the southern tip of the Island — primarily Victoria and the other areas here. It will also go across to Port Alberni.

AN HON. MEMBER: Powell River?

HON. MR. McCLELLAND: No, not at this point. Powell River is not included. I'd like to speak about that and about the needs. The member said that we should also have a defined area for the Howe Sound–Squamish–Powell River area. Perhaps if I explain what the government policy is in terms of natural gas extensions, I could answer the question that way. It is the government's intention, as quickly as possible — we'll be presenting a policy paper to cabinet very quickly — to have a rapid extension of natural gas services all over British Columbia. The first extension is to Vancouver Island. We decided to go ahead with Vancouver Island before that policy is firmly in place, because Vancouver Island is the last large population area in the province which is not served with natural gas. It seemed to us an emergent situation to make sure that natural gas got to Vancouver Island as quickly as possible.

The next step following the policy of how incentives and other things might be created for extension of natural gas services will be to decide on a priority basis which areas of the province should have the benefit of that extension next. I remind the Chairman and the members that the Powell River–Sunshine Coast area is an important area of British Columbia, but it isn't the only one left without natural gas service. In my estimates last year the member for Shuswap-Revelstoke (Mr. King) made a very strong plea for extension into Revelstoke. I've had representations in this committee for extensions in the Columbia River valley and a whole lot of other areas. What will happen is that the government will develop priorities for the extension into all of those other areas.

I ask the members to consider whether or not it might make more sense to develop an extension into the Squamish–Sunshine Coast area from the existing mainline rather than developing a very expensive new 250-mile pipeline at the same time that the main transmission line — which is almost fully looped except for about 50 miles — is very seriously under capacity. One of the concerns I have is that if at the end of our current export contract the National Energy Board should consider in its wisdom either not to extend that contract or perhaps to restrict it in some way, we could find ourselves with a lot of very expensive pipeline in the ground that is not being used. I just ask the members to think about that a bit, Mr. Chairman.

I think the member asked how important the federal government's involvement was in the decision we made. The ownership of Westcoast Transmission wasn't a factor at all. The National Energy Board's involvement in setting rates in cost of service for Westcoast Transmission was a serious consideration that we made. It's public knowledge, and all members know about the decisions which have been made by the National Energy Board. Frankly, in the last couple of years, the National Energy Board has not given much concern for British Columbia's interests in making its decisions. That's a consideration we had to put out front as well.

The member talked about the British Columbia Utilities Commission being bypassed in terms of the water rental increase. The water rental increase was a government decision made as a financial decision. I don't have the figures, but it's been an awful long time since those water rates — perhaps 40 or 50 years — were adjusted in any way. I don't see much difference in B.C. Hydro asking the Utilities Commission to pass on those rates than I see in B.C. Hydro or others asking Inland Transmission or the B.C. Utilities Commission to let them flow through the increased taxes which were put on by the federal government. It's normal utilities practice. It's done all the time. If the companies are to survive, especially when a government puts on a tax over which they have no control, then they must have the opportunity to have that flow-through done.

There's no doubt the British Columbia Utilities Commission will have its hands full in attempting to regulate B.C. Hydro for the first time. It's going to take them a while to get a handle on what is a giant company, but once they do I think the public will be much better served than they have been in the past in terms of some greater measure of accountability for British Columbia Hydro. They are also going to have some very serious decisions to make in recommending major policy and industrial development initiatives to government.

[Mr. Davidson in the chair.]

With regard to the matter of pricing with Ocelot Industries.... I hope the member is listening to this, because he's pretty confused about it. He says he doesn't want any special deals with companies, but I think he does. We want

[ Page 5497 ]

some special deals. We don't want to sell our natural gas, which will be processed and then primarily exported out of the country, for the domestic price which everybody else is paying right now. I invite the member to have a look at this booklet which was put out by the ministry called "A Pricing Policy for Industrial and Processing Applications of British Columbia Natural Gas." It outlines a formula which will be followed in using natural gas as a feedstock for the kind of development that Ocelot is developing in Kitimat at the present time. Basically, what it does is take the difference between the export price of gas and the domestic price of gas, have a close look at what kind of industrial benefits will be delivered to the people of the province in terms of capital investment, jobs and further processing that might be done, and establish a formula to reach either the level of the domestic tax, but never lower, or some place in between. I'd like the member to have this in case he hasn't had the opportunity.

The member says that the Employers Council has talked to him and said: "Hey, other industries want the same deal." I'll bet they don't, because it's a lot higher than what they're paying for gas now. I don't think they want that deal at all. In fact I think industry would be screwy if it was saying: "Hey, charge us more than we're paying now." Their shareholders would run them out of the country. I think the member should understand that what we've done is developed a policy in which we will get full value for our natural gas, and I think that's a policy that every member on that side of the House would applaud.

The member asked what the Ministry of Energy, Mines and Petroleum Resources involvement is in coal development. We are extremely involved. We chair the committee which develops the guideline process for any new mine development, coal or otherwise. I sit as co-chairman of the coal committee of government with my colleague Hon. Don Phillips. Our ministry is involved from step one all the way through in developing new coal mines and any other mines in the province. The member asked if we are examining our coal royalties policy or our coal income policy. The last level of value was set in 1978, and I think it's fair to say that all revenue matters of government are always under review between the Minister of Finance and the interested ministries.

With regard to the Hat Creek question, I have no hesitation in responding to that member's request for me to give a very strong assurance that the environmental concerns will be addressed and that there will be no development without full public hearings, without full opportunity for all the public to get involved and without clear and definite proof that the emissions which come from any development in Hat Creek will not measurably harm the environment to which we've become accustomed. I can give that assurance categorically.

The proposal for the thermal station at Hat Creek is a far different proposal than was first contemplated by British Columbia Hydro. At a cost of some $600 million extra on the project, there are scrubbers included in that proposal which I'm told — and which will have to be substantiated at public hearings — will bring the level of emissions well within the guidelines set by the pollution control branch. I suppose those public hearings will determine if that's not enough, and then the determination will have to be made as to whether the project goes ahead or whether more money is spent to further lower those emission levels. That is a decision that will be made at the time those considerations are under consideration.

As far as the liquefaction program goes, this summer I hope to have a report from the steering committee which is presently looking into the very preliminary studies of liquefaction. Unless the same kinds of conditions can be met, it's not in British Columbia's interests to accept less than the best, and I give the guarantee that we won't.

I think, Mr. Chairman, I have covered all the questions the member gave to me.

MR. DAVIS: Mr. Chairman, I enjoyed the minister's remarks last night, and again this morning, especially those relating to hard-rock mining. He was right on in describing the way in which the metal mining industry in this province progressively closed down, prospecting dropped to next to nothing at all, drilling fell to one-third of what it had been a few years earlier, marginal mines were closed and certain mining areas closed out altogether. The period from 1972 to 1975, in other words, was a disaster as far as have hard-rock mining in the province was concerned. It's been reviving. It takes a long time to revive an industry of that character. It's accelerating now, and fortunately the remaining cloud on the horizon — possible actions on the part of the federal government which might tend to duplicate those of the NDP in the earlier years of the 1970s — is not likely to be forthcoming.

We've recently had some assurances from the federal Minister of State for Mines that there won't be any new policies aimed at conservation, restricting risk capital or reducing the incentives to develop our mining industry across Canada. So we don't have to worry about that unduly.

I want to turn to energy, Mr. Chairman, and address your attention to that. I'd like to begin by saying, as emphatically as I can, that energy in Canada is in an unholy mess. Per person, we're the world's greatest energy hogs; the minister has been saying that around the province. Yet we go on subsidizing its use as if the world's fuel resources would last forever.

We pay foreigners twice the price for their oil that we're prepared to pay our own producers here at home. We drive foreign capital away, when we don't have enough savings to look after our own energy development program and our own requirements. We're crazy when it comes to dealing with our own energy situation. We're committing economic suicide, certainly, but it is typical of our modern government leadership — at least in a number of administrations in this country — that we're at least trying to be sophisticated about it.

The fact is that we're playing politics. We're playing short-sighted politics at that. We're looking for votes rather than results. We're pushing consumerism when a good dose of old-fashioned supply-side economics would do the real job for us. We're pushing consumption when a drive towards greater self-sufficiency would not only generate more jobs in Canada but would work towards better conservation as well. We're especially foolish when it comes to management. We put too much faith in government, ministries, regulatory agencies and Crown corporations. We continue to make policy pronouncements as if talking is everything. We're light on planning and poor on production. Yet governments and their creatures grow and the private sector is crushed under a load of taxes and fresh regulations. Free enterprise is no longer free, and what used to be our main engine of economic progress is grinding slowly to a halt.

Effectively we have nationalization in this country on top of Canadianization. Take the national energy plan announced by the Trudeau government last fall: Ottawa, not the produc-

[ Page 5498 ]

ing provinces apparently — or so the plan seems to indicate — will run the show from now on. Taxes on the petroleum sector will go up, not down. The depletion concept will be done away with, and large government grants will go only to companies which are preponderantly Canadian-owned and Canadian-controlled.

Petro-Canada, owned outright by the federal government, will be given the inside track. Subsidized by the nation, it will soon outrank Exxon, Shell, and Gulf Oil combined. This is bad — at least the latest study from the EEC certainly indicates this — from an international relations point of view. It discriminates suddenly and substantially against foreign capital investing in productive enterprise in this country.

Canadian investors, of course, get a substantial break. Outsiders get the opposite. Petro-Canada, as an instrument of federal policy, has the right to take over 25 percent of the oil and gas found by anyone else, essentially private enterprise, in the high arctic and offshore without any compensation whatsoever.

This is nationalization, on top of Canadianization. It's something which some Canadians will say is long overdue. In other words, it has political backing in certain quarters. What really doesn't make sense is the companion policy of keeping the price of energy down in Canada when the cost of replacing current consumption is double or triple that of the production which we are now wasting by consuming it as if it were going out of style. The politics of Ottawa's national energy plan may be understandable to some, but the economics of that plan are awful, ridiculous, upside-down and anti-conservationist. They encourage consumption when consumption should be constrained. They discourage the development of new resources when we should be exploring — developing new sources instead. They use up existing supplies without a thought for tomorrow. They subsidize the use of high-priced foreign oil with Canadian tax dollars when the same dollars, applied to further exploration and development in this country, could give us greater self-sufficiency and security overall — not to mention jobs, larger Canadian content, greater activity, greater employment and greater income at home.

Canada is the only country nowadays that subsidizes the use of OPEC — Middle-Eastern — oil. Western Europe never did. The European Economic Community countries always paid the world price for the oil they bought from outside. Japan, well known for its economic perspicacity, did likewise. Countries like Australia and New Zealand pay the world price. The United States, after some years of delay and procrastination, pays the world price for its oil imports today. All of the western world does now, with the single exception of Canada. If Canadians managed their own affairs intelligently enough they could be self-sufficient in all forms of energy, oil included. This is really consumerism at its worst. It's short-sighted consumerism. It's buy votes today and forget tomorrow. It's play the majority game to get elected, and tell the people the bad news later. Certainly that's what the Trudeau administration has done. It's pit the central provinces against Alberta, because Albertans don't support us — that is, the federal government now, anyway. It's political cynicism of the worst kind. It's economic suicide for the rest of us, to boot.

When it comes to pricing, I'm all for pricing at replacement cost. Today's barrel of oil should be sold at a price which will provide enough revenue to put another barrel in its place. Don't dig back into history to find out what the barrel you're using today cost historically. Look ahead. Look at what it will cost to find another barrel in the Beaufort Sea, off the mouth of the MacKenzie River, from our tar sands — which are great in quantity in Alberta — from the heavy oils which are abundant in both Alberta and Saskatchewan, or from offshore in the Atlantic region. That's what a replacement barrel will cost. That's the true cost to ourselves and future generations of Canadians. The barrel which we're using up thoughtlessly today shouldn't be priced at yesterday's costs. It should be priced at the cost of its replacement.

Of course, the producer makes a profit; but as long as that profit goes back into exploration, development, new pipelines and new processing facilities, we're covered. We all benefit. We're looked after in 1985, and even in the year 2000. We're being statesmanlike in economic terms and physical terms. We're continuing to put new facilities in place, and we are assuring ourselves of a degree of security of supply which is largely absent from our so-called Canadian energy planning process today.

Many of the criticisms which apply at the national level can also be aimed at our activities here in British Columbia. Philosophically, our government is against big government, but B.C. Hydro is our Petro-Canada writ large. It's already much larger on our provincial energy scene than Petro-Canada is ever likely to be at the national level. It's got electricity. The biggest growth commodity sector is already cornered. It's Mr. Big in the distribution of natural gas. It will shortly be moving into coal, not only for the generation of electricity, but perhaps for the production of liquid fuels as well. B.C. Hydro, a totally B.C. government-owned corporation, has been given a mandate to develop all the remaining hydroelectric sites in the province. There's no room left, as far as I can see, for investor-owned power companies or even for resource-processing industries to do their own thing locally, in the B.C. interior and in the north. Big Hydro will do it all for us. It will cover the entire province with a massive power grid. It will charge the same average cost-based rates everywhere. It will wipe out any local advantage insofar as unique or distant power sources are concerned, and all this will be done on the advice of a few people at the top in B.C. Hydro — people who don't have to get elected and who certainly don't have to pay attention to the workings of the everyday marketplace.

I personally believe that B.C. Hydro's gas activities should be split off from its electricity business. These should be administered by a separate government agency, or, better still, by a private corporation regulated by the B.C. Utilities Commission. Then there would be some competition between gas and electricity — for instance in the space-heating business. Then the same people who strike our power rates won't be formulating our local gas rates as well. Gas and electricity would compete for our business and we, as consumers, would have some choice, a modicum of choice, between energy services — gas and electricity in that case — something that 60 percent of the population of British Columbia doesn't have now.

I went after the federal government for its upside-down policy with regards to pricing because I was critical of its two-tier pricing insofar as oil and gas are concerned. I wanted the federal government to move to replacement cost when it comes to pricing production at its source, and I wanted the consumer to pay this higher cost not only because it will act as a brake on consumption, but also because it will provide

[ Page 5499 ]

investment capital for the finding and harnessing of fresh sources of supply. But we're doing the same thing in British Columbia; we're two-pricing our natural gas. We have frozen the price in the field, and we're spoiling our own B.C. consumers by subsidizing the use of this non-renewable fuel to the tune of between $100 million and $200 million a year.

We're killing the exploration and development end of the business in the Peace River area by refusing to give our investors a reasonable return on their capital, and we're postponing the day when B.C. users of B.C. gas will pay the full cost of services, which they're receiving in a heavily subsidized way today. Our field prices have been frozen for three and a half years, ever since the fall of 1977, when I was still Minister of Energy, Transport and Communications. Field prices in Alberta meanwhile have continued to rise. They've risen even though Ottawa has kept the brakes on prices in the oil and gas industry generally. They're now at least 50 percent higher — 50 percent better from the producer's point of view — than our B.C. field prices; and remember that our costs tend, on average, to be higher in northern B.C., in our northern foothills areas, than they are in most parts of Alberta. It's no wonder that our drilling rigs are moving out. They're moving to Alberta in some measure, but more are going south to the United States, where that market for new gas is more predictable and where the net profit margin in the field is now three to five times the return in Alberta — not to mention B.C.

Back to government involvement, Mr. Chairman. Thanks to the New Democratic Party, we have a government-owned B.C. Petroleum Corporation. It doesn't drill for oil and gas and it isn't in the oil-refining business yet; but under our laws it is the only buyer of gas produced in this province, and it is the monopoly seller of natural gas in B.C. It follows that a petrochemical company therefore cannot do what is commonplace in Alberta and generally true in the United States — namely, buy natural gas direct from the producer in the field, have it transported by a regulated utility and price it in its own production as it sees fit. It has to go through the B.C. government and the government-owned B.C. Petroleum Corporation instead — and remember that the B.C. Petroleum Corporation really doesn't have a mind of its own; it acts on instructions from Victoria. It's the government which is making these business decisions and, being an elected body, it has to be doubly sensitive on such issues as windfall profits, obtaining a maximum return for the Canadian taxpayer, B.C. content and so on. These are among the reasons why many petrochemical plants, perhaps nine out of ten, are still being built in Alberta and why industries using large quantities of natural gas are slow to locate in British Columbia.

There is a further matter of concern, however, and it relates to the exceptional regulatory powers of the B.C. Utilities Commission — powers carried over from the old Energy Act passed by the NDP. Under the present act, energy-using industries of any size are still regulated in much the same way as public utilities traditionally are. Big Brother is looking over their shoulders too. This is another reason why energy is less of a magnet for industrial development in B.C. than in Alberta and Saskatchewan. If we're really concerned about energy supply, then quantities, duration and prices can be administered by way of B.C. Hydro, Inland Natural Gas, Columbia Gas — regulated utilities, in other words, regulated by a utility commission — and let the utility commission tell them what their rates to these energy-intensive industries should be. So we don't have to regulate the energy-use industries as well. Such duplication is unnecessary. It's regulation on top of regulation, and that's bad.

What really bothers me is this: we have big government getting bigger not only in Ottawa but also, at least currently, at the provincial level. Crown corporations are certainly taking over from the multinationals. So at best we're replacing one kind of giantism with another. Worse than that, we're using our Crown corporations — our Petro-Canadas and our B.C. Hydros — to do battle for us when it comes to pitting one level of government against another. Even private enterprise governments are using this approach, unfortunately. They are squeezing out the private sector, and they're giving the consumer less and less say by doing so. I hope we can reverse this trend. But when there are two levels of government battling over their share of the resource pie, there doesn't seem to be much hope unless a rational resource-sharing formula can be developed by our first ministers working with a broader and longer-term public interest in mind.

I don't have much more time, Mr. Chairman, so I'm going to list a number of recommendations which I've already tried to justify in a paper which I recently wrote, entitled "Some Further Thoughts on an Energy Policy for British Columbia." These recommendations are essentially as follows:

1. Demand-growth in B.C. can be cut in half if we adopt energy conservation measures which are in effect elsewhere. The most effective weapon is price. Prices should at least cover replacement costs.

2. The B.C. government should guarantee all producers of new oil produced in this province the going world price for their product.

3. B.C. should consider reverting to a percentage royalty system for the collection of revenue at the wellhead. Patterned on established practice in Alberta and generally in the United states, it would make exploration and development for natural gas more predictable from a financial point of view. Adoption of this recommendation would, of course, mean the end to one of the major functions of our B.C. Petroleum Corporation.

4. Power-intensive industries in remote areas should be free to produce their own energy requirements.

5. B.C. Hydro and B.C. Coal should be encouraged to build a medium-sized thermal plant in the East Kootenays for the conversion of low-grade waste coal into electricity. This power could be sold at a profit to adjoining utilities in the United States until it was needed at home here in British Columbia.

6. Projects involving the export of energy, and particularly energy from renewable sources, should be approved for construction as long as they produce fuel or power which is clearly surplus to our provincial needs and generates revenue which can help to reduce rates to consumers in B.C. I believe this is presently the policy here in Victoria.

7. Free up the energy sector. Oil should be deregulated as much as possible, certainly in the manufacturing and distribution end of the industry. Electricity and gas, as far as they are produced, transported and distributed by utilities should be sold on a total-cost-recovery basis. The electricity and gas functions of B.C. Hydro should be separated corporately in these forms of energy and sold, insofar as possible, in competition with one another.

8. Our tax bias, if any, should favour renewable sources of energy over non-renewable ones. In the case of pipeline

[ Page 5500 ]

companies, right-of-way taxes should provide revenue to the province comparable to that paid by other industries using Crown land for commercial and industrial purposes.

9. The present B.C. Utilities Commission Act should be amended in such a way as to remove its high-handed powers in regard to increased seizure commission management. Also to lift from the private energy sector the threat of regulation, and make it easier to finance energy projects which require certification by the commission, under the present act.

I could go on at length, especially where the shortcomings and overkill aspects of the present B.C. Utilities Commission Act are concerned. However, I'll leave this to another time.

I'm sorry I have to say this, but the minister hasn't seen fit to introduce legislation which would make our present B.C. Utilities Act more acceptable to members on both sides of the House, I believe, and certainly as far as I'm concerned. He promised to do so last fall. I hope these important changes won't be long in coming.

On your behalf, Mr. Chairman, I'd like to introduce a school from your riding — 55 grade 7 students from Heath Elementary School in Delta. The two teachers accompanying them are Mrs. Linda Waterman and Mr. Chuck Carignan.

HON. MR. McCLELLAND: I'll be brief, but I do want to respond to a few of the questions raised by the member for North Vancouver–Seymour (Mr. Davis). Perhaps I'll start with the recommendations that he gave at the end, because I believe they cover pretty well all of his questions.

First of all, I can only agree wholeheartedly with the remarks that the member made about the national energy policy, Petro-Canada and other federal considerations. I've made a number of speeches both inside and outside this House. Perhaps we could discuss that further as our estimates move along. In a very brief comment, I do believe that the national energy program, while its stated objectives can be shared by all Canadians, will not achieve its goals. In fact, it is bound to failure. Rather than allowing us in Canada to achieve any measure of energy security by 1990, I believe instead that the act puts an impediment on our opportunities to ever achieve energy security at all.

I move on to the questions raised by the member dealing particularly with my ministry. Firstly, on the price of natural gas, I agree with the member that increases should have come earlier and that we are late in getting increases to the price of natural gas at the domestic level. The wholesale price and the field price are inevitable. However, I have asked the B.C. Utilities Commission to hold public hearings on this matter. I would have expected that those recommendations from the B.C. Utilities Commission would have come to me last fall. But again the introduction of the national energy program created such uncertainty within the industry — both the oil and gas industry and other industrial consumers of natural gas — that they requested the British Columbia Utilities Commission to hold further hearings so that they could revise their submissions. That was done. I have that report now. I think I received it yesterday or the day before. I have not yet had a chance to have it reviewed by my staff or by myself, but I hope to be able to do that very quickly and make recommendations to cabinet as a result of that report.

Certainly the conservation measures, which the member requests in order to cut demand growth in British Columbia, must be put in place. We must move as quickly as we can. I agree that price would be one of those considerations to reduce demand. It's proven all over the world now, I guess, that a higher level of prices does cut consumption of energy, but there are other measures which also have to go with that price in order to ensure that it's a long-term solution and not just a demand cut over the short term.

The matter of reverting to a percentage royalty system for the collection of revenue is a matter which is under steady review — the way in which we collect revenue from the production of our oil and natural gas. I don't know whether or not the B.C. Utilities Commission considered that matter. I know it was considered, and evidence was given in that regard. Whether or not they've made recommendations I won't know until I've had the chance to review their report to me. They may have.

The matter of power-intensive industries in remote areas being able to produce their own energy requirements is to some degree a policy of the government at the present time. We have a lot of small producers of energy who have no access to B.C. Hydro energy. We're doing that now. Having listened to other speeches that he's made in this Legislature, I think the member would like us to expand on that to a great degree. Again, we'll have further discussion about that. At the present time there is a difference of opinion regarding government policy on that matter. It's always open for review, though. I undertake to continue that review.

[Mr. Mussallem in the chair.]

The matter of the thermal plant in the East Kootenays to take into account the waste coals is under urgent review at the present time. I believe that it's wasteful to have all that waste coal just sitting there and not being utilized in some way. We have to be extremely careful that anything we develop there is done with a great deal of care in order that the environment is protected in terms of acid rain and other things. They're producing waste coal from those mines at something like a million tonnes a year. Not only is it a waste of a good and valuable energy resource; it's also an environmental hazard in itself in that they're running out of places to store that waste coal. There could be some serious problems in the future if we don't find ways in which to utilize that real resource. That's being discussed on an urgent basis within my ministry and with B.C. Hydro at the present time. I would have to say that the matter of exporting any power from that development would, at the present time, be contrary to government and B.C. Hydro policy, which is that only that power which can clearly be shown to be surplus to our needs at the present time can be exported. We're not exporting very much power at the present time. In fact, for most of this past year, 1980, we weren't able to export any power, because we were short of power ourselves. It was only in about the last three months of the year that we were able to have a surplus which could be exported to the United States. As I mentioned earlier in my remarks to the member, if, in fact, we have before us inquiries for something like 9,000 megawatts of power, we're going to have to scramble to just keep up with the economic development in this province ourselves, without having to export. But I don't think anyone has any objection to export of power which can be clearly determined to be surplus. And, of course, that can't be done without approval of the National Energy Board, in any event.

I agree with the member's comments about tax biases. They should favour renewable sources of energy. We've made some moves towards that. I'm sure we'll make more.

[ Page 5501 ]

The last question was on the matter of the Utilities Commission Act and its amendment. I have stated in this House that I intended to review the Utilities Commission Act, and that I would bring in an amendment to that act to try to meet some of the concerns which have been expressed by the member for North Vancouver–Seymour — by members on both sides of the House, as a matter of fact. I apologize that it will not be in this session of the Legislature, but I can guarantee the member that my staff are actively working on amendments at the present time. They will be making recommendations to me. Hopefully, I can have them approved by government for our next legislative package. That's underway. I apologize to the member that I didn't meet the timetable he would have liked me to have met, but the work is continuing.

MR. SKELLY: Mr. Chairman, I'd like to go back, briefly, to the minister's introductory remarks. He talked about the condition of the mining industry under Social Credit periods of government, as compared to the condition of the mining industry under the NDP term of government. It seems that he was leaving in the minds of the members some confusion as to the health of that mining industry during those two periods of time. Just looking back over the minister's own reports for the period 1970-1980, and also over a number of Price Waterhouse studies which are done on a regular basis for the mining industry, I think that the minister, whether intentionally or not — and I don't believe that he would intentionally mislead the House — has given some information to the House which could be interpreted as misleading. Perhaps he simply made this information available through Hansard for circulation during the Kamloops by-election. I don't know what his motivation was.

I would like to assist the House by setting the record straight, using the minister's own figures. I recall some of the reasons that I became involved in this occupation. I used to work for Jedway Iron Ore Co. Ltd., up in the southern end of the Queen Charlotte Islands. The member is right: under the Social Credit government of the day, it closed down. At roughly the same time, the iron-ore mine in Zeballos on the west coast of Vancouver Island, which was in my constituency, closed down. At roughly the same time — in fact, just before I took office in 1972 — Kennedy Lake iron mine also closed down. So a series of mines in the province closed down at roughly the same time.

MR. KEMPF: For what reason?

MR. SKELLY: The reason is not Social Credit government and it's not any particular domestic government problem. They probably closed down because of conditions of international trade, international requirements for iron ore, depressed world conditions and so on. I cannot blame Social Credit. I cannot blame the NDP.

[Mr. Strachan in the chair.]

MR. KEMPF: Were they out of ore?

MR. SKELLY: In some cases they were. But we have to remember that it's the price of the ore that decides whether they continue to mine or whether they're out of ore altogether. In most cases, if prices were high enough, mining could have continued in those areas. So I suspect it was probably the price of iron ore on world markets that they couldn't meet. The NDP fell victim to the same problems.

Let me give you an indication from the minister's own figures on the values of ores produced in British Columbia during the period 1970-1980, to find out just what the situation with the mining industry is.

Let me start off with copper. In 1970 the value of copper production in British Columbia was $124.7 million. In 1971 it went up to $131 million. In the first year of NDP government it was $209.4 million. In the second year of NDP government it more than doubled to $582.8 million. In 1974 it declined slightly, but still had a record high of $541.6 million — not because of the NDP government or anything we did or neglected to do as government. It was simply because world copper prices at the time, as a result of shortages due to conflicts in South America — Chile in particular — and conflicts in Central Africa's Zimbabwe and that area. Shipments of copper were difficult to export, so there was a shortage of copper and the price rose. As a result, British Columbia was able, under a stable government, where the copper ore was available to international markets, to take advantage of shortages created by conflicts elsewhere in the world. We were able to sell a tremendous amount of copper — in fact record-high values of copper during those two NDP years.

Now look at the facts between 1975 and 1978. In 1975 there was a decline of $210 million in the value of copper as world copper prices declined. The situation in Chile, as the mining companies would like to state it, was stabilized when General Pinochet came in and murdered many of the Democrats in that country. It increased slightly in 1976 to $379 million. In 1977 it was $380 million.

AN. HON. MEMBER: That's what we did wrong.

MR. SKELLY: I think it should go on the record, Mr. Chairman, that the Minister of Forests feels that that's what he did wrong — he didn't imprison and assassinate democrats.

HON. MR. WATERLAND: Mr. Chairman, on a point of order, I would ask the member to withdraw that rather ridiculous statement.

MR. SKELLY: I do withdraw, Mr. Chairman.

In any case, Mr. Chairman, until 1979 — four years after the NDP government left office — the Social Credit government did not equal the value of copper production during the two peak years of the NDP term of office.

AN HON. MEMBER: It's not their fault.

MR. SKELLY: No, it's not their fault this time. It's not their fault either that in 1979 they've produced $656 million worth of copper; it's simply the advantage of world copper prices. If the price is high, that's the time to sell. I don't fault the Social Credit government or the mining companies involved in British Columbia for doing that. We have very little control over copper prices throughout the world, but we should certainly take advantage when those prices are high — as the NDP did during the two peak years of their term of office.

Look at zinc prices. In 1970, $44. 1 million worth of zinc was produced in British Columbia. In 1972 when we took

[ Page 5502 ]

office, $47.2 million was produced, which was increased by about 50 percent in 1973 under an NDP government when $62.6 million worth of zinc was produced. In 1974, $59.6 million; 1975 saw record high production in terms of the value of zinc of any year in this decade under an NDP government — $80.6 million. It's declined almost consistently over the years of the Social Credit administration down to 1980, the last figures I have, where it's almost half of the peak historic record under the NDP government. In 1980 we produced zinc to the value of $44.6 million.

Are we saying that the Social Credit government has killed the zinc industry? Are we saying that that's the problem? I think we're being a little more realistic on this side and a little more positive, as we always have been. We realize the impact that world economic conditions and world base metal prices have on the value of production of base metals in British Columbia.

The minister said that the NDP scared away the mining industry and sent them up to the Yukon and the Northwest Territories. They produce a lot of molybdenum up in the Northwest Territories. I can hardly say it, and most people can hardly spell it, but they produce a great deal of it up there. In 1971, the year before we took office, the value of molybdenum produced in British Columbia was $37 million. In the first year of our government it went up to $43.3 million. The next year it went up to $51.9 million. The next year, under that deadly anti-mining NDP government, it went up again to $60.8 million. In 1975 it went up again. While all those companies were moving out to the Yukon and the Northwest Territories the value of molybdenum produced here in British Columbia went up to $71.2 million. The price of molybdenum has been rising consistently. It's at a pretty high rate right now. To their credit, the mining companies in British Columbia, in the last year that I have in my figures under Social Credit, were producing $296.9 million worth of zinc. Well, congratulations, Social Credit. Congratulations, mining companies. It's not your fault, but I hope that you take advantage of it for the benefit of the people of British Columbia. It's a lot of money. We're very pleased that molybdenum prices are as high as they are. We don't blame you. We don't give you credit. We don't give the companies credit. Thank God for those world-wide conditions. Thank God for those high prices for molybdenum that are keeping people working and employed here in British Columbia.

Let's look at coal production in British Columbia. In 1971, just before the NDP government took office, the value of coal produced in British Columbia was $45.8 million. During the first year of NDP government it went up to $66 million. During the second year it went up to $88 million. We're doing okay for an anti-mining government. The next year, 1974, it doubled to $154.6 million, even after we had raised the royalties. In 1975 it almost doubled again, to $317.1 million. That's almost a third of a billion dollars, even though that grasping NDP government was taking more royalties out of coal to spend on the health, education and social assistance requirements of the people of British Columbia.

Then what happened? Social Credit took over. In 1976 it declined to $298.7 million. What happened? What ugly things had you done to the coal mining industry during that period? As far as I was concerned, it was nothing that was done by Social Credit. It was nothing that was done by the NDP. It reflects a change in world market conditions and world industrial health. Now it's gone up again. In 1978 the value of coal production in B.C. was $381.9 million. In 1979 it was up again to $439.3 million. In 1980 it was up again to $467.8 million. What do I have to say about that, Mr. Chairman? Congratulations, Social Credit. Congratulations, coal mining companies. Congratulations, world economy. Congratulations, OPEC, because without the change in OPEC prices, coal certainly wouldn't be worth what it is today.

We can blame a lot of things, but I don't think that any government here in British Columbia, regardless of its political stripe — NDP or Social Credit, extreme right or extreme left — is going to have much influence on the value of ores, metals and energy commodities produced here in this province by people in this province.

Precisely the same thing happened with crude oil. It increased in value during the time of the NDP government, with certain changes. In 1973 when $103.3 million worth of oil was produced, in 1974 it went down to $94.2 million, but it went up again in 1975 to $116.6 million. But again, the NDP government can neither accept the credit for the increases, nor should they always be kicked for the decreases. It was really something that was beyond our control. This province is so dependent on world economic conditions and on conditions established outside our boundaries that we simply cannot take the credit or the blame and, I'm sorry to say, Social Credit can't either, because you're bound by the same conditions as any other dependent state in the world. Like any other resource-dependent state in the world, you are bound just as we were when we were in government.

There is one area that we can take some credit for, so let's look at natural gas sales to pipeline. In 1971, the year before we took office, natural gas was selling to the pipeline at $31.9 million. That was the value of natural gas sold to the pipeline. When the NDP took office, very little changed; it went up to $41.6 million. In 1973 it was up again to $54.8 million. Then came OPEC, the international oil embargo and the raising of prices. It would have been silly for any government in office at that time, whether it was an NDP government or a Social Credit government, not to jack up the price of natural gas to represent almost an equivalent value of oil in order to prevent a misallocation of our valuable natural gas resources. So the NDP raised the price. We went to the National Energy Board and said we wanted to raise the price. The Energy Board said: "Yes, but not as much as you want." So in 1974 the value doubled to $128 million. In 1975 it almost doubled again to $214.7 million. In 1976 it went up to $288 million — that's under Social Credit. In 1977 it went to $396.6 million, and through the years increased regularly to the 1980 rate of production of $546.9 million. There was a consistent increase over the years.

The NDP can take credit for one of those years, because it moved to increase natural gas prices into export. We did not do it for reasons we could control; we did it because OPEC forced us to do it. We would have been wasting a precious resource and encouraging misallocation of that precious resource if we underpriced it in the export market. So it only made sense, and it would have made sense to Social Credit to do the same thing. So as a member of the NDP government of that day, I can't take that much of the credit; nor can Social Credit take any credit for the increase in price that we have had to date.

If you look at the figures, over the years from 1970 to 1980 there has been a continuous, consistent increase in the value of mineral production in British Columbia. In 1971 it was $528 million total, and in 1972 — our first year of office

[ Page 5503 ]

— $636.2 million total. But look at this jump: from $636.2 million during the first partial NDP year, we jumped in 1973, the first year where we had control over the budget of this province, to $1.1094 billion, the greatest jump that was ever taken in mineral production in the province of British Columbia. It went up to $1.2 billion in 1974 and to $1.3 billion in 1975. When Social Credit took over they carried on with the increase: $1.5 billion in 1976; $1.98 billion in 1978. When you get to 1979, Mr. Chairman, we have the first decline: the total revenue went up to $2.949 billion in 1979; in 1980 it declined to $2.928 billion.

Now you can't blame Social Credit even for the decline, unfortunately, because again we're dependent on conditions in the markets to which we export these mineral resources. So for the minister to mislead this House and the public of British Columbia, whether intentionally or otherwise, and I believe it's otherwise.... I don't believe the minister was politically motivated, Mr. Chairman, when he made those statements that the mining industry was killed from 1972 to 1975, and that now that those hostile policies have been removed, the production in the mining industry has increased. I think he was doing it as a bit of showmanship, something to package in Hansard and send up to Kamloops and pass around the Kamloops riding, posing as fact.

Mr. Chairman, I hope the minister will put this part of the Hansard in the package as well — that there is another side of the story and that, using the minister's own figures, it can be shown that the mining industry was never killed, and that the value of mineral production has been increasing substantially both in NDP years and in Social Credit years. For the credit that we can take for that, congratulations NDP, and for the credit that you can take for that, congratulations Social Credit — but all of the people in British Columbia are going to benefit from a healthy mining industry. I want to tell you, Mr. Chairman, that I certainly intend to circulate my remarks in Kamloops within the next week.

HON. MR. McCLELLAND: Mr. Chairman, I'm in danger of agreeing with that member about something. It may be the first time in this House that I ever have or that he's ever agreed with me. I agree that prices go up and down. Because of what happens in the world, in Canada and corporately, revenues have increased on a steady basis for at least the last decade. They'll continue to increase. Inflation bears a great part of that. World prices of metals and conditions in the various industries which use those resources all have a great bearing on how much revenue you get in. So do taxation policies.

The members opposite don't understand what happens in a resource industry. You don't have a mine until somebody finds it and develops it. There's no ore — it's only rock — until a mining company comes along and develops it. It isn't anything until somebody comes and finds it. The same is true in the oil and gas industry. Unless you get out there, dig holes and find gas, you don't have any resource. It's just there. It's the government policies which develop the incentive to go out and find and develop the mines that will have the long-term benefit on whether or not you have a resource economy. What those members didn't understand when they were government was that if you kill the industry's exploration activities and if you stop new mines from opening up — as that member himself said, mines close down sometimes when they run out of oil or for some other reason — and if you don't have new ones coming on stream, then you don't have a resource development economy. What I've tried to say in the early parts of this debate this year in this House is that the policies of that government over that three-and-a-half-year period effectively stopped the exploration industry and the opportunity for new mines to open and new oil and gas resource opportunities to take place. I won't argue with the figures about the increased revenues, because they're there. I've admitted that earlier today. But those increased revenues were in jeopardy because the exploration industry was killed. It moved effectively to other areas, including the Yukon and other parts of the world.

You talk about revenues coming in; they came in for a while. But what we were seeing was a serious effect on the industry and on the people of this province. I can remember talking about this when I was in opposition, and showing you stacks of letters that high from people at Jones Tent and Awning, who supply camping equipment to the mining industry; their business was going down the drain. Small safety equipment supply companies were going bankrupt because the mining industry was no longer using their facilities. Helicopter companies were going out of business because the exploration part of the mining and oil industry was no longer healthy. Hundreds and hundreds of small businesses employing thousands of people and representing income of millions of dollars were lost to this province because the government didn't understand that if you don't have a healthy exploration industry — regardless of the fact that you can add on super royalties and bring in new revenues — that industry will die. It takes years and years for that industry to come back.

Those figures are there, and they are the important ones. I wish the members opposite could understand them. In that period we had new-mine spending plunge from about $271 million in 1971 to $20 million in 1975; that was for the development of new mines — the only way you are going to have a continuous healthy mining industry. It's the little guys who go out there, wander around the mountains and find mines. It isn't the Norandas and the Esso Resources and the big companies that find mines; it's the small prospectors who spend their lives in the woods and mountains. They find the mines, and then they bring in the big companies to develop them. Claim-staking plunged during those three years. Miners' certificates plunged during those years.

In the oil and gas industry we had 201 wells being drilled in 1971 in this province; by 1975 it was down to 82. Last year it was back up again to about the 400 mark, because of progressive government policies. It's those policies that give the incentive to drill the holes to find the gas. If you don't do that, you don't have an industry. You don't have anything.

You can talk about revenues all you want. Let's talk about the people who didn't have work because the companies and the people were not exploring for new mines.

Even the value of exploration in oil and gas suffered a disastrous tumble during 1972-75. In fact, it was hardly a factor at all. The leases for which companies bid in order to go out and drill those wells are the same kind of thing. Those, I'm happy to say, are booming today. The number of certificates being issued to people to go looking for.... Miners' certificates are booming. We can't keep up with it. We can't hire staff fast enough to look after those people who want to go out and look for minerals in this province.

The members opposite have got to learn sometime that it's not the short-term revenue gain you'll get by some smart, socialist, philosophical policies which gives the incentive to make sure that the industry continues for a long period of

[ Page 5504 ]

time; it's the long-term development policies which will give the investor confidence and businesses confidence to keep investing and finding new minerals in this province. That's what is not understood now. That's what wasn't understood then. The fear that people like those who live in the Highland Valley and Kamloops have is that that's the policy that would be reinstituted, should that party ever get back into government. Again, I say, those people won't forget. The thousands of guys in the new jobs that have been created because of the resource development policies of this government who are now making good money won't forget. Those little businessmen, who I talked about going out of business, won't forget, because they're back in business. The helicopter industry is booming in this province, and so are many of the supply service industries which are directly related to resource activity. They won't forget. I don't have to circulate my speech to those people, because they already know. I don't need to send my speeches to them.

The member said that government policy doesn't have an effect on values. Maybe that's right. I'm not sure about that, but I would agree with the member, in that perhaps other external things have more effect on values than government policies do, regardless of which party is in power. I think that I could probably agree with that. The question is not whether or not government policy has an effect on values. The question is whether or not government policy affects the opportunities for development of the industrial opportunities that are available to you. I say to you that it sure does. Government policy which was put in place between 1972 and 1975, particularly Bill 31 in 1974, had a disastrous and immediate effect on the mining industry. That's what has an effect down the road on the opportunity to provide a continuing, buoyant economic climate. Maybe it doesn't have an effect on the values of the product. But it sure has an effect on the industrial opportunities which are available, and it's immediate. If it's the wrong kind of policy, it sends almost immediate shock waves throughout the industry.

We have an example before us today of how government policy can effect industrial opportunities and, down the road a bit, affect the values and revenues which come to government: the national energy program. It's not a joke that drilling rigs are moving out of this province right now. Drilling rigs are moving out of western Canada. Opportunities which are there are not being realized. You take a government policy, for instance, which concentrates on the Canadian lands which offer investment or revenue opportunity to the federal government — mainly the offshore lands and northern lands — and concentrate on them to the detriment of the traditional producing areas of Canada, which are in the conventional areas of Alberta, Saskatchewan and British Columbia, and you have a policy initiated by a government which immediately and drastically affects industry, and then affects the values and revenues which come to government. That takes a little while to be felt, but it sure doesn't take long to be felt for the immediate effects on the industry.

Here we have a government policy which says to us: "Most of our concentration will be in areas which are iffy, to say the least, and certainly won't produce any new oil or gas until the 1990s" — to the exclusion of areas which if drilled will produce millions and trillions more cubic feet of natural gas, and perhaps significant new amounts of oil as well, although that's not as hopeful as natural gas. We are seeing federal policy force us out of those traditional areas at the same time as we're seeing the United States putting all of its efforts into getting more oil and gas out of the traditional producing areas. We find, because of that policy in the United States, 46,000 wells were drilled last year, and a similar amount are about to be drilled this year.

We've seen the United States go from a serious deficit of oil and gas — or at least gas — in the last couple of years to a surplus today because of the policies which put in place programs insisting and ensuring that drilling would take place and that resources would be found. What the members opposite don't understand is that the policies they put into place here in B.C. during those years directly inhibited the opportunity for that further development to take place. Those are the differences that I see between the policies which are now in place and those policies which were there before.

I have one final comment. I don't think the member really meant to take credit for the natural gas price increase he talked about. The NDP government didn't raise the price of gas, and this government hasn't raised the price of natural gas. The National Energy Board has the responsibility for raising the price of natural gas.

MR. COCKE: Nonsense. Pure nonsense.

HON. MR. McCLELLAND: The responsibility for raising natural gas prices in this country is in the hands of the National Energy Board. At the same time that that price increase came into place — and others have come into place since — the same price went to Alberta and to Saskatchewan. It isn't a British Columbian price, although the members opposite would have us believe that it is. Sure, the government pressed for increases as we've pressed for increases since. But don't let us think that in some magic way the NDP raised gas prices. The same prices were increased for Alberta and Saskatchewan at the same time.

I know we'll never come to a meeting of the minds of this, but I say again that we'll leave it up to the people. I think they understand what happened during those years and what's happening today. It's quite a difference.

MR. SKELLY: With reference to the member's comments that what we do domestically can have some impact on the mining industry, on reflection I think now that the NDP opposition feels that given a second opportunity we would not go into the kind of royalty system....

MR. KEMPF: You're changing your spots, are you?

MR. SKELLY: No, I'm afraid that's been admitted province-wide and by people who are more expert on the issue than I am. But to say that Bill 31 royalties had the impact that they had on the decline in the mining industry is totally false and misleading. I'm not blaming the minister for that. I think there is a responsibility on the part of members of the Legislature to try to correct that. It's interesting that in the 1971 Price Waterhouse annual report, they predicted the capital expenditures for the opening of new mines would decrease in a single year between 1971 and 1972 by some $200 million. They projected that. They said in their statement that they felt that capital expenditures for the opening of new mines would decrease even more in subsequent years. I don't think anybody was not expecting a decrease in capital investment in new mines. We certainly expected it on receipt of the Price Waterhouse report in 1971 — a year and a half before we were even in office.

[ Page 5505 ]

So those trends were already in motion by the time the NDP government was in office; they had been predicted by the industry itself. While the mining industry is on the way down, and is being influenced by, for example, low base-metal prices, surpluses of base metals around the world and other problems, some people may take it to their political benefit to attack the British Columbia NDP government and say it's their fault the industry was going down, but it then becomes very difficult to justify the fact that mines were also closing in Montana, throughout the United States, in Mexico, South America and central Africa, all subject to the same conditions and international world problems. But a political party here in British Columbia saw a political advantage to be gained because we presented Bill 31 when we did. Maybe it was timing, but it was definitely a mistake; we admit that.

The fact that the mineral industry declined in the province of British Columbia between 1971 and 1975 was predicted by the industry while your government was still in office and the first part of the decline took place.

HON. MR. McCLELLAND: I won't prolong this. Sure some decline was predicted, but the decline didn't happen in some places that you didn't mention. One of them was the Yukon, and it was because the opportunity was made available for them.

I'd like to ask everybody who's interested in this to go back and look at the newspaper articles of the day and see how they read. I think you'd find that many of the things I've said have been substantiated by what was actually happening at the time. Again, there is no doubt that the opportunity for exploration and investment in both the mining industry and the oil and gas industry was effectively destroyed during that period. The figures bear it out; the activities, unemployment and loss of income bear it out; and I don't think the people ever want to go through that again.

MR. PASSARELL: Mr. Chairman, there are three quotes from the minister's speech earlier that I would like to go over: (1) "Let's talk about people"; (2) "The long-term investment in people...."; (3) "The government's policy affecting people — if there is a policy made by government, it will send a shock wave through the industry." I'd like to talk about the last quote — it's not a joke.

I want to talk about a joke that this government has allowed to happen, and that's Amax. To paraphrase simply what Amax is about, on January 12, 1979, the provincial government allowed Amax — a multinational corporation based in Connecticut — a pollution-control permit that exceeded the federal guidelines by 8,000 times, allowing the dumping of 400,000 milligrams of toxic mine waste per litre into the ocean. The federal limits were 25 to 50 milligrams per litre. The government's pollution-control permit No. PE4335 has allowed 400,000 milligrams of toxic waste per litre to be dumped into the ocean daily. It works out to approximately 12,000 tonnes of mine waste dumped into Alice Arm daily. Nothing in this country comes close to this. Later in my speech I'll go over exactly what this mine slurry is composed of.

I'd like to talk about what happened yesterday, to bring this House to a bit of an understanding. The Nishga nation's tribal council and the Anglican Church bought approximately 1,000 shares of Amax. Yesterday was the stockholders' general meeting in New York City. The Nishga went down with 1,000 shares of stock in Amax, out of approximately 62 million shares. They presented their case concerning what effect this mine will have on their livelihood, families, land and fishing industry. Surprisingly, a vote came up and the Nishga received support from 16 million shares concerning their opposition to the Amax deal. One of the surprising stories that came out of New York City yesterday was that the daughter of one of the former owners of Amax stated, "My father didn't start this company to kill people," and voted her large block of shares with the Nishga people, opposing this government's plan of dumping 100 million tonnes of toxic mine waste into Alice Arm.

Also yesterday, Mr. Chairman, an interesting facet of the story of Amax happened. The exhaust pipe, which is one of the most archaic ways of disposing mine waste into the ocean — it's probably the cheapest for the company just running a pipeline from the mining operation into the ocean 50 metres down and letting the mine waste dump into it — had a bit of a problem yesterday. At 5 a. m. the pipe burst, and it wasn't for two hours that the company found out that these toxic mine tailings were spewing across onto the beach and had wiped out approximately 2,100 square feet of beach along Alice Arm. It took them two hours before they finally understood what had happened. The company's official position yesterday, from a Mr. Byron Cox, stated....

Interjection.

MR. PASSARELL: To the member for North Peace River (Mr. Brummet): it works out to approximately 200 square metres. Maybe 2,100 is too high for you — 200 square meters of beach is easier for you to understand.

Mr. Chairman, the official position of the company was: "We're unable to determine how much material was spilled." Isn't this completely crazy? Here they're putting out 12,000 tonnes of toxic mine waste into the ocean today, they have a spill, and what does the official of the company say? "We're unable to determine how much mine waste was dumped into the ocean." The only thing we do know is that 200 square metres of beach were wiped out, and that the toxic mine tailings were taken up by the ocean and taken out into the Alice Arm chuck. It's unbelievable. The company said: "It's the safest mode of disposal, backed by the provincial and federal governments."

The Nishgas stated yesterday that they won; even though they didn't defeat the 62 million shares held by the company on the Amax issue, they received approximately one-third of the support. They stated that it was a moral victory for their nation and for the aboriginal people of this country. Another important aspect of the shareholders' meeting yesterday was that one-third of all the shareholders boycotted that vote and would not vote against the company or the native people. Adding on the 16 million shares that supported the Nishga and the one-third of the shareholders who would boycott the meeting on that vote, it definitely is a moral victory for the Nishga people against Amax concerning their livelihoods and what's happening to their area of Alice Arm.

It was interesting that there's a very similar project going on in the state of Alaska. It will be on stream in approximately one year. It's called Borax Mine. Is the minister familiar with Borax Mine in southeastern Alaska? It will be a molybdenum mine. It will have a very similar ocean dumping permit. The engineers of Borax have looked at the the Alice Arm tailing disposal and the method that is used by Amax. They have stated that that would have been outlawed

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25 years ago in the United States. It's unbelievable that in 1979 in British Columbia they allowed Amax to put an exhaust-pipe 50 metres into the chuck. The chuck is approximately 500 metres deep. This ministry's counterpart in the federal government has stated: "The mine tailings will simply go to the bottom of the ocean like sand and cause no problem." We've seen the problems that have been caused by ocean dumping. We've seen what's happened in Rupert Inlet. The dumping of that mine has destroyed the life-sustaining forms on the bottom of Rupert Inlet, and this government still has the audacity to say: "No problem. It's the safest method of disposal." We'll see how safe it is. They've only been in operation for three and a half weeks, and already they've had a major spill. There were 200 metres of ocean beach wiped out. The company does not know how much of the toxic mine waste has been disposed of into the upper levels of the ocean. Second is the story on Amax itself. Last year an article in the Vancouver Sun stated: "The share in the mine is death to the band, the Nishga say." The chief of the Nishga, Jim Gosnell, stated: "The mining company has offered us a share in the mine. That share is death to our people." I doubt if the government, on both the federal and provincial level, really understood what they were getting into when they allowed Amax special permits to dump mine waste exceeding the federal and provincial limits 8,000 times.

I'd like to read from a recent Vancouver Province. It's a letter to the editor, dated March 31, 1981, by the Rev. David Retter, headed "Life and Death."

"The dumping of mine tailings in Alice Arm is causing great concern not only to the Nishga people but also to all of us on the Pacific coast. Recently a demonstration organized by Project North in Victoria brought together 400 church people and other concerned citizens to call for a public inquiry into this whole question. It was unique in the spiritual aspect and was emphasized by many church leaders, who prayed together on the steps of the Legislature.

"We are concerned about the lack of coverage given to this event by the media. We believe the issues involved require careful and full coverage, so that the people can be accurately informed about the serious implications involved."

He goes on to talk about the toxic waste which is to be dumped into the Nishga food fisheries:

"The Nishga people believe that the dumping of radium 226, arsenic, mercury, zinc and uranium will destroy the fish on which their life depends. For the Nishga this is a matter of life or death. We in Project North stand with them and invite your readers to join with us in our common struggle for survival."

Mr. Chairman, it is unbelievable that this government has allowed the dumping of radium 226 — some of the highest levels; we will go over that table later — uranium, arsenic and mercury into a food fisheries source the Nishga nation depends on.

AN HON. MEMBER: It's cultural genocide.

MR. PASSARELL: In a sense it is. It's cultural genocide brought about by this present government.

[Mr. Davidson in the chair.]

Those people have to depend on fish in that area for their livelihood, and 12,000 tonnes of toxic waste per day will be dumped when the company is in full operation, once they get their exhaust-pipe fixed again — the one which would have been outlawed in the United States 25 years ago — 12,000 tonnes, and the company still has no idea of what amount was dumped yesterday. It took them two hours to finally find out that the pipe had ruptured.

Another article I'd like to talk about is a recent one in the March 27, 1981, edition of Fisherman, headed "Dumping Approval Ignores Protest; Amax Review Was Never Reported." It is the whole method of the provincial government, granting their permit on January 12, 1979, and their friends in Ottawa, the Liberals, who gave the permit on April 10, 1979, during an election campaign. I wonder if they were working together. They granted two permits so Amax could go ahead and dump these toxic wastes into the ocean. You know what they used? There were no independent studies done at that time. They used a report by a Mr. Littlepage, who was commissioned by the company to go over the exact feasibility of dumping 12,000 tonnes of mine waste into the ocean. Mr. Littlepage was paid generously — into the hundreds of thousands of dollars — to provide a report. In a sense what the two levels of government — the provincial and federal government — did was to take this company report and use it as their own basis for developing the permits. It's almost reminiscent of the story of Little Red Riding Hood; the wolf prepares the report and acts on it.

Mr. Chairman, it's looking as though the members are becoming restless. It's getting on into the day. We have a great weekend coming. I move that the committee rise, report progress and ask leave to sit again.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 12:51 p.m.