[ Page 8189 ]

CONTENTS

Routine Proceedings

Committee of Supply: Ministry of Forests estimates. (Hon. Mr. Waterland)

On vote 42: minister's office (continued) 8189

Mr. Lockstead

Mr. Passarell

Mrs. Wallace

Mr. Gabelmann

Mr. Levi

Mr. King

TUESDAY, JUNE 15, 1982

The House met at 9:30 a.m.

Orders of the Day

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

ESTIMATES: MINISTRY OF FORESTS

(continued)

On vote 42, minister's office, $170,140.

MR. LOCKSTEAD: Mr. Chairman, I know the minister made notes of the few questions I posed to him before we adjourned regarding his estimates and the administration of his portfolio. I have a few more questions to pose to the minister this morning. It's a nice quiet morning, the galleries are empty and we can be very relaxed.

Last night I mentioned the economic plight of many communities in British Columbia because of the severe downturn in the forest industry and the effect that that is having not only on the jobs and workers in all of these communities but also on the business sector in these communities. What is the minister doing? What is the government doing? I know that the minister said to my colleague earlier in this debate that he's met with the industry. That's not a good enough answer, Mr. Chairman.

MR. CHAIRMAN: There appears to be an awful lot of conversation, hon. members. The member for Mackenzie has the floor, and I wonder if he could speak uninterrupted.

MR. LOCKSTEAD: In his rely I would like the minister to tell us exactly what he, the ministry and the government are doing to stimulate the lumber industry in British Columbia. This is part of his responsibility as Minister of Forests and a leading member of cabinet. Forestry is B.C.'s number one industry, so I'm sure the minister has a very strong voice in cabinet when he speaks.

I mentioned last night the matter of the government failing to keep its promise in terms of relocating a new industry in the community of Ocean Falls. Two years ago the government promised this province that within six months there would be a new operation underway in that community. Nothing has happened there. I wonder if the minister has spoken to his colleagues in cabinet, particularly the Minister of Energy (Hon. Mr. McClelland), and asked that Minister of Energy why they have not appointed utilities commissioners to choose a route for the natural gas line to Vancouver Island. I just thought I'd put this in there, The minister might wish to discuss this matter with his colleagues.

Concerning the matter of the small business program that he announced a few years ago, I'd like to know also.... I suppose all MLAs in British Columbia, but certainly those from rural areas, receive inquiries from their constituents who want to get into the small business program one way or another. I know the markets are depressed and it's difficult now. We know that that ministry has stalled for a couple of years on this program. I'd like to know from the minister whether that program is underway now, how many applications they have received and how many have been approved, if any. That's a pretty straightforward question: I'm sure the minister can answer that.

I know that many coastal MLAs have received inquiries and representations from small, independent logging companies regarding the amount of quota. Basically the problem is that under the quota system the smaller independent loggers must log a certain amount of timber over a five-year period or lose the quota, but they do not have the markets, so they can't sell their products — it's as simple as that. I'm thinking of companies like Jackson Brothers on theSun shine Coast; I won't give you all the names of the companies in my riding. I have a great deal of correspondence from these small independents. They are deeply concerned about losing their quota, or portions of it, because of poor market conditions. I would like to know whether the ministry is prepared to reduce the quotas of the small independents during this severe downturn in the lumber industry, so that they won't lose the total quota which they are compelled. at the present time, to harvest. I could tell you from experience.... I know one small independent who has approximately half a million board feet of raw logs tied up in the Fraser River so that they won't rot — it will keep the bugs out — and there is simply no market for those logs at the present time. There is deep concern. That operation had 11 people working. The two owners, who are partners in that little operation, are merely monkey-wrenching their equipment at the present time; they're not putting a log in. And 11 employees are sitting at home, or doing whatever they do, but they're out of work.

I was also going to discuss with the minister the reforestation program. I heard the minister's response yesterday to my colleague from Shuswap-Revelstoke in this regard, but I don't think it answered the question. When we have literally thousands of qualified people out of work in the lumber industry, why are we not preparing sites for reforestation at the present time? Why are we not going into a massive tree-planting project throughout British Columbia to catch up on the backlog of hundreds of thousands, if not millions. of acres that have been neglected over the years? That's a program that could possibly employ a lot of people and pay very handsome dividends in the future.

Last but not least. Is the minister and the government involved in any kind of aggressive marketing program around the world? Has the government taken direct action in this regard? I know that some of the major forest industries have representatives in European and eastern nations, but is the government involved in any way? If they are, what are you doing to compete with other producers of forest products, countries like Norway, Sweden and the United States? What is the government doing in this regard? We don't see any tangible evidence that the government is doing anything, but if I'm wrong, the minister will get up and tell us so. He will explain to this House what the government is doing to aggressively market our forest products abroad.

With that. I will sit down and perhaps the minister will respond.

HON. MR. WATERLAND: Mr. Chairman. going back to the member's initial remarks of yesterday, he asked questions about what the government is doing regarding jobs in the industry. I went to considerable length in responding to the member for Shuswap-Revelstoke (Mr. King). and rather than repeat I will refer the member to the Blues. He can read that himself, and if he has any further questions I am sure he will bring them forward.

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The member talked about Ocean Falls and said something about a promise made two years ago that a flitch plant would be established there. I don't believe any promise was made. We in the Ministry of Forests agreed to make timber available under a special experimental licence, with the hopes that means could be found of using some of that wood at Ocean Falls. At the present time it's difficult to market even high grade, high-quality logs and forest products in British Columbia. Economic times are making it necessary for B.C. Cellulose Company at Ocean Falls to defer some of their plans. However, they are still working on ways of utilizing that material, especially the low-grade cedar in the area.

He asked about unallocated timber remaining in that part of the province. Unallocated timber can be acquired either through incentive allocations, such as we have done with B.C. Cellulose Company, or through competition. A lot of the remaining timber has been reserved for the small business program, to give an opportunity for the small entrepreneur to have direct access to Crown timber.

The member asked about log exports. We have always had a policy in this province, and it continues, that logs shall not be exported in an unmanufactured state if they are needed in British Columbia. We have a log export advisory committee which has representatives from various sectors of the industry, including organized forestry labour. Only after advertising for sale in British Columbia, and being assured that there is no need for them here, are logs given approval for export.

The member asked about comparative figures in the last couple of years –– I can advise that during 1981 approximately 300,000 cunits of logs were exported from British Columbia. In the first four months of this year that figure is about 120,000 cunits. It is running at about the same rate, perhaps slightly higher, than last year. All exports are subject to the export advisory committee procedure.

The member started talking about the natural gas commissioner; I am afraid he is going to have to refer that to the minister responsible, because that does not fall within my area of responsibility.

Regarding the small business program, the member says we have stalled on this program over the last couple of years. In fact, Mr. Chairman, over the last couple of years we have been pursuing our small business program in attempts to sort out some of the administrative difficulties we are having with it. I can advise the member that right now there are over 5,000 people registered in both category one and category two of the small business program. Since the program started, we have had about 900 sales approved in the small business program –– 600 and some in category one, which is the logger category, and almost 300 in category two, which is the small manufacturing category. It has not been until recently, when our allocation plan was finalized, that the district managers knew exactly what volumes they would have available for the small business program. That is in place now. I believe that in most of the coastal areas, where the member's riding is, in the order of 12 to 15 percent of the allowable cut will be reserved for the small business program. My intention and that of the ministry is that now that we know what wood is available, we will put forward schedules of sales so that the small operators can see in advance what sales will be coming up, and thereby perhaps get away from some of the panic bidding that has taken place, when they are not sure what is coming up in the near future.

From the government's point of view, I can not offer markets for those loggers who are having difficulty selling their logs. They have to assess market potential as they bid on the sales. If their logs are not needed in British Columbia, they, like everyone else, have the opportunity of requesting an export permit for them. We do not try to encourage the export of logs. During times like we have now it can be argued that if you allow the export of logs, at least you are keeping some of the loggers employed. That may be true, but they still require the process of the export advisory committee.

The member says: "Why don't you prepare sites for reforestation and undertake a massive tree-planting program during this period of market problems in the industry?" I will advise the member that we do have a massive tree-planting program in British Columbia, and it is expanding year by year. Last year we planted in the order of 90 million seedlings in British Columbia. This year our nurseries will be putting out very close to 100 million. Seedling production is not something you can instantly turn on and double your seedling production. It takes a number of years to put a seedling nursery into production. Expansions are underway at the present time. That is why our actual planting of seedlings is increasing year by year at a tremendous rate.

We are preparing sites for reforestation. Some will be prepared under our employment-bridging assistance program. However, there is not much sense in preparing sites for which you may not have seedlings next year, and you would probably be faced with the problem of sites brushing in again and you're having to reprepare them. We will prepare sites as needed for seedlings as they become available.

The member talked about what we are doing in marketing efforts in other countries. The Ministry of Industry and Small Business Development has been very aggressive over the last five or six years in working with people in my industry — me and others — in attempting to expand foreign markets. The member may have read in the newspaper these last few days that the Minister of Industry and Small Business Development (Hon. Mr. Phillips) has expanded his contribution to the cooperative overseas market development program so that we can continue to aggressively pursue these markets. I was in China last fall with a group of industrial people for the purpose of establishing a liaison with that country in the hopes of expanding markets there. Since that time — I think it is a direct effect of our trip — there have been increased sales to China. There is currently an industrial mission in China working on market potentials, and we have had two visit from Chinese delegates here. I think we have established a good dialogue with the Chinese people, and there is some tremendous market potential in that country.

I mentioned yesterday that the percentage of our forest products sold in the United States has decreased rather markedly over the last six or seven years — by about 10 percentage points. This demonstrates that we are expanding our markets into other areas.

The member asked what we were doing to compete in world marketplaces. We are doing everything we possibly can to keep our industry cost-competitive. I think it is the responsibility of all sectors — government, industry and labour — to make sure that we don't impose costs upon our industry that will make it impossible for them to compete in world marketplaces. We are all in that ship together. We all have to pull together and make sure that we do keep our industry cost-competitive.

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I believe that covers the areas discussed by the member for Mackenzie.

MR. LOCKSTEAD: I appreciate the minister's answers. I'm not sure I heard the response I wanted to hear, but the minister did answer most of my questions, I think.

In the matter of seedling production, it is our understanding that you actually have more seedlings than sites prepared this year. I don't know if that's true or not. We've been told that. Site preparation is a very important part of reforestation. Perhaps the minister can explain that, if he hasn't already.

The final question I have for the minister at this time is: can the minister assure this House that the application for a TFL by Scott Paper, which I'm not necessarily opposed to.... I've checked with Fisheries and the environmental people. I've read the briefs for and against that particular application. That company employs almost 600 people, I believe, directly for their specialty product. They do require a certain type of wood. I'm not opposed to the company having that. Can the minister assure this House that the return to the people of this province under that TFL will at least be equal to the return received by the people of this province under other TFL licences? I've heard some criticism. Whether that criticism is valid or not is almost impossible for me to say. I've discussed the matter with Scott Paper. They've been very open with me. I've discussed it with other people in the Forest Service and people involved with environment and fisheries. The one question I have for the minister on that particular application is: will the return to the people of the province be equal to the return from other TFLs issued under similar circumstances on the coast of British Columbia'?

HON. MR. WATERLAND: I can tell the member that we are currently addressing the massive volumes of information that were prepared and put together as a result of the tree-farm licence hearings held in Vancouver, I believe, in March.

The numbers we have developed indicate that for the utilization of broad leaf species such as cottonwood by a company like Scott Paper the return to the government is higher if you consider all of the tax revenues that flow from it. I'm not speaking just in terms of stumpage, because stumpage revenue is lower because it's a lower-value species. However, if you consider stumpage plus the personal and corporate income tax of Scott Paper, and make a comparison between that, the direct stumpage and the corporate and personal income tax received for an equal volume of coniferous species, you will find that in the cottonwood. as used by Scott Paper, the total revenue flow to the government per cubic metre is in the order of $31 per cubic metre. The same comparison for a coniferous species is in the order of $21.

There appears to be a substantial increased benefit. However, there is a limited market for that type of product, and you must also consider the fact that Scott takes the product to the final retail level. The value added is substantial. Therefore the employment created is about seven to one. It requires about seven man-days of work per cubic metre of cottonwood, versus one for the normal coniferous species and the products we produce from them. There are very substantial benefits. I will be announcing the result of our deliberations on that application probably in the very near future.

MR. PASSARELL: I have about eight questions for the minister. The first one concerns the timber sale up in northern British Columbia. I have some questions on the order paper which we can't deal with in committee stage, so I have to go around that a bit, but I would appreciate the minister answering those questions. The question I have concerning the sale up around the Kaska Dene area is: what is Cattermole doing with this timber? Are they processing it in British Columbia, or are they taking it up into the Yukon? We'll have to stay away from there so I'm not ruled out of order in dealing with questions on the order paper.

The second question I have concerns B.C. Timber and the road access from Nass camp to Terrace. That's a forestry road which approximately 700 people use. Does B.C. Timber, through the ministry, have any idea of any kind of new...?

Interjection.

MR. PASSARELL: No, I'm not out of order for talking about questions on the order paper. You're jealous.

MR. CHAIRMAN: Seriously, hon. member, you are not in order. One cannot discuss legislation that could be on the order paper, but a question is quite in order as long as it deals with the administrative actions of the minister.

MR. PASSARELL: Is anything happening with the road improvement for the 700 Nishga people who use that road? I was wondering if the minister would know of that.

On the questions concerning B.C. Timber, can the minister explain why the Kaska Dene people were not consulted regarding the timber sale to Cattermole Timber in northern British Columbia? From discussions I've held with the Kaska Dene, they were told they had approximately three weeks to be notified of the sale. I m wondering why the Ministry of Forests hadn't contacted the Kaska Dene prior to the sale of thousands of acres of timber in their territorial land.

The third question I have for the minister concerns Silver Grizzly, which is also in my riding, and I'm wondering why in this stage of tough economic times we're allowing raw logs to be exported out of this province at ever-increasing rates. Why hasn't Silver Grizzly been using the facilities in Terrace or Prince Rupert for processing of their logs instead of helicopter-logging in the north of that area and sending the raw logs overseas?

The fourth question is the silviculture program. I notice from the budget that it's down by approximately 1,200 percent. Last year it was S24,395,863: this year in the budget it's only S2,054,521. I'm wondering why there is such a cut in this important silviculture program. The minister earlier this morning mentioned that last year there were 90 million seedlings, this year 100 million seedlings. Where are these seedlings coming from? Are they coming 100 percent from British Columbia or Canada or are we importing seedlings from the United States?

The fifth question is the harvesting program. Last year it was $51,116,904; this year it's been cut back by a little under $10 million to $41,346,306. Why has the harvesting program been cut by approximately $10 million?

Fire protection program: $15,844,382 last year was cut in half to $7,539,881 this year, Why has the fire protection program been cut approximately by half?

The range program was also cut by approximately 15 percent from $4,660,150 to this year's figure of $3,495,079. Why has the range program been cut?

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The seventh question to the minister is concerning Bell-Irving. There was a timber sale this year up at the Bell-Irving, and I'm wondering if the minister can state what's happening. Are logs being processed through the port of Stewart? Where are these logs going'?

The last question I have to the minister is on the fire site rehabilitation, which was cut in half. Last year it was $120,881, this year $64,294. I'm wondering why this important program has been cut almost in half, when it looks like we're going to be in for a record number of forest fires this year. I'm just wondering why we've taken the rehabilitation sites and cut them in half under these estimates.

Those were about nine or ten questions, Mr. Chairman, and I would appreciate the minister's response.

HON. MR. WATERLAND: Mr. Chairman, first of all I'll go into the numbers the member has quoted. I'm afraid he was misinterpreting the figures in the blue book. He was looking at figures that do not include section 88 and fund allocations. If he looks on page 128 he will see that protection, for example, last year was $17 million, this year it's $21 million — an actual increase. The silvicultural program has stayed about the same; last year it was $52,399,000 and this year it's $52,438,000. So if he compares those figures he will see that in the area of silviculture, protection and so on, there is no reduction. Some of the work in intensive silviculture has been levelled off, but as I pointed out yesterday, more than what was levelled off will be made up by our employment bridging assistance program.

Seedlings. The numbers I quoted are all seedlings produced in British Columbia. We did look into the possibility of buying some seedlings out of Oregon and southern Washington state which were not required there. However those seedlings would not have survived in British Columbia. They were not from the same provenance that our seedlings would have to be from in order to survive in the province, so we couldn't make use of them.

The member talked about Cattermole Timber. Cattermole is taking some wood from northern British Columbia — I believe it is from the general Cassiar area — and manufacturing it at Watson Lake. At the same time we have an agreement with them whereby they will bring wood from the Yukon and Northwest Territories down into the Fort Nelson area for manufacturing. It happens to be where the plants are and it seems like a pretty good tradeoff.

The member has some questions on the order paper, and he repeated them to some extent here. Regarding the Kaska Dene band I can only advise that they have been advised in the normal route — through advertising in papers, by notices posted in post offices and so on — of the sales that will be taking place in what they claim to be their traditional lands. I don't treat any group of people any differently than others in providing them with information. For example, the timber sale he was speaking of was advertised in April 1982 in the Gazette and it was posted in newspapers in the area. The sale was not finalized until June, so they had a couple of months to be involved in that. The Kaska Dene council are treated in the same manner as others. The information is as available to them as it is to anyone else. If they have a particular interest, I suggest they take a particular effort to find out when these sales are coming up and where.

I believe that covers the questions asked by the member.

MR. PASSARELL: I gave the minister nine questions. Maybe the minister, through his staff, can peruse the Blues and come back with the answers.

Concerning the seedlings and the silviculture program, it still says "$24,395,000 down to $2 million." I respect the minister's statements with regard to the 1,200 percent cut and how it is made up in other programs. I would appreciate his responses to the other seven or eight questions I posed to him concerning Silver Grizzly and some of the other cuts in the harvesting program and the fire site rehabilitation program.

HON. MR. WATERLAND: I did neglect the question regarding Silver Grizzly. Silver Grizzly has been pioneering in helicopter logging techniques, and we have been cooperating with them in order to acquire cost data on this type of logging. Helicopter logging can add to our allowable cut by bringing areas into production which were not otherwise accessible. We did grant Silver Grizzly an export permit for the simple reason that the cost of helicopter logging is so high that local manufacturers could not afford to manufacture those logs and still allow the helicopter logging to go on. I believe, though, that helicopter logging costs are coming down because of the gained experience that has resulted from our working with them and allowing them exports. Silver Grizzly still has to go through the normal process of export approval before they can export logs. They have been a pretty aggressive company in experimenting with helicopter logging. We have all gained a lot from their experimentation, and future permits for export will have to be dealt with in the same manner. Timber sale will be coming up in the not too distant future in that area. I believe Silver Grizzly is interested in bidding on that sale. I have indicated that they would be interested in establishing a sawmill in the area if they are successful. They will have to go the normal competitive route before acquiring that kind of timber.

MRS. WALLACE: I have three rather basic questions for the minister. Unlike the questions of my colleague for Atlin, they are not specific. They are more or less general and relative to the policy of his ministry and his responsibilities, although they do relate to specific areas within my own constituency generally.

A few years back the minister brought in new forest legislation. At that time he indicated to us that we now had a Forest Act that was going to allow much more control over our forest resource and a minister who was going to really take control of the forest industry and ensure that there was a just return to the people of British Columbia from our forest industry. I submit to you that that has not happened. I Would be the first to recognize the economic problems that the forest industry is facing at this time, with the downturn in the market and the general economic recession in which we find ourselves. But I would also suggest, Mr. Chairman, that this minister has done little or nothing to ease the burden of that downturn on the people of British Columbia — on the workers involved in the forest industry and on the taxpayers generally.

We know that the five-year Forest and Range Resource Fund, which came in with such great fanfare, and which the minister would try and have us believe is still intact, is not intact. Those moneys and that five-year plan have been completely removed, and the minister's words at the time he brought that in should certainly still be very true — should be more true in this time of unemployment when we could be

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using our workforce to carry out the objective. He said, and I'm quoting from Hansard:

In order to assure a continuation of funding over the years — and especially during those parts of the year which, for the reasons set down long before, are the transition period between fiscal years in government — we are making a provision in this bill...that we would have the 146 million for over five years.

He went on to say that all silviculture techniques we use are not things that we can start and stop year by year. There must be assurance that funding will continue through the years and will actually, in our case, increase through the years.

Then he went on to say:

The government has made a commitment in accepting the five year management program. This bill before us today is a part of that commitment, a part that will assure that this funding will not be intermittent, but will be continuous and will give the Forests ministry, in cooperation with the private sector, an opportunity....

Those points are still valid, but unfortunately the minister's fund is no long intact. It's completely removed.

That's just one example of the fact that this government goes willy-nilly as far as forestry is concerned. The minister is great at signing his name to fine-sounding letters, and making fine-sounding statements at various meetings, some of which I've attended with him.

One point that I wanted to refer to is the forerunner of what's been happening in our forest industry, and that is the situation at Honeymoon Bay, where Western Forest Industries was taken over by ITT and then eventually became Western Forest Products, a consortium of Rayonier, B.C. Forest Products and Doman. It was interesting when that first takeover was in the works that the minister wrote to the representative of the workers at the plant and said:

"I have just now returned to my office, and by this letter will confirm statements made to you at our meeting in Lake Cowichan. I made it, as a condition of my approval of the ITT takeover, that the new owners must make every effort to continue employment in the wood-manufacturing plant at Honeymoon Bay. I have, since our meeting, discussed this matter with the directors of Western Forest Products and have reiterated the takeover condition to them. As a result of my discussions I have the sincere feeling they are making every effort to fulfill this commitment.

"In discussions with them a proposal was presented which, if carried through,. will resolve the problem of wood supply at Honeymoon Bay. The ministry will be pursuing the proposal with Western Forest Products, and I feel confident that the details can be worked out in the near future. As a result of my discussions with Western Forest Product's directors. I am even more confident now than during my meeting with you that the wood-supply problem can be resolved."

Those are the things he said. We all know what happened. They were fine-sounding words. but a few months later there were headlines like: "357 Jobs Vanish With the Mill." There was three days' notice and four days' notice. Some were told on Wednesday, I believe, that the mill was going to be down on Friday — people who had been there for 30 years and more. He built up false hopes by those kinds of remarks.

What did he actually do? I sat with him in a meeting at Lake Cowichan with the village council. sometime after the mill went down, in an attempt to try to resolve some of the problems that had occurred. One of the major concerns was the fact that the company owned the property where an industrial site was proposed and they were tying this in with the settlement of the townsite. The minister at that time indicated that he thought the company really should separate those two issues, and he promised to write a letter. He did write a letter, but that letter was quite different in its tone than the firm sort of commitments he made at that meeting. His letter to the company, when it finally came, was very long and very vague in its demands.

It's also interesting to notice that when this particular takeover was in the works — it took place in October 1981 — it wasn't until April of this year that B.C. Forest Products finally applied to FIRA, after the fact, to see whether they could legally take over the company. Where was the minister when all this was going on? Did he not make any representations? Was he not concerned about the possibilities there? Was he not concerned about that mill? The regional district is now trying to negotiate with Western Forest Products. I sat in on a meeting months ago, when the regional district actually made an offer to Western Forest Products. There was no response at all — dragging their heels. I suggest to you, Mr. Chairman. that the real purpose of that takeover was to get their hands on the good supply of timber that will be ready in ten years; and the intent from the word go was to close down the mill at Western Forest Products. I think the minister sat by and let that happen.

Now we have the Chemainus situation. Here we have another takeover, Mr. Chairman. The Premier was very adamant when CPR was going to take over MacMillan Bloedel; he said that B.C. was not for sale. And CPR did not take over MacMillan Bloedel. But when Noranda came along. It seemed to be a different story. We have Noranda taking over MacMillan Bloedel. The history there is very interesting indeed. Over 500 employees have been put out of work. Of course, that particular mill is an old mill — we know that. But MacMillan Bloedel had announced a $500 million expansion program, part of which was to go into the Chemainus mill. The announcement was made that they were going to upgrade that mill. In fact, they had put in a new sorter — the kind that can be moved easily. Incidentally, it's all-steel frame, set in cement. This all began three years ago, and they publicly announced that the Chemainus mill upgrading was included; in fact, they put in some landfill so that this could go ahead. Now that the mill is down. some MacMillan Bloedel representatives are saying quite frankly and openly that the money slated for Chemainus is being spent in Alabama. Where was the minister when all this was going on? What was he doing'?

I have a letter here from his deputy, which indicates that when Noranda took over he made some conditions. He said that Noranda will not seek to elect a majority of the members on the board, that Noranda will dispose of its shares in B.C. Forest Products. and that M&B's capital expenditure program will not be detrimentally influenced by Noranda. I wonder if the minister has even inquired whether Noranda had any influence on those decisions not to invest in Chemainus.

It seems to me that not only MacMillan Bloedel, Noranda and B.C. Forest Products but also the various other forest companies in this province are perhaps using this economic downturn in the forest industry to get their own houses in order. I wonder if any studies have ever been undertaken by this ministry to establish whether or not they have an overcapacity in milling facilities in British Columbia. Have any rational studies been made to see whether or not this is the

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case? Has any attempt been made to sit down with the major logging corporations in this province and work out a rational plan, if that's the case, to ensure a flowthrough of jobs and the utilization of the forest resource?

The Chemainus closure is very similar to the Western Forest Products closure, but it's different inasmuch as MacMillan Bloedel do have a timber supply. It's interesting to note that the logs that would have normally gone into that mill are still being harvested, dumped into Chemainus Bay, and transported to White Pine on the mainland, or to Alberni. I wonder why that is, Mr. Chairman. Something was mentioned yesterday about sympathetic stumpage. Has it anything to do with the fact that some forms of tenure give a lower return to the Crown, a lesser stumpage, than other forms of tenure? Is that why it's happening? Is this an attempt to get various members of the workforce arguing with each other — the old divide and rule philosophy? Is that part of it? Has the minister ever inquired or looked into whether or not that is part of it? He says he has great powers under the Forest Act. Has he ever tried using any of them, Mr. Chairman? It seems to me that there's a great game of chess going on with our forest resource, and the workers of this province are pawns in the game. Never was that exemplified more than in the case at Chemainus mill. We were down at Christmastime; we didn't know when we were going to open. We were down again just after Christmas. We came back, and a few weeks after we were back we got notice that we were going down again indefinitely. How long is indefinite?

Has the minister ever attempted to get an assurance from the manager of MacMillan Bloedel that that mill will reopen? If that mill stays closed for 18 months, the people who work there will lose a tremendous amount in severance pay. Their contract specifies that after 18 months the Employment Standards Act applies. The contract, if in fact there is a closure of a mill, grants one week's severance pay per year of employment. The Employment Standards Act sets a maximum of eight years. There are at that mill, Mr. Chairman, I believe 175 employees who have 25 years and more of service; of those, half have over 30 years of service. Is it a game of chess, and are the employees pawns in this game? Has the minister checked into it? Has he made any effort to gain an assurance that that mill will operate within that 18 months'? If he hasn't done that, will he now proceed to do so? Because believe me, there is a tremendous number of very concerned workers.

If you have worked in a mill for 30 years, you are probably 50 years of age or more. What chance in today's economic picture does anyone 50 years of age have to procure employment anywhere else? In addition to that, you've established your home, raised your family and you probably have grandchildren. It's an impossible situation for those workers, Mr. Chairman. I have seen or heard nothing that this minister has done. I have letters to him, but I don't have any responses. I have a letter here from the president of the local union urging him.... He's not unaware of this, because this letter is dated May 11. He explains the situation relative to the severance pay. He says:

"You must understand why this is so important to us. Firstly, there are many junior employees who are trying to raise a family and provide for them during these difficult times. These people are faced with a proposition of not knowing when to expect a possible return to work; therefore they do not know whether to pack up and leave the area in hopes of finding employment elsewhere or to wait it out here.

"Secondly, there are many workers who are over 50 years of age and have more than 30 years' seniority. As you know, these workers have little chance of finding employment due to their age factor. They still have some 15 years to work for a full pension and ten years until they are eligible for early retirement. These people face a very bleak outlook of uncertainty."

"Thirdly, there's a large group in the middle who are trying to make house payments...." and so on.

Have you done anything to ensure that that mill opens, even if for a short period of time, to at least keep the flow so those people have some degree of security relative to unemployment insurance, to their pensions and to their homes? I haven't seen it happen. Instead, we hear much talk about the so-called employment-bridging assistance program. I don't think the Minister of Forests has had much to do with that either. If the Minister of Forests had anything to do with it, I don't think he'd be calling it by a name like that and I don't think he'd be calling the workers involved in it participants. It seems to me that it's something dreamed up by someone who knows very little about the forest industry.

We've heard lots of talk. We've had the head of Manpower come out and say: "We've got six applications." We've heard another representative of the federal and provincial governments say that they're going to make 2,000 jobs. We've heard nothing else: Nothing seems to happen. Are there any programs underway? Are there any programs proposed for Vancouver Island? Have these applications been approved? Are they going to take place on Crown land, or are they going to be done on company land? All I have seen is a draft dated, I think, May 13 and called "Program Guidelines to Companies." I don't know if this is the current thing that's being used or not.

I haven't talked much to the trade union movement about this, because they don't seem to know anything about it at all. They haven't even heard anything about it. I think they did sit in on a couple of meetings, but got very little information. When I talked to company representatives about this, do you know what they told me, Mr. Chairman? They say that it won't work. They say that what the government is asking them to do is break their contract with the unions. That's their concept of this program. If it's working anywhere, I'd like to know about it — how many people are employed and what they're doing with it. I'd like to know what the plans are for Vancouver Island — when they're going to get underway, where they're going to be and who's going to be employed.

Are mill workers going to be employed? I hear that they're not, that this is only available to loggers and forest workers. I hear that mill workers would not be eligible for this because of the safety problem. If they were eligible, there would have to be quite a training program, because mill workers are not used to climbing around the sides of mountains, using chainsaws and all the things that go with site preparation. Neither do they have the equipment. Perhaps they don't have safety shoes. They may have safety shoes, but they certainly don't have rain gear, and they may not have a lot of other equipment. It's been estimated to me that the cost of outfitting themselves to do this job would be something like $200. With the amount that they get extra, over and above their unemployment insurance, it would take several weeks to make up the extra costs involved. So there would

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have to be some assurance that the program was going to be long enough to make it worth their while to get that equipment and to train to do the job. If it's just a two-week program, or even a four-week program, that isn't going to be the case.

The other thing is that I understand this does not apply as a credit to unemployment insurance, unless you're completely out of unemployment insurance credits — then you can earn a few weeks.

The whole thing seems like a bureaucratic nightmare that's costing the taxpayers a mint of money for a lot of public relations and no action. I certainly haven't seen any action. If there is some action, I'd like to know where it is and how many people are actually working under this program,

HON. MR. WATERLAND: It amazes me how negative the member for Cowichan-Malahat can be about a very sincere effort to assist those who are currently unemployed in the forest sector. I would suggest, if the member is as interested as she claims to be, that she could very easily get the current information that is in wide distribution around the province now, answering the questions she has proposed here today. We have put together rather substantial packages of information after having worked through the administrative procedures that must be followed in order to get the program into place. If the member had been in the House yesterday, she would have heard me advise the House that we are currently in the process of approving several projects. In fact we have approved some eight or ten projects. but they cannot get underway until the master agreement is signed in Ottawa. That agreement was signed several weeks ago by our Minister of Labour (Hon. Mr. Heinrich) and myself, and it was then sent to Ottawa. All the procedures — the ways of implementing the program and the agreements that have to be signed between sponsoring companies and participants — are in place. It's simply a matter now of CEIC selecting employees to take part in the programs.

Safety aspects are a very important part of the program. If there are people involved who are unfamiliar with the type of work that has to be done, we are insisting that a training program and proper supervision be provided so that we don't have people unnecessarily subjected to hazards. The program is open on a voluntary basis to anyone who is unemployed. They don't necessarily have to be in the forest sectors, but it's directed to those people who are employed in the forest sector — mill workers, loggers, pulpmill workers or anyone who voluntarily wishes to take part in the program. The program will be available to be put into place on any managed forest land. I went into this yesterday. One of the problems we have on Vancouver Island is that a great deal of forest land is incorporated into tree-farm licences, both private and Crown land, and there are other great tracts of privately owned land. In order to make the program as broad in area as possible. we're including any land that has a history of forest management. We're not suggesting that someone with a private 40 acres can take advantage of this program to enhance his 40 acres when it has not been managed in the past. But any land that has been managed either in a taxation tree farm or in any tree farm itself or even land that is outside of taxation tree farms or tree-farm licences that has been managed and has a history of management is eligible.

The member went into considerable debate regarding the Chemainus mill. I suppose she would include other plants of MacMillan Bloedel that are currently in the shutdown state. I have to agree with the member wholeheartedly that the uncertainty is very difficult for employees to deal with, and it is equally difficult for the company to deal with, When they say "an indefinite shutdown," such as they have said at Chemainus sawmill, that's just what they mean. They don't know when markets will be recovering sufficiently to allow them to go back to work at that plant. But I have had very lengthy discussions with senior people in MacMillan Bloedel and they advised me that "indefinite" means just that. They don't know. They would very much like to be able to advise their employees when they can reopen. but they don't know what the market situation is and none of us do. All we know right now is that it's very depressed, prices are low and volume movements are very low. It's a difficult thing to deal with, but I'm afraid, Madam Member, that I have no instant magical answers, nor does anyone else. We are taking considerable effort and administrative moves within the ministry to try to keep as many people employed as possible by our sympathetic administration policy. We're trying to hold back on any cost impositions that we could through normal procedures impose upon operators. because we realize the very difficult economic times they're going through right now.

[Mr. Davidson in the chair.]

The member talked to a considerable extent about the Honeymoon Bay situation. When the transfer was taking place I did ask and the company agreed that they would make every effort to keep that operation going. I had many hours of discussion with them and they did many hours of planning themselves — the three companies involved in Western Forest Products. I am convinced that they did make sincere efforts to keep that plant going. but it is an old, obsolete plant with a very limited timber supply. The only way that plant could have been kept going would be if we were to somehow take timber allocations away from someone elsewhere was also using them and creating employment and direct them there. We had no legislative authority to do that: there is no uncommitted wood available for that program. As the member we'll knows, there is a considerable loss in allowable cut brought upon us by the west coast park proposal; we have to recognize that. I am convinced now that there was really no practical way of keeping that plant going. It's a very sad situation. I did attend, as the member mentioned, a meeting at Cowichan Lake. I had followup discussions with the companies and the Ministry of Municipal Affairs. and they have, as a result of the discussions, placed a senior person to oversee what is going on there. I recognize that the regional district made some kind of offer to purchase the assets. I don't think that it is appropriate for the regional district or a level of government to get involved in the purchase of a townsite. In any event, if they do and if the company wishes to sell it to them, they would have to do so based on a realistic price, because it is an asset of the company.

I have not followed up recently on what progress has been made in resolving the administrative problems of the regional district. the Ministry of Municipal Affairs and the company insofar as the Honeymoon Bay townsite is concerned, but I assume that is going along. I understand from the meeting at Cowichan Lake that everyone agreed it would take some time before all the problems could be finally resolved. I don't really know where that is right now.

Western Forest Products, like most companies in the province, is having a difficult economic time. They were

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losing a substantial amount of money by attempting to maintain the Honeymoon Bay operation. In fact, right now they're probably losing very substantial amounts of money on all of the operations that they acquired from ITT-Rayonier. However, I'm sure they will get through these difficult times as well. I think if we had insisted that they continue to run that operation, perhaps we couldn't say that today. We have to recognize the difficult times we're in. I do meet with representatives of corporations and individuals involved in the industry, with people in labour, to try to find ways of getting around some of the difficulties we're having. I'm as involved in it as anyone else, and I'm making every effort to help get through these times.

The member mentioned something about "sympathetic stumpage." I don't know what she means by that. Our sympathetic administration does relieve as many of the higher costs as we can from the industry. By doing that, they're able to carry on longer. I think everybody involved — government, the industry itself — has pared costs as much as they can. Unfortunately, a lot of this is through a lessening in the number of people employed. But at least we're looking after and helping those who are still employed. Many of the companies, as the member knows, have decreased their staffing levels on the salary side by very substantial amounts. Those people too are now unemployed; and it's difficult for them as well.

I went into the employment bridging assistance program with the member, and also with the member for Shuswap-Revelstoke (Mr. King). As soon as the federal government signs the master agreement, we can complete the formal approval by the western director of CEIC and programs will get underway. Eight or ten of them are approved, and we have several dozen additional applications before us. I expect the program to be underway shortly. In many parts of the province we couldn't have been underway much sooner because of weather conditions, breakup in the interior, snow conditions and so on. I hope it will be signed in Ottawa, perhaps today, so that we can get on with putting people to work in that program.

MRS. WALLACE: I thank the minister for his answers. I have just a couple of quick questions.

I'm somewhat surprised to hear him passing judgment on what a regional district should or should not do. Surely that's a little outside of his purview if a regional district decides they want to do it. Is he opposed then to North Cowichan forest? That's an outstanding example of local government involved in forestry. The minister did the official opening. There's an example of local government involved in a forestry project. It's a planned and managed forest utilized by the people who live in the area as parks and recreation at one point, and then later harvested. There's a whole educational process going on there, and a real job is being done by local government in forest management. What's so wrong with a regional district doing exactly the same thing?

Anyway, that is completely beside the point. The problem is that the regional district made an offer, and Western Forest Products has not even replied. The regional district has looked at ways and means of carrying out their offer, but they can't do anything until and unless Western Forest Products replies, and there's been no response. That's the problem that's facing them at this time; that's part of the whole tie-up. The thing is held back just that much more.

Regarding the Western Forest Products closure, I know it's an outdated mill and I know it would be costly to upgrade it, but the minister didn't answer my general question about mill capacity in the province. Western Forest Products closed their mill down in October 1981. We have an announcement from B.C. Forest Products, one of the three in that consortium, that they are going to build a new mill in conjunction with their Crofton operation in 1983. Surely, if the same company is closing one mill down and building another, there should be some correlation, some flow and some assurance that the one mill stays open until the other mill is operative, so those people living in that vicinity have a continuing job. I submit, Mr. Chairman, that that's a responsibility of that minister, and that's a responsibility he has failed to carry out.

MR. GABELMANN: I want to make a few general comments, most of which relate to constituency matters. The first thing I want to say is that I often have occasion to deal with people in the minister's new structured offices in both Campbell River and Port McNeill in my riding. I want to say very clearly at the outset that I have had nothing but excellent cooperation from what I think is a very professional and very well-trained staff in both cases. I can't comment on any other offices because I don't deal with them, but I do know that in both Port McNeill and in Campbell River the people I have to deal with on an almost weekly basis are really very cooperative and very good. Their problem is that there aren't enough of them and they're run off their feet. The shortages of personnel will, I think, come to haunt us in future years — if not in burnout with some of the existing staff, then certainly in terms of properly managed operations that will have an effect years down the road. I did want to say at the outset that there are some very good people there, and the public of B.C. is well served by them.

The minister will understand that geographically, at least, I represent half of Vancouver Island. Almost all of that is forest land, and most of that is in various TFLs, but there are some public forests as well. The one I just want to mention briefly is the Sayward forest, which has been for years and still is in very real need of some major work in terms of thinning, spacing particularly, and fertilization, The forest is getting older and it's still in pretty desperate shape. The kind of money that needs to be spent in there to make sure that that can be a productive source of fibre in 30 or 40 years is not being done at the level that is required. I think we're shortchanging future generations if we don't spend that kind of money today.

In that context I think it's nothing short of disastrous that the five-year plan, which was announced with the kind of commitments that were contained in it, is not being maintained, is not being kept. We tend to do this in society in so many areas. We try to save some dollars today. We do this in social services in the same way. We end up saving some dollars this year, but at a phenomenal cost in 5, 10, 15 — and in forestry's case sometimes 60, 70, 80 — years down the road. I really wonder if we aren't shortchanging our children and grandchildren in this respect. I wonder whether or not we're serving our responsibility properly when we make the kinds of cutbacks that we do in so many government programs. The five-year plan cutback is as good an example as any.

I have a sense that the government doesn't take its full share of responsibility in terms of marketing and developing new markets. Obviously the Pacific market is one that is now

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beginning to develop. I know that some of the companies in my constituency have opened a few markets in that area. One of the problems they have is with quality. Even with modern planers and planing mills they are often not able to meet the high quality demands, particularly with the Japanese market. I don't have a sense that there is very much work being done jointly between the government and the companies to upgrade that. I don't have a sense that there are some very vigorous attempts being made by the government to develop markets. I know the minister has travelled, and I know that there have been various delegations from the ministry to China and to other places in the east. There's not a sense.... Maybe it's happening, but if it is, the workers in the industry don't seem to feel that it's happening. I don't have a sense that it's happening in the kind of vigorous way that is required. We've been so dependent on the American market, and what's happened this year in this province should really have been predictable. We put all of our eggs in the American basket, and now we're suffering the consequences. It was predictable, and we didn't take the steps that should have been taken before to diversify the markets. I'm not confident that those steps are now being taken in a vigorous enough way.

I wonder what the minister's reaction is to the idea of establishing an agency similar to the Agricultural Land Commission for forest land. I think he and I would share the view that forest land needs to be preserved. We need to understand which of it is the best. We need to make some decisions about how we prevent the continued alienation of that land. It never ceases to amaze me that we pick one corridor for a highway, another corridor for a pipeline, and yet a third corridor for a hydro powerline. Usually those corridors, because they're cheap, go along the bottom land and the best land. I don't understand why we don't count the costs of doing that and understand that even though the initial costs of establishing those swaths through the bush might be higher if we went into some of the upper land or poor timber, it would, in fact, be a cheaper cost for society in the long term by preserving the good forest land. Perhaps we do need some kind of commission or agency that will protect and preserve forest farmland over the years.

One of the difficulties I have in my riding in making the argument for the preservation of forest land with foresters, Forest Service people and various people who are really quite concerned about forestry is that people who are not directly involved in it look around them and say that everything in northern Vancouver Island is already controlled by the big forest companies. That's a reality. There's a perception problem there. It appears to people that everything is already controlled by the forest industry, whether it's the government or the companies, and they ask why they should worry about a few more acres here or there. That's a general problem of perception that the minister has. I cite a current example that the minister may well be aware of. The Forest Service is attempting to take over from the lands branch the responsibility of Malcolm Island in terms of setting up a managed provincial forest on part of that island. They are meeting intense opposition from the residents, probably almost totally unanimously, who, I think, quite strangely, would prefer to be managed by the lands branch rather than Forests. If I had my choice, I'd pick Forests, not Lands, in terms of how the two operate. You can at least deal with Forests, but you can't deal with Lands.

There is virtually unanimous opposition on the island to the attempts by the Forest Service to take over the management of part of the land on that island, which is good productive land. You have to ask yourself why all these people are so opposed to it, because from a public policy point of view it makes sense that those forest lands be cleaned up and replanted anywhere that is needed, and that whatever else is required be done to upgrade those lands so they become productive forest land. Most of the people who live on the island either work in or around the forest industry, or have great connection with it, yet they're opposed to what the ministry is doing. I think the minister should ask himself why that is. I think it's because he has allowed the big companies to be so dominant, particularly on the northern part of the island, that the public doesn't trust anything the companies do. Of course the government is lumped in with the companies because the government has given those companies the massive powers they have over almost all of the land that exists up there. To go back to the first point on that issue. It may well be time to establish some kind of forest land reserve in this province that has sonic of the powers that the ALR has.

The minister and I have had discussions about the contractor clause in the past, and I've raised the issue that when the 50 percent clause was provided in the Forest Act my initial reaction was that that was a good idea. I was supportive of it. I didn't understand then some things that I understand now. Every tree-farm licence is different, and various parts within each tree-farm licence have some differences that militate against an absolute kind of proposal like a 50 percent clause. It so happens in my constituency that the Tahsis Co. TFL should probably be sitting at between 70 percent and 80 percent contractor, as it does. That's probably an appropriate division between the contractor and the company operations. But in various parts of their TFL it should be required that it be 100 percent company-operated. I cite the case of Zeballos, Tahsis and Gold River. I don't understand why we have a policy that allows for the destruction, or possible destruction, of communities by allowing contractors to operate camps within a few miles outside the town itself.

When reductions occur in logging, as they have this year — particularly in Zeballos, where there will be permanent reductions because of the limited log supply — the reductions are carried out on a so-called even-handed basis. But that means that people with eight months' experience in the contract camps lose their jobs and seniority, and those who have as much as eight or ten years' seniority in the company operation also lose their jobs. That's not even-handed. It means that the community suffers. It means that the people with seniority can lose their jobs. I would argue for a much more flexible application of the contract clause. It should be decided upon TFL by TFL, within a general philosophical framework that says we want to split it up and share it. But there should be sonic flexibility, so that the minister can say, "Okay, in this part of your TFL you should be 80 percent to 100 percent contractor, but in this other part of your TFL you should be 100 percent compam operation," to help preserve communities and allow them to continue to exist. It's a lot better for loggers to live in their own homes in an established community than for them to have to commute to logging camps. That's the kind of future economic and social direction that I personally would like to embark upon.

I think it's a much healthier situation that people who work in logging camps in and around Zeballos should live in Zeballos when possible. They shouldn't be travelling every

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week from Courtenay or Campbell River. It's disruptive to family life and it's expensive to society. It means that the community of Zeballos is faced with being uneconomic. That is not directly as a result of the contractor clause, but a different way of handling that clause would allow us to make sure that these communities had some long-term viability. Obviously I'm also concerned about the whole seniority thing. It strikes me as being strange that in bad times we're able to lay off people with many years' experience but keep people on who have had only a few months' experience. That's also an effect of this clause.

Another thing that is happening that I'm sure the minister is aware of — and I would be interested in his reaction — is that some of the contractors are becoming as big as the big, bad companies were in the first place. It's pretty expensive to operate.... It costs a million dollars to buy a piece of equipment these days. The little guys go out of business in bad times, but the big guys get bigger and bigger, certainly in my area. We aren't very far away, particularly in these economic times, from seeing some of these contractors grow almost as big as these big, bad multinationals with the TFLs. It's a little strange that the original intention of the contractor clause, as I understood it, was to allow some of the little guys to get a piece of the action. It doesn't really work. It might work if we had continued good times. But many of the really little guys are being driven out of the business. When you talk about a million or more dollars for equipment at today's interests rates, how many months are they going to be able to keep those machines in operation? It's just not feasible. That's a very real thing that's happening, and we'll have to deal with it one of these days.

The Minister of Forests has responsibility for conducting multi-use studies — for example, the Tahsish study currently underway. I think it leads to some strange situations. The Minister of Forests and his ministry are responsible for conducting, staffing, organizing and running those particular studies. We're talking about conflict between logging and wildlife and recreation and a variety of multi-use conflicts, where one of the participants is organizing and running the study — even though independent chairpeople are appointed and community people are participating in the study. Wouldn't it be far better if a more independent agency, such as the Environment and Land Use Committee, were in fact the administrative body running these studies into conflict situations?

From informal discussions with people in the Forest Service, I think there is a fair amount of agreement between people on the minister's staff, particularly at lower levels, who share the feeling that it's inappropriate. It would be the same if we were doing a study on the Tahsish and said to the Parks Branch...or to be even more absurd, to the people in the ecological reserve branch of the Ministry of Lands, Parks and Housing: "You will do the study here; you will organize it, and your staff will be the support staff for it. We're going to decide whether the place should be set aside as an ecological reserve in a park, or in a partially logged situation, or whether the wildlife potential is going to be maintained by a different kind of logging program." It would be absurd to have the ecological reserve branch run that study. It is just as absurd to have the Forest Service run it, in my judgment.

There are some problems with that. The whole public process is hampered by the fact that staff of the big companies can get to the meetings. They are paid to do it. But the public representatives have to take time off work and often travel a great distance at great personal expense to participate on their side, so there's a real imbalance between the powers of those people who represent the big companies and those who represent the public interests. They are varied and not always the same. I think that is something that should be dealt with. Frankly I don't want the minister to deal with it. I want him to shift the responsibility for that whole program away from his ministry and into an agency like ELUC. It doesn't necessarily have to be ELUC, but it seems to me that that's the most logical place for it to be.

I wonder if the minister would comment, even if only briefly, on Western Forest Products' pulpmill in Port Alice. There is still concern in the community that the company could shut the thing down for good, forever. It's my understanding from discussions with people who were involved at the time that it was pretty clear there was a commitment that that pulpmill would be kept going. I don't want to mislead the minister; there's been no indication recently that they will be shutting it down permanently, but there is a great deal of anxiety on the part of people who live in the community and work in the mill about the prospect of that mill being closed at some point, particularly given Western Forest Products' current financial situation, which is not as short-term as many of the other companies.

Log salvage is an issue that I don't know very much about. I'm confused by it, and am further confused when I ask people involved in salvaging what their view of it is and then talk to people in the ministry and in the business on the upper end about what their view of the problems and the solutions is. I get two totally different perspectives. I thought I would just relate what.... I've made some notes of various letters, phone calls, and things that have been said to me in public meetings about log salvage, from a public point of view — not the salvagers' or the Gulf Log Salvage Cooperative's, point of view, or the ministry's point of view; just the public's point of view. Boaters and fishermen say there is an immense amount of pulpwood drifting in and around the northern Georgia Strait and up into the Johnson Strait. There are quite a number of sawlogs floating around and not being collected. There is a concern about whether or not the salvagers are getting enough money with the new procedures. There is some concern about the current method of piling these logs along the beaches and just leaving them there. I know there are some in front of our house in Campbell River, and they sit there for months on end, right on the beach. Maybe it's not a bad thing; I don't know. I do know that the public is concerned about the way in which the whole log salvage program operates. There seems to be too much stuff in the water. There doesn't seem to be enough responsibility on the companies who put the stuff in the water in the first place to make sure it gets cleaned up. As I say, it's not a subject that I have a great deal of familiarity with: in fact, not much at all, and I'm quite candid about that.

The final thing I wanted to raise with the minister — it's partly a Highways' problem, possibly a Forests problem — is the road between Tahsis and Woss. The minister was in Tahsis a few weeks ago at their loggers' sports day. I'm sorry I wasn't able to be there, but he would have heard from people there about their desire to build a road from Tahsis out through Woss to the Island Highway, rather than having to go through Gold River on the existing logging road. The minister, I understand, had a meeting with the mayor of Tahsis just last week in which a relatively detailed proposal, from their point of view, was presented concerning the timber values

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that would be opened up northeast of Tahsis if that road were to be constructed. We're talking, basically, about 12 miles, and there's an estimate there, in today's dollars, of something just over $4 million, with a class 3 logging road standard. I wonder what the minister's reaction is to doing that through section 88, as opposed to a Highways ministry program to build, as they would, a very different kind of road, probably at a cost of $35 million — whether or not this isn't an appropriate avenue to develop a road like that through section 88 if, in fact, the kind of timber values that are claimed to be there are there and would be opened up. I'd be interested to know. Even though I suspect this is at a relatively preliminary stage. I'd be interested in the minister's reactions at this point.

HON. MR. WATERLAND: Mr. Chairman. I thank the member for North Island for what is obviously some rather thoughtful discussion on the forest industry and things pertaining to his constituency. I'll start at the beginning. I appreciate his comments on the cooperation he has received from ministry staff. I really think that our decentralized reorganization has made that type of dialogue much more possible. I'm getting similar comments from many parts of the province, although we do have problems in some areas and are not getting such glory reports from those areas.

The road from Tahsis to Woss. As the member mentioned, I was up in Tahsis a month or so ago and had a meeting with the mayor — I believe it was last week or a week before. He put forward his suggestion on that rather short road of 11 to 12 miles as opposed to the 42 miles that it is now from Tahsis out to Gold River. I have asked my ministry staff to look into just how soon we could do that and also to have some discussions with the Ministry of Highways to see if there is perhaps a way that we could share some responsibility there. Strictly from a forest-harvesting point of view, it would be hard to justify, but I think we have to consider the feeling of isolation that people in towns like that have. Despite the fact that they do have a road they didn't have a few years ago, it's quite a long road with some severe grades on it. I went over it in the springtime when it was in relatively good condition, but I'm sure that in the wintertime that road is much more difficult to travel. I have a great deal of sympathy for them because I spent a great part of my life living in relatively isolated communities in B.C. and know the feeling they have. So I've asked my ministry if they will look at how we could perhaps modify some of the harvesting patterns in the area with the cooperation of the licensees and get that road built at an earlier time than it might otherwise happen. I would think that during the current economic times and with the limited or negative cash flow that is being experienced by communities, it wouldn't happen this year, I mentioned this to the mayor when I talked to him. I said we'll have a very close look at it and see if we can do something, particularly with some cooperation from the Highways ministry. They could travel over 12 miles of road which would have less severe grades than the existing road and, of course, it would be much shorter. Then they would be on the North Island Highway. This would, I think, do a lot to relieve their feeling of isolation.

The Sayward forest is probably the most current of any of our forest areas on the level of forest management is how advanced it is. We were having tremendous cooperation from other ministries and particularly the Ministry of Environment in managing wildlife habitat in that area as well. We have had to delay our fertilization plan for the area for a year. A delay of fertilization for a year is not a serious thing, although I very much would like to have had it done this year. But we will carry on with our management plans there, and that is an exceptionally good growing site and can contribute a lot to our allowable cut.

The member mentioned marketing and what he perceives as a lack of aggressiveness by the provincial government and the industry in searching out new markets. Perhaps the member wasn't in the House when I talked about COMDP, our cooperative overseas market development program, which the Minister of Industry and Small Business development has increased his funding to this year. He and I have worked rather hard at trying to develop additional markets. I mentioned I was in China this fall, and already some very positive things are flowing from that trip — some increased market activity and a very good dialogue in terms of exchanging technical information between the companies. I think we're establishing a dialogue with them that will serve us well in future markets. Over the last six or seven years we have changed our market concentration from the United States rather substantially: I think we have further to go. Six or seven years ago we were selling in the order of, I believe, 62 percent of our manufactured lumber products in the United States. That is now down to just over 50 percent, so we have diversified our market some what. We are continuing an aggressive program in cooperation with the industry in trying to do that, because we have been too dependent on one market area. However, in saying that, I don't think we should ignore that North American market, because it is closest to us and I think will always be a very important area for the selling of not only our lumber but our plywood, pulp and paper as well.

We have, in addition, to work with COMDP. Via my ministry I have been funding Forintek. which was formerly the Western Forest Products lab. A lot of their research is into standards, especially in foreign countries, so that we can manufacture to those standards and thereby increase our market penetration.

The member talked about an agricultural land type of concept for forest land. I think what we have right now in provincial forest designations is as far as we have to go in protecting forest land. Land is designated as a provincial forest only after detailed discussion by various land management groups within the government to assure us that it is the best use of that land. For land to be removed from a provincial forest it has to pass a test. This makes it necessary to demonstrate that the land is being removed for a higher economic or social benefit to the province. That test is made and if the land is being removed for a better use — either economically or socially — it can be removed by order-in-council. There are very many legitimate demands on the forest land base — agricultural, residential and wilderness — which we have to accommodate.

The business about multiple corridors for pipelines. powerlines. highways and so on is a serious problem. and I agree with the member that we should try to do more to coordinate a corridor concept. If you look at a stretch of powerline, for example, there is a tremendous amount of forest removed from production. That is why any major development like that is now required to be processed under our linear development guidelines under the Ministry of Environment.

[Mr Richmond in the chair.]

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The contractor clause ties in very closely with the Nimpkish Camp problem. A contractor clause does say that a minimum of 50 percent shall be harvested by contractors. We do have the authority, when deemed advisable, to change that. They can go anything over 50 percent they wish, but if there is a need — because of community stability, seniority problems because of people working with the companies — that can be varied. I do have a contractor clause advisory committee, established a couple of years ago, which has representatives from the IWA, major licensees, integrated companies, small companies and logging groups. Members are suggested by the Truck Loggers Association, for example, to which most coastal loggers belong. If there is a need, they judge whether it is a real need or not. They are the people who should know best, because they are involved in it. They are associated with the communities and so on. Quite often we do vary that requirement by order-in-council. We do have that flexibility, and it is used.

I recognize the problems of community stability. I also recognize the social problems that develop because of the camp syndrome. I think it is much better to have people live at home with their families rather than in isolated camps, even if they have to commute a fair distance. It can't always be that way, because commuting would be too time-consuming and too expensive at times. But camps are also expensive, and they are becoming more expensive all the time. I think you will see a trend towards more commuting and fewer camps in the forest harvesting area.

The member mentioned contractors getting quite big. In coastal logging particularly, although it is small business as far as the forest sector is concerned, in comparison to most businesses even a small contractor is a pretty big businessman. It doesn't take many pieces of equipment to add up to $1 million, and it is quite a large business. Being a big contractor does not necessarily guarantee survival, because usually the big contractors have some pretty big liabilities as well. I think most of the companies are pretty good at helping contractors in financing. In many cases right now companies are actually carrying contractors with guarantees to banks and so on to make sure that the proper array of contractors is around, because they are quite essential to the major companies.

The Tahsis study. We have various methods of getting public input and involvement of people concerned with the use of various land areas. At times there is a separate agency which is the lead agency in doing the studies. At other times we feel it more appropriate that we should be the lead agency. Our total philosophy in my ministry is not how not to use the land but how to integrate the use of the land in such a way as to recognize other resource values. Many times when we do such studies, even though we are the lead agencies, we do take areas out when it really makes more sense to keep them in a pristine setting rather than to harvest them. Our legislation requires us to consult and cooperate with other agencies of the Crown and with the general public in determining the best use of forest lands.

The Port Alice pulpmill. I have had meetings with the council from Port Alice and with Western Forest Products. I have been assured that they have absolutely no plans or thoughts of any permanent closure of that operation. I have passed that information back to the council, and I am sure that the company is in constant dialogue with the people and the council of Port Alice. They are suffering market problems now, and I understand that their operation is up and down depending upon markets for their sulphite pulp. They fully plan to continue on with that mill. I think the sulphite-pulp business is coming to an end, but their plan is to convert that to a Kraft mill when their markets disappear or get to a point where they can't afford to keep it running as a sulphite mill.

I guess log salvage is not as pertinent to the North Island area as it is to the Gulf and Howe Sound areas. We changed the log salvage regulations about a year ago. We had very extensive discussions via White Paper and meetings with log salvagers before these changes were made. When the changes were announced, I had a meeting in Vancouver with log salvagers. There were questions asked at the time which we subsequently answered. Since that meeting I've heard nothing from them, so I can assume that they're not unhappy with the changes that we made.

One of the effects of the changes was to make it more profitable to them to salvage the low-grade logs. In the past they would go after the higher-grade logs, and the lower grade ones would be floating around as a hazard to boaters. Our regulation change has made it more attractive for them to salvage these lower-grade logs. We're also working with the Fraser River debris control committee, which is a cooperative thing among the Canadian government, the provincial government and the industry. We have a fin boom up in the Fraser River near Laidlaw which traps a lot of the debris coming down that river before it ever gets to the salt water. When driving past there about a week ago I noticed a tremendous amount of wood in behind the fin which has been taken out. A lot of it is being chipped and used, and some of it is being burned.

I think that covers most of the areas discussed by the member. I thank him for his very thoughtful comments.

MR. LEVI: I want to ask the minister to deal with two points. One relates to the statement he made when he was making his opening remarks about the long-term prospects for the forest industry. The other one is: will he tell us what the role of the government was in respect to the ITC hearings in Portland, Oregon and Washington? What did the government, along with the Council of Forest Industries, do in relation to that?

Yesterday the minister said that the long-term prospects for the forest industry in British Columbia are relatively good. As the minister knows, the Fraser Mills are in my riding. At the moment, they're not operating. I had a chance to talk to some of the people who are usually there on the weekend. The average guy who works in the mill, or even in the forest industry, as I understand it, is not quite sure what's down the road in terms of the industry. When the minister says that the long-term prospects are relatively good, he really doesn't put any flesh on that statement, and it does fly a little bit in the face of the reality of the situation, for instance, in the United States.

The industry is 25 percent of all our workforce. It's almost like we are a single-industry province, not discounting the mining industry, but in terms of the size and the number of employees and the spinoff effects as well. Our industry does go up and down relative to the U.S. economy, particularly because we constantly look at the housing market in the United States. In fact, everybody feels that if things pick up down there they'll pick up up here. That is a major question in terms of what is happening both in the industry and the government in respect to some future planning.

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We're going through a period now which is, according to the economists and political observers, the worst possible period since the Depression of the thirties. There were some lessons that we learned from the thirties probably more so in the United States than here. They did public works programs and made a great effort to put a lot of people to work. They also did an enormous amount of development of resources with things like TVA and that kind of thing. What they did do was a lot of planning and a lot of public discussion as to what was going on. The only time we've ever come close to doing that in this province was when the Second World War was on, and this Legislature in 1943 set up a post-war reconstruction planning commission. They had a lot of work on it. The former Premier of this province, W.A.C. Bennett, was on it. He was a great advocate of that kind of thing.

What kind of discussions go on between the industry and government? What vehicle is there for the government to be able to say this is what we're going to do as we gradually get out of this economic depression — not what we as the government will do, but rather what we will do in conjunction with the forest industry, because it's the major industry, and how we'll go about doing it.

Some of the things that are happening in the United States indicate to me that we're not going to be able to go back to the old rules. We are not going to be able to be that dependent on the United States as a major importer of our forest products. We know that in respect to what's been happening with our exports already. Our exports have actually been dropping in the United States. However, they've been picking up in some areas — in Japan to some extent. However, that is still the major market. We have not done particularly well in terms of the development of overseas markets. We know that the Minister of Industry and Small Business Development (Hon. Mr. Phillips), along with the IDSA people, has done a market study for upgrading B.C. lumber products in Japan and other selected countries in the Orient. The move is to look at the Far East. The minister said he was in China last year.

What I'm saying to the minister is that surely it's time to have some discussions here, both in this House and making use of the forestry committee, in terms of where we can go with the industry. What kind of planning can go on? When the minister says, as he said yesterday, that the long-term prospects are relatively good, I might draw his attention to a statement made by Mr. Knudsen last October. He was talking about the state of his own company, but he did say we're now in the process of taking a very hard look at every single operation. The eighties are going to be a hell of a lot tougher than the seventies. That seems to be the general theme of the major spokespeople for the industry. Peter Bentley made similar remarks. People we meet in the Council of Forest Industries are also saying that. If this industry, which is the major industry in the province, does not make use of a reasonable vehicle by which we can take the public along with us, if the minister along with some of the people in the industry, and hopefully the standing committee on forestry. don't come forward and talk about it.... We haven't had that happen in this province for a long time — almost ten years — and we need to do that, because what people need to understand is that economic aberrations aren't necessarily going to spell total doom for us and that there are some plans. That's what we have not had.

The minister, in response to what is happening to the industry, has come up with a phrase. He says: "We're using a sympathetic administrative process." What occurred to me when he was saying this was: if you're sympathetic now, why aren’t you sympathetic when the industry is operating and why don't you tighten the thing up? What you've mainly done is say: we’re leaving them more money so their cashflow problem isn't as difficult as it is at the moment. Well, the cash-flow problem is always a problem with those people, but the main thing is what the minister has avoided — he has avoided it — the major strategy.

Now some of the Wall Street people have been looking at that industry. I have in mind a man called Milman, who is with Rothschild. one of the big banking houses in the United States which has an interest in our industry. He makes an observation. "Milman said a major reason for the projected declines in housing starts is because of a revolution in the U.S. mortgage demands. which will have profound effects for years to come." That's an examination of what's going on in the United States housing market, for which we supply a large amount of the product. He's from one of the major banking houses, and he says that things aren't going to get any easier. they are going to get a little tougher, which makes it very important for us to look at alternative strategies.

Now it's not just that we have to go out and look for other markets. That's a major thing. and that's being done. I recall at the recent COFI dinner asking one of the leaders of the industry: "What would happen if there was a major concentration by the government in terms of developing our own housing market in British Columbia?" To my surprise he said: "Well, that would only take up another 8 percent of what we manufacture and produce in this province." I was some" hat surprised by the very small amount of product that would be used by that. So we really have locked ourselves in — we export or we die.

One would hope that as a result of the study taking place we're going to be looking at alternative manufacturing processes. Earlier this year, under the chairmanship of our critic, the member for Shuswap-Revelstoke (Mr. King), we did have some hearings in Vancouver, and we did hear from the Greenpeace people and, of course, the fellow that presented the brief, Bob Nixon, who is a professional member of the Canadian Institute of Forestry and the American foresters. He made some observations which I would like to bring to the minister's attention. He was talking about what kind of work goes on by the ministry. He has a section in his brief, "Forest Planning," in which he says:

"The key to a prosperous industry is sound forest planning. It's not an accident that the province continues to lack credible forest planning legislation. The Ministry of Forests Act does not give the Forest Service a clear mandate to assist the economic implications of either existing or proposed forest policy. Witness the recent hearing held by the United States International Trade Commission concerning B.C. lumber export prices. I can cite any number of forest economic policy discussion papers which inform the people of Washington and Oregon on a wide range of options. benefits and consequences of alternative forest policy proposals. In British Columbia comparatively nothing is published about the forest policy. I submit that this reality exists because our decadent industry fears the consequence to its special status were it otherwise."

Leaving aside the rhetoric for a minute, what he is saying in some respect is that usually the only time we ever discuss the forest industry is when there is a crisis. Either there is a

[ Page 8202 ]

strike and somebody gets up and tells us what impact that industry will have on the economy, or we are in this particular situation today which is a straight economic problem. Then we begin to examine a little bit closer some of the shortcomings of what really is a lack, in my opinion, of sound planning in respect to the industry. I am not talking about the minister's department only, but the industry. To my knowledge there is no planning vehicle. The government does not have an economic planning vehicle anyway; they have a subcommittee of cabinet. The main thing is that in terms of this industry surely the time has come for this kind of candid, public, straightforward, discussion. I am not looking so much at a commission of the Pearse nature, which dealt with the technicalities of the industry, although albeit you dealt with one area which is still of a major concern. He talked about corporate concentration; it has to be a major concern. The thing is that we need such a vehicle, because, as Nixon points out, when it came to looking at what the hearings were in the United States, they had it all down. They had a complete understanding of what was going on. On the basis of that they were able to make some decisions, albeit the people who started the hearings didn't make their case as clear as they had hoped. There are other diplomatic implications of that.

I ask the minister to enlarge on the statement that he made in respect to his view of how the industry is, and back it up with something which gives him that kind of certitude.

I want to refer him to a statement and I wonder if the minister would comment about corporate concentration. Last year we discussed in this House the impact of the Noranda takeover of MacMillan Bloedel. They spent almost $700 million to do that. I don't know what they're talking about in the boardroom these days, but I'm sure that that $700 million might have been better used than it was. I'm thinking about what the director of operations for the B.C. Forest Service said on May 1. "Al MacPherson, director of operations for the B.C. Forest Service, deals with companies in trouble and has a chance to look at the books in most of the companies in the industry." Then the article goes on to describe what takes place when they look at the cash-flow problems. However, he does have a statement which perhaps the minister is aware of. "We'll see some concentration in the industry — like it or not. Certainly there is going to be some consolidation." I'm now quoting from Don Currie of Balfour Guthrie. "The big get bigger. Ten years ago someone said the forest industry would eventually be in the hands of 10 or 12 people." Now if there was ever an opportunity for a move for greater corporate concentration in the forest industry, it's now and a little later, as the economy improves. There are obviously the giants who are prepared to move in and do that.

We've had some discussions in this House about corporate concentration. I have never been very enamoured of the minister's point of view about that, because for some time they talk about not wanting any corporate concentration people outside — that was with CP; and then of course Noranda came in, and Noranda is almost a citizen of this province because their operation is in the north. But the concern I have is — and I think it's observed by Mr. MacPherson and then agreed to by Mr. Currie of Balfour, Guthrie — that we are likely to see a greater corporate concentration in this province. Now all of that goes together with what I started to say: that the minister should tell us about the planning, the discussions with the industry and this major concern that we could wind up, once we get out of this depression that we have, with a larger and larger portion of the industry in fewer and fewer hands, and that's indicated both from your own official and also from a senior official in the forest industry.

I would like to hear the minister's views on that. It is a very serious question. We have said many times over here, as Pearse pointed out in his report, that the concentration of a large amount of the industry in a few hands puts any government in a very difficult position, particularly if it doesn't have an updated economic blueprint about where the province is going. We have no indication from the minister, in respect to the forest industry, that there is such a blueprint. I don't want him to dot the i's and cross the t's, but to give us some kind of direction and understanding of what they are doing and whether they are prepared to bring the public into their confidence. I say again that we have a vehicle right in this chamber. There is no reason why we can't use the standing committee on forestry to do that kind of thing. I would appreciate it if I could get some response from the minister.

HON. MR. WATERLAND: I will just go through the points raised by the member for Maillardville-Coquitlam. He started off with the recently concluded ITC hearings in the United States. I realize that the report has been issued, and I think British Columbia was exonerated in that report. We had been accused of subsidizing stumpage and thereby giving an unfair advantage to our industry. The report did not conclude that at all. It did conclude that we have a different form of stumpage here but it was not necessarily an unfair advantage to our industry. It also pointed out the very large difference in the methods of determining stumpage, the difference in cost factors related to our country and theirs.

Our ministry was involved through the Council of Forest Industries. We, as a ministry or provincial government, did not directly make presentations to the committee, although we did have observers at it. We did work very closely with the Council of Forest Industries in putting together the technical information. We did have people from that commission here discussing technical matters with our staff in order that they fully understood the very nature of our stumpage appraisal system. I think one of the results is that you are going to see the Americans moving towards the type of stumpage system that we have rather than the other way around, because they have recognized that their bidding process makes it very difficult during economic recessions for their industry to carry on with the high prices bid for logs during more buoyant times.

What's down the road for our forest industry? I said that the future is bright for our industry, and indeed it is. We have a very large part of North America's softwood fibre supply, and it's up to us to make sure we can present that supply into needed markets and products. Quite a bit goes on continuously in the form of market and silvicultural research in British Columbia. A couple of years ago we set up, as was required by the Forest Act, the Forest Research Council, whose job it is to coordinate and monitor the research taking place in various sectors and areas of British Columbia, and in those parts of the world with which we deal.

Some very innovative things are being done. These innovative things are usually started off by the smaller companies. That has traditionally been the way it's happened in British Columbia. For example, the member perhaps read some time ago about Yellow Lake Sawmills Ltd. of Penticton — I believe that's where they're located — and their penetration into European markets with lodgepole pine to Scandinavian specifications. They found a market niche. I'm sure that type

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of thing will be adapted by other companies in the industry. A little company in my riding, Andrew Wood Products Ltd. of Merritt, was the first company to use the green-lumber finger-jointing process, which upgrades forest products substantially. They are now dealing with housing companies in Japan, sawing to very exceptional Japanese specifications and selling products that our industry would not otherwise have sold. They are moving along quite well, in spite of the recession we're having right now in British Columbia. That's one of the reasons I insisted on having our small business program: so that these small, innovative companies can have access to Crown timber to carry on this type of thing.

That gets us into the problem of concentration within the forest sector. I think Mr. MacPherson said that traditionally, during a downturn of markets, you see a tendency towards concentration. He didn't say it was going to happen: in fact, it's not happening now. I think one of the reasons it's not happening is the length of this downturn and the policies we have established regarding concentration. Another is that large companies quite frankly don't have the cash to go out and acquire other companies. They're hurting very badly. I agree that there are probably some very interesting discussions taking place in the boardroom of Noranda right now, given the large amount of money they spent a year ago acquiring an interest in MacMillan Bloedel.

Mr. Knudsen said the eighties will be tougher. Fifteen months ago he was saying there was nothing but brightness down the road. It's amazing how a philosophy changes as you go into and come out of recessions. I guess that's what is referred to as the lumberman's mentality. When things are good, they feel they're going to stay good forever: when they're bad, they think they're never going to get good again. We do go through these cycles. We will come out of it. and our forest products will be in demand. Our industry has to continue — as it has in the recent years — to adapt to the marketplace. These things are changing all the time. Housing demand in the United States is not being fulfilled now: and a backlog of need for housing is occurring there. You may see a change in the form of housing as costs continue to go up. You may see a tendency towards smaller homes and more multiple-dwelling units. The demand is there. It is a pent-up demand which I think will explode once interest rates get into an area where people can afford to make a commitment to buying a home.

I guess Mr. Nixon of Greenpeace will never agree with what we do in forestry in British Columbia. It is strange that he says we have no vehicle for good forest planning in this province and yet the Forest Act we now have as our administrative tool has been hailed throughout the world — not just in North America but throughout all forest jurisdictions — as being very progressive forest management legislation. It does not get into the industrial side. The nature of the industry is more in keeping with the Ministry of Industry and Small Business than directly with my industry, although we cooperate and consult at great depth in this subject area, as we have very extensive dialogue with the industry.

The member mentioned the varying reports he receives from economists. I guess that's always been the case. Economists are always pointing in different directions. I get reports from one economist saying that in three months we are going to start having an upturn, and another one says three years. Others say it will never get back to the way it was. I don't know which of them are right. I think the problem economists are having these days is that the decisions as to what will happen in the future are largely political decisions to be made primarily in Washington. The fiscal and monetary policy of that country is what will determine when our recovery begins. It will begin, and I don't think economists are any better equipped to determine what those political decisions are than we politicians are. We might even be better equipped.

The member mentioned that there is only discussion about the state of the industry. the future of it and so on when there is an economic crisis at hand. Perhaps that is when the member and the general public notice the discussion taking place, but discussion is taking place on an ongoing basis. It is the type of thing that never gets great bold headlines in the newspapers except during recessionary times, but there is always public discussion and planning, primarily in the industry side. If the member were to read some of the trade journals of the forest sector, he would see that this type of discussion on new equipment. new methods of harvesting, new products and innovative technology is taking place all the time. A good example is a trip I made to Tillamook. Oregon, a few months ago. Several forestry companies in British Columbia are funding some research and the construction of a prototype harvesting machine. It's called a cyclo-crane. It's a combination of fixed wing and rotary power with a lighter-than-air vehicle. If it works, as they seem to think it will. It could revolutionize the harvesting of timber in British Columbia. There's an awful long way to go in developing it into a workable tool, but that type of thing is taking place all the time.

We in British Columbia are as advanced as anyone in helicopter logging techniques as adapted to our terrain. The steep slopes in British Columbia are probably some of the most difficult logging terrain anywhere in the world for harvesting. We are actually world leaders in that type of technology.

I support the suggestion of referring to the environment and resources committee some discussion as to the future of the industry. I think it would develop a better awareness on the part of the people of British Columbia of where we are, where we're going, probably just in the form of disseminating information and ideas and thoughts that are presently before us. I think it would be a good exercise. It would be time-consuming. but I think well worth while.

I believe that covers most of the points raised by the member, Mr. Chairman.

MR. KING: Mr. Chairman. I'm pleased to hear the minister say that he supports the proposition of referring business to the committee on environment and resources. When it was raised yesterday in the Legislature, his colleague, the acting Minister of Intergovernmental Affairs, was not prepared to accept that recommendation. So I hope the Minister of Forests will prevail on his colleague, either the House Leader or the Minister of Intergovernmental Affairs, to actually refer some worthwhile work to the select standing committee. I think it is a good time, and I certainly agree with the minister that dialogue in that area would be very useful.

I would like to question the minister. In the few minutes that are left before adjournment, with respect to the estimate contained in this year's budget for an increase in revenue of some 23 percent flowing from the forest industry. The minister has suggested to my colleague, the member for Maillardville-Coquitlam (Mr. Levi), that Cal Knudsen was a bit of an agent of doom and gloom for predicting a protracted period of difficulty for the forest industry. That would seem to infer

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that the minister feels that we are getting back on our feet. Indeed, the minister made a statement last spring indicating that the slump in the forest economy had bottomed out. That comment was met with a good deal of derision from most areas of the industry, which had witnessed no signs of a bottoming out of the slumping market. The minister seems to feel that his guess is better than the economists', and that indeed we are on the road to recovery. If that is the case, is the minister projecting that we will in fact meet the 23 percent increase in revenue projected in this year's budget by his colleague, the Minister of Finance (Hon. Mr. Curtis)? I'd like his reaction.

HON. MR. WATERLAND: Revenue projections, which were made by the Ministry of Finance in cooperation and consultation with our ministry, were made a number of months ago. These projections can change almost on a daily basis. We are now only two and a half months into our fiscal year. The projections as to when the turnaround will start are all over the block, as I mentioned a few moments ago. Things can happen very quickly. The Patterson bill, for example, in the United States, could be approved, as could the Lugar bill; I understand they have gone through their two lower Houses already. If they are approved, they could add 400,000 or 500,000 housing starts in the United States in this fiscal year. If that were to happen, yes, we could very well meet projections. If it doesn't happen, perhaps we won't.

The Minister of Finance will be revising his estimates as the year goes along. What they are right now would, I think, perhaps be better addressed to that minister. At the time of the original estimate of revenue, I think it was very realistic. Whether or not it has changed now, I don't know; it could very well have. But with these other factors that could change things down the road, perhaps it will change again. It's a moving target that we're shooting at.

MR. KING: The minister is shooting at a moving target. He admits that his prognostications are highly flexible and change from month to month. Indeed, I would suggest to the minister that even if the bill in the U.S. House that he referred to does pass and there are increased appropriations for homebuilding, we face about a six- to eight-month lag before benefit from any economic stimulus in their market ripples through and affects demand in this country. I appreciate that estimates change, but it seems that the minister is the only one who is looking for any major turnaround this year. I guess we could say: "There he goes, God bless him. He's the only man in step." He certainly doesn't have a great deal of support in the industry or from any knowledgeable commentator on what's happening in the forest industry.

It's interesting that the Interior Lumber Manufacturers Association issued a press release on June 7, "Profits and Taxes Study — ILMA Companies (1976-1981)," which said:

"Financial losses for B.C.'s southern interior forest industry are becoming more severe all the time, a recently completed study confirms. A survey of the financial condition of member companies of the Interior Lumber Manufacturers Association was conducted by Price Waterhouse and Co., chartered accountants. 'The results of this survey clearly demonstrate that poor lumber markets, which started in late 1979, are getting progressively worse,' ILMA manager A.D. Macdonald said. For example, combined sales of companies declined from $480 million in 1980 to $442 million in 1981. At the same time net losses increased alarmingly from $9 million in 1980 to $32 million in 1981, an increase in loss of 350 percent. The survey shows that for the first three months only of 1982 the same companies suffered a staggering net loss of $15.6 million, which is double the comparable loss in 1981. 'Those conditions which made the last two years so disastrous for the industry are continuing in 1982,' Macdonald said. 'Demand for our products is very low. Lumber prices are 16 percent lower than they were last year at this time." A continuing low level of home-construction activity in North America, caused mainly by continuing high interest rates on mortgage funds, has severely depressed markets for lumber and other building materials."

All the comments from the industry today paint a pretty bleak picture. I think the minister has to do more than display an optimistic front when he addresses problems in the forest industry. I think he has to do more than cast some backhanded aspersions on spokespeople, such as Calvert Knudsen, who express identical concern about where the industry is heading. I appreciate that the minister has a duty to try to bring some psychological hope but, as I pointed out yesterday, he has done precious little in terms of any firm action to try to mitigate the effects of the very deep recession in the forest industry. I don't think it behooves him to take potshots at those who are realistic enough to tell it as it is to the public. I have great difficulty understanding how the minister can even suggest that the budgetary projection of a 23 percent interest flowing from the forest resource this year is going to be met even if the house-building market were to pick up now. That being the case, I think the province is facing some very difficult shortfalls of revenue for the next budgetary year. I think the minister and his colleagues should be devoting some attention and thought — and discussion in the Legislature, perhaps — to how that shortfall is going to be met, and whether it is going to mean further brutal cutbacks in human services to people or whether the government has any alternative plan which might ameliorate this major loss of revenue to the Crown.

Mr. Chairman, since the hour is here, I would move the committee rise, report progress and ask leave to sit leave again.

Motion approved.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Williams moved adjournment of the House.

Motion approved.

The House adjourned at 11:59 a.m.