[ Page 2837 ]

CONTENTS

Routine Proceedings

Partnership Amendment Act, 1983 (Bill 34). Hon. Mr. Hewitt.

Introduction and first reading –– 2837

Oral Questions.

Beautiful British Columbia magazine. Mr. Cocke –– 2837

Motor vehicle testing stations. Mr. Lea –– 2837

Mortgage foreclosures. Mr. Blencoe –– 2838

Rent increases. Hon. Mr. Hewitt replies –– 2838

Committee of Supply: Ministry of Industry and Small Business Development estimates.

(Hon. Mr. Phillips)

On vote 53 –– 2840

Mr. Lockstead

Mr. Skelly

Mr. Davis

Mr. Howard

On vote 55 –– 2845

Mr. D'Arcy

Mr. Howard

Committee of Supply: Ministry of Consumer and Corporate Affairs estimates. (Hon.

Mr. Hewitt)

On vote 19 –– 2847

Hon. Mr. Hewitt

Mr. D'Arcy

Mr. Lauk

WEDNESDAY, OCTOBER 19, 1983

The House met at 2:03 p.m.

Prayers.

HON. MRS. McCARTHY: Mr. Speaker, I am very pleased to inform the House that today we have visitors in the gallery originally from Britain but now making their home in Ottawa: Patricia and Richard Baker. Mr. Baker is the Deputy High Commissioner for Britain in Ottawa. I would ask the House please to give them a very warm welcome for their first visit to British Columbia.

MS. BROWN: Mr. Speaker, Dr. Gene Usdin, the Royal College of Physicians and Surgeons McLaughlin-Gallie Visiting Professor from Louisiana State University, is here, accompanied by his wife Cecile. I would like the House to join me in bidding them welcome.

MR. CAMPBELL: Mr. Speaker, in the gallery today is a man from Okanagan North. He was born in Okanagan North. His father was one of the original settlers in Burton. Mount Marshall was named after his father. Mr. Clark Marshall is in the gallery today, and I'd like to give him a welcome.

Introduction of Bills

PARTNERSHIP AMENDMENT ACT, 1983

Hon. Mr. Hewitt presented a message from His Honour the Lieutenant-Governor: a bill intituled Partnership Amendment Act, 1983.

Bill 34 introduced, read a first time unanimously on a division, and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

BEAUTIFUL BRITISH COLUMBIA MAGAZINE

MR. COCKE: Mr. Speaker, just as an introduction to question period, look at the decimated cabinet benches and this is supposed to be question period!

SOME HON. MEMBERS: Order!

MR. COCKE: Don't give me that "order" stuff. That's disorder.

Mr. Speaker, I would like to ask the Attorney-General a question. Has the Attorney-General reviewed the agreement for sale of Beautiful British Columbia magazine to the Jim Pattison group, prepared by his ministry, to see whether there is a provision in that agreement that the province covenants and agrees to exert its best efforts to cause B.C. Hydro to mail subscription notices at no cost to the Pattison group for a period of two years?

HON. MR. SMITH: He has not.

MR. COCKE: Mr. Speaker, I direct the Attorney-General to the Minister of Tourism's (Hon. Mr. Richmond's) denials yesterday of government involvement with B.C. Hydro. I'd ask the minister if he took any cognizance of the denials of the Minister of Tourism yesterday, and under those circumstances would he peruse the document? Has he decided to?

HON. MR. SMITH: I don't answer in the Legislature for other ministers, nor do I peruse their answers to questions and respond later when new questions come to me, but I will take your question under advisement and consider it. But I have not decided at present to do as you request me to do.

[2:15]

MR. COCKE: Just one other question: in view of the failure of the Minister of Tourism to make this important agreement public — and you have a copy — has the Attorney-General decided to table the agreement himself?

HON. MR. SMITH: No.

MOTOR VEHICLE TESTING STATIONS

MR. LEA: A question to the Minister of Transportation and Highways. The minister has stated that there have been a number of reports done, within a number of different agencies of government. that have looked at the possible effects of taking the motor vehicle testing stations out of service. Has the minister decided to have government, through him, make these reports and studies available to the Legislature and to the public?

HON. A. FRASER: I would think that we could discuss that in my estimates.

Interjections.

MR. LEA: Yes, he's right, but the question I'm asking right now is has the minister decided to make those reports available to the Legislature within some time-frame — say, three days?

MS. SANFORD: Prior to the estimates.

MR. LEA: Yes. Has the minister decided to make those reports available to the Legislature and the public prior to the estimates?

HON. A. FRASER: Well, Mr. Speaker, I'll have to answer the member by asking him a question: which reports do you want?

MR. LEA: A question to the Minister of Consumer and Corporate Affairs in his responsibility for ICBC. ICBC staff have worked up a report looking into the possible effects of closing the motor vehicle testing stations in the province. As I understand it, one report done by the staff indicates that we will be in for more fatalities, more injuries and more traffic accidents because of the action. Has the minister decided to make all of the reports done by ICBC staff in relation to the effects of closing the motor vehicle testing branches available to the Legislature and the public prior to his estimates?

HON. MR. HEWITT: Mr. Speaker, I am not aware of any official report being done by staff concerning the motor vehicle testing branch and its closures. However, I will take the member's question on notice and confer with the staff of ICBC to see whether or not they were opinions, and express

[ Page 2838 ]

what we might do as ICBC to help ensure that there are fewer fatalities on the roads in British Columbia.

MR. LEA: Mr. Speaker, another question to the minister. I am not asking for official reports, because an official report will probably be one requested by government. As I understand it, the reports were initiated by staff in ICBC and forwarded to the government, and are on the desk of the Deputy Attorney-General and the desk of the Deputy Minister of Consumer and Corporate Affairs. The reports that I'm talking about, the ones initiated by staff and now in the desks of government — has the minister decided to make those reports available to the Legislature and the public prior to his estimates?

HON. MR. HEWITT: Mr. Speaker, if there are such reports, I assume they are staff reports giving comment with regard to what ICBC's role might be in the future. I am not aware of the report, so I cannot comment to the member. But as the minister responsible I would certainly be interested in the comments of the staff members of ICBC. I will go back to them and ensure that I obtain a copy of the report for my information.

MR. LEA: To the Attorney-General, Mr. Speaker. It's my understanding that the ICBC report that was initiated and carried out by staff is on a desk of a deputy minister of the Attorney-General's ministry. Will the minister give this House an undertaking that he will seek out those reports, if he hasn't seen them already, and make them available to the Legislature and the public of this province prior to the estimates of the Minister of Consumer and Corporate Affairs. coming to this House?

HON. MR. SMITH: In the event that there is such a report, or some likeness of such a report, sitting on some desk, then the probability is that that report, if it is sitting on some such desk, would arrive on the desk of a minister and eventually be made public or be laid before the Legislature in due course in the fullness of time.

MR. LEA: Mr. Speaker, the Minister of Consumer and Corporate Affairs has already said there is no official report, which means they didn't have any preliminary work done before they brought the legislation into the House to do away with the testing stations. But the responsible staff of different agencies have done it without the government asking them. The Attorney-General says: "Some desk, somewhere." I'll narrow it down. Would the minister give us an undertaking to look on the desk of Mr. Bourne and then bring in the report that I know is there? If the minister finds the ICBC report on this topic on Mr. Bourne's desk, will he bring it to the Legislature and make it public, prior to the estimates of the Minister of Consumer and Corporate Affairs?

MR. SPEAKER: There is some hypothetical aspect to the question, hon. member, but the Attorney-General may wish to reply.

HON. MR. SMITH: Mr. Speaker, I will actively pursue the invitation contained somewhere in that hypothetical question.

MR. LEA: My last question. Why wouldn't the government be bending over backwards to make these reports available to the Legislature and the public? Why would they be taking this evasive action? Why wouldn't they be only too glad to go back to their ministries and bring these reports out? Or have they already seen the reports and they don't like the results, because they show their legislation to be a sham?

MORTGAGE FORECLOSURES

MR. BLENCOE: Mr. Speaker, I have a question for the Minister of Consumer and Corporate Affairs — my favourite minister in this House. British Columbia homeowners are still threatened with mortgage foreclosures at an alarming rate. In Vancouver, for example, mortgage foreclosures have increased 28 percent over the same period last year. Has the minister decided to communicate with his federal counterpart to press for changes to the Interest Act to ensure that any mortgage could be opened upon the payment of no more than three months' interest in penalties?

HON. MR. HEWITT: Mr. Speaker, to my favourite opposition member who always asks me questions, I have had meetings with my counterparts from other provinces and the federal Minister of Consumer and Corporate Affairs. One of the items that we did discuss during our meeting was the standardization and the full disclosure within mortgage documents of all the terms of the contract. We also talked about modernizing some of the legalese, if you will, that is in mortgage documents. I hope that in the fullness of time and after the analysis of the discussion we have had at our meeting, we may see some changes to better disclose to the borrower the terms and conditions of the contract. When that happens I would certainly be pleased to let the member know.

MR. BLENCOE: I am glad to hear the minister has decided to take some action with the federal.... Has the minister decided to instruct his own staff to make full, detailed reports on the situation for recommendations to this House for a course of action?

HON. MR. HEWITT: No, Mr. Speaker. Any determination with regard to changes in legislation and policy certainly would be discussed with and agreed to by cabinet and by the government in any presentation. Amendments to legislation, of course, then would come to the House.

RENT INCREASES

HON. MR. HEWITT: If I may, I'd like to have this opportunity to respond to the member on questions I took as notice yesterday. The second member for Victoria was concerned about increases in rents. He raised three items of concern. One was 115 Haro Street, and he had suggested a rent increase of 112 percent. I can advise the member that the rentalsman has no file for this address, and no application has been received for rent review, which is in place, Mr. Speaker, and available to the tenant.

With regard to another address advising that there was a 60 percent increase, I can advise the member that the party involved did apply for review, and evidence has been given. The matter has not been resolved yet, no decision being made. However, in preliminary investigation, I can tell him that two other suites in the same building had increases of 44

[ Page 2839 ]

and 50 percent. They had also applied for rent review, and these cases have been completed. And under the rent review and the rentalsman's office, these increases were allowed. Both were one-bedroom suites in the west end of Vancouver renting, under rent controls, for $205 and $206 per month. The statistical figures for the surrounding area showed an average rent for a comparable unit to be $418 a month. There has been a suggestion that the building was not being properly maintained. However, a complete on-site inspection was made and that was found to be incorrect.

Finally, Mr. Speaker, the last property the second member for Victoria advised us of had a 48 percent increase. The rentalsman's office shows no application for any suite showing that 48 percent. However, they did have one at 38 percent that requested review. The rentalsman's office now advises that they believe that the tenant has abandoned his request for review.

MR. MACDONALD: Mr. Speaker, I ask leave that the rules of the House be suspended so that I can make a motion relating to the Leader of the Opposition.

MR. SPEAKER: Order, please. Hon. members, the Chair cannot entertain the motion at this time. As has been ruled on previous occasions, this is not the time for the motion to be made. The only way such.... One method at the disposal of the hon. member would be to make an arrangement with the government House Leader or acting government House Leader. This has been the ruling of the Chair, and it is not a matter for debate. At only one time can a member gain the floor, and this is not that period. The Chair so rules.

[2:30]

MR. HOWARD: In the past, you personally, Your Honour, have taken just the opposite view with respect to a request that I made similarly asking leave. I think you cannot have it both ways. I challenge your ruling.

MR. SPEAKER: While the division is taking place, I will try to ascertain the specific reference for the benefit of the House.

Mr. Speaker's ruling sustained on the following division:

YEAS –– 26

NAYS — 21

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

MR. SPEAKER: The reference that the Chair wishes to give to members is our own Journals. April 29, 1982, page 64, which clearly outlines the decision and the precedents of the House.

MR. HOWARD: I wonder if Your Honour would also have entered into the Journals a decision that you yourself made on Monday, September 26, 1983, in which you said substantially the same thing about the prerogative of the House Leader, but you took the specific course of asking the House whether leave would be granted. You denied the second member for Vancouver East (Mr. Macdonald) that same opportunity. That I consider perhaps to be the subject of another motion with respect to Mr. Speaker.

MR. SPEAKER: Whatever.

MR. NICOLSON: Mr. Speaker, I think before we look at previous rulings of the House, we should look at the standing orders of the House. Standing order 49 says: "A motion may be made by unanimous consent of the House without previous notice having been given under standing order 48." Standing order 48 requires two days' notice to be given on a motion for leave to present a bill, resolution — which this was — or address or for appointment of a committee, etc. We need not look beyond the little red book to find out how this House must be guided.

MR. SPEAKER: Hon. members, to briefly answer the point raised by the member for Nelson-Creston, clearly that point would have to be raised at the appropriate time in our debates. It cannot be raised at this particular moment.

MR. NICOLSON: Mr. Speaker. I would ask when the appropriate time is.

MR. SPEAKER: Hon. members, again, so that, hopefully, we may resolve this matter, I will read from the decision that I referred members to earlier. That would be on page 66, and was the third point of the ruling made by Mr. Speaker at that time. "Standing order 49, which reads, 'A motion may be made by unanimous consent of the House without previous notice having been given under standing order 48,' contemplates motions of a substantive nature and should only be invoked when the House is then engaged in the business of 'motions and adjourned debates on motions' as designated on the order paper under standing order 25."

MR. NICOLSON: On a point of order, Mr. Speaker, might I ask how one gets the floor to ask leave to make introductions in the House, and what is more important?

MR. SPEAKER: Hon. members, the Chair cannot instruct members. Members here have a knowledge of the rules of the House. A member should be aware of the proceedings of the House and know that this is not the time for that motion to be entertained.

Orders of the Day

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

[ Page 2840 ]

ESTIMATES: MINISTRY OF INDUSTRY
AND SMALL BUSINESS DEVELOPMENT

(continued)

On vote 53: ministry operations, $68,112,503.

MR. LOCKSTEAD: The Minister of Industry and Small Business Development is the minister responsible to this House for Ocean Falls. I don't want to belabour this question. During debate of a bill that passed through this House not too long ago, I think the minister basically answered all the questions that I had, and not much has changed, which leads me to a couple of question I have. At that time, Mr. Chairman, the minister, I believe, told me that if no permanent sale or transaction had been completed by the end of this month, all of the assets of that community would accrue to the Crown, the province of British Columbia. I wonder if the minister could now just bring me up to date very briefly on that situation. I'd appreciate it.

HON. MR. PHILLIPS: In answer to the member's question, I anticipate that we will be closing Ocean Falls down at the end of the month.

MR. LOCKSTEAD: I understand that there is a small sawmill operation now operating in Ocean Falls, and I don't suppose that by the fact the Crown owns the assets rather than the corporation that that business would be in jeopardy. I wonder if the minister could tell this House if there are any further negotiations going on with anybody in British Columbia, or anywhere else, at the present time with regard to that sawmill operation, future sawmill operations or other operations for that community.

HON. MR. PHILLIPS: There are still negotiations going on, but none sufficiently close to becoming a reality to warrant keeping it open at this time.

MR. LOCKSTEAD: I wonder if the minister could then tell me if he has had any negotiations with a company called Canarctic — that's all I have here; I believe its president is a Mr. Rollie Back.

[2:45]

HON. MR. PHILLIPS: Not that I can recall offhand, but I'd be quite happy to check with Mr. Williston to see if he has, and get back to the member.

MR. SKELLY: My question relates to a brief that was submitted to the Minister of Labour (Hon. Mr. McClelland) and to the Minister of Industry and Small Business Development by Local 6613 of the United Steelworkers of America. It relates to the closure of Gearmatic Co. In Surrey by Paccar Inc. from the United States. Maybe I should read through three points in the brief — I'll do it very briefly — and ask the minister what has been done to try to keep the jobs involved in Gearmatic Co. In the country. I'll outline in brief detail some of the manufacturing that the company does.

This company is presently manufacturing six mechanical winches and 15 hydraulic winches. All of these winches have been designed, researched and produced in Canada. Their basic application is for logging, fishing, the oil industry and other varied operations throughout Canada, the United States and international markets.

Until the current recession came upon us in 1982, they manufactured 650 winches per month. At its peak the workforce at Gearmatic Co. was approximately 300 people. On page 3 of the brief it says:

"Secondary industry and vendors that this company deals with across Canada and in British Columbia have been put into jeopardy because of this move."

That is, the move to close Gearmatic's manufacturing operations in Surrey.

"At present this company deals with over 291 Canadian vendors. The impact of the closure of this company will drastically affect a large majority of these vendors and in some cases may ultimately result in the closure of some of the smaller ones that rely on Gearmatic for the bulk of their business.

"Gearmatic Co. has received federal government assistance in the form of grants for research and development to enable them to manufacture the winches they produce. This company has used this money to develop and perfect the manufacture of the winches made at Gearmatic. The engineering, research and development department will continue to operate at Gearmatic" — in Surrey — "with federal assistance, to further develop products for manufacture in the United States. It is a known fact that prototypes are ultimately vastly more expensive than the eventual manufacture of a winch. The money that is used in the tooling and preparing of the dies, preparing the assembly and production of winches to start the operation, is greater than that needed to actually run and produce winches on an assembly line. This money was Canadian taxpayers' money used to develop these winches."

Gearmatic doesn't have a great record of corporate citizenship in Canada. I'll outline some of the previous record of Gearmatic and Paccar as detailed on page 5 of the steelworkers' brief:

"Early in 1970 Paccar as a corporation bought out Hayes Trucks, a truck-manufacturing firm in Vancouver. In 1975 they closed Hayes Trucks, putting 350 people out of work, Once that operation was closed, they imported Peterbilt trucks from the United States, manufactured in the United States and owned by Paccar Inc. All they accomplished was putting a competitor out of business. They also owned Kenworth Trucks. They closed down their Kenworth operation in Burnaby, which was a truck-manufacturing outfit. The only reason which we can see was, again, to cut competition for their export trucks."

Mr. Chairman, here we see a corporation, Paccar Inc., which has taken over a number of British Columbia companies including Hayes Trucks, Kenworth Truck and now Gearmatic Co. In Surrey. They have transferred all of their manufacturing operations for these companies into the United States. Instead of manufacturing in British Columbia and putting approximately 1,000 British Columbians to work — about one-fifth of the proposed workforce in northeast coal — they put those Canadians out of work. Now they manufacture the items, many of them designed through subsidies from the federal government — subsidies to product development and to process development — in the United States and import them into Canada, with a loss of jobs and a loss of foreign exchange.

[ Page 2841 ]

My question is: what has the minister done as a result of the brief from Steelworkers Local 6613 to request that the minister contact Paccar Inc. to request that they keep in Canada jobs which were developed in Canada, products which were developed in Canada and processes which were developed in Canada with taxpayers' subsidies'? What has the minister done to keep those jobs in this province?

HON. MR. PHILLIPS: Mr. Chairman, I'm aware of the situation that the member has brought up. My ministry has had several meetings with the company involved. The short answer is that other than going in, taking them over or buying them out, there is not a devil of a lot we can do. I'm glad that you did highlight the fact that that was federal government money that went into the company and not provincial government money. I'm not all that happy with that. but it is the situation.

The truth of the matter is that it would appear the closure is a rationalization of the operation caused by declining markets in Canada and an increasing market in the southern United States. Unfortunately the decline of the winch market overall has led to the decision to close the British Columbia operation and transfer manufacturing activity to Ontario and the United States.

MR. SKELLY: Mr. Speaker, it just doesn't seem enough to me. The minister obviously considers taking over the company not to be an alternative. Of course, that's only one of the options. Surely this government can exercise some persuasive pressure on the company to keep their manufacturing operations going here. He says the markets in British Columbia have slowed down; I suppose that's true of virtually every market. The products we're talking about at Gearmatic in Surrey were designed through federal taxpayers' subsidies to Gearmatic Co., and most of those products are designed for application here in British Columbia. We're acing to see products sold into British Columbia which were manufactured in the United States and developed by Canadian money and British Columbia expertise.

When the minister says he's happy that the federal government put the money into this operation to develop those products for export or local sales, I suppose he's saying he's glad that the federal government lost the money and not the government of British Columbia. The fact is that British Columbians lost jobs, and that British Columbia suppliers who supplied parts and equipment to Gearmatic in Surrey have lost jobs and business. Federal taxpayers and provincial taxpayers are precisely the same taxpayers: we pay to both levels of government. The idea here was that we're paying into an operation to produce in Canada, through the use of Canadian talent, research and development, a product that has application mostly in Canada. Even if it has application in export markets it should be manufactured by Canadian labour right here in Canada. It is irresponsible of the minister to say that just because the federal government lost their Subsidies we're not all losing as a result of this closure.

It appears that the minister hasn't exercised sufficient persuasive pressure on this company to keep them operating in Canada. He provides the corporate excuse that it's simply a rationalization of the company's business. and whatever is good and profitable for the company, and for the company's United States operations, is okay by him, as long as the federal government loses money and not the rest of us. It simply doesn't make sense. We're talking about the lives, income and employment of British Columbia's citizens. and we should be doing our utmost, our best to see that those jobs remain in Canada.

HON. MR. PHILLIPS: I might ask the member a question. You stand up there and pontificate. What would you have me do?

MR. SKELLY: I'd have you resign right off, through you, Mr. Chairman. If I was the Premier and he was the Minister of Industry and Small Business Development, and he didn't have the talent necessary to keep this company operating in British Columbia, he would be gone clown the road, Mr. Chairman. and that's where he belongs right now. Here we are spending hundreds of millions of taxpayers' funds to subsidize the development of northeast coal. Each one of these jobs is just as valuable, in terms of employment for the people of British Columbia, as each one of those jobs in northeast coal, and the minister should at least be prepared to put out the same kind of effort to persuade the is company to keep its operations in Surrey as he puts out to spend taxpayers' money to subsidize the northeast coal development.

To answer the minister's question. Mr. Chairman, I'd certainly have that man down the road as soon as possible.

HON. MR. PHILLIPS: I've got to tell the pontificating member for Port Alberni that have no intention of resigning. I believe you have a brother who is an MP in Ottawa, where the records are of what commitments were made by that particular company when the loan from the federal government was made to them. He has all the records available. I'm sick and tired of doing MPs' work. They get paid better than a cabinet minister, and they sit down in Ottawa and do absolutely nothing to help the province of British Columbia. I'm a little sick and tired of it.

MR. SKELLY: Start doing your own work.

HON. MR. PHILLIPS: You can stand up here and pontificate and say that I can go in there with a golden wand and make that company stay in British Columbia. You can pontificate all you want, my friend. but you won't bother me.

MR. SKELLY: I'm talking about 300 jobs. That doesn't bother you either.

HON. MR. PHILLIPS: There are certain things I can do, and certain things I can't. But I'm not a socialist interfering with the marketplace. Why don't you write your brother and ask him to tell the boys down in Ottawa, who made the decisions and have all the records, to check with this company and see what commitments were made when they got that money, instead of standing here harping at me?

MR. SKELLY: I'll do it because it's useless to talk to you about it, that's for certain. When it comes to Canadian jobs, it's useless to talk to this minister.

MR. CHAIRMAN: Order, please.

MR. DAVIS: Mr. Chairman, I know the Minister of Industry and Small Business Development is aware of the concern of the shipping companies about the exceptional new high tax the province is placing on bunker oil that the ships

[ Page 2842 ]

take on. I think he must also be concerned about the fact that the company that was looking into the possibilities of carrying out a bunkering function in Prince Rupert has now put its plans on hold. I wonder if the minister would look into this important subject, either himself or through his ministry, and have someone consult both with the shipping industry and with the buyers of bunker oil with a view to maintaining this industry in the province, expanding it from Vancouver northward to Prince Rupert, and make sure the industry survives in Vancouver, despite our current tax policy.

MR. CHAIRMAN: Debate on that subject with respect to previous legislation would be out of order; with respect to administrative actions it is in order.

HON. MR. PHILLIPS: Mr. Chairman, I appreciate the member's concerns, and because of the variations of stories and because of the large file that the Minister of Finance has on it, I have set out to have an independent study done. I hope to have it done very shortly, and I will certainly be consulting with the Minister of Finance, because I am concerned about what is happening in that industry in the province.

[3:00]

MR. HOWARD: Mr. Chairman, there is a certain hazard involved in putting forward thoughtful, positive and employment-creating ideas in the House, especially when the minister takes umbrage at any suggestion that he might be in error. I say there's a certain hazard and we have to take that and recognize that. But I want to suggest to the minister, through you, sir, that the government has got a pretty scant interest in job creation and employment development, in the northwest at least. Maybe elsewhere as well, but I'm particularly talking about the northwestern part of the province.

It seems that the government, with its unholy marriage to the capitalist system without question as to whether or not it's an appropriate marriage, is blinding itself thereby to a few facts of life. One is simply that if the government, as seems to be the case, throws up its hands and says, "We can't do anything about this particular subject," whatever it is, "because that's what industry wants to do," then, of course, there is an abandonment of a responsibility on the part of government to try to create jobs, and it leaves it to the decision of somebody else. The decision that somebody else will make will be based on what serves the interests or balance sheet of that somebody else. That's primarily what the minister is saying. He and the government are saying that really it is secondary whether or not jobs are created so long as industry can do whatever it pleases to do.

The result of that kind of philosophy, as I said from the beginning, is that there is a scarcity of any promotional activity with respect to the northwestern part of the province in the area of processing and manufacturing. Primary resource extraction — that's fine and dandy. That employs the fewest number of people possible out of the resource. It also exports the resource to people in other lands, and people in other lands are employed in the processing or the manufacturing of that raw resource. In many instances it is shipped back to us and we buy the finished product back again. While we may get a dollar for exporting the primary resource, it could cost us $5 to $10 for the finished product. That's what happens when you have a government — this government is headed in that direction as well, and as this government has said for quite a number of years — that does not pay attention to the need to create jobs in the manufacturing and processing segment.

Let's just talk briefly about the lumber industry in the northwest. We're engaged in primary production. We have a company active there — B.C. Timber — that decided that it would go and buy lumber from other producers rather than produce it itself. That's on the cash market. It would go and buy carload lots of lumber on the futures market for delivery at some time in the future, whenever those contracts were deliverable, and whenever they came due. It would do that rather than employ people locally to cut the lumber themselves, and to employ people to do it. That works against the interests of the northwest. It may work in favour of the interests of B.C. Timber. It may not, because the process of a producer of a commodity or a product buying on the futures market is contrary to established practice. What they should have been doing is selling on the futures market, saying, "We will sell our future production," instead of buying it. If they buy it it's a gamble. The price goes up and they can sell out the contract, and they may make money, but that is gambling with the employment of people in the area.

Interjection.

MR. HOWARD: The member who just interrupted will have an opportunity to put forward a view about this if he would like. I didn't hear clearly what he said, but there is no need for him to repeat it.

The fact of the matter is that producers of products should not be buying that product on the futures market — that's a gamble. If the price goes up, as I said, they can close out the contract and they make a profit and they say that's fine — that's helped our balance sheet. But if the price goes down and they close out the contract and not take delivery of the lumber, they lose money. Of if they take delivery of the lumber at the lower price — which is, I gather, what has occurred in some instances with respect to B.C. Timber — they have bought lumber at a price higher than the market was at that particular time and employed people, usually in the United States because that's where most of the deliveries take place, and at the same time have laid off workers here in this part of the province. That's what happens when there is an abandonment on the part of the government of concern about what takes place in the economy.

We also have the situation I raised in the House earlier where B.C. Timber has been selling sawlogs to Metropolitan Trading for export at the same time that they closed down shifts in some of their sawmill operations in that very same part of the province. That is an unconscionable sort of action, and it works against the interests of people in that particular area.

MR. R. FRASER: Not necessarily true.

MR. HOWARD: If my friend from Vancouver South who indicated that that is not necessarily true is prepared to stand up here and tell the committee what he knows about what B.C. Timber is doing, I'd be glad to listen to him. People in the area that I represent know that it is true. They're the people who have been laid off. People working in the Kitwanga mill one shift were laid off. They know what happened to them. The same as elsewhere in that area. They know what occurred to them. They see the same company for which they work buying lumber on the futures market when that is the

[ Page 2843 ]

wrong thing to do, and selling sawlogs for export while they're out of work. If the member knows something beyond that, I'm sure it would be appreciated by the committee. And I'm sure that information that he has or appears to have would be appreciated by the workers who have been out of work for some period of time up there — people who just got back to work in the sawmill industry after a long layoff by that same company and have now been laid off again and have found themselves at the point of layoff, unable to have had a sufficient number of weeks of employment in the interim to qualify for unemployment insurance. They're just a few weeks short in some instances. What is going to happen to those people? The member for Vancouver South, I am sure, has a concern about it. Whatever words of wisdom he has to impart to the committee, I'll tell it to the people in Terrace who are faced with a pretty dismal future and a pretty dismal winter.

Unemployment is high and getting higher. What I am suggesting to the minister is that we need to have an extraordinary effort in the area of manufacturing and processing. We need to do something other than just say: "I wish somebody else would do it." Because he knows as well as I do — take aluminum for argument's sake — that the only interest that Alcan has is in producing another smelting capacity or two other smelting capacities in that area, dependent upon a potential hydroelectric development, but I won't talk about that at this time.... Alcan, regardless of anything else, is primarily concerned with its worldwide operations and is not concerned with moving into the processing and manufacturing of aluminum unless it serves Alcan's interests, and they won't do it unless government....

I remember the minister standing up in this House one day not too long ago and saying: "I could snap my fingers and tomorrow we'd have three new aluminum smelters in British Columbia." I wish he'd snap his fingers and see whether we can get some aluminum processing and manufacturing in British Columbia, especially in the northwest part where the hydroelectric power is and where the smelter is. If he could snap his fingers to get three new aluminum smelters, surely he could snap his fingers and get some extra employment in an area where it is much needed, namely something much more stable than relying upon the prime resource development. It's possible to do that, and that's what I would urge the minister to do. Instead of just concentrating his activities on selling the raw resource to producers in other lands, let us use our resources rather than receiving a minimum amount of money for them and employing people in other lands to do the manufacturing and processing and then ship the finished product back to us. That's the kind of economic strategy we need in this province, and I would surely urge the minister to embark upon that direction, rather than the one he's been headed on in the last few years.

HON. MR. PHILLIPS: Well, what the member has said is on the usual socialist high horse about what we should do for manufacturing and that we're just shipping out our raw resources — hewers of wood and drawers of water. I think that I should a reiterate few facts to the House. There are actually very few raw materials that we ship out of British Columbia that we might be able to process here. Coking coal, for instance, happens to be an international commodity, and we have the opportunity of leaving it in the ground or selling it on the world market — the same as other nations have done, including the United States, Australia, South America and practically every country in the world.

As I said this morning, we supply about 4 percent of the known production of coal, so you could say we're shipping out a raw resource. Very few people understand that before that raw resource leaves the province, it is processed through cleaning and scrubbing plants which cost literally hundreds of millions of dollars to build and to process. It isn't a case of just taking the coal out of the ground and putting it into a boxcar and shipping it overseas. I guess maybe some day, when our population increases and that investment that we're trying to create the climate for brings more people to the province, a steel mill in this province would be viable. I would hope that some day we would be able to supply coking coal to our steel industry in Ontario, and I would like to see us move in that direction.

I realize that those steel mills have interests. Do you know they actually own interests in a natural resource in another country? That's taboo, I suppose, as far as the socialists are concerned, but Canadians actually own an interest in a natural resource in another country. Tut, tut! We must not have that, my boy! No, that's bad! So we bring our coking coal, about 12 million tonnes a years, into Canada from the United States.

Now what other natural resource do we ship out? We ship out copper concentrates, I guess, and maybe some day we might manufacture it into wire — you know, copper wire and other copper products. We have a copper smelter here at the present time, but because of the overcapacity in copper smelters elsewhere in the world it is not viable and they had to close it down. It's certainly not viable to build a new copper smelter at the present time. I have checked into it. So it's just a reality and a fact of life. I suppose if I were a socialist, we'd build a steel mill and let the taxpayer be saddled with the burden of running it uneconomically for the next X number of years, or we'd put in a copper smelter.

What other products do we ship? What other of these great raw materials do we ship out of British Columbia? What are they? I've named two. What are the rest of them? Some molybdenum, I suppose. Molybdenum is another worldwide commodity used in steelmaking and certain other manufacturing processes that we don't have here. I suppose we should leave the molybdenum in the ground and all those people that were gainfully employed in extracting it should go without jobs. But the member who just spoke is from an area that brings a natural resource in from another country, and I don't know what the Australians and those people who ship bauxite to Canada say. I suppose that they stand up in their legislature and say: "We shouldn't be shipping that bauxite to Canada; we should be processing it here." We do process it here. We make aluminum of it, and when we announced that some of that aluminum was going to be used in the manufacture of car wheels, what did the NDP say? They pooh-poohed it. What's a $23 million investment? What's one hundred jobs?

[3:15]

Processing aluminum. There are other manufacturing plants in British Columbia that process aluminum. The Toyota plant is just the beginning, but eventually we will be manufacturing not only aluminum wheels but also cylinder heads, intake manifolds and mufflers. We could be manufacturing a number of aluminum components for automobiles and shipping them into the world market. But here you have the exact opposite of the concept that the member opposite is

[ Page 2844 ]

trying to foist on all British Columbians — that we're just hewers of wood and drawers of water.

They didn't listen to me this morning when I named five companies that had nothing to do with hewing wood and drawing water and that received awards for exporting the products they manufacture here or the millions of dollars of sales and hundreds and hundreds of people employed. They paid no attention to that whatsoever. They chose to overlook that. Here we bring in a natural resource from another country. We process it into a finished metal. We take some of it and process it into a consumer product, and then we take that consumer product and export it to another country for them to use in their manufacturing and assembly of automobiles. If that isn't motherhood, I don't know what it is. Nobody ever said anything about that.

With regard to our lumber industry, I hear the vibes coming out of Ottawa that we have to be careful because there might be some combines in Canada. We can't have any combines in Canada, because it might rule out competition. So far as I'm concerned, if we had a combine in the paper industry, we might be able to get all these little plants together to manufacture some of the high quality paper that is manufactured in bigger areas with a bigger market. But you can't have a combine. You can't have those people get together and pool their resources to seek out a market and put their technology and money into one plant to manufacture fine paper. Oh, no, that would be a combine! That's anti-socialist.

Here we are in a market of 27 million or more people. The majority of manufacturing has been long established in that golden triangle of Ontario. It used to be in the Maritimes, but because of Ottawa's policy, we soon got rid of those manufacturers in the Maritimes. Boys, we'll get them out of business and bring it all to the golden triangle. That's been the policy of Canada.

But relatively speaking, we have a tremendously small market, and if you're going to build up a large manufacturing base, as they have done in the decades past, you build it to sell at home. That's how the American manufacturing business was built up. It was built to sell to the 200 million or more people in the American market. That's how Japanese manufacturing was built up. It was built up to sell at home. When they got their businesses established, they did some exporting. That's how the European community did it. It built up its manufacturing base to sell at home.

I suppose as Minister of Industry and Small Business Development, I can go out and tap my little magic wand and make a lot of things that the member was talking about economically viable. I happen to represent a northern riding. I would love to see manufacturing in the north, but I'll tell you, when the economics aren't there.... You as a socialist may be able to make it economically viable by pouring gobs of taxpayers' money into it — the same as you did when you bought up every broken company in the province and tried to put it together to make it work. It was great. It made a couple of bucks in the good times, but when the crunch came, it didn't do so good. But we are encouraging the lumber industry to add further value.

I have encouraged lumber manufacturers, and we are now manufacturing doors, moulding and panel work a lot more than we were. We have one kitchen cupboard manufacturer in British Columbia who has shipped millions of dollars of kitchen cupboards into the Japanese market. That's happening, but as long as the socialists keep painting the picture of British Columbians as being hewers of wood and drawers of water, the rest of the world will think we're all walking around with pails on our back hauling water uphill to make electricity. Not so, We have very sophisticated manufacturing,

As I pointed out this morning to the member — but he chose not to listen — we have a number of highly developed high-technology manufacturing industries in the province, We have enough now to start forming what we call a family of high technology industries. Once that basic family is established and the parts distribution and talent and salesmen are all here, people will come and join that family. You've got to have that nucleus. Once Dynatek gets going, we will have the first chip manufacturing in British Columbia. Then it will grow. We haven't had the advantage of being able to get Silicon Valley going, like they have in Ottawa. But we're doing our part here in little British Columbia, and we have the good nucleus and the good base.

We have, for instance, apparel manufacturers in British Columbia who are selling sportswear in Japan. I haven't the figures here, but if you look back in last year's estimates I could tell you how many people were employed and what the payroll is in manufacturing clothing. They're not ordinary black suits but sports suits, and we're actually selling them in the international marketplace. We have another project going in the north. He talks about the northwest. What about Ocelot? Who do you think fostered Ocelot, which is the nucleus that someday will grow into a petrochemical industry? That's manufacturing; that's using a natural resource and adding further value in the northwest, right there in little old Kitimat. We've got an LNG plant going in, north of Prince Rupert, and the member for Prince Rupert pooh-poohed it. He said: "Why ship it to Japan? My gracious sakes, why add further value? Let's just shove it in a pipeline and take it down to the United States. Why have more people employed? Why have tankers and why have an investment and why have the security of a long-term market? Why have an LNG plant? Let's just put it in a pipeline and send it down to the United States, and when they don't want it they'll crank it off and, boom! no more production, no more drilling, no more nothing." If we don't go with that LNG plant, we might as well close the petroleum industry in British Columbia down until 1990.

But all of those items — and I could name off thousands more that we have.... Do you want me to name off some small manufacturing industries? I've got a whole list of them here. I won't take up the time of the House. But please, Mr. Member, as a British Columbian don't stand up here in this Legislature and say that we're just hewers of wood and drawers of water. We have had a concern about the manufacturing industry. We have fostered it; it is growing; it is coming. I'll tell you, we've got a lot of diversification, and those companies are working and doing a lot of good sales work in the offshore markets.

MR. HOWARD: Oh, what a message of despair and misery we just heard from the minister! No hope whatever for the future, to listen to him. I said from the beginning that there's a certain hazard involved in putting forward suggestions to this minister, because he doesn't listen to what they are; he has a pre-set bias about something, tosses around clichés and label words that are supposed to mean something, and passes it all off as it if isn't anything worth suggesting, indicating that anybody in this House who raises any concerns with him about employment, and the hundreds and hundreds of people who are out of work in this province and

[ Page 2845 ]

are looking for some hope.... He's passing that off as being not even worth talking about. Well, I can accept that from a minister who was so concerned about subsidizing the Japanese steel industry that he is digging into the taxpayers' pockets in this province to the extent of somewhere between $1 billion and $1.5 billion over the next 15 years. That's his perception of the way the economy should run. Well, it isn't mine.

He talked about the copper industry. We had a person in this province, the late W.A.C. Bennett, who had a vision about the copper industry and copper smelting, and introduced legislation — which was subsequently wiped out of existence — to set aside reserves of copper underground for potential use in the future for copper smelting. That's the kind of vision that we need now, not this claptrap that the minister passes off as truth.

MR. CHAIRMAN: Let's be parliamentary.

MR. HOWARD: Well, he does tell the truth, but it's about fictitious situations most of the time.

He pulls out Dynatek and says: "Isn't this a wonderful thing?" How much public money went into Dynatek? The taxpayers supported that. He talks about the Toyota wheel manufacturing plant; no effort whatever made to try to establish that plant close to where the primary production takes place. How much public money went into Toyota? He can't have it both ways. He can't condemn the use of public funds to assist in providing jobs, and at the same time trot out as examples of the worth and value of the capitalist system examples that involve the use of public funds. That is why I say the minister's perception of truth is primarily revolving around fictitious situations. The truth needs to be told about the whole aspect of it. One does get a little tired standing in the House, or even writing letters to the minister, as has been the case, raising concerns about people in areas disadvantaged by what's happening in this province, and then to listen to the froth that comes forth masquerading as rational debate. If the minister would spend a little more time concentrating on a direction and a vision for this province, and a little less time in bombast, perhaps we'd be a lot better off.

HON. MR. PHILLIPS: I would hope the member would stand there and ask truthful questions, Mr. Chairman, but he prefers to heap personal abuse, which is his nature, and I understand it. He's got to be personal and heap personal abuse, because that's the only thing the member knows. He wants to perpetuate....

MR. CHAIRMAN: Order, please. We've had enough of personal reflections, I think.

HON. MR. PHILLIPS: I just want to set the record straight, Mr. Chairman.

MR. CHAIRMAN: Maybe we can get back to the ministry.

HON. MR. PHILLIPS: Again, he's perpetuating the lie that we're subsidizing the Japanese steel industry, when indeed that deal on northeast coal happens to be the best deal ever put together, and the member knows it. There has been nowhere else in the history of the world where the revenue from the first two contracts would pay for the entire infrastructure to be put in place.

MR. CHAIRMAN: Just one more item, hon. member....

HON. MR. PHILLIPS: The members knows that, but he chooses to take the view that he can perpetuate a myth on the people of British Columbia, and perpetuate lies so that....

MR. CHAIRMAN: Order! The minister will withdraw any improper motive imputed to the member.

HON. MR. PHILLIPS: I certainly wouldn't want to imply that that member over there was doing anything....

MR. CHAIRMAN: Thank you. Now if we can get back to some parliamentary language, using some courtesy and avoiding personal reflections.

HON. MR. PHILLIPS: We were getting on very nicely in the Legislature until that member for Skeena had to stand up over there and try to perpetuate on the people of British Columbia...and heap personal abuse on the member. I just want to set the record straight, Mr. Chairman. I realize where it comes from. Everybody in this province understands where that member comes from, and understands his tactics, so we know where we're at.

We did a study on the Kitimat and Terrace area, and I think that member over there who represents the area was probably one of the first to condemn it. He said we were going to take all the lumber in the area out of use, and he didn't want this, he didn't want that. There certainly was lots of vocal opposition. We have finished the study and it shows there is ample land in that area for industrial development; we will ensure that it stays ready and available for industrial development. I would presume the member has read the study, and if he's so concerned about his particular area, I would invite him to come to my office sometime and sit down and have a discussion, rather than stand up pontificating here in the Legislature.

[3:30]

Vote 53 approved.

Vote 54: British Columbia Railway — historic debt, $70,000,000 — approved.

On vote 55: financing transactions, $10.

MR. D'ARCY: It is my understanding that the travel industry subsidiary agreement that we've had with the federal government expired as recently as yesterday — October 17, 1983. Since I consider this program to have been of tremendous value to the economy of British Columbia, with a great ripple and multiplier effect of benefit to B.C. taxpayers, as well as to the private sector involved in the travel industry, I'd like to ask the minister if he has taken initiatives, along with his colleague from Kamloops, to approach the federal government and recharge this particular program with funds. In my view, it has replaced itself several times over in value to the province of British Columbia over the last two or three years that it has been in effect.

[ Page 2846 ]

HON. MR. PHILLIPS: I appreciate the member's question, and I want to say how pleased I am that the member recognizes the value of the TIDS agreement. As you know, it was the first tourist industry development subsidiary agreement of its kind to be signed in Canada, and was put together by this ministry in cooperation with the Ministry of Tourism and is part of that vision of diversification which this ministry had, and which the member for Skeena doesn't seem to recognize. The member for Skeena has a very short memory, because it wasn't too long ago that he participated with me in the opening of Hudson Bay Mountain in Smithers. He did absolutely nothing to foster it. I went in and worked with the area and put the whole deal together, and it's certainly been a benefit. That member certainly didn't waste any breath or any effort in helping that particular riding, but it has been a great diversification in the area.

MR. CHAIRMAN: We've had enough of the personal reflections. To the bill, please.

HON. MR. PHILLIPS: With regard to the questions, Mr. Chairman, I'd like to say that yes, the program has wound down. I think what we set out to accomplish with that program has been accomplished. As you know, we wanted to assist in travel-generaters, and assist in helping communities and societies build up something that would make our province a tourist attraction twelve months of the year. I think we've done that. What we're doing right now is assessing where we can best help the industry. I don't think just putting more money into the same agreement will accomplish what we really want to accomplish in the next decade so far as the tourist industry is concerned.

I don't want to say that we're not going to, but I don't think we're going to get another agreement with the feds. I think the feds will carry out a part of the development that they want to carry out so that, as you know, they can take the credit for it. It seems ironic to me that they're more interested in the political credit they get than they are in the results of their programs. However, we are assessing where we can best assist the industry itself, and hopefully we will be announcing a program in the not-too-distant future.

MR. D'ARCY: I'm not suggesting that we discuss the policy regarding a renewed agreement on the floor of the House. The minister does have that discretion. He has always had that discretion in consultation with his colleague from the Ministry of Tourism. What I am saying, Mr. Chairman, is that if there is any possibility that we can get a new infusion of federal funds to match provincial funds, regardless of how the minister and his colleagues decide to spend the money in the future, then that opportunity should be pursued and should be pursued forthwith. The minister, in my view, is trying to fudge the question by talking about future policy. Future policy is at his discretion. What I'm talking about is: is he going to recharge the program. If he takes five years to spend the money, or ten years to work out policy, that's unfortunate but a reality. What I'm saying is: is he going to go after those federal funds? Simply saying that in his view he doesn't think he can get those federal funds isn't good enough. Has he been after his colleagues in Ottawa to see if the program could be recharged?

In my view, it has been of no net cost to the Canadian taxpayer living in British Columbia, because the program has, by and large, paid for itself several times over, even taking away the odd bad investment in Whistler, which may or may not repay itself in the future; I hope it does. But most of the investments that the public has under the TIDSA program have already repaid themselves with a good multiplier and ripple effect throughout the economy.

HON. MR. PHILLIPS: I want to say that I have already pursued that area with the federal government and will continue to pursue it. Again, I appreciate the member's comments. I'm glad that he brought up Whistler. We put into Whistler somewhere in the vicinity of $12 million — $6 million federal and $6 million provincial.

It's great for opposition members to use Whistler as a whipping-boy, but I want to tell you that the money the private sector has invested in Whistler so far has more than repaid both the federal and provincial governments for what they put in. We have in Whistler approximately a 20:1 ratio; in other words, for every dollar that the provincial and federal governments have invested, the private sector has invested $20. It happens to be the best ratio of any project anywhere. As far as I am concerned, Whistler will be one of the finest recreational villages you will find anywhere in the world. Certainly their land sales ran into difficulties with the downturn of the economy, and the government moved in rather than have somebody pick that up for a song. Whistler will go down in history as being a great decision, and will be one of the finest recreational villages that you will find anywhere in the world. Already it is bringing literally thousands and thousands of foreign skiers. With those skiers come millions and millions of tourist dollars to the Vancouver area and to the Whistler area in the wintertime.

MR. D'ARCY: The minister might be surprised, but I agree with what he just said. But the fact is that taking into account what he just said, and the fact that I agree with it, Whistler has been the worst use of the TIDSA funds. All the other uses have been better. If it's that good — and the minister has said that even Whistler is good in his view — it certainly should be renewed, and it should be renewed immediately. In fact, it should not have been allowed to expire. It should have been renewed several months ago.

HON. MR. PHILLIPS: Well, there again the member thinks that the minister, because he accomplishes certain things, has a magic wand, and I can just go down to Ottawa and wave that little wand and it will be renewed. Mr. Member, it's not that easy dealing with Ottawa these days, because Ottawa has taken the socialist approach and gone out and spent all their money on airy-fairy programs and spent more than we can afford and plunged the country into debt. Today they haven't got the money or the flexibility to do the types of things that we need to do in Canada to insure that the economy progresses. So I don't have a magic wand. I wish that Ottawa had the money. I wish that Ottawa had been prudent and cut back in government spending a few years ago. Today there would be money in the bank and we could go down and get money to help the economy of Canada. My friend, I wish they hadn't taken the socialist approach. I wish that today they would come in with government restraint so that they could get people to invest in this great country instead of them being afraid. My friend, I wish I could go down to Ottawa and get some of that money that they should have there.

[ Page 2847 ]

MR. D'ARCY: Mr. Chairman, we ask for information; we get rhetoric. For the minister's dubious benefit, in the last three or four years the per capita debt under Social Credit in British Columbia has been growing faster than the per capita debt in Canada under that disgusting Liberal regime in Ottawa. So it's crazy for him to talk about how much they've been borrowing. It's true that they have, but his government has been borrowing far more.

HON. MR. PHILLIPS: Mr. Chairman, the member talks about the per capita debt and then in the next breath he's saying: "Why don't you spend more to build up the province of British Columbia?" When he talks about the per capita debt, does that socialist over there talk about the assets that have been built in this great and growing province? When you've got a pioneering province, you have to spend money to invest in the future. That's why our per capita debt has grown. But we haven't been spending the province's daily grocery money, going into debt, and borrowing. That's what Ottawa has been doing. I didn't say that Ottawa had gone into per capita debt on national assets; that's what has happened here in British Columbia, my friend. Keep the record straight.

MR. HOWARD: I wonder if the minister would mind repeating that. I missed some of what he said.

What the minister said at the end was "keep the record straight." Well, I'm attracted to do that on the basis of the minister's earlier comments under this vote about my participation with respect to Hudson Bay Mountain and the trip that he and I made together up the ski-lift and in the helicopter. I'm not going to relate any of what went on there; that is a matter between the minister and me and it's going to stay that way. But for him to say that I've had no involvement whatever in that is simply contrary to the facts and contrary to the record. I don't know if the minister knows it, but I have to put it on the record: if there is anybody in the whole northwest, excluding my colleague the member for Prince Rupert (Mr. Lea), who has done more to try to promote people locally to apply under TIDSA, it has been 1. I've had dozens of conversations with people who are interested in TlDSA. I've advised them about where to get the applications and provided them with the application forms and the information. I did it without any fanfare or asking for any credit, just as a normal, hard-working member of the Legislature from Skeena trying to do his job on behalf of the people up there. In spite of the minister's intransigence in such matters, I've been fairly successful.

Vote 55 approved unanimously on a division.

An hon. member requested that leave be asked to record the division in the Journals of the House.

[3:45]

ESTIMATES: MINISTRY OF
CONSUMER AND CORPORATE AFFAIRS

On vote 19: minister's office, $184,197.

HON. MR. HEWITT: Mr. Chairman, it's a pleasure for me to stand today and put forward my estimates for debate in the House, this being my first opportunity since my appointment in August 1982.

The ministry is responsible for some 50-plus pieces of legislation. As Minister of Consumer and Corporate Affairs, I also have the responsibility for the Insurance Corporation of British Columbia and the liquor distribution and liquor control and licensing branch. As we proceed, I would be pleased to respond to any questions raised in those two areas.

The major administrative theme during the past year in my ministry, as in others, has been to live and operate effectively with fiscal restraint and to deal positively with restraint as a challenge rather than as a barrier to good administration. We take pride in setting as our goal the carrying-out of our administrative and regulatory responsibilities with the least possible interference in the activities of those we regulate.

In Corporate Affairs, the emphasis during 1982-83 was on the improving of regulatory systems and procedures. A major study was undertaken at the central registry with a view to modernizing the existing computer system. This initiative will ensure that the information revealed by searches is up to date, and it will provide capability for direct access to our information data base from remote terminals throughout the province. The benefits of this new system will be dramatic. My officials are now proceeding with its implementation, with a targeted completion date of next spring.

Computerization is also very much in the fore in the office of the superintendent of brokers, real estate and insurance. All licensing under statutes administered by this office is now computerized, and the securities, real estate and insurance industries all have access to the records. In connection with security matters, Mr. Chairman, let me say that my ministry has been watching very closely the processing of financing documents through our regulatory authorities. We appreciate that any delays in this process can have adverse effects on those raising money, and we intend to take all reasonable steps to avoid such delays.

In this respect, the superintendent of brokers has initiated a number of measures to improve the processing time. These include the reorganization of vetting procedures, deregulation of listings to the sole responsibility of the Vancouver Stock Exchange, and the transfer of authority to the exchange to approve new escrow releases and transfers for listed stock. In addition, the superintendent has been working closely with the exchange and the industry to develop short-form statements of material fact. This is a simpler financing document which will make it not only easier to prepare but also faster to be vetted. It is now at the trial stage and, from all indications, should prove very successful.

On the consumer side of the ministry, last year we completed ten prosecutions under our trade practice legislation, along with one substitute action, several assurances of voluntary compliance and one Criminal Code charge. An additional ten legal proceedings were still underway at the last year-end. At the same time, we investigated 55 complaints and laid 28 charges to offences under the Motor Dealer Act. Those are an indication of the regulatory aspect of my ministry, but related to the total operations in the retail consumer field. The numbers are fairly small and indicate that the retail sector of our economy and the consumer transactions are in the main carried out in an honest and forthright manner by those involved.

Due to the economic situation in 1982, our consumer credit and debtor assistance branch saw increases in the number of new clients who sought our assistance. Many debt problems were related to mortgage renewal penalties. In

[ Page 2848 ]

some cases consumers who were in the process of renewing their mortgages at a high rate were told, or it was implied to them, that they could renegotiate later if rates fell. When interest rates did in fact drop significantly, some lenders refused to honour those stated or verbal or implied commitments. Along with the federal government, I can advise that we did consult and review with those lenders, and in many cases we were able to assist in renegotiating consumers' mortgages as was implied or promised by the lender.

With regard to the travelling public, I can advise that during the past year we paid out over $300,000 from our travel assurance fund to rescue more than 1,400 travellers whose holidays were threatened by business failure of their travel agent or a wholesaler.

As hon. members are aware, we recently made the difficult decision to close our consumer centres and to discontinue our complaint mediation service. The centres provided a useful bridge between consumers and business, but it was necessary to discontinue this service as part of our overall restraint program. I would like at this time to pay tribute, however, to those dedicated consumer centre staff members and those funded groups whose members worked so hard to help consumers and businesses resolve their differences. I am pleased to note, however, Mr. Chairman, how quickly the private sector has responded to fill the gap created by the closure of our centres. Shortly after the announcement was made, the Victoria Better Business Bureau stepped in to provide some expanded arbitration service to assist consumers and business in resolution of problems. The Vancouver Better Business Bureau has also done the same thing.

[Mr. Pelton in the chair.]

Also, it was interesting to note recently in the local newspaper a listing of those agencies that could help the consumer. I for one feel very strongly that government should provide the legislation and the regulation to monitor and provide the law for the consumer and the retailer to live by. However, sometimes I have some concern how we seem to wedge ourselves between the two parties, and I'm hopeful that in the years to come there will be more negotiation and dialogue between the two parties involved in the contract. Failing that, there are many agencies in British Columbia and in Canada that provide a service to the consumer and the vendor, and I just wanted to refer to this ad that was in the newspaper covering all those agencies that are available to serve should there be problems in various areas of the marketplace. Let me just read a few to you.

Under advertising there is a non-government agency, the Advertising Standards Council of British Columbia, which deals with concerns in the advertising field. In the automotive field, there is the Automobile Protection Association, the Automotive Retailers' Association, the B.C. Automobile Association — all agencies that work with consumers and vendors if there are problems. They are not government or public funded, but are there as agencies to help. For business complaints in general, as we know, there are the Better Business Bureaus of Victoria and Vancouver, the Consumers' Association of Canada, the Retail Merchants' Association and the Retail Council of Canada. In various individual sectors of the business world.... There is, for example, with regards to carpets, the Canadian Carpet Institute, which assists where there are problems with quality or accuracy of labelling their products. In dry-cleaning there is the B.C.

Fabricare Association, which deals with problems that may occur. There is the Restaurant Association, dealing with problems that may be experienced by people eating out and not getting good service or satisfaction. For electrical appliances there is the Canadian Standards Association, an organization there to identify and endorse good-quality products.

The Electronic Guild of British Columbia deals with complaints on TV sets. On the financial aspect of our marketplace: the Credit Bureau of Vancouver, the superintendent of credit unions, cooperatives and trust companies. With regards to funerals, there's the B.C. Funeral Service Association, the Memorial Society of British Columbia, the ombudsman's office, Insurance Bureau of Canada and the Life Insurance Information Centre. All these facilities are available to the consuming public should there be problems in those areas. There's the B.C. Press Council, of which we are of course aware, considering the recent complaint that the Minister of Labour (Hon. Mr. McClelland) had with the media, the B.C. Motor Transport Association, the photographers' association, Law Society of British Columbia, the B.C. Optometric Association, the housing manufacturing association, the Real Estate Association, the condominium owners, B.C. tenants, the retail housing council, the office of the registrar of travel services, and others.

[4:00]

I'm sorry if I expanded the list and carried on with more than a few examples, giving you a fair amount of detail; I wanted to show people in the chamber and to have on the record the number of agencies that are available to the consumer should there be a problem. What happened was that government, responding in good times to complaints of a few individuals who were concerned that they weren't getting satisfaction, developed another government service. It worked well and the people who were involved in it did their job well. But when we came to 1982-83, I think it is fair to say that in attempting to live within our means we recognize that these services, although useful to some, are not essential. We felt it was an area where government could step away and allow the marketplace to work with less government interference, but also allow those agencies who are there to assist consumers and vendors, to step in and assist where it was necessary.

Moving to the residential rental area, we can say that we have been experiencing the best rental market in British Columbia in more than 10 years. Vacancy rates in Vancouver are in the 3 percent vicinity. Other vacancy rates around the province in smaller communities range anywhere from 5 to 15 percent. So we're finding that it is a renter's market to a great extent, and because of that, disputes between landlords and tenants continue to decline. Within the context of this greatly improved rental market, we have made some significant changes to our legislation and dispute-resolution processes.

I would refer you, Mr. Chairman — although I cannot get into detail on it — to Bill 5, the Residential Tenancy Act, which is before the House. However, prior to that bill being passed, under the old act we have removed rent controls. The new act offers the phase-out of rent review and the office of the rentalsman. It is my belief that these changes will in the long run benefit both landlords and tenants. In the new legislation we deal with such areas as secure deposit provisions, which I think strengthens the legislation and protects the tenant. We also have taken into consideration some of the

[ Page 2849 ]

special requirements of tenants of manufactured homes — or, as we call them, mobile homes — in their dealings with mobile-home-park operators. It is fair to say that the items contained in Bill 5 will be discussed in detail during debate on that bill; however, in my estimates I'm sure we will be dealing somewhat with the operation and office of the rentalsman, as it comes as part of my estimates.

I think the office of the rentalsman has provided a valuable service to the people of British Columbia since its inception in 1974. Our rentalsman staff are as dedicated and hardworking as any employees of government. But clearly we must live within the means of the economy to pay for the services we provide if our economic recovery is to continue. Accordingly, we have taken these steps to reduce the cost of government and to return to a competitive marketplace. The total cost of the rentalsman's office during the last full fiscal year was approximately $4 million.

If we look to the need for a rentalsman's office, to the need for dealing with problems between landlord and tenant, it is fair to say that over the period of time the legislation has been in place, both landlords and tenants are today far more familiar with their rights than they were in 1974. In many cases the difficulties can be and are resolved by both parties, rather than moving to a third-party involvement: that is, government intervention between the two parties to the contract. Furthermore, I believe these deregulatory measures will ultimately result in new real estate development, more jobs and a continuing healthy availability of rental accommodation.

Moving then to the other sectors of my responsibility, liquor control and licensing, we continued our move to make our policies and procedures clearer to those we regulate. Most notably, for the first time, we published a comprehensive enforcement policy, which was extremely well received by licensees and their association.

The major legislative change in the area of liquor during the year was to permit beer and wine advertising on television and radio and the electronic scoreboards in professional sports stadiums. To date we have been pleased with the results of this amendment, and there have been no serious problems resulting from that change in policy. We did accomplish, first of all, the ability for British Columbia to control the quality of TV ads, as opposed to having them produced and transmitted from areas outside of our boundaries but, nevertheless, coming into our TV sets and homes. They will be controlled here as to their content. If they're manufactured in British Columbia, of course, there is a result of jobs in keeping funds at home in paying for the cost of those TV commercials.

Finally, one of the major benefits, I think, that came from the change in the policy, and one which I compliment the broadcasters' association for, is the fact that of the air time devoted to commercials on beer and wine, 15 percent must be devoted to commercials which are educational in content and advise people of the downside of consuming alcoholic beverages. I compliment the broadcasters' association and the breweries and wineries involved for the quality of some of their educational ads that they have put on to indicate to people that there is a downside to promoting alcoholic beverages. I think the policy was well thought out and well described to the industry — and, I think, well accepted by the public.

You might be aware, Mr. Chairman — and if you're not I'm going to tell you — that I'm a strong supporter of the B.C. wine industry, considering that probably about 50 percent of the B.C. grapes that go into the wines come from my constituency. I'm very pleased to advise that there has been excellent growth in that industry — the production of good quality B.C. wines — and I think it's fair to say we've come a long way in a short period of time. We still have a long way to go, but our wines are matching up and competing well with wines from offshore, and I appreciate the support that the B.C. consumer has given our wine industry.

The estate wine industry, which is unique to British Columbia, has continued to grow and gain acceptance with the general public. At year's end there were five estate wineries in the province of British Columbia, all with their own uniqueness.

Similarly, the concept of the brew pub, which produces its own draft beer for sale on the premises, has proved to be successful, and the emphasis on this program is to encourage production of high-quality, truly unique draft beer. Guidelines have been developed by the branch to permit expansion of this innovative concept to ensure good control, if you will, and reasonable regulations to protect the consumer, but at the same time still allow some innovative approaches regarding the manufacturing of beer, or the retailing of it at the consumer level.

The liquor distribution branch sales during the year reached an all-time high of some $836 million, with a net income to the branch, and therefore to the government as part of government general revenue, of $337 million. It could be argued that if you're into the sale of alcoholic beverages, you may receive that type of revenue, but the downside or offset to that, of course, is the cost of problems with regard to the consumption of alcohol. In the distribution of alcoholic beverages, we have to be careful that we ensure that alcohol is consumed in a moderate fashion and that we have the proper regulations and laws in place to deal with people who cause problems with regard to the abuse of alcohol in order that our taxpayers don't have to pick up the cost for the carnage on the highways, and the abuse in the home, etc., from the over consumption of alcohol.

There is an educational side to it and I think the Attorney-General (Hon. Mr. Smith), the Minister of Highways and Transportation (Hon. A. Fraser) and myself, as minister responsible for ICBC, work well together in attempting to educate — and penalize, where penalties are necessary. If we keep that under control, we can provide the consumer the opportunity to purchase alcoholic beverages and to drink in moderation. Of course, the revenues to the government can be used to cover other operating expenses of government.

I am pleased that my ministry has been able to accomplish a considerable amount in the past year within the framework of fiscal restraint, which was our commitment, and I took forward to continuing to fulfill our mandate as a ministry in an efficient and responsible manner. I'd be pleased to respond to any questions that may be raised by the members opposite, or my colleagues, during my estimates.

MR. D'ARCY: Mr. Chairman, on vote 19, the minister's office. I'll get right to the point. Since the minister's responsibilities, especially in the consumer part, have, to all intents and purposes, been completely eliminated, perhaps the minister can explain to the committee why his total office salaries are up by an amount in excess of 30 percent over last year. We have, after all, a period of downsizing the government in general, and this minister's ministry, in particular, has been

[ Page 2850 ]

hit by the downsizing acts of government — the deregulation acts — and it is very difficult to justify a 30 percent increase in the amount payable for salaries directly within the minister's office when so much of his ministry has been eliminated or reduced to a shadow of its former self

Mr. Chairman, proceeding on to some of the responsibilities under this minister, I have a concern about the loss of the debt counsellors, not just because it means a hardship for those British Columbians, many of whom are in dire straits — some because of their own inability to deal with their finances; some because hard times have been thrust upon them by unemployment or underemployment; some, as the minister said himself, simply due to the fact that they have unconscionably high interest payments to make on their mortgages. Whatever the reason, many British Columbians found themselves over the last couple of years in need of debt counsellors. This was of tremendous value to the private sector, to whom these people owed money, because without the debt counsellors more and more people have declared personal bankruptcy, simply skipped town or been unable to reorganize their personal debt structure. One of the fundamental purposes of the debt counsellors was to allow and help these individuals to reorganize their lives to the point where they could make good on their obligations, to where they could meet their contractual obligations, to where they could, shall we say, meet their debts to society and to their fellow men.

Further, Mr. Chairman, I think there is general agreement on both sides of the House that one of the very important parts of the B.C. economy and certainly a leading edge of recovery is this province's small business sector. I believe we all know, both subjectively and probably through surveys if they've ever been taken, that the area of the retail business which suffers the worst from bad debts and bad debtors is the small independent businessman. The large retail businesses — the department store, etc. — have their own system of credit checks. They have their own system of evaluating credit applications and therefore have fewer bad debts as a percentage of their total sales than the small businessman. The small businessman has kind of a Hobson's choice here. He can either have no credit whatsoever, in which case perhaps his sales volume is severely undercut by competitors, or he can grant credit, perhaps using his own discretion, but without the comprehensive credit checks that the large retail businesses have. As a result, the small businessman, no matter how careful he is, if he grants credit at all, is far more likely to have to take a bath on that credit than the large retailer. So the debt counsellors were very important not only to the consumer who finds himself in a tough situation but to the small businessman as well, who in many cases recovered all or part of what otherwise would have been completely bad debts and would have had to have been written off.

Mr. Chairman, further regarding the ministerial responsibilities, I want to question the minister's assumption that the private sector has taken over the cause of consumer protection and consumer complaints. Let's remember that the consumer protection agencies help the businessman too. As I and many other people have commented before, the square-shooting businessman doesn't need a consumer protection agency. The majority of small and large businesses never need a consumer protection agency. It's the occasional bad one that needs it. The minister has made the rather ridiculous statement that consumer complaints would disappear if we didn't have a consumer complaint department. Well, Mr. Chairman, this is rather like saying crime and murder would disappear if we didn't have police and courts, because none of it would ever get reported. Clearly, we want not only to protect the consumer but also to protect the reputations and integrity of the overwhelming majority of businesses in this province from the actions of a few quick operators who would cut and get out and either disappear completely or move out of the province and leave innocent consumers, in many cases pensioners and other underprivileged people, holding the bag.

[4:15]

Mr. Chairman, as I have done in question period before, I want to question his decision to allocate in excess of $4 million for capital expansion of new liquor stores and enlargements of others. His own ministry has said that this year, and in part last year, has seen declining sales volume. That declining revenue is not necessarily because of price increases largely due to tax increases brought by this government and by the federal government in Ottawa, but the fact is there has been declining sales volume. I'm unaware, Mr. Chairman, of any great consumer or neighbourhood or community demand out there for more liquor stores or expanded liquor store facilities. Remember, we're not taking about normal renovation or maintenance; we're talking about new and expanded liquor store facilities in this province. It's absolutely inappropriate, Mr. Chairman, in a time of restraint, in a time of cutbacks and declining sales. You certainly don't see the private sector expanding their marketing facilities at a time when their sales are declining; they hold the line. They might make plans for future expansion, but they don't go out and invest that money.

Mr. Chairman, when you consider the deficit that this province is running, when you consider the amount of money the province is borrowing through its Crown corporations and other agencies, the expenditure of $4 million-plus on expanded liquor-marketing facilities simply makes no sense at all. Of course, if one really wanted to moralize about it, we could connect it with the abandonment of the Alcohol and Drug Commission and the insignificant amounts that the government spends regarding the evils that some people perpetrate on themselves and the rest of society through the abuse of alcohol. We know that the government is the only wholesaler and also the major retailer of alcoholic beverages in this province.

Further, Mr. Chairman, I would like to ask the minister if he could release or at least comment on the Goldberg report on beer prices; I understand it's been available to him for at least 12 months, perhaps longer. Since the price of beer has been deregulated, what could there possibly be in the Goldberg report that could prove embarrassing to the minister or to the general public's interest? Surely we know that the percapita consumption of beer has, by and large, been declining in this province and other provinces, in part due to price increases — a real increase in the price of beer over the last few years. Why cannot the minister release this information, a non-political report that was put out by a fairly distinguished academic in the business administration field? As the minister himself said in his opening remarks, he is very proud of the B.C. wine industry and a very strong supporter of that industry, and certainly the gain in per-capita consumption of wine in this province has clearly been, in part at least, at the expense of the brewing industry. Surely the minister can make some of this information available to the public.

[ Page 2851 ]

During the previous 12 months the minister has suspended the publication of enforcement reports. He talked about the prosecutions which his ministry took; he did not talk about whether or not they were successful, and he did not talk about the fact that it's very difficult for the general public to find out about those prosecutions. Once again, as with the consumer complaint department, the minister said at the time that he did not want to stigmatize all business with reports on a few businesses that were irresponsible. Once again, Mr. Chairman, most business people in a certain area — let's say automotive retailing — do not want to be stigmatized. The overwhelming majority of responsible people do not want to be stigmatized by the fact that there may be a few people out there who are not responsible. Certainly the publication of people who have been convicted by the courts of this land — convicted not by the government but by the courts — of a violation of federal and provincial statutes is a major factor in bringing to the public's attention that most people in a particular segment of the retail economy are good operators, I would think that the minister should take that into account and let people know about these enforcement situations.

Mr. Chairman, I want to talk in greater length about what the minister is doing, because he didn't go into great detail about the new Securities Act that was originally tabled as a sort of discussion paper or legislative White Paper by his predecessor. A new, updated and modernized Securities Act for the benefit of the economy of the province of B.C. has been talked about by this minister and his predecessor and his predecessor. I don't recall, but they were probably talked about by their predecessors in the New Democratic government and the predecessors in the W.A.C. Bennett government. Clearly, I think, everyone in this chamber and certainly the entire investment community, the brokerage community out there, would agree that we need not only an updated superintendent of brokers' office but an updated act. It's been a year and a half now since the last tabling, and perhaps the minister has had sufficient time to gather information and have discussions with the business community regarding that and bring that action in, because a new, modernized and updated act that was supported by the investment and brokerage community in this province, even though it would be very lengthy and very complex, in my view would probably be given speedy passage by this chamber if the minister would take that kind of initiative.

Mr. Chairman, perhaps the minister can comment on the 1981 Stanley report, which talked about the tremendous need to improve staffing of the superintendent of brokers' office, not to improve the quality of the staff but to improve the numbers there so that they could do the job with which they have been charged by legislation passed by this chamber and by the policies as laid down by the minister. The minister did talk about some mechanical improvements to the operations in the office, but he did not talk about meeting the time and quality requirements that the brokerage industry in this province say they need in order to compete properly for investment capital with other financial markets in this country. In fact, the government seems to have no sense of urgency about this and does not seem to want to assist the Vancouver Stock Exchange to move away from its reputation as a high-risk market that deals primarily in gold, silver and hot air. It's our view on this side of the House that the VSE badly needs a new act — it has for a number of years — and that we have missed a number of business opportunities in this province because we have only what is seen as a junior market. I'll be returning to that in greater detail.

Mr. Chairman, some time ago — back in 1978 — one of the minister's predecessors, the former member for Kamloops, Rafe Mair, circulated a White Paper regarding a new cooperative act. He thought it was a good idea. There was generally favourable comment outside the chamber, but nothing more has been heard of it since that time. We've been through two ministers. If the minister has no interest in updating this act, that's fine; at least he should let us know, because this has been hanging fire for some time.

I am not going to deal at length with the rental housing situation in this province, but I would like to note that the entire expenditure for the rentalsman's office during the most recent fiscal year that we have on record.... If you divided that by the number of suites and rental units of all sorts, you would come up with a cost of slightly less than $7.50 per unit. Mr. Chairman, the minister has, since last April.... I don't know exactly what he calls the position, but he has created a position called "user pay director." We're wondering if the minister, because of his desire to downsize government and reduce the tax burden, had ever considered having the rental industry, shall we say, pay for the operations of its own rentalsman's office. It would seem to me that we're looking at about 63 cents a month per rental unit, which is hardly an imposition on either landlord or tenant in the province in order to maintain this service. It is generally conceded it has been operated with a great saving compared to the same operation if it were looked after through the courts of this province. We'll leave that part.

I would like to go into greater length on the need for a new Securities Act in this province. His immediate predecessor, the former member for Vancouver South, introduced and circulated a bill with a certain amount of smoke and mirrors and ballyhoo, but it was generally well received on this side of the House. Certainly it was generally well received by the brokerage community. The proposed bill was of great complexity and length. As the former minister said, in his view it was of profound importance to the economy. It would boost the economic activity on the Vancouver market and the reputation of the Vancouver exchange. We needed an appropriate, modernized legislative framework that would safeguard the investor and enable the Vancouver exchange to compete for listings and market capital with markets in Alberta, Toronto and Montreal.

It is my view that it is not just high time but way overdue that B.C. took its rightful place in Canada's financial markets. The fact that we have not done so has injured our provincial pride. Resource and manufacturing majors located here such as MacMillan-Bloedel and Cominco, which are based in Vancouver, including their head offices and chief executive officers — are hardly ever traded on the industrial board in Vancouver, certainly in no significant way.

I would ask why the minister has not proceeded. Maybe he's intending to, but at least he could explain to us why he has not proceeded. How much consultation and feedback does he need? As we mentioned earlier, this has been going on for years. In the meantime, all kinds of economic development in this province has passed us by. If we ever needed economic development, it certainly is right now.

[4:30]

From my discussions with the brokerage industry, they really do want revamped rules. Perhaps the minister could tell us some concerns that he has. Or perhaps he has been lobbied

[ Page 2852 ]

negatively by somebody. Maybe he could tell us who and why. Certainly I'm not suggesting that he bring in the proposed bill from 1982 carte blanche, but modifications to suit his own feelings and views of the changing situation since 1982 would be in order.

The first and most obvious benefit that we would have from a new Securities Act along the lines that I'm suggesting is that there would certainly be greater knowledge for investors in the Vancouver market. When we go through an unfortunate crash, as we've seen over the last month or so on the Vancouver exchange — and I don't blame that on the operation of the Vancouver market — there would certainly be fewer investment losses if investors had better ongoing information. If they have fewer losses, investors have more funds and, perhaps most important, more confidence available to them for future or even immediate reinvestment on that exchange — rather than taking their depleted investment funds and putting them on some other exchange because they no longer have confidence and trust in the future of their money on the Vancouver market. So that's the first and immediate benefit, I believe, of a revamped and updated and modernized Securities Act in this province.

Going more immediately to his administrative responsibilities regarding the superintendent of brokers office — and it's not directly under that legislation, but it's related to it because it's all part of the same problem — we find that there is little or no increase in the staff of that office. But, as I mentioned earlier, the minister's own personal staff is up by 30 percent. When his ministry has been downsized, we on this side of the House have to wonder where the heck his priorities are. We all know why the superintendent of brokers office is important. Any company wanting to list on the Vancouver exchange must go with a prospectus to the superintendent of brokers office, must have the right kind of information, and the staff at that office must have the time and ability to make a proper analysis of that information before they can approve that prospectus. Unfortunately, that takes too much time with the Vancouver superintendent of brokers office. That's no criticism of the superintendent of brokers or any of his staff; they do the best they can with a limited number of resources and personnel.

The point I'm making is that in order to provide the proper service they are mandated to, both by this Legislature and by the minister's policies, they need greater resources at hand. If they do an incomplete or too-slow job, investors, when the prospectus is approved and the listing does go on the board.... First, there is some question investors have as to the adequacy of the analysis that's been given by the superintendent of brokers office. Perhaps even more important, the companies that wish the listings get impatient waiting for something to happen in Vancouver, so they go to some other market, probably Toronto. We have lost listings of important junior companies and important growth stocks from the Vancouver exchange simply because the superintendent of brokers office has taken too long to analyze and approve a prospectus. If the minister were prepared to make the kind of increased staffing available to the superintendent of brokers that he has made available to himself and his personal staff in his office, it would be of tremendous benefit to the investment community, the brokerage community and the economy of B.C. In addition to the factors that I've just been mentioning, we do know that Toronto brokers have been aggressively going after — because they know this situation exists in British Columbia — what rightfully should be our junior companies, and even some of our not-so-junior companies. And all too often they've been getting them. The companies that wish to go on the Vancouver board simply can't get on the board fast enough to satisfy their backers.

A further area where there have been no additions is this. As we know, the Vancouver exchange has traditionally been, and still is, primarily concerned with precious metals — too often gold and silver — and that's one of the basic reasons why we see the low values on the Vancouver exchange right now: gold, silver and hot air, as some people would say. We'll deal with the gold and silver here. We have heard discussions by many people on the government side and on this side as well.... Certainly, the first member for Vancouver–Point Grey (Hon. Mr. McGeer) and the member for South Peace River (Hon. Mr. Phillips) have talked about how we need a high-tech revolution in this province, and how we need to take advantage of it. Well, I am advised that there is not a single person available to the office of the superintendent of brokers who has any sort of investment analysis or understanding of high-tech industry. So if we are to attract any — even junior — companies in this very important field in British Columbia to a listing on the Vancouver exchange, we're going to have to have some people there who can deal with the new economic reality. But the minister in his administrative responsibility, in my view, has not even thought about this. He has listened to speeches by his colleagues on the treasury benches; he's probably given them himself, talking about the need for a high-tech industry in British Columbia. But he has not even made the first move as far as the superintendent of brokers office to see that when a company goes there with a prospectus for analysis for a listing, there's anyone there with the experience and knowledge to deal in a credible way with that particular application. Once again, we have lost high-tech listings and junior companies to the Toronto market.

Quite frankly, the minister is simply not meeting the challenge regarding the brokerage and investment community, which is under his direct ministerial responsibility. We have seen opportunities slip away, and this is only one other economic area in which B.C. Is seen as a laughingstock in too many parts of Canada, and in more and more cases it's blamed on Social Credit. I don't care whether they blame it on Social Credit or not, but I'm a resident and taxpayer of this province, and I don't like being laughed and snickered at by investors and other communities in Canada. They're saying: "You guys are missing the boat. You don't understand what's happening all around you."

What we need is an administration in Vancouver that is keyed to attracting venture capital. That is what the Vancouver Stock Exchange has been about, and I would like to see it do some different things. I think the government can take some leadership in that, and I will get to that in a minute or so. But at least the government could try to continue to do a job in the area that we have traditionally been active in, and that is in attracting venture capital — in any sector.

Interjection.

MR. D'ARCY: Do we have to have some intervening business? I don't know how much more we have, but could I try, Mr. Chairman, to ask leave to complete my remarks here?

MR. CHAIRMAN: I believe under the rules....

[ Page 2853 ]

MR. D'ARCY: Ten minutes at the most.

MR. CHAIRMAN: I was just going to suggest, hon. member, that....

MR. HOWARD: This is very interesting. I'd like to hear more of it.

MR. CHAIRMAN: Did the minister want to respond to some of the remarks made so far?

HON. MR. HEWITT: Mr. Chairman, the member for Skeena has made a comment, and I gather that's the intervention in the debate. However, I'll gladly respond, or I'll take my place and let the member for Rossland-Trail continue with his questioning if he has a line he wants to pursue. I certainly wouldn't want to interrupt him if he wants to proceed at this time. Maybe he could nod and give me an indication. Would you like to proceed?

MR. D'ARCY: Mr. Chairman, I was discussing the fact that the province has simply not met the high-tech challenge as far as the brokerage community is concerned — although I don't think it's too late — in the main, because the minister has simply not authorized the superintendent of brokers to hire staff with the correct specialized qualifications. That is no reflection on the existing staff there. I'm simply saying that there are specialized qualifications which have not been needed until recently in the superintendent of brokers office, but they're needed now. We would like the minister to broaden the abilities they have to deal with those specific things.

While some of the major resource corporations, especially those ones operating in British Columbia, are listed in Vancouver, our industrial board is a joke. Again, that's no reflection on the exchange. It's simply that the investors in major blocks of capital, dealing on what would be the industrial board here, are in fact not using it. They're dealing with the industrial boards in other exchanges — notably Toronto. Other jurisdictions, both to the south of us in the United States and in Canada, have met this problem of being saddled with only the very junior resource companies, even though there was an industrial board, by the government investing its trusteed funds through the industrial board in its local exchange.

I'm not suggesting for a moment that the government alter its investment policies in terms of what it buys. When I talk about trusteed funds, I mean the ICBC investment funds, workers' compensation and all of the various pension funds that the government has jurisdiction over. I am not suggesting that the government make different investment decisions. I'm simply saying that they channel those investments through the industrial board of the Vancouver exchange rather than simply assuming that they should go outside the province in order to do this.

The first and most obvious benefit is that the brokerage fees, which run anywhere from I to 3 percent, would accrue to the province. Since that would be our gain and someone else's loss, it would in fact mean an increase in net revenue of economic activity to the province of somewhere between 2 and 6 percent of the brokerage fees on all of the funds under the government's jurisdiction. Of course, it wouldn't happen immediately, because it would take a while to build up, but at least the move could be made. As I say, this has been successfully done in other jurisdictions, both to the south and to the east of us, and there's absolutely no reason why it couldn't and shouldn't be done in British Columbia. That 2 to 6 percent, with all the attendant ripple and multiplier effects, would have a great effect on economic activity in British Columbia.

Of course, we know that the minister may say: "Oh, the private sector wouldn't cooperate." The experience elsewhere has been that because there are such large amounts of money involved, the private sector has cooperated. The costs to the B.C. government, in this case, or the agencies under the control of the B.C. government, would be no higher. As we all know, where major blocks of money go, whether they be public or private, private investment capital and trading tends to follow. This is not just theory; it has happened in practice in other jurisdictions. The government could prime the pump at no cost to itself and gain a great deal of credibility and support from people in the province who would be delighted to see the government, or any government, take action to invest its trusteed funds through investment agencies and brokerages right here in the province. As I say, there is no attendant risk and no attendant cost. There might be some phase-in period, and there might be a period in which not all of the investments would be accepted at that rate, but it would come slowly but surely because that is exactly what has happened with other exchanges in other parts of the country — in Alberta, Quebec and to the south of us.

[4:45]

What we would see, then, is that the Vancouver industrial board, instead of being, as I said, something of a joke at this point, with no volume at all, would have real bids, real offers and real business, and the government could take the credit for starting that action. Once started, the private sector would sustain it. Certainly another major benefit is that overall we would develop major liquidity on the Vancouver Exchange. We have to make the initial effort, because it's not going to happen by itself.

I don't want to belabour these points. Hopefully the minister will address them. The three basic needs of not only a revamped Securities Act but a fresh new look at his policies and resources that he makes available to the superintendent of brokers are: firstly, to protect investors and investment confidence in a time of downturn on the Vancouver market, such as we have now; secondly, to protect us from losing investment to the Toronto exchange and other exchanges; and, thirdly, to use the trusteed funds as a major tool at no cost or risk to ourselves.

There is one other area I want to talk about. Perhaps the minister could comment to the committee as to whether or not he has considered bringing in simple laws to control commodity trading in this province. I am sure he knows that commodity trading in B.C., when done by fast operators and boiler-room operations, is totally chaotic. There is virtually nothing illegal in the commodity trading business in British Columbia. The stock market has rules. There are rules in this province and in this country relating to chartered banks, credit unions and trust companies. There are rules to protect the credibility and operation of the real estate industry. There are other rules in the public sector which do not for the most part overregulate. But an area where there is no control whatsoever and no regulation is the commodity exchange.

[ Page 2854 ]

[Mr. Strachan in the chair.]

Brokerage firms voluntarily follow Chicago and eastern regulations. There is no problem with them. The problem, as I said, is with the boiler room traders who, in fact, have deprived many innocent and small investors, by their crazy operations, of a major part of their savings. I'm not suggesting that the minister bring in regulations that prevent small companies from getting into the field. We all know that in many cases in this country, and in other jurisdictions, under the excuse of saying, "Well, we've got to have regulations," they.... In fact, the major function of regulation in many of these areas is to protect the interests of the large concerns — which in Canada are the chartered banks — and to prevent small companies from getting in on the action.

I don't want to move in that direction. I simply want to see some rules put in place, similar to the rules that we're looking and asking for and the brokerage community is asking for, that apply to the stock exchanges and the brokerage companies to control — I don't like the word "control," nor do I like the word "regulate" — and to protect the investor from fast operators in the commodity trading area of this province.

Once again, if you have these kinds of things going on in the province, the entire investment community gets a bad reputation. Once again, it frightens away legitimate investment, and it means that other jurisdictions and investors in other jurisdictions simply don't take us seriously in this province. We need to be taken seriously. We want to see a strong investment and brokerage community in British Columbia, and we want to take our rightful place, considering the tremendous resources that we have in this province, in the financial markets of Canada.

HON. MR. HEWITT: In regard to questions raised, I compliment the member for setting them out in detail and raising, I think, issues that are fair at this particular time — as an Opposition member wanting answers. As I say, I compliment the member on how he has put them today, very straightforwardly, and they're ones that deal with the technical operations of the ministry.

Considering the minister's office, there is an increase there. You can appreciate that when I came as minister in August 1982, I brought with me the additional cost, you might say, of an executive assistant dealing with the Insurance Corporation of British Columbia. That, of course, has increased the cost of operations in my ministry office. Also, though I don't have the exact dollar figures here, for a time my predecessor had staff members seconded from the ministry to work in his office. As a result, although the staff numbers don't change, the cost is now, in my opinion, properly allocated to the minister's office.

The member raised the question of debt counsellors. I can advise him that the debt counsellors are still in existence. They have not been discontinued; that aspect of the program is not being discontinued. It was the consumer advisory service that we had.... But the debt counsellors dealing with problems under the debtors' assistance program, etc., are still in place and still operating. They are in the budget. The member was concerned that they had gone.

The liquor distribution branch. I believe the member mentioned $4 million with regard to capital expenditures for increasing government liquor outlets. I'm sure the member is aware that we're talking about the liquor distribution branch. We're not talking about taxpayers' dollars. It is a marketing branch, one that distributes and markets alcoholic beverages at the retail level. We are driven in that area by providing service to a market. If it's a case of either upgrading a store because it is not of sufficient size to serve the consumer or putting a new store in an area that requires a store because of the market in that area, we are no different in liquor distribution than the private sector in that regard, whether it be a new Safeway store or a new Woolco store or whatever. Those are management decisions to serve a market area at the retail level, and it's not taxpayers' dollars; it's a capital expenditure which is amortized over a period of time and which, of course, provides a retail outlet to the consumer. We have to recognize from time to time that we must either upgrade, renovate or acquire new accommodation to provide service to the consumer. It's not a loss to the taxpayer — that's the point I want to make. It is not taxpayers' dollars when you're talking liquor distribution branch; it's the administration of a distribution and retail service.

The Goldberg report deals with deregulation. The member was concerned about it not being released. I appreciate his comments that because of, I guess it's fair to say, an election in May 1983, plus a restraint program, budgeting, legislation, etc., that report has not been dealt with. I would certainly take the member's remarks and consider when would be the opportune time that we could release that report. There's no reason that it shouldn't be released. It's a report that dealt with the deregulation of beer pricing in the province of British Columbia after its, you might say, first year of operation.

You expressed concern about enforcement reports not being available. What I did as minister was cease sending out several hundred or a thousand reports with regard to enforcement under the Motor Dealer Act, the Trade Practice Act or the Consumer Protection Act to the news media, and spending a lot of dollars in distributing them to editors' desks or reporters' desks, some of which, I assume, went right into the wastepaper basket. Others were dealt with. However, those reports are still available. First of all, court action is public knowledge. Those reports are in my office, and the reporter, should he or she wish to investigate any action taken by the ministry, has the ability to acquire that information on request. It's just that we couldn't understand why we would have to mail out all these reports all across the province and in effect do the reporters' work for them. So they're still there, but they are for those reporters who wish to take the opportunity to request them, and their response will be met.

When will the Securities Act proceed? I think that was a question. You can appreciate that the act is a fairly complex one. It was brought in by my predecessor. In dealing with the securities people, brokers, lawyers and accountants of the stock exchange, I was working towards getting their responses, and I must say some were long in coming. But that act has not been forgotten, and I have had discussions with representatives of the stock exchange. There is not a "panic" because it isn't being proceeded with, but I can advise you, Mr. Member, that that legislation will be dealt with, hopefully in the not-too-distant future. Again I refer to you to the legislation and the activities of this session in dealing with the major problems at hand — the restraint and the budgets and the legislation that we have had to deal with in the past several months.

The rentalsman's office. I think it is fair to say that any economist.... All the reports that I've seen indicate that in the long term rent controls are detrimental to the landlord,

[ Page 2855 ]

to the developer and to the tenant. I personally believe that if you maintained rent controls you would go through about three stages. First of all, because the landlord is in effect subsidizing the tenant he can't meet his costs of operation, and the building tends to fall into disrepair over a period of time. Secondly, new developers and new landlords are not prepared to put their capital at risk in doubt of whether or not they will get a fair return because of government interference. If that is the case, you end up with zero vacancy rates. Finally you move to that stage to resolve the problem, which is apparent in European countries: that is, public or state-owned housing. I'm sorry, Mr. Member, that is not my philosophy. I think what we need to address here, particularly at this point in time, is the fact that we have a window in time, if you will, with a reasonably high vacancy rate, with the opportunity for tenants to shop around if they are not satisfied with the accommodation or the price of that accommodation. It is a renters' market. We move out of that field, and as time goes on new development will take place to fill the need for rental accommodation because landlords and developers are not bound by legislation as to what they can charge. As a result there will be a reasonable vacancy rate in the future as well as now. You may argue differently, but I think you all have available to you some of the reports that have been made — some of the comments made by others than the Fraser Institute, others than Mr. Walker — which deal with the same problem; in the long term rent controls can be detrimental to the renter as well as the landlord.

The Securities Act I talked about. You repeated yourself, Mr. Member — you went back and referred to the Securities Act again. The proposed legislation was well received. There were a lot of comments and a lot of input that came back. As I said before, the urgency expressed to me is not that great, and the investment community recognizes the period of time we have been going through in the past several months and hasn't been pushing for that legislation to be brought forward. It still is intended, however, that we would bring in the Securities Act with various amendments after consultation with the investment community and the banking community, the legal profession, etc. I am confident that when we do bring that bill in it will be one that is concise, one that allows for expansion and further development of the stock exchange and one which provides for ample and good security for the investors so that their capital will not be jeopardized because of poor regulation in the investment community.

[5:00]

Superintendent of brokers. You were concerned about the lack of increase in staff. We have attempted to improve our systems, our administration in that office. We have done away with some of the irrelevant inspections, and we have worked with the Vancouver Stock Exchange with regard to vetting, etc. I think we've come a long way. There still is some delay, and I'm sure some investors or promoters would say to you that we aren't responding quickly enough. We are working within the confines of fiscal restraint, of course, to have a very efficient operation in the superintendent's office.

With regard to high-tech industry, we are working at this time on a paper concerning policies and rules, and we'll have those in place after consultation with the high-tech industry. My ministry staff have met with the representatives of industry and small business regarding the high-tech matter, and the superintendent of brokers and my assistant deputy minister responsible for corporate affairs are heading up that task. As I understand it, Toronto is at this time also developing a paper on the high-tech industry, and we aren't lagging behind; we are right there with them. In the past we have had high-tech shares listed on the Vancouver stock exchange, but once we develop the rules so that there is understanding by the investor and by the industry, that policy paper and the policy of the stock exchange, the brokers' office, etc. should — and I'm hopeful that it will — attract further investors once they know our rules and policies dealing with the high-tech industry.

I think you talked about the change of government investment through the industrial board of the Vancouver Stock Exchange, and I think you were looking at funds that ICBC, let's say, would have, and you wished the investments to go through on the industrial board. Am I correct? Our main policy with regard to ICBC, with which I am familiar....

MR. D'ARCY: Or the Compensation Board.

HON. MR. HEWITT: Or the Compensation Board, but I'll just deal with mine; we have several hundred million dollars, as you know. We have a major concern, of course, about (a) the security of investment, and (b) the return on that investment. We have funds placed in the money market; we have funds in short-term bonds and some funds in long-term bonds; we have a very capable staff that deals with that at ICBC. But the point I wish to make is that if you're looking at investment and share equity on the industrial board of the Vancouver Stock Exchange, I would have to disagree; I do not feel it would be correct to invest in equities where the principal involved could be at risk if there was a downturn in the marketplace. We have to ensure that we have those reserves available to us. Because of downturn in interest rates we may lose return on the investment, but we would never risk the capital that we have put up. In my opinion, trusteed funds should not be used for that type of equity investment, particularly with the Insurance Corporation of British Columbia.

The Commodity Act is under study, Mr. Member, and I appreciate your comments. It's one of the areas that I hope to address in the not-too-distant future.

MR. D'ARCY: In what I hope will be a fairly brief reply, I simply cannot accept the minister's statement, and the implication to this House, that liquor sales are somehow done by a Crown corporation. Liquor revenue is general revenue, just like revenue from the sales tax or stumpage or anything else; and capital expenditures are general expenditures, just like expenditures on highways. To use the minister's argument, reforestation or firefighting doesn't cost the taxpayer anything, because after all, the forests pay that much and more into the B.C. general revenue. Or perhaps the operation of the Ministry of Mines doesn't cost anything because mineral revenue brings in more than it costs. Certainly, Mr. Chairman, some departments of government have a net value in terms of bringing more money into government than it costs to operate those departments, and some cost more to operate than they bring in. Liquor sales is clearly one that the government makes money on, and for the minister to suggest that somehow that $4 million-plus is not a cost to the taxpayer out of general revenue is a totally and completely specious argument. I stand by my concern that it is very difficult to explain to the taxpaying public in British Columbia, when so many services are being eliminated or reduced under the name of downsizing government, that the government would somehow have $4 million to spend on new and expanded

[ Page 2856 ]

liquor retailing facilities when they don't have any money for so many other services which are deemed to be needed by a wide cross-section of the community.

Further, Mr. Chairman, the minister attributed to me complaints that he had eliminated rent control or rent review. That was not the thrust of my remarks at all; in fact, I don't believe I even mentioned rent control or rent review. I did talk about the rentalsman's office. The reason I didn't mention rent control or rent review is that under the policy of attrition, which was indeed started by the New Democratic government, very few rental units were in fact controlled in this province; in a few years probably none would have been. So the minister, in eliminating rent control, just accelerated a process that was already in place. And indeed, the rent review commission has not existed for a year or so.

What I talked about, just for the minister's benefit, was the disputes which were brought to the rentalsman's office. I understand it was roughly two to one: roughly two brought by tenants for every one that was brought by a landlord. It's my view that a very small.... If the minister and his treasury bench colleagues were tremendously concerned about the cost of operating a rentalsman's office as it related to rental disputes — that it was a tremendous burden on the taxpayers of B.C. and needed to be eliminated — a very simple charge per rental unit could have more than paid for that, especially when you consider that since he was eliminating rent control we can only assume the cost of operating a rentalsman's office would, if anything, have declined. That is what I was referring to: the resolution of disputes which now are either not going to be resolved, Mr. Chairman, or be resolved at much greater expense, and with much greater delay, through the courts of the province.

Mr. Chairman, once again, the last point I am going to bring up.... I made it quite clear in my remarks regarding the investment of trusteed funds — and the minister evidently either didn't understand or wasn't listening — that I was not talking about changing investment decisions, or about going into high-risk shares on the Vancouver exchange that they wouldn't otherwise have gone into. In fact, I was not suggesting that they even buy shares of companies listed on the Vancouver exchange, unless that's what they decided to do.

What I was suggesting, Mr. Chairman, is that when carrying out the investment decisions that they were going to make anyway, that they had already made, instead of sending those funds through the Toronto, Montreal or New York exchange, that they go through the industrial board of the Vancouver Stock Exchange — the same companies, the same investment, no extra risk, no extra cost. I was not talking about the minister taking risky investments, unless that's what he decided to do. I was saying that if he channelled that investment activity through the Vancouver industrial board, there would have been no extra risk, no extra cost. In some cases, as I said, there would not necessarily, in the early stages, have always been genuine bids or real offers; in other words, in some cases the private sector would not have responded. That's fine. Go back and do it the old way in those regards. But slowly, surely, the private sector would have responded because of the amounts of money involved. That would mean, if nothing else, substantial new brokerage fees for the B.C. brokerage community.

So I'm not talking about the minister taking any risks with the money, or about any of his treasury bench colleagues taking any risks with money trusteed under their jurisdiction — any risk that they're not taking now. I'm saying, do the same thing, but instead of using one agency outside the province, use an agency inside the province.

MR. LAUK: Mr. Chairman, the minister did raise the question of rent controls, which was not raised by the member for Trail, and commended to us literature produced by the Fraser Institute. I have read through most of that literature; it was kindly provided to us by the well-funded institute that he has mentioned, and together with other information obtained elsewhere on the continent of North America and also in Europe. The material that was gathered together by the Fraser Institute is a misrepresentation of the experience in jurisdictions where rent controls have been in place; it's a misrepresentation and it's an artificial argument on the part of the Fraser Institute. Part of that artificiality was expressed by the minister — and I am sure inadvertently — when he said, "You know that we can't have the landlord subsidizing the tenant," when in fact most economic analysis of landlord and tenant and rents indicates that it's the other way around. It's a normative judgment about what is a fair rent. In any economics argument you can place certain things in a category and say it's fair if you include the cost of land; it's fair if you include a refinancing of the landlord's property; it's not fair if you do; and so on. It depends on what the economist includes in his analysis of what is a fair rent, and it's altogether very arbitrary. As with so many expert opinions, you can obtain the opinion you want simply by including or excluding certain factors in your calculations. It is a fact that even recently rent controls were in place a little more substantially than the member for Trail obviously is aware of, but they were there. And the rent controls that are in place in jurisdictions in such as Los Angeles and other cities in the United States, and certainly in Europe, have not been a disincentive — if there has been one — to the production and manufacture and construction of rental accommodation. Indeed, rent controls were in place in British Columbia in 1974, and the highest years of construction of rental accommodation occurred between 1975 and 1977 in this province while those rent controls were fully in place. And as rent controls have been decreasing and falling off the edge of the cliff, rental accommodation has decreased. Now the two aren't related. I'm not saying that rent control encourages the construction of accommodation, but it doesn't necessarily discourage it either; other jurisdictions have a form of rent control and rental accommodation has exceeded the production levels that we see in Vancouver.

Particularly in large urban areas like the city of Vancouver, there's a captured market for tenants, and the rent is not based on the marketplace idea of vacancy rate vis-à-vis rents that the minister tried to suggest. It just doesn't happen. The rents that are charged on an area basis are based on the economics of the investment in favour of the owner. If he's spent so much for the land and so much for improvements, irrespective of the fact that it may have been a foolish investment and he paid too much for it, or that the market is going crazy, as it did in 1980-81, the tenant has to pay for that investment. I argue that the tenant is subsidizing the landlord. If you can't argue that rent controls are a form of artificial restraint in the free market system, then you'd have to argue that zoning is, that the control of interest rates in the central bank is and that the chartered bank act is. I find that the argument is a one-sided argument. Where a free market system benefits the owner, the investor, the industrialist or the

[ Page 2857 ]

banker, then he wants free enterprise. If it doesn't benefit him he wants regulation.

I have noticed that it's the same thing that happens in all the chartered banks. They want to socialize their losses with Dome Petroleum, Mexico and Poland, but they want to privatize their profits. It's the same with landlords. They want to socialize their losses. They want subsidies, tax breaks, this and that, and they want rezoning, but they want to privatize their profits. This is the argument they've been able to sell to the minister, and I think it's wrong, because the minister is really admitting that his government stands up for the small minority who are landlords. I'm not arguing to be unfair to them, but I am saying that he's standing up for them exclusively and not taking an interest in the plight of tenants, who comprise over 50 or 60 percent of the population of the city core — if not more. I think that is really turning your backs on a lot of British Columbians who need the protection of the government.

[5:15]

What I really wanted to talk about, Mr. Chairman, is ICBC, and I've actually done some research. It was a unique and refreshing experience and I commend it to all of you.

I found the committee report from ICBC quite disturbing, because of its superficiality.

HON. MR. HEWITT: You're biased.

MR. LAUK: The minister says I'm biased. I'm not biased, but I will disclose an interest. I'm a personal injury lawyer. Sitting 24 hours a day in Victoria, of course, makes me a very minor personal injury lawyer. I have a handful of files....

AN HON. MEMBER: File your contingency fee schedule.

MR. LAUK: Yes, I will. It's well known on the bench and bar. I'd like to deal with those two points initially, and the minister is the best straight man I've had in months.

HON. MR. HEWITT: I'm just trying to help you.

MR. LAUK: One is that I'm a personal injury lawyer. I'm speaking, though, on behalf of those injured. I will not deal with the economic loss that may be suffered by lawyers. In my experience as a practising lawyer and looking back in history, lawyers don't suffer much from loss of income, no matter what a government does — I wish sometimes they would.

The second point is that it was recommended by the committee of ICBC that the contingency fees be abolished. I would argue against that. I certainly am in support of regulating them, and I think that if the benchers — that is, the governing body of the Law Society — don't do something to regulate contingency fees, then the government must act. But I think it would be a real mistake to abolish contingency fees, because you would exclude those people who don't have ready money to hire a lawyer to defend them, in terms of their rights, no matter what system is imposed upon them, vis-à-vis personal injury, a WCB system or a new form of no-fault or so on. A lawyer will take a risk with a client if it's a reasonable risk, and represent that person. If the fee is reasonable, a percentage of the damages — and that should be regulated.... There are very few. It's exaggerated about how many personal injury lawyers are charging horrendous fees, but there are some, and if there is one it's one too many. They should be regulated — there's no question about that and they should be reasonable.

But you should know that the vast majority of clients coming to a personal injury lawyer have no money for a lawyer. They simply do not. So a reasonable contingency fee under a contract that is reviewable and that is regulated is the way to go. Otherwise these people would not have a lawyer, and it would be an imposition on the Crown. If, for example, enough of these people accumulated with serious injuries and they could not get lawyers, they would be asking the government for legal aid and so on. So I think it's a false economy in that sense. But certainly those few who are overcharging.... There should be a limited percentage, and it should be a straightforward percentage dictated by the benchers with some variations depending on the kind of cases involved.

Having made those two preliminary remarks, I want to deal with the report in its substance. I've gone to some of my old files and some of my colleagues' files of personal injury cases which are completed. I won't name the clients or describe it in any detail to identify them, but show you what would happen to these people who successfully prosecuted their injury claims in court if some or all of the recommendations of the committee report were in place. The committee has recommended a general, no-fault scheme and to abolish all claims for tort except those for injury over $10,000 — tort meaning negligence. Secondly, to abolish the right to a trial for economic loss — that's loss of income and other related income losses. Thirdly, income loss would then be reduced to some kind of formula that would make an attempt to try to cover contingencies and uniqueness in each case. Fourthly, the innocent will be treated the same as the guilty. I use those words very advisedly. In other words, there is a total no-fault philosophy behind the recommendations.

Under the formula, those who have not lost money will be entitled to it, and those who have lost money will not be entitled to it. I'll explain what I mean by that in a minute. Instead of using the courts' principle that the loss is to the restored, the insurance formula of whether you fall within the strict words of the plan will be followed. No matter what formula is devised, it will have to be a generalized formula, and many people will fall out of the plan. The innocent injured will have their right to money for their injury taken away from them, and that money will be used to provide income loss replacement for the guilty. It is anticipated that every claim under $10,000 will be regarded as a minor injury and will be denied. Ten thousand dollars to an insurance executive is no doubt a minor injury, but to a student, an unemployed man, a housewife, it is a significant sum. If, for instance, a young lawyer or young executive or medical student at a hospital is totally disabled when he is being paid $1,000 a month, his income loss for the rest of his life will be calculated at $1,000 a month — whatever his future prospects. That's the WCB type of standard.

It is customary for insurance proposals to speak of benefits and apparently full coverage. At the present, a judge restores the loss according to sensible argument fitted to each case. The scheme proposed will ignore what has been lost, but will award money only according to the words of the scheme. The test will be loss of income on a current basis and not actual loss, which is future loss of income. Much loss is not loss of income. Human experience is so complex that it is

[ Page 2858 ]

impossible to reduce into a statutory scheme of this sort a fair definition of income or loss of income. The scheme suggests that persons with a potential income loss of over $30,000 should insure themselves. If a student at a university has an annual income of $3,000, which is not unusual, but he hopes to have an income of $100,000 a year upon qualifying as a doctor or an engineer, he would be deprived of that coverage because he could not find the money to pay for the coverage, and the loss would fall on him as a result of someone else's negligence. Large potential loss does not mean an ability to pay. The whole scheme is to be justified by administrative convenience — all factors in a person's life which go into his potential are to be reduced to code and symbols and entered onto a computer which will regurgitate answers. Administratively, the scheme is beautiful, but from the point of view of delivering justice or protecting anyone, it fails completely.

I want to report a composite of two cases as my first example. A Rolls-Royce travelling at 50 miles an hour goes out of control and hits a tree. The car is completely destroyed; the negligent driver is entitled to $150,000 in that case, and a brand-new Rolls-Royce. There was a girl standing beside the tree whose leg is broken, and she is scarred for life. Under the scheme she'll get nothing. Her injury is minor and not permanent, according to the committee's recommendations. She has lost no income. She may have lost a year of school. In the one case I'm using in this composite example, it's true. She lost a year of school, suffered a nervous breakdown and had three operations on her face. She will not be protected by this scheme, because it does not take those categories of loss into consideration. The negligent driver, who was driving the Rolls-Royce, is fully compensated.

Here's another case. A man in a ten-year-old car drives it at approximately 50 miles per hour and strikes a young girl in a crosswalk as she pushes her bicycle across the road. The bicycle scratched the car from end to end. This man will be entitled to complete compensation for the damage to his car, which I presume is a new paint job. The vehicle, however old, must not be permitted to go on the streets, according to insurance law and the recommendations of this committee, in other than pristine condition. However, the girl has a severe scar on her face. She has 10 operations. She carries the scar on her face for the rest of her life. She has what is called posttraumatic nervous condition — nervous breakdown, if you like. She was thinking of modelling and doing acting in addition to any job that she might hold. Her social life is virtually destroyed. She is awarded nothing under the scheme. Her injury is minor, and she is not totally disabled. The scar on the car is completely recoverable, if you like. The scar on the face is denied.

Take the case of two women totally disabled in a car. The driver, a qualified nurse, is married to a millionaire and has no intention of ever going to work. She has lost nothing in terms of economic loss, but she would be entitled to $3,000 a month for life, though she caused the accident. The passenger is a student nurse, one week before qualification. Though her earning potential is $30,000 a year, that's potential and she would be paid under the plan less than $14,000 a year because she was a student. She would therefore lose $15,000 a year for life because of the wording of the plan. She's totally disabled.

Here's another case. A boy in school with straight "A"s, age 15, would be entitled to $11,000 a year for being totally disabled. He was a passenger in a car driven by a boy of 18 who left the highway at 90 miles an hour. The boy of 18 left school at age 14. He had been on drugs, had never earned any money, had a year in jail and had worked for a week as a logger. He would be entitled to 90 percent of the net income he could earn from being a logger if he was currently employed as a logger — presumably the maximum of $33,000 a year for life under the proposed recommendations. The award for unemployed, part-time workers or casual workers would not be based on their probable loss but upon their earning capacity. It appears that persons who were disabled by temporary injury at the time of the accident would be entitled to $135 a week, in spite of the fact that they might have been about to return to work at $1,000 a week. The scheme assumes that a person is either disabled totally or not totally disabled. There is no provision for reduced earning capacity or loss of opportunity. There is no provision for being handicapped in the marketplace. If a man who has a 95 percent chance of obtaining employment in a job earning $3,000 a month is injured so that he has a 10 percent chance of a job earning $1,500 a month, he is not covered because he is not totally disabled. I'm applying the recommendation to these examples and using my experience with the WCB. Even if the plan were amended to include this, the fact that the man only had a 10 percent chance of obtaining employment with his disability would be ignored because he is capable of working. He is not totally disabled and does not qualify under the plan. On the other hand, a judge would take into account his handicap and give him a substantial award. The plan would fail him completely.

[5:30]

With respect to death benefits, the spouse and dependents of a man whose income has been increasing at the rate of 50 percent per annum would be compensated exactly the same amount as the dependents of a man whose income was declining by 50 percent per annum.

All the abuses of the no-fault scheme that we now have, and the WCB will have, will pervade the system if these recommendations are accepted. Many times it is difficult to establish whether a person is disabled or not, but all the evidence would be collected by the adjuster handling the case, and when the time came for a person to be somewhat more active, after maybe a year of recovery, the claimant would find his claim denied. Then he would have to find out how to prove he was disabled. At this point the adjuster would have all of the evidence at his fingertips. The claimant has nothing, because the adjuster has controlled the evidence from day one. This is the way it is done by the WCB. Under these recommendations, this is the way it would be under ICBC. The system proposed awards money to those who have not lost it and denies it to those who have. It recommends full coverage for property damage — bent fenders, scratched paint and bent metal, which, by the way is the largest amount of money spent by ICBC — but for persons who have lost even $1 million in income, coverage may be denied, because a person cannot prove that he is entitled to the full income loss under the words of the scheme. Anyone who is familiar with the personal injury area will tell you that it is hopeless to bring an action against ICBC under the current part 7, no-fault benefits. There are approximately eight clauses which provide that money may be paid to a disabled or bereaved person, subject to qualifications. There are 40 clauses of exceptions, restrictions and conditions. I concede that a lot of them were brought in by the NDP administration. The scheme, when it eventually appears, will no doubt be worse, because it would be an expansion of part

[ Page 2859 ]

7, and more substantial amounts of money would be involved.

The ICBC study by the committee admitted that 80 percent of the general public in British Columbia approve of the present system because it's fair. Two-thirds of the general public believe that all injuries should be paid for. What is recommended is that claims under $10,000 shouldbe denied. The income loss scheme was proposed because it was alleged that people who receive large sums of money from the court squandered the money. A survey was taken, a most extensive search was done, and no evidence could be found of squandering. The scheme assumes that just because the plan provides for repayment of money, there will be no question that the claimant is entitled to it and that he will be paid immediately. In fact, there are over 25 standard defences today to a claim of loss of income.

Examples are that the accident never happened; that the loss of income was caused by pre-existing disease; that the income loss was not caused by the accident; that the person is not disabled; that the person was not employed and couldn't be, is not qualified to be employed; that he was not entitled to the full amount which he claims, only a lesser amount; that he'd been drinking; that he was not totally disabled; that there are other occupations that he could perfectly well go through; that he's under 18 or over 65.... There are all kinds of defences, depending upon the nature of the case. The plan is supposed to abolish disputes. Any time a claim is made against an insurance policy anywhere in the world, there is a dispute. The adjuster is trained from the beginning to take a full statement from the claimant to establish any one of the 25 defences which are available to the corporation. At this time the adjuster is fully aware of the full nature of all the possible defences. The claimant is in pain, crippled, anxious and totally ignorant of the law. He must pay his mortgage and buy food for his family.

The position is totally unequal. The injured party believes that he is being helped by the man who is paid to deny his claim. He is required by statute to cooperate with him. We're talking about today. The adjuster is not required by statute to cooperate with the claimant. There is no penalty for late payment or non-payment of the amounts due. Anyone who has dealt with the insurance companies over a long period of time knows that making a claim involves, sometimes, a very bitter war. The fact that the systems are tolerable at all is because ultimately the court is there to right the wrongs. Fearsome abuses in the WCB will not be tolerated by the courts, in the ICBC situation. Fifty percent of the persons surveyed by the committee expressed dissatisfaction with their adjusters.

There is a gross loss of freedom as a result of this plan. Instead of having the victim have money available to spend as one wishes, according to another recommendation, he will be tied to the corporation as a pensioner for the rest of his life. Should anything happen to the corporation, such as restructuring of its income by cabinet order under an austerity program, when claims are increasing at 30 percent, this will make the corporation unable to pay, the future benefits will be reduced or denied, and it will seriously interfere with the setting of premium rates and the traditional mode by which those rates are set.

Nothing is worse than having huge corporations snooping around one's property through these adjusters, and letting air out of one's tires, in one case I had, presumably because a guy with a sore back can't get out there and pump it up. They do childish things like that and try to get it on film to show it in court. Dumping gravel in the driveway so some supposed whiplash case is out there shovelling the gravel....

AN HON. MEMBER: I understand that one worked.

MR. LAUK: Well, I understood it, too, but in the case that I had, in a Safeway parking lot the adjuster put a sack of cement behind the back wheels of a claimant who was in shopping. Indeed, they got him on tape trying to pull this 150 pound bag, or whatever it was, out of the way, but that added another $27,000 in general damages to the award because the court found that that was part of the negligence, that it exacerbated my client's injury, and that he was entitled to a further amount.

Interrogating one's friends and employers to test whether the victim is still disabled, and so on. Okay, you can do that, but what happens to the other side? How do you protect the claimant from that kind of interference with the administration of justice?

The corporation will have the right, no doubt, under this plan, to have medical examinations by examiners of their choosing, asunder the Workers' Compensation Board. There is a short-Iist of medical examiners by WCB, and I claim they are blind, deaf and dumb. Those doctors can be exposed by a lawyer in court as charlatans or paid hacks if need be, under the full light of day in a trial. The proposed scheme places the claimant at the mercy of the adjusters and the paid medical examiners.

The winners in this proposed change will be the drivers who cause the accidents. The losers are the innocent victims. Four out of five claimants will have their loss denied. The scheme supposes that the adversary system that presently exists arises out of fault. It is not so at all. It arises out of a claim against an insurance company. Lawyers do not make the problem in that sense. No one would come to a lawyer if he did not expect to have a problem with the insurance company and not the defendant.

I have one example of a case which has not been tried but is a good example of what I am talking about if this scheme is adopted. There is a girl who had whiplash that lasted over six months. It dramatically changed her life in the following way. She had won the amateur national skating championship, and for ten years she had been getting up at 5 in the morning to get ice time. She would get nothing for her injury under this scheme. It finished her career in skating. She will never travel the North American continent in the Ice Capades, go to the Olympics and represent her country, nor will she be able to teach skating and attract pupils in the way that she had planned. Her income loss is $20,000 a year. She will recover nothing under the proposed scheme of the committee. Her injury is not serious, and she will receive nothing because it is not totally disabling. She will receive no income loss. Her staggering loss will be completely ignored. The man who hit her, however, will have all of the car damage repaired with $50 deductible.

I do not believe that the proposal that there be an arbitration system should be rejected. I think that may be a good idea. I think it is better than going to the trial and finding there is no judge available, for one thing. But I don't think it should be compulsory. I think that if both sides agree.... I think the minister will find that if that part of the recommendation is imposed, 75 percent of those claiming against an insurance company will agree to arbitration. It is simpler. It is easier and

[ Page 2860 ]

the courts are clogged. But there must be the right of appeal in a full rehearing if the arbitrator goes nuts. We've always got to have that access. That part of the recommendation should be seriously considered by the government.

MR. CHAIRMAN: Your time is up. Does the minister wish to act as intervening speaker so we can carry on?

MR. LAUK: I've just got five minutes.

HON. MR. HEWITT: Thank you, Mr. Chairman. The member is pursuing a line of thought here and I'll allow him to finish.

MR. LAUK: I thank the minister.

With respect to death benefits, Mr. Chairman, the wording of the plan speaks of replacing the income the deceased had earned. There are many people earning no income whose potential is tremendous. I mentioned that earlier. A farmer building up his herd, a person starting out in business, students, contractors part way through a contract, persons in their first year after leaving college and entering into the workforce, or after their apprenticeship, and so on. Such persons and their widows have the future potential totally ignored by this proposal. The plan is a typical, slickly set out and superficial analysis of the problems in personal injury matters. It sounds good and reads well, but it does not stand up to close examination. The rights which are proposed to be brought up by the other insurers have been fought for. The rights that are proposed by this committee to be eliminated have been fought for over many centuries in the common law. It is now proposed to take them away as a result of a campaign, I think, by the insurance companies. It's being promoted as being an improvement.

I must point out to the minister that the committee which sat to make the recommendations to government did not include any representative of the injured. There were no representatives of injured parties, or an adequate representation, I would say, from people who deal with these matters over the long haul.

I think also, in dealing with this matter, that the minister should disclose whether or not there is a group of insurance companies in Canada that has proposed to purchase ICBC from the government. There are always rumours of these kinds of things in the field. The latest one is that insurance companies of Canada will buy ICBC for several billion dollars with a similar no-fault scheme. I think that if this committee report comes together with some kind of scheme to sell ICBC to these major insurers, that should be disclosed, because that's a serious persistent rumour in the field. It should either be dispelled, or the minister should disclose today that that is one of the considerations the government is now looking at.

HON. MR. HEWITT: I appreciate the second member for Vancouver Centre's remarks. I said somewhat in jest that it was probably the paper he was going to submit to the Bar Association for their magazine.

MR. LAUK: But I did use their paper in preparing mine.

HON. MR. HEWITT: I think it's worthwhile. I think you approached the problem from your point of view, and I'm going to try to give you another point of view. It's not necessarily mine at this time, but because the study is there and took several years in preparation by people who were appointed from all areas of concern, including lawyers, I think it's fair to say it was an unbiased report. It's not a report done by the corporation or government but by a group of people trying to address the problem of personal injury and the costs involved and problems related to it in these days, which are well beyond the days of the horseless carriage, where the automobile may have gone off the road and somebody was negligent. We're talking now about settlements that are increasing every year, that are becoming astronomical and that have to be paid from the purses and pockets of those people who are driving cars. As the member is aware, you buy insurance to protect yourself against a legal suit, but the cost of buying that insurance increases year after year because the settlements keep getting higher and higher.

[5:45]

The committee, I think, addressed the question in an unbiased manner, as I said, and I think they put that report forward to get the reaction of you, who, as you admitted, have some interest in this as a lawyer. I think it's fair to say that before this exercise is over the lobby of the trial lawyers in this province will be substantial. It has already started; I've had a number of letters across my desk. The contingency fee is a problem, but it isn't the problem. It's unfortunate that 20, 30, 40 or 50 percent is assessed by a lawyer on a client, and that comes out of the claim settlement from the insurance company, leaving that client $300,000 out of a $500,000 settlement to live on for the rest of his life — one lump-sum payment. It's fair to say there have been cases recorded where the individual, because of emotional stress and the influence of family and friends, a number of years later feels he has not received fair compensation or that it has been poorly managed. Possibly they are left in a difficult situation — just possibly at the expense of the taxpayer because they have no ability to earn and they've lost all the funds provided to them, net of the legal fees. The contingency fee is a part of the problem but not all of it.

The issue in that report is basically fault, or the tort system, versus a no-fault system; possible security versus a compensation program and secured income for the rest of the individual's life.

I think it is fair to say that you have to look at the loss of income as of today. The accident happens today. The member opposite raises the issue of a student going through to be a doctor, or a young person.... I'm not sure whether we have a responsibility — again, taking the no-fault position — to look down the road to future earnings, as opposed to saying: "What is the earning ability today? What is the base we'll determine today for a young person or a student?" A person could go through life, graduate as a doctor, be a neurosurgeon and have the ability to earn millions a year, only to fall by the wayside because of mental stress or involvement with alcohol or lung cancer from smoking. So you can't really take the position....

MR. LAUK: The courts take that into consideration; they take a percentage chance.

HON. MR. HEWITT: Well, I have some difficulty in understanding how the court could take that into consideration with confidence. I'm not sure they could. Nevertheless, I'm not sure that's the approach we should be taking. I have some difficulty with "future earnings."

[ Page 2861 ]

I give you another question: should all the drivers pay for possible future earnings of an individual after the fact? If something happened to us today, do we look to all the people in society to give us the income that we're earning today for the rest of our lives? I'm not sure. Believe me, Mr. Member, it's a very complex issue.

MR. LAUK: Put yourself in an injured person's place.

HON. MR. HEWITT: I will. Let me give you a reference to your fellow MLA, the first member for Vancouver Centre (Mr. Barnes), whose daughter had an accident. The liability was determined and the settlement was X number of dollars. I can't remember exactly; I'm going to say $400,000, but I'm not sure if that's correct. He doesn't have that coverage and is now exposed to that liability. Under a no-fault insurance program the individual injured would receive compensation for the rest of his life, would have security, would have the ability — if you will — to look at different possibilities for employment or whatever. Nevertheless, the other individual involved in this rather unfortunate situation, the owner of the car — not necessarily the driver as in the case of your fellow MLA — would not be exposed to that horrendous debt that he has to face in this particular case. We should try to approach this, Mr. Member.... I think you have fairly raised your points on the tort system versus the no-fault system. Let's try to approach this in a rational manner, and not be too influenced about the fact of large settlements and contingency fees. Let's take a look at it and see, from society's point of view, if moving to no-fault is the best approach to take.

There is abuse on both sides, Mr. Member, when you talk about the bag of cement. There are even the comments about lawyers following ambulances from time to time. I know that doesn't happen. There have been claimants who have been found to be attempting to commit a fraud. You can nod and agree with that.

At the request of my colleagues I'm going to sit down and ask the member across the way to make his final remarks.

MR. LAUK: I know the first member for Vancouver Centre (Mr. Barnes) doesn't mind us chatting about this, because it's something he doesn't want to see happen to any other British Columbian. In that kind of situation it's a minimal cost for personal injury, or third-party, coverage. To go up to $1 million instead of $50,000 is only a few dollars, compared to the total premium.

The other thing is that court settlements for personal injury are a small percentage of the total cost of ICBC claims. The courts now have limited personal injury claims for pain and suffering. Major settlements are a thing that we saw maybe four or five years ago. They've now levelled off. It seems to me, Mr. Chairman, that the minister is trying to solve problems that are yesterday's news.

I think coverage for personal injury is a minimal part of the premium paid. That's why it's such a crime if we deal with an area that's not of the greatest cost to ICBC, and ignore the area of all that property damage — fender benders and so forth; maybe put a little heavier response on those people. But I'm not sure. I think no-fault is generally not a bad way to go, but I have problems with it. I don't like the idea of an innocent person knocked down in a crosswalk having their potential claims vastly decreased and the negligent party being guaranteed. Somehow there has to be some real thinking on this matter before any steps are taken.

The House resumed; Mr. Speaker in the chair.

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

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

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 5:54 p.m.