[ Page 3029 ]

CONTENTS

Routine Proceedings

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

On vote 41: minister's office –– 3029

Mr. Skelly

Mr. Lockstead

Mr. Passarell

THURSDAY, FEBRUARY 2, 1984

The House met at 10:04 a.m.

Prayers.

Orders of the Day

HON. MR. GARDOM: Mr. Speaker, three items of business, First of all, Gong hai fat choy to everyone in our Chinese-Canadian community. Secondly, hail to Groundhog Day, shadow or no shadow. Thirdly, I call committee of....

Interjection.

HON. MR. GARDOM: I've been informed that today is the birthday of the mother of the hon. Provincial Secretary (Hon. Mr. Chabot). I'm sure every member of the House would not only want to wish her happy returns of the day, but to express our heartfelt and warmest thanks for bringing up a very difficult child.

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

ESTIMATES: MINISTRY OF FORESTS

(continued)

On Vote 41: minister's office, $143,879.

MR. SKELLY: Last night we were talking about a concern of the NDP, and of a number of people in the province and the country, about the concentration of ownership in the forest industry. The current tenure system and the changes in that system brought about by the Social Credit government after the Forest Act of 1978 have actually increased that concentration of ownership, and in fact led to a series of takeovers in the forest industry that resulted in about $2.5 billion being spent in a very wasteful way. Much of that $2.5 billion is being paid out of revenues from the forests of British Columbia to chartered banks, holding companies and financial institutions.

The minister responded by saying the NDP is against big companies and that's the only reason we're raising this concern. I should remind the minister that the NDP is not at all against big companies. We do believe in a mixed economy. We believe that the best advantage comes to the B.C. economy from a reasonable mixture of large and small enterprises, and the government should exist as a countervailing power to make sure that those enterprises can function within their particular spheres. In fact, Mr. Chairman, when the Socred government came to office in 1975, they said they were against everything big: they were against big governments, big unions and big companies. Yet it's their policy over the years that has resulted in this increased concentration of ownership and concentration of ownership outside the province. Our concern is that when the government becomes the servant of those large enterprises and the enemy of those small enterprises that it claimed to support and nurture in this province when it first came to office back in 1975, the government's policy is making it tougher for small business in the forest sector to survive and making it easy for those big companies to get bigger. As they get bigger, they get more slothful and more bureaucratic. They fail to pursue markets as actively as they should. The government allows them timber virtually without any competition whatsoever. As a result we get get low stumpage returns to the provincial treasury.

When we were discussing this last night, the minister took the opportunity to insult one of his former colleagues, Mr. Lloyd, who was sitting in the gallery. First of all, he insulted him by calling him "my current adviser," and I'd like to correct that on behalf of Mr. Lloyd, who is not an adviser to me and doesn't serve me in any capacity at all. He only found an open door at the NDP caucus when he came to register his concerns about the way the Forests ministry is operating in this province. When he wrote to the Premier three times on behalf of his organization, the B.C. Independent Logging Association, the Premier didn't even have the courtesy to answer those letters, as is the Premier's custom in this province.

MR. CHAIRMAN: I'll remind the hon. member that we are dealing with the estimates of the Minister of Forests.

MR. SKELLY: I'm talking about an organization in the logging industry in British Columbia that has been trying to make contact with this government from your constituency, Mr. Chairman, to express their concerns about the way the province is being divided up by the Social Credit Forests minister among big companies that are operating in the province while the small businesses in that industry aren't getting a hearing from their local MLAs, aren't getting a hearing from the Forests minister and aren't even getting a hearing from the Premier, who should be concerned — if you can believe the statements he made in 1975, that he was concerned about big government, big industry and big trade unions. The fact is that now they seem to have made a sea change in that caucus. They've totally changed around. They appear to have become the servants of big government.

A few days ago I asked the Premier a question relating to forestry matters.

The B.C. Independent Logging Association has written to the Premier on a number of occasions — March 16, 1983; July 13, 1983; September 7, 1983 — requesting a meeting to outline their concerns over such issues as contracting clauses in the interior and the granting of rollover tree-farm licences. Is the Premier prepared to say why he has not acknowledged the letters of the BCILA or agreed to meet with them to discuss these issues?

The Premier responded:

All matters relating to particular ministries are referred to the minister. It has not been my policy to try to develop policy in isolation or in absence of the ministries. Their policy decisions come to cabinet, where they are given my consideration as well as the consideration of others.

He said in response to a supplementary: "Again, any matter relating to the Forests ministry would be dealt with by the Forests minister."

Yet the people who represent the big companies in the industry seem to have an open door with the minister and the Premier. The Premier doesn't seem to apply the same restrictions to those big companies for access to his office as he does to the small operators — even the small operators who are represented by one of his former colleagues in the Social Credit caucus.

[10:15]

MR. CHAIRMAN: Once again I'll remind the hon. member that we are in the estimates of the Ministry of

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Forests, and debate during Committee of Supply on the ministerial estimate must be relevant to that ministry only. There will be other opportunities for the member to discuss other ministers' estimates.

MR. SKELLY: Mr. Chairman, all of this relates to the Minister of Forests. All of this relates to the lack of access by small operators to his office. All of this relates to the discrimination that this minister exercises as between big companies and small companies operating in the forest industry in this province. All of this relates to the fact that if small operators can't get access to the government through the minister responsible, then of course they attempt to get access through the Premier. The Premier said in his statement that he refers everything back to the minister, that the ministry deals with matters that are within its jurisdiction, yet.... Let me read another letter from the Council of Forest Industries, again relating to forestry matters. It is dated July 28, 1983. You will recall, Mr. Chairman, that 15 days prior to that date the BCILA wrote to the Premier and couldn't get any response at all.

"Dear Mr. Premier:

"This letter and the attached brief are submitted to you in response to your personal invitation to the Council of Forest Industries of B.C. on May 27 to present industry's ideas on ways to make the Ministry of Forests' activities more cost-effective."

The Premier at one time is saying that he refers these matters to the ministry. But in a confidential letter from the Council of Forest Industries to the Premier they are responding to a personal invitation on behalf of the Premier to make the Ministry of Forests more cost-effective. I thought that was the minister's jurisdiction. Instead, the Premier is dealing with huge companies operating in this province, asking those companies to dictate to this government how the ministry can be made more cost-effective from their point of view.

The Council of Forest Industries goes through a number of suggestions. One is to decentralize the decision-making authority for forest management more effectively and structure the ministry to make it smaller and more cost-effective. What has happened since that time? The ministry has begun to sack their staff in various areas of the province in compliance with the Council of Forest Industries request.

Recommendation No. 3: "Delegate responsibility and accountability fully to licensees in line with their existing and suggested additional contractual obligations, subject to government audit of response." Suddenly we get the partnership management proposal, which is newspeak for exactly what the Council of Forest Industries dictated to the ministry. Privatized log-scaling, timber-cruising, marine transport services and components of the forest nursery program — all subject to government audit of results. All of those things, dictated to the Premier by the Council of Forest Industries, have become the policy of the ministry in the last little while.

I ask you, Mr. Chairman, who is telling the truth in this matter? The Premier says he refers everything that comes to his office to a particular ministry, and yet the Council of Forest Industries, representing the large corporations doing business in the province, seem to have open-door access to the Premier's office in order to put forward their position that dictate changes within the Ministry of Forests. Partnership management proposal — dictated by the Council of Forest Industries. Decentralization and downsizing of Forests ministry staff — dictated by the Council of Forest Industries, acceded to by the Ministry of Forests. And the Premier is the go-between in all of these operations.

MR. CHAIRMAN: I will again remind the hon. member that we are discussing the estimates of the Ministry of Forests, and debate must be relevant to the administrative actions of that ministry. If the member wishes to discuss another estimate or another minister, there will be ample opportunity for that. I am sure the member is well aware of that.

MR. SKELLY: Mr. Chairman, I wish we had an opportunity to discuss the estimates of the Council of Forest Industries, because they appear to be the real government of the province of British Columbia, establishing the real priorities for the Ministry of Forests — establishing them through the Premier's office — and the Minister of Forests is simply a pawn for the Council of Forest Industries. The policy in his ministry is dictated by the Council of Forest Industries. It seems that those big companies operating within the Council of Forest Industries are carving up the forest land base of this province for their own benefit and establishing policies within the Ministry of Forests for their own benefit. Anybody involved in small business in forest management in this province or anybody involved in small business in harvesting the forests of this province seem to be told, if they can get access to the government at all: "Go see the Council of Forest Industries, go see those companies represented in the Council of Forest Industries, and see if you can get a job with those companies." That's the policy of this Ministry of Forests with respect to the forest industry in this province.

This brief was submitted to the Premier, "Forest Industry Proposals for Cost-effective Forest Resource Management," submitted by the Council of Forest Industries of B.C., Cariboo Lumber Manufacturers, Interior Lumber Manufacturers, Northern Interior Lumber Sector, and COFI, in July 1983. Virtually every recommendation except one appears to have been followed by the Ministry of Forests. So who's dictating forest policy in this province? It appears to be the Council of Forest Industries.

Earlier in the year a discussion paper was released to us on the partnership management proposal. I think we were required to have in our submissions in response to that proposal by the end of October. The proposal was dictated to the ministry by the Council of Forest Industries in their brief of July 1983:

"Though licensees have contracts which hold them responsible for a wide range of specific management functions, company professionals are subject to constant and costly checks, cross-checks, approvals and inspections of many decisions."

It sounds like the wording of the government's discussion paper.

"Government's responsibilities could be met more efficiently and more effectively by delegating responsibilities in fact as well as on paper, particularly where these responsibilities relate to the defined licence areas. The vast majority of licensees are competent operators who are willing to accept their responsibilities and to be held accountable for their results. Acceptance of a defined risk factor by government will not only eliminate considerable duplication of effort within the ministry but will also facilitate adoption of management-by-exception philosophy."

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It's virtually the same wording that appears in the government's partnership management proposal. Virtually all the recommendations have been adopted by the government. In fact, when the discussion paper came down and the public was asked to comment on the discussion paper, we were told to have our comments in, I believe, by the end of October 1983. In fact, we heard from the Ministry of Forests that the necessary implementation detail, including the computer software, had to be prepared ten days before the public submissions had to be in. It was a simple fact that the partnership management proposal was already in the process of implementation before the public's comments were even considered. So again the Council of Forest Industries had dictated the policy of this government. The same thing applies to the privatization costs.

The only thing that has not yet been done visibly is the way that the Council of Forest Industries would like to restructure the Ministry of Forests. They say here that they want to create a new provincial ministry of renewable resources, and timber management should play a lead role with broad multiple resource-management organization.

Going back to their brief, they say:

"The Ministry of Forests is guided by section 4 of the Forest Act, which directs in part that the ministry shall manage the forests for multiple use 'in consultation and cooperation with other ministries and agencies.' This is recognized as an integral part of multiple-use management.

"The Ministry of Forests is the only ministry so directed. The other resource agencies each act in an advocacy role for one mandated single-use management objective and are under no legislated obligation to seek realistic solutions to mutual problems. In practice, each of these other agencies has assumed a resource-management veto power without responsibility or accountability for the use of such power.

"While many individual staff people in these other agencies are motivated to cooperate fully to achieve truly coordinated resource management, they have no legislated requirement to do so.

"The resulting conflicts can all too often lead to lengthy and costly public debates" — costly to whom? — "major delays in reaching decisions and less than optimal multiple-use management decisions. Additionally some agencies have hired their own experts in other agencies' fields as a defence mechanism for arguing their own cases.

"Further, a very costly, formal referral and review process has evolved which consumes many man-years of effort in each of the involved ministries, as well as the forest industry.

"Establishment of a single forest resource management agency would facilitate faster, more cost-effective" — and I ask: more cost effective for whom? — "decision-making internally by groups of civil servants operating under one common set of harmonized objectives. Many other provinces are already operating successfully with forest management as part of a larger multiple-resource ministry."

The recommendation, which has yet to be adopted, I suppose because we have yet to see the throne speech, is the recommendation which would bring under this ministry the Minister of Forests' responsibility for all of those other resources that are currently managed under the Ministry of Environment or the Ministry of Lands, Parks and Housing. All of those concerns, for example, around water resources, fish and wildlife, parks and the management of public lands, so that....

I have a question for this minister. Did he consult with the Council of Forest Industries prior to developing the partnership-management proposal? Was it based on the brief presented by the Council of Forest Industries? Did the minister begin implementation of the proposal before the responses from the public were even in or before the deadline for the responses from the general public according to the White Paper? Have there been any licences in the province where the partnership-management proposal is already in the process of implementation prior to an official decision being made by the government?

In the downsizing of the Forests ministry and in the elimination of certain of the Forests ministry's review and checking functions, has the minister already begun to lay off or notify people in the various forest regions that they will be laid off? How many people are involved in each forest region? We hear from the Nelson forest district that as many as a third of their staff will be laid off in anticipation of the new regime being brought in. We hear from Prince George that a third of their staff will probably be laid off in order to privatize the management functions of the Ministry of Forests and put responsibility for those functions onto licensees. Is the minister in fact following the dictates of the Council of Forest Industries as communicated to him through the Premier's office? Are there any plans in process now to change the structure of the ministry from one with sole jurisdiction for forestry to one that has jurisdiction over fish and wildlife, certain jurisdictions of the Ministry of Environment and certain jurisdictions of the Ministry of Lands, Parks and Housing?

[10:30]

HON. MR. WATERLAND: Thank you, Mr. Chairman. The member for Alberni started his comments today by saying that he doesn't have any advisers, and then he went to great lengths to prove just that fact. I would suggest that perhaps he does need some adviser, whether it be Howard Lloyd or anyone else.

I'll start with a couple of questions the member asked towards the end of his speech.

He asked whether the ministry has any plans for changing the makeup of the ministry with regard to other resource management. That's not a function of the ministry or of the minister. The naming of ministers and their responsibilities is the jurisdiction of the Premier, and the Premier has not discussed with me any contemplated plans for changing the makeup of resource ministries in the province.

The member asked whether layoff notices have been given to members of the ministry. As he well knows and as everyone else in British Columbia knows, we will be downsizing our ministry. I have gone quite a way already in reduction of staffing levels, so far mostly through attrition and elimination of some auxiliary positions and employees. That process will continue, and I will be making announcements when appropriate regarding further staff reductions.

The member asked whether the partnership proposal that was the subject of a discussion paper issued by the ministry was put into effect prior to receiving feedback from various people in the public sector. We have one such management agreement in effect — it has been in effect for a number of

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years, as a matter of fact — on an experimental basis with Weyerhaeuser in the Kamloops area, just to see how that type of approach would work, and it's working exceedingly well. That tree-farm licence is being managed well and we're quite pleased with what has happened there. That, in fact, is the reason we decided to expand this program. The member seems to think, because the Council of Forest Industries was aware of that experiment and agreed that it was a good idea, suggesting that we expand that type of proposal, that suddenly the Council of Forest Industries is dictating to the government.

I would also remind that member that he seems to equate the Council of Forest Industries with these terrible big companies that he has such a distrust of. I'd advise him that the Council of Forest Industries actually represents a very broad cross-section of the forest industry in British Columbia. It's composed of large and small companies, companies with and companies without manufacturing plants of various kinds in the province. So I do consult with the Council of Forest Industries quite extensively. I'm not ashamed to say that. As a matter of fact, I consult with all of the associations in the forest industry, including the ILA. There are probably more associations involved with the forest industry in British Columbia than there are with any other resource sector. I think that's probably rightly so because it is such an important part of our economy. I consult with the council, yes. I consult with the IWA, yes. I consult with the Truck Loggers' Association, the Northwest Loggers' Association, the North Island Loggers' Association — with any association in the industry that seeks my consultation. I don't always agree with all of the advice or requests made of me by the associations, and I currently have one such disagreement going with the Interior Logging Association in Prince George. Whether that disagreement can be resolved, I don't know; in a moment I'll explain to the member exactly what the area of disagreement is with Mr. Lloyd and his group within the Interior Logging Association.

Yes, we have indeed consulted the Council of Forest Industries and will continue to consult them. We'll consult any and all associations in the industry. We'll consult with large, small, independent and multinational companies in the industry, because I believe consultation is the best way of cooperatively managing such important resources as those that exist on the forest land base in British Columbia. Yes, I believe the Council of Forest Industries did make recommendations as to what they think would be a more effective makeup of renewable resource industries in the province. These discussions have been ongoing for years, as they were when that party was in government. The Minister of Lands, Forests and Water Resources at that time had jurisdiction for all of the things that the Council of Forest Industries is now suggesting be included in a natural resource ministry; they had jurisdiction over many other things as well.

So there's nothing new in discussions as to what responsibilities should be involved in what ministries. I think a good argument can be made for closer cooperation between the various resource management ministries and agencies in the province so that cooperation rather than confrontation is the rule.

I said I would discuss briefly.... This member seems to be trying to create a myth that I as a minister, and this government, somehow do not like small. I'll have him know that I as Minister of Forests, and my ministry, have probably done more in the last two years to encourage and ensure that the small sector does continue to exist and thrive in the forest industry in British Columbia. We have a small business enterprise program, and we made sure, when the reallocation of forest values and tenure in the province took place a few years ago as a result of the change in licence forms, that we kept aside a very substantial portion of the allowable cut that could not be concentrated and that would be available for only those classified as small businesses to compete for.

We have an extremely good contractor clause advisory committee. Mr. Chairman, we have committees within all of the logging and small business associations to assist and advise us, and to help in monitoring some of the things that are in the legislation and regulations to make sure that our small business sector survives and actually prospers.

The area of disagreement, which seems to be the focal point of that member's suggestion that we don't like small business, is one particular clause in a forest licence in the interior of British Columbia where the interior loggers are saying: we must have within that licence a clause saying that at least 80 percent of logging be done by contract. I have no objections to such a clause, except at the present time it is completely unnecessary because right now 90 to 95 percent of interior logging is done by contract. It seems rather silly, to me, to put in a clause that requires 80 percent to be done by contract when much more than that is being done already. I have the ability and the statutory authority to include in those forest licences, anytime I wish, a requirement that a certain percentage be done by contract. I have told the ILA that with their assistance I will monitor the performance of licensees, and if anybody should depart from the traditional pattern of contract logging I will insert a number in that particular company's licence, probably considerably higher than 80 percent. That is the only area of disagreement that I have had with my friend Howard Lloyd and with the Interior Logging Association headquartered in Prince George.

I believe that covers the few points made by the member.

MR. SKELLY: If those were the only concerns you had with the ILA in the past they're certainly not anymore, because those concerns have grown a great deal since the minister last talked to the BCILA. Clearly that must have been some time ago, unless you count the opportunities that the ILA have had at public hearings in Chetwynd, where they expected the minister to attend, but he didn't show up and left his deputy to chair the meeting.

There are concerns about the guarantees granted to large companies as opposed to the minimal guarantees granted on contractor clauses. A company getting a tree-farm licence in the interior of British Columbia has a 25-year guarantee of access to that timber on a non-competitive basis. They are the only operator in that licence on a 25-year basis. The small loggers are asking for a minimum of 80 percent; they're not saying that 95 percent is not desirable or that 100 percent would not be even more desirable. They are simply asking for a guarantee of 80 percent as a minimum, and the minister should have no problem in establishing those minimum guarantees when we're allocating so much timber to large companies, over such a large area, on a non-competitive basis over a long period of time. To many people in this province it appears that the tenure system creates a slothful attitude on the part of those companies. They don't use the timber as effectively as they should; they don't return as much money to the Crown as competitively based allocation of timber would; in fact, it is causing serious problems for industry and

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the government in the province. That is why the Interior Logging Association is asking for that minimum guarantee.

They're also asking why they should establish those tree-farm licences in the interior. Why should a company like Canfor — in the case of the licence hearing at Chetwynd — be given control over something like 800,000 hectares of timber, 68 percent of which has been classified as non-productive land for the purposes of growing timber? Only 32 percent of that land is considered good timber land. Why is that company being given jurisdiction over 68 percent of the land, which is non-productive for forest purposes, and control over recreation, fish and wildlife and virtual control over agriculture? Also, that company is being told that they will be the responsible authority for coordinated range management, etc. The Forests ministry seems to be getting out of that altogether.

In his last speech last night the minister accused Mr. Lloyd twice of selling out his timber holdings to large companies such as Takla Forest Products, Canfor and Northwood. I believe that Mr. Lloyd will.... Unfortunately he doesn't have an opportunity to correct the record, because the minister's statements were not true. He will probably try to correct the record in some other way. It's interesting that when Mr. Lloyd came to me to respond to the minister's accusations, he said that in the timber he held near Prince George the government put up a timber sale that totally surrounded his timber and virtually drove him out of the business. He was forced to sell out first to his brothers — he didn't sell out to these larger companies, but he sold out his ownership to his brothers while he was still an MLA. They in turn sold out to larger companies after the ministry put up a timber sale that totally surrounded his operations.

The same thing happened when he set up North Central Plywoods — again, with his partners. Williston said that anybody who set up a plywood mill in the northern interior, in the Prince George region, would get access to the timber required to serve that veneer mill or plywood mill. He was given timber down near McBride, near the headwaters of the McGregor River, very remote from his operation. It was not peelers and he was forced to trade with the larger companies operating in the Prince George area to get those peelers. He couldn't get them all the time. On the other hand, he wasn't allowed to establish a sawmill. That was one of the conditions of his licence. He ended up with millions of dollars worth of logs in inventory in his mill yard that were only suitable for sawlogs. He couldn't trade them with the larger companies. As a result he was forced to sell out to those larger companies. In fact, he was forced to sell out to his partners, and they in turn sold out to a larger company. But he said that this minister had come up to see him and this minister had suggested that there was some concern on his part about the big companies controlling everything. He asked him if he could help North Central Plywoods to improve their operations — instead of going broke — to see what he could do. They asked him to supply them with some suitable peeler logs closer to the mill. The minister said he could do nothing. As a result the company was forced to sell out to a larger organization. I guess that in that case it was Northwood. He did indicate that there was quite a spread between the price he was paying for timber delivered to his mill and the price Northwood was paying. The spread was something like $120 for North Central Plywoods while Northwood was paying $30 a cunit — quite a spread between the prices that those two companies paid. The minister did absolutely nothing to improve access to the resource for the small companies as opposed to the large companies, and as a result North Central Plywoods was forced to sell out.

[10:45]

So we do have concerns about the people the minister listens to and the people the minister follows in terms of developing policy. The question I asked the minister before was not whether his ministry was considering expanding to form a ministry of renewable resources but whether discussions are underway to do that. I would appreciate it if the minister would answer that question directly.

Another problem that I'm concerned about in the forest industry is: who pays? Where is the money going in this industry? It seems that over the past few years.... I was talking a short time ago about the $2.5 billion that was invested non-productively — simply in takeovers and acquisitions of forest companies. Not a job was created. In fact, many jobs were done away with permanently. Companies are being concentrated in fewer and fewer hands, and as a result of these corporate acquisitions, companies are being saddled with more and more long-term debt in order to finance the acquisitions. I was looking at the annual reports, for example, of MacMillan Bloedel. In 1976, with sales of $1.707 billion, they had a long-term debt of $372 million and an interest expense of $33.7 million. In 1982 they had roughly the same sales: $1.843 billion. But their long-term debt had doubled to $676 million and the amount that they must pay out annually to service that debt had increased to $78.3 million. So each year the amount of long-term debt of these companies is increasing as a percentage of sales, increasing as a percentage of assets, and more and more of that money is going out of the province to those eastern holding companies and financial institutions.

Our companies operating in British Columbia are being bled by the chartered banks, and that money is going out of the province. It is not invested back here in new plants and new equipment. It is not invested here in expanding the forest resource, enhancing the forest resource or even replacing the forest resource. That money is going out of our industry completely and it is being invested elsewhere. In fact, it appears that in the forest industry the real profit centres have changed from the operating companies — from the milling and the pulp- and paper-producing companies. The real profit centres have changed over to the chartered banks and the financial institutions and the holding companies. Over the years, as the profit centre changes, we will get less and less in the way of returns from those companies operating in British Columbia.

[Mr. Pelton in the chair.]

Crown Forest Industries. In 1976 with sales of $394 million, they paid out $3 million annually in interest on a long-term debt of $27,900,000. In 1982 sales had doubled: $654 million. Long-term debt had increased tenfold to $228,200,000 and the interest payout in 1982 was five times what it was in 1976. More and more money is being drained out of the operating companies in the forest industries to service that long-term debt, and much of that debt — as was pointed out in Jamie Swift's book — is debt that was generated in order to acquire companies, not to improve plants or process. It was

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generated to acquire other companies in the industry or to pay off other companies that did the acquisition.

B.C. Forest Products; 1977 total sales, $491 million; long-term debt, $236 million; interest payments, $14 million. In 1982 sales were at $799 million; long-term debt, $600 million; and each year that company is paying out $77 million in interest on long-term debt.

So these companies have really become paper companies. They are not the profit centres in the operation; they are part of a series of companies where the profit centres are located at the ends where the holding companies are located and where the chartered banks and financial institutions are located. Those are the sectors of ownership that are earning the profits, and the forest companies themselves are becoming increasingly unprofitable or marginally profitable.

When I was looking at the....

Interjection.

MR. CHAIRMAN: Order, please, hon. members. The member for Port Alberni does have the floor.

MR. SKELLY: Somebody was asking if it had to do with the world recession. I wonder if the world recession began in 1977 under the Social Credit government as these companies progressively increased their long-term debt and their interest payouts. Those companies are only marginally profitable and will probably be only marginally profitable in the future, if they're not making a loss. It is interesting, for example, when you take those three cases — MacMillan Bloedel, B.C. Forest Products and Crown Forest Industries. In 1981-82 they lost $141 million between them, and yet they paid out, in terms of long-term interest, $140 million to those chartered banks and holding companies. A lot of those losses were accounted for by interest payments on long-term debt.

The Financial Post has been talking about the potential for investment in the forest industry, and they weren't all that confident in investment in the forest industry, but now they are. One consultant is saying that the reason for his bullishness is the tax holiday that the former bleeders will enjoy now that the good times are returning. He calculates that the Canadian industries have $8.3 billion in unused capital-cost allowances and tax losses that can be carried forward as deductions against future earnings. He is predicting that these corporations will enjoy a tax holiday for several years as a result of the losses they've sustained over the last two years.

In other words, the public is going to subsidize the losses of those corporations by lower tax revenues and increased tax revenues on individual income earners. Those companies never seem to suffer themselves; in some years they sustain a loss and in subsequent years the individual taxpayers of this country make up those losses. In any case, the real profit centres are those industries. The chartered banks have never suffered a loss. The holding companies who own those operations have never sustained a loss, and that's where the real profit centres are. They complain about losing money....

AN HON. MEMBER: Talk about Forests.

MR. SKELLY: I'm talking about companies operating in the forest industry, and I'm talking about the reason why government revenues will probably continue at low levels. The companies are structured so that they're designed to lose money or to be marginally profitable.

Interjections.

MR. SKELLY: Because they are only a part of a larger system, which has its profit centres at the holding company end of the operation. That's where the profits are being made.

Even Pearse, in his report....

Interjections.

MR. SKELLY: Can we have some order, Mr. Chairman? I understand that the Premier is in the House and that there are some problems.

MR. CHAIRMAN: Order, please, hon. members.

MR. SKELLY: Even Pearse in his report back in 1976 had some difficulty understanding why people continued to invest in the forest industry when there was a fairly low return on invested capital. I think if Pearse had examined the whole industry from the holding companies right through to the operating end, he would have found that profits are being made out of the forests of British Columbia. They're simply not being made by those operating companies to the extent that they should be. Part of the problem is the way those companies are structured. That's one of my concerns: that in the future this government will not be receiving the corporate tax revenue that it should from the forest industry. This government will not be receiving the direct revenue from those companies in terms of stumpage and a resource rent for the timber because of the way those companies are structured to make only marginal profits, or no profits at all in some cases.

One of the members in the back of the room says that no company in the world is making a profit. Yet look at the holding companies and chartered banks: these are people who have weathered the recession and have come out much better off than before because they are the real profit centres in industry. The operating companies have been absolutely bled. That's why we'll be getting very little return on stumpage and corporate tax revenues to the province.

Another of the concerns I have is the nature of the tenure system and the government's feeling that tree-farm licences are the best form of tenure. This represents also a way that government can transfer jurisdiction over property and resources owned by the Crown and can transfer virtual proprietary interest in those resources to private companies without requiring those companies to make the necessary capital investment. It was interesting that at the Canfor tree-farm licence hearings, Canadian Forest Products compared their position to the position of a farmer. I don't know of any farmer in the world who can get into the land for no initial capital investment, and yet can have a 25-year right and title to those resources and absolutely no competition for the timber that's growing on that property. There's absolutely no comparison between farmers and tree-farm licensees at all.

What we're doing is giving away on a non-competitive basis to those tree-farm licensees vast amounts of provincial land and timber for virtually no cost at all. Those tree-farm licences create serious problems in the regions that they serve. For example, they don't encourage any increase in the use of those lands. Before the last provincial election I proposed a number of alternative ways of using tree-farm licence lands on the west coast of Vancouver Island which would have brought in more revenue from the lands without

[ Page 3035 ]

interfering with the timber harvest. Part of that was to take the unproductive lands out of the tree-farm licences or to use the unproductive lands for other productive purposes. For example, on the west coast of Vancouver Island there is a large number of tree-farm licences that have waterfront lands — thousands and thousands of miles of waterfront. Much of this land is considered unproductive for forest purposes. Much is considered not useful for booming and sorting, as well as other purposes necessary to the forest industry. I proposed that this land be used for tourism.

[11:00]

Port Alberni has a serious problem with tourism. It is surrounded by industrial land. It is very difficult to get through that community to other areas of the coast surrounding Port Alberni where people can have access to the water. We see something like a quarter to a half a million people annually going out to Pacific Rim National Park and bringing in tremendous amounts of money to that area, causing tourist developments to take place. But Port Alberni appears to be cut off from that tourist influx. The reason is that we are totally surrounded by single-use tree-farm licence land. My proposal is that parts of the land be taken out of the tree-fann licence, especially those non-productive waterfront areas, and be used for tourism development. For example, there are hundreds of miles of beaches that could be used for marine resource protection, to create a buffer zone between the forest management areas, the productive forest areas and the water areas that are rich in sea life — shellfish, oysters and other sea life. It would also be suitable for salmon ranching and other things that are currently being carried out in the Alberni region. Other areas of the waterfront could be used as beaches, boat-launching ramps, tourist development sites or summer cottage sites. In fact, in consultation with some regional district planners, I even proposed that summer cottages be developed in the area.

At the current time we have a problem with floathouses in Alberni Inlet. A number of people are complaining, and the Ministry of Lands, Parks and Housing is threatening to remove those floathouses from Alberni Inlet. The only reason they are there is because there is no access to the upland for people to put up summer cottages and cabins. The upland is totally controlled by the licensee in the two tree-farm licences involved. If we remove that non-productive forest waterfront land and use it for tourist purposes, we could probably increase the amount of tourist dollars flowing into the Alberni region and increase the utilization of that tree-farm licence. I'm sure that's the case all over the province. Tree-farm licences committed to single use surrounding many communities in the province could be used for further tourism and recreation development. It's one of the proposals I made in Port Alberni just before the last election. Interestingly enough, it was endorsed by MacMillan Bloedel and by the local chamber of commerce and many other groups in the community; it was opposed by the professional foresters. I plan to carry that submission further. Pearse identified a large number of tree-farm licences around the province that had a large percentage of non-productive land for forest purposes that could be used for other development. In fact, the person who suggested this to me in the first place was Jack Christensen, who at that time was president of Tahsis Co. Ltd. He felt that waterfront land, especially non-productive land for forest purposes, could be used for other purposes to increase provincial revenues from tree-farm licences. I suggested that the lease fees from those summer cottage sites could be reinvested in silviculture in the productive forest land so that it would decrease the province's liability under section 88 of the Forest Act and save money. We would be able to plant more trees. We would be able to get involved in more intensive silviculture by using non-productive forest land on a lease basis, and turn those lease fees back into a fund for silviculture purposes. It would avoid the problem we have today in a period of declining government revenues by producing revenues for a separate fund which would be used to decrease the government's section 88 liabilities. I plan to elaborate on that proposal and make a more formal submission to the minister. I think we can do more in tree-farm licensed land to better utilize the timber in those lands. I'd be interested in the minister's preliminary response to that suggestion.

A few years ago I also proposed that the waste in coastal tree-farm licences could be used for other products and purposes as well if we allow loggers or companies to take a second pass at the waste in those cutting areas before they are burned. The member for Prince Rupert (Mr. Lea) identified a problem in the Queen Charlotte Islands last year where there was a tremendous amount of waste in a particular cutting area, and nobody was allowed access to that waste to utilize it commercially.

The federal Ministry of Environment did a study on the potential for thermal generation of electricity from forest wastes on Vancouver Island. In their report they estimated that by using only 45 percent of the commercially available waste they could develop sufficient wood product to feed four 50-megawatt generators on Vancouver Island. Those 50-megawatt generators would be located near Duncan, near Port Alberni, near Campbell River and near Port Hardy, using only 45 percent of the commercially available waste. In British Columbia, of course, something like 17 percent of the electricity generated in the province comes from wood waste, which is an amount almost equal to the use of natural gas in this province.

So wood is a very important source of energy. I got in touch with the Burlington Electric Authority in Burlington, Vermont, which has established a 50-megawatt generating plant and they say they can do it on a cost-effective basis; they can produce energy cheaper than they can get energy from other sources. In addition, they are creating employment for woodlot operators in the area and creating additional utilization of timber that would ordinarily have gone to waste. There is a market for that energy in the Alberni Valley and on Vancouver Island. So it's a way of increasing energy utilization on the Island and waste utilization from tree-farm licences, and it's something that the minister should consider.

This material came out from ENFOR I think back in 1978 or 1979. I'd be interested to know if the minister has examined it at all. Some people have expressed concern about the possibility that this would pollute the atmosphere on Vancouver Island. In fact, I was in touch with Procter and Gamble, the company that is putting in a 10-megawatt wood generating plant in Long Beach, California, and they are required to conform with the restrictions imposed by the southern California air quality management district. Those are very tight restrictions, and yet Procter and Gamble's plant emissions fall well within the guidelines of the southern California air quality management district.

I would be interested, Mr. Chairman, in the minister's response to proposals for increased utilization of timber and waste in the tree-farm licence areas.

[ Page 3036 ]

MR. LOCKSTEAD: I'm intervening at this point because I thought the minister would probably get up and respond to the member. I do have some questions to the minister, but I think I will hold them, with one exception.

My colleague the member for Alberni, the minister's critic, is doing an outstanding job in putting forward for the edification of the public of British Columbia, in my view, many of the problems that occur in the forest industry today in British Columbia, government policies, as we see them, and problems as expressed to us by people in the industry and the public at large. I hope the minister will address himself to the questions posed by the member for Alberni.

The member for Alberni suggested I proceed with the two or three questions I have. I'm going to be quite short because we'll be back into your estimates, I presume, sometime in two and a half or three months, whatever, and we'll do a larger type of examination of your spending at that time. The first question I have is: it's my understanding that the federal government is cutting back considerably on its contribution to the forestry programs in British Columbia. If this is a fact, could the minister provide us with the figures? How much is the federal government reducing its contribution to silviculture programs, research programs and other programs here in British Columbia? The figure may be contained somewhere within the reports from the Ministry of Forests or some federal reports, but I have not been able to find them. So that's why I'm asking the question at this moment.

I think I would be remiss, Mr. Chairman, if I did not put forward the views of the majority of my constituents in terms of the cutbacks in the silviculture, reforestation, thinning and fertilizing programs that are taking place in my riding. It's estimated that probably that program in my riding will have been reduced this year because of financial constraints.... I'm not sure it's restraint; in fact, I'm quite sure it's not, because I think we'll pay in the long run for not taking part in these programs. But it's estimated that these programs in my riding will be reduced by some 60 percent. That is a figure that I could not possibly confirm. I've come up with that figure in discussions I've had with people within the ministry at the local level, people who normally would be out in the forests at this time of year on thinning programs, bidding for contracts, this kind of thing. I'm not going to spend a long time on this subject at this point, during these estimates we're discussing which should have been discussed a year ago. I just wanted the minister to know that we on this side of the House are aware of the problems in this regard and the long-term effects that the lack of initiative by the minister and the ministry will have on the forest industry and revenues to British Columbia.

Basically, what I got up for this morning, and why I'm spending a few minutes on this, is something that's a problem not only in my riding but certainly throughout the coast of British Columbia. I think the member for Alberni (Mr. Skelly) discussed this matter with you earlier during the course of this debate. I want you to know that we're not unaware that your small business program, your woodlot program, on the coast of British Columbia.... Believe it or not, there are still a number of people who attempt to make their living at handlogging. I'm very much aware that you have a meeting with some of the people from my riding on February 13 of this month with regard to timber allocation. I'm sure that some of the problems that they wish to discuss with you at that time will be resolved. But what I am talking about here now is not only that area of the coast but the whole coast of British Columbia, and, I suppose, the interior as well. I must admit that I am not as familiar with the problems relating to this matter of wood allocation in the interior as I am with those on the coast. I do write to you quite frequently about these matters when they are brought to my attention....

HON. MR. WATERLAND: I always answer.

MR. LOCKSTEAD: You always answer, but you say: "Thank you for the letter. Signed, Tom Waterland." That isn't what I'm on about, Mr. Minister. What I'm on about is the policy in this regard. I know your small business program, for example, was a long time in getting off the ground. It barely got off the ground and then belly-flopped right back on. You've got to admit it. When you get up, you'll have to admit that that program had a lot of publicity when it was announced and was a long time coming on stream, and there were a lot of problems with that particular program. The woodlot program is not functioning the way it should be — certainly in the view of my constituents, whom I talk with frequently. Perhaps when you're responding to the member for Alberni's questions, you could respond to this question on wood allocation for the small business program, the woodlot program and the handlogging program, which affects a number of people in my riding and, I'm sure, in other parts of the coast of British Columbia.

I promised the member for Alberni I would not be longer than ten minutes. I think my ten minutes are up, so thank you, Mr. Chairman.

[11:15]

HON. MR. WATERLAND: Starting with the member for Mackenzie, yes, indeed, I believe it is next week or a week and a half from now that I'll be meeting with the Bella Coola small loggers' association, as I try to do with all associations, large and small. As a matter of fact, I had a very brief conversation with a district manager from there who happened to be in Victoria yesterday, and he says they're a pretty good bunch of people and he's doing what he can. What their specific problem is I don't know, but I'm sure we can understand that better and, hopefully, help them.

I can't agree, Mr. Member, that the small business program has belly flopped after getting off the ground. Of course it has had problems; any new program does. We've had some administrative problems and some wood supply problems, but I think it's quite a successful program. Right now we have over 3,000 small businesses in the province registered in either category 1 or 2 of the small business program. By the end of last year, as a matter of fact, we have had over 1,500 small business sales in the various timber supply areas in the province; it'll be considerably higher than that by now. Through the very serious recession we hopefully are now emerging from, the small business program has been growing at quite a good rate, and even during difficult times has been good. The small operators I think have been doing a good job. They are also now beginning to realize that if they try to abuse the program by taking little shortcuts around the regulations, they're only going to hurt themselves, so some self-policing is now taking place as well. By and large I have to disagree. I think the small business program has been successful and is getting more successful all the time. Wood available in it: the average in the province is just over 10

[ Page 3037 ]

percent. The total allowable cut set aside for the small business program ranges from 0 percent in some TSAs — I believe up in the Mackenzie area there is no need or demand for a small business program because of the very restricted logging season — to in some areas over 24 percent of the allowable cut in the small business program. So we set aside what we can in wood supply, and that depends to a large extent on the flexibility we have at the time and the demand for the small business program.

Basic silviculture we have not cut back on. We have had to withdraw some of the expansion we had planned for intensive silviculture and have had to cut back in the last year or so because of necessary economic restraints. But the things we have cut back on are the more optional things such as spacing, thinning, fertilizing and so on, where you can hopefully catch up in later years. Last year, 1982-83, the year we had our employment bridging assistance program going, we did quite well, because that other program filled in some of the things that we weren't able to fund directly through the ministry. But our basic program — that is, planting of recently denuded areas — is expanding continuously. In the last year for which our annual report is available — 1982-83, I believe — we planted 105 million seedlings on Crown and private lands. I don't think all the numbers are in for this year yet, but it will be between 115 million and 120 million. So it is growing and it is expanding and, as I think I said yesterday, our target is to be planting about 55 percent within the term of our current five-year program.

Wood waste and the use of wood waste for electrical generation. Yes, considerable research and study has been done on the subject. There are some problems, one of which the member alluded to, and that is the environmental problem, which I'm sure can be overcome. It does cost money, though. One problem we had identified in the Quesnel area, where we came closest, I think, to getting a wood-fired thermoelectric plant on stream, was the continuity of supply. Companies that have cutting rights are reluctant to make long-term commitments to supply the wood waste that is necessary to offset the capital cost of plants, because new uses for such low-quality wood are being found all the time and they are reluctant to commit it to a thermoelectric plant when perhaps a year or so down the road there may be higher and better uses. That problem, I think, can be overcome if the basic economics problems of thermoelectric plants fired by wood waste are overcome. It is marginal now. I'm sure that the incremental cost is no more than the incremental cost of hydroelectricity, provided you can put a substantial plant on stream. That is coming closer. When it actually happens will, I think, be determined by economics.

The member for Alberni mentioned foreshores and higher use of some of these lands. I am afraid I am going to have to agree wholeheartedly with the member's comments. That's rather unusual, I guess, but I have to acknowledge when the member makes a good point and is basically right in his thought process. I will agree with him. If there are foreshore areas in the Alberni Valley or on any other lands, whether foreshore or otherwise, within tree-farm licences that have a higher and better use, and especially when they don't reduce the allowable cut — that is, when they are non-productive forest lands — if there is a need, they should indeed come out of the tree-farm licences and be used for these higher uses. I'd be very happy to discuss that with the member. I don't believe any formal request has come to me re the Alberni area yet. My deputy is not aware of one, but I'd be very happy to discuss it with him; and I'm sure we'd have to include my colleague the Minister of Lands (Hon. Mr. Brummet), because if these lands in non-productive forestry have a better use in foreshore leases, for recreation or for the tourist industry, by all means let's find a way of doing it. Involve my colleague the Minister of Lands, because it would be his responsibility to proceed with whatever other use there might be for the lands. I think we can work together productively in an attempt to accomplish that.

The member went on at considerable length about tax holidays, returns on investments in the industry and so on. I don't think we need debate that any further. I don't agree with him. I think the return on investment in the industry is low — less than 10 percent over the economic cycle. A tax holiday? Yes, the industries will have committed tax losses to write off over the next few years. I'm glad that is the case and that the taxation system provides for that, because I want to see healthy corporations because healthy corporations are better at supplying secure employment for the working people of British Columbia. Whether they be large companies or small companies, I'd like to see them all with a very healthy balance sheet. I'd like to see them all very profitable, because that is the only ultimate security that the working man has, and that's the only time we as government will get the revenue we should be getting from that resource.

MR. LOCKSTEAD: Mr. Chairman, the minister made an oversight on the one question I had. As I said, it may be public knowledge, but I am unable to find.... I understand the minister has it.

HON. MR. WATERLAND: Regarding federal government funding cutbacks, I am not aware of any cutbacks. As a matter of fact, Mr. Member, the federal government has expanded some of their programs — for example, the new pulp and paper research thing they are doing at UBC. You may be alluding to the fact that our current intensive forest management agreement with the federal government is due to expire at the end of this current fiscal year. That is the $50 million, five-year program which we shared fifty-fifty with them. We have been trying to negotiate toward a much larger program. The federal government has some difficulty right now, both politically and financially, in concluding an agreement of that nature. What we are looking for, and I've been negotiating toward, is a $600 million program to be spread over ten years, with the object of attacking the backlog NSR lands. We are still negotiating toward that, but in the interim — I don't think we are going to to able to conclude such an agreement by the end of this fiscal year — what we will try to do is perhaps extend the current agreement for a year until we can get a more comprehensive agreement in place. That may be what vou were alluding to. But I know of no serious cutbacks by the federal government. They really haven't had that much involvement in the forest resource in B.C., other than perhaps through research work.

MR. PASSARELL: Mr. Chairman, I hope you have a happy Groundhog Day.

A couple of constituency questions to the hon. Minister of Forests, since this is the proper time to ask questions. The first one has to do with a letter addressed to Mr. Duane Clarke — he's the resource officer for timber in the Cassiar forest district — and it's regarding timber sale licence A17865 on

[ Page 3038 ]

the lower Stikine. The letter comes from the economic development commission of the regional board of Kitimat-Stikine. The first question asked by them that I would like to pose to you is: what was the cost to the successful bidder of A17865? The second question is: was this licence advertised in Telegraph Creek, the only Canadian settlement on the Stikine River? The third question is regarding the export of whole sawlogs from this operation: will they be exported through Wrangell, Alaska? I know the minister is looking at that. The reason, I think, they are tying in the third one is that they are looking at the next constituency question that I am going to ask, which is one regarding Stewart. The next question is: if further licences on the lower Stikine are considered under the small business enterprise program, will your ministry require public hearings on this matter? The regional board is asking his question because they felt that prior to this application being approved and the sale, very few residents of Telegraph Creek were informed of the public hearing held in Dease Lake. The last question I have from the regional district is: what reforestation requirements has the ministry stipulated for TSL A17865? Those were the questions asked by the representative for the Kitimat-Stikine Regional Board.

The second constituency question I would like to address to the minister is regarding TFL 1 — the Nishga and their concern to be able to gain some of TFL 1 since B.C. Timber is down, Nass Camp is down. Canyon City, as the minister is aware — he has travelled there himself — has an excellent program in operation. The band itself at Canyon City has an excellent small business program going in logging in that area, and I would hope that further bands in the area — the Greenville band, the Kincolith band and the Aiyansh band — would be able to have programs similar to TFL 1 for small business entrepreneurship.

The last question I would like to address to the minister regards the port of Stewart. I know the minister is quite familiar with the port of Stewart on both sides of the border.

HON. MR. WATERLAND: Cheap shot! Are you talking about Hyder?

[Mr. Strachan in the chair.]

MR. PASSARELL: No. But knowing firsthand the facility, not the inner structure of Hyder, Alaska.... With the mine being closed in Stewart.... It looks like Esso is going to have that mine down for a while in Stewart and the need of some individuals and particularly of the community to have a business going.... The minister was involved in the program a short time ago — it was just prior to Christmas, when the federal government stepped in with their environmental concerns and more or less stopped the program that had a number of logs going through the port of Stewart. I know the minister and I share the same concern and feelings in support of the movement of logs out of Stewart. But in their wisdom the federal government felt that it would be detrimental to fish or bugs in the area — not particularly wolves. Could the minister state what happened to that application for the export of logs out of Stewart, and if there are programs in his ministry to use Stewart as a port for logs, since it is the most northerly ice-free port in the province of British Columbia?

Those are the three constituency issues that I address to the minister, and I would like his answers to those seven or eight questions.

[11:30]

HON. MR. WATERLAND: To the member for Atlin, I'll have to take your questions regarding licence A17865 as notice and get the information back to you. That is a small business sale, though, and small business sales don't have requirements for reforestation. That responsibility is assumed by the ministry after harvesting. The other questions you raised are specific to that licence, and I'm afraid I am going to have to get back to the member and will do so at the earliest possible time.

TFL 1. If in fact any other operators are allowed in or if that TFL in some way is changed, access to the wood that was or is in that TFL would be through a competitive process. The Nishga, of course, would be as welcome as anyone else to compete. If we happen to involve the small business program.... I believe some Nishga people, and small logging companies owned by Nishga, are registered under that program. So they have the right to compete, and I will not treat the native Indian bands any differently than anyone else insofar as the administration of Crown timber is concerned. As a matter of fact, I've told the Nishga people that a number of times.

I can't encourage the export of logs from Stewart or any other port in the province. However, as long as log export requests go through the normal channels.... A number of ships have loaded at Stewart this last year. The problem we are involved in was, I believe, a foreshore problem in which the federal Fisheries got involved. I had my colleague the Minister of Lands, Parks and Housing and Minister of Environment (Hon. Mr. Brummet) contact the mayor up there. I believe we made a bit of progress, but then the feds said we couldn't do whatever it was we had to do.

As a port, Stewart is coming of age as far as the forest industry is concerned. Perhaps the member and I can get together quietly and talk about what's going on. There are some things happening which are rather encouraging to me, but are not yet ready to be announced publicly. I think that perhaps something will happen there. I know the economic climate there is going to be very depressed as a result of the announced closure of the Granduc mine. I just hope that the Scottie goldmine can continue and maintain at least that base. Some fairly encouraging things are happening so far as use of the forest resource is concerned. I have a lot more optimism now than I did a year or so ago in that regard.

I'm afraid I can't help the member too much re A 17865, but we'll look it up for him.

MR. SKELLY: Mr. Chairman, I'll just deal with a number of not necessarily minor issues before we adjourn at noon.

I'd like to thank the minister for his suggestion that we could sit down and discuss the proposal covering non-productive lands and tree-farm licences in the Alberni area. I think there are a large number of similar areas in other parts of the province where those non-productive lands could be put to much better use — to encourage other industries and to diversify local economies, which has been identified as a major problem in British Columbia. Economists for the credit union and other institutions have pointed out that over the years the forest industry will be a decreasing source of

[ Page 3039 ]

employment and that we should use our forest resource and forest land base to encourage growth of employment in other sectors of the economy without necessarily impinging in a negative way on the conduct of the forest industry. So I will definitely be in touch with the minister on that.

One of the things I was concerned about, as a result of a number of incidents in the past year, is the ministry's public involvement program. It's a program that started out with such promise when Bruce Fraser initially developed it, but in recent years it seems that more and more concern is being expressed about the program. I'd like to quote briefly from the ombudsman's report for 1982:

"In my last annual report I noted that almost a third of the investigations in forestry concluded in 1981 pertain to public input. I also noted that the ministry had initiated a new public involvement program and that a few wrinkles were to be expected with the development of any new program. I commended the ministry, as I had in the previous year, for pioneering efforts in the development of what appeared to be a genuine attempt to involve the public in the provision of advice for forestry planning. It appears I spoke too soon. Although the actual number of public input complaints is down, several developments during 1982 have led me to the conclusion that I can no longer attribute the complaints about the public involvement program to ironing out a few wrinkles.

"Even more unsettling is the apparent reluctance on the part of the ministry to implement its own carefully developed public involvement guidelines. More recently, I've noticed that the ministry has amended its public involvement policy so as to restrict further the role of the public. Under the new policy there is no longer a requirement for the local manager to consult with the public in choosing a public involvement method. There is no longer an opportunity for the public to influence the contents of timber supply area plans. Instead, there is an opportunity to evaluate and comment upon, as there are for white paper documents coming down from the ministry, and there is no longer an opportunity for the public to develop and evaluate forest management alternatives for timber supply area plans."

Mr. Chairman, this is one area of the minister's jurisdiction that showed a great deal of promise when it was brought down and when Bruce Fraser was travelling around the province explaining his proposals to people, seeking their involvement and their concern in drafting the public involvement program which he finally produced. Unfortunately, that promise has now evaporated. We've seen the disastrous results in the case of Meares Island and Sombrio Beach, and of course in the case of the southern Moresby area. We're very concerned that this ministry, which is dealing with such a tremendously valuable resource, the most valuable resource in British Columbia, is dealing with conflicts among users of that resource. The forest is the ecological base for fish and wildlife, the land base for recreation and other human uses of the environment. It's a very serious question, and the public should be involved every step of the way.

We are concerned that the ombudsman has perceived a gradual pulling back in commitment by the minister and the ministry in this public involvement process. I think it was witnessed as well in the CanFor tree-farm licence hearings that I constantly refer to. Here we're dealing with allocation of a resource on a non-competitive basis. Since the change in section 27 of the Forest Act, only the existing forest licence holder can submit a proposal for the new rollover tree-farm licence. Before, we expected some competition and a much more open procedure. A number of companies bidding on the same quota, as it used to be called, or the same volume allocation of timber, could have made proposals that would have provided more economic benefits to people in the area, more job creation and better utilization. Instead, we have one company producing a document. When I look at that CanFor document, I think it would have flunked as a Grade 12 geography project; there was virtually nothing in it. When the timber information was requested, it was said to be confidential. There was no ministry representative there to answer questions about the Forests ministry's involvement in preparing inventories and data for that tree-farm licence. The only organization there to make a presentation and be questioned, except for the people who submitted briefs, was Canadian Forest Products. As a result, it was very much a one-sided operation. I'm not quoting as adviser when I say this, but one of the people present at the hearings said that it was a case of my going to a hearing and questioning CanFor, "Do you think you should get this licence or not?" and having them answer honestly, "No, we don't think so, because we had a poor submission prepared." But that was roughly how the hearing was conducted.

The minister mentioned that if we go back to the ministry of renewable resources system or the Ministry of Lands, Parks and Housing system, that this is the system we had under the New Democratic Party, but that is not true. We did have the Lands, Parks and Housing ministry, but we also had an Environment and Land Use Committee and secretariat which dealt with resource conflicts coming out of the line ministries. People had an opportunity to submit a number of studies to the Environment and Land Use Committee. In general those studies were made public so that the public also had an opportunity to analyze them. That's one thing we don't have under this government, since the ministry sacked the Environment and Land Use Committee secretariat. All of that material is now dealt with in the House. We are concerned that a lot of the opportunity for the public to get information, analyze that information and cross-examine people who provide the information is now gone. The government has become a little more dictatorial and autocratic in the way it deals with resource-allocation decisions. So when you say we're going back to the NDP system, you're really going back far beyond it to the Ray Williston system, which is one of the problems that this province will have to live with for a long time.

My concern is that when we're allocating resources of inestimable value in the province, that when there are conflicts in those resources, when there's no competition in the proposal, when there's no representation from other ministries, no cost-benefit analyses submitted, when there could be serious social, economic and environmental implications, we need an impartial review process. That's what the B.C. Interior Logging Association has been asking. It's what a number of environmental groups around the province have been asking. It's what a number of people who are concerned about the basic justice in allocating resources have been asking. We're really dealing with a giveaway for a 25-year period and longer — in perpetuity — of resources which are really the property of the people of British Columbia. We feel that a far more appropriate public hearing process with built-

[ Page 3040 ]

in protections for the public, with the right to cross-examine and with impartial chairmen should be the format of this public information process. I don't wish to challenge personally Mr. Apsey, who was the chairman of that meeting. It's not the people I'm challenging; it's the process, which is neither fair nor seen to be fair. That's the real problem.

In view of the criticisms of the provincial ombudsman as to the commitment of the ministry in following a good public involvement process, in view of the concerns that I and others have expressed around the CanFor tree-farm licence hearings, will the minister at least establish a much more impartial process for subsequent tree-farm licence hearings that he has on hand now? Will he re-examine his commitment to the public involvement process that was developed by Bruce Fraser in view of the frustrations felt by the people at Sombrio Beach, who are now taking their case to court; the people at Meares Island, who are now taking their case to the ombudsman; and the people at the CanFor tree-farm licence hearings, who are now taking their case to the ombudsman as well? Will the minister re-establish his commitment to a more impartial and an improved public involvement process?

[11:45]

Interjection.

MR. SKELLY: Does the minister wish to answer that question?

HON. MR. WATERLAND: Carry on.

MR. SKELLY: I'll ask another series of questions of the minister, then. These questions concern the data base in the hands of the ministry that is used to establish allowable cuts and growth increments for the purposes of allocating those allowable cuts to licensees or in various timber supply areas of the province.

I was just reading through Reid, Collins and Associates Forest Management in Canada a little while ago. On page 6 he was talking about data problems:

"Knowledge of the forest resource base is quite inadequate. The inventories in use vary so much that it's almost impossible to aggregate them. They're frequently 10 to 20 years out of date and, as a rule, they provide far too little information for effective planning of forest management and other essential activities. Coverage of smaller, privately owned forests is generally minimal. Dr. B. Steenberg of the Royal Institute of Technology in Stockholm has written the following commentary on our inventory: 'The plain fact is that the owner does not even know what the forests contain or can produce. Canada has one of the lowest levels of forest inventory in the developed world.' He didn't separate British Columbia from that general statement. 'Allowable cuts in use in the province are likewise so diverse that it is natural to question whether they can all be valid. They tend to give a false sense of confidence, in spite of the subjective judgments which they contain. It is doubtful if any of them take into account the true dynamics of the forest with respect to stand development, interspecies competition and especially hardwood encroachment.' "

So there have been some serious criticisms of the state of forest inventory data in Canada.

In looking at the comments in your 1981-82 annual report, the most recent available to us, on page 17 it says:

"Growth and yield specialists were active in processing data obtained from local and international sources in a continuing program to produce managed stand yield tables for principal commercial tree species. The preparation of interim-yield tables for coastal Douglas fir and interior lodgepole pine neared completion, and work commenced on western hemlock, interior spruce and Douglas fir.

"Only limited progress was feasible in establishing new growth and yield installations which address recognized efficiencies in the existing data base in tree physiology research science.... "— that's a separate part of a new paragraph.

In any case, it appears that not only is Canadian forest inventory data insufficient and at a lower level of quality than forest inventory data elsewhere in the world, but research also appears to be cut back in the ministry and insufficient funds are being granted to the research program to improve on that data. In looking at the summary of basic data for PSYUs in the 1980 report, much of that information was compiled in 1966, 1967, 1969; much of it was 10 or 15 years old.

Under the estimates that we're currently considering, the research program has again been cut back. Since this data that we use to calculate annual growth increments and allowable cuts is so far out of date and so inadequate, according to international analysts, why has the minister chosen to cut back on the research aspect of our forestry budget when it appears that that's one area in which our program is seriously deficient? I would like to know what the ministry has done to attempt to overcome that deficiency.

HON. MR. WATERLAND: Mr. Chairman, just a brief reply to the member.

I'd like to start by issuing an invitation to the member to visit our research facilities and our inventory branch. I think he will be very impressed at just how advanced British Columbia is in this regard. Our IGDS system — interactive graphic design system — for inventory and forest-cover mapping is being copied throughout the world. It was designed here in British Columbia with the help of American computer firms. Many of its principles are being copied in many countries of the world, including Sweden. We are, in effect, world leaders in that type of computerized inventory system.

Our inventory is being constantly updated. This year we are involved in our second complete resource analysis in British Columbia. The member mentioned managed-stand yield tables. There is a cooperative program between British Columbia and the western states of the United States, and we are sharing data to put together these yield tables, which in effect tell us what will happen in plantations of various species and various physical climatic conditions. It is a separate thing from our inventory program. However, if the member would care to visit our research branch and our inventory branch, they can explain it much better than I. I am not a forester, but I have been very impressed with what our people have been doing for a number of years. I believe we are world leaders.

The remarks re tree-farm licences: the member always seems to refer to them as big companies. Not all TFL licensees are big companies. Probably the greater part of them are,

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but it is a very good form of licence and provides us with the best level of forest management in the province. We will continue to encourage companies to apply for TFLs. I believe there are some 30 or 31 applications, more or less, in front of us right now. They are coming in every day.

MR. SKELLY: I was talking about the process, not the licences.

HON. MR. WATERLAND: The member seems to think that the TFL turns the sole use of land over to a licensee, whereas, in fact, it doesn't. The TFL is a part of a management for multi-uses for an area of land. The only difference between that, basically, and forest licences is that it is area specific. It does provide a good level of management and encouragement for the industry to make more investment themselves than we can possibly allow in our section 88 credit program.

I don't think I am inclined to change the way we have the hearings. The reason for the hearings is to provide myself as the minister and people in the ministry with information whereby we can make a good decision. The hearings the member attended in Chetwynd were the third set of TFL hearings I've had since the program was reinstituted. I believe the last one was in 1966. The hearings have gone well, and exceptionally good information and feedback has been received by us, including the one in Chetwynd. We received a lot of good input. Howard Lloyd made some excellent points in his discussions and involvement there. Many of the points he made are going to be readdressed as we make our decision. I haven't heard what direct advice the member gave us. If there were things of import that he brought up, those too will be considered. The hearing is an information process whereby we learn more about what other conflicts there are. Normally other ministries aren't involved at the hearings, because they have adequate opportunity for input as the plan is developed, and also as we are in our decision-making mode, as we are right now. The Chetwynd TFL hearings brought forth people from the agricultural industry who were interested in wildlife management and many other uses of the land base, and provided us with information that we are now readdressing and will incorporate into our final decision.

I think the process has gone well. Not only have we had three TFL hearings, but we've also had a couple of pulpwood hearings as well, which I think have also gone extremely well and have provided a good forum for people to get their input to us. Bruce Fraser did an excellent job while he was with us in expanding our public involvement process. I don't agree with the ombudsman. I think the ombudsman is incorrect when he says that we are pulling back. We have been much busier in that process in the last year or so, because as people become more aware of it there is more demand for the public involvement part of it. I think the ombudsman is also running around trying, in effect, to drum up business for us. We run a pretty open ministry, and when we make decisions — and I must emphasize the fact that the decision is ours to make, in spite of all the public involvement we have.... When we have that input from the public, we are charged with the responsibility of decision-making. The member perhaps doesn't agree with our decision at Sombrio Beach or at Meares Island, but those were our decisions to make. I don't practise single-use; I must practise multi-use. That is a part of my mandate, and that is what we're trying to do.

The member also mentioned Moresby. No decisions have been made at Moresby. In fact, it's only recently, I believe, that we have had a report of the Moresby study group, and the Environment and Land Use Committee will be addressing that in the very near future.

I believe that covers most of the points made by the member.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Schroeder moved adjournment of the House.

Motion approved.

The House adjourned at 11:56 a.m.