[ Page 6813 ]

CONTENTS

Ministerial Statement

Airline disasters. Hon. Mr. Gardom –– 6813

Mr. Skelly

Tabling Documents –– 6813

Court Order Enforcement Amendment Act –– 1985 (Bill 57). Hon. Mr. Smith

Introduction and first reading –– 6813

Oral Questions

School taxation. Mrs. Johnston –– 6813

Closing of hospital beds. Mr. Williams –– 6814

Expo 86. Mr. MacWilliam –– 6814

Vancouver transition house. Ms. Brown –– 6814

School taxes. Mr. Ree –– 6815

Mrs. Dailly

Meadow Lake timber licences. Mrs. Wallace –– 6815

Tabling Documents –– 6815

Workers Compensation Amendment Act, 1985 (Bill 61). Committee stage –– 6816

Mr. Cocke

Mr. Gabelmann

Division

Third reading

Special Enterprise Zone And Tax Relief Act, 1985 (Bill 49). Committee stage –– 6818

Mr. Williams

Mr. Blencoe

Mr. Davis

Third reading

Vancouver Stock Exchange Amendment Act, 1985 (Bill PR405). Second reading

Mr. Ree –– 6826

Mr. Cocke –– 6826

Vancouver Stock Exchange Amendment Act, 1985 (Bill PR405). Committee stage –– 6826

Third reading

Committee of Supply: Ministry of International Trade and Investment estimates.

(Hon. Mr. Phillips)

On vote 49: minister's office –– 6827

Mr. Cocke

Mr. Williams

Mr. Davis

Mr. Howard

Capital Expenditures Miscellaneous Amendment Act, 1985 (Bill 54). Hon. Mr. Curtis

Introduction and first reading –– 6841

Appendix –– 6841

MONDAY, JUNE 24, 1985

The House met at 2:04 p.m.

Prayers.

AIRLINE DISASTERS

HON. MR. GARDOM: Mr. Speaker, I'm sure that all members of the Legislative Assembly of this province would associate with me in feelings of horror, shock, consummate sadness and expressions of grief and sorrow regarding the wanton savagery experienced by the passengers and next of kin on Air India and those of the baggage-handlers who serviced the Canadian Pacific Airlines flight to Japan, and indeed their next of kin.

This murderous activity cannot pass without universal feelings of disgust by all free men, women and children in every part of the world. We offer our prayers and our condolences to the families and friends of those who have been so disgracefully murdered, and pledge that the perpetrators shall be brought to the fullest extent of justice.

MR. SKELLY: The opposition would like to thank the government House Leader for his statement, to join in the sentiments expressed and also to offer our prayers and condolences for those who have suffered as a result of these terrorist acts. We would ask that our condolences be conveyed as well as the government's on this occasion.

MR. KEMPF: In the gallery with us this afternoon, hailing from that great little community of Telkwa, are two very near and dear friends of mine — and a newly married couple in Victoria on their honeymoon — Myrna and Lloyd Gething. I would ask the House to make them very welcome.

MR. SKELLY: I would like to introduce a constituent who is in the gallery today, Wolfgang Zimmermann from Port Alberni, and also Red Fairhall from Sidney. These two gentlemen are members of the disabled forestry workers' association of British Columbia. They're in the buildings today to meet with the second member for Vancouver–Little Mountain (Mr. Mowat), and I understand that they want to convey some concerns to the second member about the treatment of spinal cord-injured workers in this province.

MR. D'ARCY: In the gallery and/or precincts today on civic and provincial government business are the mayor of Trail, Charles Lakes, aldermen Norman Gabana, Jerry Paul and Allan Tognotti, and city manager Ken Wiesner. I'd like the House to make them very welcome.

MR. STRACHAN: Also in the buildings today and in the precincts from Prince George, Alderman Monica Becott. Would the House please welcome her to Victoria today.

Hon. Mr. Rogers tabled the annual report of B.C. Hydro for 1984-85.

Introduction of Bills

COURT ORDER ENFORCEMENT
AMENDMENT ACT, 1985

Hon. Mr. Smith presented a message from His Honour the Lieutenant-Governor: a bill intituled Court Order Enforcement Amendment Act, 1985.

HON. MR. SMITH: Mr. Speaker, it's with pleasure I introduce to this House the Court Order Enforcement Amendment Act. The main purpose of this bill is to provide for the implementation of a convention between Canada and the United Kingdom, providing for a reciprocal recognition and enforcement of judgments in civil and commercial matters, which was signed in Ottawa on April 24, 1984.

This convention was drafted to protect Canadian-owned assets in Britain from being attached by litigants in countries which were signatories to the European convention of 1968. We expect that the government of the United Kingdom will become a party to this European convention this coming summer, at which time, if our legislation is introduced and soon in place, the effect will be to protect B.C. residents who own property in the United Kingdom. Implementing legislation has already been adopted at the federal level and by at least five other provinces. There are some other minor amendments as well in the bill, Mr. Speaker.

Bill 57, Court Order Enforcement Amendment Act, 1985, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

SCHOOL TAXATION

MRS. JOHNSTON: Mr. Speaker, I have a question for the Minister of Finance. Over this past weekend the dailies had some very dramatic headlines in reference to school taxation, and they certainly don't reflect the understanding that I had when the budget was brought down. The superintendent of schools for Burnaby stated that we were placing the burden on homeowners in order to be generous to our business community, and that $80 million was transferred from the business community to homeowners.

MR. SPEAKER: And the question, hon. member?

MRS. JOHNSTON: Would the Minister of Finance please clarify exactly what happened with regard to school taxation in the last budget?

HON. MR. CURTIS: Mr. Speaker, I'm aware of some news reports in the past few days which suggest that a shift has occurred between residential and non-residential property taxes, grouping non-residential under non-residential, commercial, industrial and so on. The member would perhaps care to refer to the budget document, where it was made clear that any shift to reduce the ratio between residential and non-residential property taxes is at a cost to the provincial government; it's forgone revenue, significant this year and in the following two years. Therefore it is quite incorrect for anyone to suggest that as a result of that change — which was

[ Page 6814 ]

announced very clearly in the budget — school property taxes have moved from one class of property to another.

Indeed, Mr. Speaker, to conclude....

MS. BROWN: What is this, a ministerial statement?

HON. MR. CURTIS: That member hasn't asked me a single question all year, Mr. Speaker.

Indeed, non-residential property taxes do not flow to the school districts but rather to consolidated revenue.

CLOSING OF HOSPITAL BEDS

MR. WILLIAMS: I have a question for the Minister of Finance, who appears to be anxious for questions. Some 783 acute-care beds will be closed this summer for a period of two months. It is my understanding that the cost of an acute-care bed is $165,000. That would represent $138 million in capital sitting idle. Can the minister advise us if he has reviewed this, and whether it makes any kind of sense at all to leave $138 million worth of hospital beds empty when there is in fact a need?

[2:15]

HON. MR. CURTIS: Mr. Speaker, while I am always happy to answer questions, I would suggest that a question along those lines would be more appropriately directed to the Minister of Health (Hon. Mr. Nielsen).

MR. WILLIAMS: In any other department, Mr. Speaker, would the minister be concerned about $138 million in assets being mothballed when there was a need?

HON. MR. CURTIS: Mr. Speaker, I again refer the member to the Minister of Health, who I am sure would be happy to answer the question and to check the veracity of the member's proposition.

EXPO 86

MR. MacWILLIAM: In the absence of the Minister of Tourism (Hon. Mr. Richmond), I have a question for his parliamentary secretary regarding the Expo conflict-of-interest guidelines. The minister recently stated they were the most stringent to be found. Yet the guidelines do not prohibit any business dealings between directors and companies, and provide only for internal disclosure. Why is there no such prohibition instituted in these guidelines?

Interjection.

MR. MacWILLIAM: Perhaps the government House Leader may wish to answer that.

Interjections.

MR. MacWILLIAM: Perhaps I could direct my question to the acting minister.

HON. MRS. McCARTHY: Mr. Speaker, I'd be very pleased to take that question as notice for the minister responsible.

MR. MacWILLIAM: A new question to the acting minister. The Constitution Act provides very strict guidelines prohibiting MLAs from entering into beneficial contracts with the government, yet the conflict-of-interest guidelines for Expo 86 directors do no such thing. Could the minister advise us as to the reasons for this inequity in the standards of conduct for public life — public life versus the Crown corporations?

HON. MRS. McCARTHY: The member's question implies two standards of conduct. I would prefer to answer the direct question by passing it on to the Minister of Tourism, who I know will bring an answer back to the House at the earliest opportunity.

VANCOUVER TRANSITION HOUSE

MS. BROWN: My question is to the Minister of Human Resources, and it has to do with the Vancouver Transition House, which is moving inexorably towards its death. Last Thursday the minister gave a commitment to the House that the services of the Vancouver Transition House would be continued. However, we have now been told that on June 28 the Vancouver Transition House will be closed. I understand that the YWCA has now indicated that it is willing to continue operating the Transition House temporarily. Can the minister inform the House whether she has decided to permit the YWCA to continue to offer this essential service until a new contract has been awarded?

HON. MRS. McCARTHY: The commitment that I made in response to the question last week was that the service provided by the now Vancouver Transition House would be continued by all transition houses to any family, child or woman in need in the province — the service would be continued.

As a response to the second question, which was whether I would know whether or not the Y would be willing to continue the service which they gave notice of discontinuance of, I'm sorry, this is the first I've heard of it, so I can't respond to that.

MS. BROWN: Mr. Speaker, Vancouver has only one transition house, and that house is going to be closing its doors on June 28 unless the government moves very quickly. Will the minister now admit that privatizing that house was a mistake, and that the government is willing to restore full funding for the operation of that very necessary resource?

HON. MRS. McCARTHY: In the question, I think, the member implies that an error has been made by the government in taking the only transition house in the whole province that was operated directly by the government and making it consistent with the over 30 transition houses which have been established in this past five years, having it operated like all the others on a contract service monitored by the province.

The answer to the direct question — did we make an error? — is no. I'm quite pleased with the fact that we have been consistent all throughout the province; the same delivery of service throughout the province, and there is no reason in the world why Vancouver should be any different than any other part of the province. The service is the important thing, and the delivery of service to people in need is the important thing. We are able to respond to a woman and a family who

[ Page 6815 ]

asks us for help in terms of transition houses throughout the province, and we will be able to do that in the city of Vancouver after June 28 as well.

SCHOOL TAXES

MR. REE: My question is to the Minister of Education. In light of the comments of the Minister of Finance (Hon. Mr. Curtis) that commercial taxes have not been laid on the homeowners, what is the status of homeowner taxes, when school trustees are saying school taxes in the lower mainland have gone up in the last year?

HON. MR. HEINRICH: The amount paid for school taxation is a function of assessment. Assessment is a function of market value. I saw the headline in the Vancouver Province yesterday and was somewhat concerned with the comments, which were attributed to a school district official.

MR. SKELLY: So we gather.

HON. MR. HEINRICH: Yes, you're quite right.

MR. SKELLY: Otherwise we wouldn't have a set-up question.

HON. MR. HEINRICH: What I'm really surprised about is that this question isn't coming from the opposition. Research hasn't read the paper.

I think it is important that we raise some of the points to explain the increase in the Greater Vancouver Regional District area and the school districts in that area. The budgets are down between 2.6 percent and 9.2 percent in seven of the nine GVRD school districts, and in the case of the other two — Surrey and Delta — the budgets are up. I think we should recognize that the total assessed values are up between 3.9 percent and 13.5 percent in each of those school districts. It's obviously a reflection of the healthy economy which seems to be going on in the lower mainland. Property values are on the way up.

I think the most telling statistic of all is what the taxes are in 1985 compared to 1981. This particular comment came from Burnaby, and I'd like to leave with the House a certain bit of information. In School District 41 in Burnaby the net homeowner tax paid in 1981 was $260. What do you think it is in 1985? It was $167 net, a decline of 35.8 percent. I can tell you that in each of the nine school districts in the lower mainland, they're down from 65 to 35 percent over a period of four years.

MR. SPEAKER: Thank you.

HON. MR. HEINRICH: Am I finished, Mr. Speaker?

MR. SPEAKER: Yes.

MS. DAILLY: A supplementary to the Minister of Education. Would the minister tell the House what percentage of the school taxation in Burnaby is paid by the provincial government, compared to the amount that is paid by the local taxpayers? He can even give me last year's figures.

HON. MR. HEINRICH: Mr. Speaker, what the member is asking me is.... You know, I'm trying to go through 75 school districts on the average. In the case of Burnaby, I would be guessing — that's understood when you're asking a question like this — but I would say it's probably in the area of about 60-40. In other words, the provincial government's contribution is, I suspect, probably around 60 percent. The homeowners' contributions in that particular district may be around 40 percent. I'm guessing at this, but if you would like me to....

Interjections.

HON. MR. HEINRICH: Mr. Speaker, I'll be precise. I'll take that question as notice and bring back the exact number for you.

MEADOW LAKE TIMBER LICENCES

MRS. WALLACE: My question is for the Minister of Forests. His ministry has recently invited applications for timber sale licences at Meadow Lake, in the 100 Mile House timber sale area, and the public auction is to be held this Friday morning, June 28. The advertisement stipulates that people can bid only if their operation includes chipping facilities. Why has the minister decided to disallow bids from small contract loggers operating in the area who are assured that they have a sale at an existing plant in that area that has a chipper?

HON. MR. WATERLAND: Mr. Speaker, the member is referring to one portion of the sales that we are trying to initiate in order to attack some of the bug damage problems and inhibit the spread of the mountain pine beetle. There are other sales running parallel to these that are available for the small logging contractors, and they need not have chipping facilities. What we are trying to do, Mr. Speaker, is to make sure that every possible opportunity is taken to use this fibre, and a great deal of utilization of fibre is in byproduct wood chips, as the member probably well knows.

MR. SPEAKER: Hon. members, the member for Burnaby-Edmonds has informed the Chair that she has a matter under standing order 35.

MS. BROWN: Mr. Speaker, I ask leave to make a motion for the adjournment of the House for the purpose of discussing a definite matter of urgent public importance, namely the closing of the Vancouver Transition House on June 28 and the fact that there will not be another facility for battered women in Vancouver until possibly the fall.

MR. SPEAKER: Hon. member, I will take the matter under advisement and bring it back to the House at the earliest opportunity.

Hon. members, two matters. First, regarding question period, it is customary for the opposition to have the lead-off question in question period, and the only time that would not happen is when no member of the opposition is standing and a member of the government is. That would be the reason for that divergence from the ordinary course of business.

Secondly, hon. members, a report from the ombudsman, No. 14, which I table herewith.

[ Page 6816 ]

Orders of the Day

HON. MR. GARDOM: Committee on Bill 61, Mr. Speaker.

WORKERS COMPENSATION
AMENDMENT ACT, 1985

The House in committee on Bill 61; Mr. Strachan in the chair.

Sections 1 and 2 approved.

On section 3.

MR. COCKE: Mr. Chairman, in the second reading of this bill my colleague the member for North Island (Mr. Gabelmann) and I both took exception to this aspect of the bill, section 3, which is that the review boards of the Workers' Compensation Board are going to be struck by regulations. We had a distinct understanding that it wasn't to be regulations of this sort that would decide how they would be struck. There are going to be single-person panels in order to get rid of the backlog. Well, that's fine. But my understanding is that those single-person panels were a worker's option. The minister keeps nodding his head all the time, but the problem is that I see this as being in law giving all the alternatives in the world to cabinet.

As long as you have the present minister who is dedicated to a specific direction, then fair enough. But the problem is that we're left with this piece of legislation on the statute books, and future governments or future executive councils can do whatever they like. For that matter, you could have in the future single-member panels for everybody. So I feel that there's a real weakness in this section, and I oppose the section as it's now written.

HON. MR. SEGARTY: To the member for New Westminster, the member is quite right. He did discuss it in second reading debate, and I expressed to him my view that the one-member panel would be on the request of the individual making their appeal before the review board, and that it would be spelled out in regulation that it would be on the consent of the individual and be for minor appeals. It's my wish, too, to consult with the parties of interest in the area of regulation before they're passed by cabinet and the Lieutenant-Governor-in-Council.

[2:30]

MR. GABELMANN: I have three specific problems with this section. The first is in subsection (4), the oath. I have mixed feelings about the whole principle of having an oath like this involved for review boards in the first place, but I'll leave that aside. Why is this reference in the oath itself, near the end, where it says: "...disclose to any person any of the evidence or other matters brought before the review board"? I'll wait for the minister to find whatever he's looking for — briefing notes or whatever.

We're talking about the oath to be sworn by appointees under this section. As I say, the oath is questionable in my mind in the first place. The requirement that you swear not to disclose any evidence is one thing, but "or other matters" is something else again. I suspect if that section is interpreted as it reads, not even widely, you're going to have a great deal of difficulty getting people to agree to swear an oath of that kind. Matters could come up in review board hearings that may not be evidence per se, but may bring an idea forward that needs some public airing and discussion. Why should the people on the review board be constrained from raising those kinds of issues that they might have picked up in the course of a hearing? That's my first concern.

The second one is the concern expressed by the member for New Westminster (Mr. Cocke), which is the wide-open possibility for panels to be composed of whatever number cabinet chooses as opposed to spelling it out, as I expected it was going to be spelled out.

My third point is the contradiction, as I mentioned in second reading, of not spelling it out in terms of the composition of panels, but then spelling out precisely that it's not required to hold an oral hearing. If you're not going to spell out one thing, why spell out the other? The oral hearing issue is important. It's sufficient cause, in my mind, to vote against this section entirely.

This point has been made before. Most workers who are having a case heard by a panel will not be represented by business agents, lawyers or any other person; they will be there by themselves. Failing an opportunity to present their view, the board may not ever have any way of knowing what their point of view might have been. Some of these people aren't able to communicate their thoughts in writing, and can only do so given an opportunity in front of a board. I believe justice is served properly if workers are given an opportunity. If they choose to waive an oral hearing, that's another matter; but that's not how the legislation is spelled out. The legislation gives the review board an opportunity to proceed without going to an oral hearing, and they may make the wrong judgment.

I'd like the minister's response on at least the first and third of those. I know he has commented on the second.

HON. MR. SEGARTY: Mr. Chairman, the oath is to protect, in a sense, the privacy of the individual who is making a review before the appeal panel, and it's taken verbatim from section 24 of the Labour Code of the province of British Columbia. It's basically the same. But it is to protect the privacy of the individual.

With respect to the oral hearing, it actually puts in place what is already in practice. It's up to the chairman of the current makeup of the panels to determine whether or not an oral hearing is granted, and that will remain the same under this act.

MR. GABELMANN: That's the way it has been since December 1984, if my memory is correct, when an order-in-council was passed establishing that oral hearings weren't required. The way that the boards of review worked in the past — until that order-in-council was passed — oral hearings were allowed. Now the minister is saying that he wants to entrench in legislation the right of the review boards to say, on their own motion, no oral hearing will be held. I can't support that, Mr. Chairman.

MR. COCKE: Just one more word. I share my colleague's displeasure with this aspect of the oral hearing, but I also indicate that the minister says regulations are adequate, and that we will be happy to see the regulations which will give the initiative to the worker. I worry about regulations, Mr. Chairman. If the minister will go back to December 21,

[ Page 6817 ]

1984, we saw some very rough regulations come down for workers' compensation. That's what cabinet can do at their whim. That's quite unfortunate, as far as I'm concerned, and for that I'm totally opposed to this section of the act. I think there should be the kind of consultation that shows that an absolute legislative process is going to be followed, rather than a regulatory process. The regulatory process can be changed at the whim of cabinet.

Section 3 approved on the following division:

YEAS — 22

NAYS — 16

[2:45]

MR. STUPICH: Mr. Chairman, may I have leave to make an introduction?

Leave granted.

MR. STUPICH: Seated in the members' gallery are a couple from Nanaimo who have lived very close to me geographically and politically from the time I was born, and who also are the parents of the deputy Provincial Secretary, Mr. and Mrs. Steve Plecas.

On section 4.

MR. COCKE: There are some concerns with respect to this amending section. Section 4 amends the original section 90 of the act, and I'd like to know where subsection (2) comes from. It would almost appear to come from either the Council of Forest Industries or the Mining Association or maybe both. It could mean that unrepresented workers would be up against large organizations. It's a David and Goliath situation as far as I can see, and I just would like the minister to give me some understanding of what's happening here.

HON. MR. SEGARTY: On that section, where at the present time an employer of his class, the individual who would be making the appeal against a particular class of employees, would then.... The Workers' Compensation has to determine their premiums. The particular employer might not be around but his class would be, and so it provides an opportunity for the class to appear before the review panel and, basically, present their case.

MR. COCKE: How does this fit with decision 395 of the board? That was June 1, 1985.

HON. MR. SEGARTY: I'd have to have a little bit more from the hon. member. Quite honestly, I can't remember what that was about.

Section 4 approved.

On section 5.

MR. GABELMANN: I wonder if the minister would tell us what he thinks the difference is between a finding and a decision.

HON. MR. SEGARTY: If the member will excuse me for just a second. I'm trying to get a handle on that.

A finding is recognized to be subject to a decision by the commissioners.

MR. GABELMANN: Mr. Chairman, I thought the blarney was confined to Ottawa these days.

The Provincial Secretary (Hon. Mr. Chabot) suggested I should consult a lawyer. I've consulted five, and none of them can tell me what the difference is or suggest a reasonable explanation.

Interjection.

MR. GABELMANN: I got the advice I paid for.

It's obviously a small matter, but when you see a change like this, you wonder why.

Section 5 approved.

Sections 6 to 9 inclusive approved.

On section 10.

MR. COCKE: What we're doing here is adding "by an officer of the board or by the review board" at the end. It strikes me that this will now read: "Notwithstanding...the board may at any time at its discretion reopen, rehear and redetermine any matter which has been dealt with by an officer of the board or by the review board." In other words, what we are doing is changing something from "will" to "may," and that gives discretion. I'm not sure that discretion is the better part of valour in this particular situation.

HON. MR. SEGARTY: In the consultation that I had with the parties of interest both parties requested that change. So we are accommodating their interests.

MR. GABELMANN: Mr. Chairman, I don't know what the parties requested from the minister.

HON. MR. SEGARTY: The parties requested the removal of section 90(3).

MR. GABELMANN: Well, Mr. Chairman, I am concerned.... We're talking about section 96(2) of the act. I find it amazing that the "parties of interest" sought to have this particular amendment made to section 96(2), adding to

[ Page 6818 ]

the words "the board may at any time at its discretion reopen, rehear and redetermine any matter which has been dealt with by it," after deleting "by it," the words "by an officer of the board or by the review board." I'd like to have the minister's explanation again as to why it was the parties of interest wanted that particular change.

HON. MR. SEGARTY: Mr. Chairman, we've made it discretionary. Previously they pretty well had to review all cases, and you could have had an appeal going on at the boards of review level and at the commissioner level at the same time on the same case. What we have done with this change is make it discretionary for them to review it in its proper form.

MR. GABELMANN: As I remember the original discussion of this point, section 96(2) was introduced to ensure that boards of review did not in fact establish policy on behalf of the compensation board. If a decision established a new policy by implication, then that had to go to the commissioners so that the commissioners could go through that process, and if they in effect agreed, ratify the review board decision and declare the new policy that flowed from that particular change.

But it goes further than that. Under the current administration of the WCB, it has allowed two things to happen. One is review board decisions to be overturned by the commissioner, and the other, more frustratingly in some ways at the present time, is delay in the final decision. A worker has an adjudication; it goes wrong; it then goes to the appeal board or to the new review board and takes two years — or it has. Then the commissioners can say: "Well, we don't like that decision of the review board. We're worried about its implications. So we're going to sit on it for another six months." Meanwhile the worker is sitting without a decision made. This makes the ability for that kind of delay even more open.... My words are wrong: it makes the possibility of that kind of delay more easily obtained by the kind of administration that we have at the board at the present time. I recognize that there's one good thing about it: that is, if it doesn't have to go for ratification....

AN HON. MEMBER: That's the whole point.

MR. GABELMANN: If that's the whole point, let's say it. But that's not the whole point, because if you go to court and get a bad decision, you can appeal it. The appeal decision is the decision; the original court doesn't get a chance to review the decision of the appeal court. Just think about it in simple terms. This process is that an adjudicator makes a decision, you appeal it to the review boards, the adjudicator's employer doesn't like it so he overturns the appeal court. I recognize that that was in the legislation before, but it's still in the legislation; it has created — and still creates — a serious problem; not in a lot of instances, but in too many.

Why do we need this particular section at all? If the minister is concerned about not having to take it to the commissioners for ratification, fair enough; let's say that. If the minister is worried about review boards setting policy, then let's have a section which spells out that any implications that affect policy of the board have to be referred to the commissioners, but let's not tie up the poor worker or the employer who might be appealing a particular case. Let's not tie them up in this kind of a process.

HON. MR. SEGARTY: The member talks about the supreme court. In this sense the commissioners are the supreme court. They are the ones who set the overall policy. The current act says that where the board of review does not confirm the original decision, that decision will be reconsidered by the board. What we're saying is that now it's optional for them to reconsider, so it should speed up the process, rather than what the member talks about.

Section 10 approved on division

Sections 11 and 12 approved.

On section 13.

MR. COCKE: Can the minister give us a guess as to when this act will come into force? I see it's going to come into force by regulation. How soon does he plan to bring forward those regulations?

HON. MR. SEGARTY: As the hon. member just stated, it will be brought in by regulation after I've consulted with the parties of interest on the regulations; then I'll bring them forward to cabinet. I hope it will be at the earliest possible time.

Section 13 approved.

Title approved.

HON. MR. SEGARTY: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 61, Workers Compensation Amendment Act, 1985, reported complete without amendment, read a third time and passed.

HON. MR. GARDOM: Committee on Bill 49, Mr. Speaker.

SPECIAL ENTERPRISE ZONE
AND TAX RELIEF ACT, 1985

The House in committee on Bill 49; Mr. Ree in the chair.

Sections 1 and 2 approved.

On section 3.

MR. WILLIAMS: Section 3 in this bill creating special zones removes municipal power with respect to the area designated. That removes all municipal requirements as we know them in this province in terms of fire, safety, zoning and all the regulatory devices that municipalities have built up through the years. It gives these powers to the zone administrators.

[3:00]

The question that it raises is: can one administrator come anywhere near meeting what municipalities have wanted through the years for their own communities? I think not.

[ Page 6819 ]

Creating these zones automatically creates a place with different goalposts. It also has a negative impact on adjacent lands, because there are special benefits conferred in these zones that are not conferred on the stuff outside the zone. In a municipality like Delta you can have the Tilbury section where BCDC is trying to flog its empty land become more valuable, and the stuff outside become less valuable. So Annacis Island and the other industrial areas of Delta and along the Fraser River are affected.

The government hasn't begun to advise us where these zones are going to be and how they're going to be distributed. The only thing they've said is that there will be one in Tilbury and the BCDC lands there, and I guess in view of the statements regarding Britannia, there's going to be one at Britannia Beach as well. Again, maybe the minister can advise us how many municipalities are going to be affected by this legislation. What sort of schedule do you have in mind? How do you think you can equal all the work that countless municipalities have done over the years to regulate their own areas?

HON. MR. McCLELLAND: First of all, Mr. Chairman, this legislation doesn't overrule any laws which are in place in terms of fire and safety. All of those applicable laws are still there. The only difference, covered in another section, is that the services to enforce those laws for the zones would be contracted by the zone authority from the municipality involved.

I can't give you a timetable at this time, nor can I say with any definition where and how many zones there may be. I believe that it will likely work the other way around. We'll be selling the concept of the zones to the world, and when we find out what the needs of a successful sales program are, then we can more likely understand the best place for the zone, because there may be a varied need by the people who are going to establish.

I don't see that these zones are going to be in direct competition with other industrial land in the area, because they'll be catering to absolutely new industry of a kind which would likely never be in British Columbia, without the kinds of incentives held here. They would certainly not go to an established industrial area which may not have all of the requirements that we can put into a special enterprise zone.

MR. WILLIAMS: I'm a little disturbed at the thought that, as I suspected with the other minister we have here, you really think it's just a matter of getting a salesman on the road; that you really think that's the way the world works; it's just a selling job. Well, you know, last year we were told it was pharmaceuticals and high-tech electronic stuff and automobile parts. This year you're going on the road to find out what it might be. But you leave the impression that local zoning will prevail. Let's get it straight: they're gutted in terms of local regulatory powers. If a municipality said it was a war-weapons-free zone, for example, and decided they didn't want any plants turning out war products in their municipality, as might well be the case, since the city of Vancouver is now a nuclear-free zone.... Many citizens of British Columbia wouldn't want us in the business of turning out munitions, for example. Obviously no municipality could set those terms then, under this statute. If you want to get into the munitions business in your special enterprise zones, you can very well do so. So that is the case; the zoning does not prevail, and if you want to go into the business of selling war materials, you are free to do so within these zones. Going into that kind of business is not a very fascinating prospect, even for the unemployed of British Columbia. Can we have some assurance from the minister that we won't be going into that kind business in these zones at this time?

HON. MR. McCLELLAND: Mr. Chairman, I can't remember the last time that a representative of our government talked to a munitions baron, nor do I know of any agenda to begin that kind of discussion. It's not the kind of industry that we're looking at for British Columbia, nor is it likely the kind of industry that would ever come to British Columbia.

Yes, I think that it's very important that we do put salesmen on the road — all kinds of salesmen — for British Columbia, but it's also important that they have something to sell and that they have, in fact, a full sales kit. With the special enterprise zones in place, we've got a full sales kit, and the salesmen will have a much better opportunity to sell all of the good things about British Columbia.

It's interesting that the member picks again today, as he did late last week, the three areas that he seems to think are not flourishing in British Columbia. He talks about auto parts. Last week he seemed to have in his head the idea that all we're doing is assembling something at the Toyota wheel manufacturing plant. It makes wheels, and it ships those wheels back to Japan.

MR. WILLIAMS: Very impressive.

HON. MR. McCLELLAND: Right.

In pharmaceuticals we've taken a very major step. Through the Terry Fox Foundation and with help from the British Columbia Development Corporation, we have taken a very major first step in a very exciting new era of pharmaceuticals.

Finally, electronics was the worst example that that member could use, Mr. Chairman, because it is one area in this province that is actually booming and has boomed throughout the recessionary period. I'd like to invite the member to go on a tour of some of the new exciting electronics businesses in the greater Vancouver area alone. Go see Glenayre Electronics in their brand new plant in Burnaby, go see MDI in their brand new plant in Richmond. Go see MDA with the exciting things that they're doing in every part of the world, right out of little old British Columbia.

So those are three of the worst areas you could have mentioned.

MR. WILLIAMS: So we don't need the zones.

HON. MR. McCLELLAND: So, Mr. Chairman, we need the zones because what we want here is a new industrial base — a totally new industrial base which will spread out all over the province, into our service industries and our tourism industry, and will in fact help us to diversify in the way that that member has been telling us we should do.

MR. BLENCOE: Mr. Chairman, I wonder if the minister can tell us what discussions and what consultation he had with the UBCM over this particular proposal. Given that we have partnership with the Minister of Municipal Affairs (Hon. Mr. Ritchie), and then we have this particular piece of legislation, there is great confusion and indeed concern in the

[ Page 6820 ]

local government about what this government is trying to do. It's giving mixed signals.

The UBCM has asked for full clarification. Indeed, they were wishing you had discussed it with them beforehand. I'm wondering what he sees in the future in terms of working with the UBCM, given that the municipalities are going to be directly impacted.

HON. MR. McCLELLAND: Mr. Chairman, there was full discussion in the community about special enterprise zones for months, and we intend to work very closely with the Union of B.C. Municipalities in the months to come, on this and on many other measures. I'm sorry that Friday seems to be a bad day to do any business — everyone leaves early — but I would ask that member to read Hansard and just read the correspondence from the UBCM about special enterprise zones that I read into the record on Friday.

MR. CHAIRMAN: The Chair is having some difficulty in reconciling the questions to the minister with committee. The comments might be more appropriate in second reading than in committee stage.

MR. BLENCOE: Mr. Chairman, I believe this section does refer to municipalities as being involved, and that's something I am obviously concerned about.

AN HON. MEMBER: Where were you on Friday?

MR. BLENCOE: I was here.

MR. CHAIRMAN: The member on section 3.

MR. BLENCOE: The minister says that he will be discussing with UBCM. Given any further announcements or regulations with this particular piece of legislation or others in the future, hopefully the minister will see fit to try to work in a sort of real partnership approach with local government. They had the partnership deal brought down a few weeks ago, and then we have this particular package, which obviously is of concern because it may attract the very industries they're trying to achieve. I know section 21 in this bill — we'll get to that later on — tries to take care of that, but I obviously have some concerns that the industry that's going to be attracted to inside municipal boundaries will now go to these special enterprise zones.

This particular section says that the cabinet will prescribe the criteria for admission of a company to a special enterprise zone. I'm wondering if the minister can give us some insights into what some of those criteria will be. I believe there is great potential for abuse in letting only certain companies into the special enterprise zone, companies that may have some direct connection or better insights into the government. I think that the criteria should be laid out, and there should be some guarantees or insurance that all businesses, particularly new ones, are going to be dealt with equally. I think it's very important, while we're debating this legislation, that we know that the criteria are going to be fair and non-discriminatory.

HON. MR. McCLELLAND: Of course they're going to be treated differently than they are in other areas. The whole idea of this bill is that they will be treated differently, and that they will be a business which will not in any way be able to go into competition with other businesses or industries which are already in British Columbia. So we have to have that kind of regulatory authority to ensure that that doesn't happen. They will be treated much differently. In fact, the bill itself will allow us to treat some business within the zone differently than other business within the zone. If, for instance, in one part of the bill which allows us to bring in some support industry for a particular industry, then in order that we protect the concept that we don't allow unfair competition between existing industry in British Columbia, we certainly wouldn't give the same kind of benefits to that industry if we allowed them to set up in the zone because of the fact that the zone is the place they can best service what will become perhaps their major customer. So there has to be some flexibility, or the zone won't work at all.

I'd just like to read to you from Hansard again. On page 14 of Friday morning's sitting, the letter from Mayor Couvelier, president of UBCM, says:

"We have reviewed with great interest your Bill 49, Special Enterprise Zone and Tax Relief Act. We recognize this bill as another key element in the government's economic strategy. Bill 49, like the Provincial-Municipal Partnership Act and the venture capital corporation legislation, has the potential to be an element that will assist local communities in their recovery plans."

MR. BLENCOE: Will the minister confirm that cabinet will have complete authority over the zones?

HON. MR. McCLELLAND: The zone authority will be the administrating body of the zones. Cabinet has, I guess, complete authority over the regulations, and always has and always will in any piece of legislation.

MR. BLENCOE: I wonder whether you will be allowing for municipal input into concerns that may arise in these zones. There are all sorts of questions about fire regulations, police regulations and these sorts of things. Who is going to have the authority to determine those, and who is going to cover those sorts of things?

AN HON. MEMBER: They'll be contracted.

MR. BLENCOE: Contracted?

HON. MR. McCLELLAND: Mr. Chairman, the bill is very specific on that: the zone authority will negotiate with the municipal government. And the negotiation implies that there will be all kinds of discussion between the municipal government and the zone authority. And they will come to a contractual agreement for those kinds of services, which will be signed....

Interjection.

HON. MR. McCLELLAND: Well, it's a negotiation.

MR. BLENCOE: Maybe the minister will confirm that the bill empowers cabinet to impose a service contract on any municipality if the nature of this relationship cannot be settled with any particular zone; in other words, you can impose

[ Page 6821 ]

whatever you wish. If the negotiations of a so-called consultation process don't work, you can impose whatever you will. Is that accurate?

[3:15]

HON. MR. McCLELLAND: The member is essentially correct. As has been pointed out by my assistant, it works for other reasons as well. It might be that during the middle of maybe five years or four years or three years after the zone was established and there was operating industry within the zone, the municipality for some reason or another decided to withdraw services, whether it be fire services or water services or something else, and I'm sure that in order to protect those people who are located in the zone somebody would want to have the authority to make sure that those services were continued.

MR. BLENCOE: If this special enterprise establishes itself.... There was discussion of a special enterprise establishing one of these zones, which happens to be highly controversial and greatly disliked by the adjacent municipality; for instance.... The second member for Vancouver East (Mr. Williams) brought up defence or munitions. Given the nature of this legislation, there is no process for public hearings or public input into what goes into these zones, because obviously they are outside the municipality.

What happens, for instance, if we get interest by a star wars manufacturer? Is it the minister's intention that certain types of industries would be acceptable or unacceptable? I'll give you a situation: a particular defence contract — American, Canadian or whatever — wishes to locate here and is attached to the star wars situation. What would be the position of the minister then, if the municipality and adjacent people want nothing to do with it, yet you've got the power to impose whatever you want, which is not exactly democratic?

MR. DAVIS: Section 3 begins: "The Lieutenant-Governor-in-Council may make regulations...." What concerns me about this legislation is not what I understand is the government's intent — namely, to set up selected special enterprise zones — but the broad sweep of the legislation. The broad sweep bothers me because I can imagine a new government with the second member for Vancouver East as the economic czar, and he would love to have legislation like this on the books because he could do a lot of things.

Out of hand, he wouldn't need to refer to other law existing in the province, and I think he would perhaps agree to what I am saying. By order-in-council a lot of things can be done under this law, and he could create an economic zone. I don't think he would, but it could, in area terms, cover the whole province. It could be a small zone; it could be selective; it could give a special preference to a Crown corporation or any other corporation. So it's really the broad scope that bothers me. I think any reference to star wars industries and so on is merely to drag a red herring in front of the Legislature. It's the broader concern that I have.

Now the minister says that he as minister would really only deal with firms or businesses which would not otherwise come to the province. You know, a lot of industries around the world are going to be interested in British Columbia if they can come here for ten years corporation income tax free, not have to pay the social service tax, and perhaps have the government instead of themselves pay their property taxes. So the bait is considerable.

The question is: what is the new industry which otherwise wouldn't come to B.C.? I think it will be very difficult, in advance anyway, to describe that industry. We may well have extensions of what have been traditional industries here offering to come. In the past it's been very difficult to further process a number of our forest products. Further processing, say, in the nature of manufacturing fine papers might well come to British Columbia if they don't have to pay corporation income tax for ten years, a social service tax, property taxes and so on.

So to repeat, there is a considerable incentive for industries to come which might at some point in time otherwise come to B.C. The bill doesn't clarify what is a new business and what is not a new business. So there is an uncertainty in the bill. There is certainly a grey area in that respect.

While I understand and sympathize with the intention of the government in this regard, it does bother me that in those areas — certainly areas of taxation — the cabinet can, in effect at its whim, decide whether or not to give "a new industry" all these breaks. Where does this process begin and end? I think that is really my question. And really, what is the definition of new industry as opposed to existing industry in the province, which admittedly faces a heavy tax load? Our taxes for larger corporations are the highest in the country, and our property taxes are certainly steep.

Existing industry is going to look on this process with some apprehension if another industry somewhat related were to offer to come to B.C. in a special enterprise zone. I realize that I am asking a difficult question or series of questions, but still, this legislation could apply to a number of places in the province — indeed, in its terminology, the entire province. The picture I painted to begin with.... Imagine the hon. second member for Vancouver East (Mr. Williams) in charge of this bill. He could do a lot of wonderful things.

HON. MR. McCLELLAND: Mr. Chairman, I think the member answered his own question. At the same time, he said he would like the definition of what would be a new business; but he also said that it probably couldn't be done in advance of having a look at the..... And I believe that's right.

Just to skip to another section very briefly, the criteria are reasonably clear — in the general sense at least — in that a very substantial declaration would have to be made by the new business that it meets all of the eligibility criteria, the major one being, of course, that it is producing new goods and services not now being produced anywhere else in the province. The penalties for breaking that declaration, or for signing a false declaration, are very severe. It's the zone administrator who negotiates that declaration, not the cabinet or the minister, as outlined in the legislation.

I agree with the member that it's very hard to decide in advance what that business would be, except that we know we have to be extremely careful that it doesn't affect other businesses.

MR. BLENCOE: I want to get back to the criteria of admission to these enterprise zones. We don't know what the criteria are, and at the moment the minister is not saying what is acceptable or unacceptable. Let's look at the situation. Often certain unacceptable industries, ones that are nuclear-related or star wars-related, or just war-related.... When you have municipal checks and balances, zonings, public hearings, processes in which the public can participate....

[ Page 6822 ]

Let's face it, one of the types of industries that are going to be attracted to these enterprise zones, because everything in terms of regulations and checks and balances is going to be virtually absent, is the type that creates great ethical concern and all sorts of other things. I would like to know from the minister if it is his intention to attract the kind of industry that has been turned away, for whatever reasons, in other municipalities or other jurisdictions. What kinds of industries is he going to attract? What are his criteria? Will he be allowing war-related kinds of research and development, star wars kinds of things, to happen? Those are the kinds of industries that often can't get into other municipalities which have a public input process whereby the public can say: "We want nothing to do with that kind of industry." But here we are setting up enclaves in which the door is going to be virtually open. Is that going to be acceptable to the minister?

HON. MR. McCLELLAND: Mr. Chairman, this is really getting ridiculous. I can guarantee that we're not going to go out and build rocket bombs in Oak Bay. We're going to be trying to attract very high-investment, job-related businesses which are probably going to be, in some sense of the term, high-tech, I suppose. Perhaps not; not necessarily. But what are you going to do? What would you do, for instance, if you were an alderman in Victoria and somebody decided to build something you didn't think was acceptable in Oak Bay? They don't have to hold public hearings. They don't have to come crawling to you and ask if they can build that in Oak Bay or not. It could be all kinds of things that are unacceptable and don't come within the regional district requirements. The same could be true of someone building something in Surrey that Langley doesn't like. There's no requirement for Surrey to do anything that Langley wants it to do, no matter what kind of industry it might happen to be. Our powers are no different in that regard than those of normal municipalities at the present time.

One of the companies I mentioned earlier, MacDonald Dettwiler and Associates, is building earth-tracking stations for satellites. Do you think that could be used for some war-related purpose sometime in the future? Should we tell them not to do that anymore, when they're leading the world in that kind of technology? One of the companies I mentioned earlier is selling the computerized systems they now have in police cars — the total communications network — to police stations all over North America, including places that sometimes have riots. Should we tell those guys not to build those communications systems anymore because they might equip the policemen in a riot or something like that?

You know, there are some companies now under devolution schemes of American defence contracts which are already building things in British Columbia. Some companies are looking, trying to get some of the work on the DEW line, which is a defence line. Should we tell that company not to bid for that very attractive contract for British Columbia workers? I mean, how far do you want to go? I can't tell you in advance what we're going to have in these zones, but I can tell you that if they work and they work for the kinds of industries we want in this province, we're going to see thousands of new jobs for British Columbians. I hope that that member wants the same thing for those same British Columbians.

MR. BLENCOE: One thing the minister forgets, in referring to Oak Bay or any municipality, is that once we finish this piece of legislation here and these zones are created, there are going to be no checks and balances in terms of the public having a say about an industry. If they discover certain things about it, there's no process. That's why we have to ask these questions, but you're being extremely vague about the whole thing. Will you, in the criteria, permit some sort of public involvement or some municipal say in terms of if there's something.... If you're going to establish an industry adjacent to a municipality that has some concerns over a particular enterprise, will you allow some participation or consultation with that local government if it becomes a matter of concern? I think that's all we're asking.

[3:30]

MR. DAVIS: I simply want to pursue in a little more detail the point I was trying to make earlier. The Lieutenant-Governor-in- Council may make regulations in respect to taxes — particularly corporation tax, property tax, sales tax, and so on — prescribing the criteria for admission of a company as a company which would operate in the special zone. What will the process be? Will the minister, for instance, canvass the industry — certainly the industry as it exists in the province currently — to find out whether Belkin, for example, or a subsidiary of Domtar — certainly in the fine paper business — would have engaged in the production of fine papers? I'm thinking of the Britannia example. Is there at least an intention on the part of the government to canvass the related industry to see whether any one of the existing firms in B.C. or through the parents in Canada might, given these same tax breaks, have gone ahead and built a plant, employing more people in B.C.? What will be the mechanism? Will you be talking not only to chambers of commerce but to actual industry associations, or particular groups of firms that may have some aspirations in the direction which this new firm, getting these breaks, would have when it established in a special zone?

HON. MR. McCLELLAND: I must say that there's been no special enterprise zone declared for Britannia, so anybody that....

MR. WILLIAMS: There will be.

HON. MR. McCLELLAND: Well, you just mark that one and see if it happens. There'll be lots more discussion needed yet before anything like that would happen.

As to the matter of canvassing industry to make sure that it's not a competing industry, we do that routinely now. For instance, if the British Columbia Development Corporation.... We try very hard not to make loans, for instance, to competing companies where a loan to one company would have an adverse effect on another. So we have a mechanism already for canvassing industries around the province to make sure that we're not, first of all, competing; and secondly, we already do canvass other companies when we get a new proposal to see whether or not there is the capability here in British Columbia, with perhaps some help to an existing British Columbia company, to do the job that the other company is proposing to do.

I would expect that the zone approval board contained in the legislation would also take on that role. Just as an aside, as a matter of fact the zone approval board, depending on the nature of the zone and what's happening there, could in fact have a representative from the municipal council. Certainly

[ Page 6823 ]

as far as discussion goes, we're going to discuss wherever we do any of this with the local officials. Of course we would, because the company itself won't want to go into a hostile environment. No company wants to do that. So if there's more than one zone, it may not be that every zone would have the same makeup of an approval board. We may want to be able to vary that, to allow for local participation on that board as well.

MR. DAVIS: The minister seems to be saying — he hasn't said it in quite these words — that there is an intention, indeed an obligation on the government, to advertise the opportunity which may exist in a zone. Some firm comes along with a particular series of products and so on, and before that firm is given the special deal which goes with the zone or zonal status, there would, in effect, be an advertisement such that industries with similar aspirations — if I can put it that way — would have their input. Is that really what the minister's saying?

HON. MR. McCLELLAND: I don't think I used the word "advertise," and I'm not so sure that would be appropriate. But again, with the zone approval board an industry expert could be brought onto the board during the time that the application was being pursued — or maybe two, who have had experience, know the industry and would be able to help the zone approval board in its deliberations, could be brought onto the board during the time the application was being pursued. We'd work something out, but as I say, we're not complete amateurs in this; we've been doing this kind of thing for quite some time.

[Mr. Strachan in the chair.]

MR. WILLIAMS: Well, Mr. Chairman, it's not too reassuring. Last week the other minister nodded his head that Britannia was going to be a special enterprise zone. Gee, there you are; you've just got a problem that way, have you? No, I don't think so.

Interjections.

MR. WILLIAMS: You get in all the debates. We all know that. Just toss it in the air.

You're saying there won't be a special enterprise zone at Britannia?

Interjection.

MR. WILLIAMS: Don't know, eh? Maybe; could be; who knows?

The man from Alberta, Mr. Mahood, said he liked all those concessions he smelled. But what about the other paper operations? As the member for North Vancouver–Seymour (Mr. Davis) says, this is a natural step in terms of our major corporations in the paper sector and in terms of moving on to finished papers and various specialized products of that nature. M&B has another subsidiary on Annacis Island, right by Tilbury; that's our only fine-paper producer in the province. Are you saying that if there is another fine-paper producer that will produce comparable materials, they will not be allowed to enter into a zone? A few minutes ago you said if it was going to compete with anybody in B.C. they wouldn't get into the zone. I didn't see that in the legislation. I don't see that in the legislation at all, unless it comes out in the regulations down the road.

MR. REID: Have faith.

MR. WILLIAMS: There are not the reassurances here that the existing industry in British Columbia isn't going to get done in by this process. You could drive a Mack truck through the definitions any time of the day or night, and that is likely what will happen. In terms of getting value added onto our major industrial processes in the province, this represents a major threat — and in terms of them doing what they should be doing in terms of extending their processes and increasing value added. If you're going to let these other birds come in and take over with tax concessions what should be the normal growth of the existing industry in the province, we've got a real problem on our hands.

That's why we're not voting for this legislation, because it discriminates against those who are here now, those that have hung in through the miserable years since you've been trying to manage the affairs of this province. Now they're going to get abused again in terms of inviting people from abroad to compete with them with tax advantages that our own people do not have. We're not getting the assurance we should have and which the member for North Vancouver–Seymour wants, which will avoid further hurt with respect to existing industries and their future. I don't think we've got the assurance, and the minister seems to think that inherent in the legislation, if it's going to compete with anything that's in British Columbia now, it won't be allowed. But I don't see that in the legislation at all.

Section 3 approved.

On section 4.

HON. MR. McCLELLAND: Mr. Chairman, I move the amendment standing under my name on the order paper. [See appendix.]

Amendment approved.

Section 4 as amended approved.

On section 5.

MR. WILLIAMS: Well, again, the minister says the zone approval board can include people from municipal councils and all the rest, but it also says it can be one person, and one can't help but wonder if that isn't really the intent: that it will just be a staff person from BCDC or his department, and that will be it. So it's a direct line from the minister, and that's it; all the discretionary powers in the world then reside in the minister's office, and that's it. Who do we give a tax concession to? Who gets the benefit? The minister's in control — a neat arrangement, but not one with the checks and balances that one expects in a proper system. It's a tremendously powerful authority to give to one person, and the legislation allows that. The chances of discrimination both for and against the people of the province are there in that section.

Sections 5 and 6 approved.

[ Page 6824 ]

On section 7.

MR. WILLIAMS: Again, it ties this to the Development Corporation, and the Development Corporation has 5,000 plus acres of land, of which only 10 percent is occupied. An ancillary side to this whole thing is filling up BCDC lands. You've embarked on projects that have not been successful. Ten years of projects, and most of them are empty. It's going to be BCDC lands that are made use of in this regard. So one can't help but think about it also simply as an internal real estate endeavour. You've put in the services, you've spent the money, you've made the investment, and it hasn't worked out very well. So the answer is: give more money away. Throw money off the back of a truck. That's the system in terms of getting new industry and filling up your industrial estates in British Columbia.

Section 7 approved.

On section 8.

MR. WILLIAMS: Section 8 is the big hammer — so-called municipal partnership arrangements. If the municipality doesn't agree with the terms or if the municipality doesn't provide the services, then the minister has the big hammer. They've got to provide the services, and that's that. And they have to provide the services under the terms that the cabinet determines. So that's what partnership means in terms of this operation. It just guts the municipalities in terms of their own authority and then requires them to deliver at the end.

Section 8 approved.

On section 9.

MR. DAVIS: Mr. Chairman, section 9 limits the company that can successfully apply to be located in a special enterprise zone. I gather this company must be incorporated as a British Columbia company. It's not a federal company; it's a provincial company. I wonder, looking at the rest of the clause, what position my son, for example, would be in. He's set up a company. He's doing business in British Columbia. It's a wholly-owned company. He is engaged in processing. I note that also this company, besides being incorporated in British Columbia, must be a company which has not previously carried on business in British Columbia. In other words, my son would have to incorporate a different company; he certainly couldn't use his existing company. I wonder then if he could qualify if he were perhaps involved in processing coal to make some new product not made in B.C. Could he set up another company and qualify?

Finally, I see also this company must have no permanent establishment outside the zone. What really is the corporate situation? Is anyone with a company in British Columbia today precluded from participating in a special economic zone by this clause?

HON. MR. McCLELLAND: Mr. Chairman, in terms of the first question, if the person mentioned qualified under the eligibility requirements of the zone approval board, I would imagine that they would be able to set up a company and locate within the zone as well. But if they didn't qualify under some of the sections in 9, they would have to either do the necessary things in order to qualify or not get into the zone. It would be as simple as that. If in fact they were carrying on business and had other similar businesses or offices outside the zone, they would have to set up a separate company. No doubt about that. I understand it is to protect our tax position, primarily, so that the taxes wouldn't leak into other companies contained or owned and operated by that person who wants to get into the zone.

[3:45]

MR. DAVIS: Well, then I assume that this matter will be clarified in regulations and not left exclusively to a zone board to decide. But still, I'm not clear. If there is any ownership link, is the new company, assuming it's a newly incorporated provincial company, disqualified if it has the same owner as another company doing business in the province and has no permanent establishment outside the zone? I don't know what the answer is.

HON. MR. McCLELLAND: The ownership doesn't make any difference at all. It doesn't matter who owns the company. The protection is built in there so that there can't be some kind of interrelationship of the tax benefits, which we are giving to the company which is within the zone. We don't want those tax benefits to go anywhere else.

MR. WILLIAMS: That's it, you know. You can drive a truck through this thing; you really can.

Interjection.

MR. WILLIAMS: Any kind of truck. The bulk of the benefits will be to the federal government. We've forgone all the provincial taxes. Then the federal government picks up all the money — all the tax money to be picked up. It's a really smart arrangement. It just reinforces the whole idea that this thing was intended to be something else. The feds simply abandoned you, and rightly so, and left you in the circumstances where you thought you had to deliver something after a year of promises, of a kind, and here we are. Two years of promises; three years of promises — good lord! — and two federal administrations of different political persuasions who washed their hands of it: doesn't that tell us something? The member for North Vancouver–Seymour (Mr. Davis) says: "Well, can an existing British Columbia company simply form another company and they own it and slip into the zone?" It sounds like they can.

AN HON. MEMBER: They can?

MR. WILLIAMS: Sure. It just has to be a somewhat different product. The minister says it can't be competitive with anything in British Columbia, but at the same time the legislation doesn't say that. It's a murky, foggy thing. They still haven't thought it all through. The pieces are still there to be worked on. They simply don't know what kind of animal they've got here, other than that they've thrown all the tax money into the pot and said: "Go for it."

The feds will continue to collect their taxes. The British Columbia companies that have hung in, by and large, will be done in. They're going to have to pick up the slack. We've got services that people demand in British Columbia. Squeeze as you might, people expect a certain level of social services in this province, fortunately. So the demand will continue to be

[ Page 6825 ]

there. The money isn't going to come out of these outfits; the money's going to come out of the outfits that have remained outside the zones. So they're the ones that will get squeezed again, under this legislation.

MR. BLENCOE: This is the very issue that many municipalities are concerned about. I think the minister has virtually admitted that if you change the name of the company and change the name of the people, and you move into the zone, an existing business, it's going to be okay.

HON. MR. McCLELLAND: Nonsense. Nobody said that.

MR. BLENCOE: So that's not okay?

HON. MR. McCLELLAND: I said that's nonsense, what you're saying.

MR. BLENCOE: So the criteria are going to be so clear that you'll be able to stop a company from setting up a subsidiary with a different name and moving into the zone?

HON. MR. McCLELLAND: They have to meet the eligibility requirements.

MR. BLENCOE: And what are those? We haven't even got any eligibility requirements. We don't even have those. This is the stupidity of this legislation.

HON. MR. McCLELLAND: Let's not have second reading debate again. That member didn't understand. What do those two members have against British Columbians having the opportunity to take part in these zones? You don't want the people to work in British Columbia. You don't want ownership by British Columbians. Of course we're going to make the criteria possible so that British Columbians can take advantage of this if they have new ideas, if they can manufacture new items that are not being made in British Columbia and likely wouldn't be made without these opportunities for them. Of course we want British Columbians to take advantage of all of our legislation.

MR. WILLIAMS: Pray tell, how do you know they wouldn't be here otherwise? That's the kind of question that's automatically asked. Of course, the proposed entrepreneur is going to say: "No, I wouldn't have done it otherwise." Who's to say otherwise? If they can forgo sales tax, if they can forgo property tax, if they can forgo corporate income tax for a decade, of course they'll say: "We wouldn't have built the company otherwise. We wouldn't go into the business otherwise." Who in business wouldn't say that in order to get those tax concessions? How in the world can you figure out whether they would have built here had this not been the case? It's that kind of foggy loophole-ridden mess that we've got here that gives us the problem.

HON. MR. McCLELLAND: Quickly, Mr. Chairman, there was a very exhaustive study done by Coopers and Lybrand, or whatever they're called, to look at the very things you're talking about. What would attract some various kinds of companies? We had them in category, and we've done the legislation to meet those criteria.

Secondly, they also looked at the tax benefits to British Columbia and have concluded, in an exhaustive study, that the tax benefits to British Columbia.... Certainly there will be tax benefits to Canada. I would hope there would be; maybe they'll help bring down the deficit you and I are helping to pay for. But in almost every instance that we looked at in terms of different kinds of businesses, different sizes of businesses and different needs for capitalization of the businesses, the tax benefits to British Columbia were almost totally comparable to the tax benefits that are being forgone. Again, these are forgone benefits. I'm sorry that too many people in British Columbia are still trapped by the economists' fear of forgone revenues, which are really fictitious taxes, which would never have been here without the businesses locating in British Columbia.

MR. DAVIS: Mr. Chairman, a question: who is the declarant? I am referring of course to section 9 — that an applicant shall include a plan and also a declaration. This declaration is signed by a declarant who "believes that the application would not without the incentives under this Act be likely to locate in the Province" in one of these zones. Now who qualifies as a declarant? It's not the marketplace, clearly; it's some person. Is it a consultant or simply a bureaucrat? Who decides whether this firm would locate only if the conditions negotiated by the firm are in fact approved?

HON. MR. McCLELLAND: Mr. Chairman, it's the person authorized to do that by the corporation which is seeking entrance into a zone.

Sections 9 to 14 inclusive approved.

On section 15.

HON. MR. McCLELLAND: Mr. Chairman, I move the amendment standing under my name on the order paper. [See appendix.]

Amendment approved.

On section 15 as amended.

MR. WILLIAMS: Mr. Chairman, this changes the situation in terms of municipal revenues with respect to the affected zones, reducing them to a quarter of what they would have otherwise gotten. If you shift from industrial land values to residential land values, that's basically the sort of thing you're doing, in terms of my understanding — unless I'm misinformed. The city of Vancouver reviewed this legislation and concluded that the impact in the city of Vancouver would be to reduce taxes collected for the municipality within the zone to a quarter of what they would otherwise be.

HON. MR. McCLELLAND: Mr. Chairman, the member is forgetting that we'll also be negotiating on contractual arrangements for the purchase of services. We would expect to keep the municipality whole by separating the two charges so that we know exactly what we're paying for, so that the zone administration can conduct its business with the zone tenant in a proper manner. But you cannot separate those two — the actual tax burden plus the contracting of services.

[ Page 6826 ]

MR. WILLIAMS: The contracted services with respect to the internal arrangements between BCDC or its companies, and the new corporation, the new special....

Interjection.

MR. WILLIAMS: Oh. But the municipality currently gets 100 percent across the board with respect to a designated piece of land in terms of property values. By changing it to residential assessments under this legislation, you're reducing that by three-quarters — at least, that's the impact in Vancouver. Are you suggesting that you might contract back to the tune of that 75 percent? Presumably that's for.... If that's the intent, then it's not as bad as it would appear, but there's no requirement in the statute for that to be the case; so you've got an awful lot of leeway in terms of your bargaining.

I'm glad to get that on the record for the benefit of municipalities that are affected. If that is the intent, then municipalities should at least feel better about this proposal, in that the intent would appear to be to give them back that 75 percent, at least in terms of the existing level of services remaining within the zone. If any losses are to be incurred, then they're to be provincial, I assume.

HON. MR. McCLELLAND: Mr. Chairman, it's not our intent, nor would we want to see municipal losses as a result of having a special enterprise zone in their municipality. Many of the things we've already done in terms of changing the level of taxation.... For instance, in the budget on the 14th we were very careful to make sure that built into the budget was a repayment to the municipalities for the loss of those tax revenues. It's not our intent to have municipalities lose; rather, it's our intent to have everyone in the province gain by this.

Section 15 as amended approved.

On section 16.

MR. WILLIAMS: Again, Mr. Chairman, Vancouver's city manager, in his report submitted to council last week, said this: "There is no doubt that the powers in this act are very broad and many of those powers are delegated to the zone administrator. One section of the bill gives the zone administrator really quite dictatorial powers." That's the view of the top administrator in the city of Vancouver in terms of the powers you're taking, the powers you're usurping and putting in the hands of one of your appointed bureaucrats. That's not very reassuring for the general public.

Sections 16 to 28 inclusive approved.

On section 29.

HON. MR. McCLELLAND: Mr. Chairman, I move the amendment standing in my name on the order paper. [See appendix.]

Amendment approved.

Section 29 as amended approved.

Section 30 approved.

Title approved.

HON. MR. McCLELLAND: Mr. Chairman, I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 49, Special Enterprise Zone and Tax Relief Act, reported complete with amendment.

MR. SPEAKER: When shall the bill be read a third time?

HON. MR. McCLELLAND: With leave now, Mr. Speaker.

Leave granted.

Bill 49, Special Enterprise Zone and Tax Relief Act, read a third time and passed.

[4:00]

HON. MR. GARDOM: Second reading of Bill PR405, Mr. Speaker.

VANCOUVER STOCK EXCHANGE
AMENDMENT ACT, 1985

MR. REE: There is little I can add to what I indicated to the House at the introduction of the bill and also what was discussed in private bills committee. I think it is a good amending bill to the original Vancouver Stock Exchange Act. It clearly sets out that the exchange is a non-profit organization, which will assist them, certainly, with the federal income tax people. This bill will facilitate the holding of meetings within the exchange, clarify the authority of delegation of power and I think broaden the composition of directors of the exchange.

MR. COCKE: The opposition has no objection to this bill.

MR. REE: I move second reading of Bill 405.

Motion approved.

MR. REE: With leave, Mr. Speaker, I move that the bill be referred to a Committee of the Whole House forthwith.

Leave granted.

Bill PR405, Vancouver Stock Exchange Amendment Act, 1985, read a second time and referred to a Committee of the Whole House for consideration forthwith.

VANCOUVER STOCK EXCHANGE
AMENDMENT ACT, 1985

The House in committee on Bill PR405; Mr. Strachan in the chair.

Sections 1 to 3 inclusive approved.

[ Page 6827 ]

On section 4.

MR. REE: Mr. Chairman, I move the amendment standing under my name on the order paper. [See appendix.]

Amendment approved.

Section 4 as amended approved.

Section 5 approved.

Title approved.

MR. REE: Mr. Chairman, I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill PR405, Vancouver Stock Exchange Amendment Act, 1985, reported complete with amendment.

MR. SPEAKER: When shall the bill be read a third time?

HON. MR. WATERLAND: With leave of the House now, Mr. Speaker.

Leave not granted.

DEPUTY SPEAKER: When shall the bill be considered as reported?

HON. MR. WATERLAND: At the next sitting of the House after today, Mr. Speaker.

I call Committee of Supply, Mr. Speaker.

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

ESTIMATES: MINISTRY OF
INTERNATIONAL TRADE AND INVESTMENT
(continued)

On vote 49: minister's office, $143,191.

MR. COCKE: Mr. Chairman, the new minister, a sort of worn-out, tired old minister but in a new office...

MR. CHAIRMAN: Order!

MR. COCKE: ...has been given a different obligation by this new post. However, he's been doing the job for the last number of years. I would hope that under the present circumstances he would be more successful than he has been over the last several years. He's been travelling the world from one end to the other. He probably spends more time in Tokyo than many of the nationals. I haven't seen too much come to British Columbia as a result of the fact that he's been doing that work. So, Mr. Chairman, if he has something to tell us with respect to just what he has been doing and what he plans to do, we'd all be interested in hearing. Having said that, and seeing that none of my colleagues seem to be terribly interested in this vote 49, I'm certainly not going to carry it very much longer.

HON. MR. PHILLIPS: In response to that devastating attack by the member for New Westminster, I'd like to reiterate, as I have done in the past, that trade in the Pacific Rim countries in the last ten years has gone up enormously. Investment in British Columbia is evident in many areas from Pacific Rim countries, e.g. Korea, which made the first offshore investment in any mine anywhere when they invested in the Greenhills mine. Trade with China has gone up dramatically in the last ten years. Our trade with the ASEAN countries has increased. Trade with Japan has more than doubled. If the acceptance that we received on this last trip to Japan and Korea is any evidence, it will be going up dramatically in the very near future again.

MR. WILLIAMS: I wasn't reassured earlier this afternoon when I got the response that it was really a job of selling. That's clearly the way this minister and the other minister see this operation in British Columbia. It's not a matter of in-depth research; it's not a matter of intensive work at home; it's simply a matter of selling. I can understand this minister's having that kind of faith in selling, just as a salesman. But this is not an automobile lot in Dawson Creek: this is all of British Columbia, and this is the international world — very sophisticated. It isn't just a matter of selling. I can understand why the minister feels good about that, because he is one dandy salesman; there's no doubt about that. He can sell a lemon when nobody can sell a lemon. Some ability — no doubt about that. But is that what we really want? Do we want lemons being sold? No, I don't think we do.

When you think about it, he sold northeast coal, and that's still a slightly sour lemon. But he sold it to all these people. He sold the northeast coal project to the Japanese; he sold it to the federal government; he sold it to the province of British Columbia, his colleagues; he sold it the companies; and he sold it to the banks. That's some selling; there's no doubt about that. But in terms of the benefits, that still remains to be seen.

The attitude of just wanting to cut a deal, the attitude of saying, "Let's do business — any deal" — behind that is a real fear. It's okay to think in those terms, in terms of smaller scale commodities, and when it is a private business on your own, and when a whole provincial economy isn't tied to its tail. But when you're selling, and you just want to cut a deal, we've got a whole provincial economy that's tied to it.

There's another underlying assumption, I think, in everything that this minister does, and that's an assumption that all foreign money is a good thing: any new money, no matter what, or any foreign money, no matter what, is a good thing. That's just a given in the perception there. I don't think that's quite good enough.

[Mr. Ree in the chair.]

I wonder if the minister, after all his trips to Japan, has ever sort of pulled back and said: "How do the Japanese feel about all this? How do they feel about foreign money in their economy? Do they make some judgments about what's good, what's bad and what's indifferent?" You bet your life they do. They have tariffs and protections and quotas, and the big five traders make judgment about what they'll buy from abroad

[ Page 6828 ]

and what they won't buy from abroad. They make those kinds of decisions all over the place in Japan. It's a very tightly run economy indeed. They make some decisions about what's best for them, and it isn't a matter of all foreign money being a good thing at all in Japan.

This is clearly one of the great success stories in terms of modem economies, but that doesn't seem to click in terms of the operations of this minister. They have a Ministry of International Trade and Investment that makes this look like the peanut stand it is. It's a total economic unit that is looking at every sector of their national economy and is working with the banks and the major industries. It is determining strategy, licences, quotas and authorities across the line throughout their national economy. It's a very different cat indeed. It's not just some kind of salesman agency with a big bill for travel expenses and a big bill for consulting fees. They have in-house knowledge and in-house authority in terms of dealing with their own economy, and that's not what we've got here at all.

When one sees what's happening in this provincial economy, you keep asking yourself: "Who is running this ship?" You look down those empty benches over there, and it's a ship of fools and there's no captain on board.

SOME HON. MEMBERS: Order!

MR. WILLIAMS: It's right, you know. There's nobody. Who's running this economic operation in British Columbia? The answer is: there's nobody home. You don't pay deputies enough, anyway. In terms of what the heck you're going to get, in terms of those slots, in terms of the ministerial functions, in terms of competing with the kinds of international people you have to deal with and compete with, there's no way in the world, with your budget and your capacity in this department, of really doing something. I just shudder at the thought of how vulnerable we are in macro-economic planning in British Columbia. It just isn't there.

Occasionally there's an exercise in crisis management, and that's what we're getting today, with the Premier flying off to Washington, D.C. I've been to Washington, D.C., and I've met with some of their legislators and some of their cabinet people in the past. I'll tell you that the lowliest economic or executive assistant in Washington, D.C., is going to be able to beat the pants off most of our administrators here in British Columbia, I'm sorry to say. The thought of doing that whole route in Washington and Japan just scares the pants off me in terms of our being able to stand up to that kind of tough competition and scrutiny that one gets abroad.

What about real targeting and the kind of backup research and staff work? I don't think it's there. I listened to your speech on Friday, and I actually made very careful notes. I didn't get the picture that there was that kind of precise honing in, targeting and understanding what we were really looking for. It was more like what the Premier said when he went with you on that trip a couple of weeks ago. He said: "Well, no, we didn't do that much homework. But I've got a nose for it. I'm an old-time businessman, and I've just got a nose for these opportunities." I'll tell you, his nose is starting to look like Joe Louis's in terms of the provincial economy of British Columbia. That kind of old-time attitude isn't the way we're going to have to move on in building this provincial economy. We should ask ourselves specifically what we want out of foreign capital, and I don't think we're doing that.

We're really saying that we'll take anything and everything that comes, and I don't think that's a very sensitive or sensible approach.

[4:15]

The Japanese have made it very clear that that's not their approach in terms of what they want to do in Japan. Without any question there are lessons to be learned from the Japanese, but there's no evidence whatsoever that we're learning any lessons from them in terms of the benefits we might get from our own provincial economy.

We should look at what Sweden has done. It's a very successful economy that has been very careful about who they let own their means of production, who they let own the land of Sweden and who they let own the resources of Sweden. They've been very careful indeed since about 1916. It seems to me that we, with this tree-based economy in British Columbia and a landscape similar to the Nordic countries, might well look to these countries as models of achievement, because their economic achievements are great compared to our own. Think about the rules they've set in terms of establishing their own modern economies in the Nordic countries. We never get that happening. This minister isn't going to Sweden to learn the details on how they manage their economy. He's busy doing his salesman job, mainly in the Pacific Rim.

I have some serious doubts about some kinds of foreign capital. I think they're reasonable doubts. I have trouble figuring out the benefit to British Columbia of foreigners coming in and buying downtown Vancouver. What are the real benefits in terms of new productivity, new enterprise and all that sort of thing when offshore people come and buy up the land of downtown Vancouver? I don't know what those benefits are. We're busy building an ALRT line costing $1 billion that's going to increase the value of land in downtown Vancouver. That's why foreigners are buying land in downtown Vancouver. They know we're going to be foolish enough — or whatever you want — to continue.... We're going to spend a lot of money around downtown Vancouver. We've got B.C. Place, ALRT, Expo and all the rest of it, and there are surplus benefits to be picked up. That's why they're going to downtown Vancouver. What do we get out of it? I don't know what we get out of it. I know why they're there: they're there for the surplus. Somebody has sold....

But there you are. In terms of our urban land and our valuable agricultural and forest land, I don't see any great economic benefit in foreigners coming in, taking over and getting control. They're there for the rent collection opportunities. They're there for the unearned increment. They're there for the capital gains being produced for the future. Many of them have reaped those surpluses and capital gains already. I don't see that as a positive or productive aspect in terms of genuine production in the economy, which is what should interest us all the most — job creation and new entrepreneurial effort. I think people from outside can help us greatly with genuinely new entrepreneurial effort. But that's not what we're getting when they buy a chunk of real estate in downtown Vancouver. They're just there for the free ride, with our pumping more money into the downtown economy and the infrastructure that we continue to spend money on.

We should spell out what we're looking for and then focus — set some rules about where we want foreign money and foreign capital going. I think that makes sense. Then we get the benefit of new technology, entrepreneurial capabilities and the like. That's what we should be looking to foreign

[ Page 6829 ]

capital for, I would suggest, not those who just want to be there for a free ride in downtown Vancouver — I don't think that's the way to go.

I can remember an example of a foreign takeover proposal from when I was responsible for the Ministry of Forests many years ago. The Marubeni Corp., one of the big five traders from Japan, had looked at a sawmilling operation in Clearwater, up the North Thompson River from Kamloops. It was the Swanson Lumber Co., which had been operating for some time in Clearwater. They had a tree-farm licence, a significant land area in terms of public resources, near Clearwater. The Forest Service was asked for a report by the minister: "Dear Forest Service, what do you think of this proposal? Marubeni wants to take over the Swanson operations and the tree-farm licence." A memo came back from the Forest Service: "We think it's okay. Yours truly...."

Well, the minister called them and said: "Why do you think it's okay?" They said: "Well, we think it's okay because it's foreign capital." Ten million dollars was going to be paid for the company and tree-farm licence assets that Marubeni wanted. I said: "Will you check out where the $10 million is coming from?" They went back and checked it out. Do you know where the $10 million came from? I'm sure you might be able to tell us. Where do you think? Half of it came from the chartered banks. Our banks in British Columbia were going to pay for the upfront money for taking over the Swanson brothers' operation in Clearwater, the main industry in that part of British Columbia. Five million dollars was going to come from our savings in the chartered banks, and $5 million was going to come from the Swansons themselves, who were going to carry on secondary financing. So the $10 million from the Marubeni Corp. to take over our land — that is, the tree-farm licence — and the mill in Clearwater was coming from us, from Canadians.

Do you think the Japanese would entertain such a stupid idea for one minute? Do you think that any advanced economy in the modern world would be so stupid as to let its own savings be applied to the takeover of industry in its own sovereignty? What kind of sense does it make? What kind of benefits are there in that? The Forest Service staff had to reflect on this and conclude: "Yeah, that's right. There aren't the benefits. It's our savings being applied to a takeover by a foreign company. It's not bringing any new technology. The milling industry in Japan is not an advanced industry."

That's a classic example of foreign money not really benefiting the people of British Columbia. Yet the underlying assumption in terms of everything you do is that it's good — that it's good no matter what it does or where it goes. That doesn't make any sense to me at all.

I'd like to continue on, Mr. Chairman. Maybe one of my colleagues has something important to say as well.

HON. MR. PHILLIPS: Well, Mr. Chairman, that was an interesting dissertation by the member for Vancouver East, as usual talking airy-fairy theory and comparing that great country of Japan with the economy of British Columbia, when there is absolutely no comparison whatsoever.

AN HON. MEMBER: Hallelujah!

HON. MR. PHILLIPS: Hallelujah! In Japan you have a closed economy, a very closely-knit economy. And it's hardly fair, with respect, to compare a provincial jurisdiction with a country. Why don't you start comparing the policies of the Canadian government in Ottawa with that of the Japanese government? Why don't you do your comparisons on an equal basis, so you can talk about apples and apples and oranges and oranges? Indeed, when you start talking about research and what ability we have, that research, I think, and that ability is fairly well set up under the Ministry of Industry and Small Business. We've been doing a lot of research. I have to agree with the member that not all investment is good investment. That is part of the process.

With regard to the type of investment we want, and where we can sell our products, we will be doing a lot more reconnaissance missions, going out and finding out what is available and where we can take our small business, our entrepreneurs and put them in touch with the markets. That's part and parcel of our responsibility. With regard to investment, we will be seeking out those areas where there is investment money available, for what type of investment money will come.

To stand here in the Legislature, though, Mr. Chairman, and start talking about real estate investment in downtown Vancouver as pertains to this ministry is hardly getting down to the nuts and bolts of this ministry. If you want Canada or downtown Vancouver to enact legislation that prevents static investment of real estate by Hong Kong investment, that's not up to me. That's a different situation. But just remember, you can go to downtown Minneapolis, and some of the largest buildings in the centre of Minneapolis are owned by Canadians. Ask me why they went to Minneapolis. Why can you go to California, Washington and Oregon and find Canadian real estate companies have invested and done very well? I don't know. Why is there free flow of money between nations and between peoples? That's hardly getting down to the nuts and bolts of this administration.

MR. WILLIAMS: I was expecting a little more hellfire and brimstone, but there you are. We all get older.

Is the minister saying that if the city of Vancouver decides that it really isn't in the city's benefit to have absentee foreign ownership in downtown Vancouver, the government will entertain legislation for the city to limit this?

HON. MR. PHILLIPS: No. What I'm saying is you've got to talk about a national policy on whether we're going to have investment. I suppose you could say maybe you didn't want the Grosvenor people to invest in....  What island is it?

AN HON. MEMBER: Annacis Island.

HON. MR. PHILLIPS: In Annacis Island. Maybe you didn t want the Grosvenor people to build a downtown building. I don't know. You're talking about an entirely major change in our attitude towards static investment. I think it has to be looked on in terms of Canadian context. You're not going to discriminate in downtown Vancouver. Are you going to discriminate in downtown Toronto? Are you going to discriminate in downtown...? My heavens, when you really boil it down, Canada needs development money, because it certainly isn't going to come from eastern Canada. A lot of their investment will flow north and south, as it typically has. If you're going to talk about the curtailment and the flow of capital and about static investment, that's a major problem and certainly one that we should use in a different form rather than in this ministry's estimates, because you're talking about a national scene.

[ Page 6830 ]

MR. WILLIAMS: Well, the ministry has this grandiose title, Mr. Chairman: Ministry of International Trade and Investment. That's pretty grand. I think that covers international investment in British Columbia. A lot of that investment is in sterile real estate; it's not productive enterprise. That's the issue. We don't gain from sterile investments; we gain from productive investments in productive enterprises that are turning out products, not capitalizing on real estate gains in the city of Vancouver or elsewhere. Much of the foreign capital that's coming into British Columbia is geared to just that. You may very well mention the Guinness interests. It's true they developed Annacis Island, and at an early stage. But they also developed highrise sites like the Marine building and the Oceanic Plaza and other buildings on West Pender and Hastings in Vancouver, and they're flogging them right now. They sold them for $70 million, and they probably cost them $30 million. That's a $40 million capital gain in a relatively short period of time in terms of the new buildings, just being flogged. That's automatically impinging on our balance of payments, and they're running off with the money in terms of using it elsewhere, abroad. Those are surpluses. Those are surpluses generated in British Columbia that could be put to work for British Columbians. That's the whole point of what I am trying to get across to this minister: that these kinds of surpluses are best used reinvested in British Columbia, that a community needs those surpluses in terms of embarking on its own programs and advantages for itself.

So I gave the example of Clearwater and the Swanson Lumber Co. There it was: it was going to be $10 million of foreign capital, it appeared on the surface, but it wasn't. It wasn't new capital at all. It was using Canadian savings here in Canada to fund the whole transfer. Then what would happen? The surpluses from Clearwater timber would go to the Marubeni Corp. in Japan.

Now it's complicated by the fact that these foreign companies can end up playing internal pricing games. When I checked some of them out again a decade ago, I found that they played internal pricing transfer games and made sure that they had no profit in British Columbia. We had pulp operations in Mackenzie and elsewhere, owned primarily by the Japanese, who were rigging prices in terms of what they were selling their product for, in order to avoid paying corporation income tax and taxes in British Columbia, so that there would be an even bigger profit abroad in Japan internally, picked up by the parent company.

Those kinds of games go on in terms of international companies, and they need to be policed and reckoned with in terms of any kind of program wanting foreign capital in British Columbia. But I doubt if the minister has ever thought of that kind of question in terms of internal price transfer arrangements in terms of these large companies. They're doing it every day. So I have this uneasy feeling about rubes running the show in British Columbia, and the swiftest people in the administrations abroad dealing with them, and that's kind of disturbing.

[4:30]

[Mr. Strachan in the chair.]

The surpluses really can.... Are they the means of renewing the provincial economy? These surpluses that foreign companies can pick up in British Columbia are surpluses that should be reapplied in British Columbia. Never, ever do we hear from this minister on that side of the equation. When people put money in British Columbia, they want to take it out as well. That's reasonable and that's understandable, but how much do they take out and how much might have remained in British Columbia had we had different policies? That's never reflected on by this minister. I've never heard him give comments about that.

The greater challenge by far, here in British Columbia and in western Canada, is mobilizing our own capital, our own savings. Does the minister know how much of Canadian banks' assets are already abroad? Any number? Canadian chartered banks, who could be funding much of the rebuilding of western....

Interjection.

MR. WILLIAMS: "What do you think — I should know something about this subject?" says the minister. You should. Forty percent of the banks' assets in this country are abroad — 40 percent.

Interjection.

MR. CHAIRMAN: Order, please. I'll ask the minister not to interject, and perhaps the member can address the Chair.

MR. WILLIAMS: I'll tell you, in terms of Vancouver City Savings, we've changed the rules: they end up putting the depositor's money back into the economy of the lower mainland. That's where they get their money. I'd like to see that apply generally across Canada, and that 40 percent of assets....

Interjections.

MR. CHAIRMAN: Just a moment, please. I'll again ask the minister not to interrupt and ask the second member for Vancouver East to address the Chair and also the vote.

MR. WILLIAMS: International investment, yes. The opportunities in terms of Canadian investment are great, and while international investment has its place, and we have a need for it, there are these tremendous opportunities internally. If the banks have 40 percent of their assets out of the country, between the banks and the pension funds, we have a tremendous opportunity in terms of building our economy with internal funds without the problems of exchange rates, without the problems of deficits.

You know, that's really the bigger challenge. All it requires is a taxi ride, in terms of dealing with some of these people, and it's not a 747 that I am talking about. The minister is used to having that as a taxi. What we really need is simple homework. It's a phrase that school kids know — homework, work at home — and that's what we need first in terms of rebuilding the provincial economy.

You know, the forest industry desperately needs retooling and rebuilding. We're now a generation behind the Scandinavians. We haven't caught up at all. There is a great need for capital to be applied in this industry in terms of value added and the rest. That's homework; that's work to be done at home and work that should be pursued. I think it needs a lot more know-how than we've seen so far out of this minister and that ministry.

When I think about the major deal that he has cut in terms of his political career, northeast coal, a few shudders go

[ Page 6831 ]

through in terms of him extending his work for the people of British Columbia. It seems to me that the minister has never had a handle on how the Japanese perceive some of these contracts and arrangements. I remember the minister saying a year ago that he had a firm deal for northeast coal; it couldn't be changed. The contract was this high; no changes in volume, no changes in price. Got a firm contract; going to stick by the contract; can't change the contract. But what happened? The thing got cut in terms of volume and price.

Well, that's the situation. The minister had trouble even figuring out what 10 percent was, if I remember correctly, and thought we were only losing a few cents per tonne of coal because of the impact on royalties, when we were losing a few dollars. And volumes? They've all been impacted. The Japanese have made sure, in dealing with their major commodity needs, that they always have an oversupply of product so that they can play off one competitor against the other. This minister has willingly entered that game in terms of spending a bundle of money — $3 billion in northeast coal, $700 million of provincial money — and has assured them that their oversupply game can be played well into the future indeed. It has impacted the southeast coal problem and area; they've had price cuts and volume cuts as a result of this minister's activities in the northeast.

But I'm even more worried by the attitude that's there in terms of the Japanese. I went through a speech given on May 27 of this year — just last month — by Takashi Imai, managing director of the Nippon Steel Corporation, to the Canada-Japan businessmen's conference in Calgary. He points out that indeed there is an oversupply of coal in terms of demand and need, and there have been adjustments in price and volume, even though the minister was blandly saying as recently as seven months ago, or something like that — last fall — that there would be no changes with respect to price or volume. But Mr. Imai said, in his speech in Calgary, that there is a very big problem: "Canadian new-project coals are much more expensive than traditional coals and new-project coal even in the United States and Australia. A very big problem." Then he outlines the very big problem. "It is a very heavy burden on us," says the businessman from Japan, as if it weren't a burden on the people of British Columbia, who threw $700 million plus into the pot. Then the head of Nippon Steel starts waving his stick in our direction and says: "Even new-project coals cannot be traded forever at the price level far above the market." What does that mean?

So watch out in the future, Mr. Minister who cut a deal with the Japanese, saying it was never going to be changed; it was always going to be a high price, a high volume. You said it was a firm contract. It's anything but. The payback for B.C. was based on ever-improving vistas and scenarios in terms of prices increasing. Well, you can forget that one in terms of what Nippon Steel is saying today.

Mr. Imai carries on on the question of price. What does he say? "The base price must be reviewed..." So much for that contract. And how should it be reviewed? "...so that price is adjusted to an equitable level with traditional coals." Traditional coals. Not new-project coal in Australia, not new-project coal in the United States, not new-project coal in British Columbia, but traditional coal; cheap coal available a decade ago around the world. That's what he's talking about. He wants us in British Columbia, who built what the Premier called "this great new transportation system," going from nowhere to nowhere to Tumbler Ridge, to start accepting a price equal to traditional coal prices around the world where there aren't the costs of infrastructure that we have here in British Columbia.

That's pretty disturbing stuff. What does it mean in terms of dollars? Well, current traditional coal prices are around $69 a tonne. What we're getting now, after the last cutback, is around $90 a tonne for northeast coal. What are the volumes up there? They're something like 7.3 million tonnes annually between the two operations — or supposed to be. That's $140 million, isn't it, or something like that? That's the kind of cutback Mr. Imai was talking about in his speech in Calgary. He's saying: "What I'm going for, my friend Don, is $140 million in my pocket, and what are you going to do about it?" That's what he's saying. Boy, are we going to get fleeced! That's another $140 million reduction. What does that mean? That probably means a negative cash flow problem for those companies. That's not paying off the banks; that's biting into operating costs. Think of the kind of disaster we'll have on our hands if Nippon Steel has their way.

What else does he say? This is Mr. Imai speaking in Calgary a month ago. He said: "The imbalance" — that was on price; now he wants to talk about volume — "in intake tonnage between traditional and new project coals must be rectified by gradually reducing the preferential treatment in the intake of new project coal." What does he mean by "gradually"? He's cutting back in terms of price; now he says he wants to cut back in terms of volume. He's leaving you out to dry. Mr. Imai says: "I think the present distinction between the new and the traditional coals must be thus removed within a few years." He wants to cut down the volumes; he wants to cut down the price by 20 bucks a tonne within a few years. What's that going to do to your project? What's that going to do to the corporations that have invested up there, Mr. Minister — who has wanted international money at any price?

HON. MR. PHILLIPS: Well, I expected some heavies from the other side, but it's the usual beating around the bush and talking about things, some that exist and some that don't. You're talking about investment in this province in various industries. You picked one particular aspect, where Marubeni was going to invest in Clearwater in a mill, and some Canadian banks, which you don't seem to have a great deal of respect for, were going to put up some money, and you talk about keeping the money at home. I want to remind you that that particular deal that you're talking about was a long time ago.

Interjection.

HON. MR. PHILLIPS: I'm talking about Clearwater. Don't get the deal confused. We're talking about Clearwater. Why didn't you talk about Crestbrook Forest Industries, who haven't taken any money out?

MR. WILLIAMS: They didn't put much in.

HON. MR. PHILLIPS: They're still putting it in. As a matter of fact, they're spending $20 million or $50 million — I think it's $20 million — this year modernizing their plant. Why don't you talk about some of the areas where investment brings stability, and where investment, my friend, brings an export market? Why don't you talk about that? I'll tell you, if you had had your way, and if the socialists down in Ottawa had had their way, we wouldn't have any investment, and we wouldn't have any markets. It's a two-way street.

[ Page 6832 ]

[Mr. Veitch in the chair.]

It's all very well and great for you to talk about what you've done with the Vancouver City Savings Credit Union. If you want to go to Ottawa and change the Bank Act so that Canadian banks can invest somewhere else, then maybe they should change the laws and keep other banks and all their money that's flowing into British Columbia — the international banking system in Vancouver that's flowing in. Maybe you'd change that same law.

You see, you pick a particular deal that fits your particular socialist philosophy, which is one that you feel you have to own to control. Well, thank God we don't have that society in British Columbia. We don't have it in Canada. It would be a lot different society than we have today, I'll tell you.

You forget that Canada is a trading nation, and that we rely more heavily on trade than any other of the developed nations in the world, save and except Germany. Japan, as you well know, only exports 14 percent of their gross product; the United States, about 10 percent; Canada, 28 percent; West Germany, 32 percent. When you talk of economics you try to set us out as an island unto ourselves, where we're not depending on the international market.

[4:45]

I have said, time and time again, that I wish Canada had a population of 120 million or 130 million people. Then we would have a marketplace here in Canada that we could manufacture and sell and generate the economy, like the States has done, like Europe has done, like Japan has done. We don't have that. We are dependent on external affairs. It's great to talk socialist philosophy, where you're going to set up Canada, or British Columbia, as an entity unto themselves. You can't do that, my friend. I don't like some of the things we have to do, but indeed you have to live with the reality.

You talk about foreign investment. I'll tell you, the Japanese steel industry has an investment in the northeast coal project. You like to pick on one particular company, Quintette. Why don't you talk about the Bullmoose project? If that project hadn't gone to British Columbia, you would have seen those jobs go to the United States, Australia or some other country. I guess that's what you really wanted.

You stand up over there and yack, yack, yack about jobs and unemployment, but you stand up and talk against every single project that we've had in this province. I don't know if you think you're going to have a magic wand, and all of a sudden there are going to be thousands of jobs. Where do you think the money is going to come from? Where do you think we're going to sell the products we produce? You can't isolate British Columbia; it's not an island unto itself. It is dependent on external factors and always will be, until we build up sufficient population that we can generate our own manufacturing and have our own common market. We haven't got that.

I want to tell you that we're diversifying, and we're diversifying a lot faster than you over there would like to give us credit for. You say we didn't do any planning. What do you think my friend Dr. Pat McGeer has been doing for the last few years, inviting in and building up high-technology industries? What do you think all our policies are about? Bringing investment here and diversifying our market. Why don't you open your eyes and find out what's going on? You talk about policies. My God, since the budget came down people have been beating a path to British Columbia. Announcements are being made; things are happening, my friend. Investment is coming, and it will come a lot faster and bring those markets and provide those jobs.

For your own political purposes it's great to stand up and make these speeches. I suppose you read them at your nominating meeting and say: "See how I told those guys over there."

MR. WILLIAMS: Sure, and I get renominated.

HON. MR. PHILLIPS: Well, you were out for quite a while. I won't talk about that right now — but maybe we should get you some investment in that hotel you're going to build up in Nanaimo....

MR. CHAIRMAN: Please address the Chair, hon. member.

HON. MR. PHILLIPS: ...you and Conrad Hilton. If you had had some investment in that it might have gone.

MR. WILLIAMS: Well, we didn't hear much in response to the speech of Mr. Imai of Nippon Steel. You didn't respond to that. A year ago you were pointing to the six inches of documents you had that were a firm contract for northeast coal. But listen to what we're hearing now. Mr. Imai is saying: "We're not happy with the volume. We're not happy with the price. We want those prices down to traditional coal levels. We want to move those prices down to the $69 a tonne that is the international price for traditional coals." That's down from the $90 that we're getting. We were figuring on something well over $90, and a growing price level to get our money back on the provincial investment in northeast coal.

Look at what the sharpies are doing to you. That means that things like the powerline that went into Tumbler Ridge, which was predicated on new prices going up, will never be paid for by the Japanese at all — never, never, never. That means that British Columbians will continue to pay more for power because of the bad deal that you cut. That's what follows. With rose-coloured glasses you anticipated everything being on the plus side. You anticipated volumes increasing and prices increasing. But listen to what the managing director of Nippon Steel was saying in Calgary less than a month ago.

He carries on. He says he has some complaints about freight rates too. We've thrown a bundle in on building a new town and a new rail line to Tumbler Ridge. We've thrown a bundle in on new power, the townsite, the new port, and on and on. Then he says he has concerns about the freight rates. Forget the fact that it's 600 miles to tidewater in British Columbia and only 200 miles to tidewater with the new projects in Australia, and that our rate per mile is better than in most parts of the world — that is, 30 cents a mile. It's among the lowest in the world. But what's the foreign trader saying? He's worried about it because it represents a quarter of the price in terms of getting the coal abroad. He said: "That's not competitive, and we want it to be competitive." They went into the deal knowing it was a 600-mile haul, but they're still saying they're not happy. Then he says: "After all, Queensland reduced." I think the minister was bragging about Queensland being the one bastion in Australia. Recently they reduced their freight rate by 10 percent, and that pleased the Japanese trader no end. And, he notes, United States rates have been frozen since 1982. He likes that and

[ Page 6833 ]

says that's the kind of competition we face. He's essentially saying that that's the kind of competition we'd better meet, despite the real haulage problems and distances that we have. So he's giving you the squeeze on price, he's giving you the squeeze on volume, and he's giving you the squeeze on freight rates. That's the game that you have entered into, and so far we're the big loser.

His final comment sums it all up in terms of the attitude of this particular investor. He says this: "We consider that only those suppliers who confront price and cost and overcome the situation can in fact be our real partner." What does that mean? That means that a contract doesn't mean anything. What this senior person in one of the biggest corporations over there is saying is that only when you meet international market conditions and traditional coal prices, conventional freight rates and all the rest — only then are you our real partner. Imagine that. That's what the contract is worth. Only then are you the real partner; so cut the volumes, cut the price and cut the freight rate, and then you've got a partner. Until then, you don't.

What kind of deal is that? What kind of minister would go into a deal like that, which leaves us threatened all the time in terms of getting a decent return back for what we put into this project ourselves? What kind of one-sided deal is that? We went into it knowing, and they went into it knowing, that it was a high-cost project, the highest-cost project in the world at the time. On that basis, there had to be a payback, and that meant a certain price and a certain volume.

Another one of our flyboys is back from China. Welcome back from China, Mr. Minister, another one of our flyboys who thinks solving our problems is elsewhere, outside of British Columbia.

MR. CHAIRMAN: Order, please. Address the Chair.

MR. WILLIAMS: To the Minister of Agriculture, welcome. I hope you sold a dollar's worth of goods while you were abroad.

HON. MR. SCHROEDER: I've been here all day.

MR. WILLIAMS: I'm sorry; you were back yesterday.

There it is. What's a contract worth on a $3 billion deal? It's a $3 billion deal, and we've got from the speech of the managing director of Nippon Steel that the contract is not worth very much at all; that the only real partner is the one that meets the lowest international price. I just think we've ended up spending a lot of money on a very expensive, education for this minister — a $3 billion project, and he's gone into it like a babe in the woods. We're getting skinned and we're going to continue to get skinned, because they've indicated their direction. It's right here. They came to good old Alberta to let us know about it.

It's not very reassuring. We're going to get squeezed in terms of price, volume and freight rates. The negative cash flow for British Columbia becomes a hemorrhage if they keep that game up. No wonder we're not meeting our school costs and we're closing down hospital wards this summer, acute beds across the province, because we don't have cash. We've put it into projects that don't pay. I don't know if we can afford to have this minister and other ministers flying the globe if they are going to come back with deals like this, because we simply can't afford them.

1 think the minister should comment on the speech by Mr. Imai of a month ago.

MR. CHAIRMAN: The Chair must caution that all hon. members participating in debate will address the Chair.

HON. MR. PHILLIPS: Again, that was another dissertation by the member for Vancouver East against a project which in the fullness of time and history will prove one of the greatest projects ever built anywhere in North America, put together at a time when the jobs were needed and the costs of construction were low — the only project that was going anywhere.

With regard to the contracts, the contracts are between the private sector and the private sector, and I haven't seen any diminishing in the tonnages being taken from the northeast. As a matter of fact, my understanding is that the Bullmoose project is selling 300,000 tonnes a year more.

You know, you like to tell one side of that story, but you fail to realize that never has a resource project been put together anywhere in the world where they've charged a surcharge on the freight line to pay for the freight line.

You like to talk about a $3 billion project, but you fail to talk about where that $3 billion came from. You forget to mention that private capital is responsible for about $1.7 billion of that: the Quintette mine itself, private sector money from Bullmoose, private sector from Canadian companies. The federal government, in building a new port and infrastructure — which will be needed; it couldn't be built at a better time.

If you think the world is going to fall apart, and that the steel industry is going to fall apart and things are going to stay the way they are forever, that's not the story you were telling a few years ago when you were saying that the world is short of energy, and indeed we should develop our energy sources so that we would be in a position to take advantage of them. I mean, you tell one story one time.... It depends on what suits you. The project will stand. Mr. Imai made a speech — yes, for public consumption. Mr. Imai knows, as well as I know and as well as the people know, that in the Quintette project there's an approximately $35-per-tonne cost built into debt repayment and interest charges. They knew that when they went into the project. I guess that if the banks want to get together and reduce the interest rate and reduce the repayments, indeed the cost of that coal could come down a lot and still maintain a profitable exercise. But it's up to the private sector to do those negotiations.

[5:00]

MR. WILLIAMS: He washes his hands of it now. It's like Lady MacBeth. He has been beating the drum for northeast coal for years and years, right until this spring when it was clear they're running into troubles and when it was clear the Japanese were starting to change their tune and start their squeeze play with respect to price, volume and freight rates. All of a sudden it's the private sector. "I'm clean. It's not me. It's their problem." It's everybody's problem. If you embark on a $3 billion project in British Columbia and you've got over a third of it in provincial and federal money, it's everybody's problem. We're in for a squeeze play.

There's an inherent problem in terms of bigness — wanting to go for the megaproject. There's too much at risk all of the time. It means that we overextend ourselves in terms of talent and capability, and Lord knows we've done it in terms

[ Page 6834 ]

of this ministry and this minister. We shouldn't put so much at risk all of the time in what we're doing. We should be looking at smaller-scale solutions and smaller-scale opportunities within the province. We spread the risk that way.

Interjection.

MR. WILLIAMS: No, no. The tradition is the big number, the big headline, the big megaproject. Everything you guys have done over the last decade has been bigness and carrying with it the risk of bigness in terms of major failure. You set us up for a kind of third-world scenario in terms of indebtedness and projects that aren't paying for themselves. That's exactly the kind of vice we got into in British Columbia. It's a third-world scenario. You're trying to make us Argentina North in terms of indebtedness and projects that aren't paying for themselves. That's what this project of yours represents — a third-world kind of approach, when what we really needed was a diversified approach across the board in terms of smaller businesses and smaller-scale proposals in countless regions.

I don't know if you knew that when you inherited that ministry in 1975 they only had plans for the northeastern part of British Columbia. None of the rest of the province did they have authority to plan for. None. I don't think you did know that. So when you arrived and you were the man from the northeast, you said: "Where are the projects? What's new? What's in the drawer? What's on the drawing board?" Only one of the four drawers had any plans in it. It was for the northeast. You waded into the coal project. You spent a decade on this baby, and three-quarters of the province was ignored. That old department of yours was not authorized to carry out projects in the other three-quarters of British Columbia. And you walked right into that one. You were the MLA for the area, so why should you argue? If it's in the northeast, it's got to be good. So a $3 billion project was pursued for a decade by a salesman peddling this project around the world. The local MLA from the local area pushing the one project from the one — of four — drawer. You didn't try to find out what the information was elsewhere. You didn't check out the work in the southeast. That was done by other people in other departments. We've all had to carry that one. We've all had to carry a decade's work. The main project of this administration for the last decade has been northeast coal, and now you leave us more vulnerable than ever to the kinds of pressure that Nippon Steel is indicating they intend to apply in terms of pushing the price down and dealing with freight rates and all the rest. It's not very reassuring. One would have thought, even a decade ago, that you might have checked out the limitations and capabilities of your own bureaucracy. But that wasn't done. So we've embarked for a decade on a project that was not well thought out initially and which wasn't balanced against the opportunities of the other three-quarters of British Columbia, where there are far more opportunities for far better investments with far greater rates of return. That's never done. It's not looking at the whole horizon in terms of macroeconomic planning, and looking at the opportunities across the province and the returns across the province. You embarked on this one because it was the only project you had in the drawer, and it happened to benefit your riding. Not good enough.

HON. MR. PHILLIPS: Again, the member doesn't know what he's talking about, and he's living in a fairy world, because the first thing we did in the ministry was to complete the studies in the other regions of the province so that we would have available the opportunities. Then the member conveniently overlooks all of the economic development and the literally hundreds and hundreds and hundreds of small projects that were carried out in every region in this province. Now if the member wishes to debate the Ministry of Industry and Small Business Development and the past history of that ministry, I would be quite happy to go to my office and get the record, because the record will show that there has never been a jurisdiction or a government that has done as much to promote small entrepreneurial businesses as has happened in this province in the last ten years.

I want to tell you, one area alone.... We didn't put the mountains there, and we didn't put the snow there, and we didn't put the weather there, but I'll tell you, we developed a ski industry that is the envy of every jurisdiction in the world, including Austria. We did it; we put the programs together. It's happening now. When you left office, instead of having a few months of tourism where you used to tell the tourists to go home, we put the package together. The private sector, with a little seed money from the government, has invested hundreds of millions of dollars in the ski industry.

Who do you think developed Duke Point? You sat on Duke Point for years. Because of your socialist philosophy you wouldn't allow the development. Because you wanted to own the foreshore, you wouldn't give a lease on it. You didn't own the backlands, and you didn't have the ability to negotiate with MacMillan Bloedel so that Duke Point could go ahead. You couldn't do it. We did it. We did it, and we bought the land from MacMillan Bloedel. They didn't want to sell it, but we negotiated with them. There you have a development....

Interjection.

HON. MR. PHILLIPS: Yes, but if you don't have the infrastructure and you don't have the ports and you don't have the land and all of that, how are you going to have development?

When we took office, you had to wait three years to get anything through the bureaucracy that you built up because you wanted a bunch of bureaucrats to plan everything. You thought they were smarter than the people who were going to invest their own money. I'll tell you, it took us two years to tell the world that we still weren't the Chile of the north. We did all that, and I'll tell you, we don't have to take a second seat to anybody. Where do you think the Toyota plant came from? Where do you think the deal at Ocelot and Kitimat came from? Sure. Where do you think all the other developments all over the province — new mines, new processes....? Certainly, I'll tell you, it came from the policies of this government.

Now as I say, I do not want to get into debating the estimates of the ministry which I just left, but if the member wants to, I certainly have the facts and figures.

MR. CHAIRMAN: No, that would be improper.

HON. MR. PHILLIPS: We don't have to take second place to anybody in this country or to anybody anywhere else. We had to do it under some very difficult times, because they had left us a legacy saying that British Columbia was not interested in development, and that the big, black hordes of

[ Page 6835 ]

the NDP might be back at any time and your investment wouldn't be safe. We've overcome that now, thank heaven. People have faith in this government. They know we're going to be around for a while, and they like our policies. That's why investment is coming here, and that's why new projects are happening all the time.

MR. CHAIRMAN: The hon. the member for North Vancouver–Seymour on vote 49, Ministry of International Trade, the minister's responsibilities, please.

MR. DAVIS: Thank you, Mr. Chairman, for reminding us that this is the vote of the Minister of International Trade and Investment. I want to focus for a moment on broad policy and strike a warning note. We profess — and indeed many Canadians profess — to be for freer trade as opposed to protectionism; for the freer movement of capital as opposed to restrictions on the importation or indeed the export of capital; for free enterprise; for greater opportunities for the market to work in a free enterprise way. That is the general face we present to the world, and it's a face I think the Premier and the minister have been endeavouring to present abroad.

One problem I see, however, is that the legislation we're passing in this House currently is the opposite to freer trade, free enterprise, etc., and we're risking a lot. There is a rising protectionist sentiment, particularly in the United States, and if, for example, under new legislation dealing with critical industries, we in fact....

MR. CHAIRMAN: Order, please, hon. member — the minister's responsibility, the minister's office, vote 49. The Chair has been pretty lax in this debate, but I'll bring you back to vote 49.

MR. DAVIS: Well, if the Chair doesn't understand that critical industries are industries which engage in international trade....

MR. CHAIRMAN: Order, please. Take your seat. I must caution you that the Chair has been very lax in this regard. It's vote 49. No argument with the Chair will be permitted by any member of this House. The minister's office — please continue.

MR. DAVIS: Does the Chairman agree that we're discussing freer trade and protection?

MR. CHAIRMAN: The Chairman reminds you, vote 49. You understand.

MR. DAVIS: I can't see how one could discuss international trade without discussing either of those subjects.

MR. CHAIRMAN: You realize that legislation or the need for legislation is not permitted in estimates. The member knows that.

MR. DAVIS: I contend that any action by governments in this country — the Canadian government or the provincial governments — which are seen by governments of other countries to be protectionist will give rise to protectionist action in those countries, or at least we run the risk of same. Therefore I urge that we embark on particular decisions in this province and in Canada which are consistent with freer trade and free enterprise and the freer movement of capital. If I can quote from the latest issue of the London Economist relative to the climate in which international trade is taking place and looking ahead over the next 12 months.... I'm talking about the next few years, not the long term. The Economist of June 15, 1985, says the real worry is that the economic growth is slowing so fast, largely because it has been so lopsided.

"In 1983 and 1984 real gross world product increased about 7 percent. Half of that came either directly from the United States or from other countries' increased exports to the U.S. Now America is flagging. Over the past 12 months its GNP has grown by only about 2 percent, which is less than that of many countries around the world. Demand in America has grown faster than output, with imports rising to make up the difference. Although that has kept foreigners happy, a recent New York Times-CBS poll found that 70 percent of American voters favour import controls and think that international trade costs Americans jobs."

So if we do anything in this province or in Canada that is seen to be protectionist, we're giving the legislators in the United States, for example, an easy excuse for limiting our lumber exports, for limiting exports of other basic materials crucial to our provincial economy. I'm simply saying that we cannot be protectionist in our government purchasing policies, in respect to industries in difficulties, in respect to zones. If the group currently travelling from the northwest looking at our forest industries.... They're looking for excuses to limit imports of lumber from Canada and from British Columbia specifically. So please, Mr. Minister, when you're in the executive council, continue to insist that your colleagues in cabinet do not implement — given these new opportunities provided by the Legislature – protectionist policies which will bring down on our heads very serious consequences indeed.

[5:15]

HON. MR. PHILLIPS: Mr. Chairman, I listened with a great deal of interest to the member's caution, and I must say that we certainly are very much aware of the protectionist policy developing in the United States. That is why we've been working on two fronts. One is to establish freer trade with the United States under a general rule of freer trade, so that North America can become a common.... I won't say a common market in terms of the economic common market, but certainly a free trade area. That is one of the reasons that early in our mandate, some of the planning and discussions we had, which we don't get any credit for from the member for Vancouver East (Mr. Williams).... We decided to put a major thrust into the Pacific Rim, because we recognized that it was an area which would offer greater growth than the market in the United States. That's why we have put so much effort into it. That's why my colleague just came back from China. We've been working in that market, and we're making a lot of progress. Mr. Chairman, some of the things that could happen that are on the horizon with regard to international trade are very scary indeed. I recognize that we must tread very cautiously

[ Page 6836 ]

and must not appear to be doing anything to subsidize existing industries unfairly or indeed anything which would appear to be of a protectionist nature here in British Columbia. I appreciate the member's comments very much.

MR. WILLIAMS: It's very nice to say those things, but the hard-nosed people across the border and abroad look at what we do. And what do we do? The member for North Vancouver–Seymour (Mr. Davis) is saying that what we do is opposite to what we say. You can't get away with that, you know. You're dealing with hard-nosed people who are very aware.

I shudder at the Premier being down there. I don't know who he took with him. He didn't take you; that tells us something. You're the Minister of International Trade and Investment. I'd feel a little bit slighted. The biggest trade problem that we have faced in the history of this province is facing us now in terms of protectionism from the Americans, and who was left at home? The Minister of International Trade.

That tells us volumes in terms of what this ministry is supposed to be. It is our biggest problem, and your staff are either here or in Vancouver — wherever your office is these days. I wonder who he's got with him. Has he got Dr. Spector with him? Is that it? Is that all there is? Is that the only economic planner we have in British Columbia? It's the biggest problem we have, and you're not there.

The member for North Vancouver–Seymour is suggesting that we've been doing things that make us vulnerable in terms of the general agreement on tariffs and trade, and so on. We have another ministry that's hastening the day of reckoning as well in terms of repercussions in trade. You may give the nice speeches that mouth the idea of free trade, but all of your actions in recent times have in fact been in a discriminatory way in the opposite direction. So you say one thing and you do another, and you make us vulnerable in the process as a result of doing that.

That minister down in the corner is making us so vulnerable it makes me shudder.

MR. CHAIRMAN: Order, please. The responsibilities of this minister, hon. member. I must caution you for the final time.

MR. WILLIAMS: But you've all been left at home and that's good news. The Minister of International Trade says: "We did this and we did that — mines, and all this. Everything is wonderful. Everything is rosy in the garden. We developed Duke Point, and you couldn't...." What about Duke Point? I bet you couldn't even tell us how big it is and how much of it is presently occupied. Have you been there lately? Have you seen the big real estate signs saying how many of the sites were available? Empty industrial land in British Columbia. I bet you don't have an idea how much of it is empty. Only 10 percent of it is occupied. A decade's work on that one, and 10 percent of it is occupied. It's not even 10 percent; 12 hectares are occupied out of 140 hectares in the whole site. So that's your success story. You want to beat the drum? There it is.

You don't talk about northeast coal in response to what I said about Nippon Steel. You go waltzing off into the ski resorts: "We've got more ski resorts than we ever had before," blah, blah, blah. Do you want to talk about that one? You took a 2-by-4 to Whistler and thumped it, so it's a decade before it's ever going to operate properly because you didn't pursue completion of the project. So much for that one.

You want to talk about Ocelot as a great international investment? It's costing us millions per job, forgoing revenue in terms of rent and royalties for gas, throwing in tax concessions in Kitimat, sales tax, property tax and all the rest, and for ten jobs. For ten long-term jobs, you throw everything into the pot, and you're willing to do it across the board.

You say we take second place to nobody. You're absolutely right. In Canada's sweepstakes, you come out tenth. You've moved us into the economic basement. We're not second to anybody anymore, you're absolutely right; we come out last in terms of real solid economic performance. You talk to those things.

The member for North Vancouver–Seymour is right. You are putting us at risk by the actions you've taken, by the actions others have taken. It's nothing short of incredible that the Minister of International Trade should not be in Washington, D.C., this evening, because it's the biggest trade problem we have ever faced in the history of British Columbia in terms of potential negative impact.

There were legislators here last week from the northwestern states, and they said they didn't think we were taking it seriously enough. The legislators from northwest U.S. said: "We think it's serious." The member for North Vancouver–Seymour said they were looking for excuses in terms of providing more ammunition down there to deal with us. They wouldn't have had to look very far to find ammunition in terms of the legislation you've passed this year alone...

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

MR. WILLIAMS: ...and in terms of attitudes with respect to these questions.

So we're a vulnerable province at the moment. The Minister of Trade, who should be the most active person in this area, is sitting in his seat in the Legislature and not in Washington at all. Maybe the minister can tell us how many of his staff have been seconded in this particular operation today in Washington.

HON. MR. PHILLIPS: I would like to remind the member for Vancouver East that indeed on this side of the House we work as a team. All I can say is thank heavens that you're not the person going to Washington, because the biggest threat to international trade and the biggest threat to future investment in this province happens to be the member who just took his seat.

It's fine for him to stand up and chastise me on a personal basis, but I want to tell you it took us years to get rid of the image that you created about the Chile of the north. I tell you, we still have to go around the province and say: "That man from Vancouver East, I don't think he will ever be back. I don't think he'll be Premier. I don't think...." That is the biggest threat hanging over this province, and it happens to be the member who just took his seat. We're trying to create an attitude and a climate of stability in this province, and you're the biggest threat to that stability that this province has ever had, Mr. Member — and you know it. Everybody knows the influence that you have over the present leader. He's your protege. That's the very kind of attitude we're trying to get rid of in this province.

MR. CHAIRMAN: Back to your vote, hon. minister.

[ Page 6837 ]

HON. MR. PHILLIPS: I just wanted to remind the member that when it comes to.... We have a Premier who was not a social worker; we have a Premier who is interested in international trade, interested in investment, and who understands it. So we work as a team here. We don't need to send two people down, because the meetings are going to be one-on-one, if you want to know the truth of the matter. I'm quite happy that our Premier's down there. Yes, he has been briefed, and he knows the situation. I'm quite satisfied that he'll do as good a job as can be done. I say again, Mr. Chairman, thank heavens it isn't the member for Vancouver East who is down in Ottawa, because they'd laugh you right out of the capital — and you know it.

MR. HOWARD: Just a few thoughts, if I could express them, Mr. Chairman. Disregard all the huff, puff and noise that we've just heard of a very narrow-minded nature; but we've come to expect that from the minister. It's no surprise to us.

Interjection.

MR. HOWARD: I heard across the floor some reference to the mud line. The minister shouldn't denigrate his fellow cabinet ministers that way. It's not fair for him to do that.

MR. CHAIRMAN: Quite right. It's unfair to be not parliamentary. Back to the vote, hon. member.

MR. HOWARD: I'm trying desperately to do that, but I keep getting interrupted by the minister, who says nothing when he stands up — and less when he sits down — of any consequence on any motion. We're talking about international trade....

Interjection.

MR. CHAIRMAN: The minister will come to order, please.

MR. HOWARD: Thank you, Mr. Chairman, for defending me, for protecting me from the onslaught of that member from Peace River.

We're talking about protectionism as something of great moment in world affairs, economic affairs and trade matters. It's something that I don't think the minister or the government recognizes. The area that we have to worry about in terms of protectionist sentiment is naturally the United States. We have to worry about it because they are our largest trading partner. We have to worry about it because of our proximity to them. We have to worry about it because of their relative size economically to that of Canada. We have to worry about it because a great portion of industry in Canada is owned in the United States. We have to worry about it, give cognizance to it and pay recognition to it, because whatever moves that the United States makes in trade matters dramatically affect Canada and British Columbia. I don't think the minister or his ministry perceives that that's a serious question facing us. Everybody else in the western world seems to think so, but I don't think this ministry does. Right at the moment the United States is not only talking at the political level in Congress about restrictions on the importation of goods into that country, but they are also talking about embarking upon bilateral trade, particularly with Japan. That's the U.S.'s greatest concern at the moment.

[5:30]

The U.S. is running a deficit somewhere in the neighbourhood of $40 billion a year in their trading relationship with Japan — four times the annual budget of the entire province of British Columbia. With a $40 million deficit in trade with one country called Japan, with being impacted by the importation of finished products in electronics, automobiles, cameras and a variety of other similar items, the United States is going to move to protect itself, not to protect Canada. At the very moment we're meeting in this chamber, the United States is talking with Japan about a bilateral trade with respect to the 15 percent tariff on plywood, not to serve Canada but to serve the interests of the United States. They want to have greater access to the plywood market in Japan. That's what they want to seek to work out with Japan. If they do that, it will be to Canada's disadvantage, because the 15 percent tariff will still apply to Canada, same as the 10 percent tariff on white wood applies to Canada. B.C. suffers as a result of that. There we have a minister whom I haven't heard express one word about that threat as yet — not one word about it.

I follow along with what the member for Vancouver East said, that we should be making our voices heard in Washington. That's where the decision is going to be made with respect to what this bilateral trade arrangement with the United States and Japan is. That's where the decision is going to be made, there in Tokyo. We're silent about the whole thing, ignoring it completely, shortchanging ourselves.

[Mr. Ree in the chair.]

The other concern that I have — and I have to express this concern given the history of this government with respect to trade matters — is that I am very much afraid that the primary influence of this government with respect to trade will be to continue the process of selling the raw materials or the raw resources and buying back the finished product. As long as we continue on that course, we're shortchanging ourselves. We're injuring ourselves, and future generations will suffer and pay the price, just the same as this current generation is paying the price for the short-sightedness of this government a few years ago when it said that the economy of British Columbia rested upon the question of supplying the raw materials to the processors and producers of the world so that we could buy back the finished product. Always when we do that we are in a trade deficit position. We are always mortgaging the future by that process. We are always seeking to sell greater and greater amounts of raw material in order to make up the balance, and we're unable to do it.

I'll give you one example, one little example I got today from the Provincial Secretary. I'll give you an example of what this government believes, in terms of producing things in this province. Here I've got an Expo 86 pin. I think the minister is wearing one. The Expo 86 pin came from the Provincial Secretary's office for distribution to school children and the like in this province. It's in a package that says Made In Taiwan. My God, can't we produce anything in this province for our own consumption? Do we always have to look to other countries to provide us with a finished product? That's an example, small that it might be, of the inability of this government or this minister to pay any attention or any

[ Page 6838 ]

heed whatever to the large question of our trade relationships with other countries.

I know the minister can drag out statistics to say we produce automobile wheels in Delta, and that we export those, they go to Japan, they put them on cars, and they send them back again — that we have those kinds of productions here. Yes, we do, but the amount that we produce and manufacture in this province out of the resources that we have here is insignificant compared with the amount that we export and/or give away at fire-sale prices. The longer this government stays in office with that kind of narrow-mindedness and blindness to realities in the international market, the more difficult it's going to be for future generations.

HON. MR. PHILLIPS: There goes that member for Skeena talking out of both sides of his mouth again. He doesn't really know what he's talking about. One moment he chastises us for flying around the world, protecting British Columbia interests and talking about British Columbia interests, and the next moment he says we're not out there protecting British Columbia interests. What do you want? You're just talking to hear yourself talk. One minute you're saying we should sell our products abroad, and the next you're chastising us for buying anything from Taiwan. Taiwan buys how many thousands of boxes of apples from B.C. farmers every year? We don't even negotiate with them. But you just pick one little deal and make a big deal out of it — make people think you know something about international trade when you don't know anything about international trade.

I have talked to the Japanese government. The Premier's in the United States market today. We've just got back from Japan. We were also in Korea. The Minister of Agriculture (Hon. Mr. Schroeder) has just got back from China. We're out there in the marketplace working on behalf of British Columbia interests all the time.

When you say the United States is going to make a deal on plywood with China, you don't understand the Japanese market. If they take the tariff off, it will be taken off for all plywood; and if they take off the tariff on dimensional lumber, it will be taken off all dimensional lumber. Sure, it'll benefit the United States. It'll benefit Canada. It'll benefit Russia. Certainly it will. But we happen to have led the way in putting dimensional lumber into the Japanese market. Of all the lumber-producing countries, we happen to have led the way in breaking down barriers and putting dimensional lumber into countries around the world. And what are we doing now? We're leading the way in Korea. I suppose you want to criticize that, because you say it'll open up the market for the Americans and for other dimensional lumber. But I'll tell you, we're leading the way and we can be competitive and we are being competitive.

I want to tell you something. If it hadn't been for the work we have done in the last few years, during this recession our lumber industry would have been in a much tougher spot. If we hadn't built that chip-exporting facility, which you were against.... You say we don't do anything. I'll go around this province and tell you where our mark is: every community in British Columbia that we've been in. The mark of this ministry is there. Thousands and thousands of people employed, new enterprises everywhere, and you tell us we haven't done anything.

MR. WILLIAMS: Dig another hole.

HON. MR. PHILLIPS: Oh, go on! Don't be so petty. You're supposed to be an intelligent individual; why don't you show it?

MR. CHAIRMAN: Order! Direct comments through the Chair, please.

MR. WILLIAMS: I'm glad the minister raised the question of Fibreco. I don't know if many people noticed it; it was on the business page a month ago or so. There was the minister in a barge or a freight car or a big holding thing full of chips. They were spraying down over his head and he had this great big grin on his face.

AN HON. MEMBER: Do they print this stuff?

MR. WILLIAMS: They actually put it in the paper. They really did. But what I found myself asking was: why is this man laughing? Why is he smiling? Because it represents a major failure in industrial policy in this province. Those chips can produce pulp and paper; those chips can produce finished products here in British Columbia. What it is telling us is that there could be massive capital investment in British Columbia, in plants and in jobs, and we're exporting chips. It doesn't make sense. It's a failure of strategy. You may very well say: "We would be burning the chips otherwise." That doesn't have to be the case. We could be using them in manufacturing here in British Columbia.

In terms of new processes and the CTMP method of producing pulp, which is the better state of the art means of pulp production now, the main requirement is electricity, and that we've got in abundance, and at a cheap rate relative to the rest of the world. So we could be creating new pulp mills in British Columbia, making use of electricity in British Columbia, which is wasted now and is flowing over the dam at Revelstoke. We could make use of workers in British Columbia who are on UIC and welfare, and we could make use of the chips that you're happily sending abroad.

It doesn't make sense. It simply doesn't make sense. We underprice chips in British Columbia because the other minister has a rigged game that puts them at 50 percent of value, unlike the Scandinavians, and so we're all the losers. He's allowed a rigged price game to go on under your nose, and that's made it economic to export the stuff anywhere in the world. If there was a real price system for that product in British Columbia, the economics and everything would change. We don't have that. He's allowed the rigged game to go on for a decade, and it's distorted the entire industry. It's distorted it in its entirety.

Mr. Nilsson, the economist from Stockholm who reviewed the whole industry, just had to pump this crazy part of the equation into his economic model all the time: well, if they charge 50 percent for chips or 70 percent for chips or whatever, if there's not a real price, how does it distort the economic model of British Columbia? That was one of the main exercises he had to do in terms of analyzing our economy. And you're the happy guy down at the wharf watching them sail away. What you're watching sail away is jobs for British Columbians. What you're watching sail away is capital investment for British Columbia. So I repeat the question. Yes, they ran the picture, but I'm still asking: "Why is this man smiling?"

[ Page 6839 ]

HON. MR. PHILLIPS: There you go again. The man displays a complete ignorance of the international marketplace. Here we build a facility — $12 million, $15 million. We have exported five million tonnes of woodchips at approximately $80 a cunit, and the man laughs at it. I suppose you'd have been happy to see all those small interior sawmills who own Fibreco pay $10 a tonne to use it for landfill or burn it in a burner. I'll tell you the pulp mills weren't here, so what were we going to do with them? That's why we built the facility. The pulp mills will come, I'll tell you. You seem to forget, my friend, that after you left the government we had the commitments and the hundreds and hundreds of millions of dollars to invest in the forest industry that weren't invested in the three years you were in government. Go to the library and look at the papers. Hundreds and hundreds of millions of dollars were committed and spent in upgrading the forest industry in this province after you birds left government — you, in particular, who were the chief czar of everything.

We've just come through a very difficult three years of economic recession not only in British Columbia but indeed in the world. We're coming out of it, and what is Fibreco doing now? What are those small sawmill operators that got together to build this company and to export their waste product doing? We exported waste and imported foreign capital, and you stand in this Legislature and laugh at it. You just don't have any conception of the international marketplace. What's happening now? The plans are coming out; there will be new pulp mills. The chips will be available. I'll guarantee you that within 18 months you will see one, two, maybe three new pulp mills under construction here in British Columbia.

It's happening, and it's happening because of the policies of this government. You know, if the Japanese didn't buy chips from British Columbia, they'd have bought them from the northwest United States, or they'd have bought them from Australia, or they'd have bought them somewhere else. So here we take a waste product, which was surplus to our needs, build...

Interjection.

HON. MR. PHILLIPS: It is true!

...a facility to export them, we export waste and import capital, and he has the audacity to stand in this Legislature and make fun of it. I'll tell you, those small sawmillers who put Fibreco together aren't laughing. They're laughing at you, I should say, and they're laughing all the way to the bank because that's what saved them during the last three years. If it hadn't been for that export facility, they probably would have gone broke, but with it they were able to sell their chips. They were able to sell them in the international marketplace, and they were able to sell them at world prices. So don't tell me about Fibreco, and don't stand in this Legislature and laugh at that facility. I'll tell you, I'll go and tell those small sawmillers about you. They know about you anyway.

[5:45]

MR. HOWARD: This is the same minister, you know, who always.... Prosperity with him is just always around the comer. Now in 18 months it's two or three new pulp mills. This is the same minister who stood up in the House just a little while ago and said: "Tomorrow morning, at the snap of my fingers, I can have three aluminium smelters built in British Columbia." Where are they? That was just as much....

Interjection.

MR. HOWARD: That snapping of fingers and having three aluminium smelters in B.C. tomorrow is in exactly the same category as his declaration about pulp mills now. The Minister of Forests (Hon. Mr. Waterland) had a word that he mentioned outside of this House, a two-syllable word that applies quite appropriately to what the minister just said, and what he has said all the time he has been here.

MR. WILLIAMS: Well, you know, you've had a decade. You've had ten years at the helm, you folks over there, ten years. You're happy about that facility. Well, it's certainly better than wasting the material, there's no question about that. But the point is that we can have a higher-value product.

You talk about $80 a tonne. You get a minister down the road that's selling it for $49 or whatever the current price is — something like that. It doesn't work. You should understand that real market prices should prevail. He has let a system develop in British Columbia where there is no reality anymore. That's why we've got the problem with the other folks. That's why we've got the problem with those Americans. That's why your boss is in Washington, D.C. It's because this guy doesn't know what he is doing, not by a long shot.

In this particular area, there is the opportunity for you. That's targeting. That's what targeting is about. We need new technology. We don't want to use Harmac's technology; it's 35 years old. We want to use the best new technology in pulp operations. The neat thing about these new technologies is that they can be smaller scale. It doesn't have to be....

HON. MR. PHILLIPS: I know all about it.

MR. WILLIAMS: You know all about it? Then why haven't you done something about it?

Interjection.

MR. WILLIAMS: There's one in Quesnel.

MR. CHAIRMAN: Order, please. Would all members please address the Chair when they are recognized to speak? Carry on, on vote 49.

MR. WILLIAMS: So this material, this stock, could have provided countless jobs in British Columbia in construction. It's not just a dock and a loading facility. What kind of long-term product is that? That's no big deal. We could instead have pulp mills scattered throughout the province, at a smaller scale, paying a market price for the pulping material and, with their more efficient plants, doing very well indeed. That's where the focus should be there. I don't think you should be celebrating the continued export of the raw material. You should be looking at maximizing returns for British Columbians. That doesn't do it.

You know, a decade has gone by. We've had a surplus for ages. We've got a surplus in the southeast part of the province and we've got a surplus in the north. There are significant surpluses, and they're flowing partly through Fibreco. They're also flowing in terms of very significant transportation costs. We could get optimum solutions that would mean

[ Page 6840 ]

plants scattered elsewhere around the province and to some extent end the oligopsonistic pricing problems we have in this industry.

This readiness to accept whatever's there, to accept foreign capital regardless of the cost, to accept it without looking at the surplus question and all the rest of it, and to accept the export of raw materials such as this, and others that could be processed more in the province, is really a failure of imagination and a failure to do what all of you are supposed to be doing over there, and that is to create employment and encourage wealth generation in the province. You're losing a lot of it by accepting things like this on a long-term basis. Things like this should only be accepted on a short-term basis.

The minister says he expects three new mills within a year and a half. Well, as the member for Skeena (Mr. Howard) says, we heard it about aluminium, and it didn't happen. There is a lot of lead time needed for these projects. Is that lead time being accommodated? Are there jobs being created now in Simons and the other major engineering companies as a result of what you are talking about? If the engineering work isn't undertaken now, then you're not talking about a year and a half at all. Maybe you can advise the House how much engineering work is currently underway with respect to the three pulp mills you're talking about.

MR. CHAIRMAN: Shall vote 49 pass?

MR. WILLIAMS: I think we're calling your bluff. Is there any engineering work being done in British Columbia on the three pulp mills you announced just a few minutes ago?

Interjection.

MR. WILLIAMS: What's that?

MR. CHAIRMAN: Order, please. Is the second member for Vancouver East standing on vote 49?

MR. WILLIAMS: Yes, Mr. Chairman. "The mills will be there." They won't be there. There's lead time that's necessary — lead time for new contracts, arrangements with respect to raw material, lead time for pollution control and all of the regulatory problems, lead time for drawing the plans for the mills and doing the engineering. That's a lot of lead time. But you pull something out of the hat, and it's been the easy way that you've operated in the past, saying: "There's going to be three mills — you watch, my friends — in the fullness of time." But this time you said in a year and a half, instead of your usual great loophole escape-hatch of the fullness of time. A year and a half is a pretty tight time-frame for getting a pulp mill under way.

HON. MR. PHILLIPS: You're so concerned about the plans and so forth. The first thing you need to have is a market, and the second thing you need to have is the capital. Those are being put together, and that's more important than getting the plans done. You've got to have a market; you've got to have the finances. Somehow you think that there's just a magic wand. That's where you fail: you don't take in the fact of the realities of the marketplace.

With regard to the aluminium smelter, I didn't hear you up north promoting any aluminium smelter. As a matter of fact, you were probably in bed with the guys who were trying to kill it.

MR. WILLIAMS: Mr. Chairman, we did have inquiries again with respect to how much of the minister's staff has been seconded for the trip to Washington, D.C. Could the minister advise us how many of his staff have been seconded to the Premier's office?

HON. MR. PHILLIPS: Mr. Chairman, the Premier was briefed before he went, and he has his personal staff with him. He's quite capable of looking after the situation.

MR. WILLIAMS: So the minister says none; he didn't need anybody for the trip to Washington, D.C. Well, what does that tell us about this ministry? This is supposed to be the specialized ministry in this field, and there's nobody from your department travelling with the Premier.

I've made trips to Washington in the past and met with undersecretaries, and I'll tell you, the lowliest assistant in Washington is probably the finest graduate of the current crop in America. That's the kind of reality you face in Washington, D.C. If we've got the Premier wandering off to Washington, D.C., and all he has with him is some of his personal staff.... You need some of the finest experts in the world in terms of dealing with international trade. I don't know if this minister could give us a speech on the difference between sectoral free trade and its implications or bilateral free trade and its implications. I know the Premier had never used the term "sectoral free trade" until last Thursday, probably after his assistant got briefed by the C.D. Howe Institute or its equivalent back east. It's a catch-as-you-can operation in terms of modest talent, when what we're dealing with is the most able group in the world in terms of the people who run the administration of the United States of America. It's incredible that nobody from your department, which presumably specializes in this field, is with the Premier. The Premier's office — we know who's there: Bud Smith, Dr. Spector and a few others. It's less than adequate.

HON. MR. PHILLIPS: Mr. Chairman, there you go. You said it all. You go to Washington; you meet with some undersecretary. I think you should be proud and happy that they even allowed you to meet with some undersecretary. The Premier will be meeting with some top officials.

Interjection.

HON. MR. PHILLIPS: He'll tell you when he gets back, my friend. He's meeting with some top officials. I think it's a feather in your bonnet that you got to see an undersecretary. I'm surprised that you even got to see an undersecretary.

MR. WILLIAMS: In view of the hour, Mr. Chairman, I move that we report great progress and ask leave to sit again.

The House resumed; Mr. Speaker in the chair.

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

[ Page 6841 ]

Introduction of Bills

CAPITAL EXPENDITURES
MISCELLANEOUS AMENDMENT ACT, 1985

Hon. Mr. Curtis presented a message from His Honour the Lieutenant-Governor: a bill intituled Capital Expenditures Miscellaneous Amendment Act, 1985.

HON. MR. CURTIS: Mr. Speaker, I might simply observe for the House that this bill is intended to streamline and modernize capital borrowing procedures as they affect school districts, hospitals and post-secondary institutions. I think it is an improvement over the system which has existed up until now.

I might point out that it is my intention not to proceed with second reading and passage of this bill in the immediate future, but rather to permit interested parties in the province to analyze it and to perhaps deal with it at a later date.

I move that the bill be introduced and read a first time now.

Bill 54 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

MR. SPEAKER: Hon. members, earlier today the hon. member for Burnaby-Edmonds (Ms. Brown) rose and sought leave to move adjournment of the House for the purpose of discussing a definite matter of urgent public importance, relating to the reported closing of the Vancouver Transition House on June 28 next.

In order for a motion under standing order 35 to succeed, the matter raised must involve the administrative responsibility of the government, and in addition must not involve a matter which has been described by the authorities as a "dispute as to fact." In the present case, an examination of the Hansard reports would indicate the effect of the proposed closing of this facility is viewed by the hon. member one way, and by the hon. Minister of Human Resources (Hon. Mrs. McCarthy) in a quite different way.

The Chair is in no position to make a judgment on the merit of either argument, but the existence of such a disagreement impacts directly on the propriety of the subject matter in relation to the motion seeking adjournment of the House for the purpose of discussing a definite matter of urgent public importance.

Motions under this standing order have been refused when they have been raised some days prior to the disputed event. See Sir Erskine May's Parliamentary Practice, seventeenth edition, page 365.

It is also uncertain from the matter on hand whether or not the immediate administrative responsibility for the operation of the Vancouver Transition House rests with the Ministry of Human Resources.

Under all these circumstances, I am unable to find that the matter raised by the hon. member qualifies under the strict guidelines relating to motions for adjournment of the House for the purpose of discussing a definite matter of urgent public importance.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 6 p.m.

Appendix

AMENDMENTS TO BILLS

49 The Hon. R. H. McClelland to move, in Committee of the Whole on Bill (No. 49) intituled Special Enterprise Zone and Tax Relief Act to amend as follows:

SECTION 4 (2), by deleting "on the subdivision plan," and substituting "on a subdivision plan deposited in the land title office on or after the date this section comes into force,".

SECTION 15 (1), by deleting "levied under section 273 (a) and (b) of the Municipal Act" and substituting "levied under section 273 (a) and (b) of the Municipal Act or section 373 of the Vancouver Charter, as the case may be,".

SECTION 29, by deleting "Section 33 of the Assessment Act," and substituting "The Assessment Act,".