[ Page 8149 ]

CONTENTS

Oral Questions

College transfers. Mr. Nicolson –– 8149

Westar Timber. Mr. Lea –– 8149

Mr. Howard

Inspection of motor vehicles. Mrs. Dailly –– 8150

Coquitlam reservoir. Mr. Parks –– 8150

Attendance of cabinet ministers. Mr. Williams –– 8150

Casino gambling. Mr. Hanson –– 8150

Proclamation of Financial Information Act. Mr. MacWilliam –– 8151

Power and freight rates for Louisiana-Pacific. Hon. Mr. Brummet replies –– 8151

Ministerial Statement

Expo 86. Hon. Mr. Richmond –– 8152

Committee of Supply: Ministry of Energy, Mines and Petroleum Resources estimates. (Hon. Mr. Brummet)

On vote 20: minister's office –– 8152

Mr. D'Arcy

Mr. Davis, Mr. Hanson, Mr. Skelly, Mr. Nicolson, Mr. Lockstead, Mr. Williams

MONDAY, MAY 12, 1986

The House met at 2:05 p.m.

Prayers.

HON. MR. GARDOM: Mr. Speaker, we are indeed honoured today with the presence in your galleries of a number of distinguished visitors from the great city of Guangzhou in the province of Guangdong. They're all senior representatives of the Guangdong Science and Technology Commission, led by His Excellency Vice-Governor Huang Qing-Qu of Guangdong. Accompanying him is Mr. Lu Zhong-He, director of the Guangdong Science and Technology Commission; Mr. Shen Yi-Li, deputy director; Mrs. Wang Yi-Zhen, deputy director of Guangdong Energy Technology and Economy Research Centre; Mr. Li Guo-Quan, secretary of the Guangdong provincial office; and Mrs. Zhu Xiao-Jian, deputy section chief of the Guangdong Science and Technology Commission and the interpreter. They are all here on a brief goodwill and information exchange tour of our province.

They've already enjoyed Expo. Yesterday they visited Cominco at Trail and the agricultural research station in Penticton, and were hosted by my colleague the Minister of Education (Hon. Mr. Hewitt). Earlier this morning they toured Pat Bay Fisheries, and tomorrow they're going to be seeing Discovery Park Microtel, plus a presentation from B.C. Transit. Mr. Speaker, this again is a very good example of the close cooperation between our two countries, and indeed our two provinces. I would like all members to bid them a special welcome.

Further, may I say Chung gwok loy der pung yao. Fan ying, fan ying.

MR. REYNOLDS: Mr. Speaker, in your gallery this afternoon are Shirley and Bill Brown from Squamish, British Columbia. Shirley is the chairman of the board of trustees of School District 48, Howe Sound. I wish the House would make them welcome.

MR. REE: In the precincts today are 45 students, 34 of whom are from the College St. Charles Gremer in Quebec City. They are visiting with students from Balmoral Junior Secondary School in my constituency. They have participated in seeing Expo and are over enjoying the sunshine of Victoria. They are under the guidance of Mr. E. Stephens from Balmoral school, and the students from Quebec are under the guidance of M. and Mme. Bertrand Lavoie. I ask the House to welcome them.

MR. REID: Mr. Speaker, it gives me a great deal of pleasure to introduce two people from Alberta who are in your gallery. One of them is Janet Koper, MLA for Calgary Foothills; and a special hand for the former Whip of the Alberta Legislature, Sheila Embury. Can we make them welcome.

Oral Questions

COLLEGE TRANSFERS

MR. NICOLSON: Mr. Speaker, a question to the Minister of Post-Secondary Education. The universities have recently announced limits on the number of transfer students from the colleges. I am sure the minister realizes that whether the limit is 750 or 70,000, it has created real, irreparable harm to the image of the colleges and to their marketability.

What negotiations has the minister entered into on behalf of the colleges with the universities?

HON. R. FRASER: Mr. Speaker, to the member, and to everybody, in fact: the college system was built so that those students who do not live in the lower mainland can receive a post-secondary education. Because of the statement of the University of British Columbia senate, I have spoken with the president of the university and mentioned to him the idea that we do not want to restrict access for college students any more than we would restrict access to third and fourth year by university students. They're trying to work on a system that will grant every able student a good education, and the colleges should not be worried about one statement in one newspaper article.

MR. NICOLSON: To the same minister: in view of the fact that the story is out there, and that students are making that career choice today, what of substance can the minister offer to the students and to the reputation of the colleges in terms of the integrity of their university transfer programs?

HON. R. FRASER: One statement by one member of one faculty from one university does not impinge upon the credibility of any of the college systems.

WESTAR TIMBER

MR. LEA: Mr. Speaker, I have a question to the parliamentary secretary for Forestry. At the end of last week I asked the minister whether he had any knowledge of an impending sale of the pulp mill in Prince Rupert now owned by Westar. Over the weekend I have confirmed — it is now a fact — that not only are the two pulp mills in Prince Rupert up for sale, but the pulp mill in Castlegar is also up for sale. Westar is desperately trying to sell those two pulp mills, and I'd like to ask the parliamentary secretary whether he has any knowledge of those mills being up for sale by Westar.

MR. MICHAEL: Mr. Speaker, in response to the member, the answer is no.

MR. LEA: Is the parliamentary secretary aware that both of those pulp mills are becoming very quickly obsolete and that the reason Westar is putting them up for sale is that they say they are so debt-ridden that they have no money available to retool and update those two pulp mills — either the one in Castlegar or the one in Prince Rupert — and that they are desperately trying to sell, hoping that someone else will have the money? Is the minister aware that that's the situation with Westar: that they have no money to retool, and therefore those two mills are in jeopardy?

[2:15]

MR. MICHAEL: Mr. Speaker, I thank the member for that information, and I assure him I will relate that information to the minister.

MR. HOWARD: I'd like to ask a supplementary question of the minister who reports to the House for the B.C. Development Corporation. May I ask the minister whether he

[ Page 8150 ]

can confirm that BCDC has in fact been in discussions with Westar with respect to the relationship between Westar and an international corporation, what were those discussions, and in what way is BCDC working towards the event of perhaps selling the whole thing?

MR. ROSE: Who is it?

MR. SKELLY: There's no minister responsible?

MR. HOWARD: Perhaps I could redirect that question to the Minister of Finance then.

HON. MR. CURTIS: I was just going to do that, Mr. Speaker.

On behalf of my colleague I'll take the question as notice. I will speak to him tomorrow, I trust, and inform him of the member's question.

INSPECTION OF MOTOR VEHICLES

MRS. DAILLY: In the absence of the Minister of Highways, I'm going to direct my question to the acting minister, who is the Minister of Tourism.

To the Minister of Tourism: the Vancouver Police Department has issued statistics showing that the number of injury accidents in the first three months of this year has doubled compared with the same period last year. Has the government decided to stop its irresponsible opposition to motor vehicle testing in the interests of public safety?

MR. SPEAKER: Hon. member, part of the question is in order — the first part. The second part is not in order.

HON. MR. RICHMOND: Mr. Speaker, I will be happy to take the part that is in order as notice for the minister.

MRS. DAILLY: A supplementary to the minister. It was three years ago that the government took the health and safety of British Columbians into its hands by closing down the safety testing program. Three years later the lack of safety standards is starting to show in the condition of our cars on the roads today. What is the acting minister going to do, and when is he going to admit the truth and clean up the number of unsafe vehicles on our roads today?

HON. MR. RICHMOND: I have already offered to take the question as notice, and I shall. I'm certain that the minister will bring an answer back.

MRS. DAILLY: The Social Credit government has attempted to divide the people of this province on this issue. In the interior they say that it's a lower mainland problem. Has the minister considered what happens when unsafe vehicles from the city are run at high speeds on our highways?

COQUITLAM RESERVOIR

MR. PARKS: Mr. Speaker, a question for the Minister of Environment. This past weekend many of my constituents — and I would think a great number of lower mainland residents — were somewhat alarmed to learn that the Coquitlam water reservoir was shut down, or at least taken off line, for the supply of water to the greater Vancouver region because there was purportedly a showing of radioactive material in that reservoir. Could the minister advise the House what efforts are being taken to bring about a speedy clarification as to the status of that particular reservoir?

HON. MR. PELTON: Mr. Speaker, I wouldn't want to be accused of eating up the clock, but there's a little preliminary information that maybe should be provided before I come directly to the question.

As many members might know, the federal government runs a number of testing stations across Canada — 28 in total. There is one in Vancouver and one in Whitehorse. They test on a regular basis for fallout but, of course, since the Chernobyl incident they have been doing it on a more extensive and intensive basis. It's the radioactive fallout in rainwater which would affect the watersheds and water supplies for the greater Vancouver regional water district, of which they have three.

Extensive testing has been done, Mr. Speaker, and I do have statistics from the tests. However, one that was taken towards the weekend showed an increase of radioactive iodine-131, and it was on the basis of this information that the regional district decided they should shut down the one reservoir, and the municipalities provided with water by that particular reservoir would be provided from the other two. Subsequently it has been found that because there's been ongoing testing of the water.... The word they used was that an anomaly occurred in this particular instant; that the results of the test were inaccurate and the amounts of radioactive iodine in that water are practically immeasurable at this point.

I have had some complaints, mostly from some of the mayors whose communities receive water from the GVRD. Their complaint was that they hadn't been notified of what was happening, but other than that I think everybody can be assured that....

MR. NICOLSON: We heard that on "Daybreak."

HON. MR. PELTON: You heard that this morning? That's good.

ATTENDANCE OF CABINET MINISTERS

MR. WILLIAMS: To the House Leader. The Minister of Industry and Small Business Development (Hon. Mr. McClelland) on Thursday last indicated that he would be reporting back with more answers to questions today. The minister is not here today, and some eight or nine ministers are not here today. Can the House Leader advise the House when these ministers will show some respect for this Legislature?

HON. MR. GARDOM: Well, I tend to think, unlike the hon. member, they always show respect for the Legislature.

CASINO GAMBLING

MR. HANSON: In early March, police forces indicated that they were concerned about the lack of controls surrounding commercial casino gambling in Vancouver, particularly in premises that serve alcohol. On March 11 the Provincial Secretary said that she would conduct a review of all of the commercial casino gambling operations, particularly in downtown hotels where liquor is served. Will the minister

[ Page 8151 ]

advise whether this review has been completed in the last two months?

HON. MRS. McCARTHY: I thank the member for the question. We have been putting together some regulations and conducting a review. There is one part of that review that is not yet complete, and that is a report from some law enforcement officers which we believe will be coming fairly shortly. We will be making those new regulations and the report of the total review, for which I have a great deal of concern, available to this House and to the public very shortly.

MR. HANSON: A supplementary to the minister. Would the minister advise the House who is conducting the review — who has the responsibility for the review?

HON. MRS. McCARTHY: Officials in my ministry, with assistance from law enforcement officers, not just in our province but in other provinces as well.

MR. HANSON: Supplementary to the minister. Is the commissioner in charge of issuing the gambling licences involved in the review?

HON. MRS. McCARTHY: I don't believe so, Mr. Speaker, the reason being that although we have had some suggestions from that person, that person is being moved from his position. Therefore we are not relying on his position to give us the material. There are other people in our ministry who will be doing so.

MR. HANSON: A further supplementary. Would the minister advise what position that person will be moved to and why he is being moved from his position?

HON. MRS. McCARTHY: I'd be pleased to take that question as notice, because my staff have yet to make that announcement, and I would prefer to have them make it.

PROCLAMATION OF
FINANCIAL INFORMATION ACT

MR. MacWILLIAM: Mr. Speaker, in the absence of the Premier, the Attorney-General (Hon. Mr. Smith), and the Ministers of Municipal Affairs (Hon. Mr. Ritchie), International Trade, Science and Investment (Hon. Mr. McGeer), Highways (Hon. A. Fraser) and Labour (Hon. Mr. Segarty), I will address my question to the Minister of Finance. More than a year ago this Legislature passed a new Financial Information Act to bring sunlight into the operation of Crown corporations. I think that in his own address the minister even named it the "sunshine bill." I wonder if the minister could advise this House why, after all the pomp and ceremony of introducing and passing the bill, the government has refused to proclaim this legislation.

HON. MR. CURTIS: Mr. Speaker, the member's question contains a number of theories which are not correct. He concluded his written question with: "Why has the government refused...?" That is an assumption on his part and it's an incorrect assumption.

I found one or two problems associated with some of the regulations which it was proposed I take to the executive council, and they've gone back. That process is taking a little longer than I would like. I don't intend that to be humorous — longer than I would have liked. But the regulations will in fact be presented in draft form to the executive council quite soon.

I cannot conclude the answer without observing that in the last several years this government has undertaken incredibly important disclosure legislation with respect to government finances.

Interjection.

HON. MR. CURTIS: The Leader of the Opposition laughs, but then he has nothing else to do these days than chuckle at questions.

The record stands for itself, starting with the appointment of an auditor-general.

Interjection.

HON. MR. CURTIS: They can laugh in their discomfiture, Mr. Speaker.

The fact is that this one particular regulation is being worked on and refined, and I'm sure that we will have it in place quite soon.

MR. NICOLSON: Mr. Speaker, as is customary during question period, I would like to raise a point of order on something that came up.

In answering one of my questions, the Minister of Post-Secondary Education (Hon. R. Fraser) acted upon what I would consider misinformation, and had the effect of not intentionally misleading the House but nevertheless leading to some misunderstanding. It is my understanding that it was the university senate, by majority vote, that made that decision, and that it goes to the board of governors; it was not an individual. I say that because there is some sensitivity in this House as to the thoroughness with which members do their work. I would not want anything of that nature to reflect upon me, the minister or any other member of the House.

MR. SPEAKER: While the intent of the member's statement on a point of order can be appreciated, hon. members could see that if we entertained this type of point of order, we would have clarification upon clarification. I'm sure that there will be ample opportunity for members to make such clarification at other times, without reflecting on what has happened — for clarification — at the conclusion of question period.

POWER AND FREIGHT RATES FOR LOUISIANA-PACIFIC

HON. MR. BRUMMET: Mr. Speaker, last week I took as notice a question from the member for Vancouver East regarding whether there were any special concessions from B.C. Hydro regarding the Louisiana-Pacific issue.

I have checked into that, and I have learned that there was no discount rate provided. There's no discount on installation. There's no transmission allowance. They are paying the ordinary distribution rate level for large users, probably comparable to a large secondary school. They don't qualify to receive any surplus power or any other special rates, because

[ Page 8152 ]

they are a new industry and therefore don't qualify for incremental sales. In effect, Mr. Speaker, there are no deals of any kind from B.C. Hydro to Louisiana-Pacific.

[2:30]

EXPO 86

HON. MR. RICHMOND: I would like to make a brief statement, in my capacity as the minister responsible for the Crown corporation Expo 86.

During the first three days of the fair, Mr. Speaker, we had an overwhelming response from the public, so much so that many people approached me, expressing the desire to have season's passes and wishing that they had purchased them instead of the three-day pass. I subsequently took that to the board last Monday, and during the ensuing week we have had many requests from people who would like to literally trade in their three-day pass on a season's pass.

I am happy to report that at this morning's board meeting it was decided that anyone who has purchased a three-day pass to Expo 86 may turn it in to the corporation for a full refund for any unused portion on a season's pass. I know that a lot of people will be happy with that decision, as they intend to attend the fair many times.

I am also pleased to report to this House that, if anyone didn't see it yesterday, we welcomed the one-millionth visitor to the fair at about 2 o'clock yesterday afternoon. I can also report that we have done extensive visitor surveys as people are leaving the exposition and can report to the House that any problems or complaints have been of a very minor nature. We have worked to correct them as quickly as possible, but the overall reaction to Expo has been very positive and very good.

MR. REID: Mr. Speaker, I seek leave to make an introduction.

Leave granted.

MR. REID: In the galleries today are Miss Lois McLean and 23 of her grade 4 and grade 5 students from the A.H.P. Matthew Elementary School in Surrey. Would the House please make them welcome.

Orders of the Day

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

ESTIMATES: MINISTRY OF ENERGY,
MINES AND PETROLEUM RESOURCES

(continued)

On vote 20: minister's office, $197,228.

MR. D'ARCY: First of all, I want to wish the minister a speedy recovery from whatever is ailing his right foot or his left foot. He seems to be doing rather well getting around the buildings anyway.

Interjection.

MR. D'ARCY: If there are any rabid socialists around, I don't think a Socred would be hurt by being bit.

Initially I want to talk about something which is tremendously important in my region and also important in the minister's region. That is the question of fair property taxation on assets owned by British Columbia Hydro.

There was a time in this province, before the minister came in here, when the government did not pay its fair share on property it owned. Its tax rates were frozen at 15 mills regardless of the assessment, regardless of the jurisdiction. But at least they were fairly unfair around the province. They did not pay part taxes in Victoria, full taxes in 100 Mile House and no taxes at all in Valemount.

Similarly, today we have the British Columbia Railway not paying property taxes, but they don't pay property taxes on their right-of-way and yards the way CP and CN do anywhere in the province. They don't pay, say, no taxes in North Vancouver and part taxes in Quesnel and full taxes somewhere else.

Similarly, B.C. Ferries don't pay taxes on any of their terminals anywhere.

British Columbia Hydro is the only Crown agency in the province of British Columbia that pays full taxes or grants-in-lieu on some of its property, partial taxes on others and on other major generating projects none whatsoever.

Now it happens that being from the interior of the province I have fairly strong feelings about this. I have a belief — and I hope the minister relates to this — that if B.C. Hydro had not been paying taxes on its property, say, in the city of Vancouver or on its many generating projects in the Fraser Valley or on projects even in the Bridge River–Lillooet area, this situation would have changed years ago. But because the major projects and the major assessments that Hydro does not pay taxes on are in the West Kootenays, in the upper Columbia and in the Peace River, where the minister is from, the popular opinion in this province — and particularly the press gallery here, which doesn't pay any attention to anything that goes on in this House or anything that goes on in the province beyond the Pitt River, if even they get as far as the Pitt River....

MR. ROSE: That's my riding. They get there.

MR. D'ARCY: But you wish they'd come more often. Because of that, British Columbia Hydro and the government of B.C. have been getting away for years without paying property taxes in an equal way throughout the province. That is not fair. I know it's not directly under this minister to do something about that, but since he is, in part, responsible for B.C. Hydro, I would like him to impress upon the Finance minister and the members of Treasury Board this terrible inconsistency that still exists in British Columbia, particularly in this discriminating way against the West Kootenays, the upper Columbia, the Big Bend part of the Columbia, and the Peace River region of this province.

In case somebody says: "Oh that's going to put rates up," we're talking about less than I percent of Hydro revenue. In any event, the point is that most parts of the province receive this benefit, and every dollar that any corporate taxpayer doesn't pay we know affects the local taxpayer where that tax isn't paid.

Now I want to talk about something else before I get into aspects of B.C. Hydro rates, which I want to discuss before this chamber today. I know the minister will understand this because it relates to his riding. It's the question of power corporation tax rebates in the federal government. B.C.

[ Page 8153 ]

Hydro does not pay income tax, but the private utilities in this province — those retailing natural gas anywhere outside the lower mainland, and the West Kootenay Power and Light Co., who supply power for the southern interior — all pay income tax. For about 15 years the federal government has been returning 90 percent of corporate income tax to the province of origin. In B.C. It's around $10 million a year. In other provinces, when the federal government does this, the Energy ministry or the Finance ministry, as the case may be, rebates those dividends to the customers. The money does not go back to the companies; it is rebated to the customers.

Now this sounds like I'm giving the opportunity to the government to institute something that, just to coin a phrase, we could call social credit. We could suggest, and I am suggesting to this House today, that in view of the fact that B.C. Hydro does not pay any corporation income tax, it would be entirely appropriate to rebate to the customers of private energy utilities in this province money that they pay as part of their rates and that comes from their region directly to the customers. Now whether the minister wants to do it through the Utilities Commission, through the companies or directly through government is up to the government to decide. But that money should go back to the customers of the natural gas utilities in the interior and in the north, and to the customers and municipal authorities who sell and distribute power through the West Kootenay Power and Light system. It's not money that should be left in general revenue.

I want to talk to the House today about the question of prebuilding electrical energy generating facilities. In the last few years B.C. Hydro should have had a windfall of about $400 million. Should have had. I say that because B.C. Hydro has been selling about $150 million a year more in export power than it used to average; B.C. Hydro has saved $150 million in wages and salaries because they fired over 3,000 people; B.C. Hydro's domestic sales have also gone up by about $100 million. That's about $400 million. In addition, rate increases have added a further $200 million. Now what's happened is that the interest charges as a result of construction of Revelstoke and Cheekye-Dunsmuir have required B.C. Hydro to come up with an extra $600 million that they have had to take out of the B.C. economy. I'm not going to get into the discussion of whether those decisions to build Cheekye-Dunsmuir and Revelstoke should have been taken; the fact is, they were taken. Money was borrowed in a major way, and the interest has to be paid on that debt.

Now before the government gets into any further generation facility construction for export or otherwise, the people of British Columbia should have more than reasonable assurance that they're not going to have to pay for any shortfall that comes from charges associated with any future hydroelectric developments or developments of any other sort in this province. In reviewing the Blues from last week I noted that the minister, in responding to comments from the member for Cowichan-Malahat (Mrs. Wallace), stated that the reason he wanted to build the Site C project was because the government studies showed that the government would get the best benefit — the people of B.C. would get the best benefit. This was the cheapest project that could be built on a per unit cost of hydroelectric energy. He criticized the member from Cowichan for being, as he said, opposed to megaprojects, because he said the smaller projects she was talking about were in fact going to cost more, and if she could show that the smaller projects would be more cost efficient he'd be willing to look at them.

Well, there is a smaller project. It happens to be in my own constituency, but that's coincidental. The Keenleyside Dam built in the 1960s on the Columbia River has never been machined. Hydro's own studies show that per kilowatt hour that dam could be machined for a lot less money than any power from Site C. I'm suggesting to this House here today that even though it's a much smaller amount of power, because we have such a large amount of surplus in British Columbia at this time, if the minister means what he says, that he is prepared to go ahead if more electrical generation is necessary with the project which gets the government, and hence the B.C. consumer of energy, the most "bang for their buck" — because it's going to be borrowed dollars — then he should be looking at all potential energy projects, not just dismissing all projects and saying that Site C is the only one that needs to be looked at.

I'd also like to point out that if we are to have export energy — and again, that's a reality; it is not a question of whether the public in B.C. wants to have projects for export, or thinks it is a good idea; that's the way the government is going — then it makes sense to have projects which are built at site, "site," in the case of export, being the 49th parallel. It's nearly 800 miles from Site C to the U.S. border. It's only 30 from Keenleyside. So when one considers line losses, transmission costs to the U.S. border, and lord knows there's going to be enough cost once the power gets over the border, if the government is going to go that route they certainly should be looking at projects near the U.S. border rather than farther away.

I want to talk to the committee about the impact of royalties on hydroelectric power on the economy of British Columbia. I think the House well knows that I've spoken many times about these royalties and the effect that they have had on my own constituency. But the fact is that my own constituency is really a microcosm, on a provincewide basis. There has been a horrendous impact of electricity sales taxes, electricity royalties, on the entire economy of British Columbia.

We heard again in this Legislature ringing speeches before the minister came into the House about how bad mineral royalties were, how there should be no mineral royalties, that they were killing the mining industry. Mr. Chairman, the royalties on the electricity that the mining industry in this province has to have to function — and mining is incredibly electricity sensitive — are far more onerous in real or actual terms than any mineral royalties that we ever saw passed by the previous administration.

Mr. Chairman, do we have a time problem here?

[2:45]

Interjection.

MR. D'ARCY: Three minutes. Thank you.

I want the minister in his discussions with the Treasury Board to do what he can to reduce those royalties, because he's minister of mines as well as energy. Those royalties on electricity impact incredibly heavily on the mining industry, and very heavily on the smelting industry in British Columbia — even more heavily. If we are to increase employment in B.C., if we're even to save the jobs we have now, especially in the value-added area, especially in the area of diversification, we cannot put taxation disincentives on those industries.

I know the minister is going to tell this House, as he did last week: "Think of the property tax reductions which the

[ Page 8154 ]

government has done." The fact is, Mr. Chairman, the property tax reductions which the government did recently have scarcely restored property tax rates to what they were before the government put them up in the late seventies and early eighties, and there has been no reduction on electricity royalties over the same period. But we all know that commodity prices in some areas in this province today, especially the mining industry, are lower in real terms than they were even in the depths of the 1930s depression. Yet in the face of these increases, in the face of the depression that we're in, in terms of commodity prices the government raised royalties.

I'm going to sit down, Mr. Chairman. I'm sure some other member will have comments to make.

HON. MR. BRUMMET: Regarding the property tax, I believe that as a basic rule Hydro pays tax on property such as buildings or that sort of thing in any municipality. It is — and has been — exempt from paying property taxes on the massive reservoirs and generating facilities. Not everyone may agree with that. It is, I guess, a stroke of geography or whatever as to where the major highly expensive dams are located, so I suppose those rivers are considered a provincial resource. If all of these were assessed at their market value and the tax paid to the municipality in which they, by coincidence, happen to fall, then those municipalities would in effect be quite rich at the expense of the other ratepayers throughout the province, because whatever Hydro pays out it does have to take in. I don't know whether there's any way to settle that argument. There are payments in lieu of taxes; there are property taxes paid on all but the generating facilities.

As far as the rebates from the federal government — corporate income tax — I really can't comment on that too much from an energy side in that it's more a matter for the Ministry of Finance. I suppose it's a matter of if you rebate in some form to users all of the taxes collected — to project it to the ridiculous extreme — then I don't know where government would get the revenue for all of the services that are expected to be provided.

With respect to the prebuilding costs, I guess it's easy enough with hindsight to project that you shouldn't have done it; that you would be richer if you had not done it. But I think I have to go back a little further in time and simply say that had that attitude been prevalent in this province for the last 20 or 25 years, we would not have many of the industries and tax-paying businesses that have been attracted by electricity. Yes, when the projections were made, when the Revelstoke dam and the Cheekye-Dunsmuir projects were undertaken, the best projections from presumably the knowledgeable people indicated that these would be required. At that time no one predicted the recession that has hit us since 1982; the projects were well underway, and at that point do you mothball a project in the middle or complete it with the jobs?

There are indications now that within a short period of time the surplus that has been generated will be utilized. If the Revelstoke project hadn't been in place, Hydro would not have been able to export the power that they did to get the $245 million in net revenue from export sales over the last year. Every effort has been made to utilize that power. Since it is in place, it doesn't make sense to shut the dam down and run the water around it if there's any possible way to utilize it — through aggressive export marketing and the discount sales for incremental use to try to increase the amount of power being used, and therefore gain some revenue from the water that flows either through or around the turbines. So every effort has been made to recover that as best as possible.

It's easy enough to predict that if you didn't have any of these costs, then you would have made money. But would the rate increases have been accepted by the B.C. Utilities Commission? Would that $400 million that the member mentioned be there from rate increases, from all the export sales, if these projects were not in place? Projections are made, and it's a question of also dealing with critical water years. In other words, the capacity of a hydro system has to be considerably in excess of the demand, because we deal with peak loads and peak draw. And to the extent that it is possible to make use of the short-term surplus, I think it has been done very effectively by B.C. Hydro.

We were talking at that point about the Site C project. Yes, in relative terms it is a.... Storage is established; it's basically a run-of-the-river dam, reusing water that's already going, which allows for integrated management between the three darns. So I hold my position that in relative terms it is one of the projects that could go ahead most economically. I did not exclude Keenleyside or Murphy Creek; those are in the plans. But I think the member knows that Keenleyside is about 160 megawatts, as compared to 900 to 940 from the Site C dam, and that is in the Hydro system plan. The surplus from Revelstoke is projected at maybe a couple of years, depending on the growth of the economy — and there are some pretty good signs of that. So Keenleyside and Murphy Creek are included in all of Hydro's plans. We know that within a relatively short time, whether that be five or eight years, we're going to need the power from the Site C project. And the idea, of course, is to try to build it now — and we need jobs — and to get the Americans to help us pay for it. That would be good economy. In other words, we've done very well from the export of hydro power, and the benefits have flowed back to the users in British Columbia. So that concept can be carried on. If we have large amounts of firm sales and those benefits can flow back to the people of British Columbia, which I think they can, then it makes sense. But there's no question about it: Keenleyside and Murphy Creek would be built concurrently or somewhere in the same framework, depending on what the technical experts agree on. So I wasn't saying that Site C was before Keenleyside; it's in integrated management with that.

The water tax has long been a point of contention. As the member knows, the government capped that to the inflation increase. I think it realizes something in the neighbourhood of $200 million to the province, and is a way, I suppose, of spreading a tax over the widespread domestic market. Of course, it's also attached to export sales, so it does help us in that respect. I'm sure there will never be agreement on that. We've tried to take some measures to.... In the last three-year program, announced in the budget last year, quite a bit went to the mining industry to try to make their life easier. It is a tax — it certainly is considered a tax. One of the things I'm concerned about is: is the member saying in effect that we should place no value on the water resource? If we treat water as a resource in this province and pay no attention to it or give it no value, then I'm a little bit concerned if that's the attitude he's reflecting in his comments. I don't know whether he intended that.

I think I've covered most of the items that the member has dealt with; I'm sure if I haven't, the member will remind me.

[ Page 8155 ]

MR. D'ARCY: On the point of British Columbia Hydro property taxation, I'd like to illuminate the minister a bit, in case I was not sufficiently articulate when we first discussed this.

The minister seems to believe that because hydroelectric projects in the Peace River — the ones that he is most aware of — do not pay property taxes, none do. What I'd like the minister and this House to know is that all energy projects, if they were built by a private company, pay taxes at exactly the same industrial assessment rate as any other industrial operation. That applies to Alcan's and Cominco's operations. It applies to those hydroelectric and thermal generation projects that were built by Hydro's predecessor, before it was expropriated, the British Columbia Electric Co. Those hydroelectric projects, particularly ringing the lower mainland and the Fraser Valley, as well as those in the Squamish, Cheekye, Bridge River, Lillooet area, were built by British Columbia Electric, and they pay property taxes exactly the same way as Cominco and West Kootenay Power and Alcan do; exactly the same way that the petroleum and natural gas industry pays property taxes. They don't get a free ride.

[3:00]

What I'm suggesting to the minister and to this House, Mr. Chairman, is that Hydro should have a consistent property-taxation policy, and the government should have a consistent property-taxation policy. All Hydro-owned property should pay taxes at a consistent rate, wherever they may be in the province; not some paying full taxes, if they're in the lower mainland or the Bridge River area; not paying half taxes, like Seven Mile or the Kootenay Canal; and not some paying none at all, such as the Bennett or Mica dams. It should be consistent.

If the government wants to eliminate the Hydro property taxes, fine. Well, it's not fine; I wouldn't like that, and I don't think anybody in the southern interior would, but I'm sure people on the Hydro system would. But at least they should be consistent and fair throughout the province. That was why I used the analogy, Mr. Chairman, of B.C. Rail and B.C. Ferries. Both of these corporations do not pay property taxes on much of the property they own, but at least they're consistent: they don't pay property taxes in Saltspring but not on Pender. B.C. Rail doesn't pay property taxes in North Vancouver but not in Prince George. They don't pay taxes anywhere, and they should, because CP and CN do.

I find myself in a situation, as a social democrat, appealing to right-wing people across the way, saying: why don't you make the same rules for the public sector as you do for the private sector? That's what I'm saying to this House. The same rules that you apply to a private utility, whether it's producing or retailing, or transporting natural gas or electricity, should apply to the publicly owned utility, British Columbia Hydro. You make the rules; you make them administratively, and don't even need a legislative change here.

Answering another point the minister made, saying some municipalities would get huge windfalls: I don't know — maybe the minister does — of any hydroelectric project that's exempt that falls within municipal boundaries. Perhaps we'd have some chameleon boundaries that would suddenly be redrawn. I know Keenleyside is partly in the city of Castlegar. But the primary recipient of property taxes would, in fact, be the provincial government, because most of these are in unorganized territories. Sure, regional district functions, such as recreation and garbage and planning, and so on, would benefit. But let's remember once again, the private utilities pay taxes; the public utilities should too.

[Mr. Ree in the chair.]

On the question of the rebate, Mr. Chairman, it was federal corporate taxes we were talking about. Once again, if B.C. Hydro paid corporate income tax, and that money was sent back by Ottawa, I would say that's reasonably fair. The government keeps it and spends it on the Coquihalla highway, or however they want to do it. It goes into general revenue. It goes to service the provincial debt, which has been growing much faster under this government than under previous governments — whatever general revenue wants to use it for. But the fact is that it's only the private utilities serving the interior and the north that pay corporate income tax federally; it's only those that pay corporate income tax provincially too. That money comes back into the provincial treasury, and it's not rebated to the regions from which it originated; that's the point. In other provinces it is: it is rebated in some form or other to the regions in which it originated.

I used the term "social credit" in its literary sense, hoping that the minister would understand what I'm talking about, especially since he does not come from an area where the gas utility is served by British Columbia Hydro. In my area we're not served by B.C. Hydro in either natural gas or electricity. So this is effectively a subsidy from the southern interior and other parts of the interior to the general taxpayer in the province, to the lower mainland and Vancouver Island. It's not a big subsidy, but whenever we come across some sort of alienation from the interior or the north, it is relatively picayune items such as this that cause it.

I thought I made clear in speaking with the minister that I was not here in the chamber today saying the Revelstoke Dam should not have been built when it was built or that Cheekye-Dunsmuir should not have been built. The fact is they were. The money was borrowed, and the interest has to be paid. The interest charges on those two projects — I'm not talking about paying off the principal, just the interest charges and other operating costs, including the water tax — are around $600 million.

Last summer it was commonly said that Revelstoke was selling $1 million a day. That's what government apologists said: $1 million a day. Now it seems to me that should have meant export sales from Revelstoke alone would be $365,225,000. But we all know, as the minister said himself, that total export sales were in the neighbourhood of between $250 million and $300 million, and we also know that Revelstoke contributed only about $150 million of that. That $100 million came from other generating stations in the grid.

The fact is that I am not arguing Revelstoke should not have been built. It is a magnificent engineering feat. It is one of the most difficult engineering projects ever undertaken in this province because of the soil and rock conditions that were encountered there. But the fact is that those two projects, Revelstoke and Cheekye-Dunsmuir, between them — and Cheekye-Dunsmuir does not generate a single kilowatt for export or any other reason — are costing the B.C. economy about $450 million in hydro rates after the additional export sales that Revelstoke generated.

The point of this discussion is that I don't want the government running off and borrowing $2 billion or $3 billion, further lowering the province's credit rating, if there is not going to be offsetting revenue to avoid impacting on

[ Page 8156 ]

pensioner and pulp mill alike in terms of hydro rates. That's the point that I want to get over to the minister and to the members on the government bench. I've got to be careful with that. I think the Social Credit caucus has sunk to three. I think we've got you four to three, Mr. Chairman.

So that's what I want the minister to understand, and that's why I brought up the case of Keenleyside. The minister is quite correct. I just used that as an example. It happened to be one close to home for me, but it is a much lower-cost project. Yes, it generates a lot less power, but if the government is going to pell-mell go ahead and borrow money for export purposes, let's be a little bit conservative about it — or what we used to think of as conservative.

Again I use a private sector parallel. If you had a company in the forest industry that had a facility for making 2-by-4s, and they couldn't sell all the 2-by-4s they were making now, and even if they could they didn't get full value for their cost, the shareholders, I am sure, would think they were crazy if they went out and borrowed a bunch of money to greatly expand the capacity to make 2-by-4s. Yet that is exactly what the government proposes to do through its energy arm, B.C. Hydro. It is the taxpayer and the ratepayer of this province who underwrite this kind of borrowing.

I sometimes think, when it comes to the export of energy from this province — and I am not standing here on the principle of whether or not the province should be exporting energy — a succession of governments, especially this one today, have treated energy much in the same way that some agricultural marketing board might treat surpluses. Where the marketing board says: "We have to maintain the price of yogurt or apples or whatever it is at a certain rate because of the costs we face. But if we have surpluses of 10 percent, 20 percent or 30 percent, well, we'll sell that outside the province for 10 cents on the dollar, if necessary, or 50 cents on the dollar."

What happens is they make a subsidy to foreign economies, and that is what happens with energy in the province of British Columbia. We have surpluses, yes, for whatever reason, of hydroelectric power. We end up selling it for less than what we sell it for to the hard-pressed British Columbia consumer and the hard-pressed British Columbia economy.

I think we have to realize that: that while the government has been selling more and more power, it has been getting less and less money in actual terms on a unit price — only about 60 percent last year in actual terms on the unit price of what export power was getting in the early 1980s. So even though the total revenue is up, we are selling far more power — on a unit price, getting less for it. But the cost of building these projects and transmitting the power has not gone down, and it is not going down.

So I ask the government to be careful on behalf of the British Columbia economy, because the industries in British Columbia which provide the employment that keeps this province going are electricity price-sensitive. They're natural gas price-sensitive. The costs of these are largely within the minister's jurisdiction.

I want to talk to the minister again, through you, Mr. Chairman, about something that we discussed in question period over a month ago. We discussed the question of royalties on natural gas. One of the minister's predecessors brought in with great fanfare a few years ago the Govier royalty system. They said: "This is going to protect the consumer, because we're going to tie the price of natural gas to the price of petroleum, so relative to the price of petroleum, the customer in British Columbia, both the residential consumer and the industrial customer, will not get gouged." That's what the government said. But they must have changed their minds somewhere along the way, because the price of petroleum has been going down, as everyone knows, but there has been no significant decrease in natural gas prices sold to the distributing utilities in B.C. for retailing to customers — both residential customers and industrial customers.

The minister said at the time that he would get back on that issue. I'm hoping he's had time to review that situation and tell us something about whether or not the government still has a commitment to tying the price of natural gas in B.C. to the price of petroleum, especially when the price of petroleum is going down. The government really liked the royalty system when the prices were going up. We're wondering if they like it as much when the prices are going down.

I want to ask again if the minister has any information on when there are going to be further decreases in the price of petroleum products at the pump and for home heating purposes. The minister used to say — or maybe will still say — it takes 90 days to work through the system. Well it's been 120 days since the low-cost petroleum has been working its way through the system — and probably more like 130 days. We are still six cents to ten cents over and above what the retail price of gasoline should be. We are still, in some parts of the province, 20 cents a litre Canadian over the price being charged in Washington state, even though they buy petroleum on the same world market as our refiners do. I know taxes are higher in Canada. I'm speaking of the Canadian national taxes, Mr. Chairman. But 20 cents a litre? I know British Columbia taxes are higher than state taxes, but not to that extent. I'm wondering if the minister can tell this House whether he has had discussions with the industry in terms of further reductions in the price of petroleum at the pump.

I have some more material, but perhaps we could hear some responses from the minister now.

HON. MR. BRUMMET: Just to try to deal a bit more with this Site C issue, or building, the member compares it to running more 2-by-4s through. I think he's knowledgeable enough to know that it takes quite a few years from the time you decide to start construction before the power actually flows from a hydroelectric project. So you can't wait until, say, 1992 and then find out that your projections.... You know, you sat there and waited, and then to try to start to build the dam which is going to take you.... You're going to be out of power by the time it gets built. So there have to be best projections made of what it's going to be five years or eight years down the road, and you have to build to that. So obviously you can't make the comparison with how many 2-by-4s you crank out through a sawmill. Hydro has an obligation to meet the electricity demands in this province, so they have quite a different, bigger role than some of the private corporations.

[3:15]

I think the member would be aware that the private corporations, even though they are private utilities, as few as there are, pay some corporate income tax. They also have a lot of write-offs that Hydro doesn't. They also don't have the obligation to have enough power to sell when the demand increases later. All they have to worry about is their particular operation. I think the member must be aware that particularly

[ Page 8157 ]

Alcan — I don't know if it applies to every utility — certainly pays a lot lower water tax, about one-twentieth of the water tax, because most of the power is for their own use. So they have other advantages.

The member keeps making the point that you should charge, say, property tax on a several-billion dollar investment — Revelstoke Dam — and that the province would collect this money, a provincial as well as municipal tax. Well, if that kind of money is being paid, it's going to have to be reflected in rates. So the government would be in effect collecting tax for all the resource developments in the province, and then somehow or other giving it back to the people through rebates. That's what you're suggesting. I have a little difficulty following that. If you follow that to its logical conclusion, the government should charge itself property tax on the parliament buildings — I don't know what value you would put on it — because that would make it fair with every other operation. There is quite a distinction between courthouses and private sector operations, which are basically designed not to serve the public need but the need of that group. There is a distinction, and B.C. Hydro is a Crown corporation. It doesn't seem to make much sense for the government to indirectly charge itself a lot of taxes to make it fair with others. I don't know how much further I can go on that one.

The member is also concerned about the royalties on natural gas being tied to the price of petroleum. Yes, there's a commitment there, and the government has been structuring the wholesale price of natural gas and making the revisions, customarily on August I for the last couple of years — that's not customary, but it has become a tradition. I don't know that we can restructure that rate every week or every month, following up and down with the price of natural gas. If the price of oil stays down, presumably the price of natural gas goes down as well. The member also knows that the price of natural gas to the consumer is affected to a large extent by industrial use because the per unit cost of transportation, which is a heavy factor, is built in. If we lose the industrial sales, then that will feed back as price increases to domestic consumers. You can't legislate that away without taxing them some other way to try to support that. It's important that we keep up industrial sales and that we hold our export sales market. The border price for gas is not less than the price for comparable sales in British Columbia. I guess the member could challenge me on that and say that there are some specific spot sales below that. But whoever is selling that must average it so that the average is still at the deemed border price, which is based on the wholesale price to B.C. Hydro.

As for gasoline at the pumps, it's a constantly flowing thing. There wasn't some magical date and then everything else flows from that. Prices have been going down at the pumps, and I believe that the wholesale price of.... Well, just to give you a comparison, the gasoline cost at the refinery was 28 cents in early February. It has gone down just over 13 cents at the refinery and 13.5 cents at the pumps. So it is sort of flowing with that. How far it will go I don't know. There has now been a sort of turnaround. Whether the prices will keep going down.... I'm sure they've gone down quite a bit since the beginning of April. There was another 1-cent reduction by some of the companies just last week. So I am assuming that they will follow the competitive market. I am sure that prices will go down if the price of oil goes down and stays down. On the other hand, there are indications that that may be reversed, that they may be stabilizing. Then at least both consumers and producers — and everyone — will be able to know what to base their prices on, if they stabilize. I think I've answered the member's questions.

MR. D'ARCY: I'm not going to belabour the point of fair property taxation, because it would seem that the minister is either unable or unwilling to understand the principle. Just for his information, though, these parliament buildings do pay property tax, and so do courthouses in British Columbia, and that's entirely my point. They do pay property taxes, and so do a great proportion of B.C. Hydro's hydroelectric generating facilities around this province. They do pay property taxes, exactly as though they were owned by a private company.

AN HON. MEMBER: A great proportion of them?

MR. D'ARCY: A great proportion.

Interjection.

MR. D'ARCY: Yes, that's the point I'm making to the House.

AN HON. MEMBER: Which dams pay taxes?

MR. D'ARCY: The ones that British Columbia Electric built, the ones that were privately owned before being expropriated by the Social Credit government of this province, paid property taxes or grants in lieu exactly as they did when they were privately owned. The point is that there is an unfair....

MR. CHAIRMAN: Order, please. Possibly you're dealing here under the jurisdiction of the Minister of Finance (Hon. Mr. Curtis), if you're talking with respect to taxation, which is not within the purview of this minister.

MR. D'ARCY: It's partly under the jurisdiction of this minister, but I don't want to belabour the point. I make the point to you, Mr. Chairman, because you represent one of the North Vancouver constituencies. I don't think your municipal, school board and hospital authorities would be very happy if B.C. Rail paid no taxes on their railway facilities in North Vancouver but you knew that up the line somewhere they were paying part taxes in some communities and full taxes in others. That's the point we're making to the minister here.

Anyway, we'll leave that one. As I say, the minister is either unable or unwilling to understand. We feel more acutely about that in the West Kootenays, I think, because we lost so much by the decisions made by government to develop hydroelectric power by B.C. Hydro in the West Kootenays and the upper Columbia. We lost forest land, and that was revenue and jobs; we lost tourism potential; we drowned favourable mineral showings, some of which may well have developed into mines — it's pretty hard to mine underwater; and we lost agricultural land. And then we found out in the West Kootenays that unlike the privately owned generating facilities that produce hydroelectric power, those owned by B.C. Hydro were not going to pay property taxes.

Mr. Chairman, something far more important economically, far more important to the people of B.C., is the gravity

[ Page 8158 ]

tax — the water tax. The minister says Alcan, which generates its own, only pays one-twentieth as much as everybody else. That's a very good point. There are no bauxite mines at Kitimat or anywhere in British Columbia. There is only one reason that there is a smelting facility in Kitimat: low-cost hydroelectric power, self-generated. The reason that Alcan doesn't pay a tax on gravity like all other electricity consumers in British Columbia is that they were smart enough back in 1948 to sign a deal with the government that prevented the government from raising the tax on gravity — that tied it to the retail price of aluminum. That was very sensible; it was sensible on the part of the government of the day, and it was sensible on the part of the Aluminum Co. of Canada.

Now, Mr. Chairman, I want to get back to the other smelting operation in British Columbia, and that's in Trail. Exactly as with Alcan in Kitimat, the critical industrial raw material input into that operation in Trail is low-cost, self-generated hydroelectric power. It is perhaps a little more obscure to the minister, because there are mines in the province producing silver, lead, zinc, cadmium, bismuth — perhaps 20 metals. The ore doesn't come from South America the way it does in Kitimat. This operation supports the mining industry in British Columbia, not owned just by Cominco but by a number of other private companies — mines that would not be viable without that operation to refine those ores. Mr. Chairman, their royalty on electricity should be tied to the average selling price of their finished products exactly the way Alcan's is in Kitimat.

I can use a parallel with the forest industry. Electricity is important, but the single most important input is of course trees, and the price of wood. The government for years and years — for decades — in this province has had a variable royalty system on trees. They call it stumpage. When the average selling price of lumber, pulp, paper and plywood goes up, the stumpage goes up, and when the average selling price goes down, the stumpage goes down. Same deal as Alcan has in Kitimat. If the government of the day — and I hope it's not for too much longer — wants the non-ferous mining industry in this province, and if they want a refining industry and a smelting industry that is job-intensive, they have got to recognize the principle that the key input is low-cost hydroelectric power, not the availability of ore at site, any more than Kitimat exists because of the availability of ore at site. The government has to realize that. They don't. Maybe the minister does, but a number of his colleagues on the treasury benches don't understand that.

Mr. Chairman, I suppose we could talk about these issues indefinitely, but I think we'll try to deal with what we hope will be quality rather than quantity, and hope the minister has some favourable responses. Even if he can't make commitments today on these things, at least perhaps he will give a commitment to take these points to his Treasury Board colleagues.

HON. MR. BRUMMET: Yes, I represent Hudson's Hope, which has a couple of big dams in the municipality, and I know that it would be very nice if they got huge taxes from Hydro. As minister responsible, I also have to recognize the possible ramifications of that. As an individual, I would love to see everything that happens in my constituency pay taxes. As a minister, I don't quite have the same luxury, and would like to do that. I think there's no question that low-cost power, trying to attract industry to British Columbia, to maintain industry, to support the mines.... Yes, I can certainly support that.

The cost of hydro generation. The demand was growing. I'm assuming that in all of the facilities built to increase that demand, people tried to do it at the lowest possible cost. The borrowing is in place. So now what we have to do is look at it, to make the best possible use of that. I'm sure that we would love to cut the hydro rates in half, down to a quarter. When you look at Hydro's annual report and the cost of operations, the cost of financing, which is included in that, then you have to wonder what other taxation you would have to put in place to raise the money to subsidize that power.

I know some benefits would flow from the extra industries; there's no question of that. There is a certain amount, as the member knows.... Despite all the efforts government has made, we're still needing more money than is being raised through the present tax structure. I'm sure that if we can find other sources of revenue to meet the spending demands, then we could well forgo the water tax. It's one form of taxation, as I tried to indicate to the member. It also affects export sales in West Kootenay, Cominco — not only for their own use, but if they don't pay the water tax, then anything they export is in effect subsidized power going out of the country. Not everyone will agree that it's a fair tax.

[3:30]

Perhaps it can be dealt with. Certainly we tried to take other measures to assist Cominco. There are negotiations now underway federally and provincially to try to keep the operation going. I'm hoping that that will be resolved fairly soon, because I know what it means to Kimberley; I lived there for some years. I know what it means to Trail, to the Kootenays, to the mines, to be able to have that smelter there: keep the mines open. It has a direct and indirect effect, if they can't keep operating. I think the water tax is only one portion of it.

I guess that about covers it. There are some times, like the member, when I wish I had a magic wand to make everything good. I also have to have some support from my colleagues, to not raise the revenue that pays for the other services.

[Mr. Strachan in the chair.]

MR. D'ARCY: I don't want to make the minister stand too long here, but I want to make a point very quickly. I know the government has to have revenue; all governments do. I know they like getting it out of resources, because it's hidden in people's bills. But, Mr. Chairman, unemployed people don't pay taxes. Idle industry does not pay property taxes. Idle real estate does not pay taxes. The government has its priorities wrong. A healthy industry and a healthy employment picture not only generates a tremendous amount of revenue for the province, but it saves the province a lot of money in terms of social and other costs.

So I want to impress upon the minister that it's not that the government doesn't need revenue; it's that they've got their priorities wrong in how to generate it, particularly when their rules are inconsistently applied between different commodity groups and between different parts of British Columbia. Not only does the forest industry and Alcan have a special arrangement for it, in terms of stumpage for the forest industry and electricity prices for Alcan, but there is a special difficulty in terms of supporting the mining industry in B.C. when it comes to the southeastern part of the province and the railway industry. Because to use the minister's own analogy

[ Page 8159 ]

regarding natural gas, that if the industrial use goes the rates for everybody else go up, I would point out that if it were not for the mineral haul in southeastern B.C., for which C.P. Rail takes over $80 million annually out of Trail alone — we're not talking about shipments originating in Kimberley or anywhere else, but out of Trail alone over $80 million — the cost of transportation to other industries, particularly the forest industry and to a lesser extent agriculture, would be somewhat higher. So we're talking about a lot of spinoff besides just the mining industry. I think probably the minister does understand that; I'll give him credit for that. As I say, I wish some more of his colleagues did.

HON. MR. BRUMMET: Just to respond very briefly, I think the major problem at Cominco and some of our other mining operations is not the water tax or some of the property taxes, that sort of thing. I think the major problem is world prices for their metals and the decreasing demand for lead, which is a fairly big component at Cominco. There are also other factors there: environmental concerns about lead, substitutes for lead, and that sort of thing, which are making it very difficult. We are trying to work on that.

As the member knows, Cominco was allowed to be for their ammonia operation an eligible gas buyer so that they could get lower gas prices. Electricity down to the discounts are being made available to try to keep up the industrial use. That has worked in keeping quite a few industries. Each one of them as they apply comes up. I know that, as you indicated, C.P. Rail makes quite a bit of money out of hauling the minerals to Trail. Don't they also own Cominco? So in other words, maybe they could lower their freight rates and help Cominco as well. We'll try to do what we can.

MR. DAVIS: Mr. Chairman, I'm rising really to make a few remarks which again express my concern about long-term planning in the energy area, more particularly long-term planning by Hydro. B.C. Hydro has been for many years the largest single corporation in western Canada, and in this province by far the largest single investor in new facilities. When a few years ago it became obvious that the demand for hydroelectric power was levelling off, it was necessary to cut back substantially on its capital operations, on its new construction of dams, on new construction of transmission lines. I don't think the cutback, or at least part of the cutback, could have been avoided because the consensus not only in this province but across Canada and worldwide was that the demand for electricity would continue to rise rapidly. That has not materialized and so there's been a marked slowdown.

There has been a marked change also in the nature of B.C. Hydro. The chairman recently described B.C. Hydro as increasingly an operations oriented corporation and not one which focused substantially, let alone primarily, on new investment, growth or development.

I'm concerned, partly because B.C. Hydro had accumulated a cadre of professionals, engineers, construction management which was among the best in the world, and that has in large part been dismantled. If one could stand back and second-guess decisions made some years ago, they would say that the rate of expansion of the system — the physical expansion — should have been moderated earlier. They would certainly say, as I believe now, that there should be a long-term plan which envisages growth, growth at a slower rate certainly than in the 1960s and early 1970s, but nevertheless that the planning contemplate an expansion which can meet our internal requirements and on occasion when surpluses are developed. I don't mean to indicate that export should be a major concern for the long term, but that export opportunities should be utilized to mop up excess capacity from time to time. Ideally we have a long-term plan. Ideally we build at a steady rate. Ideally we continue to employ people with considerable competence, professional competence, which in itself can be exported also through the sale of our know-how overseas, our ability to build power dams, high voltage transmission lines and so on.

I think we also have to decide how we're going to use our energy as a source of employment, certainly as a guarantee of a reliable supply. Exports come into this only incidentally. Do we use our energy as a magnet for industry? Traditionally — and this applies mainly to central Canada, and in oil and gas to Alberta — energy was seen as a magnet for industry. It would attract industry. In British Columbia our costs have been higher. By and large our costs have been such that our rates have been among the higher rates for power and other forms of energy in Canada. But we seemed to give up any hope of using energy as a magnet for industry when we increased the water tax a few years ago. We apparently decided, for tax reasons — not industrial development reasons necessarily, but certainly for tax revenue reasons — to add to the price of electricity directly — and indirectly the price of other forms of energy, including gas — by adding the water tax, a tax which is exceptional in that it is not levied on anything like our scale elsewhere in the country.

In the late seventies, early 1980s, we really turned our back on using electricity as a means of attracting industry. The only way we can attract industry now using hydroelectricity, for example, is to say that we can guarantee the physical supply, the supply over a long period of time; but we certainly can't offer low rates. That is a decision which has been made, and I think we must face it. It is not in the cost price area that our energy is attractive. It is only in that we can guarantee supplies 10, 20 years ahead because we plan ahead and plan physical facilities which physically can meet those needs. So I think we should talk less about using hydroelectricity as a resource for attracting industry, at least for the short term — perhaps even for the long term — if we are going to recognize (a) the high costs of developing far northern sites, for example; (b) our high tax rates, including the water tax which we insist on levying on power.

Looking ahead, one big question that I think must be addressed — it can only be addressed in cost and price terms — is whether we sit back now and utilize, for example, the downstream benefit energy owed to us by the United States beginning in the late 1990s, or whether we continue to develop sites in this country and continue to sell that downstream energy which is our entitlement at a really high price in the United States — use it as a device. Again, presumably we wouldn't sell the energy for an indefinite period. We would sell it for several decades at most. We would use that energy as a source of income to Hydro so that we could develop other sites in this province, could provide jobs in this province, particularly for engineers, construction firms and so on.

Because the amount of energy involved in the downstream benefit settlement is comparable to, I believe somewhat in excess of, the amount of Site C, a simple question has to be answered, and I certainly wouldn't expect the minister to try to seriously address it right now. But it's something that should be brought out in the open as a result of a series of

[ Page 8160 ]

hearings, say, before the Utilities Commission, as to the likely costs of simply using up the downstream benefits which are returned to us in time and will cost us nothing delivered back to the border, or whether we should begin now or shortly to build a substantial project, or perhaps more than one, in northern British Columbia.

[3:45]

I can remember, and it's only a few short years ago, when the cost of an additional kilowatt of hydro capacity was of the order of $1,000. It had been $100 or $200 in the early 1950s, say $1,000 in the late 1970s. The number I've seen in the press on Site C is not $1,000 a kilowatt or even $2,000; it's $3,000 a kilowatt. At high rates of interest, that kind of investment is not only large but poses a big question: what will be the delivered price of that energy?

Clearly that has to be set off against a comparable amount of energy which can and would be returned from the United States in the late 1990s if and when we decide to bring back that energy rather than sell it at a high price down there. I'm focusing on the downstream benefit energy partly because it's comparable in amount to what Site C could produce, partly because 30 years ago when I wrote the energy volume for the Gordon commission I recommended that the treaty projects be in large part financed that way. It took the provincial government here another seven years to decide that that was a good idea, but it went ahead largely on that basis. While the opposition has always been critical of the Columbia Treaty, one of the big holes in their earlier arguments was that they totally ignored the downstream benefits and their value. Now they've suddenly recognized them, and they're a great asset. Well, okay, their argument earlier was faulty to that extent. But my main point is that we have two blocks of power, Site C and the downstream benefits, of comparable magnitude and both conceivably coming on at the same time. We have a major decision to make: do we repatriate those benefits which are ours by treaty at no cost to British Columbians, or do we go ahead with a major project in the north of comparable size and finance it, largely if not entirely, on the proceeds from the sale of that same downstream benefit energy?

There are several other questions that arise in my mind. Recently, within the last comparatively few years, one of the major investments of B.C. Hydro was a substantial transmission line, the Cheekye line, from the mainland originating — at least the underwater section — in the general area of Powell River and crossing over to Vancouver Island. That connection from the mainland to Vancouver Island has cost about $1 billion. I know that its long-term economic viability was predicated on several things, one of the more substantial of which was the sale of electricity for space-heating on Vancouver Island. Industrial loads, hopefully, would develop over the years along with other uses of electricity, but the largest single growth sale category was to be residential spaceheating. Well, a gas line, if it's ever built to Vancouver Island, will be predicated, particularly in the early years and again in the later years, on residential space-heating sales. Those standing back at a distance, and I'll even say standing back and looking at British Columbia from Ottawa, have to say: "Look, Vancouver Island has recently been equipped to look after its space-heating needs as a result of a billion-dollar investment by B.C. Hydro backed by the people of the province. Why should half a billion dollars or more be invested in order to duplicate that facility?"

I'm concerned about the possibility of a duplication of investment. I suppose if we can get the federal government to put up all, or nearly all, of the half-billion dollars, that makes some sense. But in all this — Hydro power projects, particularly gas line projects and, I might say, underwater gas line projects — the B.C. labour and equipment content is low. In the underwater gas line case it's negligible. There isn't much of a spinoff in job creation in building a gas line to Vancouver Island. There isn't an incredibly large spinoff in building large hydroelectric projects, partly because most of the machinery used — all of the heavy machinery used in construction — is imported, not only into the province but into Canada; also because a large proportion of the highly trained personnel who operate that equipment come from outside the province and leave again if there's no other work due to an on-again-off-again overall construction program on the part of Hydro.

The role of the Utilities Commission is important. Latterly it seems to have pulled in its horns. It does review requests for rate increases. It doesn't really seem to provide a forum for costing projects — not only those yet to be built, but also projects the economics of which should be proven before they proceed. I hope that the Utilities Commission is brought back into that role. I note that one of the directions of the government to the Utilities Commission was to get Hydro up to 1.3 times interest earnings, which certainly is in conflict with any plans to keep rates down or to build new projects — but that's for another time.

HON. MR. BRUMMET: Mr. Chairman, the member says that there should be more long-term planning. There had been a great deal of long-term planning, and some of that long-term planning resulted in some of the overbuilding that Hydro is being criticized for. I know that the rate has slowed down. It became fairly apparent that with Revelstoke nearing completion and generating something of a surplus, it didn't seem to make much sense to keep a large staff of design engineers in place when there was nothing going ahead for several years. Yes, anyone hates to lose good people, good engineers. But to pay them until there's some indication that they're going to be needed, just to maintain the good staff.... I guess Hydro had to make a pretty hard decision there and go more into the operations mode, since there seemed to be no projects for design on the table.

I can assure the member that there is long-term planning for growth being done both by Hydro and my ministry. Through the use of computers we try to project possible high increases, low increases and medium increases — the demand. There is a lot of long-term planning going on. Unfortunately every once in a while someone says that you've got to prove what's going to happen ten years from now. You can't prove what's going to happen ten years from now. All you can do is give the best estimate on the best possible evidence. Of course, therein lies the argument. Presumably some of the projects that were built.... I have to accept the integrity of the engineers who said: "This is going to be needed." Somebody had to say it was going to be needed.

MR. WILLIAMS: You don't need engineers today?

HON. MR. BRUMMET: We need engineers, but we can't keep on a large staff of engineers at a time when there's nothing happening for a couple of years. Those engineers will again be available, and I hope will be needed.

I can also assure the member that the Columbia River downstream power he's talking about, at virtually no building

[ Page 8161 ]

cost, is part of that long-range planning of B.C. Hydro. It wouldn't be available, through whatever form of negotiation it takes, until 1998. We are going to need some other power before 1998 according to the lowest projections of Hydro, the ministry and others. We have managed to utilize more through discount sales and incremental use for reopening of mines — that sort of thing. There is power moving, and I would hope that that will encourage growth.

I wish, and I know in talking to Hydro that they wish, as is requested of them time and again, to make good projections on how much we're going to export and how much we're going to need ten years from now, when everyone recognizes that they do not control the factors, whether it's interest rates, other uses, world metal prices — whatever it is. They cannot prove what's going to happen five, ten or 15 years down the road. You have to plan accordingly. So there is that type of overall planning going on, and it is being checked by the Utilities Commission, who see their role as wanting proof, when proof is hard to be had.

MR. HANSON: Mr. Chairman, I listened carefully to the member for North Vancouver–Seymour (Mr. Davis), and there's a chunk of his speech that I agree with very much. I'm just going to say it in a different way. You know, the people on Vancouver Island, through no fault of their own, don't have access to cheap energy, the cheap natural gas that they have on the lower mainland and through other parts of the province. Yet we the taxpayers of the province spent something in the order of $1.2 billion in total for the Cheekye-Dunsmuir line, which won't meet its installed capacity until the year 2010. There's cheap electricity there, and I'm saying, why can't we have it? Give us some of the juice. Give us the power.

The people on this island, it costs them an arm and a leg.... Even for a new house that's fully insulated, it costs $500 a year more for space-heating in a brand new house here in the city of Victoria than it does for a brand new house of a similar type — same dimensions, same insulation etc. — on the lower mainland. You take an older house and it's worse. It's something like.... I can give you the numbers. I'll give them to you in a minute when I've finished saying what I want to say now.

We've got that surplus power from Cheekye-Dunsmuir, which the good people on this island are paying for and are going to pay for long into the future, so what do we do? We sell it into the United States dirt cheap, and a lot of that electricity, I believe, goes into making aluminum beer cans, which put our people out of work in any event. Then the liquor distribution branch buys the aluminum beer cans back and ploughs them into the ground. We don't even recycle them. It's wonderful economics.

I'll just give you the numbers here on a house. These are figures supplied by B.C. Hydro. They show that for a 1,200-square-foot home built prior to 1976, the average annual energy bill is $1,420 in the lower mainland. A similar house on Vancouver Island, however, has an energy bill of $2,320. That's $900 more for a house built prior to 1976. New homes, as I've stated, which are more energy-efficient and have lower total energy bills.... But there remains a difference of $500 between the cost of the Island compared to the mainland. A new home in Vancouver has an average bill of $1,100. The average new home on Vancouver Island or in my constituency of Victoria has a bill of $1,570 — $500 more. Yet why can't we have that power? It doesn't make any sense.

[4:00]

Here we have in a throne speech that appeared in this House a couple of months ago reference again to the natural gas pipeline. Now the B.C. Utilities Commission says it's going to take about, I believe, $528 million of federal money to build it. My first question to the minister: has the federal government given you the approval for the $528 million to build the gas pipeline?

HON. MR. BRUMMET: The answer to the last question is no, but negotiations are going on with the federal government, and hopefully we'll get some positive results. I was trying to follow the member in that I know that the rate structure for the lower mainland and Vancouver Island is the same for electricity. The line capacity is there. And then it twigged that here you don't have the natural gas on the Island. In Vancouver, they would heat hot water and the home with natural gas and so that same home would have a lower electricity use because they are using natural gas. I guess what you're doing is making the case for the Vancouver Island gas pipeline, because the electricity is available. It is there.

The member said something about a surplus of electricity until well after 2010, or something — that is not correct. The capacity to the line is there, yes; it's got plenty of capacity. We're talking about the surplus of hydro power. And judging from some of the other comments, you don't want us to build more expensive generating plants. But if you lower the cost of electricity so that it replaces all other fuels — and it is not as efficient as natural gas for heating, if you start making comparisons — then you would create a massive demand for electricity if it became subsidized, in effect, as compared to the other energy sources. So that is one of the reasons. If you did have a surplus to 2010 or something of that nature, then it might make some sense. But it does not make sense when you only have a two- or perhaps three-year surplus that you can count on. None of the electricity, discounting that being done to industry, is being done for more than about three years, because we can't count on the extra supply.

MR. HANSON: My comment to the minister basically is that the people of British Columbia who do not presently receive the benefits of natural gas because they are not on the network should be served first before that power goes cheaply into the United States and doesn't benefit our people.

[Mr. Ree in the chair.]

It is not good enough to have an election promise for a natural gas pipeline to the Vancouver Island — for the almost 35 years that we have been promised the natural gas — when there is surplus electricity through the Cheekye-Dunsmuir line which the good taxpayers of the province of British Columbia and Vancouver Island are paying for but are not allowed to have access to.

I agree that there have to be other things going in tandem with it. There has to be a retrofitting of homes and insulating of homes to maximize the benefit of that power.

AN HON. MEMBER: That'd create jobs; you don't want to do that.

[ Page 8162 ]

MR. HANSON: That would create a lot of jobs on this island. The member for North Vancouver–Seymour pointed out the labour component of the pipeline and so on.

Now if you want to build the pipeline, and it is economically feasible, and the federal government is going to build it, and so on and so forth.... We've waited 35 years now. In the meantime, give the people of Vancouver Island the juice to support their own home-heating needs. It's not good enough to have pie-in-the-sky jam tomorrow but no jam today. It goes on for year after year after year. The people of this island deserve a fair shake — and the people of the interior, and wherever else. We're talking jobs, and we're talking energy. It belongs to the people of the province. They've paid for it, not the cheap aluminum beer cans that are made down in the United States that put our people out of work. We come first. Our people come first, and that's the only way you should be approaching your responsibility.

HON. MR. BRUMMET: I take it then that we have the full support of that member to get the gas pipeline to Vancouver Island as soon as possible. If we made a decision today to subsidize electricity rates, I tried to point out that it would create a greater need for electricity-generating facilities, which would create more borrowing, which would create the very things that one of your other members was arguing against.

MR. HANSON: Give us the surplus.

HON. MR. BRUMMET: Yes, I know that the member is being very parochial there, but if a decision were made today to use surplus electricity for, in effect, oil furnace conversion or retrofitting, it wouldn't take very long before we would have no surplus electricity left, and the prices would then go up. So I think we have to look at it on a little longer term — and we are looking at it, because the gas is the most efficient one to get over here — not use your short-term solution which would cost the people of this island a lot more in the long run.

MR. DAVIS: Residential space heating is not, especially over the next few years, likely to be a major consumer of power, but it can be a significant one. The point I was trying to make is that the excess capacity in the Cheekye line is incredibly large and could certainly look after any significant growth in, say, conversions from oil to electricity. It could look after it quite easily. I'm sure that on a close calculation, looking at that load now, any prospective rates of growth could see that the Cheekye line could accommodate it.

What I wanted to address more particularly is the long-term policy. In electricity we have what's called the postage stamp rate: we have the same price for power, at least power sold by B.C. Hydro, to each category of consumer everywhere in the province. In other words, you pay the same price for residential electricity in Vancouver as you pay in Fort St. John, as you pay in Victoria. I am sure that the long-term political pressures, and perhaps economic ones also but certainly political pressures, will say: the price of natural gas to the consumer must be the same on Vancouver Island as it is on the mainland, at least to the residential consumer.

One great difficulty I have then is: if the price is the same on the mainland as it is on Vancouver Island, or vice versa, what are the economics of any investment in a pipeline connecting the two? It's a very difficult political question, one of standardizing rates across the province. If the rates on Vancouver Island for gas are going to be the same as on the mainland, on the face of it there's no economics for a pipeline; there's no way of paying for the pipeline that connects the two. My argument really is: use the Cheekye line, for some years at least, and in order to get apparent or political equity, why not strike a space heating rate on Vancouver Island which provides the equivalent in energy terms, or monthly cost terms, to the residential consumer on Vancouver Island? In other words, electricity is sold for space heating at a unique price on the Island, less than on the mainland but equal to the gas rate. Therefore the user of B.C. energy, electricity, on Vancouver Island for the next few years for space heating and the user of gas on the mainland for space heating pay the same price; the monthly bill is comparable. A postage stamp rate, if you like, for energy, as opposed to gas versus electricity.

I'm not sure when the economics of a pipeline will be proven, but in the face of a very substantial Cheekye link, and in the face of the possibility at least of finding offshore gas, or moving liquid gas down from Prince Rupert in concert with some export proposal for LNG to the Orient, why not wait for those possible developments to either be proven or disproven before building a line? The basic question, the basic recommendation, I suppose I'm making is that in order to displace oil on Vancouver Island in the short term, in order to give Vancouver Islanders an equitable rate for space heating, why not strike a special space heating rate on Vancouver Island that would apply to all connected power customers now, which is equal in rate per energy terms with gas in the lower mainland?

HON. MR. BRUMMET: I guess you have to look at the long term. Then when the surplus has run out, there's no argument about the capacity of that line to carry the electricity. There is a concern about the continued use of that availability. If you put that rate in, get everybody to get into space heating with electricity, and then when that surplus runs out and you have to build another dam and you have to bring up the cost, what happens in the long term?

As far as the exports to the United States, what is happening there is that the power that is surplus, that is available as spot sales, is all that's being sold at the lower prices. When we're talking about Site C or firm contracts, then we're talking about firm prices. But when you're on the spot-sale market, just taking for now little bits and pieces, then you either sell at the price that somebody's going to buy, or you don't sell at all. You say, okay, let's keep it. There is not the demand for it here on a spot-sale basis for space heating.

MR. DAVIS: Mr. Chairman, I hear what the minister is saying. He's saying that the commitment to supply consumers on Vancouver Island with electricity for space heating is going to be horrendous, or at least is going to be very large. I agree that the conversions from oil, for example, which would take place over the next few years, would be irrevocable — at least they'd continue to use electricity for space heating for another 20 or 30 years. But I'm saying that the amount of power committed in that case is relatively small, not only compared to the Cheekye connection's capacity, but compared to our generating surpluses, our transmission excess capacity currently. And what it can do is buy us some time.

If there are real economics for a gas pipeline in a few years, then gas will be available to look after the conversions

[ Page 8163 ]

or the switch from oil, but in the interim (a) we're not dealing with very large numbers, but (b) we're talking about equity for as many as half a million connections on Vancouver Island. After all, the price of oil is not as high as it used to be. The cost of conversion is significant. I don't expect that the conversions will be wholesale over the next few years, but at least the opportunity should be there and the price comparable to gas prices in the lower mainland.

MR. CHAIRMAN: The Chair would draw to the attention of the members that the white light on the Chair's table is malfunctioning. The green and red lights are satisfactory.

MR. SKELLY: Due to a shortage of electricity I assume, Mr. Chairman.

I think I'm very pleased to see that the member for North Vancouver–Seymour is now starting to listen to some of the arguments that have been made by the opposition over the last several years.

Interjection.

MR. SKELLY: Some things he doesn't hear, Mr. Chairman, and since he's been in the back bench he's found it a lot easier to hear and to understand some of the arguments that are being made — the same arguments we've been making for a number of years with respect to this Vancouver Island gas pipeline project. Maybe the reason the minister has difficulty understanding it is because it's based on a principle of fairness.

Now some of my colleagues would argue that a postage stamp rate across the province for hydroelectricity is a fair rate, but in fact, as the minister should understand, because he represents or is elected from a constituency along the Yukon boundary, he should know that the principle should be based on degree-days. The cost of heating in the north is very much different from the cost of heating in the south. If we're going to apply the principle of fairness, maybe we should be applying the principle of fairness on a different basis; not on the basis of a postage stamp rate for electricity, but on the basis of the cost of heating or the cost of whatever application that energy is put to.

[4:15]

We're also not dealing here, Mr. Chairman, with a particular area such as Vancouver Island, which has been proposed to be served over the last 35 years by a gas pipeline. We're talking about a number of areas in the province of British Columbia that are outside the natural gas market. We're talking about places like Revelstoke and, as my colleague has suggested, Nakusp and a number of places that can never, ever, ever be served with any economic justification by natural gas.

Now an example is the west coast of my constituency. Tofino and Ucluelet, if they build a natural gas pipeline to Vancouver Island, will never be able to benefit from the service provided by that natural gas pipeline. If you go up north on the north end of Vancouver Island, you're looking at a number of communities on the west coast as well: Port Alice, Gold River, Tahsis, Zeballos — all of those communities on the northwest coast of Vancouver Island that could never in a million years be economically serviced by a natural gas pipeline. So when we're applying this principle of fairness, electricity is one of the things you can distribute to many thousands of people in British Columbia in many isolated communities, and you can apply the principle of fairness there because they're capable of having that energy commodity distributed to them. It can be done in a very short period of time. The minister could make a decision in the House today that would immediately benefit those people on Vancouver Island, in Nakusp, in other parts of the province. They could see an improvement in their economic circumstances as a result of what the minister does today in terms of providing electricity to customers in areas outside the natural gas market area. The benefits could be distributed today.

If you brought natural gas to Vancouver Island.... A lot of people on Vancouver Island have oil heating. Some of them have oil space heating; some have central furnaces that are fuelled by oil. In central heating they would find conversion to natural gas fairly easy and inexpensive. But a larger percentage of heating customers on Vancouver Island use electricity. They would find conversion to natural gas very costly — almost prohibitive. That would be a serious problem for those people. Many would not connect themselves to the natural gas distribution system because of the cost of converting their homes, retrofitting their homes for central natural gas heating. On the other hand, it requires a very low upfront capital cost to convert to electric heating. In addition, you could leave your oil furnace or your oil space heating intact so that you could have a hybrid system which makes you less vulnerable to pricing changes and that kind of thing. It would provide customers on Vancouver Island with an advantage.

In addition, by lowering the cost of electricity on Vancouver Island for heating purposes, you are going to increase the disposable income of citizens on Vancouver Island. They will immediately have money that they're not paying to that huge, cash-guzzling, debt-ridden B.C. Hydro and Power Authority. They'll be able to spend that money in their local businesses right here on Vancouver Island, up in Revelstoke, in Nakusp, on the west coast of British Columbia — in all of those communities that would see some immediate benefit in the reduction of hydroelectricity costs.

Just imagine what the advantages would be to those communities of having the citizens in possession of more disposable income which they could use to stimulate demand for the products and services of small business. Imagine how the economy of British Columbia, which has been so distorted by this government's economic policies.... Imagine how the economic benefits could be redistributed through every region of the province if we were able to lower the electrical energy costs of people around the province who are outside the natural gas marketing area. Imagine the stimulus to those communities, and the benefits that could be distributed in those communities by increasing the disposable income of our citizens.

As the Utilities Commission suggested — as the Site C panel of the Utilities Commission suggested — B.C. Hydro doesn't look at the overall costs and benefits of their project to the province as a whole. They look at it in a very narrow and circumscribed sphere. As a result, they don't take into consideration the costs and benefits to the whole province. In fact, the Utilities Commission told Hydro to go back and develop a more appropriate cost-benefit analysis before they would give them approval to go ahead with the Site C project. That's something that you and this government rejected, but it should have been done before you began talking about going ahead with the Site C project.

[ Page 8164 ]

Imagine the benefits to every community around the province if, through a change in hydroelectricity and electric pricing policies, we created more disposable income in the hands of our citizens which they could use to stimulate small business in their community. The benefits would be dramatic; the employment impacts would be dramatic. The employment impact here on Vancouver Island, which is particularly hard-hit by this government's economic policies, would be dramatic as well.

I think the minister has a chance here today to make a decision that will make him a hero to the people of Vancouver Island and to those other areas outside of the natural gas distribution area. By changing the price of hydroelectricity for space-heating or for home-heating, he could distribute immeasurable benefits — with almost no cost to B.C. Hydro, because they have a surplus in the system. They have surplus transmission because they overbuilt their transmission capability to Vancouver Island, because they were thinking at the time that they were going to build a nuclear power plant on the north end of Vancouver Island. That was their proposal.

So think of the possibilities the minister has by reducing electrical energy costs for space-heating all over the province outside the natural gas marketing area, increasing the disposable income of citizens, allowing those citizens to spend that money and stimulate small business in their communities. The benefits to B.C. would be terrific compared to some of the other proposals that the minister has been making with respect to gas pipelines and new dams. Let's hear the minister accept for once a positive proposal made not just by the opposition in this Legislature but also by one of his own government back-benchers.

HON. MR. BRUMMET: Starting out, I am delighted to hear the Leader of the Opposition argue for fairness for the people in the north. I presume that extends to roads, to freight subsidies, to paved roads, to all of the things that you have here in the south. I am sure that you would....

MR. SKELLY: You're the Minister of Energy.

HON. MR. BRUMMET: No, but I mean you talk about general fairness, so I am sure that you would like to see all of those other things made available to my people in the north at the same price as they are made available to the people in the south — all the facilities and all of the conveniences, all of that. So I am delighted that you finally acknowledged fairness to the people in the north.

As for the extensions to communities without natural gas, a great deal has been done under the federal-provincial programs to try to provide gas to those....

Interjection.

HON. MR. BRUMMET: It is not going to be possible for all of them. I listened courteously to you, but I guess that is not in your lexicon, is it — courtesy? That member mentioned about cash-guzzling Hydro, that this huge monolith, I take it implicitly, is just taking in money and not providing any services. Yet at the same time his argument runs for short-term gain, it's long-term pain for the very people.... I know that may be politically expedient to you, and it may be nice to turn around and say, wouldn't that be great? But on the one hand you say Hydro is too expensive because it guzzles all the cash from the people, while on the other hand you are arguing to try to get the situation so that by subsidy.... Where would those subsidies come from but from the other Hydro ratepayers? It's got to come from somewhere if they are selling electricity at less than what it costs them to produce it.

MR. COCKE: Come on! What are you selling it to California for?

HON. MR. BRUMMET: Because that is a spot sale.

Interjection.

HON. MR. BRUMMET: Yes, I am sure that you would, and once the people have converted to electric space-heating here and then the surplus runs out and it no longer can be treated as a spot sale, but it has to recover what it cost to generate, that and additional power that is going to be required, then that member will blame somebody else again because his idea didn't work out.

So it is very nice and very politically expedient to talk about short-term benefits which would be hurtful to those people in the long run. Politically, economically, otherwise from a common-sense point of view, I would not like to join that member in trying to get these people short-term gain for long-term pain.

MR. SKELLY: In responding to my proposal and the proposal of the member for North Vancouver–Seymour, the minister accused us in both political parties of asking for short-term gain for long-term pain. The minister has never presented to this House, nor has B.C. Hydro, a strategy that would deliver that kind of energy to Vancouver Island or to other areas of the province, to justify his position. There is a surplus of electrical energy available in British Columbia. We're exporting that surplus, the minister says, on spot sales to California and other parts of the western United States. Those spot sales seem to cover a long time, Mr. Chairman. We know that Hydro has had a policy of building new generating capacity, which leaves a large amount of surplus energy between dam projects so that they can sell that surplus on spot sales to the United States.

In any case, there is a surplus of electrical energy available in the province now. My colleague from Victoria suggested to the minister that at the same time he provide a part of this surplus to the people on Vancouver Island at lower rates or rates that are equal to the heating costs on the mainland and in the natural gas marketing area. We're not asking for any preference for the people on Vancouver Island. We're not asking for any subsidy for the people on Vancouver Island, or in those other areas of the province that the minister talked about — the north and the coast and some parts of the Kootenays. We're simply asking that their costs of heating should be equalized with the costs of heating in the natural gas marketing area. That's all we're asking. We're not asking for any subsidies; we're asking for some fairness here. The minister twisted the argument around and rephrased it in his own terms to suggest that we're talking about a subsidy. We're talking about fairness. The member for North Vancouver–Seymour (Mr. Davis) talked about fairness. That's all we're asking for for the people on Vancouver Island.

[ Page 8165 ]

We're also suggesting that the minister should look at this in larger cost-benefit terms, in terms of the amount of disposable income that this will create in certain areas of the province that have been extremely hard hit by this government's economic policies, and in terms of the benefits that will accrue to all British Columbians by increasing disposable income in certain areas of the province — the products that will be demanded, the services that will be demanded, the jobs that will be created, and the increased economic and employment activity that will result from lowering those hydroelectric costs in the areas that I described.

If the minister refuses to go along with the argument, will the minister then agree, at least, to study the argument, to see what the benefits are? After all, this was the Utilities Commission's criticism of the Site C project — that Hydro did not examine the overall costs and benefits to the people of British Columbia. They only examined those costs and benefits in very narrow terms. Will the minister at least agree to study the proposal?

HON. MR. BRUMMET: Mr. Chairman, I have absolutely no problem in agreeing to studying it because I have been studying it for some time. With respect to the comparisons among electricity, gas, oil heating and all that, a lot of study has been going on with respect to the Vancouver Island gas pipeline. So yes, I'm studying, I'm reading those reports. All the studies have been done. There are ongoing studies. So I have no problem with that.

The member seems to say: "We don't want a subsidy; we just want lower-priced electricity." Whenever you take a higher-cost energy source and adapt it for use in something that can be done with lower-cost energy, then you in effect create a subsidy. You're talking about the surplus. The surplus is very short-lived. That's why I say short-term gain for long-term pain. If you use your short-term philosophy, then you eliminate that surplus much more quickly and force higher prices after people have spent money to try to get to that point. It does not make sense, other than in your expedient political terms, to do this.

[4:30]

MR. SKELLY: This is amazing, Mr. Chairman, that the minister talks about political expedience. I asked the minister if he was willing to do a study of this proposal. That's all the opposition is asking: a study of the proposal. I don't want a list of the books you've been reading recently. I don't want a list of the studies you've read on the Vancouver Island gas pipeline. We've seen those studies. What I'm asking the minister to do is to make a commitment to take a look at the economic benefits to the whole province, and to all of the people in the province, of making surplus energy available to Vancouver Island, even at the same rate that he's making it available to California.

Mr. Chairman, that's not much to ask: that the minister do a study of the proposal. This minister talks about political expediency, and all of these kinds of things. Demonstrate your good faith for a change, and agree to do a study. The opposition comes into this Legislature, Mr. Chairman, year after year after year. It makes proposals, presented in good faith to the government, proposals for the government to study, and we see this kind of off-the-cuff, immediate rejection of good, sound alternatives. Will the minister at least agree to study the proposal, and to make those studies broadly available to the opposition as well?

[Mr. Strachan in the chair.]

One of the things the minister might do, if he wants to defuse whatever political value there might be here, or political expediency, is refer it to one of those select standing committees of the Legislature that hasn't met for a decade, since this government came to office. The eyes and the ears of the Legislature have been struck dumb and deaf as a result of this government's depriving this Legislature of the very committees that provide information to us as MLAs and allow us to distribute information to the people of this province. Why doesn't the minister refer this issue to a select standing committee of the Legislature? He is the only one that has the power to do that.

We can't trust the minister when he presents information, or when he says in the House that he's been reading studies. We want to see the studies. We're not allowed to trust the minister, Mr. Chairman. We're not allowed to, unless we see the studies and can judge the figures for ourselves, and the terms of reference that these studies are based on.

What we're asking the minister to do is simply to do an open study, a public study, of the alternative methods of providing energy to Vancouver Island. Will the minister at least agree to refer it to a select standing committee?

MR. CHAIRMAN: The committee is reminded that a select standing committee would have to be struck by the House and not by the Committee of Supply.

HON. MR. BRUMMET: Mr. Chairman, I'm somewhat appalled by the Leader of the Opposition saying: "Will you commission a study to look at this?" I take it you're implying: please ignore any and all studies and public hearings that have been done to date, and commission a study now, so that we study the thing to death and never do anything. You must have heard that the B.C. Utilities Commission had a public hearing — the results of which are available to that member should he wish to read them — on the Vancouver Island pipeline issue. There was the Abercrombie report. There has been report after report after study, and you want to make it sound as though nothing has been studied, that nobody has looked at all of the relative comparisons, and anything of that nature, and that all of a sudden you have just woken up. Now you say we'd better take a look at this: "Will the minister promise to take a look at it," after the B.C. Utilities Commission has been looking at all of these proposals and all of the applications from everyone. Now he wakes up, all of a sudden, and says: "Well, study it. Please make a promise to study it." And then he says: "Refer it to a select standing committee." Once again, in all the time since I've been here, anytime we have met in a committee, what did you do? Want facts? No. All I ever saw your members use them for was political expediency. So nothing gets accomplished.

If ever you'd come down to earth with some pragmatism and some common sense, and abandon your political expediency, maybe something worthwhile could come of meetings with you. But as long as all you do is use every issue, and take out of context anything and everything, for your political short-term purposes, then it's pretty hard to get any sense out of you.

[ Page 8166 ]

MR. CHAIRMAN: Order! I realize that the committee is a bit heated at this point, but perhaps we can maintain parliamentary language and decorum and return to good parliamentary process.

MR. SKELLY: Well, it is interesting, Mr. Chairman, that the minister is constantly distorting the question, and then answering his own distorted question. Sometimes you get the impression that some ministers are as thick as a fence post. I won't say that about this minister, but you could probably string wires on him to Vancouver Island.

Mr. Chairman, we know about the Abercrombie report. We know about the work that the B.C. Utilities Commission has done on Vancouver Island. We know that there has been no comparison between the alternative sources, as between gas and electricity or as between the proposals that have been made here by the member for North Vancouver–Seymour as to reducing electrical energy rates on Vancouver Island in such a way as to provide fairness in heating costs by basing your prices on the cost of energy rather than on the cost of a particular energy commodity — what we felt was a good proposal by the member for North Vancouver–Seymour.

Granted, it is a proposal that we've made before in this Legislature, Mr. Chairman, and a proposal that we've made on a number of occasions. But we thought that since it was made by a government back-bencher this time, it might get a little better hearing. The minister should not simply be rejecting out of hand alternatives that are presented to him in the Legislature. That's one of the problems with this Social Credit government. They reject out of hand good information, good proposals, information that could be used to the benefit of all citizens of British Columbia. I'll tell you, if the minister thinks it is just being done on the basis of political expediency, which we sometimes think was the basis for proposing a natural gas pipeline to Vancouver Island.... But of course we wouldn't say that, even though it has been promised for 35 years.

Mr. Chairman, all we are asking the minister — and I want to be very clear about what we are asking here because it tends to get distorted when it comes back — is for a study of the proposal that has just been made in the House today, a proposal for reducing electrical costs on Vancouver Island, making that electrical energy available to Vancouver Island and to other areas of the province outside the natural gas market service area, so that we can have a reasonable basis for comparing energy costs, so that we can determine, as members who are responsible to the citizens of British Columbia, which energy commodity can be distributed to those areas for the best benefit of the citizens in those areas and for all of the people of the province of B.C. That's all we're asking. It's not too much to ask. It's not too much to strike a select standing committee of the Legislature to have them meet for four….

Interjection.

MR. SKELLY: No, because we don't think you'd come through with a royal commission, Mr. Chairman. You've been embarrassed by a number of them in the past because they have identified certain problems with this Social Credit government. All we're asking for this time is for the committees of this House. The committees have been named, people have been appointed to those committees. The committees have not met for a decade since this government came to office, and the reason they haven't met for a decade is that this government is afraid of the truth. They're afraid of the information that citizens of B.C. can provide to this Legislature, because they have distorted and corrupted this Legislative Assembly, and they have managed the news and the information that comes out of this capital here in Victoria. That's what you're afraid of, Mr. Minister. You're afraid of getting the facts.

HON. MR. BRUMMET: I would be delighted if the members of the opposition have made studies of the relative prices, that sort of thing, that now supersede the Abercrombie report, all of the other studies, the public hearings that have been held almost as though this is a new issue. There are rate comparisons; there are cost comparisons between all the different energy forms. If the member has, and you have worked out among yourselves this report about what it will be, I promise you I will read it if you will send it to me. I have read as much as I can of any of the other reports.

Although the matter was studied last year or the year before and all of the comparisons were looked at by the B.C. Utilities Commission, by all of their experts, you're saying: "Please, Mr. Minister, ignore all that, and commission another study to find the same thing." I don't know how long that sort of thing goes on. We have an opportunity at this time — probably a better opportunity than we've ever had — to get a federal contribution to make a gas line to Vancouver Island possible. It would be nice to have the support of you and the other island members to try to make that pipeline possible to the island, instead of giving your nice little political speech about distortion and corruption of the Legislature and so on.

Interjection.

HON. MR. BRUMMET: Well, you made the allegation, Mr. Leader of the Opposition — if you're the real leader; I'm not sure.

MR. CHAIRMAN: Perhaps we could get down to relevant debate on the estimates.

MR. NICOLSON: Mr. Chairman, I rise in this debate with some sense of relief. I was quite taken aback when my leader got up and presented such good suggestions to the minister on the heels of the member for North Vancouver–Seymour — well-thought-out comments by both members — but I was quite distressed. I thought that perhaps we were blowing it, and that maybe, Mr. Leader, you had made the first serious mistake of your leadership by giving such an excellent platform to the other side. But I guess I overestimated the intelligence of the minister, Mr. Chairman, so that brings me some sense of relief in this matter.

Really, when you think about it, there are some really serious misunderstandings. I don't know where they emanate from, but the previous Minister of Energy seemed to have the same misunderstandings. I recall just a little while back in November when the Minister of Energy made a ministerial statement and said that for the first time we have had to use the power of the Revelstoke dam because of this cold snap. It was the first time that we had been required to use it and the system was being taxed today. I want to ask the minister: can he define what is meant by nameplate capacity in terms of energy requirements, and can he differentiate that from total

[ Page 8167 ]

annual energy requirements? Obviously his predecessor didn't understand, because what we had was not the need to build a new dam to store more water but simply to install another couple of turbines in the Mica or Revelstoke or Pend d'Oreille dams, or in several other sites within this province in which they can be installed. The minister is getting up here today and talking in terms of the energy needs. I want to ask the minister if he can define for me right now the difference between nameplate capacity and total energy requirements for electrical purposes in this province?

[4:45]

HON. MR. BRUMMET: Mr. Chairman, I guess the member has certainly wrongly estimated my intelligence if he expects me to swallow a lot of the drivel that's been coming at me here. Nameplate capacity is the total that the generators are capable of generating if they were ever to all run at 100 percent, which as the member knows is not possible. I'm not quite sure, since you used two different terms for the other…. Total annual requirement is the amount of electricity that is needed and, if you want to go on, that is used during the year. So theoretically the name-place capacity times 100 percent operation 100 percent of the time gives you a lot of electricity, but you cannot use that, because electricity cannot be manufactured and stored on the shelf until it's needed. You have to deal with peak periods and low periods of draw. Electricity is generated as it is drawn, as it is used, and then your generator kicks out more electricity.

There is a distinction between that and the total annual and the actual operating capacity that is available from the generators because of the water supply, because of generators not all running at 100 percent all of the time. If you had such a system in hydro-generation where you could actually be using 100 percent of the power at any one time, then theoretically if you ever needed a little bit more electricity, you've got nothing in reserve and you would have brownouts. You never operate at 100 percent capacity with hydro projects. Probably 65 percent is pretty good.

MR. NICOLSON: If the hydroelectric generators in this province are only capable of producing at 65 percent of their nameplate capacity, I suggest we had better have a real royal commission and a shake-up — if that is the state of preparedness of the installed nameplate capacity in this province, other than the Burrard thermal plant which, for some political reasons of course, one is not going to use for environmental reasons. Hydroelectric energy, as the member for North Vancouver–Seymour (Mr. Davis) knows, is very efficient and relatively easily maintained. Certainly we have the technology in this province to do so.

I am convinced, then, by the minister's answer that he has…. I certainly wouldn't give him a failing mark for his answer, but I don't think I would give him a B either. This is really at the root of a lot of the problems that we encounter in this province in terms of our energy policy: we have politician after politician taking the position of Minister of Energy, and I don't think they know the difference between an erg and a kilowatt or a joule and an amp, and they really don't appreciate the difference in terms of the two different ways in which we measure our energy requirements.

In a year we are going to have to generate a certain amount of electrical energy. It requires a certain amount of water being stored over a long period of time. When we have the statement by the previous minister that we had to turn on the full system to meet the electrical demand, that was simply a matter of nameplate capacity, and there is provision in the existing dams to provide more nameplate capacity with more generators. So that really is not a problem.

Of course, having installed that nameplate capacity, you've got to have enough water to flow through it on that given day. That is not a problem. We have a surplus of water storage right now. We have, in the words of B.C. Hydro itself, enough for a ten-year surplus, as I predicted back in 1978. You are spilling water and wasting energy every day. To put it in terms that the minister might understand, it would be like flaring off all of the capped wells in this province. It would be almost as wasteful to continue to do this. To push natural gas when we have this energy, and you cannot recover…. As the minister said, you can't store this electrical energy. We can't store that energy this year and use it three or four years from now. You are spilling that water every day. It is going through the system without generating power, right through the Columbia River system.

AN HON. MEMBER: Name one dam.

AN HON. MEMBER: Keenleyside.

MR. NICOLSON: Well, Keenleyside is another, yes — it doesn't have any generators in it. At the Pend-d'Oreille Dam you could be generating more. On any one given day you might be using the full capacity. You might be holding back at a certain dam, but you have more capacity, and you're not using it. Certainly to be exporting this power when we could be using it domestically, when it could be used to give people on Vancouver Island, and in places like Nakusp, Golden and Revelstoke, the same kind of choice in energy cost as is obtained in other parts of the province…. If the minister is worried about the effect that it will have, he doesn't have to make it available exactly at the equivalent of natural gas. He can use a variable pricing structure, which is being used in California, to influence choices that are being made, with tremendous cost benefits. These are the kinds of things that certainly I'm not going to attribute to other members but that I certainly would call upon the ministry to do.

You can affect the supply and the demand situation by a variable cost structure. Right now your variable cost structure is ridiculous. I would submit that this minister is blinded. He lives in the heartland of the gas-producing region of this province. I've heard him speak many, many times about the gas industry in this province. I don't think he looks at the energy equivalents. I don't think he looks at the fact that natural gas is not going to be available to the people in Nakusp. It's not going to be available, very likely, to the people in Golden or Revelstoke. It's not going to be available in many, many places. Yet in other parts of my riding, in a little place like Salmo, they have natural gas. Out where I live the natural gas pipeline stops, just coincidentally, a few hundred yards from the end of my home. But, Mr. Chairman, if you are a couple of hundred yards beyond that natural gas pipeline, it might as well be a thousand miles away. It might as well be locked up in the ground up in the Peace River. So what is needed is something a lot more imaginative.

The minister places great reliance on these internal reports. Well, there were all kinds of internal reports that led to the current hydroelectric surplus situation, which were second-guessed by other informed reports in the ministry, in the commission, and by others. But it's really a matter of the

[ Page 8168 ]

minister taking charge of his ministry, showing that he is in charge and that he's working for the people. You're not there to make life easy for B.C. Hydro. You're not there to make life easy for the Utilities Commission or for some of the very nice people who work closely with you and help you to prepare responses to letters for your signature in your ministry. If you have to kick butts, you have to do it, and you have to work for the people of British Columbia. You have to think not just about the natural gas industry in this province; you have to think about fairness for the people, whether they are on Vancouver Island…. And a natural gas pipeline is not going to provide fairness for everybody even on Vancouver Island, let alone in the interior.

So I would urge the minister to get busy in his ministry. Really, what I said in my opening remarks somewhat facetiously I actually mean quite seriously. In some ways I would just as soon that this topic hadn't been brought up in the House, because I think it's a doggone good platform for a party that's willing to run with it. And we are on this side of the House. If you're not willing to run with it on that side of the House, good on you. Good on you, because I think that we are on the right side of this issue, not just politically, but in terms of economics, conservation, and just intelligently using our God-given resources. We're on the right side. If you want to be on the wrong side, Mr. Minister, even though some of your back-benchers have the informed opinion to differ with you, well, then that's fine. I leave it to you.

HON. MR. BRUMMET: I hope that when you run with this you will throw in a few facts, instead of the politically expedient thing: "Have we got a promise for you!" Maybe I wasn't talking about internal reports when I was making reference…. I was talking about public hearing reports where people had input. l was talking about studies that have been made public, that are available should you wish to read them. I was not talking about internal reports. Yes, we have some internal reports, as that member well knows, but the ones I'm talking about are the external, the public reports that are available, where all this information is available to you.

I hope that when you run with this platform of, "We will promise you cheaper electricity because they're selling some to California," at that time you will also tell the people: "We pick the day or the month or the season during which you can have it; you don't have that choice." That's what interruptible sales are about: we don't got it, you can't have it.

Those are the sort of things that I hope you will add. In other words, give them the correct and the total picture when you are doing that. Tell them that if we can pull this off for the next year….

Interjections.

HON. MR. BRUMMET: You don't really want to tell them that when that draws on this surplus and we have to build more expensive facilities to generate it, you will be paying through the nose for the wonderful favour that we did you. I hope that you tell them the whole story. Because if you don't, I can assure you that I will.

We talk about the nameplate capacity, and the member says: "We are not using those generators. My goodness, we're not using them to 100 percent capacity." Let me draw you a simple picture. Your car, whatever it is, may be designed to go up to 120 miles per hour, but if you are going to drive that car at 120 miles per hour, besides being illegal — I'm talking in pragmatic terms — how long will your car perform at that velocity?

Those are the sort of things that you don't want to talk about. You say we could put in more generators where there are dams now, and we could turn out a lot more electricity. I'm assuming that the engineers that designed the generators knew something about how much water it takes to run so many generators and how much reservoir you have to have. If you have a run-of-the-river dam…. I said earlier, had you been listening, or had you been here, that the Keenleyside project is definitely in the plans. Whatever capacity it can turn out, it's definitely in the system plans and will be needed. It's there.

Any of those that you're talking about are already in the plans. If you're talking about, well, you've got a dam and maybe it's wide enough so you stick in another couple of generators and then you run the water out so that none of the generators run…. If that's the kind of reasoning that you're doing, then I'm sorry. I'm going to leave you to that on your own. You run your water up and down in an irrational way. What I would like to do is listen to the engineers, the experts and the people who have had many years' experience to coordinate and rationalize that system. So run your car at 120 miles per hour every day if you like.

[5:00]

MR. NICOLSON: Mr. Chairman, I'd like to invite the minister to come and tour the Ten Mile Dam on the Pend d'Oreille. I'd like him to come and tour the Revelstoke Dam or the Mica Dam. We can show you where the penstocks…. The engineers know that they'll be able to put more water through there. They've made provision for it. When the nameplate capacity was to be required, to oversimplify, they would merely have to put in the generators. The provision is built into the dam to put in the extra generators. It's not something that the engineers forgot, and if the minister would read the prospectus of B.C. Hydro submitted to the U.S. borrowing authorities, like Salomon Bros. and so on, he would see that this is all explained in the prospectus. Look back at any one in the past few years, and a lot of it will be explained.

It's about the only way, though, that real hard information can be made available to the public, because it's available to the people of British Columbia through the freedom of information act of the United States and requirements of their securities and investment. That's the way that we get information, but it also would be in the B.C. Hydro annual report, a matter quite that simple.

These things are all explained, so they're there, and if the minister wants to go and tour any of those dams, he can see that provision has been made. It's not an oversight of the engineers. They provided for it, and the capacity is there.

HON. MR. BRUMMET: The argument can go on indefinitely, but I'm trying to say to the member that in all of the projections, all of those things that have been designed in and planned for are included in the amount of power that Hydro will be generating over the period of time. If you want to take one statement about adding an extra generator out of context and say that I know nothing about that sort of thing, that's your privilege, but I will not accept it. I'm aware of extra design that's been built in. It's a matter of cost and it's a matter of demand. I get criticized that Hydro is borrowing too much money. You say that demand isn't there this year, but go stick

[ Page 8169 ]

a generator in there to please you politically. It doesn't make sense. Yes, all of that is planned in, plus the additional. The one point that has been made over and over again regarding Site C is that there will come a time, depending on which projection you want to use, when we will be needing the power from Site C, that there are people in the United States who may be willing to pay enough to make that happen; if they're not, it won't go — we've said that. We're not going to be subsidizing Site C. I don't know the exact figures. I don't know at what time, or the construction cost changes, and that sort of thing. Again you say: "Prove to me how much." I'll leave that to the experts. But we're going to need Site C, in addition to all of the things we have been talking about. We're saying: wouldn't it make better economic sense for the people of this province if when we needed that power, it was half, three-quarters or fully paid for by other people who can use the electricity at this time? But I don't suppose you will ever accept that argument, because you say: "It's ours. Let's keep it in our back pocket, no matter what kind of economic sense it makes. Let's not build it until ten or 20 years from now, when it's very expensive to build, and we've got to pay the whole shot ourselves." So there is some sense to building something and letting other people, who want to and need to, help pay for it, so that it's available when you need it; otherwise we'll have to bear the whole cost ourselves. Again, to that member, we've tried to say that the Site C project has to make economic sense to those people.

[Mr. Ree in the chair.]

I was at a conference most of Saturday with the Western Interstate Energy Board, listening to the points of view of Southern California Edison, PG&E and the transporters from El Paso — the interrelationship of gas and electricity. Yes, I'm trying to get as knowledgeable as I can to make those decisions. I do not try to make those decisions on the same impulsive expediency basis as you want to do.

MR. LOCKSTEAD: My reason for getting up this afternoon was to ask the minister a few more questions about mining. But I found the debate this afternoon extremely interesting and enlightening. I would like the minister to understand that when we have other members in this House requesting energy for their areas, there's no way in the world that we will ever have natural gas on the Sunshine Coast, in Powell River and these areas, or consideration. When elected and we become the government, our party will in fact consider all these areas. We will reduce energy rates for our own people rather than send it across the border at a cut-rate price — it's as simple as that.

You may be interested to know that for the last 30 years and more we have been promised a natural gas line to Vancouver Island, through Powell River. In the last election we had minister after minister coming up through my riding and saying: "Vote me and you'll have your natural gas line." We knew they weren't telling the whole story. I have in my possession a letter from the then federal Minister of Energy, Mr. Jean Chretien, who in spite of what the minister was saying…. I didn't care what the candidate there was saying; he was just repeating what you guys were saying. He said in his letter, which I produced at an all-candidates meeting, that yes, there had been some discussions with the government of the day in 1983, with the then Minister of Energy, but they had led nowhere at that time. In the view of that federal minister and his people, the project wasn't viable. Although studies were done later by the B.C. Utilities Commission, and by Abercrombie and others — I'm very familiar with those, but I don't want to go through that whole thing…. What I'm telling you is — not you personally, Mr. Minister, because you weren't the minister then — that for political reasons your government made, or attempted to make, election campaign promises which in fact you knew were incorrect at that time.

Interjection.

MR. LOCKSTEAD: There were at least seven ministers in my riding, Mr. Member, and that was about the only thing they talked about up there.

The minister earlier, in a response to, I think, the Leader of the Opposition, said something about a gas line not producing that many jobs. We all know that. And we know that the federal government is not going to come up with $553 million to subsidize a natural gas line to Vancouver Island when we have Cheekye-Dunsmuir in place at a cost of $1.2 billion. The government has not admitted to that figure, but if you cost in the tertiary type of line extensions that were required on Vancouver Island, the figure comes to approximately $1.2 billion. Why would a federal government that can't even properly fund projects throughout Canada throw $553 million into a pot for energy that is not required right now, when an obvious solution has been put forward by our Leader of the Opposition and the member for Victoria, and by other members in this House?

Anyway, that isn't what I was going to talk about. It's just that every year in this House since I've been here we've been talking natural gas lines, Cheekye-Dunsmuir transmission lines. I could make that whole speech off by heart without reading a note, I've made it so often, but what's the point? The only thing is, I want the minister to be more candid with us when he's answering these kinds of questions to the Leader of the Opposition, and at least bend a little bit. Have a look at the proposal. It's a good proposal that's been put forward. It makes good common sense.

This minister is also responsible to the Legislature for mining in the province. I'd like to ask the minister just a couple of quick questions without changing the topic too much. One of the questions I'd like to discuss is the — I'm looking for the correct term — mineral exploration incentives program. The government has announced — in fact, it appears in the budget — a sum of $5 million under that program. I believe the question was asked the other day…. I'm talking about the $5 million so-called mineral incentives program. I see that $100,000 of that is scheduled for operating costs, another $4.9 million for other expenditures. What does "other expenditures" mean? You could perhaps explain that. I might add that some of my contacts in the industry suggest that this $5 million is really a pretty miserly and piddly amount in view of the downturn in the mining industry all over the world. I suspect this is just a little political plum that some people in the industry may or may not receive, but it will look good going in to the next election.

Secondly — and I want to get back to this one, Mr. Chairman — is another passed-up federal initiative. Last year B.C. signed the ERDA agreement with the federal government, including the mineral subagreement for $10 million shared fifty-fifty with the federal government. That all sounds very well too, until we look at what really happened.

[ Page 8170 ]

This was the lowest sum received by any province in Canada, believe it or not. Manitoba received $25 million; Saskatchewan, $12 million; little New Brunswick, $22 million; Nova Scotia, $27 million; Newfoundland, $22 million; Ontario, $30 million; Quebec, $100 million. I would like the minister to explain why, at the bargaining table, with the large mining industry we have here in this province, B.C. was only able to negotiate ten measly million dollars for what used to be our second-largest industry until under the Social Credit government mine after mine after mine has shut down — at least 12 to date, I do believe.

AN HON. MEMBER: Let's look at forestry numbers.

MR. LOCKSTEAD: We'll look at forestry numbers under the Forests estimates, but we're dealing with mining right now.

I wanted to change tack here a bit. Mr. Chairman, I would like to ask the minister about the Klappan coal project in the northwest part of the province. I want you to understand that I am not necessarily opposed to this project, but there are some unanswered questions, so I'd like to take a few brief moments to ask the minister some questions on this project, which is being developed by Gulf.

It's the anthracite coal situation, and everybody knows what anthracite coal is. It's used basically in Europe and parts of Asia for home-heating and cooking and those kinds of things. In those areas of the world, this type of coal is in short supply. The mines are being worked out. It would appear that we do have a potential for some sales in that part of the world for this resource. However, there are some concerns that have been expressed to us, and I'll just go through these very briefly.

Number one, the power needs for the Klappan development proposed by Gulf can be met with either a tie-in with the Hydro grid or by an anthracite-burning generator. The generator is causing residents in the area considerable worry because of the possible environmental damage, both from damage to the Spatsizi wilderness — I'm sorry, I don't speak that language very well; this language either — and from acid rain over three watershed areas. It has been proposed that B.C. Hydro can run through the same corridor as the necessary road link for that area, Highway 37, and it would offer an opportunity to increase the coverage of the Hydro system. What steps is the ministry taking to encourage Gulf to meet its power needs with a tie-in to the B.C. Hydro grid?

Second, Gulf has undertaken and continues to undertake a variety of feasibility studies for various aspects of the Klappan development. What has been the province's financial contribution to these studies?

[5:15]

I would like to know as well if the government has taken any steps to ensure that the market for this particular resource, anthracite, is both stable and financially viable. Now I doubt that the minister would have an answer to that, but I'm asking him anyway just in case he has. The government is going to be committing some financial resources in one way or another to this project if it's allowed to proceed. Approval for the step one has been given, and the company expects the approvals for step two to be issued sometime late summer or early fall. I wonder if the minister would know as well if the Klappan reserves have been adequately approved, or if that kind of exploration work is still going on.

I guess last but not least…. There are a couple of questions here I'm not going to, bother with, but there is one other major development. There are some — in fact two separate — Indian land claims in that particular region that involve two quite large Indian bands or nations. They also have names which I couldn't possibly pronounce. I don't even know if I could spell them. Nonetheless I wonder if the minister has, or if the company has, in any way — well, it has to be the minister; it has to be the government — addressed the native Indian land claims in that area before the project is allowed to proceed.

I see the green light is on. I do have a couple of other questions, Mr. Chairman, but I'll take my place.

HON. MR. BRUMMET: I'm trying to answer them, I guess, in the order that I made the notes. The argument about whether the Vancouver Island pipeline is viable or not viable, I guess, will go on indefinitely. You mentioned that. I take it that you are supporting your leader and the other members of your party in saying…. Now that we've finally gotten close to getting some federal money to build this pipeline, you're saying: "Don't build it."

Interjection.

HON. MR. BRUMMET: Use electricity. You said something about the fact that we should not build the pipeline now, that we should use electricity; we're going to need electricity. Several of your members made that point, and so I guess you're supporting that. We know that it's not going to create that many jobs in the long term directly, construction jobs, but that it will pump quite a bit of money into the economy should that pipeline go ahead. We also know that a lot of money has gone into extending pipelines to the east from the money that came from the gas revenues and all of these sorts of things. So we don't feel very apologetic about saying that I think it should help to serve our people in this area.

As the member for Nelson-Creston (Mr. Nicolson) was talking about, he hasn't got gas in his constituency, or hasn't got it to his town or to his house. Well, I didn't spend much time bellyaching about it here in the Legislature. I worked hard. I worked with the gas companies to get cost estimates, to get that applied. We've got a lot of gas extensions in that area from the people. We've just got another $3 million this year to extend gas. So that's how I operate. I don't once a year during an estimates complain about gas pipelines.

Okay, let's leave the Vancouver Island pipeline. I wish instead of the nitpicking, instead of the pros and cons when we're finally getting close…. We've had to get revised estimates because of the world oil price changes, that sort of thing. We've asked the people that have put in the applications to redo their numbers. We'd really like to go ahead with that Vancouver Island pipeline. Maybe the problem is that the federal government is now listening and saying that the members that represent the Island are saying don't do it.

Are you saying: "Let's go now"? Are your members, the ones that were attacking me here earlier, saying: "Let's go now. We'll do the electricity thing as well"? If that's what you're saying, terrific. I would like to have that support of all of the people, of the representatives of Vancouver Island, when I go to the federal government on behalf of this government and say: "They all want it now." This is the time to move. We finally got somewhere on it. Now I get into a

[ Page 8171 ]

debate about don't do it; send over electricity instead. So I have some difficulty with that.

Probably the simplest thing you talked about was that exploration funding program, the $5 million that we put out to try to accelerate mine exploration. I think you made some comment about there being a few political plums. Well, I'll tell you, we've appointed somebody experienced from the mining industry as the chairman in this, a Mr. Gammon, and he knows mining. He knows whether it's a viable proposal or not, and $100,000 out of that $5 million has been allotted for the year's operations. It's a one-year job. I hope it might go on beyond that if it proves a success. I've challenged the mining industry to make it work, to make this $5 million the best investment we've had in this province, and perhaps we can go on. But for the apportionment of that money, all the standards, I don't know whether you want me to take the time of the House, but I'll certainly be glad to send you this. It's got the amounts written in; $200,000 has been earmarked for prospectors. It's got $3.2 million for the second part of the program, which is developing identified ore bodies, $1.5 million for an accelerated mine exploration program and then $100,000 for the overall administration.

So if the member hasn't received this booklet, I would be glad to make my own copy available because I can always get another one. So you are welcome to it; and if you see any secret notes in there, don't publish them, will you? But there are none! No, the numbers are written in. I am being a bit facetious there.

As for the Klappan coal, I think you were asking about some numbers there. The provincial government is, through the federal-provincial agreement, sharing 50 percent of the cost of a $700,000 study about which way the road should go; you know the environmental road studies. So $700,000 is going into that; the company is providing half of that, we're providing the other half, the other 50 percent under ERDA, the shared federal-provincial agreement. We have a very strong interest in the environmental concerns that might be related to various options, and a lot of good has come out of that study so far.

Undoubtedly that is the only direct cost that I know of except the costs that are naturally associated with our ministry looking at the stage one, stage two approvals, that sort of thing. So we know that is going on, but those are the only direct costs. We know that it is supposed to generate some $500 million in capital investment in the province. They have done some test shipments now to study that anthracite coal, and I wish them great success because it is the type of coal that is not interfering with the other markets. So it could be a good development in northwestern British Columbia.

As for the hydro, you know, coal-fired, all of these various options, coal-fired on site, different ways to approach it with hydro lines, I have asked for even more than that. How does it relate to other demands for hydro, even if you went the longer route initially, and what sort of thing would do? So all of these studies are coming together; hopefully there will be a decision this summer or by the latest this fall for Klappan coal to proceed.

Yes, the environmental concerns we are very much aware of. We are considering those. But I guess the member has to be a bit realistic too. If it costs you many millions of dollars to put in the ideal route rather than one that is acceptable, then you kill the project. So you have to weigh one against the other. We don't want to sacrifice any environmental concerns, but on the other hand we don't want to make the project blind.

As far as the land claims are concerned, my God, I've got enough problems. I'll leave that to others without trying to get into that. We have to be conscious of the argument that is going on, but we can't stop our planning for trying to do everything that we can until those are settled, because we don't know where they end up. We don't know the extent of them or that sort of thing, so no, I leave that to the people who are negotiating land claims as such, where they exist and what they are and what's wanted.

[Mr. Strachan in the chair.]

MR. HOWARD: I ask leave to make an introduction.

Leave granted.

MR. HOWARD: Mr. Speaker, I wonder if the committee would join me in welcoming to the House today a couple of dear friends of mine. One is Miss Alma Said from Ottawa, and the other a gentleman who I think more than any other one person probably made a contribution to the modernization of family law in this nation, a Member of Parliament along with me for many years, Mr. Arnold Peters from Timiskaming in northern Ontario.

MR. LOCKSTEAD: Mr. Chairman, I don't want to belabour this proposed natural gas line to Vancouver Island again and again, but the minister was quite wrong when he said the members over here didn't support that particular project.

Just to refresh that minister's memory, what I proposed and what I supported was the proposed natural gas line to Vancouver Island via the so-called northern route. As far as I am aware, the overwhelming majority of mayors and councils, chambers of commerce and other groups supported that proposal over and above the Cheekye-Dunsmuir transmission line; $1.2 billion was spent on that of taxpayers' money. We felt it made a great deal more sense that that natural gas line should have been built to Vancouver Island ahead of this $1.2 billion project by B.C. Hydro. But that didn't happen. They proceeded. The Cheekye-Dunsmuir transmission line is there. Now is the minister telling me that they've just about concluded negotiations with the federal government for the $553 million? Are they just about ready to say yes? Are they? Because, Mr. Chairman, the information that I received from Ottawa not too long ago didn't indicate to me that the federal government was seriously considering that. But if they are, fine. We'll accept the $553 million subsidy. Sure, we'll take it. Why not? Maybe we could open up another food bank or two. Maybe even give them some money. Or maybe do something for our education system or for our health system. Why not?

Anyway, that's not what I'm here to talk about. One topic I want to get into before 6 o'clock is an area that we haven't discussed yet in this House under this minister's estimates, and that's the mining situation in the southeast coal area.

There have been a great number of layoffs in the coal mining sector in that part of the province. Some people would say, and in fact have proved to my satisfaction, that because of this government's involvement in the northeast coal sector we've faced these massive layoffs in the southeast coal sector.

[ Page 8172 ]

At the same time the customers are attempting to, once again, reduce the price of that resource. Those kinds of things have been happening since — well, I'm going back to 1981 in some cases. Nonetheless, I would like to ask the minister: what action is the government taking? Are they just sitting and letting…? Is anything happening in these communities? What? I don't think they're doing anything.

One hundred and fifty-two workers in Cominco's Sullivan mine in Kimberley were either laid off or offered early retirement in 1986 — that's this year. This represents about 15 percent of the total mine labour force there, and a major loss of jobs from the main employer in that community. The Westar mine — 200 employees were laid off in 1985. The unemployment rate in the Kootenay sector is now, according to Stats Canada, approximately 13 percent, but I think the real unemployment rate in that area is closer to about 21 percent — the real unemployment rate.

[5:30]

No programs have been offered or attempts made by the provincial government to help these laid-off workers that I'm aware of. I have a whole list of layoffs and contract cutbacks in the southeast coal sector in front of me, but I know the minister has this information. It's public information, so the minister is very much aware of all these things that are happening in that sector.

I don't want to talk about northeast coal for a minute; I just want to stick with southeast coal. Since 1981, 1,100 direct mining jobs have been lost in the southeast coal sector. It's as simple as that; that puts it in a nutshell. With the multiplier effect, that means 2,600 jobs have been lost in the Elk Valley since 1981. Jobs. I have some quotes here from the MLA for that area, but I won't quote him. Those quotations are extracted from Hansard. That member, who is now Minister of Labour (Hon. Mr. Segarty), knows what he has said, and he knows how he is fighting for his constituents. He supported northeast coal all the way, in spite of the economic loss in his own communities that he represents.

What has northeast coal turned into? Well, I think we have a member in this House who just might tell us. Anyway, if the minister has any response at all….

HON. MR. BRUMMET: I'm glad the member raised the point. I guess it depends on what year-to-year comparisons you want to make. The southeast coal mining sector has grown considerably over the years. You want to talk about the layoffs. If I want to use the statistics, I can show you how many more jobs there are there now than there were ten years ago — that sort of thing. In other words, depending on which comparison you want to make…. I can tell you, for instance, that in 1981 there were 3,620 direct jobs in the coal mining industry. That went up and down, but in 1986 it looks like 5,800 jobs as compared to 3,620 in coal-mining. Those weren't all in the southeast, but there have certainly been more people working. There have been ups and downs. It's gone up and then it's gone down again. You concentrate on the layoffs, which we're all concerned about. But if we had not been developing our coal mining and our coal policy in the province, we'd have a lot less jobs than you have now.

So hopefully, if we don't get too much problem from people who are trying to undermine the coal industry in this province, perhaps the buyers will continue to buy. I can tell you, for instance, that contrary to many statements that were made, in 1985 our metallurgical coal and thermal coal went up to 23 million tonnes. For the first part of 1986 it's running slightly below. There has been productivity. The total coal picture has increased in the southeast, as well as the addition of the northeast. New mines opened in British Columbia. In 1982, Line Creek coal: 429 jobs at that time, an average of 615. Greenhills: 260 jobs added, averaging 452 a year. Byron Creek: I don't have the numbers there. I'm picking from a chart of numbers of people in the mining industry.

Yes, there have been jobs added in the northeast, but there certainly have been a lot more jobs added in the southeast as well. So you have probably something like 5,800 jobs. If you multiply that in the coal-mining industry in this province by, say, the two and a half factor for indirect jobs, you have quite a bit happening because of the coal industry, despite the impression that some people have been trying to give that the coal-mining industry in this province is collapsing. It is not; it is growing. Even the president of the Coal Association of Canada says we're going to be fairly flat. We're only going to have a 1 percent increase per year, perhaps, from our ports. That may not sound like a great deal, but I percent of what we're talking about now — 23 million tonnes — has to be some 230,000 extra tonnes a year. That's quite a bit more than 10 percent was when only two million tonnes were being exported out of this province.

MR. WILLIAMS: The head of Fording Coal, the major CP operation in the East Kootenays in the southeast part of the province, made it very clear in his speech in the last year. Mr. Morrish said that every job lost in the southeast was lost to the northeast as a result of your exercise. That's the head of one of the major coal companies in the province speaking, not a member of the opposition; this is a leader in the coal industry in British Columbia who says there is no question that your intervention in northeast cost those jobs in the southeast. You can select your figures any way you like, but the reality is that that's what happened. You can talk about Greenhills and other operations in the southeast. They've laid off half their workers at Greenhills in the last few months. They're cut back to 50 percent of what their production had been. So you can take earlier numbers and say, sure, they're better than the even earlier numbers of five or six years ago; but you check them against what they're doing, and the fact is they've been cut in half. So that one just doesn't wash at all.

I'd like to ask a couple of questions about B.C. Hydro operations as well, specifically with respect to extending power into new areas on a different basis than we've known before.

MR. CHAIRMAN: Order, please. The member for Vancouver East is recognized on the floor. There are many other conversations. If we could have some silence, and allow the member to speak without having to raise his voice….

MR. WILLIAMS: Thank you, Mr. Chairman.

Maybe the minister could advise us what arrangements B.C. Hydro has made with respect to extending power to Holberg on northern Vancouver Island, and maybe the minister could advise the House what the arrangements are with respect to delivering power from Ocean Falls to Bella Bella and making use of the generating facilities there in Ocean Falls. Just what involvement does B.C. Hydro have with respect to the new extensions on northern Vancouver Island and in the central coast of the province?

[ Page 8173 ]

HON. MR. BRUMMET: Perhaps, first, to respond to the coal situation, I know that member has spent the last few years trying to pit northeast coal against southeast coal, for whatever reasons. When he goes to the northeast, he seems to be a supporter of coal-miners there. When he goes to the southeast, he's a supporter of coal-miners there. But he's always against the other side. So I guess it fits your particular agenda to pit people against each other. That seems to be your tactic: always to pit people one against the other, and try to capitalize on it. You have your go at that.

We know that the people in the coal-mining industry are hurting, and that when people hurt they complain, and that sort of thing. I'm not trying to minimize that. But I can tell you this: we are working hard with those companies to try to maintain those coal shipments. Despite your death-wish for both projects, which you seem to be working on by trying one against the other, I think it's still going to go ahead. And it's going to succeed. If that member wanted to go a little touch further than his pitting one against the other, he would also know that there are other coal suppliers in the world. If the project at northeast had not been built here in British Columbia, it would have been built somewhere else in the world, and that member very well knows that. Tell that to the thousands of people who were involved there in construction; tell that to the people who are working there now on a steady basis; tell that to the people who are working on the rail line because of the extra traffic; tell that to the construction people who helped build the CN line, and to all the people who were manufacturing things in Canada. Tell them that you would like to have seen that project stopped, and that you find the greatest advantage by pitting one against the other.

I don't have any particulars about Holberg. I may have some….

AN HON. MEMBER: Poor Tony.

HON. MR. BRUMMET: No, it's not "poor Tony." I just feel that it's rather unfortunate that for your purposes and for that member's purposes, his whole thrust has been to try to pit one group against another. Isn't that convenient for him? Go up into the northeast and tell them that they shouldn't be working there. Come into my constituency. Tell the people what you're against. No, when you come up there you're against something else somewhere else, and you're all sweetness and light, which must be a pretty onerous task for you.

[Mr. Ree in the chair.]

I'm informed that the Holberg situation is still under study, and that it involves the Department of National Defence and a private industry, so I think the member will realize that we've got all those players and it's going to take a little while.

The Oceans Falls, Bella Bella: again it's still under study, but Hydro has made an offer to sell the Ocean Falls power, or buy it from a private operator. So let's hope that those people will get on power if these negotiations can be successfully completed.

MR. WILLIAMS: Maybe I could get that clearer, then. Right now the public of British Columbia owns the Ocean Falls dam and storage capacity and generating capability. A private company is coming along and will take that off our hands and then use it to sell power to Bella Bella. Is that the proposal?

HON. MR. BRUMMET: I don't know the exact involvement there, but obviously somebody has to try and finance getting the power to Bella Bella.

MR. WILLIAMS: I presume then that the minister is of the opinion that B.C. Hydro is not experienced in transporting power from one location to another. Is that the problem? Only a private company would be able to do that on a power line from Ocean Falls to Bella Bella?

HON. MR. BRUMMET: Mr. Chairman, I made no such statement, nor did I intend to. I don't know how the member drew from that. I simply said that there was discussion, there was negotiation going on. I can't answer your questions as to exactly who is going to be doing what. The purpose is to try and get that Ocean Falls plant in operation and to somehow get power to the people who can use it, and the exact route that it will take. Hydro has plenty of experience in transmitting power.

MR. WILLIAMS: That is the point: Hydro has great experience, more experience than anyone in this province or this part of the world, in transporting power. The public owns the facilities at Ocean Falls. Why on earth is some private party needed in these transactions?

I ask the minister a further question: is Hydro considering guaranteeing the lending with respect to transmitting this power from Ocean Falls?

[5:45]

HON. MR. BRUMMET: I don't know whether the private party that I mentioned is in the negotiations will stay in the situation, and whether Hydro is considering any financing. I don't know that. It's being negotiated. So I'd certainly be trying to become more informed on it, but I don't have those answers for the member right now.

MR. WILLIAMS: Could the minister advise us of the name of the company involved with respect to the proposal?

HON. MR. BRUMMET: The answer is no.

MR. WILLIAMS: Is it that the minister doesn't know, or is it that the minister is unwilling to advise the House of the name of the company?

HON. MR. BRUMMET: The member asked: "Do you know the name of the company?" I stood up, and I said no. Now is my answer clear? I am not trying to not bring it to the House. I don't know the name of the company. I thought you could have picked up on that.

MR. WILLIAMS: Well, then, Mr. Chairman, will the minister endeavour to find out the name of the company and advise the House?

HON. MR. BRUMMET: I think I had said to the member that I am going to try and become much more knowledgeable about the particulars of this. Yes, I will now, for my own curiosity, if not for your satisfaction, try and find out exactly what is going on there.

[ Page 8174 ]

MR. WILLIAMS: The minister, then, might well reflect on the question of why a private company would be needed in this situation when we already own the dam, own the generating facilities, and probably have the best experts available in this part of the world in terms of transmission capability, including underwater transmission, since that would be involved in this whole exercise. So maybe the minister could then advise us how much expertise this private company, once he lets the House know who the private company is, has in these various fields, and why this whole exercise is underway, and further if maybe the icing on the cake isn't that B.C. Hydro is even entertaining guaranteeing the loans for the private company involved in the exercise.

Maybe the minister can bring us up to date, though, on the project that he speaks so glowingly about, northeast coal. He said: "Pit one against the other." Mr. Minister, if you will forgive the pun, it is this administration that put one pit against the other, the northeast and the southeast. You played the game that Japan Inc. wanted. You helped bring down the price of coal through oversupply in terms of the world problems, in terms of dealing with the sale of coal.

But maybe the minister could bring us up to date in terms of what he's heard, in terms of the latest negotiations with respect to volume and price in the northeast. Remember, the newly departed Minister of Trade — and former minister of trade and industry — told us there were contracts this high, and that volume and price would never be impacted no matter what. The negotiations have been going on for a while, Mr. Minister, and maybe you can advise us what kind of progress you have made and whether that might in fact affect the date of an election. How are those 56 or 57 bankers who are involved in financing northeast coal doing in dealing with the debt problem — that they probably won't get paid with respect to the principal owing shortly in the northeast? Just where are we in those negotiations between these companies and the Japanese in terms of price and volume?

HON. MR. BRUMMET: I'm going to respond to the member fairly quickly, because I believe I can. I certainly will get more knowledge about that hydro situation and look into all of those things that the member is so concerned about as far as the volume and price negotiations going on in northeast coal. I can say to the member that there are serious negotiations going on between the buyers and the sellers about volume and price. As far as the bankers, I know there are serious negotiations going on between the bankers and the companies there, and I'm very hopeful that they will be able to sort out their problems so that the project can proceed.

About pitting one against the other, if I accept your reasoning, Mr. Member, I guess that once we have a pulp mill in British Columbia, we should never have a pulp mill anywhere else even though there is timber in other places.

MR. WILLIAMS: It's just not that straightforward, Mr. Chairman. It's a critical question, and one gets the impression that the minister is simply a bystander in this whole exercise. It's between the companies: it's Teck and Quintette, and the minister…. They have to deal with Japan, their Ministry of International Trade and Industry, the Japanese steel cartel, and the whole way Japan manages its buying abroad. What kind of chance does a relatively small British Columbia corporation have dealing with Japan Inc.? We have a ministry that is sitting on the sidelines. Surely the strength of government is needed at least at the bargaining table when you're dealing with these things. You're the people who initiated this project in the first place. Delivering northeast coal was the exercise of the member for South Peace River. You guys back away now? You're not players in this game? That makes it a lot tougher for the individual companies, it seems to me, Mr. Chairman, in terms of this whole exercise of dealing with the modern, successful state of Japan and the way they operate on the world scene. I'm not knocking it. It's just that they are incredibly competent. They're obviously good bargainers. They used the power of government with the power of the corporation. That's the way they operate in Japan. If you're really going to be of some use, you're really going to have to develop your skills and help these people at the bargaining table.

I suspect that what we face is terrible problems in the northeast, to the point where these volumes may indeed be imperilled. The question is: is the government of B.C. prepared to step in to make sure that the volume remains, no matter what, for the province of British Columbia? If problems prove to be too severe in the northeast, will the overall volumes be preserved for British Columbia? That's the question, so that we can at least deliver some benefits in terms of the whole province and maintain the overall numbers; so that there is some bargaining around the business of overall numbers for the province of British Columbia, in which the province is the player in terms of arguing for overall numbers with Japan Inc.

MR. CHAIRMAN: Shall vote 20 pass?

MR. WILLIAMS: No, Mr. Chairman. I'm asking the minister to start thinking about something that I suspect he hasn't given much thought to, and that is the whole question of whether British Columbia should be bargaining with the Japanese to maintain our overall position relative to world coal supplies for Japan, so that we are a player with Japan, insisting one way or another, regardless of problems in the northeast, that we maintain volume for British Columbia. That's what I'm saying. You've got to have some kind of emergency plan with respect to the mess you've created in the northeast. Part of that emergency plan, I argue, is maintaining volume for British Columbia regardless of the individual companies involved. That's what I'm arguing for. That kind of planning should be taking place.

Mr. Chairman, I move that the committee rise, report progress and ask leave to sit again.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Gardom moved adjournment of the House.Motion approved.

The House adjourned at 5:55 p.m.