[ Page 8415 ]

CONTENTS

Oral Questions

U.S. shake and shingle tariffs. Mr. Rose –– 8415

Pentachlorophenol plant. Mrs. Wallace –– 8415

Public opinion polls. Mr. Hanson –– 8416

Tourist information centres. Mr. MacWilliam –– 8416

Counterattack program. Mr. Lockstead –– 8416

Committee of Supply: Ministry of Finance estimates. (Hon. Mr. Curtis)

On vote 28: minister's office –– 8417

Mr. Stupich

Mr. Blencoe

Mr. Williams

On vote 81: management of the public debt –– 8420

Mr. Williams

Mr. Stupich

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

(Hon. Mr. McClelland)

On vote 44: minister's office –– 8421

Hon. Mr. McClelland

Mr. Williams

Mr. Lockstead

Mrs. Wallace

Mr. Rose

Mr. Cocke

Tabling Documents –– 8441

THURSDAY, MAY 29, 1986

The House met at 2:06 p.m.

Oral Questions

U.S. SHAKE AND SHINGLE TARIFFS

MR. ROSE: Mr. Speaker, I have a question for the Minister of Forests. This is from one Mission boy to another. It concerns the red cedar countervails, a danger far too serious for petty partisanship. I think this Legislature should present a united front, if possible, on this issue.

Is the minister prepared to support the request made today by the Leader of the Opposition at the Peace Arch rally of concerned shake and shingle workers and mill operators that the Prime Minister recall Simon Reisman from the talks in Washington and instruct him not to proceed until the threat of the shake countervail is removed?

MR. SPEAKER: Hon. members, question period must relate to the ability of a minister to function within his ministerial responsibility. With the greatest of respect, hon. member, you are asking a member to do something that is the jurisdiction of another body. You might wish to rephrase part of the question, hon. member.

MR. ROSE: Has the government considered such a request to the federal government that Simon Reisman be recalled until the threat of the countervail has been removed?

HON. MR. HEINRICH: Mr. Speaker, the answer is no, the government has not. The position of the government has been very clear. As a matter of fact, the position of the government and the position of the opposition with respect to the enhancement of free trade on the issue of lumber and forest products is very clear. It seems to me, when I listen to the critic.... The member for Skeena (Mr. Howard) made it abundantly clear, as did government, that in the matter of free trade the free flow of lumber on a competitive basis between our countries, particularly British Columbia and the U.S., should remain.

MR. ROSE: I hope that might be communicated to the federal government, because the Sun story today quotes Crosbie, the Minister of Justice, as threatening retaliation

I wonder if I could ask the minister another question.Since the only type of compensation provided for is tariff relief on other Canadian products sold in the United States, could the minister tell me if the B.C. government has endorsed this type of compensation for shakes and shingles?

HON. MR. HEINRICH: As you will recall, the Premier forwarded a letter to the Prime Minister dated May 7. That letter, I believe, was filed in the House. Attached to that letter was a copy of federal legislation. The purpose of that legislation is to assist any industry within Canada that is detrimentally affected arising from the imposition of a tariff. As a matter of fact, the request from the provincial government was that we would want the federal government to review that particular possibility.

But it's interesting to note, as well, that the shake and shingle operators, who visited Ottawa and were well covered by the press, made it abundantly clear, as did the leader of the IWA, that they are not interested in compensation. They believe and have maintained that they are entrepreneurs in the purest sense and do not wish any form of subsidy or compensation, but they want to exercise the right for free trade.

MR. ROSE: Supplementary. The minister mentioned the Premier's letter. In that letter to the Prime Minister the Premier asked for a retaliatory trade package to be applied against the United States in a way that benefits British Columbia. I would like to ask whether or not this is still the position of the government.

HON. MR. HEINRICH: The Premier's letter is abundantly clear. The object is if there is to be any form of countervail imposed on the Canadian side, the benefit flowing from that form of duty would be used to assist those in our shake and shingle industry who are affected.

MR. ROSE: I understand that officials, including the mayor of Mission, were to be here today to discuss with the government their very serious problem. I wonder if the minister is prepared to tell what measures of assistance the provincial government is prepared to offer the community of Mission and others so affected, should there be a failure to resolve this very serious problem.

HON. MR. HEINRICH: Mr. Speaker, it seems to me that the member is asking a question about future actions of government, and I'm not so sure that that is in order. But I would like to make reference to a document circulated, I presume, to all members of the House, entitled "Provincial Participation in the Canada-U.S. Trade Negotiations." It is presented to the Western Premiers' Conference. The author is the Premier of the province, and he is in Manitoba today at Swan Lake discussing these particular issues.

PENTACHLOROPHENOL PLANT

MRS. WALLACE: My question is to the Minister of Environment. Is the minister aware that the machinery for the proposed pentachlorophenol plant in Lone Butte is actually from the old Uniroyal plant in Edmonton that was known to be one of the most contaminated plants in Canada?

HON. MR. PELTON: No, the minister is not aware that the equipment is old and contaminated and comes from another province. However, I am aware of the situation in Lone Butte, that we've called an inquiry on the situation at Lone Butte, and that we are in the process of setting up terms of reference for that inquiry and appointing three members to look into it.

MRS. WALLACE: I'm surprised the minister is not aware of this, because that plant was closed down some 30 years ago and the equipment being used is the same, with a few changes. Is the minister aware that if this plant is built, it will be the identical operation to the Reichhold operation in the U.S., which was shut down for environmental reasons?

HON. MR. PELTON: I'm not too sure about things that happened 30 years ago, because I'm not quite as old as the member opposite. [Laughter.] Sorry, I couldn't resist that. I'm not necessarily assuming that anything is going to happen at

[ Page 8416 ]

Lone Butte, so I don't see any point in responding to the last part of the member's question.

MRS. WALLACE: A question to the Minister of Industry and Small Business Development. Can that minister confirm that the B.C. Development Corporation has agreed to loan Bradbury Industries, the outfit that's proposing the PCP plant, funding once the permit is approved?

HON. MR. McCLELLAND: Mr. Speaker, no.

PUBLIC OPINION POLLS

MR. HANSON: Mr. Speaker, in the last seven years $1.4 million has been itemized in public accounts as being spent on public opinion surveys. In the Social Credit leadership campaign, some of the potential candidates would have access to those taxpayer-paid surveys, and others would not. The public certainly has been left out. The voting delegates would not have access. Would the Minister of Finance agree to disclose those polls to this House so that there is a level playing-field in the province of British Columbia?

HON. MR. CURTIS: First of all, Mr. Speaker, a number of theories were advanced in the preamble to the question which are not necessarily correct. Unless the member has been skulking around our caucus room.... That's not an attack on another member; if he wants to skulk, he couldn't find a better place to skulk. But I am not charged with the responsibility for the issuing of polling material or government surveys. I would refer him....

Interjection.

HON. MR. CURTIS: Well, we said that in Committee of Supply. I'm responsible in one way or another for every dollar that is spent or received, but if we continue in this approach, then I will be responsible for all estimates.

MR. HANSON: Mr. Speaker, I would like to point out to the Minister of Finance that he is the backup for the Provincial Secretary (Hon. Mrs. McCarthy). He does have the second responsibility. Now if you're not prepared to disclose it.... There are principal secretaries who have been in the Premier's office, there are people who've worked in cabinet or have been attached to key committees of cabinet who would have access to those attitudinal polls. So other candidates would not be treated fairly.

Mr. Speaker, my second question is: is that minister prepared to assure this House that there will be no taxpayer paid opinion surveys by Goldfarb, Gallup or any others before the leadership convention?

HON. MR. CURTIS: Mr. Speaker, if we were indeed in a period where the Provincial Secretary was going to be absent for a prolonged period of time, then as her first acting minister I would feel obliged to look into the matter, but the Provincial Secretary was here yesterday and I'm sure will be here tomorrow.

MR. LAUK: Where is she today?

HON. MR. CURTIS: She's in your law office, Mr. Member, which was her first serious mistake.

Mr. Speaker, I'll take the question as notice for the Hon. Provincial Secretary.

TOURIST INFORMATION CENTRES

MR. MacWILLIAM: Mr. Speaker, I have a question to the Minister of Tourism. On Tuesday the minister told the House that my information regarding the closure of the Osoyoos tourist information centre was totally wrong. He replied that he had an excellent arrangement with the chamber of commerce in Osoyoos for the operation of the facility. My question to the minister is: has the minister reconsidered his statement?

HON. MR. RICHMOND: The answer is no, Mr. Speaker.

MR. MacWILLIAM: For the minister, the president of the chamber of commerce offered a two-letter response to the minister's statement. He said: "B.S."

In light of the response of the president of the chamber of commerce....

Interjections.

MR. MacWILLIAM: I'm sorry, those aren't my words, those are the words of the president of the chamber of commerce. In light of this information, I would like to ask the minister whether I have been misled or whether the minister has misinformed the House or whether he has failed to get competent advice on this situation.

HON. MR. RICHMOND: Mr. Speaker, I didn't hear the very last part of the question. The answer to the first part is that I guess I understand what the member meant, but all the information I have is that we have a very fine arrangement with the chamber of commerce provincewide and especially in Osoyoos, where the subject of the information booth did come up. We have an arrangement with the trailer that is there, and, as I informed the member the other day, at the end of the season ownership of the trailer will revert to the chamber of commerce and they will acquire an excellent facility for next to nothing.

MR. MacWILLIAM: A supplement to the minister. Regardless of the circumstances, the city of Osoyoos is left without an information services centre. It is inoperable at this time. I wonder if the minister has decided to look into the matter and do something about it, because what appears to be the situation is at odds with the minister's statement.

HON. MR. RICHMOND: Well, the statement that the city is left without an information centre is just totally incorrect. It is pointless to comment beyond that.

COUNTERATTACK PROGRAM

MR. LOCKSTEAD: Mr. Speaker, I have quite a short question for the Minister of Transportation and Highways. In view of the minister's proposal to increase penalties for people caught driving under the influence of alcohol, is the minister aware that the Attorney-General's department has

[ Page 8417 ]

cancelled the Counterattack program held throughout the province each year at this time, because of the unknown demands, as they say, that Expo would place on the RCMP?

HON. A. FRASER: Mr. Speaker, I'm not aware.... I'll take it as notice, but maybe you should ask the Attorney-General (Hon. Mr. Smith).

HON. MR. RITCHIE: Mr. Speaker, may I have leave to make an introduction?

Leave granted.

HON. MR. RITCHIE: Visiting Victoria today are a large number of students from the Abbotsford Christian School in my constituency. A number of those students are in the gallery with us now. 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 FINANCE

(continued)

On vote 28: minister's office, $209, 220.

HON. MR. CURTIS: Mr. Chairman, just before the adjournment for lunch, the member for Nanaimo (Mr. Stupich) raised the issue of corporate income tax revenue and the reduction in the tax rate announced in the 1986 budget.

There are two issues and I would like to deal with them. May I touch on the latter first. The phased reduction in B.C.'s corporate income tax rate from the current 16 percent to 14 percent by 1988 is a key element, as I said on a number of occasions, in the government's economic development policy. It is crucial for us to have a tax system in the province which is competitive with those in other jurisdictions, both in Canada and elsewhere.

More than ever before investors around the world, including those now based in the province of B.C., are looking at the option of locating their business wherever they like. They have that option, and British Columbia has many advantages, such as our relationship to the Pacific Rim, favourable climate and lifestyle, and our skilled workforce. But we also have the disadvantage, as the member will know, of being considerably far from major markets. So the effort over the past couple of years has been to bring our tax regime into a more competitive environment and to ensure that our tax system is not a disadvantage which impedes investment in the province.

On the member's other point regarding the revenue derived from corporate income tax, he is correct in noting that revenue from this source has been relatively low. That is the subject of the last two budget speeches in one form or another. This, of course, reflects the profits weakness which has existed despite three years of recovery; they remain well below historical averages as a percentage of GPP. But I point out that the 1986-87 estimate of corporate income tax revenue is more than double the amount received in 1982-83. I expect to see more revenue generated by the corporate side of the economy as the economy improves further over the next few years. At least the trend is in the right direction.

There was another matter raised on Tuesday, if I could just deal with it briefly. The member for Nanaimo wanted to know what is considered commercial versus non-commercial debt. I don't have my note, but I would refer the member to the relevant page, the number of which escapes me, in the Financial and Economic Review of last August. I refer you to pages 146 to 148, Mr. Member, table 7.10 of the Financial and Economic Review. I think that will tell him all he needs to know about that. I did not cover that on Tuesday.

MR. STUPICH: I appreciate the minister's comments about the corporate income tax and the fact that it is low. My concern is about his whole economic program and what he described in that press release. I have it; it is just a matter of finding it. This is the end of the program, sort of. My concern is that we'll just have to differ on this. He has been giving relief, assistance and aid and succour, if you like, to those who have made it and are making it very well. The ones who are new and haven't proven that they are making it are not getting that particular relief; they are getting other forms of it. Those that have fallen by the wayside, of course, are getting nothing.

I would just like to ask the minister about a question that has been asked several times in the past, and I wonder what the current situation is. The minister did tell us on previous occasions that with respect to the Canadian Commercial Bank we put up $13 million in the form of a debenture. The Workers' Compensation Board had $5 million of its funds in a debenture, and B.C. Rail had a $500,000 note. I am wondering whether we are any closer to knowing whether we should write off the whole total, or whether some portion of it may be received at some future date, if he has any more current information on a total of $18.5 million.

HON. MR. CURTIS: Mr. Chairman, I was just checking one point with respect to the British Columbia Rail note. That matured, and that wasn't in at the time of the severe difficulties at the bank.

Yes, it had matured, so....

Interjection.

HON. MR. CURTIS: Well, I would have to check just which statement. My understanding, and I was double-checking with officials, was that the B.C. Rail note matured.

With regard to the $5 million WCB and the $13 million of provincial funds, not a great deal has changed in the interval in that I have made it very clear to the federal government, the Minister of Finance and the Minister of State for Finance, the Hon. Barbara McDougall, that we consider that money to be repayable to the province. The committee will know that the Estey commission looking into the Canadian Commercial Bank and the Northland Bank, the latter of which we had no association with at the time of its difficulty.... The Estey commission report is not yet available to anyone in Canada. That is very much a current topic, Mr. Member. At each appropriate time I mention it, and I shall continue to pursue it.

[2:30]

MR. BLENCOE: I have two things I wish to bring up with the minister. One is very serious, one that I think

[ Page 8418 ]

concerns all British Columbians, and that is the destruction of sensitive material that is no longer used by the government and should be destroyed. As we all recall, some months ago this issue was a fairly major controversy here in Victoria and in the province of British Columbia. It was discovered — and I won't go into the tangential issues — that here in Victoria literally tons of sensitive material were being stored in an unsecured warehouse. Indeed, a number of people I talked to or met over this issue when it achieved public attention told me that they had seen that material many times; many times the doors of that warehouse were wide open and these sensitive documents were blowing in the wind — incredible documents of business transactions, mining, all sorts of things that were very sensitive. The public would, and should, be amazed at how this material was kept.

There were a number of controversies around that particular incident. There have been reports from various sources that there is concern about how sensitive material is collected for destruction. There have been reports that material is collected in open trucks which make the rounds of various ministries, that there aren't secure systems in place for material collected, and that material is transported to Allan Paper Co. for shipment, I believe, to Vancouver. I want the minister to perhaps respond as to what actually happens to this material. It can sit in a yard which is unsecured over in Victoria West, and that material can sit for days, either in bales or in the back of trucks, waiting for shipment to Vancouver for destruction. Given these disclosures and sometimes a feeling that the process is not as tight as it could be, I'm wondering if the minister can report to this House — and he may indeed have done so during these debates on his estimates — and tell us whether new processes have been put in place, whether there are new procedures and whether the public can be assured that sensitive documents are being taken care of in the province of British Columbia.

HON. MR. CURTIS: I will refer the member to the Provincial Secretary (Hon. Mrs. McCarthy). Her estimates have not yet been presented to Committee of Supply. A relatively recent development following my lengthy statement in the Legislature last November is that destruction is now overseen by the records management branch of Provincial Secretary and Government Services to ensure the tightest possible control. The member will have an opportunity to canvass that topic with the responsible minister when those estimates are called.

MR. BLENCOE: I recognize that the minister said in question period that he could be responsible for a number of estimates, but of course — with respect, through the Chair — many of these documents pertain to financial arrangements within the purview of his ministry. I am sure he must be concerned, and indeed he made some statements in this House. I thought it would be useful for the Minister of Finance to share with this Legislature, and therefore the people of British Columbia, that he has indicated some concern or has been witnessing some new procedures for retention and destruction and for removal of these documents from ministry offices to Allan Paper Co. and then to Vancouver. I would think it would be useful for the Minister of Finance, despite the fact that the Provincial Secretary has the ultimate responsibility, to share with this House anything that has been happening in this area, certainly since November, and to assure us that as Minister of Finance he is concerned.

HON. MR. CURTIS: Clearly, as a member of the executive council, I am concerned. I have indicated to the member and to the committee that earlier this year — to be as precise as I can, in early March — the Ministry of Provincial Secretary and Government Services issued a government wide policy entitled "Standards for the Disposal of Government Records" — not only those from the Ministry of Finance; from any other ministry where sensitive material is dealt with, the Ministry of Finance complies. I refer the member to the Provincial Secretary, who administers that program.

MR. BLENCOE: I will, of course, take it up with the Provincial Secretary. There are a number of others, Mr. Chairman, that I will take up with the Provincial Secretary. One of them which would I'm sure concern the Minister of Finance is getting value for dollar, in terms of companies that are charged or given a contract for removal and ultimate destruction of very sensitive documents. It's my understanding, Mr. Chairman, that the tendering of this, particularly.... Allan Paper has had this contract for a number of years, and we've had no tendering process introduced on this particular situation. I know that this is the Provincial Secretary's department, but the minister should be concerned in terms of the potential financial savings to the taxpayers of British Columbia. Here is an area that really should be tendered; and Allan Paper, for a number of years, automatically got this contract — a very lucrative contract, I might add — and I would think that the Minister of Finance, for whatever reasons Allan Paper has got this, may wish to indicate to this House that he is concerned about Allan Paper getting this contract year after year after year.

MR. CHAIRMAN: Inasmuch as the question could deal with the Purchasing Commission, which the minister is responsible for, it would be in order, but really with respect to the administration of another ministry the question is out of order.

HON. MR. CURTIS: Mr. Chairman, thank you, I note your caution. Through you to the member, the Purchasing Commission is not involved in this, It's not quite correct to say that this firm has had the contract year after year after year, because if the member traces back objectively the difficulty, he will know that, before it became the responsibility of the Provincial Secretary under the standards for disposal of government records, the contract was with another firm; that was the genesis of some of the difficulties which were experienced then. Mr. Chairman, I must refer all these questions to the Provincial Secretary, particularly in view of the fact that the Committee of Supply will be dealing with that minister's estimates.

MR. BLENCOE: I will indeed do that, but thank the minister for his indulgence.

I have one other item. It may have been brought up by another member on this side; I'm not sure. The one that constantly comes to my office and my attention is the whole question of the restaurant tax, which the minister in his wisdom introduced a number of years ago. I don't think I have to go into the details of the concern. The minister knows enough restaurateurs in this community. I constantly hear, Mr. Chairman, of the problems with that tax: the paperwork, the restaurateurs being forced in some way to try to find ways

[ Page 8419 ]

around it. It has created all sorts of problems, and the minister is aware of that. I'm sure he's had delegation after delegation. Has the minister considered cancelling the restaurant tax?

HON. MR. CURTIS: I at the outset confirm that that is an area for which I am responsible, Mr. Chairman. The experience that we've had in my office and in the ministry recently — and I realize I may be inviting more mail — is we haven't had much in recent months, a good number of months.

MR. BLENCOE: We can soon change that.

HON. MR. CURTIS: Well, I appreciate that anyone around can change that. But each year I review those tax measures which are in place, or which should not be in place, or which should be, perhaps, considered to be brought in. Certainly the British Columbia branch of the Canadian Restaurant Association soon after the introduction and for a number of months thereafter made it clear that they didn't like it. But I think one of the tests, Mr. Chairman, is that in this year particularly, with a significant number of visitors from jurisdictions where a tax along those lines is in place, we've had no increase in difficulty, no measurable increase in complaints, either from the operator of the restaurant or from the consumer of the restaurant meal. But I recognize, as with other tax measures, that it's not terribly popular. However, as I explained at the time, it was seen as a revenue source where some discretion was permitted on the part of the consumer, particularly with the threshold of $7. But the experience in recent months has been quite quiet in that regard.

MR. CHAIRMAN: With respect to this, we are really recanvassing a former budget. Debate in Committee of Supply must be strictly relevant and pertain to the estimates of this year.

MR. BLENCOE: Mr. Chairman, I'm just going to finish off because other members wish to speak. I gather from the minister, then, that there's no intention in the near future — perhaps in the distant future — for this government to remove the restaurant tax.

HON. MR. CURTIS: Mr. Chairman, any such consideration would only be given in the several weeks prior to the preparation of a new budget. We are just now starting a new budget for '86-87 fiscal. It's in our files as an issue, but no tax changes are contemplated at this point in the budget year, or any budget year.

MR. WILLIAMS: Mr. Chairman, I wonder if the minister could reflect on how liquid assets are currently distributed between different banking institutions in the province.

HON. MR. CURTIS: We have a rating system which is handled by the treasury division of the ministry. It is not done in absolute isolation. Banks, trust companies, credit unions, other financial institutions are rated in terms of the relative safety, one to another, of the taxpayers' money that is placed on deposit there, whether it be short term or long term.

MR. WILLIAMS: In these days, when there's a so-called flight quality, whatever that could be called in terms of the big five — which I personally don't consider quality; I might apply some different judgments to them — and when we have provincial institutions that this administration is responsible for, how can one really justify that kind of an approach? If there are problems with those institutions, this administration has the power to deal with them; it has monitoring agencies to deal with them. Why then should that kind of limited criteria be placed?

HON. MR. CURTIS: I trust that in my response a moment ago I didn't suggest that the rating system was so narrow as to force us to the so-called big five. That's not the case. It's a matter of relating a rating with respect to the amount of money that might be placed with any financial institution.

He speaks of those financial institutions for which the province has responsibility. Some responsibility; one can argue whether it's all or most. If we are speaking of credit unions, I meet often with credit unions and have officials present with me at that time. We discuss if they are growing, reorganizing, seeking more deposits from the province or some deposits where none have existed. The rating system does not drive all decisions that we make, but it's a guide that we follow quite closely. There have been exceptions, and there will be in the future, I'm sure.

[2:45]

MR. WILLIAMS: What you place currently is probably different than what you placed a few months ago in terms of the so-called flight quality and the problems of the Alberta institutions. There really was a drying up or a shifting of provincial funds from many of these institutions, including smaller chartered institutions, or at least the threat thereof. Can the minister confirm that in fact there was very little available to these institutions at the time of so-called flight quality?

HON. MR. CURTIS: Mr. Chairman, I'm not sure that I would agree that there was very little, and I'm not engaging in semantics here. There was perhaps for a while less than there had been before the difficulties in Alberta, but one of the other considerations, as 1~m sure the second member for Vancouver East would know, Mr. Chairman, is that we are not necessarily the least expensive depositor in terms of the rate which is paid. We have good placing power, and there are smaller institutions which often can attract other deposit amounts at less than we are prepared to place for. It might be ten basis points or five or even two or one. That's very much a factor of the marketplace. We're ready to place, but if they can attract deposit money from another source and pay a slightly lower rate — even, as I say, a very few basis points — then that's the end of a very pleasant telephone conversation between our money managers and the people at the other end of the line.

MR. WILLIAMS: What have we generally placed with the Bank of British Columbia over the last year?

HON. MR. CURTIS: Over the last year? Oh, Mr. Chairman, through you to the member, it has varied quite dramatically. I am not prepared today or at any point in Committee of Supply to give precise numbers, other than to say that it has ranged from virtually nothing to relatively large sums, and that is very much a factor of our available funds and what we wish to place with any financial institution.

[ Page 8420 ]

MR. WILLIAMS: Has it been as high as, say, $250 million with the Bank of British Columbia?

HON. MR. CURTIS: Mr. Chairman, I am not prepared to discuss specific numbers, nor to reach an approximate range by saying: 'Is it as much as this or as little as that?"

MR. WILLIAMS: I suggest, Mr. Chairman, it was, and the question is: was the threat of moving that money ever there with the Bank of British Columbia? I leave it at that.

HON. MR. CURTIS: I'm sorry, I don't completely follow the member's questioning. The threat to remove the money? I don't understand that, Mr. Chairman.

MR. WILLIAMS: You said that your money managers are always looking at the rate of return, and one would assume then that that would happen in the normal course of business in terms of the rate of return.

HON. MR. CURTIS: Then I think the member has answered his own question, Mr. Chairman. We don't use the moneys we have available for deposit in any way threatening to any financial institution.

MR. WILLIAMS: It's clear that there has been a lot of funds removed at different stages from this bank by various depositors. If my memory serves me right again, it's as much as $800 million in the last short period of time. So they've had to rely on the Bank of Canada to replace those funds. My concern is that British Columbia should not have been a timid player with respect to this significant provincially-based institution. Or it shouldn't certainly have been worse than a timid player. That's my concern.

HON. MR. CURTIS: Mr. Chairman, I don't think we have approached that circumstance nor any other in a timid fashion, with timidity. The extent to which the Bank of British Columbia or any other bank accesses the Bank of Canada, of course, is a matter that is reported on a fairly regular basis.

MR. WILLIAMS: I find it very interesting, Mr. Chairman, that in this recent time period and through these difficulties — and I mentioned the kind of role that Mr. Kaiser has played in British Columbia in the past in terms of benefiting from our lack of rigorous concern with respect to resource revenues. He benefited again in terms of naive management and board at the B.C. Resources Investment Corporation, wherein he capitalized those rents that I discussed this morning. At the same time, I wonder if a belated government didn't have all this in mind in recent months in dealing with the Bank of British Columbia.

HON. MR. CURTIS: Well, no, Mr. Chairman. Insofar as the Ministry of Finance relationship with any number of financial institutions, personalities do not enter into it.

I have had discussions recently with the heads of a number of banks, and would have met with Mr. Mulholland, the chairman of the Bank of Montreal, the other day if events had not prevented that. We will reschedule that. As of ten days ago I met with Mr. Parker of the Bank of B.C. That was the second meeting I have had, possibly the third, since he assumed responsibility for the bank. I hope we can keep personalities out of it.

Vote 28 approved.

Vote 29: government financial support, $61,562,461 — approved.

Vote 30: Provincial Capital Commission, $555,000 — approved.

Vote 31: compensation stabilization program, $715,773 — approved.

Vote 32: critical industries commission, $511,830 — approved.

On vote 81: management of the public debt, $457,900,000.

MR. WILLIAMS: I just can't let this modest item go unnoticed. Let's face it: for an administration that is supposed to be called businesslike, this administration has borrowed more than all of the administrations of British Columbia in history. Imagine! In Bill's ten short years, you have had that job of going and borrowing all over the place, having to go to Europe, having to go to New York, having to go to Japan, borrowing more and more from more and more places than any administration in the history of British Columbia. And all at a time of costly money.

Given the base of this province, it is absolute economic madness that we should have borrowed on the scale we did. And then to have borrowed for lemon projects! That's what we have been doing: borrowing for lemons that can't pay for themselves. Northeast coal, the biggest industrial project in the history of British Columbia, as the former MLA was wont to say. Imagine, all stuff that can't pay a rate of return. Absolutely nobody in private business could do these things, and it is very difficult for governments to do them as well. Governments can take it out of people's pockets, out of lunch bucket folks and all the rest that can little afford it. But in the end, this chunk here represents a cost of the mismanagement of this province over this past decade. It is an extraordinary story of a quadrupling of the public debt of this province on projects that can't pay for themselves. It is an extraordinary story, and the bill now comes in annually.

HON. MR. CURTIS: Mr. Chairman, we spoke about public debt the other day and covered a number of aspects of that. I think, however, since the second member for Vancouver East has raised the topic again today under this vote rather than my office, that I have to point out just six figures. The provincial debt per capita in the province of Manitoba in 1981 was $4,796 and rose to — this isn't an old chestnut, this is 1985 — $8,170 in 1985. That's a 70 percent increase. In British Columbia, 1981, $3,940 rising to $5,564 in '85. That's a 41 percent increase. Mr. Chairman, not all of the debt, as the member knows — nor did he suggest it — can be attributed to capital projects. Much of it was for the continued operation of government, and that relates back to the discussion which the member for Nanaimo and I had the other day. On a province-by-province basis, while I am not pleased that we have any debt other than commercial — to use the phrase in the context that I've attached to it in these discussions — I

[ Page 8421 ]

take comfort in looking at our debt level and our decreasing deficit in comparison with other provinces in Canada.

MR. WILLIAMS: I guess when we have to compare ourselves with Newfoundland and places like that, it may be. As always with these things, it's a matter of when you saw it off, when you take the date and how you look at the numbers and relate them.

I think you said a 41 percent increase since 1980 or something like that in B.C. The more interesting figure would be after 1975, to tell you the truth. At that point, there's a significant break in terms of prudent management, despite all the rhetoric, despite all of the stuff we got after 1975. There was prudent management of this province up until the end of 1975; there has not been prudent management thereafter. Never did we contemplate commercial projects publicly financed that could not pay for themselves during our administration, and never previously, other than some of the stuff the first Mr. Bennett spent time on.

[3:00]

What saved the first Mr. Bennett, really, was inflation. Inflation buried his mistakes through his 20 years. That luxury of inflation is not there for us today to bury your current mistakes in this administration. In fact, we are going through a deflationary period in some areas. You have invested on the basis of continuing inflation in terms of your quasi-commercial projects like northeast coal. We're going through very different circumstances indeed. We're going through a deflationary period that is constricting the world and British Columbia's economy in some ways. We have to pay on the basis of the old prices and the new lower returns ' Unlike former administrations of this province, there is this problem of deflation and so you're not going to have the problems covered up by any current changes such as inflation as the first Mr. Bennett had. Looking at it that way, the picture is fairly dismal in terms of some of these debts that we've incurred for ourselves.

MR. CHAIRMAN: The Chair, in recognizing the member for Nanaimo, reminds the committee that the vote clearly specifies management of public debt in this current year, and that discussion of other ministries or how debt might have been incurred would not be relevant on this vote. Also, extreme latitude was allowed during the minister's vote, and I think we must be quite specific to this vote with respect to the management of public debt, which is the vote title.

MR. STUPICH: Mr. Chairman, in cautioning me I think you've taken longer than I intend to take in responding. But the minister's comment about Manitoba invites at least a few words in reply.

With respect to the management of the public debt itself, may I simply say that one thing that concerns me as much as anything else about our public debt is the fact that in 1985, according to my analysis of public accounts, the people of British Columbia had to export $673 million worth of something to pay the interest on that portion of our debt that is in the form of American dollars. Now that's a lot of exports simply to pay for the foreign part of our debt.

With respect to Manitoba, I'd like to quote from a speech by the Minister of Finance in Manitoba, sentiments that I can endorse, and I would invite the minister to comment on these sentiments just briefly.

'As a politician, I don't see the aim of economic policy as simply balancing a set of books. My interest in economic policy is not only how it affects the government's coffers, but also how it affects the people it touches. For me, the importance of economic policy is how it helps us to improve the quality of life, whether it redresses economic imbalances. Economic policy should work for those who have less in our society, not for the benefit of those who already enjoy more than their fair share."

One of my arguments consistent through these estimates is that the minister, with respect to his policies, is doing it just exactly the other way around, and he's done it presumably to try to put British Columbia, as he might say, back on its feet. But by almost every measure, British Columbia has gone further and further behind compared with most other Canadian provinces while we have been doing just the opposite of what his counterpart was doing in Manitoba.

[Mr. Ree in the chair. ]

HON. MR. CURTIS: Speaking strictly to the management of the public debt, the member for Nanaimo may care to look at some of the material that I have had from time to time. Manitoba's foreign debt is disproportionately high. The provinces together have raised about two-thirds of their funds in Canada or in Canadian dollars, with no exchange exposure, obviously. Less than half of Manitoba's borrowing has been domestic. Manitoba's U.S. dollar debt, Mr. Chairman, is also excessively large: 37 percent of its obligations are in U.S. currency, compared to 30 percent for the provinces in aggregate. Mr. Chairman, I trust that, as we decrease our deficit and as the economy improves, I will have been seen, with others in this government, to have managed the public debt in a responsible fashion.

Vote 81 approved.

Vote 82: contingencies (all ministries), $50,000,000 — approved.

MINISTRY OF INDUSTRY AND
SMALL BUSINESS DEVELOPMENT

On vote 44: minister's office, $215,347.

HON. MR. McCLELLAND: Maybe I'll make a couple of brief comments, Mr. Chairman, before we get into this vote. I'll be very brief. Most of the operations of the ministry are pretty straightforward.

I'd like to say to the House, though, that in my opinion this ministry is the best job in government. It offers a person the opportunity to meet with dynamic, far-seeing and innovative businessmen around British Columbia, and to be able to help them to develop the economy of our province, and that's a very positive feeling to have.

We do, of course, have as our objective the responsibility to encourage and to facilitate the expansion and the diversification of the province's economic base — industrial and small business — of course in conjunction with the British Columbia Development Corporation; to develop financing packages; to assist many kinds of operations.... Some of them include the very exciting construction of Moli Energy's rechargeable battery plant at Maple Ridge; a biomedical

[ Page 8422 ]

research centre on the campus of LJBC devoted to the discovery, development and study of disease control, particularly cancer; one which we will be celebrating with the commissioning of a new aircraft very soon — Conair Aviation of Abbotsford, in its major project to convert used Fokker F-27 airplanes into firefighting air tankers; and a number of other projects.

I will, Mr. Chairman, just coincidentally, be releasing today a press release regarding some opportunities which have been delivered under small business incentives that have been developed in my ministry. We'll be announcing that 16 British Columbia firms are receiving government loans under the small business incentive subagreement, the small manufacturers incentive program, the industrial development assistance program and the aquaculture incentive program. Those programs and those industries, since they're all small businesses, Mr. Chairman, are all over British Columbia. They're well represented in every member's constituency.

We, of course, were successful in negotiating the seven subagreements under the broad ERDA agreement which was signed, which committed $575 million, jointly funded by the federal government and our government, over a five-year period for various kinds of industrial opportunities, a major one, of course, being in reforestation opportunities of $300 million.

The small business venture capital program is now in place, designed to attract new equity capital into British Columbia businesses. During the first three months of operations 17 venture capital corporations were registered, representing about $13 million in approved equity capital. Our next step — in fact the step we have recently taken — in conjunction with the small business venture capital program, is really a marriage service almost, in which we have a matching service available within the ministry to take people who want to invest, and have money to invest, and other people who are looking for money, and try to put them together. So far, Mr. Chairman, it's working very well.

We are administering, in conjunction with the Ministry of Municipal Affairs, the community organizations for economic development program. During the past year that program has supported the operation of 29 municipal and regional economic development committees, and 19 special projects, including the establishment of a northern B.C. communities promotional office in the World Trade Centre at the Canada Place.

During the past year, in our small business services branch, our counsellors responded to over 30,000 direct inquiries, while the business information network handled an additional 80,000 requests for advice and information.

So it's been a busy year, which only says, Mr. Chairman, that a lot of people are looking at a new way of providing their livelihood, and that way is in enterprise. Rather than going and looking for a job, they're making their own jobs, and some of them are being extremely successful at it.

With the Ministry of International Trade, Science and Investment we have developed a further agreement with the federal government to extend the cooperative overseas market development program, a program funded by my ministry, the federal Department of Regional Industrial Expansion and the Council of Forest Industries of British Columbia. This program has now received a further five-year extension, and is an excellent example of the way that people can work together. Its aim is to extend the use of British Columbia forest products around the world.

We have now agreed to a similar kind of program with the Fisheries Council of British Columbia. That will be the Fisheries Council of British Columbia market development program, announced late last year. It is a three-year domestic and export market program, and it's funded again by the federal and provincial governments. Its aim is to expand our fisheries products both here at home and around the world.

Mr. Chairman, I'd like to pay a brief tribute to the people who have worked so hard in my ministry — my deputy and his staff and all of the others and those in the British Columbia Development Corporation as well. So far we've had a very busy year, and I'm looking forward to continued steady activity within the ministry. I'd be happy to answer any questions.

HON. MR. CURTIS: Mr. Chairman, I waited until my colleague had concluded. I wonder if you could advise if there's a quorum here.

MR. CHAIRMAN: There does not appear to be a quorum at the moment.

There now appears to be a quorum.

MR. WILLIAMS: Mr. Chairman, it was a fairly short speech from the Minister of Industry and Small Business Development in opening the debate on his estimates; I guess rightly so, because the achievements have been so modest.

We're still a resource-based province, and that is something that we have to deal with in our evolution as a more mature economy. But we have not pursued effective courses of action during this past decade under this minister or the ministers before him in this portfolio.

The story is dismal. It's one of significant massive failure in the projects they have entertained and in the goal of diversifying the economy of the province. That has not happened during this past decade at all. We have not effectively developed a value-added industry for our basic products. I don't want to spend too much time today on that, because last year I spent some time on the whole question of value-added in our primary industry, particularly in the forest sector, and the minister is fully aware of that speech. I guess by now he is fully aware of the kinds of studies that have been undertaken by top-notch professionals like Woodbridge Reed and others on how we move that major industry of ours out of the doldrums and into the new sophisticated era.

In the wood sector, we are still a province that turns out 2-by-4s instead of more finished wood products. We turn out market pulp and newsprint instead of fine papers and higher grade newsprints and the like. We send the bulk of our product out of this province in a semi-finished or unfinished form, particularly in the case of raw logs. We're now sending out raw logs, 12 percent of volume on this coast, and, I suggest, 25 percent of value.

Despite the fact that further processing would provide jobs in B.C., we don't apply simple principles to our industrial goals, and that's the problem. The minister will hire all kinds of so-called experts, really little more than mumbo jumbo people that aren't dealing with fundamentals. Take a simple thing like weight-losing, which I should do and the minister should do. If we applied that principle....

[3:15]

[ Page 8423 ]

AN HON. MEMBER: Me too.

MR. WILLIAMS: Okay, all of us. But if we applied that principle to our industrial sector, it's really worth thinking about. What we need is an industrial sector that starts losing weight. We turn out heavy products, costly-to-move heavy products. That's basically what we produce in terms of our primary products in British Columbia. We should be producing lighter products, more valuable products, rather than these heavy, less valuable products which are our staple.

We should be talking in these simple straightforward ways, Mr. Chairman, because there's too much gobbledegook around in this economic development area, and the Third World has paid a terrible price for that, but we in some ways are like the Third World and still swallow some of that nonsense. This ministry ends up spending hundreds of thousands of dollars annually on consulting studies and bringing in experts. I wonder if the minister could tell us the number in terms of what you spent and what your predecessor spent on special economic zones, and all of those studies carried out with respect to special economic zones. That's the kind of gobbledegook I'm talking about. How much did you spend in hiring consulting engineers in looking at the Delta-Roberts Bank area, looking at the farmland in the ALR and the possible industrial development of that, looking at Tilbury Island and the possible development of that, in terms of engineering consultants, in terms of economic consultants and all the rest? How much did you spend in consulting fees on northeast coal? I think on northeast coal alone it was $10 million-plus just in consulting fees.

MS. SANFORD: Look at the advice they got.

MR. WILLIAMS: Exactly, and for all that is there a rate of return on the project? No, there isn't. So here's a department we've had around for how many years — what, about 13 years? It was basically established as a new agency in about, what, 1973 — rather than just the old department of economics and statistics and that kind of gathering of information. Yet for all those years — 13 years — as a basically so-called economic development department, the results are just abysmal, and you are still at the same level in terms of diversification in this province as the Maritimes.

No, you can shake your head; you can throw it back to the pillar.

Interjection.

MR. WILLIAMS: Well, it's true, and it's nothing to laugh about. It is true. The diversity that you seek has not been achieved. Our level of diversification, according to the best academics that I've seen from our own universities in this province, is still at the same level as the Maritimes. That's a reality. That's the end result of 13 years of having this ministry.

So you spent hundreds of thousands — we don't know what the total number is — on the special economic zone idea, and whatever happened to that? That's something you were giving speeches on for a good 18 months or a couple of years. It's clearly as dead as the dodo, because you needed the feds to play along. You needed the feds to give the concessions on a scale like you were willing to give in British Columbia, and they've proven unwilling to do that. They've proven unwilling to give those kinds of subsidies, because they see it as an endless waste of public money. So for 13 years you've been pursuing will-o'-the-wisp kinds of new ideas instead of dealing with the fundamentals of the British Columbia economy. It's always stuff like special economic zones or it's stuff like.... Well, we know what they are.

It seems to me that at this point in time after more than a decade of chasing projects that don't work essentially, it's a time for major reassessment of what you've been doing. It is indeed, as others have said, a time for renewal. It's a time for renewal in terms of the talent you've got, the backup you've got, and the whole way we look at the province's economy. That has not occurred. This is a standstill department. It's an economy that stands still, and in fact is sliding backward in far too many sectors. It's sliding backward in our historically sound sectors. That's a great, great loss.

This morning in the Finance estimates I showed that the non-collection of economic rent of resources has had a negative impact on provincial income needless to say, as we're not collecting legitimate revenue but beyond that it's had a negative impact in the private sector as well. I don't want to elaborate on that in great detail, but I'm saying that our non-collection of public revenues and rents with respect to our basic resources has allowed the corporate sector to not perform as efficiently as it otherwise would. They historically have been used to the non-collection or under-collection of rents in terms of our natural resources, be that minerals or other products; it doesn't matter. There is a consistency there at the provincial level in not collecting these revenues.

If we look at our wood sector and compare the coast with the interior, we find that the most efficient industry is in the interior of the province. Our least efficient industry in the wood sector is on the coast. You can again shake your head and say: "Oh, that's not really my department." The problem is that it is nobody's department in this administration. The efficient wood-producing plants in British Columbia are in the central and northern interior, and some of the most efficient ones in the world are in the Prince George area. However, if we look at the difference in terms of the fundamentals that they both face, we find that the interior had to face more competition for supply than the coast. The people in the interior of this province have had to face competition for their raw material historically and more recently than the people on the coast.

So the lack of competition on the coast has meant an incredibly inefficient basic resource sector in terms of sawmilling, pulp, paper, whereas in the interior we have an efficient industry. I suggest that the reason is the greater collection of rent in the interior and the need to compete for what used to be called not too long ago third-band wood: a third of the wood supply was withheld and then reallocated on a regular three-year basis — or something like that — on the basis of performance and efficiency. That's the difference. The coast got rewarded for performance and efficiency in public wood supply. Those on the coast remained with their public wood supply regardless of performance and regardless of efficiency.

I'm suggesting that what we need in British Columbia is something like the Japanese are calling for in their more sophisticated economy. They're calling for lighter, smaller, slimmer, or whatever it is, and we should be calling for the same in British Columbia's industrial sector. The benefits would be even greater than those in Japan. Just think about that simple idea of producing lighter products. If we all lost weight collectively, if we lost weight in terms of our products,

[ Page 8424 ]

it would automatically mean more regional development. If we reduce the weight of the products we sell abroad, it means more work where the products are harvested. That would apply to every sector.

Like most important ideas, it's a simple one. If we simply produce lighter and with less weight we would be turning out more valuable products and creating jobs in the regions of the province where we desperately need them and where we don't have them now. In the southeast part of the province the unemployment rates hover constantly at 20 percent. They hover regularly in the Prince George area around that level and very close to that in the Kamloops region as well. The policies of this administration have essentially been geared to new mega projects in the urban Vancouver area, and the price tied to that is the underdevelopment of the hinterland. Ironically, under this administration we have had a continuing underdevelopment of the small towns of British Columbia and the hinterland. I say that as an urban member who has some sense of the scale of this province of ours. So I'm arguing for products that will lose weight because we will get more jobs, and we'll get more jobs in the region.

I'd like to refer to one small plant which happens to be in Surrey, called Kaywood Industries. It used to be Dashwood and Kayline, and it's down sort of southeast of Newton along the B.C. Hydro right-of-way there. They turn out products that are lighter, not heavier; products that are more valuable, that benefit the economy and create more jobs. Mr. Stusiak, the main owner, happens to be a Burnaby alderman. They turn out a product that's basically worth $1,200 per thousand board feet. So they're turning out lighter products that are worth $1,200 on average per thousand board feet, instead of two by fours worth about $200 per thousand and raw logs that are a fraction of that. It's a wonderful example of lightweight production that we need. Lighter is better; it's creating jobs and adding value. They turn out doors, window materials, cupboards and other finished products, and after some restructuring and consolidation of ownership they're doing okay.

They and a handful of others in the province are a model we should be pursuing. Ironically, they've been squeezed in terms of supply, in terms of raw materials. They've been squeezed because of our excessive export of raw logs — that's been a factor — and because during the good market for our cheap products like two by fours the availability of supply for them has not been as easy as in the past. So they've been squeezed.

I'm suggesting, Mr. Minister, that, you should play an activist role with respect to operations like that, encouraging more operations like that and making sure that there's not log exports and that there is availability of raw material supply for those kinds of producers.

Beyond all this we're still more and more in this province a branch plant economy: a branch plant economy to the United States; a branch plant economy for eastern Canada; a branch plant economy for owners abroad.

MR. CHAIRMAN: Time, hon. member.

MR. WILLIAMS: I think I'm the designated speaker, Mr. Chairman.

MR. CHAIRMAN: The hon. member is aware of practice recommendation 9 in the Standing Orders, presumably. The Chair will read it. "A member who wishes to speak as designated member should advise the Chair as early as possible after the commencement of his or her speech." That would save the Chair the embarrassment of interrupting the member in the middle of his speech.

MR. WILLIAMS: Thank you, Mr. Chairman. I wouldn't want you to be embarrassed and I apologize for not advising you earlier.

So beyond that, we're a branch plant economy. In the end that means an outflow of capital — capital that could be used for renewal, reconstruction and for new plant.

If we look at the overall figures in terms of negative capital outflows in this country, between 1950 and 1976 the outflow was negative in terms of capital. We tend to think of Canada as a positive importer of capital, but in fact that has not happened. It's caught up with us. We actually lost $9.6 billion. So we have a negative outflow of capital.

The branch plant problem that we face in this province and in much of the rest of Canada has very real regional implications. We tend to lose the head office jobs. We lose the head office jobs that go to the senior offices. That applies to companies from abroad. We lose the head office jobs even in terms of Canadian enterprises. So you get a company like MacMillan Bloedel, for example, significant as it is, whose real head office is still Noranda in Toronto. And that applies to far too many other enterprises in the province as well.,

We lose the research and development work as well. If you check the R and D expenditures in British Columbia as compared to other jurisdictions and administrations, or even indeed in other jurisdictions in Canada, you'll find that we are about the lowest anywhere in the western world in terms of the chunk of our gross provincial product that's spent in research and development.

[3:30]

Those then, too, are jobs that we lose because of the branch plant problem that we have.

If this ministry wanted to look at things in a fundamental way, they would look at this staple economy of ours, i.e. our natural resource economy, and they'd start looking more seriously at forward and backward linkages in terms of at least the resource sectors. But we don't do that.

There is the whole question of the machinery that we need for extraction of raw materials and resources. We should and could be a world-scale producer of machinery in the forest sector. We are not. We simply are not. We could be a world scale producer in terms of machinery for the mining sector. We are not. Had there been a conscious policy on the part of this ministry in terms of those backward linkages and the exploitation of natural resources, we would have had more machinery operations in the province working and developing new machinery both for forest exploitation and for mineral exploitation. But this is not the case. We do not compare with other jurisdictions. Given the nature of our natural resources, the percentage of our production in those areas is very, very modest indeed.

Beyond that, I've mentioned value-added. Again, it's a slipshod kind of approach to the question of how we can really move in the value-added sector. You know, who did the last guy hire in terms of value-added production in the woods sector? Can the minister tell me? I'm sure his deputy can.

[Mr. Strachan in the chair.]

[ Page 8425 ]

Going through public accounts of the last fiscal year, there was a $100,000 contract with respect to value-added in the woods industry and furniture production — $100,000. And who was the person hired? It was a lawyer in West Vancouver.

Interjection.

MR. WILLIAMS: Hugh W. Cooper; that's the one. But you know, the question is, don't we have existing industries and existing industrialists that are very experienced? Do we need to send people to the Royal Museum in London to look at that kind of question? That's what's happened under this ministry.

We keep looking for the glitzy stuff. We got the same sort of thing from another minister, talking about high-tech as our great future, when in fact we haven't rebuilt the basic provincial economy that we have to retool and rebuild on a constant basis. What we've got to do, Mr. Chairman, is do what we do better and more efficiently and more productively; and we've got to do it lighter and make it more valuable.

In the pulp and paper sector, I wonder if this minister has ever looked at the most recent data with respect to the public pulp and paper sector; I suspect not. There's data now out that shows that we.... I wonder if the minister might guess: in terms of our efficiency in the pulp and paper sector, are we the most efficient, the second most efficient, the third most efficient, the fourth most efficient, the fifth most efficient? I ask the minister. Just nod your head. Do you think we're number one? No. Number two? Number three? I think it's clear, Mr. Chairman, the minister doesn't know. I think it, s clear that he doesn't know.

The reality is we are the least efficient producers of pulp and paper in the world, despite the fact that we supply the wood at a lower cost than in any other jurisdiction in the world. Just think about that: we sell our wood to the pulp and paper industry....

HON. MR. McCLELLAND: Could you give me your source for that?

MR. WILLIAMS: Sure. I'll develop it. I'll give you the figures.

HON. MR. McCLELLAND: You'll give me the source.

MR. WILLIAMS: I'll give you the figures.

HON. MR. McCLELLAND: You don't have a source.

MR. WILLIAMS: Indeed I have a source, Mr. Minister.

Our problem is that we're still basically using 1960 technology. The minister says that I don't have a source. I'm saying that studies have been undertaken internationally, looking at the Norscan countries. He's changing his tune; he's now nodding his head. I'm saying that studies have been undertaken with respect to Norway, with respect to Finland, with respect to Sweden, with respect to eastern Canada, with respect to the United States. Relative to all of those international producers in pulp and paper, British Columbia is the highest-cost producer in the world. The people that carried out the studies were Price Waterhouse Associates, international people in the field of accounting. They carried out the studies I referred to. The minister has millions of dollars worth of staff to advise him, and he doesn't have this kind of basic information.

The problem in our pulp and paper industry, Mr. Chairman, is that we're basically still using technology of 20 years ago. That's when the bulk of our investment was made in this industry — or earlier. We have the oldest plant, generally, of any of the western economies: 1960 technology. We are a generation behind.

The numbers from this international study by Price Waterhouse are as follows, in terms of market pulp: Sweden, $383; Finland, $438; the American west, $500; U.S. south, $504; eastern Canada, $504; B.C. Interior, $513; B.C. coast, $557 per unit. So the differences between the B.C. coast and these other jurisdictions is $174 between B.C. and Sweden; $119 between Finland and the B.C. coast; $57 between the U.S. west and our coast; $53 between the U.S. south and our coast; $53 between eastern Canada and our coast; and $44 between the coast and the interior, in terms of the cost of producing market pulp.

Those are real figures. That, put together by Price Waterhouse, looking at plant and equipment in pulp and paper in the Norscan countries, in the United States and in eastern Canada, is the most up-to-date information currently available. It is a measure of the disastrous problems we have within our traditional basic industry in this province. It is a measure of your and this administration's failure over the last decade, as well as the private sector's, in terms of not making funds available for plant and improved production and better technology in this field in British Columbia. Those numbers are the measure of our general collective failure in this field in British Columbia. That burden is primarily yours, Mr. Minister.

Our labour costs to produce pulp and paper in British Columbia are four times what they are in the Norscan countries. That is not a factor of wage rates; that is a factor of plant, equipment and technology.

Interjection.

MR. WILLIAMS: Yes, that's what it is, and if you find that puzzling, that is an indication of the depth of the problem we have in this province.

Our energy costs in this industry are, again, four times what they are in the Norscan countries. That is also a reflection of the technology and the inefficient plant we have in British Columbia.

But what about newsprint? Here are the numbers, again carried out by Price Waterhouse, and the measurement is cost per foot: Norway, $388; Sweden, $411; the U. S. west, $450; the U.S. south, $472; Finland, $475; Canada, $506 — a $128 difference with Norway, Mr. Minister, in terms of the cost of producing newsprint. That's the measure of the age and inefficiency of our newsprint capability in the province of British Columbia.

As I said, that's despite us having the lowest wood costs in the world in terms of wood delivered to pulp-and-paper mills in the province. In case you're not aware, the pricing is generally about half of what the roundwood log supply.... All the other jurisdictions in the world charge the same as roundwood supply costs, in terms of the fibre for these particular mills. Our mills have this additional benefit of a

[ Page 8426 ]

lower-cost fibre supply for a range of quasi-monopoly reasons in the province. Despite that, the difference in efficiency between us and the Norscan people is on this huge scale.

What does the future look like? What about proposed capital investment in this industry? The last figures I saw, and they were of a year ago, were projections to 1989. The projections for spending in this particular sector were: Quebec, $2.5 billion in capital spending for modernization, new plant and equipment, before 1989; Ontario, $686 million; B.C., only $430 million; New Brunswick — little New Brunswick — $422 million, virtually the same as the province of British Columbia. We have to remember that in British Columbia we have one-half of the forest resources of the country. On any ratio basis we should have half the capital spending in this sector. What we're doing, up until 1989, is 10 percent of the proposed capital spending. It simply doesn't make any sense. What that means is that right up until 1990 we will continue slipping behind more. We are already the highest-cost producer in the world in pulp and paper, as documented by Price Waterhouse. We should be spending more than anybody in this nation or in the rest of the world in terms of improving plant and equipment. We are not.

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

Leave granted.

MR. MICHAEL: I'd like to introduce a couple visiting the Legislative Assembly today: Mr. Barry Prouty and his wife, Valerie. They're from the constituency of Shuswap-Revelstoke and live in the area of Chase Creek. Would the House please make them welcome.

MR. WILLIAMS: I just told him that we are in disastrous straits in terms of our basic industry, that we're the highest cost producer in the world, that all of the projections indicate that we will slip behind even more until 1990. What has the minister to say about that?

[3:45]

HON. MR. McCLELLAND: Mr. Chairman, the member also said that we have four times the labour costs in our mills. Just looking at a graph of pulp and paper production in British Columbia, in 1975 we produced about four million metric tons of pulp. In 1985 it was very close to six million, record levels last year as a matter of fact, and a similar thing is true for paper.

Mr. Chairman, that member, in every estimate, uses it to debate forestry issues. I don't think he's ever been in order, except maybe in the forestry estimates. I'm not going to debate with him on forestry issues in my estimates.

I can tell you that he doesn't know what he's talking about most of the time when he talks about making this a leaner economy, losing weight in our economy, manufacturing lighter products. I'd invite him to go to more than one plant in British Columbia. Perhaps he should start his visit with Vancouver East, his own constituency, because he continually talks about the opportunities that we have in British Columbia to be world leaders in the manufacture of equipment related to the forest industry.

What he doesn't know is that we already are world leaders in the manufacture of forestry equipment, and one of the best manufacturers is right in his own constituency — CAE Machinery. At one point in this House, he even accused a company of not buying any equipment from that company, and it turned out that most of the equipment that that particular company bought was in fact from that company. So first of all, I suggest he start with a visit in his own constituency. Then I'd like him to go around the province and see what really is happening to industry in British Columbia and the way in which diversification is taking place.

We are no branch plant economy, Mr. Chairman. Nothing of the sort. If you look at what's beginning to happen in British Columbia with added value to our wood products, you'll be excited, as I am, and I'd really like you to get excited for once in your life.

We are remanufacturing wood into other products. There's more than one company. I realize the company which the member refers to in his comments is a very good company, but there are lots of them all over British Columbia remanufacturing wood into other products — doors and windows, furniture. The Minister of Education will be opening a new furniture manufacturing plant in Penticton on June 24. We are manufacturing chopsticks from wood in Prince George, and I expect that there will be several more. We are now manufacturing diapers in British Columbia from wood products. We soon will be manufacturing tissue of all kinds and a number of other products in British Columbia from wood waste. That is the exciting thing that's happening, and all that is happening, Mr. Chairman, right under that member's nose, except he won't look. What is more exciting is the way that this province is diversifying.

The fastest growing sector of our economy over the last ten years has been the manufacturing industry — nothing else — and the service industries that service the manufacturing industry. The three fastest growing segments of our economy, all through the period of the recession, growing at rates of something like 30 percent per year, are the motion picture industry, the software manufacturing industry and the electronics manufacturing industry, today our fourth largest industry in British Columbia and growing very fast. Do you know that? It is the kind of industry that we need and want to diversify the economy of our province.

I think that member better get out around this province and find out what's going on.

MR. WILLIAMS: If you want to see the numbers in terms of the cost in the pulp sector....

HON. MR. McCLELLAND: It doesn't mean anything.

MR. WILLIAMS: Price Waterhouse doesn't mean anything? You say that those aren't real labour costs?

HON. MR. McCLELLAND: It doesn't mean anything.

MR. WILLIAMS: It doesn't? It means enough to the international people in the field of pulp and paper to hire Price Waterhouse to go around the world and compare efficiencies, and we fail on all counts.

Interjection.

MR. WILLIAMS: What's volume got to do with it?

HON. MR. McCLELLAND: For heaven's sake....

[ Page 8427 ]

MR. WILLIAMS: The difference is profit. There simply isn't the profit in the industry in British Columbia, and when price goes down, then we're in trouble.

HON. MR. McCLELLAND: What do you want me to do about it?

MR. WILLIAMS: Become informed.

MR. CHAIRMAN: The member has....

MR. WILLIAMS: If you want the numbers for administration and supervisory staff costs in the market pulp sector, it's $6 a unit in Finland compared to $24 and $26 on the B.C. coast. These are 1983 and 1984 figures and data. It gives you an idea of the kinds of difference. That's the fourfold kind of thing that I'm talking about.

What we haven't heard about today from this minister is the biggest project of his department in this decade — northeast coal. That was the brainchild of this ministry and your staff and your former ministry.

Interjection.

MR. WILLIAMS: Northeast coal is your biggest exercise in industrial development during your decade, the biggest exercise ever in the history of British Columbia. And its future looks worse and worse. It's impinging more and more on the southeast part of the province in terms of cutbacks and layoffs and ultimately, I'm afraid, closures.

It is a tragic story — a 50 percent cutback in the southern interior where they are more efficient producers. What kind of wrong-headed policy is it that would have us focus on the high cost producing area in the northeast rather than the southeast, to everybody's loss? Your policy, that's what.

We never hear a word about this one. I'd like to see a copy of the film and videotape that you did on northeast coal. Is it available, Mr. Minister? It was through your various slush funds of one kind or another. It's called "Take a Giant Step." Maybe they've had to change the title since it was originally produced. That was Doug Heal and Dave Brown and all those guys. The last number I saw for just a part of that one was $150,000 for that film in the public accounts. But maybe that can be corrected. I think they have had so many hundreds of thousands of dollars, Mr. Heal and Mr. Brown, that it is hard to keep up in terms of their propaganda effort. But I wonder, is that film available? Is it available to the opposition? Because we would like to take it around the province and show it to everybody.

Now the CBC did one film called "Megadream," "Megabust," or whatever it was called. That clearly indicated that this was a massive, monumental failure. It would be interesting to compare it with your propaganda film called "Take a Giant Step," and we could see how these many hundreds of thousands of dollars spent on your propaganda film compare with the CBC's effort in terms of the same exercise. Is the film available, I wonder? It would be interesting to see.

MR. CHAIRMAN: On this note, hon. members, the committee notes that in the 1985-86 estimates there was a reference in these ministry operations to northeast coal development. However, in the current estimates there is no reference to this ministry nor any expenditures, so I would find that discussion to be not relevant. Debate in Committee of Supply must be strictly relevant.

MR. WILLIAMS: I find that if you dial the northeast coal number that is in the book and wait for a response — and you have to wait longer for telephones to be answered in British Columbia since restraint — you find that when you dial the northeast coal number on Hornby Street, the answer is: "Industry and Small Business Administration." That's certainly what you get when you dial the number, Mr. Chairman. I certainly can understand the department wanting to abandon this project as quickly as possible. It looks like the other players are about to do the same.

Maybe we could look at another interesting project, and that is Louisiana-Pacific. which this ministry has provided a bundle for, $25 million at zero percent interest. Can the minister advise if the cabinet was advised that there was concern about the lion's share of the funding coming from the Crown when this project was proposed?

HON. MR. McCLELLAND: Well, there are a couple of questions in there, I guess, Mr. Chairman. If you would like to have that film to show at your annual meeting, Mr. Member, why, just call our library and we'll make it available to you.

As far as the Louisiana-Pacific, the Chairman is right. I have no money in my budget for anything to do with northeast coal at this present time. But as far as Louisiana-Pacific goes, I don't know what the member means by was there concern given to cabinet about the amount of the funding being done for Louisiana-Pacific. I don't understand the question. Obviously, before preparing a paper for cabinet a whole lot of things would be considered, and we were very thorough in making those considerations available as points to begin discussion with cabinet. That was done in this instance. I would be very unhappy if it wasn't done in every instance in which government funds were being provided.

MR. WILLIAMS: What I asked was: was the cabinet advised in terms of concern over the fact that the lion's share of the risk with respect to the waferboard project in Dawson Creek would be borne by the province rather than the private sector, and that this was contrary to all provincial policy heretofore.

HON. MR. McCLELLAND: Mr. Chairman, the cabinet knew every detail of the loan that was being made to Louisiana-Pacific.

MR. WILLIAMS: So the minister, Mr. Chairman, is saying that the cabinet was advised that the lion's share of the risk was being borne by the Crown?

HON. MR. McCLELLAND: The cabinet knew every detail of the loan that was made or is being made to Louisiana-Pacific. I would be very unhappy if they didn't.

MR. CHAIRMAN: Before recognizing the member, I will remind the committee that discussions regarding cabinet are not relevant to a minister's estimates. Only the voted expenditures are discussed.

[ Page 8428 ]

MR. WILLIAMS: The minister is not answering the question, Mr. Chairman. That's very clear. He is not answering the question. Will funds have to be provided by this administration for the B.C. Development Corporation to meet the shortfall in terms of your generous loan terms provided by BCDC?

HON. MR. McCLELLAND: The answer is yes.

MR. WILLIAMS: The minister didn't know until he checked. What more can one say? Here is a $10 million subsidy just in terms of interest, and the minister doesn't know if the money has got to be paid by the Crown to BCDC or not. It does have to be paid by the Crown to BCDC, so for the next six years the public, the taxpayers, of British Columbia have to cough up that $10 million. For the next six years, we have to cough up that $10 million in terms of interest subsidy, and we're giving them tax holidays at the municipal level and at the provincial level that total millions more again. The minister didn't know that that was going to be the case. Of course he knows now, he says. Of course he knows now, but he had to check with his deputy to see for sure. That's simply extraordinary.

What we have here is a deal that the Minister of International Trade and Investment cooked up and that this minister was saddled with. It's clear he doesn't have a handle on all the details. It's clear that the former member from South Peace saddled him with this deal and he had to swallow it whole. That's what's becoming more and more clear as time goes on. He had to swallow whole a deal pulled together by a minister who did not have the authority to pull the deal together. BCDC had to swallow a deal in terms of a $10 million interest lump that they would have to pay by requiring that this government cough up the $10 million for them. This man wasn't even aware of the kind of mess he's had to swallow. He's not aware of the kind of mess he's had to swallow with respect to the Louisiana purchase, or the Louisiana-Pacific deal. That's extraordinary.

[4:00]

The cabinet was advised in the following words, and I quote: "The cabinet was advised that this arrangement would clearly burden the province with the lion's share of the project risk," — I quote from a cabinet document — "risk which is contrary to established policy, and the cost to the provincial treasury would appear to be excessive — approximately $10 million in present value terms." The modest civil service in your own department sent that report to cabinet stating those words, that the risk would appear to be excessive, the cost to the province would be excessive, and the lion's share of the risk would be borne by the people of British Columbia. That's in a document from your department to cabinet, Mr. Minister. It's an extraordinary deal. We have never seen the equivalent in the history of British Columbia in terms of that particular deal. Your staff essentially were blowing the whistle on it. They essentially were saying: "This is not justified." They were essentially saying: "We've never, ever done this before in the history of the province." They were saying that it wasn't justified, and they were saying that the private company should be the risk-taker in an exercise like this.

The problem is that this is a profitable sector for the Louisiana-Pacific company. You check their annual reports, and you find that they say this has been their most profitable sector and that's why they've been expanding it as quickly as they have over the last decade, because it's a profitable sector for them. If it's that profitable for them, then we don't need to put money on the table. We simply don't, and didn't, need to put money on the table in terms of this kind of proposition.

It's very clear. The cabinet was warned. The minister was warned. They were told that this was excessive, that they were taking too much of the risk. Despite all that, they went ahead with the project. The same earlier minister of this department that gave us northeast coal is the minister who gave us Louisiana-Pacific. What kind of track record is that anyway?

This minister simply had to swallow it whole. He was given a fait accompli by a minister who didn't have jurisdiction or authority and had to swallow the deal whole. That's the mess he's had to deal with. And there is no way he can excuse it away. The information is there. The cabinet was warned.

HON. MR. McCLELLAND: Mr. Chairman, I told the member earlier that the cabinet was aware of every part of the deal with Louisiana-Pacific, and all of the discussion papers which led up to Louisiana-Pacific's loan were laid before the cabinet. The cabinet made a decision, and this is the result of that decision.

It's not extraordinary for the government to indemnify British Columbia Development Corporation on loans. We do it all the time. It's not extraordinary in any way at all. So this is no different. We can't expect a development corporation to be responsible by itself for the costs of incentives which are at the request of and for the benefit of the government. So we do it. We indemnify the British Columbia Development Corporation.

The size of the loan, if that's what bothers the member.... We've made other loans that.... We've got $20 million into Moli Energy, which is developing a revolutionary new product that very likely is going to be the product of the future, in terms of rechargeable batteries. LouisianaPacific has been subsidized in every waferboard mill they've ever built. The Alberta government has heavily subsidized two waferboard plants in Alberta. I'm told that they offered Louisiana-Pacific $27 million.

Mr. Chairman, I don't apologize for going out and actively soliciting something that will provide 375 jobs in a community that badly needs them. I don't apologize for having the opportunity to use what is presently an underutilized resource in this province — aspen wood — which is just waiting to be tapped. As for the way in which we arrived at the decision to grant this loan to Louisiana-Pacific, I don't apologize for that either. It was all straightforward. It went to cabinet and cabinet approved it. That's the way it usually happens.

MR. WILLIAMS: When did cabinet approve the loan?

MR. CHAIRMAN: The question really is not applicable to the estimates before us.

MR. WILLIAMS: They are supplementing funds to BCDC. The question is: when was the loan approved, Mr. Chairman?

HON. MR. McCLELLAND: I don't have the exact date with me. I'd be happy to get it for the member and the approximate date of when it was approved. But it was a little while ago.

[ Page 8429 ]

MR. CHAIRMAN: Just before I recognize the next member, with respect to what I said earlier, the minister is responsible to the committee for decisions that he has made, but a question dealing with the executive council is not in order. The minister can respond on his own behalf, but not on behalf of other members.

MR. WILLIAMS: That is absolute nitpicking, Mr. Chairman. It's very clear that this is this minister's responsibility; this is the department responsible for BCDC. The loan was granted. It went through a process. When was this matter put to cabinet by your department? That's the question, Mr. Chairman.

Interjection.

MR. WILLIAMS: It's the administration of this department.

Interjections.

HON. MR. McCLELLAND: I can tell that member quite clearly that that matter was never put before cabinet by my department.

MR. WILLIAMS: The matter was never put before cabinet by this minister's department; that's what he's saying. So it was put by the Minister of International Trade. Is that correct?

Interjection.

MR. WILLIAMS: Come on now, don't be coy. I'm interested. It's a very intriguing question.

Interjection.

MR. WILLIAMS: You mean this never was put forward to cabinet by your department. That's what the minister has said?

HON. MR. McCLELLAND: I've answered this question before in the House. When that member asked why the Minister of International Trade and Investment put forward this proposal, I told him why: because it was an investment and because it came from outside the borders of our country, which makes it international investment. So the responsible minister was the Minister of International Trade and Investment. However, Mr. Chairman, my ministry did a great deal of work on the proposal with the Ministry of International Trade and Investment, as we always do when we work extremely closely together, and we did in this case. I am the minister responsible for the British Columbia Development Corporation, so I would have done an additional amount of work on this as well. There's nothing sinister about it, or even interesting as far as I'm concerned. Normal practices were carried out.

As that member probably will know, once cabinet approval is achieved, under the British Columbia Development Corporation Act an order-in-counciI it must be passed by cabinet on any loan over a million dollars. That was done. That order, of course, would be carried by me, with my responsibility to British Columbia Development Corporation, and all orders are public.

MR. WILLIAMS: Is the minister saying there was no report to cabinet by his department on this project?

Interjections.

MR. WILLIAMS: What? You said no? You say there was no report by your department to cabinet? When did your department report to cabinet on this project, Mr. Chairman?

HON. MR. McCLELLAND: It was sometime during the course of the debate on whether or not there would be a loan to Louisiana Pacific. I think the important date is when did cabinet approve an order- in-council, and that's a public document, Mr. Chairman.

MR. WILLIAMS: I submit, Mr. Chairman, that this minister's department essentially made a recommendation to cabinet to not approve this proposal. I submit to you, Mr. Minister, that that indeed was the position of your staff and your advisers; that this was excessive risk, excessive cost and was simply unjustified, and you got stuck with the burden of the former minister's activities.

It's very clear, from the reports your department sent to cabinet, that your department was against this proposal because of the excessive cost and excessive risk. That is abundantly clear. You simply were saddled with a player and a decision by a person who should not have made the decision, who should not indeed have been involved in the process to the extent that he was.

MR. LOCKSTEAD: I want to discuss with the minister the matter of Ocean Falls. I understand that the minister visited Ocean Falls recently. I've gone through this exercise in regard to Ocean Falls every year for the last 10 or 12 years. I don't want to go through the history of that but just say that the community was shut down as a vindictive move by this government. The present minister was not the minister at that time.

Over 500 direct jobs were lost. The pulp and paper produced in that community was sold totally in the United States, which brought revenues into this province. However, the fact is that this government, in spite of a study done by H.A. Simons Ltd., a very reputable firm in terms of pulp and paper around the world, a report commissioned and received.... By the way, it was never made public, although I happen to have a copy. I've asked on many occasions for that report to be made public. It's water under the bridge now; the community is dead, is closed.

But there are some questions I have for the minister in regard to the future of that community. Before I pose this question I might add that there was a point back in August 1985 when the government, through B.C. Cellulose Company/Ocean Falls Corporation, started ripping down houses and apartment buildings and these kinds of things, and there was a great public outcry — and not only from the residents of Ocean Falls. I wrote to the minister, and the destruction of the community was halted. I hope that I played some small part in that. At least the minister did listen, and through his intervention stopped the destruction of a possibly viable community.

[4:15]

However, to more recent events. I'd like to ask the minister, first of all, about Central Coast Power Corp. The one question I have about that corporation is: who are they?

[ Page 8430 ]

Nobody has ever heard of them. Who are they and where do they come from? This government has granted them the right to produce electrical energy for the community of Ocean Falls, and they have a further undertaking to construct a transmission line to a community some miles away in Bella Bella, which is currently being served by a very expensive diesel-operated plant in that area. I have no objection to that. But who are they, and how much money have they put up front for the four generators, the dam and related facilities in Ocean Falls? How much did they pay for that? And to whom does that money go? What is the cost, and who is paying for the power transmission line? This is extremely rugged country. As a matter of fact, I had the opportunity to see a study commissioned, I believe, by B.C. Cellulose Company of that proposed transmission line to Bella Bella — an extremely costly undertaking.

I am not opposed to that undertaking, primarily because the people in Ocean Falls and Bella Bella are not opposed to it. But I wonder why this private corporation.... What were they given for these undertakings? Who is paying for all of this? How are they financing these projects? Why didn't B.C. Hydro, the major Crown corporation in this province, who not too many years ago constructed a $1.2 billion transmission line from Cheekye to Dunsmuir here on Vancouver Island, have the ability? Of course they have the ability to build that type of transmission line.

So this private company is going to supply energy to Bella Bella and sell it to Hydro at Bella Bella. That's okay; fair enough. But who is bearing the cost? Are there large interest-free loans being extended to this company, and why when we do have a Crown corporation? I know the generators in that community need repairing. Is this corporation going to be responsible for repair of those generators? Or is the government once again paying for repair of those generators, writing the cost off and turning the whole thing over holus-bolus to this corporation? There is considerable cost involved in this transaction.

One more thing on this very costly hydro study that I believe was undertaken by B.C. Cellulose Company, if not by Ocean Falls Corporation itself. Does this private corporation — CCPC as it is referred to in this article — receive free of charge this very costly study that was paid for essentially by taxpayers' money? Was it just given to them, or did they have to purchase this study? All the groundwork for this new corporation has obviously been done by somebody. So I would ask the minister that question.

I'd like to ask the minister as well if he has any idea.... The minister, I know, was present at a ceremony in Ocean Falls. There was an auction in the community. A great deal of equipment was sold off at the auction to some 300 bidders, I believe, who attended that auction. How much money was raised out of that auction? Where did that money go to? I don't need precise figures, but approximate figures would do. Particularly, is that money going to stay in that community and go to the new improvement district that has been formed, is it going into general revenues, or where is that money going? Some of the prices.... But I'm not going to get into that.

In the publication that I have before me, Mr. Chairman, the author who attended the auction gives us the bid price for some of the very expensive equipment that was bid on, and some of it went extremely cheaply. However, since I have no control over that, the decision has been made, the auction is over, the community sold out.... At least the industrial part of the community has now been sold and is gone.

Well, one more question: I understand as well that the hotel has either been sold to a private buyer or is in the process of being sold. People who, of course, haven't been there wouldn't realize that it is in fact a six-story hotel, a large hotel. At the time it was constructed it was either the largest hotel or the second-largest hotel in British Columbia, and a centre of many community activities.

My question to the minister is: if the hotel is being sold my information is that it is, or has been — how much money is the government or the B.C. Cellulose Company receiving for that facility? Or is that money staying in the community to stay with the new improvement district that has been formed?

HON. MR. McCLELLAND: Mr. Chairman, I hope I didn't miss any of the member's questions. But first of all, with regard to the power generator, Central Coast Power Corp. Is a private corporation which was started for the purpose of negotiating to do what they're doing now. We did have a proposal call from people who may be interested in providing that power to.... Primarily our interest was in keeping power provided to Ocean Falls. A secondary interest to us would be any other provision of power anywhere else. But the proposal came in to build a transmission line to Bella Bella, and we accepted that proposal, Mr. Chairman.

The cost of developing that transmission line is all paid for by the corporation; no government money is involved in that. In fact there is no government money involved in any part of it — not in any refurbishing of the generators or anything else. There is a requirement in the agreement with Central Coast Power that their first responsibility is to provide power to Ocean Falls. So there's no government money in that, Mr. Chairman.

I do want to say, though, that in terms of the destruction of the community, as the member pointed out, the member knows, I'm quite sure, that there was never any plan to demolish Ocean Falls. There was a plan and there was a map, which could have been available and probably was available to that member, of the houses and structures which were going to be demolished. The first ones that were demolished we felt were demolished for safety reasons, because they were in that area of very unstable soil condition, and there had been other slides in that same area in the past with the resultant loss of property.

Mr. Chairman, the member is correct: the community asked if they could sit down with us and talk about the map — what we were going to be demolishing. We did sit down with the community, to the point where we got an agreement, a signed agreement, from the community for a plan for the demolishing of some of the buildings. The rest will stay. There's no plan to do any more than that.

The auction. As you know, once an decision is made to have an auction, prices go as the prices go, pretty well. There may have been some low prices, there may have been some high prices. I believe that Maynard's Auctioneers, whom we contracted with to conduct the auction, did give us a guarantee of about $1.25 million or something in that neighbourhood, after which we would share in the proceeds of anything above that. We do not have at this point the final accounting from the auction, but I know it's well over $2 million. There will still be some accounting coming in from my staff, which I will share with that member the moment I have it, if he'll remind me about it.

[ Page 8431 ]

As far as the hotel goes, I don't know if it's been sold yet or not. I know there has been interest in it, as there.... I believe, however, if I'm not mistaken, that the old hospital has been sold, and there is, I think, one other building in Ocean Falls which somebody has expressed interest in buying.

AN HON. MEMBER: The school.

HON. MR. McCLELLAND: I guess it's the school, yes.

So I'm not positive about the fate of the hotel, but I know that there has been active interest in it.

I think I've answered all his questions.

MR. LOCKSTEAD: One of my questions was, is this all the money — $2.5 million — that eventually somebody will be receiving for the hotel? I do believe it has been sold. I'm not sure if the transaction is totally complete; but my information is that it has been sold. Anyway, the money for the auction — does that money go into general revenue, or does that money stay in the community with the residents?

HON. MR. McCLELLAND: The first charge on the money, or the debts, which B.C. Cellulose has. and any money that's left over after all of B.C. Cellulose's responsibilities are taken care of, I expect will go into general revenue. However, the member must know, too. that we have given a commitment to the Ocean Falls Improvement District for an annual grant from the government to keep them whole, in terms of what they have to do to keep the town running in a normal fashion. So there will be money coming out of consolidated revenue, but anything that's left over when we finally get whatever gets done at Ocean Falls will go to general revenue.

MRS. WALLACE: I want to deal with a different facet of the minister's responsibilities. There's a saying, something about being penny wise and pound foolish. We've been hearing a lot of remarks that indicate that perhaps the policies of the ministry have been pound foolish. I want to talk about some of the penny type of programs that the ministry has for the small operators. I'm wondering whether or not they are really wise, or whether some of them are rather foolish too.

I'm always pleased to get from the minister — this is, I think, the second or third year he's done this — a breakdown of what kind of moneys have come into my constituency and for what purposes. It's always interesting to look at this to see the amount of dollars and the number of jobs. For example, the assistance to small enterprise program, ASEP, from the first loans in 1977 through to 1981 — they're still being recorded here. It's a bit discouraging when you realize how many of those people are no longer operating, and how many of those loans have had to be written off, in effect. It's an excellent program to be able to assist those businesses, but the problem seems to occur that either there aren't sufficient funds, so the program can't make it, or else there isn't sufficient review of the actual situation to indicate that the program can go ahead.

[4:30]

I notice one here, an operation that received $3,000. They were going to create three jobs. Now $3,000 certainly isn't very much. They are not operating, and they are likely going to be written off. Another one that also received $3,000 was a boat-building outfit. It was going to create 19 jobs. There's something wrong with that kind of mathematics, that for $3,000 you're going to create 19 jobs. It seems to me that obviously there must have been a problem there in the beginning. That operation is in the hands of the receiver. So again, it's not very much but it's written off — and a lot of heartbreak.

Even more important, I think, than the taxpayers' money written off is the investment of the small operator who invests money into those enterprises with the assurance from government and the support from government that this thing is going to go. They are the ones who really suffer in this, even more so than the taxpayer.

Another one is Hidden Valley, a most unfortunate situation. I'm very familiar with that one: a sawmill that was financed. It had a much larger loan and it went down as well. The unfortunate part about that one was that the owner had put up the property as security and his home was on the same title. So he lost not only his mill but his home. It seems to me that in making these loans and grants it's the responsibility of that ministry to ensure that that doesn't happen, that a small business person doesn't get into the situation where his home is on the same title as his mill. There has to be some assurance or some advice, because those kinds of things are pretty traumatic for a small business operator. That's one that I happen to know about very well.

We actually got one in '82 under the small business program. But with so many of them, now the comments are there that they're no longer operating.

Small manufacturers — that seems to still be going, the one loan that was made there. A couple of grants to the local governments for studies: those are commendable. Also to the Forest Museum, a marketing study, and that Forest Museum of course is a very valuable asset to our area. I've spoken to the minister before about the travel, the TIDSA loans, and I see that there is no change in the statement this year from the preceding year. There have been no loans made since then,

There were five loans made, four of which went into bankruptcy and receivership — large loans — which meant that the government lost the money. The people who had invested their money lost the money and some opportunist came along and picked that operation up for a very small portion of the cost involved. The only one that succeeded was a very small one over on Thetis Island, a farm resort. But the major tourist resorts that received funding in my constituency certainly indicate to me that there was something wrong, and I think the minister agreed last year when we talked about this that perhaps that program did need to be reviewed a bit more. I notice there are no more loans under that program in my constituency, and I'm wondering whether the minister has reviewed that and whether or not there is a different approach now towards that, or whether or not the loans are still going forward.

[Mr. Ree in the chair.]

The student venture loan is an interesting one, and I'm particularly interested in the fact that they don't all seem to be students. There seem to be some business concerns here — a fitness centre, a marketing concern, some outfit that's going to make house calls, and a dance production. There are, I think, $15,200 in loans that went out to those students loans; only two of them indicate they're going to make any employment at all. That was one job in each; for the others, it was not applicable — the creation of new jobs. So I'm a bit surprised

[ Page 8432 ]

about this, and I wonder whether the minister could give us a little more information on just what the criteria is for those students loans.

The other thing that I would like to know — I have been told that in order to get those loans, you have to have a co-signer. Some students who were applying for them have indicated that to me. I'm wondering whether or not these loans were all paid back by the applicant. I don't expect the minister will have this information at his fingertips. Were they paid back by the applicant, or were they in fact paid by the co-signer, if that's the case, and, if not, were they not paid back at all?

I guess what I'm saying is that while certainly we need assistance to small business and we need it very badly, there seem to be problems in ensuring that those concerns remain operative. I guess one of the most outstanding ones recently was the fibreglass boat manufacturer in my constituency, Cowichan Fibreglass Ltd., which had 30 employees and seemed to keep going from one crisis to another until finally the only answer seemed to be foreclosure there, and bankruptcy is now proceeding. That was, I think, the major employer, the major job-creator of all the grants that went out, and yet that one is now closed down and in bankruptcy.

It sounds good when you give the figures about the number of jobs you've created and the loans that you made, but when you look at the fine print and really analyze it, a lot of those jobs that were supposedly created are just not there anymore. What's happening is that a false impression is being given of the effectiveness of your ministry, because those jobs, while they're added up into the totals as being jobs created, and the money is going out as being assistance to those operators....

MR. WILLIAMS: A revolving door.

MRS. WALLACE: That's right. Those people — and I've said this before — who face bankruptcy as a result of the fact that they've expanded perhaps beyond the economic viability of the particular operation, encouraged by that government loan, lose even more than do the taxpayers, because they sometimes lose everything they have and wind up in receipt of social assistance. That's a very sad commentary on a government program. Certainly the jobs created that are espoused by the ministry are far from accurate, because so many of those jobs have faded into oblivion long since.

HON. MR. McCLELLAND: You know, I take a little issue with the member in terms of the numbers. I'm sure some of those firms have gone bankrupt, but what we've tried to provide you with is a complete list of the activity in your own constituency with the numbers of jobs which were created at the time. I mean, you've gone back to, I think, 1979 over that period of very severe economic recession in our province. I have not added those numbers up and used them for anything. I'm simply trying to provide you with factual information. If you think I'm giving you misleading information, I won't send them out anymore. I don't want to send you misleading information.

You and I are pretty well protected in this House from the economic realities of life. We didn't have to face what a lot of businessmen in the community had to face — and there were failures. I would say to you that the evidence I have is that the businesses which have had assistance from government, particularly from the ministry for which I'm responsible — and I don't take credit for it; I give the credit to my staff — probably have a better track record than those who have not had assistance from my ministry, for the simple reason that one of the first things required by the ministry, before we'll consider any kind of assistance, is a very strong business plan from a small businessman. If the small businessman doesn't have the resources to put a good business plan together, we'll help him to do it, and make business counselling available to him. It's a very active program — I quoted you some of the numbers today — and we think it's one that's well worthwhile.

As far as TIDSA goes, the loans to small tourist operations were stopped, I think, after the second or third year of TIDSA, at the agreement of both the federal and provincial governments. There is a son of TIDSA, I guess, in the subagreement under the ERDA agreement right now. It is being used only for large destination-type projects. I don't know whether anyone has applied from your constituency or not. I'd be happy to try to find out.

The last question you raised had to do with the student venture program. Those are all students, but they form companies for the purpose of applying for the loan under the program. If it says in the material you have that one job was created, that means that the student who applied for the loan is hiring one person. But we don't care, as long as.... The idea is to give the student a way to make some money during the summer by employing himself or herself. But if we get extra jobs out of it, that's even better.

As far as repayment of loans is concerned, you're right, there is a requirement that there be a co-signer. I've had no complaints about that. I haven't found it to be onerous. At the present time I do not have the rate of repayment. We have certainly not called any loans or anything like that at this time. I am told, though, that the rate of repayment is very high. I will likely have that in next year's annual report. If it comes out sooner, I'd be happy to file it with the House, when we find that out for sure. But I'm told it's very high.

MR. WILLIAMS: The minister says that he's told the payments are fairly high. How does it compare with commercial banks in terms of bad loans — the relative position with respect to our lending? What is the actual loss in terms of bad loans and the various lending activities under this minister? Maybe he could provide us with that for this last fiscal year, or a little earlier, so we could have a picture of what percentage of the value of the loans is non-performance.

HON. MR. McCLELLAND: If I don't have the rate of failure, I can't answer that question, because I have nothing to compare it with. That material should be available quite soon. I've said that I believe it's a very high repayment factor. I believe that in Ontario, the first year or two of their program, the failure rate was somewhere in the neighbourhood of 15 to 20 percent. I'm not saying that it's the same here, because I don't know yet; but as soon as I do, the House will know with me.

MR. WILLIAMS: Normal lending institutions keep very close track of this kind of information, Mr. Chairman, in terms of failure and non-payment. It's reasonable that prudent financial managers would do so. That data should really be at your fingertips, or should at least be available from your department and deputy on a pretty ready basis. It's a fundamental measure of success or failure in lending activities.

[ Page 8433 ]

While one accepts that lending from BCDC or a group such as that should automatically be higher because higher risks are involved in the program, it's still a matter of comparing it with other agencies — as the minister suggests, Ontario and so on. It would be most worthwhile to have that data. One would expect, in a normal review of departmental estimates, that that kind of data would be here now.

HON. MR. McCLELLAND: This isn't a normal lending establishment. I hope the member knows what he's talking about. We were talking about the student venture loans, not anything to do with BCDC or any of the normal lending functions that we perform as a ministry, These loans aren't repaid in the normal way. They all come due at one time. They don't pay them back at $38 a month. They are loaned by the Royal Bank of Canada for us. We pick up the interest on the loans. So they are not normal loans, Mr. Chairman.

But we will have most of that material on computer at the present time, and I will be happy to have my staff pull it out of the computer and make it available to the House.

[4:45]

MR. WILLIAMS: Just to clarify, we are not just talking about student loans.

HON. MR. McCLELLAND: Yes, we were.

MR. WILLIAMS: No, we're not. The member for Cowichan-Malahat (Mrs. Wallace) was talking about TIDSA lending with respect to tourist facilities and that sort of thing. I am really expanding that to the whole broad question of all of these various programs under your umbrella ministry in terms of non-performance.

You can say what you like about payments every month or different arrangements. It is pretty easy to determine what non-performance is: if they are not paying back under the terms agreed to, it is non-performance after a short period of time. Now the banks do this after 30 or 60 days. That's not a heck of a lot to ask from you.

When we have had detailed questions of other ministries, Mr. Minister, such as Health, which is a far more complex organization than your ministry, the data is there right at the fingertips of the staff of the minister, if not of the minister himself. It is a measure of the level of competence of most ministries in terms of that delivery of information. We don't get this delivery of information from you as we do from other ministries. It simply is not there. We have had the same problem in Human Resources. The data isn't there. It shows a kind of attitude in terms of analysis of the programs and policies of the department that is disturbing. If you are really on top of it, if your staff is really on top of it, that data is here ready and now. Because it is a measure of your problem areas. It is a very obvious measure of where you are getting into trouble. No bank or lending institution wouldn't be on top of that every day of the week. It is the essence of their operations in order to remain solvent.

But you know, you're going to have to go back to the computer and get the data and then come back. That's the kind of information that should be reported here in estimates. It is not unreasonable to have that kind of basic data here available now, and you're not providing it. It is a measure of the way your department is run, I suggest, that you are not on top of it, and your senior staff are not on top of it. It is a measure reflected in the unemployment rate. The competence level of your ministry is directly reflected in the unemployment lines in British Columbia. Make no doubt about it. When we can ask simple, fundamental, basic questions such as this, it's non-performance from you and your staff,

It is not very reassuring, after a decade in office, that this is the kind of response we get out of this ministry that is supposed to be doing the job of economic development. It is not very reassuring at all. Is there no reflection at all on what you have been up to? Do the staff never get together and say: "Hey gang, it hasn't worked. Gee, we started out with that big one, northeast coal, starting in '76, and we've beaten that horse to death, and it's bleeding the provincial economy and wrecking the southeast. Mark an X beside that one. It sure didn't work." With $10 million worth of consultants, it didn't work.

One of the outstanding analysts in the province was never asked. The southeast mayors asked him, and he called the shots. He laid it out and told you what to expect in markets for coal. You can laugh and smile and giggle all you like along with your staff — do it as you will. But an outstanding PhD., an outstanding analyst of this industry, did some work for the southeast mayors and showed conclusively, and has been proven correct over time, that the thing was a mess and wouldn't work. You spent $10 million, and you smile to yourselves that you hired the real experts. Going through public accounts I have seen the kind of experts you hire, and they are not adequate to the job.

Tell us about your special economic zones, that horse that you tried to ride for a couple of years. The thing fell apart. You brought in legislation, you gave speeches about it, you hired consultants, you spent hundreds of thousands of dollars, and the old beast fell apart.

You never deal with the basics, and your staff somehow doesn't have the capability of reflection and analysis of their own non-performance, which has been absolutely dismal. They don't and won't deal with our basic industries. They don't analyze the problems in our basic industries. They leave that to somebody else, and the somebody else leaves it up to somebody else. It simply doesn't happen.

You and your staff should be working day and night to repair this wrecked provincial economy. I kid you not. Both you and your staff have a major obligation in terms of rebuilding this provincial economy, but it doesn't happen. You can be sure that the guys who leave at five are the Ministry of Industry and Small Business. In some of the more competent ministries in this administration, such as Finance, you'll get them working overtime. You're simply not going to get it in your department. That too is measured in terms of our unemployment line-ups in this province, That's the way we measure your failure. It's been a miserable decade in terms of performance on the part of this little ministry. Virtually everything they've done has failed, and certainly everything big they've done has failed monumentally — no doubt about it. The latest exercise with Louisiana-Pacific is little different. There your poor staff at least recommended against the thing.

It's just not there. Nothing's happening in British Columbia. Not very much is happening in our provincial economy compared to eastern Canada, compared to other parts of Canada. Look at capital expenditures in this province, by the private sector or in total; it's been a dismal decline consistently in terms of capital spending in British Columbia. I covered projected capital spending in pulp and paper. It's miserable. We're down with little old New Brunswick. Our

[ Page 8434 ]

number one industry, and half of the country's industry in this sector, yet capital spending is right down in the basement. Capital spending overall has been the same kind of pattern for the last five years at least. A decline, albeit supplemented by some provincial projects, but when you look at private sector capital spending, the graph is very clear — it's downhill all the way.

All of these things come home to roost. Mismanagement and abysmal policies are now reflecting in the problems of Dewdney riding, in the problems at Mission. Make no bones about it; these things are at our doorstep today because of mismanagement yesterday. These problems don't suddenly rain down out of the sky. The problems in a riding like Dewdney or Mission are the inheritance of your decade. Those jobless in Mission, Mr. Member for Dewdney (Hon. Mr. Pelton), are the heritage of ten years of Social Credit administration. The serious problems we face at the border are to a great extent similarly a result of your decade in office in British Columbia. The current economic malaise of this province is the result of ten years of Social Credit maladministration. It's the result of the go-home-early boys in your department, Mr. Minister, the ones who aren't there after five. It's clearly the result of inactivity and a general lack of competence: hiring the wrong people in the wrong place at the wrong time, for projects that are in the wrong place at the wrong time. It is an absolutely consistent track record. Our dismal economy is the end product of your Ministry of Industry and Small Business Development, Mr. Minister.

HON. MR. McCLELLAND: I think maybe there were a couple of questions in there somewhere. It is consistent with that member's style that when he doesn't know what he's talking about he attacks the public service. I find that deplorable, Mr. Chairman, and wouldn't want to be part of it.

As far as how we report our loans and how we keep track of the transactions and their repayment, if that member wants to do his own research, that information is readily available. The British Columbia Development Corporation is required by law to file an annual report, and that full information is in the annual report, as is my ministry. In terms of all of our agreements with the federal government, we're required by law and by agreement to full disclosure, and we do that; that member has access to it, and he knows it.

In terms of British Columbia's economic performance, I would just point out that the Conference Board of Canada forecasts that for 1986 there will be an almost 5 percent increase in gross domestic product in the province, compared to 4 percent for Canada and 1. 8 percent for the United States.

MR. WILLIAMS: Can the minister advise what his department's projections are for future capital construction, machinery and equipment in this province?

HON. MR. McCLELLAND: The forecast for 1986 is $11,824,000.

MR. ROSE: Mine's on a totally different subject.

Like the member for Cowichan-Malahat (Mrs. Wallace), I appreciate getting those little letters about the various grants and loans in my riding. I haven't gone in to see how many of them have gone bankrupt. But the thing I want to bring up today is the fact that one of my constituents did ask for some assistance under your Small Business Development Act. I think that you're perhaps well aware of it, because it was quite recent, but just to refresh your memory, I have a small manufacturer in my riding who applied for a loan. Included in the loan for $20,000 was the need to buy a computer for his business. He got his answer back that he couldn't use a computer, or he wasn't eligible for a loan for a computer, unless of course the computer was going to be actually used in the manufacturing process. The minister nods his head, so he's familiar with this.

I guess that there would be only a certain limited number of ways in which this could be done. It sounds to me like it's kind of the automation or whatever might be done in, say, the auto industry — automatic welders and that sort of thing. But I visited his establishment about a week or two ago and talked to him in a little bit more detail and saw what kind of operation he was running. It's not that large that you could probably justify, in terms of economies of scale, a computerized manufacturing industry. It's essentially a craft industry in which he makes various light fixtures and forms, and does a very good job of it. But I don't see anything there that would even amount to an automatic welder, or an assembly line, or any of the things that I would think would be suitable for that kind of automation. Nevertheless, in terms of his audit, his material and all this other stuff, the computer would be extremely helpful.

I wonder if perhaps the ministry is not being somewhat short-sighted here. I don't quarrel over the fact that this man doesn't qualify. I don't think there's any doubt that under the present thinking he doesn't. What I'm trying to do is get you to change your thinking, and not just for my particular constituent, because this hasn't come up. I hadn't heard about it before. While a lot of industries in my riding — and I have a fairly large manufacturing and commercial base in various parts of Port Moody and Coquitlam, being very contiguous to water, rail, highways and services.... But this business to manufacture light fixtures is just getting started. There are extreme export possibilities here.

[5:00]

I think that the administrative tasks.... Inventory control is essential for efficient operation. You admit that in your reply to me. So the quarrel again isn't with whether or not the man qualifies; the quarrel is with the regulations themselves. I wonder if it would be possible for the minister to enlighten me on why this kind of narrow and rigid attitude prevails regarding computers, or whether the ministry feels that perhaps there would be no limit or end to it: it's so trendy that everybody and his brother would be after the minister.

It seems to me, though, that someone could go out there and make an assessment of that business to see whether it has.... And it was mentioned before: in these businesses that the ministry has assisted there are winners and losers. This guy is a winner. He started from virtually nothing. He's gradually expanded, and now he's into export on a part-time sometimes basis, but certainly on a full-time basis at other times. There were people working there on a Saturday in the manufacturing plant; not the full staff, but shipping people and a number of others.

Maybe there could be some flexibility in the regulations where the business could be assessed for the value of a computer to this business. Certainly I don't think that at the moment it justifies a full kind of investment — or certainly he's able to make at the moment with material and all the rest of the cost associated with it.... But why not go out and have a look at it? Why not go out and say another business that might apply, in your view, isn't a winner and therefore

[ Page 8435 ]

doesn't qualify? But just to rule it out on the grounds that it can't be used for inventory and must be used totally or at least partially in the production process is beyond me. I suggested that maybe he could rig up some way in which he could use it in his production process, but he didn't feel that that would be quite playing fair and he wanted to put forward an honest request.

[Mrs. Johnston in the chair.]

But why not, Mr. Minister? I've never looked at the number of people you have in your department in the phone book, but presumably you've got lots of staff who could make that assessment, rather than just simply the inflexible, "No, he doesn't qualify because it's not going to be used as part of automation; it's not going to be used in the production process." Probably that's not a question, it's more of a representation, but I would be delighted to hear the minister's response.

HON. MR. McCLELLAND: I don't recall the exact words of the letter that I sent to the member. I thought I said, however, that we were looking at it again to see if there was a way. The problem is — well, there are a couple of things. First of all, I believe the loan was applied for under the terms of one of our subagreements, small business assistance, and the rules — I'll just kind of stall a bit until I see it — are established jointly by the federal government and the provincial government. The loans are managed by a joint committee, and one of the rules that they designed in this one, and I think it makes quite a lot of sense, is that computers can be part of a loan application. It's going to be very hard for us to get into just providing computers for accounting and management systems. There is no end to it, in my opinion. I think the rule is not a bad one; however, there is the opportunity of an ongoing basis for us to review those rules. We do it all the time to see if there are some anomalies.

I did say that he's still eligible for assistance for the rest of his project. I'll send another guy out there to see if there's another way that this might be handled, if that's what you want me to do. We'll have another look at it but, as simply as I can say, that is the reason for not including systems management computer programs in our programs.

MR. ROSE: I appreciate the offer and I am sure that it will be followed up. Another took at it would be kind of useful, and there may be ways in which your experts could suggest the way in which a computer might be used in his business. I assume that in your employ, or at least people that you have contact with or are able to hire on contract or otherwise, there are people who could perhaps assist him in this way. I think that would be a valid task for your ministry.

The other one is to suggest another program not similarly limited by the hobbling effect of the federal bureaucracy; that's another idea. So you might be able to suggest to him another way, another avenue of approach to your ministry.

MR. WILLIAMS: The Development Corporation is lending $70 million to Fibreco. Can the minister advise us of the terms of the loan?

HON. MR. McCLELLAND: We haven't lent $70 million to Fibreco.

MR. WILLIAMS: It's my understanding that lending is proceeding with respect to Fibreco. There have been feasibility studies in terms of pulp mill locations, and it's my understanding there's some commitment on the part of BCDC with respect to the proposed mill for Fibreco. Now Fibreco, as members know, is the company that presently jointly is a sort of condominium group of sawmillers that export chips to outside of the province. The chips, of course, could produce pulp and paper in British Columbia.

The costs of transporting those chips represents, in effect, a kind of economic waste. We could be producing more finished product in British Columbia from the chips and we'd all benefit more, including Fibreco presumably. Maybe the minister could advise the House, then, at what stage the arrangements with Fibreco are.

HON. MR. McCLELLAND: We have not concluded a loan arrangement with Fibreco. We have had discussions with them. It's my understanding that they are presently in the stage of seeking additional financing and attempting to secure equipment contracts. at which time, if that happens, they would come back to us and we would negotiate a financing package with BCDC.

MR. WILLIAMS: It's not clear to me. Is the primary financing, then, expected to come from elsewhere and secondary financing from BCDC?

HON. MR. McCLELLAND: You know, we had to deal with what Fibreco asked us to deal with, and I am not privy to their other financing arrangements at this point. In fact, I don't think they have other financing arrangements in place. We've had a request to enter into negotiations with Fibreco, and BCDC has. You asked me what stage it's at, and as I understand it, Fibreco is doing market studies. They are trying to line up equipment contracts, and they are looking at additional financing.

MR. WILLIAMS: It is still not clear then. Is primary financing from BCDC the stage we're at right now?

HON. MR. McCLELLAND: We have not entered into an agreement with Fibreco, Madam Chairman. That's all I can say — we have not entered into a loan arrangement with Fibreco. If we do, I expect it would be very major financing from the British Columbia Development Corporation.

MR. WILLIAMS: Well, we see in your television ads regularly that BCDC and Fibreco are partners.

HON. MR. McCLELLAND: We are in the present operation.

MR. WILLIAMS: But the degree of partnership is still being worked on. I guess that's....

Interjection.

HON. MR. McCLELLAND: I'll tell you, they're going bad — that's what's the matter with them.

We are a major partner with Fibreco in their existing chip exporting operation. We would like to be a major partner with them in a pulp operation as well, but at this stage I cannot tell

[ Page 8436 ]

you that we have negotiated any firm loan agreement, because we haven't. It's in Fibreco's court at the present time.

MR. WILLIAMS: I wonder, in view of the lack of success of this ministry, if some thought might be given to the question of some economic advisory group that might work with the minister and the ministry to chart some new direction for the provincial economy. It seems to me that our universities have some exceptional people, both at UBC and Simon Fraser — and in the private sector and the consulting field — in terms of their capacity as economists. We really have some of the most able people in the country in this province; there is just no doubt about that in my own mind. When you see the federal government reaching out into academia for help and assistance, they frequently get academics from British Columbia to assist them. Dr. Helliwell from UBC has an outstanding record in several sectors and has been borrowed by the federal government on many occasions in an advisory role. I suggest that colleagues in Dr. Helliwell's department could be equally helpful, along with him, at the provincial level. I suggest that people at Simon Fraser University, in their departments of economics and business and natural resources, could be equally helpful. I would suggest to you that there are consultants in the private sector who could be equally helpful, even some in the trade unions.

What I am suggesting is that maybe the time has come for some conciliation and the use of the brain power available outside this administration in dealing with the task of rebuilding the provincial economy. I am saying it's beyond the capability of any single agency. The problem is that serious and that large. Would the minister entertain the idea of an advisory group of economists from the universities of the province, the private sector, the consulting field and the trade unions to help chart a course in rebuilding the provincial economy?

HON. MR. McCLELLAND: Madam Chairman, the member hasn't listened to any of the other things I have said. I have said that the economy is on the build, and it is going to continue to build, according to the best economic forecasts that we have.

I have not considered, nor has the government, a formal advisory institute such as the one the member proposes. However, our ministries are in regular contact with our three major universities and with our community colleges and technical schools. We have entered into partnership agreements with the three major universities to develop entrepreneurial centres on campus, which has been well accepted by the universities. We have a constant exchange of views with the departments of commerce — particularly, from my own point of view, the department of commerce at UBC.

As a matter of fact, on several occasions we've had the dean of the department of commerce, and Michael Goldberg put suggestions before the Cabinet Committee on Economic development, which I chair, on ways in which the economy could be improved. Virtually no week goes by when some major group representing a large sector of the economy of British Columbia does not discuss with that committee ways in which the economy can be improved. I believe that in that way we have the broadest possible cross-section from which to choose ideas. That's been going on now for several years. Again I say, Madam Chairman, that hardly a week goes by when we don't have a major presentation on economic outlook from one of the major sectors of our economy in this province.

[5:15]

MR. WILLIAMS: What we need is some consistent overall viewing at the macro-economic level; and that just isn't happening. It's a very demanding challenge to the most able, to operate at that level. It requires the best intellects available to understand the potentials of this province. I'm suggesting to you that there has not been that kind of input on a consistent overall basis; and we are all the losers for it.

The minister seems to confuse departments of economics with departments of commerce. There's a tremendous difference. The economists generally have a broader grasp of the major issues and opportunities, and commerce is generally more narrowly specific to individual sectors or a tighter view of business problems. Those are two different worlds, in a lot of ways. At least Simon Fraser has tried to mix them together in a faculty of economics and business administration; that has not happened at UBC. So you have this separation of the commerce people and the economists at UBC. That's really quite different.

[Mr. Ree in the chair.]

I wonder why the minister couldn't be more responsive and divorce himself from the tight political affiliation, reach back and look broadly at what has and hasn't been happening in British Columbia, particularly in some sectors where failure has been dismal — really significant failure — and say: "Yes, we could use all the help we can get." That's what I'm suggesting: this minister could use all the help he can get. This is a tough job for anybody, building and improving the provincial economy.

I suggest an advisory economic group for provincial development that included the universities, the departments of economics and business, and the private sectors in terms of economic consultants, and the trade unions and some of their advisors. Then we'd all be better off. I think that everybody would start understanding each other better. You could play a conciliatory role, one that the Premier has been unwilling to play during his decade. It is an opportunity to begin that conciliatory process of mending the pieces of the economy of British Columbia, and at the same time having the brainpower and talent available to you at virtually an honorarium cost from some of the best minds in British Columbia. I think that it would be a golden opportunity, one that would be readily seized by most administrations. I wonder why the minister isn't more positive about the proposal.

HON. MR. McCLELLAND: The minister isn't more positive because I don't agree with that member, that's all. I remember the institute that that member set up, and I wonder whatever happened to Dr. Mason Gaffney. Where did he go? What benefit to British Columbia can we claim as a result of that institute?

I will use the best brains in British Columbia anytime we can, and we do, but we're not going to do it in the kind of form he wants. We will do it through consensus. We will do it through negotiation, asking the best brains to come for-ward with their idea. I believe that that's the best way to do it. I don't agree with that member's formula. That's why I'm not going to be more responsive to him.

[ Page 8437 ]

MR. WILLIAMS: For the minister's benefit, the good professor is teaching, alive and well, at the University of California in Riverside. He is tenured and doing exceptional work, as usual.

HON. MR. McCLELLAND: Give him my regards.

MR. WILLIAMS: Indeed.

Another idea that has been successful elsewhere, and one that we haven't considered to date in British Columbia, is the whole business of innovation centres. Innovation centres have been established in other jurisdictions. One has been established in Manitoba and has been most successful. These innovation centres expedite the transmission of information regarding new products, new possibilities, new potential and that sort of thing. They've been extremely productive in other jurisdictions. Has the minister considered that idea?

HON. MR. McCLELLAND: Again, Mr. Chairman, I'd really like that member to leave his office in Victoria and find out what's happening in British Columbia. Go and visit discovery parks.

Interjection.

HON. MR. McCLELLAND: It is the same thing, Mr. Chairman. Go and visit our innovation office. I hesitate to discuss this because it's not a responsibility of this ministry, Mr. Chairman; it's the Ministry of International Trade, Science and Investment. But it's there and it's working. They just issued an annual report and I wish that member would get a copy of it.

AN HON. MEMBER: You mean discovery parks.

HON. MR. McCLELLAND: No, I don't. I mean our innovation office.

MR. WILLIAMS: I mentioned the whole business of backward and forward integration with respect to our primary industrial sector, Mr. Chairman. It's my understanding that the amount of machinery that we import in terms of these sectors is two-thirds. We actually import two-thirds of machinery and equipment in these primary areas. That's an obvious area where we can do much more than we presently do. The coal sector in particular: can the minister advise us how much we've actually done in trying to develop the machinery side of the coal industry? We went on this $3 billion binge in northeast coal. The question is, how much did we do to establish machinery and equipment builders in British Columbia for this whole new venture in mineral extraction? That is maybe the longer-term benefit we could have had out of the whole exercise; that is, we could have significant machinery and equipment manufacturers in British Columbia as a result of embarking on the enterprise.

How much of a conscious program was there on the part of this ministry to get us into the machinery and equipment building area, what impact has that had on the provincial economy, and what in fact are the mineral extraction numbers with respect to that sector?

HON. MR. McCLELLAND: Mr. Chairman, I don't have those numbers at my fingertips. First of all, government policy, to begin with.... In all of our incentive programs the target is equipment for manufacturing and processing. Whether it's British Columbia resource products or anything else, that's the target of all of our incentive programs. Those programs are designed to try to help people to do more of the manufacturing in this province, whether it's for domestic use or for export.

As for a project like northeast coal — and again I don't want to be out of order, because northeast coal is not in my vote at all.... Every major project in this province is, first of all, asked, especially if there's government assistance involved, to give us their business plan with regard to all purchases, where those purchases will be sourced. We provide those companies with a full list, based on that business plan, of all of the opportunities for them to have their purchases made in British Columbia. I know, in my own constituency, Mr. Chairman, in terms of, for instance, the ALRT program, that small manufacturers and large manufacturers were very major winners in the development of equipment and machinery. The same was true at the time for northeast coal. So we do everything we can in an attempt to make sure that as much as possible is developed in British Columbia, and we'll continue to do as much as we can.

I don't know if your figures are correct about two-thirds of the equipment being imported, in the terms you put forth. I would suggest, Mr. Chairman. that in order to balance that off we should have a pretty good look at how much we export in terms of equipment as well, because we do have a knowledge base in many of these industries. But in order to answer the member's question completely I would have to get a list of all of the purchase contracts, if it's available to me, and I'll attempt to do that for the member. I'll do the best I can anyway.

MR. WILLIAMS: Thank you. I think it would be a useful learning experience for everybody; that is, how much we really got out, in terms of new equipment, in terms of this extractive game that we're essentially in in the province. It is my understanding, Mr. Chairman, in reviewing academic sources, that in this coal industry we do not manufacture any of the specialized high-technology heavy equipment, the high-value inputs to that industry, in terms of the major equipment.

HON. MR. McCLELLAND: Mr. Chairman, again, at he risk of giving the member incomplete information, which I wouldn't want to do, I can tell you that you're wrong on that one for sure. A manufacturer in my own constituency provided much of the very same kind of equipment you're talking about in the northeast coal developments. In fact, they're up there shooting a film on it today — not for the government, for the company. He is so proud of it that he's going to use it in the truck expo that's coming up in a very short time. So that simply isn't factual.

We are doing a number of other specialized things in the province as well. Again, I'd like to see you go out and have a look at what's happening out at Conair Aviation. We're world leaders now in the development of firefighting equipment, all built here in British Columbia. I mentioned in my opening statements that we had assisted Conair in development of the restructuring of the Fokker F-27 aircraft into a fighter plane, and Conair will be exporting those aircraft all over the world — and have already. They have aircraft in France, Australia and Brazil. We hope to be doing $20 million worth of business out of that one plant. So there are some very specialized

[ Page 8438 ]

manufacturing operations. We have two fire-truck manufacturers in British Columbia.

I will bring you as much information as I can, Mr. Chairman, about the actual purchases in the coal industry. But I can tell you that the highly specialized hauling equipment that you're talking about has been made in B.C.

MR. WILLIAMS: It's my understanding, though, that the percentages are in the general realm that I suggested — about two-thirds from outside. I suspect that we probably didn't do anywhere near what we might have in terms of those kinds of huge capital expenditures and spin-off new industry that might be related to it. That's really the long-term benefit. The ways things are going in that particular market now, the prospects for just the extraction and sale of coal don't look very good at all.

I wonder if the minister, through his ministry, has looked at the question of the B. C. Resources Investment Corporation as a unique corporation in B.C. and again a very sad story as an exercise. It's one of our major industries, and this is the Minister of Industry. I think he should share in the credit for BCRIC, along with this Premier; he should share in the credit for BCRIC, for northeast coal, and all these other projects that don't make any money.

I wonder if the minister has any thoughts about a provincial program, or whether there are elements under his ministry, that could be used to help BCRIC. BCRIC is in very bad shape. BCRIC has a debt load that is unmanageable. BCRIC has assets in British Columbia that are falling apart, that are rust buckets because they don't put any more money into it.

We have pulp mills and sawmills owned by BCRIC that are basically put back together with baling wire and chewing gum because they are not putting any money into plant and equipment. It is a company that took a flyer in North Sea oil. They went and invested the bulk of their boodle out of British Columbia in an enterprise that they were not experienced in, with all kinds of commitments in terms of new capital demands for their chunk of the field in the North Sea.

As a result, because of the pressures to produce capital for that company and their North Sea operations, they are now ready to sell off their timber assets in British Columbia; and they have trouble selling off their timber assets in British Columbia because they failed to keep them up, so that they are not efficient companies. So in terms of a sector that has all kinds of problems, some of the worst problems reside with BCRIC, the B.C. Resources Investment Corporation.

I wonder if the minister realizes what a debt load BCRIC currently has. BCRIC has a debt load of $1.25 billion. It has probably the highest debt to equity ratio of any corporation in British Columbia. The question I ask the minister is: does he have any proposals? Are there chunks of his ministry that could make help available to the B.C. Resources Investment Corporation so that they could patch together their failing forest sector industry in British Columbia?

[5:30]

HON. MR. McCLELLAND: I don't have the ministerial responsibility for BCRIC, nor do I have for any other private company. So I can't say any more than that ministerial programs that are available for incentives are available to BCRIC subsidiaries, the same as they are available to any other private sector companies.

I will say to the member that I have had extensive discussions with officials of BCRIC and Westar about a number of matters.

MR. COCKE: Mr. Chairman, not to change the subject, but I'm naturally interested, like everybody else, in BCRIC. Unfortunately I didn't get the five free shares, so maybe my interest isn't as.... No, I overlooked going and acquiring them. I was a little bit bitter at the time that they gave away what had been hard won for the province.

Getting away from that, the minister is responsible for the B.C. Development Corporation, and there are aspects of what the B.C. Development Corporation have done in New Westminster that I can commend. I must confess it's taken a long, long time.

MR. CHAIRMAN: Order, please. The member for New Westminster has the floor. There is considerable other conversation going on. Possibly the caucuses could meet in their own accommodation and not here for such conversations.

MR. COCKE: I thought for a second there it was a leadership campaign, but I notice it's both sides of the House, so I guess maybe it's not that.

MR. CHAIRMAN: It is equally vocal from both sides of the House.

MR. COCKE: I noticed that, Mr. Chairman.

I feel that in dragging its feet the way it did to begin with in the development of the foreshore....

MR. ROSE: On a point of order, Mr. Chairman, I wonder if the Minister of Education (Hon. Mr. Hewitt) would mind moving his chair a little bit, because he's distracting the member for New Westminster.

AN HON. MEMBER: It's sunshine.

MR. CHAIRMAN: On the point of order, hon. member, have you decided whether it's a halo yet or not?

MR. COCKE: I'll tell you, the sun in this House is selective. I notice that every afternoon it does exactly the same thing.

The problem that I see in New Westminster is that there were so many changes in direction, and when the whole project was given over to the private sector and they were told, "Go with it, " then suddenly the whole waterfront was gobbled up — not actually purchased, but options on it. You know, a major construction company came along and said: "Okay, we're going to build a hotel here." Therefore, they booted out the King Neptune on the basis that ultimately there was going to be a hotel built there. The King Neptune, of course, turned around and said, "Well, look, we would sure like to stay where we are, " and B.C. Development and the FCC — that's First Capital City, which B.C. Development is a part of — said: "No, no, unless you're prepared to build a hotel, then you can't be here."

Here we are, Mr. Chairman, right now, with this Expo thing on, and New Westminster is a logical departure point. If you're going to go to Expo from New Westminster you have to either live there or get bed and breakfast at somebody's house, because all we really have to offer is the Royal Towers

[ Page 8439 ]

Hotel, which has been relatively run down by bankruptcy and finally, I believe, sold to a new chain, but only recently. Other than that, there isn't really very much to offer. It's a shame, because there were to be developments down on that waterfront. Agreed, tough times hit — high interest rates and so on. But I believe that the government has made a wrong move. What we're doing down there is all housing. The wrong move, of course, was moving Douglas College down to Royal Avenue in the first place and not ICBC.

What is needed down there is some commercial development. What I'm doing is making a suggestion. I'm not really saying: "Look, an oath on your head by virtue of the fact that you didn't do this, you didn't do that." I think that FCC and the B.C. Development Corporation had better take another look.

One of the things that's going to happen down there is that you're going to go down to the chamber of commerce an d they are going to say: "What we need is to increase the retail establishments, and so on." That area will never compete with the flat shopping centre syndrome that people are used to. How will you get them down to Columbia Street to shop in major shopping areas when they have the Lougheed Mall, all these other malls — Surrey, malls in Burnaby? Now you're getting the Burnaby central Metrotown growing, and so on. You're not going to get them down there.

My colleague the member for Vancouver East rightly describes one way of getting people down there, certainly not for any major kind of shopping, but to get them down and around by either cable car or some kind of transit that makes a loop and joins up with the ALRT That would help rejuvenate it, but it's not going to do the whole job. I believe that the way downtown New Westminster needs to be developed is with some major commercial development — non-polluting, because it's right within a very densely populated area something along the lines.... Had ICBC gone there with their headquarters, and the allied commercial development around it, it would have really built that place up.

Another thing that B.C. Development Corporation should be looking at is what we had planned in the first place, and that was that in conjunction with the courthouse would be a B.C. government building. We've got B.C. government offices spread out all over the place, renting here, renting there, jumping around. There's no central place that you can go for British Columbia government offices. You have to hopscotch around the whole area. That was one of our plans, to get that down there.

The original design, the liveable region design for our area, which was part of that liveable region thing, said that there had to be a rejuvenation of the core of New Westminster. We've been sort of fighting hard, making a little progress once in a while. But I believe that that is a very important city to this province, an extremely important city to this province. It must have a heart; it must have a core. The way it has a heart and core is the kind of development that will sustain it. Right now we're still not looking at it with any real degree of assurance that we've got it going. We don't even know if that new city market is going to go. We hope it does. It might be a real answer to people in Burnaby, New Westminster, Surrey and so on, to save them the trouble of going down to False Creek, down to Granville Island. The new building that they have down there is a dammed good start, an excellent start.

So I commend First Capital City and the Development Corporation for going ahead with it — incidentally, after Jimmy Pattison backed out. The great entrepreneur of our province was at the threshold of building that. He backed out and suddenly they were left with this thing on their hands, and they built it. So I commend them. But that's just a very small, token part of what is needed down there.

One can say: "Why not let New Westminster go the way of all places?" We see what happens when you let those kinds of things happen. Socially it's a catastrophe. I've talked to you about areas that grew like Topsy, that were unplanned. Surrey is a good example. If you go into Surrey you find there is no real heart; therefore you have all the problems in the world developing. That's the one thing we're now seeing in New Westminster that we don't like. Crime has increased to a point where it's outstripping most of the other areas. We blame it on people coming into our town from outside, but unfortunately it's not. A lot of it is self-induced, and it's only a symptom of an area that hasn't really got the kind of planning that should be going on.

So I ask the minister: is there going to be a really hard look at that very important town in our province? I'm extremely concerned, as are 42,000 other people, in terms of just what's in the offing.

HON. MR. McCLELLAND: Mr. Chairman, I'm sure I don't have as much affection for New Westminster as that member does, but I do have quite a lot of affection for New Westminster. Yes, I'm desperately anxious to see something happen with the downtown.

The specifics? I agree with you that something like ICBC would have been a really great catalyst. The decision was made to go to the Lonsdale Quay with ICBC, and it has proved to be a catalyst in that location. I'll be happy to discuss the things you've mentioned to me with the B.C. Development Corporation executives. I would encourage you to as well, if you haven't already. I'm sure you probably have, but continue to do that with them.

I think you're not giving as much credit or importance to the market as you might. I say that because I was just recently at the opening of the Lonsdale Quay market, and there were 20,000 people at that opening. It has been packed ever since. One of the attractions of the Lonsdale Quay market is that a person can go down to Granville Square or some place like that, park the car easily for a relatively inexpensive price and take the SeaBus across to the market. You have somewhat the same situation at the New Westminster quay, because you'll be able to take the ALRT, for instance. I think that's going to be a bigger catalyst than you might think. I hope I'm right. But I do also agree that there has to be some other kind of catalyst there. The Prince George might prove to be an attraction long after Expo's over.

[5:45]

I might just say to the member that the construction of the New Westminster quay market was not totally a government project. We went into joint venture with the Laing group — which I believe is probably even bigger than Jimmy Pattison — and that has proved to be a really good joint venture. I think it will come to an end fairly soon, as Laing takes over the project themselves; but that did prove to be a good venture between government and the private sector.

I'd be happy to discuss the things that you've raised. I agree with everything you've said, except for the nature of the importance of the market, and I would encourage you to continue to talk with executives of BCDC as well.

[ Page 8440 ]

MR. COCKE: I wasn't downgrading the market, but I've been disappointed with so many things that have happened that until I see that market plugged up every day with people coming in, shopping and getting it going down there.... Another thing. When you're the end of the line, like we are on ALRT, the tendency is that it's a one-way street — they're all going to Vancouver. What we've done is say to people in New Westminster who would normally shop around there: "Well, all you have to do is jump on, you get off at the Pacific Centre, and you can go and shop at all the stores in the world." We have to have some way of getting them back. We have to have some way of attracting those people who are living in Burnaby to zip down here, and eventually, when they get it out to Surrey — people coming in and so on and so forth.... It's really important. That could be a good start. I love it.

We've got the Prince George, the Pegasus and the Patricia all down there — three floating hotels. It indicates to me that had they built a proper hotel on that waterfront in the first place, they would have had a nice start, because it would have been opening about now by virtue of the fact that it was planned, blah, blah, blah, and it was coming along. But I don't know how long you can count on boats being your hotel. They're very nice and I think the people put up with them during Expo, but in terms of luxury, or rather in terms of space — luxury is in the eyes of the beholder — there is not a great deal of space in a cabin for people who are coming to stay and do business and so on. But I really want to see something happen in terms of a hotel down in that area.

Now in order to attract a hotel, you have to have something going. The Royal Towers is fair, but the Royal Towers will never be a major hotel in the lower mainland. It is not built to be that good and all the renovations in the world aren't going to give it high enough ceilings and all sorts of things. So I do hope that that kind of.... What I'm really asking for, and I think what the minister has said that they're going to continue with, is a priority for that particular development.

Incidentally, I was with the minister at one or two of those openings, so I recognize the fact that he's aware of what is happening down there, but we just have to have a little more impetus. I worry about what's going to happen after Expo, and so on and so forth. I just don't want to see it go back to where it was. Unfortunately or fortunately, depending on where the blazes you sit around here, I'm not going to be around here to voice my concerns and so on, so I just want to make sure that there is that kind of priority.

The one thing — and I'm certainly going to talk it up at home — that I think is also important is the fact that we do have some kind of a ring transportation system. Now who should pay for it, how it should be paid for, that's something that we're going to have to discuss, but if you could get people moving around that town from uptown to downtown and back up again and around.... I can see a corridor, a picture in my mind of something starting up at Sixth and Sixth, coming down to Columbia Street, over to Twelfth, up Twelfth to Sixth and back and around. Beautiful for a cable car, because it's steep enough that the car going down could pull the one going up, type of thing. We've got our own power distribution centre there, so maybe we could even look after that need. That, incidentally, was the idea of my colleague, who would like to see cable cars everywhere but San Francisco; but nonetheless I think it's an excellent idea.

Some day hopefully we're going to do those kinds of innovative things that will get people there and get them running the other way on that ALRT of yours. It's a great exodus. You get up early in the morning, you go down there, and you see everybody going out and nobody coming in. That's true. The cars come in empty and go out full: zip, zip, zip. So I just see it as making — this is my worry — New Westminster a bedroom of Vancouver. Vancouver has enough bedrooms, as far as I'm concerned, and we don't want to become one. It's not to say that people shouldn't live in New Westminster and work in Burnaby, but there should be people who live in Vancouver and work in New Westminster and Burnaby, etc.

We have to become viable; we have to become a place where people are excited to live. Everybody who goes to New Westminster, just goes through it once in a while, says: "What kind of a town is this?" It's a very exciting place to live. I've been happy there. I think it's a very fine place to bring up children. I brought up my family there. I just think that any government that ignores that town, for whatever reason, is ignoring what I consider to be a very important entity historically and from a practical standpoint. We don't want everything to become one great metropolitan area.

With that, I just say that that's our priority, and I'll certainly do whatever I can in terms of talking to people and whooping it up. I just hope that the government will do the same and the minister will do likewise.

HON. MR. McCLELLAND: I give the same commitment I did before. I'll do my best to work with you to try and do what you want to get done.

MR. WILLIAMS: I think that's encouraging, and I'd like to commend the minister for that, because I think New Westminster is an underdeveloped urban part of the region now. The SkyTrain is really focusing more on downtown Vancouver as the destination, and New Westminster could more and more be a significant destination on SkyTrain. As the member for New West says, that would balance the movement to a greater extent and be a better use of the very high capital cost that we've got in SkyTrain.

If one looks at what's happened in Metrotown to date in Burnaby, where new, significant office towers outside of the downtown peninsula have occurred on a pure market basis and in fact, I think, have a very high rate of return, it's intriguing because, to my view, Metrotown has nowhere near the potential that New Westminster has. Historically Vancouver, or the GVRD, has been an area with two significant urban centres: downtown Vancouver and New Westminster. Historically New Westminster was not that small, relative to the downtown peninsula. That's changed tremendously in the last 20 years, but I think that the opportunity is there again to move it ahead.

I suspect that maybe the initial job is necessary in terms of some government agency, the First Capital City corporation or B.C. Development Corporation or the like. BCDC now has more experience in this area, with the success of Lonsdale Quay, which of course was an excellent land acquisition under the former administration with just that idea in mind, although I personally would have preferred to have seen ICBC in the interior of the province, not in New Westminster or on the North Shore. The people that really won that particular battle, Mr. Chairman, were the bureaucrats who mainly live on the North Shore. I think that's the real explanation for that location. Some of us made an error in acquiring all of the land at the SeaBus terminal, because it served that way.

[ Page 8441 ]

But, seriously, New Westminster has significant potential. I suspect the first major new office tower in New Westminster requires some public involvement, but only the first one. I suspect that after that the market would do the job for you. But I think an initial job is there to be done, and I think, as the member for New Westminster says, if BCDC and the First Capital City corporation were to get together with B.C. Transit for the secondary steps, in terms of the evolution of New West as a new central place, then we might well have something underway. The minister has indicated he's willing to get together with the member for New Westminster, and with these agencies that he's responsible for. I'd like to commend him, because I think that's encouraging.

I think it's a significant potential. I think that it could trigger market forces down the road that would spin off considerable benefit for everyone. There may even be private financial institutions that would be interested in working with your agencies, not to mention any one in particular. Anyway, I think other financial institutions would be interested in working on the rehabilitation of New Westminster.

Interjection.

MR. WILLIAMS: With a name like VanCity, what can you do?

Interjection.

MR. WILLIAMS: Certainly. If they're willing, by all means. I couldn't argue about it. We're talking about significant assets in terms of the rebuilding of New West, and the capital assets of the New Westminster Credit Union are more limited, useful as they would be in this whole process.

I'd like to commend the minister for this positive initiative that he's accepting, and encourage the member for New Westminster (Mr. Cocke) to work diligently with him in the near future.

The House resumed; Mr. Speaker in the chair.

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

Mr. Speaker tabled the 1985 annual report of the Legislative Library.

Hon. Mr. Hewitt moved adjournment of the House.

Motion approved.

The House adjourned at 5:58 p.m.