[ Page 8609 ]

CONTENTS

Oral Questions

BCDC loan to Repap Enterprises. Mr. Williams –– 8609

Mr. Lea

New Cinch Uranium Ltd. Mr. Macdonald –– 8610

BCDC loan to Repap Enterprises. Mr. Williams –– 8610

Forest fire fighting. Mr. Nicolson –– 8611

Presenting Reports

Appointment of Stephen Owens as ombudsman –– 8611

Resolution 67. Hon. Mr. Gardom –– 8612

Mr. Nicolson

Motor Vehicle Amendment Act, 1986 (Bill 17). Second reading

Hon. A. Fraser –– 8612

Mr. Lockstead –– 8613

Hon. A. Fraser –– 8613

Motor Vehicle Amendment Act, 1986 (Bill 17). Committee stage –– 8613

Third reading

Committee of Supply: Ministry of International Trade, Science and Investment estimates. (Hon. Mr. McGeer)

On vote 49: minister's office –– 8613

Hon. Mr. McGeer

Mr. Williams

Mr. Nicolson

Mr. Davis

Mr. Lea

Mr. Rose

Ms. Sanford

Mr. MacWilliam

The House met at 2:05 p.m.

Prayers.

HON. MR. NIELSEN: Mr. Speaker, I would ask the House to welcome a visitor from Victoria, Brendan Hopwood. Accompanying Brendan to the House today are a young lady from Vancouver, Dorothy Fong, and a special visitor, Keina Fong, who is visiting from Fiji.

MR. MACDONALD: Mr. Speaker, on the floor of the House we have Tony Gargrave, who was the member of this Legislature for Mackenzie from 1952 to 066. For a period of time he was the only real lawyer in this assembly. He used to compile a list of the quips of the assembly, and he should publish them. We all wish him well. He is now a practising lawyer in the city of Vancouver, and his card .... Have you got a card?

HON. MR. WATERLAND: Mr. Speaker, we are honoured today to have in your gallery in the Legislature the Minister of Agriculture and Rural Affairs from Australia, the Hon. Evan Walker. He is accompanied by Mr. Michael Taylor, his director of agricultural marketing services. Would the House please make these gentlemen welcome.

MS. SANFORD: Mr. Speaker, on behalf of the MLA for North Island (Mr. Gabelmann), I would like to introduce to the Legislature a group of students from Phoenix Secondary School who are seated in the gallery at this time. They are accompanied by their teacher, Ms. E. Kaiser, and I would ask the House to make them all very welcome.

MR. D'ARCY: Mr. Speaker, I would like to rise and ask the House to join with me in paying tribute to a distinguished public servant, Merrill Sproul, who passed away last week. Merrill was regional highways manager for the Nelson district, which covers southeastern British Columbia, and I know that the members for Nelson-Creston (Mr. Nicolson), Columbia River (Mr. Chabot) and Kootenay (Hon. Mr. Segarty), along with the Minister of Highways (Hon. A. Fraser), will know this man and remember him, and support what I have to say here. Merrill was a construction superintendent in the Kootenays in the most difficult period of highway construction during the 1960s. He was regional manager in Prince George, district manager in Cranbrook, and for the last I I years regional manager for the southeastern part of the province, the Nelson district. Most importantly, Mr. Speaker, he was a friend to a great many people in the Kootenays, and very loyal to his crews and loyal to the people they served. He died in service and he's going to be missed by a lot of people.

MR. NICOLSON: Mr. Speaker, I might ask, without fear of creating a precedent, that if you were to convey expressions from the House because of this untimely death during service, it would be most appreciated by myself and I'm sure my colleague from Rossland-Trail.

MR. SPEAKER: Such is agreed by the chamber?

SOME HON. MEMBERS: Agreed.

MR. SPEAKER: So ordered.

Oral Questions

BCDC LOAN TO REPAP ENTERPRISES

MR. WILLIAMS: Mr. Speaker, to the Premier regarding a BCDC loan of $75 million to Repap Enterprises. Can the Premier confirm that that loan is simply for the buy-out of these assets of BCRIC and is not to create new plant or equipment in the province?

HON. MR. BENNETT: Mr. Speaker, I'll take the question on notice for the Minister of Industry and Small Business Development (Hon. Mr. McClelland).

MR. WILLIAMS: Can the Premier assure the House, Mr. Speaker, in view of the fact that BCRIC was his baby, his entity, that this $100 million will be spent in British Columbia in new jobs and reinvested in British Columbia, rather than paying BCRIC's debt and investing in its North Sea oil mess in the Brae field?

MR. SPEAKER: Question taken as notice. Supplementary, the member for Prince Rupert.

MR. LEA: A new question.

MR. SPEAKER: New question.

MR. LEA: Mr. Speaker, to the Minister of Forests, regarding the same topic as the second member for Vancouver East. It's my understanding that the $75 million loan bears an interest rate of prime plus 2, therefore not subsidized. I'd just like to preface my remarks, Mr. Speaker, by saying that this is good news for Prince Rupert and for Terrace. However, I'd like to ask the Minister of Forests whether or not, within that loan to Repap, there are guarantees that there will be upgrading of the Prince Rupert pulp mill and the sawmills in the Terrace area. My understanding is that there's an undertaking by Repap of $40 million for upgrading. Is that in the contract as a guarantee on the loan?

HON. MR. HEINRICH: Mr. Speaker, I cannot advise the House as to the contents of the contract - that is, the loan -with the B.C. Development Corporation. I can say this, however: the acquisition by Repap, a Canadian corporation having its head office in Montreal, is to acquire both pulp mills located in Prince Rupert, one of which is now operating; the other is not. It is also for the purposes of acquiring the woodlands operation and the Pohle sawmill in Terrace. It's a term and condition, as far as I'm concerned - and as the government is concerned - that by assuming these assets certain obligations are on the purchaser, one of which is to maintain the employment base in Terrace of the Pohle sawmill; second is the commitment by Repap to spend - and the member is correct - up to an amount of roughly $40 million not only on the existing mill, but also to open the new mill. That new mill will employ somewhere between 125 and 150 people. It will also create roughly 100 further jobs in the woodlands operation.

Overall, I think I can understand why the member is elated to have such development take place in his riding.

[ Page 8610 ]

MR. LEA: A supplementary to the Premier. The undertaking, as the Minister of Forests has pointed out, is that approximately $40 million will be spent on upgrading. As I understand it, within that upgrading will be a paper machine which will add value. It does concern me, however, if guarantees aren't written into the loan that they will do it, and do it within a certain time frame. However, the question to the Premier - and I remember when B.C. wasn't for sale - is: why didn't BCDC make a direct loan to Westar to do the upgrading? Was it because by using this scheme they can divert $100 million to BCRIC?

[2:15]

HON. MR. BENNETT: I guess before you lend money to someone they have to have applied and asked to borrow it, Mr. Speaker. You've only asked in a different way the question taken as notice for the member for Vancouver East.

MR. LEA: I didn't ask the same question at all. What I'm saying is that it's good news for Prince Rupert; however, it would have been good news had Westar borrowed the money from BCDC. It would have been only a $40 million guarantee loan by BCDC, as opposed to $75 million to a Montreal firm.

MR. MICHAEL: You don't like Canadians?

MR. LEA: I love Canadians, but I just happen to like B.C. better. What we could have done . . . .

MR. SPEAKER: Order, please. Hon. member, this is question period.

MR. LEA: I'm trying to point out, Mr. Speaker, that it wasn't the same question, and I'll get to the question again.

MR. SPEAKER: Order, please, hon. member. We must have a question.

MR. LEA: The question is, why didn't BCDC loan $40 million for the upgrading to Westar as opposed to loaning $75 million to Repap in Montreal? It would have kept the province owning it, instead of Quebec firms owning it, and it would have brought the same upgrading program through Westar.

HON. MR. BENNETT: Again, I suppose B.C. Development - let me take it very slowly for you - only considers applications for funding when they are made by a firm. If Westar has not approached B.C. Development Corporation for funding, it's hardly likely they would phone them and ask them if they wanted $75 million.

NEW CINCH URANIUM LTD.

MR. MACDONALD: The Minister of Consumer and Corporate Affairs, who is reading a note at the moment, must have heard of New Cinch Uranium, trading in which was suspended in January 1981 after .... It's a big joke to those who wish to be wilfully blind. After $100 million or so was raised based upon a salting of a mine down in Arizona, trading in the shares was suspended by the superintendent of brokers. Was any report made on that suspension? Why was it done?

HON. MR. VEITCH: Thank you very much for the question. I'll get the answer back to you very shortly. I'll take it as notice.

MR. MACDONALD: A supplementary question to the minister.

MR. SPEAKER: Order, please.

MR. MACDONALD: Would the minister also give us a report ...

MR. SPEAKER: A new question.

MR. MACDONALD: A new question.

. . . as to whether there was an investigation into the fact that the Chem-tec lab down there, which did the assays and found the bogus gold and silver, was financed by two of the principals of New Cinch Uranium, namely Applegath and White? Will the minister bring us a report as to why there wasn't an investigation into that and give us a full explanation?

HON. MR. VEITCH: I'll investigate the relevance of the situation, and we'll get the answer back.

MR. MACDONALD: To the Attorney-General, this question having been raised before. Can the Attorney-General assure this House, based upon his police investigations, if there have been any such investigations, that the slaying of Michael Opp, who worked for Chem-tec, which made the bogus assays and left a letter behind, was not related in any way to the raising of that $100 million by the underwriters for New Cinch Uranium?

HON. MR. SMITH: Can the hon. member assure the House that when he raises the question of a killing in a state to the south of the U.S. that he has some evidence besides his homespun innuendo to link it to the question he asked me many months ago?

MR. MACDONALD: A supplementary to the Attorney-General. Has there been any investigation into whether that murder was related to the raising of the money in British Columbia?

HON. MR. SMITH: I will inquire with the FBI and report back to the House.

BCDC LOAN TO REPAP ENTERPRISES

MR. WILLIAMS: To the Premier, can the Premier advise the House why negotiations did not take place with Westar? They took place with BCRIC, who holds all of this monstrous, billion-plus debt.

Interjection.

MR. WILLIAMS: The negotiations were with BCRIC, not Westar, the operating agency in the northwest part of the province, which handles those pulp mills.

HON. MR. BENNETT: I'll take it on notice for the Minister of Industry and Small Business.

[ Page 8611 ]

MR. WILLIAMS: It's disturbing to see that a lame-duck Premier is so ill-informed on a huge loan of $75 million that involves a question of jobs and the monstrous mistake he made with respect to establishing B.C. Resources Investment Corporation.

HON. MR. BENNETT: Well, Mr. Speaker, I just want to retire with good humour and not embarrass the member for Vancouver East once again. Just to remind him, the assets in that area were acquired by himself as Minister of Forests when he was with that socialist government between '72 and '75, and the facilities haven't changed. If they were a bad deal then, I guess he made a bad deal. That's what he's saying. What he wants to find out is how a company in the private sector conducts negotiations. I will refer that member to the Minister of Industry and Small Business to find out why private sector companies deal with parts of their organization in any negotiation and perhaps they may wish to share that information with him or they may not.

FOREST FIRE FIGHTING

MR. NICOLSON: I have a question to the Minister of Forests. It is a beautiful, warm day again in the Kootenays today. Last year the Nakusp field office of the Ministry of Forests spent over $5 million and had over 1, 200 firefighters working to put out local forest fires. I know that the minister has given assurances of increased aerial attack in the area, but despite that experience and the 3 10 recommendations of your recent report, there have been no additions to the six-man initial fire crews in Nakusp, as an example. Why is there not an increase in the initial fire-attack crews in the field office at Nakusp?

HON. MR. HEINRICH: Mr. Speaker, I will secure particulars and bring back a full answer later this week. But if I might raise it with the member, usually two or three times each week I secure a report from the fire suppression branch of the ministry to determine exactly what the status is of fires throughout the province. It seems to me it was last week that I was concerned about a fire just east of Castlegar toward Salmo covering something in the order of about 100 hectares. I made an inquiry as to how many people were on site, how many pieces of equipment were on site, what aircraft were on site, what caused the fire, what the ground was like -whether or not cats could move; was it moist - and I found out that there was certainly adequate manpower and everybody was able to come together like we expect everybody to do to put out the fire.

If there is some concern about how many people happen to be in one specific location, I think I have made it abundantly clear from the very beginning that the Rapattack crews have increased and are available, the number of aircraft have been increased and are available, and the people on standby are available. It seems to me that we have gone some distance in looking at the recommendations, which were compressed into about 30 good, solid recommendations, and those are in place. If the member can come to me with a distinct problem, you know that I will do whatever I can to give you whatever assurance that all of us can do, all of us on both sides of the House, to protect our forests. You know that our intentions are both moving in that same direction.

MR. NICOLSON: A new question. The Nakusp area is part of the larger Arrow timber supply area and stretches from Castlegar to just east of Revelstoke. Before restrain in 1979, Mr. Minister, there were 35 people on initial attack suppression in that Arrow timber supply area. Last year there were only 12, and this year we're informed that no changes have been made. It's early in the season, the humidity is still very high and the odd lightning strike right now is manageable. But why, I still ask the minister, is the initial attack crew in the Arrow TSA cut by two-thirds, in spite of last year's experience and those recommendations?

HON. MR. HEINRICH: Mr. Speaker, as I recall, a similar question was asked by the member for Nelson-Creston during the forestry estimates, and it seems to me that part of the answer given at the time was that when the season becomes warmer, the moisture leaves the ground; lightning, which usually comes in the month of August and not in the months of May and June as it did last year . . . . We will have available the number of people required. Also, when we get into the hotter part of the season, more people will be available. So the member can rest assured that I will find out more about the Nakusp area to see whether or not he will be satisfied with what is available.

MR. NICOLSON: New question, Mr. Speaker. The head office of the Arrow TSA is in Castlegar, and we're informed that the only change there in preparation for this year's forest fire season is that one vacant forest protection position has been filled. When you get into the crisis, that is no time to start hiring experts. Again I ask the minister: why is the ministry failing to make the necessary changes to ensure that this area is properly protected from this summer's fires? It was $5 million in the Nakusp area alone last year.

HON. MR. HEINRICH: I take the question as notice, Mr. Speaker

Presenting Reports

MR. PARKS: I have the honour to present the report of the special committee appointed to select an ombudsman for the province of British Columbia. In doing that, Mr. Speaker, I think it is incumbent upon me as chairman to extend to you and this House my personal apologies for the fact that some of the salient features of this report have in fact been leaked prior to coming before this House. I'm very disappointed, in that that committee worked so well for so many months . . . .

SOME HON. MEMBERS: Name names.

MR. PARKS: It's not my position to name names; but as I say, on behalf of my committee I do extend our apologies.

At this time it is with great pleasure that I move that the report unanimously recommending the appointment of Mr. Stephen Owen for the position of ombudsman be taken as read and received.

Motion approved.

MR. PARKS: Mr. Speaker, I move that the rules be suspended and the report adopted.

[ Page 8612 ]

Motion approved.

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

Leave granted.

MR. PARKS: Following the adoption of that report, Mr. Speaker, I take great pleasure in introducing to the House Mr. and Mrs. Stephen Owen, our next ombudsman and his wife.

[2:30]

Orders of the Day

HON. MR. GARDOM: First, Mr. Speaker, I would call resolution No. 67, standing in my name in the order paper. For purposes of record, I shall read it:

"That the committee of selection appointed by this House on March 11, 1986, comprising the Hon. G.B. Gardom, the Hon. J.A. Nielsen, the Hon. R.G. Fraser, Mrs. Johnston, Messrs. Mowat and Reid, and Ms. Sanford and Messrs. Howard and Hanson be authorized to appoint a special committee of the Legislature to recommend a person to be appointed as auditor-general, as provided under section 2 of the Auditor General Act, and the special committee so appointed shall have the following powers:

(a) to appoint of their number one or more subcommittees and to refer to such subcommittees any of the matters referred to the committee;

(b) to sit (i) during any period in which the House is adjourned and during any sitting of the House, and (ii) to adjourn from place to place as may be convenient; and shall report to the House on the matter referred to it during this session, or following any adjournment of the House, or at the next following session, as the case may be."

As all hon. members know, Mrs. Erma P. Morrison, first appointed by this Legislature on June 21, 1977, and reappointed in 1983, has indicated her intention to retire and has furnished the assembly with six months' notice. Before sitting down, Mr. Speaker, I would very much like to acknowledge the tremendous job that Mrs. Morrison has done. I know that all members of the assembly would thank her for her commitment, her fairness of approach, her efficiency and cordiality throughout.

MR. NICOLSON: I rise to oppose one part of that motion: that the committee sit when the House is sitting. We amended the rules of this House, Mr. Speaker, so that committees could sit on Wednesdays without interference. I think that it is impossible for members to do their job properly. We're not in the House enough as it is, what with other duties that we have. I hope that in passing this motion, this provision will be more honoured in the breach than in the observance. I regret that that one aspect is in this motion, which is otherwise, I'm sure, going to pass nemine contradicente.

HON. MR. GARDOM: Just in response to the hon. member's observation, one that I do not disagree with, the provision is in there in order to take care of urgent situations or a requirement to come in and do a report in a short space of time, etc., as has been the practice.

Motion approved.

HON. MR. GARDOM: Mr. Speaker, I'd like to call second reading of Bill 17.

MOTOR VEHICLE AMENDMENTS ACT, 1986

HON. A. FRASER: I have the honour to move second reading of Bill 17.

The most significant amendment contained in this bill is the increase in the mandatory prohibition from driving, on conviction for serious motor vehicle offences, from six months to one year. These include the Criminal Code offences of impaired driving, hit-and-run, and criminal negligence causing bodily harm or death, as well as driving while prohibited under the Code and under provincial statute.

The provinces of Ontario and Nova Scotia have increased their mandatory prohibition periods to one year. I understand others are considering similar action in an effort to reduce the incidence and costs of impaired driving accidents. We in British Columbia have made significant progress in tackling the impaired driving problem. The statistics, though, are still unacceptable. In 1985 there were 16, 000 impaired driving convictions, 152 deaths and 5, 450 injuries in alcohol-related accidents. A stronger response is necessary, and I feet an increase in the length of the automatic prohibition is most appropriate. Not only does it have a greater deterring effect; it also serves to protect the public from convicted drinking drivers for a further six months.

I am sure that all members recognize the consequences of lengthy prohibitions for convicted drivers. Under the Motor Vehicle Act prohibitions start on the day of the sentencing and continue for twenty-four hours for consecutive days now for one year. The convicted drinking driver cannot obtain a driver's licence for work purposes and he is subject to a minimum seven-day jail term if he continues to drive. These conditions can result in the drinking driver losing his job, and as such they can be very severe consequences indeed. Given the consequence of causing an accidental death or injury, they are, however, justified.

Several of the other amendments contained in this bill are made necessary by charter-related decisions made by the courts. The hit-and-run provisions of the Motor Vehicle Act were ruled inoperative because the relevant section - section 62 - makes reference to the duty of a driver in relation to an incident on a highway. The county court rules that the word "incident" without a statutory definition is too vague to give a citizen a sensible appreciation of what is meant by the section. The reference to "incident" in a number of sections of the act will be changed to "accident" and a statutory definition of "accident" provided.

Two provincial court decisions now under appeal have the potential to seriously undermine the traffic rule enforcement procedures used by the police. The present traffic-rule violators who produce valid B.C. drivers' licences are normally issued traffic violation reports, which if not successfully disputed attract penalty points. Other violators such as out-of-province drivers who do not have a valid B.C. driver's licence are issued traffic ticket informations which if not successfully disputed attract a fine as well as points. While the case law is not clear on this, the courts may hold that this constitutes discrimination under the equality provisions of the charter. An adverse decision on appeal could result in the traffic violation reports or traffic ticket informations, or both, being ruled inoperative. Should that happen it would be

[ Page 8613 ]

extremely difficult, if not impossible, to enforce traffic rules on our highways.

This bill contains amendments to provide for uniformity and procedures for alleged traffic rule violators. These amendments will be proclaimed if the existing procedures are ruled inoperative by the courts.

I'll just say that I move second reading of this bill.

MR. LOCKSTEAD: I'll be very brief. We have examined this bill, sections 1 to 13, very carefully. I have a section-by-section report here. Our caucus of course will support the government bill.

The bill deals primarily with increasing the prohibiting of driving from six months to twelve months if convicted of impaired driving. We all know the consequences of these actions. I promised our caucus I wouldn't make a long speech on this; except for this section, the bill is basically very straightforward and our caucus will support this bill.

Motion approved.

HON. A. FRASER: Mr. Speaker, I ask leave to refer Bill 17 to a Committee of the Whole House to be considered now.

Leave granted.

Bill 17, Motor Vehicle Amendments Act, 1986, read a second time and referred to a Committee of the Whole House for consideration forthwith.

MOTOR VEHICLE AMENDMENTS ACT, 1986

The House in committee on Bill 17; Mr. Ree in the chair.

Sections 1 to 14 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 17, Motor Vehicle Amendments Act, 1986, reported complete without amendment, read a third time and passed.

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

ESTIMATES: MINISTRY OF INTERNATIONAL

TRADE, SCIENCE AND INVESTMENT

On vote 49: minister's office, $169, 768.

HON. MR. McGEER: With the opposition in fine good humour this afternoon, I don't intend to labour the House with a speech; certainly nothing partisan, because of course I never do that.

The ministry, as members know, was newly created a year ago to place greater emphasis on British Columbia's traditional export-oriented economy. This past year the additional responsibility for science and communications was added to that portfolio simply because these have such an important bearing on our overseas trade. Fully two-thirds of British Columbia's processed materials - its manufacturing - is for export. Because we enjoy the full range of consumer goods that go with any society having a high standard of living, so we must be able to produce and sell to the world in order to command the wealth which will give us that opportunity to be high-level consumers.

Those export markets have been challenged in recent weeks, a cause of great concern to all British Columbians. It has served, however, to focus on just exactly how important exports are to our economy and how the rest of the world, including other parts of Canada, views this province. May I give one example of last week? A report leaked by a senior Ontario ministry official was given to the Canadian press and subjected to front page coverage in the Globe and Mail, our national newspaper published in Toronto.

[2:45]

That article said Canadian industries were 20 percent less efficient than their United States counterparts, and therefore it would be perilous for Canada to be engaged in free trade negotiations with our neighbour to the south. I immediately telegraphed my counterpart in Ontario, sending copies to Simon Reisman and James Kelleher and the other trade ministers across Canada, pointing out that British Columbia's industries are not 20 percent less efficient than their American counterparts but considerably more efficient. The reason why we are in an embarrassing situation with our neighbours to the south is that our mills are too darned efficient for their mills, so the whole purpose of this countervailing trade application of the U.S. softwood industry and the 35 percent duty imposed by the United States administration on our shake and shingle industry is not because we are 20 percent less efficient - if that were the case, there would have been no difficulty at all - but because our industries are more efficient.

That has been our difficulty in British Columbia. We sell two-thirds of our products overseas, in many cases against tariff barriers imposed by foreign nations. That is the history of British Columbia - industries that are highly efficient on a world scale, with an ability to penetrate foreign markets. Indeed, that is how British Columbians make their living. That is not recognized in the province of Ontario, Mr. Chairman, because in the province of Ontario they say Canadian industries - not Ontario industries but Canadian industries are less efficient. That's not the circumstance.

People from Ontario should not be speaking for British Columbia industry, because they don't understand it and they don't recognize the wealth that those industries bring, not just to this province but to Canada as a whole. Our difficulty has been a failure to recognize the contribution and efficiency of British Columbia industries across the rest of Canada, the assumption on the part of the province of Ontario that they can speak for all of Canada. As for the moves by foreign nations, including the United States, to cut down our most efficient industries, if we were not competitive, they wouldn't worry about us. They wouldn't know we existed. They know we exist when we are able to command their markets by giving their consumers higher quality goods at a lower price.

Not everybody in Canada agrees that it is a wise thing to pursue free trade, even though that has been our greatest advantage in British Columbia. We do best in those industries where we do not have to climb over tariff barriers erected by the United States or by foreign nations. Therefore it behooves

[ Page 8614 ]

us to maintain free trade where we already have that equality on world markets, and to seek more opportunities of the same kind.

Our industries have always been competitive. What we have to do is to persuade those in other parts of Canada and in other countries who are not competitive to improve their efficiency. The secret for the United States, if they cannot compete with our shake and shingle industry and our softwood lumber industry, is not to try to make ours less efficient, not to try to raise the prices for their consumers, but instead to try to make their own production as good as ours. That's what we should be asking the people in the United States to do, and in Korea and in Japan and the other countries that are our major trading partners.

If one looks over the past 24 years since I have been in the House at where the shifts have taken place in the trading pattern for British Columbia, the major gain has been to Japan, which now buys 25 percent of our output versus 7 percent over 20 years ago, and a corresponding decline in the importance of the United States as a market for our goods. As we move into the future, we will see enhancement of trade particularly with the Far East, with Japan, with Korea, with China and with other nations, Asian nations in the Pacific basin.

We are placing great emphasis on Expo and on our international trade to develop these markets as a method of improving the prosperity of all British Columbians, and a method for producing earnings that will make it possible for all of the NDP spending plans to be implemented. But you have to work and you have to earn before you can spend. This ministry is associated with the productive end of British Columbia enterprise, and I'm very proud to be representing that ministry and our export industries around the world.

MR. WILLIAMS: Well, it's as empty as we usually get from the member, Mr. Chairman. It's just extraordinary. You know, what we've really had for a decade is essentially a know-nothing party and a know-nothing administration. One would have thought and hoped that one of the members over there who had at least some academic training and some academic tickets could provide us with some depth, with some real understanding of what British Columbia is all about and what its potential is all about. But we get the most empty-headed, vacuous nonsense from this member that we get from any of them. I suppose it's appropriate that he should have been elevated to this high office as minister of investment, science and whatever the rest of it all is.

He argues that our industries are the most efficient. Well, where's the data? Professor, where's your data in terms of our efficiency? I can provide you with reports from Price Waterhouse that show you the state of our pulp and paper industry, carried out by the industry in terms of looking at the Norscan countries - Finland, Norway, Sweden - looking at the United States, looking at eastern Canada and looking at B.C. In that sector in pulp and paper we are simply the highest-cost producers in the world. So let's have the data. Let's produce it. There are indeed some sawmills in the province that are efficient in terms of the low-value product they turn out; they're primarily in the north central interior. But don't use that as your universal touchstone in terms of a whole industry.

The data is now in, professor, in terms of the pulp and paper sector, and we are the world's most costly, least efficient producers, with the highest labour cost, the oldest technology - the highest management costs as well, the highest administrative costs. So don't give me that empty-headed stuff about efficiency in some sectors at least, Please give us specific data, professor. Try to give us something specific that we can work with, because you have not done so.

Now you can do your whole blanket number on free trade, and that's fine, but do you want to talk to the agricultural sector in this province in terms of what blanket erasing-the-border free trade would mean in our agricultural sector? You happen to come from Point Grey. That may not be a great concern, but there are some arguments around the whole idea of greater self-sufficiency. It isn't just a simple question of erasing the borders and having full access.

What about our basic agricultural industry if you boys had your way? Do you think we'd have a dairy industry left in British Columbia? Do you think we'd have a winery industry in British Columbia? Do you think we'd have grape-growing in British Columbia? We would not. We would be the market for the surplus product from south of the line, and in terms of self-sufficiency in those areas, it just wouldn't happen. Now if there are internal problems in British Columbia toward creating efficiency in that sector, you people could deal with it. You never have. So you're willing to risk the whole agricultural sector at this stage of the game in the dealings with the Americans.

Let's look at what you've got going with the Americans. What was supposed to have been a deal in terms of mutual involvement in the negotiating process between Ambassador Murphy and Ambassador Reisman . . . . We are now getting an update every three months. So much for the promise from the Prime Minister.

This gentleman from Point Grey, Mr. Chairman, is the man who said he wanted to create, at one stage in his career, an intellectual Philippines. Well, well, well - Mr. Marcos's boy in B.C. Look at the disaster there - a country with an $800 per year annual income on the average, and he's talking about wanting to achieve that in British Columbia. He, like the rest of the members on that side of the House, have chased the glitzy projects, the empty projects, that never, ever would have produced jobs: the Dynateks, the IECs. That's where he's been, pursuing these projects that were just stock promotion schemes of one kind or another. That was his great diversification plan for British Columbia - trips to Texas, trips to Silicon Valley.

What really has been the end result of that whole exercise? What about research and development in a genuine sense, research and development throughout the existing industries that we have in the province? We in B.C. spend the lowest amount, in terms of the operations of private sector companies, on R and D of pretty well anywhere in the western world - the lowest amount on R and D in our forest sector, in our major primary industries. That's where we can do the homework, where we have to provide the incentives and get going in terms of existing opportunities in the province, in terms of existing companies and sectors in which we do significant work and create significant wealth. Those are the obvious real opportunities.

They aren't in running around the world trying to get something like Louisiana-Pacific through this ministry, trying to bring a company into British Columbia and providing it with $20 million in subsidies for a product that is almost as common as plywood - a waferboard operation. That's the kind of incredible stuff we got out of this ministry in its one year of existence. Their great achievement is a waferboard plant in Dawson Creek, B.C., brought in by the previous

[ Page 8615 ]

minister for this department. And we had to provide $20 million in subsidies - $10 million in interest subsidies alone. If we're going to give away $20 million, wouldn't it be better to look at research and development with existing companies in the province? Why should we entertain a $20 million gift to a foreign company that previously fought us on the countervail action in the United States and that serves essentially American interests? Why would we give $20 million to a company like that, a company that ran away from British Columbia a few years ago without even paying the $71, 000 in stumpage fees that were owing? It's incredible that that is what they see as the new technology, the new investment, the new industry. Who couldn't get a waferboard plant if they gave away $20 million? My God, they might be willing to build one on the tundra of Alaska for that kind of money, with no valuable resources at all. But that's what happened under this know-nothing administration. There is simply no excuse for it at all.

This department has been set up . . . . We're spending great amounts of money in its operation. It obviously is in conflict at times with other ministries. The actual duties have not been adequately sorted out. The Ministry of Industry is the obvious ministry that should be handling some of these things, and it's being replaced by the Ministry of International Trade and Investment in some areas. At the same time, they're not fully equipped or fully briefed in areas that are obviously their areas of responsibility.

You think about this whole trade situation with the United States that we're currently going through, in particular the countervail activity with softwood lumber. Has this ministry hired a lawyer in Washington, D.C.? The answer is no, they have not hired a lawyer in Washington, D.C. - in terms of British Columbia's specific interests. Have they hired a public relations firm in Washington, D.C. - in terms of British Columbia's specific interests? The answer again is no, they have not hired a public relations firm in Washington, D.C. We occasionally send a lower-level staff person from this ministry to Washington. That's what has happened in the last couple of weeks: a junior person from this ministry is sent to Washington. No wonder we're in trouble, Mr. Chairman. There were new interpretations with respect to the countervail and subsidy on raw materials and resources. What kind of analysis has gone into that? Obviously not very much, because our negotiating stance has not changed from the past.

[3:00]

It's very clear that in the core areas of responsibility with respect to this ministry, they're not really the key players. The bulk of this is dealt with out of the Premier's office - on occasion and generally too late - and that's abundantly clear now in the problems we face with the countervail duty. Meanwhile, in Ottawa they carry on - the so-called freetrade discussions - but right now we face a countervail threat with respect to our primary industry in this province.

Surely the very first thing in the bargaining between Ambassador Reisman and Ambassador Murphy should be no countervail. That's issue number one. And if the Americans won't buy that argument or won't agree, then there is really nothing to talk about. I've listened to economists from Harvard in the last little while, and to other experts in the United States, who indicate that the countervail has never been given up by the Americans. The anti-dumping provisions have never been given up by the Americans. They have a special trade relationship with the state of Israel, but despite that special relationship they have not given up the countervail, they have not given up anti-dumping. That issue of the countervail is clearly the issue for British Columbia today. If the Americans are not willing to back off on the question of the countervail, then there is simply nothing to talk about; that's the crisis we're facing today in terms of free trade and in terms of maintaining our trading relationship insofar as softwood lumber is concerned.

We have here a ministry that dabbles like a dilettante that makes sense in terms of this minister - in several areas. It ends up providing largess to American companies that don't need largess in order to locate in British Columbia. When we have good raw materials for their basic needs, they don't have to put money on the table; this ministry makes sure that money is put on the table. But when it comes down to the basic issues of the trade question for this province, they are just not equipped. They send a junior person to Washington, D.C. We do not have representation specifically for ourselves in a direct sense. We have traditionally relied on the forest lobbyists from this province, rather than relying on ourselves and building up our own capability in the United States and elsewhere. So we are weaker for all that.

They have not kept up to date. Letters from the Premier's office with respect to shakes and shingles were far too late in terms of dealing with that basic commodity. It is incredible that there weren't letters from the Premier's office earlier. That's an indication that the staff job is not being done, that the minister is a belated player in the whole trade exercise. It has essentially been handled out of the pockets in the Premier's office, not in this ministry at all. We see very little here in terms of product, capability and specifics in terms of doing the major job that has to be done in this sector. It's a dilettante's piece of work. It's a part-time job by a part-time minister in a part-time department. Make no mistake about that.

HON. MR. McGEER: Mr. Chairman, the member asked for some facts and figures. I will offer these with respect to the pulp and paper industry in British Columbia, which the member claims is so terribly high cost and inefficient that it simply can't compete with these marvellous industries in Europe.

Pulp exports to the United States between 1983 and 1984, the last year for which we have figures, increased from $376 million to $468 million; paper in the United States, from $527 million to $594 million. Pulp and paper exports, 1983 to 1984: Japan, from $274 million to $328 million; the United Kingdom, from $56 million to $79.4 million; France, from $74 million to $88 million; Germany, from $173 million to $194 million. I'm mentioning these figures in Europe to illustrate the increase of sales in pulp and paper to the European Economic Community, whose normal trading partner would of course be the Scandinavian countries. Exports increased to all of these, as well as to the ones in the far east: Korea, from $30 million to S41 million; China, from $56 million to $72 million; Australia, from $26.5 million to $36.1 million in pulp and from $22 million to $40 million in paper and paperboard. All of these show the sharp increases of this industry to all major trading countries in the Far East, in Australia, in Europe, in the United States. So it may be the opinion of the member opposite that this is a high-cost non-competitive industry, but the facts speak otherwise.

I'm pleased, I might say, Mr. Chairman, that the labour costs are high, because that means that the workers in these industries are achieving the high wages which they deserve

[ Page 8616 ]

and they should have. You may be against that sort of thing, Mr. Member, and you may be all for protection and the things that your party stands for, but the fact speak otherwise. You asked for them, and you may not like the answers, but that's the truth. You'll see when the latest figures are in for 1985 and 1986 that they will again show forward progress, penetration of international industries.

That member opposite, Mr. Chairman, has even insulted the cows of British Columbia, claiming that once there were subsidies taken away from the farmers in this province, why, we would just be a dumping ground for all the milk from those better-surplus cows on the other side of the border. What absolute nonsense! What's the matter with you people over there? Don't you think anybody in British Columbia can do anything to compete with anybody anywhere else? Of course there'll be no difficulty with our . . . . What's the matter with our cows? They're good productive cows that make nice milk. Why do you think they have to be protected and can't stand any kind of industrial . . . ? You people are just crazy over there, the worst protectionists we've ever seen in Canada. I'm starting to get worked up with this protectionist crew over there, Mr. Chairman.

You're against the scientific industries in British Columbia as well; that's our fastest-growing sector, about 20 percent a year. Yes, we've put science policies in place in this province to stimulate that industry because, again, this is an opportunity for our exports. Now the scientific industries in British Columbia are the fourth-largest; they've surpassed fishing as a major industry, and it's almost all for export. So the policies that we put in place, in encouraging science and science industries, are starting to bring a handsome payoff to our province. I released, I think, to all members of the House the results of the Walden report, which show already that we've scarcely started our program of a four-to-one return of all money we've given to the Science Council in Science Council grants; we've already returned in economic activity, with the expectation that through the life of that technology just the bit that we have done so far will produce more than a twenty fold return for every one of the dollars that has been invested through the Ministry of Science.

That's only the Science Council grant side. We have got evidence, which we're now quantitating, to show similar spectacular returns on money that we've invested through the Discovery Foundation and the discovery enterprise program. These have been highly successful. It's no abstract academic exercise. These grants and their economic return have been more closely monitored in British Columbia than in any jurisdiction I know of in the world.

And we're going to have very solid evidence accumulating to show just how far these kinds of programs can go to stimulate the export industries. When you make things and you sell them abroad, that's the way the wealth comes in that gives everybody in British Columbia an opportunity. People talk about jobs for government, as though if you go out on some kind of a FLIP program, or whatever these federal government people are always spending taxpayers' money providing, somehow you're generating wealth from that. That consumes wealth. The genuine wealth is produced by what is manufactured, there for people to consume and use, and particularly what we can sell overseas. We're not going to try to make every consumer product imaginable here in British Columbia; it's an impossibility. In order for us to have the range of consumer goods that we want to have and deserve to have, you've got to make some things and sell them around the world to exchange for that.

That's what production is all about. Governments don't create jobs; the private sector creates jobs. All jobs that are created aren't equal; perhaps they are in terms of pay, if you look at normal wage rates, but in terms of what is brought back to the economy, those that are in primary manufacturing are the ones that really count. The jobs that are at the bottom of the line - and I don't mind preaching this to anybody -are the jobs that come directly out of government, because there are no spinoff benefits for those; those are consuming taxes. That makes the hurdle just a little bit higher that the genuine producers have got to climb in order to sell their goods to the United States and to Europe, and wherever else we have our export markets.

Interjection.

HON. MR. McGEER: We're getting scoffing. Well, I'll tell you, when that member was in office, we started to have a tailspin in the production here in British Columbia. The mining industry in this province collapsed - and that was at a time of record mineral prices - because this minister had no respect at all for the resource industries of British Columbia and what they earned in wealth, and what they had to do in order to overcome world markets. You thought that they could be taxed indefinitely; you thought that they could be run by your socialist friends; you thought that you could pay taxes to the mining industry for minerals that were in the ground, and not even take them out.

That's what caused you to be over on the other side. It was the disastrous application of policies that didn't recognize the simple, fundamental facts of economic progress in British Columbia. I would have thought that with that experience yourselves in office, and having watched from the other side for ten years, you'd begin to reform your policies and begin to get behind the producers of Canada and British Columbia, instead of always being against them.

I'm proud of our agricultural industry. I've got confidence, just as I have confidence in our high-technology industries and our resource industries, and I think if we get behind them and allow these industries to be productive, then their wage rates are going to be, as they should be, the highest in the world. That will bring wealth to all of us here in British Columbia.

The member opposite remonstrated with this side of the House for not having their own lobbyists and lawyers in Washington. In international dealings there is one address and one address only in Canada; that's Ottawa, and through Ottawa our embassies around the world. When we deal with the political forces in other countries, it behooves us to unite and be one nation behind a program that is backed by all of Canada. When we asked for support from our Prime Minister in this matter, he gave us support, some of the strongest language we've ever seen coming out of Ottawa to wake the Americans up. And . . . . Pardon me?

MR. STUPICH: Did you see the letter?

HON. MR. McGEER: Yes, I approve of that as well. I'll tell you what I didn't approve of, Mr. Chairman. I did not approve of the display put on by the leader of the New Democratic Party in the House of Commons. That was destructive; it was counter-productive at a time when we needed

[ Page 8617 ]

to have all elected members backing the government to bring strong notice to the Americans of the difficulties they had put our major industries in here in British Columbia.

We got that support from the Prime Minister, but we did not get it from the leader of the New Democratic Party. He was divisive; he was unsupportive. It's all very well to have a leader of the New Democratic Party that's supporting the interests of the big trade unionists in central Canada; but it's a different story out here in British Columbia, and I think the loyal opposition opposite should quickly dissociate themselves from the leader of the New Democratic Party nationally. You should dissociate yourselves from him, because he's an embarrassment.

[3:15]

In any event, we are working through our national government and through our embassy, as we properly should be. I think that the Prime Minister of Canada has done an excellent job of bringing to the notice of the American administration the damage that they have done to an industry here in British Columbia that was efficient.

That's why they tried to pick it off. I've watched national television, major spokesmen for the Department of Commerce saying: "Canada overreacted. What are you fussing about? Why, this is just a small industry, and this is not our policy. We don't understand why the Canadians are so upset." Thank heavens the Canadians are upset. Thank heavens that the national government would not stand for seeing hundreds, many thousands of jobs lost in the shake and shingle industry, because when the national government stands up for small industry here in British Columbia, they're standing up for all Canadians.

They're bringing notice that Canada is not a nation to be trifled with; that industries are not to be held hostage, no matter how insignificant they may seem to the big power brokers in the Department of Commerce in the United States that would sooner, for political purposes, buckle to some protectionist industry or lobbying interest in Washington or Oregon.

All of the predicted things happened when that countervailing duty of 35 percent was imposed. First of all, the price of logs went up across the border. The price of logs went up; the price of shakes and shingles went up; the markets for these went down, and a lot of efficient people were put out of jobs.

Everything is wrong about that, and of course strong action needs to be taken to prevent this sort of thing becoming the rule and not the exception. I suspect that it may be the rule, because you certainly don't go after industries that are inefficient; you only go after the ones that are efficient. I just hope that at least the New Democratic Party here in British Columbia will get on board and be a positive, constructive, unifying force. The best way to start that would not be to ask Prime Minister Mulroney to pick up the phone to President Reagan, but to have your leader pick up the phone to Ed Broadbent and ask him to smarten up.

MR. WILLIAMS: It is no service to the universities of this province to have this member giving the kinds of speeches he's giving today. He gives the universities a bad name. It is a step forward, at least, that he is not the minister responsible for universities.

In his response to the question of efficiency in the pulp and paper sector of the province he simply points to volume figures-. Professor, I was talking about cost; I was not talking about volume. Yes indeed, we export a considerable volume of pulp and paper. The problem is that we don't make very much money doing it. The Scandinavians in Norway, Finland and Sweden make more money doing it than we do. The Americans make more money doing it than we do. Eastern Canadians make more money doing it than we do. The result is, professor, that even though these volumes are very significant, there is not a surplus or profit in British Columbia to retool, in terms of new plant, new equipment to decrease the cost of labour and management, because we've got a technology that's 20 years old. We have not updated. We have not reinvested in plant and equipment in British Columbia.

So, professor, your volume figures are meaningless. You're talking, of course, about oranges when we talk about apples. And you know that a first-year class at UBC -freshmen - would be failed for the kind of response you're giving the Legislature today. You would have been a high school dropout with the kinds of arguments you're trying to put forth in the Legislature today, professor. You've been associated with those know-nothings for too long.

MR. CHAIRMAN: Order, please, hon. member. When referring to other members, will you refer to them by their office or the constituency they represent.

MR. WILLIAMS: Right. I agree. I am sure that many other professors in British Columbia would be equally disturbed, along with you, to hear the term professor used in terms of the kind of argument that has been put forward today by the member for Vancouver-Point Grey.

The reality is that we're turning out pulp and newsprint at the highest cost levels in the world, and there are not the surpluses left to rebuild in British Columbia. That's happening in Quebec, the United States, in the Norscan countries. It's not happening here. That's why we've got problems in this fundamental industry.

The reason we pay more in labour in British Columbia is not that labour gets X dollars an hour. The reason is that we use technologies that are outdated, and we have to use more labour than is necessary to turn out products that other people turn out with far less labour input. So that's the reality in that sector.

The professor - I'm sorry, the member for Point Grey; I don't want to insult the other professors of British Columbia - gets up and says: "Our cows are as good as anybody's cows in the world." Well, let's look at some people who happen to know something about this industry. What does the B.C. Federation of Agriculture say about these questions of free trade and its impact in their sector? What do the people like the dairymen's association say about these things? I would be inclined to favour their views on these questions rather than those of the member for Vancouver-Point Grey. What does the B.C. Federation of Agriculture say? "It is clear that free trade would mean the end of the dairy industry as we know it." The Kamloops-Okanagan dairymen's association has concluded: "It is the conviction of our organization that negotiated so-called free trade in dairy products with the U.S.A. would kill the Canadian dairy industry. We will fight it in every way to prevent that from happening."

Those are views from people in the dairy industry. In fact, they argue: "The U.S. could supply all of Canada's milk needs immediately because of their chronic oversupply situation." If the member for Point Grey had a degree in economics he would understand that the production on the margin,

[ Page 8618 ]

which is what would end up supplying Canada, is a little different. Of course we would get products produced on the margin.

To quote others with respect to this question, Richard Allan, the chief economist for B.C. Central Credit Union, says: "While free trade might be good for the B.C. forest industry" - which we don't argue - "it would be an absolute disaster for Canadian agriculture." That's the chief economist for the B.C. Central Credit Union, a qualified person in the field, looking at this sector. So you can give your cow speech somewhere else, Mr. Member for Point Grey. There is no question that disruption would be major in British Columbia in our agricultural sector. I don't think the homework has been done.

At the same time, it's nothing short of incredible to get from this member for Point Grey the so-called "real jobs" argument that we get from Surrey and other members from the back bench in this Legislature: the idea that only certain manufacturing jobs or the like are real jobs and that government jobs aren't real jobs. Or, mister person in the education industry, that jobs at universities aren't real jobs. It's pretty disgusting to get that kind of know-nothing argument from a bird that has spent some time in the colleges of this country and the United States. It's simply a know-nothing kind of approach intended to appeal to rednecks who have some doubts about education and the potential that education could create, applied well.

Look, I was in Massachusetts last summer, and I was very impressed by the state of Massachusetts. I was impressed by their colleges, their universities. We all know the prominent ones - the Massachusetts Institute of Technology, Harvard - but there are countless others in numerous fields. The reality is that education is the biggest "industry" in the state. Education is the industry in Massachusetts. You check the numbers out and you'll find that the economy of Massachusetts has been moving ahead by leaps and bounds.

I suppose the member for Vancouver-Point Grey would say that despite all that increase in employment, despite the good state . . . . They've actually been able to cut taxes in Massachusetts, their economy is so good. I suppose the member from Point Grey would say: "Ah, but they're not real jobs." The people who don't have real jobs are the unemployed in British Columbia, professor. They're the ones who don't have real jobs. The people who are on welfare are the ones who don't have real jobs. I think that can only apply in that area, and that kind of view of the world is just a little sick.

Then the member for Vancouver-Point Grey gets up and says: "Well, what do you mean we should have our own lawyers in Washington, D.C.? Where do you think we should have our lobbyists from the B.C. government? What do you mean we should have PR people who represent B.C.'s interests?" He says: "Why, there's only one address when it comes to these questions, and that's in Ottawa." Well, what does that tell us about your job description? If there's only one address and it's in Ottawa, then obviously you have no role to play at all on that basis. That's the argument you're making.

Then, when we think about Ottawa these days, the member for Vancouver-Point Grey is saying: "It's all in Ottawa." He can see the disaster coming forth. We haven't been players in terms of dealing with that monstrous problem in Washington, D.C., and the countervail. We simply haven't been players in the whole exercise, and he's already pointing out a month or two ahead of the disaster: "The address is Ottawa, the address is Ottawa. It isn't here at all."

Well, who is there in Ottawa, Mr. Member for Vancouver Point Grey? We have a Prime Minister who has more limited credibility now than Pierre had in his last months. There are terrible credibility problems in terms of the Prime Minister himself, and the minister responsible for trade, Mr. Kelleher, is sent touring around the globe. He isn't there dealing with these critical problems; he's out touring. He's always been considered a junior member relative to the others who have got in trouble, like Mr. Sinclair, the minister responsible for industry. There are not the players we need in Ottawa in dealing with this monstrous problem that we face in the next few months in British Columbia in terms of the countervail. There are not the players in British Columbia in terms of dealing with the monstrous problem that we face that could create a whole new depression in British Columbia.

What we've got here in terms of these kinds of empty-headed comments from the member for Vancouver-Point Grey is the sort of stuff one would get from I don't know what. I think we've got a problem in terms of having an educated fool on our hands. It's something like that. Some people just spend too long in these institutions without developing the kind of common sense that's necessary. I think that's really what's happened to the member for Vancouver-Point Grey. We don't get any solid common sense out of the member for Vancouver-Point Grey on these critical issues.

He came back just a few weeks ago talking about a trade war and talking about ammunition against the Americans -talking like Rambo, as if a country with 10 percent of the population of the United States could win in a trade war with the United States. The member for Vancouver-Point Grey was little more than Rambo with a popgun, trying to deal with these questions, suggesting that if we didn't send our wine from the Okanagan to the United States, then they would hightail it and run away in terms of those kinds of threats. Clearly the member for Vancouver-Point Grey has lost all sense of proportion in terms of dealing with issues like this, and the material we got from him today confirms that indeed.

HON. MR. McGEER: Just a few comments on the member's comments on my comments on his comments. Mr. Speaker, the only academic embarrassment we had in British Columbia was when the member opposite brought Gaffney up here with his economic policy institute, who embarrassed the University of Victoria and the academic community.

[3:30]

Do any of you people remember when Gaffney came along? Yes, sir, I can remember that clearly. I had forgotten about it until the member reminded me of those days when we had all of these weirdo resource policies coming from his economic guru, Gaffney. I don't know where he found Gaffney and I don't know where Gaffney went. He sort of appeared out of the mist somewhere in the U.S. south and then disappeared again.

However, what happens - and maybe Gaffney was the one who originally began to educate the member opposite, because he didn't worry about the profits of the pulp industry when he was the minister, I can tell you that. But it is very nice occasionally to have the members opposite slumping into these revolutionary free enterprise ideas like profit. Well, I think that nothing could be better than to have a healthy profit in the pulp industry, and I am sure that investors

[ Page 8619 ]

will be rushing over to Finland on the strength of the member opposite's recommendation, because this is where the profits obviously will be.

One of the great problems that our forest industry has experienced is the extensive retooling of the industry right at the time of very heavy inflation, and just with the onset of a worldwide recession. There has been a slump in almost all commodity markets around the world. But despite that slump and despite the international competitiveness, British Columbia never cut and sold more timber than last year. There was never a time when more money came to British Columbia than last year as a result of its forest products industry and its pulp and paper.

Some firms in British Columbia, having extensively retooled on the basis of debt capital - not equity capital, debt capital - are faced with paying that off and paying it off at very high interest rates. It has eaten into the profitability, but certainly 1 am not going to comment on the kinds of canards raised by the member opposite, quoting remarks that I never made to anybody. So why would I discuss that? You go ahead, Mr. Member, with your imaginary quotes, but don't expect me to grace them by recognition. I just never said anything of the kind.

Now, Mr. Chairman, returning to how we promote trade worldwide, politics is one thing. You deal with that through your national government and through your embassies worldwide. That's the appropriate face that we present politically to any government in the world. When it comes to promoting trade, which is private sector to private sector, we establish offices and contacts wherever possible through the trading section of our embassy. This year we will be opening six international offices: Tokyo; Seoul, Korea; Hong Kong; San Francisco; Los Angeles; and Dusseldorf, Germany. Four of these locations will be within the embassies themselves where we will avail ourselves of the facilities, the trade facilities, of the national government for reasons of economy as well as for reasons of gaining leverage for the amount of money that we will spend.

In other locations we will open our own independent office, but these stations are there as services to our private sector in establishing business contacts. This is what our business visitors program at Expo is all about. Thousands and thousands of business visitors are coming to British Columbia this summer. They are extremely high-level people. We meet them every day, and it is through these people that we hope to extend and develop commercial contacts.

So I don't think one should confuse in any way the commercial enterprise side, which is private sector to private sector, with the political lobbying side, which is government to government through the diplomatic channels. And you say: "Who is there in Ottawa?" I have no hesitation in saying I was extremely proud of the Prime Minister and the way he dealt with the shakes and shingles issue. I was extremely proud of our Minister of External Affairs, Joe Clark, and the way he has dealt with it. I wish I could say the same for some of the other members in the House of Commons in Ottawa.

MR. NICOLSON: One of the duties of this minister which has carried over from his previous portfolio is that for the areas of communications, science, technology and any wild and crazy ideas he might have from time to time, like tunnels to Vancouver Island and other things. I heard the minister quote a figure on the rate of growth of science-

related industries here in British Columbia - and he immediately takes credit. He talks about the payback. Yet I have in front of me press releases which were marked "Rush" back on May 29, 1983. Here's a press release about the discovery enterprise program - "a place for B.C. in the age of technology" - announcing the new program of support for innovative companies and individuals. and new opportunities.

Of course, part of that is the area of discovery parks. We've been trying to contact one of the people in charge of discovery parks here in British Columbia, and he seems to be out of the office quite a bit lately. I don't know, but I think he might be a little bit like the Maytag repairman: he's waiting for these industries to come to British Columbia to apply for occupation of some of these discovery parks. It is a very nice sinecure, no doubt, but it is one of the major disappointments and one of the areas . . . . It’s a disappointment to me, as I am sure it must be to the minister.

For instance, 1 read last year's president's report from Simon Fraser University, and in it I was amazed to find what appeared to be the fact that the only permanent tenant of this Simon Fraser University discovery park was Microtel. It's pretty safe to say that Microtel would probably have located in some part of the lower mainland whether or not the discovery park site was there. Similar inquiries to the other campuses indicate that there are a few old army huts assigned to some work being done in this area at the University of Victoria. The University of British Columbia has been a little bit more successful in attracting activity.

You know, there really is a lot of activity going on in British Columbia~ there are a lot of things about which we could be very proud. But these are things which government cannot take any pride in any more than any other British Columbian. We have one of the best software companies in the whole microcomputer industry, the Basic Four software group, based in Vancouver and, I think, started by a few University of British Columbia professors and others. Their ACCPAC software - or IUS software, as it's marketed in the United States - is probably the standard in terms of accounting software for the IBM PC and clone microcomputer. We have other small groups, such as GETC Software and others. But what has been the record of this government? I don't think anything symbolizes this government better in terms of its approach toward technology, modem communications and the development of computers than the B.C. Systems Corporation, and look at that embarrassment.

Mr. Chairman, what we should really do is modernize. I'm going to be leaving this Legislature sometime in the next couple of years, and what we should do is send a signal to the world that we've modernized. We should turn this place into a museum. We should kick everybody out of that B.C. Systems Corporation and break it down into smaller units, as has in fact happened. We should probably put the Legislature over there; it's a fine building - very flexible, very modem - and might be a much more fitting place for legislation for the next century. I don't know what other use we could put it to. The great plans, the big plans. You were going to put in the latest processors. They were going to be co-processing, 16 units going side by side simultaneously. So far they've only hooked up two of them. And as I predicted back then, work has of course been broken down into smaller units because of the improved minicomputers and microcomputers, and the various ministries have undertaken these things.

[ Page 8620 ]

What this government did to the software companies in this province - and also to some of the small computer companies - when you made that grand move toward the B.C. Systems Corporation was to set back software development, set back hardware development. They set that area of technological development in British Columbia back a great distance. When everybody else was running in one direction, they persisted in putting their heads down and burrowing through the crowd, much to our disappointment. That building out there cost, I think, $43 million; a $43 million white elephant, as it has been described in B.C. Business magazine. We do have small, independent companies that are making big waves in the world in terms of software development, but it's more in spite of than because of the efforts of this government.

I almost couldn't believe what was appearing to be the case. I wrote to Dr. William Saywell, and he thanked me for my reply to his letter that accompanied his report on Simon Fraser University, which I thought was an excellent report. In that letter I asked: "Am I to understand that Microtel is to date the only tenant currently present in your Discovery Park?" And he said: "In reply to your question, yes. Microtel is to date the only tenant currently present in the SFU Discovery Park." That is a really big payoff.

[Mr. Rogers in the chair.]

When we look at all of the . . . . This used to be a glossy brochure, Mr. Chairman; now the gloss has gone and it has the patina of something that has been photocopied. I think the shine has also gone off any kind of an illusion about a progressive science and technology policy in this province. I'll accept your figure that we're growing at 20 percent per year, but if you drive down around the Seattle area and look at what's going on down there, and if you compare it with what's happening up here - we're both in the Pacific Northwest - we are missing the boat. If we're growing 20 percent, they must be growing 60 percent, because it is possible to have large growth in these areas.

[3:45]

What has happened recently? What has the minister done about the recently imposed duties on computer parts? If you want to do something, put a duty on computers, on finished product. But what you're doing, if you stand by and support the federal government in its actions, if this is the way you want to fight the war . . . . Look at what has happened. We actually do manufacture and assemble computers in Vancouver in a fairly substantial way. Many people are employed doing this. But it's done with parts. These things that have been assembled from parts are going to be in competition with finished product that will come in at very low duties or no duties at all. I don't hear the minister crying from the rooftops about that particular situation.

I don't know when he last visited one of these little production units, but they exist all over the lower mainland: in Richmond, Burnaby, Vancouver, North Vancouver. There are 6, 8, 12 employees. That's how you build jobs: 6, 8, 12 at a time. You don't build jobs with a big, fancy program and say we're going to bring in thousands and thousands of people. You build jobs 6 at a time, 12 at a time, 20 at a time. If it sounds too darned tough to do it that way, too complicated, then this government should get out of the way and let somebody do it who's willing to do it.

The situation in terms of B.C. Telephone. We have in this province, under this minister, taken a hands-off attitude toward B.C. Telephone. The minister has often told us that he wants to talk to the organ grinder, not the monkey. If it's the monkey, I want to tell the minister that it appears that the monkey has allowed B.C. Tel to spend millions of dollars in investment in the last few years, transferring that cost onto the ratepayers, and now B.C. Tel has decided to abandon investments that were made as recently as 1980. We have a very classic case in Cranbrook, where they allowed a rate hike in 1982 in order to pay in part for such things as building a new facility in Cranbrook, which actually eliminated a lot of jobs in other areas. Having built that, now they're trying to abandon that particular place. Again, the monkey allows them to do this, Mr. Minister - that's the CRTC, and it's your appellation, not mine, to call the CRTC the monkey. I want to tell you that that monkey is very active and busy, and it's not always in the best interests of people here in British Columbia.

If the official voice of British Columbia in communications does not speak out, then what's going to happen? What we have in this province in communications is a lot of people concerned about the threat of local measured service. We have a lot of people concerned that there is going to be a transfer of the admitted cross-subsidy which has traditionally been in place where long-distance revenues have been used to offset the cost of local service. It's a battle people thought was fought and won probably almost 50 years ago. When decisions were made to regulate telephones, telephone companies accepted the responsibility to serve areas that might not have been economic, some of the rural areas. Some of the battles were most intense on the prairies, but it was also a significant battle here in British Columbia. We have had regulated telephones and we have had this type of cross subsidy, but today there are new moves afoot and we really have no one to speak out. Certainly I have filed interventions and letters with the CRTC over the past few years, and many concerned British Columbians have done so. One senior citizen spends all of her time - she travels on buses - trying to inform seniors, and she has done a good job of informing seniors about the dangers of things like local measured service.

I would like to ask the minister, now that he's in a new portfolio: is there any change in his thinking in terms of that aspect of the old portfolio pertaining to really taking up some of the challenge of fighting for the citizens of British Columbia in maintaining reasonable, affordable telephone service? And I want to ask the minister what he will do to try to enhance the role of people who are engaged in high-technology industry here in British Columbia - the small ones, not just the big ones.

HON. MR. McGEER: I had a deja-vu experience momentarily here. The overall record of our discovery parks, which came on stream coincident with the worldwide recession . . . .

Interjection.

HON. MR. McGEER: I'm not offering excuses.

In terms of research parks associated with universities, we're now eleventh in size in the world, which is not bad considering that those ahead of us were all in business a long

[ Page 8621 ]

time before we were. I think the progress has been substantial, though I might have hoped for even more than we've been able to achieve so far.

In our multi-tenant facility at the discovery parks location in Burnaby, specifically dedicated to small companies, there are presently 44 new high-technology companies. The success rate has been over 95 percent in terms of survival of those businesses, and the average from U.S. labour statistics of survival of small businesses is roughly 15 percent for three year survival. So the record of these businesses is truly remarkable, and I would challenge anybody in the world to find a higher success rate of small businesses than has taken place in our discovery parks location in Burnaby. I would commend all members opposite to go through that. They'll arrange a visit for you any time that you would like to go individually or as a group. It's something I think all members of the House should see.

Now with respect to the discovery park at Simon Fraser University, Microtel Pacific is the only tenant to date at that location. It's been extraordinarily valuable, both for Simon Fraser University and for Microtel Pacific, and I would say of all of the interactions that have taken place between academia and industry, this has been the most productive for both sides. As a consequence, you're going to see some major developments at that park which will be extremely exciting in the not-too-distant future.

With respect to the one at the University of British Columbia, just on Friday I held a press conference to announce that the federal government has finally given clearance to sell interferon and there will be the building of an interferon plant at that campus, which will be a multipurpose facility to produce not just interferon but a variety of other lymphokines and new products that we hope will be discovered from the biomedical institute, which itself will break ground in about a month. So now we have high-level scientific investigation in the medical field related to entry into the commercial business. The interferon market worldwide is now estimated to be of the order of $300 million a year, but that in my view is a very small estimate of what it will turn out to be. It will be much, much larger than that, as the economists begin to appreciate the full spectrum of diseases that will be treatable using this new agent.

Since it's not my portfolio, I can't go into the B.C. Systems Corporation. I think there's little question that it was overbuilt. It's an in-house activity and some overestimates were made of the in-house demand, but you don't want to build your software industry on attempting to sell to government, because the success of the software industry, which has been quite substantial in British Columbia with about 150 firms, has been largely based on developing new software systems for broader markets than just the British Columbia government.

The biggest problem that we have encountered in . . . .

Interjection.

HON. MR. McGEER: Well, it's not my portfolio, and I don't want to be called up by the . . . . I'd be happy to debate outside, but after all, the Legislature has got to stick to the votes in question. Otherwise the Chairman . . . .

MR. CHAIRMAN: Please do.

HON. MR. McGEER: You see, already we've awakened the Chairman to ask for some relevance in debate.

MR. CHAIRMAN: I really wish you hadn't done that, but now that you have done it, I'd ask you to stay in order.

Interjection.

HON. MR. McGEER: You've got ministers - the Minister of Education, the Minister of Finance.

Mr. Chairman, getting back to my estimates, the greatest problem that we have faced in getting commercial investigative facilities - I'm talking about scientific industries and providing them with facilities at the discovery parks - is that first of all mortgage money virtually disappeared in the late 1970s and early 1980s, so that people couldn't get borrowed money for anything. Then as mortgage money . . . .

Interjection.

HON. MR. McGEER: Well, anyway, as the mortgage market began to reappear . . . .

MR. CHAIRMAN: Perhaps if you would address the Chair, this whole process would be much shorter.

HON. MR. McGEER: Certainly, Mr. Chairman. When mortgage money began to reappear, it became very difficult to find mortgage money that would go into scientific buildings, the reason being that lending institutions in Canada, financial institutions across the country, have had no experience with this area and therefore they are very nervous about supplying mortgage money. For a law office it's easy, but for a research laboratory it is not the same thing at all.

MR. NICOLSON: B.C. Systems got a mortgage.

HON. MR. McGEER: That's right, they did.

MR. WILLIAMS: 16.5 percent until the year 2000.

HON. MR. McGEER: In any event, that's what the private sector faces. The B.C. Systems Corporation, not being in the private sector, may have had special deals on mortgage money and I won't go into that.

The communications policy in our province, Mr. Member, has not changed. It is summarized in four words: open skies, free competition. We did have a meeting of communications ministers in Montreal, and as a matter of fact a second one is going on in Vancouver today, and were I not appearing before you with the estimates, I would be at that meeting. The communications ministers have developed as a policy, and this goes right across the country, that there shall be universal access at affordable rates for every citizen to the basic communications system of the country. You can take it for granted that policies nationally and provincially will adhere to that principle.

We are, however, undergoing a major revolution in the equipment that is available. With great versatility, the world is in the process now of throwing out the old stroud switches and introducing new sophisticated digital switches hooked together by fiber optic cable. As the switches and the phones get heaved out and new and better equipment introduced,

[ Page 8622 ]

attempts to clamp the system into the past based on rules and regulations drawn up by lawyers who had no relationship with the technology, no need to know about it at all, are clearly not going to apply today and especially tomorrow.

So the purpose of our having open skies and free competition is merely that we will encourage the introduction of new technology into British Columbia because it always brings benefits to the consumers, and by allowing competition, that ensures that the best will become available.

I might say that not all governments in Canada share such objectives, particularly the province of Manitoba. I won't go into depth as to the policies there and the reasons for them; but we remain committed to promoting advances in technology rather than inhibiting them. But we certainly will subscribe to the principle of universal access at affordable prices.

[4:00]

MR. NICOLSON: Well, I am just amazed by that sweeping statement that these changes in technology, particularly in the telephone system, always bring benefits to the consumers.

A question: has the minister not ever tried to make a phone call, maybe on a Sunday afternoon or evening, and bill it to his billing number and had the message: "I am sorry, but all of our circuits are now in use"? How can they all be in use? How can all of those channels on the optical fibers, how can all of those microwave channels on a Sunday afternoon possibly be as busy as they are during the week in which commerce is going, in which computers are linked up and in use? I mean, come on now, that is ridiculous.

The other question is: should we not question sometimes the motivation of B.C. Tel, which is a regulated company? It really doesn't matter if B.C. Tel makes profits, except to the very small minority which are shareholders of B.C. Tel. The majority shareholder of B.C. Tel really doesn't care because it owns other companies, like big parts of Microtel, When those companies sell new equipment, it is very much in their interest to sell that equipment, and in the unregulated part of the conglomerate which is, through Anglo-Canadian, part of General Telephone and Electronics of New York.

So should we not be looking at those things? Because is it not passing strange that when new technology was introduced into the Cranbrook office as recently as 1982, new equipment, the thing that has done away with the electromagnetic switches and everything, is it not passing strange that they should be in such a rush to replace that technology and also displace many more British Columbians from their jobs?

MR. DAVIS: I have a few general comments to the Minister of International Trade, Science and Investment, and then a question or two.

I regard myself essentially as a free enterpriser and am certainly for free or freer trade. Their ideals assume genuine competition. The real world in which we live, however, contains a number of monopolies, large corporations, indeed whole governments, which at times secure a monopoly and are able to exploit their advantage in international as well as internal or national trade. We have to deal with these realities in any discussion of trade negotiations. The ideal is the open blue sky, the level playing field, the all-out competition between firms which don't have any particular advantage over other firms except that they're more efficient than their competitors.

Let's face it, there have been no international negotiations in the western world or, indeed, the Asian and America worlds which have included free trade in agriculture or freer trade in agriculture, mainly because the producers in the main are small. They have been authorized to gang up together and form, for example, marketing boards, organizations which protect the producer even in western Europe. I shouldn't say "even"; certainly in western Europe there has not been much in the direction of freer trade or easier trading relationships internationally in the area of agriculture. I think if we're being practical, we're not talking about much or many changes in trading relationships between Canada and the rest of the world, or specifically Canada and the United States, which are in the area of agriculture.

[Mr. Ree in the chair.]

We're not going to see many, and perhaps no, changes in areas where large monopolies, particularly large government monopolies, trade any differently in the future than they have in the past - the power companies, the pipeline companies, the telephone companies, and so on. They are regulated by their own local or national governments, and trading to the extent that it occurs will be as a result of hearings through tribunals which basically are aimed at protecting the consumer in the country of origin. We're not going to see free trade or indeed any freer trade in the area of large monopolies.

Canada rarely has attempted to sell as a government abroad in that area, government sales. In state trading there isn't going to be freer trade. Canadians have attempted in the past to sell nuclear power plants at a profit and failed miserably in the process. Canadians have endeavoured to sell aircraft - at least aircraft on a large scale, military-type aircraft and large commercial aircraft - and been heavily subsidized in order to sponsor "development technology" in Canada and have failed miserably. The main reason for that is our small population, our small numbers. Our product in both instances - nuclear power plants and aircraft - has been excellent, but we haven't been able to sell in numbers and haven't been able to recover our costs. So the field is narrower. The opportunities for freer trade are fewer than those who take the blanket approach or a wide-open approach assume.

We in this country are more protectionist than we like to admit. The MacDonald Commission, which reported last year, said that some 2 1/2 percent of the output of our industry was subsidized or, to put it another way, subsidies in Canada accounted for about 2 1/2 percent of the gross value of production of those industries. The comparable figure in the United States was about one-fifth of that, or half a percent, nearly all of that being protection. Subsidies to industry - and I'm not talking about tax subsidies; I'm talking about direct subsidies such as those to shipbuilding and so on - are more effective in Canada than they are in the States. They are also more heavily localized to central Canada.

In eliminating some of the protection in this country, we will be exposing industry largely in other parts of Canada than British Columbia, principally Ontario and Quebec. I think the official opposition would probably also take the view that that isn't a bad thing, at least as far as consumers in this province are concerned.

[ Page 8623 ]

1 think the opposition would also concede that in some industries which have flourished in this province the economies of scale are important, that to be a successful producer of newsprint, you have to have a large mill with a large forest base. Similarly with pulp, similarly with some of the minerals, and that scale is inevitable. Jack Munro and others say -and I believe them - that in some of those industries, certainly those in which we have been successful in exporting large volumes of product, we are among the most efficient in the world. We've had to be, partly because of our distance from markets, partly because we've had to pay our people more. They've had every reason to expect higher wages, but they do live at a distance from suppliers of consumer goods and so on, and because of our higher productivity we have been able to pay better wages and enjoy higher standards of living.

But those large-scale industries now seem to be increasingly exposed to protectionist moves in the United States. This is not a novel situation, but it has been nearly 50 years since the U.S. was as protectionist-minded as it appears to be currently. The United States has a big commodity trade deficit with the rest of the world. It imports more visible goods than it sells abroad. It is therefore impacted by, as it calls it, low-priced labour from abroad. Employment in the United States is increasingly an issue. The United States does not talk about its invisible balance of trade - namely, trade in tourists, investment dollars and so on. One of the worldwide problems is that money is fleeing from many parts of the world and going to the United States to find a safe haven. That creates an artificially high American dollar. This foreign currency is bidding up the price of the U.S. dollar. The price of American-produced goods - automobiles, transistors, whatever - rises on world markets. Americans are less competitive, and the politicians - and one can't blame them; we here who have to be elected understand what's happening - want to protect employment in their own areas. They are essentially responding to those natural pressures from their own producers in their home constituencies.

The producers of forest products in Washington and Oregon, for example, want to see forest products from the rest of the world - and, as it happens, British Columbia is a big supplier nearby - cut back to protect their position. The natural political response, especially in an election year, is to raise barriers. The only tactic which I believe Canada and, I think, the provincial administration can reasonably take is to try to head that off not on an issue-by-issue or product-byproduct basis, but by endeavouring to develop as broad as possible an understanding with the United States on the principles of freer trade, or a more level playing-field and so on.

My main concern is that we here in Canada, and more specifically we here in British Columbia, will do a few things which will give the American protectionists some grounds -I'm not saying really compelling grounds to objective observers, but sufficient grounds to politicians really looking for an excuse - to establish quotas or prohibitive tariffs on our goods. I was concerned about our legislation last year which had to do with the establishment of special enterprise zones. I am concerned about us giving low power rates, admittedly for a limited term, to industry, low municipal tax rates, and other concessions which will be seen from the vantage point of Washington, D.C., especially by those who are looking for anything as an excuse to limit our competitive products, to curtail our trade . . . .

[4:15]

We cannot expect with our small population to produce everything economically. We will look after more of our service industry requirements certainly, and much of that will be done by small firms. But in the area of manufacturing, and particularly in the resource industries, we have scale, and we will have large corporations. We are inevitably going to have economics of scale, but we also need to have a good record in terms of keeping the playing-field as level as we can.

The area in which I have some concern, and mostly because I don't understand it, is the area of stumpage. Very few people in the industry understand it, and I doubt if many in this Legislature really understand what stumpage is all about. In British Columbia it appears to be a profits tax. I am using loose terminology, but it's a profits type of tax. Stumpage dues are high when the industry is very profitable. And when it's profitable, its American competitors are probably reasonably profitable and they're not too excited, but when the industry is not profitable, markets are difficult to obtain, profit margins are minimal, our stumpage rates are very low. The Americans have seized on this before, and they're likely to seize on it again.

I think we have to be concerned about appearances - the nature of our tax system, as well as subsidies in dealing with the Americans and others in this question of freer trade. I would like us to be able to prove - I hope we can prove -that our stumpage rates, the profit tax type of rate we charge, are a fair and equitable tax. I think it was proven to the satisfaction of the Americans a few years back, but whether the politicians in Washington, D.C., are prepared to be as objective as they were a couple of years ago remains to be seen. But in areas such as taxation we have to be careful, and I think we must be prepared to re-examine any of our government-instituted measures, be they taxation, subsidies or whatever, in order to make sure that that playing field is as level as possible in those commodities, goods and services where we trade with other countries.

Now basically I support the minister's position. I certainly agree that Canada, supported by the provinces, must be endeavouring to concentrate the U. S. attention on the broader field and the broader principles of trade. We can't deal with the Americans commodity by commodity, because we don't trade across the whole spectrum, and we certainly are more vulnerable than they are, in that our market is so much smaller than theirs is. Theirs is so much more important to our few exporters in this province. So I certainly wish the minister well, but I hope that he's prepared to take a good, hard look at, and perhaps defend - I hope he can defend -our stumpage system. I hope that we're granting subsidies particularly to mining and forest firms which we can defend in the context of our current trade negotiations.

HON. MR. McGEER: Mr. Chairman, with respect to our stumpage policies, I don't think we have the slightest risk on the merits of the case. The stumpage system that exists in British Columbia has been for some considerable time -certainly the 23 years I've been in the House, and as long before that as people can remember . . . . It was copied from the U.S. Forest Service. It even endured the NDP years, that resilient stumpage system. It's a tax and not a subsidy, and to start the idea, as has been done by the softwood lobby in the United States, that it's a subsidy is really in a way an insult to intelligence, that a tax somehow becomes a subsidy.

[ Page 8624 ]

Of course, what happened on the other side of the border in the days when the lumber industry looked much better than it is today in terms of profits, is that people bid for private timber and they bid the private timber price up. Now what we're being invited to do in Canada is to somehow put on additional taxes so that this will increase the costs of housing on both sides of the border, and at the same time make the stands of timber that are held in private hands more valuable. It inflates the cost of a standing tree.

I believe precisely the reverse - that what should be done in this situation as far as the United States is concerned is for them to find ways of deflating the cost of standing timber, because that's not related to production. That's just money in the hands of some private investor who has nothing to contribute in terms of production. All that's going to happen by yielding to these protectionist forces is to have the cost of housing go up and windfall profits come to those who have private stands of timber in the United States. I don't think that we should participate in that.

I don't think there is any place at all for negotiation, any place at all for changing the stumpage tax in British Columbia, which is what it is, but there is a lot of case to be made for the United States to find methods of deflating their high costs of timber, which have been artificially increased by a bidding system placing windfall profits in the hands of private owners, and at the same time decreasing . . . .

MR. WILLIAMS: A market system - shocking.

HON. MR. McGEER: Well, we do have a market system, but the proposal you see is to take that system away by preventing British Columbia from having its traditional market in the United States. That is taking the market system away. We have a market system, and the market system is working extremely well for the United States consumer. We should never even be in the position, as Jack Munro suggested, of pleading guilty to a crime we didn't commit and be willing to negotiate a system that requires no negotiation at all.

What is required here is methods to get costs of housing in the United States down for the benefit of Americans; and that's what our premium timber at an affordable price is doing.

Yes, we always have difficulties with those who would place impediments in the way of free trade. This is what GATT was all about: to try to get down the artificial barriers around the world. GATT was successful in improving our access to American markets - far more successful, I might say, than my former Liberal colleagues in Ottawa who talked about freer trade but had no intention at all . . . . You didn't talk about free trade; you talked about freer trade, because if you did that, you could postpone any action into the hereafter. Some of these people, like Mr. Axworthy, have been unmasked as rank protectionists. They should be sitting with the New Democratic Party members.

When you get the GATT round, reducing tariff barriers all around the world, as has been done - and there is now active discussion with respect to a new round of GATT negotiations - then everybody gains. As Ambassador Murphy said when he was addressing the Conference Board of Canada in Vancouver only about three weeks ago, with free trade there is a win-win situation. This is not a zero-sum game, where there is a little bit of trading off here for your exports against their imports. What free trade does is provide win-win, because it means the most efficient industries are the ones that have an opportunity to supply a broader market, and that way prices go down, production goes up, and we all gain.

In British Columbia and in Canada we have everything to gain by free trade. Agriculture, admittedly, is difficult. Some have suggested, because it is subsidized in every country in the world, that probably the safest thing to do is to get it right off the table altogether. I disagree with that, because I think that what one should attempt to do, however difficult it may be, is to find methods by which the agriculture industry can be made more efficient; again, for the overall benefit of all of us. The fact that it's difficult doesn't mean to say that it shouldn't be tried. Of course the members opposite - and I hear comments from the protectionist from Vancouver East - are all against any kind of trade development that would make industries more efficient. I don't share those views. I agree with Ambassador Murphy that even in agriculture we should attempt to find ways of improving trade relations and therefore possibly doing things like opening American markets to some of Canada's agricultural products. Now I know that that sounds radical and revolutionary, but this is the sort of thing that free trade is all about.

As when the auto pact was originally negotiated between Canada and the United States, if a phase-in is required you provide in your negotiated agreement - which will come back to this Legislature for ratification - for phase-in to permit industries to adjust, if they are hopelessly inefficient and in a non-competitive situation.

The goals should be very high. Maybe you won't reach every goal, but every step that is taken will be an improvement in our standard of living. The safeguards are built into the ratification process and into the system that was originally made part of the Canada-U.S. Auto Pact. Going on simultaneously is the worldwide discussion through GATT of reducing tariff barriers. Always what one hopes to do is to resist, in every trading nation in the world, moves that are counterproductive economically but expedient politically, to support this industry or that commodity.

It's all very well for people . . . . I condemn an article that Keith Spicer wrote in the Ottawa Citizen, saying we can't do this because you can't win a trade war, and there should be no response at all to the unilateral action taken by the United States, which was punitive and unjustified, against our shake and shingle industry. Of course you must respond. You must get a political message out that an important trading nation simply does not do that sort of thing to a neighbour, even though they think the industry is insignificant and it can be squashed like an ant. No, you can't win a trade war. Nobody wins a trade war, any more than anybody wins a military war; everybody loses. But what you must do is to say we are not prepared to be squashed like an ant. Our protections are to do the sort of unpleasant things that the national government did. I would condemn the necessity for doing that, but the necessity did exist. To ignore what the Americans did would simply be for us to be fools. Thank heavens our national government was prepared to take that step of saying: "You may not do that sort of thing without some response from Canada."

GATT is our second line of protection. Of course, what the Americans did would not qualify under GATT. They very carefully moved to something that was outside of the GATT negotiations, saying in their press release: "This won't affect

[ Page 8625 ]

American workers." So it was a neat attempt to take something, however damaging to British Columbia, because there was no prospect of GATT retaliation. But GATT is slow; if something looms its head in some other industry, the damage is done before GATT begins to act. It isn't the most secure safeguard or the most rapid response system in the world, but in my view, all small trading nations that are subjected to the jeopardy which obviously exists in British Columbia in an industry like the shake and shingle industry need to be mutually in touch with each other. If collective action is taken around the world against pick-off plays of the kind that happened in our shake and shingle industry, then we can have a considerable degree of security, which doesn't exist today.

When we're talking about the necessity of improving trade relations, of reducing barriers all over the world, this kind of retrogressive action should not even be part of our conversation. Unfortunately it is, and while one works for better trading relations around the world, 1 suppose it behooves one to keep in mind as well the necessity, in times of peril, to have a defensive trade system just like we have a defensive military system. Most regrettable, but there it is.

[4:30]

1 know from our days many years ago when championing free trade that the member for North Vancouver- Seymour (Mr. Davis) is one of the strongest and most progressive members in Canada on this particular subject. For those of us who fought these protectionist elements in Canada 20 years ago, it's a source of some satisfaction to know that the government of Canada has taken exactly the opposite view and that we can look forward to a higher standard of living as a result of those actions.

MR. LEA: In some ways, I think the minister is sort of taking a stroll through Bretton Woods blindfolded, because he doesn't seem to understand that it doesn't really matter very much what we do here. The United States is going to make their decision based on their own political needs, and right now their own political need is protectionism. Every senator, every congressman, is pandering to those needs, and what party has been the protectionist party over the years in the United States? The Republican Party. Now they've got the Democrats joining them, and they're going to make their decision regardless of the facts as we present them. In fact, they won't even let us present the facts at their own hearings because they don't want to hear them.

It seems to me that we'd better face the political reality that the States is in a protectionism mood. They're going to go for more and more protectionism regardless of a plea from Canada and regardless of whether we can in fact show them that we're clean. It seems to me we have another route that we should be going, and I think the member for North Vancouver suggested it. We have to clean up our own house. One of the areas we have to clean up is to take a look at the long-term tenures of the major forest companies in this province. If we don't start dealing with that, if we don't start taking some of those long-term tenures and giving some of that timber to the small, independent operators in this province who can do it more efficiently, then we're going to be facing this same question time and time again. When we talk about stumpages, I don't think we're going to get any money from the majors for ten years at least.

We're going down a slippery road. I will agree with the minister on a number of things. I believe we have to move to a free-trade position if we're going to survive. To go the other way is taking a long circuitous route to suicide; after awhile we'll find ourselves subsidizing every industry, and where are we going to get the money to do the subsidies? I guess we'll have to borrow it. We'll see the national debt go up and up and up. We'll see the provincial debt go up and up and up. That way, we're going down the suicidal route. It's like smoking; it just takes a little longer than slashing your wrists.

But Mr. Chairman, what do we have here? We have a province that has great internal problems in our own economy and in our forest industry. And what are they saying? They're saying we're going to reason with American senators and American congressmen who are facing in their home ridings pressure to bring around protectionism. We know what they're going to do. They're going to go for protectionism. They've got a history of doing it, so it shouldn't be any surprise to us. But if we don't get our own house in order and get the most efficient industry going that we can, we're in real trouble.

Does the minister know that in this province, to bring our forest industry up to scratch, to retool, to upgrade, the industry as a whole is looking at an aggregate bill of between $7 billion to $10 billion? That's what they need. They'll tell you if you ask them. They'll also tell you if you ask them that they have no cash on hand to spend on the retooling and the upgrading. They'll also tell you that with the cash flow they're getting - although sales haven't been bad the commodity price has been low - they can't save any money to do it. And if you ask them, they ~ 11 tell you that they can't borrow any money because they're already so debt-ridden that they haven't got the collateral to go out and borrow it. We have a crisis on our hands. Every day that this government and industry don't deal with that problem, we become another day more obsolescent. And every day we become more obsolescent, we become less competitive.

I haven't heard any minister of the Crown mention that we have that crisis in the forest industry. They talk about partners in enterprise. Shouldn't government be calling together industry and the trade union movement that works in that industry and sitting down and saying: "We have a real problem: we're becoming less competitive every day because the industry that we have cannot retool, cannot upgrade, cannot get higher productivity, because they have no cash nor any opportunity to get any cash." For us to be standing in this House hoping against hope that the Americans aren't going to become more protectionist is putting our head in the sand and pretending the world isn't there.

Then he applauds the federal government for bringing in protectionism to protest protectionism. I've never heard anything so ludicrous in all my life. You say it's wrong for you on the other side of the border to practise protectionism, and to show you how displeased we are we're going to put in protectionism. Even the moves that the federal government made hurt not only Canadian consumers but Canadian business people - immediately.

AN HON. MEMBER: We shot ourselves in the foot.

MR. LEA: We shot ourselves in the foot, exactly. I think we have to bring real pressure on the United States. I think we can bring real pressure where it counts. I think we do have to make an appeal to Canadians, that until the United States comes to its senses we ask our people, through patriotism, not to travel to the United States until they lift the tariffs on shakes and shingles. Who would it hurt? We spend over $4

[ Page 8626 ]

billion a year, Canadians, in the United States, and we spend a great proportion of that money . . . .

Interjections.

MR. CHAIRMAN: Order, please. The hon. member for Prince Rupert has the floor. Would the hon. member address his comments to the Chair?

MR. LEA: Yes, Mr. Chairman.

So what are we doing? Who are we going to hurt? Where is the large proportion of that $4 billion spent? It's spent in those northern states that have lobbied for protectionism. If we can hurt their tourist industry even more than what they get out of their shake and shingle industry, we will be bringing real pressure on them. Those governors would be down there seeing their President so quickly, saying: "Come on, let's not be stupid. Let's not shoot ourselves in the foot."

Interjection.

MR. LEA: Oh, it goes both ways, my friend. However, I'm going to tell you that when it comes to the exchange rate it works both ways. Does not protectionism work both ways? You mean to say we're going to keep applying more protectionism, hurting our own consumers more? Hurting our own business people more? I guess it's a matter of choice. At least if we ask Canadians to stay home, we'll be enhancing Canadian business people; we'll be enhancing our own economy. At least it wouldn't be forced; it would be a matter of choice for Canadians to do that.

Interjection.

MR. LEA: There is no good answer in the short term to try to deal with American protectionism. But in the long term let's get our own house in order. Let's make our forest industry as efficient as it can possibly be. That means we have to address the real problem. The real problem is that every day we're becoming more obsolescent and industry has no money to change that, and they're telling us that they have no opportunity in the foreseeable future to change that.

We have to deal with long-term tenure of the majors, because they are not efficient. All you have to do is go by a small logging operator and you'll see them all out there working. Go by MacMillan Bloedel at ten in the morning. You'll see 26 pickup trucks of supervisors meeting at the office, and there are another 26 with supervisors in them out in the bush. That's efficiency? It is not efficiency, and this government is not the government of free enterprise. It's a government of working with corporate monopolies by licence, and it happens in the liquor control board and the Motor Carrier Commission. For them and that minister to point the finger across at the opposition benches and say, "They're not for free enterprise and we are, " is ludicrous. Is there anybody in his right mind in this province who doesn't know that if you're a small fellow you can't compete with the Hotels Association, because the liquor control board hands out licences to set up monopolies to stop competition, and this government goes along with it?

AN HON. MEMBER: Nonsense!

MR. LEA: Nonsense? If you want to get rid of protectionism, you have to clean up your own house. That means that if somebody meets the fire regulations, the building code regulations, the city zoning regulations and the city licensing laws, they should be able to get a licence to sell liquor; and there shouldn't only be licences to sell liquor if you have 40 or 50 or 100 rooms and . . . . You're setting up a monopoly by licence. That's what they're doing, Mr. Chairman, and even the minister used to say that before he was one.

MR. CHAIRMAN: We are on the estimates of the Minister of International Trade.

MR. LEA: It's all the same thing. We're talking about setting up monopolies. We're talking about setting ourselves up so the United States can point the finger at us. I'm only pointing out a number of areas where we set monopolies up by licence. It happens with the Motor Carrier Commission. This government sets up more monopolies by licence than any government in Canada. We have more Crown corporations per capita than any place in Canada. They are the free enterprisers, Mr. Chairman?

I remember when I used to sit in cabinet and we'd get appeals to the Motor Carrier Commission.

HON. MR. VEITCH: Did you change anything?

MR. LEA: No. I should have, but didn't.

HON. MR. VEITCH: Why didn't you?

MR. LEA: Well, I'll tell you. At the time I was so stupid I didn't even know we should. And I'm saying that you're in exactly the same position now. You're so stupid, you don't know you should. However, I don't mind people making mistakes; it's when they never learn from them that I have some problem. Throughout our whole Canadian economy we set up monopolies by licence, from one end of this country to the other. If we're going to start talking about free trade -which I'm in favour of - then we'd better start talking about getting our own house in order. This government had better start talking about getting its own house in order. They're not making one move in that direction.

For the minister to get up and put forward the great benefits from free trade while he sits on the cabinet benches of an administration that probably does more to thwart free trade than any government in Canada is a joke. It's doublespeak. It's "Write something on the side of the barn and change it before the afternoon" - that's Animal Farm. The minister is sucking a little wind on this one because down deep I know he's a free-trader; however, down deep he likes being in cabinet and in government even more, and therefore won't make one move to change it. He talks big and acts weak. That's the story of this government: cheap rhetoric and little action, because they go along with it all.

[4:45]

In conclusion, I'd just like to say that a guy who has been in Social Credit for years just resigned from them three weeks ago and is going to be running for the Conservative Party. I said: "Why?" He said: "Because I've finally got it through my thick head that that government is not for the little people anymore." That's what he said, and it's true. They're in league with every big entity that they set up by licence and monopoly, and that's where they're going to stay until they're

[ Page 8627 ]

defeated. Only through defeat will that group learn the meaning of renewal. Only through defeat will that group learn the meaning of rejuvenation. Not through the arrogance of office, but through the humility of defeat - and Mr. Chairman, it's coming.

HON. MR. McGEER: Mr. Chairman, I don't support the policy of the Conservative member or his leader with respect to starting a tourist war with the United States. Nothing could be more foolish during our Expo year when millions of visitors are coming from Washington, Oregon and California to support our fair. We have no quarrel with the Americans or the American tourists. We have a quarrel with some powerful political figures in Washington, D.C.; that's all. I remember when that member, Mr. Chairman, was the Minister of Highways for British Columbia, and he said: "Yankee, go home." He didn't want yankee tourists here in British Columbia, because they crowded the highways. He never went on the highways. He hired helicopters to fly him over the top of it, at public expense. That was the record of that man when he was a minister.

He was against tourism, and not only is he against tourism, his leader is against tourism - a mayor, if you can believe it, of the city of Victoria, trying to discourage tourism. Can you imagine anything more appropriate than to have the leader of the Conservative Party in British Columbia opposing tourism as mayor of the city of Victoria? I tell you, that's the quality of leadership that we have with the Conservative Party here in British Columbia, and it fits that the former Minister of Highways, who said, "Yankee, go home, " when he was a minister here in British Columbia should join that movement. But we are not against tourism. We recognize it as one of our more important industries, and we are here to support it.

AN HON. MEMBER: You're here for protectionism.

HON. MR. McGEER: For protectionism, no.

MR. LEA: Then why are you backing the federal government on their protectionist measures?

HON. MR. McGEER: It's not a protectionist measure. It is a measure to defend industries of British Columbia and Canada from unilateral and unjustified attack.

Let me quote just from today's newspaper in which it was said that Canadian lumber exporters are about to get hammered as the price of the United States involvement in free trade talks. This comes from Les Santos, describing President Ronald Reagan. " . . . Santos said there is a widespread feeling that Prime Minister Brian Mulroney damaged his standing in Washington with his angry reaction to the imposition of U.S. tariffs . . . ...

MR. LEA: On a point of order, isn't it against the rules of the House for the Minister of International Trade to find out exactly what is going on in his portfolio by reading the Vancouver Sun? It's at least against the rules of the House.

MR. CHAIRMAN: Hon. member, the Chair is not aware of any such rule, and possibly the hon. member would refrain from such frivolous points of order. The minister continues with his copious notes.

HON. MR. McGEER: Mr. Chairman, I would be the last one to defend the accuracy of reports in the Vancouver Sun. But in this case, it is an international news story, so I think it might have more credibility than the usual fare that we get on politics in British Columbia.

The point that I was trying to make by reading from this article is simply this. Let me translate what it means that Prime Minister Mulroney did not improve his standing in Washington. It is: "Holy doodle, we thought we were going to get away with this, and this Canadian Prime Minister is tougher than we thought, because he was prepared to defend the British Columbia shake and shingle industry. Now we've got something else we hope we could pull off which is tariffs against softwood lumber from Canada, and it's ten times as big. Maybe this guy is going to get tough again." So what are they to do? I'm talking about the interviews given in Washington, D.C. They say: "He is weak internally; therefore we don't need to pay attention to him." Who are the ones who are attacking the Prime Minister of our country internally when we are trying to develop strength in our negotiations with Washington, D. C. ? It's Ed Broadbent of the New Democratic Party, the best friend American protectionists ever had. If we've got a problem in Canada, it's not with the Prime Minister; it's with the leader of the New Democratic Party nationally. The weak people here in British Columbia are not the government of the province of British Columbia; they're the opposition that will not dissociate themselves from their protectionist national leader who is undermining British Columbia's case against the shakes and shingles tariff in the United States.

Yes, that's what the circumstance is, and I can only say we aren't engaging in Canada in a trade war. What we are doing is we're telling the Americans that you simply cannot go out and pick off a Canadian industry of your choosing because it's done a little too well in your markets.

Let me put it in a fashion that even the New Democrats here might understand. Suppose somebody arbitrarily fired one union worker on the job. What would the union do? Would they defend their member by joining together, or would they not? If you can understand that a trade union might act to defend one of its members that was arbitrarily harmed, then you understand what the Prime Minister of Canada is trying to do for our shake and shingle industry: not to start a trade war, but to defend one industry. That's what you should be understanding. Perhaps if I put it to you as the arbitrary discharge of a union member from a job, you can get it through your heads that that's what's involved.

MR. NICOLSON: I'd still like to go back to some questions that the minister didn't answer. I'd like to ask him about B.C. Tel, and the minister's call for the abolition of the CRTC and the adoption of a communications free-for-all in this very important area. Is this the official policy of the government? That is one question. Does the minister think that a free-for-all on telephones will benefit the employment situation in British Columbia?

Jobs are being lost now by this free-for-all. There are 70 at risk right now in Cranbrook, as part of B.C. Tel's downsizing and centralizing. This downsizing results when profits have been kept at the 1980 levels in each year since. Certainly B.C. Tel has not experienced a recession or a depression such as the rest of British Columbia has had to endure. The jobs have been cut from 14, 406 in 1981 to 13, 079 in 1985, a loss of 1, 300. Over $I billion has been added to plant since 1980.

[ Page 8628 ]

Has the minister taken any steps to obtain regulatory jurisdiction over B.C. Tel for the province of British Columbia recently or at any time? Why does the minister favour a telephone company accountable only to its shareholders rather than to the community as a whole? Would the minister support the principle of public hearings in the Cranbrook situation before a decision is finalized to close that office? In other words, would he correspond with Marcel Masse? Would he correspond with the corresponding minister, calling for such hearings?

HON. MR. McGEER: Mr. Chairman, the last time in which I put forward a case for the Utilities Commission of British Columbia governing B.C. Tel was at the last meeting of Communications ministers. I had dinner last evening with the Communications ministers of Canada, who were here in British Columbia for a meeting today. Were it not for my estimates being up, I'd be there making the case again today.

We favour and I state publicly, as I've done many times privately jurisdiction over B.C. Tel going to our Utilities Commission. As long as jurisdiction is in another arena, we cannot tell that arena what to do; they are not under our control. It would be a counterproductive exercise for the provincial government to try to conduct public hearings on a matter where they have no jurisdiction. So I'm afraid that I can't accede to the member's request, for that obvious reason.

Naturally, one would like to see as many jobs in the telephone industry protected as possible. But as the members opposite have so frequently pointed out today, new technology must be accepted in order for British Columbia to remain competitive, even if it's in the matter of giving modem telecommunication services to all of the residents of the province. I don't know what more I can offer to the member than what I've said. But I can assure him that we will do everything we possibly can to obtain jurisdiction of B.C. Tel.

The member says that B.C. Tel is responsible only to the shareholders and not to the public. That's not true of any corporation which sells services to the public; it's responsible to the people for whom it is providing service. I think that our British Columbia Telephone Company does as commendable a job as any telephone company in Canada, particularly the ones on the Prairies that are government-owned.

MR. NICOLSON: The minister has put a few words in my mouth. I did, I guess, however, get an answer to the question which I asked. My question was: why does the minister favour a telephone company accountable only to its shareholders rather than to the community as a whole? That was something that I felt was a . . . . The minister has contradicted that, and I accept that contradiction.

It's very interesting, though, that the minister has spoken out about his position that he feels we should be able to regulate B.C. Tel. Certainly the official opposition feels that way. If the minister would bring a resolution into this House, if it would strengthen his hand, I'm sure that we could pass it unanimously. I just don't see enough of a fight. It must be a very nice, very polite kind of discussion that goes on. But we certainly don't see that much evidence, as the public, that we're fighting for this. I don't think we're fighting hard enough for it. I can't, for the life of me, understand why Ottawa would want to hold on to such a jurisdiction in British Columbia when, in most other provinces in Canada - or many other provinces - they don't have that jurisdiction and when they are not suitably equipped by their distance from the situation in B.C. to serve us best. I would say that even with a Social Credit government in power I think we would be better served if the regulation of British Columbia were in the hands of this province.

[5:00]

MR. ROSE: I'm a bit hesitant to get into this debate because I have a suspicion that I don't know very much about this free trade. I think most people don't either. We know what the effect of the retaliatory measures are, At least we have some sense of what they might be. But it seems to me that it's been sold to such an extent that anybody who has any serious questions about the matter at all is immediately branded as being some sort of a traitor. There are serious questions that we should be involved in. It seems to me too that if you're not branded as some sort of traitor, if you don't go full bore down the road with Brian on this whole matter, somehow you might even be dumb and you might even be in the pocket of Bob White and therefore you obviously couldn't be objective about this whole matter.

I know quite well how the minister feels about, for instance, open skies. He doesn't believe in protectionism, even of a Canadian broadcasting industry, judging from what I've heard of his comments before. He may deny that. He may say, "Well, look, it's not that I believe that there should be no protection for Canadian broadcasting, but I feel if somebody beams a signal into my backyard that I didn't ask for, I'm not committing a crime by picking it up with a dish." I think I quote the sense of what he had to say on previous occasions fairly accurately.

There are many questions having to do with this free trade that make me worried. Piled on top are the recent problems in shakes and shingles. I happen to come from and was brought up in that town of Mission. It affects lots of other communities too. I think it's a two-edged sword. I think it was a wrong move. I think it's going to hurt Americans as much as it does Canadians. We can huff and puff and say: "Look, you know, it's going to make shake and shingle roofing even down in the States uncompetitive." And of course competition is a good thing; open competition in the marketplace is what Americans believe in. If the shake splinters, suffer. One of the things we have in America and we're very proud of is the right to fail. I mean that's a tenet of the philosophy. But a lot of people are concerned about that. We're two, in many ways, alien cultures. I have American cousins - and that's not a pun having to do with the movie, either - but their whole ethic is totally different than our own. We're huddled along the border, a few of us, and we've developed our own answers to problems through cooperation. Things like medicare would be an example, and there are many others: pension plans, the national pension plan. We've done all kinds of things. They don't believe in that stuff. They believe that there should be entrepreneurial medicine. There should be competition in the marketplace, no matter what it is. I don't blame them for that. That's their culture. They like it that way; that's fine. That's the kind of thing that made them perhaps the strongest nation in the world - plus a few little other things, like having a lot of free land and the slave trade, and a lot of other things. You can't knock them for that. But everything has to be on the table, according to the Americans. So we're going to send our friend Reisman down there to meet with his counterpart - I think his name is Murphy; it may not be, but I think it is. So he's going down there with a

[ Page 8629 ]

different kind of baggage entirely. What we're going to end up with, I believe, if we end up with anything . . . . I don't believe we're going to end up with anything anyway, because the industry in which we had free trade was the one that was hit first - the very first one. Picked right off, as part of the package. Now there are people who will allege that it was a bargaining chip and in order to get a deal and to buy off old Packwood down there in Oregon we would have to give up something, even to get the talks started. Well, if we're going to have to give up something just to get the talks started, what in earth are we expected to give up to keep them going? That is a very interesting question to me. If we have a clean launch, do we have to give up medicare? Do we have to give up the Canada Pension Plan? Do we have to give up all kinds of, say, marketing boards to protect our primary producers? Do we have to change the stumpage rates of our forest industry? In short, do we have to become Americans in order to survive as Canadians? Because I don't think that will fly here.

We have heard from some groups over the last year, and I have asked them this question personally - the publishers, the printers. We had the printers over here last year, and they hosted us like many very generous lobby groups do. Interest groups is another way to describe them. The big printers in B.C. - I can name some of them but you know them as well as I do - said: "We can't do it now; yellow pages catalogues are printed outside our country."

We talked to the people in the marketing boards. I am not going to get into the agricultural debates, not too deeply, but I know, for instance out in Dewdney, there are lots of people who are members of the Egg Marketing Board. There are other members of the Turkey Marketing Board. There is a B.C. Vegetable Marketing Commission. We have got a lot of seasonally . . . . We are seasonally disadvantaged. Some people will say: "Look, they have as much right to protection and the survival of their industry as the College of Physicians to protect their members, or the Law Society or the Teachers' Federation or any other group."

But to the Americans, they are a closed shop union, and they hike the price up to consumers. Therefore they are bad. We know that in the United States - and I was part of the debate when the Natural Products Marketing Act went through in 1970, which was for the survival of various commodity groups within the provinces. We had a war not between countries then, but in terms of commodity groups such as chickens and eggs and turkeys and all that stuff. We had a war between provinces. We settled that through an arrangement in which each commodity group in each area, more or less, satisfied the demands of that area.

If this free trade comes through, we must realize that 17 major corporations, vertically integrated . . . . They are usually with feed companies. They've got feed companies. They've got turkey farms. They've got processing companies. They've got retail outlets. Some 17 corporations in the United States satisfy, or did then, the total market for turkeys in the U.S. If I were a punster, I would say that the talks so far are an example of a couple of turkeys getting together - Reagan and Mulroney - because I don't think anything is going to come of it. If I were a further bad punster, I would say the talks are probably going to lay an egg.

I would be willing to bet that by now our friend Mr. Mulroney wishes he'd never heard the word.

AN HON. MEMBER: Call it gobbledegook.

MR. ROSE: No, it isn't part of that. I can think of something perhaps.

[Mr. D'Arcy in the chair.]

What are we going to do if we are going to have a clean launch? Are we going to have any more Canadian content which in 15 years - because we had a third Canadian content on radio and television on our own Canadian stations, complete imports, a flood of dumped American stuff on our local radio programs and television programs . . . ? In order to protect ourselves we developed some content regulations. We also incidentally developed some recording stars, people like Anne Murray and others who have gone on to great things, and there are many more of them. 1 think you know of them from the recent awards.

Are we going to have a quota on Japanese cars? Or because we sell a lot of coal, are we going to let them flood in, over 70, 000 last year? So you see, there are very many, I think . . . .

HON. MR. KEMPF: You people over there keep buying them, so why not bring them in?

MR. ROSE: What I am saying is, if they want to come in, that's fine with me as long as they play by the same rules as the U.S. and Canadian automakers. Volvo does it. Volkswagen does it. Toyota does it in certain parts of the world, in Australia, because they have what they call sourcing. If you sell so many million cars, you buy an equal number of millions of dollars worth of parts made locally, and that is why we have Canadian jobs.

You take an unbridled importation of foreign cars - let's not single out the Japanese; they make very good cars. I never bought one of them because for me they haven't employed a Canadian worker other than auto salesmen, and when auto salesmen are not successfully selling autos, they’re all elected and sitting over there. I'm sorry; it is just the owners who are sitting over there, or were sitting over there.

Anyway, what I want to know is, what are we going to do about broadcasting and recording? That isn't necessarily a British Columbian interest, but what can the minister tell us about the various studies and things that have been undertaken to determine whether or not our agricultural industry might survive under a clean launch? Have you got their unqualified approval? Have you talked with them? The member for Dewdney (Hon. Mr. Pelton), a lot of his constituents who vote for him are members of marketing boards. The same with the member for Central Fraser Valley (Hon. Mr. Ritchie) and the member for Langley (Hon. Mr. McClelland). And there's the member for Shuswap-Revel stoke (Mr. Michael), who has raised his hand - I don't know whether he wants to be included or just wants to leave the room. If he wants to leave the room, I'm no longer a schoolteacher, so he can go if he likes.

Anyway, I think there are some very serious signals coming out. Anytime a nation of 23 million begins competing with and threatening a nation of 230 million, the 230 million become very protective. We can't win in a fight with them on those grounds. We've got a $20 billion surplus with them, I am told. I think that's the right answer.

As far as the direct questions are concerned, aside from his ideological approach to this whole thing, and aside from his recognition that, yes, we do have to compete on a world

[ Page 8630 ]

stage, what has the minister got to back up his enthusiasm for what's going on, other than the fact that if we don't do something about it, we're down the tube anyway?

HON. MR. McGEER: There are a variety of sectoral committees - and these are not government - that are advising Mr. Reisman with respect to each of the individual items that may come up in these free-trade discussions. Agriculture, as I've mentioned earlier, is one of the more difficult ones because there are enormous subsidies on both sides of the border. The Americans don't have clean hands in agriculture either. It doesn't mean that Canadian agriculturists are unable to export, as hog-farmers in Manitoba will tell you, and as even a former member of this House, Mr. Vander Zalm, who has had some experience with developing products, will tell you in respect of the U.S.

All of that will be part of a discussion. There will be sectoral advisory committees and, in addition, each province will develop its positions, which have been communicated. Ours has been communicated to Mr. Reisman. It does not behoove us to disclose publicly all of the details of the analyses of each of our industries. That's not a very intelligent way to negotiate. Nonetheless, from both the private sector and the public sector, in-depth position papers are being developed and will form part of our negotiation.

As these talks proceed - and I'm not like you; I believe that they will - there may or may not be an agreement concluded. If there is an agreement concluded, it will come back for ratification to this Legislature, so that we're in there before, during and after. It's been explained many times that it won't be easy, because there are so many protectionist devices that have been developed on each side of the border. Ambassador Murphy stated when he was here - and I concur in this - that when there have been improved trading relations between a large and small nation, there is no case in the history of the world in which the smaller nation has not been the largest gainer by that exchange.

If we only dealt with the United States, perhaps some of the remarks that have been raised by members opposite would have validity, but that isn't the case at all. British Columbia in particular, over the past 20 years, has developed much broader trading relations. The amount of our export that goes to the United States is substantially less. It used to be over two-thirds; it's now about 47 percent and going down.

MR. ROSE: But the market for cedar is going down even faster.

HON. MR. McGEER: Oh, no. Our exports are growing in terms of volume every year; 1985 was by far our best year, and 1986 will be even bigger.

We're obviously keen to develop markets in the Far East, to spread our markets around, and that's not just because tariffs have been raised against us in the United States. It's better for you to have diverse markets for any of your products in case demand in any one nation begins to decline. We have this position of spreading our exporting opportunities around the world, placing emphasis on those nations that offer us the best opportunity for growth, and it's definitely showing results.

[5:15]

[Mr. Ree in the chair.]

MS. SANFORD: The minister has just advised us about all of these various sectors that will be represented in advising our negotiator on the issue of free trade. It's interesting, because at the very moment that he was speaking about this, I happened to be reading a presentation from the B.C. Federation of Agriculture on free trade. I just want to read into the record, as a follow-up to the minister's comments, two paragraphs from this particular report. The B.C. Federation of Agriculture says, as follows, Mr. Chairman:

"The greatest fear often expressed by BCFA member organizations is that agriculture in the context of total Canada-U.S. trade will somehow be traded off to advantage other industries. Our fears are not relieved when we see that on the International Trade Advisory Committee, the senior private sector committee advising the federal government on trade, only two of its 40 members are connected with primary agriculture."

Mr. Chairman, as I understand it, one of the representatives is a representative from the Saskatchewan Wheat Pool, which hardly relates to very much that's happening in agriculture in this province. The other one, as I understand it, has some experience with agriculture and banking - the whole financial process rather than the primary industry as such.

Then the report goes on to say this, Mr. Chairman, and this is where I wanted to follow up the minister's comments:

"And we are unhappy with the fact that of a number of sectoral advisory groups on international trade intended to advise the ITAC, it is proposed that there be only one for agriculture, food and beverages. The large corporations controlling food and beverage processing, wholesaling and retailing do not have an a priori commitment to domestic agriculture; their and farmers' priorities are significantly different."

So, Mr. Chairman, it's quite clear that the agricultural community in this province feels that they are totally left out, in terms of any representation on international trade.

The report says, further: "We fear that if farmers are lumped in with food and beverage corporations, our voices may be drowned. We support the Canadian Federation of Agriculture in pressing for creation of a separate SAGIT for agriculture" - that is, the sectoral advisory committee for agriculture.

Mr. Chairman, this afternoon the minister has given us absolutely no assurance that this government is prepared to protect agriculture, to fight for the farmers in this province. Instead, the only thing that we have learned is that they continue to push and fight as hard as they can for free-trade negotiations to proceed. It's not good enough. We have not had any information about what kind of studies this government has done on the impact of free trade on agriculture. We have not had any assurances from the minister that they in fact have even considered agriculture in their representations to the federal government. He tells us: "Oh, we can't say what we've told the federal government, because that may jeopardize our position."

Well, I want him to know, Mr. Chairman, that the farmers of this province are very concerned about the issue. They are looking toward this government, looking toward this minister, looking toward the Minister of Agriculture and Food (Hon. Mr. Waterland), for some assurance that they're not going to be sold down the drain during these discussions

[ Page 8631 ]

toward free trade which the minister and his government have been promoting.

MR. MacWILLIAM: I thought I'd just jump in and put a few of my comments in.

Interjection.

MR. MacWILLIAM: I'll talk to you on Friday.

Mr. Chairman, I think the value of free trade is very much an article of faith for most people; in fact, even for most economists. The concept is not well defined. It's a concept that's largely hard to argue with because of the simple words "free" and "trade." They're kind of like buzzwords and boosterisms. But in terms of what it really entails, very few people, I would say, including our economists, have a good idea of what the term really implies.

I think that the pressure for free trade globally has come very much from the fact that the world's economy has become more and more dominated by the large multinational corporations. There's been a massive worldwide reorganization, I guess we could say, of these corporations, requiring the extraction of advantages from workers, from governments, and even pitting nations against other nations. I think what's happened is that governments have been pressured by these large multinationals to develop economic strategies, Mr. Chairman, that are compatible to the corporate thrust of the large multinational corporations.

I think the minister should recognize that the issue of importance is not primarily free trade. At least the issue of importance for this province, as well as for Canada as a whole, is not the issue of free trade, but rather what kind of economy we want in this province and in this country. What are we looking for in terms of long-range economic development? What steps do we have to take to strengthen and to diversify our economic base, to become more self-reliant, and to venture into those areas of international trade that we're truly competitive in?

I want, Mr. Chairman, to outline some of the arguments that are used by the proponents of free trade to make their case. One of the arguments is that because trade is important to Canada and British Columbia, then the more we have the better. That's a fairly simplistic argument. Another one is that Canadian tariffs maintain artificial income levels and increase consumer costs. A third argument is that a CanadaU.S. trade agreement is vital because of rising U.S. protectionism, an argument that has taken higher precedence in view of the latest problems we've had with the tariffs on shakes and shingles and the impending tariffs on the softwood industry - almost as if they were threatening us into dealing at the bargaining table. A fourth argument is that because the majority of goods cross the Canada-U.S. border with little or no tariff, then complete free trade is really not that big a step. I think about 85 percent of the goods that cross, cross without or with very minimal tariffs.

Now I want to look at a couple of the facts which pertain to this argument. Free trade involves not just the elimination of tariffs but also the elimination of numerous important non-tariff barriers. I think that's a fact that's often missed. When people hear us talking about free trade, they think we're only talking about the tariff that's applied at the border; but the argument goes much further. What might be on the bargaining table is the elimination of non-tariff barriers, such as quotas on imports, government domestic purchasing preferences, subsidies to encourage import substitution and agricultural incentives. The whole concept of marketing boards is thrown into question. Even the concept of Crown forests can be put on the bargaining table. So the push for free trade is really an attempt to remove much more than these non-tariff barriers.

In a recent Financial Post interview with a senior executive of a major U.S. firm, this executive was quoted in a discussion on free trade - and I'm sorry I don't have the date of the quote - with reference to his particular firm: "If there were free trade, there would be less investment in Canada. The company would seek to supply its present Canadian customers from its U. S. plants." Mr. Chairman, Patrick Lavelle, president of the Automotive Parts Manufacturers' Association, made, I think, an important point, which the minister missed when he was holding up Auto Pact as an example of free trade. He pointed out that those who favour free trade with the U.S. and use Auto Pact as an example forget that the pact includes specific safeguards without which there would be no automotive industry in Canada. Even with the CanadaU.S. Auto Pact there are certain safeguards built into that negotiated agreement that ensure that Canada gets a piece of the action, and without those safeguards there would be no automotive industry.

Let's take a look at some of the major economic consequences of free trade with the U.S. These are concerns that have been highlighted by numerous individuals. A possible decline in manufacturing and increased foreign ownership is one. A large increase in immediate unemployment, due to a shifting of industrial priorities, and a relocation of production outside Canada are others. Third is increased pressure on the remaining workers to make concessions in order to be " internationally competitive." Fourth is a reinforcement of Canada's tradition as a resource-extraction economy - i.e., we would continue to play the role of hewers of wood and drawers of water. Fifth is severe regional socio-economic readjustment as the economy is redirected toward a resource-based industry, rather than expanding and diversifying. Sixth is the crippling of our domestic agricultural industry through the possible elimination of restriction on agricultural imports, assistance to farmers and, as I mentioned before, the entire concept of marketing boards.

Rowan Lalonde, a member of the Canadian Dairy Commission, stated in an article in Harrowsmith in August 1982 that: "Free trade is only advocated when you can produce something cheaper than everybody else. Opening the doors to a flood of cheap imports would only allow other countries to unload their surpluses at such low prices that the . . . Canadian industry would be crippled and in some cases virtually wiped out." I think that sounds a note of caution in terms of what is on the negotiating table as it applies to our agriculture community.

A lot of questions remain to be answered. There are a lot of questions that this minister has not answered and has not indicated that they are even seriously considering. I guess we can even take it one step further and ask the question: how far do we go in this whole concept of free trade? How far does our union with the U.S. market go? Is it just the simple elimination of tariff barriers, or do we go the full route to a social-political union with the U.S.? It depends upon where we sit in that whole scenario of things.

In summary, Mr. Chairman, the note of caution from this side of the House is that free trade must be approached on a

[ Page 8632 ]

sectoral basis. We have to look industry by industry, sector by sector, at what happens to our economy when we enter into a free-trade agreement with the U.S. It has not been demonstrated by this minister or this government that much has been done in terms of studying the long-term implications of what will happen in such a free-trade agreement. We certainly haven't had any indication of the concerns that we have addressed . . . that my colleagues have addressed specifically to the agricultural industry. A lot of points have been made in terms of what can be the overall impact, and very few questions have been answered.

I think the caution we're trying to raise is to look at it on a sectoral basis. We certainly have to look at freer trade; there's no question about it. But we are simply not willing to accept the concept of carte blanche free trade without looking at what is going to happen to our critical industries in British Columbia.

[5:30]

MR. WILLIAMS: I wonder if the minister might respond to the comments of the members.

HON. MR. McGEER: Mr. Chairman, I'll respond this way: perhaps this will be an issue for an election in the not too distant future.

It's very clear that the members on that side of the House are not only against free trade, they are against even discussing free trade. It appears in every single speech of the members opposite - the fact that we can't even have any discussions with those Americans, they're so big and powerful. Well, they'll destroy this industry; they'll destroy that industry; they'll destroy the other industry; they'll displace workers here. I've never run into such a pusillanimous bunch of members in all my life. They're afraid of their shadows.

We don't feel that way on this side of the House. We believe that our industries in British Columbia wear long pants and compete with anybody. If you don't think so, go ahead and say so. Say that you're frightened of the Americans; say that you're frightened of free trade; say that you're frightened to give industries the opportunity to compete with foreign markets. That's what all of your speeches have been all about. If you don't want free trade, if you want protectionism, say so, and let's have an election on that issue.

MR. MacWILLIAM: I thought I had developed a reasonably rational argument in presenting some of the concerns that not only members on this side of the House but those within our financial community and within various sectors of our small business, agricultural and primary resource community had also expressed. I am expressing the concerns that have been relayed to us through discussions with members of the agricultural community as well as other sectors of the economy.

What we're saying is that we have to approach the whole concept of free trade in a rational manner. We have to guarantee that when we're putting something on the bargaining table we're not going to lose our shirts in the process. This member has not indicated that they have any studies to show that the jobs in the agricultural industry are not being put on the chopping-block as a result of the free-trade investigation. If you're so confident of the health of the agricultural community in the free-trade negotiations, then you must have some studies to back it up. If you've got some studies to back it up, Mr. Minister, I challenge you to table those studies in the House to allay the fears of the agricultural community throughout British Columbia - that their jobs are not in fact on the chopping-block. If you can demonstrate that those jobs are not on the chopping-block, then we'll be quiet. But until you do, we're going to raise those concerns time and time again.

MR. WILLIAMS: Well, Mr. Minister, there's your challenge. You say there's not a problem.

Interjection.

MR. WILLIAMS: No, no, your captain abandoned ship. You're not planning an election this month after all. He kept looking at that June envelope, and the window was gone. That's over. Sorry. That option's gone. You may be sorry about that, you may regret it, but it's gone, just as the captain is gone.

MR. CHAIRMAN: Order, please. On vote 49 please, hon. member.

MR. WILLIAMS: There's a challenge, Mr. Minister. If our agricultural industry is so safe, show us the reports that show it's safe. Where are the reports that show that the dairy industry is safe in this province under free trade? Where are the reports that show that the wine industry in this province is safe? Where are the reports that show that the poultry and egg industry in this province is safe? You tell us.

It's abundantly clear that in other jurisdictions the agriculture sector has been left alone, in the Common Market and elsewhere. So it's put up or shut up, and you're not putting up. We're not going to see any of those reports, because they're damaging to you and this administration. That's why you're not going to produce them. Well, produced too late - too little and too late. As the member for Comox (Ms. Sanford) says, who have we got at any of these bargaining tables representing people that understand this basic industry in British Columbia? They're simply not there.

I just wonder if any lessons have been learned over there from the exercises you've been involved in in recent years. Can you tell me, Mr. Minister? We got rid of the last guy because he was a monumental failure. He developed the whole northeast coalfields. That was the big thrust of the last decade. That was the big thrust of international capital in British Columbia: $3 billion in a coalfield that has created a disastrous black cloud over that little member from the East Kootenay - a black cloud that's going to knock him out for good. My question to the minister is: have you learned anything out of that exercise? Have you learned anything about how the Japanese bargain? Have you learned anything about how they manage supply? Have you learned anything about how they have affected the world coal price? Have you learned anything about how they have impacted oversupply to serve their interests and not the regional coal producers' interests? Have you learned anything at all?

Is it not now abundantly clear that some kind of common policy is necessary if we're to avoid the devastating layoffs and cutbacks in production that have taken place in the southeast part of the province? All stuff endorsed by the member from the southeast part of the province - all there in Hansard. But the question is: have you learned anything

[ Page 8633 ]

from the exercise? For our $3 billion investment in the northeast coalfields, which are looking more hopeless day after day, have you learned anything about how we should handle our international bargaining in the future? Do you really think we can carry on the way we are today, where individual coal companies are whipsawed off against one another? Whether it's Fording, Cominco, Canadian Pacific interests, northeast coal, Quintette, the Teck Corp., the other operators in the southeast of the province - they're all being whipsawed one against the other by the Japanese steel monopoly that controls the whole policy at the Japanese level. I wonder if the minister has ever looked at the structure of the ministry of international trade and investment in Japan, an incredibly sophisticated organization that involves the private sector, the public sector and the banks in how they plan their acquisitions around the world in terms of raw-materials supply. Has the minister learned anything about this exercise?

Clearly, what was desperately needed in terms of developing a coal strategy in British Columbia . . . .

Interjection.

MR. WILLIAMS: No. What was desperately needed was a coordinating agency involving government and the private sector. There's no way in the world that one company in British Columbia can deal with Japan Inc. and the huge steel monopoly of Japan, yet that's what we've attempted to do. They've been able to ratchet down price, ratchet down production volumes and so on. We've been the loser to the point where our own revenues, in terms of commodity pricing for coal and so on, are disappearing, and income to the province relative to investment simply isn't there. It's negative.

Now that it's all in place, now that we've spent hundreds of millions in infrastructure and new towns, now that we've learned how the Japanese bargain, I ask the minister: are there no lessons in all this? Is it not now abundantly clear that we need some common bargaining with the Japanese that involves all of these companies in British Columbia, and the provincial government and, I suggest, the national government, and maybe even going so far as to cooperate with other Commonwealth countries such as Australia? We're dealing with a giant, and we are but a midget in dealing with that giant. The issue is that we cannot afford to continue this way. We have now had a $3 billion lesson. My question to the minister is: has he learned from that lesson?

HON. MR. McGEER: Yes, Mr. Chairman, I've learned that exports of British Columbia coal have increased from 169.3 million in 1974 to 1.5 billion; that coal has grown more rapidly in terms of export sales and revenue to British Columbia than any other sector; that the coal industry has doubled in its exports since 1980; that it employs 5, 600 people directly; that we have put in an infrastructure to eight billion tonnes of coal, something like a 1, 000-year supply; and that the railroads are in place, the townsite is in place and the power structure is in place. The town is thriving. How many workers, Mr. Minister, are there now in northeast coal?

AN HON. MEMBER: We'll talk about that tomorrow.

HON. MR. McGEER: All right.

I'll get you accurate figures. Thousands of people are at work in an entirely new town in British Columbia, sitting on top of eight billion tonnes of coal, with a complete infrastructure in place to move that coal to markets around the world.

At the present time the world steel industry is running at about two-thirds of its capacity. If that steel industry increases its demand, there will not be enough coking coal available from all the mines in the world to supply the capacity for steel that exists in the world today. We're commanding premium prices for our northeast coal as a result of contracts that were negotiated by this government. That premium price of $95 a tonne is being paid by the Japanese, Mr. Chairman, despite the fact that world coal market prices have declined substantially, despite the fact that there is a surplus of coal, given the current steel production in the world. But make no mistake about it, steel production in the world will increase more rapidly than will coal-mines to supply that steel capacity. We are doing extremely well in terms of coal exports in British Columbia, and we're going to do better in the future. We are extremely advantageously poised as a result of the infrastructure and investment that has been put in place.

We've heard, Mr. Chairman, from that side of the House for years . . . . We heard Mr. Leggatt when he was here saying how bad northeast coal was, knocking it every single day. We've heard it from this member opposite. When he was the minister he was a total disaster in terms of resources. We've read about it every single day, or almost every day, in columns in the Vancouver Sun, but somehow these people have forgotten that a complete infrastructure has been put in place to supply a thousand years' supply of coal, when around the world there is insufficient coal supply to serve current steel mills if production begins to go into high gear. We have faced a recession worldwide which had dramatically reduced demand for steel. That's been going on ever since the OPEC crisis in 1979.

[5:45]

There will be a return, and in the not too distant future, of traditional steel production around the world. When that happens there will be pressure placed on coal-mines in British Columbia, in Australia - every supplier in the world -to provide the necessary coking coal for that increased steel production. That material is going to come from British Columbia. I want to see how red the faces are on that side of the House when world steel demand increases and you realize the wisdom of putting in place two systems in British Columbia: railroads, terminals, mines, to begin to supply that increased market. People over on that side of the House must have a vision that goes about this far and is about that broad.

MR. HANSON: Tunnel vision.

HON. MR. McGEER: Tunnel vision? It's not that wide and it doesn't go that far with you people opposite. You've got no vision at all. You're myopic looking backwards. I tell you, the economic witch doctors we have on the other side of the House, you can't believe them. People are going to be looking back 10 and 15 years from now, praising the wisdom of this government that was able to stand up to a jackboot opposition and an irresponsible press and bring an industrial future to British Columbia.

MR. WILLIAMS: I don't know why the minister couldn't have given a simpler answer than he gave. The

[ Page 8634 ]

question was, has he learned anything, and the answer is simply no. You haven't learned anything. After all those years with old Don Boy, you are starting to play the same game. My God, you haven't learned a thing. The member says we are advantageously poised in terms of future coal. Advantageously poised to fall into the hole; that's where we're advantageously poised. Come on!

You say we've got all that infrastructure there, and you brag about it. What you don't tell us is that we have to move three times the volume of coal out of the northeast than we presently do if it's ever to even break even. Don't shake your hand, Mr. Member from Point Grey, soon to be replaced by Ms. Marzari. Don't shake your head, because that's the reality - three times the volume.

You talk about the fact that the steel industry is going to boom. You talk about the future boom in the steel industry and how there won't be enough coal to serve it. The facts simply don't support your argument. What in fact is happening, even if there is increased steel demand - and the prospects do not look good at this stage in time - is that the technology has changed dramatically and the Japanese have changed substantially in terms of their mix of high and low-quality coals. So we have two things working against us.

Even if the steel industry is going to expand - and the prospects currently are not good in terms of that expansion -we face a decline in terms of demand as a result of the two new technologies the Japanese and others are using that are more efficient and do not require coal on the scale that was needed before. Beyond that, they've become more confident in terms of their mixing of low- and high-quality coals, and that has decreased the demand for quality coal as well.

So there are those realities out there, in terms of the international marketplace that you are supposed to be familiar with, that betray your argument. The realities simply don't support your argument at all.

I wonder if the minister could tell us about the recent meetings between our own coal industrialists and the representatives of the coal and steel industry in Japan, in Nagoya. Because what came out of those meetings, as I understand it from the international press, is that the contracts aren't going to be held to. They intend to move more and more to spot-pricing for their coal supplies; i.e. they won't accept high-priced coal from the northeast in the near future. We are cruising for a bruising; they are not going to stand by those contracts, and we face those kinds of problems.

So I wonder if the minister can tell us what he has learned out of the conferences in Nagoya, and what he has learned from Mr. Morrish of Fording Coal and other representatives of the B.C. coal industry in those discussions in Japan.

HON. MR. McGEER: Mr. Chairman, the Japanese will be honouring their coal contracts in the northeast and with British Columbia. I don't think there is any question about that. They have no intention of tearing up those contracts and throwing them away, notwithstanding the fact that coal prices, as in many commodities, have sagged on world markets. The current production of steel in the world is about a million tonnes, and there is capacity for more than that. Once demand goes up, coal demand will go up with it.

Now none of us can predict what the price of lumber, copper, lead, zinc, steel or coal is going to be, because commodity prices are determined by the forces of supply and demand. If you have a contract, that price holds until the contract is finished. When a new contract is signed, it is going to be based on whatever the world prices are for a commodity at that time. I would be a very foolish person to try and predict for you the price of copper, 2-by-4s, shakes and shingles or any of these commodities. But what I can tell you is that the capacity is there to supply coal, just as there is capacity to supply pulp and paper and plywood and shakes. It is a very weak economy that does not place itself in a position to supply markets when world demand is there. We're in extremely good shape in coal.

The New Democratic Party and others have predicted that the sky is falling in. I can't remember a day when the sky hasn't been falling in as far as the members opposite are concerned. It seems to me that for eight years we listened to them criticizing Expo - what a terrible disaster that was going to be. Expo and northeast coal are the same thing. The proof of the pudding is in the eating, and when you discover the sky hasn't fallen in and that you've got a stunning success on your hands, it challenges the credibility of the people who were the Chicken Littles calling for the sky to fall in all the way along.

MR. WILLIAMS: Anybody who says that northeast coal is a stunning success would have been singing "Happy Days are Here Again" when the Depression came in, in the 1930s. You tell that to the people in Kootenay riding. I challenge the Minister of International Trade to debate in the riding of Kootenay with a representative from this side of the House the stunning success of northeast coal. I challenge you here and now to a debate in the coal country. I challenge you to a debate in the town of Cranbrook about the stunning success of northeast coal. Do you accept?

HON. MR. McGEER: Mr. Chairman, I will debate that member in any forum any place on any subject anywhere in British Columbia. I couldn't wait to do it.

SOME HON. MEMBERS: Hear, hear!

HON. MR. GARDOM: Are you finished tonight?

MR. WILLIAMS: For today.

MS. BROWN: Just for today.

MR. WILLIAMS: If the House Leader so wishes.

HON. MR. GARDOM: I'm hearing veiled messages from across the floor, Mr. Chairman. That being the case, I have decided to move that the committee rise and report certain progress and ask leave to sit again.

The House resumed; Mr. Speaker in the chair.

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

[ Page 8635 ]

Hon. Mr. Gardom presented a message from His Honour the Lieutenant-Governor: amendments to Bill 36, intituled Miscellaneous Statutes Amendment Act (No. 2), 1986.

HON. MR. GARDOM: Mr. Speaker, I move that the message and the amendments accompanying the same be referred to the committee having in charge the bill in question, Miscellaneous Statutes Amendment Act (No. 2), 1986.

Motion approved.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 5:56 p.m.