[ Page 2221 ]

CONTENTS

Routine Proceedings

Committee of Supply: Ministry of Forests and Lands estimates. (Hon. Mr. Parker)

On vote 34: minister's office –– 2221

Mr. Williams

Mr. Clark

Mr. Kempf

Mr. D'Arcy

Mr. Rabbitt

Appendix –– 2233

The House met at 10:03 a.m.

Prayers.

MR. MOWAT: Mr. Speaker, it's my pleasure this morning to introduce to the House Mr. Jim Watson. Mr. Watson is the past chairman of the Rick Hansen "Man in Motion" tour. He is a past national president of Kinsmen and a great servant to the citizens of British Columbia. Mr. Jim Watson was born in Flin Flon, Manitoba, has done a lot of radio broadcasting throughout the province, but is now living in Vancouver, and I would ask the House to make him real welcome.

HON. MR. REID: Mr. Speaker, I'd like to add my welcome to Mr. Jim Watson, past national president of the Kinsmen Club, and also commend him for all his energies in the "Man in Motion" tour. Mr. Watson, we welcome you to Victoria.

Orders of the Day

HON. MR. STRACHAN: At the outset, I'd ask leave for the Select Standing Committee on Standing Orders, Private Bills and Members' Services to meet this morning while the House is sitting.

Leave granted.

HON. MR. STRACHAN: Secondly, Mr. Speaker, I'd ask leave to move Motion 82, standing in my name on the order paper. [See appendix.] I'll just describe that briefly.

It's a rearrangement of the membership of the select standing committees, items 1 to 5; members can peruse those. Mr. Kempf is substituted for Mrs. Boone on Forests and Lands; Mr. Kempf for Mr. R. Fraser on Standing Orders; Mr. Kempf for Mr. Pelton on Tourism; Mr. Huberts for Hon. Mrs. McCarthy on Economic Development, Transportation and Municipal Affairs; and Hon. Mrs. McCarthy for Hon. Mr. Richmond on Public Accounts.

Motion approved.

HON. MR. STRACHAN: Committee of Supply, Mr. Speaker.

The House in Committee of Supply; Mrs. Gran in the chair.

ESTIMATES: MINISTRY OF FORESTS AND LANDS
(continued)

On vote 34: minister's office, $210, 165.

MR. WILLIAMS: The minister got up last night in his first speech.... I think he's the seventh minister in the last 14 months. He's only the sixth minister in the last 14 months, or something like that. There have been some acting ministers; it has been the revolving door in cabinet — the Minister of Forests. It remains to be seen how fast that door continues to revolve, but time will tell.

The minister said last night.... What were his quotes? He said: "We are ready like never before." I think that's almost ominous, Mr. Minister. But then, you've lost five other ministers in the last while; we'll see. You say you're ready in terms of managing for maximum benefits from our forests, maximum benefits in terms of commerce....

Interjections.

MR. WILLIAMS: I'll trust you with our forests as much as I trust you with water in Point Roberts.

You say maximum benefits, Mr. Minister, in terms of commerce; you're ready. You say you're ready for maximum benefits in terms of settlement. You say you're ready for maximum benefits in terms of conservation. Well, let's just think about that. Let's just try to see how ready you really are. Maximum benefits — remember this — for commerce, settlement and conservation.

What about the public? What about our revenues from this resource? Let's just look at that for a minute. We, the people who own the trees of British Columbia, who are supposed to.... What about that? What are we getting in terms of revenues from the forests? The budget tells us this year that, other than the federal money, the provincial money is something like $124 million. What are you going to be spending in this ministry? According to the budget, you are spending $530 million. If you deduct the $124 million from the $530 million, that leaves us with minus $410 million for the selling of our trees. And the minister says we're going to have a more active marketing division.

Even if we throw in the federal money that comes out of the export tax — some $350 million — we're still in minus figures. It comes out at something like minus $60 million in net revenue out of the forests of British Columbia in a fine market year, in a superb market year. There is an empire of forests in British Columbia, but in terms of direct, immediate provincial revenues, it's minus $410 million for the forests of British Columbia.

It takes a strange kind of free enterpriser, Madam Chairman, to handle this business of our forests and come up with minus $410 million for our trees, which is only rectified by the federal government intervening and putting on an export tax. It is no wonder at all that we are squeezing our seniors by way of fees for Pharmacare and all of the rest, because we don't charge properly for the trees in British Columbia.

It's interesting to look at what's been happening with the profits of the companies over the past year. Is the minister aware of the kind of incredible profits that have been occurring within the industry, and that somehow this doesn't relate to income for British Columbia? Doesn't it register that there is something wrong in this commercial arrangement?

What does Price Waterhouse tell us? They say that there were first-quarter profits within the industry of around $300 million this year. If you throw in an amount of about $100 million for depreciation, we're talking about something like $400 million within the industry just in the first quarter of this year. On the basis of our revenues, what would we have in the first quarter, Mr. Minister? A relevant pittance relative to what has been happening within the private sector.

We should look at this whole business of revenue a little more. You still haven't changed the rules in terms of the stumpage system. An incredibly profitable year, great surpluses being piled up by the companies, all kinds of problems with the Americans because of a subsidized system that exists in British Columbia, which the nation and the province finally concurred with and accepted, and yet you still have

[ Page 2222 ]

not rectified this system. So we end up having in the interior some of the most efficient mills in the world, and yet you still don't operate your appraisal system on the basis of those efficiencies. You operate on the basis of old numbers and former mills. You haven't cleaned up your act and caught up to the actual efficiency that is there within the private sector in the interior.

When it came to the costs that you put into your appraisal system down here on the coast, you ended up accepting the costs submitted basically by the people from COFI — Mr. Apsey, who is now back with COFI, and his gang. You basically accepted those costs. That has been documented by Mr. Hopwood, who carried out work for the independent truck loggers' association and showed the gap between what you allow by way of costs and the kind of funds that they were able to pocket within the private sector by fooling around with that appraisal system. That's the kind of pattern you've got. Again you've got a situation, where you're not accommodating pulp values in that formula either. Chips are still not plugged into the formula. Half of our wood economy is in pulp, and you're not plugging that into the system.

Anyway, you say there are maximum benefits for commerce, settlement and conservation, Mr. Minister. Well, let's look at the business of commerce. If there were maximum benefits in British Columbia, we would have a sophisticated industry on our hands. We do not have a sophisticated wood products industry in British Columbia.

Interjection.

MR. WILLIAMS: Oh, yes, you do. Certainly it's a little better in Prince George than elsewhere, Mr. Minister.

Interjection.

MR. WILLIAMS: Best in the world. Yes, we turn out 2-by-4s faster in Prince George than most anywhere in the world. But that's not good enough, Mr. Minister. I don't think 2-by-4s are a product of the future in terms of sophisticated value-added at all. And we have to move in other directions. Essentially eastern Canada has moved ahead of us in many ways. The Scandinavians remain far ahead of us. They create far more wealth out of their forests than we do. Commerce is about creating wealth out of the resources. We're not doing anywhere near what our competitors are doing at all.

[10:15]

Log exports. You're allowing log exports out of this province now, Mr. Minister, from your own riding and from the central coast and from the Queen Charlottes on a scale unprecedented in the history of British Columbia — unprecedented in modem history, in terms of letting raw materials go out of this province, an area the size of something like France.

Interjection.

MR. WILLIAMS: Yes, you're letting log exports go, out of a huge area of British Columbia. What value-added is there from that? What wealth creation is there from just sending out raw logs in terms of genuine new work and sophisticated work in British Columbia, and putting our unemployed to work? It isn't there. It's just a modest amount of extractive work that is destructive and wasteful, by and large, in terms of the environment.

There was an export log seller talking about the kind of money they can get for some of our fine virgin timber from the Charlottes and from the coast. They're actually using some of that stuff in Japan for producing guitars and violins — incredibly valuable wood.

There is the Minister of Culture (Hon. Mr. Reid) taking off at the very thought of violins and music. It's wonderful having such a cultured member as our Minister of Culture.

They talk about values per thousand board feet of $7,000 and $8,000. You'd better listen, Mr. Minister: $7,000 and $8,000 a thousand in terms of that virgin timber used for guitars and finished products — extraordinary values, and you let it go out as raw logs with no understanding or appreciation whatsoever of those incredible end-product values. It's just an indication of the potential in terms of our trees in this province, if we would only realize it.

Interjection.

MR. WILLIAMS: Now you add that you've barely begun. We have regions of despair in this province, including the one that you happen to represent. We have regions of unemployment that are regions of despair because we mismanage our forests. There is a clear link in terms of the way you've allocated and misallocated and wasted the forest resource, and the staggering unemployment in this province. There is a clear link between the incredible problem of your tenure system, and inefficiencies within the industry. Those links are clear, and any sound economist would advise you in that regard.

Look at the Queen Charlotte Islands. It has some of the most magnificent timber in the world.

HON. MR. REID: It's a national park.

MR. WILLIAMS: Yes, at least they're going to get something out of part of it in the form of a park, but in terms of the timber resources, there's not one sawmill on the Queen Charlotte Islands. Think about it.

HON. MR. REID: They knew it was going to be a park.

MR. WILLIAMS: Oh yes. A small part of the islands is designated as a park. The rest of it is part of one of the great forest resources of British Columbia, yet there's no valued added within the Queen Charlotte Islands in terms of milling and finishing. That is a profound loss for the people of the Queen Charlottes; it's a profound loss for the people of British Columbia. Put that together with your screwball non-stumpage, non-marketing system with respect to trees in this province, and you get inefficiencies on a grand scale. You get waste and wood left in the Charlottes and elsewhere on this coast on an incredible scale, because you're allowing export on a grand scale, more than you've ever allowed before, and the people who are buying the export logs want only the best. As a result there's activity in terms of bum-and-bury, in terms of the butts and the ends of the trees, and that pattern has been going on for some time.

Beyond that, because you allow it, the lower-value wood ends up too frequently getting dumped in these regions, because of your screwball stumpage system. It automatically creates diseconornies across the board, so that there's too much of the poorer quality wood left in the forest. Yet if there were milling operations within these regions, the poorer-

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quality wood would be economic to work on within the region. You've allowed a highly centralized industry to evolve on the southern coast, and you have allowed through the stumpage system incredible diseconomies throughout the piece. That has hurt employment in the regions tremendously, and we've lost across the board.

I would argue, Mr. Minister, that we see waste in the forests of this province on a scale unknown in the western world. You've had a pattern of sympathetic administration over the last several years with this industry, which has ignored statute, directives and requirements in terms of activity in the forest. So the waste has gone unchecked.

AN HON. MEMBER: A general statement.

MR. WILLIAMS: A general statement, yes. What about value added? Let's talk about plants like, say, the little Ikea plant in Penticton, which is an indicator of what we should be doing more and more of. In Penticton there's a plant producing Ikea furniture for here, for the eastern United States and they expect shortly for Japan, employing 85 people.

They could employ one-third more than they presently do if they had wood provided. Where do they get their wood now? They end up chasing around to little bush mills in British Columbia to supply that Ikea plant in Penticton, and they go as far away as your own riding in the northwestern part of British Columbia. Think about that. They scramble around to get their wood supply. Are they looking for an exotic species? No, they're not. They're using lodge pole pine, which was a waste wood until a generation ago. That's what they're mainly using right now at that Ikea plant in Penticton. If they could get wood, they could increase production; but because you've locked it up and thrown away the key in the form of the tenure system, they can't get it. The big companies can't be bothered to supply small operations like that. That is an indication of the mind-set within this major industry for which you're responsible.

MADAM CHAIRMAN: Hon. member, your time has expired. The second member for Vancouver East.

MR. CLARK: I'll let the first member wrap up his comments, and then I'll continue.

MR. WILLIAMS: There they scramble through the bush mills to supply a furniture plant in Penticton. They can't get wood supply locally because the major companies can't be bothered.

You talked about maximum benefit for settlement. What do you know about that, Mr. Minister? What do you know about questions of settlement in this province? What do you think the pattern of settlement is in this province, and what was it at the beginning of this century? Do you think it's changed very much? Well, I'll tell you....

Interjection.

MR. WILLIAMS: It has, has it? Vancouver has always had 50 percent of the population of this province, my friend. Do you realize that?

Interjection.

MR. WILLIAMS: The member for unemployment in Kamloops is speaking out. There's been chronic unemployment in Kamloops, and the junior member for Kamloops has the nerve to talk about how good things are in the town of Kamloops. Imagine the gall!

MR. S.D. SMITH: Do a little research.

MR. WILLIAMS: He's still bitter because he didn't make cabinet.

Let's look at the pattern of settlement in this province. Your tenure system, Mr. Minister, has created a strait-jacket in this province that is disallowing settlement across the landscape. By giving away these huge forest tenures and not allowing settlement within them, you are not strengthening the settlement fabric of British Columbia at all. In fact, exactly the opposite. Don't you talk about maximum benefits in settlement; that's not the case.

I'd like to cite a little case in point, up in Nimpkish on Vancouver Island. There's been a village at Nimpkish for decades, but owned by the company Canadian Forest Products. The people of that community wanted to continue living there. The company, however, decided it was going to phase out the village, and the workers — loggers and others — could move up to Port McNeill, some 35 miles away. But they wanted to maintain the village. They saw and opportunity in small-scale hydro that could be beneficial. There were waterfalls near the village that they could harness. They saw it as a significant little settlement along the new highway leading to the north end of the Island, and they wanted to maintain the village. Canfor said no, they wanted to wipe it out, and your ministry in the past went along with it.

AN HON. MEMBER: You can't get buried there.

MR. WILLIAMS: You can't even have a graveyard in the town. It's that kind of strait-jacket that your tenure system represents, so as a result we don't get the mixture that we should be getting on the north end of this island, in terms of the economy, commerce, tourism, agriculture, small-scale bed and breakfast operations, you name it. The multiplicity of human skills applied to the landscape that a free system should provide — we don't have that.

We essentially have had company towns in the north end of this island. Then you compare this island, and you look at the southeastern one-third of this island from Campbell River to Victoria, where there is a pluralistic system and a multiplicity of land ownership, and you have a healthy economy relative to the rest of this island. You try and understand the reason, and it's very clear. The reason is the strait-jacket system of forest tenures that applies on the rest of the Island. A handful of companies control the rest of the forest land on this island, and settlement has been frustrated as a result. It isn't there, by and large.

We could have a thriving, modest tourist economy along that highway through the northern half of this island. We don't have it at all. There's a little bit of a thing at Woss Camp; it's the only thing I can recall on that route right now. Nimpkish phased out because the company wanted it phased out. Think about it. That's one part of this.

Then you think about regions like the Arrow Lakes — essentially a settlement pattern frozen in the Arrow Lakes. You get Nakusp and some of the old settlements that remain. But again, the resources are dragged through the region to

[ Page 2224 ]

some other industrial plant at the southern end of the lakes. In the northwest, the same pattern again: the resources dragged for mile after mile, hundreds of miles, to the southern settlements, yet no settlements to speak of flourishing in the northern parts or the hinterland.

A free system would create that. But there isn't a free system in British Columbia, Mr. Minister. You should understand that; you've peddled a lot of rhetoric, along with your colleagues, about free systems. But it isn't an open free system; it isn't a pluralistic system at all. It's a monopolized system that you people guarantee. So we have a settlement pattern in British Columbia frozen in time; frozen, basically, at the turn of the century. You look at the pattern of towns in this province; it has not essentially changed since the turn of the century.

I suggest to you, Mr. Minister, the reason is this modem strait-jacket of the tenure system and forest licence system now in place. You are preventing the development of settlement in British Columbia, as a result of that tenure system. You're preventing a pluralistic economy from evolving. You're preventing a diversified forest industry from evolving by the nature of your monopoly system and your tenure system that you accept so readily. That creates profound economic losses.

I suggest to you, Mr. Minister, that if you really think about this in your heart of hearts, you might see the linkage between the profound despair in the regions, the unemployment in the regions, the lack of new settlement in the regions and your strait-jacket forest tenure system. It's a kind of banana republic out there in the hinterland, in terms of forest licences, that has frozen British Columbia in time. It is a tremendous loss for us all. These are regions that are gutted and cannibalized in the Queen Charlottes and elsewhere, to questionable advantage for questionable corporations that we have in the southern part of the province.

You say we need a market system desperately, Mr. Minister, within this industry. We desperately need an open market system; that is, with many willing buyers within the system, with access to public timber, We need a market system that starts allocating our great timber resources properly. We don't have it any more in British Columbia. We don't want good material going into pulp mills when it shouldn't be. We want good material going into furniture plants when it should be. It's not.

[10:30]

We don't want so-called weed species trashed, as they are now in British Columbia. Birch in British Columbia is, by and large, trashed by operators in the forest. Alder, too often, is trashed in the forest. Yet birch is one-third of the forest cut in Finland. One-third of all the trees in Finland, in terms of their great forest industry, are birch. We trash birch. Your ministry has actually mowed it down to plant conifers. Furniture people have talked about acquiring some of the birch in this province, and your ministry has actually trashed it to plant conifers in recent years. The beautiful furniture that comes out of Scandinavia — much of it is birch. That's an indication of how profligate things are in British Columbia under this ministry. Weed species: that's what they tend to be called under your ministry and this industry.

Thinnings: the thinning of the forest, in terms of managing the forest like a farm. Mr. Minister, do you know how much of the actual cut in Sweden comes from thinnings? No, you don't know. That's quite clear. Thirty-five percent of the total annual volume cut in Sweden is from thinnings. Has the member for Kamloops been in Sweden, in Finland? The member grew up in a little spot in the North Thompson called Birch Island, an interesting little spot in the hinterland. It hasn't changed a lot through the years, I suspect. Birch Island — and we essentially trash birch trees in this province. But back to the question of thinnings: 35 percent of Sweden's volume is from thinnings. Think about that, Mr. Minister, and ask yourself how much of the annual forest cut in British Columbia is from thinnings. Zero? It's between zero and 1 percent at best, if you keep track of it. That's an indication of the difference between the ethic in other parts of the world and the non-ethic in British Columbia.

Conservation. In your speech you said we are managing for maximum benefits in terms of conservation. What newspeak! What nonsense! Visit the coastal forests of British Columbia — the Kimsquit Valley, parts of the Charlottes — and look at the devastation and wasteland that you call forestry. And you say "maximum conservation." You have a system that feeds waste, that encourages waste. No market tests are applied in terms of genuine conservation in this province, and you say it's a vigorous industry. Now you say you're going to establish a more active timber and land marketing section in your ministry. You've already allocated all the wood, Mr. Minister. What have you got left to market? You say you're going to do it in terms of lands as well.

Tell me, Mr. Minister, how does a new entrepreneur get into the business of cutting Crown timber in British Columbia if you establish a marketing division? It only happens on rare occasions now that timber is put up for some kind of access. You see the occasional ad in the newspaper. But all too often these are rigged proposals that are carefully defined for only one player, in terms of that particular type of wood, in that particular location, with that particular type of manufacturing process.

I can show you memos from your department, Mr. Minister, that wrestle with this question of how we define this so that only one person will qualify in terms of this small amount of wood that is available. What kind of free system is that? A civil service that is working away at rigging the game, in a game that is 99 percent rigged and controlled now. The small pieces of timber that are made available on occasion are still tightly defined rigged games. No pluralistic system, no open access, no free market. And we're talking about the most valuable natural resource — other than our people — in this province. What kind of rigged game can we live with and expect an economy to flourish? You can't. You can't expect the economy of British Columbia to flourish with the kind of rigged game that you have.

[Mr. Weisgerber in the chair.]

Let's look at your ministry itself. There was a 35 percent reduction in staff. Half of the ranger stations went under the restraint program, and there were about 90 to 100 of them, as I recall. In terms of settlement in British Columbia, that was the provincial flag out there in the hinterland — the old Forest Service office. We're all familiar with them. You've ended up flogging half of them, getting rid of them, and we've paid the price in fire season and all the rest. This office of the provincial government was the flag of the province out there in the hinterland and was an important part of settlement in hinterland British Columbia. It's not there now. In half the province, it is not there. You talk about maximum benefit for settlement. You end up creating a staff of paper-shufflers who

[ Page 2225 ]

have to spend most of their time traveling through the bush to even begin to see the forests that they're supposed to manage, in highly centralized locations.

The hinterland is a loss; the province is a loss. We have an industrial structure in this province, Mr. Minister — as I said earlier — that is far behind the rest of our competitors.

I guess the final point I'd like to make is the disgusting linkage between the Social Credit Party and people in the forest sector — the managers in the private sector of the resource. We are seeing it more clearly now and in a more overt way than we have ever seen in the modem history of the province in terms of active Social Credit Party members being people with forest interests. Certain foresters — certain people in certain corporations — are tied in, a critical factor in your last Social Credit convention: the players there from the Queen Charlottes, from Prince....

MR. CHAIRMAN: Hon. member, your time has expired.

MR. CLARK: I'm enjoying the comments of the first member for Vancouver East and will defer until he wraps up his opening remarks.

MR. WILLIAMS: Mr. Chairman, with the indulgence of the House, we can continue. Others might participate, and the minister might respond.

We have never seen more overt linkages in the modern history of the province between log exporters and membership in the Social Credit Party playing a factor in the leadership convention. The players from the northwest, whom you're more than familiar with, Mr. Minister, are indelibly in the party processes, indelibly involved in the business of choosing the leader of your party and, in the end, the Premier of the province, and yet, at the same time, are wanting concessions in tenures of export, in terms of quota, in terms of various privileges with respect to the forest resource.

Never have we seen these linkages more clearly than we have in the past year. I suggest to you, Mr. Minister, that the reason one of the last Ministers of Forests left — the former member for Prince George North, Mr. Heinrich — was that he was unwilling to concede the kind of log export privileges that the Premier was demanding. No nonsense at all. That former minister lost his job — chose to lose his job, I should say — because he would not tolerate the kind of expanded log exports that this government and this Premier wanted, that people who supported this Premier in the leadership convention wanted. That Minister of Forests was determined to take the high road, and he gave up his job because of that.

Interjection.

MR. WILLIAMS: No, there have been half a dozen of them in the last little while.

Log exports in an area the size of France, unprecedented in the modem history of British Columbia.... I did a rough estimate earlier this spring in terms of the benefit to those log exporters, and the rough estimate was $100 million in extra, new money for them out of log export, rather than selling those logs in the British Columbia market. A fee of $100 million of extra, unearned money for those log exporters, and many of them were linked to your party, were delegates at your convention, were people who clearly supported the Premier of British Columbia and his candidacy at that time. It's very, very clear. This simply shouldn't happen. It is not acceptable in a free, open and honest society. They are very disturbing tendencies.

Just in the last few days your Social Credit Party members, who are foresters from regions, came to see you and again are dealing with these questions. It goes across all these links. We're talking about $100 million in benefits, in terms of export logs, that should be feeding the economy of British Columbia. Those benefits are being pocketed by a few, the majority of whom have clear Social Credit links. That's not good for the economy. It's not good for the forest sector in the end in this province.

Interjections.

MR. WILLIAMS: You know what I'm talking about, Mr. Minister. You know only too well what I'm talking about. That simply shouldn't be happening, Mr. Minister. So you tell us. You're managing for maximum benefits in commerce, settlement and conservation — and where's the evidence, Mr. Minister? We have a province of unemployed. We have a province where regions are in despair. We have regions without any industries to speak of, other than limited extraction. You tell me where the maximum benefit is, Mr. Minister. The burden's on you.

MR. KEMPF: Mr. Chairman, it is really with much regret that I must rise in these estimates and say what I'm about to say about our province's primary resource industry. If from time to time I sound angry, it's not anger directed at this minister. It's not anger for what has been done to me and my family and friends over the past four months. It's anger for a job unfinished. It's anger because I was not able to complete a job started, a job which in my estimation is long overdue in British Columbia.

Mr. Chairman, a once-proud industry, which in its day was instrumental in building the very foundation on which this province sits today.... I said "with regret," and I mean it, for it was but a few short months ago that I was thoroughly convinced that finally, after many decades and a number of administrations in this province, there was a government in office in British Columbia that would bring a halt to the rape and pillage of our forest lands. Finally there was someone with enough intestinal fortitude to seek a fair return from that industry for the people of this province. Finally there was a government which would ensure a place in that primary resource for the average British Columbian; however, that I soon and very painfully found out was not to come to pass.

[10:45]

I found out the hard way, Mr. Chairman, why it was that consecutive Forests ministers sat back and had an open, swinging door to the Council of Forest Industries; sat back and allowed the forest giants to have it all their way in this province. I found out why those ministers, perhaps with the exception of my immediate predecessor, were merely puppets in the hands of multinational monopolies — outsiders to this province.

For a number of years, as one who had spent 20 years of my life directly in the industry, I had seen what was going on. I had seen the waste. I had seen the way in which our best timber was virtually disappearing before our eyes, with less and less return to the provincial coffers. I had seen more and more control of our resource consolidated in the hands of

[ Page 2226 ]

fewer and fewer multinational corporations. I saw firsthand the opportunity disappear for real British Columbians to partake in their own business.

It's a crime. It's been a crime of phenomenal proportions. And there are some of us in this chamber — perhaps even yourself, Mr. Chairman — who, unfortunately, realize what it is that has happened to us, but fewer still who have the political will and the intestinal fortitude to do something about it. We have in this province an $8 billion-a-year business, our primary resource industry in British Columbia, returning virtually nothing in the way of direct revenue to the people of this province.

The former speaker talked about the budget. There is $530 million to be spent on the Ministry of Forests and Lands in this fiscal year, to return in direct revenue to the coffers of this province, as the member said, $124 million. That is unacceptable. It's happened for 40 years in this province, and it's got to stop. I don't know now how it can be stopped, but it's got to stop, Mr. Chairman. It has gone on for far too long.

Interjection.

MR. KEMPF: Let me give you an example, if you think it's bullshit — Mr. Chairman, to the member behind me. I didn't phrase that; the member behind me did.

MR. CHAIRMAN: Please, Mr. Member, refrain from using that type of language.

MR. KEMPF: I guess I'm an old logger.

Mr. Chairman, I'll give you an example. Let's take the year 1985 and compare what was paid in stumpage in British Columbia with that of our closest jurisdiction, the state of Washington. I've reduced it to common denominators so we can all understand — that of cubic metres and Canadian dollars. In that year in the state of Washington.... AAd I use a U.S. Forest Service sale, because it most closely resembles what we're doing in British Columbia. Admittedly we allow some export in British Columbia, but there is no export allowed from U.S. Forest Service sales in the state of Washington.

In the year 1985 the stumpage paid in Canadian dollars per cubic metre in the state of Washington was $17.48. In that same year, selling into the same world markets — in fact those people were selling to their own country — the average stumpage in British Columbia was $2.18 per cubic metre: a $15.30 per cubic metre difference. I know the minister is going to get up and talk about wages and all of those things, but $15.30 per cubic metre represents a billion-and-a-half-dollar difference between what was collected in British Columbia and what would have been collected in British Columbia had we been on the same rates as the state of Washington.

Mr. Chairman, I'll talk for a moment about the Vancouver log market, as I've done in question period earlier in this session. Wash-trading, price-fixing: they sell to themselves. They set their own prices. We don't even know what that wood is worth in British Columbia, because there is no free market system. There is no log market in British Columbia, and there will never be a log market in British Columbia until we mend our ways in the forest industry.

In other jurisdictions you'd go to jail for what is being done in the Vancouver log market. I called for proposals to investigate what was going on, not just in the Vancouver log market but also in regard to scaling on the coast of British Columbia; what is going on in regard to towing those logs on the coast of British Columbia. We all know about Shoal Island, but I ask you, Mr. Chairman: where are those investigations now? The minister said in question period it was too expensive — $50,000 for a thorough investigation of what is really going on and what has gone on since 1947 with respect to the movement, scaling and sale of logs on the B.C. coast. What's wrong with that? What's wrong with having that kind of investigation to find out once and for all whether I'm right, or whether successive Forests ministers have been right? What's wrong about calling this individual to do this investigation? I know what's wrong. The Council of Forest Industries won't have it.

Interjections.

MR. KEMPF: You can heckle all you like, but I gave 20 years of my life to this industry. It's an industry that I love dearly. I happen to know a little about it. I did spend seven months as the minister responsible for that industry.

But where are those investigations now? What about reforestation and silviculture? It's a provincial disgrace. I found that out very soon after becoming the minister responsible, and I called on December 12 for a silviculture audit. Where is that audit now? Why hasn't it been made public? Where are the results? I can give you the results. Perhaps that would help. I'll do that at another time. Where are the results from that silviculture audit? Why are the people of British Columbia not allowed to see what it is that multi-millions of their dollars are being spent on, with respect to silviculture and reforestation in this province? Why aren't the results of that audit made public?

How are we spending the $235 million the minister so glowingly talked about last evening? Are we really spending it in a competent manner? What is happening with section 88 moneys? Taxpayers' dollars — $105.73 million in this fiscal year alone to be written off by the forest companies against stumpage for reforestation and silviculture. I talked in this House earlier about a company from 1980 to mid-1984, who, rather than pay the $4.207 million they should have in stumpage, paid in effect about $142,000. The rest was written off. We not only give them the trees, we pay them to take them. It's a disgrace.

We write those things off for reforestation and silviculture — and road building, of all things. The multinationals reap the profits, and the taxpayers of British Columbia subsidize them to do so. We don't even know if that money is being spent properly. Mr. Minister, all you have to do is check with your people. I found very good people in the B.C. Forest Service in the seven months I was there. But they're afraid to speak out and to say it the way it is. Well, I'm not.

The question remains: why aren't these companies building their own roads? They're reaping the profits. They're writing their own ticket. Why aren't they paying their own reforestation costs?

MR. CHAIRMAN: Hon. member, your time has expired.

MR. D'ARCY: I'm enjoying the impassioned and knowledgeable oratory of the member for Omineca, and I hope you will permit him to continue, if he wishes.

[ Page 2227 ]

Also, I would hope that those members in the peanut gallery of the government back bench — especially the junior member for Kamloops — will see fit at least to go through the formality of asking to be recognized by the Chair before getting up and giving us all the benefit of their non-knowledge on this subject.

MR. KEMPF: Thank you very much, Mr. Member, and Mr. Chairman.

Why aren't these multinational monopolies paying their own way? I agree with Jack Munro. I very seldom do, but I did recently when he said that if those multinational monopolies don't wish to pay their own way, let them leave this province. But let them leave the trees behind. I agree with him. The multinationals have called the shots for so long in this province that everybody thinks it's normal; everybody thinks that's the way it has to be. Everybody thinks it's necessary that the multinational monopolies, under the pretence of creating thousands and thousands of jobs in British Columbia, should lead government around by the nose. Not for one minute do I believe that. I think British Columbians are quite capable of handling that resource and of ensuring many more thousands of jobs if that resource were in their hands.

[11:00]

I don't believe for one minute that the people of this province would stand for what's going on, if only they knew. But that's not the case, unfortunately. We talk in this chamber about conflict of interest, and we think it only relates to politicians. Was it not a conflict of interest, I ask — and I'm going to ask this many more times — for someone from the Council of Forest Industries to be hired as the deputy minister for the province of British Columbia to write the new Forest Act, and then to go from this place back to the Council of Forest Industries? It's a crime that the taxpayers of this province are being taken to the cleaners to the tune of an estimated $1 billion yearly, and we sit idly by and let it happen. And it's in our primary resource in British Columbia. It's a crime that the political process is so involved that a non-elected government directs policy in this province. It's a crime that this province, so rich in resources and people, has a deficit which now exceeds $5 billion, and is rising. It's a crime when more and more punitive taxes are heaped on our heads. It's a crime when those elected to do a job haven't the courage of their convictions.

I could talk all week about my very real feelings for our primary resource in British Columbia.

Interjection.

MR. KEMPF: Oh, we'll be here a week from now. I could talk many, many days on what's going on in the industry — the industry which is my first love. But I'll sit down now, because I want to hear what the minister has to say. We'll get into some specifics later.

HON. MR. PARKER: I'll just touch on a few points. On the matter raised by the member opposite on industry development and marketing in the B.C. Forest Service, the division was set up as a refinement of the department set up by him for special studies when he was minister, '72-75. It is to promote the development of and investment in the province's forest industry, to ensure continuation of its reputation and competitiveness in world markets, and to provide economic analysis for the ministry's executive and other ministry staff. It works closely with the Ministries of Finance and Economic Development.

Some of the things that they've dealt with in the recent past include the five-year forest and range resource program — the annual requirement by this Legislature, the annual review — and other items, such as the forest management review summary, the forest resource value review, the evaluation of FRDA, the countervailing duty data and information, and bid proposal evaluations on forest licences.

To touch on stumpage, the stumpage program used in British Columbia is a modified Rothery system, named after an American who developed the stumpage appraisal system that the U.S. Forest Service uses as well. When we draw parallels with the U.S. Forest Service, we must remember that the development on a timber sale offered by the U.S. Forest Service is all done by the U.S. Forest Service with public moneys and public employees. The total cost of building the infrastructure has to be met by the bidder. So that, and a few other funds, depending on which state it's in and what the policy is for the particular national forest, sees the stumpage numbers higher. The member for Omineca (Mr. Kempf) touched on this, and I saw some figures on a timber sale that was analyzed under his purview for the same piece of ground. It was actually a British Columbia timber sale, but the parameters were translated into the U.S. system as well as the British Columbia system so we could get a measurement, and they were within $2 of each other, in Canadian funds, in dollars per metre. So we can play around with that sort of arithmetic and comparison until hell freezes over and be no further ahead.

Just to touch on the matter of conflict of interest that the member for Omineca touched on, impugning the reputation of the former deputy minister, the gentleman came from a partnership — I believe it was Woodbridge Reed — into government because of his background as a consultant and his worldwide experience, and subsequently left to go to the Council of Forest Industries as a knowledgeable person.

On section 88, which is a favourite harp to be played in this House.... As I've said before, section 88 is a means of getting capital investment in a public facility, be it a road, a bridge, a plantation, or whatever. The way we opt to pay for it is with a credit note rather than with cold, hard cash. When we pay for it with a credit note, we don't pay any interest. So we get the licensee's money for nothing, and that's not a bad deal for the people of British Columbia. That's bearing in mind that the land base is owned by the people of British Columbia. It isn't privately owned, as it is in Finland, for example, where forestry has been going on for several hundred years, so that naturally there are thinnings — because there are no old-growth stands; they're all juvenile stands or younger mature stands — because thinning is part of the silviculture regime for dealing with immature stands. We don't have private tenure in British Columbia. Basically, forest operations in a large scale have taken place since 1910 or 1912. We're getting into that stage. We're coming up to it, and the member opposite misses that point, or chooses to ignore it, because he does like to mislead us at every opportunity.

Stumpage in British Columbia is a system that gives the people of British Columbia an opportunity to participate in the marketplace. Some people will describe it as an income tax before income is realized. The system is tied to the market — it's market-driven. So if your returns on stumpage aren't

[ Page 2228 ]

high, maybe you should take a look at the whole picture. When the markets were low — dwindling — in the first part of this decade, our stumpages dropped, because they were driven accordingly. Costs didn't drop anywhere near the amount that the markets did.

When you go through a stumpage appraisal analysis in some parts of the province.... A good example, because we can lead into export from the north coast, is in the north Kallum and Bell-Irving area, where the stand is about 40 percent waste, decay, breakage factor. An appraisal there will indicate a negative appraisal. That doesn't mean, though, that the people — the owners of the asset — have to pay to have it logged. No, they still take a minimum amount from the operator, and he eats the losses while he's generating the jobs and the revenues.

What happens up in the north coast, where there is no power grid at this time and the opportunity to set up a manufacturing plant is limited, where costs are rather prohibitive, where the resource is less than desirable in most cases.... It was examined time and time again over the years and found to be wanting by various expert operators throughout North America and some from overseas, as a matter of fact. What we have now is an opportunity in Stewart to go with the log export industry. Some of the logs that come out of there come south to Hazelton, Kitwanga and Terrace. Most go out through the port of Stewart, which has revitalized Stewart and created a great deal of industry there. The pulp logs that are generated — and probably more than half the volume that is recovered is graded out as pulp — go to Prince Rupert, the lower coast, Kechika, wherever the market opportunities exist.

In the low-grade sawlogs that are left, in comparison to what's available in Oregon and Washington, because there is an enormous volume that comes out of the Pacific Northwest, because not all of the Pacific Northwest is U.S. Forest Service lands.... The log grades that come out of Stewart in comparison to the Pacific Northwest are marginal, and the prices paid are commensurate with the log grade.

Some of the logs that come out of Stewart have opened doors for sawn lumber products in Japan and China, and that's a marketing strategy done by a firm that was involved in all products. But they found they could not get into certain lumber or sawn-product markets in Japan and China without having some roundwood to provide also, because the people of Japan and China wanted some roundwood for their local industry.

A lot of the sawmills in Japan, for example, are small family affairs run in spaces not much bigger than this chamber. They're family operations, and they're not big. They spend a lot of time deciding on how they're going to cut a log and for what. Their products are totally different from ours, and that's another thing that comes into marketing. That is why we have a marketing section in the Forest Service: to work with the industry component through the embassies of Canada, with trade officers, to identify the different opportunities that exist. So we're proactive as a ministry in that respect.

MR. WILLIAMS: That's really coming through.

HON. MR. PARKER: The member opposite likes to hit hard on recent profits realized by the private sector in the last few months, but he always manages to keep his mouth shut about the substantial losses for the five years prior. That kind of misleading information isn't necessary, Mr. Chairman, and I find it repugnant. Not only that, but he likes to talk about the efficient mills in the interior and how we should be penalizing them for being efficient.

He likes to touch on cost allowances, claiming that cost allowances used in the stumpage appraisal system are generated by the Council of Forest Industries. They're collected by Forest Service personnel from operators throughout the province, and they are brought up to an average efficient operator concept.

In the interior, pulp chips are part of the appraisal system. But on the coast, we haven't been into an end-product appraisal system yet, so they're not involved.

[11:15]

Interjection.

HON. MR. PARKER: The first member for Vancouver East likes to hit on the fact that 2-by-4s aren't good enough. Prince George produces more 2-by-4s than anywhere else in the world, while it has been a foundation.... As a matter of fact, it is a foundation element when you talk about house construction, because it's integral; it's most important; it's key. Two-by-four studs are key. If you like to have a roof over your head, you like to have it held up by walls, most likely, and those walls consist of studs.

Two-by-fours are a foundation of the interior industry, and we have probably the most efficient industry in the world when it comes to producing precision end-trimmed studs. Yet those mills aren't the only ones looking at further remanufacture and value-added opportunities; so are the dimension mills and the board mills that we have in the province. By the way, there are several sawmills in the Queen Charlottes. You might like to visit there one day and take a look for yourself.

[Mrs. Gran in the chair.]

We were talking about value-added wood supply. The independent remanufacturers who have spoken to me have told me that there isn't a problem with wood supply. I would like to introduce you to them, and they'll tell you the same thing. The problem they have, though, is getting particular sizes. We have an industry that basically cuts to North American standards; the sort of thing that we're familiar with and we grew up with. The way you get better lumber recoveries and better efficiencies — which everybody is talking about and likes to belabour as a motherhood issue — is to saw your product very accurately.

So if you're calling for a size of 1-by-13/16 and then a remanufacturer comes in and would like a lift of full two-inch sawn, you can't supply it because your mill is set up otherwise. What the remanufacturer does is seek out a source where he can get full two-inch sawn, for example. All these opportunities exist in the small business enterprise program and in different forest licence bid proposals, some of which are going on in the province right at this moment.

I want to talk about settlements and the fact that we've been "frozen since the turn of the century" — nothing new has developed and nothing has happened. Well, I don't think the people of Tumbler Ridge or Elkford or Logan Lake or Mackenzie or Fort Nelson or even Nimpkish, for that matter, would agree with you. You see, settlement has burgeoned over the province and continues to.

The opportunities in resource extraction and resource use are many in the province, and have served to develop the

[ Page 2229 ]

province. When you talk about most of the population being in the lower mainland, that's quite correct. However, it is supported by the rest of the province, because we're a province as a whole.

Let's just touch on the fact that industry is market-driven. If you understand that, you probably understand that if there is no demand for a specific item such as birch or alder or big leaf maple or aspen or balsam poplar or any other hardwood species.... If there is no demand, then I guess that's no market, isn't it? As long as the material is....

MADAM CHAIRMAN: Mr. Minister, your time has expired.

MR. RABBITT: Madam Chairman, I too have an interest in the debate of these estimates, being probably the only member in this hall who still is active in making a living in the industry. It's rather enjoyable listening to the replies coming from the minister to two former ministers in this province. I would like to ask the minister to continue. Next week in the debate, I'll come forward with some of my questions.

HON. MR. PARKER: I'd like to thank the member for Yale-Lillooet for the opportunity to continue.

In the matter of hardwoods, softwoods, or any other weed species that the member for Vancouver East (Mr. Williams) touched on, where there's an interest and where there's an opportunity, we're there to assist the entrepreneur with his endeavours. That isn't denied anybody.

We were talking about ranger stations in the province; I think it was 97. He said half of them were decommissioned, and now there are fewer people and the resource isn't being looked after properly. Well, there are 46 forest districts in the province, and the staffing is far greater than it was under the ranger station system. The resource is being dealt with in a most effective manner.

There have been a number of allusions to the so-called sympathetic administration that took place in the first part of this decade. That was done in a proactive manner to help industry stay operating during a severe world market downturn which, in spite of sympathetic administration, saw some industries go away. However, the fact that we have survived and we've gotten better is a tribute to the workers, to the management and to the government of the day, who saw fit to work together to pull us out of a very tough economic time.

There were some allusions made by the first member for Vancouver East — the sort of thing that I'm sure he's not prepared to do outside the House — about membership in the British Columbia Social Credit Party, participation by people from all walks of life, including the forest industry. I'd like to remind everybody that you're welcome to be a member of the British Columbia Social Credit Party, but you can only be a member of one provincial party. So if you're a member of the British Columbia Social Credit Party, you can't be a member of any other provincial party. We're open; we're not clandestine like some across the way. We're quite open about our membership and our participation, proud to show our faces and proud to stand for what we believe in; and we do that time and again. The people of British Columbia clearly appreciate the honesty and openness, because that's why we're government and you're not.

The member for Omineca (Mr. Kempf) referred to past ministers as being puppets of industry. He's entitled to his opinion, but it should be possible to substantiate those kinds of claims. I see he chooses not to sit in the House, as usual. He may have had 20 years in industry, but he's missed a lot in the last 15. The enormous waste that he referred to was certainly a case in point when we were on rough utilization, as it was known, and then subsequently intermediate utilization in the central interior, with which the member is familiar.

But as we went through the end of the sixties into the seventies we saw close utilization, third-band lifts, to the point where we were using four-inch tops, which in a lot of cases were very difficult to handle in a mill that was designed to handle six-inch tops, for example, so the industry had to catch up. We have the most effective and efficient industry in the world because they have devised ways to get a little smaller than four-inch tops — in some cases, down to about three inches. Utilization has improved considerably with mechanized falling. We see the stump collar arriving at the sawmill, whereas before we used to see as much as 12- to 18-inch stumps in the bush.

The industry has done well by British Columbia; I think British Columbia has done well by the industry. It is up to us as a ministry to get the best return possible for the people of British Columbia. There are a number of moves underway, which I'll be sharing with you in the not-too-distant future as we look to improving our revenues and assisting the improvement of utilization and assisting the opportunities in the various weed species. This is a ministry that's been mandated with the stewardship of the forest and land resource of the province, and this ministry will do that and do it well.

MR. WILLIAMS: We thank the minister for the impassioned reply and tremendous defence — and the meanderings.

What about the difference in terms of log export and value obtained by people who export logs? What do you estimate the difference to be in terms of log export values versus domestic values in the province? How much money are they making in log export? How much is going untapped? Can you answer that, Mr. Minister? What is the difference between log export values and Vancouver market values?

HON. MR. PARKER: The difference is what the marketplace dictates.

MR. WILLIAMS: I think the member for Omineca indicated very clearly that the Vancouver log market is not a genuine market. All the economists that have studied it have come to the same conclusion — such as Dr. Pearse from the University of British Columbia and outside experts. Yet it is the foundation for your evaluation and appraisal system on the coast for what you charge for public timber. The only genuine market test, Mr. Minister, is when we export to the Pacific Rim. That is a real market. There is a difference between the Vancouver market and that Pacific Rim market. What are the numbers, Mr. Minister?

HON. MR. PARKER: Firstly, if the log market was such a bad deal, why did you allow it to exist during your tenure? Secondly, the reason that the markets are stronger in the Asian area is the lack of wood supply in their own lands, the labour differential, the products they have put together, and the products they need. It's a function of all those items, and it's an incremental amount, as far as they are concerned. So their market price reflects all those items.

[ Page 2230 ]

MADAM CHAIRMAN: Before the Chair recognizes the next member, I would just like to ask the minister and the first member for Vancouver East to please address their comments to the Chair. The Chair recognizes the first member for Vancouver East.

MR. WILLIAMS: Thank you, Madam Chair. The minister says that there's a difference and that he recognizes the significant difference. The Vancouver log market has gotten worse over time, Mr. Minister, in terms of not being honestly represented. Prof. Pearse made some recommendations that this government has never pursued in terms of making that a more honest market. They were part of a royal commission report that came out in 1976. I don't know if the minister has read that report, but there were very clear recommendations for dealing with some of these problems and beginning to establish a genuine market system in British Columbia.

The minister recognizes that the Pacific Rim market is significantly different than this domestic market in Vancouver. I suggest to you that it's hundreds and hundreds of millions of dollars different. That is a huge, unearned increment that properly belongs to the owners of the timber: the people of British Columbia. What are those numbers, Mr. Minister? How much are we losing? You're responsible as a custodian in terms of these great public lands and the great values in these timbers. What are those numbers? What are you letting slip through your hands in your so-called appraisal system based on the Vancouver log market?

[11:30]

HON. MR. PARKER: As I said before, the log market numbers are generated by the market itself, and they change from day to day.

I'm pleased to see the member for Omineca (Mr. Kempf) back in the House. Just to touch on the silviculture audit which was called for last December, my advice is that it was not the silviculture audit that was called for, it was the silviculture review, and it is proceeding. It will result in a report being released for public comment later this fall. When the public comment is received, the total report will be available about three months later.

MR. WILLIAMS: According to the numbers I looked at on the difference between the Pacific Rim market and the export logs that are going out, it was some $100 million in the past year. In that narrow area alone, $100 million on the coast; that's 10 percent or 12 percent of the volume on the coast currently, or something like that.

There's another huge area: the whole question of the pulp boom. Our pulp mills are pushing out pulp like they never have in our modem history. These integrated companies are making money like they've never made before. But they don't pay the Crown for the value of the material that makes the pulp — that is, the chips, the residuals. That doesn't get pumped into our appraisal system, so we don't get the value of the raw material that's going into the pulp mill as owners of the forest resource.

Mr. Minister, what is the number of residuals going into your stumpage appraisal system currently?

HON. MR. PARKER: There are two appraisal systems used in British Columbia. One is for the interior, one is for the coast. The coast system is based on the Vancouver log market. The interior system is based on the U.S. rail lumber market, and it includes pulp chips at an equivalent of $10.50 a bone-dry unit. Our stumpage is charged on the whole — all the sound wood. We have a firewood scaling program in the province; stumpage is charged on the whole log. So stumpage is charged on the volume, whether it's sawn up into sawdust, chips, planer shavings, lumber, plywood, veneer, waferboard — take your pick. Stumpage is charged on that fibre.

Also, when it comes to the interior system, there's a further addition to the market value: a chip price allowance. That is what is in the system at the moment.

MR. WILLIAMS: Here we have the greatest modern boom in the pulp industry, they are running at full capacity, selling all their product at prices higher than they've ever had in the modern history of the pulp industry of this province, and the number that is put into your appraisal system to factor the value to the public of the trees is $10.50 a bone-dry unit. Where does that number come from, Mr. Minister? It comes from the last intervention in the pulp monopoly back in 1973-74. That's when the price was established at $10.50 a bone-dry unit, and it has never been touched since. It is absolutely scandalous that this pulp industry should walk away and not pay anything near what those chips or raw material are worth. Mr. Minister, do you know what prices are being paid right now in the free market in the northwest United States — Puget Sound, Washington, Oregon? Do you know what chip prices those pulp mills are paying? Can you give us the numbers?

HON. MR. PARKER: The prices paid in the Pacific Northwest are reflective of incremental cost allowances. If all you're doing is purchasing 1 percent or 2 percent of makeup, then because most of it comes from your own sources, you can afford to pay a ridiculous price. When you average over your total fibre supply cost, the increase is probably pennies. The Canadian and provincial tax laws will provide for revenues to the province from current improvements in the pulp industry, the newsprint industry and the paper industry.

Interjection.

HON. MR. PARKER: The histrionics of the member for Vancouver East are.... That's all they are: histrionics.

When the industry is well, the province is well. Employment is high, taxes are paid, wages are paid, services are bought and paid for. That augurs well for British Columbia at all times. When the industry is strong, we're strong. I think he always misses that point, Madam Chairman.

MR. WILLIAMS: One more comment in this regard. That is the typical General Bullmoose vision of the world that I would expect from that minister: "If it's good for General Motors, it's good for the nation." How perfect for the Minister of Forests of British Columbia!

He talks about these prices. You say you want a market driven industry, Mr. Minister, and it should indeed be a market-driven industry. In British Columbia it is not a market-driven industry. You get south of the line, you get in other jurisdictions, and you get a market-driven industry. This industry never paid a market price for a log in terms of public timber in recent years at all, or in terms of supply for their pulp mills, because they never faced any competition. The only way you can establish market is through competition.

[ Page 2231 ]

We do not have competition in British Columbia. You say those numbers are only incremental numbers, Mr. Minister, down in the United States. Where is your backup for that?

There is a real market. It is not the 1973 numbers of $10.50 a bone-dry unit. You know that. You're not doing your job. You're inviting another action by the United States of America against this province. You've already had them come after us with respect to lumber — and rightly so — and you crashed. Your Premier ended up agreeing that there was indeed a subsidy, because we didn't charge what the timber was worth in terms of softwood lumber. Now, in these years, it's abundantly clear that the same problem exists in our pulp industry as well. How long before you again get charges from these other administrations in that regard, in terms of subsidies to the pulp industry? Will we then have to rely on the federal government again to bail us out and to try to make us a little more honest in terms of what we charge for raw material going into the pulp mills?

There have been many occasions when the staff of the Ministry of Forests have talked to those previous ministers and said: "It's wrong. We want to upgrade that system. The pulp mills are getting away with murder in terms of the under pricing of the raw material." Always as a result of intervention by COFI and the big players, the ministers on that side have buckled under, and you still have in place that archaic, antique $10.50 — it's totally unjustified. It really amounts to theft from the public treasury in terms of that phony system you've got.

You get up and do your little so-called professional forester dance, saying,"Well, we have the Rothery system," which is the way you try and measure the value of the tree. You don't say that you don't put the right numbers into the system. You don't say, until it's pulled out of you, that with respect to the pulp sector it's $10.50, when in fact the market is up in the eighties in the U.S. northwest, the Pacific and the Puget Sound Basin. That's an incredible gap, and it represents theft from the public treasury, as I perceive it.

MR. CLARK: Just to follow up on the comments of the first member for Vancouver East, just as a layman standing here, I wonder if the minister could give us some explanation regarding 1974 prices. We know what's happening to the price of pulp; we know what's happening to the profit margin of the industry; we know the tremendous explosion that's happening in pulp mills and expansion in this province. Is it not reasonable to assume that, even given inflation and other things, $10.50 frozen in 1974 dollars is too low? Has the minister decided to increase that $10.50? Is he doing any analysis? Can he justify it on the basis of those increased end product prices for pulp? Or is it going to stay at $10.50 for another ten years?

HON. MR. PARKER: Let's go back to an earlier comment, another misleading statement from the member for Vancouver East.

MR. CLARK: Point of order.

MADAM CHAIRMAN: The second member for Vancouver East on a point of order.

MR. CLARK: This is the third time now that the Minister of Forests has accused the first member of misleading the House, and I think that deserves both a withdrawal and an apology.

HON. MR. PARKER: The member opposite said in the debate on countervailing duties that the Premier of the province admitted that the industry was being subsidized, and our Premier did not say that. The way that the....

MADAM CHAIRMAN: Mr. Minister, there is a point of order by the second member for Vancouver East.

MR. CLARK: My point of order hasn't been addressed. The fact is that the minister has accused the first member for Vancouver East of misleading the House, and that statement should be withdrawn uncategorically.

HON. MR. PARKER: Madam Chairman, the member opposite stated that the Premier of the province admitted that the industry was being subsidized in the matter of countervailing duties. That is not correct, so I consider it to be misleading.

To go on to the rest of the question, I can't speak for the next umpteen years, as the second member for Vancouver East brought up, but at this point we are not considering changing the chip price allowance in the stumpage appraisal.

MR. KEMPF: That doesn't surprise me one little bit. You know, we don't have to go into another jurisdiction to find out what the fibre that's going into our pulp mills should be worth. The minister need only ask his staff. Mr. Minister, they told me; they'll tell you. They'll tell you we're getting terribly shortchanged in this province.

They told me when the price of pulp was $100 a tonne less than it is now. You need not go into another jurisdiction. I want to dwell for a moment on export, and I've got to differ with my friend to my right here in regard to export. I have no problems...

HON. MR. BRUMMET: He's to your left.

MR. KEMPF: He's looking further to my right every day.

...with the export of a certain amount of timber from this province, but I do have a problem with the people of British Columbia not seeing a proper return for that timber.

Just last week a shipment of spruce left Stewart for the export market in the Pacific Rim. The price paid for that spruce was $400 a thousand EASs shipped. How much did the people of British Columbia get in stumpage for that wood?

HON. MR. PARKER: If the member would care to supply me with the necessary export forms so that we can identify the timber marks and the volumes, then we can identify how much was received by the province of British Columbia.

MR. KEMPF: Madam Chairman, I haven't access to those documents; the minister has. All he has to do is check the shipments from Stewart — they weren't that large last week — and he will find out exactly what I am talking about.

[11:45]

The minister talked about how the state of Washington arrived at their stumpage, and suggested that operators in Washington don't pay corporate tax. They don't pay income

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tax. They don't pay all of those taxes that are paid here in British Columbia. Is that so, Mr. Minister? I don't think so. You see, I've operated in the state of Washington. There's nothing wrong with that; check the multinationals that operate in British Columbia and find out how many of them are U.S.-based. A small company operating in the state of Washington, and never, in the three years that I was involved with that company, did I ever pay less than $100 a thousand average, including pulp. Not only that: we were required to skid even firewood to the landing. There's no waste there. We had to advertise it for sale in local newspapers, and only if we couldn't sell it could we get rid of it on the landing. Don't tell me about operating in the state of Washington. Don't tell me about paying corporate taxes in the state of Washington.

Let's talk about waste with respect to the multinationals. Let's talk about the perfectly good sawlogs that are going through pulp mills in this province. Let's talk about the 50 percent of all fibre in this province that goes through pulp mills which the people of this province aren't seeing a fair return for — the sawlogs that go through pulp mills. I'm sure my investigation of the towing practices on the coast would have shown just how many sawlogs should have been going through sawmills, not into pulp mills, and seeing a greater return to the people of this province.

The minister talked about section 88. I know his feeling about section 88, that system of corporate welfare to the multinational monopolies in the province. What I'm going to ask the minister at this time is in regard to something else he talked about: the management review. Where is the management review at this time? Some stories that I don't like to hear are coming out of the ministry about the management review, because that management review and the recommendations that I saw coming out of that review are absolutely necessary if we're going to turn the industry around, as you just a moment ago said you were going to do. That management review and those recommendations are absolutely necessary.

The decision-making process in the B.C. Forest Service has got to return to the local level. For far too long — and your staff will tell you this as well, Mr. Minister — local decisions made in the B.C. Forest Service that came right to Victoria.... That has got to stop. It has gone on for far too long — as you know, as a professional forester. This is a very diverse province. It changes not only from area to area but from drainage to drainage, and those decisions have to be made by competent people at a local level, not by politicians here in Victoria.

HON. MR. PARKER: Madam Chairman, the member for Omineca is quite correct, and I follow that philosophy myself. The best decisions are made by the local managers with the local knowledge and the local input.

Just to touch back on whether or not corporate taxes are paid in Washington, I didn't bring anything up to this House on that. What I was talking about was U.S. Forest Service sales on federal lands under national forest administration in the state of Washington, because in some counties the counties dispose of timber. There are some state lands, and there are some other lands that are held by school districts and so on. It's a means of financing school districts; I guess there were some land grants back in the last century. So there are a number of different publicly held lands, and in the U.S. Forest Service timber sales, the U.S. Forest Service builds all the infrastructure. In British Columbia the licensee has to build all the infrastructure, so the cost allowance is put in the appraisal. In the States it's built and charged up-front. So there's a difference in philosophies.

As far as the matter of sawlogs being towed to pulp mills and so on, the sawlogs on the coast are scaled by firm-wood cubic metre volume, and by log grade, and charged accordingly, and if the end user sees fit to cut it up and put it in his fireplace, that's up to him. He still pays that high stumpage first.

MR. WILLIAMS: It's real high stumpage. We're still in the minimums, Mr. Minister. You went through a bunch of gobbledegook about the spruce going out of Stewart — $400 a thousand — but aren't those people up there operating on minimum stumpage, Mr. Minister? Isn't the bulk of that a rehabilitation forest — your new euphemism for another scam in that beleaguered region? Westar, whom you used to work for, trampled over that whole region, did not do proper work, didn't reforest properly, and all the rest. They left a mess behind and left a rehabilitation forest, and the next scam moves in.

What's minimum stumpage today?

HON. MR. PARKER: In that area it's 3 percent of the selling price, or $1.10 usually — about $1.10 a metre. The previous licensee for tree-farm licence No. 1, Westar Timber, when they relinquished the north block of the tree-farm licence, retained the silviculture obligations, and they have been meeting those obligations. I had a short and interesting career with Westar. The successor company, Repap, has the downsized tree-farm licence, and they continue to meet their obligations, too.

MR. WILLIAMS: So there you are, Mr. Member for Omineca (Mr. Kempf): it's $1.10 versus the $400 you're talking about for some.... It's just incredible. We're talking about different units, and you have to transfer and do the arithmetic relative to that, but it gives you an idea of the difference.

A few minutes ago, you also dealt with the question of deciduous trees — like birch — being trashed. You explained it away by saying: "Well, if there's no market, that's what happens to them" — just like that. In Finland, a third of their forest cut is birch; we trash them here. I know of cases where your ministry trashed them in order to plant conifers, instead of tying it in and selling it to potential furniture buyers in the next year or two, when that could be arranged.

Think about that. You explain away the trashing of the deciduous forest resource in this province by saying there's no market. I guess you do need a marketing division if you don't think there's a market for these things. What kind of system is it that can allow such profligate waste? Only a wealthy province could mismanage on the scale that we do in this ministry. Only a wealthy province could afford to trash birch trees, and other deciduous trees, in the name of some kind of forest management policy.

Think about what you said: there's no market, so it's okay to trash those trees. Do you have any kind of ethical base that you work from, in terms of what this planet is about, what this wonderful land base of British Columbia is about, and what your responsibility is as the custodian of this great public wealth, the land base of British Columbia? You think about that. You think about the oath of office you take, and then you think about your response to that question, and you think about whether you're doing your job.

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HON. MR. PARKER: Madam Chairman, I get a little tired of the preaching attitude of the member opposite. He suggests that I don't operate under a code of ethics; I most certainly do, and I have.

I want to go back to the birch matter. If there is a demand for birch, the birch is harvested. If the forester responsible for the silviculture prescription for a specific site suggests that the area should be clearcut and the new crop should be conifers, that is reviewed by the licenser, which is the Forest Service. If it is acceptable, then that's the program. If there is no market for the hardwood portion of that stand, then it does get knocked down, and a new crop is planted.

Or, in some cases, you windrow and catch a natural seeding, if possible, for natural regeneration. And you trash it. You know, if you don't have a market for anything.... If you don't have a market for a used milk container, you trash it. So if there is no use, if there is no market demand, if there is nobody seeking that wood and the better use of that forest land is to get it under a conifer crop, then that's what you do.

MR. KEMPF: I know the hour is near lunchtime, but there are a couple of things I want to touch on before we leave this interesting subject.

The minister talked about their being no demand for birch and related that to the Stewart area. There's a proposal before the ministry — it's been there for some six or seven months that I know of — by a constituent of mine to use the birch that's presently growing between Kitwanga and Stewart. Where is that proposal? Where is the ministry on that proposal? If we're going to talk about these things, let's get down to basics.

The other question I have before we leave the Stewart area — and maybe we'll return — is: what is the status of Tay-M? What is the present status of Tay-M in relation to their living up to the contract that they have with the provincial government with respect to their timber limit?

HON. MR. PARKER: I haven't alluded at any time to birch in the area of Stewart, but now that the member for Omineca brings it up, if he cares to check with his constituent, he will find that the constituent worked with the local district manager and they have come to an agreement on how to deal with the constituent's interest. It's being dealt with by the local manager at the local level where it belongs. The minister didn't interfere.

On the other matter, Tay-M Logging — the present status as far as their licence is concerned — again, I will find out from the local district manager and return to you.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Strachan moved adjournment of the House.

Motion approved.

The House adjourned at 12:00.

Appendix

MOTIONS

82 The Hon. W. B. Strachan to move-

That, pursuant to Standing Order 69 (2):

I . Mr. Kempf be substituted for Mrs. Boone on the Select Standing Committee on Forests and Lands;

2. Mr. Kempf be substituted for Mr. R. Fraser on the Select Standing Committee on Standing Orders, Private Bills and Members' Services;

3. Mr. Kempf be substituted for Mr. Pelton on the Select Standing Committee on Tourism and Environment;

4. Dr. Huberts be substituted for the Hon. G. M. McCarthy on the Select Standing Committee on Economic Development, Transportation and Municipal Affairs; and

5. The Hon. G. M. McCarthy be substituted for the Hon. C. H. Richmond on the Select Standing Committee on Public Accounts.