[ Page 2317 ]
Routine Proceedings
Miscellaneous Statutes Amendment Act (No. 2), 1987 (Bill 42). Committee stage.
(Hon. B.R. Smith) –– 2317
Hon. Mr. Strachan
Mr. Sihota
Mr. Jansen
Mr. Lovick
Committee of Supply: Ministry of Agriculture and Fisheries estimates.
(Hon. Mr. Savage)
On vote 7: minister's office –– 2320
Hon. Mr. Savage
Mr. Rose
Mr. Peterson
Mr. Chalmers
The House met at 10:08 a.m.
Prayers.
Orders of the Day
HON. MR. STRACHAN: Mr. Speaker, committee on Bill 42.
MISCELLANEOUS STATUTES
AMENDMENT ACT (No. 2), 1987
(continued)
The House in committee on Bill 42; Mr. Pelton in the chair.
HON. MR. STRACHAN: Last night the committee on Bill 42 rose having postponed sections 82 to 98 inclusive. The Minister of Economic Development (Hon. Mrs. McCarthy) is with the Premier this morning on an economic development council, and representing the government in discussion on sections 82 to 98 will be the member for Chilliwack (Mr. Jansen).
On Section 82.
MR. SIHOTA: It certainly is a matter of some regret on my part that the Minister of Economic Development is not here. I appreciate that she was here last night and I wasn't, and accordingly I won't go into any details. I didn't realize she was here last night until a minute ago, so that changes the tenor of my comments a bit. But I understand that the parliamentary secretary is here to look after this matter.
I have several concerns about the Small Business Venture Capital Act and the changes proposed in Bill 42. and instead of being long-winded about it I would start off by just wanting to ask a question on section 82. Would the member responsible give me an explanation of the intent of section 82?
MR. JANSEN: Mr. Chairman, there are essentially two changes to section 82. The first change is the removal of the non-arm's-length classification as far as associated companies are concerned, relating to nieces and nephews having ownership. The other change is that in-laws not residing in the same residence are also not deemed to be associates. That's the intent of section 82.
MR. SIHOTA: A question again to the member: is that with respect to the company in which the venture capital corporation will be investing?
MR. JANSEN: Mr. Chairman, yes, that is in respect to what is called the ESB — the business that the VCC would be the target company.... In other words, the investing company.
MR. SIHOTA: If I can just take it one step further. I take it that what is being said with respect to the affiliate sections here and relatives is that it is possible for a VCC to invest in a company or to provide funding for a company where the principals of the company — as opposed to the VCC — are related to the principals of the VCC, in the sense that they are nephews and nieces. Am I correct in that understanding'?
MR. JANSEN: Yes, Mr. Chairman, that is correct. There could be that relationship, although there are other sections in the act that would preclude any actions that were not following the spirit and intent of the legislation.
MR. SIHOTA: I take it that that applies to section 82 (l) (a). With respect to what I read as 82(2) and 82(6) of that section, could the member explain the intent of those two sections?
MR. JANSEN: Mr. Chairman, talking about subsection (6).... Is that the question? I think he was talking about 82(l)(a), which deals with the definition of "associate," and subsection (6), which is more technical and talks about the vote carrying.... I'm not sure what his question is, whether he's talking about the exercise of control, as subsection (6) does, or he's talking about the relationship as far as associates are concerned. Maybe he can clarify that.
[10:15]
MR. SIHOTA: Maybe I'll be more to the point, Mr. Chairman. What I'm trying to find out is what the impact of those changes is. Am I correct in assuming that the purpose of those changes is to allow the shareholders of a VCC to be closer to the target company?
MR. JANSEN: Yes, Mr. Chairman, that is the intention. It simply broadens the small business's eligibility for an investment from the venture capital corporation.
MR. LOVICK: I think both my colleague and I, Mr. Chairman, are struggling a little with, in more precise terms, what the intent of this is. The explanatory note tells us that the intent of section 82 is to strengthen the relevant provisions. The predicament is that as I read the appropriate clauses listed in 82, and for that matter in other sections as well, I see, if anything, the converse, the opposite, a loosening of.
Let me just illustrate that. For example, in subsection (b)(ii) the old legislation used to say that it is a question of fact about what the relevant facts are, including, for example, the existence of an option, warrant or right described in the other subsections. Now of course, what it says is "account shall be taken of." It seems to me there's a tremendous and significant difference between the two.
I mention that particular example, Mr. Chairman, simply asking for information. What does it mean when we talk about strengthening the relevant provisions? I think both my colleague and I are asking for edification on that point.
MR. JANSEN: Mr. Chairman, there are two thrusts. First of all, there are situations in which — although the act specifically makes mention of a certain relationship — the spirit and intent of the legislation, which is to encourage the formation of eligible small businesses, are still followed. In which case the administrator would exercise discretion. There is a broadening of the legislation in one aspect, and it has a more restrictive transfer capability in the legislation in another part. It is certainly broadening the legislation in reference to the relationship in the definition of "associates," and the strengthening, transfer and restrictive part of it would
[ Page 2318 ]
be dealt with in subsection (6), where we talk about transfer rights and voting abilities.
MR. SIHOTA: Perhaps the member could either comfort me or cause me greater concern by answering the next question, which will probably determine how I feel about this section.
It seems to me — and I would like the member to correct me if I'm wrong on this — that it is possible for a VCC under this section to have a significant controlling interest in the target company. I see the member nodding as if to say I'm wrong in that assumption. I feel comforted by that.
Would the member agree with me in principle that it would not be appropriate for the VCC to acquire controlling interest in any target company?
MR. JANSEN: The legislation enables the venture capital corporation.... It comes further in the legislation; we're jumping ahead a little bit. We're talking about controlling interest there, and we've changed it to reflect what the Income Tax Act indeed provides. It's now 50 percent or more. That is the controlling interest.
MR. LOVICK: Just another quick question about section 82 –– I want to ask about the two new sections that have been added — the brand-new ones; namely, subsections (9) and (10). My specific question concerns subsection (10). I would like to ask what the rationale for that is. Why do we give the administrator that extra discretionary power? We say: "Any calculation or determination under this Act or regulations may be based on projections that the administrator considers to be reasonable." I don't think that's a very tight definition, with all due respect, and also I don't understand what the rationale for it is; and I would ask therefor.
MR. JANSEN: The intent of this legislation is to assist and to enable new companies to be developed, new eligible small businesses. Where there are startups, there will be no historical data being provided, because of the nature of the company being started. So the administrator then has to rely on pro forma data; in other words, data that has been prepared on the basis of the best estimates. In those cases, then, there isn't historical data, and the information being supplied is of a pro forma nature and, as such, has to be taken in that context.
MR. SIHOTA: I think it's important at this point that I let the member opposite know where it is I'm coming from and where I think everybody on this side of the House is coming from. That may indeed colour the balance of the debate on this, Mr. Chairman, but I'll be very brief in dealing with that.
I think there is a general acceptance on this side of the House that venture capital corporations are a good thing and that the vehicle for investment that's being set up under this legislation is also a good thing. There is also a recognition on this side of the House that perhaps in the past the rules and regulations have been too rigid, have prevented appropriate investments from happening and have prevented us from seeing the growth of VCCs as an appropriate investment tool and an alternative to traditional sources of equity financing.
On that I think we will all agree. The tension in this debate, as it goes on in the forthcoming sections, will be with respect to the extent to which you relax the rules to bring about the flexibility we all agree is needed. That's where our concern is: are we moving too far, are we swinging the pendulum too far over, to allow too much flexibility and to allow for perhaps too much of a nexus between the venture capital corporation and the target company? In my view, the further you move away from arm's-length relationships between the VCC and the target company, the more likely it is that factors other than good, sound business principles will play a role in investment policies with respect to the VCC. I don't think anybody wants to see that. That's our concern with respect to this section.
We're quite prepared to let it go as it is proposed here in section 82 at this time to see how it works out, but I do that with a degree of nervousness, and that should be made clear. I would hope everybody else does as well. There is a potential problem there. We've seen in the past in other areas, particularly from my perspective of jurisprudence but also in business relationships that are not truly arm's length, that people have a very clever way of working around nephews and nieces to be able to secure other tax advantages or to achieve equity financing. But we'll agree to this and we'll proceed to the forthcoming sections.
Sections 82 and 83 approved.
On section 84.
MR. SIHOTA: I take it, if I'm correct in this.... I don't have any problem with this $100,000 to $50,000 reduction, although I share the same nervousness as I did before because you're allowing for a little less equity.
Am I correct in saying the intent of subsection (4) is to allow the venture capital corporation a period of six months to build up its equity to the $50,000 level, if indeed it floats below that par line? Is that the intent of subsection (4) ?
Okay, I'll say it again. I take it that the intent is to maintain an equity of $50,000 –– I take it that if it slips before that, the purpose of subsection (4) is to allow it to float back up to $50,000 over a six-month period. Is that interpretation correct?
MR. JANSEN: Mr. Chairman, the legislation requires that an initial investment can be made of $25,000, and that within 12 months the investment of the equity position of the venture capital corporation be increased to $100,000. Recognizing that the intent is to help as much as possible small businesses, we've reduced that requirement of achieving $100,000 within 12 months down to $50,000 in 12 months. So it's $25,000 going to $50,000.
Section 84 approved.
MR. CHAIRMAN: Just before proceeding, hon. members, the second member for Okanagan South has indicated he would like leave to make an introduction. Shall leave be granted?
Leave granted.
MR. CHALMERS: Mr. Chairman, in the gallery today we have a gentleman who has had a very distinguished career in civic administration, starting some years ago in Prince Rupert, and he is now the city administrator for the city of Kelowna. I'd like the members here to help me make Stewart Fleming welcome.
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On section 85.
MR. LOVICK: Mr. Chairman, when I was doing some examination of this bill last night, I had occasion to refer to the record in Hansard of the original debate when the venture capital corporation was first set up. I read with interest a number of statements offered by way of justification for the venture capital corporation. For the record, I just want to draw members' attention to the fact that it seems that the rationale has done a rather significant turnabout.
In section 85, for example, what we perceive is that clearly there is a loosening of relationships; there's no question of that. To illustrate that point, let me just try this out on the member opposite.
The minister responsible for the venture capital corporation legislation at that time, Mr. McClelland, stated in Hansard, May 31, 1985, as follows:
"I want to emphasize that in addition to" — the other test for small business — "the VCC-funded firm must be located and primarily operating in British Columbia. This will require that 75 percent of the wages and salaries of both the qualifying small business and its affiliates be paid to employees who normally report to work at operations located in this province."
I am wondering — and my question is this — whether the impact of section 85 is effectively to make that rationale, that argument, obsolete or no longer operative.
MR. JANSEN: The answer is no, that's not the intent. The intent is to assist as much as possible venture capital corporations and eligible small businesses to benefit from the program. What section 85 does is take away what is in any case a technicality. For example, where there is a blood relationship and the ownership of a company could have less than 1 percent — effectively having no say whatsoever in a company business — it was precluded in the past from having the benefits of that program. What we're saying here is that where there isn't a business relationship such as what I've indicated, that company can still benefit from the program. We've had, in fact, a specific case where two brothers were involved in companies. One had a less than 1 percent ownership, and because of that situation — he had no business relationships between the eligible small business — he was precluded from attracting the benefits of this program. So that's what that does.
All these suggestions included in this legislation are a result of what we studied in the other provinces and found to be the weaknesses, and what the investment community has told us, and what the Institute of Chartered Accountants have told us, and what the firm of Woods Gordon has told us. What you're seeing here is not a loose thing, and not a lesser control, but an assist to enable the companies to take advantage of that; that's what this does. Section 85 specifically talks about enabling assistance from this program, with the spirit and intent of the program still being followed.
[10:30]
Sections 85 and 86 approved.
On section 87.
MR. SIHOTA: I guess this is the one section that does cause me a fair bit of concern, because I think, as I read it, it allows for the VCC to take a controlling interest in the business. Am I correct in that reading of section 87?
MR. JANSEN: No. This allows the equal partner scenario, where partners can now have equal shares in the business. It won't enable the controlling interest that the member is referring to.
MR. SIHOTA: Is that an equal interest in the VCC and the business?
MR. JANSEN: Mr. Chairman, what would happen is that the venture capital corporation would enjoy an equal voting relationship in the eligible small business, as other outside third parties would have. So in other words, there would be an equal voting relationship. The venture capital corporation could have 50 percent, and its outside investor could also have 50 percent.
MR. LOVICK: Mr. Chairman, section 87, as my colleague from Esquimalt-Port Renfrew points out, causes some concern. We're not, however, going to try to make this into some kind of half-hour debate. We nevertheless want to pose a couple of questions, as we have thus far, and to get some assurances, I guess.
Let me refer again to the passage from Hansard that I quoted from before; namely May 31, 1985. I'll pose the question before I read this. Is it the case that this statement made by the minister in 1985 no longer obtains, given section 87? The minister said: "In addition, a VCC is not allowed to acquire a controlling interest in any of the small business investments. That restriction is designed to ensure that the VCCs fulfil the spirit and the intent of the act, and that the control of the company remains with the original shareholders and with those who had the ideas and the energy to put the company together."
The question is whether section 87 makes that statement still alive and well, or whether that too is no longer operable. I think I mean operative, Mr. Chairman; I'm struggling with that.
MR. JANSEN: Yes. Mr. Chairman, that statement is still alive and well. What you have to remember when you're dealing with section 87 is that you also have to relate to section 82, which talks about the de facto controlling interest of an eligible small business. That is still the case. It is not our intention that the VCC should exercise control, and the statement made at that time is still applicable now.
Sections 87 to 90 inclusive approved.
On section 91.
MR. SIHOTA: In keeping with the comments made by the second member for Nanaimo (Mr. Lovick), I have a lot of problems with this one because I believe that the minister, when he originally introduced this legislation in May 1985, was bang-on when he said:
"A small business is defined as a firm which, together with its affiliates, has fewer than 75 employees. Once the investment has been made, the company will be allowed to expand to a total of 150 employees. That limit should ensure the company remain a true small business. If you go beyond that,
[ Page 2320 ]
you lose your small business status, and presumably you've been successful enough that you can carry your own equity from then on."
As I read this section, it takes away the figures of two years and the 150 employees, and I don't think that's in keeping with the original intent of the legislation. I honestly believe that that restriction should be there. I'm sure that I'm correct in that assumption; if I'm wrong, I'm sure the member will correct me.
I really think that at that point you begin to lose the intent and spirit of the act and the purpose of these VCCs as investment vehicles. I don't want to get into a debate on it. I would prefer that this section be given a second look and be stood and dealt with later on, Mr. Chairman, because I really do believe that the member would agree with me that it is a far departure from the original intent of the legislation. I would suggest that this section be postponed or stood down, because I think it violates that intent.
MR. JANSEN: The requirements still are that the VCCs invest in small businesses. But it acts as a great disincentive to the business community to suggest that once that investment has become successful and the company grows, you immediately divest. So we're saying essentially that the message or the signal to the business community is that if the investment works well and is a success, then you must divest.
We're suggesting here that the VCC would enjoy the profits and then turn around and have those profits available for reinvestment in other small businesses. The business community has requested this change by suggesting that, indeed, the winners — the ones that are really successful.... Why are you asking us to disinvest in that particular situation?
MR. SIHOTA: It reminds me of a debate that we will have in the future with respect to privatization. Why sell off all those private corporations in the hands of the province that are profitable and are making money for the province? Same analogy. I hope the member will remember that when we get to that situation.
Section 91 to 98 inclusive approved.
Title approved.
HON. MR. STRACHAN: Mr. Chairman, I move the committee rise and report the bill complete with amendment.
Motion approved.
The House resumed; Mr. Pelton in the chair.
Bill 42, Miscellaneous Statutes Amendment Act (No. 2), 1987, reported complete with amendments to be considered at the next sitting of the House after today.
HON. MR. STRACHAN: Mr. Speaker, I call Committee of Supply.
The House in Committee of Supply; Mr. Ree in the chair.
ESTIMATES: MINISTRY OF
AGRICULTURE AND FISHERIES
(continued)
On vote 7: minister's office, $241,948.
HON. MR. SAVAGE: It is indeed a pleasure to rise before the hon. members of this assembly and do the estimates for the fiscal year 1987-88. Let me say at the outset that I'm pleased to be here on behalf of the Ministry of Agriculture and Fisheries to deal with the spending estimates for that fiscal year. I'd like, if I may, to give a brief overview of the agriculture and food industry, particularly the climate in which it operates within this province.
[Mr. Pelton in the chair.]
B.C.'s agriculture and fisheries industry is in fact our food industry. I think it's too often taken for granted that we don't define what the portfolio really does. It is the basis of the food production unit for the people of British Columbia. I can say for a fact that it has been one of the solid performers in recent years in influencing our provincial economy.
We've had steadily increasing economic activity. We have created many direct and indirect jobs. We have been producing food at relatively stable prices in what I believe to be some of the most efficient farmers' and fisheries' operations in this country and, for that matter, in a lot of places around the world. We have been contributing beyond British Columbia. We are now exporting ever-increasing amounts of food products grown in B.C.
If I may delve somewhat into industry indicators, farm cash receipts for the second consecutive year have just gone over the billion-dollar mark, and we are forecasting that they will pass the billion-dollar mark again in the year 1987. The record high realized net income in 1986 — which was $214 million — could and probably will increase during 1987. Part of that is due to the $8.2 million brought into the provincial farmers' hands via the deficiency payments made by the federal government.
For the fifth straight year the primary industry has increased direct employment. We directly employ in this province for the portfolio between 31,000 and 32,000 people. And when you swell that up over the entire sector — both direct and indirect jobs — it amounts to 170,000 people.
The fisheries sector, specifically aquaculture, had sales in 1986 of $6.8 million, as compared to sales in 1985 of $3.9 million. The wild fish stocks have a landed value of $382 million. That's a 55 percent increase in the aquaculture sector over 1985.
I believe the agriculture and fisheries food sector is a great example of the contribution and the benefits that accrue through economic diversification. That diversity gives great stability to the sector and has in fact led to very consistent growth.
[10:45]
I must say, however, that even though the industry has grown quite steadily, it has not been without some problems. As many of you have read in papers or heard on the newscasts, a good many of our farmers have felt severe financial stress. A good example, if I may, is to refer to the grain sector, where today's prices, backed off in real-dollar terms, are back to prices equivalent to the Depression years. I believe, looking at grain price forecasts, that a number of our grain producers will face severe financial stress for two or three years to come. If we have recovering grain prices, there is such a great debt load being borne by a number of our grain producers, specifically in the Peace River sector, that it will take many years of savings to bring them out of debt.
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In my judgment, and I think it's been talked about on a worldwide basis most recently, until we convince the other trading countries to discontinue the trade wars and subsidies that are prevalent in some of our major producing areas, we will not come to grips with the fact of the low prices that exist today. It is far from being a natural market price. We feel that until those particular subsidies are dealt with, it is actually encouraging, by the payment of subsidies, excess production. Those subsidies, in fact, have been paid on a production basis.
On the ministry's budget, a lot has been said about the fact that the budget has come down somewhat from the 1985-86 and 1986-87 fiscal years, but a number of things have caused that to happen. There have been better market conditions in a number of commodities. Another contributing factor for the reduction of the budget is the fact that a number of the input costs have also been reduced, and we've also seen quite a reduction in interest rate costs.
There are more and more federal-provincial initiatives being undertaken. In our budget, the major drop in the 1987-88 fiscal year was the termination of the partial interest reimbursement program. That amounted to a reduction of $8.52 million. We felt that the program was becoming ineffective as interest rates dropped. The farmers' distress problems are more from cash flow, because of the prevailing prices. We feet that instead of the partial interest reimbursement program, more emphasis has to be placed on the agricultural land development assistance program; that's a 15-year low-interest loan that allows farmers to borrow up to $50,000.
We are also taking extensive efforts to cooperate with the federal government on developing national programs that will be substantially the same across this country. In other words, we are trying to reduce the number of provinces having specialty programs that allow one to be more competitive than the other or to be at a complete disadvantage to another.
The farm income insurance program, which stabilizes the difference between the costs of operating in the marketplace and the actual return from the marketplace, will be reduced approximately $6.4 million in 1987-88; that's when it's paid out. That is because of the stability that has occurred in the marketplace, strengthening prices in some of the commodities. The actual demand on that program will be reduced. It is also seen that if we can get a consensus with the provinces across Canada on a national agricultural strategy, which is being proposed, we will see participation by producers, provinces and the federal government to stabilize incomes.
If I could touch on a few initiatives that I feel have borne fruit in 1986 and that we look forward to carrying on in 1987, in the marketing sector, as many of you may well recall, we had Food Pacific '86. That was launched to promote what we have in B.C. and also what some of the other provinces have. The overall impact of that show was a contribution to the Canadian economy of some $122 million. Sales stemming from that show brought in net value to Canadian companies worth more than $45 million, and in excess of $30 million specifically to B.C. companies. We are planning Food Pacific '88, which will be even bigger and better.
Another program that our ministry launched was "The Great Taste of B.C." where we jointly encouraged restaurants to come onside supporting products grown and produced in British Columbia. That program has proven to be very successful and well accepted. The basic message to the restaurateurs was to support the use of B.C. products on their menus whenever possible.
Another program that launched in February was "Best Buy British Columbia" with the concurrence of the different chain stores — the food retail system — their cooperation and participation in labeling and advertising the value of B.C. products and home-grown B.C. produce during specific periods of different months. They could label them on their store shelves and identify them in their flyers.
We've gone through a couple of other very key things. One that I might like to refer to is the testing of cold tolerance of kiwi fruit on Vancouver Island. Believe it or not, we're trying to get into the kiwi fruit industry.
The greenhouse assistance program has been very successful. In doing some of the research we found that we had productivity increases, particularly in cucumbers, of up to 20 percent; and in tomatoes, on some varieties, through research, we've had productivity increases of up to 60 percent.
We are pushing very hard to increase sales to other countries — not only Asia Pacific but also with our trading partners to the south — of our B.C.-produced products.
We have a large value-added production base in this province, through the processing companies, distilling systems, etc., and we are dealing extensively with specialty products in value-adding.
The ministry's food industry development program which began in 1985 is a program that provides financial assistance for projects aimed at developing new or expanded markets. We are introducing and improving our food processing technology capabilities. To date $1.4 million has been expended on those projects. There are a total of 69 underway.
If I may refer to aquaculture for a moment, aquaculture has been a growing industry, part of the agriculture and fisheries sector, and at this stage is still continuing to grow, I'd like to refer to some numbers, if I may. In 1984 we had 10 operating farms; by the end of 1986 we had 69 and by the end of this calendar year, we will have approximately 125 operating salmon farms. The value of that aquaculture production, as I referred to earlier, was $6.8 million. We feel we have a potential by the year 2000 to exceed $150 million in salmon and aquaculture-related industry for the province of B.C.
There is one other item I'd like to touch on, Mr. Chairman, and that is the national agricultural strategy that I referred to earlier. It's very important to recognize that we in B.C. played a major role in promoting the development of a national agricultural strategy. We felt that it was very important to have all the provinces cooperate with the federal government in designing a strategy for the future of agriculture in this country
Mr. Chairman, I thank you very much for the opportunity to give some opening remarks.
MR. ROSE: I'd like to thank the minister for his overview and congratulate him on his appointment. It's the first time he's had to defend his estimates. This is the first time I've had a chance to attack them.
HON. MR. BRUMMET: You wouldn't do that.
MR. ROSE: I wouldn't do it frontally. I might do it snidely here and there.
[ Page 2322 ]
I think, though, that the minister enjoys wide respect among the people of the agricultural community — at least he did, and I hope he continues to do so. I've certainly enjoyed our relationship, as I enjoyed his deputy and the freedom and the openness with which he addressed and briefed our resource committee of caucus, before the session started. So I thank Mr. MacEachern for that.
I suppose it's my hope that we on both sides of the House could work to enhance agriculture and its health and its continued growth and importance. Policies don't always do that. I hope that we can continue to support the family farm, so that those units, which I think are very close to the heart of the minister, continue to be a major part of our system, and that we don't develop an agriculture based on the corporate farm — or that conditions are such that the only farms that can survive in the future are those backed by huge financial, vertically integrated companies, and millionaires are the only ones who can afford to be in the business. We don't want, either, the kind of marginal fanning that so many people are forced to undertake today. Most of the farmers — I would say "most" without hesitation — work off the farm, and are really part-time farmers, and unless you're lucky enough to enjoy the luxury of some marketing or supply management program you have a very difficult time earning a living, and there are some implications for that.
I don't mind the minister boasting about his accomplishments, and the initiatives through the various things — Food Pacific, various kinds of import substitutions that he has,"taste B.C.".... . I wonder, though, about the implications for "buy B.C." and "taste B.C." and import substitutions when we're faced with the spectre of free trade — whether those things will be as effective if we have free trade in agriculture. I'll get to that in a little while.
The trouble with a debate such as this in the middle of July is that we all feel the pressure that we can only hit the high spots, and that's all I intend to do. I know the Provincial Secretary (Hon. Mr. Veitch) would be delighted if I would move on to another high spot. [Applause.]
I notice that Mr. Rabbitt — Thumper — is at it again.
I'm not sure how a federal program is going to work out, because it's so varied. We talk about western agriculture, but what we really mean is prairie agriculture, and we talk about mixed farming — whatever is left of that — and we're talking about British Columbia, the little bit that we have here, plus some in the Maritimes and the large bunch of it really in Ontario and Quebec.
Despite the fact that we've made some progress, we can't hide the fact that we haven't had a bill in agriculture since the Bee Act of 1977. That was the last biggie we had. We haven't had a piece of legislation dealing with agriculture since then, and that comes from an impeccable source: the Ministry of Agriculture itself. So we got stung with the Bee Act in 1977, and ten years later we haven't had another legislative initiative. That's performance.
HON. MR. VEITCH: That was a honey, too.
MR. ROSE: That was no honey. That was a honeymoon.
I don't think we can hide the fact, either, Mr. Chairman, that B.C. agriculture is in trouble. Let me give you a little overview.
[11:00]
B.C. probably has more financial stress associated with its farmers than any other province in Canada. It is attested to by a written question which was supplied to me in the last couple of days. I'll get into the details on that in the next section.
There were 5 percent fewer farms in '86 than there were in '81. Most serious losses were small operations with sales below $10,000. Over 1,300 small farmers disappeared. That doesn't sound to me like a healthy industry — '81 to '85. I admit quite readily that those were severe days in terms of massive high interest rates and all kinds of other problems with oil prices, input costs of various kinds — squeezed a lot of people out. That's the lunacy of the federal restraint program and tight money policies, and tying our interest rates to the United States, so that the unemployed can be soldiers fighting inflation. The unemployed, instead of being considered welfare bums, should have hero medals pasted on them, because they are a million and a half people fighting the battle against inflation. The central argument has been that the more unemployed you have the easier it is to control inflation.
The lunacy of tying our interest rates to those of the United States has caused a good deal of trouble. It had nothing to do with the province, and it certainly was beyond the control of the farmers, just as they cannot as individual farmers fight the subsidies of governments, whether you're talking about the U.S. government or the EEC. The minister is aware that in Britain, just one country of the EEC, the agricultural production was approximately two and a half billion pounds sterling in '85. They got out of it, in products, one and a quarter billion pounds sterling. So subsidies are there, and they got half of what they paid for the produce.
Our farmers cannot fight against that. If the U.S. is subsidizing grain for 2.65 and the EEC for 3.13, there's no way we can get away with an 85 cent subsidy on our wheat. We just can't do that. So what do we do? Do we join the subsidy war? Do we join the support war? Because agriculture is probably, in B.C. and Canada and practically the world, the most subsidized industry there is. And I don't know how it produces so many free-enterprisers, because most of them are in the public trough up to their ears — no, snouts. Anyway, there's no way that that's possible.
There are some other things, if we want to continue the doom and gloom. There's an 11 percent drop in the individual ownership of farms in that same period I'm talking about, '81 to '86, and a dramatic growth in partnerships, corporations and other forms of ownership: 31 percent, now 49 percent. Pretty soon over half our farms will be owned by partnerships or corporations, and they won't be family farms at all. So the programs vitally needed to preserve these family farms, if indeed we don't think that this farming is a sunset industry.... And we may feel that way; we just don't want to say it. You know: "Goodbye, fellas, goodbye. Peasants, get lost." On the one hand we're going to have a bunch of rich farmers, corporately led, probably paying rotten wages and probably having rotten safety records — and I don't want to get into that part of it — and on the other hand we're going to have a bunch of peasants. That is something we need to address, if we mean what we say. If we don't mean what we say, it doesn't make very much difference.
Young people are driven off the land; 33 percent under 35 have left the farm in British Columbia since 1981. And they are a rapidly ageing group. Some of them are almost as old as I am; the average age of a farmer in British Columbia is 55. Again, the group is ageing because the average young person is leaving the farm. It's the same as the average schoolteacher
[ Page 2323 ]
— I notice the Minister of Education (Hon. Mr. Brummet) there. The average schoolteacher is gaining in salary, because there are no young schoolteachers hired, and as they go up on the increment rate, their age and their cost increases. My God, we couldn't afford what the minister would cost if he threatened to go back to teaching; we could hardly afford to hire him. It's cheaper, really, to have him here as a minister. Of course, he couldn't do as much damage. Well, maybe he could to fragile young minds, but he couldn't do nearly as much damage.
The minister said: "We're criticized, you know, because our budget has dropped." The minister has not defended his budget. He may say that input costs have gone down and interest rates have dropped. We can all rationalize, and we all do this, so the minister, like all humans, is going to put his best foot and face forward. But let's look at the facts. In 1975, the budget for Agriculture, which even then was a teeny, weeny ministry, was 1.6 of the provincial budget; in '83, 1.04; and now about 0.97 percent, even if you include aquaculture. In 1987-'88 it's 0.6 percent of the budget, $58 million. In 1975 it was $51.2 million, and that was 1.6 percent of the budget. But do you know what the dollars would be worth in 1975 dollars? They'd be worth $118 million. Your department hasn't even kept up to inflation.
So you can't sit there and feel smug about this — and I know the minister hasn't got a smug bone in his body — because facts are facts, sir. The picture is not a pleasant one. It may be for some, as long as we don't have free trade. If we have free trade, goodbye, you egg-producers and all you chicken-pluckers out there in the Fraser Valley — phsst, gone. Goodbye, all you dairymen. All you have you owe to udders, but you're gone. You'll be swamped in an ocean of surplus milk from the good old U.S. of A.
Interjection.
MR. ROSE: You should; that would be a nice change for you.
I guess what we're saying is that the agriculture industry is not reflected in government priorities. Agriculture is not a government priority, and there's no way that you can convince me otherwise.
Free trade — marketing boards, goodbye; no more supply management. How is it that we're going to have free trade with the United States in certain commodities? We know that they're not on the table — they say. But if you look at some of the leaked documents from the United States, you'll find that they really are a very serious concern, in the wine industry particularly.
We don't even have free trade between provinces in eggs, poultry, milk or beer. How, if we can't even do it in our own country, can we have our industries survive and not go under? If there was non-board grain available to all the chicken feeders in the Prairies, it's doubtful that we'd have industry even in the Fraser Valley. I don't say it would be impossible, but it certainly wouldn't rank very high in the pecking order. That's a real problem, and I don't have the faith that our government has in this business of free trade with the United States. I think it's integration with the United States; I think it's sovereignty-association — but that'll be another time. We just turned it down for Quebec with Canada, but we're going to try it out with the United States; that's more lunacy, in my view.
Anyway, the government has already started an assault on the support programs. Eliminating the partial interest reimbursement program, cutting the farm income insurance program by $3.2 million, 10 percent.... I don't see how the minister can stand up and beat his chest, gloat and boast in his modest way about what he's doing in face of these things. People say you can't solve anything by throwing money at it, but the facts are that since 1975 the budget has been cut in half in real dollars. That's a fact, and I don't think anyone can quarrel with that fact.
I would like now, if the minister would like to make any comments, to move on to some of the other little items that I have.
HON. MR. SAVAGE: Mr. Chairman, to the hon. opposition House Leader, the reduction in the farm income insurance numbers that you just referred to is the result of improved market conditions in the beef sector and in two or three other sectors, which will reduce the claims to the provincial government on the dollars in the budget. Those are our best estimates, looking at market returns, as to what the draw will be on farm income insurance.
On the partial interest reimbursement program that you referred to that we have cancelled, the problem with the program, unless it was changed substantially, was that it was not targeting the needy. I believe, with the programs that we have dealt with, that we are looking at the people in the greatest need, identifying that need, and dealing with it directly — not whether it's an ongoing program.
MR. ROSE: What you're saying is that you didn't anticipate having such a payout, because there would be greater income and therefore the fund wouldn't be called upon for so much money. Isn't that what you're saying? But there are probably other areas that might need more money; I don't know.
There have been enhanced programs in some of the things that we are exporting. We export certain things that don't grow very well other places. Blueberries are one example, and so are raspberries — the Canadian banana. They don't grow elsewhere, so we've done very well in those, and I think we should. I think we should be specializing in things that we do well in and that others don't; I don't quarrel with that part of it at all.
First of all, I want to thank the minister and his staff for answering certain kinds of questions that I put to him about stress. I asked him a question — and he answered it very ably — about how many British Columbia farmers had gross sales of more than $25,000 in 1986. The estimates for other years seem to be.... I'll read them. This will show you the health of the industry: 5,000 estimated in 1984; 1985, 5,500; 1986, 5,600; and 1987 — we don't know, but it appears to be roughly keeping up with inflation. It's certainly not getting any better.
But I asked some other questions. "For the farmers identified in question 1, how many, and what portion, had the following characteristics in that year? Less than 30 percent equity. Debt payments or living expenses exceeding 60 percent of gross income." This is the business of having to work off the farm. "Ratio of debt payments and living expenses of assets more than 25 percent or a debt to gross income exceeding 2.3." These have to do with stress measurements. I asked for a number of other things as well.
[ Page 2324 ]
I was also concerned a little about the research capabilities of the ministry, because to those questions I got no answers. The information is not available. I asked about that information a few months ago, and I was looking at a paper by George Brinkman at the University of Guelph. The ministry does not have the data to rebut the charge that the level of financial stress was increasing sharply, but it's all in Brinkman's paper.
I don't know whether you have access to the libraries over there or not, but you should have a research capability and you don't. You don't have a decent research capability to get economic research to answer questions. If you don't have it, I think you should be developing a research arm within your industry. I'm talking about economic and financial research. It's just not good enough, when there are published figures, which I have and can table, to tell me that the information isn't available.
HON. MR. BRUMMET: You asked the wrong questions.
MR. ROSE: Did you read the question? They had the answers to all the other questions.
HON. MR. BRUMMET: Yes, but you asked the wrong questions, the ones that didn't have the answers.
MR. ROSE: Moving right along now.... Look, I'm an expert in asking the wrong questions. I make it a specialty.
Interjections.
MR. ROSE: No, it wasn't a long-winded question. There's the rabbit pack again. They sit down there in the comer nibbling on Canadian lettuce, and then thump their desks from time to time and wiggle their noses. They turn up their noses at my questions.
I wanted to ask the minister a question. What has he done? He made some remarks to the sheep-herders of Cobble Hill about changing the proposed tax exemption which was to rise from $1,600 gross sales to $5,000. I wonder if the minister could report on his progress on that with the Minister of Finance (Hon. Mr. Couvelier), because people found that excessive. I think the argument can be made that many of these people, who are in fact part-time farmers, put in far more than they take out. They have to develop, they have an expectation of profit, but it takes a while to achieve that.
[11:15]
But they do serve another purpose: they preserve rural land. If you tax them off these small holdings.... As I said the other day, these people are not out shooting grouse on Sunday morning or riding to the hounds in their hunting pinks; they work off the farms in logging and all kinds of things and put far more into the farm than they take out. The proposal in the budget was to increase this exemption from $1600 — and it used to be one cow per acre — to $5,000. What has the minister to report on any progress to relieve some of that stress?
HON. MR. SAVAGE: The discussions are continuing and a decision will be made shortly about the qualification of income levels on land that is designated within the ALR. I have made presentations with the help of some of my colleagues and have attended a couple of meetings relative to taxation levels, and let me assure you it is my position that it should not be up at $5,000. We are reviewing it, and in my judgment I feel it is not too far off where it is.
MR. ROSE: I am delighted to hear that, but in that case I would like to ask the minister to comment on this Country Life article of June 26 on page 20. Savage is quoted here: ".... that through discussions with the federation over the past two to three years. I remember Harvey Schroeder" — so do I, parenthetically — "coming over when I was president of the federation and asking for a level to be up to $10,000 to qualify." Here's the minister speaking: "I think it should be $5,000. I think that's a fair definition of what's really a farmer."
The minister now says it's too high, but on June 20, not a month ago, published in this estimable journal called Country Life, he says flatly he thinks $5,000 is a good figure. So I'd like to know if he's had a conversion on the road to Cobble Hill, or some other destination.
HON. MR. SAVAGE: To the hon. opposition House Leader, let me assure you that there are two different criteria we're talking about. One is assessment; the other is eligibility for provincial programs. The $5,000 I referred to was a requisition from the Hon. Harvey Schroeder, when he was the minister, to up the qualifying level for provincial programs to $10,000. When I was president of the Federation of Agriculture, we suggested that it was too high a figure, that it should be down in the $5,000 range. We still suggest that, but it's not anything to do with the assessment on farmland.
MR. PETERSON: First, I would like to personally congratulate our Minister of Agriculture and Fisheries for what I think is a tremendous job he is doing. He has that open-door policy. I'm well aware that he meets with anybody and really strives hard to solve what are pretty heavy-duty problems in the agricultural industry, but things are looking better.
I just would like to take this opportunity during the minister's estimates to point out some alarming facts in terms of an article I read in a dairy publication called Butter-Fat. The article was called "The Border Drain," and maybe I could just take a moment to quote from it:
"The lure of cheap American milk, along with cheap eggs and cheap gas, has made border-hopping a regular part of many British Columbians' lives. Each day tens of thousands of dollars' worth of dairy products are purchased by Canadians in the United States, then brought back across the border for consumption at home in Canada.
"In most cases, those who buy the goods have no other business to attend to in the U.S.... and although any dairy products brought into this country are legally subject to a 17.5 percent import duty, the sheer weight of numbers makes the enforcement of that duty exceedingly difficult, which spells serious trouble for the province's dairy producers and also a lot of other marketers.
"As much as $198,000 slips through the hands of B.C. dairy farmers every day" — that's every day. "On an annual basis this amounts to a whopping $72 million" — out of our economy.
The U.S. dairy industry is subsidized at a rate of about 35 percent through transfer payments. It's pretty tough for our dairy farmers to compete with Uncle Sam's treasury.
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British Columbians enjoy a pretty good life in this province. We have excellent health and education facilities. We have a very good standard of living. Individuals who choose to make these purchases south of the border probably don't realize it, but they are in fact contributing to a reduction in B.C.'s standard of living. I would ask that they consider this before they make their next trip south of the border. Those big dollars taken out of our economy cost us a lot for the minor savings that they're personally realizing. I just wonder if the minister would choose to comment on what I think is a very alarming and increasing problem.
HON. MR. SAVAGE: I would be delighted to comment on the statements that were made. Certainly in discussions with the federal government and the federal minister we are very concerned. It's not unique to B.C. It's not unique strictly to agriculture either. But it is alarming, in my judgment, where we see a number of our Canadian people who are very accessible to U.S. points of entry proceeding south to make their purchases, and so on. The part that is disturbing is that we don't seem to have the officers responsible at the borders to collect duties that are in place. We're trying to encourage the federal government to implement and address the problem of the officers collecting the appropriate duties for the product that is crossing the border.
A good example, if I may, is the amount of milk that comes across at, I believe, five border crossing points. If you added it up for a total year, it amounts to $75 million. The utilization of that U.S. fluid milk is taking away from the capability of MSQ of the province of British Columbia. The MSQ sector is derived on the 65:35 formula. And if that food and milk is taken from the United States, it does not help the capability of an industry to establish for producing cheese, specialty cheeses, yoghurts, etc., because the fluid being used is from the U.S. Before we can achieve the MSQ share for industrial production, we have to use the fluid sector. So we are being deprived of very nearly 1 percent of the amount of MSQ we could have accumulated if that milk were purchased in B.C.
MR. ROSE: I was going to comment on this as well. Has the minister suggested some sort of duty on U.S. milk? Seventeen percent is the difference in the subsidy that we give milk, which is about 10 percent, quoting from the same article; I'm sure I saw the same article as the member for Langley. The U.S. is about 65 percent. So U.S. customers pay 65 percent of the true cost, while our customers pay 90 percent.
I want to know whether or not the minister thinks it would be helpful if the two sides of this House could work together on seeking some redress from the federal government. If they're pelting headlong for a free-trade arrangement, we don't have a very good bargaining chip here. And that's the problem, because they'll drown us in that milk.
I've heard this story before: if we had a level playing field, we could compete. There will be no level playing-field. There's not going to be the same price for labour, the same price for workers' compensation, land, water or hydro; and that's the only way we can compete. We're dead in the water unless we can do something to protect ourselves, or decide we don't need the industries. Now if we decided that, then that's a simple problem. We don't need the beer industry either, because one Milwaukee brewery could flood all of Canada with beer — and I'm not going to do the sadder but wiser routine.
We have certain provincial policies. and we'll get to it when we talk about free trade in wine and beer. But the Americans obviously want it, and we're going to have a difficult time.
Perhaps the minister might comment to say, look, if the U.S. reduced their own subsidies, or we made certain that we had tough, thoroughly investigated duties.... Those officers know who's buying milk; they do it daily or weekly down in Blaine, Aldergrove, Sumas, Douglas, and Point Roberts — well, they'll be drinking water now.
I wonder if the minister could comment on the two things. Does he think that enforcing the duty, greater enforcement, attempting to get the subsidy reduced or at least equalized to our own so we can compete.... There's one place we can compete well. Might there not be an effective sort of bipartisan approach to John Wise and the feds?
HON. MR. SAVAGE: Mr. Chairman, I think the hon. member opposite asks very good questions. It's something we've been dealing with very extensively. If we are to realize the importance this industry plays to the economy of the province of B.C., I'm sure the federal minister has to recognize on the same basis as the other provincial ministers the extent agriculture plays in the economy of Canada. It's very prudent that we understand the number of issues that are going to have to be addressed relative to bilateral trade.
There are a number of things. As the hon. member referred to, there's common subsidy practices, programs that are in Canada: Canada Pension, certainly B.C. workers' compensation, the hourly wage rates that will allow either our processors, our farmers or our delivery system to compete equally with the U.S. Unless all of the programs are identified fairly on each side of the border, then we are going to be hurt. We cannot just carte blanche say we're going to open up for free trade, because, as the hon. member said, we will lose that battle. There is no way the Canadian producer, in light of the acts and programs exist in the United States, can compete. We do not have the funds available in this country to match U.S. programs.
MR. ROSE: Well, I'm tempted to go into the free-trade stuff now, as a result of that, because it does offer a bit of a springboard, but there are two or three other things I wanted to talk about, and one of the major ones is the agricultural land reserve. We've had the latest example of a complete capitulation out in Richmond, with 150 acres exempted from the agricultural land reserve and signed by the minister.
[11:30]
This is only one example of an appalling story going into the past for about ten years, and probably into the future, unless people really get angry and outraged. I sometimes wish I had the powers of outrage of the first member for Vancouver East (Mr. Williams). However, I don't want to develop severe chest pains, and even though I feel deeply about it, I'm not at the same time prepared to fulminate to the extent that sometimes, I think, would be more effective.
Here's the story. In 1975 there were 4,700,000 hectares in the reserve; and today, in round numbers, there are 4,600,000. There is a loss of 30,000 hectares over 11 years. Everyone knows how scarce a commodity farmland is in British Columbia; it amounts to about 4 percent. Most of it is in areas which are seasonally disadvantaged.
[ Page 2326 ]
I look at the Agricultural Land Commission, and I look at the inclusions and the exclusions. The exclusions, by and large, are in the Okanagan Valley, the Comox Valley, the Fraser Valley and places in the lower Island. Those are the places where people like to live, and they are the development areas.
I think everyone knows — if they don't, they should — that the Agricultural Land Reserve was brought in because roundheeled pushovers — that's not a rare bird, those are older persons — on councils couldn't withstand the blandishments of developers. That's why we have it. That's why we took it out of local control. So what happens now? Some wiseacre comes along with either a political connection or some scheme that's going to bedazzle a local council into millions of assessment riches, and he gets it on approval.
So it goes to the Land Commission; they turn it down — in the case of Richmond — four times. It's in the Richmond plan as agriculture land. There's no recreational need for it, according to any assessment, in Richmond. Yet plunked right in the middle of farmland is an exclusion for a golf course and a spot zoning for a clubhouse. Next thing, there will be a driving range and then a parking lot, and then maybe some houses around it to make it viable.
AN HON. MEMBER: A bar.
MR. ROSE: Well, that would be nice on the nineteenth hole, and maybe a couple of highrises around there.
So what happens? There has never been a case when a golf course has returned to agricultural land — it's gone.
I'd like to know why the minister.... What are the criteria for this sort of thing? Look what happened to the appeal. Let the House know what the score is on this. If there is to be an exclusion from the agricultural land reserve.... And maybe there should be, and there should be additions too — I don't think we quarrel with that — for good and sufficient reasons. But most of the reasons aren't very good.
He comes from Sardis — strictly from hunger, up in Sardis.
There are a couple of other examples of that. There may be some good reasons. That's not one of them, in my own view. It doesn't matter what my view is, particularly. The point is: if you want to get out of the agricultural land reserve because it was slapped onto you and maybe there were some mistakes made and there are some reasons to get out of it, you go to the Agricultural Land Commission for a review. That was done four times in the Richmond case. When it wasn't granted....
I see the member for Chilliwack (Mr. Jansen) is getting poised on the balls of his feet. You'd just better rest your feet and anything else you might want to rest, for I'm not finished. Do you want to make an introduction, or do you want to get some more land out of the land reserve?
It's turned down by the land reserve, then they go to the council, and you deal with the roundheel pushovers. The roundheel pushovers say: "We can appeal to cabinet." Then they go up to cabinet. In the case of Richmond, guess who the members are on the council. The second member for Richmond (Mr. Loenen). And guess who else is in the cabinet. Who is he? Big VZ. And he, along with the Minister of Agriculture — who is supposed to be protecting farmland — signs the order, ignoring the advice of the Land Commission completely. All right?
Here's what has happened here: cabinet, by individual appeals. What you can't get by the front door, you get by the back door. And here's the record — a sorry record. Appeals to cabinet by individuals were established in 1978, and use made of this provision has changed dramatically. In three years — '80, '81 and '82, 23 percent of the appeals were granted, while in '83, '84 and '85, 74 percent were granted. About 70 percent of all exclusions were prime farmland. If the minister is going to be a trustee of that prime farmland, then he has got to show me the rest of British Columbians, because I'm from Missouri and so are they, and they resent this.
This land in Richmond — for those of you who don't know — was surrounded by agricultural land on three sides and across the road was more agricultural land. It was in the plan of Richmond. So there have to be reasons. There has to be a good reason, or else people get very suspicious. Now I'm a very trusting person, but I get suspicious when things like this happen.
What guidelines were used to come to that decision? Maybe if we had some guidelines and these were published, it wouldn't be just, sort of, you get palimony. It would be something that you could defend publicly, and I don't think that's the case. Why don't you publish the criteria? Why is it just done by order-in-council in the dead of night, furtively, behind closed doors? And when the dirty deed is done, then, and only then, do you publish.
This is not a very good record for the minister. I would just love to hear his explanation for joining forces with the roundheeled pushovers on councils.
MR. CHAIRMAN: Just before I recognize the Minister of Agriculture, the second member for Langley has asked for permission to make an introduction.
Leave granted.
MR. PETERSON: Mr. Chairman, in the members' gallery is a very good friend, a lawyer who lives and practises in Langley, and his family. I wish the House to join me in welcoming Mr. Peter Minten and his family to the chamber.
MR. CHALMERS: It's no secret that the Okanagan area has been world-famous for its grape-growing and wine-making for many years. We in that area have some severe concerns, as some of the members opposite also have, about free trade. We recognize the importance of free trade to western Canada and see a lot of benefits, but we have some concerns.
The grape industry is about a $150 million industry. It provides some 600 jobs directly in British Columbia — 300 of which are in the grape-growing area, 300 in the winemaking — and, I'm told, some 2,200 seasonal jobs. Also, in the Okanagan it is very significant from the standpoint of tourism. That's something that is extremely difficult to measure but nonetheless is very important.
Of course the growers are concerned about their future after a free-trade agreement with the United States. I think they're looking for some assurances that, first of all, the government is fully aware of the industry and its unique problems; and, secondly, that we as government are prepared to help wherever possible to ensure that some sort of orderly phase-in period is provided. Because it's a federal jurisdiction and in the federal hands, we just want to know that the
[ Page 2327 ]
ministry is going to be there to help them in every way possible.
HON. MR. SAVAGE: I think the member for Okanagan makes a key point relative to an industry that plays a very important role, to the extent of approximately $145 million in the economy of the Okanagan in British Columbia.
Let me say that under the Wine Equities Act in the U.S. there is continued pressure put on Canada to allow, in the beverage sector, freer trade and the importation of California or U.S. wines. But I think it goes without saying that it is my responsibility to defend what the industry means in the way of jobs, as the hon. member recognized, and the value of that industry. We're not just talking about the producers; we're talking about the wineries. I have taken the opportunity to meet with the wineries and with the grape-growers and have put their concerns forward to the government of British Columbia. I think, hon. member, you're well aware of that. I believe it is a very key industry, a good industry for the province of B.C., and we should do everything we possibly can to maintain that industry in British Columbia; and I make that commitment to you.
If I may now respond to the hon. member opposite, the House Leader, relative to the questions on the ALR, the particular application that was referred to in Richmond is not an exclusion, as I recollect it; it's a conditional use. If you're worried about the golf courses being on land.... There's the odd time when fairways are plugged with trees, etc., and sand traps are laid; but it does not prevent, in the event that we need that land base for food production, those trees being lifted and the sand hauled away, and we still have the farmland left. That's the only way that I think we should be looking at.... And I think I've been as good a defender of the ALR as anybody. I value the family farm contribution to this province, and I will continue to do my utmost to secure the maintenance of the family farm in British Columbia, and for that matter in Canada.
MR. ROSE: I'm relieved to hear that. I know the minister is interested in maintaining the family farm. I hope he's equally interested in maintaining Colony Farm, because there's another razzle-dazzle development scheme about a racetrack, and some veterinary services where the forensic clinic is at present, and other scams to spot-zone as they've done in Richmond.
What we want on this side of the House — and what the residents in that area really want — is to have that land leased out on a long-term basis under your ministry. Because B.C. won't lease it; they haven't so far. It's worth about $6,000 an acre, and there are 600 acres. There's $3 million there, if you got the full price for it. But in 20 years, with rent at $250 an acre, you get the same amount of money, and we preserve that farmland and don't cover it with horse manure from the racetrack. That's all the scheme is: it's designed to spot-zone the grandstand, which is not compatible, just the same as the golf course clubhouse is not compatible with the land use, so you spot-zone it. But what you do is raise the expectations of every landowner surrounding the main property, because you've gone commercial. Don't take my word for it. Take the word of the Land Commission. This is what the Land Commission said: "A golf course represents an irreversible loss of agricultural lands, given the capital costs involved." I know, you could go in in wartime, and dig it up and plant lettuce and have Victory Gardens. But you know that that's nonsense.
And everybody else knows that it's nonsense. The draft plan for Richmond says it's "agricultural." I think it's a crime that this stuff goes on.
What's Terra Nova's future? It's before ELUC, too. Does ELUC join the rest of the roundheel pushovers on councils? The back door? After this turn-down by everybody in sight, what's going to happen to Terra Nova? Can you tell us? No, it's before cabinet. In the dead of night it will be changed, and they'll say: "Well, I'm sorry. There were good and sufficient reasons for it."
Two things: will the minister publish the criteria? What are the criteria that would move a council to grant an appeal when it's turned down by the Land Commission four times? I don't object to appeals to cabinet. That's not the objection. I think there should be an appeal — maybe from dumb decisions by the Agricultural Land Commission. It doesn't matter if you're a murderer; you have the right of appeal. But when the cabinet is increasingly granting these appeals — and I gave the House the figures a little while ago — one of two things must be wrong: either the Land Commission is ineffective and should be beefed up, because they don't have the proper intelligence to operate, or else the cabinet holds their decisions in contempt and doesn't give a damn about them. Then get rid of them; they're no good to us then.
[11:45]
Will the minister publish the criteria for exclusions by cabinet? And will he show us and provide the House with the designated criteria and the reasons, not just past.... That's the only way the skeptics among us can be reassured.
HON. MR. SAVAGE: To the hon. opposition House Leader, certainly I can say that the number of appeals that have come to the government before I was the Minister of Agriculture.... Those appeals were in the process before I had any say on whether they did come forward. They were agreed to by previous ministers. They had to be dealt with, yes.
Interjection.
HON. MR. SAVAGE: Yes, the Richmond one which you referred to. I signed the thing after, but it had to come forward because it was agreed to by a previous minister, to come forward to ELUC. It wasn't agreed to by me. That was the process, and that's allowed under the act if you read the sections in the act.
On the issue of publishing, the act clearly states — and the act is public — what processes are allowed to come forward for appeals. If I'm not mistaken, approximately 93 percent of all applications that come forward to the Agricultural Land Commission are dealt with by them. Now relative to the criteria by which those decisions are made, under the act, if I recollect it properly, the decisions are made on the basis of soil capabilities. It has nothing to do with the economics of the particular farming operation. The Land Commission's decision is made on the soil capabilities. That's their qualifying criterion. That's how they pass the decisions on through. They then give reports to the minister, who in turn will take them to ELUC to evaluate the decisions and how the process is followed through. When it gets to ELUC, that's a decision they have to follow on the basis of the recommendations of the Provincial Agricultural Land Commission.
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MR. ROSE: I hope the minister doesn't quarrel with that, because if we get into economics, then divide it up completely, four or five houses to an acre, because you can make eight times the amount that way than you can on farmland. That decision caused the hiking of the prices and the economic disviability of every one of those surrounding parcels. So you created a tremendous value for the golf course and the guy that owns the golf course — the May family, I think. You made the others uneconomic to farm because the land prices are too high. One of our problems in Canada is that our best land is around our best cities. Compared to the United States, where serviced land is $500 an acre, ours is worth $6,000 to $10,000. That's what's wrong with the grape industry here in Canada compared to the United States, even in Washington.
But the land criterion is the only criterion, in my view; it's not the economics of it at all. The economics are terrible, because the best thing to do is to plow your farm up and put houses all over it. It's just like another Spetifore amendment.
I guess I've expressed myself on that one with, I hope, sufficient vehemence.
Let me talk a little bit about free trade, if I may. There are other things I want to talk about, but I promised the minister I wouldn't be at this more than three hours, and I know he's prepared for that, and it's nice to have him here. I wish we weren't pressed for time, so we could tiptoe through the tulips for longer perhaps. It's an agricultural term.
Interjection.
MR. ROSE: No, I'm going to carry on, unless I'm carried away — bodily.
Here's the leaked document from the United States that I referred to earlier. It said that agriculture is not a topic of free trade. Here's a staff briefing by the American Bill Merkin, deputy U.S. negotiator for U.S.-Canada trade delegations. It's a brief to the Congressional staff on the progress of negotiations towards the bilateral Canada-U.S. trade agreement. The following summary provides highlights of Mr. Merkin's presentation. It's in a plain brown envelope. It's not pornographic, but it's very threatening.
It says here: "Canadians are pushing strongly for a trade dispute tribunal that would require binding arbitration." I think that a lot of people, the carrot people, the lumber people, the hog-producers, all the people who export from the United States are not concerned so much about tariff barriers; it's the non-tariff barriers that bother them — the phony non-tariff barriers. In the case of softwood, it was the power to countervail.
But look what it says here. The U.S. administration has problems with this kind of process. They don't want a dispute-settling mechanism. If they don't want a dispute-setting mechanism, it means that we let down our barriers to trade, and they keep theirs. Look what it says here about agriculture a little further down. "The issue is on the table, but not much progress has been made." This is under the heading "Agriculture." "The administration will address Canadian dairy and poultry quotas and discriminatory practices of the Canadian Wheat Board." That's good news, isn't it? The important issue for agriculture in the talks is to try to develop a unified stand on agriculture subsidies and global agricultural policies so that the U.S. and Canada can increase negotiation power in what amounts to the GATT talks in Uruguay. Beer and wine: Merkin's gut feeling.... It's interesting that he would use the term "gut feeling," as it applies to beer, anyway. Wine is less of a problem than beer. I don't know why. I guess because there are fewer of us, and we don't have the same problems interprovincially.
"Beer must be brewed in the province if it's to be sold there without the high taxes assessed on imports. This provincial restriction has led to ubiquitous small breweries in each province." So the only way we can have the American kind of heaven in the beer industries is to get rid of the jobs — like 400 in Newfoundland — in a brewery. We'll do it all in Milwaukee, and we'll have one giant brewery to serve B.C., Alberta, the west coast, and right down to California. I don't know if that's good for us; I don't really know. I think it sounds fine on paper. There may be jobs elsewhere, but I know 400 brewery workers in Newfoundland would be mad if they lost their jobs, because they're kind of short of jobs there anyway.
So this is really the crucial thing, and I'm not particularly relieved. I hope the whole thing goes down the tube, in spite of what they said about our federal party in this morning's paper, as if they've done some sort of shift. What they're essentially saying is: "Carry on with the talks. Let's see what you've got." But the thing is dead in the water, because I don't think the U.S. Congress is going to give up these things. Unless we get a dispute-settling mechanism, we are not going to have it anyway.
I had hoped to complete this business about the impact of free trade on things generally; I may come back to it. I'd like to say a word, though, about the wine industry in the southern Okanagan, because that's high on the U.S. priority list, and it really alarms.... It's $150 million and 6,000 jobs at peak periods, according to the grape and wine people that I've talked to. But at the same time that that's threatened.... And it is on the table — the wine industry. Some suggestions about a 15-year phase-out are laughable. I mean, the climate's not going to change in 15 years, and that's why we can't grow those varieties. The land prices are not going to change. We're not going to get taxes and subsidies, and pesticide standards of that kind aren't going to change in 15 years.
They're gone. Your friends in the Okanagan are down the tube. They're going to be trampled upon; they've been crushed with the bare feet of the United States.
At the same time that we're doing this, I've got a couple of little news releases here. "For immediate release," all over B.C., June 16: "Inkameep Vineyards will be able to bring currently unproductive land into production due to an irrigation project that has received" $60,000 in federal funding. The wine industry is suffering from a terminal illness, and we're going to give them $60,000 more to put in more grapes. Come on! Something's got to be funny about that one.
Here's another one: Okanagan Falls. "A South Okanagan plan to increase vineyard production through improved irrigation has received $13,764 funding assistance under the federal-provincial agriculture agreement." I have no objection to those things; they're terrific. That Inkameep, I believe, is on a native Indian reserve. I don't know what the O.K. Falls one is. But it doesn't seem to make much sense to me. I can't reconcile the fact that we're putting money like that — maybe $70,000 or $90,000 or whatever it is — into these two projects when the Minister of Economic Development says it's high on the priority list, it's going to go, but maybe we can give them a 15-year phase-out period.
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I don't understand that, and maybe the minister could think about that while he enjoys a nice lunch, and when we come back we can talk a little bit more about that if he'd like to. He should try some Canadian beer and, to be a good, loyal citizen, have at least a litre of wine, and we can have a more enjoyable time here this afternoon. Okanagan wine if at all possible.
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 11:56 a.m.