[ Page 5187 ]

CONTENTS

Routine Proceedings

Credit Union Amendment Act (No. 2), 1988 (Bill 47). Hon. Mr. Couvelier

Introduction and first reading –– 5187

Environment Management Amendment Act, 1988 (Bill 50). Hon. Mr. Strachan

Introduction and first reading –– 5187

Private Members' Statements

Kettle Valley Railway. Mr. Rabbitt –– 5187

Ms. Edwards

Community college funding. Ms. Marzari –– 5189

Hon. S. Hagen

Senate reform. Mr. Loenen –– 5191

Mr. Rose

English as a second language. Mr. Barnes –– 5192

Hon. Mr. Brummet

Hydro and Power Authority Privatization Act (Bill 45). Second reading

Hon. Mr. Davis –– 5194

Mr. Clark –– 5197

Mr. S.D. Smith –– 5204

The House met at 10:06 a.m.

Prayers.

HON. MR. COUVELIER: It is my pleasure this morning to introduce four gentlemen from the lower mainland who are in the gallery. Would members of the House please join me in welcoming Mr. Tod Manrell, chairman, and Mr. Wayne Nygren, chief executive officer, with the B.C. Central Credit Union; and Mr. Jack Edwards, chairman, and Mr. Gordon Wallace, president, of the Credit Union Deposit Insurance Corporation. These gentlemen are accompanied by the assistant deputy minister of corporate relations, Mr. Gerry Armstrong. They are obviously here to participate in the presentation of a bill shortly to be introduced.

Introduction of Bills

CREDIT UNION AMENDMENT ACT (No. 2), 1988

Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor: a bill intituled Credit Union Amendment Act (No. 2), 1988.

HON. MR. COUVELIER: I move the bill be introduced and read a first time now.

I am very pleased to introduce this legislation. It constitutes an important initiative that demonstrates the government's ongoing commitment to and confidence in the credit union movement in British Columbia. The bill establishes a formal arrangement for government backing of credit union deposit insurance and makes other changes to the part of the Credit Union Act which deals with deposit insurance. It commits government support to the deposit insurance fund to a $100,000-per-deposit limit should support be required. The support will be in the form of a government guarantee of deposit insurance fund borrowings over a minimum ten-year period. This initiative will enhance confidence in the credit union system and should contribute to the continued growth and development of credit unions in our province.

Bill 47 implements the first of a number of policy decisions taken after broad consultation on the credit union discussion paper released last July. I would like to take this opportunity to thank the credit union system for its contribution to this process and to assure them that work continues on consolidated financial institutions legislation, which will encompass other important measures.

I would also like to briefly mention the constitution of the Credit Union Deposit Insurance Corporation board. Mr. Jack Edwards, chairman of the board, will be retiring upon the expiration of his current term this month. As chairman of the board for the past 14 years, Mr. Edwards has guided the development of credit union deposit insurance in British Columbia. His selfless contribution has been a significant factor in the continued health of B.C. credit unions, particularly as manifested in the system's capacity to weather the severe economic downturn of the early 1980s, which was done so successfully.

I am certain the members of this House will join me in expressing sincere appreciation for Mr. Edwards's contribution. It has been significant and one that is very greatly appreciated.

In conclusion, I commend this legislation to the House. This is an important initiative for both the government and the credit union system in our province. I move that the bill be introduced and read a first time now.

Bill 47 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

ENVIRONMENT MANAGEMENT
AMENDMENT ACT, 1988

Hon. Mr. Strachan presented a message from His Honour the Lieutenant-Governor: a bill intituled Environment Management Amendment Act, 1988.

HON. MR. STRACHAN: In asking for first reading, I will advise the assembly that this bill introduces changes to the system for appeals to the Environmental Appeal Board. These changes are based on several years of experience with the existing legislation and will result in a more effective, thorough and focused appeal process. They also anticipate the river rafting act currently being debated, so there's an appeal process to that legislation as well.

These amendments are consistent with the recommendations contained in the report issued by the ombudsman in March 1988, which dealt with regulation of pesticides used on public lands and the system for appealing pesticide use permits. In this respect, as well as in other areas of environmental regulation which are subject to appeals — water, waste, wildlife management and, as I said earlier, river rafting — the province will have a uniform, efficient appeal system which will also be flexible and fair.

The improved procedural framework made possible by these changes will benefit all who participate in the appeal process, a process which is essential to the sound management of our environmental resources and the well-being of our citizens.

I move this bill be introduced and read for the first time now.

Bill 50 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Orders of the Day

Private Members' Statements

KETTLE VALLEY RAILWAY

MR. RABBITT: I would like to open today with a few lines from Barry Sanford's McCulloch's Wonder, a marvellous book on the history of the Kettle Valley Railway. He says:

"The Kettle Valley Railway was more than just an ordinary railroad. Those who rode the Kettle Valley Railway — every cliff-clinging, heart-chilling mile of it — became believers."

There was no other railway like it. In the last three sentences of his book he goes on to say:

"Evolution may have destroyed the Kettle Valley Railway, but evolution cannot wipe out the fact that for an entire generation the KVR was the lifeline of

[ Page 5188 ]

southern British Columbia. Nor can it wipe out the fact that the Kettle Valley Railway, though it never made a penny profit for the CPR which built it, paid the people of British Columbia handsomely in the development of their province. However rusty they remain today, the rails of 'The KV' were not laid in error."

I would like to add, may they not be ripped out in error.

The Kettle Valley Railway starts at Spences Bridge and traverses my riding and the riding of Boundary-Similkameen and now terminates in Penticton. It is known as the most expensive and difficult railway ever built in Canada. I can tell you that for those who rode it it was an experience. I rode it as a little boy, where I had to stand up on the seat to look out through the windows, and it was an experience which, even though I was under three years old, I can still remember today. I also rode it the year it closed, the section between Brodie and Hope. I can remember that quite clearly, and I can tell you that although the route is closed, we can visit it today via the Coquihalla Highway and enjoy the scenic beauty that's still there.

[10:15]

The experience of that particular rail line may be coming to an end. The original line, which went from Hope to Midway, has been partially abandoned, and there are indications that even the entire line as it remains today may be abandoned.

The Princeton to Copper Mountain branch was abandoned when Copper Mountain closed. Brodie to Hope, which is the Coquihalla route, has also been closed. Just a few years ago, Midway to Penticton was closed, and the Merritt to Nicola has also been closed and abandoned. What survives today is part of the Kettle Valley and part of the Nicola to Spences Bridge line, which is all referred to in the local area as the Kettle Valley. That is Spences Bridge to Penticton, and it's called the Princeton subdivision.

The big question that I'm putting to you today, colleagues, is process. A process has been developed for the abandonment or closure of a rail line, and I suggest that this process is wrong because it's unfair. It leads to crisis management and crisis decisions. I firmly believe that we need more notice up front. We need to be able to get earlier input from communities and from shippers in the province.

This issue was raised in this House last year by the former first member for Boundary-Similkameen, Jim Hewitt, and he put forward a good solid case, which I supported then and I support today. Presently I see no details in section 175 of the National Transportation Act policy as it reflects on this line. To our knowledge, no officials have visited the area to assess the impact on communities or the province. There's no indication on how much money is available, if any, to address problems.

You may ask why I have an interest. Well, I have a biased interest. Nobody has come out and said that this line may be closing or be abandoned, but there are many indicators. Some aren't too subtle. The employees were given a layoff notice for June of this year, which has since been withdrawn. There are presently negotiations going on with the sawmills of the area to convert rail line traffic to highway traffic, and that highway traffic will have a destination point in Kamloops at a new reload centre being built at Campbell Creek.

Another indicator is the 4 percent that the federal government has allowed the major rail line to close each year. Presently, CPR has an application to close the Midway to Robson line, approximately 100 miles, known as the Boundary subdivision.

I believe that we as a province have an invested interest in this railway. Research shows that we have invested $5,000 a mile on the construction of it back in 1910, and we put in free Crown land for right-of-way and temporary exemption on certain taxes. If we stand back and allow the closure and abandonment of this line without major discussion at this point, I feel that we will lose a once-in-a-lifetime opportunity to make this railroad viable.

One of the options that I foresee is a short-line railroad.

MR. SPEAKER: I regret to inform the member his time is up under the standing orders.

MR. RABBITT: Thank you. I'll conclude in my final minutes.

MS. EDWARDS: Well, the member for Yale-Lillooet brings up an issue that cuts many ways. It's interesting to hear him suggest that the federal government is not doing its share here, and it's interesting that he thinks that we should know ahead of time what happens to these railroads, because somebody should do some looking at it in a broad sense, and we should have some process that deals with a magnificent asset like the Kettle Valley Railway.

I certainly offer my congratulations to the member for having that little bit of the Kettle Valley Railway that's left, because there are other parts of the province that don't have anything left. The Midway to Penticton line, for example, was abandoned by the CPR, and the rail was lifted. Despite the fact that all of this was happening, there is an opportunity for a body such as the provincial government to look at these things to see what is happening. If, in fact, it makes some sense to use the rail and what's left of it for the kind of industrial purposes that the member for Yale-Lillooet is talking about, then the provincial government should be on the federal government's back and talking about it. If in fact even that is not a possibility, the provincial government should have a broad enough view to see that the Kettle Valley Railway would be an absolutely magnificent tourism resource — the parts that can still be used — because the railway was, as the member pointed out, McCulloch's Wonder. It was a wonder of its age; it was an engineering feat of great magnitude. It was highly expensive, and it had the highest grade of any railroad that didn't have other solutions to the problem of grade such as the spiral tunnels; they were further north. Down on the Kettle Valley route we had this magnificent engineering feat, with trestles that were the wonder of the world, and tunnels and bridges that make it one of the most interesting rail lines to travel.

It is the kind of thing that should be developed as a tourism resource if it's not still in use as an economic and industrial resource, as the member for Yale-Lillooet says. However, the provincial government isn't dealing with things like the Kettle Valley Railway. The Kettle Valley Railway now sits in shreds and little bits. There's one bit left; other bits have been wiped out. There are still people working to say that this could be a major resource. So what is the direction of the government that this member represents? He's in the caucus. Is he making representations to his own government to look at what he calls the lifeline of southern B.C. — in other words, the essence of the heritage of this province, which should be given some resources? It should

[ Page 5189 ]

be given so me provincial money resources; it should be given some provincial planning and manpower resources. Instead of that, we've got members of the government caucus standing up and saying that not enough is being done.

Certainly the CPR owes the province something, and that's a direction in which I think the provincial government should work. For example, on the Midway to Penticton route, which was discussed in the Boundary-Similkameen byelection, as a matter of interest to the member, by the member-elect for that riding.... He pointed out, for example, that the CPR was given a 999-year lease. It honoured only 75 years of that lease, which means that the CPR owes the province a considerable amount for the service that it did not give, for the land that was granted which is not used for the purpose that it got the land for.

I would certainly join the member for Yale-Lillooet in saying that there should be a plan. There should be a process, and the government itself should be taking up an issue like this. They should be making the case to the federal government, they should be making the case to the CPR, and they should be taking moves themselves to make this railway an asset instead of a rusting, fading former asset.

MR. RABBITT: Mr. Speaker, I'd really wanted to see a positive reply to the ideas I put forward today rather than some of the old socialist rhetoric.

The government's not dealing with this, we hear. Let me tell you: the government has been dealing with it, and I've been dealing with it. I've been on to our ministries, the federal ministries and the CPR. What have you done in your riding to save that Midway line? The government also went into a TIDSA study to see what could be done to save that line.

There are many things we can do in this House. We can work towards the betterment of our tidings and take the opportunity of situations such as we have today to put forward positive ideas and steps, and try to convince our colleagues to get harder behind the wheel, or we can take political action, which I guess we found out in Boundary-Similkameen sometimes works out a little more favourably than trying to do positive things here in this House.

We don't want to get excited. I have a severe question of concern, and I want assurances from this government, from all the ministries involved, that the shippers, the communities and everyone along that Princeton subdivision are not going to be abandoned when CPR tries to abandon that line. I have concerns that sometimes we do not act early enough, and this was the idea I was trying to portray this morning, that we have to get out there even though the regulations say that this is the process, this is how it works.

Ninety days prior to abandonment, CPR can put the notice forward for a hearing. I'm trying to deliver the message that that's not good enough, that we have to work together on both sides of the House. This is for the common good of all British Columbians, whether they wear a Socred stripe, a Conservative stripe, a Liberal stripe or even an NDP stripe.

The process I am speaking of has four components, and I don't have time to get into them today. Mr. Speaker, I thank this House for the opportunity to deliver this message on the Kettle Valley Railway.

COMMUNITY COLLEGE FUNDING

MS. MARZARI: Mr. Speaker, it's perhaps appropriate that we talk about community college funding today. We are reaching the end of a long session. The minister in charge of Advanced Education will probably not be in his position by next week. It's possible that by the time we meet together next year, I won't be the critic of Advanced Education, so taking a look at community college funding right now is a very appropriate thing to do.

Just to put on the record and leave something of what we both, perhaps, have learned in the last year and a bit, I want to start by looking at what the system has had inflicted on it just since the budget came down.

Basically, in 1988 we're 30 percent behind where we were in real dollars in 1982. When the budget came down, community colleges found themselves with a status quo budget, which they discovered after three weeks and which, after some lobbying, was restored by $10.5 million.

We then found that out of that $10.5 million, BCIT would have to pay the piper. So after some vigorous lobbying by BCIT, we found that BCIT was restored $2.6 million of that, and then a quick three-week task force came along to redo the work, to re-establish what the budget might look like, given community anger. We then found an additional $8.3 million restored to the colleges and institutes just a few weeks ago, and guidelines for them still haven't been announced.

I'd like to suggest that we've had some backward budgeting going on in Advanced Education in the last few weeks. Community colleges and BCIT have all been the less for it, and your government has been regarded the less for it.

[10:30]

Community colleges are now asking: what is the real increase? Do they have an increase to even look at? They are looking at that $8.3 million and are saying: "This is only going to come to us if we enroll more than what we enrolled last year. " Last year the community colleges were basically taking in 20 percent more students than they could afford to take in, given numbers of faculty, student contact hours and space. This year they won't get any of that $8.3 million unless they enroll above that floor — that already unbearable floor. Community colleges are saying: "What is our real increase? When you gave us that so-called increase after the budget came down — that $10.5 million — what did that really mean? Is it a real percentage increase, or is it an increase only on certain aspects of our program?"

When the formulas first came in in 1984, the formula funding and the FTE funding were supposed to redress an illogical system of funding community colleges. People regarded it as a system with flaws and problems, but they said they could work with a full-time equivalent and a student-contact-hour form of funding. The last three years have proven the undoing of that kind of formula funding. The colleges are now saying the system is not responsive to variables such as economies of scale, multicampus situations, different program waits. We have yet to really come to terms with how we fund our community colleges.

Since 1983 we've asked our colleges to do five-year strategic plans which we ask them to update annually. Isn't it ironic: we ask our colleges to do five-year plans, but our government has not done a plan for what it expects of those colleges and post-secondary institutions. So the colleges are acting in a vacuum. One principal has suggested to me that it's a crap game. You never know which way the dice are going to land. Other principals have suggested that it's helter skelter. Others have suggested that it's very difficult to keep the system going at all with any kind of good will.

I would suggest to the minister that we have an excellent system of colleges in this province. They are not very old.

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They're still young enough. The administrations are still enthusiastic and excited enough to pursue and continue and develop ideas and programs, and to talk to the minister about what their requirements are. We have a faculty that has not burned out. We have students still willing to put up the good fight to ensure they get what they need. It's not too late for this system to be turned around. But we need a different assumption about how we approach post-secondary, and that assumption has to be based in an economic development model, not in a welfare model. We have to regard postsecondary and community colleges as a consultative economic development process. We have to talk to the communities in a serious way. We have to talk to the federal government to make their programs meld with ours. We have to talk to the students and the faculties and the boards of the community colleges. We should be electing those boards to make them more regionally responsive.

If we start viewing our students as human capital, then we might be able to start seeing them as doing more than just teaching themselves at a college. We'll start to see them as an investment for the future of our own province and the economic health of our own province. We have to start with that new assumption and then return to the task of planning strategy and programs through the community college system. Until we do develop that new assumption and a way of working closely with the communities, the regions, the colleges, we are always going to be stuck planning backwards in this zigzag approach, starting with the FTE and working through the student contact hour without looking at the overall needs of the system.

HON. S. HAGEN: I want to say to the hon. member opposite that I really appreciate her compliments this morning. I certainly don't take those compliments personally, but I appreciate her compliments with regard to the system. I share those feelings towards the post-secondary system in this province. I agree that the system is enthusiastic. I agree that the system is responsive. I agree that we have excellent faculties in the colleges and universities and institutes. I believe that one of the reasons that is in place is the planning that has gone into this system by this government. I believe that the system is out there because of the resources that have been provided over many years to this excellent system.

Yesterday morning, I was at BCIT for the graduation ceremonies for health sciences, and I can tell you that the enthusiasm and the response I received there as the minister were very encouraging. Many people came up to me afterwards and expressed their appreciation for the confidence that this government has shown in BCIT, and I want to tell you that this government will continue to show confidence in BCIT.

BCIT feels very positive with regard to the new direction that has been given to that institution. Only this morning I met with the president of the Vancouver Community College — one of the fine colleges. I think the members should be reminded that although we have 15 community colleges in this province, those colleges deliver their educational programming from over 100 different delivery points around this province. When you combine that with the Knowledge Network system that delivers distance education to over 255 communities in this province which are outside of the lower mainland-Vancouver area where people don't have easy access to education, I think it says something very positive not only for the system, but for the people of this province.

After all, it is not the system we are serving; it is the people of this province we are serving. My job as the minister and the job of the government is to make sure that we are providing educational opportunities to all the people of this province, not just the people who live close to the universities and colleges.

I want to assure the hon. member opposite that this government sees the post-secondary education system as a very vital and important part of the economic development of this province. Looking at some of the students who were graduating yesterday from BCIT — all of whom have jobs, by the way; at least all the ones I talked to had jobs — they are going out not only to work as we sometimes look for them to do, but they are going out to serve in their various communities in volunteer groups and to take what they have learned at BCIT and use that to assist in developing community groups and to provide opportunities for these groups to serve in their communities.

Unlike some of the members opposite, I don't want to spend my whole time as a minister just planning and having committees doing things. We have to perform on this side of the House. We can't just set up committees to study things and do this and do that; we have to make sure that the system is in place out there so the people of the province can be served in a first-class manner.

With regard to the funding, I'm sure the hon. member opposite is aware that the government has provided the extra funding that I think will be necessary to meet the needs generated by the additional students who come into the system. The fact that we have additional students coming into the system only accents that we have a good system, because more and more people want to gain that access. We also have more and more mature students coming into the system.

MR. SPEAKER: I regret to inform the minister his time is up under the standing orders.

MS. MARZARI: I'm happy that the minister came into the House to respond. It's probably going to be our last time to wrangle across the floor, Mr. Minister, so let's go to it.

Yes, there are more students trying to access the system, but guess what? You've got an overcrowded system: 20 percent overcrowded, and you're not helping that system out by giving them little carrots over here to enroll even more students in an already hopeless situation in terms of crowded classrooms and overworked faculty.

Yes, you went to BCIT yesterday. Yes, they all have jobs. They always did get jobs out of BCIT. I would suggest that BCIT is thriving, despite the monkeying around you've done with their budget in the last three months.

Yes, you need committees. You can't just do planning without committees. Yes, you need to consult every day of the week and the best way to do that is to establish committees which report back to you. Having committees does not mean you don't do anything. Having committees means that you're actually out there talking to people, and they are reporting back to you so that decisions can be made in a consultative process with a decent mandate and so that you know what you're doing every step along the way.

You consulted with Mr. Bob Elton. His report, "A Funding Allocation System for the Colleges and Institutes of British Columbia," which was a year in the making, has just come across my desk. This is your new hope for college funding, and do you know what he says on page 1 of the executive summary? He says:

[ Page 5191 ]

"We can try to make choices by formula, but a consultant cannot absolve government of its responsibilities to express its objectives clearly and either carry them out or require others to carry them out. Many of the objections which people have expressed to me have nothing to do with the formula, but they are rooted in ignorance of what the government wants.

"There will never be a clean universal ordering of priorities, but" — he cries out — "the process will greatly improve the more government discloses its intentions and ideas."

The government appears to have set a few priorities, but they are very inconsistent. If this is what your consultant is saying after a year in the field, I'd suggest to you, Mr. Minister, that we have a long way to go. I would suggest further to you that the way to start is not down there with the nitty-gritty, but up at the top with the assumptions, values and priorities that you claim your government has but that don't show themselves in any of the attitudes, strategies, actions and policies you've been playing around with since the budget came down.

[10:45]

SENATE REFORM

MR. LOENEN: I appreciate the opportunity to make a few remarks on Senate reform, a topic which I think is of very great importance to all Canadians, and in particular to the western provinces.

As I see it, there are basically two constitutional or structural problems that face our country. One of them pertains to the Senate. We know, and I think most Canadians of every political stripe are convinced, that the Senate has not been effective; that in fact it has been totally ineffective; and in particular, in one of the areas for which it was set up — namely, to function as a way to have the regions and the provinces represented in our national parliament — that it has simply not worked in that way at all. The question is not: should there be a reform? The question is: how much longer do we have to wait, and what form should the reform take?

The second problem we're confronted with today in terms of our national constitution pertains to the fact that the regions are simply not equal partners in Confederation. We know that from many examples. Most of the elections are decided in Ontario and Quebec. By the time their polls are closed, the game is up and the rest of the country simply doesn't count. The city of Toronto alone has more MPs than all of B.C.

It is a structural problem. For many years we used to think it was big, bad Trudeau and all his Liberals, but it's not the particular party; it's not the people involved. It's the structure, the game and the rules of the game. We know that the Speech from the Throne earlier this spring mentioned many of the disparities and inequities that exist and many of the ways in which our province does not reap its fair share out of Confederation.

We were recently reminded that the Bank of Canada increased the bank rate to fight inflation. It also recently — I think it was just last week — allowed the Canadian dollar to rise to 82 cents (U.S.). Why was that done? Well, the justification was that the economy was heating up. Where was the economy heating up? Central Canada. The point is that in very concrete ways we see that what we get in the name of a national policy is in fact nothing of the sort. It's a policy that is influenced and made in Ontario and Quebec.

Those are the kinds of structural problems we're faced with in our country. What it means is that our industries are hurt. In fact, all of the industries outside of central Canada are hurt when the Canadian dollar and the bank rate are allowed to rise, supposedly in the national interest.

I have identified two problems, and they certainly do not originate with me. We all know about them. What I'd like to plead is that we can solve the second problem by making the first problem more effective. In other words, if we were to restructure the Senate, we could in effect solve that second problem of unequal partnership in Confederation.

People have suggested that because the Senate is a big joke, we should abolish it, and we're going to hear about that. I believe that is a great mistake. We should seize the initiative; we should use that Senate reform as a way to address the regional disparities that exist.

Moreover, what I would like to say is: what is it that we are waiting for? If we want Senate reform, then why don't we push for it now? Why wait until the Meech Lake accord has run its course? That could take another two years or more. We're losing valuable time. Why don't we get on with it now? The west should grasp the initiative. Last year the Prime Minister promised that within a year — in 1988 — there would be a conference dealing with Senate reform. Well, I'd like to know what happened. We're still waiting for it, and we haven't seen any action.

A number of the provinces have agreed to the Meech Lake accord and have ratified it — that's great — and perhaps we will do the same. But why don't we grasp the initiative and in the meantime work on the existing way of amending the constitution — namely, getting seven of the provinces, representing at least 50 percent of our population, to agree to what shape and what form that Senate reform ought to be all about. We don't need a constitutional conference; it's not necessary. We already have a very detailed resolution that has been prepared by the Reform party recently. Why should we wait until we need ten of the provinces to okay any kind of Senate reform? We should proceed now. We should take the initiative. I was happy to see that the western Premiers in their communique went for the idea of pushing for a triple-E Senate.

I'd like to suggest to the Legislature that we should do more than that. We should actively pursue the means available to us now under the present constitutional arrangement, whereby all we would have to do is get seven provinces, representing 50 percent of the population, to pass similar resolutions and to get this show on the road and to not wait. Perhaps in time there will be an opportunity, as a result of Meech Lake, to seriously push for Senate reform. But then at least we're ready, we have something on the table, and we can tell the other provinces and the federal government what the west and the other regions want.

MR. ROSE: I was interested in what the member had to say. I thought it was very thoughtful, and it was put forward in a positive way, and I congratulate him for that. He didn't really come out for the triple-E Senate as such. I think there would be some problems with that, because we already have one. When I was there for ten years, they had one that was elderly, expensive and expendable, and I don't think that's changed any. There are some very able people in the Senate, and there is also a large dose of political hacks in there who

[ Page 5192 ]

are just there for the payoff. I suppose at my age, the Senate becomes increasingly attractive, but my hon. friend over there from North Vancouver-Seymour (Hon. Mr. Davis) also feels that we should have a triple-A Senate — abolish, abolish, abolish — and I agree with him.

The member holds great hopes for a different kind of Senate eliminating regional barriers, diversity and the fact that some regions are increasingly affluent and some regions, such as the Maritimes and parts of British Columbia, are increasingly desolate. I'd like to give him a couple of quotes from an article by Ross Howard in the Globe and Mail in June 1987 — one year ago. To quote him in part, he says: "However, several political and business figures caution that reforming the Senate to diffuse political power more equally across the country cannot reshape an economy that is concentrated in central Canada and controlled by market forces."

That should appeal to the hon. members; there's a free market operating here. Mr. Savage, the chairman of the Canadian branch of the ITT, had this to say: "Regional politicians who sell Senate reform as an economic panacea are deluding the public.... 'The apex of economic activity and prosperity in Canada is the Quebec-Windsor corridor. The Senate does not change that."'

If we're going to have a call for a Senate as the end of regional diversity or regional problems in this country, then why don't we have a bicameral House in British Columbia? We've got certain parts of this province that are highly affluent and doing very well — the lower mainland. We've just established eight new regions with little princes in charge of them called ministers of state, but if the argument of the second member for Richmond is a sound one, and we could give fairer representation to the various regions of our province — we'll just start with eight; some are rich and populous, and some are poor and have very few people — by maybe having a bicameral house in British Columbia.... I don't know if he'd support that, because anything I've heard about his party's view on electoral reform or adding more seats.... They have been opposed on the grounds of its cost. I think that's a good reason to oppose the Senate completely: the cost.

There are many other reasons we could think of as well. There could be a deadlock between the Senate and the Commons. We want the Commons to be superior. We do not have a congressional system, with a presidential veto. There have been some ideas about Senate reform. Certainly British Columbia doesn't want to be equal to Prince Edward Island in the Senate; it's completely ludicrous to suggest that as part of the triple-E package. Would we sit still for that? I doubt it.

There may be a case for direct representation in the Senate, and university professor Terry Morley has suggested that a Senate with direct representation from the government of each province is a possibility.

Interjections.

MR. ROSE: That is not the position taken by my party. I'm just saying that there are many ideas out there having to do with Senate reform, but they all founder with certain problems. I think the easiest thing we could do would be just to get rid of it completely, and we'd all be better off.

MR. LOENEN: I was just reading some sayings here, and I think this one from Alexander Pope fits the bill perfectly: "Blessed is he who expects nothing, for he shall never be disappointed." That pretty well sums up what I've heard: "Let's abolish it. It's never going to happen anyway. It's the free market that runs it, etc. We don't really want equality, because we have to give it to PEI as well." We ought not to be cynical; we ought to hope that there will be a way to solve our problems. We ought to reach for that and do all we can, and not just kill these ideas before all the possibilities have been resolved.

I find nothing offensive about the fact that the provinces should be equal and have equal representation in the Senate. What is wrong with that? The basic unit that makes up Confederation is a province. Some provinces are big and others are small, but they all represent communities of interest, and it makes absolutely no sense to say that if you're a big province you ought to have more. The fact is that those partners that make up Confederation — those political units — are provinces, and they should have equal representation, just as the states have equal representation in Congress, whether it's Wisconsin, with very few people, or California, with many. It makes no sense whatsoever.

Every city has a mayor. Whether you're in Nelson or Vancouver you've got a mayor, and whether you have many people or a few, those are the units that make up our political structure. I find it entirely defensible to suggest that each province should have equal representation, particularly in the Senate, in order that there may be some possibility of getting the regions represented in a way that is fair.

The member quoted someone as saying that it's not the political realities but the economic realities that create the discrepancies and inequities we talk about. The fact is that we don't have a free market system; we know that. We have a mixed economy — very much so — particularly in our country, and the federal government is very much a determining influence, because it's in charge of communications, transportation, international trade and banking. There is an interplay between the political system and the economic system we have. The member is well aware of that.

MR. CLARK: You're a Marxist, are you?

MR. LOENEN: I'm talking about the reality of Canada today, and to suggest that we have an open, free, unfettered market is simply not true.

The member said that maybe we ought to have a system like that in B.C. I'm glad he mentioned that, because this government, more than any other, has tried to do everything it can, and will continue to do everything it can, to have those regions represented fairly.

[11:00]

ENGLISH AS A SECOND LANGUAGE

MR. BARNES: I'm very pleased to have a few moments to discuss the English-as-a-second-language factor in our society, because as we all know, English is the primary means of communication in this country, followed by French. Without question, those who do not have command of the English language are at a disadvantage in participating in society, maximizing their citizenship, taking advantage of the amenities and opportunities, etc. This is such a fundamental thing that I am appalled at the lack of serious commitment on the part of this government in providing the resources to ensure that all citizens have no impediment whatsoever between them and acquiring this most vital resource — the use of the English language.

[ Page 5193 ]

Today is just a very brief insight into the status of the ESL facilities in this province as they now exist. I would just say that from kindergarten to grade 12, by 1986 statistics, there were some 16,000 students provincewide in ESL programs. Another 11,000 adults during that same year were upgrading. Some 15,000 — a separate group again — were in the colleges. Even though this 30,000 or 35,000 or so seems minuscule, I am sure there are many more people in the community who are not registered and are not aware of the facilities available or have a difficulty raising the funds they require in order to participate in the programs.

There are two initiatives that this government has taken that concern me. One is the elimination of funding for the Canadiana school in Vancouver, which has been operating for some 18 years in the Chinese community, by and large, serving some 260 students on a first-class basis with top-quality programs based on ability rather than on some catchall system where you throw different levels of experience into one class. They had about half a dozen categories providing 12.5 hours per week of instruction, as compared with about half that much in most of the facilities, and for a lesser amount of time.

The other is the government's plan for 1989 to remove, in the Vancouver area alone, about 30 sites to be turned over to the colleges, so that instead of a person in a community, for instance, with a family of young children, or senior citizens or whatever, going to a local elementary school or community centre and having instruction among their friends and within walking distance, they are now going to have to go to those few facilities that are available in the colleges, like Langara or the King Edward campus on Broadway — those types of facilities which, in most cases, require people to travel a fair distance.

I'm wondering if the government is aware of the need as opposed to its fiscal concerns, because I am sure that the government is going to tell us that. As we've just heard from the second member for Vancouver-Point Grey, colleges are being strangled and starved, and the government is not acting in a rational way in terms of providing dollars for those programs. If the colleges are going to have the responsibility for providing ESL on the basis of traditional programs as opposed to essential programs which are vital and should be accessible, we are looking at a system of ability to pay. We are not looking at a system that is designed to provide an essential service to a community that, without it, would be disadvantaged.

There is a serious question about public policy in this regard, and I'd like the minister to respond. Just how does he rationalize, for instance, removing ESL from the community schools and community centres to the colleges and placing a much higher fee on it? In most of those cases as well, for instance with the Canadiana school, those were 50-cent dollars provided by the federal government through an agreement for immigrant upgrading, programs for new Canadians in their ethnic community to upgrade their language skills. That would be one of the things I'd like the minister to respond to, because we are having trouble on this side of the House seeing the rationale for shifting that vital program to the colleges which will, in most cases, make it out of reach for most of the people in need.

Even more sinister — if I've got enough time to approach another aspect of this subject — is the downside for those people who fail to get English. For instance, in the downtown area, the Chinatown community particularly, the Attorney-General, in his zest to deal with some of the difficulties with youth and some of the problems associated with gangs, has — I think unwisely — designated a special police enforcement group as the Asian youth gang detachment, or something like that. It is shortsighted to refer to a group of people in this society by their race or national origin if you understand the implications of the multicultural mosaic in terms of multicultural policy, in terms of our duty and responsibility....

MR. SPEAKER: I regret to inform the member that his time under standing orders is up.

MR. BARNES: That's fine, Mr. Speaker. I'll wind up on that note after the minister has had a chance to respond.

HON. MR. BRUMMET: I wouldn't blame the member for being upset if what he was saying were correct. Unfortunately, there is a misinterpretation of what has happened, and on that basis the member attacks the government's lack of serious commitment to the ESL. That is not correct. In the change of jurisdiction, saying that it moved to the colleges.... The member has translated that as meaning the classes will move to the college. That is incorrect. The classes can stay in the school, in the neighbourhoods, in the communities, in basements, in halls, wherever. There is nothing to say the sites need to be moved. That's an interpretation that somebody has placed on it.

What has happened is that between the public school system and the college system we have adults finishing off grade 12 in the school system. They could not be counted by the districts for funding because they were funded by someone else, yet the school system was looking after them because they were under the continuing education funded by post-secondary. Between us and among us we decided to determine the funding responsibility. So what we said, in a logical sense, is that those students who are completing up to grade 12 courses will now be counted as pupil enrolments for the fiscal framework funding for school districts. They are in there. Then adult education will be clearly under the funding mandate and the funding responsibility of post-secondary, and they could make arrangements with the school boards, through the college system, to put on these courses that are necessary — the ESL and many others. It's only going to be the funding distinction.

The school boards are going to be better off. They are going to be able to count students who are finishing grade 12 as pupil enrolments for funding purposes. The colleges will be funding the rest of it. There is no reduction in funding. That's a misconception. And the sites don't have to move.

MR. BARNES: Will the fees paid by students change?

HON. MR. BRUMMET: No, I don't see that that needs to change at all. They are not going to become college students. It's the post-secondary through the college system that's going to fund the ESL programs. That's the only change. I want the member to understand that.

On the Canadiana college, I'm told they're shutting down that facility because they have determined that with the community and neighbourhood schools and funding through the post-secondary, they can actually cover more students with the same money for ESL by not trying to concentrate it all in the building but by moving the emphasis and the

[ Page 5194 ]

priority into making it available to the most students. They assure us they can do that, that it can happen. In other words, the priority will be on getting the most students for the same amount of money, rather than having them institutionalized in one place. I think it has great possibilities. In the past the college system has done all sorts of courses as night school in the community schools, with no rent. There are all sorts of advantages.

You say no commitment for ESL. In the public school system, ESL funding has increased dramatically. In the province the students are funded in the total picture for staffing and what have you, and there is approximately $2,500 per pupil for ESL. I think that's fairly good. You say no commitment. The Vancouver schools have about two thirds of the pupils in this province, and about two-thirds of the funding for ESL goes into the Vancouver school system. Out of the 16,584 provincial pupils, 10,473 in September 1987 were in the Vancouver school system. The projections were there in September, when it was found out that the enrolments had actually increased. In the province ESL funding was increased immediately for this 1987-1988 school year by $2 million and in the Vancouver school system by $1 million, so the funding is there. The sites are there, the programs are there, and I would love to have an opportunity to explain that so that people don't get the impression that we are moving away from it. It's important.

MR. BARNES: I really appreciate the defence on the part of the minister, but I think that, as usual, the minister is better at explaining after the fact than prior to any action, because I'm sure that those students at the School Canadiana, for instance, would have appreciated you providing them with a rationale. This is one of the complaints: no one knows what is going on. The school is closing. They do not have the $250,000 that they require.

AN HON. MEMBER: Four hundred thousand.

MR. BARNES: No, it's $400,000 from the college, but it's $250,000 for that school. They had a $400,000 adjustment to make, that's true, but the school could have operated with a $250,000 commitment, which it doesn't have. Students are crying. They are upset. Where do they go? I realize we can't have the dialogue because of the way it's set up here, but I'd like you to be able to respond to those questions.

We don't want to confuse people. We want them to be clear on what's going on, and when we commented last week to the Minister of Advanced Education about the transfer of some 30-odd sites to the colleges — as far as those facilities being available — that was the impression that was made clear by the ministry. It never explained those situations. We looked at that press release. It also said that if the colleges wished, they could contract back to those. You haven't talked about their arrangements in terms of any contractual situation. I don't know if that means the price is going to go up or not, or will it be based on the cost-efficiency of it? There are questions. As far as we are concerned, there is consternation out there and it is legitimate for us to challenge the government to let us know in advance. For instance, who did you consult with? Was this a unilateral decision? Was it something you just brought down, or was it something that was based on consultation with the people who are participating with the multicultural community who are by and large subscribers to the programs? These are the things we are talking about.

As far as public policy on multiculturalism, you have none. This is another thing that your government has been promising. The Minister of Tourism, Recreation and Culture has been promising that he is going to have this studied and that advisory committees are going to come in.

Interjection.

MR. BARNES: I don't want to get political, Mr. Speaker. I just want to try and advise the House that things are not happening in here the way they should be happening, and we have a legitimate complaint on this side of the House.

Let me just wind up by saying that the consequences of this loose day-by-day approach to a very serious public requirement, as far as multicultural policy is concerned, are pretty disastrous. I was talking about the mistake of the Attorney-General — and I do believe it was a mistake, because I don't believe that he would commit himself to anything that would have negative effects on any community. But when you designate people in the Chinese community as "Asian gangs" — as has happened — and that becomes the catchword in the media, you are casting aspersions and defamation on a community. That's the kind of thing that we want to avoid. That's ignorant, and I don't think it reflects fairly on those of us who are trying to work with the people in the community.

[11:15]

MRS. GRAN: Mr. Speaker, may I have leave to make an introduction?

Leave granted.

MRS. GRAN: Seated in the gallery today are several schoolchildren from Aldergrove in my constituency and the second member for Langley's (Mr. Peterson's) constituency. They are from Shortreed Elementary School with teachers and parents. Would the House please make them welcome.

HON. MR. STRACHAN: Mr. Speaker, I ask leave to proceed to government bills.

Leave granted.

HON. MR. STRACHAN: Second reading of Bill 45, Mr. Speaker.

HYDRO AND POWER AUTHORITY
PRIVATIZATION ACT

HON. MR. DAVIS: I am pleased to say a few words on second reading of Bill 45, the B.C. Hydro and Power Authority Privatization Act. It provides the legal framework for the sale of four divisions of B.C. Hydro: the lower mainland gas distribution division, the Victoria propane air gas distribution business, B.C. Hydro Rail — the terminal railway in the lower mainland that B.C. Hydro operates — and the research and development division of B.C. Hydro. Four are for sale, not the rest of B.C. Hydro. The electric side, and particularly the water licences, the public assets which are managed by B.C. Hydro for the generation of electricity, are not for sale and will not be for sale until the next government has a mandate to carry out that disposal arrangement, if ever. Specifically, we are dealing with four divisions of B.C. Hydro.

[ Page 5195 ]

[Mr. Weisgerber in the chair.]

I heard the first member for Vancouver East (Mr. Williams) on CJOR recently say: "Peanuts." I hope we don't get peanuts for them. In total, they have a market value in the $700 million to $800 million range. In terms of book value, the lower mainland gas division has a depreciated investment of $454 million, the Victoria gas division $13 million, B.C. Hydro Rail $15 million, and the research and development facility in Surrey $32 million: a number more of the order of $500 million. That's the book value of these four divisions. It's a large number to most of us, but it's relatively small as compared with all the assets of B.C. Hydro. The depreciated book value of B.C. Hydro currently is in excess of $9 billion. We're in the process of selling, or certainly exposing for sale, four divisions the total book value of which is of the order of $500 million. Again, B.C. Hydro in total is $9,000 million, so the assets for sale are roughly 6 percent of the plant and equipment assets of B.C. Hydro as it stands today.

The process is as follows. A small committee was appointed, chaired by the president and chief executive officer of B.C. Bancorp. His committee includes a number of people who have a background in finance, accounting, ratemaking and real estate, and they are following a process, first, of evaluation of the projects, of the obligations of B.C. Hydro to employees, etc., and of the market value of these assets.

They have a schedule. They have called for expressions of interest worldwide and have received a large number of expressions of interest from within British Columbia, from across Canada, and from the United States and the Orient. They developed on their own initiative — following the general guidelines issued earlier by the government — short lists in each case. So we have a short list of five, for example, for the lower mainland gas operations; we have a short list for each of the three others. Those companies, consortia, and groups of individuals — one is an employee group — are now being interviewed in rotation with the view to identifying, I'll call it, the best bid in each case — the most useful bid, at least, to the province. This committee will be making a recommendation to cabinet. The final responsibility for selection, of course, rests with the government; however, we're following the process as carefully as we can to avoid any charges or claims of undue interference or unique opportunity for some as opposed to others.

The legislation isn't as bulky as some bills, but it's one of the largest bills being presented to the Legislature this session. The main reason it runs to so many pages is that it allows the government and this evaluation-negotiating committee as much flexibility as possible in coming up with the best bid in each of the four cases. We are not absolutely committed to selling any one of these properties. Indeed, if the best bid isn't good enough — if I can put it in those terms — the process will be hoisted or may have to begin again at some later date. But my expectation is that the lower mainland gas division operation will be sold this year, and that the selection process will have resulted in a best-bid nomination by the middle of August. One or more of these divisions almost certainly will be sold.

In its final stages the process allows each of the bidders to improve his bid, to endeavour to make it more attractive not only from a dollars-and-cents point of view but also from that of the scope of the activities which the successful bidder would enter into which they believe are — and which cabinet would later find to be — in the public interest.

Two of these operations are public monopolies. B.C. Hydro Mainland Gas is really a gas retail operation. B.C. Hydro owns a lot of pipe in the ground. It owns some gas-processing facilities. Its main challenge is to sell gas at reasonable rates and to provide high-quality service. In the selection of the successful bidder, the principal concern has to be service to the consumer, service to residents in the lower mainland, low rates and high quality of service.

There are other considerations covered in the bill. One relates to share ownership — foreign ownership, if I can put it that way. Clearly a public monopoly — a monopoly granted by the Crown, by the people of the province, to a particular operator, be it a public corporation or an investor-owned one — carries a number of obligations with it. The operation must be closely scrutinized, the rates must only reflect costs which are absolutely necessary, and there must be no exceptional or undue profit made. So in the case, at least, of Mainland Gas and Victoria Gas, these will be closely regulated.

In addition, the legislation requires that as many employees of each operation own shares as possible; as many British Columbians have an opportunity to — and do, in fact — own as many shares in each operation as possible; and that there's a cap on the totality of foreign ownership, and indeed, that there's a cap on the number of shares any individual or corporation can own. The foreign ownership cap is 20 percent. I think that in the recent case of Air Canada it was 25; but it's 20 percent in this case. The cap on individual share ownerships is 4 percent.

With respect to job security for the present employees of the gas division — now employed by B.C. Hydro; in future, employed by a private utility company — this legislation provides that all of their pay, fringe benefits and other security arrangements are carried over in toto. In addition, any employee who wishes to work in another area within B.C. Hydro which is publicly owned has one year in which to make up his mind to make that change. So the present employees are substantially covered, and indeed, will have an opportunity to buy shares in this new operation if they wish.

I made reference to regulation. These two — the gas operations of Vancouver and Victoria — are monopolies and will be closely regulated. They will be regulated in the long term by the B.C. Utilities Commission. In the legislation, however, provision is made for a three-year freeze on their rates. Indeed, there's a three-year freeze on any new investment which they make. However, in consultation with the Utilities Commission, it may be necessary to allow them to make some installations — for example, in respect to underground storage. With advice from the Utilities Commission, that permission may or may not be granted. The reason for the three-year freeze in this legislation — in other words, rates will neither rise nor fall — is to give certainty to the bidders, to give them a better opportunity to assess what the income flow may be to each of those operations should they be the successful bidder.

I realize there's some skepticism in this regard. I must point out, however, that B.C. Hydro was never regulated at all until 1981, that throughout the period of the NDP government there was no regulation of any of the public utilities. Effectively, Hydro has not been regulated from a rate point of view to date. We're now moving into a new era in which this monopoly will in fact be regulated by the B.C. Utilities Commission. Certainly the profits will be regulated, but so also will any addition or increment to their investment ahead of time — ahead of the investment being made.

[ Page 5196 ]

The test of success of any of these privatization efforts, not only in British Columbia but across Canada and around the world, is perhaps threefold. First, is the price control mechanism effective? Are the consumers going to get a good deal from a price or rate point of view? Second, is the quality of service going to improve or at least be maintained? Third, is there an opportunity for the user to be involved in the ownership end of the business as well as simply be a consumer-user of the operation?

Experience elsewhere is interesting. Generally, privatization of commercial-type operations is opposed at the outset almost always by the employees and sometimes by a fairly large segment of the electorate. Generally speaking, after privatization and the trauma involved in change is over, it is deemed to be a success because the quality of the service is up, and competition usually helps keep the price of the product down. Because a large number of people are involved in the ownership end of the business, they become much more interested in its success, efficiency and ability to deliver the product successfully.

[11:30]

We've had various privatizations in Canada. At the provincial level, Alberta sold Pacific Western Airlines Ltd. in 1983. Saskatchewan has already privatized several Crown corporations and some social services. Quebec has successfully privatized all or part of eight Crown corporations worth roughly $150 million. In Manitoba, Premier Howard Pawley sold the money-losing Flyer Industries which made transit buses and which now, in private hands, is beginning to make money. When his government fell, he was considering the sale of Manfor Ltd., a pulp and paper and sawmill company which employs about 1,000 people in northern Manitoba.

At the federal level, there have been a number of privatizations. Eleven Crown corporations in all have been privatized, and in the process, the federal government has raised roughly $1.5 billion. Some 40,000 employees have been transferred in the process to the private sector. In the United Kingdom, privatization — I am not sure if the list is complete — includes Associated British Ports, British Gas, British Telecom, Sealink, National Bus Co., British Airways, British Airports Authority, British Petroleum, cable and wireless, Britoil, Enterprise Oil, British Aerospace, Jaguar, International Aeradio, British Sugar, British Rail hotels, Rolls-Royce, Royal Ordnance, North Sea oil licences and county council housing, which is an ongoing transaction.

I think, substantially, that privatization has been successful, mainly because while there may have been a need there originally for the government to take an initiative and create a corporation to do a job, that is not always the need. Time and competition may develop, and the opportunity eventually arises for that operation to be turned loose in the marketplace where it has to survive on its own, prove its own worth by being able to sell a product competitively and be a good investment as far as its investors are concerned.

I will conclude with some references to costs and benefits. The cost of privatization and the cost of the fees or salaries charged by the privatization committee in the case of Hydro gas will be of the order of $1 million or so. That's $1 million or so in the context of a sale in the order of $700 million or $800 million. It's clearly a small fraction of 1 percent. It's a lot less than real state fees charged in many other operations. It's a necessary cost, and I trust that we've had the best people on the job.

I am sure that, given the figures I'm referring to, we're getting real value for our money. The cost of privatization, in the narrow sense of assistance, advice and the selection process, is minimal relative to the gross value of sales. The members opposite particularly — and I think the public generally — are interested in the overall dollar figures. B.C. Hydro's investment in the lower mainland gas division, as I've mentioned, is of the order of $440 million. Had it been a private utility with an investment today of $440 million, its rates would have been substantially less than the rates it is currently charging.

In maintaining the rate level at Hydro's high rates, we put a valuation on the rate base of $580 million. The difference between $440 million and $580 million is a measure of the extent to which Hydro was overcharging, if I can put it that way.

MR. WILLIAMS: Is this an old B.C. Electric man talking?

HON. MR. DAVIS: Well, B.C. Electric goes back 20-odd years, so I don't want to revisit....

Interjection.

HON. MR. DAVIS: I'd rather deal with the rates the private sector would have been allowed to charge had they had the operations of B.C. Hydro gas over the last, say, 20 years. The rates would have been appreciably lower. We are selling a going concern with the present level of rates; hence the rate base is higher.

Interjections.

HON. MR. DAVIS: The hon. members opposite are asking if Hydro's management is incompetent. Basically, Hydro was subsidizing the electric service out of the gas rates. At long last, after many years, the electric side is now healthy, and the prospects are for very few, if any, rate increases on the electric side. In any case, if Hydro is made whole as a result of this transaction, I don't see how there would be any impact on the electric rates merely from this transaction. I'm saying that had the private sector been operating the gas division alone and competing head-on with the electric side for space-heating and other markets, gas rates on the lower mainland would be lower.

The privatization committee has done an elaborate study involving computers and so on, and has made projections of future rates. It sees no reason why rates would rise in years four or five, for example, after a three-year freeze. If we — the industry — find storage capabilities in or around the lower mainland, rates should go down 5 or 10 percent; on the other hand, if the raw price of gas from the field goes up, that's okay.

I'm trying to put all of the possibilities on the table. I'm confident, Mr. Speaker, that in private hands rates will remain as they are; that rates will not go up in any unusual way; that in the long term the lower mainland gas division operation will, from a consumer point of view, a rate point of view and a quality-of-service point of view, be equal to or superior to that of B.C. Hydro. The employees will be more involved; certainly the public will be more involved from the ownership side.

B.C. Hydro Gas is, with the exception of Sask Power, the only publicly owned gas distribution system in Canada, and

[ Page 5197 ]

one of the very few in North America. So it's not as if we're doing a radical thing and taking a public sector operation and privatizing it when almost everywhere else it's in the private sector. We're going to the norm for North America — indeed, the overwhelming practice: private ownership, citizen ownership and tight regulation. The next bill to come down after this one, Bill 46, deals with the tight regulation in the public interest.

Mr. Speaker, I move second reading of Bill 45.

MR. CLARK: The minister has talked at some length about the Hydro gas division and the four components he has indicated the government wants to sell. I will deal with them, but first I want to deal with what the bill and its companion legislation, Bill 46, say. I am pleased to rise to oppose both of those bills, and I might state at the outset that I am the designated speaker for the official opposition.

Mr. Speaker, Bills 45 and 46, when you view them together, represent the most devious, insidious and, I would say, deceitful package of legislative change I've seen. The government and the minister have repeatedly made statements that are simply not supported fully by the legislation itself, and I want to go through that. The two bills combined pave the way for the privatization of the entire B.C. Hydro corporation, not just the gas division, the R and D division, the rail division and the Victoria gas division. The minister, I am sure, knows full well that in fact this paves the way for the privatization of any asset of B.C. Hydro — and I will go through that in a minute.

What will be left with B.C. Hydro after these two bills are passed is the wires. There'll be nothing left of B.C. Hydro but the transmission facilities, the wires. That is what these two bills in tandem contemplate. How is that done? Bill 46 requires B.C. Hydro for the first time to wield private power, to transmit private power. The government says that that means co-generation and paving the way for power exports from Alcan and from the two thermal plants being contemplated in the Kootenays. It does that. Absolutely.

It allows B.C. Hydro for the first time — it requires them in fact — to wield private power through its distribution lines. But when that is combined with this Bill 45, the real agenda of the government is clear. There can be no other explanation. I will go through that. Bill 45 is not entitled the Natural Gas Privatization Act or any such thing. It does not even refer to the R and D division of B.C. Hydro. Nowhere in this large bill does it even mention the R and D division or the rail division.

This bill is entitled the Hydro and Power Authority Privatization Act. It does not just say what the minister has said today, that there are only four components of hydro on the block. This bill makes no such distinction. It is in fact the most sweeping legislation for privatization that we have seen in this House. It is as sweeping as anything we have seen in any other jurisdiction in the world.

What are the implications of the fact that it doesn't mention these components? It means that hydro dams could be sold in British Columbia. It means that the Revelstoke Dam could be sold to private interests; it means that the Bennett Dam could be sold. It means that any asset, any piece of land, property or equipment, anything owned by B.C. Hydro, under Bill 45, can be sold to the private sector.

It can be done when this bill is passed without any public debate or scrutiny. After this sweeping, radical bill is passed, that can be done by this administration or future administrations without any scrutiny in the Legislature, simply by this act. One could draw no other conclusion, when one views these two pieces of legislation in tandem, than that is clearly what is being contemplated by the government.

Regardless of what the minister, the Premier and other people have said about what is for sale with B.C. Hydro, this bill goes far beyond that. I submit that there were easy amendments that could have been made to this bill which would have limited the privatization initiatives to the four components of B.C. Hydro that the minister says are for sale.

The government has said that at this time it has no intention of selling the electric division of B.C. Hydro, which in fact comprises about 94 percent of investment. The minister mentioned that again today. We're talking about $9 billion of assets, and he's only contemplating 6 percent. Why then does it not say that in this bill? Why then does it not mention that this was a narrow piece of legislation that was only going to deal with the initiatives that the Premier announced and the minister reiterated today? That could have been done very easily.

[11:45]

I submit once again, Mr. Speaker, that we see a really frightening and radical vision for British Columbia in imposing their unwanted ideology on this province. It's instructive when we see this sweeping legislation. It's instructive that the minister introduced it the night of a by-election, when they knew that the news story would be the by-election, when they knew that their flagship privatization initiative was going over like a lead balloon, and when they wanted to sneak in, in a devious manner, sweeping changes to the entire way in which we deal with energy policy in British Columbia. It's absolutely clear, and I will go through the bill in some detail to document how that is the case.

How devious is the bill? Let's just go through a few things. The minister says: "Rates will be frozen." That's not in the bill. Nowhere in the bill does it say that natural gas rates for B.C. Hydro gas, once privatized, will be frozen. Nowhere does it say that. It says that cabinet will do that. Even though they repeatedly say that rates will be frozen, why didn't they put that in the act? They could have put it in the act; of course they could have.

They say that they won't sell the electric division of B.C. Hydro. That's not in the act. Nowhere does it say that this does not apply to the assets of electrical generating facilities. Clearly that is allowed, and I will argue that it is expressly allowed and contemplated by the bill.

They say that this bill limits foreign ownership. Once again, that's not entirely truthful when we look at how the bill is structured, and I'll talk about that later as well. Quite clearly, as I will mention and argue, the section that deals with foreign ownership is only if the cabinet decides that any of those components that are sold off should still fall under that section of the bill. Even then, every restriction on foreign ownership allows for cabinet discretion to override that restriction.

It's instructive, and I will look at the BCRIC experience, which we just dealt with yesterday, which dealt with foreign ownership in a much different manner than this bill contemplates. What does the bill say? It doesn't say all the things that the minister and others have said it will. Let's go through it.

Part 1, division 2, says that any assets of the authority may be transferred to an intermediary company, with the government and/or Hydro owning all of the shares. So they set up an intermediary company that for all intents and

[ Page 5198 ]

purposes is still a Crown corporation, and they can move any assets that the B.C. Hydro and Power Authority owns. Then shares of that intermediary company are for sale— or any other variety of techniques for privatization that the government wishes to contemplate.

MR. WILLIAMS: Any assets?

MR. CLARK: Any assets that B.C. Hydro and Power Authority owns can be moved to an intermediary corporation.

MR. WILLIAMS: Sell the Bennett Dam?

MR. CLARK: Absolutely. The Bennett Dam is clearly on the block.

Division 2 is entitled "Disposition of Assets and Liabilities" — again, a wide-open and sweeping clause or division of the bill that allows the disposition of any assets. The division expressly deals with more than simply the gas component, because the gas component is dealt with separately. So at the beginning, under part 1, division 2, of this bill we have what could be called a generic corporation, a generic set of rules regarding any assets. Then later on in the bill we have specific reference to the gas division of B.C. Hydro. I submit that if the government was not contemplating the selling of the electrical division or did not want to do that, they could easily have limited the scope of this bill to the kinds of things the minister talked about today.

The bill also contemplates in part 1, division 2, rights-of-way transferring. It says that rights-of-way will be transferred to the private company, and all the power and authority that was vested in B.C. Hydro with respect to those rights-of-way transfers to the private company. The minister said we're only dealing with this tiny little part of B.C. Hydro — the gas division. As the minister well knows, most of the rights-of-way are electricity rights-of-way. Of course, that section of the bill is not included under the section dealing with gas; it's included in this generic section. We know there are many farmers and others all over British Columbia who farm on those rights-of-way; they get special permission and don't pay rent to B.C. Hydro. The private company, of course, will have exclusive jurisdiction — as Hydro has had — to do whatever they want with those rights-of-way, because they override any of the land titles sections dealing with rights-of-way. I submit that it may have consequences for users of the land, given that we're now essentially transferring fee simple to private companies.

What does division 2 say? It deals with gas distribution intermediaries. That is where the minister says that they're going to freeze rates. Well, it does not do that, and I think most people have seen it by now. We have to trust the cabinet to do what they desire with rates in British Columbia.

MR. WILLIAMS: Oh well, there will be a new cabinet.

MR. CLARK: There may well be.

MR. SERWA: Wishful thinking.

MR. CLARK: Wishful thinking for you, my friend, not for us.

In division 3, sections 11 to 19 are the ones that have the sunset clause; the ones that move all the power and authority of the Utilities Commission to regulate — move it all behind the closed doors of cabinet. It suspends all the regulatory authority of the Utilities Commission Act and the Gas Utility Act.

MR. S.D. SMITH: There are no closed doors.

MR. CLARK: My friend reminds me that there are no closed doors in cabinet these days in British Columbia.

What does this section say? It says it "deems" that the successful bidder will have a certificate of public convenience by fiat, by the legislation, which means there will be no public hearing on any of the sale of any of the assets of B.C. Hydro — no public airing of that sale, no scrutiny. A sale is made by cabinet, and it expressly disallows any review by public hearing that the Utilities Commission might have under normal circumstances.

The member and the minister know full well that West Kootenay Power and Light was recently sold, and that sale or any transfer of assets of a utility goes through a full public hearing process where members of the public and others get a chance to debate it. But here we don't get that chance, and worse than that, this Legislature does not even get a chance to debate it, because this bill vests all power into cabinet to deal with that.

It's worse than that, Mr. Speaker, because section 15(a) says that any privatization shall again be "deemed" to be in the "public interest." By legislation, whatever cabinet decides is deemed to be in the public interest, with any privatization in this province — with respect to gas, that is, because this section deals with gas — it expressly says that it cannot at any time be reviewed by the Utilities Commission. It expressly goes on to say that there are no technicalities, no loopholes — specifically, there is no chance for review by the Utilities Commission when the sale takes place, when cabinet makes that decree or after the three-year period when all of these clauses fold. It says that there can be no review by the Utilities Commission.

Section 17 says that it transfers all of the commission's rights, powers, obligations, duties and functions to the cabinet — no scrutiny for any of those actions. Any orders that would have been done by the Utilities Commission are now done by cabinet, and they cannot be scrutinized. It says cabinet shall have "the absolute discretion" whether to hold a hearing or even to give notice of rate increases. It removes the requirement the Utilities Commission had to give notice of rate increases, to give notice of a hearing, and to give notice of any order, obligation or duty pursued by the commission.

That's not only removed to cabinet, but the cabinet has the discretion not to do any of the things the Utilities Commission did. Cabinet is not even required, as the commission is, to prepare written reasons for any "certificate, order, approval, rule, regulation, endorsement or decision." Anything they do can be done by order-in-council without any explanation — no review in terms of public hearings; no review by the Utilities Commission, the regulatory body; no review by this Legislature; no review by anybody. No written or oral justification has to be given by the cabinet. I don't think we've seen this kind of sweeping move of regulatory authority into the cabinet in any other legislation, certainly since I've been here.

So that deals with the gas division. It does not do any of the things the minister has said it does. It does allow for what

[ Page 5199 ]

the minister says the government is going to do, but it certainly doesn't expressly say that.

I want to just briefly refer to the BCRIC experience, because yesterday we had occasion to roll back the foreign ownership regulations that were in place with respect to BCRIC. It's ironic, really, that today we are here saying that there shall be foreign ownership restrictions — maybe — on any privatization initiatives, much like they had with BCRIC, while yesterday the government was moving to remove those restrictions. It's ironic because the minister responsible came into the House yesterday and said: "We believe in foreign ownership. We think these restrictions on foreign ownership have depressed the price of BCRIC, and that's the real problem." So they came in here and asked us to open up the doors for a foreign owner.

I submit that there's only one reason for that, surely, unless the government.... Why would the government bring in this legislation with respect to BCRIC? It could be simply that they haven't realized that might trigger people's memory of failed privatization; that's certainly a possibility with this government — that they simply brought it in in ignorance of what it would do in terms of the public's attitude toward privatization. But it's more likely to be because there is a foreign owner waiting in the wings to purchase the assets of BCRIC, and this government jumped to open the door for that eventuality. There can't really be any other explanation.

So what happened? When BCRIC was established, they said: "We will not allow foreign ownership." It says here: "A person shall not purchase or hold voting rights in right of or for the use or benefit of a non-resident of Canada unless the non-resident is a Canadian citizen." It defines non-resident, again, (a) through (g). Interestingly enough, it's exactly the same definition that we see before us today in Bill 45. They have lifted the definition out of the old BCRIC legislation and placed it in the new BCRIC legislation.

But worse than that, Mr. Speaker, yesterday they removed that from the books. So what's to stop the government removing this from the books tomorrow? I don't think British Columbians trust the government to deal with that. I certainly don't, because we've seen it....

At least with BCRIC, in the early days, they had an absolute dictate and it said they "shall not," and it went on and on to document how foreign owners shall not own any shares of BCRIC. So what does this legislation do? Does it do that? The government announced again today.... The minister made great statements about not allowing foreign companies to own this monopoly resource. I suspect the only reason this is here is the outcry that the citizens made in the Kootenays and in the Okanagan and in Boundary-Similkameen with respect to the selling of West Kootenay Power and Light to a foreign company — the first foreign sale of an electrical monopoly in the history of Canada, and this government and this minister not only allowed but supported it.

All of a sudden we have a flip here with respect to the statements on foreign ownership. But once again, Mr. Speaker, does this bill restrict foreign owners? It doesn't do that at all. As I've outlined, you move the assets from B.C. Hydro to an intermediary company. That intermediary company is then sold, and only then, part 2 of the legislation says that the cabinet may designate any of those intermediary companies as special companies for this section of the act. It doesn't say it "shall" designate these companies as special companies; it says it "may." The previous BCRIC legislation said it shall limit foreign ownership.

What do special companies do? This is the part that purports to limit foreign ownership. The government has moved, I submit, to head off any public opposition on this ground because people know that in British Columbia there is a depth of opposition to what's happening in British Columbia with the Bank of British Columbia being sold and Li Ka-shing buying B.C. Enterprise Corporation and the government going and meeting with Glenn Babb, the South African Ambassador, and begging him to buy British Columbia. That's what we're seeing with this government: begging foreign ownership.

Why did they move now to limit it here? They've moved now to deal with the opposition that British Columbians face. It's ironic.

[12:00]

Interjection.

MR. CLARK: Oh, the member for Langley wants South African investment. Nowhere else in the world wants it except British Columbia, loony-tunes British Columbia with this Premier who wants to beg South Africa to come here and invest in British Columbia. Maybe they'll buy the natural gas division of B.C. Hydro. I'm sure the Premier would be happy with that.

The special companies "may" be designated by cabinet — not "will" be, as the BCRIC legislation said, but may be. What do those special companies do? If they really wanted to forbid more than 20 percent foreign ownership, then that designation would be mandatory. When it dealt with the natural gas distribution facility, it could easily have specifically said that no foreign companies shall own more than 20 percent of that utility. It doesn't say anything like that. First of all, special companies may be designated by cabinet.

The bill is even weaker than that. You'd think that's all the cabinet would need. They don't have to designate any of these companies as special companies, so they may not. What more power do they need? But they've made it even weaker. Part 2 of the bill includes section 35 that says that if the government designates a special company, they cannot move its head office out of British Columbia — unless approval is obtained by cabinet. So they can move it if approval is obtained from cabinet.

Section 36 says that no foreign individual or company can own more than 20 percent in total in aggregate of the total number of voting shares — unless cabinet decides that that foreign company has an agreement that "protects the public interest."

Section 37 says that no single individual or company can own more than 4 percent of the shares — unless cabinet decides that there is an agreement that "protects the public interest."

In every single instance where there is a restriction on foreign ownership in the special companies designation section of this bill, the cabinet can override it. It doesn't have to make the natural gas distribution utility a special company and subject to foreign ownership restrictions, but if it does that, it can exempt any one of the restrictions in this section under this section of the bill because of the power of cabinet override. If they really wanted to restrict foreign ownership, it would be very simple. In fact, a previous Social Credit government did just that with BCRIC: it said that there shall not be any foreign ownership of BCRIC. This legislation does nothing like that at all. It is so weak you could drive a truck through it. The cabinet has absolute discretion in every section of the bill to waive those restrictions.

[ Page 5200 ]

So what do we have? We have a document that contemplates the selling off of all of the assets of B.C. Hydro, and it does that in a fairly complicated manner. It doesn't mention R and D. It doesn't even mention the B.C. Hydro railway. It doesn't mention Victoria Gas. It doesn't specifically mention any of the components of B.C. Hydro that the minister says they want to privatize. It gives the cabinet complete authority to sell any of B.C. Hydro. Where it moves into restrictions on foreign ownership, it only does that if the cabinet agrees. Even if the cabinet agrees to that, on every clause that restricts foreign ownership, the cabinet has the right to overrule with no legislative debate and no public scrutiny. It is a very devious, sweeping and radical piece of legislation. I'm happy to rise and oppose it.

I want to deal with the four components of B.C. Hydro that the minister states are on the agenda now. Because of Boundary-Similkameen and because of public opposition, I don't think they're going to run out and sell Revelstoke Dam tomorrow — which they could if this bill passes. They may wait a year or two; they may wait down the road. The minister even acknowledged that a future government may want to. Though it may not be a very good analogy, it's a bit like the tree-farm licence situation. We had an amendment to that the other day in here. The real problem was the 1983 amendments, but they sat there idle. This bill could pass, and we may not see the selling of generating facilities for some years. But when they do it, they will have the power to do it without any scrutiny.

I want to deal at least briefly with my opposition and my party's opposition to the limited amount of privatization that the minister has said is moving ahead so very rapidly, the four components of B.C. Hydro.

The first component the minister has mentioned is the Hydro gas division on the lower mainland. I cannot think of a dumber thing to do in the 1980s than to sell off this kind of monopoly asset, especially in light of the chaos and deregulation that we're seeing in the natural gas industry. I might say at the outset that one thing I did not mention with respect to the bill, which I should have, is the disposition of the proceeds. We have seen that the government wants to sell this, and it has two options. It can pay down the debt at B.C. Hydro, in which case the public will see no benefit from the sale, because the proceeds will simply be sucked into the debt that exists at B.C. Hydro. If it does that, B.C. Hydro will be made whole. The other alternative is: if it takes the proceeds and puts them into the phony privatization fund that they've set up for the sake of public relations and politics, then the B.C. Hydro electric component will have to absorb the debt that was accrued by the gas division. Then electricity rates will rise significantly. The minister almost admitted that today.

We could see electricity rates rise because of two things: (1), because the profits that the gas division makes that go to offset losses at the electric company will no longer be available; and (2), because the government in this bill does not require the proceeds from the sale of assets to go to pay down debt at B.C. Hydro. Once again, we have a strange piece of legislation, because it allows for every eventuality. It doesn't say that the proceeds for the gas division of B.C. Hydro will go to pay down the debt at B.C. Hydro. The minister has announced today that at least some of it will, but it doesn't have to; it's completely at the discretion of cabinet. It doesn't say that the proceeds will go into the privatization benefits fund or into general revenue; it says they might, if cabinet decides that.

Every single option with respect to the proceeds of any sale of any asset at B.C. Hydro is at the discretion of cabinet. I can't think of legislation that tries to cover every eventuality and does not do what the minister has said it is intended to do, or does not specifically limit the options of government to what it says it's going to do. The government announces what it's going to do, and then brings in legislation that allows not only that but allows every other eventuality in case they change their mind, probably because the Premier changes his mind every 30 seconds. They don't want to lock themselves into a particular option that may change with government policy, as every other policy with this government changes all the time.

We don't know what's going to happen with the proceeds. We have no idea what will happen, and this bill is not instructive whatsoever. It simply says that the cabinet can determine where the proceeds go at any time in the future.

What about the gas division? The minister says the public corporation has been overcharging. But then he goes on to admit that if they are overcharging, the profit is going to pay the electric company and keep electricity rates down. One can argue the public policy implications of cross-subsidization, and I might even find myself arguing, as I have in the past, for splitting off the gas division to a separate Crown corporation, because there are some benefits to competition. I would rather see the profits from the gas division....

MR. S.D. SMITH: Say that again slowly.

MR. CLARK: There are benefits to competition, and I've never said there aren't. The second member for Kamloops asked me to repeat that. It's interesting, because in Great Britain — they always tout Great Britain as the privatization initiative — what did Madsen Pirie say? He said: "Privatization only works where there is competition." But what do we have here? We're having the sale of a monopoly to the private sector. It's not a competitive situation at all. It's a monopoly that serves the vast majority of British Columbia in terms of natural gas — the largest natural gas distribution monopoly in British Columbia.

Even under their own guru Madsen Pirie and even under the privatization experience of Great Britain, they have failed because they haven't worked in any of the competitive market structures that might drive down the rates. This is a monopoly, and the government and the minister know that. The government, of course, is already moving to privatize things like highways and monopolies. Thatcher went through all the Crown corporations actively competing in the commercial sector first and is only now moving into monopolies and the things that this government contemplates.

It's instructive that it's now that they have moved into monopolies that they are facing the real problems. It's not as popular as it used to be. British Telecom has more complaints now than ever before in history — in one year — because it's a monopoly, and they privatized it. We see that the British experience doesn't apply in British Columbia, because this government is more radical than Margaret Thatcher's government. Their first initiative is to deal with stuff that Margaret Thatcher is only now dealing with, after I don't know how many years in public office.

What happens with natural gas in terms of that monopoly? The private company has to do at least three things to drive rates up more than the public corporation does.

First of all, they have to make a profit. They have to make a rate of return, and no one begrudges them that. But when

[ Page 5201 ]

they do that, it comes out of the pockets of the consumer. A public corporation is not required to make the same rate of return as a private one. You know that, and the members know that. So the private corporation that makes a profit is going to impact on rates and services.

[Mr. Pelton in the chair.]

Secondly, a private company cannot borrow at the same rate as a Crown corporation. They have to pay at the very least 1 percent more than British Columbia, because the British Columbia government guarantees the borrowing of B.C. Hydro at 1 percent lower than the private sector. If that borrowed money is going to cost 1 percent more, that means significant increases in rates, and the members know that as well. So for a private corporation, it costs more to borrow money.

Thirdly, interestingly enough, a private company has to pay federal income tax. Isn't that interesting? This government constantly attacks the federal government. We saw another example today of the problems and the evils of the federal government. We are going to be giving the federal government several million dollars more every year in corporate income tax. A provincial Crown corporation does not pay those corporate income taxes. Corporate income taxes....

HON. MR. DAVIS: It's all rebated to them.

MR. CLARK: Yes, it's all rebated. The minister makes a good point. It is all rebated, because that was dealt with to stop reactivist governments. But the minister knows.... Oh, the minister was the minister at the time. That's very good and instructive. The problem is.... Maybe the minister can make this commitment. In Alberta, when the private company pays federal income tax, that's rebated to the province, and the province passes it on to the private company to keep rates lower. But that doesn't happen in British Columbia, and the minister knows that as well. When private corporations — utilities — pay federal income tax, and that tax is rebated to British Columbia, it goes into the general account in British Columbia, not to keep rates down.

[12:15]

The minister might want to deal with that in terms of policy, because at the very least, the Alberta experience makes sense. If he doesn't deal with that, then we have three things: the fact that the private company has to make a profit; the fact that borrowed money costs more for a private company; and the fact that a private company has to pay federal income tax. Those three things alone account for at least a 12 percent increase for every single person consuming natural gas in British Columbia. We are going to see rate increases because of privatization. That is absolutely essential and inescapable in terms of economic logic.

MR. LOENEN: They're far more efficient.

MR. CLARK: If they are inefficient, it's because of Social Credit mismanagement for years and years. But the minister didn't say they were inefficient; the minister said they were making a profit, and it was paying down electricity rates. He didn't say that the rates would go down because they were inefficient. He said they would go down because they would no longer be paying the profit to the electric division, which means that electricity rates will go up. You can't have it both ways, Mr. Member.

There is no explanation for what the government is doing, except blind faith in ideology. It doesn't make any common sense, regardless of whether you agree with Crown corporations or not, Mr. Member. Any government, including.... As W.A.C. Bennett well knew, those Crown corporations performed a function. They were and are good for British Columbia. It's only blind ideology that we have seen, in every single instance from the Labour Code changes to other changes in government, with this particular Social Credit administration. It is ideology that drives them; it is zealous ideology, and we're seeing it again here today in this bill. Electricity rates will rise as well because of that.

What about deregulation? These are complicated subjects, I know, but because of deregulation — and the minister has said this as well — we now depend more on utilities to bargain on behalf of consumers than at any time before, because before we had B.C. Petroleum Corporation. They set the rates. Then we had a Crown corporation that distributed the natural gas that was regulated by government. Now we have no B.C. Petroleum Corporation. We have a free market, so to speak, although we do have some regulation, because large companies, of course, got a far better deal than the consumer. They saw their rates go down 30 percent because of this government's deregulation, but only 5 percent at the residential level.

With deregulation and the elimination of the surplus test and the supply test and — the minister knows this as well — because of free trade, quite frankly, and the kinds of deregulated marketplace we're seeing with natural gas, we no longer have protection from shortages. We used to have government protection. In 1974, when the Beaver River field got contaminated with water, we went from a 25-year surplus of gas to no surplus of gas. Today in British Columbia, there is no 25-year surplus test for exports.

The minister says that's okay, because the utility can bargain for long-term contracts. We now are more dependent on utilities to bargain on behalf of consumers and to protect consumers from shortages, rate hikes and high natural gas prices. To protect consumers generally we are more dependent on the utility. So what are we doing in British Columbia? We are giving that utility to a private company. We are eliminating the government regulation of prices at one end, and now we're eliminating the regulation of prices at the other end. Deregulation means quite clearly that we are going to depend more on the distribution utilities, and that clearly increases the need — or necessity, in my view — of public ownership.

There are a couple of other aspects I want to deal with in respect specifically to the natural gas distribution company — the privatized version. Clearly there are going to be other increased costs. The minister talks about efficiency, but there will be other costs associated. Currently we have one large company set up by W.A.C. Bennett, and it deals with both natural gas distribution and electricity. That means we have one big computer that does everybody's billing. When I get a bill from B.C. Hydro, it's for both gas and electricity; when someone comes to read my gas meter, it's the same person — electricity and gas. There is a complementary function. Very clearly there are economies of scale, and the minister knows that as well.

What's going to happen now? I'm going to get one bill from the new privatized gas company and one bill from the

[ Page 5202 ]

old publicly owned electric company, at least until the minister sells that as well. We're going to get one person reading the gas meter and another person reading the electricity meter. We're going to have all kinds of duplication of services. That's the reason previous Social Credit governments, I am sure, did not split the gas division from the electric division — because there are all of these complementary services. Either they're going to sell those services to the private sector as well in order to keep them whole, in order to keep both functions going.... What we're going to have at B.C. Hydro is a huge computer that's only operating at half capacity, and that is inefficient, Mr. Speaker. The inefficiencies that will be caused by the duplication of services, with respect to breaking off those services from the electric company, will also cause rates to rise, I submit.

The initial cost. What about the new private company? Say it's a brand-new company and they have to capitalize the computer system and the software that B.C. Hydro has developed — unless they give that away as well, which seems unlikely. The capital expense that the new company will have to absorb will also find its way back into rates. When tenants move to a new apartment, they pay one hookup fee for both gas and electric, because it's the same company; but not after this is passed, not after they sell it off. There will be one fee to the private gas utility for hookup and one fee to the public electric company for hookup. Again, more fee increases, more duplication of services, more cost to the consumer.

Hundreds of miles of rights-of-way are shared by the gas division and the electric division. What happens there, Mr. Speaker? There is a gas pipeline running underneath or adjacent to large electric power transmission towers. What happens? Are they going to sell those rights-of-way to the gas company and make the electric division pay rent for that space, or is the electric company going to keep them and make the private company pay rent? Clearly there are some efficiencies having the same company share the same rights of-way. I can see it being an absolute nightmare in terms of.... The minister said $1 million, but I find that hard to believe.

Vehicle fleets. These are smaller examples, but they're real. It means that we have one B.C. Hydro vehicle fleet. They get fleet rates: they get cheaper insurance, they get cheaper rates for buying cars, etc. All those things will now be duplicated by a private company. The bottom line is that the consumers will pay for that duplication again and again.

One other thing: service will decline. How can we make that statement? We can make that statement because we know that today in British Columbia, if I own a gas stove a Hydro gas employee will adjust the gas burners, analyze your gas flue, grease stiff taps, reposition handles and even tighten loose oven door handles — all for free. This is from B.C. Hydro, by the way. I know it horrifies the members on the other side, but the publicly owned gas company pays for all those services and the individual consumer does not. It is free — dozens of minor repairs.

I don't know if anybody in the lower mainland has ever called B.C. Hydro for a gas leak. I certainly have. They are an excellent service. They come out for free, and they repair it for free. Will that happen with the private utility? Not likely. Private companies who have to make a profit will charge for every service. Historically, private companies will either charge for them or they won't do them; it's as simple as that.

The people are happy and satisfied with the quality of service they are receiving with respect to B.C. Hydro gas, and the polls B.C. Hydro have done document that. I submit that it has been an outstanding service in British Columbia. We're giving that away as well.

If the government does freeze rates for three years in order to get by an election, it's very clear that the company will have to devise new and innovative ways of getting that revenue out of the taxpayer. The minister knows that as well. These are clearly ways in which private companies will do that. They will charge for every single service every single time they come to a consumer's home. It means that small individual homeowners will pay more again.

One last point, and that is with respect to procurement. B.C. Hydro has a public procurement policy that means they buy their goods and services in British Columbia. Once again, the government has put all kinds of restrictions — perhaps — on foreign ownership, but it hasn't dealt with this huge purchasing power that's available in the public sector. I know that previous Social Credit governments.... Even today they mention that the purchasing power of the public sector is a tremendous force in terms of economic development. It means that we could have, for example, a move toward import substitution. The government has moved in a minor way in some areas, and one place they have moved is B.C. Hydro. B.C. Hydro has a preference for B.C.-made goods and services. Will that be the case with a private company? Not necessarily. The facts are that they won't do that as readily as B.C. Hydro, and not because they are more patriotic but because they are a private company. They will buy their desks from the cheapest source. They will buy their equipment from the cheapest source. That's what a private company does. B.C. Hydro has a procurement policy that gives some preference for B.C. companies. That will disappear with privatization.

For all of these reasons, we completely oppose the privatization of the mainland natural gas division of B.C. Hydro. It is patently clear that the consumer will pay and pay in the end. There is no logic to it. It is simply an ideological mission on the part of the government. There is no logic.

I want to deal with the three remaining divisions that the minister has announced will be privatized. One is Victoria Gas: $13 million in assets. My colleagues from Victoria no doubt will speak at greater length in second reading on this question, but suffice it to say that that is a heavily subsidized operation, and the minister knows that as well.

Regardless of what the public pronouncements are with respect to rate increases or rate decreases, they know that B.C. Hydro subsidizes every person that consumes the propane on the Victoria Gas distribution network to the tune of $1,000 a year. I know the members opposite don't like that. I know they don't believe in subsidization of homeowners by the public sector. Instead of raising rates, as they want to do — but they are worried about the political consequences — they're going to sell that as well to the private company.

Unless there's cross-subsidization, the minister knows that the private company will be forced to raise rates. It's instructive that in his introduction of this bill, the minister did not say that rates will be frozen. He did not say they would be frozen on Vancouver Island. In an answer to a question, he said: "The rates are high." If he feels that way, maybe the minister could say that the current rates in Victoria are the ceiling above which rates will not rise, and that if there is natural gas, rates will fall in Victoria. I agree with him on that.

[ Page 5203 ]

He said we were going to freeze rates in Vancouver. Maybe he could say to the 4,000 consumers in Victoria on the propane network that rates will not rise above the current level. That is the logic of what the minister answered in response to the first member for Victoria (Mr. G. Hanson). He hasn't said that either.

Nothing in the bill, of course, deals with the Victoria gas division and the rates here. The economic logic is very clear. It means that rates will rise here dramatically. If we get natural gas, they will drop, and I certainly agree with the minister on that, but there is not necessarily any prospect of that. Even if there is it would be several years down the road, and in the meantime those consumers will be paying through the ear.

The minister knows also that B.C. Hydro has sunk significant capital into Victoria in an attempt to revitalize this section and reduce the subsidy. There are other initiatives, I submit, that B.C. Hydro could take very easily to reduce the subsidy level in Victoria, but they haven't done that. The government has shown no inclination to make the system work better but simply wants to sell it off. Those 4,000 people in Victoria — interestingly, most of the load in Victoria is restaurants — are going to see their rates for propane go up dramatically.

[12:30]

Research and development is another division that the government says they're going to sell. Thorne Ernst and Whinney was hired to do a consulting report on privatization, and they said that research and development is "not a standalone proposition." It doesn't make any sense to sell B.C. Hydro research and development, because it is geared to research and development as it relates to Hydro, not as it relates to the Science Council or to pure research. It is applied research — applied to the problems of B.C. Hydro.

There used to be all these technicians all over British Columbia working on little problems. What Hydro did — and I commend them for it — was bring them all together. Anybody who knows anything about research and development and high technology and those kinds of creative industries knows that it requires a certain critical mass. They built a new facility in Surrey and brought all these people together, and we have one of the best teams in the utility business. It does applied research and technology. It has patents on all kinds of things, like little nails to kill saplings so that we don't spray herbicides everywhere but make it site-specific. It has testing facilities.

All of those things are done by B.C. Hydro research and development. They are applied. Every day people in the field with B.C. Hydro phone the research and development office for advice. It works well. Thorne Ernst and Whinney said that. Stone and Webster, another international consulting firm, said it works well. It doesn't make sense to privatize. "You can't privatize," they said. "It's not stand-alone." So what does the government do? They're going to try to sell it off. B.C. Hydro is going to have to pay, it seems to me, for every phone call now. That's the only way it can work. A service contract will have to be arranged with B.C. Hydro.

It will not save us any money. The minister knows that as well. It doesn't make any sense. Both consulting reports said that. So why are they doing it? Once again, the only explanation is ideology. When I asked the Premier in this House in question period to name one study that backed up the government's contention that this should be sold, he could not name one. Not a single study, not a single expert, has said this can be sold. It doesn't make any sense, like so much of this legislation. As I said earlier, it is not in the bill.

Finally, B.C. Hydro Rail. That's going to be sold. Does that make any sense? It doesn't make any sense. Again, the study showed that it didn't make any sense. The Hydro railway is valuable; it makes money. But what the international consultant said was: "If you sell it to another railway, it will become federally regulated." If it's federally regulated, it won't make any money. We now have a cash cow; we actually have a vital link that takes us out to the Roberts Bank terminal. It makes a lot of sense to keep that in the public sector.

The previous government looked at it, and the only other option that makes any sense whatsoever is to move it to B.C. Rail. Now that might make sense. Let's merge B.C. Rail with B.C. Hydro Rail. In fact, that makes a lot of sense. But is the government doing that? No. It wouldn't do that, because that's against their ideology. That's another Crown corporation.

MR. RABBITT: Let's talk about ideology. Let's talk about big government.

MR. CLARK: That government over there.... They are the ideological zealots, not this side over here. That's clear, and the people of British Columbia know it's clearer every day. Every day it becomes clearer and clearer that there is a radical government in British Columbia, that they are zealots, and that they are ideologically driven.

It does not make sense to privatize the B.C. Hydro railway; everybody has said that. It is not a going concern. The only thing that would make sense would be to move it to B.C. Rail. The government has not only not done that, but it has expressly excluded that option, which is the only one the consultant said made any sense. So why are they doing it? Again, the only explanation is ideology.

To wrap up, if I might, we've seen that this bill does not do specifically what the government has said. In fact, it is the most radical and sweeping piece of legislation that we have seen. It means that they can sell the electric division without scrutiny of the Legislature. It means that they can sell dams. They can sell the legacy of British Columbia to private companies.

This bill and its companion bill, Bill 46, pave the way for the ultimate privatization of all of B.C. Hydro, all $9 billion worth of assets. Not only that, but it doesn't deal with foreign ownership restrictions, because the power is now in the hands of the cabinet. It doesn't deal with freezing rates in the lower mainland. It puts the power in the cabinet. It doesn't do specifically what the government has said. There are very easy amendments that could be made which would have limited the scope of this bill to what the minister and the Premier have announced. but they want the power to be able to sell anything at B.C. Hydro without public scrutiny. That is clearly the real agenda. Nothing will be left but the wires after these guys act through with B.C. Hydro. That's clear.

With respect to the specific projects that they have announced — the four projects that they are moving ahead on today, even though the bill allows them to do much more than that — none of them make sense either.

Mr. Speaker, we will be opposing this legislation. We will be opposing every clause of this legislation and we'll be opposing it all the way through. We are opposed to this very narrow ideological vision for British Columbia.

[ Page 5204 ]

DEPUTY SPEAKER: The member for New Westminster has asked leave to make an introduction.

Leave granted.

MS. A. HAGEN: I'd like to ask the members in the House this Friday morning to welcome students from Lord Kelvin School in New Westminster who are visiting the gallery. I'm really pleased that they are here today during debate on a very significant piece of legislation. As students of the future, it's good to have them in the House this morning.

MS. SMALLWOOD: A point of order, Mr. Speaker. I noticed the minister was wanting to respond. As far as the rules of the House go, if the minister responds, does he not close debate?

DEPUTY SPEAKER: This is second reading. The minister's response closes debate, yes.

MR. S.D. SMITH: I am pleased to rise in this debate to speak in favour of the bill, but I want in due time to speak to some a very specific part of the process that is contemplated by the legislation, the R and D section.

I was very interested in the remarks of my friend — as it turns out, to my right here — earlier in the House. There were some things that interested me, and one of them was this whole notion about ideology and hypothetical fear mongering and the sort of paranoia that we see arise. I was especially interested in some of the heckling that came up during that period of time, especially from the first member for Vancouver East (Mr. Williams), who, in his sort of guttural tones, came forward with the proposition that the rivers are for sale in the province of British Columbia. You know, that song we're heard from him, I guess, since the days when Dave Barrett defeated him for the leadership of his party.

But more importantly than that, it was interesting to me because last week in Kamloops, Nelson Riis in attacking the free trade bill came up with a proposition on rivers which was equally goofy. That's when he resurrected the NAWAPA proposal. He talked about flooding Prince George and Golden and so on. I say this in speaking to the principles of the bill, Mr. Speaker, because I think sometimes the public properly listens to its political leaders, and when they get statements that are alarmist and, frankly, silly, it really does demean the whole process. I think we can do much better than that.

In terms of the sale of some of the assets that were talked about, we heard some discussion that some of the very well-known assets — the ones with big names on them, historic names in this province — would be sold, and that was suggested as the raison d'etre for this bill.

I would suggest that perhaps the most realistic ultimate limitation on their lack of salability would be: who, indeed, would want them in the private sector? Why would they want to purchase some of those high-profile things? It's a tremendous opportunity for a quick headline, and so on, but realistically it doesn't make a whole lot of sense.

There are three ways, it seems to me, that we control monopolies. Of course, worse than a monopoly has always been a publicly funded, inefficient monopoly, in my experience. So there are three ways to control monopolies. One is by owning it outright — either the distribution capacity of the monopoly or the resource that supports the monopoly. A second way to control a monopoly is through the regulatory power. A third way to control a monopoly is a combination of both, and we've had that model in British Columbia for a long time.

I don't see why it is so difficult for members of this House, particularly members of the opposition, to accept the proposition that you have as much or indeed perhaps more control of a monopoly through regulation as you do through ownership. Indeed, you can make the case that your regulatory power is diminished when you also have an ownership capacity, because often there is a conflict inherent in that process. So I think that the suggestion that we will lose control over our destiny or, somehow, our heritage really doesn't make a lot of sense, because we have the regulatory power. I know the minister, when he closes debate, will be much more skillfully able than am I to demolish that argument that came from the second member for Vancouver East.

I was especially interested as well, Mr. Speaker, in the argument that was put forward from the opposition today that federal tax rebates ought to go directly to the corporation rather than to Crown general revenue. That, I'm sure, is a suggestion that some of your colleagues may take issue with, to say the least.

But the disclosure that most affects us in the interior is the proposition that the gas division, a publicly owned monopoly, is a demonstrably better citizen somehow in terms of procurement than a private sector situation would ever be.

Interjection.

MR. S.D. SMITH: You ought to go around the interior and learn something about your province, because, my friend, I want to tell you that there has been no better demonstration of good corporate citizenship in the area of procurement than from Inland Natural Gas, particularly through their Venture Inland program, where indeed there is self-interest — their own self-interest, you may say, because they obviously sell natural gas to businesses and people in the community. Their own self-interest, you may say, has driven them to develop a program that sees them do a better job at using their purchasing power for local procurement than any other entity in British Columbia, including all agencies of government. They have gone beyond that to develop a partnership system whereby throughout British Columbia, in their distribution area, through partnership with local communities and businesses, they have developed marketing strategies to attract industry, to enhance the industry that is there, to use the ability that they have for research and development, to further process commodities in the area, and to use their purchasing power to buy locally. I think that no better demonstration of the fallacy of your argument could be found than in comparing B.C. Hydro gas division with Inland Natural Gas in terms of the way they have dealt with local procurement and purchasing.

[12:45]

There is not always, as you suggest, black and white in these matters. There are a lot of examples where a somewhat pragmatic approach to these things may well be taken. And it is particularly in that area that I want to address some views to the minister with respect to the principles of what we are dealing with here. That is in the area of the research and development division of Hydro.

[ Page 5205 ]

It seems to me that while we ought to take a look at and put out proposal calls to offload the research and development capacity from Hydro to the benefit of the province and the people of British Columbia, the minister ought to reserve the option in the case of the research and development, to use that or some other Crown creation to pull together the expertise we have in the province of British Columbia. I'm thinking particularly of engineering innovation. I'm thinking of construction technique, management and technology. In the areas of electric power transmission, dam construction, rail and road construction and maintenance and in the area of port development, this province and its entities — often Crown owned — have developed tremendous ability and expertise in management, construction techniques and technology. It has always seemed to me that we could do a better job in British Columbia and should do a better job of marketing that expertise, because we talk a lot in here about an information society, diversification and high tech. Of course, that's exactly what that technology, that technique and that management capacity is.

I don't see privatization necessarily as an absolute, as my friends on the other side do. I see it as perhaps a recognition, as you have, Mr. Minister, with the export sale of electricity. There are times when an agency supported by the Crown will serve the interests of the province just as well as any other entity. In the world where our technology is in demand and where the expertise we've researched and developed is a very saleable commodity, I think we ought to consider — or at least have the option to consider — a proactive marketing of that expertise both to benefit from its own sale and to be the catalyst for enhancing the overall British Columbia research and development sector. In large part, it seems to me, we ought to do that, because the Crown and its own agencies now own much of the expertise to which I refer. Therefore it may be better able to lead the kind of joint venture marketing model that I would suggest you consider as an option in this process.

I recognize, as I must, the apparent irony of a somewhat free-market fan making this kind of suggestion. However, I want to emphasize again, in contrast to what we heard earlier, that I think we ought to take a pragmatic view of the process of privatization and recognize, like you, Mr. Minister, that it isn't only a matter of ideology and absolutes, as we heard earlier, but it recognizes that in some instances it may be prudent and ultimately beneficial to our province to use agencies of our Crown in that particular way.

As R and D has characteristically been wholly or jointly funded by the public and as the R-and-D-spawned expertise to which I earlier referred in port, rail, road and transmission development is largely Crown-owned, I would suggest that we should retain the option of leading the development of a significant British Columbia agency to market jointly — with the private sector and perhaps our universities — the plentiful R and D innovations and those plentiful techniques of management and technology, those assets we've developed. If the proposals you receive to Hydro with respect to R and D are inadequate, then I would urge you to give that kind of marketing capacity an opportunity to be developed. I would suggest it is something that is consistent as well with the statements in the throne speech which dealt with the possibility of developing corporations to market British Columbia and its products internationally.

I support the initiatives you are taking and I generally support the proposition of privatization. I think the private sector model is, on balance, the model we ought to use. However, I see privatization as a continuum of events; at times there may be a sound argument to be made to develop a Crown agency for a particular purpose, and over a period of time there may be other times when, after having done that and having had that purpose served, you want to offload that agency. But there will still be other times, it seems to me, when we ought to look at the ability of a Crown agency to serve the continuing interests of the people of British Columbia. I would suggest to you that the area of research and development may be one in which the option of developing a joint venture with our Crown agencies, which own in-house expertise, our universities and our private sector.... It's an option and a model which I suggest we retain if we don't get the kind of proposal that in your judgment and the judgment of the executive council can do the job in that regard for the people of British Columbia.

Mr. Speaker, I would like at this time to move adjournment of the debate until the next sitting of the House.

Motion approved.

HON. MR. STRACHAN: I'd like to offer my best wishes to all of us for a good weekend, and with that said, move adjournment.

Motion approved.

The House adjourned at 12:54 p.m.