[ Page 6233 ]

CONTENTS

Routine Proceedings

Committee of Supply: Ministry of Government Management Services estimates.

(Hon. Mr. Michael)

On vote 31: minister's office –– 6233

Mr. Williams

Mr. Lovick

Ms. A. Hagen

Mr. Clark

Mr. Rose

The House met at 10:05 a.m.

Prayers.

HON. MR. SAVAGE: It's indeed a pleasure for me and the second member for Delta (Mr. Davidson) to welcome, in the gallery, Ald. Rick Green and my ministerial assistant Barbara Logie. Would this assembly please make them welcome.

Orders of the Day

HON. MR. RICHMOND: Committee on Bill 17, Mr. Speaker.

Interjections.

HON. MR. RICHMOND: I thought this is what we agreed to. Would you rather go into Committee of Supply? I don't really mind one way or the other. I want to finish them all this morning.

Interjections.

HON. MR. RICHMOND: Well, agreements are agreements.

I call Committee of Supply, Mr. Speaker.

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

ESTIMATES: MINISTRY OF
GOVERNMENT MANAGEMENT SERVICES

On vote 31: minister's office, $259,265 (continued).

MR. WILLIAMS: A week ago the minister promised he would provide the House with details regarding the list he had deposited with the House in terms of which properties were actually — we're talking about properties sold by the Enterprise Corporation — sold on a bid basis, which ones were sold on a negotiated basis and which ones had an up-to-date appraisal.

I was away from the House for a couple of days, but I have checked the records, and I am not aware of the minister providing that information. Maybe the minister could advise. As I recall, the minister said he could have all that information by six o'clock on April 11 –– 1 suggested that he had a whirlwind staff, and he said indeed he had several whirlwind staff people there. Maybe he could advise the House if I've missed something, and whether all that information has been provided.

HON. MR. MICHAEL: If my recollection is correct, I made reference to information by six o'clock regarding the question the member brought up specifically covering the Foursquare Gospel Church land deal, as well as his armchair appraisal of the sales of a parcel at Songhees and the Cavell properties in New Westminster. The commitment that I gave at the time was that I would attempt to get a response by six o'clock. If the member would check Hansard, he would see that, indeed, there was a response given that day.

However, for his edification today, we could respond again to the sale to the Foursquare Gospel Church which took place in February, 1987. As previously stated, the church made an offer on a parcel at Westwood over which high-tension powerlines pass. The member was wondering why we sold this piece of property so cheaply, when we could have cut it into four lots and made a lot more money. Well, the property is under high-tension powerlines. The price was negotiated with the church and reflected the powerline easement and the parcel's limitations to support only one residence. The offer was reviewed by the corporation, and the sale was completed in early 1988 –– 1 trust that that satisfies the member's query. I see that he is listening intently to this alleged giveaway by the Crown corporation.

The other one that was indeed earth-shattering on the surface: the comparison of the lot sold at Songhees to those sold at Westminster Quay to Cavell. The response is that the Westminster Quay site had absolutely no roadworks, underground utilities or park improvements in place. Furthermore, development of the site, which consists of 2.81 acres of land and the rest under water, requires construction of extensive foundations to offset severe soil conditions and a railway overpass for vehicles to access the site.

In addition to the price of $2.2 million paid to BCEC, the developer of this land will be required to spend approximately $17 million in additional site costs not required by Cavell properties for the land in Songhees. The property in Songhees was fully serviced and ready for construction. Again the member should be, hopefully, quite satisfied with the explanation of that armchair appraisal given last week. I would be very interested in his remarks on the response to those two.

MR. WILLIAMS: The minister also indicated that he was going to provide information about appraisals in each case and about whether they were market sales or negotiated sales. Is that analysis underway by his staff currently and will we subsequently get the information?

HON. MR. MICHAEL: Yes, I'm very pleased with the follow-through on that question. To give the member the response, I will be sending over to him right this minute for his review an outline of documented sales between April 1, 1987, and March 31, 1988, that have taken place since the inception of the B.C. Enterprise Corporation. We will also send over sales of parcels completed between April 1, 1988, and December 31, 1988, and we will be outlining for him, on the front page, the legend of the sales process.

[10:15]

The document is being delivered to him now, and the member will note that there are four legends indicated on the front page. The first, number 1, would

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indicate the call for competitive proposals, a publicly advertised call for proposals to purchase lands on an as-is, where-is basis. The process requires extensive evaluation analysis and final negotiations.

No. 2 on the legend is titled "Tender Call, " which would include all those properties where there was a publicly advertised call for firm prices to purchase land as-is, where-is. Prices are submitted in a stipulated format to simplify closing procedures.

As the member will note, No. 3, in the right-hand column, would indicate listed advertised sales, covering lands listed or advertised for sale. Final terms are negotiated for these.

Under No. 4 is special development sales — lands sold or transferred to accommodate utilities, easements and servicing, or for public policy reasons.

I trust that the member will be satisfied with the document as delivered to him now.

MR. WILLIAMS: I do appreciate that. It is useful information, and information which should be provided to the public. I commend the minister for that. I do want to discuss the New Westminster waterfront deal in some length, however. The minister has not said whether he had an up-to-date appraisal at the time of the sale. Was there an up-to-date appraisal?

HON. MR. MICHAEL: It is my understanding that the valuation of the property about which the member inquires was done in-house by our staff in comparing and setting the price based on the properties which sold next door.

MR. WILLIAMS: I appreciate that too. We will reflect upon that a little later today, because whoever it was needed a seeing-eye dog.

Let's talk about the New Westminster waterfront. It is an interesting exercise in public enterprise for which the government can be commended in a broad sense. If you recall, First Capital City had a grand plan for the waterfront, of which about half has been achieved. That's no mean achievement. Those of us who remember New Westminster from the old days remember it as some deteriorating docklands back of Columbia and Front Streets hidden by the old parking ramp and the deteriorating Columbia Street. So with the SkyTrain, Douglas College and many other public investments, into the billions in terms of public expenditures, the area was being transformed. Exactly how much First Capital City spent and how much it lost in terms of its initial work in infrastructure and amenities such as building the overpasses, the marketplace, the pedestrian route from the 8th Street station and all the rest, we may never know, because it was buried in your earlier legislation regarding the Development Corporation, and it was all folded in.

We're talking in the tens of millions of dollars of upfront money in infrastructure. Maybe the minister has those numbers, and they'll be interesting.

For those of us who have looked at New Westminster in recent years, it's been a pleasure to see the change. The esplanade along the waterfront, the co-op housing that initially went in when some of the private sector people weren't willing to take the risk, the Bosa brothers projects along the esplanade and the market have been part of the transformation of modern New Westminster. It's something for which we should all be proud.

This document put out by First Capital City talks about the key components: the McInnes Street overpass — spending by the public to improve those lands; the Westminster steps at the foot of 8th -spending by the public to improve those lands; the parkade modifications — spending by the public to improve those lands; street-end extensions — spending by the public to improve those lands; Begbie Square — spending by the public to improve those lands; Douglas College campus — spending by the public to improve those lands; the new law courts — spending by the public to improve those lands; other waterfront housing in the private sector — improving those lands; and offices, the hotel and the market -all spending by the public to improve those lands to be the catalyst in rebuilding modern New Westminster. It's well on its way.

The expenditures were huge. The numbers are available if we want to go into them, and I have some of the data in terms of the spending. Right around that waterfront strip, about $200 million had been spent in both the private sector and the public sector, dramatically increasing the waterfront values on that whole strip and in New Westminster.

The remaining land held by First Capital and BCEC was still a half a mile of waterfront in downtown New Westminster. You think about that. That's from 8th Street up river. The whole core of old downtown New Westminster waterfront — one half mile. We are talking about the equivalent of the Expo lands in the eastern Burrard peninsula. We're talking about the prime urban waterfront in eastern Burrard peninsula, right there where all that spending had taken place. We're not talking about some small-scale waterfront exercise.

So most of the expenditures have been made. That esplanade was a showcase in the making. Anybody who has walked along it knows that it gives a different atmosphere, a different ambience, than you get anywhere else in the region. High-density housing along our greatest river: something we've never had before, and something that people are beginning to perceive as very special indeed. What would you pay for a penthouse in a highrise along the downtown waterfront in New Westminster? I suggest to you, Mr. Minister, that in a matter of months the price they'll be paying for a condominium along that waterfront is what you sold half a mile of it for.

We're then at the stage where we could have recouped all of those millions and millions of public spending. You folks, with your smart talent, your privatization team, were on an ideological crash course, determined to sell off at fire-sale prices no matter what. You were going to get the Crown out of business. You sure were. It was land with an absolutely incredible potential: one-half of that waterfront still available; a significant amount of commercial

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potential — not just housing, not just highrises, but commercial land and water lot land as well. The residential potential is immense. An absolutely immense value.

But what happened? It's hard to believe that this one was bungled even worse than the Expo lands, but on its scale, it was. You gave us the information just today that it wasn't a tender call. I'd sure like to see the half-page ads for the sale of those lands. Can you show me any half-page ads, Mr. Minister? That's what it deserved, not something back in the personal columns.

The same mistake that was made with Expo was made here. You're not dealing in terms of pieces. The minister talks about some of it being water, some of it being dock, some of it being land. It's waterfront, Mr. Minister, and you know what that can be worth.

So now we know. Here we have a half-mile of downtown waterfront in New Westminster. It's all the up-river land left from the whole project from the market area. We all know the town a little bit: the King Neptune outfit and Mr. Almas, an old Socred supporter, being turfed out. I think, if I remember right, he was told that if he wanted to relocate there he had to pay something like half of the amount you sold the whole riverfront for — for those who remember the King Neptune restaurant.

Let's go into what can be built there, because that really establishes the value. What you can build there are eight highrise towers. Under local zoning in the city of New Westminster, C4 and some other amendments, you can build 25-storey buildings along the waterfront. We're not talking about summer cottages; we're talking about 25-storey buildings with penthouses and balconies right over the river half a block from the downtown core. Eight of them — eight highrise towers and half a mile of waterfront, $175 million spent just in the immediate area.

The property was sold as part of your privatization program. That's the hallmark of this administration: your privatization program.

Interjection.

MR. WILLIAMS: You nod your head. What happened? A deal was cut in the summer of '87 with a group: Royal Pacific Investments, VJT Investments Ltd., Silver Cloud Holdings Ltd . . . . An agreement was entered to purchase this whole half-mile of waterfront, and the deal was with First Capital City Development Co. Ltd., the subsidiary of the Enterprise Corporation, or BCDC.

The price was $2.2 million. Mr. Minister, what does that come out to per foot — $2.2 million, 2,200 feet of water frontage? Is that $1,000 a foot? I guess it's $1,000 a foot. A thousand dollars a foot on the water adjacent to downtown New Westminster tied into SkyTrain and Douglas College, and zoned for eight highrise towers plus waterfront development plus commercial development.

I happened to look in the waterfront column of the Vancouver Sun last night and prices on Saltspring Island, 50 miles away, are more expensive. If you want to buy a summer cottage lot on Saltspring Island, you will pay more than that.

MR. LOENEN: Why didn't you buy it if it was such a good deal?

MR. WILLIAMS: I didn't see any advertisements, Mr. Member. Eight highrises. Okay, let's figure out how much that was per condominium in terms of land cost. Land cost per condominium in those towers comes out to $2,700. Have you got that, Mr. Minister? Something close to the average industrial wage for a month — land cost for their dwelling unit for life.

[10:30]

1 know of nowhere else in British Columbia at that time where any deal like this was contemplated, considered or consummated. There is no way in the world your staff looked at data in that area or in that region and came up with that number of $2.2 million, and you are going to have to do some fancy dancing to justify the numbers you came up with in terms of infrastructure costs, because you cannot support them at all, and your staff cannot support them at all.

So it's $2,700 per suite, land cost. Most of us know that if you are building a highrise apartment building even today, the efficient producers can do it for $60 a square foot — a thousand square feet, put on the $2,700 What are they selling for in New Westminster now? Is it $130,000 or $200,000? You name it, because as a result of the public spending, the capital expenditures and the acceptance of what happened on the waterfront, land values have increased dramatically. Land values are the residual after you have deducted the cost of the building. We can figure out the square footage cost of building very easily. Your staff could. You could. Yet you somehow accepted that incredible price.

I think I'm close to my time, Mr. Chairman.

MR. LOVICK: I have been listening with interest to the comments of my learned colleague for Vancouver East, as I'm sure the public has been listening and will be interested in listening. Therefore I would like him to continue.

MR. WILLIAMS: I thank my colleague. This location, the Westminster waterfront, has outperformed the entire lower mainland in condominium sales, in terms of demand.

HON. MR. RICHMOND: Thanks to SkyTrain.

MR. WILLIAMS: Oh, well, if the Minister of Housing wants to get into the debate, be my guest. Mr. Minister, $2,700 a suite! Do you know of any land you can buy anywhere for social housing at $2,700 a suite? The answer is nowhere, absolutely nowhere. There's nobody who can get conned the way your friends got conned, the way the former minister got conned. There's no way. If you cared about social housing, you would have kept at least 20 percent of that land on the waterfront for social housing. Do you have any idea what you'd have to pay per suite today

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to get that land back? Does the minister have any idea? What a vacuous lot! I'll get to what the numbers are today per suite in the New Westminster waterfront, and you'll hang your head then. Demand for suites and condos on the New Westminster waterfront has consistently outstripped supply. You should know that. Your staff should know that, when it comes to selling this land. The very best prices could have been obtained for that land at that time.

What happened? Let's look at the land registry documents: January 7, 1988, registration No. AB002732 indicates the transfer for $2.2 million to a numbered company. That's not the company you told me. That's not the number we have on our list.

AN HON. MEMBER: Check the file.

MR. WILLIAMS: He's checking the file now. It says to Royal Pacific, on my list. It was to a numbered company by the number of 330612BC Ltd. That's what it says, January 7 –– 1 believe, Mr. Minister, there was indeed a policy by BCEC not to sell to numbered companies. You have said you were not aware of that. I say to you that there indeed was a policy and that it was changed in this case to sell to a numbered company.

On the same day, the numbered company in turn sold the property to Westminster Pier Development Corp. for $10.5 million; $10.5 million minus $2.2 million, an $8.3 million flip the same day. That was a back-to-back filing.

At the same time, on January 7, 1988, there was a debenture placed on the property for $3.5 million, a mortgage. They put a mortgage on the property for $3.5 million, land that you had just sold the same day for $2.2 million. Borrowed money of $3.5 million, and who gave the loan? Was it some fly-by-night outfit that didn't know what they were doing? No. That's right, it was not a fly-by-night company that gave the mortgage. The others, that's another question, but the mortgage was the Bank of America Canada. Does anybody doubt that there is an appraisal staff at Bank of America Canada who would think about what the land value was before they put a mortgage on the property? Anybody here? Where's the Minister of Housing (Hon. Mr. Richmond) now?

That debenture was signed by the three participants in this corporate exercise, the president, Mr. Bruce Branch, and the directors, Mr. P.A. Levitt and Mr. Constantin Penn. On the same day that these three parties bought the land for $2.2 million, they got a mortgage for $3.5 million — a difference of $1.3 million there alone. I'm sure the minister knows that the normal procedure when you borrow against land is that the maximum is 75 percent of the value. The Bank of America gave a mortgage for 160 percent of the sale price — some deal.

What is it that the Bank of America knew that your staff, your privatization crack team, BCEC and the rest didn't know?

Interjection,

MR. WILLIAMS: The land was worth far more than the people paid for it. But that's not all. A little later they put a second mortgage on the property for another $3.5 million — $3.5 million plus $3.5 million equals $7.0 million; mortgages of $7 million on land that your people sold for $2.2 million. That's $4.8 million more than was paid for the land. The second mortgage — was that with a fly-by-night outfit that didn't know what it was doing? No.

The second mortgage, Mr. Second Member for Vancouver-Little Mountain (Mr. Mowat), was with the Canadian Imperial Bank of Commerce and was tied to prime — 1¾ over prime.

Interjection.

MR. WILLIAMS: What it tells us is that the Bank of America and the CIBC both thought the land was worth far more than the $7 million they had mortgaged it for. The tradition of lenders in terms of raw land is to not lend more than 50 percent of the value. That being the case, we are talking about $14 million in value if you take standard lending procedures. I suggest, Mr. Chairman, that they were more conservative than that, and that the value exceeded $14 million. If it exceeded $14 million, then somebody made at least $12 million on the deal.

The $2.2 million deal was a cruel joke on the people of British Columbia in the name of privatization. It was an inexcusable price in absolutely every way: in terms of public policy, of getting a decent payback for First Capital City, of equity between buyers, of social housing for the future and so on.

The minister said that the staff — that whirlwind crackerjack group — carried out studies. They would know what sales had been in the neighbourhood, and that would justify the number. That's what he said; we all heard it just minutes ago. Let's look at some comparable sales.

Less than one-fifth of what you sold –– 1.8 acres — at 1045 Quayside sold to Bosa Bros. in August 1986. That was far earlier. The market had not reached what it had in January 1988 at all. In August 1986, much earlier in the game, when the success of the whole project was less sure, they sold it for $1,296,773. How many suites could they build on the site? How many condos? One hundred and nine — not 812 but 109. They sold it for basically $1.3 million. That comes out to $11,909 per suite or just about $12,000. That's a sale to Bosa Bros. Quayside Towers 1 and 2 were the projects.

Do you want another sale, Mr. Minister? Do you want another comparable one in the same area? In November 1986, again before the success was assured as it was at the time of the sale we are talking about, at 1250 Quayside Drive, 1.02 acres was sold to United Properties for $1,274,510 — that was their Promenade project. That's $12,745 per unit, nearly $13,000, the year before you made this deal. That information is in the public record. It's available in terms of checking the building department and the land registry office in New Westminster. It's available to you, your staff and to the public.

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There were other listings at the same time in the $16,000 to $17,000 per unit range for adjacent highrise sites; that's the reality.

[10:45]

If we just took the earlier number from 1986 of $13,000 a suite, for the 812 units we end up with 812 times 13, which comes out interestingly at $10.5 million. Somebody else was looking at the numbers, because the flip was at $10.5 million — the same numbers. They had a sense of what the marketplace was doing there. They understood where the market was. They probably thought the market was substantially above that, but those are the numbers that were used.

When you deposited that list in the House a week ago, in the statement you said: "All sales were based on market value as determined by land valuations and/or competitive process." How do you explain this one, Mr. Minister? All this is in the name of privatization. We don't have the research staff to go through all of the deals, but obviously they deserve our attention.

In terms of the New Westminster waterfront, we are aware of the details. We understand what has happened. It's clear there was a major flip of scandalous proportions with respect to that property. It's clear that the returns the public should have got for the land have not been received. It's clear that the beneficiaries are a handful of people who have made millions and millions of dollars. When I reflect on it, Mr. Minister, I think privatization is simply a code name for plunder, because that's what has been happening.

HON. MR. MICHAEL: I was extremely interested in that outline as given by the member, and I was indeed pleased with the positive overview he gave of all the exciting things that have happened in the NDP constituency of New Westminster, It's not often we get such tremendous pats on the back for having spent so much public money in the opposition's constituency. It's generally the opposite, but it's certainly indicative of the exciting things that can and have happened throughout the province as a result of infrastructure that is being made possible by this government.

There is no question that the downtown core of New Westminster has gained a great deal as a result of placing SkyTrain into that community.

Also, I have to reflect on the member's remarks about the bad deal at Expo. I just don't know how many hours of explaining or how much selling or convincing I suppose one never would be successful in convincing the members opposite that indeed the Expo land could — at the time the deal was made — possibly be described as fair market value, both provincially, nationally and internationally.

I don't know how the member could object to the fact that the B.C. Enterprise Corporation advertised that land worldwide. It was not only advertised with monstrous ads — and indeed we have received criticism from some quarters about the tremendous amount of money spent and the size of some of the ads — in the local papers. It was placed in the Vancouver Sun, the Vancouver Province, the Victoria Times-Colonist and indeed our national paper — if it could be described as such — the Globe and Mail. It was also advertised extensively throughout the United States, throughout Europe in the Financial Times, and in the Asian Wall Street journal. I don't know what else that member, or any member of the opposition

Interjection.

HON. MR. MICHAEL: By the way, Mr. Second Member for Vancouver East (Mr. Clark), I am having drafted today a response to your queries from yesterday. You will be pleased to receive them within 24 hours of your making the request. They will be delivered to you. I hope you will be pleased with them.

I don't know what else you could do to convince the members opposite that fair market value can best be determined by offering what you have to sell on the international marketplace. It was not restricted to British Columbia; the property was advertised internationally. The member was absent when one of his colleagues stood up last week and suggested that the property should have been sold for $1.1 billion. Why stop there? Why not go to $3 billion or $7 billion or $15 billion? If you are going to lay exaggerated figures on the table, make them real good and fat.

The member wasn't here either, I believe, when one of his colleagues was talking about the cleanup costs. That was another gross exaggeration — $485 million to clean up the site. Ridiculous! I don't know how one responds to that type of idiocy and exaggeration.

I wish I could get some response that could be more logical. The facts, as set out clearly, are that the price of the land was determined in the free marketplace — not provincially, not nationally, but internationally. Indeed, there was tremendous interest. The negotiating team named by the government — the B.C. Enterprise Corporation — decided on what we considered at the time to be the best deal on the table in the interests of British Columbians. True, it was not all cash. The Concord agreement is tabled, and the figures were well advertised prior to that. How else will we satisfy the members opposite that that was the marketplace value of the property at the time? I just don't know how else to argue against wild suggestions that we should have received $1.1 billion.

Suffice it to say that not only is the sale finalized, but the government of British Columbia has willingly accepted, as all proponents had insisted, the responsibility for the cleaning-up of the property. We've covered that before. We are proud of the position taken by the minister in the cabinet of the day and the B.C. Enterprise Corporation in accepting that responsibility. I was very pleased to read in the paper in the last day or two that the city of Vancouver is extremely pleased with the commitment made by the Minister of Environment (Hon. Mr. Strachan) on the

[ Page 6238 ]

quality of that soil when it is cleaned up and turned over to Concord.

Regarding the question of the property in New Westminster, I want to say to the member — I don't know whether he is aware of this or not — that there is a court case pending on that piece of property. I will not be able, regretfully, to get into an extensive debate with him, because there is a court case pending.

Suffice it again to say that it is difficult to argue and rationalize with the member, who compares Expo land with downtown Vancouver developed land, and developed and undeveloped land in New Westminster, and tries to do market comparisons. He is free to attempt to show discrepancies and small figures, when he knows full well that to put in underground services and to provide utilities, roads, wiring, sewers, storm sewers and all those things costs millions and millions of dollars. In this particular instance, it costs many times more than the original purchase price.

Regarding the original purchase price, it is somewhat difficult for me to comment, as I was not the minister of the day, other than to say that there was free and open tendering. There were ads...

MR. WILLIAMS: Where?

HON. MR. MICHAEL: ...in the Vancouver Sun, the Vancouver Province and the Columbian. Perhaps we should have gone a step further on this property. Perhaps we should have advertised in the Globe and Mail, as we did with Expo. Perhaps we should have advertised throughout Europe, as we did with Expo. Perhaps we should have advertised the property in Asia; that could be a fair and reasonable criticism. If the member is criticizing me or the previous minister for not having advertised internationally, we will accept that criticism. Suffice it to say that there was advertising in the major papers surrounding the property There was every opportunity for interested parties to come forward and put their offers on the table.

As previously stated, when comparing properties, as the member attempted to do last week, putting out a wild comparison of the Westminster property and the property in Songhees, which was fully serviced.... Other than making those explanations, I really have very little else to say regarding the accelerated prices. Yes, I'm certainly familiar as well with some of the figures quoted, but I'm also aware that there is a court case pending by the person who purchased the property from the person to whom we sold it.

MR. WILLIAMS: At first I thought I would have to give the minister a road map so that he could get to downtown New Westminster. He kept talking about Expo; he at least knew that there had been some decent advertising there. In terms of the advertising, I don't think there's been a Columbian newspaper for about 15 or 20 years, Mr. Minister, so I'd really like to see the Columbian ad. I think that would be fascinating.

Interjections.

MR. WILLIAMS: Yes, he did say the Columbian.

The point is, there were other sales. The data was there. The buildings were there for your staff to see; they were there for everyone to see. They established a land value in that area, a year and a half earlier, of $13,000 a suite.

You're trying to say that the infrastructure costs would eat it all up. This is half a mile. This isn't like building some wilderness development all over the landscape. This is just half a mile downtown. The water main is right there; no changes needed. Phone up the engineering department in New Westminster — I'm sure the member can give you the number — and they'll tell you that their waterworks is fine, thank you very much, and if you want to plug in, it's right there across the street. Then you can phone the sewer department, because we have to deal with that too, and the man or woman at the end of the line will say the line is right next door and doesn't have to be rebuilt. It doesn't have to be made bigger for those 800 suites; you can plug right in. They might say there'll be a bit of a gradient problem in one area and so you'll need a small pumping station. I'm advised by some that the pumping station might cost $100,000.

[11:00]

An item of some substance that would have to be paid is a new overpass over the railway, but because of the configuration of the land it's not a high cost. The estimates, if you want to check with the engineering department in New Westminster, are around the $2 million level. So we're talking about something little different than a couple of million dollars in terms of the infrastructure costs. The other costs are internalized. Parking facilities and all the rest are part of the cost of doing the building. It's standard procedure that each highrise tower would meet the costs of its own parking and circulation. Once you've done that you've got the system, because you've got a very tight configuration on that New Westminster waterfront. So there's no way in the world you can justify a dance around the infrastructure costs.

In the end, the marketplace tells you the numbers, and the marketplace said $10.5 million the same day your guys sold for $2.2 million. That really covers it. If you check in the marketplace today, Mr. Minister, you'll find that land value in the downtown New Westminster waterfront, a little more than a year later, is $25,000 per suite. That puts the land value up around $20 million, ten times what you sold it for. And I suspect that with time, even that price will look like a bargain, because the recognition of what old New Westminster is and can be has really only begun.

It's a credit to public enterprise in terms of transforming that town, but we should have got the payback. We, the public, could have got the $20 million, or a chunk of it could have been used for social housing or for more amenities in that waterfront strip. Instead, it has been dissipated in the most foolish deal imaginable. It's been dissipated while you folks

[ Page 6239 ]

with your ideological blinkers on are determined to privatize and to flog off the public treasury in one way or another, be it laboratories, testing systems, highways maintenance, public lands or the New Westminster waterfront. You are hell-bent to get rid of the assets of the Crown and hell-bent to get rid of the treasures of British Columbia in the name of privatization. There's no way in the world you can justify it. There's no way you can go out on a public platform and justify that deal. There's no way you can go to New Westminster and justify that deal on a public platform — neither you nor the former minister. It was scandalous.

HON. MR. MICHAEL: Well, Mr. Chairman, it's difficult to debate with a person who has so much experience in the development business. Having so much experience behind him in development properties, rezoning and things along those lines, it's difficult to be as familiar as he is. When I talk about development cost charges and values per unit, I can only take the information I get from my staff and what the facts show in periodicals and documents laid before me.

The information I get — and I reiterate — is that the ads were placed in the Sun, the Province and the Columbian. It was advertised in January, 1987.

Interjections.

HON. MR. MICHAEL: My staff listed that as the name of the paper. I apologize to the member from the constituency. But whatever the daily paper is in....

Interjections.

HON. MR. MICHAEL: Mr. Chairman, I take objection to that remark. I would ask the member to pay a bit more respect to my people. We are working very hard to get information for that member, and I think he would agree that we have been very cooperative. I take very strong exception to remarks that reflect against my staff in any way, shape or form. I happen to think I've got a very competent group of people working under my direction, and they work very hard.

I want to repeat that of the 9.5 acres of land sold in the marketplace and freely and widely advertised in the lower mainland, seven acres are under water. I have received criticisms both ways: ads are too small; ads are too big. I don't know how we're going to finally resolve this, but I can tell you I'm getting it both ways from my colleagues and from people in government. We try to do our best in making those decisions in the interests of what the common developer or the interested party might identify with, as far as an opportunity.

The ads were placed, the bids were received and decisions were made. The member seems to refuse to take the development costs into consideration when doing those valuations. Again, I can only go by what I'm told, but I am told that development costs to bring that piece of property — taking the services into consideration — to the standards set down by the municipality are in the range of $15 million to $17 million.

I don't know what else I can say, Mr. Chairman. I don't know how else you can determine fair market value. You can have all the appraisals done, and indeed I have been involved personally with having a lot of appraisals done. They can vary all over the ballpark. You get appraisals and attempt to sell for the appraised value, and you can't get bids anywhere near it. You get them high and low. But I am a believer that fair market value can best be determined by going to the marketplace, providing you go to the marketplace in a wide enough area, where you attract a wide enough variance of interest from the people who would be interested in the property.

I'm satisfied that it was done in this instance. Once again I repeat, as the member has stated, there is a court case pending over the question of the price between the person to whom we sold and the person to whom they sold, and I have nothing further to comment on in that respect.

MR. WILLIAMS: The facts of the matter are that the flip was instant from $2.2 million to $10.5 million. The facts of the matter are that the Bank of America and the Canadian Imperial Bank of Commerce were both prepared to loan up to $7 million on the property. That's a market test right there. That's the know-how of the major banking institutions of Canada and the United States, which said this property had immense value, and they didn't consider it a risk to put $7 million on the line.

MR. LOENEN: Tell us something new.

MR. WILLIAMS: Tell you something new?

MR. LOENEN: We haven't got an answer.

MR. WILLIAMS: What do you do with a member like that from Richmond?

MR. SERWA: He's worth any ten of yours.

MR. WILLIAMS: Mr. Member, don't you find it somewhat offensive that land sold by a Crown agency for $2.2 million should be flipped for $10.5 million the same day? The minister has tried to justify this with infrastructure costs that he claims could be $15 million to $17 million. What's $2 million? It's what you got paid for the property.

It ain't there; there's no way. We've got the list. Does your staff have the list — the way you can justify the $17 million? They don't have it; it's not there. Easy come, easy go. Right? Win some, lose some.

When are we going to start winning? When is the public going to start winning? That's the real question. We've been on the losing end. The plundering goes on.

There's a market test there — all kinds of market tests: the Bosa Bros. property and the United Properties project. Right there, right next door, those tests

[ Page 6240 ]

are there. Any junior-level appraiser would have that information. It's public information. It should have determined price; it did not. There's something desperately wrong.

I think you and your staff should get back to work. I shouldn't say that: get back to work. My God, we can't afford them any longer. We should give them a golden handshake in the David Poole manner, and we'd all be better off. I'd be ready and willing to vote for $175,000 to get rid of the privatization team, right here and now. It would be the best bargain in terms of public policy in the recent history of British Columbia. It would be a real bargain.

Where do we begin with all of these things? You privatized in this area of lands, and it's been a monstrous failure. You privatized in terms of loans. We haven't even got into the old BCDC loans; you sold them off to the smallest bank in town. I walked by their branch down here just last night. I bet most people here don't even know where it is. It's called Canadian Western Bank — I think that's the name. You sold off millions and millions of loans to a penny-ante bank.

AN HON. MEMBER: Who runs that bank?

MR. WILLIAMS: I don't want to get into that right now. It's just incredible, and this example is a classic. You're not giving us an explanation. You came up with the $15 million or $17 million number. How was it going to be spent. What's the list?

HON. MR. MICHAEL: A quick calculation — and again, I hate to toss around figures without a thorough analysis by the staff — would indicate if indeed the price was anywhere near $17 million. Even if it was half that figure, it would still compare favourably with the development next door that the member refers to, commonly known as Bosa.

I don't know how you explain to the member any further than we have already that he is comparing developed property with undeveloped property. We all know the tremendous cost in this day and age of providing services on developed pieces of property, and that there are tremendous responsibilities laid on the developer by municipalities. I can only quote the figures I'm given. I would suggest to the member that if he wants to do an analysis and calculation using his own figures on a per-suite basis, perhaps he should cut that development cost estimate in half, and he will see that the figures still come out quite favourably.

Other than that, I don't know what other explanation I can give. I have repeated on a couple of occasions the manner in which it was sold, the fact that there were ads, and the fact that the marketplace has spoken. I think the member has made some exaggerations in his estimates. I think he has done an extremely good job, conversely, in describing the tremendous spinoff that we've received in that community, which is truly what the B.C. Enterprise Corporation and the B.C. Development Corporation were all about — attempting to put packages together for the tremendous economic spinoff that naturally evolves and follows from developments such as this.

[11:15]

1 would be interested in doing some analyses at some point to determine the tens of thousands of man-days of employment that have been generated as a result of the development in that area — indeed, several million man-days if you take everything into consideration, including the delivery of SkyTrain and all the infrastructure to which the member refers.

We on this side of the House are certainly interested in economic activity, and we look at economic activity in its broadest terms as to what it means in relation to bringing in social services taxes, income taxes, employment and all the spinoffs that result as the initiatives and developments come about. What that means to the province is more tax dollars in the coffers, more tax dollars for the Minister of Finance to allocate to much-needed areas, whether they be education, health or any of the social services that this government provides.

The member does his very best to try to downplay and criticize the efforts of this government in the area of economic development. I suggest to him that, compared to any other area in the Dominion of Canada, with the possible exception of the highly industrialized area of Ontario, we lead this country in economic development. He is aware of that. He is also aware that from the point of view of economic management, the management of money, we do a first-class job in this province. We stand second to none in the Dominion of Canada in balanced budget, in sound economics. If the member is interested, he can read the bond ratings and do some comparisons. Perhaps it would do him good to read some comparisons of the bond ratings in the province of Manitoba with how we are sitting here in the great province of British Columbia, being well managed.

Have a good look at some of the poor examples of socialism in western Canada. Have a look at the tremendous rate of return that that famous Saskatchewan potash delivers, based on its purchase price, a return, Mr. Member, of somewhere in the neighbourhood of 3 percent. Have a look at the great economic development, the investment and the negotiation expertise of the socialists in Manitoba. Get in and have a look at what they did with the Limestone project. The member is aware of what has happened in that province with the socialists: the giveaway to the Americans; the fact that they are to this day selling hydro locked in on a long-term contract, getting nothing for their hydro — half the price we are getting in British Columbia. The member is aware of that, and I know he is aware of it because he is one of the best-read members on that side of the House. I know he does his homework.

Before criticizing too severely, Mr. Member, I think you should reflect somewhat on just how well the economy in this province is doing. Yes, I heard you criticize the privatization program of this government. You'd do me a favour, Mr. Member, if you would keep doing that. I hope you did it last Sunday up in Sicamous, and I hope you continue to do it

[ Page 6241 ]

throughout the length and breadth of this province. I am prepared to stand up and talk about the tremendous programs of this government in the area of privatization.

The public will be well informed as the months unwind as to the tremendous initiatives of this government: the Langford sign shop; highways maintenance, the 28 highway contracts; the parks programs that we have; Crown Publications. The list goes on and on. We are proud of the privatization initiative. Furthermore, I want to tell the member that we haven't finished yet. There are other announcements pending. I suggest there will be two or three in the next week or ten days that the residents of this province will be proud of.

I'm sure we will be hearing from the member opposite, trying to pick them apart and criticizing them. All we get from the members opposite is negative, negative. Everything is down; the roof is falling in; the clouds are falling among us. That's all we hear, but that's all we've ever heard. You've been against everything over the years. Go back in the records since 1952. Whether it's opening up the north, whether it's SkyTrain, whether it's the extension of the rail lines, you've been against all those projects

You've been against the hydro projects that this government has brought about and against exports. The list goes on and on. So it doesn't surprise me that you are against privatization.

Mr. Member, please keep talking across the length and breadth of this province about how you are against the privatization initiative. I welcome those statements because it certainly gives us the opportunity to go out and tell the public the facts. The facts, Mr. Member, will speak for themselves.

MR. CHAIRMAN: Hon. members, the member for Cowichan-Malahat asks leave to make an introduction.

Leave granted.

MR. BRUCE: I'll just take you away from this debate here for half a moment. There is a beautiful little hamlet in my constituency where the sun always shines; it's a place called Maple Bay. I know some of you may have visited it. Today in the precincts are 25 students from the Maple Bay elementary school with their teacher Mr. Heise. I would ask that you welcome them and extend a warm greeting while they visit the parliament buildings here in Victoria.

MS. A. HAGEN: When the minister was concluding his last vigorous defence of his party's and government's achievements — question mark — he noted that he was interested in the facts. What I would like to do for a brief moment is request some facts. The minister has indicated that one of his goals is to make sure that we all are fully informed about the transactions of this government. I've listened with great interest to the skilled presentation of my colleague from Vancouver East about the facts of a corrupt land sale in New Westminster, where the public was defrauded of money that it should have had.

Public policy has indeed had a very significant effect on the redevelopment of the downtown in my constituency. About 15 years ago the constituents of my riding indicated that the reclamation of the waterfront was their primary goal, and they have watched with great interest and delight the developments that have taken place in that time. But they are also interested in knowing what the cost of that development has been, and I would like to ask the minister if he would be prepared to table in this House information about the B.C. Development Corporation, First Capital City Development Co. and the costs that they have incurred in the development of the infrastructure for the waterfront of New Westminster.

I have heard what I think is informed speculation that the cost of that development to the public purse in very direct costs is in the order of $30 million. It may be more or less than that, but we have no accounting of those costs. They have been, in fact, completely buried by the government's means of folding, refolding, unfolding and folding again corporations and Crown corporations, one into the other.

When we look at the loss to the public purse, which has been outlined by the first member for Vancouver East (Mr. Williams) today, a loss that is anywhere from $8 million to $18 million, depending on when we look at the valuation of that land, I think it would be fair for us to also know the infrastructure costs that have contributed to the rise in value of that land, a rise that had taken place before the sale that the member for Vancouver East outlined so graphically this morning. Would the minister be prepared to table in this House an accounting of the infrastructure costs for BCDC and for the First Capital City corporation, which preceded BCEC as the responsible Crown corporation for the development of that land?

HON. MR. MICHAEL: All I can say, Mr. Chairman, is that I'm certainly not prepared at this point for a question along those lines. I think the member would appreciate that. However, I will see what I can find, if those figures are available.

MS. A. HAGEN: I'd just like to follow that response with one clarification. The minister said: "if those figures are available." Is there any question that those figures are available? Is there any question that there is not a record of the public's largesse in contributing to the infrastructure of the downtown New Westminster area through its Crown corporations?

HON. MR. MICHAEL: I'm certain that the accounting division of the B.C. Enterprise Corporation would be able to provide any figures on what they may have spent regarding that particular area. It's just a matter of the staff getting at it and providing the report.

MS. A. HAGEN: Then I take it that the minister has made a commitment to provide that information to us after an appropriate time for research.

[ Page 6242 ]

MR. LOVICK: Mr. Chairman, I was distressed to discover that the minister was not prepared to answer in any detail the suggestions made by my colleague from Vancouver East concerning just what happened to that property within a given day, which would seem to fly in the face of all the notions about fair market valuation. If indeed that property appreciated in value apparently by some $8 million in the course of a day, I think that constitutes pretty overwhelming and powerful evidence to support our contention that fire-sale prices were involved.

I'm concerned, because the minister seems to choose to entirely ignore that question and its implications, and rather, either by obfuscation or by an appeal to some rather esoteric and arcane point of law, to refuse to answer. He says: "Well, I can't talk about that because it's tangentially connected to some kind of case." Quite frankly, I think what we're getting is an entirely unacceptable answer.

We've made two main points throughout this debate. First, you have not been able to determine or to demonstrate for us precisely what the costs of the privatization initiatives have been. Moreover, you have indicated that your group doesn't much care about dealing with those things and has no mandate to deal with those things. Rather, you are concerned with checking initiatives to the point of the deal being consummated, and then it falls within the realm and responsibility of particular ministries. That's one problem: we do not have a clear accounting of what the initiative itself has cost us to be undertaken.

The second thing, of course, is the allegation that we have been getting rid of assets at what we often refer to as fire-sale prices. Mr. Minister, I would put it to you: if you cannot or will not answer those kinds of questions to our satisfaction, how then by any stretch of the imagination can you continue to trumpet the virtues and the benefits of the privatization initiative? Surely you would agree that those are the fundamental questions, and you're not prepared to answer either; therefore it would seem clear that you are making some admission that things are not as they seem or not as they ought to be.

HON. MR. MICHAEL: I must say, I take a great deal of offence when members who know better make allegations toward me and my staff regarding not bringing forward information and not answering questions. I bend over backwards to answer all of the questions asked of me, whether they be in the form of a letter, in Orders, in question period, in questions taken as notice or questions given me verbally. I go out of my way. I work very hard in attempting to satisfy queries brought to my attention. With respect, the member should perhaps check with his colleagues, or with whomever he wishes: this minister answers the questions and follows through on any inquiries from any quarter that are brought to his attention.

[11:30]

The question of the accelerated value. Yes, Mr. Member, no question — a big question mark with you, and I appreciate that. It's a big question mark in my mind, and I hope you appreciate that. I also hope that you appreciate what I have said on numerous occasions here this morning: that the entire matter is in the courts. Indeed, the person who purchased the property from us, to whom he sold it.... There is a court case, because obviously somebody thinks something is the matter. All I can say to you is what I've said previously: we advertised, we compared, we took into consideration developed versus undeveloped property and costs of infrastructure, we made a decision, and, yes, some big figures were floated around. They are in the record given by the first member for Vancouver East, but all that I can say to that is that there must be somebody somewhere along the way who is unhappy, because there is a court case pending on that very subject.

MR. LOVICK: An oft-quoted phrase in this chamber is: "I do not want to belabour the point, but...." But let me quote that: I do not want to belabour the point, but two things must be said. First, the minister's propensity to self-righteous indignation notwithstanding, let me remind him of what he said yesterday in the chamber. In response to my very specific question about how much a particular privatization initiative cost, I got this verbal dexterity: "The member asks a specific question as to how much an evaluation would have cost for a single project like the vehicle modification shop." The next sentence is: "I will not be able to answer that, nor can anyone else."

I would suggest to you that that is the predicament. You're trying to tell us how much you've made, you're trying to tell us what a wonderful benefit this program has brought to the people of this province, and yet you haven't factored in the costs of the exercise. That's the problem, not your willingness or lack of willingness to answer questions, Mr. Minister. I will grant you that; you have indeed made very effort to answer questions. The point is that you aren't answering the questions in any significant sense of the term — that's the predicament.

The other matter, of course, about saying that all of this is sub judice or some such thing, I think sidesteps the fundamental question: we are surely owed an explanation here. You don't have to name names. You don't have to refer to principals who might have been involved in the dealing. What you ought to do is try and provide us with some counterargument to the claim that that property was not sold at market value. If it's the case that it was effectively resold on the same day for a factor of some fives times as much, that's a very compelling argument that says you didn't get fair market value. What you are doing is saying: "Well, I can't answer that. I can't comment on that, because that matter is before the courts." I think that is a bogus argument. I don't think it is a satisfactory response at all, Mr. Minister.

HON. MR. MICHAEL: Regarding the vehicle modification question that was put to me: I did give

[ Page 6243 ]

him an answer. The answer is that I don't know what it cost.

Interjection.

HON. MR. MICHAEL: There's no way, Mr. Member. You can ask me what it costs per employee of government to walk from their place of work to the restroom and back every day. That's a logical question. The answer is that I don't know what it cost.

I also told you very clearly, and I'll tell you again, that as far as the privatization analysts are concerned, it is a global budget. It is a global figure and we are not able to tell you, nor will we ever be able to tell you, what the cost of the analysts was for any single project within the privatization process. Indeed, there have been some 100 projects either accepted or rejected, and we do not do a thorough analysis or a punch-card system at the end of each day to determine how many hours and minutes each employee spent on each particular project.

So please don't suggest that I didn't give you an answer. I gave you the only answer that's available to me. In other areas where you can be more specific — and there are figures in the records — I will search for them; we will do everything we can to satisfy your requests.

Market value, Mr. Chairman. I don't know how a firm can go out and get those kinds of mortgages on the same day. I can't explain that. We know what we did in regard to determining the market value, and what better way — as I have repeated on at least two other occasions — to determine market value than to go to the marketplace in a wide and broad enough area to attract the number of investors — corporations and individuals — in that area in which the piece of property is to be sold. Yes, we advertised in the two major dailies in B.C. and in the paper in New Westminster, whatever the name of that paper might be. I've yet to find that out, Mr. Member, but I will later on. We won't make that mistake again.

MR. CLARK: Just to follow up on my colleagues from Vancouver East and Nanaimo about the New Westminster particulars, it is quite clear that the land was sold for $2.2 million and flipped for $10.2 million the same day. No development costs, no sewer, no roads; an $8 million profit. It is true that there's a court case pending between the parties. We won't deal with that.

Nevertheless, just because a court case is pending does not exonerate the staff of BCEC from their original estimate of the value of the land as $2.2 million. It seems to me there are only two explanations: either the staff was grossly incompetent or there is some corruption in your organization. Those seem to be the only conclusions one could arrive at, given the fact that there was no bidding; given the fact that the land was sold on a negotiated basis by your staff for $2 million when it is currently worth in the neighbourhood of $20 million and last year was in the neighbourhood of $14 million.

I would like to ask the minister, who has not answered any questions with respect to these facts — which I think all members would agree are rather alarming — what he plans to do about it. Has there been, or has the minister decided today that there will be, an investigation with respect to his staff and their evaluation of that property? Will there be an investigation by an outside party? Will there be an investigation by a forensic accountant, for example? Will there be an investigation by police? These are the logical questions that seem to flow from the fact pattern we have seen in the House today, which is not disputed by the minister.

The fact pattern is very clear, and I think all members — to be charitable — would be alarmed that we clearly under priced a valuable asset. The question then is: how did that come about? The only explanations, as I said, are either gross incompetence or corruption. I want to know what the minister plans to do about uncovering why we made such a bizarre transaction.

HON. MR. MICHAEL: I take some offence at the words chosen by the member opposite; I think that's grossly unfair. I would ask the member to consider his remarks in talking about incompetence and corruption. I would ask the member to consider withdrawing what he said until we're able to check our files. We will go into the archives and pull out as much information as we can find, anything that is pertinent to the debate here today. I will attempt to assemble the working papers of the staff in the valuation of the property. I will have a top person working in the office on my behalf this afternoon, and we will go over the working papers.

I'm not certain if the employees we're talking about are even in the employ of the government today. They're probably not, because the staff has been dramatically reduced at the Enterprise Corporation. We're operating right now on a skeleton basis. We're in the final wind-down mode, as he is aware. We still have the Westwood, Songhees and Whistler properties to finalize, as well as a lot of cleaning up to do. The staff are extremely busy, but I will assign someone to go into the archives to find as much information as we can about this transaction.

I'm as interested as you, Mr. Member, in getting all the cards on the table. We certainly don't want to in any way jeopardize or interfere with the court case currently in process, but we will go in and find out what the projections were on development cost charges for this particular piece of property. I repeat: there were no services to it. It was some 9.5 acres in total, but he's aware that some 7 acres of that were underwater. We'll do our best to get the information together, because I want as much information to satisfy the members opposite as I can possibly supply.

MR. CLARK: I welcome the minister's remarks to see that there is some action flowing from the debate we've had this morning. I will reserve my judgment. I said, and I think it is patently obvious that there is

[ Page 6244 ]

a prima facie case that either there is some corruption or there is gross incompetence. We obviously will reserve judgment until we find out what possible explanation there can be for such a gross undervaluing of the assets. I appreciate that the minister has indicated that he will bring back that information, hopefully this afternoon, because we wouldn't want these estimates to go on for weeks and weeks.

I have a couple of other areas I would like to canvass with the minister. While we are on the subject of information, I would like to request some information which perhaps he could also bring back this afternoon, or whenever the estimates are recalled, so that we could canvass them with the minister. It has to do with the privatization of the loan portfolio of BCEC. I wonder if the minister could tell us which loans were privatized, the value of the loans when the loans were granted and the current value, because I understand they were written down; I would like to know which loans were written down and by how much. I would like to know essentially that kind of detailed analysis of the loan portfolio so that we can have some independent analysis made of the value of the loan portfolio that was privatized fairly recently. I wonder if the minister could give the House a commitment that we could have that information. It seems to me it is probably readily available.

HON. MR. MICHAEL: Several points to the member. The first thing I would suggest he do is read the pertinent sections of the auditor-general's report. The second thing that I would suggest he do, after he reads that and does an analysis, is question the Minister of Finance (Hon. Mr. Couvelier) in his estimates regarding any details that he wishes to ask, because he is one of the members of the board of directors and is the one who was accountable and responsible for the sale of the loans portfolio.

I can tell him my knowledge of the process, as the chairman of the board and the minister responsible. Certainly it was well advertised — a lot of interest, hours of negotiations, handled very professionally, from my point of view, by an extremely competent staff. I would like the member to consider the fact that we indeed have extremely competent people over there handling these types of things; they are extremely thorough in everything they do, I would suggest that if he has any further details than what I have just given as an overview, then he should direct them to the Minister of Finance.

[11:45]

MR. ROSE: Mr. Chairman, I have a few questions, probably few of which will be provided with a direct reply by the minister today. I would also seek his cooperation in bringing back the answers at a later date.

This first one would be of interest perhaps to not only the Minister of Labour (Hon. L. Hanson) but also the Minister of Social Services and Housing (Hon. Mr. Richmond). That has to do with the auxiliary workers who are often paid late. I wonder if the minister is aware of this. They're forced because of the fact that their pay is....

According to the Employment Standards Act, they have to be paid within eight days. Some of these people — and there's one person not named, but a former Social Services ministry employee.... Short-term auxiliary employees are sometimes told to take hardship grants from the Minister of Social Services, because their paycheques haven't come in. I'd like to know whether his ministry has encountered this problem. The Minister of Labour probably more centrally deals with the Employment Standards Act. But why this isn't being complied with may be a problem that is encountered because the Ministry of Government Services hasn't got the staff, or the staff is not getting this stuff out. I'd like him to look into that one. If you want the documents, there is a piece of paper.

But essentially it means that because people are not paid on time, as the Employment Standards Act requires, there must be some reason for this. It's interesting to note that a former Social Services ministry employee is now an auxiliary employee. So that leads me to the next question, which was unanswered by the minister when I asked it earlier. How many ex-employees of the government are now — because of early retirement, privatization or whatever — back as contract employees? I'd like a list from each ministry. I know that in the Ministry of Health, because of the early retirement option taken by a number of nurses at Riverview and because of the shortage, many of them have contracted back. So they took the golden handshake, and now they're back as auxiliaries, while the minister is allowed to boast that he has cut government workers by at least 2,700.

MR. CLARK: I was going to ask that question.

MR. ROSE: Why don't you ask a question like that, too?

For my next number, I want to turn to....

Interjection.

MR. ROSE: No, the violins are all over there.

Interjection.

MR. ROSE: No, the second fiddles are all over there. These are triumphant trumpets over here.

HON. MR. RICHMOND: Don't give up your day job.

MR. ROSE: Page 54, Ministry of Government Management Services, STOB 20 — big hunks in here. "Privatization and communications" under 20 lists $518,000 for government personnel services. I'd like to know what this money is being spent on. I think I have an idea, so I will ask the direct questions.

What is the annual cost of grievances and arbitrations? On how many occasions in the last year has the government pushed an issue to arbitration that had been lost in the previous five years? That amounts to

[ Page 6245 ]

harassment, which is very much like what's happening to the number of actions against the native people. I am astounded at the number in this province alone. The amount of public money we're spending on these matters — appeals, appeal, appeals.

What is being spent on legal advice for labour matters? There is over a million dollars in vote 32 that could be used for legal advice. The cost to some law firms — Russell and Du Moulin, Jordan and Gall.... Last year, according to Public Accounts, we spent about $1.7 million on these firms.

Do the agreements to privatize highways maintenance contain a provision to indemnify the contractor for any increase in wages for the first contract the company negotiates with the union?

Is the ministry working on plans to give workers greater control over their pension investment? The current policy appears to put enormous power in the hands of the Minister of Finance (Hon. Mr. Couvelier). I talked about that the other day when I talked about the seniors. The minister wasn't here My concerns about the whole pension system, both public and private, are outlined in a couple of written questions to the Minister of Labour and the Minister of Social Services, found later on in the order paper.

The Minister of Finance outlined the plans to invest 25 percent to 30 percent of pension funds in equities. Is the Minister of Government Management Services prepared to commit that pension funds will not be invested in this way without the express consent of the workers? This is the whole story all over again of pensions, where in both public and private pensions, the working people whose money it is have little say on how this money is invested.

I'd like to know what plans this ministry has for consulting with those employees who have their funds socked away in superannuation and other plans like teachers' and hydro workers' plans and all the rest of it. I'd like to know what he intends to do. If he wants to know where I'm coming from on this issue, to use an old clichéd, look on the order paper, because my concerns are expressed there in 25 detailed, intelligent questions which I asked.

I'd like to know too — maybe the minister could tell us here — how the Nemetz inquiry is progressing with the guidelines for term-duration of employees.

HON. MR. VEITCH: It's coming along well.

MR. ROSE: Okay.

Finally, how many contract managers have been assigned to oversee the operation of highways maintenance following the privatization? What is the cost? These are highway maintenance contract managers to oversee the privatization. There are some horror stories coming out on this matter, at least in some instances. My colleague from the Okanagan boundary has just shown me one. I'll leave it for him to outline rather than seagull it away from him.

I wonder if the minister is prepared to answer any of that stuff before lunch. If not, I'd be very pleased to join with the Minister of Social Services and Housing (Hon. Mr. Richmond), the government House Leader, in moving that this estimate be adjourned until the next sitting.

HON. MR. MICHAEL: Some very interesting points were brought up by the member. I can assure him, regarding the question of late payment, that it has very much come to my attention and that I am doing all I can in working with the office of the comptroller-general to bring about a resolution. I can assure you that we are as upset with that "mess" as the members opposite are. There have got to be some changes, and we're working with the comptroller in trying to set up systems and procedures that will resolve that. I am confident that he will see progress along those lines.

I want to just say to the member this question of government re-employing persons who took advantage of the early retirement incentive program is certainly of a great deal of concern. We have tremendously tight policy and controls on that overall matter. We addressed that a long time ago, and the existing policy states that no employee who took advantage of that program shall be re-employed or retained on contract without a very senior ministerial approval. That approval must be granted by the deputy minister of GPSD. It has only been granted under very extraordinary circumstances, very rarely used. Tight controls are in place.

Regarding other questions, the member asked for a lot of details, and we will get at those and, without any promises as to timing, because we are very busy trying to sort out the questions that were asked prior to yours, hopefully we will have a response that we will be able to deliver to the second member for Vancouver East (Mr. Clark) sometime shortly after lunch.

HON. MR. ROSE: Just briefly, I did ask for how many. You said these were rigorously kept to a small number, but I would like the minister to give us a number. The policy may be rigorous, but I think the numbers are larger than he perhaps would like us to think, So I would like to know the number.

HON. MR. RICHMOND: I move the committee rise, report very little progress, and ask leave to sit again.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Richmond moved adjournment of the House.

Motion approved.

The House adjourned at 11:58 a.m.