[ Page 6745 ]

CONTENTS

Routine Proceedings

Private Members' Statements

Forestry. Mr. Miller –– 6745

Hon. J. Jansen

Motorcycle awareness. Mr. Rogers –– 6747

Mr. Lovick

Hon. Mr. Richmond

Youth. Mr. Barnes –– 6749

Hon. S. Hagen

Horse-racing. Mrs. Gran –– 6751

Mr. Rose

Hon. Mr. Ree

Committee of Supply: Ministry of Transportation and Highways estimates.

(Hon. Mr. Vant)

On vote 72: minister's office –– 6753

Mr. Lovick

The House met at 10:05 a.m.

Prayers.

HON. MR. REID: It's with a great deal of pleasure that I introduce to the House today a Rotary International group of businessmen and professionals from Kanpur, India, hosted by the Rotary Club of Vancouver Chinatown. They are in a study exchange which promotes goodwill and understanding between countries. With them are Ed Kisling and Terry McLeod of the Vancouver Chinatown Rotary Club. These gentlemen from India have toured the entire province and met with their counterparts in professions in British Columbia. Most of the members of this House are in one way or another associated with Rotaries, so we do understand the challenges and dedication of the Rotary and its members, and offer a special recognition of these Rotarians today.

With the group is Rotarian Ravindra Khanna, Dr. Sunil Tanaja, Dr. George Antony Chunkath, Ashok Kant, N.K. Bhattacharya and Rajeev Sexena. My apologies if I have mispronounced the names — we do respect these gentlemen — but they are tough. I wish I had my colleague the member for Esquimalt-Port Renfrew (Mr. Sihota) to help me with the names. In any event, Mr. Speaker, would the House make these gentlemen, along with the Rotary Club, especially welcome here today.

MR. BLENCOE: I have the great honour to bring to the attention of the House an event that is happening off the Victoria waterfront this morning aboard HMCS Huron: a special memorial service for a distinguished Canadian and a resident of Victoria, Lt.-Cdr. Ted Simmons. Lieutenant-Commander Simmons received one of our highest military honours, the Distinguished Service Cross, for his heroic action at sea when he and his crew boarded a sinking U-boat to capture secret intelligence data. Lieutenant Commander Simmons also received the Distinguished Service Order, an honour awarded for his extreme bravery in a sea battle in the Mediterranean. His bravery was portrayed in a motion picture called Corvette K225.

Lieutenant-Commander Simmons received a number of other awards for bravery and indeed has been portrayed as a genuine Canadian hero. Would the House please join me in sending our condolences and our thanks to his family, in particular his wife, Ruth Simmons.

MRS. BOONE: It's not very often that I have the honour of introducing a class of students, as not very many of them actually make it down here. I'm very happy today to introduce to the House a class of students from Blackburn School in Prince George, and their teacher Mr. Dave Harrison. Would the House please join me in welcoming them.

Orders of the Day

Private Members' Statements

FORESTRY

MR. MILLER: Mr. Speaker, I appreciate my colleague moving to last place to allow me to catch an airplane back to my constituency in about half an hour.

I wanted to talk this morning about forestry. It's fitting, because this week is National Forest Week in Canada. It would have been fitting had that been recognized in a higher fashion in this Legislature at the outset of the week. Nonetheless, we all recognize the importance of forestry to the economy of our country and our province.

The value to Canada of forest products that we export to the four corners of the world is about $22 billion. The value for British Columbia is approaching $10 billion. In terms of the economic value of the industry, we can see that it is indeed critical to our economy.

In terms of jobs — and we're just talking about direct jobs now — in Canada there are almost a quarter of a million jobs and about 75,000 direct jobs in British Columbia. Normally, with a multiplier of 1.8 or 2, we're looking at a considerable increase in that. You can't really emphasize enough the importance of forestry to the Canadian economy, and to the British Columbia economy in particular.

It's very timely, given that importance, that we do reflect on the state of the industry. I'm going to talk about British Columbia this morning. We have a serious problem in terms of the sustained yield in British Columbia. It became clear to many of us this year when Fletcher Challenge announced cutbacks in its annual cut on Vancouver Island, in tree-farm licence 46, that we indeed have some serious problems in terms of the amount of wood available for harvesting and that required to feed our processing plants and maintain that economy and those jobs in British Columbia.

With the Fletcher Challenge cutbacks, we have seen a reduction in jobs — perhaps up to 800 direct jobs. Again, using a multiplier, we're looking at in excess of 1,500 jobs. We note some cutbacks in the northern end of the Island, another 100-or-so jobs, as a result of rationalization of the amount of timber available to harvest.

So in the last short while, we have seen probably about 2,000 jobs disappear in forestry on Vancouver Island. We see the objective information provided by the Reid Collins study about the imbalance between the amount of timber available and the requirements of our processing facilities. It's estimated that the sustained yield on coastal British Columbia is in the order of 26 million cubic metres per year. It is also estimated that the requirements of industry to feed those processing plants in 1989 are forecast to be about 36 million cubic metres per year. There is an imbalance of 10 million cubic metres per year, in

[ Page 6746 ]

terms of the fibre requirement for our coastal processing facilities.

I won't go into statistics on all the timber supply areas, but it's clear that we have not been following a policy of sustained yield; we have been following a policy of depletion of the old growth. And built into that policy are fall downs, gaps between the time the second-growth timber will be available and the volume of that second-growth timber to feed our processing plants.

There will be serious problems in terms of employment in the forest industry as a result of this very poor planning. As Professor Pearse has stated, despite the rhetoric of the Sloan commission in 1945 and '46, we have not really been following a sustained-yield policy. It's with some amazement that I listen to the response of the Minister of Forests (Hon. Mr. Parker) on that important question, in terms of employment and the economy of British Columbia. When confronted with the evidence of over cutting and poor planning, the minister said: "The problem isn't that we have not enough timber. That's not the problem we face in British Columbia. The problem we face is we have too many processing plants." That's the Minister of Forests' rather simplistic analysis of the major difficulties we are facing: it's not that we don't have enough timber; we have too many processing plants. I suppose the minister, then, is in favour of shutting down some processing plants, of creating unemployment. That in itself is shocking.

When we look at where we have to go in terms of developing this industry, in terms of maintaining and actually increasing employment in this industry, it's equally shocking that we can see that we will not get the second reforestation agreement that we require for this province from the federal government.

It is disappointing in the extreme when we see the Premier wholly embrace that federal budget which will have such a negative impact on this province. It's a major disappointment.

[10:15]

1 see that although ministers on the government side are reluctant to criticize the Wilson budget, the Minister of Finance (Hon. Mr. Couvelier) crept into my riding, unbeknownst to me, and the Daily News captured some of his words. It is heartening to know that the Minister of Finance said to the Daily News....

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

MR. MILLER: Thank you, Mr. Speaker. I'll get to it on rebuttal.

HON. J. JANSEN: My comments will be brief and perhaps more succinct in terms of talking about the opportunities of the forest industry in British Columbia.

As the member opposite indicated, forestry has a significant impact on the economy of the province We are very pleased to see that this week has been declared National Forest Week. The theme this year, of course, is that your forests are your responsibility

The events happening throughout the province in over 100 communities reflect the importance of forestry to our province and the profile that it is receiving. We, as you know, are looking very closely at identifying new markets for our forestry. In fact, through the new B.C. Trade Development Corporation, one of its sectors will be to examine and assist the forest industry in identifying markets and working with them to identify new product opportunities. I have had occasion to visit some of the operations in the province, and the initiative that these operators have in developing new products is indeed heartening to see.

Sustained yield is something we are looking at in a number of areas. I was surprised the member for Prince Rupert didn't talk about the problem we're finding with groups that are not enabling harvesting of our forests in a planned way. We don't see the multi-use of our forests that we'd like to see, and I'm surprised that the member has not spoken about that and talked about the frustrations that we have in determining our harvests in a planned way.

The member also did not talk about the significant silviculture program that we have undertaken. In fact, we have increased our planting to over 200 million seedlings annually, and we are looking at increasing that to over 300 million seedlings per year. In fact, we have planted the two billionth seedling since reforestation began in the province in 1924, and we hope to be planting the three billionth — and we've counted them all — in three years. That's a significant opportunity and really shows the commitment we have in forestry.

Indeed, in my own community we have many people working in the forest sector, and we have tried to make sure that the public is aware of the opportunities in forestry. We have organized — and I'm not sure whether the member for Prince Rupert has taken that same initiative — tours through the forests so that people understand when we talk about thinning, harvesting, planned management, weeding and brushing. That has received a lot of interest in the community. Unless the public is aware of the opportunities of the forest and understand how well the forest is being managed, they don't understand when we talk about sustained yields.

My colleague the Minister of Forests is not here today. I wanted to have the opportunity to at least briefly address some of the points that the member opposite raised. I'd like to emphasize that our commitment to forestry is as strong as ever. We are working very closely with the forest sector to enhance our export opportunities and to further develop the value-added sector of our forestry community, where we see a significant opportunity for the future.

MR. MILLER: I recommend that the member take a walk in the woods. You should take a walk in the woods, and you will see the problems we have in this province. The Minister of Finance obviously understood the ramifications of the federal budget because, quoting from the Prince Rupert Daily News, he

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said.... But he did admit he was worried the federal government might not help fund a second $700 million forest resource development agreement with B.C.

That's the first admission we've had that there has been any concern in the cabinet benches about the lack of this vital reforestation program. I admit there has been a vast improvement in reforestation and silviculture. We're making up for more than a decade of neglect by the Crown. We have 500,000 hectares of NSR land in this province which this government is responsible for creating.

Interjections.

MR. MILLER: It's fine. I talked to the minister about his bill and finding new markets. But, Mr. Minister, I've got to re-emphasize that we have neglected our forest land base. We are overharvesting; there will be severe falldowns, and there will not be the fibre available to feed the industry that exists in British Columbia now. There will be unemployment created as a result of that.

The Minister of Forests introduced a conversion policy in this House last year. Again the Minister of Finance, who is a bit of a forest critic on the sly, quietly said he didn't agree with it. There seems to be some division or argument between the Premier and the Minister of Forests with regard to the need for a royal commission in this province.

I attended those sessions out there in British Columbia, and people came out in the thousands. They wrote letters and said: "We need a royal commission in British Columbia. We've got to identify those very serious issues, and we've got to have a plan to deal with them." This government's reluctance to move is really being taken into account by all those people out there who have this concern about the forest industry.

Mr. Speaker, I would suggest that the best present this government could give the people of British Columbia to conclude National Forest Week would be to call a royal commission on forestry in British Columbia.

MOTORCYCLE AWARENESS

MR. ROGERS: I was going to speak on motorcycle awareness, and then my arm was severely twisted by the member for Mackenzie (Mr. Long), who wanted me to discuss the gas pipeline, because it's fully seven days since we heard about it. But I won't do that.

I hope this is a genuinely non-partisan issue, which I believe all members of the House will want to think seriously about. I'd like to congratulate the government on its proclamation of May as Motorcycle Awareness Month, because this is the season of the year when many people who have a fondness for the two-wheeled machine take it out of the garage, dust it off, or else go out and buy a new one, and hit the road and enjoy it.

Last weekend a number of the members of the House were invited by the British Columbia Coalition of Motorcyclists to go on a ride, to experience firsthand what it's like to have a motorcycle. I was delighted to be one of the people chosen. They lent me a brand-new, very powerful Harley-Davidson motorcycle, which I got a big kick out of. Unfortunately, I returned it on Monday. The member for Alberni (Mr. G. Janssen), who distinguishes himself very well on a motorcycle, came with his own machine and put me to shame in terms of his performance of the vehicle. But between the two of us, the motorcycle coalition was aware that members on both sides of this House share a concern with the fact that the general motoring public isn't aware of the ability of motorcyclists to navigate or move their machine the way someone in an automobile might be able to do.

Driving home from this event on my motorcycle, I found to my horror, on several occasions through the city of Vancouver, that I was cut off by people who would never have cut me off if I was driving a four-wheeled vehicle; there's just no way. But they didn't mind at all.

I was delighted that our caucus chairman, who was also invited to come on this event, came. The caucus chairman arrived in style on a BMW, but with the class and panache that she has been known for, left on a hog. And it was appropriate.

MR. LOVICK: Black leather?

MR. ROGERS: No, it was full white leathers. I just want everybody to be aware of that. I'm not even going to discuss the colour of her corsage; it would probably be out of order.

One of the reasons they had this particular ride was to raise awareness, and that's the reason I'm taking this opportunity here today. There are a substantial number of motorcyclists injured every year, and in many cases they are not able to ride a motorcycle again. In fact, in some cases they are injured so severely that they're not able to work or even walk again. In many cases, it's because they've been hit by another vehicle, the drivers being unaware of the maneuverability and even the presence of a motorcycle.

Motorcyclists are an interesting group of people. They cover a pretty broad cross-section of society and a total spectrum of age groups. As a societal group they do some interesting things. They have two or three so-called rides a year where they try to raise money for their own awareness, but the rest of the time, on a very frequent basis, they raise money for worthy charities. Probably the most widely known charity ride is the Christmas toy run, when every motorcyclist brings a gift for a needy child. I think it's fair to say that every weekend of the year, somewhere in this province, motorcyclists — who by the very fact that they just love their vehicle and love being associated with it — get involved in raising money for worthy causes and needy people.

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Mr. Speaker, it seems to me that a private member's statement is the correct opportunity to discuss this issue, and I'm delighted to inform the House that the British Columbia Coalition of Motorcyclists, with my persuasion and also that of the member for Alberni, is arranging to bring to this Legislature next month enough motorcycles to take every sitting member for a ride at lunchtime. Even the members of that estate that doesn't exist are going to be invited to go, so that you may all experience the thrill and excitement of catching a yellow jacket in your face at 30 miles an hour, as you go around Beacon Hill Park or wherever. Perhaps for some of them we'll arrange a Malahat trip and for others something a little more local.

So you've been warned in advance. I believe this is a non-partisan issue, but I also believe the opposition House Leader, who of course drives a quieter and more sedate motorcycle than the kind I normally try to get my hands on, wishes to respond. After that, Mr. Speaker, I'll see if there's anything I wish to add.

MR. LOVICK: I have the pleasure of responding on behalf of my colleague the member for Alberni (Mr. G. Janssen), rather than our House Leader — just to clarify that, if I may.

I agree with the member for Vancouver South that this is a genuinely non-partisan issue. I think we're all very happy at the good work done by the B.C. Coalition of Motorcyclists, in terms of their efforts to make us aware. It is a very large organization. There are some facts about what motorcycling means in this province that I have a hunch most people are unaware of. There are some 153,000 class 6 licence-holders in the province, and according to the most recent statistics — in May of this year — some 67,000 motorcycles were registered. We're obviously talking about a large and thriving organization.

As I said a moment ago, the B.C. Coalition of Motorcyclists deserves credit, and we should show our appreciation to them for the work they've done in trying to make us aware that riding a bike is obviously somewhat different than driving a car. I haven't ridden a Harley or anything like that, although I would have loved to. My experience is restricted to riding bush-bikes when I worked for the B.C. Forest Service, a little different kind of experience.

[10:30]

If I may, my colleague from Alberni has asked me to make a couple of points and register some concerns. First, I think all of us in the House are being asked to take into consideration that insurance premiums have apparently continued to increase very significantly. I gather they've doubled in the past ten years, despite the fact that some 85 percent of accidents are actually caused by car drivers. I notice that the Solicitor-General (Hon. Mr. Ree) is listening, which I'm pleased to see. Another concern is whether the licensing arrangements are as tight as they should be. I understand, for example, that a first-time motorcycle driver — a kid 15 or 16 years old, in effect — can buy a 145-horsepower bike without having to have a licence and can in fact take it away. In the industry those bikes are known by some rather interesting terms, suggesting they go very, very quickly and can blow you out of the seat. One perhaps wants to be a little careful about that.

The other concerns are to do with safety. The member for Vancouver South certainly touched on some. Most of us are familiar with the helmet controversy. A fairly major study was undertaken by the B.C. motorcyclists' association and a national group, and that was submitted to government. They're looking to see whether some action will be taken on that. Other matters of hazards, road conditions and so forth are obviously to be brought to our attention, and also some other provisions besides helmets in terms of safety. For example, you see people riding the new trendy kinds of bikes that don't look very threatening, wearing shirts and sandals and virtually no clothes — the members opposite have suddenly perked up — and obviously not protected if they get into any sort of misfortune.

We on this side of the House are certainly happy to provide our support and endorsement to the campaign for increased motorcycle awareness. I'm pleased to do so.

HON. MR. RICHMOND: I thank the second member for Vancouver South (Mr. Rogers) for allowing me just a moment to add my words about motorcycle awareness. I think the key word here is awareness. Those of us who have ridden motorcycles for many years know that the primary cause of motorcycle accidents is motorists turning left in front of a motorcyclist or pulling out of an intersection turning right. They tend not to see motorcyclists — or cyclists, for that matter. I happen to ride a bicycle a fair amount, too, and it's even worse because you don't have the power to get away. I would just urge motorists, when they see that headlight coming down the road, not to turn left in front of it or pull out in front of it; there is a human being on it.

A lot of responsibility lies with the motorcyclist too. The member for Nanaimo mentioned the rockets, as they're called; a lot of responsibility must go with a machine of that kind of power. I urge young people especially, who tend to get into problems on these machines, to stop and think for a moment. You don't have to go 100 miles an hour to enjoy yourself on a motorcycle. You can get a lot of pleasure out of it in the bush, as the member says, or riding at the speed limit down the highway.

Some of us own more than one motorcycle and have difficulty explaining that at home, but we enjoy all different kinds of riding. The member for Vancouver South did mention that it covers a broad spectrum of people, all the way from Malcolm Forbes to people like us who cannot afford to own 85 motorcycles.

I thank the House for the time, and I urge everyone to be aware, have fun and watch for loose gravel in the corners.

[ Page 6749 ]

YOUTH

MR. BARNES: I'm very pleased to have a few moments to bring before the House some thoughts about the young people in our community. As politicians, I'm sure most of us have at one time or another had to address so-called issues concerning young people: such things as the quality of life, education, employment opportunities, socialization and their rights. As a matter of fact, recently in the Legislature we were discussing the right of 18-year-olds in the province to vote for the government, as is the case throughout the rest of the country. I don't really think we should think in terms of issues that are exclusive to young people. I think that is a course that we as a society should begin to resist, because really the issues of today should concern all of us regardless of age, race, colour, religion, ethnicity or whatever. In other words, I guess what I'm suggesting is that we're going to have to begin to see ourselves as common inhabitants with common concerns and a greater awareness of our interdependency, one with another.

I'm not sure we will do that well if we continue to think in terms of youth issues. What I want to suggest is that although the situation is pretty bad in terms of world conditions When you consider the increased global destruction, particularly with respect to the ozone and the effects we're just beginning to realize are resulting from the use of CFCs in coolants, refrigeration, spray cans, etc., and when we look at the poverty and economic disparity in the world, social chaos and rampant inhumanity, there are many who are cynical and would say: "What's the point?" I think the point is that we as adults, or as the establishment, have clearly been unable to change the tide and turn things around, although I'm sure we've done our best.

What I'm really saying is that this disheartening situation that the world faces, that all of us face, should not be addressed only by the establishment, only by those who are in power, only by those who so far have been mandated to assume responsibility for the decisions about tomorrow. I don't think we can any longer afford to exclude the young people of the world from a legitimate rightful role as participants in decisions about where we go tomorrow.

I know those objectives and goals as far as involving the youth would almost be revolutionary in our society. It simply is not the case.... Young people are not directly involved in the decision-making process in our society at any stage. Young people have been led to believe that they must wait their turn. No matter how well educated, how informed, how enlightened, how anxious, how truly capable of making a contribution, they have been told to wait their turn

I think when we consider what is happening in the world, when we look at the kinds of atrocious acts we are perpetrating upon ourselves, when we look at nearly a million young people dying from malnutrition, starvation and war in the southern African countries alone, and when we look at hungry children in this country who are having to be fed by special programs as a result of neglect, abuse or whatever you may want to attach to it, then we know we're in trouble.

Let's give youth a chance. Let's take the bold step. Let's stop the youth suicides, the youth dropouts, the alcohol and drug abuse, the prostitution of our young people on the streets, the advantages that are being taken of them by adults. Let's stop the neglect. Let's tell young people that not only do we respect their capabilities to participate in the decisions of society in a constitutional and rightful way, but we are going to guarantee that these things can happen and must happen if there's going to be any hope for tomorrow.

What I'm suggesting is that the status quo has — to use a phrase from business — used up its line of credit, and it looks as though the powers that be or the nature of things have begun to activate some form of settlement. In other words, the moment of truth is upon us.

I realize that notwithstanding anything I've said, there are a number of young people who are actively involved in the community, certainly on our university and college campuses and in public schools. We even have an advisory committee of young people to the government. But I'm sure that most of us will recognize that these young people

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

MR. BARNES: Perhaps I could conclude in my windup remarks.

HON. S. HAGEN: As the minister responsible for youth in British Columbia, I am pleased to take this opportunity to respond to the second member for Vancouver Centre. I would like to say at the outset that I believe the member's comments are sincere. He has a true concern for the young people of our province, particularly, I think, for young people who may be less fortunate than others.

I would like to talk about the Youth Advisory Council that the member spoke of. As he knows — I know that he has met with the president — the Youth Advisory Council is composed of 16 young people from the eight regions of the province. Each one of those young people has a regional committee. We have a network of about 160 young people coming from all eight regions of the province who give advice to me on issues confronting young people today. There is a broad cross-section of issues.

One issue the council recently did a comprehensive study on was substance abuse by youth in northern regions of the province. They have now completed this study and have submitted their findings and recommendations. In fact, they have met with officials from the Ministries of Labour and Consumer Affairs, Health and Social Services to review this study with them to see how they can assist with the TRY program in helping to compile advertising and other means of attracting youth's attention. One difficulty we have as adults is putting out programs that youth will actually take notice of. I

[ Page 6750 ]

am hoping that they can give some good solid advice to the ministries involved.

One of the other things that the Youth Council has responsibility for is the administration of the youth grants program. They have a budget of about $500,000. They receive applications from all over British Columbia. I believe this year they received about 100 applications. These projects that they fund deal with peer-counselling issues; they deal with establishing youth drop-in centres, which we have done several of; and community-specific projects related to tourism, health, employment or recreation.

The main focus, however, of the grants that they have funded this year was the issue of drug and alcohol abuse among young people. Eight projects were funded in various places in the province. We haven't published the list yet, so I am unable to tell you which ones they are. That will be public very soon.

In February of this year the new Passport to Apprenticeship program was announced. This is a very important program and was very well received. It is a joint initiative between my ministry and the Ministry of Education and provides high-school students specializing in trades areas the opportunity to gain valuable work experience and on-the-job training. We are trying to put more programs out there to capture more of these young people so that they won't turn to the street or to drug and substance abuse.

[10:45]

Another program the government funds is the Challenge '89 program, which is both a federal and provincial program. The federal contribution is about $19 million; ours is $10 million. The federal government put some restrictions on this year and concentrated on high-school students instead of university students. We left ours open so that all students and all young people could apply. We feel this will help approximately 6,000 young people this year to gain summer employment.

One of the other programs that the government announced through the Ministry of Environment recently is the Youth Corps program, which will provide work in environment-related jobs throughout the province to approximately 1,000 youths from the ages of 16 to 24.

The Youth Council has also published a book called "The Next Step." Youth, like many other British Columbians, have difficulty finding out about, remembering or acknowledging all of the government programs that are out there to assist people. "The Next Step" was updated in the spring of 1989 and is a comprehensive resource guide to the public services available to British Columbia youth, whether it is how to apply for a driver's licence, where you go for help with health problems or anything else.

The Social Services ministry has its Reconnect program, which deals more directly with the concerns of the second member for Vancouver Centre. I understand that this program has been successful. It's based on a one-on-one experience, where street workers in the field....

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

MR. BARNES: I want to thank the minister for a very comprehensive review of government initiatives to assist young people. It is certainly encouraging in that it recognizes that the government is concerned and is attempting to achieve some of the objectives that young people are concerned about.

I should say that my point in raising this issue is one that deals with the political accessibility of the decision-making process to young people. The mere fact that this long list of programs that the government conscientiously has brought forward was in fact laid on, brought forward, determined, decreed or understood to be part of the solution on behalf of youth, perhaps with some input from the youth advisory group, but primarily in a decision by the government on behalf of the young people.... It is an established way of addressing issues concerning young people.

I would really like to see a shift from this traditional way of addressing their concerns. We know that 10 percent or 20 percent and higher of young people are unemployed constantly, and we feel that if we can address 5 percent of those needs then we are doing pretty well. What I want to see us do is take a look at a scheme that would bring about 100 percent employment and engagement in the life of the community — economically, socially, politically — and also deal with some of the problems that have become almost impossible hurdles for us to overcome by traditional ways of addressing them; in other words, using the old tried and true methods.

We all know that you cannot ask the establishment to reform itself to the point where it relinquishes its power or control. We need a joint venture. We need to have a little perestroika or glasnost, if you will, in the youth movement, whereby we say to young people: "You are parties to the future. We have to take a look now at your political rights. Your political opportunities are far too few for us to seriously expect you to be jump-started into reality when you become age 18. You've got to be involved all along."

This is not happening. I don't think we have the understanding....

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

MR. BARNES: Mr. Speaker, I hope that the point I am making will be recognized, because it is not a partisan thing I am suggesting. I am saying that we have to pull together if we are going to deal with the year 2000.

MR. SPEAKER: The member for Surrey Guildford-Whalley seeks leave to make an introduction.

Leave granted.

[ Page 6751 ]

MS. SMALLWOOD: I am told that 60 grade 5 students are now in the House. I always find it unusual that 60 kids can be so quiet. They are from Lena Shaw Elementary. With them are five adults and their teacher, Miss Kassam. I'd like the House to make them welcome.

HORSE-RACING

MRS. GRAN: This morning I want to spend a few minutes talking about one of my favourite subjects: horses. In Langley a lot of women are involved in the horse industry. In fact, it might even be said that a woman's best friend is a good horse.

SOME HON. MEMBERS: Oh, oh!

MRS. GRAN: Well, remember, they say a man's best friend is a dog.

The first thing I would like to do is compliment the task force initiated by the member for Oak Bay-Gordon Head (Mr. B.R. Smith) under the chairmanship of Mohan Jawl. I believe all of them did an excellent job, and I want to start my little talk by reading to you one of the statements from their findings.

"Our meetings with the industry confirmed a widespread, almost universal concern about the future of horse-racing in the province, particularly thoroughbred racing. The consensus among those who work in the industry is that it is heading for disaster if nothing happens. Some attributed the problem to increased competition from other forms of gambling, particularly lotteries; others blamed it on the intense competition for the entertainment dollar in the Vancouver market.... Inadequate facilities was on almost everyone's list."

Having said that, what I'd like to do next is point out what horse-breeding means to this entire province and particularly to Langley, the community that I serve. In fact, over half of the thoroughbred breeders are in that constituency, so it's extremely important to the economy and the quality of life in my community.

On the breeder's part, the cost of raising a thoroughbred to August of its yearling year is approximately $12,000. The average selling price of the 157 yearlings sold at public auction in 1987 was $5,244. The aggregate loss to thoroughbred breeders, just with respect to this one crop, was in excess of $5.1 million.

On the owners' part, the aggregate cost for maintaining horses in training for racing at Exhibition Park during 1987 was approximately $18.6 million. The total amount distributed in purses for the same year was $8.6 million. The net loss to owners in 1987, excluding capital costs, was $10 million.

The economic impact on this province of the horse industry — both thoroughbred and standardbred — is as follows. B.C. racetracks and breeding-farms create 3,000 full-time jobs, $33 million in goods and services and $28 million in wages annually. Net tax revenues to the provincial government are $9 million. The total annual economic impact in British Columbia in one year is $173 million.

Mr. Speaker, this is an important industry. It goes beyond the racetrack and the people who go there for entertainment and perhaps in pursuit of dreams of coming away with money that they didn't have to work very hard for.

The industry of horse-breeding, whether it's standardbred or thoroughbred, is extremely important to the entire province — the Fraser Valley in particular and also the Okanagan. Every dollar wagered at B.C. tracks produces 35 cents in direct economic activity in the racing industry, 52 cents in indirect activity and 5 cents in net revenues to the government.

I believe that the economic viability of the industry is such that the government cannot afford to waste any more time in finding a new location — or the same location, but certainly a location — for a one-mile track. Without the one-mile track, the industry will not survive in this province. I don't think we can afford that.

I want to read one more statement from the task force report:

"These figures show that the economic relationships within the thoroughbred industry are seriously out of balance. They also explain a number of obvious trends in the industry. Many of the major owners have left Exhibition Park and are either out of the business altogether or run their horses in other jurisdictions. A number of breeders have become reluctant owners, because they cannot sell their horses. Many trainers have become part-owners of horses because their owners cannot afford to pay training expenses. The distortions resulting from the economic imbalance are everywhere, and the migration from the industry has already begun."

Mr. Speaker, I believe that the industry is not an industry of rich people. It is not a sport for kings. It's a sport, a lifestyle and an industry for people who have chosen that particular lifestyle. I implore the government.... I know that they're working diligently to find a way for this province to have a one-mile track, and I urge them to work even more diligently.

MR. ROSE: As a former resident of Langley for a number of years, I can testify to the fact that it is very horsey around Langley. However, I didn't expect to be saddled with this response this morning, and I intend to share it with the other side — what's left of it. There's only five minutes anyway, but I know the former Attorney-General wanted to have a word, and I see the Solicitor-General (Hon. Mr. Ree) all poised on the balls of his feet there ready to jump up.

Let me start by saying that I agree that the horse-racing industry is important for British Columbia. According to all the information I have, it's in terrible shape. We don't have decent facilities here.

I'm told that what they want is a one-mile track, a turf course, a training track, a modern grandstand, a clubhouse, turf club, modern sales pavilion for horses, clean living quarters for backstretch workers, stabling for 1,200 to 1,500 horses and a landscaped area and parking lot for 4,000 to 5,000 cars at

[ Page 6752 ]

reasonable rates, which is one of the major reasons that I don't want it out at Colony Farm.

[11:00]

I guess it's the "not in my back yard" syndrome that I'm indulging in again, but I am very much opposed, and so are residents of my riding. The two councils are split on whether or not it should go to Colony Farm. These are my objections to it: the choice would alienate some 600 acres of the best agricultural land in B.C., more and more land would be lost to parking and commercial development, environment would be damaged, wildlife habitat would be destroyed and important paths of recreational opportunities would be diminished. The proposal is unlikely to receive approval from both municipal councils— maybe one but not the other, and it's in two municipalities. The site is not served by mass public transportation such as SkyTrain. The Port Mann interchange is just a nightmare in terms of traffic. Nobody goes there if they can avoid it, but unfortunately they really can't, and it's right adjacent to it. There's increased traffic noise in the evening, and uses will intrude into the suburban neighbourhood. Right along the slope above Colony Farm, lots are selling for $80,000 a pop. I think it would certainly denigrate a very important suburban area.

We want a racetrack, and we want decent facilities, but we want to put it in a place where it doesn't intrude on the urban area.

HON. MR. REE: I wish to compliment the first member for Langley for her excellent presentation, particularly in stressing the economic impact, the economic importance, of the industry within this province. It certainly has, and this government recognizes that impact and the necessity of maintaining or enhancing the economic viability of the industry.

Mr. Speaker, when you start to deal with people's lifestyles, or particularly, shall we say, their vocations or employment, people get a little bit upset - in fact, maybe sometimes more than a little. A great number of the people involved in the horse-racing industry do it as a love and as a hobby. When you get involved in that, the resounding roar far exceeds what you might find otherwise, because it is one of their loves; and we in government have recognized that. We recognize the need for a first-class facility — maybe not a world-class facility — in this province. That first-class facility is a one-mile track of a standard configuration. Any other configuration or smaller size would not enhance the industry in this province, and I don't think it could survive with anything other than that. That is a goal of this government: to try and find a responsible location where such a track could be constructed and could survive, considering the number of people who go to the racetrack, the people who invest in the racetrack, the people who invest in horses, the owners and the breeders.

Recently the federal government has passed legislation, called Bill C-7, dealing with teletheatre licensing for off-track betting. We believe that to enhance the industry this is needed. We do not necessarily agree with the form of the federal legislation, that teletheatre betting or off-track betting — outside the racetrack area — will be needed, in due course, to make horse racing financially viable. But I will commit, as the government, that such betting would be done on a very responsible basis.

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

MRS. GRAN: I'll end my comments in this three minutes by simply talking about the ownership of horses and what it means in a constituency like Langley.

I will very gently remind the Solicitor-General that all breeders are not doing it for a hobby. It's their lifeblood. They put a tremendous amount of time and money into it, and often with very little return.

I've visited many of my friends who are breeders, particularly thoroughbred breeders, and during the breeding season if they get two or three hours' sleep a day, they are lucky. It's hard work. It's hard work physically. It's hard work mentally. In the breeding industry when you're dealing with the births of foals.... And they're very expensive foals; often the stud fees will be anywhere from $2,000 to — what? — a million dollars for one foal. So if something happens during that birth, it's a traumatic experience, especially if that mare happens to belong to someone else, which is often the case. So I want it understood that those people work hard for what they're doing.

They're working hard not so much to gain monetary value but because of the lifestyle and what that industry means to them. Langley would not be the beautiful community that it is if it weren't for the horse industry. I say that because of the rolling hills and the green grass, and the agricultural land that is being saved for future generations by those people, some on hobby farms, some in full-fledged businesses. But the lifestyle that is enjoyed by the families....

I made a little bit of a joke about women. But men, women and children in families work side by side in this industry, and everyone gets involved. It becomes their life: their social life and everything. I think that a lot of people from the city move out to areas like Langley so that they can get a horse for their youngsters, especially girls, when they're getting to their teen years. They spend the time that they might normally spend hanging around street corners and giggling with the opposite sex.... They spend time working with the horses, with their other colleagues in the industry, and perhaps spending valuable time with people who understand the horse industry, instead of getting into trouble. And that's a very real problem.

Anyway, thank you very much for the opportunity, Mr. Speaker.

HON. MR. RICHMOND: I call Committee of Supply.

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

[ Page 6753 ]

ESTIMATES: MINISTRY OF TRANSPORTATION AND HIGHWAYS

On vote 72: minister's office, $304,242 (continued).

MR. LOVICK: Mr. Chairman, today I want to zero in on the whole subject of Highways privatization — more specifically, the costs. I have a series of questions I want to work through. I'm sure the minister will be very pleased to respond to these questions because, of course, he takes some pride in the achievements of that program.

To get directly to it, let me just say this. On Tuesday the minister claimed that the total savings of the highway maintenance privatization program would be almost $106 million over three years on a theoretical expenditure of around $1,172,000,000. The first question is: whose estimate is that? Was that prepared by the ministry, or was it done on instructions from a minister?

HON. MR. VANT: In terms of the projected savings regarding the highways privatization, as we began these estimates — this is in light of our discussions yesterday — I decided that rather than have you wait for Public Accounts, I would table the document of the actual costs of the road and bridge maintenance in all 28 of the contract areas throughout the province. I also wanted — which I did — to table that audited statement of the original cost, so that we had that very necessary baseline, and you wouldn't be taking my or my ministry's word for what the costs would be. You had to have that base cost in order to project three years down the road to compare the cost of the maintenance contracts on the one hand with what the cost would have been if it had been business as usual and the government itself was still doing the road and bridge maintenance.

Coopers and Lybrand is a very well-known, internationally renowned and well-respected firm of chartered accountants, so we engaged their services to come up with the figures. It's quite correct, as you indicated. The direct and indirect savings to government as a result of the privatization process is actually $105.97 million.

MR. LOVICK: The direct savings you refer to amount to some $22 million — about $7 million a year on that expenditure I quoted earlier. Then the minister identifies a further $23 million in "indirect benefits" such as school taxes, motor vehicle licence fees and corporation income tax. I wonder if that's playing entirely fair with the taxpayers and the public of the province, because if we talk about indirect benefits such as that, it seems to be assuming that private entrepreneurs would just be sitting around unemployed, not doing anything and not paying any taxes. The fact is that that already was happening. Is that indirect benefit new money?

HON. MR. VANT: In a sense it is, because as I understand it, the ministry itself was not responsible or didn't — under the Highway Act and so on — have to pay things like school taxes, motor vehicle licence fees, social service taxes, corporate income taxes and those things. In a sense, what we did as an indirect benefit of the privatization process was to create new sources of revenue for the provincial government. This is indeed a plus on the revenue side for government; therefore it is very definitely an indirect benefit as a result of this privatization process.

MR. LOVICK: I want to talk a little bit about that methodology of cost estimates. On September 2, 1988, the minister issued a press release and stated in that document that service standards would not decline, and that highways maintenance would not cost the government more money. The minister also said: "Two independent national chartered accounting firms have verified the methodology used to determine those ministry costs." How did they do that? What were these accounting firms asked to do exactly, and how much did we pay for that accounting?

HON. MR. VANT: That's a very good question. Coopers and Lybrand went through a very detailed way of calculating just what the direct and indirect savings would be. I'll just look up the details of that. It was a very complex process, because they had to audit all kinds of things.

[11:15]

I would refer you as well to the auditor-general's audit, which was done, in detail, of contract area number 1. You have read that, and that was a sampling. Naturally they wanted to have a detailed look. That process started while we were still in the process of privatizing other contract areas. Indeed, we didn't finish the last one until March 31, 1989. 1 quote his report:

"In our opinion, the process followed to privatize road and bridge maintenance operations on southern Vancouver Island was adequate to provide the information needed to evaluate the value-for-money consequences of this privatization. Furthermore, we believe that the representations made by the government about this privatization were fair and sufficient for the legislative assembly and public to judge the value-for-money achieved from it." Our estimate was very accurate regarding the savings on that particular contract area."

Now I would like to move on to your question — and I'm leading up to that — regarding the further process of Coopers and Lybrand. What you are asking is the validation of our historic costs; that's part of the process that Coopers and Lybrand was engaged in. Unless we have a firm grasp of what those historic costs were, I don't know that we could really verify the savings over the three-year contract period.

The second one was to assess the benefits and savings of privatization relative to the ministry's projected costs. The third — a very important part — is the audit of the value of sales and leases of the equipment.

As the hon. member opposite knows, we did, in our wisdom, actually sell some of the small hand-

[ Page 6754 ]

tools and smaller pieces of equipment. We very wisely decided to lease the heavier pieces of equipment at commercial rates.

The cost of the Coopers and Lybrand activities in regard to these three major things amounted to $120,000 for all those audit services.

MR. LOVICK: Is the Coopers and Lybrand report you refer to the same one you tabled in the House yesterday or the day before?

HON. MR. VANT: In terms of the validation of our historic costs, yes.

MR. LOVICK: I am a little puzzled by that, Mr. Minister, because the Coopers and Lybrand item tabled yesterday is dated January 8, 1989, and the press release I quoted from, which talks about the two independent national chartered accounting firms, is dated September 2, 1988. Could you explain that discrepancy to me? There must be some confusion.

HON. MR. VANT: What the hon. member is referring to are auditors also engaged by the privatization group, which was a separate engagement of a different accounting firm, I believe.

MR. LOVICK: Also on September 2 — the date of the press release — I sent a letter to the ministry, you will perhaps recall, asking for copies of those verifications of the two national chartered accounting firms. Twelve days later you responded by saying: "I will consider your request for this information and will advise you at a later date as to the availability of this information." Have you decided to release all those verifications now? You just established and emphasized that we weren't getting all but rather a part of, and I am wondering if you have decided now to release all of those, and if not, why not?

HON. MR. VANT: The end result was the Coopers and Lybrand statements, which I have in the last couple of days tabled in this House.

MR. LOVICK: But is it not true, Mr. Minister, that we are talking about different evaluations? There are a number of those, and what you tabled in the House yesterday had to do rather with the historic costs. Is that not the case? We are not talking about all the documents that were first referred to; rather, we are talking about a part of.

HON. MR. VANT: I think we are, indeed, talking about two separate sets of documents. For the purposes of your original question this morning on the direct and indirect benefits of privatization, I feel very confident that the information I have tabled gives the necessary information to verify in a proper manner the savings and benefits to this government as a result of privatization.

If the member wishes me to elaborate a little bit on the process of the projections in response to more specific questions, perhaps I could respond to them as we proceed.

MR. LOVICK: I am going to let that pass for a moment. I think we still have a problem. We are talking about two different sets of information. Let me come at some other things, because I do want to focus very directly on the information that was tabled, which I have reviewed. I do want to do that.

The minister said, and again I quote: "Because of competition and to protect the integrity of the tendering process, I will not be making available a detailed breakdown of our historic costs by contract area...." Whose decision was it not to release that information, Mr. Minister? Since you said "I," can we take it that that was your decision, made on your own judgment, or rather on the basis of instruction? Whose decision?

HON. MR. VANT: I think the hon. first member for Nanaimo has to agree that it's very wise and prudent of this government, in all situations where we are engaged in negotiations from time to time for entering into a contract to have private-sector firms provide services to government, for us to be very conscious of our obligation to the taxpayers of the province to negotiate the very best possible deal, if you will, for having those services provided at the most reasonable cost. For us to reveal the financial details of each of those 28 contract areas would place us in a very vulnerable position regarding future negotiations.

At the same time, however, we certainly make available the very precise details of the maintenance qualifications and standards necessary for performing the actual job. It's just that the very delicate negotiations about the remuneration for those services are very sensitive, because of the nature of entering into an agreement.

You must admit, too, that each of the 28 contract areas is unique. There are some small areas and some larger areas, and one area would have maybe twice as much equipment as another area or twice as many kilometres of road. There are so many variables in there. It wouldn't serve any useful purpose for us to reveal the actual historic costs in each area, but we have given the overall audited base cost, and it's for that reason we've done that.

MR. LOVICK: I'm interested to hear that rather passionate explanation, as these things go, of your decision not to release the historic information cost, because you have. Historic information costs are available. In fact, they're available for all 28 areas of the province. They are available from the years 1982 to 1987. Your ministry staff supplied that material to us. The privatization group did the same. We thought they'd done so on the minister's authority; we just assumed that that was the case. We were grateful. The question is, though, if this information has already been made available to the people who bid on the opportunity, and to the opposition, why shouldn't it be made available to the public? Why shouldn't they also have access to that information?

[ Page 6755 ]

How could the integrity of the bidding process be impaired by making available the historical records which are already well known? How could that be?

HON. MR. VANT: There's only one little glitch in your idea here regarding the information which was previously available, because that information includes a lot of functions which the ministry is still doing. So in a very real sense, anybody using those figures would be comparing apples with oranges. There are certain things that we're asking the maintenance contractors to take on where historically the costs were shown in other areas. Those figures aren't the same as a breakdown of the actual road and bridge maintenance contracts in each contract area.

MR. LOVICK: I would suggest that by a close analysis of the ministry data from 1982 to 1987 we can break it down very thoroughly. We used to have, you recall, very detailed reports from the Ministry of Highways. We know about every seal-coating project in the province, for heaven's sake. We can do that; we know what the costs are. Mr. Minister, are you telling us that the privatized contractors are now doing a whole bunch of extra stuff? We're getting more service than we had before? Is that what you're saying? That's why you can't give me that answer?

HON. MR. VANT: I can assure the first member for Nanaimo that the exact same information broken down would not yield exactly the same answer that you're seeking. It would be a pretty tough exercise to separate all the historic costs and the ones that are now actually being contracted out. But I want to assure the member that a breakdown — like how much seal-coating took place in the Nanaimo constituency — will still be available if he is seeking more detailed information about some specific function. Some of these are still performed by the government; some, of course, are still paid for by government but performed by a private contractor.

[11:30]

MR. LOVICK: If I understand your answer aright, Mr. Minister, you're telling us that we will never know all the answers to the question of precisely what is in those contracts.

I note that on Tuesday, the same date I referred to a moment ago, you said you would not be releasing the contracts that were signed for the 28 contract areas. I just want to remind you, Mr. Minister, that this is in direct contradiction to what your former deputy minister, Bob Flitton, had to say. Your former deputy said in a news release dated September 2, 1988, that we would at least get the contract for area 1, southern Vancouver Island. Whose decision was it to reverse Mr. Flitton's decision? Did you do that, Mr. Minister?

HON. MR. VANT: That refers, of course, to my former deputy. He made that statement at that time, but it is the minister who makes the final decisions regarding direct responsibilities of my Ministry of Transportation and Highways. Whoever may be my deputy minister ultimately gets his orders from me.

MR. LOVICK: Sounds like a derivative of Louis saying, "L'état c'est moi," or some such thing. I'm intrigued by that. You are, however, saying there has been an abrupt, direct and discernible change in policy. When that particular deputy left, you changed the policy. It was intimated to the press and to others that eventually the details of contracts for all 28 areas would be released. That was the policy as everybody understood it at the time. 1 hope the minister will agree with me. I will ask the question: would you agree that that was the case? Would you agree with me that we have now reversed our decision on that policy?

HON. MR. VANT: All I can do is emphasize the current policy. As I said earlier, the very important maintenance standards, which are very precisely specified, will be available. Those very precise maintenance standards were actually put down in writing for the very first time, I think that was an exceedingly useful exercise on the part of my ministry, to come up with those very precise, all-important maintenance standards. Actually specifying them in writing ensures the safety of the traveling public in our transportation system. To me, that is a very important part of those agreements between the government and the various contractors.

It is not unusual — in fact, it is standard practice for the government and indeed all of the ministries — for us, to protect the interests of the taxpayers whom we represent, not to reveal the financial details of an agreement between us and private parties that are providing services to government. Naturally we want to be in a position down the road to negotiate the best possible agreement we can to ensure that we are dealing with very competent parties in a very cost effective manner.

MR. LOVICK: Well, I guess this is a rhetorical question rather than a direct one, though I certainly extend an invitation to the minister to answer it if he wishes. If these are such good deals, if the public is doing so well, why aren't you anxious to tell us about them? Why aren't you anxious to show us the deals, so we can check, compare, feel good, feel vindicated, and say: "Ain't things lovely"? Why are you reluctant? That's the obvious question. But as I say, that's rhetorical, so let me come now to the more direct one. You can pick it up in a minute if you want.

The minister assured taxpayers: "The bottom line is that we will pay less." I will give you the reference for that, Mr. Minister, if you want. It comes from a statement in the 100 Mile House Free Press, dated January 25, 1989. You have vowed highway costs will be cheaper, and you are quoted as saying that we will pay less. That was your commitment, which was going to be the justification for the process. Do you stand by that commitment, Mr. Minister?

[ Page 6756 ]

HON. MR. VANT: Yes, the statement was that we'd be paying less than if we were continuing to do the road and bridge maintenance ourselves.

I want to further say, for the information of the hon. first member for Nanaimo, that of course all of these agreements between the government and the contractors are subject to audit by the auditor-general. As you can see in his report, we are certainly achieving value for the taxpayers' money that we are spending.

Interjection.

HON. MR. VANT: No, no. There is an actual audit by the auditor-general. Surely that should satisfy the hon. member opposite. It is normal government practice, as I said earlier, no matter which ministry is involved, not to reveal the specific details concerning the financial aspect of an agreement, in order not to put us in a very precarious position, as down the road we'd be entering into negotiations in very properly achieving contracted services at the correct price.

MR. LOVICK: I take it that that rather detailed answer was a yes. This was an affirmative that you do stand by the commitment that service will cost less? We will pay less? I notice the minister is nodding, and I will take that as a given.

Let's try another direct question. The minister has repeatedly as well offered assurances that service standards will not decline under highway privatization, and he points to the service standards themselves to support his position. What the public wants to know, of course, is whether the ministry in these 28 contracts has purchased the same quantity of service in the period of 1989 to 1992 as the ministry crews carried out in the period of 1982 to 1987.

HON. MR. VANT: Yes, absolutely — not only the same quantity, but for sure the same quality, if not improved quality of service.

MR. LOVICK: I have another direct question then. If you make that claim, Mr. Minister, are you willing to produce the schedule of quantities so that the public may check and compare? Are you prepared to release those — not the details of the contracts specifically, but rather the schedule of the quantities?

HON. MR. VANT: The precise standards which are available very clearly specify the obligations and the amount of services to be rendered. As I indicated in my initial speech, part of the tendering process involved the road inventory and the bridge register, for example, in each of these contract areas. It's quite specific.

MR LOVICK: Let's look at the document that you tabled and the information that you provided. You've given us the commitment that we won't have a reduction in service, and that we will be paying less. Assuming that the service has remained the same — in other words, that there have been no cutbacks in service — the figures you released suggest that the public is paying about 48 percent to 50 percent more for services than they were when those services were delivered by ministry crews.

Let me show you how. I should have brought an extra copy of your document; this is your information. We reached the conclusion in this way. First we use the information supplied by the ministry for the period 1982 to 1987. We have all that information, of course. We then calculate the average spending per contract area. That becomes the first figure for a period from '82 to '87.

Second, we take the average obtained for '82-87 and inflate it by a factor of 5 percent per year, just as the minister recommended when he referred to appendix H of the budget. As I say, 5 percent per year for the projected annual average determined for each of the three years to get the projected annual average for those three years covered by the contract '89-92. We then take the contract figures for the privatized maintenance contractors, the ones listed in the Coopers and Lybrand report, divide that by three — that's a fairly simple matter — also inflated by 5 percent annually, and we come up with some rather startling conclusions that indicate that the privatized maintenance.... Surprise, surprise.

Well, come on, Mr. Minister, don't smile. Hold it. We're talking about providing the service between '89 and '92, and we're using the same quantities, the same levels of service we've been guaranteed we're going to get, based on ministry figures. We've factored in inflation, done the calculus in terms of three years as opposed to one year, and the conclusions are very clear. The conclusions are very obviously stated that we are apparently paying significantly more. Do you want me to quote you some? Do you want me to give you some specific examples?

AN HON. MEMBER: Why don't you do that.

MR. LOVICK: All right. Between '82 and '87 — let's take number 1 on the list; we'll provide you with the list — the annual average for South Island was $6,126,229. For the '89-92 estimated annual cost under public management, using your methodology for calculating private contracts, i.e., the 5 percent inflator, as recommended in budget appendix H, we get a different figure: $7,390,326. Then we take the '89-92 annual average under privatization, and we discover a figure of $10,126,351. The percentage difference between '89 and '92 under public management versus the private one of your system, based on your data, is a 37 percent difference. We do that with all those 28 contract areas, and we come up with a tremendous difference in cost between the public operation of some $169,848,000 versus some $250,560,510 under your system of privatized maintenance. That's done. It's not a complex analysis; I think it's a correct analysis. If you have difficulty with it, I would certainly like to know why.

[11:45]

[ Page 6757 ]

I will say to you now what I've said from the beginning: if you want to prove us wrong, go ahead. Show us the details of the contract; that would be the easiest way. Show us the contract quantities; show us where we're making the mistake; show me what's wrong with the mathematics of this. Don't, however, do what you've done before on a number of occasions, when you've simply said: "They don't know what they're talking about. They don't understand the figures." What's wrong with that analysis, Mr. Minister? I see you've got three of your staff. I'm sure you can provide me with an answer, and I look forward to hearing it.

HON. MR. VANT: Those are very interesting figures the first member for Nanaimo has mentioned. He's all over in terms of the years '82 to '87, and we'll certainly have a detailed look at them. But a question I have for him is: did he have all these figures he's been mentioning audited?

MR. LOVICK: They're your figures, for heaven's sake.

HON. MR. VANT: I would like to explain to him that after the 1987-88 costs were determined and the amounts audited and verified by Coopers and Lybrand, the figure produced was compounded by the inflation rate provided by Treasury Board. This inflation rate was 4.1 percent for the first year and 5 percent for the remaining two years of the contract As the first contract was not contemplated to come on line until September 1988 — and we were working with 1987-88 actuals — the first year was compounded for 18 months. Therefore 6.15 percent was added for the first 18 months and five percent for each of the remaining two years. The audited figure which you received in that Coopers and Lybrand document that I tabled the other day came out at $229.06 million after inflation, producing a projected ministry cost of $773.11 million for the three-year contract period. The contractor bids for the 28 contract areas produce a firm three-year contract price of $751.59 million; therefore there is a direct saving, between the projected government cost and the fixed contractor price, of $21.52 million. The hon. member opposite could certainly refer to that exact same figure on table H, which is in the Minister of Finance's report.

I'm happy to report at this time, of course, that all 28 contract areas are now signed and operational. So we have these audited and verified very firm figures, which compares.... Those inflation figures could, as time goes on, prove to be very conservative. Only time will tell. But our advisers tell us that this is a very reasonable inflation rate. Coopers and Lybrand did a very careful process in determining that all-important base cost, because if that is not verified and audited, then we don't have the necessary take-off point for an accurate comparison, which I know the member opposite is very anxious to have.

MR. LOVICK: In short, you aren't going to respond to those figures, the means of calculus. You're not going to say: "Here's what's wrong." You're just going to say: "Well, I'd rather not talk about those; I'd rather talk about Coopers and Lybrand. I'd rather talk about contract quantities that we know about and you don't know about, and you can't have." I want to talk about service levels and ask for your assurances that those are indeed the ones we used to have before.

I'm suggesting to you, Mr. Minister, that the process we go through is very straightforward and, I think, absolutely correct. We're talking about average cost. We used the same five-year period that you provided to the potential bidders which your ministry determined would provide them with a good base on which to know and calculate historical costs. We took your figures for an inflation factor. And even if we go with yours — which were what, 4.155? Let's assume we did 5-5-5; the difference is still not going to be that outrageously larger.

In short, I'm standing by this analysis. I'm saying that what we did, I think, on the basis of any kind of normal, rational evaluation, would lead one to the conclusion that we are paying more. Your answer is to say: "Well, let's look at what the auditor-general had to say about area 1." I am going to talk about the auditor-general's report; I have a number of questions about that. But I do not think, with all due deference, Mr. Minister, that you have in any way refuted the claim we're making. I would offer you, then, the opportunity to look at that calculus that we've Just completed, which I went through in painstaking detail. Tell me what's wrong. Where is it in error? What's wrong? It may not have the exactitude you would wish, sir, but certainly it is going to take us very close to the truth. And the truth, I think, is indeed evident: that we are, to judge from the evidence you tabled in the House, paying more.

HON. MR. VANT: Mr. Chairman, naturally I disagree with the member's last statement. We definitely are not paying more. But for sure we would be happy to review the hon. member's numbers, provided he gives us in writing his methodology; with this, we will certainly be able to show the errors in his method and dispel his figures.

MR. LOVICK: I'm very pleased to learn that, and I'm happy to inform the minister that I shall indeed be prepared to provide him with that information, if he is prepared to give me an assurance that when we next come to these estimates on Monday, he will give me a formal answer to that analysis. I am more than prepared to do that; the quid pro quo, though, is that I want an answer in return. Can he give me that assurance?

HON. MR. VANT: That would, of course, depend on exactly when we receive the written description of his calculations and his methodology.

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MR. LOVICK: This begins to take on the appearances of a pas de deux or something, this lovely dancing back and forth. I can assure the minister that I will get that information to his office within half an hour of adjournment.

HON. MR. VANT: Certainly we'll do our best to carefully consider his calculations. We've been willing to lay on the table of this Legislature facts and figures audited by a renowned chartered accountant firm that has an international reputation for being very competent to do that important work. As I have said, for the most part the auditor-general's report describes in some detail the privatization process undertaken by this particular ministry. I must say, as the minister responsible at this time, that I'm very pleased with his report.

MR. LOVICK: I see the lateness of the hour, and I would therefore respectfully move that this committee rise and report 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 11:55 a.m.