[ Page 6759 ]

CONTENTS

Routine Proceedings

Workers Compensation Amendment Act, 1989 (Bill 27). Hon. L. Hanson

Introduction and first reading –– 6759

The British Columbia Recycling Act (Bill M212). Mr. Harcourt

Introduction and first reading –– 6759

Oral Questions

Joe Borowski's incitement to blockade abortion clinic. Ms. Marzari –– 6760

Toxic fuel imports. Mr. Cashore –– 6760

Doman case. Mr. Sihota –– 6761

Chinese medicinal wines. Mrs. Gran –– 6761

Legal action against IWA officials. Mr. Sihota –– 6761

Condoms for prisoners. Mr. Perry –– 6762

Motions on Notice

Motion 42. Hon. Mr. Parker –– 6762

Trade Development Corporation Act (Bill 3). Committee stage.

(Hon. J. Jansen) –– 6763

Mr. Gabelmann

Mr. Williams

Mr. Clark

Hon. Mr. Vander Zalm

Mr. Miller

Mr. Kempf

International Trusts Act (Bill 18). Second reading

Hon. S.D. Smith –– 6781

Mr. Sihota –– 6782

Hon. S.D. Smith –– 6782

Statutes Repeal Act, 1989 (Bill 2). Committee stage. (Hon. S.D. Smith) –– 6782

Third reading

Tabling Documents –– 6782

Budget Measures Implementation Act, 1989 (Bill 5). Second reading

Hon. Mr. Couvelier –– 6782

Mr. Clark –– 6783

Hon. Mr. Couvelier –– 6783

Committee of Supply: Ministry of Transportation and Highways estimates.

(Hon. Mr. Vant)

On vote 72: minister's office –– 6783

Mr. Lovick

Mr. Kempf

MONDAY, MAY 15, 1989

The House met at 2:06 p.m.

Prayers.

HON. MR. STRACHAN: Visiting us in the precincts today, from the city with the lowest unemployment rate in the central interior and the highest per capita salary in the province, is the mayor of Prince George, John Backhouse. Would you please welcome him.

HON. MR. REID: Visiting us today in the House are some of the people who help pay some of the benefits into Prince George and other areas of the province. Would the House make welcome: Allen Price, member of the board of the B.C. Lottery Corporation; Guy Simonis, president of the B.C. Lottery Corporation; Vic Poleschuk, vice-president of the B.C. Lottery Corporation, from Kamloops; and Michelle McBride, executive director of marketing for the B.C. Lottery Corporation. Would the House please make these people welcome.

MR. GABELMANN: I have a couple of introductions today. First of all, there is a group of students –– 24 in all — from the North Island Secondary School in Port McNeill, here as part of the Fletcher Challenge tour. They are accompanied by teachers Nancy Bain, Rod Bain, Kathy Parker and Pat Parker, together with Fletcher Challenge reps Hans Grenander and Caroline Grenander. I trust I've pronounced those names correctly. I would ask the House to make these students and other visitors welcome.

Mr. Speaker, also in the House today is a constituent of yours and the mother of my legislative assistant, Mrs. Dulcie McCallum. Would the House please make her welcome.

HON. J. JANSEN: In the House today and visiting Victoria from the great constituency of Chilliwack are Jane and Casey Langbroek. Would you please make them welcome.

MR. PELTON: Hon. members, today it's a great honour and privilege for me to introduce to this House nine very talented musicians. These gentlemen are purveyors, in the very best sense, of Dixieland music, and those of you who have had the privilege of attending Victoria's great jazz festival will know what I'm talking about. But there's one thing just a little bit different about these gentlemen. They are here as living proof that music has no bounds of any kind at all. These gentlemen are all from Russia — from Leningrad.

Although I never studied Russian, I would like to read their names into the record. They are Oleg Kuvaitsev, Alexander Usyskin, David Goloshokin, Vladimir Voronin, Anatoli Chimiris, Boris Ershoz, Constantin Dyubenko, Alexander Skrypnik and Yuri Miroshnichenko. They are accompanied by Hermann Nieweler and their interpreter, Steve Boulay. Would the House make them really welcome, please.

MR. ROSE: On behalf of the opposition I too would like to welcome the visiting musicians from Leningrad, and I would like to tell the first member for Dewdney (Mr. Pelton) that it didn't sound like a group of musicians at all he was introducing; it sounded more like a hockey team. Anyway, if they play music as well as they play hockey over there, then I'm sure we're in for a great treat, I'm hoping to come over there to at least listen to one chorus of "Midnight in Moscow."

MR. LOENEN: It's always a delight to welcome constituents. On behalf of the Premier and myself, would the House please welcome Dolena Kirkwood.

MR. ROGERS: On behalf of our visitors from the Soviet Union, dobry vyechr.

Introduction of Bills

WORKERS COMPENSATION
AMENDMENT ACT, 1989

Hon. L. Hanson presented a message from His Honour the Lieutenant-Governor: a bill intituled Workers Compensation Amendment Act, 1989.

HON. L. HANSON: Mr. Speaker, this bill reflects what can be accomplished when labour, management and government work together towards a common goal.

The Advisory Committee on the Structures of the Workers' Compensation System was able to reach unanimous agreement on their recommendations. I would like to thank publicly the participants. The chairman was Donald Munroe, QC, and other members were Gordon Cameron, Oksana Exell, Ken Georgetti, Robert Hallbauer, Claude Heywood, Bernice Kirk, James Matkin, Jim Nielsen, Stan Shewaga, Glen Smale, David Weller and Len Werden.

The proposals of the Munro report have been accepted by government. Both employers and labour will be given a greater role in the development of policies, programs and procedures. A new independent 13-member board of governors comprised of labour, management and public-interest representatives will be responsible for establishing overall Workers' Compensation Board policy direction.

This bill represents a significant step in giving the main parties of interest a greater role in charting the future of the Workers' Compensation Board.

Bill 27 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

THE BRITISH COLUMBIA RECYCLING ACT

Mr. Harcourt presented a bill intituled The British Columbia Recycling Act.

[ Page 6760 ]

MR. HARCOURT: This important bill is part of the desire of British Columbians to go down the path of the three Rs, which is to reduce the waste we have, to reuse and then to recycle. This particular act takes new steps, by establishing a provincewide recycling program, to reduce garbage incineration and waste landfills that are threatening our environment. A B.C. recycling agency will be established to provide financial and technical support for curbside recycling in all B.C. communities. The agency will also take action to minimize garbage from non-biodegradable materials, which include styrofoam and plastic packing, and problematic waste such as tires, construction materials, motor oils and batteries. It will also encourage new B.C. markets and industries for recyclable materials. Lastly, it will encourage research on and development of environmentally sound packaging products and recycling technologies.

Bill M212 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

[2:15]

Oral Questions

JOE BOROWSKI'S INCITEMENT TO
BLOCKADE ABORTION CLINIC

MS. MARZARI: This is a question for the Premier, Mr. Speaker. Yesterday Joe Borowski indicated his complete contempt for the rule of law in British Columbia. He incited people to commit a criminal offence by blockading the Everywoman's Health Centre. He also supported you and your government. Do you concur, Mr. Premier, with Mr. Borowski's view that people should break the law to further their own personal view on the abortion issue?

HON. MR. VANDER ZALM: We do not support the counselling, or the suggestion, that people should break the law.

MS. MARZARI: That being the case, Mr. Premier, what steps are you taking to protect the public from the unlawful activities of these hooligans who are harassing ordinary citizens as they go about their business?

HON. MR. VANDER ZALM: I think we do from time to time find that people take very strong stands on issues they are very emotionally involved with, and we've seen it in this province and this country a number of times. Obviously in a democratic country people are entitled to speak their piece. I realize this, however, is a very difficult situation. I can recall it being debated previously in the House. Perhaps I might ask our Attorney-General (Hon. S.D. Smith). As a matter of fact, I might also ask the critic, the member for Esquimalt–Port Renfrew (Mr. Sihota), what his advice would be in a situation like this.

TOXIC FUEL IMPORTS

MR. CASHORE: My question is to the Minister of Environment. The minister said on the weekend that he doubted that fuels coming into British Columbia have been contaminated with toxic substances as they have in Ontario and Quebec. He also stated that the amount of toxins in diesel or gas fuels would be very small. Since federal officials have only just begun border checks, does the minister have evidence to support his contentions?

HON. MR. STRACHAN: We do. As a matter of fact, the fellow who blew the whistle on the New York State–Ontario problem, Mr. Porterfield, indicated that although he is of a suspicious mind that some of the contaminated or toxic elements could be mixed with fuels coming into British Columbia or western Canada, it is quite unlikely. He cited as his evidence the fact that those fuels would probably be coming from the state of California. California has for some time had the most stringent legislation with respect to handling toxic wastes. On the basis of that, he has said it is highly unlikely, and he is the one who has brought this to the media's attention.

For the benefit of the member and the House, since the story broke last week the ministries of environment, provincial and federal, have been inspecting all home-heating oil, which is not a big factor in British Columbia because we have that good, clean-burning natural gas — outside Vancouver Island, which is another movie. We've also been inspecting the supply route of diesel fuels and gasolines, and to date we have not found anything that indicates we have a concern; but we are still inspecting. Of course, as the member knows, Hon. Lucien Bouchard, the federal Minister of the Environment, has indicated that all border crossings will be inspected for fuels.

I thank the member for his question, and I can assure him and this House that we are being as diligent as we possibly can in terms of monitoring this very critical situation.

MR. CASHORE: A supplementary. How long has the minister known that fuels contaminated with hazardous substances might be being imported into Canada?

HON. MR. STRACHAN: It has been a concern for some time, only sort of at the rumour stage. Ministers of environment have discussed this because there was evidence that it was happening in the United States for U.S. distribution. We did not expect, though, that it would be coming into the Canadian market. Because of the supply system in New York, Ontario and the eastern states — which includes very small jobbers, a sort of industry regime that you don't see in western Canada — the possibility did exist and now, of course, has been uncovered. The suspicion that it was happening, particularly in the eastern United States for eastern U.S. consumption, has been around for some time.

[ Page 6761 ]

MR. CASHORE: A supplementary. It is interesting that the minister says there was some awareness that this might be happening, and we are all very concerned that actions apparently had not been taken to investigate the possibility with regard to British Columbia until just a day or two ago.

This contaminated fuel could be burned in our homes, in our neighbourhoods and on our streets. Is the minister prepared to take immediate action to test all fuels entering the province from every possible entry point — including Alberta and the Yukon — and to set up a squad of toxic cops to carry out random checks on the home-heating fuels being sold throughout the province, to test every commercial storage tank in the province to see if it is permanently contaminated with toxic substances and to check all outlets in the province selling fuel at below-market prices?

HON. MR. STRACHAN: That's quite a list. I would suspect that most of it is in place. If the member had listened carefully to the answer I gave about three questions ago, he would have known that all fuel coming into Canada is now being inspected by the federal government and has been for at least the greater part of last week.

In terms of the Canadian supply, the Ministry of Environment is investigating We do know refinery practices; we certainly know the refinery practices in British Columbia and Alberta. We know that cannot happen here. As I said earlier, we do not have the jobber market that exists in eastern Canada and on the east coast of the United States, so it's highly unlikely that the practice could be happening.

As I told the member in the House earlier, we are investigating with all our resources, and we are being aided by the federal Ministry of the Environment to ensure that this practice is not taking place and these toxic substances are not being burned in western Canada.

DOMAN CASE

MR. SIHOTA: Could the Attorney-General explain his ministry's decision not to call Bill Bennett as a witness in charges involving the buying of Doman shares?

HON. S.D. SMITH: Mr. Speaker, as that member who is presumably a practising lawyer knows, the issue to which he's referring is subject to a period of appeal — a decision for appeal by both of the parties. Therefore it would be extraordinarily inappropriate for me to answer his question.

MR. SIHOTA: We're not talking about anything that involves matters of appeal. We're talking about the Crown's conduct of the case and its decision not to call a witness who had information. Could the minister explain why, during the conduct of the trial, his ministry chose not to call that individual as a witness with respect to the buying. He wasn't charged with that offence. So why was he not called, Mr. Attorney-General?

HON. S.D. SMITH: Mr. Speaker, I'm not going to stand in the House and give this member the lesson he so obviously needs on the conduct of the case. Suffice it to say that my original answer ought to stand.

CHINESE MEDICINAL WINES

MRS. GRAN: Mr. Speaker, my question is to the Minister of Labour and Consumer Services. In light of the front-page story in Sunday's Times-Colonist regarding the abuse of Chinese medicinal wines, can the minister explain why access to these wines should not be regulated to the same extent as for other spirits that have equally high alcohol contents?

HON. L. HANSON: The authority for regulating the sale of those products does come under the general manager of liquor licensing. The issue was first raised with my ministry in 1987, and at that time we put forward some rules to the various people who are selling: that all products containing more than 1 percent of alcohol and which retail for less than $6 per bottle must be placed in the store in an area that is completely separate and is secure from public access; that all products containing more than 1 percent of alcohol shall not be sold to minors under 19 years of age; and that the products may not be sold to persons under the influence of alcohol or apparently under the influence of alcohol.

Each of these products is laboratory-tested as well as tasted within my ministry, and those that are deemed to be unpalatable to be drunk as such are not restricted from sale as liquors are in that sense. But if any members of this Legislature or others have an instance where there is a misuse of these or they are sold improperly by a merchant, if they would report those to my ministry we certainly would investigate in detail.

LEGAL ACTION AGAINST IWA OFFICIALS

MR. SIHOTA: Mr. Speaker, last week there was an incident involving IWA officials in Maple Ridge and the consequent laying of criminal charges against a number of those officials where there was a civil injunction in place mandating particular behaviour. In previous cases, of course, the Attorney-General has supported the notion of proceeding by civil injunction as opposed to criminal charges. Could he explain why in this instance criminal charges were laid and the government did not proceed in light of the civil injunction?

HON. S.D. SMITH: Again, that matter obviously is before the court, and the member ought to have some sensitivity to due process in our system. Nevertheless, so that he is not able to confuse the public, which frequently is his desire on these issues, the civil injunction to which he refers has been acted on

[ Page 6762 ]

and relates to the area around the location of the facility. The activities for which the investigating police recommended that charges be advanced occurred on the road a considerable distance from the site and followed a number of incidents on both sides of this unfortunate situation. There was evidence of the escalation of violence, which in their judgment required police intercession and their recommendation. The Crown then looked at those matters in the usual way, in light of the circumstances before them.

MR. SIHOTA: These individuals were detained in prison for about 18 hours and held in custody. Could the Attorney-General explain the reason for that rather inordinate amount of time in detention? What steps — if any — are being taken by the ministry to review the circumstances surrounding that detention?

HON. S.D. SMITH: The ministry is somewhat ahead of the member. They reviewed the matter some time ago, and his conclusions are as wrong as his questions.

CONDOMS FOR PRISONERS

MR. PERRY: I have a question for the Minister of Health. The preliminary results of a study in Quebec show that the AIDS virus poses a serious problem inside correctional systems in Canada. Last week the minister told us he is opposed to letting inmates protect themselves from this deadly disease by using condoms. What steps is the minister taking to protect the general population from the spread of AIDS when these inmates return to the community?

[2:30]

HON. MR. DUECK: Mr. Speaker, I think the member for Vancouver–Point Grey knows quite well what we have done in the area of AIDS education. If he would like to have the total itinerary of what we've done in that area, whether it's information sent to each household, through the health units, or education through physicians— which he's certainly familiar with — I can give him that information. However, as far as distribution of condoms in jails is concerned, that is the Solicitor-General's area of responsibility, and I have not counselled or recommended that they should do so.

MR. ROSE: I have a mild point of order to put forward. Recently we've seen a spate of government backbenchers asking questions that look almost as if they were planted. I wouldn't say they were.

Interjections.

MR. ROSE: Mr. Speaker, would you mind protecting a rookie from this very vicious crowd across the way? I was about to say that this is a time-honoured tradition, and the opposition backbenchers have a right to ask questions. That is not the point of order. It's the answers that bother me. It looks as if the minister has been given notice. The answers sometimes are of interminable length, indicating much research, and much more explicit and detailed than the answers we get when we spring a question on them — unless it is the Minister of Finance (Hon. Mr. Couvelier). These authored questions will continue, I have no doubt. I wonder if we could keep the answers a little more brief. They look like ministerial statements most of the time.

HON. MR. STRACHAN: If I could just respond to that.... Of course, Mr. Speaker, there is a policy of freedom of speech within this Legislative Assembly. I presume that all private members in this assembly are treated equally, which you do with fairness. In terms of the long and somewhat prepared answers, there is no doubt about that. The question posed to me, as an example, from the member for Maillardville-Coquitlam (Mr. Cashore), has been around for seven days now, and to be not prepared for it would be unacceptable. I had lots of notice that the question was coming. He's a week late, and what else would I be thinking about? It's a very serious issue. If the opposition House Leader wants us to apologize for being prepared, I'm afraid I can't offer that apology.

MR. ROSE: I was going to refer Your Honour to the point about brief questions and brief answers, but I'm not going to do that. All I can say to the government from this side is that I can't win 'em all.

Orders of the Day

Motions on Notice

On Motion 42.

That this House authorize the Select Standing Committee on Forests and Lands to examine, inquire into and make recommendations with respect to exemptions under Part 12 of the Forest Act and in particular, without limiting the generality of the foregoing, to consider:

1. the criteria and procedures for determining the availability of the exemptions pursuant to section 136 of the Forest Act; and

2. the conditions, fees and permits imposed pursuant to section 137 of the Forest Act; and furthermore, that this House authorize the Select Standing Committee on Forests and Lands to examine, inquire into and make recommendations with respect to the prices of timber bought, sold or traded on the Vancouver log market, and in particular without limiting the generality of the foregoing, to consider:

1. whether such prices represent or reflect the true market value of species for export or domestic use;

2. the suitability of such prices for determining the relative values of different species for the purpose of calculating stumpage payable under the Forest Act; and to report to the House as soon as possible, or following any adjournment, or at the next following Session, as the case may be; to deposit the original of its reports with the Clerk of the Legislative Assembly during a period of adjournment and upon the re-

[ Page 6763 ]

sumption of the sittings of the House, the Chairman shall present all reports to the Legislative Assembly.

In addition to the powers previously conferred upon the said Committee by the House, the Committee shall have the following additional powers, namely:

(a) to appoint of their number one or more subcommittees and to refer to such subcommittees any of the matters referred to the Committee;

(b) to sit during any period in which the House is adjourned, during the recess after prorogation until the next following Session, and during any sitting of the House;

(c) to adjourn from place to place as may be convenient; and

(d) to retain personnel as required to assist the Committee.

HON. MR. PARKER: Mr. Speaker, I move motion 42 standing on the order paper in my name.

Motion approved.

HON. MR. STRACHAN: Mr. Speaker, I have a couple of items to ask the House. I ask leave for the Select Standing Committee on Public Accounts to meet today at 3 p.m. while the House is sitting.

Leave granted.

HON. MR. STRACHAN: Secondly, pursuant to the motion just raised by my hon. colleague the Minister of Forests (Hon. Mr. Parker), I ask leave for the Select Standing Committee on Forests and Lands to meet at 2:40 p.m. today while the House is sitting.

Leave granted.

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 3.

TRADE DEVELOPMENT CORPORATION ACT

The House in committee on Bill 3; Mr. Pelton in the chair.

Section 1 approved.

On section 2.

MR. GABELMANN: I want to ask the minister to tell the House the reasons for establishing a board of not less than 15 and not more than 30 persons. What reasons does the minister have for reserving the right to appoint a board of such size?

HON. J. JANSEN: Obviously, to put in place a board, there has to be a fairly large representation from a number of standpoints. The first is that to get a quorum we need a fairly large board, recognizing that many of the members are in business and extremely busy, and getting committee representation and so on would be much more difficult if it was a small board. Secondly, and perhaps more importantly, we wanted to ensure, as much as possible, representation from the many groups around the province that represent industry and the various commercial organizations that promote industry and trade for British Columbia. It is a board taking into consideration those parameters.

I realize that a board of 30 members is perhaps seen to be unwieldy, but certainly it's very difficult, unless you have a fairly large board, to get that representation, not only geographically but also in terms of industry.

MR. GABELMANN: I wonder whether the minister would take a minute or two to describe what he sees as the role of the board. Is it a board that will be actively involved in administration of the corporation, or one that will have very much an arm's-length relationship? Just what kind of relationship to the administrative structure will this particular board have?

HON. J. JANSEN: The corporate board is a board of a Crown corporation and would have the responsibilities and duties of normal Crown corporations, particularly on a new trade corporation where we are developing policy and some of the initiatives that the corporation will be undertaking. I expect the board to have significant involvement generally, but also in terms of the board's audit, credit and executive committees. They would have a very close relationship with the staff, bringing forward policy initiatives.

MR. GABELMANN: One assumes that the board would be involved in making decisions about loans, loan guarantees or financial assistance of one kind or another that the trade corporation makes to potential exporters. Is that correct?

HON. J. JANSEN: The anticipated structure of credit granting is under review, but to focus for a moment on the loan guarantees and so on, the credit committee would make recommendations to the board. In certain situations the board would approve it, and following that, the credit committee would recommend to Treasury Board. Treasury Board would have some involvement in the larger loans.

MR. GABELMANN: Just to digress for a moment from my own line of questioning, the minister says Treasury Board approval would be required for larger loans or loan guarantees. What amounts are we talking about here?

HON. J. JANSEN: The entire question of limits will be addressed through the actual program when it is announced, We are dealing with Treasury Board, and they would like to see the same kind of limits as are now apparent through our Crown corporations. Suffice it to say there will be a strong control to ensure, first of all, that we stay within our budget framework, but also to ensure that the policy is applied consistently.

[ Page 6764 ]

MR. GABELMANN: In debate on second reading, we indicated support for the concept of this corporation but had very real concern about the fact that no section of the bill provides any real information about how this trade corporation is going to be run. I had hoped that during debate at committee stage we would be able to get some answers as to just how the corporation would be run, what kind of constraints would be in place and what kind of protection would be ensured so that the public— whose money it is, after all — is protected.

To go back to the line of questioning that I was beginning a few minutes ago, the board is going to be making decisions on approving loans, loan guarantees or assistance of one kind or another. The board is comprised of perhaps 30 business people. Presumably these are going to be people who are active in the export business. Presumably we are going to have a situation where theoretically, at least, 25 or 30 of the largest exporters in the province will be represented on the board of directors.

Does the minister not worry a little about the potential conflict of interest that will be involved in this particular situation with such a wide variety of representation, such a large group? No doubt, when a particular company's bid or application comes before the board, that director will absent himself, but we all know how these organizations work. They become cozy after a while.

I wonder what the minister's response is to those concerns.

HON. J. JANSEN: First of all, let me correct one statement. It is not the intention that on the board of directors we would have directors from large corporations in the province who already are in the export business and, certainly, are doing quite well without the assistance of the Trade Development Corporation. What I've said before is that the Trade Development Corporation would be focused on the small to medium exporters, and in fact the board of directors, when we do bring them forward, will be a board of directors who represent these small to medium-sized companies in the province who are exporting.

The matter of conflict of interest is what the member is speaking about. It's certainly of concern that where a decision is made, conflict of interest is not part of that decision-making process. We have in the bill, as you are aware — and perhaps we'll be speaking about it later — provision that the Company Act applies in terms of the board of directors, but further to that, to strengthen it, to bring forward a specific outline of conflict-of-interest guidelines for the board which will enhance the conflict-of-interest criteria that are outlined in the Company Act. There will be very clear guidelines, very clear targets in terms of conflict. Where there is a conflict, of course, it's required that the board member would absent himself.

[2:45]

MR. GABELMANN: What form would these conflict-of-interest guidelines take? Would they be included in another act to be presented to the House? Would they be included in regulations attached to this act? Would they be like the cabinet guidelines: simply just a statement out of the minister's office? How would these guidelines be developed, and how would the public be guaranteed that these guidelines would in fact be appropriate and enforced?

HON. J. JANSEN: First of all, as the member is aware, the guidelines or the requirements that are incorporated in the act are those that relate to the Company Act. We are working with the Attorney-General's department and with the board, and we will be announcing what those conflict-of-interest guidelines are so that the public is aware of what the strict guidelines will be.

It's not incorporated in this act because I wanted to have the ability to talk to the board and understand the concerns both from a public standpoint and from that of the Attorney-General, and bring those in through his regulations as far as the board is concerned.

MR. GABELMANN: If I understand the minister correctly, he is saying that he wants to talk to the board before he develops conflict-of-interest regulations. Just think about that for a minute.

It seems to me that a person accepting appointment to this board should know what the rules are before the appointment is made and accepted. I also think that before this Legislature provides carte blanche, this Legislature should have an opportunity to know what the rules are. How can we possibly pass a bill that includes a section establishing a corporation with up to 30 directors who have, as far as this Legislature is concerned at the present time, wide-open sesame? If we're talking about 25 or 30 — or up to that many —  small or mid-sized British Columbia corporations, these are just the corporations or businesses who will be in the market for financial assistance, for loan guarantees.

I'll come at it another way. I wish the minister would explain to this House, first of all, why he wants the people who are going to be in receipt of the money to be making the decisions about the money. Let's ask that one first.

HON. J. JANSEN: I'm wondering why the member hasn't — perhaps he has — gone through the Company Act, which is very clear in terms of the obligations on a director to disclose his interests: the director-liable-to-account section, 145 of the Company Act, and 146, and disclosure of conflict of office or property under section 147. Those are statutorily in the bill, and I have indicated to the member that we will be looking through that to determine if any other conflicts could arise that we should be aware of and that we could prevent from happening.

I'm surprised that he feels that I should have that all in my mind prior to going into the corporation — prior to developing our programs. As we go along, I'm sure that a lot of this information will become clearer, as well the necessity for us to have very clear

[ Page 6765 ]

and concise additions to what is quite strongly incorporated in the Company Act.

I forget the other question that the member had. Is it relating to the size of company? Oh yes, Mr. Chairman, it's coming back to me with great clarity now.

It was the question of the board making a decision on its own account, so to speak — members on the credit committee of the board making decisions on their own loan applications. Well, obviously that's not the case. They would be making decisions on loan applications in industry, generally speaking, and understanding the conditions that apply as far as export is concerned, the limitations that equity financing has and some of the concerns that the export community has. That's where we draw on the expertise and skills of the board and their experience and their ability to advise on the applications before them.

MR. WILLIAMS: Mr. Chairman, it's reasonable that some fundamental guidelines be in place from day one, so that people asked to sit on the board can determine then whether they can comply with the guidelines before they sit on the board.

The member for North Island (Mr. Gabelmann) is asking a simple, fundamental question that deserves a better answer than the amateurish performance we're getting from this minister right now. Mr. Minister, you might elaborate on the whole question of how much you're planning on lending and the kind of market niche you see that is not being filled currently by the private sector or the banks.

You say the credit committee will make some report to the board on the kind and the size of loans. What kind of stuff are you talking about? We want to know the numbers. You're talking about small to medium exporters. Okay, if that's what we're talking about, what kind of loan size are you talking about in terms of their needs? Maybe you could elaborate on how and where these are not being met in the private sector.

HON. J. JANSEN: Mr. Chairman, we're jumping all over the place, and the power and capacity of the board is discussed in section 3 of the bill. If the member wishes to jump to that section now, we could talk about that. I thought we were dealing with the other line of questioning that was previously raised.

It's the intention of the Trade Development Corporation to be involved in areas that the banks currently do not look after, and that's essentially pre-order financing — equity financing — to assess export operations. It is not to replace in any way what is being done through the banks; in fact, it's an export guarantee program. It will be complementing many of the organizations whose mandate from a federal standpoint is to assist in export opportunities as well. I'm talking about CIDA, EDC and the Canadian Commercial Corporation. Those are entities whose mandate is to provide export assistance. I see the corporation filling the niche that is currently not met by any of those corporations, and in fact assisting the exporters of the province to make sure that they have a fully covered operation and an opportunity to export their product.

MR. WILLIAMS: If it's equity financing we're talking about here, then we're talking about risk — presumably fairly high-risk financing that the banks won't touch. Is that the situation, Mr. Minister?

HON. J. JANSEN: As the member for Vancouver East knows quite well, being a corporate officer in a major credit-granting institution, any loan constitutes a risk. It's a question of collateral that concerns exporters and those who.... It's not only collateral; it's the conditions that many of the countries the exporters deal with impose on clients that are of concern to the exporters.

We see the corporation as very similar to the ones in Alberta, Ontario and many other parts of the world, where you guarantee assistance to enable the export transaction to take place. Yes, there is certainly a degree of risk, and as we announce our programs, we'll be applying some revenue measures to take that risk into consideration.

MR. WILLIAMS: Then is the minister seeing this as a profit-making institution?

HON. J. JANSEN: I would not see the corporation in its entirety to be self-liquidating. But as we develop those programs over time, some of them would certainly be self-supporting.

MR. WILLIAMS: Now the minister is saying that this is not going to be a profit-making or even a break-even institution; it's going to be an institution that loses money. Is that what he's saying?

HON. J. JANSEN: There are a number of components to the B.C. Trade Development Corporation. Its primary objective is to provide marketing assistance for our products worldwide and to provide a marketing arm for the ministry, essentially. We've done that, concentrating in six sectors of the economy. That's a very major part of the corporation, and we would obviously see charging for marketing initiative as very difficult, given that you have to focus the marketing on one particular client in order to charge that client. That has been going on for some time, and it's no different than what happens in other jurisdictions.

The other programs relate to export assistance. When we get into export assistance programs, some of them lend themselves to charging flat-fee rates. But again, operating through banks, credit unions and trust companies, the B.C. Trade Development Corporation is simply there in a guarantee role only.

MR. WILLIAMS: But if you guarantee a loan and the guarantee is called, that's it. It's the public's expense, isn't it? The minister nods his head.

Maybe the minister could advise us about his business plan for this corporation, Maybe that's the

[ Page 6766 ]

way to get the information we legitimately require in order to make some determination about this bill. What's the business plan in the first year and over five years, Mr. Minister, in terms of anticipated losses for this corporation?

HON. J. JANSEN: The losses of the corporation relate — as the member opposite indicated — to claims on guarantees relating to an export assistance program. The budget that we'll be talking about during our estimates reflects the claims we anticipate over time and the reserves necessary to deal with those claims. The estimates we've used in our budget, which will be coming on the floor of the House, we've determined by speaking to those who have very similar programs. It's very difficult to anticipate your expenditure from one year to the next; and of course, it relates again to the whole question of how you make your decisions. I know they have them in credit unions and banks.

We have a credit committee which reviews the exposure risks and makes recommendations to the board, so it's no different in that regard — except that the B.C. Trade Development Corporation would be in an area where traditionally none of the lending institutions have been offering their services.

MR. WILLIAMS: The minister avoided any reference to a business plan whatsoever other than referring to the estimates. Can the minister advise us if there is a report available for members of the Legislature on the business plan of the corporation for the first year and the medium term? And what maximum amounts are anticipated in terms of lending guarantees?

[3:00]

HON. J. JANSEN: The determination by the government to put the B.C. Trade Development Corporation in place came in July last year. As you know, in July last year we filed a paper called "An International Business Development Strategy for B.C." Included in that was the B.C. Trade Development Corporation. It outlined what we saw the role of the B.C. Trade Development Corporation to be, in three areas. There is a marketing strategy, and over time, as the board gives us the input, we'll be developing a marketing strategy plan. Already we've established a number of key areas where we see the marketing to proceed. The other two areas are those relating to some of the programs that will assist the corporation to address the types of programs and guarantees and so on that the member is speaking about. So there are three aspects to the corporation, and they were covered fairly extensively in the document I referred to.

I don't know what else the member wishes me to elaborate on. I certainly can answer his direct questions.

MR. CHAIRMAN: The first member for Vancouver East.

Interjection.

MR. WILLIAMS: I don't know if that will reassure me or not, Mr. Premier.

I'm still wondering about the maximum amounts, Mr. Chairman, in terms of initial guarantees. In a lending institution you would normally limit your loans relative to your equity position, so that you wouldn't loan beyond X percent of your equity in any lending exercise. Isn't there some basic rule of thumb for this corporation as well?

HON. J. JANSEN: I'm kind of surprised at that question, given that this member has a fair bit of seniority in this House and would know that the corporation is limited by virtue of its estimates in its budget. When the programs come forward, we outline in detail how we expect those new programs to function. The bottom line in any Crown corporation or ministry is that you're guided by what the estimates have produced. The estimates will be debated in the House. They are there for the member to look at. We can talk about those when the estimates are on the floor of the House.

MR. WILLIAMS: That's a good try, but you've got unlimited borrowing powers that commit the Crown.

Interjection.

MR. WILLIAMS: Sure you do. It's right here in the statute. They are absolutely limitless. Unlike B.C. Hydro, which is limited to merely $9 billion or $10 billion, they're limitless in this one. We've already gone through that burial routine for BCDC and BCEC. I shudder at the kind of funeral expenses for the Trade Corporation. When we get to it, I'm sure the member for North Island (Mr. Gabelmann) has some thoughts about limitations on borrowing and amendments in that regard. Surely the minister is aware that he has limitless borrowing powers here that are all outside estimates and the normal budget process.

HON. J. JANSEN: The borrowing powers are those that the Minister of Finance, through Treasury Board, enable the corporation to have. In the budget process there have been reserves and provisions for loan losses and guarantee losses. That is the criterion, the bottom line which the ministry must operate within. We cannot commit beyond what we anticipate the budget provisions will provide for as far as both of those write-offs are concerned.

MR. CLARK: I have some more mundane questions on section 2 for the minister. We have several specific problems with the bill, but I would like to deal with the ones that arise out of section 2, because that is one of my real concerns.

Thirty members on a board of directors strikes me as being way out of line. With all due respect to the minister, it's more like a club than a board of directors. It's hard to have a functioning board of

[ Page 6767 ]

directors approving decisions when you have as huge a gathering as seems to be contemplated in this bill, with no rationale or defence given by the minister today. I wonder if we could have some questions around the committee structure that seems to be envisaged.

Oh, the Premier is giving some advice; that may be some rationale. I would appreciate that, because we haven't had that to date.

The minister did say that a credit committee would be formed. I notice it's not in the bill. Perhaps we could talk about that committee. I'm sure the Premier is aware that when you have a big committee you actually have a smaller committee, which is the real committee, that ends up doing a lot of the work; you then have a big committee, to which you have to go to get everybody to approve it. It seems to be an inevitable, almost bureaucratic syndrome that when you get a small working committee they work, and then the larger they get the more difficult it is to have them an actual working board of directors.

Because this is an international trade corporation, you can't help but be a little cynical about it being a nice little perk for somebody, especially if there is any travel involved with this. A huge board of directors, you can put lots of your friends on — excuse me; you can put lots of people on — and they travel around the world at taxpayers' expense. We're concerned about that on this side of the House. As the member for North Island said, we support the principle of the bill, but we're really concerned about what would appear to be weaknesses in the bill, and not an articulated defence, not a tough enough defence, not a tight enough defence, one which gives us some assurance that this isn't open to abuse. Maybe with respect to specific questions, the minister could tell us how many of the members of the board of directors would be on the credit committee, how many committees of the board are envisaged, and how many people are likely to be on those various committees.

HON. J. JANSEN: Mr. Chairman, it's very difficult to be specific when you don't get specific questions relating to the general comments that the member indicated. As I said before, the reason we had a large board was to recognize the various geographic parts of the province. Recognizing that, we had a number of industry sectors that were extensively involved in export, and we wanted to ensure that they were very much part of this process as well.

I can't answer what the future will hold, but certainly current planning indicates we would have three committees to start off. As provided in the bill, the committees would be an executive committee, an audit committee and a credit committee. The reasons for each of those, I think, are quite apparent and quite necessary and, in fact, no different than most private companies and lending institutions. So it's not an unusual situation.

The executive committee is comprised of eight members; the credit committee, five; and the audit committee, five. Each one of those would draw on the expertise of those members, because I wanted to ensure that when the board was finally put in place it would have expertise from the financial community and the audit community, expertise that we could rely on in each of those sectors. That's what I perceive to be in place initially. Over time, if the board feels that other committees are necessary, I'm sure that they will be structured.

MR. CLARK: A private sector board doesn't normally have 30 people, but it does normally have three committees. So now we know that the real committee is the executive committee and that's where decisions will be made, and the others are there for whatever perks go with the job, I'm sure.

It contemplates remuneration for these members of the board. Maybe the minister could tell us what the remuneration will be, at least currently. This, of course, allows rates fixed by the Lieutenant-Governor-in-Council, which I understand. You wouldn't necessarily want to engrave in the bill in perpetuity an actual rate. But maybe you could tell us what the rate will be at the moment.

HON. J. JANSEN: Mr. Chairman, currently there is no rate. The nominees we want to put forward to the board of directors have not raised the issue. Certainly that's not in their minds, it being an important point to become part of the corporate board. Their contribution is to assist the province of British Columbia in developing its export community and its export potential, and the question of board fees has not come up, nor has it come up in any other discussions. I don't intend to raise it at this point in time.

MR. CLARK: Is the minister saying, then, that there will not be a per diem allocated at this time?

HON. J. JANSEN: Mr. Chairman, as I said before, we are covering expenses of the directors. The question of board director fees has not been discussed or brought up, and it's not my intention to do so in the foreseeable future.

MR. GABELMANN: We're dealing with the section to establish the corporation. One of the areas that I want to get more clearly established in my own mind is the relationship of this Crown corporation to the government. With respect to the 30 potential directors, roughly how many of these would be ministers or MLAs in category one and, secondly, public servants, people outside of the private sector?

HON. J. JANSEN: Mr. Chairman, it's difficult to say, obviously, before the board is put in place. It is my proposal that there would be the minister on the board of directors, the parliamentary secretary to the minister, and the president, who will be the deputy minister. That's it, as far as the public sector involvement is concerned; the rest is all private.

MR. GABELMANN: The deputy minister would be the president and CEO of the Trade Corporation;

[ Page 6768 ]

the minister would be the chairman, as they say in old-fashioned language, of the board; and the parliamentary secretary would also be on the board, in some capacity or other, as a member. That's the extent of the public sector involvement? The minister nods his head.

Mr. Chairman, I wonder if the minister might take us through the thinking, briefly, that led to the principle of having the deputy minister also act as the president and CEO of a Crown corporation.

HON. J. JANSEN: I think, many times, Mr. Chairman, we have situations where there is a redundancy of effort as far as a ministry and a Crown corporation are concerned in whatever field, because by the sheer nature of the Crown corporation, because it is a legal entity on its own, it would operate in a way that would see its own mandate perhaps differently than the ministry mandate.

Throughout the process of being minister, I have had a lot of concern about.... There are organizations in the community which essentially do very similar work to that which the ministry has historically done or is currently doing. It is my purpose, as much as possible, to eliminate that redundancy and work with the community groups to ensure that we in government don't duplicate what is being done elsewhere.

I have the same concern about this corporation. I wanted to ensure that there was a continuity of initiative, that there wasn't redundancy and that the left hand knew what the right hand is doing, given that the mandate of the corporation is marketing and that marketing is its primary goal. That plays such an important part with the rest of the ministry that I felt it important the administrative side be totally in sync — the ministry and the Trade Development Corporation.

MR. GABELMANN: I understand the rationale and the motivation of the minister and the government in respect of the close working relationship between the ministry and the corporation, and I can understand all the good arguments for it. We may well find as time goes on that it is a system which proves to be inoperable, that there will be some very real difficulties. I suggest that members of the House might want to keep a close eye on just how that works. It's not something that's done commonly, if at all, and I think it carries with it some very real risks.

[3:15]

If there is a full complement of 30 members, presumably there are 27 private sector or non-public representatives on the board. Is it the minister's intention that all 27, or up to that number — the remainder — come from and represent either manufacturing concerns, export companies themselves or their trade organizations? What kind of balance is there between the trade organizations or the industry organizations that might exist and the companies themselves, and what other representations will there be on the board? Will there, for example, be trade union representatives? Will there be academic representations and any other kind of representation on this board?

HON. J. JANSEN: Obviously, if you wished to ensure that every sector of our society and our economy were represented, the 30 people would probably have to be expanded to 300 or some such number. It's very difficult to ensure that all the interests of the province in terms of export development are represented. What I have tried to do — and will when we make the order-in-council — is ensure that the representation is that of the mining, forestry and tourism sectors, but also following through and making sure that a lot of those members, as they come forward, have had some liaison or interest with many of the organizations that also promote trade: the chambers of commerce, regional economic development commissions in the province and those types of things.

As the member can appreciate, it was a difficult task to determine what type of representation should be on the board. I would like to have a much larger board if I wanted to ensure that everything was met, but you obviously can't do that. I don't indicate that there will be 30 members to the board; in fact, I anticipate that the number will be less. But as much as possible we tried to ensure that the various economic sectors of the province were represented, given that we had a focused approach, that we realized there were only X number of dollars available and that we had, as much as possible, to focus our targets on the various sectors within our economy.

MR. GABELMANN: The minister anticipates that the number will be less than 30. I'd like to help the member confirm that anticipation by moving an amendment to section 2(1). The Chair has a copy of the amendment. It would change the wording, "a board of directors of not less than 15 and not more than 30," to read: "a board of directors of not less than 10 and not more than 15 persons." I will read the new section as it would read if it were amended: "There is hereby established a corporation to be known as the British Columbia Trade Development Corporation, consisting of a board of directors of not less than 10 and not more than 15 persons appointed by the Lieutenant-Governor-in-Council." I would so move, Mr. Chairman.

MR. CHAIRMAN: The table has had the opportunity to read the proposed amendment, and it certainly does not appear that this changes the intent of the bill before us, and so the amendment is in order.

On the amendment.

MR. CLARK: We've had no specific defence from the minister that gives us any grounds not to move or support this amendment. I think we on this side of the House can appreciate — I certainly can — the need for some kind of sectoral balance, but we have to guard against it simply being some kind of

[ Page 6769 ]

boondoggle, some kind of rewarding of friends of government, or some such thing. It seems to me this would be a nice board to get on, especially if there's any travelling. The minister can dole it out as some kind of perk. That's what we're concerned about.

We think 15 gives adequate range for the minister to appoint from regions and for some sectoral balance. We are not trying to be vindictive or anything else; we're simply trying to keep a tighter focus. As the minister said, it could be 50. If we wanted to try to get all sectors represented, it could be 300. We understand that, but that's not what boards of directors are used for. They're presumably used to help run an organization. We think 15 is more than adequate to do that. It's certainly larger, I think, than any other Crown corporation board in the province. Other Crown corporations — like B.C. Hydro, which has billions of dollars at its disposal — do not have 30-member boards of directors. Presumably the government tries to be balanced in terms of regions when making appointments to those boards.

We think this is an appropriate amendment which the minister should support, particularly in light of the fact that we haven't seen a specific defence to justify upwards of 30.

HON. MR. VANDER ZALM: I don't know how much research went into the suggestion of 15 and ten. It probably came up fairly quickly. I can assure hon. members that the ministry put a great deal of time into determining what the number ought to be.

Frankly, I would hate to see us arrive at a situation where we'll have sufficient numbers to give representation to the various groups that we want to see represented from the lower mainland and the lower part of Vancouver Island because they're handy and close to where much of the activity tends to be. This is why I could certainly support the number that was given by the minister in the bill, which would allow us to have representation from all parts of the province. This is not to say they could always attend all of the meetings. As the minister suggested, there could be a working committee — an executive — that would meet on a fairly regular basis, while the larger committee would possibly not meet quite as often.

I think North Island should have some representation. I think the Cariboo, the Kootenays, the Peace River country and all of those areas should have an opportunity to have some input, because we're dealing with something extremely major. This group will be part of developing a new strategy for this province in keeping with the goals of this government to diversify the economy. We don't want to be dependent on a single industry in some particular region or city in this province. All British Columbians, regardless of where they live, deserve a choice. They deserve a choice of job opportunity. I would like to see it for our people in all parts of the province.

What this government has been striving for is to see children continue to live with the family, with their friends, with the people they know, in places like Grand Forks, Cranbrook, Quesnel, Williams Lake, Prince George or wherever and not always have to migrate to the lower mainland or Victoria. Heaven forbid, if the NDP ever became government they would all be stored in towers here in Victoria as a part of the bureaucracy. Every day we hear another suggestion. What was it today? Today we had a toxic squad. I think somebody estimated this to be 10,000 people.

What I'm saying is, we don't want to deny our people in other parts of this province being a part of the tremendous potential that exists in this province.

Interjection.

HON. MR. VANDER ZALM: The second member for Victoria (Mr. Blencoe) says: "Why not 50? Why not 100?" That's typical of the NDP. They throw out these wild suggestions. Where did the number 15 come from? I don't know. I listened to the arguments put forth by the second member for Vancouver East (Mr. Clark), and I appreciate those. They're rational. He's certainly an intelligent member for whom I have respect. But right next to him sits the second member for Victoria. You spoil it for the NDP. You give people the assurance that socialism is taboo because there are those wild people in the group who make ridiculous statements. "Why not 50? Why not 100?" How dumb!

We've put a lot of work into this. We didn't just invent this overnight, as the NDP might do. It has taken a lot of preparation. The minister has come forth with an excellent recommendation that will give all of the groups and regions representation on the board. Regardless of where people live in this great country, they're all looking to British Columbia because we're taking that great leadership role and making things happen. More people are moving to British Columbia now than at any other time in the history of this province. People in Alberta, Saskatchewan, Manitoba and Ontario are looking to this province, because it is the place of opportunity. There's a diversity developing in this province such as we've never seen before, and we're seeing all regions of this province prospering. It isn't happening just in Vancouver East or Vancouver Centre; it's happening throughout the whole province. That's why this committee must be representative of all the regions of this province.

I would urge this House to turn down this irresponsible NDP amendment to change the numbers for no particular reason, except that they want to have something to say. By all means, do not accept the further amendment that might come from the second member for Victoria (Mr. Blencoe) that we change it to 100.

MR. GABELMANN: The Premier's comments about the alleged radical nature of the second member for Victoria (Mr. Blencoe) reminds me of what Social Credit members all over North Island say about the Premier in respect to his caucus.

I am going to make a few comments in response to the Premier, but I understand the member for Surrey-

[ Page 6770 ]

Guildford-Whalley (Ms. Smallwood) has introductions to make.

MR. CHAIRMAN: Shall leave be granted?

Leave granted.

MS. SMALLWOOD: Mr. Chairman, in the precincts today — I'm sorry but I think the elementary school has just left the gallery — are 43 grade 7 students and four adults from Riverdale Elementary School. They have a special guest with them from Quebec: Ms. Arseneault. I'd like the House to join me in making them welcome.

Interjection.

MR. GABELMANN: The Premier made an interjection which changed the level of debate, but I won't respond in kind — although I'm tempted — because if we do, we may well be on this bill the rest of the day and perhaps longer. I don't think that members are keen about having that happen.

I am interested in the Premier's response that it's necessary to have 30 people on this board so we can have people from various regions in this province. Even North Island will be represented, and presumably almost every community in the province will have an opportunity to be represented.

I can tell the Premier that when he directs his cabinet legislation committee, he might want to direct them to bring in amendments to the B.C. Ferry Corporation so that we can have representatives on the Ferry Corporation board from Port Hardy, Quathiaski Cove, Campbell River and every community where B.C. Ferries serves, because the same principle would apply.

If we're going to establish Crown corporations on this basis, we might think of amendments to the B.C. Hydro act as well, so that consumers of Hydro around the province and communities which are impacted so greatly by Hydro's activities in terms of dams can also have representation on the board of B.C. Hydro. We may as well have Crown corporations with 30 members on the board of directors in every case.

That kind of big government is something that we on this side of the House are not in favour of. We think that big government is the exclusive preserve of Social Credit in this province, and we want to reduce the size of government. Therefore we would like this amendment to pass.

HON. J. JANSEN: Mr. Chairman, obviously we can't accept that motion to amend.

I'm a little surprised actually that on the one hand the member said that we should enlarge all the other boards of our various corporations, and on the other hand, he makes a motion to reduce the size of this one. I'm not quite sure where they're going at this point in time.

I said before that we wanted to ensure that representation was throughout the province as much as possible. We also identified the key areas of our economy that we should represent on the board. We wanted to ensure that we had input from agriculture, fisheries, natural resources and a whole host of areas before we determined policy direction from the board.

[3:30]

The other thing we talked about — but it seemed to be overlooked in this amendment — is that the executive committee and the committees of the board sit far more regularly than the board. We look to the board for general direction and policy determination, but in fact a lot of the work would be done by the executive committee discussing in more detail the initiatives that we're putting forward.

We would be unable to support the amendment; we have a responsibility to the regions of the province to ensure that we're getting a balanced board recognizing all the interests of the various sectors of our economy.

Amendment negatived on division.

MR. GABELMANN: Continuing on section 2, Mr. Chairman, I'd like to move another amendment which relates to the question of the minister's role on the board of directors. The amendment would be a new section. I've suggested it be 2.4, and then renumber the others after that. It reads as follows: "The minister responsible for the corporation shall not serve as chairman of the board of directors."

MR. CHAIRMAN: The amendment is in order. It doesn't change the intent of the bill.

On the amendment.

HON. J. JANSEN: That amendment is obviously unacceptable. I talked about the need for us to ensure that there isn't a redundancy of effort and that there is good synchronization of effort for economic development from an international standpoint. I told the member that I felt it extremely important to have that communication link and that continuity of interest, and as such I cannot accept the amendment.

Amendment negatived on division.

Section 2 approved.

On section 3.

MR. GABELMANN: Just a clarification on this. The relationship of this particular corporation to the ministry is different from the relationship of other Crown corporations to the respective ministries or to the government itself. First of all, in the minister's mind is it fair to call this a Crown corporation?

HON. J. JANSEN: Yes, Mr. Chairman, it is a Crown corporation.

[ Page 6771 ]

MR. GABELMANN: Given that, Mr. Chairman, I assume that as a result of this and other sections of this bill and other acts it will have the same accountability to the Public Accounts Committee as any other Crown corporation.

HON. J. JANSEN: Yes, Mr. Chairman, it will have the same accountability.

MR. GABELMANN: Given the fact that most Crown corporations are not accountable in any regular fashion to the Public Accounts Committee, given that the committee meets only when the House sits, and even then not frequently, given the large number of Crown corporations in this province and given the particularly delicate nature of the funding and financial assistance being envisioned by this corporation, is it the minister's intention that there be any accountability process other than the Public Accounts Committee in order to be sure that the activities of the corporation are accountable in the fullest and fairest way?

HON. J. JANSEN: There are a number of control mechanisms, of course. The first and foremost, I guess, is the interest the auditor-general would have. He certainly has access to the corporation records and could at any time wish to do a review of any of the programs the corporation was involved in, That's certainly within his mandate. Secondly, the corporation, through its auditors, would also have that accountability. But the Public Accounts Committee can also, through their normal process, obtain information as it's currently doing from B.C. Hydro. It could obtain information it wishes in terms of looking at some of our programs and doing some review.

MR. CLARK: I have some real concerns about this section of the bill. This section allows grants to be given to export companies, loans to be given to export companies, loan guarantees to export companies. I remember the Premier, when he was running for leader of his party, talking about all these grants and loans to business and how terrible they were, and how he pledged to eliminate them. Here we have a bill which, I think, potentially expands dramatically the amount of money and assistance to business in British Columbia, particularly with respect to exports.

I wonder if the minister could comment. The whole thrust of this section appears to be a violation of both the General Agreement on Tariffs and Trade and the free trade agreement.

HON. J. JANSEN: Obviously, Mr. Speaker, we wouldn't put in place a corporation that would not be GATT-consistent, nor a corporation that would violate the provisions of the free trade agreement. The areas of interest the corporation has are as indicated by the member, but also again limited by the amount that our budget does give us as authorization. A number of the grant programs we are talking about are those that grant assistance to a company or group of companies that wishes to participate in a trade fair, for example, or trade mission. That's the kind of grant we would be talking about. It's not an outright grant that would place us in violation of any of the provisions of either GATT or the free trade agreement.

MR. CLARK: That's not what the bill says. The minister can say it's for trade missions. This says, "...make grants to an export enterprise to facilitate the export and sale of its goods and services." If I can use an analogy that I think the Minister of Energy (Hon. Mr. Davis) used, which by the way I think is apt when you are dealing with GATT, subsidies that are for broad social purposes may be acceptable in some respects, but using a rifle — I think that was the analogy the Minister of Energy used — to target a specific subsidy for a specific firm for any reason, particularly for export, is a violation of GATT. That seems to be precisely what is contemplated in this bill. If the minister can tell us that grants or moneys used in aid of exporting will be for trade missions, trade shows, visiting Switzerland, or whatever it is that the minister and other members of cabinet did, then clearly, in my layman's view, that doesn't appear to be a violation of any international treaty.

I'm concerned that this bill is very wide open. It seems to me that the way in which this section in particular is worded is specifically to contemplate money going to specific companies for specific exports. That's what appears to me to be a violation of GATT. I wonder if the minister could comment on that.

HON. J. JANSEN: Obviously we would not put in place provisions that would contravene GATT principles or be inconsistent with GATT rules. The grant program that we are talking about is a general type of assistance program to assist in marketing. It is not a subsidy to a product. It is not a subsidy to an industry that would essentially create an unfair situation for trade as far as another market is concerned. No, it's essentially there for market development and market promotions, such as trade missions, market research, travel for market development and that type of thing related to companies in the province of British Columbia. It is not an industry sector subsidy in a general sense that would lend itself to a challenge under GATT.

MR. CHAIRMAN: The member for New Westminster asks leave to make an introduction.

Leave granted.

MS. A. HAGEN: Thank you, Mr. Chairman, and thank you, members. It's not often that members of the student body of New Westminster Secondary School are able to visit the Legislature, so it's a particular pleasure to welcome 55 of them today with their teacher, Mr. Morris Knight, and two other adults.

[ Page 6772 ]

I might note that although there is a lively debate in this House, there is also a lively debate in one of our committees of the House, the Public Accounts Committee, just down the hall. If any of the members want to come and join us there, that's where I am going as a member of that committee, and they're welcome at that session as well.

MR. CLARK: The minister hasn't allayed my concerns, because what he is saying is not in the bill.

Interjection.

MR. CLARK: Well, you know, your comments regarding assistance in marketing, market research or travel.... None of that is delineated in the bill in any way. The bill is a broad one which allows you, it seems to me, to give specific subsidies to specific firms. The minister would have to concede that the bill allows that, whether or not it's contemplated. Will the minister agree that that is allowed under this section?

HON. J. JANSEN: The intention of the Crown corporation is to promote export, not to ensure that we are going to be in violation of GATT principles or GATT rights or the free trade agreement obligations. Obviously, when we are drafting this legislation or interpreting legislation, we would not do such a thing as to attract that kind of attention. It's very clear that it is the thrust of the corporation to responsibly address both those trade relationships.

MR. CLARK: Any grant, of course, that goes to assisting a company with market research, if it is market research which presumably would have been or should have been done anyway by the company, indirectly affects the price of that product and therefore is a subsidy. I don't know how you can cut it any other way.

Perhaps we could deal with loans, though, because the minister is saying that grants are to deal with marketing, market research, travel and the like, and are presumably therefore quite small and aren't directly a subsidy. They'd have to take that extra step which I've just done. But the loans clearly are. The minister can clarify that for me. A loan seems to me to be a loan specifically to enhance or to support manufacturing in British Columbia for export; therefore presumably it's a loan that the government of British Columbia will give that could not be given in the private sector for whatever reason — as an assistance to a company to export. I wonder how the minister gets around GATT provisions or free trade provisions in that regard when it comes to the loan question.

HON. MR. VANDER ZALM: Before the minister answers, perhaps I could — also for clarification — give my understanding of this particular section. As I read section 3(a), it says: "Make grants to an export enterprise to facilitate the export and sale of its goods or services." It is not to assist in producing a product at a lesser price, not to build buildings or to create branch offices or anything of that nature; instead, it is to facilitate export.

It is the intent, as I see it — Mr. Minister, you can clarify this further and it will certainly assist all of us in that regard — to make it possible for small industries to get into the export business. There are a lot of good services and products with small businesses that do not have the expertise or that initial resource to tap a foreign market. This is to assist strictly in that process, not to assist in some way to produce a cheaper product, not to build a building or to purchase a machine. Obviously if that were the reason, it would be GATT-able, and it would be contrary to the free trade. Instead, it is to assist or to facilitate the development of export opportunities for small businesses especially.

[3:45]

MR. CLARK: To the Premier. I think it's a fine distinction between facilitate and assist directly. I'll accept that explanation with respect to the grants. Maybe the minister — or the Premier, who seems to be keenly interested in this, and that's useful — could deal with the loan question. The loan question does appear to be a loan specifically to a company to enable them, presumably, to lower the price of their product for export abroad. Is that a distinction?

HON. J. JANSEN: No, again, it's the whole question of subsidization. It is not the intention of the Trade Corporation to subsidize. If we're talking about loans, we could talk about loan subsidies. In other words, would we put in place a loan at 4 percent when the going rate is prime plus two, or whatever it's going to be on the marketplace. It is our intention to work with lending institutions and provide guarantees at a fee. It is our intention that those loan rates not be subsidized. In fact, we would anticipate the client would deal directly with the bank in these commercial transactions.

We would not be in a loan subsidy situation. As such, it wouldn't be looked upon as being in contravention of GATT, because, in fact, we do not subsidize.

MR. CLARK: It seems to me that unless there's some attractiveness in the terms of the loan, one would suggest they might go to the private lending institution rather than to government. What's the assistance here? Why would you compete with the private sector to provide loans when the private sector can surely provide them? I don't understand. Unless there's something attractive, some hidden subsidy somewhere, why be involved in this business that presumably the private sector is doing quite capably at the moment?

HON. J. JANSEN: We covered this before. The reason the Trade Development Corporation is involved is to fill those areas that currently the private sector does not meet. We're talking about pre-order financing, export opportunity, equity financing. We're

[ Page 6773 ]

talking about those things that currently are not covered by the private sector. Again, we see our role not as replacing the private sector but as working with the number of organizations that are involved from a federal standpoint and also very much keenly interested in ensuring that export opportunities are achieved.

It's a complementary type of process, not replacing the lending institutions, not replacing the federal institutions that are interested, but really providing that middle ground: the ability to help all of them put a package together that will enable the exporter to export. I've dealt with them in private practice, and those that have any association with the lending institutions will know the most difficult part. You can have a letter of credit in hand or you can have some order in hand, but you have to get that financing in place that enables you to meet the order before it becomes a receivable or before it becomes inventory. It's really the difficult period.

That's where I'd see the corporation being involved in this initial period when you have an order in hand or a letter of credit in hand but are unable to process the order because you simply don't have the working capital or you don't have the financing in place that enables you to achieve that before the order is finally received.

MR. CLARK: What the minister is saying is that the banks and the credit unions are not today doing an adequate job in terms of financing these kinds of export businesses. Is that what the minister is saying?

HON. J. JANSEN: The reason the corporation has been structured is to assist the small and medium-sized companies. If you are a company with sufficient collateral, you can put that collateral at risk, or put that collateral forward, to achieve financing for some of your new exporting ventures. If, because you're developing your company and it's in a developmental mode, you're unable to put forward that equity position or put forward that working capital, because of needs through the rest of your organization, yes, the financial institutions cannot — will not, in many cases — put forward that type of financing structure. That's where I would see the corporation being involved.

MR. CLARK: So the answer is yes. Then I agree, for what it's worth to the minister.

Perhaps we could deal briefly with another aspect of this subsidy or assistance or facilitation or whatever you want to call it: equity financing. Does the minister contemplate using this corporation to take an equity position in companies, to assist them with further financing, say, from the private sector or the like?

HON. J. JANSEN: Mr. Chairman, if the member is talking about our taking an ownership position or taking a security position of equity, I'm not sure what his question is coming around to.

MR. CLARK: Either one.

HON. J. JANSEN: Both of them, he says now.

The act obviously enables the corporation to take an equity position if it wishes to do so. I would be very reluctant to take an equity position, again because I think the corporation's mandate is not to be an owner of business, or not to be an operator of business, but is there to provide guarantees and assistance in terms of export. I would not see that as happening.

MR. CLARK: Can the minister point to where in the bill it enables the Crown to take an equity position?

HON. J. JANSEN: Section 4 (2) (c): "to provide financing by way of loans to or purchase of shares...."

Section 3 approved.

On section 4.

MR. MILLER: I resisted the temptation to get up on section 3 to ask some questions in terms of the Crown stepping in with a Crown corporation. Obviously it's at variance with, and some would say contradictory to, current government policy, which has relied heavily on areas such as privatization, having the private sector fill these positions. I perhaps more appropriately should have asked that under section 3. It does strike me as somewhat strange that the government is taking this role of an active participant in the marketplace. It points to either a deficiency in the private sector or a desire on the part of government to be more active in the private sector. Perhaps the minister would comment on that.

HON. J. JANSEN: Mr. Chairman, the opposite is true. What has happened is that the marketing arm of the ministry has now fallen within the Crown corporation, as far as international trade is concerned. It is not there as a trading company but as a trade facilitator. In other words, we see our role really as providing assistance and coordination and not in an active way. I've answered that question before about taking equity positions. We don't see our way as being actively involved in the running of business. I'm very much cognizant of the criticism that could happen as a result. Our role is very clearly trade facilitation.

MR. MILLER: What you're saying is that we want to use the public's money, and use it for stimulating export business through a variety of means; as section 3 says, through making grants, through lending money, through the guarantee and payment of a loan or the interest. In other words, we're taking the taxpayers' money and becoming involved in an area of business. Presumably — I'll restate it — it's because the private sector does not fill that role. That

[ Page 6774 ]

would be, I presume, the only reason why the government would want to take the taxpayers' money and lend it and make grants with it and guarantee the payment of loans with it and forgive interest payments with it. It's the taxpayers' money you're dealing with. It seems highly contradictory, given the statements that have been made for the last few years, in terms of the political emphasis that the government has.

It strikes me that if you're going to get involved in the game, maybe you should be. If you've taken the first step — that is, to set up a Crown corporation to use the taxpayers' money — you then say you want to limit yourself. You say: "We don't want to become active participants. We don't want to take equity positions. All we want to do is loan or give away the taxpayers' money." There have been all kinds of schemes floated by many governments in Canada that have had that premise, and most of them have lost the taxpayers' money. The taxpayer has shouldered the burden, and if companies go under, well, that's the way things are and there go our tax dollars.

MR. CLARK: The Attorney-General (Hon. S.D. Smith) agrees with you.

MR. MILLER: My colleague the second member for Vancouver East tells me the Attorney-General is nodding and agreeing.

It would seem to me much more prudent, if you're going to become involved, to get in a little deeper. You've already put your foot in the water; you might have to go up to your waist. That always has some negative consequences, depending on how deep and cold it is.

I'd like to hear from the minister on that point, because as I pointed out, I think correctly, in second reading, there are many inhibiting factors in terms of export, not the least of which might be the corporate structure that runs our primary industries. I'm speaking particularly of forestry. I think it's been detailed adequately by a number of fairly objective sources that both concentration and control from outside the province have been inhibiting factors in adding value to our primary resources. For instance, the level of meaningful research and development done in Canada and British Columbia in forestry is virtually negligible. As a province blessed with enormous wealth in the form of natural resources, how do we get beyond the primary stage of making pulp and cutting dimensional lumber and into where we really have to go, given the constraints on our forest base — into the manufacture of products with a much higher value? What does the corporation intend to do in terms of playing some role with regard to that situation? Is the corporation prepared to undertake some decent research on that subject in British Columbia, particularly as it pertains to the forest industry? I see in clause (e) that you can "act as agent for and provide assistance to the government in the administration or implementation of government programs...."

Does the corporation intend to play a meaningful role in analyzing the situation we find ourselves in in British Columbia with respect to corporate structure and with respect to inhibiting factors on research and development, or are you simply going to sit back and wait for the submissions to come in and make the best decision you think you can make in terms of lending, granting or guaranteeing? If it's the latter, if you're just going to sit in a room periodically and say, "Yes, this looks like a good prospect; we'll lend or give them a certain amount of money," I don't think it's going to work.

If the conditions are there in the private sector, it seems to me that we would be doing more value-added work. Why isn't it being done now? It's a logical question to ask, given the size of our natural resource.

Are you going to dig a little deeper, or is it just going to be another scheme whereby the taxpayers' money is used to fill a void created by the private sector?

HON. J. JANSEN: Obviously the member missed my eloquent speech the other day when I introduced second reading. It was a great speech in terms of what the corporation was all about.

[4:00]

The approach is a very proactive one. Its approach in the natural resource sector the member is talking about, as a value-added wood product section.... We anticipate that we would talk to those in the industry, find out what market niches we can explore together, and work through the COMDP, COFI and other organizations — if you want to take that as an example — who identify export opportunities. That's the proactive side. From a reactive side, when a company, for example in Prince Rupert, says, "We have an opportunity here to export product X or product Y, and in order to do that we need some assistance on what the market is like, what the custom clearance is like, what we should be doing or not doing, and the experience of others of a similar nature in our sector," we would have the database that would enable the exporter to make a decision. We would also have people in the Trade Development Corporation who would be able to say: "Here is a program from EDC, CIDA" — or whatever it is —"and here is how we can meld that program with providing new direction in terms of exploring that market."

It's a very hands-on type of approach, but a facilitating approach. Our focus is not to become involved and not to tell business how to run business; we are really there in a facilitating role. There are two aspects, as indicated: the proactive and the reactive. I would see very significant strides being made in both those directions.

MR. MILLER: Maybe I can ask a series of short questions. It might be easier.

Is it the minister's intention under the corporation to do any kind of analysis of the subjects I have talked about, in terms of the corporate structure and

[ Page 6775 ]

the lack of research and development, and to make specific recommendations on that subject?

HON. J. JANSEN: It gets back to what our role is. Our role is one of trade development, not industry development. I don't see our role as getting involved in industry and finding out the underlying problems of that industry, and what should or should not be done from a government standpoint. That really relates to individual ministries or to areas Regional Development would cover. Ours is a trade-related function: to promote, encourage and facilitate trade.

MR. MILLER: Is the minister saying there's a wall between industry development and trade development?

HON. J. JANSEN: No, I am not saying that at all. There is no wall. I see our mandate as being clear and focused. If we wished to talk about all the other problems, then I would have to have a much larger corporation covering quite a number of areas that I'm not sure government is even skilled enough to speak about, let alone address.

As I've said before, the industry groups themselves can talk about and deal with issues that are unique to their sectors. I would hope we would take that information and relate it to trade development, but not so much as it's the province of the industry Obviously there is a communication link, but our primary mandate is one of trade development.

MR. MILLER: Has the minister read the federal booklets I made reference to in my speech on second reading? Have you read the latest Deloitte Haskins Sells analysis of the deficiencies, particularly deficiencies in research and development in the forest industry? Have you had a chance to be apprised of the recent federal study of the long-term development of the forest industry? Is the minister aware of the deficiencies in research and development? Is the minister aware that there is a connection between that kind of activity and success on the export market; that you don't just sit back and wait for cute little ideas to come along; that there needs to be a whole host and range of other programs undertaken by industry in order to get to the point where you are successful?

Are we just going to have 30 people doling out some $11 million of the taxpayers' money, or are you really going to get in and do some meaningful work to assist this province in getting to where it should be in terms of adding value to its natural resources?

MR. RABBITT: Mr. Chairman, I ask leave to make an introduction.

Leave granted.

[Mr. Rogers in the chair.]

MR. RABBITT: It's my pleasure today to introduce to the House 20 students from grades 10, 11 and 12 at Boston Bar Secondary, some teachers and a representative from Fletcher Challenge, which is hosting the class to Victoria to visit the Legislature. With this class is a special grade 12 student, Miss Dawn Davidson, who was chosen from the Hope district to visit China last year and had a very enjoyable time there. The class that is here today also visited Trenton, Nova Scotia on an exchange program and will be hosting that particular class in our beautiful province in the near future.

I would like to introduce the principal, Miss Joyce Rebb, teachers Kai Lerche, Geordie Webber and Mrs. Debora Dillon. The Fletcher Challenge rep is Mrs. Heather Campbell. Would the House please give these students and the adults accompanying them a very warm welcome.

HON. J. JANSEN: The question asked about policy matters or the industry sector concerns regarding the policies that exist for their industries, and how the corporation saw its role. As I said before, our role is.... Where those polices impact on export or import, are trade-related, certainly we would have concerns. But if it's a sector — for example, the forestry sector — that has a general industry concern, that would probably be dealt with through the Forests ministry. If the corporation had a concern in terms of how some policies relate to the free trade agreement, GATT or export opportunities, that would be dealt with from a different perspective.

Our role is to facilitate trade, and where general industry concerns relate to that, by all means we would have some impact. But I'm not suggesting that we would speak for the entire sector and deal with all of the policy problems and industry concerns, because it's not industry development we're concerned about; it's trade development.

MR. MILLER: I think you're going to have trouble.... Okay, so once you're up and running.... We have this hypothetical company in Prince Rupert. You've got your corporation and your board — whatever. Somebody has an idea, and they submit it directly to the corporation. Is that how the process is going to work? Maybe the minister could advise on that.

HON. J. JANSEN: We would have a sector officer, a director of that sector — natural resources being one of those.... He would speak to that director, and we would be able to advise him how much we could assist him in that Prince Rupert company wishing to export its product. He would utilize as well, to make sure.... We talked about the concern we had about continuity of interest. If there were trade policy questions or questions about market conditions through our overseas offices, that would all be integrated through the corporation and the ministry. The entrepreneur would come forward with his idea and his product, and we would provide technical, financial and any counselling service the company felt it needed to get that product on line.

[ Page 6776 ]

MR. MILLER: So in the final analysis, the company in Prince Rupert — we're using this as a hypothetical case — would not have to go, then, to the Regional Development minister to get approval for any loans, grants or guarantees.

HON. J. JANSEN: The primary consideration is that the buck stops here. If there were other ministries or programs involved, we would coordinate those to ensure that the person didn't have to deal first with this Trade Development Corporation and then with Regional Development or anything else. We would coordinate the programs that Regional Development had, to ensure that the client got all the programs available to him that we were aware of and all the assistance available to make his product marketable.

MR. MILLER: I listened very carefully to that answer, and I don't know what it meant. The minister could try again, I guess, or maybe I could rephrase my question.

HON. J. JANSEN: The question was: how are we going to ensure that the client company — and we're using the example of Prince Rupert — has access to the regional programs? What I said was that the director — maybe I'll be a little clearer — or the officer assigned to that particular company would ensure in making the contact that all of the available programs, be they Regional Development, CIDA, EDC, Canadian Commercial Corporation or whatever, were available to the client customer. He would be the person ensuring that all of this information was available and was passed through the various ministries; he would be the contact person, or mainly the contact person.

MR. MILLER: What particular regional development programs exist that mirror anything you're proposing in the bill? The question I asked is about a company, an entrepreneur in Prince Rupert, who perhaps wants to manufacture some value-added product out of wood. Presumably he or she would go the corporation, because that's the purpose of the corporation. That's why we're debating this bill.

The government feels that it's necessary to set the corporation up, because there is a void right now Those programs don't exist. So my question was pretty straightforward. The individual would have to deal with the corporation, and I asked whether that individual would have to get loan, grant or guarantee approvals to go through the regional development minister for that particular region. I got a pretty fuzzy answer back.

[4:15]

Are people going to be able to deal directly with the corporation or not? If the corporation feels that their idea is worthwhile, that the product they're proposing is worthwhile and that they need some assistance to get to marketing stage or whatever else in the area of expertise of the corporation, do they then have to be funnelled off through some regional development minister who has to give the stamp of approval before the corporation can act?

HON. J. JANSEN: Mr. Chairman, I'm not sure how many times I have to answer the same question. I've said that we would ensure the client is made aware of the regional programs applicable to the company. We would ensure that the client is not required to go from one ministry to the other to have access to those programs, and that we would act as the legs and the coordinating point to ensure those programs are addressed. Whether it's seed capital or whatever the program is, we would ensure that the client is informed of those programs and make them available to him.

MR. GABELMANN: Let me ask a related question. Perhaps it's not just related; maybe it's the same question in a different way. At the present time, if you apply for a lotteries grant, you have to go to the lotteries minister to get approval. But you don't get the grant until the regional minister has said yes to the grant.

When you apply for a loan guarantee or for some other assistance that's provided in this legislation, and you go through all the hoops, will the final approval be delayed by the corporation until after the regional minister has said yes or no to this particular application?

HON. J. JANSEN: When we're dealing with programs that are the responsibility of the Crown corporation, it is the Crown corporation's decision. When we're dealing with programs through EDC, Regional Development or any of those, obviously it's their decision. I said that we would ensure that the process is followed, and that our person would coordinate those applications.

If a regional program — for example, the seed capital program — were to apply to a client, we would ensure that the person responsible for the seed capital program was brought into the application process, and that the programs were funnelled through that particular client. But that would be the decision of Regional Development, of course, given that it's a regional development program.

MR. MILLER: I want to be certain of this so I can advise my constituents, once you're up and rolling, of what they have to do. They can get confused right now. I often use the services of the Federal Business Development Bank people in Terrace who have managed to computerize every known grant, loan and guarantee known to any government in British Columbia or Canada, so they can actually plug in requests to their computer and provide some fairly specific advice to people interested in getting into business. There is a plethora — and there has been — and I'm hoping this isn't just one more in the long line of those kinds of programs.

Obviously, I don't want people in my constituency to have to go through political screening in order to avail themselves of the assistance offered by the

[ Page 6777 ]

Trade Development Corporation. The only program that I know of is seed capital. There is no other regional program in terms of assistance to business that I'm aware of; that's it.

HON. J. JANSEN: You brought it up.

MR. MILLER: No, you brought it up. I didn't mention it; you did. If you had given me a straightforward answer to start with, we might have actually passed this clause by now. Sometimes the length of time it takes to pass a clause is in direct ratio to the clearness of the answers, Mr. Minister.

A client would not have to go through a political screening in order to tap into the services — the funding — that may be offered by the corporation; it's just business?

HON. J. JANSEN: I'm not sure that question deserves the dignity of an answer.

MR. CHAIRMAN: Order, please. Perhaps the members would respect the order and address the Chair with their comments.

HON. J. JANSEN: As I said before, I'm not sure that question deserves the dignity of an answer. Obviously that's not the case. It is a trade development corporation, and its board of directors is a private directorship in the private sector. I don't know why the question would be asked in such a way as to determine that the only way you get assistance is if you have some political connections.

MR. GABELMANN: On some days, that would be enough to keep us going for the rest of the afternoon, but we'll let that go — other than to say that the question is fair and appropriate because almost every activity of government now requires that people out there have to go through political screening before they can receive the benefits of government programs. Given the direction of the political screening as established by the regional ministries, it's entirely a fair question to be asked.

Continuing on section 4, I want to ask a question that might help to clarify just what this corporation intends to do. A few years ago, the British Columbia government assisted Cominco with the amount of some $50 million equity for some modernizing activity that they wanted to undertake. This was designed to ensure their viability to be able to export their product. Would section 4(2)(c) be used for the kind of share arrangement that was made with Cominco a few years ago? Is that the kind of activity envisioned?

HON. J. JANSEN: Not specifically. I think Cominco's initiative was to modernize their facility. As I said before, I do not envision the corporation becoming an equity owner through the purchase of shares However, it's also fair to say that the assistance to industry to enable export is provided in a general way in terms of legislation. It's very difficult for us to predict precisely what type of interest is generated for the company to address as far as policies are concerned. The answer to your question is no, the intention is to deal with that type of initiative through the legislation.

MR. GABELMANN: It's not the intention to deal with that kind of initiative in respect of an equity arrangement that the government took, or because of the large number of dollars involved, or because that's being a significant player in the economy? For what reason would the government not participate in something like that?

HON. J. JANSEN: The intention of the trade assistance of the corporation is project-related, in other words, dealing with a project for export of a specific nature. It would not be the intention of the corporation to assist in the general modernization of a facility to enable trade to happen; there are other programs available. As I said before, our mandate and role is, number one, marketing; and number two, having programs that assist in exporting a particular product, opportunity or service, and it's related to that product that we really have the assistance programs in place. It's quite a bit different from what you're talking about. Our focus by virtue of addressing the needs in our economy is on the small to medium-sized companies, not the very large ones which would have access to different programs and opportunities.

MR. MILLER: I have a great deal of difficulty at this point. I've tried to canvass what I think are some very important issues in terms of developing the economy in this province and some of the constraints I see. I have not been assured by anything the minister has had to say with respect to the Trade Development Corporation that we're really going to get into that in any meaningful way.

I was a bit offended by the minister's last response to my question, that he wasn't certain it should be dignified with an answer. I won't say the same thing. I see no accountability; I see just another boondoggle here of throwing a bunch of tax money into a corporation that doesn't seem to have very well-defined terms of reference. The minister hasn't been able to articulate that clearly — at least to me — or how it's going to benefit development in British Columbia in some of our key sectors. We've got a ballooning board and an opportunity for a boondoggle.

I didn't start out feeling that way about the bill. I registered my concerns under second reading, and I thought they were pretty valid. But, I'll tell you, I've certainly changed my mind since then. I think the taxpayers' dollars may not be well used by throwing them into this kind of weakly defined.... You know, the terms of reference of the bill — what the minister is proposing to do — are weak. The minister hasn't been able to explain to this House what particularly they intend to do. I think we're just going to see some tax money go down the drain. A lot of people take trips around the world, but very few benefits come

[ Page 6778 ]

back to the citizens of this province, who are out there working and paying the taxes for the money that you're going to use.

Sections 4 to 6 inclusive approved.

On section 7.

MR. GABELMANN: Section 7 is the borrowing powers section. Unlike the B.C. Hydro legislation, it doesn't say how much. May I ask the minister how much?

HON. J. JANSEN: The amount is zero. The only way the corporation can borrow is through the minister, with the authority of the Minister of Finance. So it's quite a bit different than some of the other Crown corporations. We have no borrowing authority until it's given to us by the Minister of Finance at such time as we need it.

MR. GABELMANN: Other legislation requires approval by the Legislature. As I understand it, the corporation could go to the Minister of Finance, ask for X number of dollars, have the minister's approval, and then the board could go out and borrow that much money. Is that right?

[4:30]

HON. J. JANSEN: I assume the member is referring to the Minister of Finance. The Minister of Finance would have to — within guidelines, of course; Treasury Board and cabinet.... As far as the corporation is concerned, it draws its authority through the current executive council delegation of responsibility.

MR. GABELMANN: I understand that. I understand also that the borrowing the corporation would embark upon would be borrowing from the government, as it were. The government would provide the funds; but if the government isn't flush that day, they would have to borrow the money, and I understand the Minister of Finance would borrow the money. But what limitations are there? I can find none in the legislation about how much that could balloon to at some day, should the Minister of Finance and Treasury Board and cabinet be in a good mood.

HON. J. JANSEN: Mr. Chairman, that's a good question. There isn't that upwards limit. Obviously, the limits are those that the executive council would enable. Through the criteria of the Financial Administration Act and the powers of the auditor-general, those would all be reviewed. The question is a valid one: there isn't an upwards cap in legislation.

MR. GABELMANN: Mr. Chairman, there are two concerns. One is that there isn't an upper level; and, secondly, there is no public accounting. There will be a public record but no accountability process, which you have in the Legislature. Every time B.C. Hydro wants to spend yet more money, they come to the Legislature for a debate about whether or not we should grant them another $500 million so they can build another dam or whatever it is they want to do. That process will not happen under this legislation. I have to register a strong expression of concern about both those issues: the fact that there are not specific dollars mentioned, and the fact that there isn't an accountability process through this Legislature.

Having said that — we could spend the next hour having a philosophical debate about that, and that's not my intention — I would like to get some idea about what thinking is going on within for the planning of this legislation. How much money are we talking about the corporation needing in this borrowing section? Are we talking about a few million dollars, tens of millions of dollars, hundreds of millions of dollars? What are we talking about in terms of this?

HON. J. JANSEN: The accountability, I guess, is talking about the reporting concerns the member has. The accountability is that because we are borrowing from government, if the corporation were to borrow, it would be reflected in the quarterly reports that show the transaction taking place. At that point it would be a public document and a matter for public record.

It's difficult to answer the question as to what I would see the upper limit to be. As I said before, we want to be flexible in reacting to programs. We have an export financing guarantee program whose drawdown in terms of those guarantees which will be covered through the estimates.... Any other programs are as a result of direction by the board and approval by the executive council. It's difficult for me to say it is going to be $1 million, $2 million, $5 million or $10 million. Having said that, I don't see that the drawdown of borrowing will be that significant. It will be minor — except for the export financing guarantee program, which will be covered through a separate announcement and covered through the estimates.

Sections 7 and 8 approved.

On section 9.

MR. CLARK: Looking at some other acts in respect to section 9, "Financial administration," I draw the minister's attention.... I'll just canvass a couple.

In the Ferry Corporation Act, for example, it's a similar section, eight or nine clauses. In the bill we are dealing with, subsection (5) says: "The corporation shall prepare for the minister, after the end of the fiscal year of the corporation. . . ." In the Ferry Corporation Act, instead we have: "The minister shall lay before the Legislative Assembly annually..." and then similar provisions. In other words, we have exactly the same wording in the Ferry Corporation Act, but in this bill it says it goes to the minister, and in the Ferry Corporation Act it says it goes to the Legislative Assembly.

[ Page 6779 ]

B.C. Buildings Corporation Act, exactly the same: nine subsections. In this bill before us we have eight; identical wording for the first four. But in subsection (5) in this current bill it says, "shall prepare for the minister," and in the B.C. Buildings Corporation Act it says: "The minister shall lay before the Legislative Assembly...."

Likewise in the B.C. Transit Act; a very similar financial administration clause. In this case it says: "The authority shall prepare for the minister as soon as possible . . . ." Later it says: "...shall be laid before the Legislative Assembly...."

Those are three examples of almost identical sections where it says that the financial statements of the corporation will be laid before the assembly. Yet this one says it shall go to the minister. I wonder if the minister could give us some rationale for that.

HON. J. JANSEN: The intention is that having received that report, I would file it with the Legislature.

MR. CLARK: Perhaps I will just get the minister to confirm that. You are saying that even though it is not in the bill — there appears to be a standard clause in every other Crown corporation act — you are going to follow it?

HON. J. JANSEN: The concern is that the financial administration of the corporation be made public. First of all, the corporation must have a firm of auditors report on it and report on the statements. As a normal course of operation, those statements would become public. In the final analysis, what the member is speaking about will happen; upon receiving the report the minister would file it in the House in the normal way.

MR. GABELMANN: I just cannot understand why that provision is not included in this legislation. The minister has not given us a reason. Does it hamper his ability to have the corporation conduct its affairs? What possible reason could there be for not having a requirement that the report and the financial statement be tabled? What possible reason is there for not having that in the act?

HON. J. JANSEN: The filing of the report with the minister would normally ensure that the minister responsible for the corporation would also file it in the House, given that the financial information act applies to the corporation and the internal auditor will have some interest in the corporation. The end result is the same: that the report will be tabled in the House as a normal ministry report.

MR. GABELMANN: There are still reports on shelves somewhere in this province that have gathered dust over decades because ministers have chosen not to file them with either the House or the public, given what the report might say, or given some fear.

I'd like to move an amendment, Mr. Chairman, on this particular point. It would be a new subsection 9(9), and it would read as follows: "The minister shall lay the report and the financial statement before the Legislature if it is then in session, and, if it is not then in session, within 15 days of the opening of the next session."

MR. CHAIRMAN: Thank you. One moment please while we just have a look at this.

The amendment appears to be in order. Would the minister wish to respond to this amendment? I'll have a copy run off for him if that's all right.

On the amendment.

HON. J. JANSEN: Mr. Chairman, I can't accept the amendment. The requirement through the Financial Information Act requires that where a member of the public wishes information they can request it. It is the intention that the corporation — because the minister is chairman, certainly — will file in the normal way. So I don't see any need to insert that requirement in section 9.

MR. CLARK: This is scandalous. The minister maybe could correct me if I'm wrong, but this appears to be the only Crown corporation in British Columbia that does not have to make an annual report to this Legislature. Is that correct?

HON. J. JANSEN: I can't answer that question, obviously, save to respond to the concerns of the B.C. Trade Development Corporation. I indicated that as part of my report to the Legislature I would report on the B.C. Trade Development Corporation.

MR. CLARK: The minister is saying that he's going to report anyway. Why won't you accept this amendment? It is simply not acceptable to say that a member of the public can go and look at the financial statements. You can't say both things. On the one hand, you're saying, "It's public information and anybody can go and look at it, and I'm going to table it anyway," and then on the other hand you're saying, "Well, we can't put this in the bill, because there may be some secret dealings or some financial information that shouldn't be made public." It's either one or the other, and if it's the former, then the minister should have no problem agreeing with this amendment.

It's simply not acceptable to bring in a bill which, we've already canvassed, has all kinds of broad generalities and loopholes, but then to say on top of all of that that we don't have to provide any financial statement to this chamber, and it's not in this bill. I think it's the only Crown corporation in British Columbia that does not have to file an annual report and lay it before the Legislative Assembly of British Columbia.

I'd like the minister to try to give us at least some pretence of defence as to why there doesn't need to be an annual report laid before this House.

[ Page 6780 ]

MR. CHAIRMAN: Shall the amendment pass?

MR. WILLIAMS: You've got to give some explanation, Mr. Minister, for not accepting this kind of reasonable amendment. This is to simply deposit with this Legislature and report formally to the Legislature for this instrument.

You have no borrowing power limitation whatsoever in this statute. It's virtually unprecedented in terms of a blank-cheque request for a rookie cabinet minister who has been quite unable to answer any of the most reasonable questions in the world this afternoon and now can't even deal with something as simple as filing a report with the Legislature. The level of incompetence in this administration.... To come from Public Accounts Committee, seeing the mess in scaling and revenues for royalty, and then to come into this chamber and see a request for a blank cheque for a rookie minister in a whole new agency of government, and then to have them say: "No, we won't file with the Legislature...." How much rope do you want, Mr. Minister?

MR. KEMPF: I wasn't going to get into this debate, but when I hear an amendment such as this brought forward in this House and then turned down by this minister, I know there's a contempt by the Premier of this province for the democratic process. I don't have to wonder about that. I only have to wonder about what the minister of state does in my own constituency. I know there's a contempt for the democratic process. I know there's a wish on behalf of the Premier....

[4:45]

MR. CHAIRMAN: Order, please. Mr. Member, please take your seat. We're discussing an amendment put forward by the member for North Island (Mr. Gabelmann). I'm afraid you're going to have to make your comments relevant just to this amendment at this time on this bill, and this amendment is pretty specific. If you'd like a copy, I will have one sent down to you. I think we'd like to deal with just the amendment at this time. Please continue.

MR. KEMPF: Mr. Chairman, I'll do that exactly. This amendment calls for the democratic process of an annual report being placed before the Legislature of the province of British Columbia; that's all it calls for. What are you going to do — report to the ministers of state as to what you're doing? All it calls for is the need for a democratic process.

I know the Premier of this province doesn't like democracy. That's what it's all about. That's what we've seen happen in this province for over two and a half years. That's why we've got people running around in my constituency thinking they're the MLA. That's all this amendment asks for — a democratic process — and the minister turns it down.

What have we been reduced to in the province of British Columbia? As I said before, I wasn't going to enter this debate. But I've seen enough of the undermining of the democratic process in British Columbia to last me all my life. If the minister turns down a simple request by the opposition of this province to lay before this Legislature — the democratically elected representatives of British Columbia — an annual report, then I guess I've seen everything.

HON. J. JANSEN: Mr. Chairman, perhaps for members to understand what the Financial Information Act requires.... "Every corporation shall, where requested by a member of the public" — "of the public" I assume means all of the people of the province of British Columbia — "provide a copy of the financial information statement prepared under subsection (1)...."

Subsection (1) outlines very clearly the statement of assets and liabilities, an operational statement, a schedule of debt, a schedule of guarantee and indemnity agreements, a schedule showing in respect of each employee earning more than a prescribed amount of the total remuneration, a schedule showing the amount to pay to each supplier and a consolidated total of all the payments.

I'm not sure what else the member is referring to, but essentially I would feel that the Financial Information Act covers the requirement to report to the public in detail.

MR. KEMPF: Mr. Chairman, the minister misses the point completely. All other legislation in this province calls for the laying of the information of which he speaks before the duly elected representatives of this province — this Legislature. Why are we bringing in legislation at this time that doesn't follow on the heels of that which has been brought in in the past requiring that democratic process? It's simple. Why would the minister turn down that request?

Members are not asking for any great change to the intent of the legislation in Bill 3 — just a democratic process whereby that information, although it may be available to gosh knows who, is made available officially to the people in this chamber who have been duly elected by the people of this province. I don't think that's too much to ask.

MR. GABELMANN: Members on this side of the House took the view that the principle of this legislation was right and appropriate. We expressed some concern about the looseness of the legislation, the loopholes, the lack of limitations and the lack of accountability. We expressed those concerns particularly because this province no longer has a Crown corporations committee to review the activity of Crown corporations.

This is a very limited measure, given the range of concerns that exist about this legislation. We are simply asking that the report prepared by the corporation for the minister — which includes, or should include, more than what is referred to in the Financial Administration Act — be tabled with the Legislature. It's as simple as that. Why not?

The minister says he will. I remember Wesley Black having reports in his office for years and not tabling them, because it would have been disadvanta-

[ Page 6781 ]

geous to government policy. The minister's suggestion that he will, as quoted in Hansard, isn't binding. The only consequence of that is a political fallout of some proportion, probably not nearly enough. There should be a requirement that this Legislature be allowed to have the report.

If the minister is concerned about the opposition playing some games with this, we're not. We took the wording out of existing legislation that other Crown corporations and responsible ministers are required to adhere to. There's nothing hidden; there are no secrets, The language is straightforward and clear, borrowed from other legislation. This Legislature must have the ability to examine the activities of agencies of government that are spending public money. We don't have those mechanisms properly in place.

This doesn't even begin to address the concern we all have about accountability. The crazy thing about this debate is that it's in the government's best interest to have this requirement, so that the minister does table it and is required to table it. Given the few minutes we've had on this, I'm sure the minister's had a chance to rethink it and is now prepared to accept this amendment. I'll sit down in anticipation of that.

HON. MR. STRACHAN: We've been kicking this one around in the last couple of minutes. At first blush it doesn't appear to be all that undesirable to the government. However, I think it might be a good idea if the ministry had a chance to look at it, and had the amendment as proposed by the member for North Island looked at by legislative counsel.

On the basis of that, I think what we'll do, pursuant to standing order 84(2), is postpone this clause, carry on with the rest of the bill, and perhaps at a later time — maybe tomorrow morning — quickly deal with this amendment as proposed and offer further debate, whether we accept it or reject it. I think we're just going to ask for some time to have legislative counsel look at the member's amendment, and stand this clause down. The bill, of course, will not be reported complete until such time as that's done. We will make progress with the rest of the sections for today's purposes.

MR. CHAIRMAN: If that's agreeable to the members of the House, so ordered.

Sections 10 and 11 approved.

On section 12.

MR. CLARK: I won't belabour this point, but I must say that I have some concerns that arise out of recent experience, particularly with the B.C. Enterprise Corporation. The ability to transfer Crown land to a corporation can effectively hide very easily losses attributable to the corporation. That's in fact what happened with BCEC. I would ask the minister this briefly, but it appears to me very unlikely that any Crown land would be transferred to an international trade corporation. I would just like some assurance that that's the case.

HON. J. JANSEN: The intention of this section is really to deal with the equipment and furniture between the ministry and the corporation. There's no real property involved.

Sections 12 to 16 inclusive approved.

Title approved.

The House resumed; Mr. Pelton in the chair.

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

HON. MR. STRACHAN: Mr. Speaker, I call second reading of Bill 18.

INTERNATIONAL TRUSTS ACT

HON. S.D. SMITH: We're going to have join us on the floor of the House momentarily, for second reading, Dr. Donovan Waters, who is one of perhaps three or four or five real experts in the world on the law of trusts. Dr. Waters is a person who has been associated very closely with the international conventions that have led up to the presentation of this piece of legislation on the floor of the House today.

I have the honour to move second reading of Bill 18, the International Trusts Act. In moving second reading, I wish to describe to the House some of the background and major features of this bill.

The bill adopts a uniform statute of the Uniform Law Conference of Canada. The uniform statute is based upon the Hague convention on the law applicable to trusts and their recognition. Canada is a signatory to the Hague convention. The object of the convention is to overcome problems between common-law jurisdictions such as our own, British Columbia, which recognize the legal institution we call a trust, and those civil-law jurisdictions such as France or Italy which do not recognize the legal notion of the trust.

It does so by providing a set of rules whereby a court in a civil-law country can recognize a trust and ascertain the rules of law by which the trust shall be interpreted and applied. This bill will protect the legal interests of British Columbians where the beneficiaries, the trustees or the property of a trust are in a country which does not recognize the trust. This bill will help to simplify and clarify international business dealings and will therefore aid in international trade.

[5:00]

The bill complements other provincial initiatives such as the international financial centre in Vancouver, the Asia-Pacific initiative and the B.C. International Commercial Arbitration Centre. This act is one more initiative which we believe will enhance British Columbia's position within the framework of international economic activity.

[ Page 6782 ]

[Mr. Speaker in the chair.]

MR. SIHOTA: I certainly want to welcome Professor Waters — as I know him — to the Legislature. I never did take his course on trusts. I don't know if I should say why I didn't, but I think it's safe to say that because of scheduling I never did get to take it. So I certainly can't hold myself out as any great expert on trusts, but during the time I was taught by the current dean of the law school at UVic, Dean Neilson, in terms of statutory interpretation and drafting of statutory provisions, we spent much time talking about the need to have uniform legislation throughout the country and in fact the commonwealth, when it was appropriate.

From all I can gather about this legislation, it is welcome, long overdue and would certainly go a long way toward resolving problems that individuals have with trusts in jurisdictions here and in foreign jurisdictions. I would think that Professor Waters has had more than just a little bit to do with this legislation, and as I always bowed to his wisdom in law school, I shall bow to it again.

I would say to the Attorney-General that the government can expect no problem in terms of our support for this legislation.

HON. S.D. SMITH: I move the bill now be read a second time.

Motion approved.

Bill 18, International Trusts Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. STRACHAN: I hope the Whips are listening, and summoning the Minister of Finance (Hon. Mr. Couvelier), because I call second reading of Bill 5, Mr. Speaker.

MR. SPEAKER: On a point of order, the opposition House Leader.

HON. MR. STRACHAN: I'm sorry.

MR. ROSE: You don't have the floor, so how can you be sorry? You're only sorry if you have the floor My name was just called, and I responded with alacrity and anything else I could think of. I just wanted to point out to the substitute House Leader of the government, the rookie from Prince George, that he missed one of the lines in his list he has before him.

HON. MR. STRACHAN: I regret that. My apologies. You win one and you get on a real roll. I stand corrected, and I would now like to call committee on Bill 2.

STATUTES REPEAL ACT, 1989

The House in committee on Bill 2; Mr. Rabbitt in the chair.

Sections 1 to 3 inclusive approved.

Title approved.

HON. S.D. SMITH: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 2, Statutes Repeal Act, 1989, reported complete without amendment, read a third time and passed.

Hon. Mr. Reid tabled a report of the B.C. Lottery Fund contributions in 1987-88.

HON. MR. STRACHAN: I call second reading of Bill 5.

BUDGET MEASURES
IMPLEMENTATION ACT, 1989

HON. MR. COUVELIER: Mr. Speaker, this bill is an omnibus bill containing legislative amendments required to implement the budget initiatives. The B.C. Transit Act is amended to increase the autonomy of municipalities and regional transit commissions which are required to share part of the annual operating deficit of public transportation systems. Currently these municipalities and regional transit commissions may impose a tax on gasoline and diesel fuel to help recover the local share of transit costs. This amendment increases their autonomy by allowing them to impose the tax on gasoline only, diesel fuel only or both fuels at their discretion.

The budget stabilization fund was created as part of the 1988 budget to enable the province to stabilize its operating revenues. The fund receives money from the general fund during years of unanticipated or unusually high revenue. This money, together with income earned on it, is available for transfer back to the operating revenue of the province in times of revenue shortfall. On March 31, 1989, the balance in the fund is estimated at $1.4339 billion. A further $125 million of interest is expected to be earned in the fiscal year 1989-90. It is the opinion of the government that a fund balance of approximate $1 billion will be sufficient to maintain services should the provincial economy experience a major slowdown. For this reason, the government is proposing that $500 million be transferred from the budget stabilization fund to the general fund during the fiscal year 1989-90.

The Correction Act will be amended to convert the corrections work program account from a special

[ Page 6783 ]

fund to a special account. This amendment is consistent with the objectives of the Special Accounts Appropriation and Control Act 1988. This is a minor technical change and will not affect the operation of the program.

Provisions of the Hotel Room Tax Act which provide for the assessment of interest on unpaid or unremitted tax will be clarified.

The Industrial Relations Act will be amended to convert the productivity fund from a special fund to a special account. This amendment is consistent with the objectives of the Special Accounts Appropriation and Control Act, 1988. This is a minor technical change and will not affect the operation of the program.

The Ministry of Human Resources Act will be amended to create a new special account to undertake the social housing activities of the government. This special account was formerly part of the Crown lands special account which was under the joint administration of several ministries.

The new social housing special account will be under the sole administration of the Ministry of Social Services and Housing. The opening balance of the new special account at April 1, 1989, will be $20 million. The balance of the Crown lands special account will be reduced by the same amount on that date. Other minor amendments are included in this section to reflect the change in the name of the ministry following the government reorganization of 1987.

Mr. Speaker, the Softwood Lumber Products Export Charge Compensation Act provided British Columbia lumber producers with a rebate of the federal export charge on lumber shipped to the United States between November 1 and December 1, 1987. Compensation was provided because lumber producers during that period were subject to both the federal export charge and higher stumpage charges which were subsequently amended as replacement for the export charge under the memorandum of understanding. Reimbursements of the lumber export charge amounting to almost $1 million have been made to the lumber re-manufacturers who submitted claims. As no further compensation claims are anticipated, the provincial act can now be repealed and the special account created by it can be terminated.

Mr. Speaker, I now move second reading of the bill.

MR. CLARK: As the minister correctly points out, this is an omnibus bill; it canvasses a variety of matters. I do have some concerns which I plan to canvass in committee stage. I might even make a speech or two in committee stage, but I won't make it in second reading. With that, we'll move on.

HON. MR. COUVELIER: I look forward to committee stage, Mr. Speaker. I now move second reading of the bill.

Motion approved.

Bill 5, Budget Measures Implementation Act, 1989, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

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

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

ESTIMATES: MINISTRY OF
TRANSPORTATION AND HIGHWAYS

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

HON. MR. STRACHAN: I'm sure the minister is arriving shortly to hustle in and move right into the debate. Here we go.

In the meantime, I'd like to say that I've got the best bridge in B.C. in my riding.

MR. ROSE: I didn't know whether the minister intended to respond to some of the questions posed the other day by my friend from Nanaimo. If he does, I'd be very pleased to yield the floor to him. Otherwise, I can make my own representations.

HON. MR. VANT: Yes, I'm very pleased to respond and carry on from where my hon. critic and I left off just before lunch on Friday.

I'm going to make reference, of course, to the press release dated May 12. The hon. member for Nanaimo held up a paper and waved it in front of our noses indicating it would prove that the people of British Columbia were going to pay $80 million more per year for road and bridge maintenance under the private sector. We could not see the document from this distance, but we did agree to review the paper and provide a response today to the hon. member's question.

[5:15]

It turns out that the paper the hon. member was waving was in fact a news release issued on May 12, 1989, by the New Democratic Party. The news release stated that British Columbians will be paying about $240 million more over the three years of the private contracts than they would have been had the service remained in public hands. This statement is totally without foundation, and the calculations — I want every member of this House to know — are flawed beyond belief.

The hon. first member for Nanaimo (Mr. Lovick) — or perhaps I should say his research group — made two gross and fundamental errors in their calculations. The first error was the fact that the figures they were using came from volume 8 of the nine-volume set that went to all proponents for road and bridge maintenance. Nine binders were prepared for each of the contract areas, and these contained all information relative to standards, performance, kilometres of road, number of bridges, historical costs, etc. Volume 8 dealt specifically with historical

[ Page 6784 ]

direct cost of maintaining roads and bridges. The fundamental error that the researchers made was that they neglected to read a key statement contained in each of the 28 contract packages. For illustration purposes, I will quote from the documents pertaining to....

MR. LOVICK: Was that statement available, or was it in the package you didn't release?

HON. MR. VANT: No, that was available.

MR. CHAIRMAN: Order! I would ask the members to address the Chair.

HON. MR. VANT: For illustration purposes, I will quote from the documents pertaining to contract area No. 2, central Vancouver Island.

HON. MR. MICHAEL: You're hitting a tender spot here.

HON. MR. VANT: Yes, I realize that.

"The direct cost of maintaining roads and bridges in the 1986-87 fiscal year by the Ministry of Transportation and Highways, for contract area No. 2, is approximately $5,183,300. These costs include direct labour, materials and equipment only" — underline 'only.' "They do not include employee benefits, administrative costs, land and building rent, nor any other district, regional or headquarter costs."

I wish, Mr. Chairman, to emphasize once again that the identical wording was provided for each contract area. I will come back to this in a moment.

The second major error was that the hon. member used average costs from 1982 to 1987. Remember, please, that he was using the average bare direct costs, not including employee benefits, administrative costs, land and building rent, or any district, regional or headquarters costs.

By averaging the 1982-to-1987 costs, he understated the cost of delivering the service. Anyone who has worked with figures at all will know that you cannot use an average when the costs are escalating; you can only use an average when the costs are up and down. If the hon. member had taken the average cost for the last 50 years I dare say he could then have stated that the average cost of road and bridge maintenance was $10 million a year. Then he would probably say the people of British Columbia are paying $240 million a year more under the private sector. Obviously this is a distortion of fact and simple arithmetic logic.

The only way to calculate the true financial benefits of privatization is to compare the contract prices against the last full year of public service operation, as we did. Let's go back for a moment to the costs produced by the hon. member which were given to this House and issued in a press release. He indicated that the average annual cost was $140 million under government operation. With his extrapolation based on using an average figure, he indicated that the estimated annual cost under public management would be $169,848,720. He compared this to the average cost under the three-year private sector contract and indicated there was an additional cost to the province of $80,711,790 per year. This is blatantly not true. It is a figure based on fiction and not supportable by the hon. member.

When my ministry was calculating the costs, we used the '87-88 actual figures adjusted to reflect only the functions to be carried on by the private sector contractor. If we had wanted to distort the figures totally we could have used the cost of road and bridge maintenance as indicated in Public Accounts, which incidentally has been tabled in this Legislature. It indicates a cost of $269 million for 1987-88. We knew — in our efforts to maintain complete honesty to the Legislature and the public — that there were costs incurred in that $269 million that were not going to be assumed by the private sector contractor, and those accordingly were removed to give a direct comparison, function by function, to what the contractor was to perform on our behalf.

By removing a portion of administrative costs, overhead and district office operations, we produced an actual figure of $229 million for 1987-88. This figure was audited by the internationally recognized firm of Coopers and Lybrand, and they have confirmed that $229 million was our 1987-88 cost.

The hon. member opposite inflated his $140 million to $169 million and said we should use this as a comparison to the average private sector cost of $250 million a year. We originally were intending to take the figure of $140 million and build that up by the items that were clearly not included in that cost to justify and substantiate our figure of $229 million.

However, on reconciliation, it is impossible to work with the figure of $140 million, because as stated, you cannot work with an average. You cannot build a bridge on a bowl of jelly. You must get down to bedrock to get a proper foundation. We did that. We got the proper foundation of the actual audited 1987-88 costs and used that as our basis for comparing the projected government cost to the proposed private sector cost.

With the figure of $229 million as our audited cost for 1987-88, we implied the inflation factor provided by Treasury Board. We projected that our expenditures over the three-year contract period would be $773.1 million. The private sector bids are $751.5 million, a clear and direct saving to the people of this province of $21.5 million over the three-year contract period. This is supplemented by all of the indirect savings and additional revenues, and by the contributions to the privatization benefits fund for the sale or lease of assets. We are not going to even attempt to reconcile the figure of $140 million. We are going to stand by our audited cost of $229 million.

Mr. Chairman, the hon. first member for Nanaimo must now recognize that with two fundamental errors made — namely, that he used an average figure and that he used a figure that excluded many millions of dollars of costs — his projected extra cost of $80 million annually is totally without foundation.

[ Page 6785 ]

MR. LOVICK: I'm delighted to see that I can indeed inspire and engender a little passion on the part of the Minister of Transportation and Highways. This is certainly a first in this debate, and I commend him for showing us some of that.

It's interesting to note, Mr. Chairman, that when we were leaving this chamber on the weekend, I said to the two assistants the minister has had with him throughout that I hoped they had a nice weekend, and one of them said to me, in jest: "Some weekend! Now because of all your questions we've got to work" — or words to that effect. Pretty obviously that's what's happened; pretty obviously the minister has put his staff to work trying to come up with a rather detailed and elaborate case to cloud the issues I raised last time.

What I'm going to do right now is reserve my more substantive comments on that until I've had an opportunity to look a little more closely at those figures. But I will offer a couple of observations. The first is: let's clarify, Mr. Minister, that the document I tabled was not a press release; it had a first-page press release appended to it. However, the substantive stuff was the tables put together based on the Coopers and Lybrand data you tabled; that was the substance. The press release was the commentary on the tables. Let's establish that and be clear about it.

The minister, throughout this exercise and throughout these debates, Mr. Chairman, has said.... His great original contribution to the debate has been: "You can't compare apples and oranges." The retort that we have offered, of course, is: give us then the apples, so that we can compare apples with apples. Maybe I ought to consider asking for a statue to be erected to my memory, or some such thing. At least I have finally been able to get some data from this ministry. Certainly we haven't to this point; we may still not have answers to the questions that I have been posing, but perhaps we are at least getting a bit closer.

When the minister says that the error on my part is that I didn't refer to particular documents, I would suggest to him that the reason we couldn't is that we didn't have the data because you, Mr. Minister, have closed the door to most of our requests for information. Please, then, don't have the temerity and effrontery to stand here and say that we have made an error, because we didn't have the data that you didn't provide us with. Let's establish that. I am not about to plead guilty to anything if I don't have the information that you have been holding onto and not making available to me.

I am going to save some of the more detailed comments until I have had an opportunity to look closely at the figures that the minister quoted today and to verify them with the information that I do have available to me. Given that the minister is apparently now committed to some new policy of something that approaches perestroika, that he is in fact going to start sharing information with us.... That's a little Russian expression the minister is perhaps not familiar with. It suggests openness, the very thing your leader some two and a half years ago told us was going to be the new way of politics in B.C. Needless to say, it's understandable that you have forgotten it was ever stated.

[5:30]

I want to pursue some very specific questions arising from that discussion we had last time, Mr. Minister, to see if you will provide us with a little more information than has been the case thus far. Last September, in your press release, you announced that two independent national chartered accounting firms had verified the methodology used to determine the costs. On Friday last week you gave us the name of one of those firms. I hope you understood my point when I said the document I was quoting was in fact written much after the date of the information you gave regarding the existence of those two firms. I assume, however, that Coopers and Lybrand was one of the firms. My question is: what was the other national chartered accounting firm, how much was that firm paid, and what did it do that was different from the work done by Coopers and Lybrand? Again, this is back to September 1988, rather than the most recent thing you tabled.

HON. MR. VANT: Yes, it was the privatization group which was engaged back in September of 1988. 1 think that's what the hon. member is referring to. There were actually two chartered accountant firms engaged by that group at the time. One was Clarkson Gordon and the other was Price Waterhouse. Their purpose was to verify the details for the privatization group to assist them as they began privatizing.

MR. LOVICK: I appreciate the answer, because certainly it is different from the information I left with last week. I was led to believe that Coopers and Lybrand was indeed the firm, so I appreciate the clarification.

Have you decided to table the information alluded to in that press release of September 2? Will you make those studies, those independent opinions, available to us?

HON. MR. VANT: Actually, the privatization group was not working directly for my ministry, so it's not really for me to say whether their verification documents will be released or not. But I want to assure you that I have released to this House — and, of course, to the hon. member for Nanaimo — the fact that Coopers and Lybrand performed the all-important task of preparing audited statements showing exactly what our cost was so that we have that very important base cost with which to properly compare the difference if the government carried on the road and bridge maintenance itself and the actual figures, which I also released to you. You have attached to your press release of Friday the actual costs determined by the contracts with each of the contractors in the 28 areas.

I was very kind — you might say — to do that. I didn't want you to wait impatiently until Public Accounts was published somewhere down the road.

[ Page 6786 ]

Really, you have this information and the audited statement, and I think that should be sufficient.

You could probably get a new calculator; I noticed that you weren't too good Friday at dividing contract area one by three. You came out with an erroneous figure there, but I don't want to get too bogged down.

MR. LOVICK: You haven't noticed anything. You haven't even read....

HON. MR. VANT: I certainly have. Believe it or not, Mr. Member, I do read the Blues. That figure you came up with — $10,126,351 — is incorrect. I would advise you to get a new calculator.

MR. LOVICK: I can't refrain and resist for just making a brief observation. When the minister tells us he was "kind" to share this information with us, let me just remind him that kindness has absolutely nothing to do with it. We're talking about public information; we're talking about the public's right to know.

When the minister spoke last week, I had occasion to refer to Louis XIV saying, "L'état c'est moi," which I tend to believe is precisely the position that this minister tends to fall into periodically, believing that he is indeed the centre of the universe and that he is in fact a kind of miniature version of the Sun King. I would remind him that he should not pursue that line of reasoning very far.

In your response to my question, do I take it that the answer, from your point of view at least, is no, but that you would perhaps be willing to talk to your colleague, the Minister of Government Management Services (Hon. Mr. Michael), who is apparently responsible for that privatization working group, to see whether we might in fact get the information and the reports provided by Clarkson Gordon and Price Waterhouse? Will you give me that assurance?

HON. MR. VANT: Perhaps that question should have been asked during the estimates of the hon Minister of Government Management Services. I would like to say that, according to the auditor-general's report.... I'm sure you don't want to question his ability to audit the books. He did a very detailed audit of contract area No. 1, and it verified our projections and confirmed a very significant saving.

It seems just amazing to me that in this flight of almost fantasy here, you came up with these incredible figures in your press release. I would like to hear the hon. member further explain how he arrived at these figures, in light of the statement I just made refuting the whole process.

MR. KEMPF: I, like the first member for Nanaimo, don't think that this minister, or this ministry any longer, is the centre of the universe. You know, the privatization group makes the decisions for the ministry with respect to privatization, and somebody else makes the decisions with respect to the members on the transportation committees in the states of British Columbia out there. What does this ministry really decide on these days? I am wondering what it has been reduced to. From a once proud ministry that looked after all the highways, bridges and people's concerns, which you really can't find....

Interjection.

MR. KEMPF: We'll talk about things in your ministry when your estimates are before this House for weeks and months, Mr. Minister of Forests (Hon. Mr. Parker). Just take it easy. Calm yourself.

MR. CHAIRMAN: I would ask the hon. member to please address his remarks to the Chair.

MR. KEMPF: Yes, Mr. Chairman, by all means. I will address my remarks through the Chair.

When I last spoke to the minister in these estimates, I was pursuing the question of a standby system for the Omineca Princess. The minister hasn't yet given me a response — not me, but the 3,000 British Columbians who rely on that service between 1 a.m. and 5 a.m. They would like to know if the minister would now give an undertaking that a proper standby system will be put in place so that they could be assured of their safety during those hours.

HON. MR. PARKER: Drive around the west end.

MR. KEMPF: We'll get to your estimates soon enough, Mr. Minister of Forests, and when we do, you too will have to answer questions for the people of British Columbia.

I want to discuss another situation in my constituency, and I've got to dwell on this, because someone besides the member for that area seems to be setting the priorities, and that's against the will of the people of the area, so we've got to discuss these matters here. It is the paving that has been sought for the François east road for so very long. I have a letter from the minister dated November 4, 1988, in which he discusses that very subject. He says: "As you are probably aware, it has been the desire of this ministry to improve the first mile of the François road through the reserve before undertaking a paving program."

What I want to know from the minister today is what negotiations are going on with the Stellaquo band with respect to that mile of road. Nothing can be done as far as upgrading it is concerned until it meets the wishes of the Stellaquo Indian band. On that particular subject, what negotiations are going on between the ministry and the Stellaquo band? Who is conducting those negotiations, and what is the ministry asking for in those negotiations? That's the next question.

I want to go on and get three or four questions in here, because the time is growing short. As well, I want to discuss with the minister a very serious jurisdictional problem that we have on a very heavily used road in my constituency.

[ Page 6787 ]

I wrote the minister a short time ago about this jurisdiction, and that is of North Road, which is between Fort St. James and a point 265 miles north of that community. It's a piece of road that's being maintained by the Ministry of Transportation and Highways. It involves the Ministry of Energy, Mines and Petroleum Resources and the Ministry of Forests. It seems to be a road that no one has jurisdiction over. Because of that lack of jurisdiction, a number of problems have arisen for the people who live in that area and have to use the road regularly.

[5:45]

I'd like to ask the minister today what he knows about the jurisdiction over that road. Why, on a seemingly public road being maintained by public tax dollars by a ministry, can a multinational forest company erect signs which read: "Caution. Proceed at your own risk. High-speed off-highway logging trucks and frequent wide loads hauling 24 hours a day"? These kinds of signs are erected on highways that must be used by the public in order that they have access to where they live, that they might seek the services they require and that they might go to town and buy their groceries. These are public roads, the ownership of which seems to have been assumed by multinational forest companies whose head office in this case happens to be in New Zealand. I think it's a very valid question to ask, and it's been asked of me by the people I represent in that area. How is it that jurisdiction over this road is being turned over to a multinational forest company?

MR. PETERSON: The road was built by them.

MR. KEMPF: The road was built by the taxpayers of British Columbia.

HON. MR. PARKER: In part.

MR. KEMPF: Even in part — I think in saying that, the Minister of Forests has to agree that even if it was built and paid for in part by the taxpayers of British Columbia, there should be no restrictions placed on the road.

Interjection.

MR. KEMPF: Listen for a moment. If that minister would only listen, he would be a whole lot more successful in his portfolio. He goes out and travels this province under the guise of listening, and he listens to nothing. He does the same thing in this chamber.

MR. CHAIRMAN: Would the hon. member....

MR. KEMPF: Yes, Mr. Chairman, I'll get back to the subject. I know the Minister of Forests likes to stand up continually for the multinational corporations ripping off this province. In this case, it's not his place to do so. They're not his estimates. I'm asking the question of the Minister of Transportation and Highways: how is it that my constituents have to put up with this kind of thing on a road that's been built and paid for by the taxpayers of the province? Among other things, those people have been told by the Insurance Corporation of British Columbia that due to the road being an "industrial" road, they can expect only 50 percent insurance coverage on their vehicles. Can the minister tell me why the people of that area, should they have an accident on a road maintained by the Ministry of Transportation and Highways out of money taken from his budget, can only be paid 50 percent of the cost to repair their vehicles?

These are simple but very realistic questions. Why should citizens be told by the Insurance Corporation of British Columbia that if they have an accident on a public road they will only be paid for 50 percent of it? Why should those citizens be told that the RCMP has no jurisdiction over that particular piece of highway; that they can't attend an accident or look into a problem before it's an accident unless somebody is hurt or killed? Can the minister tell me why such a situation can exist in the province on a road maintained and paid for by his ministry? They're very simple questions — not so simple answers, but very simple questions.

Why are those people told that the Workers' Compensation Board of British Columbia has no jurisdiction over those wide-load trucks hauling 24 hours a day as indicated by the Fletcher Challenge posting? Why does the Workers' Compensation Board of British Columbia have no jurisdiction over those trucks hauling wide loads 24 hours a day at high speeds after they leave the landing where the logs are loaded? Can the minister tell me how that happens on a road maintained and paid for by his ministry? How is it that these things can happen? The Minister of Forests makes fun of it, Mr. Chairman. Well, I'll tell you, the people of Manson Creek and Germansen Landing don't think it's fun. I know you want to give that whole area to Fletcher Challenge; that was quite apparent.

Back to the subject, Mr. Chairman. I wouldn't want to be off the mark on this one. These are very valid questions that I have to answer, as far as my constituents are concerned. I know there are certain people, such as the Minister of Forests, who don't feel it's important that problems be addressed in an area in which maybe only a very few citizens live. I know there's contempt for the democratic process by a number on that side of the floor. But I think it's incumbent upon me, as one who was duly, democratically elected in that area, to respond to the questions of my constituents. I want answers to every one of these questions. Why do such situations exist on a public road, which is paid for by money from the public purse and maintained by the Ministry of Transportation and Highways?

The minister has quite a few questions there. Perhaps we could get some answers.

HON. MR. VANT: First of all, not only today but also on Friday and the day before that, the hon. member for Omineca was concerned about standby

[ Page 6788 ]

for the Omineca Princess. After listening to the hon. member at length, what I am going to do is review all of my inland ferries — there are 16 of them — to see just what the situation is regarding providing emergency services during the hours in which they're not running. I have to look very carefully at the total picture and see just how, if I did change the policy.... Meanwhile, as I assured the member the other day, at least the oiler-mechanic is on deck at all times. The captain lives on the side of the lake where the ferry is docked. It does appear to me that it wouldn't be difficult, and it never has been in the past, to muster the necessary crew to make an emergency run.

Nevertheless, in light of the hon. member's comments, I will certainly carefully consider the matter of having these ferries on a formal standby basis. If I do it for the Omineca Princess on François Lake, I would have to do it for every one of my inland ferries. So it's in that light that I will carefully review what my current ministry policy is.

Also, I have been advised that we have been pursuing negotiations with the Stellaquo Indian band with a view to regularizing the right-of-way through their reserve. Heretofore those negotiations haven't met with complete success, but we are still working on it and we will pursue that.

The matter of North Road. I would call that, as you did, I think, an industrial road or resource road. At one time the Ministry of Energy, Mines and Petroleum Resources maintained the road from Fort St. James to Moose Valley, and my ministry only assumed responsibility for that portion of the road when the Ministry of Energy, Mines and Petroleum Resources pulled out. Primarily it is a resource road. Many sections of it are the responsibility of the Ministry of Forests. Ministry of Forests policy, of course, is that the user maintain it. I have been informed that the contractor is achieving a high standard. As the member well knows, approximately 200 people use that road and are working in the area. I will attempt to clarify, because it appears to be and has been a very confusing situation in terms of exactly which part is a public road. I can assure the member that if a road is a public road and I as Minister of Transportation and Highways spend public funds on it, it should be completely accessible to all the public. For sure there should be no reduction in insurance coverage — or any of the other concerns regarding attention by the RCMP.

Also, in terms of the part maintained by the Ministry of Forests, it's very proper to have warning signs. Indeed, I have many roads like that in the Cariboo constituency. They are not public roads and are not maintained in any way by any particular ministry. You do venture onto those roads at your own risk, and you have to be very cautious of the heavy industrial traffic.

I will seek clarification because I understand there is a lot of confusion regarding the status of various parts of that road since the Ministry of Mines pulled out from having any responsibility for it.

Given the lateness of the hour, I would now like to move that the committee rise, 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. Strachan moved adjournment of the House.

Motion approved.

The House adjourned at 5:59 p.m.