[ Page 8419 ]

CONTENTS

Routine Proceedings

Regional and Economic Development Act (Bill 84). Hon. Mr. Veitch

Introduction and first reading –– 8419

Municipal Amendment Act (No. 3), 1989 (Bill 80). Hon. Mrs. Johnston

Introduction and first reading –– 8419

Islands Trust Act (Bill 78). Hon. Mrs. Johnston

Introduction and first reading –– 8419

Presenting Reports –– 8419

An Act to Continue the Moratorium on Offshore Oil Drilling and Exploration

(Bill M221). Mr. Harcourt

Introduction and first reading –– 8420

An Act to Prohibit the Dumping of Toxic Materials in British Columbia and Its Coastal Waters (Bill M222). Mr. Harcourt

Introduction and first reading –– 8420

Oral Questions

Forest resource development agreement. Mr. Miller –– 8420

AIDS needle exchange programs. Mr. Perry –– 8420

Purchase of property along Cassiar connector route. Mr. Clark –– 8421

St. Ann's Academy. Mr. Blencoe –– 8421

Sale of BCEC land at Whistler. Mr. Williams –– 8422

Free trade agreement. Mr. Barlee –– 8422

Committee of Supply: Ministry of Energy, Mines and Petroleum Resources estimates. (Hon. Mr. Davis)

On vote 20: minister's office –– 8422

Hon. Mr. Davis

Ms. Edwards

Mr. Perry

Mr. Clark

Mr. Kempf

Indian Land Tax Cooperation Act (Bill 77). Second reading

Hon. Mr. Weisgerber –– 8447

Mr. Williams –– 8448

Hon. Mr. Weisgerber –– 8448

Litter Amendment Act, 1989 (Bill 60). Committee stage. (Hon. Mr. Strachan) –– 8448

Mr. Williams

Mr. Lovick

Mr. G. Janssen

Third reading

Waste Management Amendment Act, 1989 (Bill 58). Committee stage.

(Hon. Mr. Strachan) –– 8451

Mr. Lovick

Mr. Perry

Third reading

Health Statutes Amendment Act, 1989 (Bill 39). Second reading

Hon. Mr. Dueck –– 8461

Mr. Perry –– 8462

Hon. Mr. Dueck –– 8462

Hospital Amendment Act, 1989 (Bill 69). Second reading

Hon. Mr. Dueck –– 8462

Mr. Perry –– 8462

Hon. Mr. Dueck –– 8463

Labour and Consumer Services Statutes Amendment Act, 1989 (Bill 46).

Second reading

Hon. L. Hanson –– 8463

Mrs. Boone –– 8464

Hon. L. Hanson –– 8464

Residential Tenancy Amendment Act, 1989 (Bill 47). Second reading

Hon. L. Hanson –– 8464

Mr. Blencoe –– 8465

Hon. L. Hanson –– 8465

Income Tax Amendment Act (No. 2), 1989 (Bill 79). Committee stage.

(Hon. Mr. Couvelier) –– 8466

Mr. Clark

Third reading

Financial Administration Amendment Act, 1989 (Bill 37). Committee stage.

(Hon. Mr. Couvelier) –– 8467

Mr. Clark

Mr. Williams

Ms. Edwards

Third reading

Municipal Amendment Act, 1989 (Bill 19). Second reading

Hon. Mrs. Johnston –– 8473

Mr. Blencoe –– 8474

Hon. Mrs. Johnston –– 8474

Mineral Tax Act (Bill 73). Second reading

Hon. Mr. Davis –– 8474

Ms. Edwards –– 8475

Mr. Clark –– 8475

Mr. Williams –– 8477

Hon. Mr. Davis –– 8478

The House met at 2:05 p.m.

Prayers.

MR. PELTON: Hon. members, on the floor of the Legislature today we have the Hon. John James Doohan and his son, Mr. John Doohan, who are visiting us from Sydney, Australia. Mr. Doohan was elected to the New South Wales Legislative Council in 1977 as a member of the National Party and currently holds the office of Whip. Would you please welcome the Doohans to our beautiful province.

MR. GUNO: I am pleased to introduce to the House two special friends of mine who are in the gallery today: Mr. Gary Youngman, who is the executive director of the Aboriginal People's Business Association. I went to school with Gary, so I can confess that between lectures we were able to knock back a few. With him is Debra Hoggan, who is a private consultant. Miss Hoggan is probably one of the few aboriginal persons who has the training and background to conduct a small business seminar, and I have seen the results of her work in the Nass Valley. I would ask the House to join me in welcoming them.

HON. J. JANSEN: In the gallery today are two special people from my own community in Chilliwack: my son and daughter, Darren and Teresa. Please make them welcome.

MR. MOWAT: In the gallery today we have Mr. Don Coghill, the public affairs manager in British Columbia for Imperial Oil. Imperial Oil was one of the first corporate sponsors to support Rick Hansen in his Man in Motion world tour. I would ask you to please make Mr. Coghill very welcome to our House.

HON. MR. PARKER: I would ask the House to welcome a long-time friend of mine and one of the best Forests ministers we ever had: Tom Waterland.

MR. PERRY: I'd like to introduce to the House the better half of the member for Prince Rupert (Mr. Miller), Mrs. Gayle Ballard, who's in the Speaker's gallery, and also a wonderful constituent of mine, Lynn Salter, who's an incipient novelist. I ask the House to make them welcome.

Introduction of Bills

REGIONAL AND ECONOMIC
DEVELOPMENT ACT

Hon. Mr. Veitch presented a message from His Honour the Administrator: a bill intituled Regional and Economic Development Act.

HON. MR. VEITCH: In speaking briefly to this bill, I'm pleased to bring before the House a bill that represents but another step in our government's continuing efforts to consolidate and update the province's economic development legislation. Members will recall that the throne speech noted plans to introduce consolidated and enhanced business incentive legislation. The Regional and Economic Development Act will combine and update two acts, one ten years old and one almost five years old: the Ministry Industry and Small Business Development Act and the Industrial Development Incentive Act. In line with our government's regional development initiative, the new act will provide the flexibility to take complementary action to realize development opportunities in each and every region of British Columbia.

I look forward to further discussion of the bill with members during second reading. I move that the bill be introduced and read a first time now.

Bill 84 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.

MUNICIPAL AMENDMENT
ACT (No. 3), 1989

Hon. Mrs. Johnston presented a message from His Honour the Administrator: a bill intituled Municipal Amendment Act (No. 3), 1989.

HON. MRS. JOHNSTON: The Municipal Amendment Act (No. 3) contains a variety of measures designed to improve the operation of our municipalities with respect to development agreements.

Bill 80 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.

ISLANDS TRUST ACT

Hon. Mrs. Johnston presented a message from His Honour the Administrator: a bill intituled Islands Trust Act.

HON. MRS. JOHNSTON: Bill 78 contains a variety of measures designed to improve the operation of the Islands Trust, enhancing its autonomy and increasing its flexibility.

Bill 78 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.

Presenting Reports

MR. PELTON: I have the honour to present a report from the Select Standing Committee on Standing Orders, Private Bills and Members' Services, and I move it be read and received.

Motion approved.

[ Page 8420 ]

CLERK-ASSISTANT:

"Mr. Speaker, your Select Standing Committee on Standing Orders, Private Bills and Members' Services begs leave to report as follows: that the preamble to Bill PR404 intituled Applied Science Technologists and Technicians Amendment Act, 1989, has not been proved and recommends that the bill not proceed to second reading.

"All of which is respectfully submitted. F.A.C. Pelton, Chairman."

MR. PELTON: Mr. Speaker, by leave I move that the rules be suspended and the report adopted.

Motion approved.

Introduction of Bills

AN ACT TO CONTINUE THE MORATORIUM
ON OFFSHORE OIL DRILLING
AND EXPLORATION

Mr. Harcourt presented a bill intituled An Act to Continue the Moratorium on Offshore Oil Drilling and Exploration.

MR. HARCOURT: This act places a moratorium on both exploration and drilling for oil and natural gas in B.C.'s coastal waters. In the absence of iron-clad safeguards, this measure is necessary to protect our coastal environment and economy from damaging spills, blow-outs and leakages. Unlike the present five-year moratorium, this bill bans exploration as well as drilling. Some U.S. states have also banned seismic testing exploration in response to concerns over the impact on marine environment and fisheries. It is necessary to take this step in B.C. until a full environmental assessment of seismic testing can be completed and reviewed.

To protect our environment, marine life and our multi-billion dollar coastal fisheries and tourism industries, the province of British Columbia has no choice but to place an indefinite moratorium on both offshore exploration and drilling.

Bill M221 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]

AN ACT TO PROHIBIT THE DUMPING OF
TOXIC MATERIALS IN BRITISH COLUMBIA
AND ITS COASTAL WATERS

Mr. Harcourt presented a bill intituled An Act to Prohibit the Dumping of Toxic Materials in British Columbia and Its Coastal Waters.

MR. HARCOURT: This act places a moratorium on both exploration and drilling for oil and natural gas in B.C.'s coastal waters. In the absence of ironclad safeguards, this measure is necessary to protect our coastal environment and economy from damaging spills, blowouts and leakages. Unlike the present five-year moratorium, this bill bans exploration as well as drilling. Some U.S. states have also banned seismic testing exploration in response to concerns over the impact on marine environment and fisheries. It is necessary to take this step in B.C. until a full environmental assessment of seismic testing can be completed and reviewed.

To protect our environment, marine life and our multi-billion dollar coastal fisheries and tourism industries, the province of British Columbia has no choice but to place an indefinite moratorium on both offshore exploration and drilling.

Bill M222 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.

Oral Questions

FOREST RESOURCE
DEVELOPMENT AGREEMENT

MR. MILLER: To the Minister of Forests: would the minister confirm that he has reached agreement in principle with his federal counterpart on a $1.4 billion reforestation agreement?

HON. MR. PARKER: We're discussing a replacement for the forest resource development agreement, and that is future policy.

MR. MILLER: Would the minister also confirm to the House that the province of B.C. will now be saddled with 65 percent of the costs, unlike the current agreements which offer fifty-fifty cost-sharing?

HON. MR. PARKER: The same answer, Mr. Speaker.

AIDS NEEDLE EXCHANGE PROGRAMS

MR. PERRY: I have a question for the Minister of Health. Last Wednesday the minister told this House that he would not participate in a federal anti-AIDS needle exchange program until he had reviewed the proposal more thoroughly. Having had a week to review the federal proposal, is the minister now prepared to announce that he will participate in this federal-provincial preventive health measure?

HON. MR. DUECK: Mr. Speaker, up to this point in time I've only got a letter from the Hon. Perrin Beatty. I have not got the outlines of that program, and I cannot comment any further.

MR. PERRY: Mr. Speaker, may I ask the minister to tell this House what steps he has taken — or his officials have taken — to pursue this offer and explore the possibility of federal-provincial cooperation, given that the present program, which has been

[ Page 8421 ]

an extraordinary success, rests entirely on funding by the city of Vancouver for a provincial problem?

HON. MR. DUECK: Mr. Speaker, there's more to the needle program than what appears in the letter that I received. When we're talking about preventing AIDS transmission — the virus transmission — by way of the dirty needle exchange, we also have to look at things like outreach education, testing, counselling, drug detoxification, withdrawal programs, street-nursing programs and support and referral services; all these things play a part in that program. It is not just a matter of clicking your fingers in the wind and saying: "Here it is, and this is what we'll do."

There is much more to it than what appears from that member for Vancouver-Point Grey. So as I said before, we have not received the full information on this program, and I cannot comment on it until I receive further information.

MR. PERRY: A supplementary, Mr. Speaker. I'm very flattered to perceive that the minister has obviously studied my statement on AIDS strategy from last week, despite the interference from his colleague who tried to tell him it wasn't an important subject.

I find it ironic that the minister refuses to participate in a highly successful program, which was pioneered in British Columbia.

The question for the ministers is: does the minister expect the city of Vancouver to continue to bear the entire cost of fighting the AIDS epidemic among intravenous drug abusers.

HON. MR. DUECK: That's an absolutely insulting remark, because we are doing many things. We have got six street nurses in Vancouver counselling street people and we do many other things in the AIDS area. To say, just because it funds one particular part of the AIDS program, that we are now depending on the city of Vancouver to fight the total disease of AIDS is insulting and it's not true.

MR. PERRY: Mr. Speaker, I agree it would more fruitful in this House if there were less insults and more rational discussion.

Interjections.

MR. PERRY: They don't like my English. If there were fewer insults.

Mr. Speaker, would the minister commit himself, then, on behalf of the government to provide treatment services for those addicts uncovered in the needle exchange program who are seeking treatment and for whom there are presently no treatment services?

HON. MR. DUECK: As Minister of Health we are concerned about all diseases, all illnesses, and wherever possible we will implement treatment services

We have done so in the past; we will continue to do so in the future.

MR. HARCOURT: Well, do something.

HON. MR. DUECK: I can read you that whole list if you want to take up another fifteen minutes. I can tell you all the things we have done in the AIDS area. I can eat up the whole clock if you wish.

PURCHASE OF PROPERTY ALONG
CASSIAR CONNECTOR ROUTE

MR. CLARK: A question for the Minister of Highways. The Cassiar connector is to be built through the riding of Vancouver East. The Ministry of Highways is currently purchasing houses along the route, but the remaining houses adjacent to the open depressed freeway will be only six metres away — that's about twenty feet. All that separates the houses from the open depressed trench is about twenty feet and a ten-foot chain-link fence. Clearly that's not good enough.

Has the minister decided to direct his staff to review the situation along the Cassiar corridor with a view to purchasing more homes and doing more to mitigate the impact on Vancouver East of this freeway that cuts right through the neighbourhood?

HON. MR. VANT: Now that the price of homes has somewhat stabilized in the overheated real estate market, my staff is progressing very carefully and slowly in acquiring the necessary right of way. We've now approached about 50 percent of the properties we need in order to proceed with that very worthwhile project, because that is the most congested intersection this side of Toronto — one of the worst spots in North America.

As is the tradition in my ministry, we always proceed very sensitively in these projects. Certainly I will take due notice of the observation the member opposite has made and consult with my staff, who have a very good reputation for being very sensitive to these local neighbourhood issues.

ST. ANN'S ACADEMY

MR. BLENCOE: I have a question for the Minister of Municipal Affairs, Recreation and Culture. It's been several months since the Provincial Capital Commission announced that it had reached an agreement with Peter Daniel, a well-known supporter and friend of this government, to lease the publicly owned building and grounds of St. Ann's Academy. None of the details of that lease or the arrangements for that incredible asset have been announced to this community. When will the minister reveal the terms under which Mr. Daniel has obtained a lease for St. Ann's and the arrangements that have been made for that public building?

[ Page 8422 ]

HON. MRS. JOHNSTON: The full range of points included in the lease will be made available in due course.

MR. BLENCOE: A question to the minister again. These arrangements and discussions have been going on for months and months and months. The entire process has been in total secrecy. People in this community have had no input into that decisionmaking process. Will the minister make a commitment to the people of this region that she will table the details and the arrangements for how that building is to be used by the private sector?

HON. MRS. JOHNSTON: You are absolutely correct. This process has taken a considerable length of time — far longer than I had expected. The Provincial Capital Commission is very concerned about protecting the provincial asset. They are making sure that all the t's are crossed and the i's are dotted before it's finalized.

SALE OF BCEC LAND AT WHISTLER

MR. WILLIAMS: To the Minister of Crown Lands regarding the north village area in Whistler, the lands held by BCEC. This is a large block of land, again, that has been in the hands of BCEC. Can we be assured by the minister that that block will not be sold as a big block like the Westwood lands and the Expo lands before it were?

HON. MR. DIRKS: Negotiations are going on with the rural municipality of Whistler right now as to the disposition of that property.

MR. WILLIAMS: Has the minister's staff then carried out an analysis which would indicate the economic benefit of one route versus the other, that is, the smaller-parcel sale rather than the large parcels?

HON. MR. DIRKS: Well, I'm very pleased, Mr. Speaker, to say that we do more investigation than the member opposite did when he purchased lands in Whistler and was the minister responsible for everything. Let me assure him that we will look at all alternatives.

MR. WILLIAMS: With respect to the golf course lands and the convention centre at Whistler, can we be assured that they will remain either in public or community hands?

HON. MR. DIRKS: Mr. Speaker, I am very pleased that he has brought up the whole matter of Whistler, because this government has prided itself in talking to municipalities and dealing with municipalities and local governments, and we're certainly in the process of doing that right at this time concerning the convention centre and the golf course.

FREE TRADE AGREEMENT

MR. BARLEE: To the Minister of Agriculture. Several weeks ago I asked the minister whether there was anyone on the staff of his ministry who had been specifically delegated to monitor the negative effects of the free trade agreement and the long-term trends or options open to those areas of the agricultural community that are at risk: namely, grapes, soft fruits and so on. I received an answer which was perhaps evasive. My question is this: can the minister confirm that there is no one on staff at the ministry to monitor the impact of the free trade agreement?

HON. MR. SAVAGE: I would tend to agree that if you're asking for a specific designation of a person on staff, no, there is not. There is the deputy minister's level, who are looking at the overall impact of trade on the specific commodities. We are also looking at the impact of future free trade issues relative to the horticultural industry — which includes grapes, I might say — and at the fact that if there are negative impacts, how we can best serve that impact. That's being monitored by our whole ministry in the specific areas. But the issue of free trade is that of the federal government relative to the federal government in the U.S. Our ministry is taking a good look at what the impacts will be. To say that we're monitoring on a specific person basis, no, we're not; it's an observation by the ministry as to what the impact will be.

[2:30]

If I can use a good example, in the discussions on free trade there was the grape agreement. I can tell you that in the agreement to pull out a number of the grape vines, there is a great deal of enthusiasm about the vinifera-type grape vines that we left in the ground. There's terrific optimism, and they believe that the government is on the right track. We're going to help those producers market a premium product in this province, throughout Canada and also throughout the world, if possible.

So I believe that there are some very positive issues that have come forward relative to that agreement. From the perspective of the Okanagan grape growers, they do have a great future, and we will help them maintain that. It's extremely important, I think,  not only from the agricultural perspective but from a tourism point of view. These little boutique or farm estate wineries will have a great opportunity in the future, and I don't think there's anything negative that we can say about what is being proposed.

Orders of the Day

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

ESTIMATES: MINISTRY OF ENERGY,
MINES AND PETROLEUM RESOURCES

On vote 20: minister's office, $282,636.

[ Page 8423 ]

HON. MR. DAVIS: I want to make a few introductory remarks about the budget of my modest little ministry. The estimate for the ministry is down from $39 million last year to $36 million this year. When I say "modest, " I want to point out that expenditures in Energy, Mines and Petroleum Resources are one third of 1 percent of the total budget of the government. The budget is roughly 1 percent of the gross value of production of the industries with which it is concerned, and the revenue to government from those industries is of the order of 20 times the budget of the ministry, so that gives some idea of its size and of the scale of its operations.

Some years ago there were approximately 500 employees in the ministry. Currently there are of the order of 360 employees. We have been engaged in a streamlining process, although in the last few months we have expanded the geological survey operation, and that has added a few FTEs. Streamlining has focused primarily on taxation, simplifying the tax regime both in respect to metals and energy commodities so that the taxes are more readily administered, with fewer personnel and less likelihood of errors being made either in collection or accounting.

Our priorities currently emphasize more geological information for industry, more mapping and more activity in support generally of the mining and energy industries, but also incidentally supporting forestry, the environment and others through the mapping process.

Reclamation in respect to mines is of increasing importance, particularly because of acid leaching, which is common in the wetter areas of the province We are focusing more on mine operations, screening new mining operations and vetting existing ones with a view to ensuring that pits, etc., when they are abandoned, will be properly serviced for all time Reclamation is an important activity; it is much more important than in the past.

Over the last several years, several substantial projects have been launched. In 1987, along with the federal Department of Fisheries, we managed to get the Kemano completion project launched. That followed a very careful environmental review. While the project was scaled down somewhat, construction is now underway, and a sizeable new source of hydroelectric energy will be available at half or less of B.C. Hydro's cost. It is economic, environmentally clean and a significant addition to the resources in the northwestern part of the province.

Last year there were several privatization efforts B.C. Hydro's gas division was sold to the private sector, and later in the year the local railway operations of B.C. Hydro were also sold to the private sector. Both yielded satisfactory returns in terms of cash payments to Hydro and to the government.

Generally, from a policy point of view, our thrust might be described as non-interventionist and certainly market-oriented. The pricing of our commodities is dictated more and more by market forces than by government. We have encouraged deregulation not only of natural gas pipelines but also of B.C. Hydro and other utilities' transmission lines — de-regulation in that case meaning that they are more and more to act as common carriers, and that buyers and sellers can work through their transmission or pipeline facilities, buying their own supplies at source and determining their own prices by negotiation rather than as a result of rate-setting.

The industry outlook on the energy side is reasonably optimistic. As far as power is concerned, we are still substantially overbuilt and won't need large new facilities for some years. On the gas side there are some 40 years of supply in hand. We certainly have all the coal we can sell and more. The price outlook for oil is for a continuation of present world prices for some time. They are relatively depressed compared to a few years ago, and that has pulled gas prices down and also influenced coal prices. So the situation, in a nutshell, is one of oversupply, of adequate but efficient capacity and low or relatively stable prices as far as consumers are concerned.

I think that covers the broad outline of the ministry, its size, the emphasis from a policy point of view. I'll certainly look forward to remarks from members of the House in connection with my ministry.

MS. EDWARDS: Thank you, Mr. Minister, for describing this as a modest little ministry. It certainly gives me a challenge, I can tell you. It seems to have a lot of things to be done.

Before I begin, I would like to welcome Mr. Horswill and the other mines employee to the House.

The direction that I think needs looking at overall in all the questions I've prepared and the kinds of things I want clarified has several directions which it might be useful to lay out now. Particularly interesting is the idea of public process. This is a matter of particular importance to me and my colleagues and I think has traditionally been that way. It's a matter of some considerable concern how this matter of public process continues so that it can adequately address the concerns of the citizens of the province, with the kind of initiatives being made by the government towards privatization, deregulation, centralization — the whole business of letting the market take control of what happens. When the market takes control, of course, the government has a harder time directing what should be done in the public interest. So it creates some problems, I would suggest, as to how the public has input into what is being done.

The minister and the government, certainly within this ministry, is declaring a particular interest in what happens with the environment, and I think some of my questions will certainly test that determination by the minister. Whether the judgments that will be made, and over which the minister has some influence, will in fact take into account, in a serious and effective way, the costs that otherwise go to our environment.... In a world where environment is certainly more on the minds of people, what we do, particularly with energy, may well determine our opportunity to survive on the planet. I think that attitude is very clear in our world now. Our choices, particularly with reference to energy, are extremely

[ Page 8424 ]

important as to whether or not we last, whether or not we have a reasonable place to live, a reasonable environment and an ecosystem that is still intact in the next century. So our short-term policies have to look forward to the long-term policies.

I think people are ready for that. I think they are demanding that. In the ways that we exchange views, we have to ensure that those kinds of goals are met. Partly because of that, partly because of what the minister is doing, I think the whole energy section of this ministry is in a state of flux right now, and we're looking to what will be the setting of precedents. The ways that things are done are going to have a great determination on what comes next.

In the mines part of the ministry, I think mines are recovering from some very difficult years. In particular, metal mines currently are experiencing relatively good prices after some years of very poor pricing. The coal mines are beginning to come out of their slump. Many changes are being made. Certainly they have been introduced by the minister in legislation, which in some sense precludes some of the discussion that we might have had in these estimates. However, I basically think it's important that we remember constantly that the questions I have are largely directed to those particular goals: to increase the involvement — and the important and effective involvement — of the people of this province.

To follow along with that, I might say to the minister that I expect to talk mainly about the energy sector of the ministry first; so we will begin with that and deal with questions on the mines section, not totally discretely perhaps, but I am trying to keep it as discrete as possible.

To begin with, I want to talk about B.C. Hydro and, of course — you might even call it the bible of B.C. Hydro — the 20-year resource plan. It's a new plan this year and different from last year, which is a good idea. Institutions like B.C. Hydro should be doing constant planning and putting out that kind of thing. This year it's a very large document. According to the preface, that's because of the requests that it be larger and have more things in it.

[2:45]

The nature of these reports, as the minister has probably observed — I certainly have — is that it's highly repetitive. You'll find the same phrases over and over again in these reports in different places. One of the phrases in this 20-year plan is that B.C. Hydro will be undertaking during 1989 — this is the phrase that I would like the minister to respond to — "a comprehensive analysis and public discussion of the options available." I applaud the idea that we look at a comprehensive analysis of the many decisions that are being made on the energy front. I would applaud public discussion of the options available.

My question to the minister is: what does he have planned to flesh out this declaration by B.C. Hydro? When is it going to begin? I imagine the minister is going to say that it began with one conference in Vancouver this spring. That was a very good conference and probably a very good beginning. Would the minister respond to that particular point: the comprehensive analysis of what's going on, when does the public discussion expand from that conference, and how does the minister see that it will happen?

HON. MR. DAVIS: Last fall B.C. Hydro began a process which is novel in British Columbia. It called publicly for expressions of interest from the private and public sector, particularly relating to new generating plants. There were no holds barred. It could be anything from small hydro to co-generation at forest products operations through to large hydro, coal or gas-burning plants.

The response was remarkable in the sense that there have been several hundred submissions, many of them from small operators, but a few dozen from larger engineering companies.

B.C. Hydro is presently vetting those proposals and developing a short list. From the short list, it will make some selections. As far as public debate is concerned, those selections will then have to go to the B.C. Utilities Commission, and the new generation which emerges as both economically the most desirable and environmentally the safest will have gone through the public hearing process before the Utilities Commission. To recap, B.C. Hydro has invited the world to indicate what projects could be built in the province and has been screening as to economics and the environment. They will be putting forward the best.

There will be an opportunity for those who have been turned down to appear also before the Utilities Commission, but the public process will really begin when B.C. Hydro has developed its short list. That will go to the Utilities Commission for public hearings.

MS. EDWARDS: Is that all? That is true; the Hydro utilities certainly did ask for expressions of interest for generation of power. Very few members of the general public were involved in that. I thought you meant that this would be for the general public. I thought you meant that the general public would be able to have its input and to balance the options that are available.

There are several options put forward here. This would be a good basis for a public discussion. There are other sorts of things that have been prepared and other ways of doing it: for example, the kinds of discussion groups that could go on and the kind of thing that goes on around Power Smart. I would applaud that that is being taken to the public. It's being taken with a specific planned initiative to go out and do it. People have been hired to do it; they have been trained as to what there is to be done. They are going out and taking to the public the ideas about Power Smart. But if that is the extent of what the public is going to know.... If you are a postman —  if there happen to be any anymore — in British Columbia and you go home after work ready to wonder about the electrical energy policy of this province, you may go to a meeting on Power Smart. But beyond that, what do you do? You are certainly not going to

[ Page 8425 ]

make a proposal for the generation of electrical power. If you are left with the only input to the process being to attend a Utilities Commission hearing after the decisions have been made by B.C. Hydro and the government as to which of the three alternative directions they may go to, that seems to me not an adequate way to have input into the direction that the utility is going to take.

I would like the minister's response. Is there more? How does the ordinary citizen in the province have some input into the choices? Probably the most important choice to the man and woman on the street is going to be how much of our policy is going to depend on conservation and how much is going to depend on a different way, because that is one of the issues on the front burner.

HON. MR. DAVIS: As the hon. member knows, B.C. Hydro has been quite assiduous in getting around the province and talking to people generally — certainly in a number of regions — as to the advantages of using power more efficiently. The member made reference to the Power Smart program. The use of more efficient lighting, more efficient motive equipment and so on can not only save energy but postpone for several years the construction of any new generation.

The Power Smart program, which is in the direction of conservation and better economics as well as better environmental practice, is underway. I could simply say that B.C. Hydro may, through the Power Smart program, save the equivalent of half of a Site C— something of that order of magnitude — over the next three or four years. To put it more realistically, it simply postpones the construction of a Site C or some equivalent plant or plants for some years.

This is done for environmental reasons, but I think also for good, sound economic reasons. It's cheaper to conserve in that manner, educating not only the public but industry, if you like, as to the more efficient use of energy. This will cost a fraction of the cost of building a new plant. It's good economics as well as being sound environmentally. I think if there is one characteristic of Hydro's current policy it is emphasizing conservation—Power Smart, if you like — for both environmental and economic reasons.

[Mr. Peterson in the chair.]

That process can, in its initial stages and throughout, involve the public. I can't imagine the public, even though the public had every opportunity to make submissions as to new generation.... They'd have to have some engineering background. They'd have to have some idea of the sites of fuel or water licences to make submissions for new generation. But at least it's a call to other than Hydro's engineers to look at new resources for the future. Until those highly technical submissions are in, and until the preliminary screening has been undertaken by experts, there is not much point in acting or pretending that every one of those projects needs to be examined in depth by the public at large, because it's uneconomic and irrelevant in most cases. There are many projects that will have been quantified in that early submission but set aside because they are either too expensive or environmentally risky and so on. The process in that case — and I am not talking about conservation now; I am talking about new production — will occur when the short lists are developed. Then the public will have an opportunity through public hearings before the Utilities Commission.

MS. EDWARDS: That's my concern: that the public doesn't know whether the minister considers all of the projects that may have been proposed through the request for proposals — whether he measures them equally or on what grounds he is going to make the decision that they are environmentally too risky. They don't know; they basically don't have any idea what kinds of proposals were made.

I think that in some way the people deserve a say in whether or not they think the risk that comes from thermal-generation, from carbon-producing fuels, is greater in certain circumstances than a hydro dam and the flooding of land. They don't know whether they're talking about dams right across the province or about 17 thermal-generation plants of a certain size, and what the fuel might be. That's why I'm suggesting to the minister — and I've suggested it time and time again — that there be public input and public discussion of the options available. That should mean that the options are made known to the public and that the public should be able to look at them in a way they can understand.

You have said another thing that's very true: not everybody understands all of the details of developing power. But there are certain general principles that the public understand very well, and they need to be able to deal with them. My first point is that they aren't put forward to them; my second point is that even if they are, how does the public know to whom they are to feed back what they might feel about them? If they have to wait until such time as we're doing a Utilities Commission hearing into a specific project, not a number of projects, and they don't know how a single project will impact on the total, then we have limited the ability of the public to tell the government what they want, what options they want, and whether in fact they want Power Smart and Resource Smart to continue or to be increased substantially.

In this regard, I might also ask the minister what the public process for Resource Smart is. I mean, as far as I know, we keep falling back to this single example: Power Smart. Resource Smart is stressed in the 20-year projection, and I'm not sure how that is going to be taken out or whether the public is going to have impact on that aspect of what Hydro is proposing. I suspect that it will be an extremely positive process, as the Power Smart process would be.

So my question again to the minister is: does he plan at all to allow the public to have some input into the terms of the very broad policy?

[ Page 8426 ]

HON. MR. DAVIS: Mr. Chairman, the hon. member says that she — perhaps even her party — endorses Power Smart because that's conservation. Resource Smart is a program whereby a selection will eventually be made of the least costly and environmentally least-damaging generating and power transmission projects. Hydro is developing a shortlist. The shortlist will then be put out in full public view, and the final selections will be made as a result of a public process.

I wonder if the member, who comes from the Kootenays, would immediately outlaw any coal-fired plants. Has she some reason to outlaw any number of these different projects before they are even advocated by different groups: engineering companies, coal-mining companies, hydro companies, and so on? Hydro has asked for input. Anyone could have put an idea in. Hydro, with our ministry, is screening the various submissions, and it is only the shortlists that will really be scrutinized in some depth. Certainly all of the considerations, particularly the environmental ones, will be addressed.

[3:00]

I think that among the projects on the shortlist will be co-generation developments at several of our major pulp mills and sawmill complexes, particularly in the Cariboo. They will eliminate beehive burners and so on and hopefully will generate electricity at or close to the price which Hydro would otherwise have to pay by developing Site C.

So there will be a number of projects. They will be reduced to a shortlist, and the shortlist will be examined in the full public gaze in a proper hearing before the Utilities Commission.

MS. EDWARDS: The minister makes a good point He asked me whether I would outlaw a thermal-generation plant in the East Kootenay. Of course, because there has been a proposal for one thermal-generating plant in the East Kootenay, I have examined it as closely as I can. A second application has been made, but there are no plans for it. There is practically nothing you can get your hands on to say: "What is it? What is proposed?"

But those are only two, Mr. Minister. I read, when I go through this, that these two plants are 120 megawatts and at the outside 720 megawatts of power, and I read in here that there is a projection, when you look at the resources there, for 3,900 megawatts. That's an awful lot of megawatts of power to come out of coal out of the Elk Valley. If I'm looking at 3,900 megawatts being burned in that valley and being produced for some other part of the country, it's going to be a different political issue, and what we're talking is politics. It's going to be a different political issue than if we're talking 120 megawatts or maybe 720 megawatts, and that's what I'm suggesting to you.

It's not okay to go ahead with one or two of these projects when, in fact, overall the utility and the ministry may be looking at a much larger conglomeration of generators together, and the effects may be very different. Besides that, I suspect the people of the province are not too sure how the ministry does its valuation and calculates the costs.

I believe I brought this up before. The northwest power council — I haven't got the name exactly right, but the power council for the northwest states — has brought forward a policy that there be a 10 percent increase in any cost calculation for the environment. That's a pretty blunt instrument to be using, but it at least gives some value to some of the environmental damage that doesn't otherwise get into the costing of a project.

My question to the minister is: has there been any work done on trying to determine the basic costs of.... I don't think we've even adequately put a basic real cost to the people of the place for flooding a valley. But have we put any costs to putting carbon dioxide into the air in such great amounts that we are contributing to the greenhouse effect? Obviously the minister is not going to be able to say right off the bat that it costs 0.2 percent of this kind of project and 0.7 percent of a different kind of project.

Because we can't do that and because it is a political issue — power is something that everybody in the province wants to say something about — has the minister considered some way to get that public input and clarify to the people of the province how the decisions are made that this is environmentally safe and that's not environmentally safe? There are some major questions about that which are not clear in the public's mind, and I suspect not in some other minds either.

HON. MR. DAVIS: The hon. member mentioned a figure: I think 3,900 megawatts. I think I said in my opening remarks that we're overbuilt. We're not about to build a number of projects. We've got time. There will be one, two or three projects of some scale nominated for closer scrutiny in the next six months or so.

One or perhaps two will finally emerge from the public hearing process. During that process, were a thermal plant — for instance, a coal-fired plant in the Kootenays.... It's unlikely, but were one of those to qualify for the short list, that plant would have to meet the province's environmental standards. The question really is: are the standards not only realistic, but are they tough enough? The manner in which acid rain from a coal-fired plant must be reduced substantially would have to be very carefully explained, canvassed, costed and so on.

I think in the case of thermal plants located in the Kootenays, even though it's relatively low-sulphur coal, the cleanup plant could add 15 percent, 20 percent or even 25 percent to the capital cost of the project. That obviously impacts on its economics relative to hydro, to wood-waste-burning plants in the Cariboo and indeed to natural-gas-burning plants, which are the cleanest of all the thermal plants. So the environmental concerns are there, and they'll be costed.

There's a lot of information around the world as to how to improve the cleanup of all those kinds of plants. It will, however, be produced in respect to the

[ Page 8427 ]

shortlist — not all conceivable projects. For the moment we're looking at all possibilities, including thermal generation. We're not ruling it out altogether.

For environmental reasons the disposition is towards hydro or perhaps natural-gas-fired plants, but hydro has its own particular kind of environmental impact, as was obviously demonstrated in the Site C hearings. Those kinds of hearings will have to be held for new projects.

MS. EDWARDS: It may be time to ask the minister whether in the public process related to Site C, he intends, when Site C is reactivated, that there be new public hearings into Site C?

HON. MR. DAVIS: Site C went through the full gamut of public hearings over a period of three years. As I recall, the conclusion reached by the special inquiry was that given certain precautionary measures, construction of Site C could begin. However, at that time they pointed out the obvious: there was a surplus of generating capacity in the province and Site C wasn't needed. I am not convinced myself that we should invest another three years going over the same old ground to check out its environmental acceptability.

MS. EDWARDS: Would the minister agree that there may be new environmental evidence on what is a danger to human health and that it wouldn't be going over the same ground, because we would be considering new knowledge?

HON. MR. DAVIS: If there is new information, fine; I think it's up to people to bring it forward. I can't imagine new information relative to human health dealing with a hydroelectric project. It is simply storing water in a river system with a conventional dam. I just can't imagine human health concerns that haven't already been addressed.

MS. EDWARDS: To follow that up, what about such decisions as on the Columbia River Treaty? How does the public have any input into the Columbia River Treaty and what the minister decides to do with it? The minister is going to have to make up his mind in less than a year, I believe, so that B.C. Hydro, as the entity, can put forward its plan a year ahead for five years ahead so that we know what we are doing.

It is not a lot of time for the Columbia River Treaty. There are a lot of ideas about what's to be done with the Columbia River Treaty downstream benefits, and I gather that the minister plans to make some trade-offs with the downstream benefits. If the minister wants to do that, I think he should be letting the public know what he intends to do and give the public some say in it. Does the minister have any intention of getting public input for that decision?

HON. MR. DAVIS: I think the principal forum for that debate is this chamber. The downstream benefits, which are the equivalent of another Site C, will be flowing into Canada roughly a decade from now, and a decision has to be made at some point on whether we simply take that power, which is currently being generated for U.S. consumption, bring it to Canada and postpone the Site C or its equivalent.

That energy belongs to the people of the province, not to B.C. Hydro. It is an important decision. My instinct is to bring it back and use it. I mean, it is currently being produced. Obviously it is environmentally benign — it's already being generated. We wouldn't have to build any new plant; in fact, the Americans have to provide the necessary transmission to the border free, so its economic cost is zero. It's the least-cost energy that we will ever have. it's one of the principal benefits of the Columbia Treaty. Admittedly, it's taken 30 years for it to materialize, but those benefits were sold in the States for 30 years in order to help pay for the dams.

I don't believe that we — you, us, British Columbians — have to make a decision on the downstream benefits for some years. We mustn't be panicked by B.C. Hydro or anyone else into making a decision on the downstream benefits. If we were to leave them in the United States, and I'm taking a purely businessman's approach to it, we should at least know what they're worth in the United States, what the Americans least-cost alternatives are and then add something to that. Otherwise, they come home. Because they'll cost us nothing, because they are considerable in volume and capacity, I think they are a resource we should use in our long-term planning for our energy supply in this province.

I don't agree with those who say we have to make a decision shortly. The energy isn't available for ten years, and it's unique. It's power generated in the United States as a result of controlled water flowing from Canada. It's ours forever. It's an important resource. Always keep it in the back of your mind as one of the alternatives to a Site C or alternatives to other generations in the province. We're just in a fortunate position that a treaty was concluded and projects built which set up a regime which gives us zero-cost power in significant amounts roughly ten years from now.

MS. EDWARDS: Would I be interpreting you correctly then to say that unless the House were given notice differently, your intention is that the downstream benefits would be repatriated and any five-year plan that B.C. Hydro as the entity has to make would depend on that determination? Otherwise, as you say, the Legislature would be the place to debate anything different, and therefore, were you minister, you would bring it back to this Legislature if you planned to do something different?

HON. MR. DAVIS: It's a very important decision not just in power terms but also in monetary terms. It depends what price you put on U.S. alternatives. You can pick a figure anywhere from $2.5 billion to $5 billion as its lifetime value. That's a big decision.

[3:15]

B.C. Hydro does have a problem. It exchanges power with the Americans with the Bonneville Power

[ Page 8428 ]

Administration. There are economies in cooperation. The Bonneville Power Administration particularly is forever putting pressure on B.C. Hydro to make up its mind what it's going to do with downstream benefits before they'll enter into other arrangements. That's where the pressure is coming from: the American side.

While I sympathize somewhat with the executive of B.C. Hydro, they have some interesting cooperative arrangements with Transalta in Alberta, Alcan and Bonneville in the States. Nevertheless, my inclination is to resist that kind of short-term planning process and say: "This is too valuable. Environmentally it's the best energy we'll ever get. Let's decide on its future in the fullness of time." As far as I'm concerned, I think it's a great resource for the province.

MR. PERRY: I don't want to interrupt the member for Kootenay for long, but I wanted to interject in this discussion with a few questions. My colleagues had told me it would be interesting to listen to the minister, and I'm delighted to assure you, Mr. Chairman, it is fascinating. He has a very interesting background. I suppose he's been involved with energy questions at least double the length of time that any of the rest of us have, possibly longer, even though he's still young.

I think there are some interesting lessons that we should strive to learn from his experience and the experience of this Legislative Assembly in the history of the Columbia River Treaty. If memory serves me — I'm sure the minister will correct me if I'm wrong — he served on the staff of General McNaughton at a time when General McNaughton attempted to avoid some of the mistakes of the Columbia River Treaty and prevented other mistakes which might have been made by ensuring, for example, the right to divert the Kootenay River or achieve alternative benefits.

General McNaughton had great foresight. In my view, he was one of the few Canadians who began to realize what was at stake with the Columbia River Treaty and had the intellectual resources to deal with the Americans, who were far superior in their research strength and the strength of their government, in the intellectual power they brought to bear on the treaty negotiations, and who therefore snookered us.

It's a matter of open historical record that the Columbia River Treaty was a very bad deal for Canada, and I think we need to ask ourselves why we got into it, as we approach the renewal of the treaty. Far be it from me to recount all that history. I only know it in a fragmentary way. If we had time to review the accounts of the debate in this assembly and in the Parliament of Canada, I suspect we would find much great humour, looking backwards historically in those debates, and we would think it pathetic how foolish some of the speeches would sound now. Part of the lesson is: how do we avoid that mistake now?

Therefore it was reassuring to me to hear the minister say that his bias is to restore the power to Canada. It's reassuring to see that he admits the complexity of the decision; that doesn't surprise me, but I was pleased to hear him lean towards his bias. What disconcerted me more was his assumption that the debate over the treaty should proceed as its highest and final point in this assembly. Why do I say that? We are, after all, the final arbiter of government in British Columbia, at least in theory. But I think we're among the least prepared. Mr. Chairman, that's the lesson — that we need to be modest enough to learn from the history of the treaty: very few of us will have, at the time we debate it, any understanding of what we're debating. We won't understand the Bonneville Power Administration and the tie-ins to B.C. Hydro; we won't understand whether $2.5 billion or $5 billion as a discounted present value of that power is a genuine value, any more than the former Premier, W.A.C. Bennett, understood what he was doing more than 30 years ago in signing the Columbia River Treaty.

Interjection.

MR. PERRY: The Minister of Forests (Hon. Mr. Parker) says: "Don't ever speak for him." I'm glad that I don't have to answer for his record, Mr. Chairman. I don't think anyone would want to have to answer for his record on the treaty or on smaller but equivalent deals, like, as the minister well knows, the negotiated settlement in the Skagit Valley, where the government of the time, the former minister of resources, Ray Williston, signed for roughly $35,000 per year for power that ultimately was valued at $4 million (U.S.) per year, and simply assigned the same flooding rate to very valuable land in the Skagit Valley, $5.60 per acre per year, that he had assigned to Crown-owned land in the Peace River valley, to flood Williston Lake behind the Bennett Dam. When you look back on that record you wonder: how could the civil service of British Columbia have recommended to a minister something so ludicrous? How could a minister and in fact a cabinet, by order-incouncil, have voted for something so ludicrous? You have to ask, I think: how do we ensure that we don't make the same mistake again?

To me, Mr. Chairman, there are two possible answers, and I do not think that one of them lies here in our Legislative Assembly, as much as I wish it were otherwise. I certainly don't profess to have the wisdom to make a decision on a subject like this intelligently, with the knowledge that we will have before us. The two solutions I see are: (1) the widest-ranging possible public debate through a royal commission or some sort of public review commission, led by the ablest Canadians we can find; and (2) using our legislative committee system to pursue this issue, with a long timetable, not a timetable of one session or a couple of months but one of several years to review the issue in a non-partisan way and look at what's best for the province of British Columbia over the available time. I see this not as superseding the responsibility of the Minister of Energy or the cabinet or the Premier, but simply as complementary, and potentially adding the ability to

[ Page 8429 ]

find information or see perspectives which we would not otherwise have available to us; and perhaps an exceedingly modest investment of public funds, in attempting to avoid a major error that could cost us billions over the years.

I wonder what the minister's perspective on that would be. Does he feel so confident, in light of the historical record, that he is certain in his conscience that he can make the best decision, faced with the monolithic and intensely nationalistic and self-serving nation that we face south of us, who historically do...?

Interjection.

MR. PERRY: The minister asks whether that's why I left the United States. No, it's not. Mr. Chairman, I'd like to ask the Minister of Forests to withdraw that remark. I think it's completely inappropriate and insulting.

MR. CHAIRMAN: May I remind all members to address their comments through the Chair when they do have the floor.

MR. PERRY: Mr. Chairman, I think it's inappropriate, because I am not accusing or implying that the Minister of Energy is stupid or incompetent nor am I in any way denigrating him. I am simply asking him to consider and to tell us his opinion on how one deals with this historical reality.

If you look back at Canadian history, look at the Alaska boundary commission where we were snookered. Look at the A-B line in Hecate Strait, where now the Canadian fish skippers are being pirated by the Americans because it is a superior country, it has more resources and they have negotiated better than we have historically. Let me leave it at that and ask the minister to respond.

HON. MR. DAVIS: I think the downstream benefit issue for the future — not the past — is a simple one. There is a large block of power generated in the United States. It comes off generators in Grand Coulee and the other dams down to the sea, and it is ours as a matter of law, treaty and economic right.

A simple decision has to be made whether we will bring it home and use it as a zero-cost resource, both environmentally and economically, to benefit consumers in this province, or whether at some price we leave it down there. That's the simple decision. It's not a complex issue; it's nowhere near as complex as the negotiations which led up to the treaty itself.

[Mr. Pelton in the chair.]

The hon. member implied that the Columbia River Treaty was a bad deal. In some words at least, he extolled General McNaughton. I was seconded off and on to General McNaughton, and I worked for C.D. Howe. General McNaughton was an engineer. The NDP in those days, as now, were Canada-firsters and they blindly followed an engineer. The engineer was going to dam every valley in British Columbia, fill it up with water and divert it into the Fraser River system.

Environmentally and ecologically, that was the most damaging thing that could ever have been done, but the NDP followed that throughout. I can remember Tommy Douglas going to Golden. Tommy was about as innocent a subject as most of the NDP at that time. At a by-election, he went to Golden and gave a speech extolling the McNaughton plan for the Columbia, and was immediately told: "Tommy, if your idea was in place, you would be under 300 feet of water."

That's as much as the NDP knew about the subject in those days, and they know about as much today. They backed an all-Canada project which would fill up the mountain trench from the international boundary line up through Canal Flats, through Golden, around to the McNaughton dam, and then they would put a diversion tunnel into the Thompson. That was the McNaughton plan.

He thought that short-term he could also do a deal with the Americans. Naturally when they saw that scenario, there was no deal possible. But that was the McNaughton plan. The plan that actually developed was in response to the American need for controlling a wild river flowing into the United States, and the projects built had a dual function: (1) they created storage capacity in Canada and controlled water flowing into the United States; but (2) those dams served as the platform for generators.

The dams were substantially built free of cost at the expense of the Americans, so the Columbia in Canada was developed. It's not going to be developed again. We are not going to repeat that scenario. We don't have another Columbia flowing into the United States; we don't have another river of any scale — save a tributary of the Columbia, the Okanagan, which doesn't happen to have hydro potential — which could be developed in cooperation with the Americans. It's history.

The Columbia River Treaty was a much more modest development than the McNaughton plan. When I was Environment minister, in retrospect, I asked staff to do an environmental analysis of the McNaughton plan versus the actual treaty plan, and on every one of 25 counts, the treaty plan was superior to the NDP-endorsed McNaughton plan.

To repeat: environment wasn't in style in those days. It was just kilowatt-hours. The whole thing was measured in engineering terms: what would generate the most kilowatt-hours? Admittedly you can store Columbia River waters at a high level in B.C., shunt them through into the Fraser and put dams all up the Fraser. You can well imagine what the fisheries industry reaction to that was. It just didn't fly.

General McNaughton was a great gentleman and Canadian patriot. For a time, he was head of the Canadian Armed Forces in Europe during World War II. But he wasn't all that practical, and that's one of the reasons he didn't continue to head the Armed Forces over there. He had his scheme developed —another scheme — which was much more modest and

[ Page 8430 ]

saw us control a wild river mostly at American expense. There was flooding and considerable environmental impact. I don't think much of that would be tolerated these days, but nevertheless it came to happen. It's all in place. We can divert the Kootenay into the upper Columbia; we still have that opportunity. We can divert over the Rockies and into the Prairies if we want, but it isn't economical. We can divert into the Fraser, but it isn't politically acceptable.

[3:30]

1 think the Columbia River Treaty that we have in place is going to last for a good long time. It has set up a water regime that's tolerable. I realize that the flooding back into the Kootenays from the Libby Dam presents us with a difficulty. Were we to divert the upper Kootenay, the Libby Dam would be irrelevant. Anyway, that's all history.

Today we certainly have to concern ourselves — mostly because of public concern — with environmental aspects. I doubt very much if anything resembling the McNaughton plan would ever take place currently. Indeed, I think the present dams would certainly meet a lot of opposition before they were built.

MR. PERRY: I would thank my colleague for her indulgence. That was a very elegant answer, but it wasn't an answer to the question I raised. I was encouraged to see that the minister changed his earlier statement from a few minutes before, which had been that the Columbia power was obviously environmentally benign. I'm glad to see he recognizes that the Libby Dam, in fact, flooded the finest wildlife range in North America. It was staunchly opposed by the wildlife biologists and ecologists at the time.

There was not a time when nobody knew about these things. That was a time when the Social Credit government wouldn't allow those reports to be published. You could see leaked copies, but you couldn't introduce them into any kind of official hearing, because the government officials — the wildlife biologists like Mr. Ray DeMarchi — weren't allowed to attend the public hearings. They were kept in their pens like good quiet rabbits.

MR. KEMPF: Sheep.

MR. PERRY: Like good quiet sheep. They weren't sheep; they knew what was going on. They told us, and it was known. Earlier, at the time the treaty was negotiated, clearly there was much less understanding of that. Even then there was some.

When looking at the Columbia River Treaty, I'm not going to apologize for anyone who supported plans to divert rivers into the Fraser River. I don't know whether Tommy Douglas supported that or not. Be that as it may, if he did, people and policies change. We don't support that. I've fought much of my life against hydroelectric dams of that kind against the Moran dam, for example, when the government wanted to build it on the Fraser. That was W.A.C. Bennett's government.

The question with the Columbia River Treaty is not: should we undo it? Of course not. The question is: can we avoid some of the mistakes? For example, it was widely considered by some relevant experts like the economists at Resources for the Future that the same benefits could have been achieved without the construction of the Duncan Dam. It gave no power benefit, flooded a very beautiful and wonderful wilderness valley and had major ecological impacts on fisheries in Kootenay Lake. I forget the other dam — Keenleyside Dam or one of the others in the system — which was considered potentially to have been unnecessary.

I think the complexity which I was alluding to is: how do we know? If we're not going to follow the minister's bias — which I hope we will — of restoring the power back to us, at what price will we sell it, and how will we know whether we're getting a good deal? The Americans are not going to negotiate softly. They will drive the hardest possible bargain they can, just as they did in the free trade deal and just as they have in every other negotiation they ever handled. We will be negotiating with a country which is ten times as large and has even more economic power than that, relatively speaking.

The price at which we would sell power to Bonneville, if we elect not to return it, is what I'm talking about. How will we know what a good price is.? How will the public have confidence in that? Are we simply going to leave it to the Minister of Energy, Mines and Petroleum Resources and his ministry? Competent as they may be, is that responsible in light of the mistakes we've made in the past in similar negotiations? I submit that it's not, no matter whether it be this minister or my colleague from Kootenay at the time as a minister. I don't think we have that omniscience, and we can use all the advice we can get.

For example, how will we know how to deal with that option to divert the Kootenay River? Given that there are strong environmental arguments not to do it, is that something we should now be prepared to negotiate away, but for a price? If so, what will be a fair price? I think these are very complex. That's why my suggestion, Mr. Chairman, was that the minister consider some more open process to achieve our negotiating strategies — be it a committee of this Legislature, which has precedent in many of the other Legislatures in Canada. We're one of the few whose committees never sit. We're one of the few that doesn't make use of our members— even our government backbenchers — throughout the year. Be it a royal commission or some other commission of inquiry — one that can hear from the interested public, including academics and independent engineers.

HON. MR. DAVIS: B.C. Hydro, under chairman Larry Bell's leadership, has held a number of town hall meetings — I'll call them that — relative not only to conservation or Power Smart but also to new

[ Page 8431 ]

resources, new power developments. I believe he's held as many as half a dozen in the Kootenays over the last 12 months.

Talking about various alternatives, when I said downstream benefits were environmentally benign, I was talking about the electricity coming off U.S. generators. I'm assuming that the treaty regime that's in place will continue. As far as we're concerned, we can bring that power into British Columbia at no economic or environmental cost. I'm not talking history; I'm only talking about future decision-making.

Diversions. I think the diversion of the upper Kootenay waters into the Columbia is environmentally and politically so difficult that it may never occur. It's not very costly to do it, but I don't think it will happen. I don't see a government of this province advocating it, and I think B.C. Hydro, paying attention to environmental and other local concerns, is not going to seriously advocate it. So the Kootenay continues to run into the Libby reservoir, on down into the States and back into Canada again.

Diversions into the Fraser and so on were certainly mooted at a time when power was all-important and the environment was a minor consideration Today I don't think there's any possibility of diversion of Columbia water into the Fraser system, for both economic and environmental reasons, but I think principally environmental. There's no point in diverting water, at least for power purposes, unless you have a generating plant downstream. You'd have to build a series of relatively low-level dams on the main stem of the Fraser from Yale up to Lytton and beyond, and I can't imagine that happening in view of the opposition from fisheries, tourism and other local interests. I think the question of diversions of Columbia water is essentially academic from now on

MR. PERRY: Mr. Chairman, as much as I like to hear that answer from one perspective, I think it's an example of the point I was making. I think the minister has just potentially given away millions of dollars of benefit by what he just said. He has given away our negotiating position, negotiating the renewal of the treaty, because he has said that we will never divert the Kootenay River. With those very words he has given away to the Americans something for which General McNaughton fought very hard at the time. I remember that during the attempt to find a solution to the Skagit Valley controversy, one of the potential options for British Columbia was to threaten or plan to divert the Kootenay River into the Columbia.

Incidentally, diversion into the Columbia does not involve dams on the Fraser; it involves passing that water through the Mica Dam, the Revelstoke Dam and the dams downstream, be there new dams at Murphy Creek or be there generation added at Keenleyside. It involved diverting it away from Libby Dam into our dams. To stand in this House and say publicly at this point that he will never do that is lunacy. It's exactly the example of total incompetence in negotiating with the Americans that has cost us so dearly in the past in this country.

I see the Minister of Forests (Hon. Mr. Parker) there looking rather sombre. He baited me earlier as to why I came to this country from the U.S. There are many reasons why I came here. But one thing I can tell you, Mr. Chairman, having grown up partially in the U.S., is that — if any of our ministers don't realize it by now — they're very tough businessmen; they drive very hard deals. They negotiate only in their interest; they don't negotiate in Canada's interest when they negotiate with us. From one end of the country to the other — if you go back to the old Woody Guthrie song, from Maine to California, from the 49th parallel down to the Gulf of Mexico — they're all Americans. They think of themselves as all one country, and they negotiate for their own national interests.

I can't believe what I've just heard the minister say. I think it is a stunning political mistake, and we will pay for it in the future.

HON. MR. DAVIS: Interesting, Mr. Chairman. None of us is here forever. An opinion I express in this House is certainly not binding on any future government or indeed the present government. I expressed an opinion. I can imagine the hon. member for Kootenay (Ms. Edwards) reacting to any suggestion that we divert the Upper Kootenay into the Columbia. You have to build a dam, you have to divert water, you have to flood Lake Windermere to, say, another ten or twenty feet, and so on. You have to do a fair amount of environmental damage to a very sensitive, beautiful area of the province. I expressed an opinion. I said from an environmental point of view that that particular diversion was unlikely. I didn't say it would never happen. I didn't say that it would never be considered.

I recall when the NDP was government and the Libby Dam was just completed. The hon. first member for Vancouver East (Mr. Williams) was the Minister of Lands, Forests and Water Resources, and he went representing British Columbia. He was asked to say a few words and his contribution to what was supposed to be a great event — ribbon-cutting on an immense dam — was to simply state that his government would immediately consider diverting the waters flowing into the Libby reservoir into the upper Columbia. It's always a possibility. He didn't make many friends in the United States that day. I don't think he would make many friends today if he recommended it in the Kootenays in Canada.

Nevertheless, it's a possibility. It can still happen. The treaty doesn't preclude diversions, but what it does say also is that if you divert and cause damage downstream, you are going to have to pay the consequences, so I think there is not only the environmental impact of diversion to consider but downstream disadvantages which also have to be paid for financially.

The hon. member mentioned Resources for the Future, a well-known, well-thought-of American economic body. Resources for the Future concluded in

[ Page 8432 ]

the mid-1960s that the Columbia River Treaty projects — the regimes set up by the treaty — were, if anything, more advantageous to Canada than the United States, so I rest my case. I don't think the treaty was a bad deal. I think it set up a good regime. No one in those days counted the downstream benefits, which were worth anywhere from $3 billion to $5 billion then as a bonus, so I think it was a good deal.

MS. EDWARDS: I do have to say that we haven't yet thrashed this one out, the second member for Point Grey (Mr. Perry) and myself. And I might say that you may well have given great joy to the U.S. by a comment like that, but you certainly didn't lose any votes in the Kootenays. It is not something that the people in the Kootenays want to do.

[3:45]

They have questioned sometimes whether in fact the government might be able to take some other steps which would be bargainable because we have not diverted the waters of the Kootenay into the Columbia. I don't know whether that's possible or not. I think about what the second member for Point Grey said about the Columbia River Treaty, in particular that it's an important issue and that people have opinions about it and they should have the opportunity to say what they have to say about it and to know what the plans are. That, as I say, is one of my major concerns today.

I want to move on to talk a bit about the conservation policies of Hydro and certainly of the government — as Hydro reflects government plans, government policy — to use conservation as part of its management structure. As I said before, the Power Smart program has been an excellent one. It marks a change in direction for B.C. Hydro. It marks a change for the provincial policy on conservation, I happen to think, and our party believes that is an extremely important direction to go. In fact, as citizens of the world, we can't afford not to begin to practise conservation, and I guess the only thing that we could say is that we think there could be more.

In practical terms, I will say that you begin small and work more toward it, but I would ask the minister if he has considered some kind of direction that says that this is almost the least expensive power that we can get and that's shown in the resource plan If it is that inexpensive, has the actual planning for that... ? Has it made an attempt to look at the most we can squeeze out of it? In other words, is it simply an attempt to sort of take a whack at the consumer society and say, "Likely we can grab this much off the top and that will be easy," or is it really saying that in practical terms we can do this and if we really go at it we can do more for conservation? Could the minister respond to that and tell us his feeling about the extent to which we should pursue a conservation policy in British Columbia?

HON. MR. DAVIS: I think we should pursue the conservation initiative as thoroughly and consistently as we can. It is very difficult to anticipate what the reaction of the public will be, even what that of industry will be, but Hydro is devoting a lot of staff time to going out, particularly to companies, and indicating that they can use less lighting, or modified lighting regimes; that they can install one-horsepower motors rather than two, and so on. There are many more elements to this initiative. We'll find out as the years go by what the success is, but I've no doubt that there are very substantial economies over time simply by people being more knowledgeable about the wise use of energy. It's more an educational program than it is a matter of.... Well, it's not a matter of decree, because clearly the consumers are deciding whether or not to modify their plant, equipment or processes.

As the hon. member knows, this is a practice which has been followed increasingly by utilities faced with very expensive new plant of their own and, in some instances, inability to get approvals to build new plant. So they're using the Resource Smart approach to their customers to modify their demands, and in the process they've found this is the cheapest energy they can get. It's much less expensive to educate and promote the wiser use of energy than it is to add bricks and mortar and plant and equipment.

MS. EDWARDS: The resource plan suggests that if British Columbians used something other than electricity to do all the space-heating, water-heating and cooking, we would be in a position to save 3,000 gigawatt-hours a year. How does that fit into our goals? Is that where we're going? Is that what Hydro says we're going to, or is there a different level? Is it this plus more? Where did we find the goal that we have, if we have a stated one?

HON. MR. DAVIS: Electricity is not an efficient source of energy for space-heating. It's certainly not as efficient as the cheapest and cleanest source available to us now, natural gas. Neither is it the cheapest source of energy for water-heating. Any sensible heat application of electricity can be supplied more efficiently using a fuel, and if you have a cheap fuel like natural gas, even better.

One of the reasons we privatized the gas division of B.C. Hydro was to have a utility in the gas business really go after water-heating, space-heating and so on. As a very loose generalization, it costs roughly four times as much in plant and equipment to build power dams, transmission lines and distribution systems for space-heating than it does to drill wells and build a pipeline and a local gas system. So for any of these competitive sensible heat applications, gas is a quarter of the capital cost of electricity, and if Hydro can progressively shed the water-heating load and not be building space-heating load with electricity, this too is like Power Smart in a way, but it means a different commodity is doing that job more efficiently. So taking the total energy approach, natural gas is much better for those sensible heat applications.

[ Page 8433 ]

MS. EDWARDS: This brings a question to mind which I may put a bit clumsily. When the gas utility took over Hydro Gas and became B.C. Gas.... There is now an incentive program which takes money out of Hydro's coffers in order to have people convert to gas water-heaters. Is that correct? You get $80, $90 or $100, somewhere in there, and that is funded by Hydro. It seems to be a great benefit to the gas company. Is that a fair deal?

HON. MR. DAVIS: I know that the gas company counted on picking up a lot of the water-heating load over a period of five or ten years in the lower mainland. I can only assume from what the member is saying that Hydro, as part of its Power Smart program, has a very modest subsidy. That must be for an old tank or something like that if it's $50.

Regardless, Hydro is not unhappy to lose water heating, because what that means is that it has to build Site C or something like that not immediately but perhaps a year a two later. It's again a Power Smart initiative to the extent that Hydro's involved. It's not a subsidy to the gas company; Hydro has no incentive to do that. But Hydro must be focusing on postponing big investments by moderating its load curve. Remember that Hydro's sales of electricity went up more than 5 percent last year despite these kinds of conversions. So Hydro is really having to look very seriously, beginning in a couple of years' time, at new generation and new transmission. If it can postpone in any way having the gas company take over some of its less desirable loads, I think it favours both the gas company and Hydro.

MS. EDWARDS: I have another question about a program that was there for, I guess.... It's not really a conservation program, but I'll ask it anyway — I have it written here. The Electric Plus program, Mr. Minister, as applied on Vancouver Island, is now being withdrawn, just as we're talking about getting natural gas to the Island instead of propane. Could the minister explain to me the extent of the Electric Plus program on the Island and why it's now being withdrawn? Why is the timing the way it is?

HON. MR. DAVIS: Electric Plus, I have to admit, is essentially my invention. Electric Plus is provincewide; it's not just on Vancouver Island or the Sunshine Coast. Electric Plus will continue, but Electric Plus really only makes sense in areas where natural gas is unlikely to be available. Electric Plus is possible because much of the time Hydro, because it's a hydroelectric system, has surplus energy, so it's able to sell this surplus energy at a low price. The Electric Plus program takes advantage of that surplus energy. It generally sells for half the price of electricity.

I built a cottage on Bowen Island last summer and put in an Electric Plus installation. Bowen Islanders are tending to go that way, because natural gas isn't going to get to Bowen Island. Straight electric heating is expensive. But if you have a backup fuel, like firewood, and Hydro can vet your installation and be sure it is in fact sufficient to heat the building, they will let you buy, through a separate meter, half-price power — and that's really what it is.

It's available all across the province. It's available in downtown Vancouver. It doesn't make sense in downtown Vancouver, because gas is cheap. But it makes sense in areas where you've got a powerline into your house or cabin or whatever and you've got firewood or some other backup source of energy. On Vancouver Island right now, with the gas line likely to be built, it doesn't make sense for people to go to Electric Plus in the cities. It still makes sense in the outlying areas.

MS. EDWARDS: I have another question about another program. There is a program which suggests power audits be done by Hydro and so on. There are people who come out and do power audits and proposals for making your house more energy-efficient and that kind of thing. This is exactly the kind of program that was in existence and that the federal government funded totally, I believe, for some time. It then proposed a number of pilot projects throughout the province, to be funded jointly by the federal government and the provincial government. The provincial government turned them down. I gather that you're now doing the same thing, but you're doing it through Hydro.

My question is: considering that the federal government was willing to do that kind of work, and in fact did it very well, and still, one would suppose, has an interest in energy conservation, has the minister addressed the federal government for funding to assist in this kind of energy conservation program?

HON. MR. DAVIS: The hon. member is quite right. Beginning in the late seventies the federal government, as part of the national energy program, made money available for better insulation of homes and so on. That program was wound up in the mid-1980s, so there is no federal money now available. The federal government's retirement from the field came about partly as a result of the drop in world oil prices.

Hydro, however, still has an incentive to continue using what's really the Power Smart philosophy. It's doing something thoroughly economic from its point of view. It's simply postponing heavy investment, and on balance it makes sense for Hydro to do that. I think the Hydro approach — going to individual homes and carrying out these assessments, going to plants and office buildings and making these assessments and giving advice— is the right way to go. It's educational; and where people make new investments and can save money as a result of using less power, they benefit in that way too.

The province doesn't have any supplementary program, nor does the federal government at the present time.

[4:00]

MS. EDWARDS: I know I can't knock the minister for failures to do something in the past, because

[ Page 8434 ]

that's not allowed, but it was a great regret in our area, where we had a very active energy conservation unit. They had retrofitted a house, they were operating, and they were going out and doing suction tests on houses and doing computer readouts of people's needs. It had all sorts of community involvement. It was an extremely good program. It was different from the Power Smart program, but it was extremely effective. It was at the right time too; it was even earlier than now. I think it's a great regret that we didn't have that program continue. I felt very badly, because once the provincial government withdrew from the program our municipal government was unable to fund it as well. We would have had in our community one of the pilot programs — that would have continued. It's a great regret that we didn't have that.

The budget speech says that the Minister of Energy, Mines and Petroleum Resources will be spending $3.1 million this coming year on a new program to produce energy from waste products, including municipal garbage, wood wastes and possibly coal wastes, and seeking matching federal funds for the initiative. I have a couple of questions on that.

First of all, it says $3.1 million. I notice in the actual estimates that the amount for that is $3.01 million. Was there to be another $99,000 in that budget from somewhere else? Is that why it would be in the budget at 3.1, or was it a misprint? The second question is: what exactly has happened on that?

HON. MR. DAVIS: I gather that the $3.1 million figure includes administration, and the $3.01 million perhaps doesn't. The proper number is $3.1 million.

We are currently negotiating with the federal government, hopefully to find matching dollars, so perhaps we can double the effectiveness of the amount. It will apply in a number of areas: heat energy from garbage, utilization of waste wood at sawmills and conceivably although I doubt whether this would happen the utilization of waste coal for power production.

I think in the first few years it will be allocated in relatively small amounts to a number of projects, rather than to one or two massive projects. The thrust is conservation and better utilization of waste, so it has an environmental kick as well as an energy value to it.

MS. EDWARDS: Does that mean, Mr. Minister, that you are going to be waiting until you get an answer from the federal government — you haven't yet persuaded them to participate — or does it mean that the $3.1 million will be spent for these purposes this year, in this budget?

HON. MR. DAVIS: We are certainly not waiting for projects. We hope, however, to be able to double the amount of money by getting the feds on board. We have made a policy decision and are going ahead, but we'd like to have the federal government share in this kind of initiative. There is, at least in general policy terms, acceptance at the federal level. They've had a program for industry, and they welcome the province's initiative.

Again, we don't have conclusive agreement right now saying that the federal dollars will match our dollars.

MS. EDWARDS: Could the minister explain what kinds of projects are going ahead and how the people who are doing the projects were chosen? Did they apply? How did they know they were going to apply, or have they been chosen because they emerged out of some other process?

HON. MR. DAVIS: One project for which money has been committed is a hydrogen-fuelled bus project for Vancouver. I will come back to that. Another possibility — and arrangements haven't been concluded — is for a co-generation development in the Williams Lake area utilizing wood waste from sawmills. Those are two.

On the first one, the paper is virtually all complete. We happen to have a company in North Vancouver, Ballard, which is now attracting worldwide attention. It has developed a hydrogen cell which effectively takes in hydrogen on the one hand and air on the other into a cell the size of an ordinary automobile battery, with no moving parts, and electricity flows out. The modification which the province is helping to finance under the energy-from waste program is to eliminate the hydrogen and simply use methanol. We will have methanol in the tank of a bus and air coming in from outside, pumped into this unique cell. A few of them will drive a bus. This, if it all works out, is by far the least polluting way of driving vehicles.

The breakthrough, essentially, has been in the membrane which is used between the electrodes in the cell. It's state of the art. It's attracting a lot of attention. The British navy, the American navy, Dow Chemical in eastern Canada and several others —Daimler-Benz in Europe — have now got versions of the cell, and they are seeing how they can apply it to their development. It is promising, but that is a state-of-the-art, leading-edge kind of development which hopefully will work out and give us a real boost in British Columbia on the technological side.

MR. CLARK: It is a fascinating discussion and I apologize for only hearing part of it. I can't engage the minister in any kind of technical debate, but hydrogen has always been touted as the fuel of the future— the non-polluting fuel, the by-product of hydrogen burning being oxygen, and on and on. The problem has always been that it takes more energy to produce hydrogen than hydrogen produces. I know that some over the years have argued that spilling water over dams and the like.... If there is any surplus, that might be a source of generating hydrogen.

This is a fascinating discussion about new technology which sounds quite promising. I just wonder how this technology gets over that hurdle, which

[ Page 8435 ]

appears to be the most insurmountable to the use of hydrogen fuel in any capacity.

HON. MR. DAVIS: The simple answer is that this particular cell is so much more efficient than earlier cells that the energy-efficiency difficulty is overcome.

Quebec is interested in the hydrogen business, mostly because they see hydrogen as a product of hydro power, electrolysis of water producing hydrogen. So Quebec is pushing hydrogen, at least as a source of hydrogen for the world. What Quebec is up against is that a far cheaper way of making hydrogen is from natural gas, and Alberta is pushing that approach.

There is a lot of hydrogen now produced from natural gas, and that hydrogen is combined with nitrogen to make fertilizer. Much of the fertilizer in the world Is now made that way. Hydrogen is a product along the way, so natural gas is your best and cheapest source.

In the case of this particular battery, they would not use natural gas. Natural gas would be converted into methanol. This is done at Ocelot's plant in Kitimat, for example. It is a liquid, like gasoline. You can then have it in a tank in a bus. Your methanol and your air go into this battery, and electricity flows out and drives the wheels. Hopefully we have got all of the inputs necessary. We have got the natural gas; we can have methanol produced handily anywhere in the province; and this bus demonstration event will be watched with great interest around the world. Los Angeles is certainly very interested in anything that can convert methanol into a fuel which is really electricity.

While it is not totally pollution-free, because the methanol has one or two carbons in it, it's the next thing to pollution-free.

MR. CLARK: It sounds fascinating, and I am interested in the concept. It just seems to me intuitively that you're taking an extra step. In other words, it seems to me that the technology is in existence, is it not, to burn methanol to propel cars. So to burn methanol, so to speak, or put methanol into a battery and then turn it into electricity to run a car or vehicle is intuitively inefficient, it would seem to me. I wonder why this extra step, and not just moving directly to propulsion from methanol.

HON. MR. DAVIS: The hydrogen, if I can put it that way, is conveniently carried around as methanol. There has to be a miniature reformer that takes methanol to hydrogen in the bus. Then hydrogen goes into the cell and, combining with air or oxygen, makes water. But electricity is the other product Methanol is just a step along the line. It's a way of packaging the energy and handling it reasonably, but it ends up momentarily as hydrogen and goes into the cell as hydrogen.

It is certainly the least polluting of the ways of driving mobiles. Mind you, its first applications will be in plants that have a surplus of hydrogen. They can simply produce some electricity using this battery. You can imagine that in defence and other applications it is unique, so the first applications will probably be military and so on. But we are putting our money into a bus demonstration scheme.

Incidentally, with the hydrogen cell there are no nitrous oxides, no ozone damage and so on. So theoretically — and the hon. member will have to take my word for it in terms of energy economics — it works out.

MS. EDWARDS: I am going to ask the minister if he could clarify his reference to a co-generation project using wood waste in Williams Lake. It's been a matter of some interest. The Premier made an announcement that you would have some such project. He was in Salmon Arm when he made the announcement. The Minister of Environment (Hon. Mr. Strachan) was unable to tell me that the Premier was correct in making that announcement. There is still some question, I understand, as to what company might do the project. That is to be determined by B.C. Hydro. Or is there another involvement? How is that project going ahead, how is it going to be decided, and will these two projects take up the $3.1 million?

HON. MR. DAVIS: Part of the $3.1 million may be available for a development at Williams Lake. There are two different projects being examined. Both essentially use wood waste. The resource is the wood waste spun off by the sawmills. Using the wood waste to produce steam and/or electricity will reduce the pollution problem there by a considerable amount. The choice as to which project goes ahead is, I understand, yet to be made. But they're both good news from the environmental point of view; they use wood waste beneficially.

Hydro's role is simply this. Hydro has told the world, in effect, that it will buy surplus energy from co-generation activities, whether it be a pulp mill, a sawmill or a smelter, and it will pay around 3.5 cents per kilowatt-hour for that energy. That's up from around 2 cents, which Hydro used to offer some years back. The 3.5-cent figure is a rough approximation of what Site C would cost. So they're saying to these industries: "If you've got waste and if you can produce electricity for 3.5 cents, we'll take it." Hydro is not bidding in this; Hydro is simply saying: "We stand ready and willing to take electricity and pay 3.5 cents for each kilowatt-hour." Hydro is not a decision-maker in the process, but they're a willing buyer— at a price. It's their offer to buy at that price that makes these several developments possible. As to which one it will be, I certainly can't say.

MS. EDWARDS: I understood, Mr. Minister, that these came in response to a request for proposals, and that, in fact, Hydro decides which project goes, and indeed, whether or not the project goes at all. My question is: if Hydro is making that decision, how does the funding from the ministry fit into the kinds of bids that these companies are making to compete

[ Page 8436 ]

for the provision of private power to Hydro in that particular process?

[4:15]

HON. MR. DAVIS: Mr. Chairman, I don't want to be too explicit about this, because there are a number of players in this game. Hydro has announced that it is prepared to buy co-generated energy for 3.5 cents from — I won't say anyone, but from reliable suppliers; and they have to check them out. That is Hydro's role. We're talking about wood waste in this case. There has to be a wood supply. The Forests ministry has to be involved in assessing whether the wood supply is there for a decade or two. Regional Development is involved. There may or may not be a request from one or several of these companies for assistance of various kinds, and I have no doubt that it will occur to them to request some money from us. But again, this has to not only fit our budget but also appear to be a breakthrough, proving up something that hasn't otherwise been done in the province. That sort of rationale would have to be applied by us, because we've got many other demands for energy from wood waste — or will have.

I don't want to pretend that I'm fully on top of the development at Williams Lake. That is a matter for several ministries, and the projects are essentially competitive — or they may be merged; I don't know.

MR. KEMPF: There are two or three things I'd like to discuss with the minister in these estimates, but I'd like to start out, Mr. Chairman, by thanking the minister for finally making available to me a copy of the Cheni loan agreement. I just want to get on the record as having said that it's rather unfortunate that agreement was not available to me before this time. It took in excess of a year for an elected representative to get a copy of an agreement between the government and a mining company in this province, and I think that's unacceptable. I certainly do hope that the new Mining Right of Way Act — and I understand that I can't speak of this legislation; but I do have some concerns on thoroughly reading it — will in fact overcome the kinds of problems that we had with Cheni Mines, which are totally unacceptable as far as doing business in the province of British Columbia is concerned.

I want first to canvass the question of Kemano 2. I've mentioned it in other ministers' estimates, but I hope in these estimates to get some answers. It has been interesting to listen to some of the answers given to other questions, and in my mind I've related them to Kemano 2 in the process. But I think the question still remains: what sort of deal does B.C. Hydro have with the Aluminum Co. of Canada with respect to Kemano 2? That's very important to a great number of the people I represent because of the fact that a promise was made, an undertaking was given, by the Aluminum Co. of Canada to build, in the process of developing Kemano 2, a pulp mill in Vanderhoof that would be of great benefit not only to that community but also to the communities of Fraser Lake and Fort St. James. Kemano 2 is well underway

There is absolutely no indication by the Aluminum Co. of Canada that they're going to start or in fact ever construct a pulp mill in Vanderhoof. So what I want to know from this minister are the terms of the agreement between B.C. Hydro and the Aluminum Co. of Canada.

I heard the minister say a little earlier — perhaps he will correct me if I'm wrong — that at present we're overbuilt with respect to hydroelectricity in British Columbia. I also heard him say that within a decade or so we could possibly have the return of a great deal of hydroelectricity from the United States. That leads me to a number of questions, the main one of which is: why at this time is the Aluminum Co. of Canada going ahead with Kemano 2? Is there some other usage on the horizon for the electricity that's going to be produced there? If not, then certainly some kind of a deal must be struck. Was it taken on because of the surplus energy policy of B.C. Hydro with respect to the building of hydroelectric, or any kind of electricity-generating, facilities?

HON. MR. DAVIS: Perhaps I'll start with the Alcan development. As the hon. member knows, Alcan currently has a surplus of power from Kemano 1, and that has been, and is still, available for developments in the northwestern part of the province, including as far east as Prince George. It is proceeding with a scaled-down Kemano 2 of 520 megawatts. They were talking larger amounts earlier. With the postponement — or elimination really — of the Nanika development, it was dropped to 520 megawatts.

It is Alcan's intention throughout to use all of the power eventually in sales either to its own additional plant in the area or to other industry in the area, including pulp mills. All that is holding up the development of those sales is really the other industries — say, a forest products industry finding a mill economic in that area. Were they to build it, Alcan is willing, ready and able to supply the energy. They are supplying additional energy to an expanded pulp mill operation in Kitimat — that's new in the last 18 months — but they would like to be able to sell more of their surplus. So it isn't for lack of power that these developments are not taking place; it's for other reasons: forest resources, economics of a new mill, location, markets and so on.

Alcan does have an arrangement with Hydro, and I'll read it out in summary form in a moment. Essentially, Alcan needs a substitute source of power while they're bringing their second tunnel in. In other words, they'll have to shut everything down for a bit, so they need Hydro to come on line and support their industry, including, of course, their potlines at Kitimat. Also, if a neighbouring utility like Hydro will buy their surplus for a time, it improves the economics of their project. So essentially Hydro agrees to occasionally be a supplier of Alcan — i.e., the tunnel-driving interlude — and a source of revenue to Alcan pending other industry coming into the northwest to locate, including Alcan's own expansions.

[ Page 8437 ]

So Alcan is choosing this time to build additional generation, but it's doing it partly on the back of a sale to Hydro, knowing that Hydro can take its surplus. Alcan's costs are far below Hydro's, so Hydro has been able to strike a price arrangement with Alcan which is preferable to Hydro itself building hydro capacity. Here is a relatively cheap source of power coming on earlier than it would otherwise, being a resource available to Hydro for a time but essentially, in the long term, utilized in the northwest and not sold to Hydro. There will be some exchanges and coordination of reservoir operations, but essentially the long-term prospect is Alcan using that additional power in its own industry or in other industries in the general area.

I don't think anyone can say that the agreement with Hydro or the arrangement to get a modified Kemano completion underway in any way holds up a newsprint mill or thermochemical pulp operation at any location, Prince George and west. In fact, Alcan will have surplus energy. It has it now and will have even more in the future. It's good news, not bad news— if I can put it that way.

Let me just give you the essentials of the B.C. Hydro and Alcan agreement. B.C. Hydro and Alcan have signed the principles of agreement applying to a long-term power purchase, a coordination agreement and an exchange agreement. Final agreements are expected to be signed in September 1989. The longterm power purchase is a 20-year sales agreement, beginning in 1995, when the Kemano completion project begins operation, under which B.C. Hydro will purchase about 2,500 GWH per year of electricity. This sale has a present value of some $200 million to B.C. Hydro. In other words, without the sale, B.C. Hydro would have had to pay $200 million if they had to build this capacity in their own system.

A coordination agreement provides the best means of optimizing the two reservoir systems, that of Alcan and that of Hydro, and means energy and capacity provided from the Alcan system will be available to B.C. Hydro customers. In turn, Alcan will receive a guaranteed 9,070 GWH per year from B.C. Hydro, representing the firm capability of the expanded Kemano project if it was to be operated independently. The exchange agreement allows B.C. Hydro to provide electricity to keep the Kitimat smelter operating during certain periods when the existing Kemano power plant must be shut down due to Kemano completion construction.

As I said before, Alcan is able to earn money in the early years, but will always have an excess of capacity and energy to sell, and its long-term objective is to patriate all that power to the northwest and sell it to industry.

MR. KEMPF: Well, it's worse than I thought. He mentions good news and bad news, and we'll talk about the bad news, because it's not all good news.

What the minister has just told me is that the Aluminum Co. of Canada intends to be a hydroelectric company, rather than a company which produces aluminum, which was the original intent.

The minister shakes his head. There's nothing on the horizon with respect to another aluminum plant or anything else for that matter. The Aluminum Co. of Canada, with Hydro's help, is going full speed ahead on Kemano 2 when we already have a surplus of electricity in British Columbia. What am I to take from that, if it's not that the Aluminum Co. of Canada is becoming a hydroelectric company in British Columbia? That's to the detriment of the people who live in my constituency, because it's not all good news.

[4:30]

We don't even know to what extent these problems are going to exist with respect to the drawdown of Ootsa Lake; they are going to be horrendous. The problems with respect to the reduction in the flow of the Nechako River to 50 percent of its present flow are going to be horrendous because of Kemano 2.

Now there was a trade-off that the people in that area were willing to take. You can talk about it having nothing to do with the construction of pulp mills, etc., but it does. The trade-off was for the construction of a pulp mill by the Aluminum Co. of Canada to provide employment for the three communities of Vanderhoof, Fraser Lake and Fort St. James. That's not going to happen; it's certainly not happening now. Again I say: the time to voice these concerns is before the final agreement is signed.

The question I guess I have out of all that is: what public input is there going to be before the signing of the final agreement between B.C. Hydro and the Aluminum Co. of Canada? Certainly as construction has not begun on a pulp mill to this point in time, it can't be started before September, because of the oncoming winter and the problems inherent in constructing anything in the winter in that part of British Columbia.

There is a problem, and the problem is that the Aluminum Co. of Canada has hoodwinked the people of central British Columbia into believing that they were going to do something for them as a trade-off for the problems which will exist with the drawdown of Ootsa Lake and the use of more water for Kemano 2.

I would suggest in this chamber that there was no intent in the first place on behalf of Alcan, as there was no intent to make good the promises they have made for several years to build another aluminum plant in British Columbia. There was no intent by that company to build a pulp mill in central British Columbia to utilize some of the hydroelectricity which will be produced. Scaled down or not, they have a surplus of electricity now, even with their expanded operations at Kitimat. There was absolutely no need for Kemano 2.

So the question still arises: what deals have been made? If a deal hasn't been made between Hydro and the Aluminum Co. of Canada, then what deal has been made between the Aluminum Co. of Canada and the government of the province of British Columbia? There is something rotten in Denmark, and we are going to get to the bottom of it.

[ Page 8438 ]

The people of central British Columbia are expecting that the commitment made by the Aluminum Co. of Canada be kept, and I would suggest that it's the responsibility of the provincial government to make sure that it is done. Has the minister been involved? Was there any mention in the agreement between Hydro and the Aluminum Co. of Canada of the building of that pulp mill?

The minister suggested involvement of other ministries and other projects and possibilities in the province. Has the Ministry of Environment been involved in this with respect to the drawdown of the Nechako River by 50 percent because of Kemano 2? Yes, I can bring it up in this minister's estimates, Mr. Chairman, because it is apparent that without Hydro's help Kemano 2 cannot be constructed, although I don't know why. I guess it's because portions of Kemano 1 will be affected.

There is something wrong here. We are not getting the complete story. I just ask the minister to answer those questions.

HON. MR. DAVIS: Naturally, having listened to the member on other occasions, I anticipated this question.

I have recently been in touch with Alcan. Alcan Aluminium Ltd. remains active in its efforts to locate a pulp mill in Vanderhoof. That's what they tell me. Technical and feasibility studies have been completed. Alcan has received a number of inquiries expressing interest in the proposal and is also taking the initiative in seeking a partner with considerable experience in the pulp and paper sector. I know of several firms with whom they have been negotiating.

Alcan currently has enough surplus power to serve the proposed pulp mill load, and will continue to have sufficient power to supply several mills between Prince George and Kitimat. In other words, serving the mill with power is not linked to the Kemano completion. Obviously, if they have the power now, they will continue to have the power available to a mill when it's completed. Kemano completion by itself is not a problem.

Incidentally, as to timing, the Kemano completion will take five or six years. A mill could be built in two to two and a half years. Good news, Mr. Member. If you and the private sector generally can put together a wood supply, clear environmental considerations and itemize the economics in such a way that a mill is financially feasible, the power is there today and it will continue to be there and be available at a much lower price than B.C. Hydro would have charged had Kemano completion and so on not been a prospect.

I don't know why the hon. member wants to be so pessimistic about his area. He's been a member here since 1975. He's talked to Alcan many times. He knows about the various projects or proposals that Alcan has advanced — I'll admit, partly as bait — to get Kemano completion built. The Kemano completion project has been scaled down several times; it's more modest. But there's a power surplus up there, and the power price is low.

There have to be factors other than power that are postponing the construction of a mill at Vanderhoof. It's not power. It's available in quantity. It's available at a relatively low and attractive price. That's the fact of the situation.

The hon. member, when he first got up, made reference to Cheni road. We've had problems there. He should know better than I, because he was a member of cabinet when the agreement was signed; I wasn't. He said that he hadn't seen it. He should have seen it when he was a member of cabinet. Indeed, last year when he asked my staff for it, they offered to bring it over to him and he refused to see it. You've got a copy now. We finally got Cheni to agree to your having a copy to keep. But you should have been fully aware of that matter from the beginning. You were one of the authors of the agreement. You know more about it than I do, so don't go after me on it. If there are holes in it, you're to blame, not me.

MR. KEMPF: I wasn't going to elaborate on the Cheni road situation, but what the minister just said is absolutely false. I was not in cabinet at the time. It was not made available to me. I did not tell your staff that I didn't want to see it. I wanted a copy— as a duly elected representative of this chamber — of an agreement between the provincial government and an offshore mining company. That's not too tough a request, I wouldn't think.

HON. MR. REID: It's called "my way or no way."

MR. KEMPF: If the Minister of Tourism wants to speak in these estimates, I wish he'd get on his feet.

MR. CLARK: It's the Premier's motto: my way or no way.

MR. KEMPF: Right. We've seen that in many instances both in this chamber and throughout the province. If the minister wants to get into that kind of argument, I certainly can. But I'll tell you what: for a government to have to go cap in hand to get this agreement to give it to a duly elected representative is not, in my estimation, the best situation in the world. That's what has happened for 18 months, and it has cost my constituents untold thousands of dollars. It has cost this province untold thousands of dollars for exploration work that has not been done, because the road couldn't be used by the ordinary British Columbian without paying a $500 toll.

Interjection.

MR. KEMPF: That's incorrect, Mr. Minister, in anybody's province or anybody's language. If you want to get into that, I can certainly do so. But, Mr. Chairman, let's just follow the Kemano 2 discussion.

The Aluminum Co. of Canada, like the government, is saying: "Believe me." I find that very difficult to do, given the track record of both. The Aluminum Co. of Canada has made promises to this province for I don't know how many years that they

[ Page 8439 ]

are going to build another aluminum smelter so that they can use their surplus power and provide more jobs. Have they done it? Now I should believe them even though they are going full steam ahead to build Kemano 2?

They have no use for the power, as the minister has said this afternoon. What are they going to do with it? All good news. Is that right? Well, tell the people on Ootsa Lake that. Tell the communities and the people that live along the Nechako River that, because it isn't all good news, and they're not going to find out how much bad news there is until it is done. That is the problem. If we want to get into that kind of discussion.... There's something rotten here.

I can go out to the private sector and beg that they build a pulp mill so that they can utilize some of Alcan's low-cost power. Is the minister telling this House that he can assure the citizens living in that area and any industry that situates there that they are going to have lower-priced power than anywhere else in the province? Is that what the minister is telling this House today?

[Mr. Mowat in the chair.]

Have you an agreement between the government and the Aluminum Co. of Canada that they are going to sell this power at less than is being charged by B.C. Hydro because it is costing them less to generate? Is Hydro selling for less what they are already taking from Kemano 1 from the Aluminum Co. of Canada, to its citizens, because they are buying it for less and it is produced for less? I don't think so. I don't think there is going to be a situation where cheaper power is made available because of the construction of Kemano 2 — not at all. Let's not get into that kind of ridiculous innuendo across this floor. It's just not so.

I don't intend to pursue it any further. I just want it squarely on the record of this House what is happening with respect to Kemano 2, with respect to B.C. Hydro and with respect to the people who took the Aluminum Co. of Canada and the government at their word that there would be some usage other than export. It will be exported, because it is going to be fed into the B.C. Hydro grid and B.C. Hydro has an excess of power. So what are they going to do with it? They can't store it. That is impossible. I'll leave it at that, Mr. Chairman. There is something wrong in the situation with Kemano 2, and I want it squarely on the record of this House.

[4:45]

The other situation I want to discuss with the minister is Equity Silver and the impending horrendous problem that exists, because of that mining operation, for the Goosly Lake-Buck River system that runs directly through the community of Houston, my hometown. That problem comes from acid leaking from the waste dumps, which — and the minister can correct me if I am wrong — with the possibility of that mine shutting down within 24 months, is going to be a problem far into the future; in fact, so far into the future as you can't comprehend: 100,000 years into the future.

I want to know if the minister can tell this House the cost. I could see that the Minister of Environment (Hon. Mr. Strachan) was very concerned about it when I spoke about it in his estimates. And who is going to bear the cost of simply containing that problem — not doing anything about it — for 100,000 years? Are we expecting the people of British Columbia, the taxpayers of this province, to pick up that tab? What is it going to cost: $1 million, $2 million, $3 million, $4 million a year? Do we know what it is going to cost? Are we going to make sure that Equity Silver puts up a bond which will in infinity draw enough interest to contain that problem so that the taxpayers of British Columbia don't have to bear the load? I want that assurance from this minister, the minister responsible for mines.

It's got to be contained. You have already killed a lake. Goosly Lake is dead. The Buck River system is dead at certain times of the year depending on water flow. That can't be changed. With present technology, all we can do is contain it. Are we going to let that mining company off the hook?

Now they want to put up the bond, but for it to be tax-deductible. Tax-deductible in a pig's eye, Mr. Chairman! They created the problems; they took the profits; it's their responsibility on behalf of this province to make sure that there is a proper-sized bond in place to ensure that the interest on that bond will contain that problem for as many years as is absolutely necessary. I would like to hear the minister's comments on that.

HON. MR. DAVIS: More good news for the member. The acid mine drainage problem at Equity has been recognized for some time. The ministry is currently negotiating a bond with Equity which will run into several tens of millions of dollars and which Equity must finance. That bond has to be sufficient to provide several million dollars a year to deal with the acid mine drainage problem. The solution seen at the present time, as the member suggested, is containment, although they will also be importing limestone to neutralize acid. A small portion of the money will go towards further research into acid mine drainage.

Other mines — certainly new ones developing where there is a fair amount of precipitation, certainly where open-pit mining methods are used — will in all probability cause acid mine drainage problems, and they will all be bonded from the outset. In this case, the door is being closed — I think in time, but rather late in the scheme of things. A bonding arrangement should have been negotiated earlier, although the scale of the problem wasn't known initially. Now we have a pretty good idea of how difficult it is to contain.

Equity will be putting up the money. The polluter will pay if there is damage; hopefully future damage will be limited or totally contained. So much for Equity Silver.

I wish the hon. member would recognize that Alcan is not a regulated power producer. Alcan is an industry which happens to generate electricity. Because it is not regulated, it can sell power at any price

[ Page 8440 ]

to anyone. The ceiling, of course, is B.C. Hydro's postage-stamp rate, but Alcan can beat it hands down, within a reasonable distance of Kemano and perhaps as far away as Prince George. So here you have an industrial company which is free and able to enter into a contract to supply electricity to a pulp mill or a smelter or an electrochemical development it either owns or is at arm's length from. Certainly its scheduling of sales indicates that its arrangement with Hydro is an interim one. It intends in the longer term to sell the power not to Hydro but to industry in that general region and in part at least to an expanded aluminum refinery.

So it is private power as opposed to regulated B.C. Hydro utility power. Alcan can make any arrangements it wants, although it has limited the quantities — not seriously, but by entering into a relatively short-term sale arrangement with B.C. Hydro, which then postpones Hydro having to build Site C or some other generating source. None of that electricity will be exported. It is relatively low-cost to Hydro; Hydro will use it preferentially. If Hydro has a surplus, it's going to shut down the Burrard Thermal plant in which burns gas in the Vancouver area. That's really the element of its system that is on the swing — certainly not Alcan, nor is any Alcan power coming as far east as Prince George.

Industrial power will continue to be available in amounts considerably more than needed by a pulp mill or two, and it will be available indefinitely. It's available now; it will be available five years from now, ten years from now and further. Alcan tells me — and indeed it has always said — that it is interested in supplying other industry in the area. The hon. member has followed Alcan's gyrations over the years. Alcan's big challenge was to try to harness the additional power for which it had a broad licence, and it has managed to do that.

Dr. Strangway, president of UBC, headed a group that spent considerable time on the environmental impact of the Kemano completion development. They concluded, along with federal Fisheries and Oceans, that given certain safeguards — and these are very much part of the overall licensing process — Kemano completion, now scaled down, will not more seriously impact the environment in that general area than the development to date has done.

Finally, re the Cheni road, the hon. member says that he had no opportunity to see the agreement. Well, he was a member of cabinet in early 1986 — I wasn't — and that was when it was concluded. It was an agreement concluded in his constituency. He was Minister of Lands. If he wasn't aware of the agreement then, I wonder where he was.

Secondly, when he asked my ministry whether he could see the agreement, we checked with the Cheni company, and they were a bit reticent to show this agreement. We thought, however, that since the hon member had been the minister, he had an opportunity to see it. The assistant deputy minister offered to come to his office and show it to him, and he said: "I don't want to see it." Presumably it would serve his debating purposes better not to have seen it. Well, now he has it. Cheni has agreed to release it. I'd like to know his opinion of it, and why he approved it at the time.

MR. KEMPF: I guess the minister could argue that point until he's blue in the face. It isn't correct, and I don't wish to pursue it. It just isn't correct.

As far as Equity Silver is concerned I want to know whether or not the bond that is going to be required of them in order to "contain" the acid leaching problem is going to also be large enough to bring back Goosly Lake to what it was prior to the mine going into operation. Also, will it be sufficient to ensure that those people who live along the Buck River — which includes the community of Houston, as it runs right through the centre of it — will not have the problems they've had in the past because of this situation? And there have been many. A number of people along the river have had to abandon their wells. They've had to abandon the use of the river for drinking water at certain times of the year because of this problem. Will that bond be large enough to assure those people that it will take care of any problem after that mining company has left the area and no longer has that mine in operation?

As for the Aluminum Co. of Canada and that situation, I didn't want to pursue it. But the minister made the exact point I was making: there's no assurance that the people of that area, because of what they're going to be giving up with respect to Ootsa Lake and the Nechako River, would in fact be able to purchase power at a lesser rate than anyone else in British Columbia. Perhaps in the end it will be more if we're going to privatize the whole system, which it appears we're going to do. I'm sure that once again the people of central and northern British Columbia will be really happy to know that we're going to take away from their environment to shut down a poor environment on the lower mainland because of the Burrard plant. I'm sure they'll be very happy to know that, Mr. Minister.

HON. MR. DAVIS: Mr. Chairman, the amount of the bond for Equity Silver to cover the acid mine drainage problem for all time is still being negotiated. A number of parties are involved, including the Ministry of Environment. The bond, in concept, covers all future problems. I'm not sure whether it is sufficient to totally reactivate or revive Goosly Lake, but I know that it must be, or indeed is, designed in such a way that downstream effects will be eliminated. The problem will be contained essentially to the mine site and close environs. Consultants have been employed. While $1 million to $2 million a year will flow from the bond to look after the problem, it looks after the problem with today's technology. Hopefully future technology will be less expensive. If so, then maybe Goosly Lake will be looked after. But those are the details that I have at the tip of my tongue at the moment. The intent is to look after the problem for all time, better than simply containing

[ Page 8441 ]

the problem, as it is today, eliminating any pollution outside the immediate locale of Equity Silver.

[5:00]

MR. CLARK: I was provoked by the member for Omineca to enter into discussion briefly about the Kemano completion project. I share many of his concerns. It's unfortunate that he has to leave.

Alcan has, of course, a tremendous resource which the government of the day gave to them. The minister talked about a broad licence. Very clearly, getting more energy from the river is a great attraction to Alcan. Putting aside for a minute any environmental concerns which one might have — and I certainly share the concerns with many of the residents up there — what I think a government would do is say: "While they want the power generation, we want economic development." The minister has said — and I agree — that they've constantly come up with ideas and floated ideas on paper about how many jobs they can create. Surely a government, before agreeing to the project — and they had all the power in the world to stop the project — would like to see some hard and fast projects on the books. In other words, you would make a deal with them to get something in exchange for giving them the power. That doesn't appear to be the case.

I don't want to criticize them unduly, but in the last couple of years Alcan has contracted its employment in this province. In New Westminster it shut down the aluminum window plant, and in Kelowna it shut down their wood window plant. In the rest of the lower mainland they've shut down other jobs. They have shut down almost all manufacturing facilities in the province, except for their extrusion plant in Richmond. They've shut down, they've laid off. They had 200 people working in New Westminster, and they've eliminated those jobs. They have eliminated several hundred jobs in their smelter in Kitimat.

The government is saying: "Well, they want more power generation. They can make a lot of money on power generation." You'd think the government would say: "Let's take a look at this company. What can they add to the British Columbia economy?" They can add a lot. All they do now is make ingots in Kitimat and ship them out of the country. We have no aluminum wire plants from Alcan; we have no aluminum window manufacturing; we have no aluminum manufacturing by Alcan in the province.

Surely those are the kinds of things a government that has a resource — the water rights on the Nechako — would do if it was acting in a businesslike manner and wanted to drive a hard bargain with a major multinational corporation. By the way, I think Alcan was the number one profit generator in Canada last year — a billion dollars in profits, I understand; a very healthy multinational company bargaining with a provincial government that wants certain things. The number one thing that I would think they would want is jobs in the region. That region was quite hard hit by the recession in the early eighties. They suffer the environmental consequences which may arise, some of which were alluded to by the member for Omineca. So there is some environmental downside that the people of the region suffer, and as far as I can see there is no benefit in terms of increased jobs, except short-term construction jobs associated with Kemano completion. Beyond that, in the rest of B.C., Alcan has not kept its employment level up to where it was in the late seventies.

It seems to me the government was in a perfect position to bargain with Alcan for more diversified, value-added products, which they produce elsewhere and were producing in British Columbia until just a few short years ago. Just after Alcan shut down 250 jobs in British Columbia, this government announced a deal to allow them a very lucrative project to produce power in the Kemano region. So I wonder whether the minister would have some comment and would justify a deal which doesn't appear — in terms of the economy, anyway — to be generating the kinds of jobs which I think could have been generated, given the leverage that the province had over Alcan.

HON. MR. DAVIS: Alcan had all the water diversion and other permits it needed to virtually double its capacity at Kemano. It was having a problem with federal Fisheries essentially, and there were other environmental concerns, When those were ironed out, it was free to proceed with the diversion of the additional water for which it had licences. It didn't have to come to the province for licences; it had the licences. The licences were issued in the early 1950s, as the hon. member probably knows, and were for all time.

The attractiveness to the province of this modified smaller development essentially is that it's the least cost power in the province. Here was an opportunity for Hydro to further postpone hydroelectric or other developments on its system and to buy lesser-cost power for consumers generally in the province. Immediately there was some attraction in that this development would proceed and modify any rate increases to B.C. Hydro's consumers. It had that benefit at least.

Alcan, however, throughout has wanted to develop hydro not for sale to someone else, but for further aluminum production and aluminum products fabrication, most of which it said — and it has varied its plans — would occur in the Kitimat-Terrace-Hazelton area. I believe that sooner or later that development would have occurred in any case. Here is a private sector company putting up all the money and making jobs and power available earlier than would otherwise be the case. It is an opportunity for Hydro to buy power at a cost less than its own alternative costs; the end result being an overhang, or surplus, of low-cost power in an area which can, because of its forest and mineral resources, sooner or later attract industry. It was more the philosophy of: "Let's have some low-cost power at long last in the province which will attract industry to the northwest corner of the province." The province had already issued the water licences in any case.

[ Page 8442 ]

MR. CLARK: It is my view that we could have had that. Again, I am not privy to negotiations, but it seems to me that using the leverage the province had.... The minister can say that we didn't have any, but the reality is that the province has a lot of power, and he knows that. Using that leverage, we could have extracted jobs — real jobs — in the region from Alcan. I think it is not good enough to say that cheap surplus power will eventually mean jobs. They have surplus power now; the minister has acknowledged that. They have surplus without Kemano completion, and there are no projects except one.

This is the middle of a pulp mill explosion in British Columbia. We are seeing the price go through the roof and record-profit pulp mills popping up everywhere, and they haven't even managed to get one there yet, although there seems to be one now. There is one in Kitimat of course — the Eurocan mill — but they haven't managed to attract much in the way of significant new expansion other than the Eurocan mill.

I appreciate there will be some development. I think the government could have taken the lead and driven a much harder bargain — not simply to get cheap power but to extract jobs — before they signed the deal. I think the people of that community — and I have been up there several times — would be more likely to be impressed by the Kemano completion project had there been other job-creating projects negotiated ahead of time. I think the government, in its haste to try to get cheap power, has given them carte blanche without the tough bargaining which I think could have been done. If it had been done, we would have seen more jobs in the northwest and central parts of British Columbia.

MS. EDWARDS: On the Kemano project, I wonder if the minister could clarify this for me. As I understand it, in making the deal for the Kemano completion, the province agreed to owe Alcan a certain amount of power per year. Is that part of the deal? They were to owe Alcan about 76 megawatts on average?

HON. MR. DAVIS: Mr. Chairman, no. I said the Kemano 2 project was scaled back. It was scaled back in 1987 as a result of the elimination of the Nanika diversion. Alcan will continue to play it as if there is some obligation on the part of the province at some time to give them another Nanika somewhere. The province has never admitted that there is any obligation on the part of the province.

The agreement didn't cost the province a nickel. The province made no commitments in any direction. Hydro did agree to negotiate with Alcan for its surplus, but didn't agree on any price. The price is now being developed. Alcan did agree, with some encouragement from the province, to pool their reservoir operations, not only the Williston reservoir and the reservoirs on the Columbia, but also the reservoir in the Tweedsmuir area. They would be used because they are different watersheds with different runoffs and so on. They could be used to complement each other, so coordination by itself yields a benefit. That was a consideration, at least on Hydro's part. But the province didn't put a nickel into it, and the province has no obligation to provide Alcan with Nanika or any other diversions.

MS. EDWARDS: I appreciate that. When Hydro provides the power that he has said it will provide to Alcan while it needs power to build the tunnel — an exchange of power — is that a straight exchange? Is Alcan going to pay B.C. Hydro's price? When B.C. Hydro buys, will it buy at Alcan's price? How is that going to work?

HON. MR. DAVIS: I couldn't say. I assume that they worked out the timetables, and it's essentially an exchange of the good electricity. It's not a pricing moment to moment. It's an overall agreement that goes out over time. Certainly B.C. Hydro will be supplying power into that area in a year or so — a relatively short period. On balance, the power is flowing out until Alcan needs the power for doubling of its smelter in Kitimat and other facilities at Hazelton, Smithers and so on.

MS. EDWARDS: I understand that Alcan did not require an energy project certificate because of the terms of the original Kemano agreement. As I understand it, Alcan does not come under the B.C. Utilities Commission. That being the case, I wonder who is regulating the construction that is currently going on. Is there someone there from the provincial government or from the Utilities Commission, which is an arm's length representative of the provincial government, so that that person knows all of what's going on with the construction project and all of what is there so that when some residents of the area have some questions about what's happening because of the construction, they can have some input? Is it simply a matter of Alcan getting the occasional environmental permit from the Ministry of Environment, and then proceeding and there being no particular government presence at all to know what the whole project is?

HON. MR. DAVIS: The Kemano project — phase 1, phase 2 — are non-regulated projects. They don't come under the B.C. Utilities Commission, because Alcan isn't a public utility. It's an industry developing a project. The early agreement — signed in the early 1950s — between Alcan and the province explicitly precludes project approval certificates and so on. In respect to the total amount of water and up to the utilization of that amount of water, Alcan can proceed with projects of its own devising.

Both our ministry and certainly the provincial Ministry of Environment and the federal Ministry of Fisheries and Oceans are closely monitoring the development and are quite concerned not only about the tunnel and its dimensions but, more importantly of course, water levels, water flows and so on. While I can't say the project is a regulated project or has had to go through the project review process which all

[ Page 8443 ]

future projects will, it's nevertheless being monitored closely by several provincial ministries and the federal Fisheries and Oceans department.

[5:15]

MS. EDWARDS: Mr. Minister, would it be fair to say that if some group or citizen felt themselves to have a message about what was happening in the area, they might have some difficulty knowing to whom to relay that message and to whom to give some input about what was happening?

HON. MR. DAVIS: They can try their MLA. Certainly our ministry would take their concerns seriously.

MS. EDWARDS: I'd like to ask a question about another plan of coordination. B.C. Hydro is going into a number of coordination agreements, and it has suggested in its resource plan that there will be an agreement with Alberta in a very short time — I had some notes on this at one time — and that there would be an agreement by fall for coordination with Alberta.

There has been lots of talk about it. I don't think it's signed yet, but I believe there is continuing talk. Could the minister follow up and give some more detail on exactly what the state of the art is as far as that coordination plan is concerned? How important is it before that is signed and before Hydro is talking about coordinating with the Bonneville Power Administration as well?

HON. MR. DAVIS: Neighbouring utilities, especially if they are physically quite different in respect to their generating sources, transmission and so on — or indeed if their load patterns are different — can gain from cooperating. The real question is: how far do they go in cooperation before they in effect become one utility? In the case of Hydro and Transalta, there is one connection, and one connection only, and that's through the East Kootenay, with somewhat limited capacity. So the opportunity for coordination is somewhat restricted. But the two systems are so unlike — one being essentially coal based and the other hydroelectric; one unable to store electricity and the other eminently able to store electricity as water behind dams - that there's an advantage in the two cooperating, running the coal fired plants more continuously and using the reservoir to a greater extent in servicing alternate demands, both high and low.

The agreement which is evolving between Hydro and Alcan goes a step down the road towards total coordination; it doesn't go all the way, by any means One of the constraints is the size of the interconnection. Another — and it's always there — is that utilities at some point don't want to surrender totally their ability to plan their own affairs.

The hon. member was referring to Alberta. She mentions Alcan.

MS. EDWARDS: No, you said Alcan.

HON. MR. DAVIS: Okay. Transalta is the limited connection, and that does limit the extent of cooperation. But I'm sure that management's desire to run the corporation's affairs and so on also sets a limit on the extent to which.... Coordination overall never takes place completely. But there are advantages, and there is also an advantage to a coordination agreement with the Bonneville Power Administration and other utilities to the south which are more limited in amount, mostly because that's an importing area almost exclusively, whereas Alberta is an exporting area. Alberta's power, incidentally, is relatively low-cost, so there's an advantage in postponing some of our developments. But we can't postpone them too long or we'll be too dependent on Alberta.

That's the nature of the agreement; it's evolving. There will be a phase 1 agreement perhaps this fall, and perhaps subsequent ones if there are improved connections and so on down the years. We have to watch Alberta with some concern, because Alberta would like very much to be a major exporter of power, and we don't want Alberta to intercept any useful power export markets in the States if they are using our transmission lines, So it's a bit complicated. We are, to some extent, competitors, but there is an advantage in coordination.

MR. KEMPF: I was taken a little off guard by comments made earlier by the minister about when this agreement was sanctioned by cabinet. Simply to set the record straight, I'd just like to read into the record — that's the nice thing about finally getting the agreement, because when untruths are told, you can rectify them — exactly when this agreement was sanctioned.

I am reading the last paragraph of a letter signed by the previous Minister of Energy, Mines and Petroleum Resources, dated June 20, 1985, clearly eight months prior to my ever seeing the inside of the cabinet room: "Please confirm your agreement by dating and signing the enclosed copy of this letter in the space and manner indicated below and having it delivered to Mr. Sivertson, free of any conditions, at your earliest convenience." just to set the record straight, Mr. Chairman.

HON. MR. DAVIS: I apologize to the hon. member. I assumed that because the matter was still being debated, as I recall, when I first became a member of cabinet in 1986, and because he was in cabinet at that time, he would have been aware of the agreement. It certainly was in his area, in his own back yard, but if he wasn't present in 1985 at the time, I withdraw any inference that he had full knowledge of the agreement at that early stage.

MS. EDWARDS: We were just talking about the coordination agreement with Alberta, which is connected to the coordination plans with the Bonneville Power Administration, which, of course, are done around the Columbia River Treaty, because treaty benefits are very clearly controlled. Everything

[ Page 8444 ]

you're talking about now is around the Columbia River Treaty power itself.

I have a number of questions and concerns about some things. It is about the coordination and how far you get into a coordination plan with other systems and then find that you can't draw back when you'd prefer to draw back. This has been a matter for utilities to worry about. The minute that you begin to supply someone's utility needs, the courts have been willing to look at that exactly as a matter of filling a need; it's called a need. Therefore, when you want to pull it back, there can be considerably more problems than I frequently hear mentioned when people say: "Oh, that contract's okay. We just have it for three years" — or 20 years, or whatever. That's all very well, but it doesn't necessarily work that way — and not just because of a tendency in the occasional court decision. It doesn't work that way because you have a lot of pressure put on you for what you want next. Where is your bargaining position and how in the world do you tell Bonneville Power Administration that you are going to pull out of a plan when they have 18 utilities or 40 utilities or whatever?

I'm concerned that we don't know, as people in this province, what the minister intends to do. I'm concerned that we're getting into these coordination agreements — which can be extremely valuable; I don't want the minister to misunderstand my position on that. I recognize that in practical terms the physical structures, the dams and the plants and so on, would obviously work better if you had all sorts of options. You can be more efficient than if you don't have so many options.

I would like the minister to respond on that and discuss, for example, the agreement on the use of storage reservoirs. There's been one proposal. I've forgotten what the figure is, but I believe there was talk of some millions of feet of storage at the Mica Dam. There have been talks between the Bonneville Power Administration and B.C. Hydro since 1987. There has been no agreement. Obviously there is some pressure from the authority in the States — which I expect the minister would tell me about if I were to ask him, which I am — and they want something more than we're willing to give, and it wouldn't be a good idea.

Nevertheless, we have this problem with the reservoirs. The minister is, in fact, bargaining away what he's going to do with the reservoirs. What's in the reservoir may or may not be something that we should be using at home. Sometimes the acre-feet you've got in a reservoir can be used for generating facilities in a while, if you could build them. You are going to tell me that you can't use them because you don't have the generating facilities.

What I want to know is: how much of that is being planned, and when is the public going to know how the plan is being made? How are we to know that our reservoirs are being bargained away in this coordination plan that we are doing with BPA? What is it worth to us, when in fact we may get tied into something we don't want to do and we may not be able to end the contracts that the minister says we can?

I would like some response from the minister about why he, his ministry and members of Hydro seem so sure that we can enter into contracts for the provision of power and that we will easily be able to get out of them. That is the whole basis for the decision to have private-industry-developed power. We will sell it on export; the contracts will be over; it will all be ours. It will be just as clean as the downstream benefits. They come back; they are ours.

I think there is a problem there, Mr. Minister. I would like to know whether he foresees a problem wit the increasing demand for energy, not only in our province but in these other jurisdictions with whom we are making coordination agreements.

HON. MR. DAVIS: First some comfort. Canada has never failed to terminate a power export agreement on the expiration of the contract date. That's the record. Second, B.C. Hydro has never exported power long-term. It has exported amounts of power which have varied considerably from year to year depending on whether Hydro had a surplus and whether the Americans were short of water, etc.

Never has there been a problem of patriation of B.C.-produced power back into British Columbia. Firstly, the amounts of power in any coordination agreement might amount to 5 percent of Hydro's total generation — not 50 percent or 10 percent, but 5 percent or less. So it isn't as if they are committing a large part of their generation or storage to international or interprovincial arrangements.

[5:30]

Let's assume that Hydro does conclude — or at least initial — an agreement with the Bonneville Power Administration for a certain exchange or regime which would last for several years. It first has to be vetted and approved by the B.C. Utilities Commission. There will be public hearings. And second, it's vetted by the National Energy Board. The energy must be surplus to our own requirements and the price must be right. In other words, it must be a price above our own costs; in fact, it must approximate the U.S. alternative costs. That all has to be argued by the utility — in this case B.C. Hydro — in two places in public hearings to prove that it's in the provincial interest that that commitment, which is for a limited period of time, take place. It will terminate in any case. I don't pretend to know all the details. The agreement with Bonneville is some distance from being finalized. My involvement — in part, anyway — has been simply to say that the downstream benefits aren't part of the calculation: go ahead and work out a coordination agreement, put it to the board of directors of Hydro and then the regulatory bodies, and see if it makes sense; but the downstream benefits aren't part of the deal.

MS. EDWARDS: I want to focus a bit on the announcement Hydro made that it's going to arrange and negotiate reservoir storage benefits. One of the major shortcomings of the Columbia River Treaty, as

[ Page 8445 ]

far as the people who live in those areas are concerned right now, is that there is nothing in it that allows some control of the recreational use around those reservoirs. The reservoirs can go down — and did last year — to extremely low levels....

Interjection.

MS. EDWARDS: It was'nt just the Libby reservoir; it was other reservoirs in the system. The Revelstoke reservoir has been low, and the dust from the mudflats was huge.

The point, Mr. Minister, is that those reservoirs do not belong only to Hydro, but there is no particular process to deal with recreational use and the other values that surround the reservoirs. I want the minister to tell me if he can assure me that there will be some kind of process to allow the public to have its say about what happens to those reservoirs.

We have the case where people live by the reservoirs and have businesses. Tourism businesses operate on the reservoirs, We had a situation last year where people who ran resorts had boat ramps that didn't even get to the reservoir. They didn't have any customers until late August, when things began to be a bit more normal.

Could the minister respond to this concern about recreational and other values — aesthetic, wildlife and fishery values — and the public need to have the right to address those issues before Hydro bargains them away and negotiates them under an agreement that deals only with power provision?

HON. MR. DAVIS: Mr. Chairman, I understand the member's concern. I'm told that B.C. Hydro has held a series of public meetings — I can't call them hearings — in Castlegar, Nelson, Trail and I believe in the East Kootenays. If they haven't got there yet, they will do so. Hydro will also be in the Revelstoke area. It will endeavour to explain what plans it has in mind and will be listening to impacts as expressed by people locally on the environment, tourism, wildlife and so on. So there is a process. It's more an educational one taking place at the present time.

I understand, however, that Hydro does have certain permits for water volumes from the water controller which were granted quite some years ago, and if they are not operating within those permits, they would have to apply through hearings to obtain any expansion in water quantities or fluctuations. I am saying that I think Hydro has most of the permits — obtained them quite some years ago — but it is currently engaged in talking to people in all the concerned areas with a view to explaining what may or may not happen.

MS. EDWARDS: Mr. Minister, I know that Hydro is doing that, and I certainly applaud them for doing it, because they, in fact, have a limited responsibility to do so. As the entity that administers the Columbia River Treaty reservoirs, I can see that they have some responsibility, but there are many things that go on around those reservoirs that are recreationally incomplete and that would depend on far more than just what Hydro can do.

You say that Hydro has the water licences, so they can do a certain number of things, but it seems to me that there is as yet no real line of responsibility that is very clear to the public so that the public can say that they want a certain thing to happen or they want to have their input.

I won't go into the thises and thats and that sort of thing, but they want input. I think they deserve input. I think the minister might agree that they deserve input. 1 certainly think that the recreational value of the reservoirs — I've said this many times, and I will say it again — was how B.C. Hydro justified its Columbia River Treaty in the first place. Now B.C. Hydro does not have the authority to do as much developing and to create the recreational resource that was expected, based on promises that were made. A lot of those things have to be done by Parks — the forest recreation people — through other ways; they have to be developed through Environment and Fish and Wildlife.

It seems to me that it's up to the minister, as the minister responsible for Hydro, which is not necessarily responsible for recreation, to see that there is some process there. The process has to go beyond Hydro, so I have to ask the minister as a member of cabinet to go beyond this and make some commitment that there be a way for people to have input into these reservoirs, which have a very different status than a normal lake in the province.

Hydro is doing some work, and I certainly applaud that, but it changes from year to year. They are having hearings, but they don't have the power to respond to all the things brought to them. I'd like the minister to respond to that.

HON. MR. DAVIS: The hon. member I think properly is searching for process. I know that Hydro has — not initially of its own doing; the initiative being taken by other ministries and other people in an area.... I recall flying the length of the McNaughton reservoir, and local people pointing out certain problems along the shoreline related to wildlife or to the appearance of the reservoir and suggesting that this or that be done.

I brought it in that case — but others did as well — to the attention of the board of B.C. Hydro. After negotiation with one or several of our provincial ministries like Environment, Hydro has funded the reclamation. That's more of an ad hoc process. It isn't mandated by the Utilities Commission or by provincial law requiring that Hydro hold hearings and so on.

Hydro is, I think wisely, sending its senior management people about and explaining not only what its present operations are and how they can be mitigated, but any future changes in water regimes and so on; how they may impact the areas locally.

I think Hydro is of a mind to pay for the necessary remedial measures. But it isn't an established process; it's something that's happening as a result of good management.

[ Page 8446 ]

MS. EDWARDS: I attended a Utilities Commission hearing yesterday in Courtenay, where the Utilities Commission had decided to have a hearing on transmission lines and the possible risk to health of electromagnetic fields. It is the first hearing of its kind for a utility in Canada, I understand. I certainly think that is a step in the right direction, a very positive thing.

I heard some of the evidence last night. There is going to be a lot more, I am quite sure. It's lined up for quite a distance and I think it may take the chairman of the commission quite some time to complete his inquiry.

The idea of the Utilities Commission inquiry, as far as I know, is to delve into the question and to look at what can be done and what is the state of the knowledge of various people and to bring in some expert evidence. Certainly Hydro was able to bring two very well-qualified experts, and the citizens group are still scrambling to pay for the amount to bring in another very well-qualified expert. There is certainly a lot of written knowledge.

When I arrived back this morning, I discovered that already the Minister of Health had rejected any other evidence except the kind of evidence that was going to be presented by B.C. Hydro. As I say, what he seems to say is exactly what B.C. Hydro said at the commission hearings.

I don't know if the Minister of Health has examined everything, and that's not your concern in your estimates. My concern is: have you, as a minister, made up your mind yet whether there is evidence on electromagnetic fields and what danger they would have to the general public or to people living near them? Or are you willing to listen to what comes out of the Utilities Commission inquiry?

HON. MR. DAVIS: Explicitly, I haven't made up my mind. I know there are certain biological effects from magnetic fields if they're strong enough; however, there isn't any hard evidence that there are adverse human health effects. The jury is out, if you like, with the scientific community, and regulatory bodies and electric utility companies around the world are carefully monitoring studies currently in progress.

I don't think one can draw any hard and fast conclusions, especially as it applies to a powerline that's 100 yards away from a home or a school and so on. If there are concerns, they also have to relate to certain equipment in the home and so on. Anyway, it's not an area where I have been convinced one way or the other that there's a problem. I don't envy the chairman of the Utilities Commission his job up there. He's going to have to have the wisdom of Solomon to deal with the issue, because if — and I certainly underline the word "if" — there's a problem, it's not confined to that area. It's many places in the province, many highly developed urban areas worldwide.

MS. EDWARDS: I'm pleased you haven't made up your mind, Mr. Minister, because I think it's important that you have an open mind on this. I think it's important because these situations change so quickly.

I would like to bring to the minister's attention the situation vis-à-vis drilling a sour gas well in Sparwood, at which time you were willing to take into account the evidence that was promised from a renowned researcher at the University of Alberta. The evidence did not come in before you allowed the application, but that very evidence was taken to the symposium this spring and corroborated by the findings of other renowned scientists that low-level emissions of hydrogen sulphide can be damaging to humans who are close to such things as gas wells, gas plants, pulp mills — and electricity-generating plants, of course. Certainly a lot of types of plants emit hydrogen sulphide. Without going into that at the moment — I certainly will later, because I'm curious to know how the minister goes about this — these things have a habit, as the minister knows.... There is suspicion, empirical evidence, unsubstantiated evidence, and so on — all sorts of things — and there is what scientists may call no hard evidence. Then it rolls, and there it is.

[5:45]

Mr. Minister, in this case, were it in fact indicated that there was a significant risk of damage to people, and if the chair of the Utilities Commission found that to be the case in his inquiry and you found that to be the case, what you would have to do about it would probably be to deal with at least new transmission line construction, which would certainly be worth well over $600 million if we just take the nearly 1,000 kilometres of new high-voltage transmission line proposed in here.

Let's look at some other things in here, some other moves that could have a similar effect. In fact, there are some suggestions for having efficiency in distribution lines, which could have the same effect as high-voltage transmission lines. That being the case, I think the implications to B.C. Hydro and to the public purse, if you want to put it that way — or certainly to the public utilities' and Crown corporations' purses — are going to be horrendous.

I just want to ask the minister if he could define in some way.... No, let me leave that out, because it's unfair to say it. If the minister chooses to say so, that's his position. It's a matter of possibly putting not only people in general at risk but children, which is a major problem. We don't know whether the risk can be defined or what it's going to be.

What I would like the minister to do is to assure us that there will be a study carried out, because it seems to me it is time British Columbia participated in a study. Ontario Hydro, with Hydro-Quebec, has committed $3 million for a three-year study. These kinds of studies take time, but they are possible to do. They may well show that things are different in British Columbia than they are somewhere else; they may well show that things are the same in British Columbia as they are somewhere else. But it seems to me that at least the possibility of major risk is there. Certainly the hazard, if you want to put it that way, to B.C. Hydro of having that possible risk there and

[ Page 8447 ]

the legal ramifications that could come from it are so great that we should know in this province whether or not there is some solid evidence.

I would ask the minister if he would consider that there be some kind of a study established. Whether that would be through B.C. Hydro or through some other less connected — in other words, if the utility study, you think, would be suspect, then could it be done some other way? It is time for this study to be done. What is the minister's response?

HON. MR. DAVIS: This is really a matter of health — human health, certainly — and I am in no position to express an opinion. I do know that in four out of the last seven Hydro board meetings the subject has come up. I know that Hydro has undertaken a very careful search of the literature. I know that it is also doing some work on its own. It has to be a matter of concern to all electric utilities.

I would be unwise to make any comment as to what I thought about the health aspects of magnetic fields because, one, I don't know, and secondly, it is outside of my ministerial responsibility.

MS. EDWARDS: My question really, Mr. Minister, is are you willing to arrange for and have a study done? In other words, do you think it's time that the province of British Columbia studied this issue? It is a public health issue. It is an issue that is coming up, and it is an issue that we are going to need to know a lot more about.

HON. MR. DAVIS: My deputy reminds me that the B.C. Utilities Commission has also been following this matter. It had one of its staff go to several conferences on the subject; it is preparing a paper on the subject. It's a matter of concern. It obviously has to be addressed, partly because of public reaction in one area and than later in a number of other areas, I assume, around the province.

Fortunately, to date at least, the health effects of magnetic fields of power lines are nothing like as consequential as the effects of gasoline or a number of other commodities that are commonly sold around the province. We will have to continue to watch the situation, and if there is some point in carrying out some unique health study in the province, I am sure that either Health or perhaps Hydro will address it.

MS. EDWARDS: I would just like to follow up a bit more on the situation I mentioned before, which was the public meeting that the minister had agreed to. It was not necessary to have a public meeting on the application of a company to drill a sour gas well, but the minister did agree to that and there was a public meeting. The citizens of the area were extremely concerned about the dangers, and the scientific evidence has come through to indicate that there can be a significant risk to the health of people who are next to a sour gas well.

Has the minister considered at all requiring public hearings more frequently in relation to applications for the drilling of sour gas wells?

HON. MR. DAVIS: I guess, essentially, the answer is no. The hon. member was no doubt relieved when they found there wasn't any gas immediately under that area; and secondly, there is unlikely to be any other drilling activity in the East Kootenays for some while.

In the Peace River area I am sure we will be subject to the same concerns and constraints as exist in Alberta, where there is much more activity and where so far they have discovered a lot more sour gas than we happen to have in British Columbia. It's a concern; and as new evidence comes in, if it proves conclusively that there are health aspects, we'll have to ensure that risks are minimized.

MS. EDWARDS: I wanted to begin on a whole different area now. Would it be in order if I moved whatever the appropriate motion is?

I move the committee rise, report progress and ask leave to sit again.

The House resumed; Mr. Pelton in the chair.

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

HON. MR. RICHMOND: I call second reading of Bill 77, Mr. Speaker.

INDIAN LAND TAX COOPERATION ACT

HON. MR. WEISGERBER: Mr. Speaker, Bill 77 is introduced to complement recent changes to the federal Indian Act, by which Indian bands were given the right to levy property taxes on reserve lands. As the House is aware, provincial legislation authorizes the province itself, as well as municipalities and other governments, to levy property taxes against non-Indians occupying Indian reserve land.

[Mr. Speaker in the chair.]

Thus non-Indians on reserves are already receiving assessment notices and property tax notices. Although Indian property taxation is authorized by federal legislation — not provincial legislation — it is desirable to encourage any Indian band embarking upon taxation to use existing services. This will minimize the possibility of multiple assessment and taxation systems being applied to the same properties,

This bill will assist in that goal by enabling provincial and municipal assessment and tax collection services to be used in support of an Indian property tax levy. Specifically this bill enables the British Columbia Assessment Authority to enter into agreements with an Indian band to perform assessment services for the band. It enables the provincial assessment appeal structure to apply to those assessments done in support of an Indian tax.

It enables a municipality to enter into an agreement with a band for the provision of tax levy and collection services, so that an Indian levy could be

[ Page 8448 ]

added to other levies for which the municipality is the responsible collector. In rural areas, it enables the surveyor of taxes to enter into tax levy and collection agreements with Indian bands.

The other main feature of this bill is its recognition that as bands develop economically, they may increasingly be in the position of directly providing municipal-type services to occupiers and charging for such services through their property tax powers. In such circumstances it may become appropriate for the province or for a municipality to reduce its tax rate on the reserve by comparison with the tax rate it levies outside the reserve. The bill therefore provides a mechanism whereby an Indian band council can enter into an agreement with the province — or municipality as appropriate — which recognizes those services that are provided directly by the band and funded through the band's own property tax. Where such an agreement is in place, the province or the municipality can then apply a reduced tax rate on the reserve in recognition of its reduced responsibility for providing services to the reserve.

The government expects that these measures will assist in the smooth implementation of the federal Indian taxation initiative by reducing the likelihood of multiple and possibly inconsistent tax assessment and levy systems being applied to the same properties. The bill will also ease fears of double taxation by permitting municipal councils or the province, in cooperation with Indian bands, to recognize the sources of property-related services and to adjust their tax rates accordingly.

The bill is an important step in the movement of British Columbia's Indian bands to greater economic independence.

MR. WILLIAMS: The opposition endorses the bill and commends the government for taking this modest step forward. But that's what it is: a very modest step. The need for coordination and the availability of our own expertise in this area is clearly desirable. In terms of natives in British Columbia achieving justice and having the economic base to determine their own future and destiny, that remains to be accomplished by another administration.

[6:00]

MR. SPEAKER: Pursuant to standing orders, I advise the House that the minister closes debate.

HON. MR. WEISGERBER: I move second reading of Bill 77.

Motion approved.

Bill 77, Indian Land Tax Cooperation 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 call committee on Bill 60.

Interjection.

HON. MR. STRACHAN: Yes, it's a misprint. I'm sorry, the House Leader's staff have made a misprint. The bill already had second reading, and we are now in the committee stage of the Litter Amendment Act.

MR. SPEAKER: There was second reading on June 27, and a division was taken.

LITTER AMENDMENT ACT, 1989

The House in committee on Bill 60; Mr. Pelton in the chair.

Sections 1 and 2 approved.

On section 3.

MR. WILLIAMS: Maybe the minister could advise us what the impact of this would mean.

HON. MR. STRACHAN: Simply to increase the amount that we would ask the courts to fine. Where we have a limit now of $500, the number will go up to $2,000 in (a) ; and up to $500 in section (b) of the Litter Amendment Act — section 6. 1 think it is self-explanatory at that point. It's limited to $500 now; we're asking the courts to consider a fine up to $2,000, and up to $500 in the other case.

MR. LOVICK: I am just having a little difficulty following the logic of this. As you know, Mr. Minister, there have been numerous allegations offered about the difficulty with enforcement and whether we are in fact enforcing the kinds of penalties and punishments that we talk about in legislation.

Now it seems that we are increasing the fines, as if that is somehow going to be an additional incentive to enforce and implement the system. Logically it would seem that the opposite might occur. If we have been reluctant to enforce the fines and to impose penalties, given the ceilings that we have established, why should we expect any better a track record from government when we are increasing the penalties by such a significant amount?

HON. MR. STRACHAN: I accept that as valid criticism. What we hope to do here, though, is focus the public's mind on the fact that we don't want them to litter , that we have increased the fines.

In terms of laying information before a court, anyone can do it. We expect that all peace officers, bylaw enforcement officers, and actually citizens on the street can lay an information before the courts and cause prosecution.

We hope that this will focus the public's attention on it. And the city police forces, the RCMP Police and all peace officers will be mindful of the fact that it can now cost up to $2,000 if you are littering, and they will start laying informations and start giving us prosecutions.

[ Page 8449 ]

I do accept the conclusion that in the past we have probably been a little bit lax - not only us, but other people who have the ability to enforce this law, such as city police.

MR. LOVICK: I am delighted with the candour of the response. I am a little concerned, however, about the conclusion. It sounds as if we are talking about a kind of vigilantism — I am not sure how to explain, define or pronounce that word. It's as if we're sure we have the ministry-level enforcement. We're not sure we have those people actually working for the ministry to do the job, but we are going to impose this fine system, a significantly increased one, and we are going to give a public relations spin to the whole thing so that everybody knows about it, and therefore everybody will become a neighbourhood monitor to make sure that no sins are committed in this jurisdiction. Is that really the case? Is that what we're talking about, or are we talking about an incentive system to encourage these vigilantes who are ever alert?

HON. MR. STRACHAN: Interesting question. As I said — and I don't know what else I can say about it — in terms of littering, everyone has the ability to file an information. Naturally it will be conservation officer service technicians in our ministry, as well as the Coast Guard in the marine environment, Parks officials and anyone working for government who would have the ability to lay that information. And we would hope that peace officers would do it.

Quite frankly, I would also suspect that — although you use the term "PR," I use the term "focusing the public's attention on the issue" — it's going to be like smoking bylaws, where we say: "You can't smoke in a store." No one is fined for doing that, but no one smokes in stores anymore, either. They just obey the law now that they know it's there. I would suspect it will have the same impact here. I certainly hope so, because my bottom line is an unlittered British Columbia, and any way that we can effect it. Even if we never fine anybody, if it stops people from littering, then the bill has been effective.

MR. LOVICK: Who can dispute that conclusion' Mr. Chairman? Wouldn't it be lovely if that were the case? I notice in passing that in the Waste Management Act, which we are going to talk about amendments to in just a few moments, there is a section about offences for littering that has never been proclaimed. I wonder, then, how we can talk very seriously about this commitment to dealing with litter when we have had this legislation on the statute books for a significant period of time and yet have never proclaimed it,

I am not disputing your conclusion, Mr. Minister, but I am sure that you can understand if some of us are a bit suspicious about what might indeed happen here.

With your indulgence, Mr. Chairman, I wonder if might just wind the clock back ever so slightly, given that I had no idea we would be into this bill at this hour, and ask a question about the first section. I know the minister believes in sharing information and feels he has nothing to hide, and indeed is proud of this legislation. I wonder, then, if he might indulge me if I were to pose a question about the first section. I know I am stretching the limits.

Interjection.

MR. LOVICK: On the Litter Act. I promise I'm not going to introduce or deal with another piece of legislation.

Section 1 talks about the notion of changing the definition so that we are talking about the entire environment. The intention is to include the marine environment in litter protection. Referring to the explanatory note, when the legislation tells us that we're talking about marine waters within provincial jurisdiction, just which ones are we talking about? The normal usage of "marine" is oceans. I am sufficiently familiar with the Canadian constitution to know what the essential jurisdictional divide is between federal and provincial, and I think there is indeed some confusion here. Would the minister be good enough to explain just which provincial waters we are talking about?

HON. MR. STRACHAN: To go through it briefly, the member is aware that the original act said: "No person shall discharge, dump, discard or dispose of litter on any land or fresh water or ice thereon." Clearly that meant land in British Columbia and the whole freshwater system, whether it be water or ice. Salt water doesn't freeze; we've established that. Now we've expanded it to include the marine environment, which is all Inside Passage salt waters and the Canadian salt waters of Juan de Fuca Strait, the whole Gulf Islands area — everything. So if you're throwing a beer can out of your boat in the straits or the Inside Passage, you are subject to prosecution under this act.

MR. LOVICK: I guess the question I want to pose — a very direct question — is whether this legislation has been drafted in consultation with the minister's federal counterparts. As we know, the federal government is very sensitive to its jurisdiction and to any infringements thereon. I wonder if the minister can tell us what steps have been taken to check this out with his federal counterparts. As we know, under the constitutional division of powers — I believe the definition concerns fish species — if fish are both sea and freshwater habitants, then it becomes a federal matter; whereas if it were restricted to fresh water, then it's a provincial matter. So we all know the confusion surrounding that. I'm wondering if the minister would share with us just what discussions he has had with his federal counterparts to see that there won't be a constitutional crisis because of his well-intentioned motion.

HON. MR. STRACHAN: We have shared jurisdiction with the federal government in the Canada

[ Page 8450 ]

Shipping Act for this type of regulation, and we are in continual discussions with them. I was just advised now that those discussions are continuing with respect to enforcement of this act. The agreement is harmonious, and it is an agreement. I should add parenthetically — not wanting to mention another act — that we first regulated river rafting under the Canada Shipping Act, so we have had that relationship for some time.

MR. LOVICK: Again on 3(1). The intention of this is to finally address the problem of litter by boaters — the beer cans, the bleach bottles that people use for water, gasoline containers and all of that stuff. Is that the case?

HON. MR. STRACHAN: I was getting a briefing that I think is going to be beneficial to the committee, which I will repeat to you. If that doesn't answer your question, it's because I didn't hear you; I was listening.

The federal government is also going to pass an order-in-council under the Canada Shipping Act giving us the authority to operate under that act. If I've missed part of your question, repeat it. I'm sorry, I was....

MR. LOVICK: That is indeed the answer to the first question. The most recent question has to do simply with whether the intention of this legislation is in fact to deal with what's becoming an increasing problem of boat traffic and littering in our rivers and streams.

HON. MR. STRACHAN: As I said, we always could regulate on fresh water. This includes the saltwater environment that's within our jurisdiction.

MR. LOVICK: Just one last question on this, if I might. What about the problem of enforcement? How are we going to do this? If we are expanding the mandate of the ministry to deal with the marine environment, are we also talking about putting some dollars and some people into that to make sure that does indeed happen?

[6:15]

HON. MR. STRACHAN: In terms of staffing for this and for the marine environment, the answer is no. I've explained in my estimates what staffing is going to take place. There's going to be more staff within the Ministry of Environment doing a variety of things, and this is one of the acts they could further enforce. But clearly there are going to be many other people involved in enforcing this act: the Coast Guard; the RCMP Police, where they have water control; Vancouver city police, where they have the harbour patrol; and parks staff. There is a marine component to the B.C. parks branch, there is a marine component to the Ministry of Forests, and there are many federal and provincial officials who would be laying information under this act, presumably for the purpose of conviction; plus the fact, as I indicated to the committee earlier, that a citizen can lay information as well.

MR. G. JANSSEN: I'd like to believe the minister when he says that he'd like to relate this Litter Amendment Act to the smoking bylaw, where people don't smoke in stores anymore simply because you put out an anti-smoking law. However, as I walk down the highway, I see tons of garbage lying along the ditch. It seems that even though there is a $500 fine, it doesn't stop people from throwing garbage out the window.

Again, if there is a $2,000 fine, will that stop them? I am not a lawyer, but I have followed the newspapers on occasion and read about the people who are charged. I can't recall anybody ever receiving a $500 fine for littering. Does the minister have any figures on how many people have been charged in the last year, let's say, and have actually received a $500 fine? If they have — or haven't, for that matter — could he explain how the $2,000 fine is going to make a difference?

HON. MR. STRACHAN: That's the member's opinion; it's not my opinion. I believe, as I said earlier, that the fear of a $2,000 fine is going to be such that people will stop littering. I presume it is going to take a couple of test cases. They will no doubt make the headlines, and attention will be focused on the seriousness of littering.

MR. G. JANSSEN: That's why I asked the original question of the minister. How many test cases of $500 have there been in the last year?

HON. MR. STRACHAN: Normally there is ticketing, and people pay the ticket. But there have been no convictions of $500.

MR. G. JANSSEN: I would like to go back to the line of questioning that the first member for Nanaimo was pursuing, the matter of enforcement. If we are not enforcing the littering at $500, can the minister assure us that if we are going to start levying fines of $2,000, some of the money collected in the form of fines will actually be used to ensure more enforcement of the act? It seems inappropriate to me that we increase the fine and hope that people will stop smoking, or in this case, as the minister explained, stop littering — but if we are not going to enforce that act I don't see how it could make much difference. Could the minister give us some assurance that in fact there will be more emphasis placed on enforcement — perhaps hiring of legal counsel to see that the people who are ticketed are in fact convicted?

HON. MR. STRACHAN: Enforcement, as I said earlier, will be up to the various peace officers in the province and government officials, or anyone who wishes to lay an information. In terms of returning money from fines to the Ministry of Environment, that would be nice, but it's not done. The courts

[ Page 8451 ]

impose the fine and the courts keep the money for their own purposes, so I don't get a chance to get it.

Sections 3 to 5 inclusive approved.

Title approved.

HON. MR. STRACHAN: I move the committee on Bill 60 rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 60, Litter Amendment Act, 1989, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: I call committee on Bill 58.

WASTE MANAGEMENT AMENDMENT ACT, 1989

The House in committee on Bill 58; Mr. Pelton in the chair.

On section 1.

MR. LOVICK: As you recall, Mr. Chairman, I came rushing in rather quickly and somewhat out of breath for the last bill that we just dealt with, not aware that we had to jump quite so quickly to attention to deal with these measures. Moreover, I find myself in the position of being a little out of my depth insofar as our environment critic and our acknowledged expert on these matters is not here. However, I have agreed to provide some yeoman service and take us through the process. My request to the minister is: do be gentle, as it were.

My real reason — and I say that in an entirely facetious way — is that I have enough ego and sufficient sense of my own importance and worth that I want to establish very clearly for the record that I have not had the time to prepare for this, but I would like to. Therefore I shall be struggling a wee bit, but I hope that between us, Mr. Minister, we can indeed get answers to all the contentious questions and clauses within this particular bill.

Let's start with the first section, the definitions. We're very pleased, by the way, with this clarification in definition. We talk about a new phrase, "capable of damaging the environment, " as something else that helps us to define "air contaminant" and "effluent." That's commendable; that's good. We're very pleased about that.

I have a concern, however, that in the new definition section we do not define in any rigorous or specific way at all the whole large area of biomedical wastes. I am wondering why we haven't made any attempt at all to grapple with that. What we do, rather, is effectively leave....

I can't find my copy of the bill. I'll struggle for a moment here. I had the Waste Management Act, and I have some notes on second reading debate. I'm struggling to find the bill, Mr. Chairman. I can't find it.

At any event, the concern I have about the definitions is that biomedical wastes, I believe, are to be defined by cabinet; and that means using the vehicle of regulations, as I understand it. I'm wondering what the reason for that is. It seems rather loose, given that we are quite direct and quite clear about defining other parts of this; we define "effluents" and we define "air contaminants" and those kinds of things. What is the reason for that?

HON. MR. STRACHAN: We've got a task force which includes Dr. John Ward from my ministry, a toxicologist, and also officials and professionals from the Ministry of Health. That task force is now putting together the regulations that we talked about, that will be prescribed, When you see the word "prescribed, " that means it's done by regulation; understand that. That will be done by professionals. As soon as the task force reports to cabinet and the report is agreed to by cabinet, the regulations will flow. As I said, it is done by professionals who will be able to provide a list of biomedical wastes. Of course it's what we refer to now as "sharps and parts and dressings." Your colleague from Point Grey could give you a far more descriptive list than I could.

To answer your question in a short form: the task force is presenting the list and also other recommendations to cabinet soon. They will advise us on what we should prescribe in the regulations as being biomedical waste.

MR. LOVICK: I was aware that the task force was established, and I thought that the report had been completed some months ago and was wondering whether there was some good reason why we hadn't had that report released before this time. Is it not the case that the report has been completed and is available? Is there some other set of reasons as to why we're not spelling out what we mean by "biomedical wastes" now, if that report is available?

HON. MR. STRACHAN: The task force has completed, but the report has not yet been dealt with by cabinet. That's really all I can tell you at this point. I will give you an undertaking. Pardon the pun.

Interjection.

HON. MR. STRACHAN: Yes, I see that now.

I give you my assurance that we will have the regulations in the public view as quickly as possible. We will endeavour to have the report through cabinet and in the public eye as quickly as we can.

Section 1 approved.

[ Page 8452 ]

On section 2.

MR. LOVICK: Section 2, I understand, has as its intention nothing more than the exemption of the activities of crematoria; namely, the disposal of human remains, which I understand is exempt from regulation or permit requirements. The obvious question to the minister is: why is that the case?

Let me just elaborate on the question if I might. It might make it easier for him to answer. Are there other jurisdictions that exempt this type of operation, this type of air pollution, from waste management permitting processes or regulation? Or is it the case that that kind of emission is perceived to be non-noxious and somehow benign? What is the reason? Could the minister enlighten us?

HON. MR. STRACHAN: This exemption is added as the crematoria are currently licensed under the act referred to, and there is no reason to impose a second licence requirement upon them. That's why the exemption exists.

MR. LOVICK: Just to clarify this, if I might, is the minister telling us that because of that licensing arrangement in another part of the act, there is in place already some kind of permitting or regulation process to safeguard against emissions?

HON. MR. STRACHAN: Yes, that's right. It's not in this act. As this legislation refers to, it's in the Cemetery and Funeral Services Act.

Section 2 approved.

On section 3.

MR. LOVICK: We have some difficulty with this particular section, because on the face of it the measure appears to be retrogressive. It appears to be taking a step backwards, and we wonder why that should be the case. The reason we say that is that, as I understand it, in reading this section of the bill, regional waste managers may now renew approvals that have the effect of allowing certain kinds of pollution or allowing the storage of special wastes for a period of time without issuing a permit.

This particular measure has the effect of allowing that exemption, that indulgence on the part of government, to expand and to extend. It used to be 12 months, and now it's 15 months. Given that we are dealing with "the enforcer," the minister who has given us his every assurance — and, of course, we don't doubt his sincerity for a moment — that he will get tough with polluters and do something about the crisis problem of pollution, we wonder why this section would be taking a step backwards. What we are doing, in effect, is relaxing the regulations, it certainly seems. So could the minister tell us that?

[6:30]

HON. MR. STRACHAN: I appreciate your concern. The way it reads, I can appreciate that it would cause you some concern. We do not in any way wish to loosen up our regulations or allow these types of problems to continue. I am advised that we have increased this period to deal with discharges that may come from construction camps, because quite often they are going to be in operation for over one year. We are anticipating that and allowing a director to make a determination that can go up to 15 months.

By no means, I can assure the committee, would we anticipate generally loosening our regulations or our control. It's just that we want to have this in here to give us more flexibility.

MR. LOVICK: The minister's answer is comforting, insofar as he tells us there is a particular problem this section of the bill is intended to address; namely, something like a construction camp, which may well want to store toxic materials or special waste materials — whatever we want to call them. The life of the camp may indeed be more than 12 months. We can appreciate that.

The problem, however, is that as the legislation is written, it simply provides a blanket authority to extend the life of that non-compliance, if I might use that phrase, by another three months. Surely the minister would agree with us that this sends out precisely the opposite signal to the one we want to send out to polluters. In other words, this is not the time to be relaxing the regulations; this is the time to be tightening up those regulations. Would the minister care to comment?

HON. MR. STRACHAN: I don't know what else I can say to this to add to what I said earlier, except to really stress that regional managers will not make decisions that are going to negatively impact on the environment. It's just that they have a term to work with now that is only 12 months. The best advice we have from them is that in cases where they would want a term to exceed the year and go for 15 months, they ask for that.

I want to assure and stress to the committee that this is not a relaxation of our standards; nor do we see it as contributing more to our environmental problems. I couldn't in all good conscience allow that to happen.

MR. LOVICK: I wonder if the minister could elaborate a bit on the nature of the permitting process. It's well and good to say that in particular instances it is perhaps necessary to expand the time-frame to accommodate particular situations, but I wonder if he can clarify for us just what that process involves.

For example, is it the case that permits can now be issued and that that isn't a public process; nor is that process available or open to any kind of public review? Is it the case, rather, that that can happen entirely behind closed doors, and that we have no idea what is going on? Could he tell us?

HON. MR. STRACHAN: Pursuant to our legislation, all permits are subject to a public hearing; there

[ Page 8453 ]

has to be public notice, and they're also appealable to the Environmental Appeal Board. They are gazetted — published — in the local area, so those who may feel aggrieved about the manager's permit approval have every opportunity, first of all, to know that the permit has been approved and, secondly, to take it to the Environmental Appeal Board and have a hearing for that purpose.

MR. LOVICK: Does that statement also apply to the renewal of permits? That's the permit process. But what about the renewal?

HON. MR. STRACHAN: That's correct, Mr. Chairman.

MR. LOVICK: Mr. Chairman, I understand that this particular section of the bill has a direct impact and connection with section 9 and section 11 of the existing act. I think I'm correct. I'll make sure I've got this entirely correct. What we're talking about in 3(b) has a direct impact on section 11(6). Is that the case? Am I right? I'm sorry; I'm dealing with two or three documents here, and I hope I've got the right one.

HON. MR. STRACHAN: Yes, the member is right: section 3(b) is in the current section 11(6).

MR. LOVICK: I'd like to just pursue that for a moment Mr. Chairman, to make sure I understand it. This particular section — this amendment — has the effect of repealing the provision whereby managers are authorized to amend permits or approvals on their own initiative, where notice has been given to the permit-holder of the date on which the amendment is to take effect. That's not less than 60 days after notice, I think the note is.

The question I would pose about that is whether that means that regional managers do not need to give 60 days' notice to amend permits and approvals. Is that the case?

HON. MR. STRACHAN: The 60 days was originally put in to ensure that the manager was not unreasonable. Now we see the section as redundant, as the permitted has the right to appeal any decision of a manager that is considered to be excessive or unfair. So this, in essence, will tighten that up.

MR. LOVICK: Sorry, Mr. Chairman, I'm not sure I understood that answer precisely, and whether in fact that answered my question. Does this mean that regional managers do not need to give 60 days' notice to amend permits or approvals?

HON. MR. STRACHAN: That's right. If they want something done immediately, they can have it done immediately, and they don't have to wait 60 days, as the current act says. They can act very quickly and ensure that whatever they want done is done. Of course, the permitted always has the right to appeal.

MR. LOVICK: I detect from that answer that the minister sees this as a toughening of regulation and, in fact, making it more rigorous.

HON. MR. STRACHAN: Correct, and it also speeds up the process by which the manager would enforce what he wants to have done.

Sections 3 and 4 approved.

On section 5.

MR. LOVICK: We're back now to that section we alluded to earlier in section 1 of the bill: namely, the definition of biomedical wastes. The matter of definition has now been cleared up.

However, I do have a couple of other questions. Biomedical wastes, of course, are now included under the provisions of this act for waste management. Regional districts and municipalities, to judge from the legislation, will now need to submit and implement a waste management plan by December 31, 1992, which seems rather some way off on the horizon.

I'm sure you can forgive us on this side, Mr. Chairman, for being a little skeptical and a little suspicious when we consider something of the history of this. There has been considerable confusion lately about who is indeed responsible for this problem. In my own community of Nanaimo, as a case in point, there has been considerable discussion about the matter of how we dispose of those particular wastes at Nanaimo Regional General Hospital.

What's interesting to note here is that perhaps an answer is being given that now the municipalities are responsible, when it wasn't that many years ago — it seems to me about nine years ago — that the provincial government assumed the responsibility. I'm wondering if what we're dealing with here is a proverbial hot potato, and whether government is saying: "It's your turn, guys; you take over, because we can't handle it. We haven't done a very good job of handling the problem, so it's your turn now." I think we can be forgiven for perhaps drawing that conclusion.

Given that premise — and the minister may wish to challenge the premise — the question is whether the municipalities have been consulted over this decision to make them responsible for biomedical waste plans.

HON. MR. STRACHAN: The consultation process was skimpy, provincially; I'll admit to that. I did spend some considerable time on this with Mike O'Connor of the Greater Vancouver Regional District, but in terms of direct negotiations, yes, you're absolutely right. The member for Victoria knows full well that UBCM is not too happy with me right now. There's a letter from Marilyn Baker on my desk, and I'm to be talking to her.

MR. BLENCOE: It was toned down.

[ Page 8454 ]

HON. MR. STRACHAN: You saw the original, did you? I didn't.

I will admit that consultation was skimpy in terms of what was going to be in the act, but for some time we'd had deliberations with Ministry of Health officials, with Mike O'Connor of the GVRD and with John Ward, toxicologist at my ministry, about how to resolve the problem. This did come as a surprise to them. Some people have been critical of me because they say this is taking far too long, in terms of 1992 for biomedical waste and 1995 for waste management plans. Yet Marilyn Baker, speaking on behalf of UBCM, says it's far too short. I'm the peanut butter in the sandwich on this one, but I'll take those lumps and admit to you that consultation wasn't as good as it should have been.

MR. LOVICK: The minister is indeed becoming the lumpy peanut butter in the sandwich. Needless to say, I can't resist prying apart the two halves of that sandwich for just a moment to take a closer look.

The minister says he's heard rumblings that perhaps the municipalities are unhappy with what has happened. Could that be in part because it isn't clear to the municipalities who's going to pay for this added responsibility? Moreover, it isn't clear just where those dollars will come from to pick up the extra costs,

HON. MR. STRACHAN: I think perhaps you're right. In fact, I know you're right.

Seriously, regional districts fund hospitals, and they will have to fund this process as well. We may develop an assistance program. I'm not going to commit to that now, but clearly we have to sort out the problem. Currently, in many cases in Vancouver we are depending upon a private firm to ship to the state of Washington. As a minister, I cannot in good conscience expect another government in another country to continue to help us solve our problems; we have to solve them locally. We are attempting in our best fashion to do that, and to do it as quickly as possible.

Everything else you've said and every criticism you've laid at me is absolutely correct.

MR. LOVICK: The regional districts do indeed fund hospitals, however, to the tune of.... What is it — about 40 percent? Roughly 60 percent of the total cost is funded by the ministry and the provincial government?

Interjection.

MR. LOVICK: So it's a little misleading to suggest that the regional districts obviously pay this amount and therefore the problem is theirs. I think traditionally we assume that it's a shared responsibility, and I'm sure the minister will agree with me that some municipalities are beginning to wonder whether the government is using the opportunity of its born-again environmental crusade to —- I won't say shirk responsibilities, but divest itself of certain responsibilities that have proven to be somewhat expensive.

[6:45]

Another question: what happens in the next two and half years? It's all very well to say to these particular municipalities and regional districts throughout the province: "We're putting you on notice. You must indeed comply with these regulations, and you must do what we all agree is something that needs to be done." But are we doing anything to assist in that process at all?

HON. MR. STRACHAN: The task force work identifies a lot of potential technical solutions. That, of course, will be available to the UBCM, and it will be of benefit to the municipalities, the regional districts and the hospitals.

Getting back to the funding, my good colleague three seats down looks after 100 percent of the operating costs. So the provincial government is still going to be responsible for that and will, as he suggests, probably pay a tipping fee, in looking after this problem of the hospitals, and the provincial taxpayer will.... But those arrangements will be entered into. I recognize that this section is a bit of a shock to the UBCM and its constituent members, and I regret that it's there, but it is there nevertheless. I want to stress, though, that as further plans are developed, we'll do everything we can to consult and enjoy continued good dialogue with the regional districts and municipalities to sort this problem out.

MR. LOVICK: I appreciated the minister's reference a few moments ago to the fact that we ought not as a matter of policy simply ship off our problem of waste disposal to other jurisdictions outside Canadian boundaries. I think we all have some sympathy for that proposition. The problem, however, is whether in the two and half years that we are waiting until the new plans come on stream we might be doing some very serious damage to our own environment, damage that might not be done because there are facilities available to us in places like the state of Washington. I'm wondering if the minister, in that task force or in other deliberations that his officials and staff have been involved in, has grappled with the problem of how serious the predicament is of what we're doing in terms of hospital waste or biomedical waste. How serious is the problem? Do we have the luxury, in all conscience, of waiting for two and a half years before we change things?

HON. MR. STRACHAN: In terms of the private contractor, the government of the state of Washington, the EPA and other people who may be involved, I don't have any assurances about that, nor could I give them — and that's why I'm so concerned. If the door closes tomorrow, if the Washington border closes tomorrow on this issue, we've got a problem, and we'll have to address it in any way we can. BFI and others have systems in place now. There's a system being tested in Ontario now for grinding and bleaching. BFI has a great, big autoclave — that's

[ Page 8455 ]

their system. So if the border was closed on us, Mr. Chairman, we would just have to act as quickly and expeditiously as we could to sort out the problem.

MR. PERRY: My interest was piqued. Forgive me if the interruption is not opportune, but it affords me the chance to ask a simple question to the minister and know the answer for future reference. Do biomedical wastes trucked to the United States, such as Bellingham, remain the property of the Canadians who generated them, or do they become the possession of the waste facility? Do we face a similar situation to that of wastes from the Expo site, for example, or is the Bellingham situation unique? This is simply a chance to ask a factual question and know the answer.

HON. MR. STRACHAN: Generally, EPA legislation holds the generator of the waste continually, perpetually responsible if there's a problem. Cheery, isn't it?

MR. LOVICK: Still on section 5, Mr. Chairman: regional districts and municipalities. We talk now about the hospital situation, and now the regional districts and municipalities, the other part of this section.

They are given until December 31, 1995 — that's five and a half years — to submit a waste management plan that deals with a refuse type of waste, i.e. garbage, I guess. We wonder on this side if that, too, is not retrogressive and if we might be taking a step backwards, insofar as under the current Waste Management Act, as nearly as I can make out, under section 16, an act that was passed seven years ago, in 1982, municipalities were to submit waste management plans for ministerial approval, and the municipalities would then be subject to a fine of some $50,000 under section 34(9) if the approved waste management plans were contravened. On the face of it at least, this measure would seem to be a step backward, a retreat from, rather than renewed vigour in the assault against. I wonder if the minister would care to respond to that.

HON. MR. STRACHAN: I could have a floor amendment right now, Mr. Chairman, and speed it up and get another nasty letter from Marilyn Baker. Seriously, I don't want to be glib on this; we do want plans to be developed. CRD, Nanaimo, GVRD have plans being developed now; other communities are not as fast on the issue. But we have, as you know, the report from my colleague from Yale-Lillooet, which UBCM is looking at now, and all the municipalities are addressing in their own way their own methods of how they would recycle, recover, reuse and enter into the four R's — or the five R's, as my colleague suggested. That's what we're insisting happen. I don't really see any wisdom in changing the date, in the sense that I think everybody is acting as aggressively as they can on this issue. I have faith that the community leaders, the councils and the regional district directors are going to be focused on this. I have no doubt that at UBCM this year in September, as last year, there will be a lot of interest shown and people will tell me what they're doing and how they're doing it. We will assist in any way we can.

Of course, as you know, my colleague the Provincial Secretary (Hon. Mr. Reid) has included environmental projects as qualifying for his Go grants, and that is being taken up now. So I think this legislation, this date, is a good way to go. I'm confident that local governments are going to react quickly, responsibly and in a forthright manner.

MR. LOVICK: The hour must be getting on, Mr. Chairman. The discourse is getting a little inflated, a little puffy, I detect, and that hasn't been characteristic thus far,

Interjection.

MR. LOVICK: Quite understandably he's outraged or at least concerned that I would suggest such a thing.

I am not persuaded by the answer I get that things are unfolding as they ought. It seems to me that we have had legislation on the statute books for some five and a half years, and apparently we've done just about nothing with it — apparently.

Perhaps here's an opportunity for the minister to prove me wrong. How many regional districts and municipalities to date, given that legislation that's been around since 1982, have been required to submit plans on waste management? How much enforcement has there been?

HON. MR. STRACHAN: There have been, up until this point, no provisions to require any local government to submit a plan. Now we are doing that.

MR. LOVICK: Excuse me, Mr. Chairman, but isn't it the case that the existing Waste Management Act, 1982, in section 16 — granted it was a permissive provision — asked them, in effect, to submit waste management plans and said that they would be subject to fines if they didn't comply with that regulation? Isn't it a fair question then? I recognize it's a very subjective question, but isn't it fair to ask whether what we're being given here has sufficient strength behind it to enforce it, to change things from what they have been? Obviously what has been isn't satisfactory by anybody's conclusion, I'm sure.

HON. MR. STRACHAN: The member is quite right; it was permissive. I'll just quote the line from the current Waste Management Act. Section 160) says: "A municipality may submit a waste management plan for the approval of the minister." Then it goes on to discuss approval and that type of thing. Finally, in subsection (7) it says: "Where the minister considers that a municipality is causing pollution, he has and may exercise in relation to the municipality the powers that a manager may exercise under section 22 in relation to other persons." Section 22

[ Page 8456 ]

allows for pollution abatement orders. So that's the enforcement ability that's mentioned. But it is currently permissive, and we are amending it to say that it's not permissive. The "may" is taken out, and the word "shall" is put in. We all know the very interesting distinction between those two words in legislation.

MR. LOVICK: Unfortunately that's not very comforting, because we still have a period of some five and a half years before the "may" becomes "shall," and that's a heck of a long time to wait. Can the minister confirm for me that in fact municipalities can do whatever they want right now with their waste, their garbage? We don't seem to have any kind of enforcement or protections against that.

HON. MR. STRACHAN: No, that's not correct; they can't do anything they want. If they do under the sections I just read to the member the last time I was on my feet, we have the ability for abatement orders. We can enforce those, and we do. As a matter of fact, what have we done lately? Mackenzie, right? I think we've taken them to task. There's one in my area, and I'm sure we could find other lists. But we do have the authority now to ensure that we are not having pollution. We are changing this from a permissive system to a "shall," and we are putting a date in there. I am also advised that regional districts and municipalities are coming forward with waste management plans now more and more every day. This is just putting everybody's feet to the fire, so to speak.

MR. LOVICK: Well, when I hear that reference to "everybody's feet to the fire," I'm reminded that this is really reminiscent of the old "shall" game — "may" versus "shall." But what the heck, I'll let that pass. I can see the minister was a little slow to pick that up, but all right.

Just one more question on this particular section. Financial matters. I'm wondering if the minister would advise me whether the financial responsibility perhaps being given to the municipalities for this kind of activity is in fact part of the reason for the delay that we clearly have to do some negotiation with the municipalities and regional districts in order to ensure they can pick up this extra cost? Is that why?

HON. MR. STRACHAN: That's right, some of it, and the Ministry of Municipal Affairs as well assists in planning. Are you asking about financial assistance? I'm saying Municipal Affairs assists in planning.

[7:00]

Section 5 approved.

On section 6.

MR. LOVICK: I really struggle with this one; I must apologize to the House for the fact that I have not had an opportunity to do the kind of digging would like to. The notes that I have before me cause me some concern. With the minister's indulgence, I'd like to try to render what I see before me here and give him an opportunity to respond to that. I think there are some serious questions here.

I understand in section 6 that regarding entry onto land — this is in terms of the inspectors or conservation officers or whatever it may be — where permission is refused, and a warrant needs to be obtained, some of those provisions have indeed been repealed. Moreover, I understand that so have the provisions regarding obtaining a search warrant for inspection of vehicles containing special wastes.

[Mrs. Gran in the chair.]

I don't think that's problematic. That doesn't seem to be a major issue, because I understand the intent of this is that enforcement capacity will be subsumed or taken over by the Offence Act. Is that the case?

All right. So far, so good. A 1986 B.C. Court of Appeal case — the Bichel case — held that administrative searches for the purpose of gathering evidence for prosecution effectively violated section 8 of the Charter: namely, the provision whereby citizens shall be free from unreasonable search and seizure. The wording of the search warrant provisions in the Criminal Code, which are the same as those in the B.C. Offence Act, I'm told, have been upheld.

The speculation or the probable reason is that these particular similar chunks were removed from the Waste Management Act just because they are more likely to be held unconstitutional in light of the Bichel case. So far, so good? I hope I'm explaining that clearly.

There is less chance then of a court challenge if the Offence Act provisions are used, even though they are less specific than the pollution offences. So far, so good.

Am I right in that conclusion? Is that the reason for this change?

HON. MR. STRACHAN: Yes, the advice I have is that we have those concerns as well, and we have done that. I also want to speak to section 6 and tell you that the sections being eliminated are eliminated because they are considered redundant, as the Offence Act specifies the procedure for obtaining a warrant. The power related to inspection of vehicles is contained currently under section 21(l) — and a few other brackets — of the Waste Management Act. In terms of the member's question with respect to the law and his interpretation and suspicion of the Charter — is it Charter-proof? — we believe the member has been given correct information. But I could not volunteer a legal opinion at this point. Our Attorney-General (Hon. S.D. Smith) couldn't on this issue, I am advised. It's a shaky piece of law that has to be tested. You may have a point, and the concern you raise is valid.

MADAM CHAIRMAN: The member for Dewdney seeks leave to make an introduction.

[ Page 8457 ]

Leave granted.

MR. PELTON: This evening, hon. members, Mr. Speaker has several distinguished guests who I would like to introduce to the House on his behalf.

We have with us Mr. Brian Watkins, who is the British consul-general, and his wife Libby; Mr. Sam Fromowitz, who is the United States consul-general, and his wife Joan; and Admiral Robert E. George and his wife Lois.

Mr. Speaker is hosting our distinguished guests at dinner this evening, particularly to honour Vice-Admiral George, who has served with great distinction in the Royal Canadian Navy and has recently completed an appointment as Commander Maritime Forces Pacific and Commander Pacific Region here in Victoria, As of August this year, Admiral George is assuming the duties of Commander Maritime Command in Halifax, Nova Scotia. I'm sure all hon. members will join me in expressing their thanks to the admiral and his wife for their outstanding service to our country and wish them and their family well in the future.

Would hon. members please give our distinguished guests a very warm welcome.

MR. BLENCOE: On behalf of our caucus and the New Democratic Party, Madam Chairperson, I would also like to welcome our guests to the chamber. The members for Victoria wish Vice-Admiral George all the best in his new appointment and thank him for his loyal service on the west coast. We will certainly miss him, and I am sure he will be back this way. It is hard to leave the west coast. On behalf of my constituents in greater Victoria, I wish you all the best.

MR. PERRY: Madam Chairwoman, I would simply like to join the welcome to our distinguished visitors. I have corresponded with Vice-Admiral George and not had the chance to meet him before. I am sorry it is just before his departure, but I am glad to have the chance. Mr. Watkins in particular I have long owed a thank-you note for a delightful luncheon at the British consulate, and 1 will take the chance to offer him my appreciation now and my delight that he is here to join us.

MADAM CHAIRMAN: The Chair recognizes the second member for Nanaimo. The first — number one.

MR. LOVICK: I am tempted, given that introduction, Madam Chair, to begin with a ritual chant about "we're number one" or something, but I won't, because that would be the royal plural.

Instead, I want to come back to the question on section 6. I appreciate the answer that the minister gave me a moment ago. The other question has to do with enforcement as well, namely the people who are given the responsibility to enforce, i.e. conservation officers and others. Will they receive the credentials required to do that job? Will they be empowered under the Offence Act to lay charges, or are we going to be in a kind of Keystone Kops routine whereby these folks rush over and say, "You can't do that, " and somebody says, "Who says I can't, " and they say: "You just wait till I go and talk to the authorities and get a permit to tell you."

I am wondering, Mr. Chairman, if the minister could answer that question for me, just in terms of whether the enforcement personnel are in fact going to be given the power to enforce.

HON. MR. STRACHAN: I thank the member for his question. As we discussed during another event, in my estimates, we are increasing the staff. There is going to be an environmental enforcement unit that will function alongside the conservation officer service. They will be trained as legal scientists. They will have the ability to enter and to take evidence. They won't have the ability to produce a warrant, but a conservation officer will. We are certainly beefing up the inspection and information and investigation side with extra staff, and the issuing of warrants will still be carried out by uniformed conservation officers or RCMP, as happens now.

Section 6 approved.

On section 7.

MR. LOVICK: This is a section I don't think we have much difficulty with. With respect to the suspension or the cancellation of permits and approvals, clearly the intent of this is to add a power, namely to do so where a permit or approval is not, in the opinion of the minister, in the public interest. I don't think we have much difficulty with that, but I do want to query, if I may, why the minister hasn't had that power in the past — to take action to cancel permits where clear environmental damage is being done. Is this a brand new discovery and therefore we are taking action now whereas we apparently haven't done so in the past?

HON. MR. STRACHAN: It was a complicated process before, and there are times when the minister wants to cancel a permit for non-echnical reasons. The best example I can give you is at Koster siding, where there was a permit given by a director of the ministry for a landfill use. The official of the ministry gave it because it was environmentally sound; the soil-testing had been done and there was really nothing that any official could see that would stand in the way of that land for that use. It was politically unsound and did not follow government policy, which was that no refuse would go from one area to another without the approval of local authorities. In this case the regional district was upset about it and so were both MLAs, because it was in the Cariboo electoral area. We decided to use the means available to us to cancel the permit, That was a decision made by me.

This gives me the right to make those types of decisions a lot more easily where it is not, in my

[ Page 8458 ]

mind, in the best public interest to have a permit. That is a decision that cannot be made by an official, who will technically see the operation as being fine. I recall earlier being told about an automobile paint shop on Okanagan Lake that technically was right but politically was quite unsound. It was in the former Premier's riding. He didn't like that one bit and neither did anyone on the lake. A decision had to be made and the ministerial discretion had to come into place, and that's what this does.

MR. LOVICK: Given that description and that kind of case, I don't think many of us have difficulty with it. We are dealing with the wholesale power, apparently without any stated guidelines or regulations and the like, and the question is whether that kind of power would stand up if we were to invoke it and use it against a major offender, say a major industrial activity or concern. Has any legal opinion been sought as to just how effective this might be if it were indeed challenged?

HON. MR. STRACHAN: It's not an act yet. I guess anything is open to challenge.

The Koster siding decision was a major decision in the sense that there had been considerable investment made in that and literally that investment, that purpose and that company had the rug yanked out from under them. They obviously sought legal opinion and were given the legal opinion that the cabinet and the minister had made a decision that was defensible, so nothing proceeded.

I can't tell you now that this section or any section is bullet-proof, because there are always new and unique remedies to the courts and there are always new avenues of appeal, and anything is open to challenge. I guess that's what happens when you have a court system that is democratic. Nothing is bullet-proof, Mr. Member, but we believe this one is as good as it can be.

MR. LOVICK: Bullet-proof? An interesting term. I'm shocked. I've heard of the slings and arrows, but I didn't know we were shooting guns.

HON. MR. STRACHAN: It's a western term.

MR. LOVICK: Oh, I'm sorry. What can I say. It must be Prince George argot, Madam Chair.

[7:15]

Section 7 approved.

On section 8.

MR. LOVICK: This section obviously authorizes a restraining order to be sought by the minister and the Supreme Court for particular things, namely for polluting or storing special waste without a permit and for transporting and/or accepting delivery of special waste without the proper manifest. Fair enough.

The question is: why a restraining order for only those things as opposed to any violations of the Waste Management Act? Surely if a restraining order makes sense in those instances; surely, moreover, if we are committed to more active and aggressive enforcement of waste management violations, then we ought to consider the remedy of a restraining order for other things as well. Could the minister explain why we haven't done so?

HON. MR. STRACHAN: First of all, let me just describe the purpose of the act, then get to the amendment and then get to the member's question.

This authorizes the minister to seek a restraining order against any person who continues to operate after the permit or approval has been suspended. We haven't had that in all cases before, and we've had people continue polluting.

In terms of the other areas the member is concerned with, I understand that the Environment Management Act, EMA, gives the minister those powers to do the same thing. So this covers restraining orders in all areas.

MR. LOVICK: I'm dealing again in areas that are terra incognita to me; I don't know the details of EMA and so forth.

Did I understand correctly the minister to say that we have in fact covered off all the areas — in other words, the kinds of things that are available to us under something like CEPA, the Canadian Environmental Protection Act, where a judge in fact has wide authority to issue injunctions and that kind of measure? Is the minister telling us that we have those kinds of remedies available to us already and therefore we don't need to do anything further with this?

HON. MR. STRACHAN: This amendment and EMA allows us, in our opinion, to do anything we need to have done in terms of restraining orders. That's the advice I have, and I accept it. I can't believe that ministry officials in constructing an amendment like this, a massive amendment, with the type of fines we have would have left a stone unturned, so to speak. They have concluded that everything we want to do can be done either under these amendments or under current provisions in the Environment Management Act.

Section 8 approved.

On section 9.

MR. LOVICK: I'm not going to spend any time looking at the dollar figures for all these particular sections of the bill. Instead I just want to pose a question to the minister. Why did he and his officials opt for this particular model as opposed to an administrative regulatory mechanism of the kind suggested by Professor Rankin at the law faculty of the university. My information is that the minister is fond of quoting Professor Rankin and various things proposed by that individual and others. I note that

[ Page 8459 ]

Rankin and his colleagues — or perhaps Rankin acting singly — has produced a paper in which he concludes that the method of criminal prosecution and fines is probably the least effective by itself, and what ought to be is something like a hybrid. I am wondering if any thought was given by the minister to that approach.

HON. MR. STRACHAN: Yes, that's a good question, and we are pursuing the Rankin administrative model now. In the opinion of my director here, it is probably something we would be introducing, unless we find it flawed. We would anticipate doing that next year, but we haven't finished our investigation yet. Our opinion is not finalized.

It's a good suggestion, and Rankin is being studied very closely.

Section 9 approved.

On section 10,

MR. LOVICK: This, I take it, is a brand-new provision authorizing a fine for a new category: to fine a person convicted for profits made as a result of pollution. Is there a particular chunk of case law that generated this clause? It seems very specific and very targeted. I am wondering why the measure is here.

HON. MR. STRACHAN: I will be candid with you. We haven't seen any of that problem appear that we have been able to identify. But I wouldn't be a bit surprised if someone has made profits out of intentional pollution.

What we have looked at, and what we have tried to cover here, is what has been happening in the United States. As a matter of fact, there was recent evidence.... I don't know how conclusive it was. but you will recall, Madam Chairman, that in the early spring of this year there were reports of PCB-contaminated oil being mixed in with heating oil and diesel fuel. Obviously a permit-holder of a special waste company had said: "I will take your PCB-contaminated oil and I will dispose of it according to the law." Well, he didn't; he dumped it into tanks, and it is alleged — it hasn't been proved — that those contaminants ended up in home heating oils and in other areas.

We anticipated that we should have a type of legislation that allows us to ask the courts to assess fines over and above what we have published if we can prove that the profit has been made. But we do not have experience of that happening here. It most likely has, but we don't have that experience. We do know that it has happened in other jurisdictions. It is extremely serious. Primarily on the basis of that U.S. experience, we realized that we should have this additional provision in here.

MR. LOVICK: Section 10 also provides for a million fine and up to three years in jail where the polluter intentionally causes damage to the environment or shows wanton or reckless disregard for the lives or safety of others. Mr. Minister, is it not the case that some six months ago you were talking about $1 million and one year? Suddenly it has gone up by a factor of three. I wonder if you have been doing some numerological consulting or whether there is a particular reason for this tripling of the penalty.

HON. MR. STRACHAN: Essentially I think it was to show that we mean business. In December, if I recall my comments, I indicated that I would look at $1 million fines. That figure came from the Canadian Environmental Protection Act. It occurred to us that we should consider first of all the profitability of pollution — because it is enormously profitable — and strike a higher figure. That's what we arrived at. We didn't gaze at the stars or anything like that. We thought: what can we get away with? What smacks them? How profitable can this crime of pollution be? Let's try to address it properly. That's what we did.

MR. LOVICK: I find that comforting news. The predicament is that the same commitment and passionate defence to being "the enforcer" is not necessarily borne out by the rest of the bill. We will let that pass.

Interjection.

MR. LOVICK: Yes, a kind of Darth Vader of the polluters, the curse and nemesis thereof.

I want to ask another question about section 10. This is based on some opinion we have had from the West Coast Environmental Law Association, a group I am sure the minister is familiar with. The advice we receive is that the $3 million fine is for intentional damage to or loss of the use of the environment, or for wanton or reckless disregard for the lives or safety of persons causing a risk of death or harm. This means, it is alleged, that you can be fined up to $3 million for damage to the environment, but it has to be intentional; whereas it only takes reckless disregard — a lower standard in law, apparently — when harm to people is involved. The obvious question is: why not the same standard for the environment as for people? Why do we use a different one?

HON. MR. STRACHAN: It's for intentionally damaging the environment and intentionally risking the life and safety of persons. It includes environment and people.

MR. LOVICK: I'm not sure I can go any further with that question, so let me turn to another, if I might.

Just some questions about what it will mean if we pass this particular bill — if it becomes law — in terms of how it will work. I'd just like to pose a couple of questions apropos of that.

When a company exceeds its effluent discharge or air emission permit — when it goes beyond that — is it intentionally damaging the environment, or is that

[ Page 8460 ]

just a by-product of whatever the company might have done to result in that? Expansion of the physical plant, or expansion of a production schedule even, might have the effect, obviously, of damaging the environment. The question is: if a company exceeds the permit, apparently wilfully — and I choose my words carefully — is that in fact an intentional infraction, by the plan or purpose of this legislation? How do we deal with that? What I'm really getting at is: what is intentional?

HON. MR. STRACHAN: That would be a determination of the court. We've been a little lax in terms of getting good evidence, and that's why we have, as I indicated earlier, appointed a special prosecutor. We're also spending considerable time training our staff for appropriate investigations. It could be the wilful speeding up of production, and the company knowing that if they go from 200 tonnes a day to 400 tonnes a day they will exceed either effluent or air emissions. They may know that. If we can prove that they knew it and prove that they wilfully went from 200 tonnes to 400 tonnes a day, that would work in court because it would constitute intent, in my layman's opinion.

To get back to your question, it's difficult to answer. It's a question that will be decided by the court. I have every confidence in the special prosecutor we have dedicated to our ministry in terms of the training we're going to be giving to our enforcement officers so that they will be able to provide airtight evidence when they go to court and get convictions for the intent to pollute.

MR. LOVICK: I remember very well the debate and discussion that was all the rage a few years ago about duty-free zones and so forth, which would become a kind of haven for polluters. The reason I mention that now is just to make the point that obviously anybody who can cut the cost of production by being lax in terms of pollution enforcement is polluting for profit. That's a logical construct, I think. I don't think we can debate that or that we need to argue that. The question, though, that surely arises from that proposition is: what do we do about all of those folks who have, it seems, been doing very well, thank you, by effectively saying they aren't in compliance with legislation — like Cominco and Woodfibre, those folks whose fines have been so minuscule as to be almost embarrassing to all of us?

The minister has said — I believe it was in question period one day — that all existing offences would also be investigated, as well as future ones. Does that mean that we're going to give notice to those mills up and down the coast — especially the north coast — that suddenly the rules have changed, and that they are now being given notice that they will qualify as polluters for profit, and that steps will be taken? Does the minister care to respond to that? Is that what this legislation is going to do?

[7:30]

HON. MR. STRACHAN: They can read, and they know what the situation is. They know what the laws are, and they know they have to comply. As I've indicated earlier in other conversations, they are announcing construction plans. They're doing it all over the province, and they are indicating that they are spending money to come into compliance. All of the evidence I've seen to date leads me to believe that they will comply. They're certainly not going to engage consulting firms and engineering firms just for the purposes of good PR. They're spending that money to come into compliance. I have every reason to believe that they will. This act only enforces my ability to fine if they haven't come into compliance and my ability to extract larger damages on behalf of the people of British Columbia.

MR. LOVICK: Well, I'm not about to make a great to-do of this rather small part of the bill. But I just have to say that those assurances of "we are now giving notice, and we are going to enforce..." ring a little hollow when we discover that those companies to which I alluded a few moments ago are fined $100 or $1,000, as opposed to the $50,000 remedy that was available under the existing legislation, let alone the new legislation.

So all I can say is that I sincerely hope, Madam Chairman, that the Minister of Environment will receive the kind of support from his cabinet colleagues and this government to do with this legislation what the legislation enables the government to do. It's certainly overdue. The act needs toughening. We're pleased that it goes in the directions it does — the questions and the reservations we have notwithstanding — and we are therefore happy to support it.

That concludes my comments on these sections, Madam Chairman.

Sections 10 to 13 inclusive approved.

Preamble approved.

Title approved.

HON. MR. STRACHAN: I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 58, Waste Management Amendment Act, 1989, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: I call second reading of Bill 39.

[Mrs. Gran in the chair.]

[ Page 8461 ]

HEALTH STATUTES AMENDMENT ACT, 1989

HON. MR. DUECK: Madam Speaker, this bill amends seven statutes administered by the Ministry of Health. These amendments will improve the administration of our health care system, and I would like to briefly outline the changes to each act and the reasons behind them.

The Anatomy Act. This amendment gives the Minister of Health the discretion to allow a school of chiropractic to use unclaimed bodies for anatomical research. This provision is presently restricted to medical schools. The amendment is related to the amendments to the Chiropractors Act contained in Bill 40 that are being proposed in connection with the possibility of establishing a school of chiropractic in British Columbia.

The Community Care Facility Act. The major change here, Madam Speaker, will address the concern related to the size of group homes in residential areas. A decision of the British Columbia Court of Appeal last September established that the existing provisions in the act do not adequately guarantee the continuation of community care facilities of less than a certain size in residential areas. Following extensive consultation within government and with the Union of British Columbia Municipalities, agreement was reached that group homes would be protected from local zoning requirements.

In the case of residential facilities, there were no more than six persons in care and four other persons resident in the premises for a maximum of ten residents, and in the case of day care that there be no more than eight persons in care. In addition to these changes, several routine amendments are being made. The definition of "personal care" is being repealed, because it can be dealt with in the regulation. It only appears in the act under the regulation making section. We have clarified the requirement that persons licensed to provide care under the act are limited to only those types of care for which they were originally licensed. One further change permits conditions to be attached to a preschool supervisor's certificate, in addition to suspension or cancellation.

The Health Act. Madam Speaker, there are two principal changes being made here. Firstly, the sections dealing with the inspection are being repealed and replaced with more comprehensive provisions. A designated official will be able to inspect any place to determine if a health hazard exists, or if there is a contravention of the act or the regulations. The official is permitted to take samples, perform tests or do other things that are necessary to enable him or her to make a determination. It is important to note that in the case of inspection of a private place, the official must either obtain the consent of the owner or receive approval by Supreme Court order prior to making such inspections.

Secondly, the provisions related to injunctions are being expanded. Presently the act provides that injunction relief can only be obtained where an action has already been commenced. This requirement is unnecessarily limited and will be eliminated with this amendment. It will now be possible to seek a Supreme Court order in any case where a Ministry of Health official is attempting to stop or prevent a contravention of the act, the regulations or an order made under the act.

Health Emergency Act. The most significant amendment being made to this act relates to the establishment of a separate licensing body for emergency medical assistants; in other words, the EMAs. Until now, the Emergency Health Services Commission has been responsible both for employing EMAs and for licensing them. As a result of the changes proposed in this bill, the commission's responsibility for matters related to training and employment of EMAs will be more clearly established.

With respect to licensing and registration matters, the emergency medical assistants' licensing board, like other licensing boards, is given the authority to examine, register and license applicants, attach conditions to a licence and investigate complaints. Where an EMA has been incompetent or guilty of misconduct or has otherwise demonstrated that he or she is unfit to practise, the board, following a hearing, may impose conditions on the licence, suspend the licence or revoke the licence.

Following instructions of this bill, some concerns were voiced by EMA representatives, Discussions between members of my staff and CUPE led to agreement on amendments to these sections, and these have now been tabled with the Clerk as proposed amendments. The most important changes relate to provisions for appeal to the Supreme Court in relation to disciplinary action, a requirement that the EMA representative on the board be selected in accordance with regulations, and clarification about the grounds for disciplinary action. I will be moving these proposed amendments during Committee of the Whole.

Other changes to the Health Emergency Act are more housekeeping in nature. The provincial ambulance service is being formally named the British Columbia Ambulance Service. Additional regulation making powers are included: for example, the authority to waive ambulance fees for involuntary committals and the authority to make different regulations for different classes of EMAs.

Hospital Act. This is a housekeeping matter to eliminate an apparent conflict between section 2 and section 28. The act was recently amended to permit the Minister of Health rather than cabinet to make appointments to the board of management of hospitals. However, section 28 continues to refer to cabinet appointments in the case of extended care and rehabilitative hospitals. This is now being repealed.

Hospital District Act. With respect to temporary borrowing by a regional hospital district, the amount that is permitted to be borrowed is established in the regulations. However, the act has an unnecessarily complicated description of the process for approval of the amount for each district, and this description is being clarified.

Mental Health Act. A variety of amendments are being made to this act. References to a person's

[ Page 8462 ]

welfare as a basis for treatment or incarceration are being eliminated because the courts in Manitoba have determined that this is contrary to the Charter. It is important to emphasize, though, that a broad range of grounds for treatment or incarceration still exists in the act. A person who is voluntarily committed to an institution can no longer be held up to 72 hours if there are no medical grounds for his or her admission. The requirement for an admission form is being eliminated in those cases where a patient is simply being transferred between two institutions; typically, between a mental health facility and a correctional institution.

References to detention in sections 35 and 36 will have the word "involuntarily" added to clarify that persons voluntarily admitted cannot be deemed to have escaped from a facility.

There are two further housekeeping matters. The physicians serving on the review panel of a mental health facility will no longer need to be on staff of the facility, and clarification is added to confirm that references to a director of a provincial mental health facility include an officer in charge of a psychiatric unit.

Madam Speaker, these are important changes in our legislation, and I am pleased to bring them before the Legislature for consideration. I would move that the bill now be read a second time.

[7:45]

MR. PERRY: In view of the amendments proposed to the bill, the opposition will be pleased to support it. I think the minister has adequately explained the intent of the legislation.

I will make some very brief comments or questions during the clause-by-clause debate. The only point I would like to make in the second reading debate is that I think we have learned a lesson from this bill. When it was introduced, it appeared to precipitate the withdrawal of the emergency medical assistants from their negotiations with the government. I think this reflected an unnecessary antagonism between the ambulance attendants and the government and reflected an unnecessary lack of consultation.

I hope that we shall not see this with other health professions — or other professions, or any other employees or people in the province — because I think it's unnecessary, and as the minister has told us, in the end a satisfactory resolution was found that presumably was available before the first reading of the bill just as much as it is now.

I think it reflects comments that I believe I made earlier in this session in a brief debate on one of the minister's earlier bills where I expressed my surprise that the ministry did not consult as a matter of course with employees affected in continuing care facilities or the unions that represent them. I think that's wise public policy that we have learned, if we didn't know it before, from the experience with this bill.

Having said that, we are pleased to support it in its present form.

HON. MR. DUECK: I move that the bill now be read a second time.

Bill 39, Health Statutes Amendment 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: Madam Speaker, I call second reading of Bill 69.

HOSPITAL AMENDMENT ACT, 1989

HON. MR. DUECK: Bill 69, the Hospital Amendment Act, 1989, establishes a new Hospitals Foundation of B.C. The purposes of the Hospitals Foundation include the improvement of public knowledge and awareness about hospitals and their work, the facilitation of programs and activities that will increase financial and other benefits for hospitals, and the management of funds and property in a way that will benefit hospitals.

The Hospitals Foundation may receive funds or other property from any source. Any individual or corporations that wish to benefit a specific hospital or otherwise attach conditions to a gift may do so. In such a case, the Hospitals Foundation will be bound by the terms of such a gift. Thus, for example, if a donor wants to make a special gift to Children's Hospital, he or she need only specify at the time of making the gift the terms that are to be imposed.

In the rare cases where the terms of a gift are no longer appropriate, the Hospitals Foundation may apply to the Supreme Court for an order varying those terms. This authority is similar to the means by which a person can apply to have a will or a trust varied in the courts.

The Hospitals Foundation is designated as an agent of the Crown in right of the province of British Columbia. As such, a person making a gift to the foundation is able to claim more than the normal 20 percent limit of taxable income in any one year that applies to conventional charities.

As a result, the establishment of the Hospitals Foundation will be an important mechanism for attracting new funding to hospitals. The Hospitals Foundation will augment, in a complementary way, the work of individual hospital foundations that now exist throughout the province. Many people will recognize the structure of the Hospitals Foundation. It is in fact modelled very closely on the structure of the three foundations established under the University Foundations Act. That act was passed unanimously in 1987. I feel that this Hospitals Foundation also deserves the support of all members of the Legislative Assembly.

I am pleased, Madam Speaker, to have the opportunity to present this initiative to the House, and I look forward to a speedy passage of the bill. I move that the bill now be read a second time.

MR. PERRY: This is a good bill. Her Majesty's Loyal Opposition shall be pleased to support it.

[ Page 8463 ]

HON. MR. DUECK: I move that the bill now be read a second time.

Motion approved.

Bill 69, Hospital Amendment 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: Madam Speaker, I call second reading of Bill 46, Labour and Consumer Services Statutes Amendment Act, 1989, printed in the name of the hon. Minister of Labour and Consumer Services.

LABOUR AND CONSUMER SERVICES
STATUTES AMENDMENT ACT, 1989

HON. L. HANSON: This bill amends four statutes: the Debt Collection Act, the Human Rights Act, the Liquor Control and Licensing Act and the Liquor Distribution Act. The amendments are designed to improve procedures in those four areas of my ministry.

Under the heading of the Debt Collection Act, there is one amendment. Appeals of licensing or discipline decisions by the director of debt collection will be moved from county court to the Commercial Appeals Commission.

Under the Human Rights Act: in 1984 the Human Rights Act was proclaimed, quite frankly amid opposition both to the extent of the protection offered and to the new and unique procedures. Now almost five years later the dust has settled, and we can review the record. During the last five years the Council of Human Rights has established itself as a credible agency which has interpreted the legislation in a fair and equitable manner. For example, the council has made significant decisions in several areas, extending the grounds of protection to include pregnancy as sex discrimination and age as a physical disability.

Recently council members found in favour of complainants who had been discriminated against because of their height and because of a skin disorder. Madam Speaker, the result of the Council of Human Rights' positive performance is that the number of persons coming to the council for assistance has increased dramatically. In fact, there were 348 complaints received in 1988-89 compared to 263 the previous year. The council has striven, with some success, to increase the number of voluntary settlements without resorting to the hearing process. However, as was pointed out during the estimates debate, a penalty of the council's success has been an increase in the time required to address the individual complaints.

The procedural amendments contained in Bill 46 will, for one, improve the administration and handling of the complaints and further encourage the mediation of settlements and the expedition of cases to the council for a decision. More specifically, these amendments to the Human Rights Act will remove the limit of five members on the council. This measure will allow for the appointment of additional full or part-time members. It will allow members to carry a full load until the end of their appointments and then complete the files before them.

It will allow the chairman to investigate a complaint and endeavour to assist the parties to achieve a settlement. This currently requires a panel of three council members. The actual investigative function will continue to be delegated to the industrial relations officers. It will also continue to require that decisions on the discontinuing of complaints will be made by a panel of the council.

Madam Speaker, under the Liquor Control and Licensing Act, this bill amends three sections. The most important of these amendments introduces tough new fines to be levied against persons convicted of illegal sale of liquor outside of licensed establishments. That is what we commonly know as bootlegging. This amendment responds to the Jansen committee's report on liquor policy, which suggested that the penalty for bootlegging should be substantially increased. As the report points out, bootlegging is a problem which impacts most heavily on youth and native people. Tougher fines should help to reduce this problem. It will introduce penalties for conviction on a first offence that will range from a minimum $1,000 fine to a maximum $2,000 fine. Second and subsequent offences will result in fines ranging from a minimum of $2,000 to a maximum of $10,000. Currently there is no minimum fine, while the maximum within the Offence Act is $2,000 and/or a six-month jail term.

The amendments will permit the liquor control appeal board to set its own rules to govern its practices and procedures which are consistent with the act and regulations. This will give the board clear jurisdiction to establish procedural rules which are not specifically dealt with in the regulations. This will avoid the potential for delays in dealing with those appeals.

A third amendment simply clarifies that brew pubs, of which we have several in British Columbia, are allowed to sell beer which they manufacture on site through their licensed on-site premises. I should also mention that the former ombudsman, Peter Bazowski, is currently undertaking a detailed assessment of current licensing policy.

The Liquor Distribution Act. This bill fulfils a requirement of the Canada-U.S. free trade agreement. An administrative mechanism will be established to hear appeals of decisions made by the general manager of liquor distribution not to list a product in the LDB inventory. Listing appeals will be heard by the liquor control appeal board, which was established to hear appeals on liquor licensing and enforcement decisions.

Madam Speaker, all of the amendments I have discussed are important because they will enable the government to provide better service to British Columbians.

[ Page 8464 ]

MRS. BOONE: The opposition has no real problems whatsoever with this bill. We see many of the amendments as merely housekeeping and certainly welcome the move away from the courts into other dispute-settling mechanisms, which we feel are a better way of handling many of the disputes. I'm certainly happy to see increased fines for bootlegging, and I think this will be welcomed by all of our law-abiding citizens.

The opposition has no problems with this bill, and we support it.

HON. L. HANSON: I move second reading of the bill.

Motion approved.

Bill 46, Labour and Consumer Services Statutes Amendment 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 second reading of Bill 47, Madam Speaker.

RESIDENTIAL TENANCY
AMENDMENT ACT, 1989

HON. L. HANSON: In December of last year I announced cabinet's decision to extend better protection to persons whose permanent residences are lower-cost hotels, motels, inns or rooming-houses. This legislation extends near tenancy to this group of people, who are usually persons with low incomes. This protection becomes effective with the first reading on June 20 and covers thousands of British Columbians. When hotel tenants are mentioned, everyone thinks automatically of Vancouver's downtown east side residents, but this legislation will protect people in many other communities, including Victoria, Prince George, Kamloops and Prince Rupert.

You will note that I use the term "near tenancy." Protection will not be absolutely identical to that of tenancy, because the situations are not identical. There is precedent for this decision; for example' protections are not absolutely identical for mobile home pad tenants and other tenants.

[8:00]

1 would like to discuss some of the differences between tenancy and hotel tenancy. One difference is that we will allow reasonable charges for overnight guests for hotel tenancy, with appeal to arbitration if the amount is unreasonable. Another difference is that landlords will be able to apply reasonable limits to visiting hours for hotel tenants. You will appreciate that many hotels will have a mix of hotel tenants, transient guests, and that hotels supply furniture and linen. You will also appreciate that hotel tenants often rent small single rooms, and the building design and number of units per floor are often different for hotels than for most apartment buildings. We all know there are tiny apartments, but this difference generally holds. If there is abuse by the landlord of the per-day charge to residents for overnight visitors or tenants' visitors hour provisions, government can take action. Cabinet may prescribe standard terms and conditions for all hotel tenancy agreements, a power that we are prepared to use if necessary.

You will note that small rooming-houses are exempt. This refers to rooming-houses with up to five bedrooms, one of which is occupied by the landlord. The intent of the legislation is not to impose hotel tenancy on the family or individual who rents rooms to students. The legislation provides that a hotel tenant may apply for an ex parte interim order that they are a hotel tenant so that they need not be concerned about being evicted before a dispute is resolved.

The dollar cutoff for hotel tenancy is set at $15 per night, which is equivalent to $450 per month. This was chosen as the cutoff based on the information from the Downtown Eastside Residents' Association that downtown east side hotel occupants in Vancouver were paying $320 to $375 per month. By setting a cutoff rate of $15 per night, tenants are protected. We also make it clear to more expensive hotels that their clientele are not being affected.

You will note that the government is able, by regulation, to vary this amount for different areas of the province. That will allow for regional differences in rates as well as periodic review.

There is a transitional rent increase provision that makes clear when the 12-month interval for rent increases for current hotel tenants begins. It will be 12 months after the last increase. The Hotel Keepers Act is amended so that the distraint of a hotel tenant's possessions is prohibited.

This bill also deals with another very important issue: security deposits. I'm sure that the hon. members are familiar with the recommendations of the report of the justice Reform Committee, which was initiated by the Attorney-General (Hon. S.D. Smith) and chaired by the Deputy Attorney-General. Recommendation 133 of that report suggested that security deposits should move from small-claims court to the residential tenancy branch. This recommendation was discussed with tenants and landlords, and both parties suggested that all monetary claims currently handled by small-claims court — not just security deposits — should be settled through arbitration.

This bill will provide for security deposits or other monetary claims to be settled through an arbitrator appointed by the residential tenancy branch. Some common examples of monetary claims are: rent arrears or damages; reimbursements of illegal or hidden rent increases; mobile home pad moving expenses, where the tenancy was terminated for reasons such as change of use of the mobile home park; and additional rent and moving expenses, where a landlord misused the eviction process.

If a landlord does not refund a security deposit or pay a monetary claim after an arbitrator's order, rent or security deposits from other tenants may be redirected to satisfy the claim. Arbitration orders for monetary claims up to the small-claims court dollar

[ Page 8465 ]

limit that are not complied with may also be filed in the Provincial Court for enforcement if a landlord or tenant does not pay.

There is a new provision that an arbitrator may order the landlord and the tenant to each pay part of the filing fee. Previously one of the parties had to pay the entire amount. Another new provision allows an arbitrator to order termination of the tenancy and to issue an order of possession at the same hearing.

The fact that there may be differences in the common law between tenancy and a licence to occupy land, which is the legal status of hotel tenants, is recognized. This is not expected to have much significance, but it does provide notice that the government is limiting the common law by statute, not repealing it. Subsections 49(1) and (2) provide that once this bill is proclaimed, all new claims for monetary damage that could previously have gone to small-claims court will be handled by the arbitrators at the residential tenancy branch. This provision will apply regardless of whether the event from which the monetary claim arose occurred before or after the proclamation of this legislation.

Both landlords and tenants will benefit from being able to deal with non-monetary claims and monetary claims of $5,000 or less through one office. When this arbitration system was introduced back in 1984, many people were skeptical that the system would work. It has worked very well. Credit for that success should go to the excellent work done by the full-time and part-time arbitrators who are responsible for that fine record. Madam Speaker, I move that the bill be now read a second time.

MR. BLENCOE: It's the intention of the opposition to support the legislation. We on this side of the House, and in particular my colleague from Vancouver Centre, have for many years called for the inclusion of those who reside in rooming-houses in the Residential Tenancy Act. Therefore I commend the minister for bringing that forward, but I do have to put on the record that I really wish, as I think do all British Columbians who witnessed what happened during Expo 86 in that incredible episode of rooming-house tenants being arbitrarily removed without any protection.... Here in this Legislature we tried to encourage the government to take action at that time. All members on this side of the House, particularly the second member for Vancouver Centre (Mr. Barnes), asked the government to show some heart and some compassion. But at that time they sat back and watched those incredible evictions go on. It's most unfortunate that this government did not see the wisdom of including rooming-house tenants under the Residential Tenancy Act at the time.

MR. WILLIAMS: Slow learners.

MR. BLENCOE: That's correct — slow learners.

The second major portion of this legislation is the decision to have all monetary items under $5,000 go to the residential tenancy branch — particularly security deposit disputes not having to go to the small-claims court.

We are supportive of that and encourage and commend the minister for bringing that forward. It is a recommendation, as he noted, out of the justice Reform Committee. We think that is a useful amendment to the Residential Tenancy Act. I cannot help but remind this government and the good citizens of this province that we used to have a Residential Tenancy Act and a rentalsman and rent review in the province. We used to have a rentalsman's office that dealt with these issues daily, especially things like security deposits. This government, in its wisdom, totally vacated the field in 1983.

1 recall standing a little behind here debating with Mr. Hewitt, the minister at the time, for many hours on the elimination of the rentalsman and this item of security deposits being sent off the courts. We remind the government and the minister, who refer to the justice Reform Committee having recommended the inclusion of this item of security deposits, that it was the Justice Development Commission in the 1970s that recommended the establishment of the rentalsman's office, the creation of the quasi-legal branch to deal with landlord and tenant matters. This government in 1983 eliminated that office, thereby eliminating those recommendations of the 1970s law reform commission.

Here we are revisiting — with band-aids, I think — issues that we on this side of the House said should not have been eliminated in 1983. We said they would create problems and that we'd be back in this House one day trying to deal with these issues. Rather than taking the whole problem of landlord and tenant issues in the province and bringing forward legislation that deals with all the issues that tenants and landlords have to deal with, we have a piece of legislation that we support, but it is basically putting on band-aids to something that requires an overhaul, and return to normalcy decent laws for landlords and tenants.

This side of the House believes we need the rentalsman back in the province. We need a fair and decent process of rent review. We believe that the 1.2 million tenants in the province need decent laws so they can fight for their rights.

This government, through its budget and its legislation in this session, is trying to give the impression that it is doing something in the shelter and housing issues for tenants. When you look at it, it's basically window-dressing; there is very little there. We request on behalf of those 1.2 million tenants decent laws, a rentalsman, a process of rent review and laws that ensure there is an equal playing-field between landlords and tenants.

HON. L. HANSON: This bill does level the playing-field. No matter how the members of the opposition would like to disguise rent control by calling it by some other name, it still ends up under that same title. I move second reading.

Motion approved.

[ Page 8466 ]

Bill 47, Labour and Consumer Services Statutes Amendment 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 on Bill 79.

INCOME TAX AMENDMENT
ACT (No. 2), 1989

The House in committee on Bill 79; Mr. Pelton in the chair.

[8:15]

Section 1 approved.

On section 2.

MR. CLARK: I know this bill is really companion legislation to the federal legislation, but I have a rather detailed case that I wonder if this section deals with, and I would like the minister's view on this matter.

Interjections.

MR. CLARK: The minister wants it factual. I want to give him a set of facts.

An entrepreneur in British Columbia goes down to the United States and raises $100,000 for his firm doing business in British Columbia. The American government has a 10 percent withholding tax on that $100,000. So that means the individual has $90,000 to invest in his business here in British Columbia. He invests $90,000 in British Columbia, but for Canadian tax purposes, he has a $10,000 profit because he raised $100,000 in the United States and spent only $90,000 in British Columbia. But the profit — the $10,000 — is held by the American government for withholding tax.

The Canadian government works it out and says: "For tax purposes, you have to pay on a profit of $10,000." But as I understand it, the U.S. tax paid can be used to offset the tax payable in Canada, except for in British Columbia. I am told that the British Columbia corporate tax requires an individual to pay tax on the $10,000 profit, which of course he didn't realize because it was paid in the United States. If the tax is about 15 percent — which it is, roughly — the individual would then have to pay $1,500 in B.C. tax, even though he didn't really make a profit; it was paid in the United States.

That's the fact pattern; those are the facts in British Columbia. Unlike other Canadian provinces and most other countries, one has to pay $1,500 in British Columbia tax, even though there was no profit made, because it really is an American withholding tax that uses the money up. It strikes me as a rather bizarre set of circumstances, but it's rather frequent in British Columbia, I understand.

As I read this section, it does have to do with earnings in a foreign country, and I am wondering whether this fact pattern — which is an actual case of an individual in Vancouver — is remedied at all by this section. If not, is the minister prepared to pass comment on this situation?

HON. MR. COUVELIER: We're having some difficulty with the member's recounting of what he describes as "the fact pattern." To the best of our knowledge, tax laws are uniform across the country and we are no different from the other provinces in the application of federal income tax changes. So we're a little uncertain about your facts as you claim them to be.

MR. CLARK: It may be. As I read this section, this 1989 set of amendments deals with changes to the federal act in 1986. Presumably there's a three-year time lag, when British Columbia law catches up to federal law. Now that may be inevitable, but the question I'm asking is whether this individual's having to pay British Columbia tax and not federal tax is a result of that three-year hiatus where provincial tax law has not caught up with federal tax law. Presumably there is some; otherwise there would be no need for this bill. This bill is to harmonize, so to speak, British Columbia legislation with federal legislation that passed three years ago.

HON. MR. COUVELIER: We're having some difficulty accepting the member's statements of what he claims to be "facts, " because that isn't our understanding of the situation. There is no three-year lag time, to the best of our knowledge. We introduced changes last year to the foreign tax credit situation. The provincial foreign tax credit was introduced in prior years, so we are not aware of the issue you're searching for. We would be pleased to involve ourselves in a dialogue with you and deal with the specifics. If you have someone who feels aggrieved, it's our responsibility to put his unease at rest and we'd be pleased to do so. If in the process you also get some comfort, that's a windfall that we wouldn't expect.

MR. CLARK: I'll take that on good faith from the minister. Maybe the minister could just agree with me that it is clearly unfair. If there's a withholding tax paid in the United States of $10,000 on $100,000, clearly it should not be construed for tax purposes as a profit which the provincial government could tax. Would the minister just agree with that general point?

HON. MR. COUVELIER: The difficulty I have, of course, in embracing my hon. colleague across the floor on this issue is that we have difficulty agreeing that the facts are correct. I wouldn't want to mislead any of the thousands of avid readers of Hansard that we are prepared to resolve something that we're not aware is a problem. I say it again: if there is an inequity in terms of our treatment vis-à-vis other

[ Page 8467 ]

provincial treatments, we'd like to know about it. It is not our intention to have such inequities exist.

Sections 2 to 32 inclusive approved.

Title approved.

HON. MR. COUVELIER: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 79, Income Tax Amendment Act (No. 2), 1989, reported complete without amendment, read a third time and passed.

HON. MR. RICHMOND: Committee on Bill 37, Mr. Speaker.

FINANCIAL ADMINISTRATION
AMENDMENT ACT, 1989

The House in committee on Bill 37; Mrs. Gran in the chair.

Sections 1 to 3 inclusive approved.

On section 4.

MR. CLARK: Section 4 changes some definitions in the Supply Act. I might say — and the minister might agree with me — that the primary purpose of this bill is to diversify investments of the government, both pension fund investments and other investments. But there are other sections of the bill which seem to make what may be minor amendments.

As I read this section, it says in subsection (7): "Where a Supply Act appropriates an amount for recoverable disbursements required for purposes referred to in the estimates, the appropriation shall be deemed to authorize the payment of an amount equal to the aggregate of (a) the amount appropriated, and (b) on the approval of Treasury Board...." I wonder what the purpose of this section is, because it appears to me to try and deal with some problems which the auditor-general may have pointed out about the shifting of money between subvotes and the like. I may be wrong in that interpretation, and I'd like the minister to clarify that. As I see it, it allows Treasury Board to alter amounts passed under estimates in this House where the government exceeds the estimated receipts set out in a detail related to the appropriation. I would like some clarification on the purpose of the amendment.

HON. MR. COUVELIER: This subsection (7) did not arise as a consequence of any expressed concerns by the auditor-general. This adds a new subsection to section 20 to clarify the definition of appropriation with regard to financing transactions. This new subsection also stipulates that Treasury Board approval is required to disburse any excess recoveries to that appropriation.

MR. CLARK: So what that means in layman's terms is that if more money comes in on a particular program than is estimated, the government is free to spend it without approval of the House and without approval of the estimates procedure. The only people that need to approve it are Treasury Board. Is that correct?

HON. MR. COUVELIER: This subsection deals basically with $10 votes. It arises, I understand, when we have slight differences of revenue over projected revenues. They are not significant sums in the overall scheme of things; they deal with the issue of revenues received from sales of maps and that kind of detail. So it's not of great moment in the dollar-and-cent terms; it is more a function of clarifying the intention of government as to what happens when your estimates were out of sync with reality.

MR. CLARK: But this is where estimates are out of sync in terms of more revenue than is anticipated. That's what gives me some concern. I wonder if the minister could give me some assurance, most importantly, that excess revenue under a particular vote can only be spent in a manner approved by that vote, or whether it allows money to be moved between spending envelopes, so to speak, or budgetary approval.

In other words, the Utilities Commission is a $10 vote because they recover their revenue from people making applications for rate increases or the like. If they recover more money than the Utilities Commission requires to do business that year, this seems to allow Treasury Board to decide where that extra money goes. Is that a correct interpretation of this section?

HON. MR. COUVELIER: The requirement would be upon the ministry responsible for that particular function to come to Treasury Board for approval to alter a spending pattern previously approved. So if they received more revenue and wished to spend it for some unbudgeted purpose, they'd have to have Treasury Board approval before they could do that.

MR. CLARK: Yes, but the purpose of the estimates is that the House approves the spending requirements. I'm not suggesting that this has in fact happened, but what if the Utilities Commission decided to dramatically increase the cost or fees charged to interveners or people who made submissions, utilities? Well, a government may, under this section, choose to hide a tax increase, essentially, and have surplus revenue go to the Utilities Commission — it may not be a large amount — which the Energy ministry could use for other purposes if Treasury Board agreed. That's what I want some clarification on.

[ Page 8468 ]

It seems to me that if one were to say that the Utilities Commission is a $10 vote and, should they see revenue in excess of expenditures, that that revenue would be only used by the Utilities Commission, even then I would have some concerns. But I have great concerns if the money can be filtered off into other branches of the ministry. If the map-selling branch makes lots of money this year, and if they take the money and spend it on a study on northeast coal or something, that's what I'm concerned about.

[8:30]

HON. MR. COUVELIER: Well, I'm happy to set the member's concerns at rest. He can sleep well tonight, because the expenditures would be limited to the purpose of that vote. We're dealing about issues in a single block. So clearly any expenditure request would have to be within the stated purposes of that vote. So there's no possibility of transfers here. I gather from the question that that was the concern.

MADAM CHAIRMAN: The Leader of the Opposition wishes leave to make an introduction.

Leave granted.

MR. HARCOURT: I would like the House to give a warm welcome to a young visitor, an observer of our great Legislature. His name is Michael Walsh. He's a friend from Whitehorse, which I understand is a suburb of Atlin, which of course is very ably represented by the member for Atlin (Mr. Guno). Would you give a very warm welcome to Michael Walsh.

MR. CLARK: Could the minister explain where in this section it says that the expenditures are limited to that set out by a particular vote?

HON. MR. COUVELIER: The definition is contained in the Financial Administration Act, so the limitation is there, and it's not necessary to repeat it here. That's the overriding act under which we operate.

Section 4 approved.

On section 5.

MR. CLARK: Madam Chairperson, as I read this bill, obviously there are several aspects to it. This seems to me to be somewhat different than the pension fund or other diversification. Perhaps the minister could explain the purpose of this section of the bill.

HON. MR. COUVELIER: This section amends the FAA to improve the accounting treatment of the province's risk-management and self-insurance programs. The addition of section 26.1 to the Financial Administration Act establishes a special account in the general fund to receive participants' contributions. Payments will be made from the account for expenses related to claims, investigations, actuarial reviews and the purchase of supplementary insurance coverage.

I can go on if that is required, but I suspect that's the answer the member was looking for.

MR. CLARK: I wonder if the minister could inform the House what the estimate of savings is as a result of this new account set up within the general fund.

HON. MR. COUVELIER: We don't have that material here. Suffice it to say that by virtue of dramatic increases by the insurance industry themselves in recent years — probably I'm going back four or five years — it became almost mandatory for larger public bodies to seek the option of self-insurance in order to minimize premium payments.

I can tell the member that even from my own experience at the municipal level, there are significant savings — millions and millions of dollars. The insurance industry, by raising its rates for premiums, had almost forced sizeable government institutions to look at self-insurance as a device to minimize taxpayer cost. It has been an effective device, and we have provided that kind of insurance for hospitals and school boards. So there is a significant saving, and it would be expressed in the millions of dollars.

Section 5 approved.

On section 6.

MR. CLARK: I don't like this bill, Madam Chairperson. This is section 6, and it contains pages and pages of changes to the act. It is unfortunate, because it contains many different aspects.

What I thought I would do, because the minister is aware of my concerns.... I stated them yesterday. Rather than simply repeat many of them, I thought I might just highlight a few of my concerns, in particular by way of an amendment.

I would like to move an amendment to section 36(1)(e). The amendment is to delete (e).

On the amendment.

MR. CLARK: I could go through and do a number of these exercises, but this particular section allows the government to invest in financial futures. I think that anybody should be aware that the futures market in any commodity is extremely volatile, extremely risky, and one in which one would expect extreme caution. Of course, the other sections of this bill allow investments in all kinds of futures — money futures, currency futures — a market in which very few people play, a market which is international and which involves an incredible amount of risk and, of course, some great returns; but also an incredible amount of expertise.

Madam Chairperson, I just use this amendment as an example to highlight some concern I have with the latitude this bill allows you and your staff to play with government money. This particular section

[ Page 8469 ]

doesn't merely refer to investments under the Pension Benefits Standards Act; this goes beyond that. This is an investment in a specific class of financial instruments — fixed-income instruments and the like — that deals with an area which I think government ought not to be involved in; at the very least it ought to be involved in it only if there are other people involved in discussion.

I have great concern about it, as I have about investing in South Africa, in foreign stocks and in a range of other venture capital projects. But I thought I might move this amendment in the hope that the minister might see that financial futures, money futures, would be something that surely isn't contemplated by the ministry.

HON. MR. COUVELIER: Under normal circumstances I would always be keen to receive the advice and counsel of my esteemed critic across the floor, but I must point out to him that this section he is moving to delete is a re-enactment. It already exists in the Financial Administration Act. The only new word in this whole exercise is the word "financial" preceding "options." It's a housekeeping amendment only. The flexibility he seems to have some trouble with is already available to government under the original act.

MR. WILLIAMS: Maybe the minister can advise us what the experience has been in this area.

HON. MR. COUVELIER: I'm very pleased to do that. It's always useful to have a better understanding of how government operates among the members opposite. The actual fact is that inserting the one word which this amendment does — "financial" — in effect reduces the flexibility in the sense that the original section.... Read it for yourself. I shouldn't have to tell you this. In the original bill we're not limited to financial options. We could deal in commodity options, presumably, if that was our pleasure. You might argue and I would make the point that adding the word "financial" reduces the range of flexibility the government may have rather than increasing it.

This section has been used and is needed so we can successfully hedge against interest rate or currency fluctuations. It's a standard device among financial institutions. The first member for Vancouver East, I'm sure, is well aware of the need for this flexibility by those people who have a sense of trust and husbandry as it relates to the management of other people's money.

MR. BLENCOE: Bafflegab.

MR. WILLIAMS: The member for Victoria says bafflegab, and he's absolutely right. When you try that stuff on the hustings, Saanich South is going to look pretty miserable, I'll tell you. Let's reflect on this. You people have ended up borrowing in the United States. The earlier eminent deputy minister who's the hotshot now at B.C. Hydro ended up borrowing heavily in the United States for B.C. Hydro. We ended up paying the bill, and Hydro is still extricating itself out of its lousy American debt problem. It's been improved significantly in the last little while by the same guy that in the end was responsible for it. It's a neat twist of irony that that learning curve was very expensive. I just worry about the learning curve for everybody else, and especially the minister. It's one thing if Mr. Bell's expensive because he has the capacity. It's something else when others have other limitations. It's disturbing.

The minister knows that I'm treating him lightly, as he deserves. The point is: what kind of salary are you paying your staff to get into this big-time league?

Interjection.

MR. WILLIAMS: No, you are competing in the private sector here in terms of these various instruments, Mr. Minister. You require significant expertise. I asked you about your track record to date, in terms of your staff and your operation in these areas. I didn't get any answer. We're tired of the bafflegab. We're tired of the fact that you don't have the answers. We're tired of the fact that you don't read the legislation. We're tired of the fact that you need a chorus line of civil servants to give you even the most basic elements of the information you need to get this stuff through the Legislature.

HON. MR. COUVELIER: I certainly would agree with the hon. member that I'm just a normal, ordinary British Columbian who happens to be elected to office to perform a function. I don't make any claim to having any unique level of knowledge, unlike some others across the floor who might be a bit more arrogant in that respect. I happen to believe that the people who elected me had some wisdom and saw some merit in my candidacy.

Aside from that, the member asked a question, and I will give him an answer. He wanted to know what use we had made of this existing practice. As I point out again, it is in the existing act. We have made $3 million dealing in financial futures since the fall of 1988.

I would point out to the member that his own entity — the Van City Credit Union — uses this flexibility. He seems to think that by virtue of the very capable leadership in this private sector entity they are better equipped than we in government might be to perform the same function. I find that a little surprising.

He also went on at some length about the borrowing in U.S. dollars. He seemed to think that we were doing this as some sort of established pattern. Once again I have to straighten the record out. The fact of the matter is that since this administration took office in the fall of 1986, we have dramatically reduced our U.S. borrowing exposure, and B.C. Hydro have dramatically reduced their borrowings.

It all comes down to this. We have an amendment put forward by the opposition which is unnecessary and clearly doesn't recognize the fact that these

[ Page 8470 ]

powers which they are railing and ranting we shouldn't have we already do have. It's in the old bill. We only added one word for the effect of limiting the statutory flexibility the government brought to the management of public money. Rather than expanding it, as the members opposite seem to be trying to claim, we are reducing it and minimizing the flexibility.

Obviously I am speaking against the amendment.

[8:45]

Amendment negatived.

MR. CLARK: I have another amendment. This is an amendment to delete section 6(36)(iv)(b).

On the amendment.

MR. CLARK: This is a section the minister talked about previously, being the power to invest in the options game. This is the section which allows the minister to invest in things itemized in the federal Pension Benefits Standards Act. The Pension Benefits Standards Act, the federal one, allows 7 percent of the money to be invested in things that do not qualify as qualified investments — in other words, venture capital and the like. It allows the government to spend a prescribed amount of money in stocks that give dividends. It allows the government to invest a prescribed amount of money in foreign stocks. It allows the government to spend 7 percent of its entire assets in real estate, of which 2 percent can be non-income-producing: in other words, cow pasture or raw land speculation.

I remind the minister that 2 percent of $18 billion is $360 million, which can be invested in non-income producing real estate. With this government's track record when it comes to real estate transactions, I don't think we should allow pension funds — or any funds of the government — to be invested in those mechanisms. This section alludes to the schedule of the federal act and is one which, if we deleted it, would make the act a lot better and a lot tighter.

HON. MR. COUVELIER: I would really love to be able to support at least something that the member opposite is saying. I find myself unable to support this amendment. It does provide me an opportunity to get into the record some reactions we've had from the trade union movement about this endeavour of ours to diversify the pension funds.

The hon. member, by suggesting that this issue be amended to reduce the powers, is getting at the heart of what we propose to do. This is really the guts of the issue. So let me just remind the member opposite that we have in written form.... I won't read all the letters, though I'd be pleased to do that if necessary, but I'll just read excerpts.

We have a letter from the B.C. Teachers' Federation which says: "Our position was clear in 1984 and has not changed. We want diversification to proceed."

A letter from B.C. Rail: "B.C. Rail management support this diversification initiative...and approval was obtained at a board meeting held on January 24, 1989 to permit the purchase of a wider portfolio of investments."

We have similar letters from B.C. Hydro. The colleges, in a letter of March 1988, reported that the association's governing body had passed a resolution in "support of the principle of diversification of pension fund investments to enhance financial returns."

We also have a letter of endorsement from the Workers' Compensation Board which, as the hon. member opposite knows, contains representation from the trade union movement. The quotation I'll read into the record from that organization is: "...diversification is advisable." Management will be recommending implementation to the new board — "...we are taking steps to develop a diversification plan."

Clearly we recognized that this issue was potentially sensitive and therefore did not include in the legislation any of the pension plans which the advisory bodies of those plans were not prepared to endorse. We only included in this legislation those plans for which we had previously received approval from the various advisory committees. As a consequence of that, any pension plans which wish to join in the diversification initiative in the future will have to be the subject of a separate piece of legislation. But it's not a perfect world, and we can't hold up this very valuable initiative awaiting for others to see its wisdom.

Clearly I can't support any initiative which would have the effect of gutting the very initiative we are attempting to deal with here.

MR. WILLIAMS: I can understand the concern expressed by the other member from Vancouver East. This government does not have a good record when it comes to its business competence. It simply doesn't have a good record. In terms of real estate, it's there. There's a chance that the first member for Vancouver Little Mountain (Mrs. McCarthy) could make a comeback and be in charge of your real estate portfolio. Then we could go through that whole Expo land fiasco again, where she sells on the never-never plan and at no interest forever and a day. And Li Ka-shing walks into the sunset with his satchel full of money and absolutely no interest to be paid. No homeowner in British Columbia got the concession that Li Ka-shing got at the hands of the member for Vancouver Little Mountain. I know she's not here a lot of the time; she's busy working on her comeback. Absolutely anything can happen. We learned that in 1975.

HON. MR. COUVELIER: A point of order. It's always useful for all of us to have the opportunity to vent, but it is necessary to be relevant. I appreciate that we didn't have our customary references to the Expo situation tonight, but I trust that now that we've had this opportunity we can get back to the issue at hand.

[ Page 8471 ]

MR. WILLIAMS: I'm sure that we won't have the chance of going through the Expo disaster again. But Westminster Quay and Lonsdale Quay, I guess we'll go through another one of those.

This minister has talked about Vancouver becoming the great new financial centre as a result of his initiative and the government's initiatives. But check the track record. We're being bought out by Toronto, and everybody's fleeing back east again. The whole thing is descending into itself, the stock exchange is going broke, they're not making enough money to pay their bills, and there's going to be great temptation on the part of these friends of the exchange. It's sort of like a new charity group forming: friends of the exchange. Doesn't it have a ring to it? Almost a cash register ring to it. After Peter the Rabbit, the friend of the member for Little Mountain, has walked away with his satchels of money, then it's up to us to help bail them out. So the minister's friends and the government's friends are all going to have to be helped out by the friends of the exchange, and the biggest friend of the exchange will be the Minister of Finance. He's got deep pockets; they're everybody's pockets. Why not use these pension funds in this reasonable way?

One can jest, but there's a track record of friends of friends in this administration. Who has been the bagman for you folks? Why, the member for Little Mountain knows lots of those bag folks, and they're not like the bag ladies we see on east Hastings Street, I'll tell you. We're concerned about these close linkages and the friends of government. We're concerned about the lack of the expertise that you need for handling these things. Frankly, Mr. Minister, you're not paying your staff and the civil service at the level that one needs, and we don't have the full range of capabilities that one needs in all these areas. You're simply not paying your staff at the level to attract the people you need. The civil servants, I'm sure, will quietly applaud, but there's no question that we're not up there in those leagues, and that makes us vulnerable.

You've got a bad track record on loans. Every year in this Legislature there's some new diversionary exercise in terms of burial of old loans that again have been made to commercial enterprises that probably shouldn't have been made. So we're vulnerable.

It would be nice to even think in terms of some limitations. We think it's dangerous getting you guys into the stock market, but as a fallback position, it would be interesting at least to look at the stock market in an ethical way and, as some have suggested, not buy stocks in firms that traded in South Africa, for example, and not be interested in companies that exploit labour. We would favour investments where women are treated as equals along with men in society, and so on. I'm serious about it. You start looking at some of the ethical growth funds like the one at the credit union that I happen to chair, or the Calvert fund or other funds. You're going to find out that the rates of return are very substantial and right up there in the top, if they're well-managed funds. You can actually do a few things with your money. That makes a lot of sense, where you've set some principles for how you invest your money. We'd like to see that sort of thing.

Interjection.

MR. WILLIAMS: The budding genius over there from Terrace doesn't generally get into the debate, and with good reason.

It does make sense to think of ethical investments if one is going to make investments at all, because that in a sense is a way to redirect things. It's a way of greening business, if you will, and using the capitalist system in a way to also further policy goals that a lot of us espouse, in this corner of the House at least.

We are disturbed, Madam Chair, in terms of overload. We have a minister who is the best actor in this chamber. He is actually pulling off the act of pretending that he can really manage the financial affairs of British Columbia. So far he has pulled it off, but to those of us who have been watching him closely and those of us who have been sitting here for the last couple of nights, it's abundantly clear that he has trouble answering fundamental questions in this area, We have some concerns about his expanding his role into areas that are clearly beyond his capability.

HON. MR. COUVELIER: A number of points were made in that rambling, interesting discourse.

In terms of the relevant points made, there seemed to be some discussion about what was called "friends of the exchange,"  the inference being that the member was talking about the Vancouver Stock Exchange. I will repeat the challenge that I made last night. If I understand the comments by both members from Vancouver East, they seem to be saying that they would prefer the trades to be crossed on the Toronto Stock Exchange rather than the Vancouver Stock Exchange. The only point of issue here is: are you prepared to transfer the commissions and the brokerage fees and all of the revenue from these transactions to the Toronto exchange, or would you prefer to see that those incomes remain on the Vancouver Stock Exchange? It's the same stocks that we're talking about.

[9:00]

We're talking about investment-quality stocks. We're talking about blue-chip stocks. We are not talking about venture listings on the VSE. We never were, never contemplated it. We are only talking about blue-chip stocks here with this initiative. If that's the case, you can buy MacMillan Bloedel on the Toronto or the Vancouver exchange. I gather, from what the members here seem to be trying to imply.... Their leader likes to hold meetings with the stock exchange clientele and tell them how cosy and comfortable he is with them — "For God's sake, don't read Hansard, but we're your friends." The two members from Vancouver East seem to be mounting a unilateral attack on the VSE's credibility. There's a contradiction there, but I won't dwell on that. That's their problem; I won't make it any easier for them. I

[ Page 8472 ]

want the members opposite to tell the House and the people whether they are arguing that the trades should be crossed on Toronto and bypass Vancouver, or what their problem is in this respect.

There was another point made by the second speaker, the first member for Vancouver East, who tried to imply that the provincial staff handling this issue were poorly paid, the implication being that they are incompetent or less than able. I see no reason to refer to rate of pay unless you make the next assumption, which is that they are unable to perform the task assigned. History shows that our staff are extremely capable and are perceived across the country as the most capable managers of public money in the country. I have attended these national meetings in the last two and a half years, and that is the message I have been consistently given by my peers. It is reflected in the performance of how public money is managed in this province.

I think we gave you a tour a year or so ago just to let the new people know how government worked so that they would be more credible opposition members and more capable of offering useful advice. We gave them this tour, and one of the things we showed them was this small group of about five dedicated servants of the people, your servants as well as our servants, who go in every morning at 5:30 and manage the money of this province on a daily basis. Just by playing the arbitrage markets, by managing the over 2,000 bank accounts that the people of this province have, managing those short-term funds, they have been able to create a profit centre of $12 million minimum per year. Clearly they are very capable, talented people, and I am very proud to be associated with them. I learn from them every day, and I hope I never stop having that marvellous experience of learning and growing as we proceed through life.

MR. CLARK: The minister has accused me and the first member for Vancouver East of attacking and single-handedly smudging the reputation of the Vancouver Stock Exchange. This is the minister who said there were scumbags operating on the Vancouver Stock Exchange. Those were his words. He has done more to hurt the international image of the Vancouver Stock Exchange than anything we could do.

The point is simply this: the minister went to great lengths to say "only blue-chip stocks." He said it about ten times. But that's not what the bill says. The bill allows 7 percent of pension money to be invested in other than blue chip stocks. If the bill said just blue chip stocks — investment quality stocks — then we on this side of the House might take a different position. But it doesn't say that.

As the first member said, the seduction of helping out their friends on the Vancouver Stock Exchange and the temptation of using government pension money to artificially prop up the volumes on the Vancouver Stock Exchange — or at least to keep the brokerage community happy during this period when they are in great difficulty — is too overwhelming in our view for this minister and this government not to use this bill and this section to invest at least some money in less than blue-chip stocks. That is the problem we have with it. The minister likes to talk about how much money we could make on blue-chip stocks. We might be prepared to entertain that. That's not what this bill does, and that's the reason we've moved this amendment.

Amendment negatived.

MR. CLARK: I have another amendment; it's to section 6(36.2)(2). The amendment is to delete the word "may" and substitute the word "shall." This is a very modest amendment, which I hesitate to make because it is a bad bill. It allows too much leeway for the government. It is completely inappropriate, and I don't support any of it.

At the very least there should be some advisory group of people guarding against the kind of investments that this minister might make. This bill says: "The Lieutenant-Governor-in-Council may, on the recommendation of the Minister of Finance, appoint a committee to advise the minister on policies respecting...matters relating to investments and loans."

The minister has said on several occasions that's where we have a policy advisory committee made up of representatives of the different public sector unions. It doesn't require that in the bill. It says "may." Surely the minister might agree that even though they have no control and even though there is complete control on the part of the government — and the public sector workers have to trust the government — at the very least there should be a committee advising the minister on this question, not at the discretion of the minister, but in the legislation.

MADAM CHAIRMAN: The Chair wishes to inform the member that the amendment is out of order, as it imposes an obligation on the Crown.

MS. EDWARDS: I would like to discuss subsection (36.2) and again make the point that my colleague was just attempting to make by way of amendment. I would like to say very clearly that as a former member of a group that would be involved in this, I am quite sure there would be considerably more assurance on the part of the people who participate in a pension fund if in fact there was some assurance that a committee was there. I think the minister should at least make some commitment that he will appoint such a committee, which will have as members representatives of the various groups whose money is being directed by the minister.

HON. MR. COUVELIER: I am not sure that I understood the opening comment of the hon. member who just spoke. Do I gather that she was on one of the advisory committees that dealt with these pension funds? If that is the case, then I would point out to her that she might have known that this is substantially a re-enactment of the existing legislation. Much has been said about the length of this bill; much of it is re-enactment, merely to consolidate in

[ Page 8473 ]

order to have all the information in one bill. There's nothing new about (36.2) in that respect.

MS. EDWARDS: I've never been on an advisory committee like this. What I am saying is that at one time I was employed as a person who would be paying into this kind of pension fund, a person who has a sense of what goes on with people who put their money into these pension funds. As we agree, those groups want diversification, but they also want diversification with their involvement. I think that the minister should make some commitment that a committee will be put together — not just that it may be put together, but that it shall be put together.

HON. MR. COUVELIER: I see. I can tell the hon. member that these committees already do exist. They have functioned for many years. They are useful, and they work very well. The member seems concerned that we won't create them. They are already in place.

MR. CLARK: Just before we let this bill pass, I notice that the first member for Vancouver-Little Mountain (Mrs. McCarthy) is in her chair. I notice she didn't speak on second reading. 1 thought it was going on quickly. We might just give her an opportunity. I have seen her comments in the newspaper and in other.... I gather they mirror mine to some great extent, which I have to wonder about — I was going to say, wonder about my own views on the matter. But I just thought that before we let the bill go through....

MADAM CHAIRMAN: Hon. member, I think the personal allusions are not necessary in this debate. I'm sure if the member wishes to speak she'll make up her own mind.

Section 6 approved on the following division:

YEAS - 26

NAYS - 14

Sections 7 to 10 inclusive approved.

[9:15]

Title approved.

HON. MR. COUVELIER: I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 37, Financial Administration Amendment Act, 1989, reported complete without amendment, read a third time and passed.

HON. MR. RICHMOND: Mr. Speaker, I call second reading of Bill 19.

MUNICIPAL AMENDMENT ACT, 1989

HON. MRS. JOHNSTON: It is my privilege to present for second reading Bill 19, Municipal Amendment Act, 1989. The bill contains a comprehensive revision of part 24 of the Municipal Act, which concerns the role of the regional district as an instrument of local democracy. The amendments will provide regional districts with greater autonomy, flexibility, fiscal responsibility, representation and accountability.

The proposed legislation is the product of two years of consultation and consensus-building. It is wholly endorsed by the Union of British Columbia Municipalities and is a truly fine example of creative consultation in action. From its inception in Dan Campbell's district-by-district assessment, through the forums conducted around the province by my former deputy, Chris Woodward, to the final product you now have before you, this legislative review has been an exemplary case of constructive consultation used to build legislation that will last. Your government fully supports this way of going about the process of revitalizing the province's legislative structure. In fact, we see it as the only way to create truly effective legislation that can be smoothly implemented.

The amendments before you address part 24's weaknesses and inadequacies. The most significant change is the process by which regional districts acquire and exercise their powers. It is proposed that the current cabinet order system be replaced by statutory empowerment providing a full set of standard service powers, all of which are designed to enhance local autonomy.

The legislation introduces a great deal of flexibility into the system, particularly in financial operations, removing unnecessary financial management constraints. The legislation improves overall representation with new voting rules, including special rules for the Greater Vancouver Regional District and more opportunities for rural areas. We expect the local community concept to be a much more popular option for rural self-government.

[ Page 8474 ]

The bill includes improved accountability measures. For instance, the voter's role in approving the exercise of powers is reinforced.

A final and very important feature of the legislation is clear direction on the rules and procedures required for the efficient operation of the corporation. As a result, problems regarding the intent of legislation will be reduced or eliminated.

The bill is now complete, including provisions which will smooth the transition between the old method of service authorization by letters patent and the new method of service authorization by bylaw. We recognize not only that we need good law but also that the implementation must be handled well. Therefore we have formulated a strong transition plan once again through comprehensive consultation, and I am very pleased to be able to put the bill forward this evening.

MR. BLENCOE: We will be supporting the legislation. This legislation has been in the works for quite some time, and it has indeed had extensive review, consultation and input from local government, and has received favourable response. There have been a few complaints here and there, but nothing of major consideration.

I commend the minister for the process she has gone through on this legislation.

Interjection.

MR. BLENCOE: I'll only say it once. Actually, Mr. Speaker, it's the second or third time I've said that tonight, so I don't know; I'm going to go home and reconsider. There are a number of questions that I will have in committee stage.

I must pass comment that although the bill has major improvements for regional districts and regional government, there continues to be a major omission in legislation put forward by this government, and that is the lack of regional planning. We have consistently said that there needs to be the ability of regional districts to do regional planning in a comprehensive fashion. This is one of the basic reasons we have so many problems, particularly in the Greater Vancouver Regional District: we do not have the ability to seriously plan for growth, to plan for long-term strategies for housing, for instance, in the various regions of the province. This government, we know, cancelled regional planning in 1983; it obliterated that function of regional districts, and we have continued to suffer as a result. It is a major omission in this legislation. Clearly, it's going to take a progressive government in British Columbia to bring back this important function of regional district government.

I will speak more about that in committee stage However, we support the legislation and we will be voting for it.

DEPUTY SPEAKER: Hon. members, you are advised that pursuant to standing order 42, the minister closes debate.

HON. MRS. JOHNSTON: Mr. Speaker, I am pleased to move second reading.

Motion approved.

Bill 19, Municipal Amendment 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. RICHMOND: I call second reading of Bill 73.

MINERAL TAX ACT

HON. MR. DAVIS: This legislation consolidates under one statute the taxation of minerals, and by minerals I mean metals, non-metallic minerals and coal. The former coal tax is eliminated, as is the mineral resource tax. The mineral resource tax was a profits-type tax; the coal tax was a flat royalty of 3.5 percent on gross.

This new tax regime is essentially a profits-type tax with two components. One ensures that a mine will always pay some tax regardless of its profitability; in other words, it will pay some revenue to the Crown even when it's not making much money. The second provision provides that the tax paid by the mining company increases as profits increase.

The great bulk of the taxes paid by mining companies are fixed. The exceptions are the federal corporation tax, which is a profits tax; the provincial corporation tax, which is a profits tax; and now the Mineral Tax Act. Together, in an average year, they may constitute 15 percent, or perhaps as much as 20 percent, of all the taxes paid by mining companies.

The remaining taxes, which account for 80 percent or more of the taxes paid by mining companies, are fixed in the sense that property tax is fixed regardless of the profitability of a mine, sales taxes are fixed regardless of the profitability of the operation, water rental fees are fixed, and so on. This will be the third-stage tax. It will be a profits-type tax after federal and provincial corporation taxes. It is not deductible from provincial corporation taxes.

As far as the metal mines are concerned, in today's market circumstances the impact of this new tax is neutral, or approximately neutral. In other words, the amount of revenue collected by the Crown under this new tax regime, were 1988-89 to be repeated, would be about the same as under the mineral resource tax.

As far as coal is concerned, the tax, again, is a profits-type tax. Because a number of our coal-mines are not very profitable at the present moment, several mining companies will be paying less tax. Roughly, the tax relief for coal-mining in today's marketing circumstances, in a not too profitable world, is of the order of $12 million to $15 million. In an average profitability year, this tax would be revenue-neutral. In more- than-average profitability years, the tax would yield more revenue to the Crown.

[ Page 8475 ]

It's a type of tax regime that the mining industry has been requesting for a long time. It's the kind of regime that the resource economists generally recommend because it tends to keep mines operating longer than what might otherwise be the case. It reduces — if I can put it in crude terms — high-grading of mineral resources at times when the world metal market is relatively depressed.

That substantially covers this legislation, which, I will say, is essentially revenue-neutral, which is, however, likely to extend by some years the life of some ore deposits, and which is welcomed, at least in its structure if not levels of tax, by the mining industry at the present time.

[9:30]

MS. EDWARDS: I'm not going to hide the fact that this is a very complex bill and I haven't yet quite absorbed it. The principle seems to be fairly clearly in response to the task force that the minister set up two years ago, as he has said.

My questions for the minister, as far as the principle of the bill is concerned, relate to his idea that it is a revenue-neutral tax. By the reports that I hear, it is not likely to be revenue-neutral, because I don't think, for example, that that's what the industry particularly wanted. It certainly isn't what the coal industry wanted. They wanted a reduction.

They see what's in this bill as a substantial reduction in the tax load they are going to bear, so the question becomes whether or not this is exactly what we need in the province; whether the coal industry should be relieved across the board relieved or whether in fact we should have gone a different way. The idea of a royalty is certainly something that the industry has objected to and it's gone now, so they don't need to worry.

The coal industry is going to appreciate this particular tax and this particular change. I think the minister is saying that it will be revenue-neutral as far as the metal mines are concerned and over a long period of time, and if you a take a long-term dimension, it will in fact be revenue-neutral for the coal industry. Certainly that may be true. It is definitely what the industry wanted.

The question, though, remains as to who bears the load of tax revenue that is not now being raised? The metal mines, at any rate, were given a reduction in taxes under the old act. There have been several reductions in fixed taxes for the mining industry.

While overall, Mr. Minister, we would applaud your attempt to make the taxation system more equal for everyone within the industry, we are going to be questioning whether or not it is as equal and as fair across a broader spectrum.

MR. CLARK: This bill essentially provides, as the minister said, a $12 million to $15 million gift to the coal industry. Well, isn't that nice? The question has to be asked: why, in the middle of a commodity boom, is the coal industry in trouble in British Columbia? Well, it's in trouble because of the failed policies of Social Credit, because of billions of dollars of subsidy to northeast coal to set up an industry in British Columbia to compete with southeast coalmines. It was absolute madness on the part of Social Credit planners — and the current Minister of Mines knows that, because he knows the economics of northeast coal were never there. But the government forged ahead with a billion dollars in infrastructure for northeast coal at the worst possible time. It's a classic example of failed government intervention. The Premier might like to know that this is a failed government initiative, lemon socialism at its worst: a billion dollars wasted on northeast coal.

Interjections.

MR. CLARK: The Japanese are currently trying to negotiate a price reduction on northeast coal. They are engaged now in a senior-level arbitration with the principals of northeast coal to try and drive down the price. What the Japanese want is for the provincial government to blink, because they are threatening to shut down northeast coal through arbitration. They are playing hardball, as they do everywhere in the world. With this bill, this government has just blinked.

We're giving tax relief to the northeast coal industry at a time when they are in the middle of an arbitration with the Japanese. I have a lot of sympathy for the southeast coal producers. I understand why they need some tax relief, because of the way this government has treated the southeast coal industry by subsidizing a competing mine. It's absolutely crazy. I understand why they might need some relief. Instead, we have a bill that gives relief to all of the coal-mines in British Columbia, including the northeast coal sector.

How much subsidy does this government have to give the northeast coal-mines to survive? That's something that the Japanese have already worked out, I venture to guess. They know how to shave the peach, so to speak. They know how to squeeze. They are in that business internationally. That's what they do, and that's what they do well.

They took the previous Social Credit administration for a ride on northeast coal. They took them for a billion dollars; they sucked them in. Now they are playing hardball to try and drive down the price. They want the government to swallow some of the price difference, and they have done it.

Interjection.

MR. CLARK: The Minister of Advanced Education and Job Training (Hon. S. Hagen) says that he hopes they read about it. If we really want to deal with the Japanese, how would we do it? Instead of giving subsidies to the industry — exactly what the Japanese want — we would take the northeast coal sector and the southeast coal sector, and as a government, we would go to Australia, to the other major coal market in the world, and we would say to the Australian government: "The Japanese are whipsawing Australia and British Columbia." They're taking the cheapest

[ Page 8476 ]

producer in the world, in Australia, and are saying: "Okay, northeast coal; okay, government of British Columbia; that's the price. That's the world price. You pay it; otherwise we'll take it all from Australia." That's what they're doing.

We have no coordinated effort on the part of this government to deal with the Japanese creatively and in a tough bargaining way, the way they deal with us. They pit northeast coal against southeast coal; they pit British Columbia against Australia; they pit countries against other countries around the world. And they win; they win every time.

In the middle of a sensitive arbitration with respect to the price of coal in the northeast sector of British Columbia, we have this government giving more tax relief to the industry — exactly what the Japanese want. It's not enough anyway for them to survive the challenge from the Japanese. It may well be enough in the southeast, and I understand that.

HON. MR. RICHMOND: They'd shave more than your peach.

MR. CLARK: The government House Leader says they'd shave more than our peach. It's an interesting comment from him. This is a minister who was around during the days of Don Phillips, who went there. Don Phillips went to Japan and said: "Please come to British Columbia. What can we give you? Do you want a quarter of British Columbia? We'll give it to you. Here. Please come." That was their idea of shrewd bargaining: give it all away, millions of dollars of subsidies.

We have two bills now that give more subsidies The Premier partly got elected, I might say, by campaigning against the kinds of giveaways that the Bennett government was known for. He campaigned against interest-free loans and subsidies for business And what we've seen in bill after bill in this session is subsidies and low-interest loans to businesses Here we have it again: a subsidy to the coal industry

Interjection.

MR. CLARK: Antibusiness? I have no problem with free enterprise. But this isn't free enterprise What those guys practise isn't free enterprise; it's subsidies and help to selected people. Subsidizing northeast coal has been what has damaged southeast coal. One of the lowest-cost producers in the world, which has its infrastructure paid for and has Roberts Bank, which could easily increase production, can't because of a competing coal-mine in the northeast of British Columbia. So here we are in a sad situation today, where the minister has to come in and give more money to the industry, abolish coal royalties, give $12 million to $15 million to the coal industry, in order to try and appease at least the southeast coal sector, which is suffering. And they are suffering from the kind of failed policies we've seen under Social Credit.

The minister said it's a revenue-neutral bill. Well, it's not a revenue-neutral bill. It's revenue-neutral for the metal mines sector. They don't pay any more, even though, by the way, they are making profits, and significant profits, for the first time in a long time.

HON. S. HAGEN: Are you against profits? Are you against business?

MR. CLARK: What I am against, Mr. Minister of Advanced Education, is that a $15 million subsidy from one sector means it has to be made up somewhere else, and we know where you've made it up — in user fees, on senior citizens, increased income taxes, fee increases, drivers' licence increases, marriage licence increases and chippy little tax increases across the board.

What we have in tax policy is quite simple. If you take it away and you don't cut expenditures, which this government isn't doing, then you have to raise it somewhere else. They are not raising it from the metal mine sector, which could afford it right now, probably. It's revenue-neutral in the metal mines sector. But it's not revenue-neutral in the coal-mining sector. It's a tax subsidy to the coal industry, and they are not recovering that $15 million from the other sectors of the industry which may, in fact, be more healthy.

What we need is a much more creative response to the challenges internationally, particularly the challenges from the Japanese. We'd be more creative than anything we've seen from this ministry so far — no hard bargaining, no tough dealing with the Japanese, but just get on your knees and say: "Please pay this high price." That's free enterprise from their side.

This bill does more than that; it changes the structure. I must say that it was brought in yesterday and we don't how it's going to impact on revenue. I have a great deal of suspicion about the way this bill is formulated. I have a great deal of suspicion that it's not going to be revenue-neutral and that, in fact, we are going to see some reductions.

I think that the coal industry needs help. We support that; the southeast in particular.

Interjections.

MR. CLARK: No, no. The members on the other side haven't been listening. We believe they need government assistance and help and government leadership. This isn't doing it. This is a tax relief measure when what they really need is creative policies. What they need as well, I might say, is to deal with Ontario Hydro and others. I know the Premier and others have attempted, but we haven't been that successful, have we? They gave up.

We need to increase market share in Ontario and the rest of Canada. It's crazy that Ontario is importing dirty coal from the United States when it could be cleaner coal from British Columbia. We should be increasing our market share in the United States on the same basis. We should be dealing with the Australians and the Canadian government on an international level and playing a little hardball for

[ Page 8477 ]

the first time in our life with the Japanese. We should be setting up some kind of marketing agency to market both the northeast and the southeast to try and increase our share. Instead, we have a failed policy, a failed attempt to give some tax relief to try and help the coal industry, which is suffering only because of their policies.

A little more creativity, a little less subsidy, a little more free enterprise, a little less government loans would go a long way to dealing with the kinds of problems we've got in some of the resource sectors in British Columbia. This bill doesn't do that.

DEPUTY SPEAKER: Just before we continue, hon. members, the second member for Okanagan South asks leave to make an introduction.

Leave granted.

MR. CHALMERS: Visiting the galleries this evening is Sharon Lynch from Terrace, and on behalf of the Minister of Forests (Hon. Mr. Parker) I'd like to ask all members of the House to make her welcome.

[9:45]

DEPUTY SPEAKER: The member for Kootenay would also like to make an introduction.

MS. EDWARDS: I'd like to introduce my son, who is in the gallery this evening. Allan Edwards is here from Vancouver.

MR. WILLIAMS: I'm sure there are a few others that might be introduced, Mr. Speaker.

I'd really like to echo some of the statements made by the other member for Vancouver East.

Interjection.

MR. WILLIAMS: I think I might elaborate a little bit.

The minister says $12 million to $15 million less out of the coal industry. Let's put the flag on this. It's a monument to a failure of Social Credit policies in this area. I remember when the minister wrote letters to the editor. Remember in that barren period when the member for North Vancouver didn't work in his office until 11 o'clock or midnight every day trying to pull together an unravelling government. In those days he had time to write letters to the editor. He wrote letter after letter — to the Bridge River-Lillooet News, to the Vancouver Sun, to all of those newspapers.

HON. MR. DAVIS: And the Sun wouldn't print them all.

MR. WILLIAMS: As he says, the Sun wouldn't print them all, he had so many out there.

Let's not forget that the minister is a trained economist, which you can't say about a lot of those people over there on the government side. On the basis of his analysis he thought the whole northeast thing was crazy. The southeast mayors figured that out too, and they had an excellent consultant in the form of Mr. Halvorson, who advised them in that regard. Unfortunately, he's been proven all too right.

I remember other statements by the minister. The minister went around saying: "We don't want to fool around with the royalty framework or the revenue framework of government in coal, because we'd only be playing into the hands of the Japanese." It's why we have this arbitration going on in northeast coal, that whole disaster zone up there. That arbitration is not settled yet. Why at this stage? Even if this is what you believe in, why at this stage would you bring the bill in? It's another $15 million for the Japanese to pick up off the table. Does it follow that it's going to go to the hands of the producers? I don't think so.

Look, we've been caught — and to a great extent the world has been caught — in a classic squeeze play by the very clever people who run Japan Inc. The five trading companies in MITI basically have a global ball game in which they want to have an impact on the price of resources for that giant economy, and by God, they do. As the member from Vancouver East said: "In the coal field, they'll deal with the cheapest producer in the world." That's at Oaky Creek in Western Australia. They ratchet that one right down to the bottom, and then they deal with the other players. That's the game of Japan Inc.

Okay, hats off to them. Smart players. My gosh, it begs capability on our side to at least move up into that league and not keep ending up in a barrel. Do you know those old cartoons with suspenders and a barrel? That's what has been happening. I might fit the barrel, but you would have a lot more exposure, Mr. Premier. There's no question about that. We really have been willing victims of the Japanese industrial empire and their strategic planning in ratcheting down resource costs for a country that has no resources other than their people and their modest land base. They've been extremely clever in doing it, but we have not been in the ball game. Every little thing we do like this basically plays into their hands.

The other thing is that it seems to me that historically there has been a principle of royalties in British Columbia. We, the people of British Columbia, are fortunate in that we have this regime where we have a great public land base and we can charge a commodity price for our resources. That makes a lot of sense to me. Here we are with this great, rich land base of ours, and all the minerals and trees. And we're not talking about taxes here. That's a misinterpretation that so many of your foggy right-wing economists fool around with. They call all of these things taxes; they are not. The Premier knows that in the forest sector it's a commodity price; that's how you got into those problems with the Americans and all of that stuff. It is a commodity price, so this member at least finds it difficult to accept this violation of a long-term principle that we have the right to establish commodity prices for the resources that we collectively own in the public lands of British Columbia. That makes a lot of sense, in my view.

[ Page 8478 ]

The problem is that there are not many economists in the land and resources field, so you get people in the economics world moving into the land and resources field without a background in it. They tend to move into the income tax area as the place they want to play.

I would be happy to hear the minister give more lengthy explanations of how he sees this statute actually working. I think that would be beneficial, and I think the minister has a good track record in that regard, in terms of talking openly about the implications of the stands he favours. He's been a little more open in the past, when he had time to write letters to the editor, but we'd like to see him be a little more open tonight in discussing this bill as he sees it.

DEPUTY SPEAKER: Hon. members are advised that pursuant to standing order 42, the minister closes debate.

HON. MR. DAVIS: I welcome this opportunity to describe an innovative tax system, one which fits our present circumstances well. If you take the tax regime in this bill and apply it to the mines individually, you will find that those which have the relief are the least profitable ones; they are in the southeast. While I have mentioned that under this year's market circumstances there is a benefit to the coal-mining industry as a whole of the order of $12 million or $15 million, most of that goes to Westar and Line Creek and to a lesser extent Fording. In the Peace River area, because Teck has run a tight operation and is relatively profitable, Teck will actually face some price increase as a result of this tax. Quintette is not as profitable; it will get some relief, in the order of $1 a tonne.

In this arbitration involving the Japanese the argument is about a contract. What does the contract mean? The mining company, Quintette, is saying that it's a base price back around 1980 escalating, and it's claiming that the price it should be getting currently is $90-plus per tonne. Now if there's tax relief in this bill, it's $1, so it's $89 or $90; it isn't a major item. The Japanese are arguing that they should only be paying world price, which is around $60 or less. So the argument on price is between $60 — which the Japanese are paying the Australians and so on — and $90-plus, which the mining company claims its contract written some years ago warrants. I'll admit there's perhaps $1 of the $90 at issue here, but the negotiation has to do with price, not with cost. If Quintette is to stay in business — and that's a big question mark, due to its very high cost — it has got to have some profitability, and with that profitability it will pay a higher tax than it's paying today.

I'm frankly saying that this year.... Mind you, this tax doesn't come into effect until April 1 next year. But given a repeat of this year, there would be a relief of the order of $12 million to $15 million to the coal industry, most of it applying in the southeast. It yields more in the case of Quintette because of the high price and the high cash flow, so it isn't a big drop for Quintette. I would argue that in the long pull, the kind of profitability that would allow Quintette to survive would see Quintette paying roughly the same kind of tax yield to the Crown as it has paid in the past. But this regime is designed to give relief in tough times and to take a bigger bite in good times. That's the nature of it. Again, the profits type taxes are not a big portion of tax paid by the mining industry.

So I agree that a flat-rate tax has some desirable features, but 80 percent or more of the tax paid by mining companies is, in effect, flat rate. This is a profits-type tax. I think it has some rationale in terms of conserving a resource. If costs do go down in periods of low prices, the ore body lasts a bit longer and there's less high-grading. This is a movement in that direction. But it's marginal. It's not a big element in total tax paid by the industry.

So I would say it's a good tax regime conceptually. It doesn't give tax relief.... It's revenue-neutral on the metal side, mostly because the tax it's replacing is also a profits tax. It's simply a cleaner, easier, more readily administered tax. But on the coal side, it does give relief. It's certainly good news in the Kootenays this year, or next year when it begins to apply. And it will be marginally effective in the northeast where, admittedly, we do have a marketing problem.

I move second reading, Mr. Speaker.

Motion approved.

Bill 73, Mineral Tax 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. Richmond moved adjournment of the House.

Motion approved.

The House adjourned at 9:56 p.m.