[ Page 8499 ]

CONTENTS

Routine Proceedings

Forest Amendment Act, 1989 (Bill 86). Hon. Mr. Parker

Introduction and first reading –– 8499

Freedom of Information Act (Bill M223). Mr. Jones

Introduction and first reading –– 8499

Oral Questions

David Poole's pension. Mr. Harcourt –– 8500

Exclusion of Spetifore lands from agricultural land reserve. Mr. Harcourt –– 8500

Child development centre funding. Mrs. Boone –– 8501

Children's car seats. Mr. Barnes –– 8501

Okanagan grape growers. Mr. Barlee –– 8501

Ministerial Statement

Conference on North Pacific drift-net fishing. Hon. Mr. Savage –– 8502

Mr. G. Hanson

Committee of Supply: Ministry of Forests estimates. (Hon. Mr. Parker)

On vote 27: minister's office –– 8502

Hon. Mr. Parker

Mr. Miller

Mr. Kempf

Municipal Amendment Act, 1989 (Bill 19). Committee stage.
(Hon. Mrs. Johnston) –– 8525

Mr. Blencoe

Third reading

Islands Trust Act (Bill 78). Second reading

Hon. Mrs. Johnston –– 8528

Mr. Blencoe –– 8528

Hon. Mrs. Johnston –– 8529

Health Statutes Amendment Act, 1989 (Bill 39). Committee stage.
(Hon. Mr. Dueck) –– 8530

Mr. Jones

Ms. Marzari

Third reading

Hospital Amendment Act, 1989 (Bill 69). Committee stage.
(Hon. Mr. Dueck) –– 8534

Third reading

Labour and Consumer Services Statutes Amendment Act, 1989 (Bill 46).
Committee stage. (Hon. L. Hanson) –– 8534

Third reading

Residential Tenancy Amendment Act, 1989 (Bill 47). Committee stage.
(Hon. L. Hanson) –– 8534

Mr. Barnes

Third reading

Indian Land Tax Cooperation Act (Bill 77). Committee stage.
(Hon. Mr. Weisgerber) –– 8538

Mr. G. Hanson

Mr. Guno

Mr. Blencoe

Third reading

Energy, Mines and Petroleum Resources Statutes Amendment Act, 1989
(Bill 59). Committee stage. (Hon. Mr. Davis) –– 8541

Ms. Edwards

Mr. Williams

Third reading

Mineral Tax Act (Bill 73). Committee stage. (Hon. Mr. Davis) –– 8546

Ms. Edwards

Mr. Clark

Third reading

Natural Gas Price Act (Bill 54). Second reading

Hon. Mr. Davis –– 8551

Ms. Edwards –– 8551

Mr. Clark –– 8552

Hon. Mr. Davis –– 8553

Parole Act (Bill 53). Second reading

Hon. Mr. Ree –– 8554

Mr. Guno –– 8554

Mr. B.R. Smith –– 8555

Hon. Mr. Ree –– 8555

Appendix –– 8556

The House met at 2:05 p.m.

HON. MR. VANDER ZALM: First of all, I'm happy to say that yesterday Lillian and I again became grandparents. My daughter Juanita and her husband, Scotty Moffat, had a ten-pound, four-ounce baby girl. That's great.

I'm also very happy to have with us today some good friends, whom I hope to meet with shortly after the sitting begins. I would like the House to welcome Steve and Carol Polywkan, Jack and Sue Quinn, and Don and Marge Potvin.

HON. MR. DUECK: In the Legislature today is a longtime friend and successful businessman. If you've ever seen a successful businessman who does not work, this is one. He represented my community for a number of years as an MLA and was also Minister of Municipal Affairs. Of course, I'm speaking of Mr. Bill Ritchie. I have to thank him or blame him for getting me into this business, and some days I'm sure it's the latter. He's wearing a beard and looks about ten years older; not being in this business, you'd think he'd look younger.

Visiting with him are his guests Jamie and Martha Gonzalez Luna from Guadalajara, Mexico. Mr. Luna's uncle was co-founder of the National Action Party of Mexico, which was the opposition party. I would like this House to give Mr. Bill Ritchie and his guests a hearty welcome.

MR. G. JANSSEN: I'd like the House to give a warm welcome today to constituents of mine: Carol Lundy and John Bassingthwaite from the Share Our Resources group in Port Alberni, Knut Leine from the Share the Forests in Duncan, and Scott Keery from Boston Bar and the Share the Stein Committee. I wish the House to make them welcome.

HON. MR. HUBERTS: In the House today is a good personal friend of mine, who is also the president of the Saanich Peninsula Chamber of Commerce, Mr. Hank Vissers. On behalf of the first member for Saanich and the Islands (Hon. Mr. Couvelier) and myself, would the House give him a warm welcome.

MR. BARLEE: In the precincts today is a colleague of mine, Jack Whittaker, who is the MP from the Okanagan-Similkameen-Merritt riding. Would the House accord him a warm welcome, please.

MR. LOENEN: Mr. Speaker, in your gallery accompanying my wife Jayne is not only a constituent, but also a very close personal friend who has made a great contribution to education. She is a teacher, and she has inspired youngsters throughout this province. I would ask the House to please make welcome Lainie Bomhof.

MRS. McCARTHY: Mr. Speaker, I would like to introduce in your gallery today my adopted niece and nephew, Steven and Cindy Dang. Along with their mother Helen Dang, they are accompanied by their aunt Martha Lin.

I would like to share with the House the fact that Steven is a recipient of the Premier's excellence award, the co-winner for the Vancouver collegiate district. He will be going on from his studies here to be a Page in the House of Commons in Ottawa. He is a winner of the Governor-General's bronze medal for the top graduate student in modern languages, social studies and English, as well as overall scholar for Templeton Secondary School. He has been awarded this year the Dr. Gordon Shrum scholarship to Simon Fraser and the K.A. Waits award for good citizenship. He will be going on to the University of Ottawa on a scholarship for the first year of his studies. He was chosen as the young ambassador for the Vancouver School District to Washington, D.C., and Atlanta, Georgia. He represents British Columbia to adjudicate the Canadian youth excellence prize to select the best educator in Canada for 1989, as well as winning the Rotary Club scholarship for service.

Would the House please give Steven Dang and his fan-Lily a warm welcome.

Introduction of Bills

FOREST AMENDMENT ACT, 1989

Hon. Mr. Parker presented a message from His Honour the Administrator: a bill intituled Forest Amendment Act, 1989.

Bill 86 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.

FREEDOM OF INFORMATION ACT

Mr. Jones presented a bill intituled Freedom of Information Act.

MR. JONES: The purpose of this bill is to ensure that B.C. residents have open access to public records and other information held by government bodies, but at the same time also includes protection for individual privacy.

During the debate of the estimates of the Ministry of Attorney-General, the Attorney-General (Hon. S.D. Smith) assured me that he shares our concerns both for open access to information and protection of privacy — because the Attorney-General knows that the public has a right to know. The public has a right to know details of government loans, of reports of such bodies as the medical ethics committee. They have a right to know what ministries CSIS — the federal government's spy agency — has access to. The public also has a right to know what industries are in non-compliance with pollution permits. As well, the public has a right to know whether or not they are getting a good deal on the sale of public assets; whether these public assets be public lands, public laboratories or public equipment.

[ Page 8500 ]

In his report to this Legislature, the ombudsman had some words of wisdom for this government when he said: "Perhaps nothing is more disarming of public controversy than openness." Mr. Speaker, freedom of information is the hallmark of open government. It did not take one year, as the Attorney-General indicated to me his ministry has been looking at this kind of legislation, for the six other provinces in Canada to adopt such legislation. All it takes is political will, and British Columbia deserves freedom-of-information legislation.

Bill M223 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

DAVID POOLE'S PENSION

MR. HARCOURT: I have a question for the Minister of Government Management Services. The auditor-general's report on the David Poole golden handshake stated that it was unfortunate that the amounts of the government's contribution for Mr. Poole's pension were not specified, and this was particularly so since the amounts were specified for other pensions made under section 34(4) of the Pension Act.

In light of this conclusion, is the government now prepared to tell British Columbians how much we contributed to Mr. Poole's pension?

[2:15]

HON. MR. MICHAEL: As the Leader of the Opposition is well aware, the issue has been well canvassed. It was well canvassed during the estimates. Former Chief justice Nemetz was able to do an in depth study, looking at government policy regarding severance arrangements, and he wrote an extensive report which was circulated to this House. Besides, the auditor-general looked specifically at the severance paid to Mr. Poole, and I am satisfied that the matter has been very well canvassed. The auditor general clearly pointed out to the House in his report that Mr. Poole was indeed entitled to a severance settlement. He further pointed out that he found no interference had occurred by elected officials in the conclusion of Mr. Poole's severance. Further to that, depending on whether or not the time that Mr. Poole spent with other governments was a part of his overall length of service with this government, he was paid slightly less or slightly more, depending on which formula you wish to use.

As the minister, I'm certainly pleased with the reports that have been done on the settlement. I believe it was clearly pointed out in the auditor-general's report that the proper staff evaluated and made the necessary recommendations.

MR. HARCOURT: He also pointed out that the proper members — government staff people, superintendent of pensions, commissioner of pensions, the member from the Attorney-General's department — did not sign that order-in-council, and that the amount was not specified.

A supplementary: can the minister assure this House that no part of the Poole severance was paid out in 1989?

HON. MR. MICHAEL: I can't give that assurance. I can only make an assumption. The settlement was made in 1988, and I have to assume it was paid out in 1988. If the member would like me to specifically reference that and make note of it as a question, I would have to take it as notice.

MR. HARCOURT: So the minister is saying he will take notice, check it out and get that information back to the House.

HON. MR. MICHAEL: Yes. As I said, the settlement was made in 1988. If the Leader of the Opposition has reason to suggest, or reason to believe, that for some reason or another part or all of that settlement was given in 1989, 1 would have to check with my staff and with the comptroller's division to find out specifically when the amount was paid. If that suits the Leader of the Opposition, I would indeed take that as notice and report back to the House at the earliest possible time.

EXCLUSION OF SPETIFORE LANDS FROM

AGRICULTURAL LAND RESERVE

MR. HARCOURT: I have a question for the Premier. This week a GVRD regional transportation committee report documented very clearly the serious traffic congestion and air pollution problems affecting the lower mainland — congestion and air pollution caused by developments like those contemplated on the Spetifore farmlands. Is the Premier now prepared to reconsider his support for the Spetifore exclusion, in light of the growing realization that we can't pave over our farmland?

HON. MR. VANDER ZALM: I'm a resident in the wonderful municipality of Richmond, so I guess I don't have much of a vote in Delta. I said yesterday, and I'll repeat, that this government has always recognized and appreciated the position and responsibilities of local government, and however much the NDP would like us to overrun local government, I refuse to.

MR. HARCOURT: A supplementary to the Premier. Yesterday 93 percent of the residents in Delta turned out to say no to the Spetifore proposal. That's a greater turnout than in the last municipal election. Ninety-three percent voted no, against the Spetifore development. Will the Premier now admit that the 1981 cabinet decision removing the Spetifore farmlands from the ALR was wrong and must be reversed?

HON. MR. RICHMOND: Wrong numbers.

[ Page 8501 ]

HON. MR. VANDER ZALM: I hear from the sidelines that it's wrong numbers. I'm not too concerned about that. We're becoming accustomed to wrong numbers from the NDP.

If I can clarify it for the Leader of the Opposition, the vote was taken in Tsawwassen. Tsawwassen is a very beautiful community in the southern part of Delta; it's not the whole of Delta. Furthermore, it wasn't 93 percent of Delta; it was 93 percent, perhaps, of those who voted in the referendum.

I certainly respect the people that took the initiative. Obviously they feel very strongly about this. And their mayor, as I understand it, has taken this to heart and has already said that he would be considering all of the information that came to him.

Mr. Speaker, I can only say again that we in this House have our own views on matters that are dealt with at the local level in municipalities throughout this province. But if, because of our views, each and every time something occurred that we disagreed with we decided to overrun that municipality and make the decisions on behalf of local government, if that's the NDP attitude, then there's no need for local government; you can eliminate local government.

CHILD DEVELOPMENT CENTRE FUNDING

MRS. BOONE: A question to the Minister of Health. On July 31 the only program in Prince George for children who are victims of sexual abuse will close due to lack of funding. How can you reconcile your commitment to the family, given your ministry's reluctance to fund this program, even though it receives referrals from mental health, from Attorney-General, from Social Services, from physicians in our area?

HON. MR. DUECK: If the hon. member is referring to the child development centres in Prince George, we have met with them and an arrangement has been reached. Some moneys have been forwarded, and a grant increase has been given. A review is being done of all child development centres in the province to see whether the funding is inadequate.

If we're talking about counsellors in general for sexual abuse, I have to tell the member that if she is aware of any specific incident where someone is looking for counselling that is urgent, I will look at that particular case. I am not aware of any area where we do not look after people in need immediately, at least if they are very urgent or in need of immediate attention, and those that perhaps can wait will go on a waiting-list, like many other areas in the health care system. However, we do look after those people in need. That is my commitment. And the health care system in British Columbia in that area is to be commended for what they do for people that have problems.

MRS. BOONE: This is not the child development centre; this is the Prince George Sexual Assault Centre. It deals with children ages four to 14. It is the only centre in that entire area that provides counselling. I have written to the minister; I have written to three ministries trying to get funding for that program. For $35,000, Mr. Minister, you can provide a program in our area that will be of great service to the children in our area. That's what we want from you: a commitment for $35,000. Will you make that commitment today?

HON. MR. DUECK: If I received a letter, I hope I have answered it. How old is the letter?

I don't ask a question in this House in that area. However, I have to say that if there is a specific need and a specific request, we will look at it. Whether we will fund every request there is, I cannot say at this time.

So often people will say — or societies will say — that they got a cutback. Let's say we fund them $500,000; the next year we fund them $600,000, but they requested a million. That doesn't mean they have a $400,000 cutback. This is what so often is done again and again by that side. I want to tell you that we will offer all the services possible in every area of health care, and we provide terrific health care.

CHILDREN'S CAR SEATS

MR. BARNES: I have a question to the Minister of Consumer Services. A recent car seat inspection clinic conducted by ICBC, St. John Ambulance, the B.C. Automobile Association, the Vancouver health department and the Vancouver police department found that 94 percent of children's car seats were incorrectly installed.

I would like to ask the minister if he could tell us, in light of these disturbing findings, what steps the ministry is taking to ensure that parents are warned of the dangers of improper installation when they purchase seatbelts?

HON. L. HANSON: I haven't been given the privilege of seeing that study yet, but once I have had that opportunity to look at the study and digest its information, I will take the question on notice and bring an answer back.

OKANAGAN GRAPE GROWERS

MR. BARLEE: To the Minister of Agriculture. I canvassed this slightly yesterday, but I would like the minister to answer this question: can the minister tell the House exactly what research his ministry did to determine what grapes the surviving Okanagan producers — the one-third that are left — should grow for future production?

HON. MR. SAVAGE: The questions asked yesterday did not deal specifically with the particular varieties but talked more about the industry itself. I can tell you that the vinifera-type grape is the grape presently planted in a vast majority of the acreage that has been contracted with the wineries and those

[ Page 8502 ]

that are being supplied to the small estate wineries that are operating.

In helping the industry, it is important to develop or to bring in, in conjunction with research that has been done, varieties that are acceptable and will command a premium price in the marketplace. It is also important to recognize that the industry will play a major role, as I said yesterday, in tourism. Relative to the potential in the economy of the province, it will give those growers the opportunity to contribute very largely and, in my opinion, to see the industry grow. I think it's extremely important. Whether it's a vinifera-type grape or any other particular type, I think the industry will do that research and we will get the proper answers.

[2:30]

Ministerial Statement

CONFERENCE ON NORTH PACIFIC
DRIFT-NET FISHING

HON. MR. SAVAGE: I'm very pleased to announce today to hon. members of this assembly that next week in Victoria the province of British Columbia will be co-hosting an international conference on drift-net fishing in the North Pacific.

The conference will bring together senior government officials from Pacific Northwest states, the province of British Columbia and the U.S. and Canadian federal governments. Delegates include representatives from the Canadian federal Departments of Fisheries and Oceans and External Affairs, the U.S. federal Department of Commerce, the states of Alaska, Washington, Oregon, Idaho and California, and the province of British Columbia. Representation is expected from the Forum Fisheries Agency from the South Pacific, where similar drift-net operations are conducted.

As you know, large fleets of up to nearly 1,500 Asian vessels are engaging in a potentially destructive drift-net fishery in the North Pacific. These fleets are ostensibly pursuing the red squid fishery, but increasing evidence is being brought forward to show that drift nets are taking large catches of juvenile salmon on the high seas, including some that may well be enhanced salmon stocks from our rivers These fleets are engaging in the so-called drift-net fishery. Every vessel, as you know, puts out 10 to 30 linear miles of light, transparent net. Unfortunately the nets may well catch mammals or any birds that are diving for food, which could become entangled and die.

This international forum will afford a timely scrutiny of this insidious fishery which has such an obvious impact on our environment and marine resources. It is the first step in the development of an international strategy to curb this growing fishery that threatens our salmon resources and also our ocean ecosystems.

I recently announced that the province contributed $35,000 towards a federal program which has placed five observers on Japanese fishing vessels to gather data regarding the squid drift-net fishery this summer. I would like to take this opportunity to wish them every success on this very important mission. The report from the observers will be processed in accordance with an agreement signed by Canada and Japan and presented to the International North Pacific Fisheries Commission.

The province of British Columbia recently participated as an observer at the first meeting on the South Pacific albacore drift-net fishery, held in the South Pacific. Drift-net fishing of tuna is a critical issue. Major concerns have arisen because of a dramatic increase in the size of the drift-net fleets of Korea, Japan and Taiwan and their estimated catch.

Marshall McLuhan coined the phrase "global village." What affects the South Pacific also affects us in the north. This demonstrates our commitment to all resources in British Columbia, to our environment and to the future of our economy. We will not stand idly by and watch the destruction of a fishery that belongs to the people of British Columbia, or tolerate the unnecessary pillaging of the marine mammal and bird populations of the North Pacific.

MR. G. HANSON: Mr. Speaker, anything that can be done to stop the high seas drift-net fishery in the North Pacific must be done. I personally think, and my party thinks, that we must take a much harder line with South Korea, Taiwan and the signatories of the North Pacific agreement, including Japan and the United States, to stop this fishery. This fishery is ecologically incompatible. It is a time bomb that is destroying the ecosystem of the ocean.

When I was recently in New Zealand, New Zealand is extremely concerned about the high-seas drift-net fishery, even that far south. They know quite clearly that the strip-mining fleets from Asia are moving into that part of the ocean. In this forum, we applaud any kind of baseline information being gathered. However, the position of British Columbia and of Canada should be to stop this and to exert any pressure we can to have that brought about.

Orders of the Day

HON. MR. RICHMOND: Mr. Speaker, I call Committee of Supply.

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

ESTIMATES: MINISTRY OF FORESTS

On vote 27: minister's office, $327,244.

HON. MR. PARKER: Mr. Chairman, may I have leave to make an introduction?

Leave granted.

HON. MR. PARKER: In the precincts today is a family from Terrace, friends of ours. Would the House make the Ted Wolfe family welcome.

[ Page 8503 ]

I'm pleased to present the estimates of the Ministry of Forests for the '89-90 fiscal year. My ministry is well along in the implementation of the new forest management policies authorized by the House in legislation in 1987 and 1988. The primary thrust of these policies is to ensure that government receives a fair return for its timber resources harvested, that jobs are created by providing new business opportunities, particularly those utilizing our wood to a much greater degree, and that forests are renewed at a faster rate than they are being harvested.

My priorities, clearly, are on forest renewal, jobs resulting from new business and from record-level silviculture work, addressing the major forestry issues and integrated forest management.

To further implement these policies and accomplish these priorities, government has committed more than $557 million to our forest resources this year. Despite government's commitment of these resources, there are many forestry issues of critical interest to the public. Officials of my ministry provide me with a great deal of information and advice on these issues; however, it's important that I also receive direct advice from leaders in local government, academia, business, recreation and conservation, labour and private professional forestry.

I have therefore recently announced creation of a permanent Forest Resources Commission to independently review and make recommendations to me on major forestry issues. Eleven very capable British Columbians under the chairmanship of Mr. Don Munroe provide a well-balanced, respected commission.

The commission's first three priorities are to advise on the effectiveness of tree-farm licences as a form of tenure, recommend ways to improve public participation in forest planning and management, and review and recommend ways to improve forest harvest practices, focusing on clearcutting. I view the commission's first priority as of such importance that I am consulting with the chairman about designation of the Inquiry Act to review the effectiveness of the tree farm licence tenure.

I held a series of eight public information sessions throughout the province in February and March of this year on this proposed policy. I heard many concerns about forest management, and I am encouraged by and pleased with the increased level of forestry awareness among British Columbians. We had more than 300 presentations at the sessions attended by more 3,000 people. Eighty written submissions also were received.

The Forest Resources Commission will in its deliberations review, among other things, our summary of these presentations and submissions and provide me with its recommendations. Until I have reviewed the recommendations of the commission, the proposed policy to replace forest licences with tree-farm licences is held in abeyance.

Over the next few months I will be making a number of announcements on other important issues such as integrated resource management, wilderness management and a strategy for old-growth forest preservation. There are, though, some additional very specific and immediate actions that I have already initiated. For example, thorough on-site monitoring and technical audits will identify any shortcomings in a licensee's contractual performance, which will be promptly and decisively acted upon. This will result in penalties such as suspending operations and even cancelling the licence. Timber not properly marked or transported can and will be seized and sold by government. I have obtained in my budget 24 additional positions to staff. These special enforcement units will carry out random, unannounced inspections to ensure timber being harvested is properly marked prior to being moved and subsequently correctly scaled.

Earlier this month I introduced a zero-waste-tolerance wood-use policy for coastal timber harvesting. Monetary penalties will be assessed for usable logs which are left on the ground if it is physically possible to remove them. In addition, such volumes will be recorded against the licensee's allowable annual cut. By my ministry charging a minimum for low-quality logs, pulp mills should find it more cost-effective to avoid using sawlogs for pulp.

Some would charge that we are not renewing our forests, and in driving to Tofino it is understandable that anyone would be offended by what they see in certain old clearcut areas. These are examples of previous forest practices which are no longer tolerated. All these unsightly areas have been or will be fully restored. A drive along the Island Highway, for example, from Campbell River northward is truly indicative of the level of forest renewal practices now required. Forestry practices should now be judged on current and future harvesting and renewal practices, not on old harvest areas which have not as yet reached an acceptable level of stocking.

There are those who would say industry is overcutting in British Columbia. The facts are that in only one year in recent years has the harvest exceeded the allowable annual cut, and that was within allowed limits. While the AAC has increased from 66 million cubic metres in 1982 to its current level of 72 million cubic metres, a record level of government and industry forest renewal effort ensures that we are providing for a sustainable level of harvest and a quality environment.

The allowable annual cut is adjusted periodically to reflect changing forest management objectives and improved knowledge of how best to manage the resource. Some of the increases in the annual allowable cut result from salvage of timber affected by the record forest fire season in 1985 and extensive beetle-killed areas in the interior of the province. Legislation now ensures that areas currently harvested are renewed, and our programs are renewing the old backlog areas, resulting in a fully sustained forest.

The forest industry remains the principal economic generator in British Columbia. It contributes $13 billion to our provincial economy. Maintaining in our province as well the standard of living enjoyed by British Columbians depends upon a high level of forest production. British Columbia produces 60 per-

[ Page 8504 ]

cent of Canada's lumber, and is responsible for 39 percent of all of the world's exports of softwood lumber. We produce in this province 30 percent of Canada's output of pulp and 18 percent of its output of paper. This provides almost 90,000 direct jobs and twice that number in related jobs.

Our estimates anticipate in direct revenue some $646 million a year, and without this revenue we could not support the high level of health care, education and social services which British Columbians have come to expect. To ensure that this level of forest production can be maintained, we are investing to ensure that all forests are renewed. We are planting seedlings at a rate which will see a billion young trees planted by government and industry between now and late 1992. This is particularly notable when you consider that it took more than 50 years to plant the first billion trees in the province. The second billion took just seven more years.

I am pleased to have initiated the $5 million community forestry program this year. Working with local government and industry to sponsor incremental silviculture projects and create further short-term training and employment for British Columbians, 25 projects have been approved, creating 750 jobs throughout the province this year and improving the value and growth of immature forests on Crown or municipal lands.

The five-year $300 million federal-provincial forest resource development agreement is addressing the renewal of the backlog of not satisfactorily restocked areas cleared by fire, insects, disease or harvesting prior to 1982. The agreement expires in 1990. 1 have requested of Ottawa a replacement of this agreement to work further towards eliminating this backlog and to conduct incremental silviculture on young stands to increase their growth and value. We will also fund further research on forest management issues. This investment in our forest resource will benefit British Columbians long after the expiry of the agreement.

To ensure forest renewal of areas harvested between 1982 and 1987, my ministry has committed the funds necessary to complete the job over the next five to six years. For areas harvested after late 1987, industry must renew the forest fully at their own expense. These government initiatives will ensure that all areas now being harvested and those harvested in the future will be renewed to provide a sustainable level of harvest.

[2:45]

Government and industry's commitment to intensively manage our forests is bringing dramatic increases in forestry growth. Before industry is allowed to cut a single tree, a specific prescription for the subsequent work necessary to quickly regenerate a healthy, vibrant new forest must be prepared and approved. Each prescription is subject to public review. Industry is required to renew, to a free-growing state, all areas harvested. They must meet targets which have been approved by the British Columbia Forest Service before harvesting takes place to ensure that a healthy, free-growing stand of an appropriate species is established within a predetermined time frame.

Exports are critical to our industry and our provincial economy; however, I am concerned whether we export jobs. I recently announced measures to curb saw log exports from British Columbia, specifically an increase in the fee in lieu of manufacture for exporting surplus sawlogs. This removes any profit advantage in exporting logs over providing them to local mills at a reasonable price. I expect this will result in a substantial reduction in log exports. However, some exports are needed to maintain jobs in B.C. I'm referring to communities in the north and mid-coast, where jobs would be lost were it not for log exports. We have provided the means to support these communities by permitting a limited amount of log export in these areas.

To enhance capturing data on forest depletions from harvesting, fire, insects and disease and yield from managed and natural growth, our inventory program funding was increased last year to more than $13 million, and we are maintaining this level of funding this year. This will help us to establish even more precisely appropriate levels of sustainable harvest and to continue to ensure that the rate of allowed harvest and actual harvest does not exceed the rate of forest renewal. Our forest inventory information is already the envy of other forest jurisdictions and forms the foundation of good forest stewardship. Once again, more money will be invested in forest renewal. More than $250 million will be spent on silviculture this year, up more than 13 percent from last year. In fact, this year we have a record number of tree seed sowing requests for the seedlings needed to reforest areas harvested in future years. Almost 300 million trees are on order, an increase of 23 percent over the previous year.

The level of funding for the integrated resource management program, which includes range management, recreation management and resource planning, has been increased to approximately $14.7 million. That's up 25 percent over last year's level. This tangibly reflects our commitment to enhance delivery of these activities. Rangeland is a very important component of our forest resource for livestock, wildlife and recreation. Additional funding will be directed to range improvements, plus inventory and monitoring of range conditions. In addition, a major range program review has made recommendations to improve range stewardship, and I will have further announcements once I've had the opportunity to consider these recommendations. Our recreation program remains an important element of our integrated management mandate. It includes managing both forest recreation resources and facilities. Increased funding will be directed to enhancing maintenance of existing facilities as well as to public information. Additional funding for resource planning is to support range, recreation and timber management.

I have already emphasized my concern for jobs in British Columbia. While the industry must become increasingly more efficient in order to compete in today's highly competitive global economy, we must

[ Page 8505 ]

continue to find ways to create more jobs. Our emphasis on expanding our new small business forest enterprise program, on expanding basic forest and forest product technology research and on identifying potential new products and markets will produce new jobs for British Columbians. The small business forest enterprise program has dramatically increased the amount of wood sold on a competitive basis to small labour-intensive operators. Expenditures under the program will increase by almost 20 percent this year to $63 million to provide road access to timber for small operators and to cover the cost of forest renewal of areas harvested. Resulting revenues to government from the program will be two and a half times these costs.

I have already started to see the results of our efforts to provide secondary manufacturing opportunities. The first timber sale under this aspect of the small business program was awarded to a well-established company in Prince George which manufactures furniture, doors and window-frames. A second sale was awarded to a furniture manufacturer in Penticton and a third to a furniture manufacturer in Chemainus for timber which will provide logging and sawmill jobs in Merritt.

Another timber sale to a new company in Princeton will result in the manufacture of various products for the European market, creating 25 jobs here. A $17 million wood processing operation in Port Alberni will provide 155 new jobs in specialty sawmill and remanufacturing aimed at the Japanese market.

So from chopsticks to construction beams, secondary manufacturing opportunities presented under our restructured small business force enterprise program is generating a great deal of interest. I expect many more applications proposing new secondary manufacturing business initiatives with the potential to create many more jobs.

Integral to my ministry's goal of encouraging small business is the woodlot program. This program is designed to encourage the citizens of the province to become actively involved in small-scale forestry and to place privately held forest land under sustained yield management. My recent announcement that doubles the timber volume allocated to the woodlot program will allow the ministry to award an additional 450 woodlots to interested parties throughout the province.

Last year I announced $13.5 million in provincial government capital assistance for the new Forintek-FERIC forest product research facility at the University of British Columbia. Several months ago, I was pleased to have announced funding of $7.8 million for a new forest research facility for my ministry at the University of Victoria, to be completed in 1990. These new research facilities will improve management and stewardship of the forests for generations to come.

National Forest Week was held this year during the week of May 7 to 13 and was officially opened in Lillooet, British Columbia's 1989 forest capital. British Columbia is one of the most active provinces in celebrating this special week. British Columbians in more than 100 communities of all sizes throughout the province again responded in heartening numbers by sponsoring and conducting field and mill tours, classroom presentations, open houses, mall displays and special parades. All these events commemorated the importance of forestry to their province and allowed them to voice their support of proper forest management.

Twenty-nine non-profit organizations throughout British Columbia, aided by our Green Gold grants program, are sponsoring projects aimed at increasing public awareness of the importance of forestry to the province.

The government is committed to continuing to renew the forests faster than they are being harvested and is committed to the creation of jobs in the forestry sector. We are committed to resolving the major forestry issues of concern to our residents. The government's new legislation and policies ensure that industry plays its part in forest renewal and pays a reasonable return for harvesting our trees. Government is doing its part by providing sufficient funding and protection to ensure that the forest resource is renewed and to ensure it will provide continued recreational and economic opportunities for future generations of British Columbians.

HON. MR. RICHMOND: On a point of order. I didn't wish to interrupt the minister when he was making his very important introductory remarks, but the member for Omineca (Mr. Kempf) made some very unparliamentary comments and I think he could be asked to withdraw them.

MR. KEMPF: If the government House Leader considers those unfortunate comments and it offends the House, certainly I will withdraw. But the truth of the matter is: it will happen.

MR. MILLER: The minister's statement was hardly inspiring, in addition to being very hard to hear, which I suggest might be one of the problems we're facing in British Columbia today in terms of the operation of that particular ministry.

Interjection.

MR. MILLER: The minister of Education (Hon. Mr. Brummet), who on a comparative basis does a heck of a lot better job, is in here to defend his colleague in forestry. I can understand why he feels the minister needs defending.

Nonetheless, I could hardly call that statement by the minister inspiring. In some sense I suppose it's symptomatic of the failure of this minister to communicate to the public. That's unfortunate, because I don't think that everything that's being done in forestry today is wrong; there are some good things being done in forestry. There has been a failure to communicate this information to the public or to have any level of public confidence in some of those activities. That is extremely unfortunate. It has nothing

[ Page 8506 ]

to do with partisan politics, because it reflects on everyone.

I would characterize the tenure of this minister — in terms of the substantive policy issues in forestry in the last year — as being a failure. I note the spate of announcements that have been made in recent days and I said the other day that in some measure they may be being made to head off controversy and to head off debate on some of these issues, but that won't be the case.

We see, for example, the announcement of an advisory commission, which in reality is an announcement of the failure of the minister to pursue his tree-farm licence policy which he so vigorously defended last year in this House. The announcement of that commission is a means for the minister to slide out and walk away from that TFL policy, which has proven to be so unpopular in this province — even among the minister's colleagues. It allows the minister to walk away from the demand that was expressed in this province for a royal commission by a wide range of groups and individuals. It was expressed not only at the tree-farm-licence public information sessions, but in letters to the minister and the Premier and, I'm sure, to other MLAs as well.

I recall the words of the minister, both during debate on Bill 28 and subsequently, when we saw the kind of jumbled administrative attempts of the ministry to deal with the TFL policy. First we have a public hearing scheduled for the latter part of last year in Mackenzie, and people were scrambling to put presentations together to appear up in Mackenzie; then that being cancelled. In one week the minister said,"We have to postpone it for a week," and before the week was up he said: "We have to cancel it, because we haven't done our work." That's surely a reflection of the administrative abilities of that minister.

Finally in February we bounce to another scheduled public hearing; again cancelled. Finally the minister puts out a press release and says: "People don't understand the value of tree-farm licences. I'm going to go out there and have public information sessions, and I'm going to destroy the myths and fallacies." That was the minister's press release on the public information sessions. Well, I don't think the myths and fallacies were destroyed; I think the minister's policy was destroyed — and a good thing too.

There are a series of failures in terms of this vital ministry in this province. The minister has correctly pointed out the economic importance of forestry to British Columbia and to the citizens of British Columbia. It is a failure in terms of integrated resource management; so much so that the ombudsman has to voluntarily offer advice on a system that should be put in place — the failure to deal with fundamental issues. The minister can talk all he wants about making announcements over the coming months. There's a failure to deal with the question of old growth, and a strategy for that tremendously important resource for this province. There's the failure to deal with the issue of overcutting, despite the lukewarm words from the minister: "Don't worry." We have people in this province whose judgment we value, people like Professor Pearse at UBC, Professor Reed and people in industry, whose judgment we value when it comes to forestry issues, who are saying unequivocally that we are overcutting, and the minister fails to deal with that issue.

[3:00]

Wilderness policies. Surely the uproar in this province should have convinced this government long before now to start to deal with those fundamental issues, in terms of old growth, wilderness policies and preservation. Yet they've been dragged, kicking and screaming, so that in the last month we see the minister making announcements: "I'm going to start to deal with all these issues. Just trust us; everything is in hand."

There's a failure in administration. I deal with people right around this province, in terms of forestry issues. The message I get from those people in terms of trying to deal with the Ministry of Forests is the lack of administrative capability and the feeling out there in those field offices and district offices. There is the almost bunker mentality that exists in the Forest Service of this province, which should be the proudest public service in this province, and it's not anymore. It has been devastated by the policies of this administration.

There is the failure to deal with the issues of corporate concentration. We see the increasing levels of concentration in our forest industry. We see the drift away from a market economy, which surprises me, because I constantly hear from the other side the need to strive for competitiveness and to pay allegiance to the principles of a free market economy. We've sold our forests out and allowed them to be locked up by a very few companies, some of them not even headquartered in this province, which doesn't remotely resemble free enterprise or a competitive market economy, and that surprises me.

There's a failure to deal with the whole question, which is linked to overcutting, of silviculture, of intensive silviculture. There are lots of examples of other countries that have come to recognize the need to deal with that and have increased tremendously the amount of timber that is available off the wonderful lands in British Columbia that could produce so much more, which could produce far more timber and field a far bigger industry. There's a failure to deal with that.

Research and development — it's a failure, again, looking at the "Adjusting to Win" report. Research and development expenditures in Canada are eighth of 11 OECD countries. "Even though" — and this is a quote from the report relative to corporate concentration — "R and D expenditures vary by sector, the overall level is low. Among the factors which may contribute to the low level of R and D in Canada are multinational control of Canadian companies and defence expenditures." The Minister of Advanced Education (Hon. S. Hagen) alluded to the defence expenditures in some countries when I spoke on that issue the other day.

[ Page 8507 ]

There's a failure to deal, except in the last week or two, with the issue of waste, so that this bountiful resource that we have, this natural endowment that supplies so much to British Columbia, has been harvested so foolishly in many instances, allowing fibre to remain on the forest floor and wood that is capable of being used for creating very fine finished products to go into pulp mills to create chips for pulp mills.

A failure, and I don't use the term lightly. There is a failure, and this is the pre-eminent public issue in British Columbia today. How we administer, how we manage those public resources for the benefit of citizens today and on into the future....

HON. MR. STRACHAN: Tell us about Carmanah.

MR. MILLER: We'll talk about Carmanah, Mr. Minister of Environment. You might want to discuss Carmanah too, seeing as you're the Minister of Environment. Hopefully, you will get an opportunity during these estimates.

HON. MR. STRACHAN: I want to hear your position. Let's hear it.

MR. MILLER: You can hear my position.

If we look at the substantive issues in terms of forest policy, in terms of forest administration, it's my view that the minister has not dealt adequately with those issues. I don't think that the current spate of announcements, as I said, which I think are designed in large measure with public relations as their guiding principle, will really satisfy that public demand that we have of renewed assessment of how we manage our natural resources.

I am prepared to leave it at that. If the minister wants to respond, that's fine, otherwise I'll move into substantive issues.

HON. MR. PARKER: I was interested in watching what's developing across the way — the change in haircuts and suit styles and colours and the anti-glare devices on the foreheads, and so on. It would be interesting for us just to take a look at the strategy, how they try to take the offensive so that we have to be on the defensive, but there is nothing to be defensive about.

This ministry functions well. We have some 3,400 employees who have dedicated their lives — they are working environmentalists — to the management of the forests of British Columbia. The policies of this government are ones that have encouraged investment of historic proportions in the last two years The jobs it has created and is creating are of great benefit.

If we take a look at StatsCan and just go back to the beginning of last year, if our population had remained static at that time, we would have zero unemployment. The enthusiasm, the opportunities that are created in this province by this government are such that the in-migration is between 5,000 and 7,000 people a month, and we are able to accommodate these folks because of our leadership and our policies.

Some of the leadership that we are demonstrating is that of asking advice of learned and caring and capable British Columbians through the Forest Resources Commission, which is an advisory commission created under the Ministry of Forests Act. If the members opposite care to take the time to read it, they will find that that provision has been in place for a number of years. It's nothing new. It's not reactionary. It just makes good sense.

I am the only minister who.... When the opposition tried to be government, their minister didn't go around the province and listen to the people, but this minister did. I noted what I heard, I noted the concern, for which I am greatly appreciative, because over the years when I was an industrial forester trying to get people interested in the B.C. Forestry Association, the Canadian Institute of Forestry and other forestry organizations, very seldom could we get anybody to turn out. In the last few years, the awareness of the forest resource has increased substantially; for that, I'm grateful.

Out of that input from the information sessions we had around the province grew several strategies. One was to create the Forest Resources Commission so that we have an advisory body giving us a continuous review of what's taking place, instead of just a snapshot. That has received a great deal of support throughout the province from all walks of life.

The member opposite talks about old growth. I'd like to see a definition for old growth, because we have an interministry group that is trying to define what old growth is at this time. Is it first growth? Is it old growth? If it's old growth, how old is old? Is 300 old? Is 500 old? Is 900 old? What's old? Then we go from there and decide how best to deal with it.

Over the years in the province, as the Europeans settled, the harvested timber has been integral to the development of the province. It will continue to be in the province.

I've passed this information around to members of the Legislative Assembly — an information sheet on forest management in British Columbia. It tells us that British Columbia's land mass is some 94.8 million hectares. Of that, the forest service manages 73.8 million under Crown provincial forests and 6.9 million in tree-farm licences. The productive Crown provincial forest land is some 43 million hectares. The productive Crown provincial forest land available and suitable under today's circumstances for timber harvesting is 22.6 million hectares out of 94.8 million hectares.

It's important to preserve selected representations of the various forest types, site types and biogeoclimatic types in the province. That's done by this government and previous governments through ecological reserves and park reserves. It is important that we protect the silvicultural land reserve, like the agricultural land reserve.

There's some reference to overcutting. British Columbia is not overcutting. In recent years, we've cut in excess of the provincial allowable cut of 72 million

[ Page 8508 ]

cubic metres by some 6 million cubic metres — well within the 10 percent limits set by legislation. In actual fact, if anybody cares to take a look, you will see that the level of harvest is actually picking up undercuts.

We have gone to great lengths to redistribute part of the provincial annual allowable cut through our small business forest enterprise program. As I outlined in my opening remarks, it's a substantial success, and there's more to be brought forward here in the next few months as the sales are advertised and the good proposals received.

This government has supported research and development like no other government in the past — basic research and some very significant research in biotechnology. We were able to save a biotechnological research group from being scooped by an eastern United States enterprise. We have it instituted in B.C. Research. We did that with the help of the federal government. It's not hard to work with the federal government. The opportunity arose; time was of the essence, and we made it possible to happen on the basis of a handshake. The federal government came through in short order together with the province to institute the biotechnology group at the research centre on the University Endowment Lands. We've also provided the funding — and this is full provincial funding — for a forest sciences building at the University of Victoria to house our research division.

[Mr. Mowat in the chair.]

What's important, of course, is technology transfer. We have taken a world leadership role in technology transfer, particularly in remote sensing and applying that to resource management. As a matter of fact, this week at the University of British Columbia there is a symposium taking place. More than 800 people from around the world are attending a remote-sensing symposium. One of the leaders of the group is our director of inventory, Mr. Hegyi. Mr. Hegyi has been invited to a number of different worldwide locations and, as a matter of fact, is chairman of one of the significant international scientific groups. He will be bringing to Victoria next year some 1,000 people from around the world to deal with remote-sensing applications in resource management.

[3:15]

So you find that this government has been a leader in research and development in the forest industries. We support the Forintek-FERIC group on the campus of UBC. Forintek is an organization funded by the federal government, the industry and the provincial government. It concentrates on solid wood products, preserved wood products, veneer products, lumber products and by-products from these items. There is a new building going up on that campus, going up because of the leadership that we provided.

With that, Mr. Chairman, I'd just like to point out to everybody in the House and the people of British Columbia that the B.C. Forest Service is a forerunner in the world when it comes to forest management, research and development and technology transfer.

MR. KEMPF: I agree with the last words of the minister. The B.C. Forest Service could be a forerunner, if only the politicians at the top would allow it to do the job for which it exists in British Columbia. That job is not allowed to be done in the field. The minister can speak as glowingly as he likes about what has happened to the forest industry in British Columbia in the last five decades. Management? Is that what the minister wants to call it? You need only go out there — and the minister has said that he's been out and around the province — and look and listen to know that forest management in British Columbia has for a number of decades been an absolute disaster, to the detriment of every citizen in this province. Mr. Chairman, I speak from a position of knowledge, having spent 20 years directly in the industry myself and, as short as it might have been, some time as the minister responsible for forests. The minister talks about good forest management. Well, we're going to talk for an awfully long time in this chamber in these estimates about forest management in British Columbia.

The minister talked about jobs. Let's look at the statistics to see where we are with the great forest management in this province with respect to jobs. From 1978 to 1985 alone, for which I have the figures, the number of jobs in the forest industry in British Columbia went down by 48 percent in logging; in sawmills, by 44 percent; and in pulp and paper, by 46 percent. On a yearly basis, between 1985 and the present, it has been even worse.

The industry has flourished all right, but the people who have flourished in it have not been those who have been working in it; they have been the large offshore, multinational, in most cases integrated, companies that have taken from this province and left nothing for its citizens in return for its primary resource. It's a shame, Mr. Chairman. It's not only a shame; it's a crime. The whole shame of it is that, no matter what we say in this chamber at this time or any time in the future while that administration sits as government, we will not have any meaningful change. That's the sad thing about it all.

If the minister were really listening, he'd go out there and listen, because the people of British Columbia know what the problem is and how to rectify it. His own staff knows what the problems are. While I was minister that very short seven months, I initiated a management review in which at the end those employees began to speak of the problems that existed. They know how to rectify them. They only have to get the politicians to open their ears. But a billion dollar-a-year lobby is a big and powerful lobby in British Columbia, and that too is sad. As I've said in this House many times, it's costing the taxpayers of this province a billion dollars a year, and that won't change, either, under this administration.

The minister talks glowingly about a permanent forest resource commission being established. Yes, there are some very good people on that commission, but they're not going to make anything happen, either, with respect to the abominable state of forest management in this province, because they have to

[ Page 8509 ]

go cap in hand to the minister in order to do anything. You need only read the press release to find that out. Independent commission indeed!

If the minister really wanted to do something with respect to the dismal management of our forest resources in British Columbia, why didn't he just go next door to the state of Washington and see what is being done — and has been done for the last two years — with their timber, fish and wildlife agreement? Why isn't the minister bringing in legislation that would allow this kind of committee in British Columbia, not a forest resource commission that has to go to the minister every time they want to go to the washroom?

You can learn a lot from others' mistakes, and they made a lot of mistakes south of the border with respect to the forest industry. But they're rectifying some of those mistakes. They have a group of people making decisions on behalf of the residents of that state which will improve an already good management system. There's some cooperation. There's no political interference, as there has been in British Columbia for five decades, with decisions being made from behind a minister's or a deputy minister's desk. That's the problem in B.C. That's why multinational corporations are ripping off the taxpayers of this province. That's why it costs us money to maintain the forest resource. That's why that billion dollars a year isn't flowing from that resource into the coffers of the province.

You can say you're listening, Mr. Minister, but one of these days someone in your position is going to have to listen. Perhaps it will be too late. It will certainly be too late for a number of the communities that I serve, which, 20 years down the road, will not have an industry — certainly not as they know it today. They may have some pulp mills, because fibre is all that will remain.

The minister says there's no overcutting. Did the minister read this report that was commissioned in 1986 by Mr. Ewing with respect to the Prince George TSA? Did you read that report before you wrote me on May 24 of this year? I quote from the letter: "The Prince George timber supply area is not being overcut. Harvesting levels are within the allowable annual cut, as authorized by the chief forester." Is it not overcut because the cut authorized by the chief forester is in effect correct? This report is quite explicit and clearly points out that in December of 1986 the Prince George TSA was overcut to the tune of at least 35 percent. Has anything changed, as far as the annual allowable cut of the Prince George TSA is concerned, since December 1986? If so, let the minister show this House.

Interjection.

MR. KEMPF: Oh, the Minister of Education is an expert on forestry. If he is, I would suggest he get up in this debate and tell us what he knows about forestry, not just make snide remarks from the corner seat. Tell us what he knows about this industry and about the resource.

HON. MR. BRUMMET: Probably no more than you do. I know we've got a good Forests minister now.

MR. KEMPF: You won't have him long, because he's an embarrassment not only to you but to that government and to all British Columbians. The sooner you get him out of there, the better he'll be. Not that that's going to change anything. Its not going to change a thing. It certainly won't change his standing out there in the eyes of even the multinational corporations. It's the little guy that's really hurting out there, and he is the guy that's really down on the Minister of Forests. Even the multinationals that he stands for have no use for him.

The minister talks about overcutting. The minister talks about listening — the so-called information meetings that were held around the province. I attended every last one of them.

HON. MR. BRUMMET: How much information did you contribute?

MR. KEMPF: Not very much, when I listened to the B.C. Forest Service giving their spiel there three times a day. Not very much, considering that had nothing to do with the reality out there in the forest industry of British Columbia. Nothing, as a matter of fact, Mr. Minister of Education.

Neither did the minister, because after coming back from that tour of eight meetings throughout this province, he had the audacity to suggest that 60 percent of the people who appeared before those meetings didn't know what they were talking about. If that minister really wants to listen to the people of British Columbia, he doesn't do it in that manner.

HON. MR. BRUMMET: You were 40 percent of the 60.

MR. KEMPF: The Minister of Education knows everything about everything. I really wish, Mr. Minister of Education, that the minister meant what he said in his opening remarks, and really believed in them, because it's quite clear, given the state of the industry out there today, that that's not the case at all. You know, you can't fool the people any longer, because you no longer have to go over the second hill to see where they are logging. They're logging on their back steps.

[3:30]

HON. MR. BRUMMET: That's not fair.

MR. KEMPF: The people of British Columbia are educated, Mr. Minister of Education, with respect to what is going on in the forest industry today. This administration or any other administration is not going to get away with it much longer. My only fear is that it will be too late.

My time is up, and I will let the critic talk for a while.

[ Page 8510 ]

MR. MILLER: The minister likes to make offhand comments about people, even his own colleagues. I noted he referred to the member for Little Mountain as a jaded individual not too long ago, so I guess we come to expect those kinds of things.

AN HON. MEMBER: Which member?

MR. MILLER: Oh, sorry. Not you, Mr. Chairman. I am sure that no one would ever accuse you of being jaded. The other member.

I have just one response in terms of what the minister previously commented on, that he was the only minister to go around the province. I would only note that the royal commission was set up during the tenure of the New Democratic Party's administration, and I think that's the kind of commitment that people in this province have been looking for from this minister.

I would restate my view that that process was far from satisfactory in terms of dealing with the issue. The complete information that was required by people was not made available by the minister. The map, for example, that was put together by the ministry, setting out and approximating the location of the licenses if the volume-based licences were converted to area-based, was not made available to the people of this province in those hearings.

That in itself does no credit to that kind of public process. I don't think that the hearing process was a good one. I don't think the minister felt comfortable at the....

HON. MR. PARKER: It wasn't a hearing, and you weren't listening.

MR. MILLER: The minister reminds me, and I stand corrected: it was not a hearing; it was a public information session. I suppose that only reinforces the point I made at the outset: if you're going to have a public information session, it would seem to me the least you could do is provide all of the information to the public.

Nonetheless, I think the process itself was not appropriate, where the minister sat without comment for... I'll give him credit for having the patience to sit endlessly throughout the length of these hearings; some of them did go for a long time. But the comments I heard from people who participated in the hearings reflected complete dissatisfaction with the process. Having gone through the exercise on an issue of extreme public importance, it's now disappeared. I understand there's a transcript that I hope will become available to the public. The minister promised, I believe, that it would be available in June; I hope so. Now we see it set aside.

To the minister's credit, the advisory commission that's been set up does contain people — and I don't know them all personally — who hold strong views in opposition to the tree-farm licence policy. I repeat my contention that it was simply a means for the minister to abandon an extremely unpopular policy.

1 want to deal with some specifics. I don't want to just continue to generalize in these debates. I want first of all to talk about some log export issues. Again, the issue of log exports and the Vancouver log market has been referred to an all-party standing committee of this House. I'm optimistic that the committee will do a good job and will work well together. It certainly was the experience in the last forests standing committee, which has resulted in the legislation the minister has tabled in the House today. But some incidents have taken place in the past that bear examination.

I want to start with the ministerial order that allowed Tsolum Timber to export 5,500 cubic metres of fir which was valued as export, I believe, at about $275,000. When I raised this issue, or when the issue was initially raised and brought to my attention by the IWA, at some point in the public proceedings and the news statements the minister said that I had only raised it because it was important to the IWA; it was a union versus non-union issue. I believe that's the term the minister used to characterize the issue. I suppose the minister is free to say that. I don't know what it was when he held his meeting with Jack Munro following the Fletcher Challenge layoff announcement and emerged from that meeting to announce that he had agreed to fairly substantially change the log export policies. Was it a union issue, Mr. Minister, that caused you to change your mind on that subject? You certainly held different views before the meeting.

Getting back to Tsolum Timber, when I review the events and look at the legislation governing the export of logs in the Forest Act, I would note, first of all, that there are criteria. Whether it's an order-in-council or a ministerial order, there are criteria that should be used to determine whether logs are exportable.

Very briefly, for members of the House who are not familiar, the exemptions listed under section 136 are that:

"(a) the timber or wood residue will be surplus to requirements of timber processing facilities... ;

"(b) the timber or wood residue cannot be processed economically in the vicinity of the land from which it is cut ... and cannot be transported economically to a processing facility ... ; or

"(c) the exemption would prevent the waste of or improve the utilization of timber cut from Crown land." 

I don't think that any one of those criteria was applied in the case of the Tsolum Timber export permit.

I find it curious that this convoluted process was followed in this particular case. The minister stated that he had to allow the exports because the company was in financial difficulty, and he had to move to protect, I believe it was, 20 jobs. The company was in financial difficulty: that was the criterion used by the minister. It doesn't appear in the Forest Act; there's no wording to the effect that if a company is in financial difficulty, we'll allow them to export our resources. Nowhere — it's quite specific. We have very specific rules brought about by debate in this

[ Page 8511 ]

House. Nowhere does it say we can allow exports on the basis that a company is in financial difficulty, yet that's the reason cited by the minister.

Further, in arriving at his decision the minister said that he contacted the area MLA so that the area MLA could give him more background information. In the Vancouver Sun he said: "We contacted Stan Hagen to verify additional information. I wanted to know who Tsolum was and I wanted some background information from someone other than the company." I don't know where that figures into our policy, because although there certainly is ministerial discretion in arriving at decisions and certainly information is important, nowhere in the process, in terms of the minister arriving at a decision to allow log exports, is there anything that says you go to the area MLA so you can get some background on the company. In fact, the area MLA is not included. The minister outlined last year in estimates the process in terms of the district manager, the regional manager and TEAC. Despite that, according to the minister that consultation took place. Yet Mr. Hagen, when asked about the statement, denied it. He said his input was simply passing on a letter from the company.

I have some difficulty here. We have two statements from two cabinet ministers, and they contradict each other. Not unusual in terms of policy, but in terms of a question of fact very disturbing. The Minister of Advanced Education (Hon. S. Hagen) said on January 18 in the Vancouver Sun: "I don't know what Mr. Parker said, but I don't have any background information on Tsolum."

I have other questions, but perhaps the minister could at the outset clear up for the House the contradiction and also respond to the questions I've raised in terms of the process and the Forest Act.

HON. MR. PARKER: I didn't have any such conversation with the MLA for Comox, and, for the record, what we've heard today is hearsay.

The logs we have in our office are complete. We've made sure our logs are complete in view of what transpired prior to my appointment. We've made sure that our records are good, and that consultation did take place. Whether or not my colleague can remember just what took place or not we'll have to determine in the presence of my colleague. I don't purport to speak for him. I can only speak for our office, and we did go through that consultation process.

I make no apologies for protecting jobs in British Columbia. We protected the jobs at Tsolum Timber, and the people who work there and the people they patronize in the shops around the Comox area appreciate it. As I said, I make no apology for protecting jobs in British Columbia and for making a political decision that from time to time has to be done in very short order. You can only do that if you're prepared to demonstrate some leadership.

I'd like to touch on a few things raised by the member for Omineca (Mr. Kempf). He's squawking about jobs being down, down, down, and I'm just wondering if he figures that all the plants that are being constructed and the new productive capacity in the province that's in place — if everybody working there are phantoms. It makes you wonder just what he's been doing with his time, because he seems to have lots of it. If you take a look at the record of '87 versus '88, there's been a growth in direct jobs in the forest industry in British Columbia. It's now at about 87,000 direct jobs, and we know we get a minimum of two jobs indirectly from every job created by the forests.

He prattles on about what's taking place in Washington next door and the wildlife, fish and forestry working committee. We've had that working committee in place for some time, and we already have fish and forestry guidelines that are being used in management applications in coastal British Columbia. The Ministry of Forests, the Ministry of Environment, the federal Department of Fisheries and Oceans and the industry all worked together over the years to prepare those guidelines, and they're looked upon as leadership guidelines by other jurisdictions.

[3:45]

Just to touch on the Prince George timber supply area and the member for Omineca's suggestion that it is overcut, a timber supply area is constituted as several supply blocks, and you would think that somebody with his past 20 years in industry and his past experience as a Forests minister would know better, would understand that. And he will recall, then, that the supply blocks in the Willow River and Bowron watersheds were severely infested not only by mountain pine beetle but also by spruce bark beetle, and there were substantial losses, which were curtailed by concentrating the operators in the Prince George area in those supply blocks to make sure that those timber values were salvaged before they'd gone beyond all redemption. He also should be aware that the forest renewal activity in there has been monumental, and that when it comes to determining annual allowable cut, you consider all of the growing stock, and you also consider your management goals and objectives and your strategies.

I can tell this House that the Prince George timber supply area is not being overcut. It is being managed in a responsible manner by some very capable people in the British Columbia Forest Service.

The member for Omineca happens to have a relative who works for the Forest Service — and one out of 3,407 does not constitute a majority. The young man is probably very capable but still cannot be looked upon as being representative of all the employees of the Forest Service.

MR. KEMPF: On a point of order, Mr. Chairman, if that minister is accusing me of having gotten the information I have with respect to the Forest Service from my son who works with the Forest Service, I ask him to withdraw that on the floor of this House. Right now!

[ Page 8512 ]

HON. MR. PARKER: I wouldn't want to get the member for Omineca upset. I'd be happy to withdraw if it offends him.

He also points out that the multinationals and the little guys in the forest industry are all mad at me. Apparently I've got everybody upset. It means I must be kind of treading the middle ground and doing not too badly.

The tree-farm licence information session that he sneers about was a very useful exercise. It's the first time since Confederation that a Minister of Forests in this province took the time to go out and share some policy initiatives with the people of British Columbia.

Interjection.

HON. MR. PARKER: That's right, we shared. We listened, and we made sure that we got the record straight. We had recording secretaries there, we have a complete transcript, and those are available for the cost of copying from Forest Service offices.

The member for Omineca sneers about what we are doing, and sneers about whether or not we are sharing information and listening.

I want to share with you, Mr. Chairman, a little episode that happened in Parksville. Somebody in the audience got up and wanted to know why TFL 23 was transferred without the pulp mill that it was appended to. I said,"I don't know, but you should ask the guy that was the minister at the time," and he ducked out the back door.

The member for Prince Rupert (Mr. Miller) claims that a royal commission is more appropriate than the advisory group that we have established, the Forest Resources Commission. The Forest Resources Commission from time to time will have powers of inquiry that can be set up for specific purposes. The value of having the Forest Resources Commission to advise us constantly on a very dynamic resource is invaluable. If anybody takes the time to read part 2 of the Inquiry Act, they'll see that a royal commission is so finite that all you get is a snapshot; and what we'll get with the Forest Resources Commission is, if you'll pardon the analogy, a moving picture, so that we can hear what the concerns of the people are. In a democracy the concerns of the people, if the democracy is working right, can eventually become policy — and that's the catalyst that this government provides.

I believe that the Forest Resources Commission will serve this province very well. They're establishing through the summer, and will be ready to work in September.

I think I'll leave it at that, Mr. Chairman, and invite comment from across the floor.

MR. KEMPF: I didn't believe the debate could fall any lower in this House than it has been in the last four and a half months, but I learned today.... For the Minister of Forests to use one of his employees as fodder for his cannon, Mr. Chairman, is absolutely inexcusable! If he ever says that again.... I dare him to say it outside of this House — not in here where he's exempt, but outside of this House, Mr. Chairman. I'm not threatening the minister at all; I'm just giving the minister the facts.

The minister talked about jobs being increased in the forest industry, what with the expansion that's being done and the investment that's coming to British Columbia. In every expansion in every pulp mill and sawmill that I have ever seen — and I've been around the industry for a long time — employees have lost jobs. Employees have lost, not gained. The only people who have gained are the corporations which stuff even more in their pockets and take it from British Columbia. For decades governments have given in to big industry in the harvesting of forest resources of this province under the guise of providing more jobs. We have to give in so that more jobs can be provided. The facts speak for themselves. Just the opposite has taken place. The opposite is taking place today. It took place very recently, very near this chamber, when, through the mismanagement of our forest resources, a sawmill was shut down and employees lost their jobs.

The minister talks about protecting jobs, increasing jobs. Every time a manufacturing plant in B.C.'s forest industry spends money to upgrade, British Columbians lose jobs. It's a fact of life. If the minister has gone around the province and talked to the right people, as he said he's done.... Don't talk to the people in those board rooms in Vancouver. I've talked to them as well. I know the story they give, but that's not the true story of what's happening in B.C.'s forest industry. Don't take all of your information from the Council of Forest Industries, which has a vested interest in retaining the status quo in our primary resource.

The minister mentioned the great new policies that were brought in in the fall of 1987 and the legislation that's now flowing from those policies. You know what has happened because of those policies? I'm sure the critic for the New Democratic Party will want to talk about FRDA. What happened is that the taxpayers of British Columbia.... You have to realize that it makes no difference whether it's FRDA money or whether it comes out of the coffers of the province; it's all taxpayers' money. It doesn't matter what pot you take it out of, it all comes out of the taxpayer's pocket. What that minister did in October of 1987 was to forgive the forest industry of this province for all its reforestation and silvicultural past mistakes. He saddled the taxpayers of B.C. and perhaps Canada with those mistakes — mistakes that happened over five decades.

Interjection.

MR. KEMPF: Listen, Mr. Minister. You may learn something.

I can take you out to blocks that I logged when I worked for a forest company way back when — that's 25 years ago — which still haven't been reforested. In October of 1987 that minister assumed all of those debts, debts which should rightly have been paid by the people who created the problem in the first place

[ Page 8513 ]

— reforestation that should be paid for by those who harvested the timber. That minister assumed that responsibility on behalf of the people of British Columbia and, if FRDA is replaced by another fifty-fifty agreement, the people of Canada. You can talk all you like about the great things the new policy brought and that the wondrous legislation is going to bring about, but that's what happened with respect to reforestation in British Columbia.

I want to ask the minister what he is doing for the small loggers and the small sawmillers that are dropping by the wayside literally by the dozen in British Columbia, because the timber they relied on has either been priced from their grasp or is being taken by the large forest companies through surrogate bidding. When is the minister going to bring in legislation against surrogate bidding in the province of British Columbia?

Because of those two situations, Mr. Chairman, the minister is virtually eliminating a way of life — not just jobs, not just small loggers and small sawmillers, but a way of life in parts of this province. I get letter after letter after letter about sad, sad situations in which the small operators can't get the timber supply that they require, while at the same time he has been told by the people of British Columbia, very clearly, in eight different communities around this province that the TFL proposal was not a good one for British Columbia and British Columbians. The minister still directs his so-called independent commission to follow that route, to continue to pursue the idea of creating more tree-farm licences in British Columbia. That's totally unacceptable.

[4:00]

What's the minister doing for the little guy? This government was elected — and I know, I ran for them — because they said to the people of British Columbia: "We're here for the little guy. We're here for the small logger. We're here for the small sawmiller. We're here for the small business person." It was a plank in their platform. But like many other things, Mr. Chairman, on being elected they immediately forgot that promise.

Interjection.

MR. KEMPF: Well, call it what you like. It's not the only promise they forgot.

They have forgotten the little guy, particularly, in the forest industry of British Columbia under the guise of making more wood available to the small business enterprise program. They gave it all to their friends in big industry.

It's sad — virtually wiping out a way of life. Not to speak of the jobs, because every small sawmiller and every small logger out there had at least three or four or five, or more, employees. They had a skidder or a cat or a feller-buncher, which now sits and rusts or has gone through the auction process. He's virtually eliminated a way of life in British Columbia — not assisted the small business person in the forest industry, but wiped him out.

1 just want to hear from the minister in these estimates what he thinks he has done for small business in the forest industry — what he thinks he has attained by supposedly making available an additional 10 percent in the small business enterprise program. I know what it's done, Mr. Chairman, but I just want to hear that from the minister.

HON. MR. PARKER: The member for Omineca says that we've given in to big industry. There is a commitment by this government to small business in this province.

In the past we heard talk by previous administrations about getting 25 percent of the provincial annual cut into the hands of the small business operators, but we didn't see any progress made until 1987, when we introduced legislation to take back 5 percent of the provincial annual allowable cut assigned to those licensees who held replaceable licences — those are major timber sales, forest licences and tree-farm licences — for redistribution to the small business operators in a value-added initiative that you, Mr. Chairman, more than most in this House, realize the value of.

Now we've created a small business value-added opportunity in this province that hasn't been here before. That can only be done through leadership and having the political will and intestinal fortitude to make it happen. We have done that.

The member for Omineca talks about the application of FRDA funds on areas that were denuded primarily by industry in the past, prior to 1987. That isn't the case. FRDA is applied to NSR areas on good and medium sites in the province denuded prior to 1982. The greater percentage of those areas were actually denuded, oddly enough, by wildfire. That's a matter of record, and anybody who cares to take a look at the fieldwork records can find that out for themselves.

The obligations prior to October 1987.... If the member for Omineca cares to consult the legislation and regulations of the day, he would know — as most people do in this province, and I am surprised he doesn't — that the reforestation obligations in the TSAs and the licences in those TSAs and on the Crown lands and tree-farm licences lay with the Crown provincial. We have recognized our obligation, and we have committed the funds. It's even more significant; we have committed the funds necessary to provide for forest renewal on those areas logged and otherwise denuded in the period of 1982-87.

From October 1987, industry is responsible for forest renewal to a free-to-grow state. We constantly hear in this House from the member for Omineca, who has been sitting across the way for some two years, about surrogate bidding and what we are going to do about anti-surrogate bidding. That has been raised from several quarters. Indeed it has been a concern of most people from time to time when a particular issue is brought....

But wholesale surrogate bidding — I don't know whether that really exists, and neither does the

[ Page 8514 ]

member for Omineca, I am sure. That is a concern that he has brought forward a number of times, and I believe that if he was genuinely concerned, he would probably — I would expect probably — bring a suggested solution to the assembly here and suggest what might be done. It's easy to carp and criticize.

This government listens to everybody, and we listen to the member for Omineca in the hopes that something of value may be gleaned. He has that opportunity; the doors are always open. I am happy to hear any suggestion. I've never seen a positive suggestion from the gentleman. Perhaps some day, perhaps even in this mandate, we might see something useful.

MR. MILLER: We might have to work something out here in terms of process, but I want to return to the issue I was dealing with, which was the Tsolum Timber export question. I had outlined the discrepancy between two ministers in terms of this. It appears to me, on the surface, that there was a decision made here without due process.

The Minister of Forests has said in response to what I outlined that he can't be responsible if the Minister of Advanced Education (Hon. S. Hagen) can't remember what happened. The Minister of Advanced Education, on at least two occasions cited in the press, said — and the quotes are very clear — that he did not do what the Minister of Forests claimed he did. The Minister of Forests said he asked for input on background of the company from someone other than the company, and the Minister of Advanced Education said all he did was forward a letter. He didn't do what the minister said he did. Mr. Minister, it's not a question of another minister having a bad memory. Would you outline specifically the role of Mr. Hagen in transmitting information to you on Tsolum's request to export?

HON. MR. PARKER: As I said earlier, my office was in contact with my colleague, and the logs in my office are complete. How my colleague is quoted in the press is one thing; how the question was put to my colleague is another. One thing I have learned in my short life as a member of this assembly is not to put too much faith in what I hear, see or watch in the media. The issue has been dealt with in a manner which protected jobs for British Columbians, and that is nothing to apologize for.

MR. MILLER: The minister didn't respond to my specific question. I wonder if he would advise the House specifically what information was provided by Mr. Hagen.

HON. MR. PARKER: I don't have my logs with me. We can consult them and report later.

MR. MILLER: I apologize, Mr. Chairman, for using the minister's name; I mean the Minister of Advanced Education.

The minister doesn't have the specific information provided by the minister. Could the minister generally advise the House — it's not that long ago; surely the minister's memory is good enough to retain some information — what information was provided by Mr. Hagen to the Minister of Forests to allow him to make this decision?

HON. MR. PARKER: The matter was dealt with last fall. I said I'd consult our logs and report later.

MR. MILLER: Could the minister advise on the earlier questions I asked about the Forest Act and the factor of a company's financial health being considered in terms of log export? Is that a policy? I had outlined that it does not appear in the Forest Act. It does not appear in the narrative description used by the minister last year in estimates to describe the process. Could the minister advise the House more fully on this whole area of a company's financial health being a consideration when it comes to a company applying for log exports?

HON. MR. PARKER: It was clearly an economic situation, and that's covered.

MR. MILLER: The minister was mumbling; I didn't quite hear what he said. And it was very brief; it surely wasn't an answer to my question.

[4:15]

HON. MR. PARKER: It was an economic consideration, and that's appropriate.

MR. MILLER: Is the minister reluctant to discuss this question? He has publicly stated that he allowed the resources owned by the people of this province to be exported because of a company's financial health. Surely the minister would want to explain and elucidate on how that policy is administered, because it clearly is not outlined in the Forest Act. I think the minister has an obligation both in this instance to explain how he arrived at his decision and, more generally, to explain to the people of British Columbia how that policy is administered. If it's part of the policy, then the minister should be prepared to explain it. I don't understand his reluctance.

HON. MR. PARKER: I refer the member to Hansard then. Perhaps he would like to check the Blues later today. The matter has been dealt with.

MR. MILLER: The matter has not been dealt with. The minister is strangely reluctant to discuss areas of policy under his ministry. I am deeply disturbed by the minister's reluctance — refusal — to discuss this particular issue and the policy generally. It only lends credence to my belief that this was a political decision reached in the back room. The minister is either prepared to advise the House on the circumstances in this particular case and to outline the policy and how it's administered, or my conclusion obviously is the correct one.

[ Page 8515 ]

HON. MR. PARKER: When the issue came up I was in New Zealand, and the Minister of Advanced Education and Job Training wasn't anywhere near New Zealand. It's tough to backroom anything when you're worlds apart. Where my colleague was when he was contacted by my office, I've no idea. But I do not apologize for protecting jobs in British Columbia.

MR. MILLER: I've never asked the minister to apologize for protecting jobs in British Columbia. Far be it from me. We've certainly lost lots. In fact he should apologize for the ones we have lost.

The minister was in New Zealand. Is the minister saying he was not involved in this particular instance?

HON. MR. PARKER: Perhaps the member opposite has never learned of the telephone.

MR. MILLER: Well, I suppose it's typical that it sometimes takes time to drag the facts and issues out on the floor of this House.

So the minister, who was in New Zealand, was in contact by telephone on this issue. I presume the Minister of Agriculture and Fisheries (Hon. Mr. Savage) must have been the acting minister, because that's who signed the order, not the Minister of Forests. In fact there was a suggestion that the Minister of Forests really wasn't involved. Did they phone you in New Zealand to tell you what they were doing or to ask your advice? just what was the extent of your involvement in this affair?

I go back again to the fundamental question, and I hope the minister is prepared to bring the specific information forward in terms of advice given to him by the Minister of Advanced Education. Generally, what kind of criteria... ? Is it sufficient in these kinds of instances for a company to simply advise the ministry that they're in a bit of economic difficulty? Do they have to hand their books over for some kind of analysis? Just what is the process if we allow economic criteria — the financial well-being of a company — to be used as part of the decision as to whether or not we're going to allow raw log exports?

HON. MR. PARKER: When I travel I make it a prime concern of mine to stay in touch with my office so that they can share day-to-day matters with me, and if my action is required on an item, then they have a means of communicating with me. I think that's a responsible approach.

In one of those telephone conversations the issue came up, and I asked for some background information. In the following conversation the information was provided that time was of the essence, it was extremely critical, Tsolum jobs were at stake, and I considered the jobs and the economics that follows with those jobs. My advice was to ask my colleague who was acting Minister of Forests at the time to process a ministerial order. It's quite simple and straightforward. It's just what I've said in the past, and it's one of those situations that arises from time to time. You have to make a decision, and you only make decisions if you're responsible and accountable, and that's what we are in this government. We are government, we are responsible, we are accountable and we have to act. We can't pontificate or otherwise procrastinate, as we see opposite. Once again, I'll tell you that I do not apologize for protecting British Columbia jobs.

MR. MILLER: I just want to remind the minister that this is an accountability process here in this House.

Perhaps the minister could advise whether Tsolum or any of the companies operated by the principals of Tsolum at the time owed back stumpage to the Crown?

Did the minister hear my question, Mr. Chairman? Do you want me to repeat it?

HON. MR. PARKER: Sure.

MR. MILLER: Could the minister advise whether or not Tsolum or any of the companies operated by the principals who owned Tsolum — one other comes to mind; I think it's called Shushartie — owed the Crown back stumpage at the time this decision was made?

HON. MR. PARKER: I have no idea.

MR. MILLER: I would ask that the minister add that to the information he is going to bring back to this House; that is, the specific information the minister promised to bring to this House in our earlier conversation.

MR. WILLIAMS: Wouldn't you ask, when you're on the telephone, if they'd paid their bills?

MR. MILLER: Yes, I would think that would have been part of the analysis, surely, Mr. Minister.

But I want to keep on this topic in terms of policy. The minister said that we allow companies to apply for export permits, and notwithstanding the sections in the Forest Act that allow companies to apply for export permits, they can make the argument that they are in economic difficulty. I would like the minister to advise the House what the process is for his ministry to arrive at the truth or untruth of that. Do they just have to come in and say: "Look, we're in trouble"? What is the analytical process that you use, or your ministry uses, to determine if that argument is legitimate?

HON. MR. PARKER: Mr. Chairman, we ask for full information from the applicant, which we covenant to keep confidential, as is appropriate in most business dealings.

MR. MILLER: So you simply ask the applicant to give you some information. Is there any attempt on the part of the ministry to examine the books of the company, to determine whether or not they really are in the condition they say they are in?

[ Page 8516 ]

HON. MR. PARKER: That's done from time to time, yes.

MR. MILLER: Is there any analysis of the particular bid in question, to see whether or not the amount of money bid by that company for the cutting licence was realistic or was a contributing factor to the request to export?

HON. MR. PARKER: There was sufficient information to make a judgment call, Mr. Chairman.

MR. MILLER: Mr. Chairman, I asked a very specific question. Is the minister not prepared to answer whether or not that is a consideration — that the ministry looks at that? Surely one could foresee, in terms of policy, a great deal of difficulty, if we found forest companies with a history of overbidding to acquire cutting rights, and then we found those same companies making arguments that they had to have permits to export timber. One would conclude that there were some policy shortcomings. In fact, you would think that under those circumstances the ministry might want to make it perfectly clear that companies that put themselves in that situation would not get a permit to export. I don't understand the minister's reluctance to discuss this.

HON. MR. PARKER: Mr. Chairman, there's sufficient information to make a judgment call. It seems an exception rather than the rule. As I said before, it was my judgment that the employees at Tsolum were best served with the ministerial order, and I so advised my office. I don't apologize for protecting jobs in British Columbia — not ever. The conjecture on the part of the member for Prince Rupert that Tsolum's predicament was caused by bidding their timber supply too high is not a consideration. It's conjecture on his part. The situation was one that warranted quick and decisive action. If it was the rule rather than the exception, I imagine we would be going through a litany of situations. It was a one-time situation that was important to the people who work and live in that part of British Columbia, and I don't ever apologize for serving the people of British Columbia.

MR. MILLER: Well, it's those little exceptions to the rules that bear scrutiny. We sometimes wonder, curiously enough, how they took place and what led to the decision-making. I suppose the reluctance of the minister makes us wonder even more.

The bids on that particular sale were fairly wideranging. Are you saying you're satisfied that the amount bid was reasonable for the timber involved, if that timber were to be sold on the domestic market?

[4:30]

HON. MR. PARKER: The 5,500 cubic metres, plus or minus, that they applied for an export permit on fall far short of the total volume of the sale that the member opposite refers to.

MR. MILLER: Well, I realize it falls short. I never suggested that it was the entire sale at all.

When I look at the bids received for that sale, which had an upset price of $18.36 a cubic metre, I see Tsolum with a bid of $32.11. The next highest was $26.70, and right after that was $24.70. These are people, presumably ... Primex, the company that tried to block the sale, presumably was an experienced operator operating a sawmill in the region.

Again, I go back to my question in terms of that bid. Surely that's a concern that's been raised. I think the minister has even raised it, and he admitted that there could be potential for companies to abuse the export process. There is a delicate balance. We want the best for our timber; we want to sell it for the highest price we can receive. But surely we want to avoid the scenario of companies bidding timber up to the point where they require an export permit to make it pay.

I have been trying to get some assurance from the minister that there was that kind of analysis done. So far he really refuses to engage in any kind of open conversation or dialogue about that. But I want to keep pressing in terms of that question. Was it the minister's view that the bid offered by Tsolum on that particular licence was sufficient, in view of the market conditions, to allow the company to log that area profitably and sell those logs on the domestic market?

HON. MR. PARKER: We have hundreds of such sales in the province, and I don't analyze them. Whether or not their bid was appropriate is the bidder's responsibility. The rate of stumpage is not considered when an application for export is made to the district manager, which is the procedure that takes place. It goes through a number of levels for consideration, but in every consideration, the level of stumpage has nothing to do with the determination of whether or not there should be an export permit awarded.

MR. MILLER: Again, I don't expect the minister to examine every one, but he is talking about an exception to a rule. The rules are laid out. Is the minister suggesting that under those circumstances all factors should not be analyzed by his ministry?

HON. MR. PARKER: Stumpage is not a consideration for economic duress.

MR. MILLER: I'll move on. I may return once the minister brings the information back to the House, and I would hope that it would be reasonably soon. I should say, before we leave this, that I'm not satisfied with the answers at all. Any time we make a decision that is an exception as outlined by the minister, any time we have a contradiction in statements by members of the cabinet, and every time we have the refusal of a minister to be forthcoming with information, it bears even more scrutiny. The question of overbidding has been raised by people in the industry. It's a problem in some areas. It may be a

[ Page 8517 ]

contributing factor to companies seeking relief on the export market, and it is an important policy consideration. I'm disappointed that the minister does not want to discuss it.

Another export issue which I have raised previously in the Legislature is the Wedeene River timber facility in Prince Rupert. It appears to all intents and purposes that a company which received a licence to harvest timber was allowed to sell the bulk of that timber on the export market to finance construction of their processing plant. That's in the initial phase. More recently the company — which had promised to build a mill capable of harvesting the profile of timber in the area — received permission to further export logs in excess of 28 inches in diameter, because their mill is not capable of processing that size of log.

It reinforces the notion that from a policy point of view the ministry has allowed that to take place. We've taken the Crown resources and we've said to a private company: "Look, you can sell these into the lucrative export market in order to raise the capital necessary to construct a processing facility." Again, that's not generally perceived as being a public policy of the ministry. I'd ask the minister to respond to that particular situation.

I have a question asked at the standing committee meeting last week by my colleague from North Island. I'll read the question asked by Mr. Gabelmann at the June 22 committee meeting:

"Is it policy or does it happen that certain Crown timber is allowed for export in order to allow for the construction of a manufacturing facility? I'm talking about mid- and north coast at the present time. In other words, if, for example, a logger wanted to get into processing — which I would think of as being higher utilization of the wood — does the ministry allow for export of a certain volume in order to develop some capital to get into that processing?"

The response from Mr. Ruhl was: "No." Yet it appears that's exactly what did happen in this instance. So I would ask the minister to respond to that.

HON. MR. PARKER: All applications by the Wedeene River sawmill have gone through process to the district manager, the regional manager and the Timber Export Advisory Committee. The process has recommended that export permits be issued in every case. It's a process, which is what the member opposite has been carping on for the last hour or so The process was properly observed and, once again, jobs are created in British Columbia. I don't know how he has difficulty with that.

MR. MILLER: When the original licence was granted in this case, there was a requirement to build a mill. I have reviewed my files, and the commitment made at that time was for a mill to harvest the profile of the timber. That was not done. We could argue very convincingly that the company did not carry out what they said they intended to originally. It's clear — whether it went through the process of TEAC or not — that in this instance that's exactly what happened. The rules have been bent, and we have allowed a private company... I should say, as I've said before in the House, that I bear no brief, grudge or anything else with this company. This Is a forum for discussing public policy. I talked to the company following the last time I raised questions in this House with the minister, and I'll continue to talk to the company.

Interjection.

MR. MILLER: Yes, the principals. We may have our differences sometimes. The fact that they supported my opponent in the last election has nothing to do with this. It's not politics, it's public policy. Maybe, as the member for Omineca (Mr. Kempf) has said, there's been a little too much politics in forestry in this province. Maybe that's why we're in some of these dilemmas.

I want to get back to the issue, because I think It's important in terms of public policy. We are allowing the resources of the province to be used by a private company to finance their own infrastructure. I can't think of a parallel anywhere else, in terms of resources, where we allow that kind of activity. There are mechanisms available to government, and they've been used by both the current government and others to assist industry. We feel it's important. We can offer all kinds of subsidies and we can fight about them, as we've fought about the generous subsidy offered to Louisiana-Pacific, where the taxpayers of this province are offering a $25 million interest-free loan to a major forest company to construct a mill. We know from our debates the other night what that cost the taxpayers of this province $7 million. We took It out of the pockets of every taxpayer and gave it to a private company, presumably because the government of the day — there's lots of discussion on that score, and I'll try to stay off it — or somebody of the day decided they wanted that built up there, that It was important. So we shelled out of the public purse.

I can't think of a parallel where we say to any private company: "Look, help yourself to our resources. Sell them. Sell them offshore — you don't have to process them — so that you can acquire the capital to build a plant, presumably to enrich yourself.- I don't have an argument with government saying it's important to have processing In regions where there's none or with government offering incentives to industry to locate. Clearly, the area where the sawmill is built in Prince Rupert was a creation of the previous New Democratic Party administration. That industrial estate has benefited the area significantly since it was put in place during our term of office. Nonetheless, it's a form of subsidy. It's using tax dollars to create the conditions where industry can locate, but nowhere do we use this process to allow private companies access to our resources.

Again, why was this allowed to happen in this particular instance? Why did the minister compound the issue by allowing the further export of in excess of 60,000 cubic metres of our resources?

[4:45]

[ Page 8518 ]

HON. MR. PARKER: The sawmill that the member for Prince Rupert is talking about is in an industrial park in Prince Rupert on a site that the operator had to create. He dealt with B.C. Development Corporation. The means to be able to deal with B.C. Development Corporation weren't created by the opposition when they were government — not at all. The site was created by the sawmill. They literally had to blast rock, fill muskeg and prepare a site. Not only that, but part of the deal was that he had to prepare additional sites for other businesses which B.C. Development Corporation dealt with. That saw miller created a substantial part of the usable sites in that Industrial park as part of his contractual obligation with B.C. Development Corporation to get a site to erect a sawmill. It's something that a lot of people in this House don't realize, and I am really surprised that the member for Prince Rupert, who has lived in the area for years and years, doesn't understand just how expensive it is to create a piece of flat ground on Kains Island. Kains Island is where Prince Rupert is located, Mr. Chairman, and that's where the member lives. He just doesn't seem to capish.

That small business operator — which is what that family is — created the site and made it possible to erect a sawmill on the site and create jobs. They did it by selling logs; some were exported, some were sold down south and some, I guess, were sold locally. But they sold them out and around, and some of them did go offshore. They used that cash flow along with their credit at the bank to get the funds necessary to create a sawmill and meet their obligations. That's not bad for small business. It's good to be able to create that kind of climate for small business.

Now the situation arises that in most wood-using Industries you have a component — it might be a species or a particular size of log — that you can't handle, and maybe you can sell it, trade it or exchange it with other operators. That has been possible up until lately. Apparently the domestic prices are below cost for those items that the mill cannot process right now, and those are oversized butts. They use the rest of the tree, but the oversized butts are a problem.

Following process, the licensee made application to the district manager and on through the regional manager and ultimately through TEAC for an export permit. That was recommended by all those people concerned: district manager staff, regional manager staff and the TEAC members. They have a short-term export permit. While that takes place, they carry on to modify their mill in such a manner that they can handle a greater percentage of the profile.

It is very difficult to have enough people and equipment to handle every eventuality that comes across the log deck. That flexibility, created by policies this government has put in place, makes it possible for small business operators like the Williams family to be meaningful employers — yes, even in Prince Rupert — regardless of the negative attitude of the member for Prince Rupert. He should always bear in mind that there's nothing like private initiative, and the private initiative demonstrated in Prince Rupert by that family is very meaningful for the north coast. It means that we have a local market for logs, and it becomes increasingly difficult for anybody to create a situation where there is a surplus or non-surplus in their application for log export.

We have a developing local market and burgeoning jobs — very Important for the northwest portion of the province where I live. That kind of diversification is invaluable.

MR. MILLER: I wonder if the minister could advise why there wasn't more assistance offered to this small struggling company to deal with the question of infrastructure in their physical plant. Why wasn't more assistance offered, in view of the fact that the government was quite generous with a major forest company from the United States? Why didn't you offer more assistance to this struggling company?

HON. MR. PARKER: I am not the MLA for the area. I don't know whether they made any requests for other assistance, but what they did request through this ministry was followed by policy, legislation and regulation. It was all dealt with in due process, and they have the export permit. Whether or not they asked for any other sort of support, I have no idea. Most operators would do that through their MLA, if they felt it could be accomplished.

MR. MILLER: What did they request from your ministry?

HON. MR. PARKER: They made application to the district manager for an export permit.

MR. MILLER: They made application for an export permit to the ministry. On what grounds, Mr. Minister?

HON. MR. PARKER: Mr. Chairman, the member opposite must figure I pack all of these issues around in my wallet. If he'd like to know the specific details of the export permit application, we'll be happy to share them with him. We'll find it, and we'll share it with him.

MR. MILLER: I'm continually dismayed at the minister's inability to recall these details. But I'm sure he will get better with time, Mr. Chairman — if he has the opportunity.

I would like to briefly canvass the export issue from the free trade or GATT perspective. There certainly are a lot of concerns. There was a tremendous debate in this country in the last federal election over the free trade issue and, further, in British Columbia over the GATT and free trade issue in terms of the export of unprocessed fish. Just piecing together the various statements that have been made — the minister's statements and others — it would appear that despite the reassurances most British Columbians were operating under that our ability to control the flow of log exports was unrestricted, it

[ Page 8519 ]

now appears that is not the case. I would like the minister to advise us of any advice he has received on that issue.

HON. MR. PARKER: Mr. Chairman, you and other Members of the Legislative Assembly are aware that that is part of the issue that was placed before the Select Standing Committee on Forests and Lands. It seems to me that time and the people would be better served if we let that standing committee do Its task and got on with the business at hand.

MR. MILLER: Well, we will do our job, I hope. I don't see why that would inhibit the minister from answering. He talked about advice he received. I don't know what his reluctance is to share that. Are we operating under a constraint, now that we have the free trade agreement in place, that would prevent us from — let's say in theory — putting a total ban on log exports from the province? It's a simple question.

HON. MR. PARKER: I'm sure the member opposite, as well as other Members of the Legislative Assembly, understands that international trade is a federal issue and has to be dealt with in that arena It's not within the jurisdiction of this House.

MR. MILLER: I take it from that answer that the minister doesn't know.

I just repeat: the silence was deafening on that one. Again, I can only assume that the minister does not know. That is indeed unfortunate. You would think that the Minister of Forests of British Columbia would be prepared to take the time to enlighten himself on all policies that affect the timber resources of this province. Indeed, it's a real shame, Mr. Chairman, that the minister has not done that.

Again dealing with a particular region, the Kalum TSA, and the blanket export that exists there, I wonder if the minister could advise whether or not — we're exporting something in the order of in excess of half a million cubic metres annually — there has been any progress in terms of trying to change that situation so that we process more of that timber in the region.

HON. MR. PARKER: Mr. Chairman, the licences the member refers to in the North Kalum timber supply area were awarded in 1985, 1 think. Along with them went a five-year standing-green export permit. The saw log out-turn in those licences, if I remember the ministry statistics, was something in the order of 10 percent. The bulk of the out-turn is pulp material, and a substantial amount of that has been exported, of course, but just across the line into Alaska.

It's a situation, as I recall, that evolved from a determination by the previous administration to take the extremely decadent — when I say extremely decadent, it's in excess of 60 percent decay — forest stands in that area, basically eradicate the rotten timber and replace it with a new forest. In 1985, long before our milestone legislation emanating out of our announcement in September 1987, those licences required the licensees to bear the full costs of forest renewal. That's the obligation there. Those licences are actually to clear what some people call a silvicultural slum and establish a vigorous young forest.

[Mr. Pelton in the chair.]

MR. MILLER: I understand that section of the Forest Act. I have a hunch sometimes that it's used almost in a convenient way. Is there no quality timber in that region that we could manufacture products out of? The term decadent is used, and I wonder if it's not simply used a little too easily or too much in descriptions of that region. Surely there must be good-quality fibre or wood in that region. I have talked to people from there who have told me that that is the case, that it's not a simply defined question of decadent forest. One gets the picture of a forest that's barely able to stand up. Has the minister had an opportunity to travel in the region, to look at that, to get reports on the quality? Surely we can extract greater value from that resource than we are currently doing.

[5:00]

HON. MR. PARKER: The area supports a number of different stands of pine and spruce. The spruce has pretty well been devastated by bark beetle, and most of it is now to the point where it's not salvageable. That's the interior strain of spruce. The area involved is a transition zone. Move off the coastal species where Sitka spruce exists, into the interior spruce and the higher-elevation Engelmann spruce, and you get some hybridization. A lot of the hybrids have also been eliminated by the spruce bark beetle.

There is some lodge pole pine. Some of it has been hit by mountain pine beetle. Trees are hit by insect infestations when their vigour Is low. It generally happens in a later stage of maturity.

The bulk of the timber type in the area is hemlock and balsam. Most of the balsam is interior balsam which is highly decadent, and the hemlock is highly decadent. The nature of the stands are such that there are pockets of more saw material and much more decadent material; some of it is sawable. As I said earlier, it seems to me that in the statistics from our ministry, something like 10 percent of what has been harvested in there is sawable timber.

From those licences with standing-green permits, for the most part the logs have been sold offshore, and that's an undertaking by a previous administration. When the licences were sold, it was understood by all who tendered that there would be a five-year standing-green permit that would permit the operator to export his logs, take the cash flow from that export and carry on the business. A lot of the pulp material is sold domestically. Some of the sawlog material is sold domestically, but the greater percentage of the sawlog material is exported, and a quantity of the pulp material is exported. The cash flow serves to sustain the business. It has carried the small community of Stewart in very difficult times. They

[ Page 8520 ]

have, together with some mining activity now, a little more diversified economic base, and that's extremely important to the people who live in the Stewart area. It has also achieved the previous administration's objective of forest renewal. I think it has served Its purpose very well, and the standing-green permit will expire.... Well, It's a five-year Item, so it will probably be in the fall of next year, I think.

MR. MILLER: I hope we could move to more processing in the area. I would note that power is going into Stewart. I've talked to people, for example, in the Skeena mill in Terrace who are concerned about the impending closure of the West Fraser mill. They feel quite strongly — and these are people who have been in the industry for years — about the question of utilization; that there is not tight utilization. I intend to deal with that in a more detailed way in a different section. But with better utilization in terms of the issue of chips or logs that could be sawed into lumber going into pulp mills....

I want to conclude the question of exports on the issue of price. It does appear to me, from all of the discussions I've had with loggers in British Columbia, that the fundamental problem they face is the price they receive for the product they cut. The attractiveness of the export market versus the domestic market is simply incomparable. The minister has moved to deal with that, at least in terms of sawlogs on the south coast, but we still have a very large section of this province where that regulation doesn't exist. I have no reason to disbelieve these market loggers; I'm not in a position to do any kind of fundamental economic analysis, but I have no reason to disbelieve them. I asked the minister the other day whether or not he would consider steps to deal with the issue of price in British Columbia. I wonder if he would care to comment on that — I believe my colleague from Omineca wants to pursue some more issues — otherwise we can leave it until I arrive at it in my carefully-put-together schedule of topics for discussion in this debate.

MR. KEMPF: You know, I sat here patiently listening to.... I don't think I could call it debate; I could call it the questioning and non-answering that's gone on across this floor for the last few minutes. I really wonder, and I wonder as well when I hear the response the minister gave to me with respect to my questions. He said,"This government has a real commitment," and that he has a real commitment The question I have to ask Is: if the government and the minister have such a commitment to the small operators of this province, why haven't you lived up to it? Why are you allowing dozens of small operators throughout this province, particularly in the north-central area that I come from, to go down the tube? Why are you pricing them from the market?

I asked earlier why the Ministry of Forests is pricing these people from the market with its upset stumpage rates of anything upwards of $21 a cubic metre. Why is it that those small business people are being asked to pay through the nose and are subsequently going belly-up because of it. Why is it, if the government has such a commitment to the forest industry of this province, that it doesn't have that same commitment to the small loggers and small sawmillers? You've virtually eliminated category 2. There's virtually no category 2 anymore, and I say that that was done purposely as well, to make sure that all of that wood out there is made available to the government's friends in big industry, to make sure through surrogate bidding that they can get it all, that these small operators would fall by the wayside and that the big forest companies would get not 85 percent of the annual allowable cut but 100 percent of the annual allowable cut. In fact, they're getting about 125 percent or 130 percent of it right now, and we'll pay for that down the road when we no longer have the resource in many areas of this province and we see small resource-based communities turn into ghost towns.

I want to pursue a matter. The minister said earlier that because of policy changes in the fall of 1987, forest companies now pay for reforestation and silviculture practices. Really, I guess, he was talking about the removal of section 88 that got so much debate in this province and in this House. I want to ask the minister: since that new policy was brought in, what credits were given forest companies through the appraisal system for silviculture, for reforestation and even, in some cases, for road building? What credits were given those companies to really take the place of section 88 credits?

I ask the minister whether he doesn't think that that's just another way — having made a big thing of doing away with section 88 — of paying the forest companies through the back door, so to speak, for such things as silviculture, reforestation and road building. In the mind of the minister, are those credits really not the taxpayer paying, as they did before October 1987, for reforestation and silviculture in the province of British Columbia? Nothing has changed, as I see it. But perhaps the minister can tell me how it's changed.

HON. MR. PARKER: I'm no evaluation specialist, but the essence of the comparative value pricing system is that, first off, there's a revenue target established by government. That's been done. That revenue will be received. Then it's apportioned pro rata throughout the province. Average costs of operation are determined, and the spread by the different operators around those averages determines whether they pay more or less than the average so that we achieve the target. That's the essence of the comparative value pricing system.

The member from Omineca says we're paying the licensees through the back door through cost analysis in the stumpage system, paying them through the back door for roads and bridges and forest renewal. What you do in evaluation for timber is consider operating costs, which includes operations of the entire business. If that's the case, I guess we're paying for the dental plans of the employees, the wages of the employees, the vehicles that the employees use,

[ Page 8521 ]

all of the physical plant, all the operation of the physical plant — use that kind of analogy and it's being paid for through the back door. That member should — anybody should — understand the business of a going concern and the fact that all the costs together with all the revenues determine whether or not you stay in business.

[5:15]

The means for determining stumpage is a reasonable and modern method of determining stumpage. He is concerned about why the stumpage is so high and why we are beating on the small operators. Upset stumpage is determined exactly the same way whether it's for a small business timber sale or a tree-farm licence cutting permit. The difference is that the small business sales are put up for auction through a sealed-tender process. Virtually all such licences offered are competitively bid on. So the final stumpage is one that has been bid in competition. That's the nature of that segment of the industry.

The member says we're cutting 125 percent of the cut, and we're going to pay for it. Well, he's wrong. We're cutting on the numbers that are sustainable for this province under current economic conditions and operational technology. We're on the numbers, and it's done in a responsible manner by people who know what they're talking about. These kinds of shots by the member for Omineca don't serve any useful purpose; they just serve to destroy his credibility — what's left of it — with the public.

MR. KEMPF: Mr. Chairman, I'll worry about my credibility in the eyes of the public, and I would suggest that the minister worry about his.

Is it not fair to say, given what the minister has just said, that the industry, since October 1987, pays for reforestation and silviculture? They're being credited on the appraisal system for that work done, which they were paid for through section 88 prior to that date. So is it not fair to say that there's no change — that the taxpayer is still picking up the tab? Whether the money is given through section 88 credits or whether it's credited through the appraisal system, it still comes out of the taxpayer's pocket. Is there any change? What change has there been since October 1987? It was done one way before that; it's done another way now. But the companies are still getting a credit. Because they're deducting it from their stumpage now, rather than getting it back from government in cash or as a credit against their stumpage, what difference is there? What validity is there to the claim that industry is now paying its share of reforestation and silviculture in British Columbia? I'm just a dumb old logger, and the minister says I don't understand. Well, perhaps the minister could enlighten me. What difference is there between today and before October 1987, when the credits were given in section 88? What difference is there, Mr. Minister?

While you're thinking about how to answer that question, could you please tell me what the voted appropriation fund is and how many dollars have been paid out of it in the last fiscal year?

HON. MR. PARKER: Mr. Chairman, the stumpage system is based on a target established by government, so that revenue will come to government. That target is in the neighbourhood of $580 million, and it's more than double what it was previously under the modified Rothery system. Industry will pay $580 million to government. Who pays a little bit and who pays a lot depends on the operating circumstances for that particular cutting permit. You take into account the timber makeup, the logging chance, the distance and so on — all the factors, including forest renewal. All the costs of doing business are compared against an average figure for that particular region. Some of the licensees pay more; some of the licensees pay less. The sum total is that the whole industry pays the whole target amount, and that is the essence of the system.

MR. KEMPF: I think it's the minister who doesn't understand, and not the member for Omineca. He seems to suggest that the forest companies are reaching into their own pockets to pay for such things as reforestation and silviculture, which isn't true. If that money weren't credited to them on the stumpage appraisal system.... I understand the stumpage appraisal system very well, because I was dealing with it before you were, when I was in industry. I didn't get this grey hair on my head for not being around for a while. I understand it quite explicitly.

How can the minister go around the province and say the forest companies are paying for their own reforestation and silviculture when it's not true? There's nothing different between what's happening now and what was happening before October 1987. It's just being taken out of a different pocket, that's all. If the minister is taking credit for the extra dollars that are coming into the provincial coffers from the forest industry — and I hear him saying that.... It was the Americans who finally got a fair return — it's fair in certain areas of the province — for the people of B.C. from their resource. It was the Americans who forced us into that situation. It certainly wasn't any politician in British Columbia. It certainly wasn't the Council of Forest Industries coming hat in hand and saying: "We don't think we're paying enough to the people of British Columbia for their resources, so we're going to pay more." You bet it wasn't. In fact, they fought tooth and nail so that they wouldn't even have to pay the 15 percent.

But that's not the point. The point I'm making is that forest companies aren't paying for their own silviculture and reforestation. The people of B.C. are paying for it, the same as they were when the forest companies were being credited through section 88. There's no difference at all. So for that minister to go around the province making a great thing of "Now the forest companies are paying their way" just isn't true at all.

I want to comment as well on a comment the minister made with respect to the auction system — the closed bid system — being fair to the small operators in B.C.'s forest industry. If it's such a fair system, such a good system, why don't we use it to

[ Page 8522 ]

sell all our timber? Why don't we use that auction system to find out where the price of timber really is in British Columbia? If it's so great for the small operators, why wouldn't it be great for the multinationals? If it's so fair and they're all paying the same, why don't we go to the bid system for everybody, and really see what a log is worth in British Columbia? No, we just do it for that small group of people whom we squeeze ever tighter and tighter in the vise, whom under the guise of new policy we make it tougher for; not easier but tougher, Mr. Minister, to the point where they're dropping like flies; people that have been in the industry all their lives; whole families that have been self-sustaining because they could — they can't now — get just a little bit, some of them asking for only 5,000 cubic metres a year or 10,000 cubic metres a year to keep them and their families and maybe two or three employees with bread and butter on the table.

You don't even realize that, do you, Mr. Minister? You are doing away with that. You don't understand that. You've got a big-company mentality; you can't seem to get down there with the little guy and really understand what his problems are. That's what comes from coming up through the ranks, Mr. Chairman, and working simply for large companies, with the large company mind-set. You can't get your mind around the little guy and his problems. It's fair that the little guy should pay $17 and $18 and $21 a cubic metre when the multinational pays $4 to $6 a cubic metre — and the differences in between make up for that. Well, I don't think so at all, given the fact that credits are written off against their appraisals for literally everything.

HON. MR. PARKER: Like wages?

[5:30]

MR. KEMPF: If they put in a 36-inch culvert or larger, they get a credit on their appraisal system.

Let's just talk about the wages for the little guy. What's he going to do for wages when he's squeezed out of his own resource? That's the small-mindedness of the present administration. You can't get their minds around the problems of real people. They get so used to sitting down here in their ivory towers, they think that's all there is.

HON. MR. RICHMOND: Knock it off, Jack.

MR. KEMPF: The government House Leader complains. I've come from there, Mr. Member, and I'm proud of it. I'm proud to stand in this House and speak for those people.

HON. MR. RICHMOND: You're not the only one.

MR. KEMPF: Then get up and say something. I guess I've hit a nerve. That's not hard because there's lots of it over there.

What about those little people? I could name family after family in my area that have gone or are going out of business because they can't get 5,000 cubic metres of wood — in a province that's cutting 90 million cubic metres a year — to keep their little three- or four-man sawmill operating. It's not right. The government House Leader might grumble, but it's about time somebody listened to the plight of the ordinary individual in British Columbia.

It's not just in the forest industry. It's almost everywhere you can name.

HON. MR. RICHMOND: Sure, name names.

MR. KEMPF: We won't have to name names come the next election. Those people — the electorate out there — will name names.

HON. MR. RICHMOND: I'll tell you where you'll be after the next election.

MR. KEMPF: Well, perhaps that's so. I know that's not acceptable to the government House Leader, because they have a kind of disdain for the democratic process. If I'm voted out, that's democracy. That's the will of the people. In the meantime, Mr. Government House Leader, I'll stand in this House and speak for the people that sent me here.

HON. MR. RICHMOND: And you're the only one?

MR. KEMPF: Perhaps that's right. Perhaps you're absolutely right on. It's about time somebody else in this House had guts enough to do it, particularly on the government benches. We don't have to fight the next election here. It will be fought in the right jurisdiction; you bet it will.

In the meantime, a whole way of life is going down the tube in the forest industry of British Columbia, because everything is being given to the multinational corporations. The multinational corporations need to continue as they have done for five decades in British Columbia, and that's to fill their pockets and leave.

Do you think after 20 years, when all the good timber and all the saw log material is gone, they're going to be here operating their sawmills? You can bet not. And who's going to be left to clean up the mess? That minister will be gone; he couldn't care less. He's going to be gone after the next election, particularly with the Fisher report. There's no doubt about that in my mind. With or without it, he's going to be gone. There's no doubt about that whatsoever, unless he intends to run somewhere other than Skeena.

[Mrs. Gran in the chair.]

But a whole way of life is going to be lost because of the inaction of this minister and this government, and it's totally unacceptable.

I want to touch for a moment on woodlots. The minister made a big announcement recently that the number of woodlots is going to be doubled in the province. Great! Finally something is going to be done with respect to the intolerable system we had

[ Page 8523 ]

respecting woodlots. The legislation was brought in in 1977, and virtually nothing has happened since with respect to woodlots.

The question I have with respect to woodlots is that this doubling of the woodlot volume.... Where is that annual allowable cut going to come from? Is that coming out of the small business program? Is it part of the small business program? It will increase by probably more than one whole percentage point. So where's the cut going to come from? Surely it isn't going to come from tree-farm licences; surely it isn't going to come from existing forest licences held by large corporations. Perhaps it's going to come out of watersheds, like we saw on television last night of the situation near Ladysmith. Is it going to come from that so-called extra put into the small business enterprise program that isn't happening but is said to happen? Where's it going to come from, Mr. Minister?

HON. MR. PARKER: The question of the member for Omineca began on stumpage issues. He's telling us that the people of British Columbia are paying the forest renewal bill for the industrial users of the forest resource, the ones he likes to call multinationals. There are a number of multinationals, but there are a number of small and intermediate businesses that are locally owned.

Anyway, the stumpage system sets a target, as I said earlier. Out of that we determine an average for the operating circumstances in a region, and we measure for each of the cutting permits the disbursal about that average based on cost of operation. It's the total cost of operation, all the costs: the capital amortization of physical plant, the cost of operation, which includes wages and also the cost of forest renewal. That's all measured. Those who have good stands and easy conditions pay more; those with poorer stands and poorer conditions pay less. The point is that the province realizes the target amount.

Back in the good old days when he was minister, there was a Rothery system that turned in less than half of what our current system does, and there was a section 88 system that paid for, out of that, less than half — paid for forest renewal. So the net to the people of British Columbia was substantially less than half the level that we have now.

Now we get the stumpage, and the licensee still has to go out and pay the people to put the trees in the ground; pay the people to grow the trees; pay the people to do the site preparation and all the subsequent works that are done to bring the crop to free-to-grow state. That's additional cost.

The total impact is close to $800 million when this is all said and done, so the member opposite is not telling the people of British Columbia the whole picture, nor does he really understand what the whole picture is. It's pathetic, but he should be able to. I am going to send him another copy of the public document that we have on the comparative value pricing system and give him a chance to look at it again. It's written quite straightforwardly.

Just to touch on woodlots briefly. If the member cares to go through the Blues a little later, I said in my opening remarks that the woodlot program was integral to the small business program and that the wood supply for the woodlot program is part of the small business program. The small business program exists to the extent it does because we took back 5 percent from all the major operators, all the TFL9 and all the multinationals that he talks about. We took it back and are putting it out through this small business program and through the woodlot program.

He also talks about British Columbia having an annual allowable cut of 90 million cubic metres a year. Well, he's wrong. For the managed lands in British Columbia the annual allowable cut is 72. From private lands you can pick up whatever. Those are unmanaged lands, usually one-time cut, usually used for something else afterwards, perhaps industrial development or housing development or farms or even urban spread. That could, on a one-time, raise the cut to maybe 90 million, but that isn't the AAC — the allowable annual cut — of the province. By definition, allowable annual cut is a managed cut. The managed cut of the province is 72 million cubic metres.

We have expanded the small business enterprise program; we have more than doubled it. We have made opportunities available' particularly in his area where he lives or where he used to live. The Lakes timber supply area covers a good part of the southern part of the Omineca constituency. Close to 30 percent of the allowable cut in that TSA is in the small business program. The small business program consists of a series of licences that are competitively bid. We offer them in a sealed-tender mode. The reason we do that is so an operator who is interested in a sale can go out and take a look at it, assess what he thinks he can afford to pay for it, put it down in a tender and offer.

In the past, the oral auction system, in the heat of an auction, often got people into trouble, and they were frequently to our ministry and to my office asking for relief. With a sealed-tender approach, I have no more of those kinds of appeals. Every one of these sales is competitively bid, and everybody gives it their best shot. It means they have to get out and really take a look.

It gets rid of a lot of the speculators. We had a lot of speculators in the small business program prior to that policy, people who just on a whim figured: "Well, I'll go bid it. I can make a case for qualification as a small business bidder. If I get it, fine; I'll go on. If I don't, that's all right too." That doesn't serve very well those who are committed to that lifestyle and those who have served the people of British Columbia in the small business category. That's why we went to a sealed tender.

All sizes of sales are offered, but there are no guarantees to any family or individual that forever after he shall have 5,000 cubic meters regardless. If he has a replaceable licence, that's do-able. But in the small business program, each sale has to be bid competitively. We changed the regulations so that a licensee can hold as many as three such timber sale licences at one time. So with some management

[ Page 8524 ]

foresight and some fortitude in many cases, I guess, they can keep wood year after year. It is a competitive process, and that Is the process offered in the small business program.

[5:45]

Now on the larger issue of whether or not we should retract all replaceable licences and go to a full competitive bid on all timber in the province, I think that would be substantially upsetting, if you will pardon the understatement. It would create absolute chaos in the industry of this province as it has evolved over the years. We can't help what has gone on in the past, but we can manage what we have for now and the future. We've done that by changing the pricing system and by making the industry responsible for forest renewal. They have undertaken that challenge. They are proceeding along those lines. We have seen an evolution of the industry in the province, where we have gone literally from wooden spars and pit saws to highly sophisticated paper manufacturers.

As we progress, I'm sure we'll find what they found in Europe, because most of those wood-producing countries are on about their fifth rotation of timber. They've been at it for several hundreds of years, ahead of us by a century and a half. What has evolved over there is a substantial reconstituted fibre industry: fine papers, newsprint, writing papers, magazine papers, medium-density fibreboard, oriented strand board. It is also a veneer and plywood industry, a sawmill industry and a joinery industry, and that's what we will see happen here. We've been very much a commodity industry, and we're coming along to a greater value-added industry. It might interest you to know that the same number of people are employed for a cubic metre of wood passed through a pulp and paper plant as through a solid wood or lumber commodity plant.

The evolution to pulp and paper is one which continues to support our employment base. More importantly, it adds value and contributes substantially to the gross provincial product.

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

Leave granted.

MR. JONES: As a former teacher, I'm used to being on holidays in mid-July, yet I look up and notice in the gallery Lloyd Esralson, a mathematics teacher at Burnaby North Secondary School. Would the House please make him welcome.

MR. KEMPF: The last thing I needed from the minister was a lesson in how the forest industry works, I've served my apprenticeship for 20 years, and I certainly don't need a lesson from that minister The minister is right: there are no guarantees for the little guy in the forest industry of this province. The only guarantees there are for the large forest companies who don't have to go to auction, and who don't have to put their life on the line to get a few scraps of timber, as does the small operator.

Again the minister takes credit for doubling the amount of stumpage that comes from the industry today compared to two years ago. Again I say for the record: that's not because of anything that was developed in British Columbia. That is simply because it was forced upon us — and perhaps there are some good American friends in the audience — by the Americans and their 15 percent tariff, because they can see the giveaways in the forest industry of British Columbia. For the interest of those Americans in the gallery this afternoon, all those giveaways have not disappeared — not by any stretch of the imagination.

I think that's indicative of the situation found by the auditor-general when talking about stumpages collected. There are so many loopholes around it looks like Swiss cheese. The minister takes credit for doubling that revenue to the province of British Columbia. He speaks so highly of the competitive process and says if he went to that sort of process for selling all of the timber in British Columbia, it would be upsetting. You bet it would be upsetting. It would be upsetting to the Norandas, the Fletcher Challenges and the other multinationals operating in this province. It would be upsetting to the Council of Forest Industries to finally have to pay their fair share into the coffers of the province. You bet it'd be upsetting. What I am trying to point out to that minister is that it's a little upsetting to the ordinary British Columbian out there who is losing his or her livelihood because of the policies — or the non-policies — of this minister and this administration. However you cut it, however flowery you put it, you simply can't get around that. That is a fact.

The minister talked about value-added. Let's talk about value-added in our forest industry in British Columbia and let's look at some facts. The average in 1985 — and it hasn't changed a whole lot; I know it hasn't — for Canada, with a value-added of $24 billion, was $147.44 per cubic metre. In the same year, the figure for British Columbia, with a value-added of $6.6 billion, was only $81.99 per cubic metre. So I wouldn't be so proud of that if I was the minister.

HON. MR. PARKER: I wasn't the minister in '85. Were you?

MR. KEMPF: No, I wasn't the minister in '85. But you're the minister now. What are you going to do for those small contractors out there who are falling by the wayside, who can't get timber because they're priced off the market or they're bid off the market by surrogate bidding? You're the minister now. Or have you realized that? You'd better do it soon because you won't be for long; I know that for sure.

The minister takes lightly the plight of the small operator. I wish he'd take seriously that plight and take a little more lightly that which we are handing on a silver platter to the big boys in the forest industry of British Columbia, because twenty years down the road our old growth timber will be gone.

[ Page 8525 ]

That return which we should be seeing and should have been seeing for the last five decades to the coffers of British Columbia will be gone with it.

Does the minister think that the price paid the Crown for pulp material is fair? Does the minister think, given what the Crown charges or asks for pulp material, and given the price of pulp on the world market today, that's a fair return to the people of British Columbia?

I don't see him raising the price of that along with bringing in a so-called policy of 100 percent utilization. I didn't see any mention of that at all. And who's really going to pay for that 100 percent utilization? Are the forest companies going to pay the contractors for removing that wood from the woods? They haven't in the past.

We had a classic example in Hazelton — a classic example where Westar made their contractors log half the winter and decked the wood on the landing, and then the company came crying to the government saying they couldn't pay the stumpage rate and the timber was given to them for nothing. What was paid the contractor for that wood? Nothing. Absolutely nothing.

This minister makes fun of the plight of ordinary British Columbians. It's a sad state of affairs. It is a sorry state of affairs, and it's one which that administration will surely pay dearly for politically.

HON. MR. PARKER: We have listened to a lot of rambling. I never make fun of ordinary British Columbians because I am an ordinary British Columbian, if 30 years residence makes you a British Columbian. Fortunately I married into the province, so I think my citizenship's okay. Anybody who makes fun of British Columbians does so at their own peril, and I have to tell you, I certainly wouldn't do that.

What British Columbians have accomplished is amazing. We have one of the most diverse climates, one of the most diverse soil regimes, one of the most diverse pieces of terrain in the world, and we've turned it into one of the most desirable places in the world to live. The in-migration serves to substantiate that claim.

The member opposite talked about prices for pulp material. In the comparative-value pricing system, the material is priced according to target and priced according to where that cutting permit fits around the average for the region. If an operator takes a high-priced item and runs it into his pulp mill, he has to make the business decision of whether it's the best end use for that particular raw material. To encourage utilization of the material and residue that has been left on the forest floor to date, we have a salvage price for true pulp material — not sawable pulp — and I would expect that the licensee would pay the contractor to remove that material. That's where the licensee employs contractors, and I would expect that he would pay his employees where his employees remove the material.

At any rate, if it's not removed, we will be checking, and where waste occurs, we'll make sure that full assessment takes place and the licensee is billed and his cut charged.

I'd like to move that the committee rise, report progress and ask leave to sit again.

The House resumed; Mr. Speaker in the chair,

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

[6:00]

HON. MR. RICHMOND: Mr. Speaker, I call committee on Bill 19.

MUNICIPAL AMENDMENT ACT, 1989

The House in committee on Bill 19; Mrs. Gran in the chair.

Sections 1 and 2 approved.

Section 3 negatived.

Sections 4 to 13 inclusive approved.

On section 14.

HON. MRS. JOHNSTON: I move the amendments standing in my name on the order paper.(See appendix.]

Amendments approved.

On section 14 as amended.

MR. BLENCOE: I'm sure the minister is aware that the transition period is going to be quite difficult. I wonder if the minister can just outline the process that is going to be put in place for the transition to this legislation from the old legislation. What sort of things will be happening?

HON. MRS. JOHNSTON: We will be holding workshops next week with the staff and the chairman of each of the regional districts. This has already been arranged, and we have a series of information pieces that will be available to staff and chairmen to fully explain how they can carry through the transition. The workshop, I believe, is one of the most important; it will be held next week Of course, we have five years for the conversion of letters patent into bylaws, so they will have considerable input from the ministry.

MR. BLENCOE: I will give the minister an example of where I see some problems — I suspect it's going to be raised. The transition is going to probably be a bit of a headache, and I commend you for trying to take it on.

For instance, under new functions, what happens if the regional district doesn't want to take on that new function? What if they say no?

[ Page 8526 ]

HON. MRS. JOHNSTON: The functions are optional. A menu will be spelled out in the initial stage which will provide for the functions that, generally speaking, are being carried out now by most regional districts. If a regional district chooses not to become involved in any of the functions, they have no obligation to do so.

MR. BLENCOE: I am not sure if this is the section in which to raise the next issue; this is such a complex piece of legislation. If I am in the wrong category or section, the minister or her staff can correct me and tell me where I should be addressing this.

The whole question of grants-in-aid has come to my attention. Under the new legislation, some regional districts, some regional areas, may right now — or will — take a cut in grants-in-aid. One example somewhere in here: 2 cents per thousand is being mentioned. Some regional areas get grants in aid of 4.5 cents, for instance. How does the minister anticipate she will be able to resolve that particular issue?

Finances are often the area of concern for local government, and I am sure you are going to hear about this. July 18, 1 think, you are having your meeting. How are you going to resolve where there's going to be a cut? I don't know if I am in the right section, Madam Chairman; maybe the minister can tell me.

HON. MRS. JOHNSTON: I am having to get this clarified myself, but the bottom line is that the staff are not expecting to have any noticeable change. The 2 cents now, according to staff, is the equivalent of 10 cents calculated prior to the variable tax rate, so they are suggesting that there will be no effective change in the amount.

MR. BLENCOE: That's interesting, because it has been reported to me — and maybe again this is part of the transition and part of the meeting that I am sure will happen next week, which I hope to attend; I'm not sure I will — that there could very well be some cuts in grants in aid. I am not sure — I wish I could ask your staff — but has that not come to the attention of the ministry staff? An example has been given to me of 2 cents per thousand, and some are currently receiving 4.5 cents per thousand. Am I off on a tangent here?

HON. MRS. JOHNSTON: I have just had a further explanation that there are some areas that have grants-in-aid functions in addition to the 2 cents, and these will stay, so they will be grandfathered.

MR. BLENCOE: Section 782 lays out that a bylaw under subsection(1) may provide different remuneration for different directors or different classes of directors. I wonder if the minister can run down for me and for the House the different classes of directors and relate to us the potential variance, for example, in remuneration between those classes. I can see some problems arising if that's the case. What kind of classes?

HON. MRS. JOHNSTON: The different classes could refer to the chairman or people from more remote areas who it is felt require an adjustment in the remuneration.

MR. BLENCOE: Section 781, the voting procedures. I think this is the section that deals with weighted votes versus one person, one vote. This is one of the changes, in terms of the original piece of legislation you are considering.

HON. MRS. JOHNSTON: We've gone full circle.

MR. BLENCOE: We've gone full circle. I recognize that. My question is that you originally were considering one person, one vote for all issues at the regional level; you moved back to weighted votes basically for financial matters. Can you give me the rationale for that?

HON. MRS. JOHNSTON: We were responding to concerns that had been expressed to us by the regional district members.

MR. BLENCOE: What were those specific concerns you were hearing?

HON. MRS. JOHNSTON: The basis, of course, would be that the areas that had the largest tax base and made the largest contribution should have the larger voice. There was concern expressed when we proposed going to one member, one vote when it came to financial matters.

MR. BLENCOE: Subsection 790 under this one is titled: "Additional local or extended services." My understanding from this section — and the minister can correct me — is that the Lieu tenant-Governor-in-Council may grant additional powers to a regional district to establish and operate services by bylaw. Without restricting the generality, the cabinet may grant to a regional district the same powers that a municipality has under this act. You list some of those areas: cemeteries, emergency health act, heritage conservation, Library Act, etc.

just a general question to the minister. Granting of additional powers to a regional district: it could be construed that those powers are within the purview of a municipality or have been traditionally within the jurisdiction of a municipality. Could this be construed as, or have you heard the concern that you could be, usurping the traditional areas of responsibility that municipalities have had?

HON. MRS. JOHNSTON: Well, I haven't personally had that type of concern expressed to me. My deputy suggests that he hasn't had that type of concern. It should be recognized that the ministry would not consider a change along that line if we felt that it would prove to be in conflict with a member

[ Page 8527 ]

municipality. There's another section, 791(2), that prevents the conflict. But no, we haven't had that concern expressed.

[6:15]

MR. BLENCOE: It may be something that will come up. It's something I certainly noticed. You know what happens with local governments: they're sort of set in their traditional areas. Anyway, we'll see what happens as we go down the line and what we report comes back.

The next one is 797,"Assent of electors — counter petition." If there's any section that could be construed as potentially controversial — and I'm not saying it is — this is the one.

I'm wanting the minister, before I ask any specific question, to give me her reasons or the ministry's reasons for introducing the counter petition concept. It is fairly unique and new. I'm not saying I disagree with it, but can the minister tell me why she decided to bring this in?

HON. MRS. JOHNSTON: On my initial review of the proposal, this particular section didn't ring any bells with me, and it hasn't with you either, even though you sat on council as well. This is comparable to a provision that is already available to municipalities, so it's not something new and startling, as obviously both of us thought it was. It appears to be something that has not been used, but it is comparable to'-what is presently available.

MR. BLENCOE: Going through legal legislation and the wording is sometimes difficult for a lay person, so I'm still trying to grapple with how it will all work. But let me try to relate what I think is going to happen, and the minister and her staff can see if that's accurate.

For a counter petition, the key area will be calculating the percentage of electives in a proposed participating area. From what I can see in the legislation, the board or the council will have to make an estimate of the total number of electors in that participating area and publish the number in a notice of some form. I think that's correct. Thinking on this, I can see that many districts will have to estimate the total number of electors on their own, given that census figures do not disaggregate it sufficiently Unfair estimates could easily be challenged in a court of law, so board and councils may be conservative in their estimates. In addition, participating areas that estimate their own population tend to decentralize power, which is not necessarily a bad thing. However, I understand it is the minister who in the end will determine the population of a regional district in this legislation.

I think I'm right in my interpretation of how this is going to work, but doesn't a board or a council face a potential conflict of interest when estimating the number of electors in a proposed participating area for the purpose of preparing for a possible counter petition against its own bylaw? Do you see what I'm getting at? They have to do the estimate. They have to do the figuring out. If there isn't up-to-date census material, they've got to do the estimation. If it's their own bylaw, there may be a bit of a problem, a bit of a conflict. Did you think about that? I did. This is fun legislation.

HON. MRS. JOHNSTON: The word "autonomy" keeps coming to mind. The regional district will have to determine its own risk, and they will make the decision which route to take before entering into a function. If we were asked for advice, if there was any doubt at all in the minds of the regional district as to the population they should be using for their calculations, we would recommend that they go the elector consent route. By that, I mean they would go a full vote if there was any question in their mind about the figures they were using to calculate.

MR. BLENCOE: I appreciate that. Next little section is 806(6), which is: "Where a board chooses to impose a fee or charge under sections 8040) or 805(l)(b), the bylaw that imposes the fee or charge may set different fees and charges on different classes of persons, classes of property or types of land use, as specified in the bylaw." Where the legislation states that different fees and charges may be imposed on different classes of persons, can the minister assure us that it will not be those who can gain access easily? I don't mean this in a derogatory sense, but there are those who can gain access to the minister's office more than others. There may be some concern that lower fees.... If you are involved in this issue, you may be accused of picking and choosing fees. Is the minister concerned about that particular issue?

HON. MRS. JOHNSTON: I have concern about the comments and suggestions the second member for Victoria is attempting to make here with regard to the integrity of our office. I can state that the suggestion that has been made is clearly out of line and doesn't relate at all to the way the Ministry of Municipal Affairs, Recreation and Culture would be operating.

Is it 806(6) you're concerned with?

MR. BLENCOE: Yes, that's right.

HON. MRS. JOHNSTON: My understanding is that the minister would not be approving the sums of money; the board would. The minister does not approve.

Section 14 as amended approved.

Sections 15 to 43 inclusive approved.

Title approved.

HON. MRS. JOHNSTON: I move the committee rise and report the bill complete with amendment.

Motion approved.

[ Page 8528 ]

The House resumed: Mr. Speaker in the chair.

Bill 19, Municipal Amendment Act, 1989, reported complete with amendment.

MR. SPEAKER: When shall the bill be read a third time?

HON. MRS. JOHNSTON: With leave of the House now, Mr. Speaker.

Leave granted.

Bill 19, Municipal Amendment Act, 1989, read a third time and passed.

HON. MR. RICHMOND: I call second reading of Bill 78, Mr. Speaker.

ISLANDS TRUST ACT

HON. MRS. JOHNSTON: It is my privilege to put forward for second reading Bill 78, the Islands Trust Act.

This bill contains a variety of measures designed to improve the operation of the Islands Trust, enhancing its autonomy and increasing its flexibility. it confirms the trust's mandate to preserve and protect the islands and strengthens its ability to do so.

The highlights include provision for the adoption of a trust policy statement to guide planning and development approvals by local and provincial agencies. The act provides for the membership of new municipalities on the trust council. It enables them to regulate the development of land and requires community plans to be consistent with the trust policy statement.

It breathes life into the trust fund provisions of the old act by providing for the establishment of a trust fund board, giving it a clear mandate and budgetary and staff support through the trust council. Board members are to be appointed by the trust council and the Minister of Municipal Affairs, Recreation and Culture.

It defines the roles and responsibility of the trust council, executive committee and local trust committees and improves the ability of the trust to administer its programs separately from the Ministry of Municipal Affairs, Recreation and Culture.

It enables the subdivision approval function, currently the responsibility of the Ministry of Transportation and Highways, to be assigned to a staff official of the Islands Trust.

The new Islands Trust Act is based on the findings of a select standing committee of the Legislature which reviewed the existing act in 1987. Public meetings were held on all of the major islands and in Vancouver and Victoria during the summer of 1987. It found strong public support for the Islands Trust and its mandate and received numerous suggestions on how the organization and its legislation could be strengthened. Many of these recommendations are embodied in the legislation before you now.

MR. BLENCOE: The minister has made the statement that this legislation is a result of consultation and feedback in hearings that were heard in 1987. At that time there was much input and expression of great support for the Islands Trust.

There was some concern that the trust as we know it was going to be altered dramatically, and of course that raised a lot of concern on the islands. I am pleased to say that this bill does not do many of the things the report wanted to do. From what we can read of this — and a lot of it is going to be trust — the Islands Trust will remain intact but obviously with some changes, which I suppose are inevitable. Things are not etched in stone, and things do change in our society.

Be that as it may, we have to reiterate to this House our 100 percent support for the Islands Trust for the work it has done over the years. It came out of our government, a rather unique approach to governing a very special area of our province. Legislation was introduced in 1974 to preserve and protect an area of the province that environmentally, physically, biologically and socially is incredibly unique — I am not suggesting only in British Columbia but in Canada and, some say, in the world. We've only got to talk to those who visit. Many stay in that beautiful part of the world.

I think it can also be said that that 1974 legislation was recognized as a unique legislative mandate, one that we on this side of the House have upheld and fought for over the years. At times the government opposite has given a different view of the direction we would like to see the trust and those islands go in. There have been occasions when the islanders have had to rally to try to convince this government that the mandate and the legislation they have are very special. That legislation has always been widely applauded. While that legislation has undergone many changes — some good, some bad — thank goodness the original mandate of the trust has been maintained, sometimes in very difficult times.

[6:30]

I just want to make a comment before I carry on. This bill, because it is a radical change, coming late in the session, and into debate the next day... I know the government wants to get on with the legislation, but I have to say that I wish there had been more time. I wish it had been introduced earlier, because of the islanders and their intense wish to participate in any legislation that affects them. Not just those who are elected but, as you know, all islanders take an interest in legislation. I and they would have preferred a little more time to reflect, to take a look, to really think through the impact. I know the minister has consulted, and I know the minister has met and discussed with those who are elected. I know I would have preferred a little more time before we got into this. Be that as it may, that's where we are.

This represents the first real major reworking of the organization of the trust. Because of that, it requires time to critically — I am not going to use the word "critically" in a negative sense, but in a positive sense — examine it for its fidelity, if you like, to the

[ Page 8529 ]

original mandate. You can't always, reading the words that are written, get the initial meaning. Time will tell, and time would have been useful to try and see what was meant in this legislation other than what is before us. In many ways this legislation is a bit of a leap of faith, a leap of trust, and I hope we can count on this minister to maintain that trust.

As I say, it's the first major reworking of a very important piece of legislation. Because of time constraints and because of not being able thus far to do all the work that I might like to do, I would like to try and highlight what I have seen as a few concerns in the short time I've been able to look at it, talk to people and get some feedback.

The first point is that the bill anticipates and paves the way for the incorporation of municipalities within the trust area. Despite the bill's attempts to make municipal development compatible with trust policy, a significant risk is being taken with the future of the Islands Trust, in my estimation — I'm not saying a necessarily negative risk; but there is a degree of risk in this particular area. If it works out that a municipality — for instance, an incorporated Ganges on Saltspring Island — complains that it cannot govern itself effectively within the scheme of this bill, it will be the municipality that, I assume, will survive, and what will be severed by legislative amendment will be the municipality's link to the trust council and the trust mandate. As I clearly read it, a major intention of this legislation is to contemplate the future creation of municipalities within the trust area. What you risk is what I've said: within that trust area you start to balkanize, break down by incorporation into little municipalities. The thing we have to work out is how those municipalities will be connected to the trust and who will have the final say

Is there a less risky alternative — I ask myself — that would still permit the delegation of administrative powers to a local community and the power to regulate and provide for necessary services? I have In mind, for instance, the concept of a local community commission as envisioned in section 817 of the Municipal Amendment Act we have just passed, Bill 19, Is that a less risky alternative?

Again, I put these out not within the confines of being negative but within the confines of what I've been able to glean, looking at this and thinking overnight — and only overnight — about what may be some of the risks.

Despite the appearance of local autonomy, the bill will require, and permits, the minister to approve local community plans, municipal bylaws that the trust refuses to approve, and trust fund plans; and gives the minister an opportunity to insert his or her political appointees into the work of the trust fund board. What I'm saying is that the role of the minister is fairly obvious and fairly dramatic, although autonomy seems to be the direction of this bill. To some degree, again, there's a leap of faith in trusting this government and this minister that that's what they intend. I point out for the record that the minister, whoever it might be, has a high degree of power and the potential for involving himself or herself in the areas I outlined.

What all of this really means is that the future of the Islands Trust in some large measure depends upon how sympathetic the minister or the government of the day is to the protection and preservation of this unique area. That is a leap of faith; but I suppose that often happens in our business.

The third point is an area that comes to MY attention through people who have worked yesterday and last night and today: the Islands Trust Fund. It seems to me that could be construed as somewhat meaningless, unless the government is prepared to seed the fund with sufficient money and/or land for the board to be able to do something. The minister may have some response to that in committee. Maybe she has some ideas for seeding some money to get them going; I don't know. She nods her head.

Then I wonder if we're Creating a cost recovery scheme that will, as time goes by, require the trust council to degrade trust policy and the bill's mandate in order to create a tax base sufficient to fund the operations that the bill assigns to it.

That's a risk, a concern I have. If this government is not prepared to seed it, to financially support it, where are they going to turn for finances? Will they be forced into taking action that would violate some of the basic components of the mandate of the trust? The minister knows what I refer to; major development that would be not in the interests of that trust. Without the finances, without the financial support of the provincial government, that may be a risk that we run and it's one that I note and put on the record.

Hopefully we're going to get a few more days before we go into committee on this.

AN HON. MEMBER: The weekend.

MR. BLENCOE: The weekend. Good.

So having offered those initial remarks, observations and concerns, I have to note that those who are given the mandate or charged with the responsibility of administering the trust thus far seem to be pleased with the legislation. That doesn't necessarily mean that those in this Legislature would have to always — how do I put it? — see that viewpoint. Sometimes when you are in negotiations, you have to accept certain things as inevitable. I don't necessarily accept certain things as inevitable on this side of the House. That is why I raise those risks. I suspect I'm not alone in seeing those risks and the concerns that although this purports to be a move to greater autonomy — and I hope and truly believe it is — there are some areas that could.... Without the right minister or the right government or the right truly sincere belief in the trust, this legislation could be real trouble for the islands and the Islands Trust.

With that, Mr. Speaker, I will wait for committee and go over some more questions.

HON. MRS. JOHNSTON: I move that the bill be given second reading.

[ Page 8530 ]

Motion approved.

Bill 78, Islands Trust 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: Committee on Bill 39, Mr. Speaker.

HEALTH STATUTES AMENDMENT ACT, 1989

The House in committee on Bill 39; Mrs. Gran in the chair.

On section 1.

MR. JONES: I want to assure the minister that I'm not rising in this debate to protect the rights of cadavers. However, I am interested in what is behind this amendment to the Anatomy Act. I'm wondering if perhaps by putting forward this amendment the minister and the government is making some announcement. All colleges of chiropractic are privately run institutions presently in North America. Although the amendment doesn't say as much, I think it implies that there will be a school of chiropractic in British Columbia. I understand that the closest one right now is in Toronto. There would be no need for this amendment unless there was to be a school of chiropractic in British Columbia. I assume that if this is in government legislation, then this implies government support for a school of chiropractic.

I have no problem with that — I've used chiropractors myself — but I'm wondering if behind this there is not art announcement of the establishment of a school of chiropractic in British Columbia. I'd like the minister to comment on the rationale for this amendment at this time.

[6:45]

HON. MR. DUECK: Currently there is no school of chiropractic in British Columbia. There has been some correspondence and also some meetings held with the university, I believe, which is not in my ministry, to perhaps establish a school of chiropractic in British Columbia. If that comes about, then we need this legislation so that they can use these unclaimed bodies for anatomical research. This provision is presently restricted to medical doctors only That's the reason.

MR. JONES: I wasn't exactly clear on the last part of the minister's comments about "restricted to medical doctors only."

HON. MR. DUECK: Madam Chairman, currently, unclaimed bodies can be used for research only by medical doctors. However, if a school of chiropractic is established, it will also need that privilege, and that's why we're putting it in this legislation: to give them that opportunity.

MR. JONES: It seems to me that if there were to be a school of chiropractic established in British Columbia it would take a year to establish such a school. From what I've read on the subject, there have been indications of government support for a school being established here. The Minister of Advanced Education (Hon. S. Hagen), from what I understand and have read in the media, is supportive of such a school. But as I understand it right now, that decision is before the senate of the University of Victoria. I'm just wondering if this legislation is not prejudging the outcome of the deliberations of that senate. It seems to me that by approving this amendment, we may be prejudicing that decision. I think It's Important, in order to maintain the autonomy of our universities in this province, that there not be undue pressure placed upon the decisions of an academic body, like the senate of the University of Victoria.

While the minister says that this just happens to be included here on the off chance that such a school of chiropractic may be established, it seems to me that tacitly the government is making an announcement tonight of a school of chiropractic, which, I assume, is the first public one ever in North America, although I understand that universities in Australia do have schools of chiropractic.

I'd like to ask the minister again if it is not an announcement tonight that there is going to be a school of chiropractic, and if it does take a year — and from everything I've read, it does take a year to establish a school of chiropractic — then why do we have this amendment at this time? Why not a year hence, at which time there may or may not be a school of chiropractic, based on the decision of the senate of the University of Victoria?

HON. MR. DUECK: Madam Chairman, I want to assure the member opposite that we're not making an announcement today. It may well be a few months; it may well be a year; it may never happen. This is enabling legislation. They would still have to have the approval of the minister. So it's really not an issue, in any case, because no one but a school could use it. Bill 40, passed two weeks ago, included this, and this is just the tail end, allowing bodies to be used for research and enabling the minister to make the decision should a school establish. We have no authority. It is the continuing education ministry and the University of Victoria that have to deal with it. We're certainly not making an announcement today.

MR. JONES: I appreciate that it's enabling legislation, but I think it's premature. I think it's prejudging the decision of the senate of the University of Victoria. Perhaps the University of Victoria will come to that decision of their own accord. But I would like to ask the minister, if he gives us his assurance that this is not an announcement tonight, will he also give us his assurance that no pressure will come from government to the senate of the University of Victoria to further prejudice its decision whether to establish a school of chiropractic at the university?

[ Page 8531 ]

HON. MR. DUECK: I can assure him on the two questions: one was whether I'm making an announcement — I've already told you that I'm not. And secondly, I cannot speak for the government, but I can speak for this ministry: we have no authority to in any way influence or pressure or whatever, because it's not my ministry, but we are prepared with enabling legislation should this happen. If you think it's premature, it may well be. I'm not worried about it, and I don't think anyone else should be either, because I couldn't make a move unless there was a college, and I wouldn't have any reason to. But the legislation is there for that purpose, and I would not oppose a college of chiropractic being established in British Columbia.

MR. JONES: I appreciate the minister's candour. However, this amendment does come under his ministry, so there is not the opportunity to ask the Premier or at this time the Minister of Advanced Education, because no such bill has come up under his purview. So the only person I can ask as a representative of the government is the Minister of Health. I appreciate his candour and his assurance that he would not unduly influence the decision of the senate, and I also appreciate that he cannot speak for the Minister of Advanced Education or the government. But I still feel that the kind of assurance I would hope for from government is that they would allow an autonomous body — the senate of the University of Victoria — to make that decision in a way that is unfettered and uninfluenced from the part of government.

Very clearly the government has an interest, both in terms of health care and the cost of the establishment of such a college. So it's very natural for the government to want to have a say in these kinds of decisions. The minister has already said tonight that he would support the establishment of such a college As I say, I appreciate that candour, but I'm still left a little wanting in terms of assurances that we do respect the autonomy of universities in this province to come to these kinds of decisions of their own accord. I'll leave it at that.

Sections 1 and 2 approved.

On section 3.

HON. MR. DUECK: Madam Chairman, I move the amendment standing under my name on the order paper. [See appendix.]

Amendment approved.

On section 3 as amended.

MS. MARZARI: Knowing the Community Care Facility Act is very carefully worded, because personal care homes, child care centres and adult care centres all have legal meaning under that Act, I'm wondering why there is the necessity to delete or repeal the definition of "personal care" and to substitute it with the word "care." I'm not briefed in depth as to why a personal care home would have to be called a personal care home. I'm concerned here that by substituting the word "care" for "personal care," we're somehow removing from legal description and regulations the necessity for certain levels of care. Would you just enlighten the House as to why this substitution? It can't simply be because the word "personal" is redundant. It must have something to do with the community care licensing.

HON. MR. DUECK: "Personal care" referred to one level of care, and in regulation it spells out all the various cares, because it was not really in any way referring to the cares we have under the licensing provisions. So rather than saying "personal care," it's .care," and then in regulations it describes all the various cares we have under licensing.

Section 3 as amended approved.

Section 4 approved.

On section 5.

MS. MARZARI: Section 5 allows conditions to be attached to a preschool supervisor's certificate. I'm interested in knowing what conditions might be applied to a preschool supervisor's certificate that the Community Care Facility Act might be interested in. Would the minister be good enough to let me know?

HON. MR. DUECK: Previously we could only suspend or cancel the licence. Now we can put a condition to the licence. It may be a situation where you don't want to outright cancel or suspend, but you may have a condition that says if you do whatever in such a period of time, you can continue. We've run into that in a couple of instances, which made it very awkward, because it wasn't really cause for cancellation or suspension. In this way it gives us a little more flexibility, because there could be cases where they could conform by being given a warning, and they could come back with the proper corrections.

Section 5 approved.

On section 6.

MS. MARZARI: I'm looking at section 6 and reading that this relates to powers generally left with municipalities. Having worked at the municipal level for a number of years, I know how difficult it is to open a group home in a neighbourhood of a city or town, and that full public involvement is usually desirable and necessary, because people don't like surprises. I've been through many a bitter battle with many neighbourhoods in Vancouver around the placement or the suggested placement of a group home. People are frightened of changing their neighbourhood, and they are frightened of community care facilities in their neighbourhood.

[ Page 8532 ]

I'm trying to find out where in section 6 you are going to listen to the municipalities and their concerns. I can see that you're lifting from the municipalities' shoulders some of the blame, possibly, by taking on the responsibility of sometimes putting community care homes into communities, but what are your own terms of reference and your own guidelines for when you want to supersede a neighbourhood's negative viewpoint?

[7:00]

HON. MR. DUECK: The member is correct that we've had a lot of problems in many jurisdictions and municipalities. At one time we could establish, without the municipality's consent, up to ten persons in a facility. We have taken this up with the BCMA and the municipalities, and they all agree with this amendment. If it is a residential facility, there cannot be more than six persons in care and four other persons; in other words, a husband and wife and two children, making a total of not more than ten. If it is a day care facility, then eight persons can be cared for.

This gives us the right to go in and establish these homes. It — has been very thoroughly canvassed with BCMA and municipalities. If we did not have some type of authority, there isn't a municipality or community that would allow these facilities to exist, because they all say: "Yes, we agree, but not in my back yard." We find that once they are there, in most cases they're fairly good citizens. I do believe that the ten persons in care in a residential facility was too high. It will cost us more — it will be more for the taxpayer — but at least it is a compromise that everyone is able to live with.

MS. MARZARI: I'm certainly in favour of this, because I know, having been through the arguments many times, that group facilities have to be incorporated in neighbourhoods which themselves produce the social diseases and the uncomfortable situations of mental distress and disorder that people find themselves in. However, I find it ironic that just today in the House your government was talking about not doing anything without full compliance and assent from municipalities. In section 6 we are going to find ourselves with a municipality deliberately...

Interjection.

MS. MARZARI: Well, we're going to find ourselves in the situation where the municipality, in order to keep their seats, will be saying,"It's not our fault; we'll pass the blame on to the province," and the province moving into neighbourhoods, sometimes against the wishes of neighbours. I'm sure this is inevitable and something we have to live with, but I would encourage the minister to encourage the municipalities in turn to do everything they possibly can to work with neighbourhoods and communities to understand community responsibility, rather than bringing the heavy thumb of the state into an unprepared community.

1 live in a community that has its fair share — in fact, more than its fair share — of group homes, because my community is a transitionally zoned community. Consequently, I think we have one group home per block. And people in group homes do make excellent neighbours.

Section 6 approved.

On section 7.

HON. MR. DUECK: I move the amendment standing in my name on the order paper. [See appendix.]

Amendment approved.

Section 7 as amended approved.

Sections 8 and 9 approved.

On section 10.

MS. MARZARI: From a briefing that was given to our researchers, I gather that section 10 revolves around a rabid bear's head which a hunter refused to hand over to health inspectors so that a sample could be taken to discover whether or not the animal had been diseased, We call this the rabid bear's head section, I believe. It's a good name for a bill.

What's interesting here is that it provides a medical health inspector with certainly more ammunition that he needs to inspect a rabid bear's head. We are looking at the ability of a health inspector to inspect premises, both public and private. The inspector's power seems to be broadened to give them the ability to take samples and perform tests and require books and records to be produced.

Section 10 goes on quite a ways to talk about the expansion of the medical health officer or public health inspector to be able to move in on a situation when that inspector has "...reasonable and probable grounds to believe that a health hazard exists." If the health inspector has reasonable and probable grounds to believe something, that inspector or health officer can serve an order to the owner; require the vacating of a place; declare a place unfit for human habitation; require the closure of a place; can require the doing of work specified in an order; require removal from the place or the vicinity of anything causing a health hazard — and here we're talking about "probable and reasonable" health hazards.

It also has some impact on the transporting and handling of food. It goes further, and the last paragraph, subsection(9), presumes that if, in the opinion of the medical health officer or health inspector, he or she determines a condition of emergency exists due to the existence of a health hazard, the health officer can take any steps they consider appropriate to remove or lessen the health hazard.

I must say that my colleague here from Vancouver Centre, now that he's read this section of the act, is quite excited, because it would mean that he'd be

[ Page 8533 ]

able to close down every flea-bag hotel in the whole of our downtown east side. Because of a particular rabid bear's head, we might be able to clean up the skids In Vancouver. I think there are a few people here that have been waiting for a long time for this legislation.

By the same token, I am interested in knowing what the minister means when he's talking about reasonable and probable grounds, because when one transmits or gives power to a level of the bureaucracy, there is always the potential for abuse of that power, and there was always the necessity for an appeal to someone or somewhere so that that power is not abused. I would ask the minister to comment on:(1) his definition of reasonable and probable; and(2) the appeal process.

HON. MR. DUECK: There is a difference between private and public. In a private place, the official must either obtain the consent of the owner or a court order. Let's get that out of the way. He cannot just walk in on a private place and have the same powers.

But when it comes to a public place, reasonable and probable grounds to believe that a health hazard exists would have to be on a scientific basis. Being a medical health officer, I couldn't prejudge an individual if it is for safety and health. That would be the decision made by that health officer. Certainly I couldn't put in a piece of legislation to spell out what might exist. So he would have to use his judgment in that particular case. Being a medical health officer, his judgment would be a professional judgment in his capacity.

Sections 10 to 13 inclusive approved.

On section 14.

MS. MARZARI: Section 14 is complementary with 16. I'm interested in understanding the definition of "board." It is my understanding that the emergency medical assistants licensing commission presently covers all emergency personnel in the province, including firefighting. By moving the emergency medical assistants licensing to a board and removing it from the commission, I would ask the minister what the commission is now intended to do and what does this restructuring do to the commission?

HON. MR. DUECK: In section 15, the commission is responsible for recruitment and training emergency medical assistants. This whole change came about from an arbitration case where the same group employing the EMAs were also the licensing body, the disciplinary body, and the arbitration ruled that we should separate the two so that it would be at arm's length. We followed that. We also made some amendments later on in this section, and discussed it with the CUPE people, and they are very happy with this new piece of legislation.

MS. MARZARI: just to make it clear. This clause makes the commission responsible only for the B.C. ambulance service and not for other emergency health services. Is this correct? Does this mean that the emergency health services which aren't now part of the provincial public service, like the firefighters which operate through seven regions... ? Will they any longer be the responsibility of the commission?

HON. MR. DUECK: The commission's responsibility is maintaining the status quo, as it has been in the past — no change. But we have another board now that looks after the other portion of it. The commission is actually the employer. That is maintained; there is no change in that whatsoever. But there is now a board set up to look after the other function so that it is at arm's length, and it should be. It was overlooked when we set up the commission.

Sections 14 and 15 approved.

On section 16.

HON. MR. DUECK: Madam Chairman, I move the amendment on the order paper in my name. [See appendix.]

Amendment approved.

Section 16 as amended approved.

On section 17.

HON. MR. DUECK: Madam Chairman, I move the amendment on the order paper in my name. [See appendix.]

Amendment approved.

On section 17 as amended.

MS. MARZARI: What are the different classes of emergency medical associations that you're going to create with this section, Mr. Minister? You've put together an amendment which I gather the union is in agreement with. I think the question still is outstanding: what are these different classes?

HON. MR. DUECK: We have these various classes now, for example, as to the educational qualifications of the various grades of ambulance personnel: EMA1, EMA-2, etc. But it was not spelled out before in legislation, and we're making it legal.

Section 17 as amended approved.

Sections 18 to 26 inclusive approved.

On section 27.

HON. MR. DUECK: Madam Chairman, I move the amendment on the order paper in my name. [See appendix.]

[7:15]

[ Page 8534 ]

Amendment approved.

Section 27 as amended approved.

Title approved.

The House resumed; Mr. Barnes in the chair.

Bill 39, Health Statutes Amendment Act, 1989, reported complete with amendments.

DEPUTY SPEAKER: When shall be the bill be read a third time?

HON. MR. STRACHAN: With leave, now, Mr. Speaker.

Leave granted.

Bill 39, Health Statutes Amendment Act, 1989, read a third time and passed.

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 69.

HOSPITAL AMENDMENT ACT, 1989

The House in committee on Bill 69; Mrs. Gran in the chair.

Sections 1 to 4 inclusive approved.

Title approved.

The House resumed; Mr. Barnes in the chair.

Bill 69, Hospital Amendment Act, 1989, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 46, printed in the name of the hon. Minister of Labour and Consumer Services.

LABOUR AND CONSUMER SERVICES
STATUTES AMENDMENT ACT, 1989

The House in committee on Bill 46; Mrs. Gran in the chair.

Sections 1 to 9 inclusive approved.

On section 10.

HON. L. HANSON: I move the amendment standing in my name on the order paper. [See appendix.]

On the amendment.

MS. SMALLWOOD: just some clarification from the minister on the purpose of the amendment.

HON. L. HANSON: In the Jansen report there was a recommendation for an increase In fines we commonly charge for bootlegging. The amendment would allow not only the fine, but also a sentence in jail as well as a fine or instead of a fine.

Amendment approved.

Section 10 as amended approved.

Sections 11 to 15 inclusive approved.

Title approved.

HON. L. HANSON: I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; Mr. G. Hanson in the chair.

Bill 46, Labour and Consumer Services Statutes Amendment Act, 1989, reported complete with amendment.

DEPUTY SPEAKER: When shall the bill be read a third time?

HON. MR. STRACHAN: With leave now.

Leave granted.

Bill 46, Labour and Consumer Services Statutes Amendment Act, 1989, read a third time and passed.

HON. MR. STRACHAN: I call committee on Bill 47, printed in the name of the hon. Minister of Labour and Consumer Services.

RESIDENTIAL TENANCY

AMENDMENT ACT, 1989

The House in committee on Bill 47; Mrs. Gran in the chair.

On section 1.

MR. BARNES: I was unable to participate In second reading of this bill, but I would simply like to make a brief observation to the committee. Obviously the bill has been a long time coming. While it's not all that we would like it to be, it certainly ends an era of no man's land as far as many of those hotel, rooming house and boarding-house tenants are concerned, in the downtown east side particularly.

The situation that has existed for so long is one that should not be overlooked. I should say, as the member for Victoria said last night in his remarks on second reading, that in hindsight the government is recognizing the error of its ways. We commend them for it. I certainly commend this minister, because had he been in cabinet six years ago, perhaps we would have a different situation in the province, because as

[ Page 8535 ]

we found the erosion of social housing and the unavailability of affordable accommodation for many people who are on fixed incomes.... Those who are on GAIN and who are for various reasons unable to afford the high cost of residential premises have just been left without decent, affordable and healthful environments to live in.

This bill certainly attempts to address that problem. I'm very excited about it for me personally and, I know, for other members who have raised this issue over the years. I can recall the frightful experiences that people were going through in 1986, prior to Expo 86, and the desperate situation they experienced as a result of landlords trying to convert and thrusting them out — people who had been living in some of those facilities for as long as 20 years. It's hard to imagine that that could have happened, but it has happened. There are still going to be problems. I hope the minister will give the committee some answers for some of the concerns I would like to raise in the face of the desire on the part of the government to begin to correct the problem.

I'd just like to ask the minister in general, although there is one section — section 6, specifically — that I will address.... It seems to me that what you're doing with this amendment is creating another class under the residential tenancy legislation: a class of tenants who are going to be protected, a new class called hotel tenants. There may be some interesting disparities that will develop as this legislation begins to take hold, because certain considerations will be given to these tenants that you will not be giving to apartment dwellers, for instance.

You may be able to explain that to me; in fact, I would like you to explain it. Will you be making a distinction between those in hotels and those in apartment buildings? Many people in apartment buildings have been asking for some of the considerations that it seems you are now going to be making available to those in the hotels. For instance, under section 6 — particularly section 6 — it looks to me as though you may have found a way to amend the Social Credit government's policies with respect to rent controls. You are talking about a mechanism whereby arbitration can be engaged to settle disputes around unfair, hidden rent increases.

[7:30]

There are a variety of scenarios you've identified which I think are quite exciting and encouraging. If it means that if for any reason a hotel tenant feels aggrieved, abused or manipulated by a landlord who is trying to get rid of them — who is trying, for whatever reason, to exploit their tenancy — they are going to be able to challenge that action. That's a good thing. Is that also a possibility for people in apartment buildings?

HON. L. HANSON: First of all, I will deal with apartment dwellers. I think what the member is suggesting is that hidden rent increases — rent increases with the intent to evict — are something that apartment dwellers would like to have. They have that now. I guess I could use an example of an apartment that has an average rent of $500 a month, and all of a sudden one specific tenant is raised to $1,000 a month. That would appear to be an intent to evict that tenant. The arbitrator is able to deal with that and has been able to deal with that — after they move out. My staff member has just corrected me. What I was saying is correct, but the arbitrator would rule on that after they had in fact moved out and the decision had been made that it was in fact a ploy on the part of the apartment owner to evict the tenant.

The other one the member may be referring to is the reference in section 6 to a rent increase, which I believe is a reference to 18 in the bill. The purpose of that is that if the determination is that the rent increase was illegal.... In fact, the apartment owner has the opportunity of increasing rent with 90 days' notice but not before 12 months have expired since the last increase. If that increase was put in place within ten months, and the arbitrator determined that it was an illegal increase in that sense, he could rule on that. This refers specifically to the tenants you were talking about earlier. That has been in place in residential tenancy for apartment owners for some time. They're all events for which arbitrators can now claim dollar amounts. They weren't allowed to deal with that in that way in the past.

MR. BARNES: I'm not quite clear, though, when you talk about rent increases and hidden rent. Rent is mentioned in such a way as would imply that it's not just the annual rent increase you're talking about, because if tenants have a dispute with respect to the rent, under this act they appear to me to have the right to arbitration. In other words, if they have a dispute over the rent for any reason. .. . Now you're saying that is not the case; we're only concerned about this as long as it's an annual rent. If it's prior to an annual increase, then they have a grievance, but they don't have a grievance if 12 months have elapsed. In other words, just hypothetically, the rent could be doubled. Is that what you're saying?

HON. L. HANSON: Yes, that's substantially what I'm saying. If, as an example, the rent was increased from $500 to $600, the arbitrator couldn't arbitrate as to whether that was a reasonable increase or not if it was within the guidelines of 90 days' notice and 12 months since the last increase.

MR. BARNES: Well then, I guess my optimism was premature with respect to an amendment to the government's policy on rent controls. But we can always hope that things will look up.

Dealing specifically with section 1, the cabinet has the right to vary from time to time the baseline on what the day-to-day rent should be. In other words, if it were $15 or less, that falls below the average, which would be $450 a month. That's pretty much the top of the line for hotels in that area, I would say. The fact that it has that authority to vary it means that we'll be looking at changes from time to time in the regulations to determine what comes under this act. Could you clarify just how this might work? Are they

[ Page 8536 ]

going to be going by cost-of-living increases as far as those people's ability to pay is concerned? While $15 per day may be adequate now, it could be $20. 1 gather there will be some changes taking place with respect to that.

While you're on your feet, could you also comment on the wisdom of considering the seasonal situation. I forget the term you used, but it had to do with hotels that have peaks — like a peak summer period — when their rates may Increase. A hotel would be exempt, as I understand It, from this legislation If It did it within the previous 12 months. For instance, they could show where there were great fluctuations in the daily rent of a unit. That seems to me to be a loophole. That could be a problem, particularly if a hotel had been renting to a tenant in its off-season — probably a long-term tenant — in the wintertime, in the spring, or when the tourists aren't there yet, and that person would have no protection come summertime when the tourists are there. Then he could be subject to eviction. He wouldn't have any protection. I see that as a potential loophole that would allow a hotel to manipulate.

Do you perceive that as a problem, or are you talking about hotels that are in certain areas, or how do you ensure that that isn't possible in the downtown east side, for instance?

HON. L. HANSON: To deal with the first question, I think that the member is probably correct in suggesting that there could be changes. Fifteen dollars a day, with very quick figuring, comes to about $450 a month, and if that norm doesn't fit the circumstances of the day, it might have to be changed to $20. 1 guess I would also point out that $15 a day doesn't necessarily apply in all parts of British Columbia. There may be circumstances where, unique as they may be, $15 a day could be too high in some specific community. Regulations would give the ability to deal with that anomaly if it were in fact there.

As it relates to the seasonal part, I don't see that as being a possibility for manipulation. Quite often it's in communities that have a peak season. As an example, here on Vancouver Island it could be a village that during the summer has a heavy tourist season or maybe a heavy fishing season during part of the year and then, because of a low traffic situation for the other six months of the year, if that's the figure, could rent those units out to people on a six-month basis. But our experience has been that there are very few of those circumstances where the rents or those situations are not a predetermined and understood situation before the people take possession. It is in the agreement and the understanding that my peak season is April till September, and I am quite prepared to rent to you by the month at a reasonable rate from September till April. After that you can stay, but the rent increases to the daily rate that we normally charge for the market.

I don't see that as an ability. I think that if that happened just on a very short period that was determined to be a ploy to avoid the regulations, it would be very clearly and quickly determined, I would think, by the arbitrator.

MR. BARNES: I appreciate your explanation. It clears it up in my mind and perhaps that of the committee. The problem, though, is that there is nothing in the legislation that specifies that type of contract. I think what you are basically saying is that any hotel or facility that has a peak season would be exempt, in effect, from this legislation. It doesn't say: .provided there is no agreement, etc., that might make an exception to this." I would say that that is one of the cautions that could be a problem.

Madam Chairman, I don't recall that the minister specifically responded to my question about how the cabinet will make these determinations, because they will need some guidelines in place to decide on the daily maximum that would qualify a hotel.

I think that in line with this you might want to explain the reason for excluding facilities operated by municipalities, regional districts, societies, non-profit agencies and so forth, because there are some potential difficulties with that unless, in good faith, we can expect the best, especially from places like the Gastown men's residence and the Salvation Army. We wouldn't assume that there would be any abuses or any problems, but there could be anomalies where there is no recourse under this act. The act is, I guess, presuming the best and all good intentions, but there could be some problems because there is no recourse for people who would be in facilities operated by the university or by the college or any of these non-profit organizations.

Although I have worked as a social worker and I know the demands on facilities as such and that usually the clients applying are not in a position to pay exorbitant rates, one has to look at the exceptional situations, and we can't have a crystal ball. The legislation should at least consider those possibilities and allow some recourse. It doesn't seem to address that. It just seems to be a good-faith situation. Perhaps you could clarify the guidelines that the cabinet would use in making determinations from time to time.

HON. L. HANSON: Quite sincerely, the process that we used to arrive at the figure of $15 would be the same process that you would go through to determine if it should be higher. But we would very quickly learn if the $15 were out of line with the sort of going rate of the day. We would very quickly learn from the usual associations that come forward with difficulties. As an example, Downtown Eastside Residents' Association; if the $15 situation were out of line with the trend of that day, we would learn that Very quickly, and it would be the same process: the ministry would go forward with a recommendation that there should be a change, using that consultative process to make that determination.

[7:45]

I think the member dealt with some other situations. I'm not sure what section we're on now.

[ Page 8537 ]

MR. BARNES: Section 1.

HON. L. HANSON: We're still on 1, are we?

A lot of these issues that you're raising are dealt with in other sections in the act.

The issue of dormitories, as an example, attached to universities, or a YMCA type of arrangement, or a Salvation Army type of thing: it hasn't come to our attention — and we did a fair amount of investigative work into it — that there is the likelihood of any difficulty in those particular areas where the protections of the Residential Tenancy Act would be appropriate to apply to. Most of the dormitories that are attached to universities or colleges are there for education. The provision of those facilities is to facilitate the students getting an education. In almost every case, I believe, they are a non-profit operation, and that hasn't been brought to our attention as being a problem. And we see no reason to foresee that as a problem, because of the reasons they exist and how they are operated.

MR. BARNES: I don't need to pursue that. I just wanted to flag it as a possible area of concern in the future, and bringing it to the minister's attention satisfies my objective at the moment.

Section 1 approved.

On section 2.

MR. BARNES: Could the minister clarify the use of the term "common law" with respect to tenants that are in hotels? What would be a situation where they'd be in a hotel but would come under common law, which you're talking about?

HON. L. HANSON: It doesn't.

MR. BARNES: It does.

HON. L. HANSON: I'm not a lawyer, so I don't go into great depth in the common law area. The purpose of that is to ensure that if the determination is that it is a residential tenancy, this takes precedence over the common law, and the protections of the act would apply. Does that answer your question?

MR. BARNES: My problem is that either you're a tenant and you're protected under the act or you're not. When you say "common law," I was just wondering, because that's not one of the remedies to attend to disagreements — at least as you've stated in another section of the act. The hotel tenant does not have as a remedy the common law. Is that not the case? So I'm just wondering why that is in there.

HON. L. HANSON: The hotel renter, the itinerant renter who rents a room at the Bayshore or wherever it may be, is protected by the common law, but we want to make sure that if there is a determination that that isn't the circumstance, this act prevails.

Section 2 approved.

On section 3.

MR. BARNES: Under section 3 as well, perhaps you could give an example of the class of tenancy agreements that you're referring to, just for the record.

HON. L. HANSON: There are a number of different forms of tenancy. If it became a requirement that the tenancy contracts should be varied for a particular type of tenancy — in other words, a mobile home pad may have a different tenancy contract than an apartment or hotel — it would allow the Lieutenant Governor-in-Council to prescribe the contract terms if there was a need for a variance of them.

Section 3 approved.

On section 4.

MR. BARNES: Could the minister give a definition of what he means by "overnight"? These are visitors who would be coming into some of those downtown east side hotels. As you know, many of the tenants in some of those downtown east side hotels are under thoroughly dictatorial landlords who control their lives, their friends and their comings and goings. I know this is an attempt to remedy that situation. When it talks about extra charges, that's okay; it's a common practice in rental facilities to charge for extra guests. But what is "overnight"? When will that be? Is it at midnight or 10 o'clock? Is there latitude for the landlord to decide what "overnight" is? That's not clear.

HON. L. HANSON: I suppose there isn't any clear definition exactly of what overnight is. Does 2 o'clock in the morning constitute overnight? I think we all have a sense of what overnight is. If a charge were levied and there were a dispute as to the charge, or if there's a dispute that there's an unreasonable charge levied because it didn't constitute an overnight guest, then it gives the arbitrator the right to rule on it. It's really hard to define all of the circumstances that might occur, but if it were abused, it does give the tenant the right to go to the arbitrator and say: "This is not fair."

MR. BARNES: I just feel that something like that should be specified in a way that the tenants and the landlords know. It shouldn't be open to guessing; that's my only point.

Section 4 approved.

On section 5.

MR. BARNES: The act says that it allows a landlord to provide maid service to a hotel tenant. I'm sure we'd all like to have someone that took care of our beds, etc, — those of us that don't like to make

[ Page 8538 ]

beds. But the point is: why Is that in the act? Are you saying that these people who are renting these hotel rooms should be forced to have someone make up their bed? It seems to me that if you're a long-term tenant, in a way you are in your residence, and normally that's an exception to the conventional sort of transient hotel guest. That being a requirement of the landlord suggests to me that the landlord may have, notwithstanding the objections of the tenant, the right to go into his premises. Is that a possibility?

HON. L. HANSON: I appreciate the member's question, but — I guess it is rather remote that this is a possibility — I suppose that in some of these hotels we are saying that there may be an agreement that there would be room service provided: linen and so on. This would allow for that, but I think we both know that the instances in which that occurs with people who are long-term residents are very isolated. It does give those operations that are truly hotels and that do have some long-term tenants the ability to deal with both situations in a reasonable manner. If a tenant who was a long-term resident had as part of their original agreement the provision of maid service, that could be done in an apartment or in a hotel. It also allows the hotel to provide maid service in the case of its being operated as a hotel where the room is rented out on a daily or a few-days basis.

MR. BARNES: From my personal experience in the downtown east side, and knowing the hassles tenants have with landlords, the real conditions down there are such that this is, to me, an open ticket to abuse by landlords who, for any number of reasons, may want to find any excuse to enter one of those hotel rooms. This is a ticket to do it. You don't have the word .right" in there, but it allows them to provide maid service to a hotel tenant. You're probably quite right: they're not likely to be receiving maid service in that area, but the fact that the landlord has that as an excuse.... He could be providing maid service on an infrequent basis at his own convenience.

I just caution the minister that this is the kind of thing you want to be careful about in that particular area, because it's a problem area. There's a lot of abuse, and we're trying to protect tenants and give them a sense of security. I think they would like to be able to enter into an agreement. If they want maid service, that's fine; but if the right is left wit the landlord, then I see a potential problem

Sections 5 to 7 inclusive approved.

On section 8.

HON. L. HANSON: I move an amendment to section 8 that does not appear on the order paper, but of which copies have been distributed. It is 8.1.

MADAM CHAIRMAN: "Section 400) is repealed and the following substituted: '(1) The minister may appoint arbitrators who may be designated by the registrar under(a) section 39(4) to conduct arbitrations under section 13 (l), or(b) section 44.1(5) to hear an appeal under that section.'"

Amendment approved.

Section 8 as amended approved.

Sections 9 to 19 inclusive approved.

Title approved.

HON. L. HANSON: I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; Ms. Marzari in the chair.

Bill 47, Residential Tenancy Amendment Act, 1989, reported complete with amendment.

DEPUTY SPEAKER: When shall the bill be read a third time?

HON. MR. STRACHAN: With leave, now, Madam Speaker.

Leave granted.

Bill 47, Residential Tenancy Amendment Act, 1989, read a third time and passed.

[8:00]

HON. MR. STRACHAN: Madam Speaker, I call committee on Bill 77.

INDIAN LAND TAX COOPERATION ACT

The House in committee on Bill 77; Mrs. Gran in the chair.

On section 1.

MR. G. HANSON: I'd like to ask a question of the minister regarding section 1, which allows the Minister of Finance to collect property taxes on behalf of native bands. Section 1 is the definition of "municipality." I wonder if the minister would explain the different statuses of lands, surrendered lands and so on. Could he just describe the intent of the act and how it's to apply to the surrendered lands?

HON. MR. WEISGERBER: The intent of the act is to allow for taxation on reserve land that's conditionally surrendered and occupied by non-Indian leaseholders.

MR. G. HANSON: I wonder if the minister could just give us a little broader definition of how the municipalities can be encouraged to take taxation or to enter into agreements with the native bands. What incentive is there in this act under those definitions for them to do that?

[ Page 8539 ]

HON. MR. WEISGERBER: I'm not certain, from the definitions, that there's any incentive for municipalities to enter Into agreements with Indian bands. This is enabling legislation, which enables municipalities or the provincial government to enter into agreements with Indian bands, first of all, for providing for a sharing of taxation and, secondly, to provide various ways that the governments can provide to the bands methods of assessment, method of appeal, method of collection. If there were an incentive for municipalities to enter into agreements with bands, I suspect it would be the fact that municipalities now have a fair amount of difficulty collecting taxes. There's a fairly high delinquency rate because the taxing authority has no remedy against the lands. If they were to enter into an agreement with the Indian band, then it would seem to me that the pie that they would be sharing would be larger than the existing one for the municipality or provincial government.

[Mr. Pelton in the chair.]

Section 1 approved.

On section 2.

MR. G. HANSON: The nub of the issue as we see it is what incentive there is for the municipalities to enter into these agreements, assuming that the appropriate bylaws have been passed and so on, and to what extent compensation could be paid to the municipality as they vacate that field. Clearly, if we want economic development on native lands, whether or not they are non-native occupiers, then it's either a matter of double taxation or of somebody having to move out of the way to accommodate; otherwise, that industry or occupation is going to move off the native lands. I'm wondering if the minister could elaborate a little further so that we can get to the bottom of this thing.

HON. MR. WEISGERBER: As I indicated in my earlier answer, one of the incentives, if you like, for municipalities or other governments to move out of the taxation area or share the taxation area with an Indian band once it passed the appropriate bylaws is the opportunity to collect all the taxes. That's one reason.

The other, I think, is the recognition that most governing bodies would not like to see double taxation or a proliferation of a variety of tax notices or forms of taxation. As I'm sure the member is aware, under the federal act, the Indian band, once it has the proper approval of bylaws, has the opportunity to issue a tax notice without using the mechanism suggested here or securing cooperation from the municipality. This provides a vehicle for standard forms of assessment, assessment appeal, tax notice delivery, collection of taxes and sharing in that area.

From the point of view of trying to avoid taxation, that, I suppose, is an incentive, and streamlining or similar form of collection procedures would be desirable for the municipality and all the people in it.

MR. G. HANSON: Is the minister aware of any charges that would be levied to the band for collection of the taxes?

HON. MR. WEISGERBER: Yes, it is possible that there would be some agreement reached between the province or the municipality on a fee for service in the area of assessments or collection and those kind of things. It is possible.

MR. G. HANSON: Could the minister advise us how those rates would be determined and whether the band could appeal if those charges were excessive?

HON. MR. WEISGERBER: The whole flavour of this legislation is to allow — enable — the two organizations to sit down and agree on which areas of taxation each will have. I would expect that fees would be part of an ongoing negotiation along with any number of other issues.

MR. G. HANSON: I know that many Indian organizations have wanted to clarify the taxation issue with respect to their lands and uphold the changes of the Indian Act that have brought that about. Would the minister care to comment on the suggestion that the government is trying to assert its authority over collecting taxes on federal lands?

HON. MR. WEISGERBER: The province recognizes the authority in the federal Indian Act for Indian bands to collect tax any way they wish. What we're trying to do is ensure that there is a uniform method of assessment appeal tax collection around the province. We're encouraging participants to use a standard form, but there's certainly no implication or indication that we would try and impose it on anyone. It's enabling legislation.

Section 2 approved.

On section 3.

MR. G. HANSON: Again getting back specifically to municipalities, we have already received some correspondence from municipalities that feel their tax base is at risk. I think what is required is that the province assist and provide some compensation where a municipality has to vacate to some extent the tax field on those reserve lands within the boundary of a municipality. To what extent are you willing to compensate a municipality for assisting in the economic stimulus of development of reserve lands or native lands within a municipality?

HON. MR. WEISGERBER: First of all, there are no specific plans for compensation of any municipality for forgone tax revenues. The member might know that the total amount of taxation is relatively small in comparison to what the province collects or what municipalities as a group collect from these alienated or reserve lands. It's a reasonably small amount of

[ Page 8540 ]

dollars, but it does affect several communities quite seriously. Foremost is Bums Lake, where about 28 percent of their revenue comes from taxation of reserve lands occupied by non-Indian occupants. In Duncan it's about 15 percent; West Van, about 6 percent; Salmon Arm, 3 percent; and North Vancouver district, 2 percent. Those are the most seriously affected communities.

So there are two or three communities where this is obviously going to be particularly significant, and it is going to require some considerable negotiation before the situation in those communities is finally settled.

MR. GUNO: I understand that this section also authorizes municipalities to enter into agreements with bands that have passed the appropriate taxation bylaws to collect as agents for the band. I notice that the act doesn't specifically give the municipalities the authority to pay such money over to the bands. What sort of provisions are there to ensure that municipalities do turn over those funds?

HON. MR. WEISGERBER: The bill, as I'm sure the member recognizes, gives the province the opportunity to pay taxes out in advance, but we would expect — again, this is enabling legislation — that the terms of an agreement between a municipality and a band would provide for the method of payment by contract to ensure payment to the band. As probably would be anticipated, if the band were to assume taxation, they would also, as part of that agreement, contract with the municipality for the provision of services. So there would be a contractual agreement for the municipality to provide some services and for the municipality to collect taxes. There would then have to be an agreement as to disbursement of funds

MR. GUNO: I take it from your response that the relationship would be largely a contractual one, not one that would be dictated by, or at least have some guidance by, legislation or even regulation. In that sense, there would be no authority. There would be no amendment to, say, the Municipal Act to allow the municipal collection agency to turn over those funds to the bands. I understand that this is not required under the bill. Is that correct?

HON. MR. WEISGERBER: Yes, the member is correct. There is no specific direction in this bill that municipalities must pay bands or compensate or reimburse bands for taxes collected, nor is there any specific requirement that the bands compensate municipalities for services provided as part of that transfer of taxation. It would be by agreement. There has been a fair amount of consultation with Chief Manny Jules and people who are involved in this process at a federal level, and — I don't believe the necessity for that was raised. At this point it is a contractual situation which enables agreements between the two parties.

MR. BLENCOE: I didn't know we were going to do this bill tonight or I would have brought in my file on this one. As the municipal affairs critic for our side of the House, I have been brought into touch with this issue by local government. The minister mentioned a number of municipalities that are affected by this — there are actually 22 — and I and my colleagues have met with a number of native leaders, including Manny Jules. I made the suggestion to the Minister of Municipal Affairs that, given that those 22 municipalities — and some more than others would be affected, as you have indicated — would stand to lose revenue, that is of grave concern.

I suggested to the Minister of Municipal Affairs — and I don't know whether the minister has discussed this with you — that whereas we believe In the native community being able to set its own taxes and tax collection, we also think that local municipalities, who are always short of revenue, should have some way of recouping that potential revenue loss. What I suggested to the minister was to include the population base of those native lands under the revenue sharing grant situation. We took a look at it, figured it out financially, and it was less than 1 percent increase in the revenue-sharing proposal. That way, local government would ensure that they maintained that revenue base.

I wonder if the minister has been made away of that proposal I made. It was some time ago so I don't have all the details in front of me, and I wish I had the file here.

HON. MR. STRACHAN: It's not relevant.

MR. BLENCOE: I think it is relevant.

HON. MR. STRACHAN: Not in this section.

MR. BLENCOE: Well, maybe the minister could see fit to — in an atmosphere of mutual cooperation and understanding and trying to resolve issues — answer and shed some light from his personal view.

HON. MR. WEISGERBER: I guess the observation that this isn't particularly relevant to this section is accurate. I will, though, try and shed what light I can on the comments.

First of all, I think it's important to recognize that there would only be five municipalities in British Columbia that would lose in excess of 1 percent of their tax revenue as a result of this change. So other than those five affected municipalities, the rest are reasonably small in terms of municipal revenue.

It's again the anticipation that those municipalities are taxing for the provision of services. So as they move out of the taxation field, it's also anticipated that they would move out of the services delivery area, and that both would then go by mutual agreement to the Indian bands. Having said all that, I think it's fair to recognize that in two or three or perhaps five communities, as we proceed down the way, there may need to be some kind of special arrangement made. But that's not the purpose of this bill. This bill

[ Page 8541 ]

is to provide enabling legislation to allow this process to start.

Section 3 approved.

On section 4.

MR. G. HANSON: I have questions regarding the B.C. Assessment Act and the appeal procedure. Will the bands need to supply their own appeal procedure, or would that be something under the Assessment Authority?

HON. MR. WEISGERBER: Again, this being enabling legislation, the bands could use their own appeal process if they so desired. But the intent of this legislation is that it would allow the bands to make arrangements with the Assessment Authority to provide the assessments and also to provide the assessment appeal process consistent with taxation in other parts of the municipality or rural area.

Section 4 approved.

On section 5.

MR. G. HANSON: I feel I am going to get the same answer as the last time: that this is enabling legislation. But with respect to taxes — where the band provides services, often the band will provide fire services or some other services. How will those be assessed in terms of what compensation they will get back, etc. ?

HON. MR. WEISGERBER: My understanding of this section is to enable different rates of taxation to reflect the various services or lack of services that the municipality might supply. The balance the two parties would strike as a result of that shift of services from one organization to the other would be by negotiation.

MR. GUNO: I guess really this is kind of a broader question on the section. It's really a question of whether this act gives anything to the bands when the cabinet needs to approve any such agreement — as you say, it's an enabling legislation — and whether the Minister of Finance, or even the municipalities that may be entering into the agreement, will be willing to enter into such an agreement.

I guess it's just a question of whether or not this bill does provide the kind of incentive to enter into such agreements.

HON. MR. WEISGERBER: Yes, this section deals with the situation where the reserve is not in a municipality but in a rural area and allows the Lieutenant-Governor-in-Council to enter into those agreements. This is legislation which enables the government to do that. In fact, the government has already done it in the case of Kamloops. I think it's fair to say that there's a willingness on behalf of the province to enter into those kinds of agreements.

MR. G. HANSON: If the courts ultimately determine that the land in British Columbia has not been adequately compensated for in aboriginal title, do you see this bill as providing compensation to non-Indians, etc. ?

HON. MR. WEISGERBER: No. This bill deals only with those lands now identified as reserve lands which have been alienated and are occupied by non-Indians. Taxation in that area has traditionally been municipal or provincial. This enables Indian bands to pass a bylaw and collect taxes on those specific lands.

Sections 5 and 6 approved.

Title approved.

HON. MR. WEISGERBER: 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 77, Indian Land Tax Cooperation Act, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: I call committee stage on Bill 59, Mr. Speaker.

ENERGY, MINES AND PETROLEUM RESOURCES
STATUTES AMENDMENT ACT, 1989

The House in committee on Bill 59; Mr. Pelton in the chair.

On section 1.

MS. EDWARDS: Section 1(d) of this bill talks about the confidentiality of information which is required to be supplied under the regulations. I would like some assurance from the minister that this is not going to create problems where the kind of information that should be available to the public is not available.

In order to define what I think should be available, I would like to talk a bit about pulp mills and the kind of information that has been done by studies and provided to the Ministry of Environment. Under those circumstances the ordinary citizens who are affected by those moves have not been able to have access to that information at all, because of concern that some information which should remain confidential is with it. There is information in those studies that have been done with public money that the public should have. I would like the minister to respond to this, because I think we need to be sure that there are limits to the confidentiality that can be offered when we are requiring information to and for

[ Page 8542 ]

the public. There are different kinds. Could the minister clarify?

HON. MR. DAVIS: I would think that general geological information would be made available after some reasonable period of time. There's undoubtedly certain information, core samples and so on, that may remain the property of the company and of the Crown but not necessarily made public.

MS. EDWARDS: What Is the nature of the information that you want under this section? Is a core sample the extent of what would remain confidential? What is it that we're talking about in this section?

HON. MR. DAVIS: I am informed, Mr. Chairman, that the companies must supply this geological information, and that after a period of one year it's public property — it's made available to the public.

Sections 1 and 2 approved.

On section 3.

MS. EDWARDS: In this section the Lieutenant Governor-in-Council may issue directives directing the authority to pay to the government an amount specified by the government for the purposes of enabling the authority to comply with this directive. It may apply to the Utilities Commission for rate adjustments and take such other steps as the Lieutenant-Governor-in-Council may specify~ This is a very broad power, and in connection with section 12, which we will come to later, it gives the government extremely broad powers.

I understand that the minister said during second reading of the bill that this move was made in order to raise rates and effect conservation — in other words, to persuade people by the price of electricity that they should conserve. My comment is that it's not necessary for the government to legislate this power for themselves in order to achieve rate hikes for conservation. In fact, they can make an application to the Utilities Commission for a change in a rate structure, if Hydro does that. The Utilities Commission has a broad mandate to consider conservation when it makes its decisions; and the government could, if it chose, emphasize that point by issuing a special direction to the commission under section 3 of the act. I am not sure why the minister would introduce an amendment which gives the government power which it already has.

[8:30]

HON. MR. DAVIS: There are several points of view here. The executive of B.C. Hydro is really telling us this legislation is not necessary and that they have voluntarily said they are willing to pay a dividend. Indeed, this was an idea that originated with the utility.

What the utility is attempting to avoid, however, is regulation by the Utilities Commission. The commission's legislation, essentially, is costs: unless there is another cost — i.e., a dividend — the commission really can't get hold of all of Hydro's costs in order to establish a reasonable rate. Hydro is saying, in other words: "We believe that a modest sequence of rate increases, 1 or 2 percent a year, is desirable, looking out over the next five to ten years. Trust us." That may be all right and may work, but the Utilities Commission is saying: "We can only recognize costs." So on an annual basis, the government will, reflecting numbers provided to it by the utility, require the utility to pay a dividend of a certain amount, and then the Utilities Commission can do its job, recognizing the dividend as a cost.

To put it this way, parenthetically anyway, I can say that it's an unfortunate product of the legislation which governs the way in which the Utilities Commission looks at utilities which it regulates. It looks only at costs and then declares what level of rate is reasonable. This is a device, if you like; however, it specifically gives the government power to require a certain dividend to be paid.

The way it will work for the next while is that the board of Hydro will say: "Such and such a dividend is likely to be spun off if we have a rate increase next year of 2 percent." Then the government will request, through a directive, that that dividend be paid. And then the Utilities Commission can take that dividend as one of Hydro's costs and decide whether a 1 or 2 percent rate increase is reasonable.

MS. EDWARDS: I wonder if the minister could tell me why he doesn't think the Lieutenant-Governor-in-Council could have done the job through the Utilities Commission by a special directive under section 3 of the Utilities Commission Act.

HON. MR. DAVIS: Again, Hydro is saying to us: "Look, we don't need a directive. We'll do it anyway." It's the Utilities Commission that is telling us they need a directive so that it is, in fact, the cost. At least the way the Utilities Commission interprets its legislation is that they can recognize as a cost a directive from the government that Hydro pay a certain amount of money. Were Hydro to come in with its costs and then say,"We've got a surplus," I think the commission would have to deny an increase. The commission is saying that to accommodate a slow but progressive rise in rates, a long-term trend in rates, it has to have a cost imposed on B.C. Hydro by the Crown. That's what the Utilities Commission tells us; otherwise we'd have to change the entire nature of the regulatory law administered by the commission.

MS. EDWARDS: Could the L-G-in-C not make that direction to the commission under the Utilities Commission Act at present so that the commission could take the requirement for a cost for conservation into consideration with existing legislation?

HON. MR. DAVIS: I have had a number of meetings with the chairman of the Utilities Commission

[ Page 8543 ]

and the chairman of B.C. Hydro, and there's a different point of view. In order to ensure that the chairman of the Utilities Commission thinks he can do his job, we've introduced this clause. As I said at the outset, the chairman of B.C. Hydro says: "trust us. We'll volunteer a dividend. We'll pay it. We'll go to the commission." The commission really says: "We can't handle it, given our type of regulation."

To back off a bit, B.C. Hydro would like to pursue what's generally described now in the regulatory world as a capping of rates and to be given a percentage which could apply over a large number of years — say five or six years at least; say 2 percent per annum. They say: "Give us that, and we'll run our own show. We don't need to be regulated." The Utilities Commission is saying: "If that is the way regulation will proceed, we don't have a job. We want to have Hydro scrutinized."

It's the Utilities Commission telling us that this directive is needed in order that they can look at the dividend as a cost, and then they can decide in a formal way what, given their present legislation, the rate increase should be. In other words, Hydro wants a rate-capping directive without detailed regulation by the commission. The commission wants to pursue Hydro in depth and in detail, and to go into all of its books and so on before it approves or denies a rate increase.

MS. EDWARDS: This is a very interesting piece of legislation, in that it does not limit the Lieutenant Governor-in-Council as to how much it can direct the Utilities Commission or for what purposes. There's no indication that there's any limit on the Lieutenant Governor-in-Council's ability to tell the commission that it wants the regulation to reflect the requirement of the government for a dividend to be paid to the Crown, into general revenue.

It seems to me that it's very broad legislation to deal with a very specific — what shall we call it? — need that is recognized by the corporation, by the commission and by the government. It allows the government to make that kind of directive for anything at all — to turn it into a dividend. That's a concern.

HON. MR. DAVIS: I think that's true in this sense The directive could be to pay $1 or to pay $102 million for this current year. The intention is to issue a directive once a year, after having received advice from the Power Authority as to what dividend it could reasonably produce without driving rates up unduly, and, of course, recognizing its ongoing costs I may not be explaining this well enough, but it is the opinion of the Utilities Commission and certainly its lawyers and so on that it can't regulate Hydro, using its present legislation, without a dividend being required. Alternatively, Hydro is saying: "Trust us We'll issue a dividend." The dividend sort of gratuitously paid over isn't necessarily recognized as a cost, according to the legislation we have for governing the Utilities Commission.

I don't pretend to know all of the details, but I know that the chairman of the Utilities Commission is most emphatic that this clause be in the legislation. I know that the chairman of B.C. Hydro would prefer it not to be in the legislation.

MS. EDWARDS: Also what I think needs examining is that the government would in fact ask for a specified amount in any fiscal year which takes, in effect, part of that regulatory authority away from the commission. I would like the minister's response on this. It's so open-ended. It in fact allows the government to basically set a revenue target for B.C. Hydro, insist by rates that they reach it and then take that revenue to the Crown. Now that is not unreasonable under some circumstances, but under other circumstances, it is not reasonable at all. I think I want the minister to suggest why he supposes that the Crown should have such broad powers in this area.

HON. MR. DAVIS: Mr. Chairman, the Crown has had broad powers. In fact, up until the early 1980s, the Crown set the rates of B.C. Hydro. In the 1980s, it brought B.C. Hydro under the Utilities Commission and has provided a public venue in which the rates of Hydro could be addressed and regulated.

It's true the Lieutenant-Governor could require a much larger sum than one might think reasonable. That would automatically result in a dramatic rate increase, So there is some discipline on the Crown to be reasonable. What we have been told by the board of B.C. Hydro is that they can afford to pay $102 million in the current year without materially affecting their rates. This flows from the fact that the mortgage that B.C. Hydro has is continually falling. Were they to be regulated strictly on the basis of mortgage costs, rates would have to fall year after year until they have to build something which is sizeable, and then rates would have to suddenly rise.

The basic thought here is that we can have a relatively smooth rate trend; Hydro paying a dividend for some years and the dividend then being extinguished when Hydro faces unusual costs. So basically the board of B.C. Hydro will be saying what their surplus is, given a slow rate increase. I realize it's a device that goes part way towards the idea of a rate cap that reaches out through time, but it also gives the Utilities Commission some teeth. When Hydro declares this dividend — and it will be required this summer by a later directive to go to the commission for a rate increase of a modest amount — the dividend is one of the costs of Hydro, and the rate will flow from an examination of all of the costs of Hydro in the public hearing.

It's an attempt to smooth out the rates of Hydro over time and to reflect the fact that Hydro, in the last relatively few years, has moved from 100 percent debt to 80 percent debt and 20 percent equity. It may go to 75AS, simply because it has not had to build new plant; it has not had to increase its mortgage. As its mortgage is paid off, its base for rate-setting by the

[ Page 8544 ]

Utilities Commission is diminishing. Adding a dividend tends to compensate for that.

MS. EDWARDS: What will be the criteria that the government uses to set the dividend?

[8:45]

HON. MR. DAVIS: The government hasn't set the dividend, certainly not this year. But the criteria would have to be, if we're thinking generally about rate trends, inflation minus a couple of percent. Hydro is really saying it wants to follow a rate increase that's modest. They've suggested inflation minus 2 percent or 3 percent, and this is the dividend that falls out of it. They've said we'll pay that dividend, which may go up next year and perhaps the third year and then extinguish it if Hydro has to build Site C and more transmission. Nevertheless, for a term, given a modest but slow rate increase, there is a surplus.

Now the Utilities Commission — not Hydro — is saying this must be indicated in legal terms to us as a cost or we can't have any say as to what is in fact a reasonable rate increase. I do want to involve the Utilities Commission in this exercise, not simply leave it to Hydro to come forward with a rate cap that extends out over time and then not be examined at any stage by the Utilities Commission.

MS. EDWARDS: Does the minister foresee that the government would require this kind of dividend if B.C. Hydro experienced a loss rather than a surplus?

HON. MR. DAVIS: Mr. Chairman, the answer is no. If the government were to require an unreasonable dividend, it would have a dramatic effect on rates. If we go back ten years, right up till then the government simply decreed the rate increase. Now we want to involve a regulatory body in the process.

It's possible that a government would demand an unusual dividend to be paid. That in turn would require Hydro to go to the Utilities Commission and get a 5 or 10 percent rate increase, which is unacceptable publicly.

MR. WILLIAMS: The reality is that the powers are quite draconian. It just seems to me an awfully ham-handed way of going about the exercise. It's potentially dangerous. There's public opinion out there, and in the end that's the only limit. This is a government that has abandoned public opinion on many occasions and has paid the price, at least in the inter-election polls.

For a person of the minister's experience, it does seem to me that it would be more challenging to think the exercise through. I can understand the minister wanting to retain the regulatory authority That's desirable because the agency, given its own inclinations, could gallop off and the pressure for efficiencies in the monopoly probably wouldn't be there, or to the degree they should be. So that's understandable.

But it does seem to me that one could look at, say, the water tax. That's a power that the province has. In a sense we're thinking a little bit about economic rent here and the relationship to other energy sources and that sort of thing. So it seems to me you might well look at the water tax as a means of doing that, or you could look at whether you want the Utilities Commission — particularly when it's a publicly owned monopoly like this one — to take into consideration conservation goals in the pricing exercise. Now that's become a fairly sophisticated exercise in North America, and if the dividend — or in effect the dividend, or the rent — funnels through to the Crown, fine. If it's a question of this being a windfall to a private sector player that happens to control the licence, that may be a problem for some of us.

This is a pretty ham-handed way of doing it. I would have thought you would have used some of the old dexterity and skills that wouldn't be quite so ham-handed as this one. I don't have a lot of trouble with this particular minister exercising this to some extent, because there probably would be some balance there. But some of your colleagues — it almost staggers the imagination. We won't name names.

I would like the minister to comment on that, because it seems to me that there could have been a more sophisticated approach for the Utilities Commission itself. It's understandable they've got a problem and this is one way of accommodating their problem, but there would be other ways of doing it.

HON. MR. DAVIS: There is probably a more sophisticated and perhaps straightforward way of dealing with this. Perhaps over the next year we can come up with a new Utilities Commission Act which will encompass this process in a more straightforward way. I can't think, though, of a more ham-handed approach than our simply changing the water rental fee in order to generate another $100 million when Hydro's in pretty good shape, and then reduce it when Hydro needs all the money it can collect in order to pay the interest on a Site C and so on — additional capacity~

It's conceivable. In a way this is analogous to a water rental fee, except a water rental fee has all the indications of being permanent, whereas this can be variable. So in one sense it's not as ham-handed. This can vary; it is variable and — you're quite right — public opinion does have an impact on rates. It has an impact on rates of private utilities, let alone public utilities.

Of course, when the hon. member was the responsible minister, he was extremely ham-handed; he simply set the rates by order-in-council. We are a little more sophisticated now. But I agree that the Utilities Commission legislation.... If we're to go for the idea of capping — or at least a gradual increase over time rather than sudden increases and then no increase for a period — that requires a somewhat different approach. We're attempting to get there, and this isn't the end of the road, I am quite sure.

In the U.K. with utilities — and it hasn’t worked out perfectly — they decided to go for long-term rate

[ Page 8545 ]

capping as opposed to following the North American model, which is utilities regulated by their demonstrated costs. The argument that they used in the end was that utilities can gold-plate their operation and as long as costs are admitted anything is possible.

Certainly rates can be driven up by gold-plating unnecessary expenditures and so on, and a smoother, perhaps more sophisticated approach would be to take a rate schedule which was inflation minus so-and-so percent — a couple of percent — and let the utility have a run for half a dozen years, and then review costs. But the utility in the interim could retain any profits.

We are moving a little bit in that direction, but I don't think we should go too far away from a Utilities Commission that periodically takes a hard look at all the costs. So we are attempting to straddle the two approaches with this legislation.

MR. WILLIAMS: I appreciate the minister's discussion of this. I suspect, though, that the minister is saying that the water charges are ham-handed and then he says that you really want the flexibility when Hydro moves into incremental development and new dams. What you are playing around with here is the command economy, and you're the market man, after all, let's remember. Surely there is a little bit of trouble with that, and surely if we got incremental development of power we should be picking up the cost of that forthwith, shouldn't we? Because what you are really suggesting is that we shouldn't, that we'll forgo the dividend when the incremental power comes on-stream, and throw it into the postage-stamp pricing system. I'm not really sure that makes sense.

HON. MR. DAVIS: Historically when new projects were under construction, that interest was simply built into the cost of the project and was not being paid in rates. Only when the project began to operate did the cost of the project, including interest during construction, suddenly hit the rate base. I think there is a good case to be made for the interest and other charges to begin to accumulate in the rate base during construction, rather than suddenly hit at the end.

But anyway, the regulatory regime which is common in North America is to suddenly hit the rate base with this project, replete with interest during construction. Hopefully this approach will smooth out the rate curve, but there is need for improvement there.

Section 3 approved.

MR. CHAIRMAN: If the minister has no objection, the member for Kootenay has asked that we allow her to deal with sections 4 through 11 together. This is all covered under the one heading,"Industrial Electricity Rate Discount Act." Has the minister got any problem with that?

Interjection.

MR. CHAIRMAN: Okay. Please proceed.

On section 4.

MS. EDWARDS: I just want to say at the beginning that I am not sure why, since the title was changed and almost every section of this was deleted, amended or replaced, that the minister didn't simply write a new act. I guess somebody had some reason for that.

This new amended act changes the definition of, customer" from people using 60 kilovolts or more electricity for specific named activities to a person who buys 35 kilowatts or more for a more general description of what they can do. I wonder if the minister could give me a reason why that change is there.

HON. MR. DAVIS: I am told that the old legislation, which was designed to dispose of the short-term surplus Hydro had, was limited to large industrial customers. This will permit sizeable commercial customers too to qualify.

MS. EDWARDS: The other change is that no longer can it be established companies unless, I gather, they start a whole new plant or operation. I am sure that the minister has heard a lot of companies who are established, who need a new injection of something or other, who complain about this. Is there some reason the legislation is made specifically to exclude those kinds of companies?

HON. MR. DAVIS: B.C. Hydro, off and on, is under pressure to supply power at lower rates or to create a novel rate for a new development in a particular area, but being a regulated utility, it has to treat everyone the same. There was an opportunity to sell that surplus power a few years back to anyone who came forward. Indeed, it was thought that this would stimulate development. It did, I think, perhaps encourage some pulp mill expansion earlier than otherwise.

In this case the energy is modest in amount. It originates outside of B.C. Hydro's system. It's 1 per cent or 2-cent power that Hydro can buy for a few years from Alberta or from Alcan, or conceivably from one of the utilities in the United States which is overbuilt. It's only available for a few years at most. It's modest in amount. It mustn't involve any addition of transmission line facilities or other costs. In other words, Hydro won't incur any particular costs. It's odd bits of energy that can be made available for a couple of years at best, and so it's important to restrict the usage.

It couldn't look after one new pulp mill for a time and not be available to others, and so on. It's limited to new development, industry unique to the province that hasn't existed here before, and so on. We've yet to produce an example, but perhaps the silicone carbide plant at Nanaimo will qualify It would have low-price energy for a couple of years, but Hydro cannot contract for longer than it can be assured of

[ Page 8546 ]

this unique energy supply from other neighbouring utilities. Maybe it will work out; maybe it won't. It's an idea. It's interim energy and modest in amount.

[9:00]

Sections 4 to 15 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 59, Energy, Mines and Petroleum Resources Statutes Amendment Act, 1989, reported complete without amendment, read a third time and passed.

HON. MR. RICHMOND: Committee on Bill 73.

MINERAL TAX ACT

The House in committee on Bill 73; Mr. Pelton in the chair.

Section 1 approved.

On section 2.

MS. EDWARDS: I'd just like to comment before we get started that it's been rather difficult to deal with a very complex bill like this in the length of time we've had since its introduction, so I'm likely to have to ask the minister a whole lot of questions about what's going on in this bill.

The central part of it seems to be in this section right here. I wonder if the minister would begin by telling me exactly how this will change the tax liability of metal mines. I know he's tried before, but this is very specific. It sets out the business of 13 percent of net revenues derived from operations exceeding the aggregate of etc., etc. I've made all the diagrams I can, and I believe I can see how that's operating, but I have some questions.

First of all, the major change from the previous tax system is in the percentage that companies normally pay. This looks like a 13 percent taxation rate. In general, it isn't exactly that, but the mineral mines have had a reduction in taxation in the past several years, and this you have said would be revenue-neutral. Perhaps you could clarify some of that for me.

HON. MR. DAVIS: The tax base is somewhat larger. First, it's not deductible. The other tax was deductible from provincial income tax; this one is not.

Second, we've eliminated the processing allowance, partially because it really wasn't used other than for reducing the tax bill of the company. Therefore one can't really look at the rate and directly compare 13 percent with 14 percent or 15 percent. We went round this a number of times with the industry and latterly with the Minister of Finance (Hon. Mr. Couvelier), and he was insisting that it be revenue neutral.

If we concentrate only on metals and non-metallic minerals, the tax which it's replacing is a profits-type tax. So we're replacing a profits-type tax with a profits-type tax. Superficially, I think one can look at those rates and say 13 percent is less than 14; but as I tried to describe, the base is larger and it's essentially revenue-neutral, according to Finance. Some of the companies are saying it's not revenue-neutral; that they're going to pay a bit more. But I think they're simply bemoaning the fact that the deducibility feature is removed and the processing allowance has disappeared.

MS. EDWARDS: One of my questions certainly was about the industry saying that this is not revenue-neutral, that it will in fact require them to pay higher taxes. I was simply unable, with the research facilities at my fingertips, to find out or to do any tests. I think you'd have to do some major computer modelling to decide that kind of thing. So I rely on your reports and those of the industry. The industry says that it will require a higher level of taxation.

Before I sit down to let you answer that, I will add this observation. The ministry has said that the system would collect more when the profits were high and less when the profits were less. At the current point in the mining cycle, the prices for metals are still relatively high, at least for copper, zinc and lead; gold is lower than they'd like, and so on — but basically, in general terms, relatively high. Does that mean that we're kicking into this system at a point where the revenue will be fairly high and that the taxation revenue under this system is likely to go down as soon as the prices of metals go down, more so than it would have under the previous tax system?

HON. MR. DAVIS: I'll repeat the obvious. We're replacing a profits-type tax with a profits-type tax. The base years we've been using, discussing this matter with the industry and with Finance, have been last year and this year, particularly this year. But as a close generalization, the rates were finally selected for insertion in this bill such that they would produce the same revenue at the degree of profitability of mines in this province as the old tax they replace. In less profitable times both would generate less revenue. This one will generate some revenue, even if none of the mines declare a profit; whereas the old tax, conceivably, extinguished at zero profitability. At the top end they're comparable. If you take the existing mineral resource tax and compare it with this tax on a mine-by-mine basis, there are some that will pay a little more and some that will pay a little less. I think the main reason for that, though, is that some were taking the resource-processing allowance into account, or were able to do so for one reason or another. But essentially there's little change in the

[ Page 8547 ]

revenue that those companies will have to provide to the Crown provincial in good years and bad.

I'm talking only about metals and non-metallic minerals. I'm not talking about coal, because coal is moved under a totally different regime.

MS. EDWARDS: Did the previous tax collected from the companies allow capital cost plus a return on investment to be deducted before the tax was calculated, as this does?

HON. MR. DAVIS: This is a cash-flow tax, and therefore the companies don't have to keep what I'll call a different set of books. This can be lifted right off their normal operating books.

I've lost track of what the member was asking. I'm groping for a simple answer, and I got a good answer that I'm not able to interpret.

MS. EDWARDS: I'll just repeat it while I'm here. Were the companies allowed to deduct capital cost and investment interest?

HON. MR. DAVIS: There is no capital cost allowance in this system, if I can add that simplification. Previously they were allowed to deduct an allowance for capital, but spread over a considerable period of time.

MR. CLARK: I thought I would try to explain this in layman's terms and see whether the minister agrees with me. As I understand it, there is essentially a form of a profits-based tax in this bill. It's different but there's still a profits-based tax — 13 percent or whatever it is. And then there's a minimum tax, which is a cash-flow tax of 2 percent.

Interjection.

MR. CLARK: Oh, they're both cash-flow, but one's based on profit and one's a minimum tax, essentially.

HON. MR. DAVIS: One's operating cash-flow and the other's total cash-flow.

MR. CLARK: The operating cash-flow is the minimum tax, I assume. And that clearly makes sense, in a sense, because one's covering operating costs and marginal costs — you survive. Even Quintette, I think, is covering its operating costs. The problem with the other tax is having to recover the cost of capital plus a profit of 25 percent above the bank rate, as I recall, which strikes me as a pretty healthy rate of return. Because it is on total cash flow, it's unlikely to be paid for some time, especially for new mines.

That aside, it's the other aspect that I'd like some clarification on. Let's say the minimum tax, to use that phraseology, or the operating cash flow tax, is $100,000, and the profits based tax is $50,000. Clearly they pay $100,000 and not $50,000, because it's deductible or whatever. So by definition — although I'm using definitions that aren't in the bill — the minimum tax kicks in when the profits based tax is lower than the minimum tax. I think the minister is following me.

In that case, the company would pay $100,000, but as I read the bill — and this is what I'd like clarification on — the difference between the two essentially is $50,000. Can the company then carry the difference over to years where they are extremely profitable and would be paying a profits based tax and not the minimum tax? Can they apply that to future tax payable?

HON. MR. DAVIS: I'm told that the answer is yes.

MR. CLARK: That concerns me somewhat, because it means that a new mine will pay the minimum tax for, I would suggest, many years. They will never pay the other tax, because the capital costs of a new mine will be enormous. They will clearly be covering their operating costs, but it's after they pay back all that capital cost that the tax kicks in. They won't be paying it off, and therefore they will be paying a minimum tax. Then when they are profitable, they'll still be paying the minimum tax because they'll be able to offset those profit years with accumulated tax credits from the early years.

This has one advantage that I agree with, which is that it evens out, to some extent, the return to the Crown, which otherwise would fluctuate wildly, as it does to some extent with a profits based tax. If no tax credit was allowed, I would be much more supportive of the tax. In other words, in years when they aren't making much money, they pay a minimum tax, essentially, and it's quite small; then in years when they are making money, they pay more on their profit. Allowing them to accumulate those tax credits seems fraught with difficulty, particularly with respect to new mines. I think existing mines will not be a problem under this system. In extremely unprofitable years, they will simply pay a minimal tax, and I think that makes a certain sense. When they are profitable, they will pay a healthy tax. But new mines will have an advantage for many years because of the enormous capital costs and the ability under this bill to write those off over a long period of time.

That, in layman's terms, is this rather complicated bill. I wonder if the minister agrees with me or has any concerns about what I've said.

[9:15]

HON. MR. DAVIS: Essentially, the tax rates apply to cash flows. If the cash flow is minimal, the rate of tax is low; if the cash flow is sizeable, then it's a larger rate applied to a larger cash flow. If a new company, a new mining enterprise, starts up and it has minimum profitability, it will only pay the low rate of tax. If it is highly profitable from day one, it will pay the high rate of tax. I can't really connect that with the tax credit deferments which the member is talking about.

MR. CLARK: The problem is that the minimum tax is a tax on operating cash flow, but the other tax is essentially a tax on operating and capital costs; so it is

[ Page 8548 ]

after operating and capital costs. It's not a cash flow tax on the entire operation; it's a cash flow tax on the entire operation after all the capital costs and all the operating costs and the profit.... And the profit is deemed to be the interest rate of the bank plus 25 percent. That's different from the pure cash-flow tax the minister seems to be implying, and that's where I have a little bit of difficulty.

HON. MR. DAVIS: Any mining operation that's paying a reasonable rate of return will pay the full tax.

MR. CLARK: I appreciate that that is correct, but it's the rate of return on capital employed, not just on the operating revenue, for example. So the marginal profitability of the mine could be significant in early years, but because of the enormous capital cost outlay, under this bill they will be able to avoid the tax. They'll only be paying the minimum tax for some years, it seems to me.

I see the minister's discussing this.

HON. MR. DAVIS: There's nothing unusual in this about the way capital is treated. Essentially, if a company is earning less than a certain return on its investment, it will pay the low rate; if it eventually is profitable, It will begin to pay the higher rate; and in the fullness of time it will pay the rate it should have paid over the life of the mine.

MR. CLARK: I won't belabour the point. The minister agrees with my layman's definition of it, but we may disagree on the rate or on the applicability~ The carrying-over of the tax credit concerns me somewhat. The reason it concerns me — and I would like the minister's comments on this — is that tax regimes generally, especially in this field, are extremely complex. Tax regimes generally are the product of judicial interpretation and practice. They become very complex, but everybody understands the rules of the game to some extent.

I intuitively understand the logic the minister has explained. I think there's a certain appeal to it, and the simplicity of it is understandable. The problem is that I'm not sure we can, with some comfort, predict the outcome of the bill. I'll give you one example.

New Brunswick produces a lot of potash. After Saskatchewan, they are a large producer. They brought in a very simple taxation bill for potash, one of the simplest around. I think it was extremely brief, and intuitively and theoretically it made a lot of sense. Everybody praised It for being simple. Then all the accountants, the lawyers and the tax people got involved, and it was appealed. There were enormous administrative costs all around, and the net result was not nearly the revenue to the Crown that was expected or, in fact, deserved in respect.... They were bringing in a very innovative and simple tax rule.

I don't want to sound too conservative on this because I understand the appeal of moving to a new tax regime. But when designing, say, a new product or mine in British Columbia — a potash mine, for example — it's generally easier to adapt the existing system with existing rules that everybody understands and all the judicial interpretations and everything else to that new product than it is to design a new tax regime for the new product. It's fraught with difficulty; it's fraught with pitfalls. We've seen that in other jurisdictions.

I don't mean to say that will be the case in British Columbia under this bill, but I do have some concerns because of some of the loopholes that are designed — if I can use that term loopholes. Some of the features of the bill, like the carryover of the tax credit, because it's an innovative and new bill.... Experience elsewhere suggests that there will be some administrative problems in trying to implement the bill. I do applaud the minister for trying, but I have great concern because of the experience elsewhere with implementing a completely different tax regime and attempting to be revenue-neutral. I just raise that caution. I hope the minister can give me some comfort that the ministry has this well in hand and thought through, unlike New Brunswick with their potash situation and other jurisdictions.

HON. MR. DAVIS: If it will give the hon. member some comfort, this tax regime is based on common practice, accounting practice, practice which is accepted in the courts which have dealt with tax law. It involves practices which are common to both the federal income tax and provincial income tax regimes. The industry has been through it. They find this much simpler to apply, given their accounting methods. Finance, which has been over it thoroughly, is convinced it's not going to lose any revenue. I'm not too unhappy with it. I think it's more workable, more readily understood by people in business than the resource tax we invented a few years ago.

Sections 2 and 3 approved.

On section 4.

MS. EDWARDS: The obvious question here is why is it then that the coal-mines are taxed 17.5 percent except for a minimum tax of 7.5 percent. There are a number of deductions allowed to mineral mines that are not allowed to coal-mines, which is the major difference. Could the minister answer that, please.

HON. MR. DAVIS: The simple answer is that coal-mines have been taxed historically much more heavily than metal mines. We weren't able to convince Finance that we should apply the metal-mine regime to coal-mines directly — the same percentage figures and so on. Coal-mines paid a fourth level of tax. They paid the mineral resource tax and the flat-rate coal royalty. So coal-mines, to repeat, have been paying much more tax into the treasury than metal mines.

We weren't able to convince Finance that they should forgo not $12 million or $15 million but maybe $20 million or $25 million to use the same

[ Page 8549 ]

regime. There were those who were arguing: raise the metal mines and reduce the coal-mines and have one offset against the other. But the metal-mining companies were not too keen on that.

The total revenue generated by this new tax regime, given the present profitability of the coal industry, produces less revenue for the Crown, but it still doesn't get down to the level paid by the metal industries.

MS. EDWARDS: Would it be on topic to ask the minister why the coal-mines have traditionally paid a higher level of tax? Does it have something to do with the ease of finding coal or the exploration requirements? Is there any reason that one can put forward that might hold some water?

HON. MR. DAVIS: The coal industry has always paid a flat-rate royalty. The metal industry did as well years ago. The metal industry paid a lower rate than the coal industry. The coal royalty is today still 3.5 percent of gross or of that order. The metal industry has paid less. If you look at natural gas, it pays 15 percent, not 3.5 percent. Oil, depending on the profitability of the operation, can pay anywhere from 15 percent to 30 percent. There has been a gradation from the relatively remote metal-mining activities that pay a relatively low royalty. That's general across Canada. Coal is somewhere in the middle, and oil and gas is much higher. I don't know otherwise what the historic reasons are, but we have relieved the coal industry, especially in its less profitable modes, of what is an onerous flat-rate tax Westar, for example, will pay relatively little tax as long as it's barely staggering along. If it becomes more profitable, it will pay a much higher level of tax. That, at least, is more responsive to its condition than the flat-rate tax.

Sections 4 and 5 approved.

On section 6.

MS. EDWARDS: On section 6, this is on the reclamation cost account. Here we have a situation where the percentage that will be considered to be in the cumulative cost account at the end of the current fiscal year will be prescribed by regulation. Can the minister respond to this and describe how this reclamation cost account will be set up and how it will be prescribed?

HON. MR. DAVIS: I gather that this applies only to a mining company. Let's assume that the mine is closed down; there is no current revenue; the company must, however, continue reclamation, tidying up the site. It can get a tax credit in the amount of its expenses and that tax credit will enable it to pull back — the term in the notes here is "claw back" — some of the taxes it has paid in previous years in order to complete the reclamation. That's the explanation I have for this item.

It's a case of an operator which otherwise is broke or bankrupt, which in the future won't occur because we'll have bonds posted and so on to deal with those circumstances. This is a means whereby reclamation can be completed, the site reclaimed, in a circumstance where the mining company has no current revenue.

MS. EDWARDS: You're saying that this does not involve mines that are now established, which will have to post bonds. This is for companies that have not posted any type of bond or may have posted a bond for reclamation and have already spent it and they have to go beyond that amount.

I'm trying to establish, Mr. Minister, the liability of the taxpayer on this. It seems to say that you go into some cumulative tax fund, and I'm not sure what cumulative tax credit account is going to be sitting there. This company is out of money. Where is this money coming from? What kind of tax cache is there to be called upon? At what point do we go beyond something that was saved for this purpose — I'm trying to assume by reading the section — and at what point is it simply provincial government money and the money of British Columbia taxpayers?

[9:30]

HON. MR. DAVIS: The best 1 can do in this case is simply read the notes. This section provides for both a cumulative reclamation cost account and the cumulative tax credit account to be established in regulations. Where an operator has depleted all of the mine's specific reclamation fund but is undertaking reclamation, he can claim a tax credit to claw back his reclamation expenses.

MS. EDWARDS: I assume that means that although he's broke and he's not going to be paying taxes on any income or cash flow, in fact he is spending money and somehow that is going to be credited against any taxes that he owes. Is that correct? If that's the case, I don't know what the difference is besides simply saying that the provincial government is going to pay for it.

HON. MR. DAVIS: I'm informed that this puts this expense — which is perhaps somewhat unusual — on a par with all other mining expenses which are deductible. So it means that the company can continue to use this ongoing expenditure to tidy up the site and can apply it as a deductible cost as if it were on an ongoing mining operation.

I am not explaining it too well, but it's a fairly common practice. In other words, it allows the operator to deduct an expense. Presumably they have some other activity somewhere which is profitable.

MS. EDWARDS: That's my question: what do they deduct it from? You just said: some other activity somewhere else where they're paying taxes — or perhaps they continue to owe taxes on the operation and this would be a deduction taken off before they get to pay it; in other words, taken off the debt.

[ Page 8550 ]

HON. MR. DAVIS: I have to assume that somewhere in the company's activities there is a profitable operation, or this tax credit is of no use to them.

MS. EDWARDS: Nevertheless, they would have to carry out the activity. Okay, what you're telling me is that they can then deduct it from another operation and therefore the public purse is out that much money from the other operation, if you really want to put it that way. This is an imposition on the public purse. What I'm trying to find out is how much an imposition is it?

HON. MR. DAVIS: I am told that that's not the case. It's simply treating reclamation like any other expense.

MS. EDWARDS: I am not sure that if I run two businesses I can deduct the expenses from business A out of business Bs books, but I thought that's what you were telling me.

Sections 6 to 8 inclusive approved.

On section 9.

MS. EDWARDS: I wanted to mention subsection 9(3). This describes a case where a commissioner may designate the disposition of a mineral product at a point prior to its actual disposition, and various things that come with that. Could the minister explain to me why this section is needed? Because I don't quite understand why the commissioner would want to assume that a mineral product was sold at a previous date. For taxation purposes I can understand the rest of it, but I can't understand why he would want to designate that that sale had taken place previous to the time that it does take place.

HON. MR. DAVIS: I gather that this proviso is in the legislation in order to cover off situations where the point of arm's-length sale is not in the province but at a distance and difficult to determine, and the commissioner therefore can arbitrarily determine a price. In other words, when the product changes hands from one company to another, those companies being strangers to each other, and if that happens within the province or perhaps within Canada and the commissioner can determine that that transaction is a fair and reasonable market-determined price, he's got no problem. But there are instances where ore concentrates are sold elsewhere at non-arm's-length and so on. He then deems a price.

Section 9 approved.

On section 10.

MS. EDWARDS: Again this is the prescribed costs and expenses under subsection(1)(b). We are talking about a cumulative expenditure account, and here is another case where it will come by regulation — the operator's proportionate share of any prescribed costs and expenses. Why is this going to be done by regulation instead of in the act? I understand that's fairly unusual; that usually the proportionate share is dealt with within legislation rather than regulation.

HON. MR. DAVIS: The term . proportionate share" is defined in section 1.

MS. EDWARDS: But it's proportionate share of prescribed costs and expenses, and the costs and expenses are not in the legislation. The costs and expenses that will be prescribed will be prescribed by regulation, I assume. I'm asking why this is not in the legislation and what the prescribed costs and expenses are likely to include.

HON. MR. DAVIS: Those regulations adopt generally accepted accounting practices, practices common not only to the mining industry but to other industries.

Sections 10 to 16 inclusive approved.

On section 17.

MS. EDWARDS: I'm curious to know why the penalty for failing to deliver an information or a document has a limit put on it so that it cannot go beyond 100 days.

HON. MR. DAVIS: I gather there are other penalties in respect to unpaid taxes. This sets a minimum.

MS. EDWARDS: It also sets a maximum, though, Mr. Minister, and that's my question.

It seems to me, Mr. Minister, that if there's a failure to deliver a paper... It seems rather silly. If you continue to fail to deliver the paper, I don't know why at some point they say: "What the heck, don't deliver the paper." I just wonder why there's a limit to that.

HON. MR. DAVIS: There are two aspects to this tax. There's the amount certain — let's say $25 a day — but there's also 5 percent of the unpaid tax. That scales up depending on the size of the operation.

Section 17 approved.

On section 18.

MS. EDWARDS: This is another question which is fairly small, Mr. Minister, but I'm curious to know... This section says that the operator or person referred to must provide information, etc., within 30 days. Thirty days from what point? I ask this because there are some problems with certified mail. I just think it could be a very messy sort of thing. Certified mail does not have to be picked up by anybody.

HON. MR. DAVIS: It's within 30 days of when the person is actually served the notice personally, so that's a time certain.

[ Page 8551 ]

MS. EDWARDS: I would have to assume that that would be when somebody picked up their certified mail. I had an unfortunate experience of having to explain my failure to report for jury duty one time because I hadn't picked up my certified mail. I think that's crazy, and I think we shouldn't have that kind of stuff in legislation. That's why I bring it up.

Sections 18 to 38 inclusive approved.

On section 39.

MS. EDWARDS: I want to just ask the minister if section 39 is a change from before as far as the six-year limit is concerned?

HON. MR. DAVIS: The answer is no, Mr. Chairman.

Sections 39 and 40 approved.

On section 41.

MS. EDWARDS: On this one, subsection 2(f) creates a problem for me. Subsection 2(e) says that there shall be a cumulative reclamation cost account established, and then in(f) it says that the regulations may deal with the provision for the treatment of reclamation costs and recoveries. I'm not sure what "the treatment of" means. Could you explain to me what that means?

HON. MR. DAVIS: Whether it is an eligible reclamation cost or not.

Sections 41 to 50 inclusive approved.

Schedule approved.

Title approved.

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

Motion approved.

The House resumed: Mr. Speaker in the chair.

Bill 73, Mineral Tax Act, reported complete without amendment, read a third time and passed.

HON. MR. RICHMOND: I call second reading of Bill 54.

NATURAL GAS PRICE ACT

HON. MR. DAVIS: The Natural Gas Price Act describes, better than existing legislation, how natural gas is currently priced in the province. It also makes certain provisions for the reorganization of the British Columbia Petroleum Corporation, splitting it into two elements: one solely a marketing entity, which may or may not be privatized; the other an administrative data-gathering tax base information operation, which will be retained as the nucleus of the Crown corporation.

[9:45]

Natural gas was priced arbitrarily by the Crown for many years. It was priced annually by order-incouncil. The change to market pricing only occurred in the mid-1980s. At that time the price was determined, and has since been determined, as a result of negotiation between buyers of gas — be they a utility in British Columbia or an industry in British Columbia or a firm or utility in the United States importing the gas — and the producers in British Columbia.

Also beginning in the mid-1980s, a royalty was attached to the selling price of natural gas and that revenue collected directly by the Crown as a royalty. The royalty provisions will continue. This legislation, however, is more explicit as to the manner of pricing. It might loosely be described as market-based pricing, but it does allow the end users of natural gas, whether they be an industry or a utility serving a core market, to negotiate directly with producers in the field; and it reduces the function of the pipeline company to simply that of a common carrier.

There is one provision in this legislation which was common to earlier legislation. It does, for a moment in time, enable the Crown in right of the province to own the gas at the wellhead, thereby asserting provincial jurisdiction and denying federal jurisdiction over the transaction.

Those are the essentials of the bill, Mr. Speaker.

MS. EDWARDS: As the minister has said, this bill allows the continued deregulation and privatization of the B.C. Petroleum Corporation and the continued deregulation of natural gas sales in the province. Our party opposes that total deregulation, because basically it operates to the detriment of the smaller consumer. What happens under deregulation, as experience has shown recently, is a particular sort of dissipation. Things have not been very orderly, and the small consumer can get hurt in that situation.

The market generally devolves into two sections. We've talked about this. They are the small consumers — small commercial and small industrial users who use utilities — and the large industrial users who can go around the utilities and buy their own gas. They come out being the beneficiaries of the lower gas possibilities. Frequently the costs of carrying the industry with long-term contracts and so on fall to the utilities, whereas the large industrial users have reductions of greater magnitude.

In fact, since the beginning of deregulation in British Columbia the price of gas to residential customers has fallen by 12.5 percent but to large industrial users by 48 percent. The current prices of gas indicate that the residential and commercial users pay somewhere between $1.50 and $1.75 for a gigajoule while the large industrial users are paying $1.03. The differences in costs are not accounted for by the higher cost of distribution, because those are

[ Page 8552 ]

the prices at wellhead. That seems to us to be a matter of severe concern.

As to the privatization of the British Columbia Petroleum Corporation, the minister said this afternoon that it is not yet decided. In fact, we may well hold on to a Crown-owned marketing entity because of the problems of monopsony possibilities. Certainly with the situation obtaining within the gas marketing agency, it may be that a monopoly or an oligopsony, as I mentioned this afternoon.... Those kinds of situations may be ruled to mean that the B.C. Petroleum Corporation marketing arm cannot be sold. We believe that would in fact operate for the good of the people. The minister has mentioned again this evening that the Crown, in right of the people of British Columbia, always owns the gas that comes out of the ground. For that reason, and because in general it is considered to be a public resource, we believe that there should be effective control of that resource and that the returns to the people should be as broadly based and as fair as possible.

Another reason we believe the Petroleum Corporation marketing arm probably should not be sold is that it will leave just a shred of the people and the ability of the B.C. Petroleum Corporation to do what the minister says he needs the Petroleum Corporation to do; that is, to act as a window on the gas industry. If it doesn't have a finger in the marketing side, it doesn't have that same instant and current knowledge it has when the Petroleum Corporation is involved in the marketing.

So for these reasons, the opposition will be opposing the bill.

MR. CLARK: I am pleased to see the Premier getting comfortable on this side of the chamber. I know he'll enjoy it.

HON. MR. RICHMOND: He's enjoying the view.

MR. CLARK: And he will have a long time to enjoy it, I'm sure.

I know it's late in the day, but this is a serious bill, and I would like to make a few remarks on it. This is really the burial, or one of the final stages of the privatization, of B.C. Petroleum Corporation, in my view. Really, it sets the stage for the continued deregulation of the marketplace, with some refinements taking place In this bill.

I think it's important to reflect, at least briefly, on the reason we created the B.C. Petroleum Corporation in the first place. Prior to 1973 we had the absurd situation in British Columbia that we were selling our natural gas to the United States cheaper than we were selling it to ourselves; and in addition, the small producers in British Columbia weren't getting a fair price for their natural gas. So BCPC was created in 1973. And what it did, really, was nationalize the elbow joint. I know that some elements of that still exist for jurisdictional purposes.

What it did was make it so all of the gas produced in British Columbia had to be purchased by B.C. Petroleum Corporation, and all of the gas sold in British Columbia was through B.C. Petroleum Corporation. The producers got their cost plus profit, and the Crown got the residual between the selling price and the price given to the producer. And that residual effectively became the economic rent for the province. That economic rent amounted, for the life of the rent collection element of B.C. Petroleum Corporation, to a billion dollars — a billion dollars in revenue to the Crown, which now is a very tiny sum as a result of deregulation and the new royalty regime, very tiny relative to what we received. We got a billion dollars in total revenue over ten years, and in real terms a lot more than that. It was revenue that we did not have to get out of taxpayers in many respects. So what happened? We had a regulated price regime which protected the consumer and the producer and ensured that gas sold in the United States was at least equal to and in most cases more than the prices to ourselves. We had a regulated regime.

Now we have a so-called deregulated industry, which started in 1985 when Social Credit and the Conservative government, and other provincial governments, negotiated a deregulation deal. But what has happened with deregulation is that we now have two separate gas markets. We have two components. In one, large, integrated industrial users and export customers have market power because they can shop around and buy from different sources. They have alternative sources of supply; there is a competitive market on the industrial side. So the priced dropped dramatically. But then we have another component of the market: the residential and commercial consumers. They're too small; they don't have market power. The rely on the regulated monopolies to bargain on their behalf. They haven't done that effective a job. They have no incentive essentially, because they can pass on the rate costs to the consumer. We haven't had a Utilities Commission that's prepared to look at the negotiation tactics of the utilities. As a result, we have an essentially three-price, discriminatory pricing structure in British Columbia: $1.03 per gigajoule for large industrial; $1.25 for small industrial; $1.50 to $1.70 for residential consumers.

This same gas, this same commodity, not counting distributional costs — not counting anything; just the market power — has made a differential now between large industrial and residential consumers. It's not justified by any normal economic criteria; it's simply an exercise in market power.

Export customers are getting prices equivalent to the large industrial prices because they too have alternative sources of supply; they too have a competitive market. So the only place where deregulation works is in the large industrial sector and in the export market, where there is truly a competitive market. So we are back now...

HON. MR. STRACHAN: It works in the interior; it works for the consumers.

MR. CLARK: It works in the interior, right. "It works for the consumers," the minister says. The

[ Page 8553 ]

price for residential consumers has gone down 12 percent and the price for industrial consumers has gone down 50 percent. The reality is that for large industrial consumers that can negotiate direct pricing arrangements with producers, it works very well; but it hasn't happened for the residential sector. It hasn't happened, because they're subject to the utilities, the regulated monopolies, and the Utilities Commission hasn't scrutinized their contracts.

So, Mr. Minister, we have a discriminatory pricing regime which allows the same situation we had pre-1973. We are again selling natural gas to the United States for less than we sell to ourselves — our gas, that British Columbians own under this regime. Under this deregulated pricing mechanism, we are now selling natural gas cheaper to the Americans than to ourselves.

What is worse, Mr. Speaker, and why we oppose this bill and this whole concept so strongly, is that for the next ton years we are going to see the prices of natural gas again rise dramatically. All the estimates are that they are going to rise again, and because we have a discriminatory pricing mechanism, because it relies on market power and competition, large industrial consumers may be able to take more advantage of the situation, and the residential consumers are not going to be protected in the way they were through a regulated market. And the Crown is not going to get the share of the increased value that they got during the regulated regime under the B.C. Petroleum Corporation.

The only people who benefit are the large industrial consumers, and the residential consumers are continuing to get not nearly the same price they could get in the industrial sector, because it doesn't work; there is no competitive market in the residential sector. More importantly, the Crown is not going to get the revenue they could receive or did receive under a regulated regime. As I have said earlier, it means that tax increases come from other sources rather than from economic rent generated from the resources that we own collectively as a province.

This is another bill in the trend toward deregulation. It goes in the opposite direction to the one I would like to see. It means that we've lost a vehicle for generating economic rent for the province which has in the past generated about a billion dollars in about ten years for British Columbia, The tax regime that's been brought in by this administration brings in very little revenue — a lot of revenue recently because of extraordinary fines and extraordinary exports of natural gas.

We are going into a situation where we're going to be reducing supply. Prices are going to be rising dramatically, and we're still selling gas to the United States cheaper than to ourselves. It's not a good bill in terms of the trend that it takes us in. It leaves residential consumers vulnerable in the future, and it leaves the Crown with less revenue than we would have otherwise received.

[10:00]

MR. SPEAKER: Pursuant to standing orders, the minister closes debate.

HON. MR. DAVIS: The one satisfaction I have is that the second member for Vancouver East will never be responsible for energy pricing in this province. He obviously doesn't know what the term "load factor" means.

B.C. Gas is the distribution monopoly in British Columbia. It's the biggest player in the market. Again this fall, B.C. Gas will be negotiating with the various producers in the Peace River area and will probably negotiate a further price reduction. B.C. Gas supplies the little guy, the small residential-commercial and modest-sized industrial-commercial customers in the province. So it isn't true that the residential-commercial customers are being held to ransom because they have no market power. The market power rests with the utility, B.C. Gas, and B.C. Gas will be buying its gas at no more, and generally less, than gas sold to others.

B.C. Gas, when it buys from the producers — and it will continue to buy the bulk of its production from the B.C. Petroleum Corporation — will pay something in the order of $1.70 for gas flowing to residential customers. Gas flowing to its largest industrial customers will be down around $1.03 or so. B.C. Gas is able to negotiate those different prices simply because the industrial customer takes gas continuously around the year and therefore pays a lower average price — in other words, pays wholesale — and the residential customer pays on a much lower load factor basis, This is common throughout the industry the world over, in socialist countries as well as in private sector economies. It is a fact of life not only in that industry, but in the power industry.

That disposes of this mythical differential in prices between the small consumer and the large user. Some of the large forest products companies buying on their own in the Peace River area are buying relatively short-term and getting gas at a low price, but they are always risking the likelihood that the price of gas at some point will rise and they will be caught having to pay much higher prices than the utilities. Another myth is that Americans buy gas at a lower price than Canadians. The Utilities Commission, our own ministry and the National Energy Board have to observe the laws of the country, which say that no gas can be sold outside the province at a lower price than Canadians pay with the same load factor and operating conditions. So it is not true that B.C. gas is sold outside the province for less.

MR. CLARK: Read the Petroleum Monitoring Agency report.

HON. MR. DAVIS: We have a monthly report. There is a special monitoring agency in Ottawa which monitors these matters, and if there are differentials or anomalies it pursues them. There may be some short-term interruptible sale going for a lower price than a long-term firm sale, but that's the only reason there would be an appearance of a lower price. That

[ Page 8554 ]

applies within the province as well as outside the province. True, the B.C. Petroleum Corporation is collecting less money today. It would be collecting less money if it operated as it was set up with the NDP, simply because the world price of oil has gone down; the competitive price of gas has had to go down; the profitability of the gas business is much less than it was in the heady days of the late 1970s and early 1980s. That was a windfall, if you like, for a term, as long as prices were going up. Now that they're going down, it's the reverse. In any case, the Crown gets 15 percent of the value of all production from the wells in the province, ~and from a producer point of view or a revenue point of view we have to hope that prices go up rather than down. But they've been going down, and that's some comfort to consumers.

I'm glad to say that gas users in the lower mainland pay half the price of oil or half the price of electricity equivalent today, and it's largely a result of large-scale operations and the regulation of the pipeline and distribution companies.

I think the regime that's developing is serving the user well. The consumer, after all — call him even the voter — is more important than the producers. If the market system serves you and me better as consumers than some other regime, so be it. That is the pricing system that's embraced in this legislation.

I move second reading.

Motion approved.

Bill 54, Natural Gas Price 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: I call second reading of Bill 53.

PAROLE ACT

HON. MR. REE: I am pleased to bring forward Bill 53 for second reading. While a provincial parole act is necessarily limited by federal jurisdiction, it can provide several features that will benefit the parole system of British Columbia.

Previously the maximum penalty for violation of most parole statute offences was six months' incarceration. However, there are now an increasing number of provincial statutes which contain penalties of incarceration ranging from one year to five years less a day. Currently such persons cannot be considered for parole. A provincial parole act will provide those persons sentenced under the provincial statute the same opportunity as those sentenced under the Criminal Code and enable them to earn conditional release.

At present, B.C.'s parole board operates under the authority of the federal Parole Act and sections of the provincial Correction Act. A provincial parole act will provide a clear legislative basis for the existence, organization and mandate of the B.C. Parole Board. A provincial act will establish a stronger identity for B.C.'s parole board, better enabling the board to maintain administrative practices which reflect the concerns of British Columbians. For example, in this province prisoners are not automatically considered for conditional release by the board but must take the initiative themselves to apply for parole.

In his 1988 report, the ombudsman made several recommendations centred on the establishment of a provincial parole act. The ombudsman recommended that parole criteria be established in legislation. This has been done.

Section 7 of the act provides that the board may grant parole where it considers the inmate has derived the maximum benefit from imprisonment, the reform and rehabilitation of the inmate will be aided by granting parole and, most importantly, the inmate's release will not present an undue risk to society.

The ombudsman's other recommendations concern the independence of the board as reflected in the structure of the board and the appointment of its members. Every reasonable step has been taken with the new act to give assurance of the board's independent nature. The act provides that board members will be selected using a community-based appointments model, which is current board policy and will now be placed in regulation. This will provide a higher level of recognition to the existing selection process. Candidates for board membership are selected on the basis of a number of criteria, including their degree of involvement in the community, decision-making abilities, understanding of the justice system and ability to represent the interests of the community at large. In discussing the independence of the board, it is extremely important to recognize the high degree of public commitment and public service that is required of board members. It is a truly difficult job offering very little in the way of remuneration. People who serve as board members do so from a sense of duty and community service.

I'm very pleased to be able to establish a provincial parole act that will provide a clear, legislative basis for the structure, function and identity of the B.C. Parole Board. I trust all members of the House will support speedy passage of this legislation.

MR. GUNO: I'm glad to respond very briefly to the introduction of this bill. What this bill does in essence is recreate, as the Solicitor-General says, the provincial Parole Board under separate legislation. We have to ask ourselves: what is the motive of the government in introducing this bill? I understand it is a response to the ombudsman's report that resulted from complaints of improper political interference in the Parole Board's operation with respect to Julie Belmas.

While this bill does incorporate some of the recommendations contained in the ombudsman's report, it remains an incomplete and unsatisfactory response to the concerns expressed by the ombudsman. In general, these concerns relate to how the board's independence is safeguarded and to how the

[ Page 8555 ]

public can remain confident that the board's decisions are based on well-defined, objective and acceptable criteria.

On the plus side, we must concede that the bill does incorporate the recommendations that the chairman's tenure be confined to a single term of six years, to incorporate that sense of independence that's required to rule on fundamental areas of justice. It also incorporates the recommendation that board members be appointed to a term of four years and, like the chairman, be ineligible for reappointment.

The concern is that it partially incorporates the recommendation that board members "neither seek nor hold any other appointment, office, employment or contract with or through the provincial government." Subsection 2(7) of the bill declares ineligible any person who holds any other office by appointment, but it does not address the whole issue of some other remunerative relationship with the government.

On the minus side of the bill — and what we're concerned about — is that it leaves the board appointment to the political process, under the label of appointments by cabinet. But I think the main concern we have, in a very broad sense, is that the guts of this bill are really by regulation. The criteria, in terms of setting them out by regulation, is a matter of concern. I think the question should be asked: why not do everything possible to set this out by legislation up front in terms of, for instance, the criteria for eligibility for appointment to the board, and the rules and procedures of the board. All these are set out by regulation. I think that is the major flaw in this bill, in that much of those very fundamental processes are now being set out by regulation. We'll canvass more of those in the clause-by-clause examination of this bill.

[10:15]

MR. B.R. SMITH: By request of the minister, I'm going to be very brief. I would just say to the critic opposite that this bill is something that was in the works for a long time. It is long overdue and it does give a separate, independent regime to parole instead of including it in the federal legislation. The notion of a four-year appointment is an improvement because it used to be that they were appointed for four years, but for one and three or two and two. Now they have a guaranteed appointment for four. The chairman has a guaranteed appointment for six. None of them can serve again, so they have total independence. They're not going to be judged for reappointment based on how they do because they can't be reappointed. It's a big step forward; it's a vast improvement. We have to bear in mind that we're talking about parole for offenders under two years. I think it's an excellent bill, nicely and simply drafted. I commend the minister for bringing it forward.

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

HON. MR. REE: I also recognize the comments of the member for Oak Bay, the former Attorney-General, who initiated a great deal of this bill. I think recognition should be given to him for that.

I will not say much more because most of the critic's comments were section-by-section criticism of the bill and that is more appropriate in the committee stage. I now move second reading of Bill 53, Mr. Speaker.

Motion approved.

Bill 53, Parole 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 10:17 p.m.

[ Page 8556 ]

Appendix

AMENDMENTS TO BILLS

PROPOSED AMENDMENTS ON NOTICE

19 The Hon. R. M. Johnston to move, in Committee of the Whole on Bill (No. 19) intituled Municipal Amendment Act, 1989 to amend as follows:

SECTION 3., by deleting section 3.

SECTION 14., in the proposed section 777 by deleting subsection(2) and substituting the following:

(2) Parts 2 and 3 apply to

(a) the holding of an election for electoral area directors,

(b) the qualifications for nomination and election as an electoral area director, and

(c) the holding of office by an electoral area director.

SECTION 14., in the proposed section 779 by adding the following subsections:

(7) The electoral area director who appointed an alternate director may appoint, as a replacement for the alternate director, another person who has the qualifications necessary to be nominated as a director for that electoral area.

(8) An alternate director holds office as alternate director until a replacement is appointed under subsection(7) or until the next general local election, whichever is earlier.

SECTION 14., in the proposed section 781

(a) in subsection(1)(b) by deleting "(13)." and substituting "(15).",

(b) in subsection(2) by adding "Except as otherwise provided," at the beginning,

(c) in subsection(3) by deleting paragraph(c) and substituting the following:

(c) resolutions and bylaws on the general conduct of the board's business, including bylaws under sections 783 and 784;, and

(d) in subsection(3) by adding the following paragraph:

(e) resolutions and bylaws under Part 29 that are not regulatory bylaws referred to in paragraph(b).

SECTION 14., in the proposed section 783

(a) in subsection(4) by deleting "the unanimous vote of all the directors." and substituting "a unanimous vote.", and

(b) in subsection(5) by deleting "may" after "special meeting" and by deleting paragraph(a) and substituting the following:

(a) may be given, with the consent of the chairperson and 2 directors, less than 5 days before the date of the meeting, and

SECTION 14., in the proposed section 788

(a) in subsection(1)(g) by adding "and the provision of assistance in response to other classes of circumstances specified in the bylaw that may cause harm to persons or property" and the end,

(b) in subsection(1) by adding the following paragraph:

(j) contributions to the costs of a service referred to in paragraphs(a) to(i) that is provided within the service area by another person or association., and

(c) in subsection(9) by adding "and assistance response" after "fire fighting" and after "fire suppression".

[ Page 8557 ]

SECTION 14., in the proposed section 789(1) by adding the following paragraph:

(h) contributions to the costs of a service referred to in paragraphs(a) to(g) that is provided within the service area by another person or association.

SECTION 14., in the proposed section 797(1)(a) by deleting "does not exceed" and substituting "is an amount equivalent to not more than".

SECTION 14., in the proposed section 798

(a) in subsection(1) by adding "and(3) " after "subsection(2) ", and

(b) by adding the following subsection:

(3) Section 298 does not apply to the obtaining of assent under section 796(1) where required under section 797(6)(b).

SECTION 14., by deleting the proposed section 807.1(1) and substituting the following:

(1) The board

(a) shall cause a provisional budget for the next year to be prepared and shall adopt the provisional budget, as prepared or as altered by the board, before December 31, and

(b) may amend the provisional budget at any time after its adoption and before adoption of the annual budget.

SECTION 14., in the proposed section 810. 1 by adding the following subsection:

(7) The provisions of the Taxation(Rural Area) Act respecting assessment, levy, collection and recovery of taxes and the addition of penalty and interest on unpaid taxes apply to taxes levied under this section.

SECTION 14., in the proposed section 819(8) by adding "of the Lieutenant Governor in Council" at the end.

SECTION 14., in the proposed section 820.1

(a) in subsection(1) by adding "Section 262 and" at the beginning and by deleting applies" and substituting "apply", and

(b) in subsection(3) by adding "for a payment authorized under section 262 or" after "amount required by a board".

39 The Hon. P. A. Dueck to move, in Committee of the Whole on Bill (No. 39) intituled Health Statutes Amendment Act, 1989 to amend as follows:

SECTION 3., by deleting section 3 and substituting the following:

3. Section 1 of the Community Care Facility), Act, R.S.B.C. 1979, c. 57, is amended

(a) in the definition of "community care facility" by striking out "personal care" and substituting "care", and

(b) by repealing the definition of "personal care".

SECTION 7., by adding 'and substituting "care" ' at the end of paragraph(b).

SECTION 16.,

(a) in the proposed section 5.1(1) by deleting "one or more members" and substituting — 3 members, one of whom shall be an emergency medical assistant selected in the prescribed manner and another of whom shall be a medical practitioner,",

(b) in the proposed section 5.2(1) by deleting paragraphs(a) and(b),

(c) in the proposed section 5.2(1)(e) by striking out "that impairs" and substituting 11 that materially impairs",

(d) in the proposed section 5.2(3) by deleting paragraph(a), and

(e) by adding the following section:

[ Page 8558 ]

Appeal

5.3.(1) A person who considers himself or herself aggrieved or adversely affected by a determination or disciplinary action of the board under section 5.2 may appeal to the Supreme Court at any time within 30 days after the date of the determination or disciplinary action.

(2) The appellant shall file a notice of appeal with the Registrar of Supreme Court and shall serve a copy of the notice of appeal on a member of the board within the time limited under subsection(1).

(3) The board, on the request of the appellant, shall furnish to the appellant certified copies of all records on which the board acted, on payment for copies at the same rate as would be charged for the same service by an official stenographer of the Supreme Court.

(4) The appeal shall be

(a) a new hearing where there is no transcript, or

(b) a review of the transcript and proceedings where there is a transcript, but the court may, where it considers it necessary in the interests of justice, conduct a new hearing or allow the introduction of new evidence.

(5) The board is entitled to be a party on the hearing of the appeal and may take part in the proceedings.

(6) On the hearing of an appeal under this section, the Supreme Court may

(a) make an order confirming, reversing or varying the decision of the board,

(b) refer the matter back to the board with or without directions, or

(c) make such other order as it considers proper in the circumstances.

SECTION 17.(a), by striking out "paragraph" and substituting "paragraphs" and by inserting the following paragraph before the proposed paragraph(b. 1):

(a. 1) prescribing the manner of selection of an emergency medical assistant for the purposes of section 5. 1( I ) ; .

SECTION 27., by adding the following section:

Commencement

27. Sections 14 to 17 come into force by regulation of the Lieutenant Governor in Council.

46 The Hon. L. Hanson to move, in Committee of the Whole on Bill (No. 46) intituled Labour and Consumer Services Statutes Amendment Act, 1989 to amend as follows:

SECTION 10., in the proposed section 48 by adding the following subsection:

(4) Subject to the minimum and maximum fines referred to in subsection(3), section 4 of the Offence Act continues to apply to a person who is convicted of an offence under section 40(1) of this Act.