[ Page 10905 ]

CONTENTS

Routine Proceedings

Tabling Documents –– 10905

Oral Questions

Awarding of forest licence. Mr. Miller –– 10905

Nurses' strike. Mr. Cashore –– 10906

Mutilation of wildlife. Mr. Davidson –– 10907

Nurses' strike. Mr. G. Janssen –– 10907

Driftnet fishing. Mr. Peterson –– 10907

Pacific National Exhibition. Ms. Pullinger –– 10908

Forest Amendment Act (No. 2), 1990 (Bill 48). Committee stage.

(Hon. Mr. Richmond) –– 10908

Mr. Miller

Mr. Serwa

Third reading

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

On vote 30: minister's office –– 10913

Mr. G. Janssen

Mr. Kempf

Mr. Miller

Mr. Serwa

The House met at 2:04 p.m.

MR. PELTON: Hon. members, this afternoon our Speaker has two guests in the gallery, and I would like to introduce to you Frank Kemp and Lynne Kemp, and ask that you welcome them to the proceedings this afternoon.

HON. MR. SAVAGE: On behalf of the second member for Delta (Mr. Davidson) and myself, I have the honour to introduce a gentleman who works hard in Delta on behalf of our party and who has been a long-time supporter of this assembly. Please welcome Mr. Vic Eaton.

MR. DAVIDSON: If you're very lucky in life, nice things happen to you, and the nicest thing that happened to me is in the gallery today. Would the House please welcome my wife Debbie.

HON. MR. PARKER: Would the House welcome today friends from Terrace: Terry Brown, Mel Bevan and Danny Sheridan of the L'Ax Ghels Community Law Centre Society in Terrace.

Hon. Mrs. Gran tabled the annual report of the Ministry of Government Management Services for the year ending March 31, 1989.

Oral Questions

AWARDING OF FOREST LICENCE

MR. MILLER: To the Premier. The ombudsman has found that cabinet overruled the Forest Act and the statutory responsibility of the chief forester in awarding forest licence A27823 in the Takla-Sustut area of north-western British Columbia. Can the Premier advise what statutory authority gives cabinet the right to override legislation passed in this House?

HON. MR. VANDER ZALM: I'll defer to the Minister of Forests.

HON. MR. RICHMOND: In response to the member, let me say that I have just received the report that he mentions, and I haven't had a chance to go through it yet. When I do, I will bring back an answer to this House.

MR. MILLER: Further to the Premier. The Ministry of Forests valuation branch, engineering branch, industrial development and marketing branch, the timber policy branch and the deputy chief forester concluded that other bidders should have received the licence. What political considerations would cause the cabinet to overrule these technical experts?

HON. MR. VANDER ZALM: I'm very honoured to have all of these questions from the Forests critic, Mr. Speaker. I suppose it's because the Leader of theOpposition is absent again. I'll defer to the Minister of Forests.

HON. MR. RICHMOND: I've already taken that question as notice. I will bring back a response to this House in due course.

MR. MILLER: Further to the Premier, Mr. Speaker, the timber policy branch concluded that the other bidders would have generated $1 million more per year in stumpage and an additional $750,000 in bonus bids over the people who got the licence. What political considerations could warrant the cabinet's breaching the Forest Act and suffering the loss of $1.75 million in the first year of the operation of the licence?

HON. MR. VANDER ZALM: Mr. Speaker, I probably shouldn't get up on these issues. I'm sorry, perhaps I'm not thinking as clearly as I might on other days; I have telephone-tapping on my mind. I'll defer to the Minister of Forests.

HON. MR. RICHMOND: Since it falls under the same report in question, and since I have already taken the question as notice twice, I will take this as notice and get back to the House. Clearly the last question was out of order and misdirected.

MR. MILLER: A new question to the Premier, whom I assume has some responsibility in cabinet. In view of the political interference outlined by the ombudsman in the awarding of this licence, would the Premier agree to cancel...?

MR. SPEAKER: Order, please. On a point of order, the government House Leader.

HON. MR. RICHMOND: Mr. Speaker, I respectfully submit to you that this is the same question asked in a different fashion, and it's clearly out of order. It has been taken as notice three times.

MR. SPEAKER: The Chair has some difficulty, because I have to hear the question. The questions, as I've heard them, have had a subtle difference between them. Until I hear the question, I can't determine whether or not it is in order. So I'd ask the member for Prince Rupert to state the question.

MR. MILLER: The question to the Premier, who has the responsibility, is: in view of the ombudsman's report and the political interference, would the Premier agree to cancel the licence, to institute an independent investigation into this whole matter and subsequently to re-tender this supply block?

MR. SPEAKER: The matter has been taken as notice by the Minister of Forests on two previous occasions, so I think.... The Premier wants to answer.

[ Page 10906 ]

HON. MR. VANDER ZALM: I could attempt to answer it, but frankly, I'm too upset about telephone-tapping from the other side, so I will take this on notice.

MR. SPEAKER: Order, please. The opposition House Leader.

MR. ROSE: I think it would be appropriate for the Premier to withdraw that remark. First of all, it's untrue; secondly, it's inappropriate. I think it's time he withdrew it. I think there has been enough news coverage on this to indicate that he is dead wrong on this wiretap.

MR. SPEAKER: Order, please. Could I ask the opposition House Leader if he was standing on a point of order at that time? I need to know exactly what the Chair is being asked.

MR. ROSE: I stood on a point of personal privilege and asked the minister to withdraw. If you would prefer it to be a point of order, so be it.

MR. SPEAKER: There is no such thing in our standing orders as a matter of personal privilege. From time to time members use "personal privilege" for some reason, but an exhaustive search of the Journals will show that there is no such thing.

HON. MR. VANDER ZALM: On the same point of order, I ask that I be forgiven for my concern, but frankly, I feel awful. I feel awful for my family, for all my constituents, for all the people who ever telephone me and for all the people I telephone, because I don't know what's tapped. I don't know what they're after. I don't know who in this province is safe anymore, with the NDP tapping telephones.

MR. SPEAKER: I'd like to deal with this point of order first. First of all, there was a request for a withdrawal. Withdrawal requests can be made only for unparliamentary language. There is a dispute as to fact, and the Chair cannot ask for a withdrawal on that. But I have not heard unparliamentary language. I've heard some things, obviously, which will concern members, but again it's a dispute between members as to fact, and that is something the Chair cannot adjudicate on.

I will listen to the Leader of the Opposition.

MR. HARCOURT: An opinion was offered which I find offensive. I find it offensive as an MLA and I find it offensive as a member of the bar that the Premier has accused me, members of this caucus and the NDP of wiretapping. I request that it be withdrawn.

HON. MR. VANDER ZALM: On the same point of order, I have reason to be worried when the House Leader for the opposition and the member for North Island (Mr. Gabelmann) put it to me that they'll give me a foot-high stack of tapes if they can have a meeting. That was the proposal. That's what the meeting you wanted.... Blackmail!

Interjections.

MR. SPEAKER: Order, please. I can only listen to one point of order at a time. If we have an interruption of one point of order in the midst of another point of order, the Chair can't proceed.

I would ask members to restrain themselves so the Chair can maintain some kind of order.

MR. ROSE: Again, I think there's something here for the Premier to withdraw. I know he's upset; we're all upset about this matter. We're very concerned about this matter.

The point is — and the Premier knows — that on two occasions, once a written one and once a phone call, the member for North Island and I attempted to come and make an appointment with the Premier so we could discuss this matter with him. It was refused both times. There was no threat attendant to any of it; certainly not from me, and certainly not from the member for North Island.

MR. SPEAKER: Hon. members, this is supposed to be question period. I'm going to listen to another point of order.

HON. MR. VANDER ZALM: I think, since we heard from the House Leader, we should hear from the member for North Island what he told to my press secretary.

MR. SPEAKER: Hon. members, before we proceed, the Chair has only to do the duty assigned to it by the members of the House. There is a dispute about fact, but the Chair is restricted in how the Chair can ask for withdrawals of matters which members find offensive. Members may find these matters offensive, but it's not within the purview of the Chair to deal with them at this time. Only when an unparliamentary statement is made — and we will determine whether or not that is unparliamentary — can we ask for withdrawal. Other statements are a dispute as to facts among members.

I recognized the member for Maillardville-Coquitlam on a question during question period. Would the member please continue.

[2:15]

NURSES' STRIKE

MR. CASHORE: The question is to the Premier. A constituent, a long-term patient in Valleyview Hospital, is being moved from the ward he shares with three people to a ward he will share with eight strangers as a result of the ongoing nurses' dispute. The man's wife is understandably distraught about the stress on her husband, who is severely depressed and suicidal.

In the interest of a speedy resolution and a productive bargaining process, has the Premier told

[ Page 10907 ]

his cabinet that he will tolerate no further interference in this dispute, whether it be inflammatory statements about nurses or unauthorized statements on the government's bargaining position?

HON. MR. VANDER ZALM: I would suggest to the member that he ask his constituent to write me. In the meantime, I'll defer to the Minister of Health.

HON. J. JANSEN: Mr. Speaker, what's more important is that we've asked both our arbitrator and the nurses' union to resolve this issue as soon as possible, in the interests of patient care.

MUTILATION OF WILDLIFE

MR. DAVIDSON: Mr. Speaker, at Boundary Bay at least six fledgling marsh hawks and a bald eagle have been found dead with their legs chopped off. I would like to ask the Minister of Environment what steps he has taken to try to find the weird individual who would be responsible for such a despicable act.

HON. MR. REYNOLDS: I can assure the member that my staff are investigating this matter thoroughly. I agree — and I'm sure all members of this House would agree — that the act is despicable. I'm sure that we will get to the bottom of it as quickly as we can, and I would hope that members will support my staff in that effort, because I'm sure it has very little to do with the issue that is taking place. I'm sure it is just some person out there with a very weird sense of what is happening who is doing this despicable act.

NURSES' STRIKE

MR. G. JANSSEN: A question to the Premier. Instead of receiving home-care treatment from community nurses, many elderly and terminally ill patients are having to check into hospital for visits that are stressful and, incidentally, cost the health system 600 percent more than home care. This is a matter the Finance Minister (Hon. Mr. Couvelier) might keep in mind the next time he decides to make an unauthorized intrusion into the collective bargaining process. Has the Premier instructed his Finance minister to stop interfering in the collective bargaining process, to stop making inflammatory statements and to stop posing as an authorized government negotiator?

HON. MR. VANDER ZALM: Mr. Speaker, I guess all the questions are aimed at me because they know how upset I am about the NDP telephone-tapping.

MR. SPEAKER: Order, please. I have a point of order.

MR. ROSE: I have got to protest. I don't like to do this during question period, but this is a repeated attack, which we find offensive. It's also imputing motives, and it's a criminal act to wiretap.

Interjections.

MR. ROSE: All right. So why don't you stop that nonsense and withdraw that kind of language?

Interjections.

MR. SPEAKER: Order, please, hon. members. I'm going to declare just a short recess. I want to talk to Mr. Clerk.

The House recessed at 2:19 p.m.

The House resumed at 2:20 p.m.

MR. SPEAKER: All of question period has been recorded today by Hansard; I will take the opportunity when Hansard is published to review all of the remarks made, and if there is a requirement for a withdrawal, I will ask at that time for a withdrawal, because I would like to be specific as to what matters were said.

I appreciate that all members today are very testy — I guess that's the correct word — and perhaps with great justification. However, the Chair must maintain the decorum and rules of the House as you have charged me to do.

I would like to continue with question period and take the next question. The next question is from the second member for Langley.

MR. PETERSON: Thank you very much, Mr. Speaker.

Interjection.

MR. SPEAKER: Excuse me; you're quite correct. The question was asked by the member for Alberni (Mr. G. Janssen), and if there's no answer to that, I will take the second member for Langley.

DRIFTNET FISHING

MR. PETERSON: Thank you again, Mr. Speaker. My question is to the Minister of Agriculture and Fisheries. In view of the massive kill of albacore tuna and other species by Japanese driftnets revealed this morning, will the minister ask his federal colleagues to make urgent representations to the government of Japan with respect to this horrible devastation of our shared marine life?

HON. MR. SAVAGE: I share the member's concern. I am somewhat appalled, and I have been very suspicious of the reports we have received. As we all recognize from news reports that have been in the paper this morning and from some of the figures we have seen previous to that, it is appalling and unacceptable to continue driftnet fishing as a means of targeting, supposedly, the red squid as the target species, the bycatch being a number of not only other marine life but, of course, mammals that are involved as well.

British Columbia, through our Premier and through our government action, has taken the lead in

[ Page 10908 ]

trying to have the cessation of this horrendous type of fishing in the Pacific Ocean. It will not be allowed, I hope, past 1992. I just wish we could end it tomorrow, hon. member, because it is despicable. I do not accept that that is the only way to catch the targeted species.

We as the government of British Columbia and I as the minister will continue to pressure the nations — not only our own government in Canada, but nations around the world — that are involved in this fishery in the Pacific Rim to cease and desist as quickly as possible.

PACIFIC NATIONAL EXHIBITION

MS. PULLINGER: My question is to the Minister of Tourism (Hon. Mr. Michael). Yesterday the member for Esquimalt–Port Renfrew (Mr. Sihota) asked whether the minister's assistant, Mr. Van....

Interjection.

MS. PULLINGER: Oh, sorry. I'll redirect it to the parliamentary secretary.

The member for Esquimalt–Port Renfrew asked whether the minister's assistant, Mr. Van, had contacted members of the PNE board concerning the future of the general manager, Russ Smith, and the minister said he would discuss this matter with his assistant. Given that Mr. Smith was fired last night, will the minister tell this House whether or not that issue has been discussed with Mr. Van?

HON. MR. RICHMOND: I would ask the second member for Nanaimo to withdraw those final comments. They are untrue.

MR. SPEAKER: Again, hon. members, we're dealing with a dispute about facts between members rather than unparliamentary language.

HON. MRS. JOHNSTON: Mr. Speaker, I would be pleased to take that question on notice and have the proper answer brought back to the House.

HON. MR. RICHMOND: Mr. Speaker, a point of order and a request to the Chair. In response to the concerns from many of our constituents who value their privacy and in the interests of enabling elected members on both sides of the House to do their jobs with some confidentiality, I have asked the Provincial Secretary (Hon. Mr. Dirks) to have those parts of the precincts that fall under his jurisdiction swept for electronic or illicit bugging.

I am asking you, Mr. Speaker, to do the same in those areas of the precincts that fall under your jurisdiction. I respectfully request that you do so.

MR. SPEAKER: It's a point of order, but I can also hear other matters on a point of order. It is not a ministerial statement. It's a point of order, but the Chair will hear...

MR. ROSE: I would just say that we on this side of the House welcome the proposal by the minister. We think that if there is any doubt about this at all, he should proceed forthwith.

Orders of the Day

HON. MR. RICHMOND: Mr. Speaker, I call committee on Bill 48.

FOREST AMENDMENT ACT (No. 2), 1990

The House in committee on Bill 48; Mr. Pelton in the chair.

On section 1.

MR. MILLER: Quickly to the minister, this section allows timber within a tree-farm licence to be allocated to a pulpwood-harvesting agreement. I'm assuming that that's not currently the case. Is this required, in view of the current pulpwood-harvesting agreement offerings that are being made throughout the province?

HON. MR. RICHMOND: This amendment makes provision for including a condition in the new treefarm licence that will authorize the disposition of timber within the tree-farm licence to a holder of a pulpwood agreement by adding references to pulpwood agreements and division (6) of part 3. The Forest Act currently authorizes the disposition of timber within a new tree-farm licence through the issuance of small business timber licences and woodlot licences, providing this was a condition of the award of the tree-farm licence.

However, tree-farm licences issued in the future could contain pulp-quality timber of little immediate use to the tree-farm licence-holder, small business licences or woodlot licences. In these cases, it would be useful to be able to make the award of a tree-farm licence subject to the reservation of pulp-quality timber within its boundaries for sale to a pulpwood agreement holder. This amendment achieves that purpose.

MR. MILLER: Just for clarity, the amendment allows current tree-farm licences to be amended to allow pulpwood-harvesting within their boundaries. Is that subject to negotiation with the current holder of the licence? I'll leave it at that and do one at a time.

HON. MR. RICHMOND: Yes.

MR. MILLER: In any new tree-farm licence issued, this would automatically be a condition of the licence?

HON. MR. RICHMOND: It could be, yes.

MR. MILLER: Rather than having an automatic ability, it really is a question of the ministry having to negotiate that specific provision.

[ Page 10909 ]

HON. MR. RICHMOND: It gives the ministry the ability to do it, but it's not necessary. It would be a matter for negotiation.

MR. MILLER: Just generally, have substantial volumes of pulpwood been identified in current tree-farm licences that currently are not being harvested, and are people and companies desirous of obtaining that wood?

HON. MR. RICHMOND: Mr. Chairman, I can't speak knowledgeably about every pulpwood agreement or every TFL in the province, but in certain instances I can, and the answer is yes.

Section 1 approved.

On section 2.

MR. MILLER: I asked a question the other day in the estimates regarding what I called an overlapping pulpwood agreement. In other words, the agreement that's currently being offered in the Prince George area — according to the holder of two current licences — overlaps those two current licences. Is it the intention under this section to be able to correct that problem by allowing the licence-holder to consolidate those two licences I mentioned?

[2:30]

HON. MR. RICHMOND: Yes, the amendment clearly establishes that pulpwood areas can be designated over tree-farm licences, thereby allowing the sale of pulp-quality timber on those licences to a pulpwood agreement holder. The current wording in the Forest Act is not clear, and this amendment clarifies that in the case of overlap it can be more clearly delineated as to species, etc.

MR. MILLER: The section reads: "With the consent of the licensee the minister may... amend a pulpwood agreement...." That really doesn't seem to offer any strength at all, Mr. Minister. Why would you want to insert that?

MR. CHAIRMAN: We're dealing with section 2.

MR. MILLER: My apologies, Mr. Chairman. I jumped.

Section 2 approved.

On section 3.

MR. MILLER: I'll pose the same question I just posed.

HON. MR. RICHMOND: Mr. Chairman, we may amend a licence or a pulpwood agreement, but it has to be with the consent of the licensee.

MR. MILLER: So if the licensee refuses, I presume nothing would happen, although certainly there are persuasive powers. The current agreements are replaceable for 25 years. Are there opportunities to amend at the anniversary dates?

HON. MR. RICHMOND: Yes, there are. Pulpwood agreements need not necessarily be for 25 years. They could be for a shorter duration.

MR. MILLER: I'm aware of that. I'm also aware that they need not be replaceable, although the provisions of the act allow for that and the pulpwood agreements currently in force, I understand — there may be one exception — are replaceable licences. Are those in fact perpetual licences?

HON. MR. RICHMOND: No, they are not perpetual, and they are subject to the many conditions prevailing at the time: performance, availability of fibre, etc.

MR. MILLER: However, providing that licensees conform to the requirements of the licence, they appear to be perpetual.

HON. MR. RICHMOND: No, performance is only one requirement that must be met. It must be ascertained that the desirable fibre is available. As we all know, conditions can change, so they are not perpetual licences. In most cases they are renewable, and as the member pointed out, in one case it is not renewable.

MR. MILLER: Pulpwood-harvesting agreements allow for harvesting, although the minister and others have said that it need not necessarily involve harvesting. The primary requirement is to purchase residuals in the area, and conditions are laid out in terms of that purchase. Having fulfilled that requirement, the harvesting is an option. But I would also assume that if harvesting takes place, the requirement is also to reforest, to put in preharvest silviculture prescriptions, and to ensure that the land is harvested on a sustainable basis and a new crop of trees is grown. Given that, I can't see why they would not be perpetual, providing that those conditions were fulfilled.

HON. MR. RICHMOND: Mr. Chairman, in many cases they may be. If the licensee has met all the requirements in silviculture, the fibre is available and the land base hasn't changed, it would be renewed. But I am making the point that they are not necessarily perpetual. In practical application they may be, but it's not written into the pulpwood agreement, and it doesn't follow automatically that they're renewed.

Section 3 approved.

On section 4.

MR. MILLER: In this section I just want to canvass the definition of "pulpwood." It would appear to

[ Page 10910 ]

anybody who reads the word that we're talking about wood used exclusively for the manufacture of pulp, although that's not necessarily the case. There are other processes that also can utilize low-grade wood. In the last few years it has become apparent that wood designated as pulpwood has been utilized for sawn wood in some cases. In other words, because of pressures, demands, availability of fibre and better utilization in mills, this wood could fall under a far broader category than the name implies.

In inserting that clause, is it the minister's intention that this wood would be awarded for any particular form? What did you have in mind when you decided to bring these amendments forward? Were you thinking of the pulp industry? Were you thinking of opportunities that might exist in other manufacturing processes?

HON. MR. RICHMOND: It is timber within the pulpwood agreement. It may be sawlogs or merchantable timber that is not of interest to a small business sale. It may not be of sufficient quantity or may not be of interest to or needed by the tree-farm licence-holder. It provides for the sale of timber in this pulpwood agreement.

If we have an agreement with a company for pulpwood or wood that's going to be used in a wafer board plant or something like that, then there may very well be wood in there that dues not fall under the pulpwood agreement. This amendment provides for the sale of that timber within the TFL to the holder of the pulpwood agreement — again, with the consent of the TFL-holder.

MR. MILLER: In the guidelines used by the ministry where offering pulpwood agreements, is there a definition of the specific industrial plants that would fit that licence category? A strand board plant, for example, would obviously fit. But are there specific industrial definitions that would qualify industrial plants producing particular products to apply for a pulpwood agreement? Or is there a limit? For example, if a small manufacturer proposed that they could manufacture a solid-wood product, would they be eligible for one of these licences?

HON. MR. RICHMOND: No. The idea of a pulpwood agreement is to make use of residual fibre such as chips, sawdust, hog fuel and non-merchantable timber. The idea of the whole pulpwood agreement is to deal with the category of wood that is of pulp quality. But this amendment allows for the sale of the small quantity of merchantable timber or pulpable product that may be in a stand of deciduous trees to that PA-holder and, as I said, with the consent of the licensee.

MR. MILLER: Okay. That seems fairly clear. There are additional problems with small operators trying to acquire excess wood that's not currently being taken out of the bush from tree-farm licences. Small operators have approached me in various parts of the province trying to access that wood, and they're having a great deal of difficulty doing it. I am wondering if this would give them some relief in that endeavour.

Sections 4 and 5 approved.

On section 6.

MR. MILLER: I wonder if the minister could describe the foreseeable conditions that gave rise to this section. It basically requires the holder of a licence to provide a security. I might ask at the same time what kinds of securities are optional. What kinds of securities is the ministry seeking in respect of this part?

HON. MR. RICHMOND: We do have some licensees — some of them in the member's riding — whose licences are running out, and there's always the possibility that the licensee may cut and run and be gone. What we're saying is that if you are the holder of a non-replaceable major licence, you must provide security prior to or at the time of harvesting to cover the estimated cost of basic silviculture, so that the taxpayers of British Columbia aren't stuck with that bill.

MR. MILLER: Again, in what form would the Minister envisage the security being done?

HON. MR. RICHMOND: It's a term I'm not familiar with, but I'm told it's a receipt-and-agreement form — a safekeeping agreement, I guess it's called — or a form of performance bond of some sort. Whatever the licensee chooses to use, it has to be an acceptable form to the ministry so that we save the taxpayers harmless in the event that we have to go in and clean up after the licensee has gone.

MR. MILLER: We've used — for example, municipally — an irrevocable letter of credit. I don't know it that would be the same type of thing.

Is there any provision — this may be an obvious question, and it may be an obvious answer — in similar circumstances when a company folds and goes out of, business? Do you take your chances that you may be stuck with the silviculture tab?

HON. MR. RICHMOND: That's always a risk, I guess, in any business venture. A person’s irrevocable letter of credit or bond may be good today, and if they're out of business tomorrow, it's not. So yes, I guess there’s always some risk that we may be stuck with a silviculture bill.

I should just clarify that this is on non-replaceable licence only, and there's always the downside risk that someone will go bankrupt and out of business and that you cannot collect.

Section 6 approved.

On section 7.

[ Page 10911 ]

MR. MILLER: It's obvious that the penalties have not been the same, and perhaps the minister would describe the difference that exists — prior to the implementation of this section.

HON. MR. RICHMOND: This amendment directs that when calculating the average bonus bid for purposes of determining a trespass charge where Crown timber is cut without authority, bonus bids tendered on the timber sale licences issued within tree-farm licences can be included in the calculation.

[2:45]

In the past, the average bonus bid has, for the most part, been calculated using only small business forest enterprise timber sale licences located within the timber supply areas, excluding TFLs. However, as of 1988, the small business forest enterprise program has been expanded into tree-farm licences. It is, therefore, appropriate now to include small business forest enterprise timber sale licences issued within tree-farm licences in the calculation of the average bonus bid for purposes of determining trespass charges.

MR. MILLER: This, then, does not apply where someone from outside of or contiguous to the tree-farm licence may trespass on the tree-farm licence, just as — let's use a different argument — in a timber supply area, where the holder of a small business licence goes outside the boundaries of that licence onto Crown lands, there clearly are penalties, trespass billings, etc. The wording of the explanatory note could be interpreted as where a small timber sale trespasses onto a tree-farm licence. Is that the case? I'd like to get the minister's response to that.

HON. MR. RICHMOND: Yes, it does apply if it's a trespass on a TFL, which is Crown land.

MR. MILLER: There's an obvious difference between what the holder of a tree-farm licence pays for stumpage and what the holder of a small business licence pays for stumpage and bonus bid. But you're saying that the value of the timber on those tree-farm licences is what the current bonus bid value is, essentially, and yet you're not charging that holder of the tree-farm licence an equivalent level of stumpage. Does the minister not see an anomaly in that?

HON. MR. RICHMOND: Mr. Chairman, the district manager has the prerogative and the ability to take an average value of small business sales adjacent to the TFL to come up with the price that the member speaks of.

MR. MILLER: I'm not quite sure I understood the minister's response. Just to restate my case, if you trespass onto a tree-farm licence, you will be charged what the current small business people pay — presumably the average for that area and species, etc. — and yet the holder of the licence itself does not pay to the Crown anywhere near that value. I was struck by what appears to be an anomaly, where the company trespassing onto a tree-farm licence would be charged this higher value, and yet the holder of the tree-farm licence is not. I asked the minister if he did not view that as an anomaly.

HON. MR. RICHMOND: It's a very technical one, and I'm not sure I understand exactly what the member is getting at. I'm told that the district manager will take an average of the prices of the small business sales in the area that are contiguous or adjacent to the TFL and come up with an average price between what the licence-holder, the TFL, is paying and what the small business bid was to determine the price that I think you're after. Okay?

MR. MILLER: That's clearer. So you're taking an average between the two. Yet the argument still holds that the higher value will be attached to the tree-farm licence lands.

HON. MR. RICHMOND: It is appropriate now, as I said, to include small business forest enterprise timber sale licences issued within the tree-farm licence in the calculation of the average bonus bid for purposes of determining trespass charges. So to me it says that you can now include the small business sales within the tree-farm licence in calculating an average bonus bid. The same would apply to both: to the TFL-holder and to the small business holder in the case of trespass. An average price would be determined by the district manager. Is that what you're asking?

MR. MILLER: I really don't want to belabour it. But we have an area called a tree-farm licence, and within that the Minister can put up a small business sale. Should the holder of that sale, either within or contiguous to or wherever, trespass onto the tree-farm licence lands, the penalty for so doing is an average price between what the tree-farm licence-holder is paying and what the average small business licence-holder is paying. There is a difference; so that would be the penalty. So for tree-farm licence lands that are trespassed onto, the Crown is going to charge a penalty which is greater than the revenue they receive from the TFL-holder. That seems to me to indicate.... You can draw many inferences from that without getting into the overall topic; maybe we can do that a little later. The revenue derived from TFL lands through the holder of the licence is lower than it ought to be.

HON. MR. RICHMOND: I think now I've got what you've been driving at. You are correct in that the amount for trespass would be more than the value strictly in a tree-farm licence. But there has to be some kind of deterrent, and that is a deterrent to trespass. Likewise, if the trespass were the other way, the penalty would be the same. An average would be taken, and the TFL-holder would pay the same penalty if the trespass were against the small business holder. Okay?

[ Page 10912 ]

MR. MILLER: First of all, the trespass billing isn't currently... Let's ignore this for a moment. There are penalties for trespass, and the minister might wish to outline exactly what they are. I've forgotten precisely what they are, but there are penalties for trespass under the Forest Act, and the deterrence is in the penalty.

The minister suggests in this case that the deterrence is in the size of the penalty, and that the penalty is greater than the value the Crown would receive from the TFL-holder.

I see the member for Omineca (Mr. Kempf) watching me, and I don't know if he understands what I'm getting at or not.

MR. KEMPF: Very clearly.

MR. MILLER: And he may wish to assist in this debate, but it seems pretty clear to me that if a small business holder trespasses on a TFL, you're going to charge him a price which is the average between the TFLs price and the small business price. On the other hand, if a TFL-holder trespasses into a timber sale....

I see some shaking of heads, and we obviously have some difficulty in communicating what is really going to happen here. The minister wants to respond.

HON. MR. RICHMOND: No, I don't think there's any confusion. I think I know what you're getting at, and the penalty would be the same both ways. In case of trespass — one against the other — the penalty would be the same. It's up to three times the stumpage plus bonus bid. So an average would be taken between the various small business licences plus bonus bids and the TFL stumpage, and the penalty would be the same either way.

MR. SERWA: Mr. Chairman, it's always nice to get involved in some of the debate in the estimates. Just some background that I've had with it. Formerly when we did some logging, if there was trespass, there was always a penalty — a deterrent, as the minister states — and it was double or triple stumpage. In this situation it certainly is appropriate that trespass charges be levied at whatever the formula determines they should be, whether it's the small business licence within a TFL or a TFL encroachment on that particular small business licence.

But it seems appropriate that some sort of formula be made so that if there was an encroachment the other way of the TFL on the small business sale, the penalty would not simply be the average, but it would be related to the original stumpage and vice versa. There should be some sort of more rigid formula rather than taking an average, but there has to be a penalty both ways.

MR. MILLER: I'll just state it one more time, Mr Chairman. It seems to me that there still is an inequity, and maybe it's just a continuing of the inequity in terms of what these licence-holders pay. The small business holder — the holder of a timber sale-originally pays stumpage and a bonus bid. The holder of a tree-farm licence pays stumpage. When it comes to fines they are both the same, but it appears to me that you just continue the inequity, because the TFL-holder is in a much more advantageous position.

In the first instance, all they pay is stumpage; they don't pay the bonus bid. So you're treating these two licences which are quite different and distinct — one is the TFL-holder, and admittedly there are some small ones; most of them are pretty big and able to handle the fines — the same as you're treating the small business contractor who bids up timber. Timber sales in this province have gone up higher than $100 a cubic metre, and I think that continues the inequity. It's treating people — in the sense that they're companies — who are entirely unequal in the same manner.

HON. MR. RICHMOND: I'm finally getting to what the member was driving at — that there is an inequity because of the size of the company.

First of all, all small business sales do not have bonus bids on them. A lot do. But whichever way you look at it, it's a theft of Crown timber. It may be inadvertent in some cases, but it is a theft of Crown timber, and therefore we feel the fine should be calculated on the same basis: an average of the stumpage in the area plus bonus bids, and either side pays the same fine.

For a quick analogy, it's the same as if you and I get a speeding ticket going down the highway. We've broken the same law, and you have a lot more money than I. So should you pay a bigger fine than I do?

MR. MILLER: I always thought the great thing about ICBC was the points system. I get those letters — I've only got one, I should say — from the superintendent as I hurry around the province to conduct the people's business. I don't know if I accept that.

HON. MR. RICHMOND: You sound like Phil Gaglardi.

MR. MILLER: God! Don't tell me I sound like Phil Gaglardi! I think I'm going to leave it at that. I think there are inequities.

I have just one last question with respect to monitoring. It was pretty clear, following reports last year about the monitoring the Forest Service does on these timber sales, that the direction of the Forest Service clearly has been to monitor the sales on the TSA lands and to essentially accept the information, I would say, generally without question from the TFL lands.

We discussed briefly yesterday the letters of understanding and the subsidiary agreements, where the government essentially turned over the management of Crown lands to a private company; and I cited the statements of the former minister, who had every confidence that people were law-abiding and that once you have turned it over to them, you didn't really have to check anymore — they knew they would do the right thing.

[3:00]

[ Page 10913 ]

He used the comparison of himself with a rifle in his hands — which I thought was kind of dangerous — and he didn't want any conservation officers on his back. I don't know why. So that raised my question. In terms of monitoring, the ministry has added some staff. They've apparently cancelled the LOUs. Will the monitoring on the TFL lands be up to the same standard as the monitoring on the timber sale of Crown lands?

HON. MR. RICHMOND: The quick answer is "yes." I will just repeat what I said yesterday. The letters of understanding have been cancelled. It's not policy anymore, and we've added either 45 or 46 new FTEs for monitoring on both TFLs and TSLs.

Section 7 approved.

On section 8.

MR. MILLER: I posed a question in second reading as to what remedies can be sought by the Forest Service. As I understood the issue.... I haven't pursued it as an issue, because there are so many others that you tend to prioritize them, but I had fairly extensive discussions about two years ago with some ministry people about what happens on private land around the issue of fire hazard. As I understood it at that time, the legislation did not allow the ministry to enter onto private lands and to say, for example: "We prohibit you from slash burning at this time, because we think it represents a hazard."

This section provides for entry to inspect slash, but it does not delineate any remedies that might be sought or any orders that could be made if the Forest Service discovers conditions that represent a hazard to adjoining or Crown lands. Could the minister advise on that?

HON. MR. RICHMOND: Quite clearly this section does allow us to enter private land to determine if there is a hazard and to instruct the owner, operator or agent to get rid of the hazard or we will go in and do it for him and send him a bill. It also gives us the power to determine when slash may be burned.

MR. MILLER: Okay. My apologies. I didn't have the Forest Act, section 117 with me, and I would say that it's obviously a reasonable move in terms of the kind of damage that could be created by people on private lands not exercising due discretion.

Sections 8 and 9 approved.

On section 10.

MR. MILLER: Really, without discussing it, I am aware that the minister had ordered or struck a committee to look at the issue of contracts and arbitration in the interior fairly recently. This was subsequent to the Forests Committee making its recommendations. Does this flow from that committee? I believe a consultant was hired to look at the matter. Perhaps the minister could advise as to why the consultant was hired. What gave rise to that, considering that the matter had been fairly thoroughly canvassed by the committee? Are these the recommendations of the committee, or are there requirements in here that were not made by the committee?

HON. MR. RICHMOND: Yes, this amendment does flow from recommendations made by the committee. Subsequent to that, many other more complex and detailed issues have arisen that go far beyond this. That is why I have a consultant right now visiting with people — especially in the interior where it is a bigger problem.

This addresses the recommendations that were brought forward by the select standing committee. The consultant is going far beyond this, because there have been many other smaller problems. I use the term "smaller" in the sense that they don't deal with the overall issue of contracts but get into more detail.

Sections 10 to 12 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 48, Forest Amendment Act (No. 2), 1990, reported complete without amendment, read a third time and passed.

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

The House in Committee of Supply; Mr. De Jong in the chair.

ESTIMATES: MINISTRY OF FORESTS

On vote 30: minister's office, $336,735 (continued).

MR. G. JANSSEN: I apologize for not being here yesterday. I was in my constituency, a constituency that is, of course, heavily reliant on the forest industry. A total of 85 percent of the economic activity of Alberni is generated from the forest industry, its related products and its workers. Although, that is probably excessive in terms of the overall province.... I notice from the Blues yesterday that the area was canvassed as to what percentage in economic activity is actually generated by the forest industry. I wasn't clear when the minister indicated that 53 percent was generated through the manufacturing sector. He seemed unsure as to whether it was 20 percent or 30 percent or whose figures were used and what percentage of the forest industry, which

[ Page 10914 ]

used to, I gather, generate 50 percent of the economic activity.... Remember the old statement that 50 cents out of every dollar came from the forest industry.

Does the minister have any clear indication — or could he give us some futuristic look — as to where the forest industry is going in the next couple of years? The concern, of course, is that in communities like my own, like Tahsis and others in the province — where the workforce is continually declining — the environmental concerns, both in land use and in pollution concerns, will diminish the number of jobs, diminish the return to that economy and diminish, in fact, the size of the community.

Could the Forests minister tell us what percentage is actually generated by the forestry sector today in tax revenues and economic activity? What does he see as a role in the future? Where are we going? Will we have to diversify even more?

In many areas, such as Alberni, we have looked to tourism to try to generate some economic activity so that we can move away from those forestry jobs and take some of those vacant jobs — where people are unemployed — and move them into other areas where they can enjoy meaningful employment, where they can become productive workers in our society, where they can contribute and pay taxes, so that the infrastructure of single-industry resource-based communities can continue to thrive.

As the minister well knows, many of those communities are diminishing not only in size and therefore in tax base, but the resource industries — usually single industries owned by one corporation or another — are finding that they are paying lower taxes as well, because they are automating their industry. Their machinery tax has been virtually eliminated.

The tax base is disappearing very rapidly, and those communities are looking for survival. They are looking for either another industry or some indication as to what the forest industry and the ministry have in mind for the next number of years, so that those communities can plan, so that they can look down the road and say: "There is something for me in my particular job." For instance, the forest worker may be saying: "Ten or 15 years down the road, do my children participate in the activity that I did, and that my father did?" Or does he move out of the community? Does the community continue to get smaller? Does he go off and get another education and find himself another avenue of work and move out of the area?

I know it's a broad question, but I hope the minister can answer it.

HON. MR. RICHMOND: What an invitation to make a half-hour speech on the future of the forest industry. I don't know if the member wants a short answer or a long answer, because it is a tremendously wide-ranging question: "What do you see in the future for the forest industry?"

To put it succinctly, I see a very bright future for the forest industry, but the industry is changing. It's probably under more pressure and going through greater change now than it ever has in its history. The pressures being brought to bear on the forest industry are incredible, not just from within the province — we can come back to those in a minute — but from outside our province and outside our country.

I don’t have to tell you the effects of countervailing duties, MOUs, GATT rulings and rulings from the European Economic Community regarding pinewood nematodes, and various other problems that are created for us by people who write articles about this industry when they know not of where they speak.

Then we've got the tremendous pressures on this industry from within our province. I think most of us know what those are, not treating lightly the natural problems we always have, such as insects and wildfires: pressures on the land base, probably a shrinking sawlog supply, the pressures we always have between the big companies and the small companies, the pressures we have from native land claims and road blockades, etc.

Interjection.

HON. MR. RICHMOND: We'll canvass that later, I'm sure.

But on top of that, there are pressures brought about by mechanization and automation. Mills can now turn out twice the amount of lumber they used to be able to turn out with half the people in the mill. The mills have become very efficient at turning out tremendous amounts of product.

There's tremendous pressure on the industry because of the cost of stumpage. The cost of silviculture — taking that seedling to a free-to-grow state, which can be anywhere from ten to 15 years — is expensive, so getting the log to the mill is more expensive than it's ever been, and it's not going to change. It's going to remain high. So the industry is looking for ways to get higher value out of that log that cost them so much to get to the mill.

The industry is going through tremendous change. It's tough on an industry that has been going in one direction for the last 30 years at least and is now realizing that they have to change direction and say: "Hey, we've either got to get higher prices for the product we're producing or produce a different product."

Wherever possible, government is assisting them to get more value out of the forest. I put out a press release just yesterday or the day before saying how successful our small business forest enterprise program has been — the value-added or 16.1 wood, whichever you want to call it.

It's like any other program. It's got some teething problems. It may not be perfect, but it's working very well. We have managed to maintain a tremendous number of jobs in the industry with that program, and we've been able to create over a thousand new jobs since the program was instituted. That is a considerable achievement, Mr. Member. We always read in the media — bless them — about a layoff of 30 or 40 people, or even 200, but we rarely read much about the creation of over a thousand jobs because of

[ Page 10915 ]

one program which was brought in to create value-added products.

[3:15]

I've been through some of the value-added mills and remanners in the province, as I’m sure the member and other members have. If you haven't, it's a real eye-opener to go into some of these places and see some of the products now being made from material that used to go to the burner or the chipper — incredible products made out of material that we literally used to throw away. There's no question that the thinking in the industry has to change.

There are also many jobs being added on the silviculture side of the industry, Mr. Member, that weren't there a few years ago — not just in planting, but in stand-tending, pruning, brushing, etc. So the tree-planting side of the industry is becoming just as important, if it hasn't already — and I'm sure it has — as the tree-harvesting side. I guess the word "harvesting" encompasses all of that.

We should also add that it isn't just the small operators that are into value-added. I want to correct an impression a lot of the public has that it's only the small people who are into value-added. They are, and they're doing a good job at it. But so are many of the large companies, and it's in many of the large companies that the research is done into new products. I know two or three of the majors who spend between $3 million and $5 million a year each just on researching new products that can be manufactured in British Columbia, out of wood-fibre. So I guess we rely on the large companies and the small companies to change the direction of the industry, and over the next few years it's going to be going through some tremendous changes.

In your constituency alone, Mr. Member, there has been a successful 16.1 sale — a value-added sale — to Coulson's, which will be manufacturing a product that they'll be sending to Japan. We have many instances of people selling specialty products in Europe, in the eastern United States, in eastern Canada and in the Pacific Rim.

So in answer to your question, if your constituents are asking you if there is a future in the forest industry, I think the future never looked better. Because of the silviculture methods we have, I think that the annual allowable cut will one day soon be increased, not decreased, and we will be getting more value out of all the trees we cut. We will be employing more people than ever in the forest industry. It isn't going to happen overnight. There are tremendous pains, I guess, to be suffered when an industry is going through the tremendous change it's going through right now. There's a lot of pain in the industry. There are those who will survive and be successful, and there are those who will not, and there are now companies that will come along to replace some of the old ones.

To canvass the question we tried to canvass yesterday, it's easy to put a number on the percentage of manufacturing dollars in the lumbering industry. It is calculated that about 53 percent of manufactured goods are in the forest industry. As to a percentage of the economy — what percentage of dollars in the economy is generated by the forest industry — it's very difficult to put a number on. As we canvassed yesterday, it goes all the way from a low of 25 percent, I heard in the House, to as high as 50 percent. Of course, it varies drastically from location to location.

In your community, as you say, it's in the 80 percent range. In some communities it's higher; in some a little lower. To put an absolute number on that.... I think the Forest Resources Commission is working towards putting a number on the percentage of the economy that forests generate. But suffice to say, it's still the number one industry in the province by a wide margin, and whether it's somewhere between 35 and 50 percent of our economy is not the salient point. The point is that it is the number one generator of the economy in our province, and I think it will continue to be for a long time.

Whatever is in second place.... They're all wonderful industries. Tourism is a great business — I was minister of that for four years, and it's a good business. It's growing rapidly.

Mining is an excellent business. I've been very close to the mining industry all my life, and it's very important to our province. It may be in second place; maybe it's tourism or maybe it's agriculture. They're all very important, but forestry is still four to five times the size of any of them and is still far and away the most important industry in our province. I think that's the important point.

MR. G. JANSSEN: I thank the minister. I'm somewhat astounded that the range runs anywhere from 35 to 50 percent. The Minister of Finance must have considerable difficulty putting together a budget every year when he doesn't know whether we're getting 35 percent or 50 percent from forestry. The Forests ministry has been around for a long time. They have a considerable amount of staff, and they have excellent people working for them. Surely they must have an idea as to what percentage of the economy it is. If it is, in fact, four or five times the size of any other industry in the province of British Columbia, the minister must know exactly — or within at least 2 or 3 percent — how much revenue is being generated.

To have the 15 percent difference that he’s speaking about must make it extremely difficult for the Minister of Finance. I would have great difficulty in running my business if I didn't know whether I was making 35 percent or 50 percent profit on one of my products.

Is the minister saying that we don't know, that we have all these people working for us but we've never actually looked at it, and we've just waited for the money to roll in the door, week after week, month after month, year after year? Is that any way to run a business which, by his own comments, is four to five times the size of anything else in British Columbia? I would be very concerned if I was the Minister of Finance if those kinds of reports were coming from

[ Page 10916 ]

the Ministry of Forests, and I couldn't depend on 15 percent.

We had the recalling of the House delayed until April 5 this year because there was some $100 million not forthcoming from the federal government. If we're actually talking about an industry that is four or five times the size of the next industry, surely the number must be higher than $100 million. Can the minister tell us if that is the fact — that he doesn't know what percentage of the economy is reliant on the forest industry or what it generates to us?

HON. MR. RICHMOND: The member is being absolutely silly, and that's the only way I can phrase it. We're not talking about revenue estimates or income; we're talking about people making speeches and saying what percentage of the economy comes from the forest industry. You can talk to experts in universities, professional economists, foresters, politicians and CEOs of companies and get a different answer from every one of them. It was the member for either Prince Rupert or Cariboo yesterday — I think it was the second member for Cariboo — who said he saw an estimate that said it was 25 percent of the economy. I've seen estimates that say it's 50 percent. The member from Prince Rupert said 35 to 40 percent.

It depends on the multiplier effect you use when you're trying to calculate how many jobs are reliant on the forest industry. We're not talking about a revenue estimate, and the member knows that. If he doesn't, he's not being silly — he's being stupid.

MR. G. JANSSEN: I could object to that remark, but I realize it's an opinion of a minister who obviously can't supply me with an answer. I'm not asking for an answer from a CEO or from a professor. I'm asking it from the man in charge of the Ministry of Forests.

His job, I would suspect, is to take the estimates from CEOs of companies, professors and anybody else involved in the industry, put them together and come up with what is a true answer — not the estimates or guesstimates of all these other people, but for him or his staff to put together those figures that are coming forth and come up with an answer. Then, when we ask a question in the House, or when he's asked a question from the Minister of Finance as to what we can expect in future planning for the province of British Columbia, we would have an answer.

It's very difficult for this side of the House to question. I'm sure it is for industry to plan. We'll get to the fact that we don't have an inventory later on. That's another factor of planning that we will be canvassing the minister on.

In yesterday's Blues we noticed a tremendous increase in the amount of advertising expenditures that the minister and the ministry will be making over the next while, and he speaks about the pressures from outside the province. There is tremendous pressure from outside the province on our natural resource here. Some of that pressure is coming from the European Economic Community, where people from the environmental movement are concerned about the destruction of the rain forest on the west coast of British Columbia and are mounting a campaign there. I'm sure the minister is aware of it.

A similar campaign was put forth for the baby seal conflict in Newfoundland. Advertisements are being taken out in European papers, asking that people not buy products from British Columbia because of the destruction of the rain forest. My question to the minister is: what percentage of that advertising budget — that increase that he has planned for his ministry this year — is he using to counteract that campaign in the European Economic Community, which is a major market for us? I'd hate to have to wake up and find out that the pressure had been such that we end up with the same situation as Newfoundland had with its seal program — that in fact there was no market. That would be disastrous for the province.

HON. MR. RICHMOND: The member seems to be hung up on what percentage of this and what percentage of that. I'm not really too interested in what percentage of our information budget we're going to spend combating the problem in Europe, but we're going to do what's necessary to combat that problem. I suggest the first member you should talk to is the first member for Vancouver East (Mr. Williams), who got up in this House and agreed with what Ms. Caufield said in her article in the New Yorker, which was picked up by the Vancouver Sun and the tabloids in Europe. He keeps repeating the statements she makes about British Columbia and likening us to the Brazilian rain forest and saying that we are treating our forests as badly as they are in Brazil.

Your own member from Vancouver East got up and sang her praises, and this is part of the problem. In Brazil they're deforesting, Mr. Member. Tell your member from Vancouver East that. In British Columbia we're reforesting, and there's quite a difference. Read our latest publication, "All Things Considered," as I said yesterday. Well, the member wasn't here yesterday, and he seems to be wanting to plough the same ground as the member for Prince Rupert did yesterday. So I think I've answered that question sufficiently. We're going to do whatever is necessary to combat the problem in the British Isles that is spreading into northern Europe. We're monitoring the situation very closely through our agent-general in London and with the help of COFI, who have people in the United Kingdom. There's no question, Mr. Member — and I've said it here and in speeches elsewhere — it's causing a problem for us.

I wonder sometimes how we can bring some accountability to the Caufields of this world and to others who make irresponsible statements that cost workers their jobs in this province. I wonder if she knows or cares how many jobs — potentially — she could cost in this province. And yet there's no accountability. Who's going to make her or the New Yorker magazine or the Vancouver Sun responsible for that? They keep reprinting these things and costing

[ Page 10917 ]

jobs in your community and in mine. Where's the accountability?

So yes, we are going to put a considerable sum into combating that. It's fighting a rearguard action; we don't have any choice. It's damage control, if you like. But I can't tell you what percentage of the budget is going in there, Mr. Member, and I don't think it's important.

MR. G. JANSSEN: I'm sorry to see the minister take that kind of an attitude with my questions. I'm as concerned about the jobs and the economic activity in the forest industry as he is, and I don't think I am canvassing the same questions as yesterday. I read the Blues; I have them in front of me. I'm simply trying to have an in-depth study into where the ministry's money — and therefore the people of British Columbia's tax dollars — is going.

He talks about a thousand new jobs being created in the forest industry through the new business program. Yes, I'm aware that Coulson is building a new mill in Alberni and that it is going to provide an additional 156 new jobs. And people do talk about the job loss. You can talk about the 2,100 jobs that have been lost in Alberni and are being replaced by 156 jobs. Coulson is to be commended, as is MacMillan Bloedel at their Somas division, which has added some 300 additional jobs. So they're back up to about 500 jobs. That's a long cry from the 1,200 jobs that used to be there. So we still have a long way to go, and people are going to suffer. I'll agree with the minister.

[3:30]

However, the tree-farm licences that are handed out in British Columbia are large; and during the debate on the bill, just before we started estimates, there was a discussion taking place as to what tree-farm licence holders and other people pay in the form of stumpage. So tied to the tree-farm licence I would like to see, and perhaps the minister can expand on this question.... It's not just a matter that the forestry companies end up with an adequate supply of wood, but in fact that there is some guarantee that there are jobs tied to the supply of wood.

I don't want to get another question about how many jobs are supplied in one country or another, because taxation situations differ, forestry methods differ and manufacturing levels differ. We could be here for many days if we got into that situation. However, I think it is important for the ministry to point out that there is a responsibility not only on behalf of the ministry but on behalf of forestry companies who are working public lands, utilizing a public resource — a tree-farm licence — and have created in many cases communities in this province They have a social responsibility that is recognized in many countries of the world; certainly the European economy and the Japanese economy recognize far more fully their responsibility to their workers than we do in British Columbia, or probably in North America.

I think that attitude will change. The big issue in Europe in 1992 is that they will have a Eurodollar and the economy will come together, but a social package that will be equal throughout all the European states will be included with that package, so those people working in Spain or in Italy or in England will enjoy much the same benefits as their other European counterparts.

If we're going to deal with a public resource — a tree-farm licence — I think there should be some guarantee to those communities and those workers that there will be a benefit, other than the profit for the company, to those communities and those workers in the form of job security, in the form of additional revenue. When those communities were created by those corporations that were granted those tree-farm licences, the idea was to give — and it wasn't a bad idea in 1955 — the corporations a tree-farm licence so that they would have continuity of supply and there would be some security for the community and for the workers in those communities on the investments that those corporations made.

That issue has changed now. The guarantee of continuity of supply is still there for the corporations. There are some pressures there, agreed. But the guarantee for the survival of that community and the economic activity that is generated is no longer there on behalf of the corporation. They're paying less taxes and they're not creating those jobs.

We would like to see, on this side of the House, some ministerial program to encourage those companies, if they want to continue to generate jobs and generate income out of those tree-farm licences, to put forward to the ministry some guarantee that they will be increasing those jobs.

I know the value-added system is going on and that there is encouragement from the ministry; however, there is no direct tie to that and the tree-farm licence. In many cases independent loggers are bidding $32 a cubic metre, whereas I believe the average that I've heard is something like $9 a cubic metre for holders of tree-farm licences. There seems to be a great disparity there. That may be a return to the ministry and to the Crown, but certainly I think the ministry has to take into consideration what return there is to the community and what return there is to the workers involved in that industry. I'd like the minister to answer that some consideration is being given to that security.

HON. MR RICHMOND: I have visited several of the operations of the large companies of which he speaks, and nobody is more concerned about getting more jobs and more value out of the wood than they are.

I think maybe the member is talking about times in the past, because I don't know of any of the large companies that aren't good corporate citizens. There may be the odd exception, but perhaps not like it used to be. In the 1990s, in the places I've been, they have been excellent corporate citizens. They take their personnel — even the leisure time of their personnel — very seriously and equip them with means

[ Page 10918 ]

of doing fish-farming, provide them with the materials, the buildings and in many cases dollars and the time to get involved in the wilderness values of their area.

I'm not just making this up. I tramped through the bush and saw it for myself. And the workers are very proud of what they're doing in the company, assisting them, etc. In all the communities I've been in, I have witnessed time after time the interest that companies have in their employees, and I think it goes both ways. I think a lot of the times that the member talks about are times in history.

I didn't hear everything you said at the last about the difference in silviculture costs, and I apologize for missing some of it. I was talking on another point that you had made. In the small business sales, of course, we do the roads and the silviculture. And in the TFLs the licensee, of course, is responsible for that. So there are a lot of differences in the prices paid and the costs, etc.

Suffice it to say — to come back to what I said a few minutes ago — that the cost of getting that log to the mill is very high. It's very high stumpage rates, high silviculture costs, so it's forcing the higher value-added out of the product. And we're going to see a decrease in the so-called spaghetti factories or the dimension lumbermills and an increase in value-added.

The members opposite are very quick to mention countries in Europe and social packages, and that's all well and good. I've been over there, Mr. Member, when I was in Social Services, and I've seen what they do over there. They do some very good things. They've had the social programs in Europe a lot longer than we have; they’ve had them for a hundred years. They've put them in for all the right reasons: to look after people; a sort of cradle-to-the-grave philosophy. The one thing that you fail to mention, and I'm going to mention it again because you brought it up, is the cost of those programs. The costs have gotten away on them. They can't afford them anymore.

I had dinner the other night with a group of Swedish businessmen. Sweden is always being quoted to us, and, yes, we can learn from the Swedes, and they can learn from us, as they have said, and we can learn what not to do from them. They have a value-added tax in their country of 23 percent. Twenty-three percent — which is the same as a GST. So all I'm saying is be cautious.

MR. MILLER: The price of beer is pretty high.

HON. MR. RICHMOND. Automobiles are pretty high too.

So be careful when you say: "Tie everything to social packages and promises of security." You mentioned that in Europe, when they were going to amalgamate, they had to tie social packages to it too. I'm saying that the thinking behind it is great; it's terrific. But be careful when you start tying social packages in, and security for life, because you may find yourselves in programs that you cannot afford. The 23 percent sales taxes and 65 percent income taxes are what they have in many of those countries. While some parts of their system may be excellent, some parts are not.

MR. G. JANSSEN: I recognize, Mr. Minister, the 23 percent value-added taxes and 65 percent income taxes, and that's why when I made those remarks I said there are many differences. I didn't want to get hung up on those instances. One of those differences is that mortgage rates are tax deductible from their housing costs. There's a tremendous savings right there.

Rather than get into that whole idea of comparing us to them, the point I was attempting to make was that some job value be tied to the tree-farm licence rather than that just a profit value be tied to that. I think that's a social responsibility on behalf of the government and it's a social responsibility on behalf of the corporations operating those TFLs.

The minister talks about new jobs and the pressure on the forest industry. I agree; there is tremendous pressure on the forest industry. As the minister is aware, one of those pressures is the bill that's now before the House on the Carmanah Valley. We've just finished second reading and are going into third reading. It was quite remarkable that the minister found it very easy to draw a line across a map and dedicate a large and significant park. I'm sure it will become significant, However, there's another area in the province that has been considered for park purposes for many years, and that's Cathedral Grove. I'm sure the minister has heard me talk about it in the House. For over 20 years we've been deciding whether or not to make Cathedral Grove a park, whether or not we can find land to trade off, whether or not we can afford to do it.

The Carmanah Valley, apparently, is going to lose the Ministry of Forests $750,000 a year in perpetuity. That's a lot of money. Besides that, we're going to have to buy back TSAs of some 1,200 hectares — and heaven knows what that is worth. I wonder if the minister could perhaps tell us how much he thinks that is going to cost the province of British Columbia. Are we going to reimburse, for instance, the TFL values to MacMillan Bloedel, the holders there?

When he's looking up those answers and when he's considering those questions, I want him to respond in the light of Cathedral Grove. How much wood is there? How much land is owned outright by MacMillan Bloedel? What is the value of that in relationship to Cathedral Grove?

I'm sure the minister is aware that city council in Alberni and the mayor herself have written letters to both the Parks and the Forests ministers asking what the status of Cathedral Grove is right now, asking why it hasn't been included in a park, and asking why Carmanah was considered before Cathedral Grove. Carmanah had some 5,000 visitors last year; Cathedral Grove had a quarter of a million. Yet we find it more valuable and more expeditious to do a Carmanah park bill than a Cathedral Grove bill.

Perhaps the minister could enlighten the House, and perhaps those people who visit those parks, what

[ Page 10919 ]

the hold-up is, and why one decision was made over the other.

HON. MR. RICHMOND: I don't know why the member wants to get into the Carmanah debate again; he clearly lost that one last week. But if he wants to lose it again, we can have it all over again.

I'm not the Minister of Parks, so I'm not up to speed on every piece of land in the province that is a park, but if I recall correctly....

MR. MILLER: We thought you were when you introduced that bill.

HON. MR. RICHMOND: No, it's going to be the responsibility of the Minister of Parks very soon.

If I recall correctly, Cathedral Grove was private land owned by Mr. H.R. MacMillan and was donated to the province of British Columbia. To the best of my knowledge, it is a park. There's a sign on it anyway, so it is a park.

He's talking about numbers of people that see Cathedral Grove. I don't know how you can make a comparison with the Carmanah. It's on a paved highway that goes to a large centre. Port Alberni, I think, is the name of the town; you should look it up sometime. It's on a paved road, and naturally a lot of cars go right through Cathedral Grove every day. I don't really know what that has to do with my estimates, but there it is.

I do have a graph here, if the Chair will permit me. It shows the answer to one of the member's questions. The primary forest industry employs 30 percent of the workforce in British Columbia, and a note on the bottom says it's growing. So the number of jobs in forestry is growing. The value of manufacturing shipments is just a touch under 50 percent. The value of exports is 53 percent. The member seems to be hung up on percentages.

He mentioned that the Carmanah decision was easy; the minister just drew a line on a map. I don't know why he wants to canvass this argument again, but it wasn't an easy decision to make. It had been postponed for a long time before I got here. It was a decision that is always difficult to make.

[3:45]

The member got up last week and criticized us that it was going to cost jobs in his hometown, because we took half the Carmanah Valley — roughly 52 or 53 percent — and made it a park. I just bring him back to the statements from his own leader that if they had had the decision to make, it would have cost them double the number of jobs, if not more, because they wouldn't have allowed harvesting in any part of the Carmanah. His own leader said that himself. I think before you start criticizing the jobs the Carmanah has cost, Mr. Member, you should review the words of your own leader, who said: "No logging in the Carmanah." That would have been a pity and a wrong decision. I think we've made the right decision, but let's not get into that. We canvassed it last week. We probably will again in committee.

When he said that it costs $750,000 a year to create the Carmanah park because of the loss of timber, he is absolutely correct. The people of British Columbia have to know that. When you create a park and remove land from the working forest, there is a cost attached. It doesn't come for nothing. There is no free lunch. Okay?

He questions us having to buy back some of the licences that were issued to MacMillan Bloedel around the turn of the century. That is a fact, we do. But we're not going to put a price on them, because that has yet to be negotiated. If I stood here and said this was how much it is going to cost, then that would be the starting point for the negotiations. But suffice it to say, it's going to cost dollars, and that price will be negotiated, Mr. Member. And we’ll get the best value we can for the people of British Columbia.

MR. KEMPF: You know, this place does funny things to you. I had absolutely no intention of getting up in this debate, but I guess something that was said from each side of the floor brought me to my feet.

Mr. Chairman, I heard the minister paint a glossy picture with respect to the multinational corporations being great corporate citizens. Well, Mr. Chairman, to the minister, I've spent a great deal of my life in the forest industry. And although there are a few good corporate citizens among those multinationals — and they're becoming fewer and fewer, as one gobbles up the other in the forest industry of our province — I would say the majority are in absolutely the opposite category.

I do believe as well, Mr. Chairman, that even though the situation faced with the United States recently on tariffs that brought about higher stumpage rates in British Columbia, those multinational corporations are still not hurting very badly in this province. In fact, a great deal of revenue should be coming to the coffers of the province, even with those higher stumpage rates, than is presently happening.

I listened to the debate from the Member for Alberni. I have to ask the question there as well: where did the IWA stand with respect to the Carmanah vis-à-vis jobs? Where was it that they stood with respect to the reduction in the workforce that has taken place in the forest industry in the last decade? Although we're cutting double what we were a few years ago, as far as annual allowable cut is concerned, we see only half the number of jobs that we saw then. I'm wondering if there is such a concern for jobs. I saw the demonstration in front of the buildings recently, where IWA members were demonstrating driving MacMillan Bloedel vehicles, and I had become a little concerned about that, Mr. Chairman; concerned about who is really concerned with respect to what's happening in the Carmanah. I didn't hear one of those people, nor have I heard anyone from the opposite side of the floor, say: "Perhaps if we had done it a little differently, we could have cut more in the Carmanah. Perhaps if we had done it a little differently, we could have provided more jobs by cutting less wood." The only concern I saw was

[ Page 10920 ]

for the fact that we were going to clear-cut the upper half of that drainage, which to me doesn't make any sense at all. I don't agree with it, because it doesn't give us everything we could get from doing the right thing in that drainage.

MR. MILLER: I've heard this one before.

MR. KEMPF: We can have our cake and eat it too, Mr. Member for Prince Rupert (Mr. Miller). All we have to do is cooperate. It's not just the Carmanah Valley that I'm talking about; it's every drainage all over this province.

MR. MILLER: Where were you hiding when the vote was called?

MR. KEMPF: Not hiding out at all. But I didn't hear one member over there — and I'd like to hear that now — stand up and say: "If we do things differently, if we change our harvesting methods, if we look at things like skyline logging, or patch logging — or whatever you want to call it — perhaps we won't have to set aside more areas for parks in the province; perhaps we can have our parks and have our logging on the same piece of ground."

I think that's the problem — and I've got to say it again here today — with this chamber. We line up on either side, no one wanting to admit that there's something good in each debate. If we would put it together, we could have a better situation for the people we represent in this chamber. That has been the downfall of the forest resource in British Columbia, and as long as we continue to do that in this chamber, it will continue to be its downfall.

We made a mistake on South Moresby. We set South Moresby aside as a national park, losing that resource forever. We could have had the natural resource and the forest resource both. In fact, because we drove logging out of South Moresby, we're not going to have much of the latter, because more people were able to enjoy that wonderful area because we did have a logger down there, because there was some place to buy gas, because there was some place to pull in if trouble was encountered with your boat or whatever. That's gone. It's put in a national park — gone forever — and that's wrong.

We did that because we played politics in this chamber. We're doing it in the Carmanah because we play politics in this chamber. Again I say it: it's because of that situation and those kinds of decisions that we had better take — all of us, all 69 members and soon to be 75 — another long look at what we're doing and who we serve.

MR. CHAIRMAN: Before I recognize the next speaker, I would just like to remind the House that we are dealing with vote 30. I know that vote 30 is very all-encompassing. However, I should also state that the Carmanah bill as such will be up for third reading some time later this session, and I don't think it would be appropriate to spend an awful lot of time on the Carmanah bill per se in these estimates.

MR. MILLER: That was a wide-ranging speech. I thought I heard it the other day. It was unfortunate that that member, who has recently rejoined the Social Credit caucus, did not come in and express his opinion by way of voting on the Carmanah bill, which he clearly indicated he was going to vote against. But he probably had some perhaps even political reasons, I dare say. That member who talked about politics getting in the way of everything may indeed have had some political reasons. But I think it's really fascinating, because we have over here the former former Minister of Forests, we have over here the former minister and now we have the current minister.

[Mr. Pelton in the chair.]

I actually wanted to get on to some pretty dry stuff dealing with some numbers. I don't make a lot of speeches, but I thought that given the opportunity with this array of talent before us, there might be some very simple questions posed about forestland and what it's capable of producing.

For example, here is a specific question: what would the cost be for a modest, incremental silvicultural program on tree-farm licence 44? What additional volume could be realized from that kind of program? How quickly could that be realized? And how many new jobs would be created as a result of that kind of program? I await with interest.

I wanted to go back and perhaps ask the minister to clarify statements made with regard to the letters of understanding. The minister said to me that the letters were discontinued. He repeated that this morning. Yet in answer to my colleague yesterday, he said: "If we find that they indeed don't serve a useful purpose or are not compatible with our current standards or practices, they will be removed, and chances are they will be." There does seem to be some contradiction in those statements, and I would seek clarification from the minister.

HON. MR. RICHMOND: No, there's no intended or inadvertent contradiction. The policy has been discontinued, but I did clarify that there are a few still in existence. We find that they're innocuous and are not doing any harm; they have been left there. But if we find there's no longer a need for them, they will be cancelled. There will be no more new ones. We just don't feel at this time that it's necessary to bother with them. I can't even tell you where they are; I could bring back that information, I suppose. But the policy has been ended, and they are a thing of the past, with the exception that there are a few out there that may still be in existence. They don't seem to be causing any problem, so we just haven't bothered with them.

[4:00]

MR. MILLER: By the way, I should have said that I would hope each of those individuals I named — the two former and the current — would seek to put

[ Page 10921 ]

together an answer to my question independent of each other. I think it would be quite interesting.

In the letter sent out in September 1989 about the cancellation of the LOUs, there was reference to the requirement for major licensees to hold an annual public meeting. The comments of the Forest Service are that a policy is currently being developed. Is there a policy on the licence-holder conducting annual public meetings, presumably to disseminate information and receive input?

MR. RICHMOND: Apparently that was the policy under the letters, and the letters are cancelled.

MR. MILLER: The letter lists 15 different responsibilities that are the obligation of the licence-holder beside each is listed the current status. It is clearly in reference to the LOUs. For example, the major issue, the five-year development plan, and the fact that companies would be the lead agency in terms of referral, has been removed. But beside the statement, point 8, "Conduct an annual meeting, " it says: "Forest Service policy currently being developed for all forest licences and TFLs...." I wonder what is meant by that. It indicates to me that the Forest Service was developing a policy. Have they developed it? Is it in place? Could you describe it?

HON. MR. RICHMOND: No, I can't, Mr. Chairman. I'll have to research that and bring back an answer. I really don't know what the member is talking about. Maybe if he wants to shoot it over to me, I'll come back with an answer.

MR. MILLER: Certainly, Mr. Chairman. I have no hesitation at all in passing along the letter. Perhaps if the assistant deputy who signed it had a look at it, it might allow him to provide an answer.

The pulpwood-harvesting agreement — we just started into that yesterday. I expressed some concern about the silviculture requirements or what I described as a liquidation policy with respect to the non-replaceable licences in the Cariboo. We talked about what is growing there and what the environment would allow to be re-grown. The minister talked about fertilization and incremental silviculture, intensive silviculture. Could the minister advise what the cost is in that particular region of the silviculture program, which is required to ensure a second crop and subsequent crops of trees? Could he perhaps describe what type or quality of trees is the objective of the silviculture plan?

HON. MR. RICHMOND: I don't think — and neither do the staff — that you can put an exact amount on that. I don't have a figure for the member, but it would depend on the site: the geographic location, the type of soil, the species being planted. I'm sure the professional foresters would have to take into account all of those factors. Of course, you would expect whatever was planted there to be the very highest quality of growth that you could achieve, whatever the species was. You would use genetically superior stock and expect the highest quality possible.

As for putting a price per hectare on it, I suppose we could give an estimation, but it's going to vary widely depending on the location and the species planted.

MR. MILLER: You're offering a licence that requires the licence-holder to submit a silviculture prescription before harvesting. Surely the ministry had some idea in mind about their objectives before offering this. Are you saying that you had absolutely none?

HON. MR. RICHMOND: Sure, we have an idea of what it will cost. You tell us the area, and we can tell you what it is going to cost. I am told that it can range anywhere from $200 to $1,000 a hectare to take a seedling to a free-to-grow state. So depending on the location, the answer is somewhere between $200 and $1,000 a hectare.

MR. MILLER: That's for basic silviculture?

HON. MR. RICHMOND: That's correct. It's not including any incremental silviculture; it's to take it to a free-to-grow state. It would include some brushing, obviously, if you call that incremental, but it doesn't include juvenile spacing, commercial thinning, pruning or fertilization.

MR. MILLER: How does that cost relate to the value of the stands?

HON. MR. RICHMOND: Again, I guess that can range all over the map, depending on the species and what the selling price was, whether it was sawlogs or pulpwood or exactly what it was. The price could range all over the map.

MR. MILLER: There must be some economic analysis of that. You're clearly going in. I'd raise the concern about harvesting in an area that obviously has some environmental constraints. The ministry documents say, and this is a quote from page 12-1 of the submission of the Ministry of Forests to the Forest Resources Commission: "Such stands include decadent timber, part of age classes 8 and 9, very dense small-diameter lodgepole pine stands on poor soil, low-site...." Surely there must be some body of work within the ministry that relates the value of the stand to the cost of reforestation. I assume that in terms of the basic economics, one would, hopefully, if the cost of silviculture is the cost of harvesting.... If the cost of silviculture is so great, in fact greater than the value that can be realized from the timber itself, it is uneconomic. That relates to my original question about what is intended for these sites.

HON. MR. RICHMOND: I have difficulty sometimes following the line of thought or reason here. I'm trying to follow what you're getting at. I don't understand how you make a connection between the

[ Page 10922 ]

value of the timber to be harvested, when it might be decadent and age classes 8 and 9, as you say, and very small-diameter, and the cost of silviculture. I don't think that the value in that stand is related. We may be harvesting that stand to get it out of there so we can get a valuable crop planted. We may also be planting trees that we may not intend to harvest. We may be harvesting the majority of them and planting some for a wilderness area or other integrated uses. Unless I'm missing something.... I'm trying to follow the gist of your question and your reasoning and be as helpful as I can. You've lost me somewhere there in relating the value of some old timber that's there to the cost of planting a new crop.

MR. MILLER: I assume that because the cost of silviculture presumably comes from the value received for the timber.... There are many costs associated with harvesting: the planting, the engineering, the road building, the harvesting itself, yarding, etc. and silviculture. All of those costs, as far as I know, are covered by the actual value received for the timber. If they are not, somebody is paying a subsidy that appears to be evident. Have you related the value of the timber to the cost of the silviculture requirements, and is it economic? Or does it have to be subsidized?

HON. MR. RICHMOND: The member has got me confused as to what he's trying to get at.

Let's say a stand is bad wood; it's just junk and should be gotten out of there. I suppose there might be cases in a sale where we would have to allow for that. Maybe the cost of silviculture would be more than it's worth. We even do silviculture in parks. We plant trees in parks, which will never be harvested, so, yes we are bearing the cost of that as taxpayers of the province.

I don't know how else I can answer the member's question. I'm not trying to be difficult or evade anything. I'm trying to get at what he is getting at and answer his question.

While I'm on my feet, I might as well answer to the best of my ability a question that he asked yesterday about how much we were spending on incremental silviculture. I don't have a dollar amount, but I do have an area in hectares. Since '80-'81 to the present we have done incremental silviculture on 442,918 hectares. This includes site rehabilitation of backlog, NSR areas, pruning, mistletoe control, falling snags and residual trees.

The benefits we receive from incremental silviculture increase the health, vigour and value of our younger stands. Of significant importance is the shortening of the time required for a stand to become merchantable. Of course, this helps alleviate timber supply shortages predicted in some areas. So we have done a considerable amount of incremental silviculture. I just wanted to put that figure on the record.

MR. SERWA: I was going to pose that question, because it's an interesting question. It's one that I have always been concerned about — the cost of intensive forest management and silviculture.

If we utilize the figure of $1,000 per acre as a silviculture cost, if we're looking at interest costs of, say, 10 percent — and money then would double every seven years — and we're looking at a relatively short coastal rotation period of, say, 80 years, it would seem to me that you would have to recover about $1 million per acre in forest values to justify that original $1,000 expenditure.

The minister has a very able deputy minister with him. I was just wondering if there is something wrong with my calculations. I'm trying to find out what amount of silviculture would be justified in return for the investment on an 80-year rotation, let alone in the Interior on perhaps a 100- or 120-year rotation.

HON. MR. RICHMOND: That's a pretty difficult one to answer.

First of all, it's per hectare, not per acre, and the costs range up to $1,000 per hectare.

I don't know if I can answer that question for you, except to say that the companies are very interested in it. They see an investment there that will pay dividends in the long run, and I am sure they wouldn't be doing it and hiring helicopters to fertilize, etc., if there wasn't a payback.

I guess what they're looking for is that 80 years from now those trees are going to be very valuable. Nobody on this earth can put a price on what they'll be worth, but the big companies who have these costs calculated right down to the last cent are very pro-incremental silviculture.

I guess that's the best answer I can give you: there must be a payback at the end of 80 years or they wouldn't be so interested in doing it.

MR. SERWA: Just further to that.... I worked in New Zealand in 1958, and we were looking at a rotational period there of about 25 years, when a substantial amount of those costs could be justified. I would really like a response at some time in the future on the economics of it. We're placing a lot of faith in it, and yet, to me, the economics seem to be in question.

It has been my experience in the interior that a lot of the spacing and thinning in silviculture-type work has been done with federally acquired moneys rather than corporate funds that have gone into it.

HON. MR. RICHMOND: I will endeavour to get as good an answer as I can for you. I am sure I won't get it today or tomorrow, but we'll have an answer as close as we can get for you.

[4:15]

The other thing is that in New Zealand there's quite a different situation. They have gone literally to one species for their growing — radiata pine — which has a term of about 25 or 27 years. So it's quite a different set of circumstances than here. But we will do our best to get you an answer. The answer will be in the mail.

[ Page 10923 ]

MR. MILLER: After the election.

On the question of reforestation, again, I pointed out that it's a requirement, and presumably it's covered, and I'll use the small business forest enterprise count as an example. The cost of reforestation is covered. The revenues derived from the sale of the timber cover the costs associated with removal and replacement of the timber. If that is not the case, then it has to be subsidized.

The Crown clearly indicates, in their timber sales, that they don't subsidize. Presumably operators would not want to bid on timber should they be required to subsidize it. It kind of begs the question then: how can you make the capital investment in silviculture if what you realize off of the land is less than what it costs to do that? Where does the subsidy come in?

Mr. Chairman, the minister just talked about some of the big companies being quite interested in incremental silviculture. You said they must be interested. There must be a payback or they wouldn't be interested. In other words, is there recovery on your investment? If there's no recovery on your investment, how can you afford to do something, and does that apply in the kind of conditions that I outlined earlier, where you have extremely poor growing sites? Do the costs of silviculture essentially outweigh any value you derive from harvesting the stands?

The minister is probably familiar with the Jeanes report on Tackama Forest Products up in north-eastern British Columbia. A great deal of difficulty was experienced — and may still be being experienced, for all I know — where a company was not paying its stumpage, where in fact the ministry wound up in a very embarrassing position of having to trash 800,000 seedlings because of a dispute that could not be resolved between your ministry and a private forest company. But the Jeanes report essentially outlined that the cost of silviculture in that region — I believe I'm quoting it correctly; I don't have it in front of me — was greater than the value received from the stands. So where does the money come from to do the silviculture? Nobody's going to make investments when they don't have a recovery on them, and certainly silviculture investments take many, many years to get that kind of recovery.

Additionally, I would cite the fact that we have extensive areas of land in British Columbia that are not stocked to our standards, so they are categorized as NSR, and a decision has been made not to deal with all of those sites. The wording in some document I read recently was: "The ministry has made a decision not to deal with those sites." You're only going to deal with some 500,000 hectares of presumably reasonably good growing potential, so I think the question is quite legitimate. It is not a trick question; I think it's very straightforward, and I think I'm expressing it in a fairly straightforward fashion So maybe the minister might want to take another run at it.

HON. MR. RICHMOND: I think, Mr. Chairman, that I've got a better idea of what the member is getting at. I wasn't accusing you of a trick question, and I'm not trying to evade answering. Today I've had a little difficulty getting at what you're asking.

We are doing studies at the moment in some of the northern parts of the province on silviculture — the cost of it and whether it is economical to do it. I don't have a specific answer. The situation you mention of the seedlings being trashed was before my time, and I'm not familiar with all the details, so I won't try to get into that argument. I'm aware of it, but I'm not familiar with all the details.

You speak of NSR land. Yes, we are replanting NSR land. There are some areas that we have left to natural regeneration because of the expense of doing it. Some areas, because of the remoteness of an area and the cost of getting timber out, are marginal at best, and in some poor growing sites there's no question that incremental silviculture would probably be out of the question, because it's just too expensive for the growing conditions. So I guess that's the best I can answer your questions.

To come back to the nub of your question, yes, there probably are some sites where the value of the timber is not sufficient to replant. There probably are some areas where the value just isn't there, and those are areas that we have to take a real serious look at as to whether it's worthwhile in the overall economics of the province to go in and replant it, and put it up for sale and then subsidize the replanting. It might be the thing to do. Maybe, if it's bad wood in there, we can get it off and put in a good crop into the land. But those are decisions that the foresters will have to make specific to each location.

MR. MILLER: I'm glad the minister understood my question — and he clearly did, by his answer that studies are being conducted. You referred to northern British Columbia regarding the cost of silviculture and whether it's economic. I'll go back to the question I asked earlier, specifically with respect to those areas in the Cariboo that are subject to PA agreements, those areas that are described as having very dense small-diameter trees with poor soil. Can the ministry offer the kind of study or analysis or documentation that you think is required? At least you're studying it in other areas. Can you offer that in this particular instance as a means of assuaging any concerns people have in that region that the land is not capable of being regenerated because of all the environmental restraints I talked about earlier? Can you offer that? Is there a document that you can offer on that?

HON. MR. RICHMOND: No, we don't have a document that we can hold up and say that we've studied it and that this is the case. But I remind the member that it is the law that before a licence-holder can harvest, he or she must have a preharvesting silviculture prescription and must replant. So in a case like that, where it's marginal, it would be up to the licensee to make that determination: if the wood just isn't worth it and I've got to replant it, then I'd

[ Page 10924 ]

better be very sure of what I'm doing before I go in there and harvest, because I've got to replant it to the specifications outlined by the ministry. So then the onus would be on the licence-holder to determine: is this going to be economical or should I just leave it alone, because I have to replant before I can go in and harvest.

MR. MILLER: I would assume the ministry would have a fair idea of what the economics are and would not over-rely on licence-holders. I wonder, just generally in relation to that whole question of silvicultural investments.... Clearly there's a cost benefit to certain investments. The minister talked about that. But whether to allow harvesting on very poor sites with high silvicultural costs, whether on those sites, if you do allow it — and this I think is an important question — you would as a policy allow harvesting where you would not require silviculture; whether you are in a position to make those kinds of decisions that I talked about in terms of alternatives like a more intensive regime on better growing sites.... In other words, I'm talking about the kind of cost benefit that I would think would be important in terms of managing the forest lands.

Despite the numbers you've read out — let's not kid ourselves — incremental silviculture is not practised to any great degree in this province, neither by licence-holders nor by the Crown. We subsidize through section 88 the major licensees to do their basic silviculture; and that's why they did it, although we even offered relief there. The Crown, simply because of other priorities, did not in many instances live up to their requirements. That's why we're doing this backlog stuff, and that's why the taxpayers are paying for it. But we really don't do any appreciable amount of incremental silviculture, at least in terms of what we are capable of and in terms of what could result with a higher level of investment in intensive.... I hope that wasn't too broad a question, but you might want to respond to that.

HON. MR. RICHMOND: I don't know whether I can capture everything. But just to repeat, I think the first question again was on harvesting and whether it should be harvested. In the case of a licence-holder, whether it would be a TFL or a pulpwood agreement, that determination would have to be made by the licensee as to whether his PHSP was going to cost more than the value he could get out of the wood.

The second part of the question was whether we would replant. We don't have any choice; the law says we will. And we cannot step outside the law — neither can a licensee — nor would we want to. So yes, the answer is that we would replant.

The member is correct when he says we don't do enough incremental silviculture. Nobody can argue with that. But again, times are changing very rapidly We did a lot of things ten years ago that we don't do now, and we didn't do a lot of things ten years ago that we do now. I just submit that as the supply of wood fibre that's specifically sawlogs becomes scarcer, there will be more incremental silviculture done in this province, not just by the government but by licensees.

MR. MILLER: Clearly the minister is saying that on Crown land timber sales that you offer directly you would not offer a sale that in the opinion of the ministry could not be satisfactorily reforested.

I wanted to talk about pulp and harvesting agreements a little more, but I'll get to it, hopefully.

The constraints on incremental silviculture are surely not constraints of capital. It seems to me the investment can be realized. Does the minister agree with that? What are the real constraints?

HON. MR. RICHMOND: Well, again, Mr. Chairman, the member is correct — provided the growing site is good enough and desirable enough. I would think there would be some sites, though, where incremental silviculture would just not provide a payback. But on many other growing sites, I agree with him. I think there is a payoff there. We should do more of it; the Crown should do more, and so should the licensees.

MR. MILLER: Is it a constraint of available capital on the part of the Crown?

HON. MR. RICHMOND: Yes, it is. There isn't a limitless supply of funds, as we recognize by the difficulty we're having signing the second FRDA with the federal government, and other constraints on the government treasury. I guess every minister in this House would like to see a bigger budget and more money spent on his or her ministry, but there's only so much of it to go around.

However, in the future we will be able to expend more money on incremental silviculture. I have no doubt about that.

[4:30]

MR. MILLER: The minister said that there's a return on capital for incremental. Let's stick to good growing sites. There is a return. Given that there's a return, why would capital be a constraint?

HON. MR. RICHMOND: I guess the simple answer would be that there's a return on many things that the government spends money on — universities, hospitals, highways, ferries and the like; and yes, on incremental silviculture. But we just don't have a limitless pot of money. Incremental silviculture is relatively new. I think that when we can demonstrate that there is a good return on it, we will be able to free up more funds in the years coming to do just that. But we can't do all things all at once for everybody. We just don't have that kind of budget. I wish we did, but we don't.

MR. MILLER: Mr. Chairman, I think it's a pretty feeble excuse: we can't do everything for everybody all at once. You said there's a payback. You now seem to be saying that you're not sure there's a payback. I

[ Page 10925 ]

don't think you compare investments in universities with investments in silviculture. I'm talking about tangible benefits.

Interjection.

MR. MILLER: I just heard the foolish minister. You used to be the Minister of Advanced Education, didn't you? Now he's travelling the world. He should listen for a while; he might learn something. He can consider this an advanced educational institute.

You said that there is a payback and that capital was the problem. Now you seem to be saying that you are not sure there's a payback.

You are shaking your head. That's fine. You can get up and answer then. Have you done that kind of modelling? Is the information available that would demonstrate that a certain level of investment in incremental silviculture produces a very tangible payback in terms of additional volume, additional jobs, etc. ? Have you done that kind of work?

HON. MR. RICHMOND: Yes, Mr. Chairman. Just to clarify the record, I didn't say that I wasn't sure there was a payback. I'm sure there is. There is a payback to incremental silviculture, and there are numbers to back it up. I don't know if the numbers are absolutely right up to 1990 and 1990 prices. Fertilization, for example, per application may also increase merchantable yields at rotation by up to 30 cubic metres per hectare on the coast and 20 cubic metres per hectare in the interior. So there are numbers that we can attach to incremental silviculture. It goes on to say: "These potential gains may also permit an increase in the annual allowable cut." I have said many times that in the future we will be able to increase the annual allowable cut because of better silviculture and incremental silviculture.

"Significant volume gains are realized through regenerating backlog NSR areas but may take 60 years or more to realize." There is a payback to incremental silviculture. There's no doubt about that. It's just a case of not being able to do everything you want to do right exactly at this moment. I'm sure the member understands that in each budget year there are only so many dollars to go around. I'm sure that as the years go by and we get more and more into this, we will be able to free up more money from one source or another and probably in some cost-sharing scheme with the federal government — hopefully, anyway — do more incremental silviculture.

MR. MILLER: Going back to the question I put earlier is there not a tangible return you could identify — an immediate or a short-term return? What's the return on the capital that is...?

The minister is perhaps familiar with the TFL 35 pilot project. There are some hard numbers in there. Are they accurate? They indicate to me an immediate return in terms of an increase in available volumes and an immediate increase in employment. Because of the method we use to calculate the annual allowable cut, when you factor in the incremental, there is an immediate return. Have you done that kind of work?

I asked earlier about the modelling required to make investment decisions. In other words, you invest a certain amount of capital and you see a return. If that's the case, it would seem that there is no fundamental reason why we shouldn't be embarking on this at a much more rapid pace than currently.

HON. MR. RICHMOND: Mr. Chairman, I think the member is referring to the project being proposed north of Kamloops. Yes, I'm familiar with it. We are taking a very close look at that, because what the licensee wants there — if I'm not mistaken; I haven't looked at it in the immediate past — is an immediate payback for something in the future. They want to do some incremental, very intensive silviculture in the area but are saying: "We can increase the annual allowable cut X years out, therefore we want to be able to harvest more now." That is a good rationale, but we just want to make absolutely sure that the calculations are correct. We are going to take a very close look at that, and we may monitor it over a two-year period. We've told the licensee: "Give us two years to monitor this project so that we can make sure your calculations are correct." The last thing we want to do is assume they are correct, allow some overcutting now, and then have the payback not be there in the future.

In theory it's good. I like the sound of it, the idea of it. The ministry agrees that on paper it looks good, but we want to make sure it actually works before we do it. So we're on the same wavelength; I don't disagree with you. There is a payback. A lot of it has to do with tenure too. If a company is uncertain of its tenure for any reason at all, they're going to say: "Why should we wait X years out to get our payback? We'll do this work, but we want the payback now. We want the benefits now." So we're saying: "Okay, we can go along with that, provided we're sure that the payback X years down the road is there." I follow you on that, and I'm familiar with the project you're speaking of. I have no doubt that in future years, if this is sound and factual, we'll see a lot more of it.

MR. MILLER: Your use of the comment, "in theory it's good, " seems to suggest that there is a lack of hard information available upon which you can make informed decisions about investments in incremental silviculture. You've pretty well hedged on it.

I was going to ask you about licensees. They always use the term "uncertainty." I'll tell you, the forest licensees of this province are a really uncertain lot. As I understand it, they want to make sure that if they make an investment, they reap the return on that investment.

Are you familiar with recent proposals by Haley at UBC to enter into specific contracts? In my view, this has been an outstanding issue since the introduction of new forest policy and legislation which, for the first time, defined silviculture on two bases: the basic level and the incremental level. Also it dealt

[ Page 10926 ]

legislatively with the issue of incremental silviculture, clearly with the intent of trying to encourage it. Yet really, since the introduction of that legislation, nothing has happened. I'm aware that there have been various attempts to come to grips with the issue, but in three years really nothing has happened. I think that's too bad, because I don't think there is any question about the current state of forestry in British Columbia that sees manufacturing companies relying heavily on timber from a variety of sources, which in the very near future is not going to be available to varying degrees in varying regions. One of the ways we can start to deal with that problem is through these kinds of programs.

So what is being done to resolve the impasse in terms of the application of that section — I can't quote you which section of the Forest Act — which really was intended to encourage incremental silviculture?

HON. MR. RICHMOND: Mr. Chairman, I forget what section of the act it is — 58 or 52 — but I am advised that it just hasn't worked. That being the case, I suppose we're going to have to go back to the drawing-board. We do have a number of stand models, both managed and unmanaged, which we can now use to predict returns depending on the sites, prescriptions, predictions and the rest of it. It's probably the most accurate way of determining what the member was talking about, the return on the dollar. But I am told that the incentive section, section 52, of the bill just has not worked the way it was intended to.

MR. MILLER: I thought that's what I said. I asked you what's being done to resolve the impasse. Is any work going on? Are you just now realizing it hasn't worked, after three years? Has there been some attempt to come up with a solution to the impasse? Where do we sit? Do you expect that within a reasonable amount of time you will see that resolution?

HON. MR. RICHMOND: Yes, I think so. We're working with the industry all the time trying to resolve this problem. I think we're making some strides. We're also asking the Forest Resources Commission for their views on it, and we work with the industry. We're not just ignoring it, because we feel, as you do, that incremental silviculture is the way to go, and it's the way we have to go in the future if we're going to replace some of the timber that's being lost to us.

MR. MILLER: Has any consideration been given to encouraging, perhaps on a pilot basis, the development in each forest district of incremental silviculture projects that could be funded out of the small business forest enterprise account? The account did return a fair investment to the Crown last year, and it's projected that in this fiscal year there will be an additional return to the Crown of just under $60 million. Is that not something...?

I have thought for some time that it would be a good idea to encourage, right across the province, in each forest district under the Ministry of Forests, the development of incremental silviculture programs. It seems to me that it would be very valuable work in increasing the knowledge that exists within the ministry in terms of testing out these kinds of applications, and it probably could be done at a fairly modest cost. It may be that proposals could be invited from each district on this kind of program so that not only could we test the validity of incremental silviculture across the geography but we could also point to these kinds of programs in each of the districts to demonstrate to the public that these kinds of initiatives and efforts are taking place, and that really this is the wave of the future. Has the minister given any consideration to that kind of program and what it might cost?

[4:45]

HON. MR. RICHMOND: Yes, we have looked at it. Again, this money goes into the general revenue pot, as does most of the money we collect in this ministry and other ministries as well. As I say, I would like very much to have the whole $60 million to do this kind of work with. If we persevere, who knows? Maybe in the future we will have that kind of money.

I should add that we're doing some interesting things on a smaller scale with the community forest project. We have roughly $5 million in community forests, in which we're doing some of the work that you're talking about. But I don't disagree with you that some more money should be spent on incremental silviculture. I wish the Minister of Finance were in here now to listen to some of this. Perhaps I could persuade him that the money shouldn't go into health care but into incremental silviculture. Then the fight would be on, and I think you know how it is from there.

MR. MILLER: I can only to say to the minister that anytime he needs some help, I'm available.

Regarding these pulpwood harvesting agreements, I want to raise the basic issue of the security of tenure that we always hear about. It's significant that there are processing plants in this province that have done well without that security — the so-called need to have that security. These tenures seem to be perpetuating the situation, as it exists now with the tree-farm licences. Given some of the hard evidence that other companies are quite capable of acquiring capital, making the kind of investments that are required and buying their raw material requirements on an open market, I wonder why we would want to continue along the same lines that clearly even your government is examining under the Forest Resources Commission.

HON. MR. RICHMOND: The member talks about pulpwood agreements and why the security of supply is necessary. I am told by those trying to develop such things as waferboard plants, OSB plants or pulp mills that the banks simply will not lend them money

[ Page 10927 ]

— nor will private lenders — if the security of supply is not there.

In many cases it will be a fall-back position; it will be a supply that will be utilized only if residual fibre cannot be obtained, and the person has to exhaust every source of supply at their means before they can request the permission to harvest. But we are told that without that security of supply and that absolute guarantee that the fibre will be there, the lenders will just not put up that kind of money on the residual chips that will perhaps be there and that seven years out may not be there.

To come back to your original question of why perpetuate pulpwood agreements, this is the answer that we are told every time we question it: the investment just won't be there. The money won't be there if we don't have that security.

MR. MILLER: Is the minister not struck by the fact that that argument is used regardless of the size of the company and of their ability to acquire capital? Is there not some questioning of that premise as advanced by companies?

HON. MR. RICHMOND: We always question the need to put up a secure supply of fibre for a long period of time, because it's a decision that is taken very seriously. It does create a lot of anxiety out there in the public when we put agreements in place for 15, 20 or 25 years. So it's not something we take very lightly, and we want all the information possible on every project before we award such a licence and before we even go to public hearings.

One of the reasons we have delayed the two pulpwood agreements up north, 17 and 18, is because we didn't feel we had enough information to answer all of the questions — the type of questions that you and the public will be asking at those public hearings. We want to make sure that we have the information before we go to public hearings. So yes, it's something we question all the time, and it's a very good question and a very serious one.

MR. MILLER: Your policy seems to suggest that although you may have pondered it, you really haven't done anything about it. You're continuing to do what you've done before, which is to offer these licences.

What about the concept of a licence — or security, if you like — over the term it would take to recover the initial capital investment? Would that not be more realistic? At the end of that period you would find that companies would have to obtain their requirements from the marketplace.

HON. MR. RICHMOND: Well, the licences are non-replaceable, and if we enter into an agreement with a company for 15 years, then they have to amortize that investment over that period of time. I'm sure their lenders would insist on that because there's no guarantee that the licence will be renewed.

The simple answer I can give you, Mr. Member, is that the reason we continue to offer these is because we're interested in utilizing the fibre that's available and creating employment in some of the areas of the province where they can really use it. We have just put up PA 9, as you may be aware, that covers the whole southeast corner of the province, and hopefully we will get some expressions of interest there because there is a surplus of fibre in that area.

A great deal of investment will be involved to build either pulp mills, OSB plants, waferboard plants or whatever the industry decides. If the only way they can get the loans that are going to be required to build these mills is with a security of supply, then so be it. We're going to continue to advertise pulpwood agreements.

MR. MILLER: Well, that's a good example though, isn't it, down in the southeast where major industrial enterprise is proposed to expand or build a new facility without having that security of supply? Maybe they have confidence in their ability in that marketplace where the surplus exists, but clearly other regions of the province have surplus residuals as well.

What's wrong with the marketplace? Would that not produce a better return where people have to bid competitively for their requirements? Would that not result in better revenues, better returns to the Crown, a more competitive and healthy marketplace and hopefully the development through the kind of economic incentive that your costs provide of a better, sounder and more sophisticated forest industry in the province?

HON. MR. RICHMOND: No, I don't think so.

MR. MILLER: That's a pretty short answer; I wonder why. Is it that you just don't think so, therefore this is the policy? That's pretty rich. Is that how you decide things over there? You sit around and say, "Oh, on this case I think so," and, "On this other case I don't think so"? Surely you can give me a little bit more than that.

HON. MR. RICHMOND: Well, the member didn't like the short answer, so I guess I'll give him the long answer. We've got lots of time.

The very company that he mentions — which is Celgar in the southeast corner of the province — were the very people that wanted us to put up a pulpwood agreement for sale, and for the very reasons I talked about: so that they can go to their lenders — wherever they go for their money; I don't know if they are going to chartered banks or to international moneylenders....

MR. MILLER: China.

HON. MR. RICHMOND: It's probably in the Orient. But it's international money, and they want security of supply before they will put up those kinds of dollars.

The member seems to have a system in his mind whereby they can get this money without having that

[ Page 10928 ]

security of supply. He should go and talk to these people and hire himself out as a consultant and say: "Hey, I can get you that money without you having that security of supply." I don't think he can. That's why when he asked me if we didn't think that a different policy, without going to pulpwood agreements, would be better, I said: "No, I don't think so." Otherwise these companies wouldn't be coming to us asking us to put pulpwood agreements up so they can expand their pulp mills.

Once they get a secure supply of fibre, that's only the very beginning. Then look at the hoops they have to go through before they will actually get that pulp mill constructed or expanded to whatever they want to do. People who know nothing about it — nothing of what they propose to do — are writing me day after day about the pulp mill, and they are against it. They are writing and saying: "We're against it." Other people are writing and saying, "Let's do the pulp mill, " because they realize the benefits it's going to bring to their area — the jobs and everything it's going to bring to Castlegar, Trail, New Denver, the Slocan Valley area.

We have pros and cons and tremendous battles for these pulp mills long after they have passed the hurdle of fibre supply. So I suggest to you that if you know how they can do it better, they'd be pleased to hear from you. And if you know how they could get out of spending the vast amounts of money they're going to spend just to get through the major project review process and the environmental hoops, then I am sure they would be glad to hear from you. But in the meantime, I think the way we're going is the way to go.

That was the long answer. The short answer didn't satisfy you; I'm not sure the long answer will either. I can come back and we can do a longer answer.

MR. MILLER: I was going to ask the minister... He said that industry comes to him and says, "This is what we need, " and then the minister went on to say: "This is what we give them." Is that how industrial policy is developed? Just responding to what industry says they need? Don't you do your own kind of analysis?

By the way, I have talked to those people and they have advised me — and if they have not advised me correctly, then I'll send them Hansard and they can correct it — that their application is not contingent on getting that pulpwood-harvesting agreement. If that's not correct, then I would like to hear from them. But they're big boys; they're a big company. They seem fairly confident that they can get out there in the marketplace and compete along with everybody else and, because of their ability, earn a profit. I thought that was the basis for the market system. There has certainly been a lot of suggestion that the system we have in British Columbia has strayed away from the market by offering those — particularly on the tree-farm licence side — and that we have, as a result, really not had the kind of healthy marketplace for those raw resources which should be in place in British Columbia, and as a result of that, we haven't had the development of the kind of industry I think we are capable of.

Your officials have said — and I would like your comment on this, particularly in terms of some sense of the time-frame — that were these licences not offered, the pace of industrial growth would be slower. Has that been quantified in any way? Is the minister aware of that? How slower? Why would capital not be prepared to come to a place like British Columbia, where we have a very rich resource, take its chances in the marketplace, and make investments, with some feeling of confidence that, given a level playing-field, it could be profitable?

HON. MR. RICHMOND: When companies decide to invest in this industry in British Columbia, they do want some certainty of supply. And if they don't have that, they will not come. They may end up in Alberta or Saskatchewan where they do have security of supply, or they might not do the project at all.

[5:00]

While the member is talking to the people at Celgar about whether they asked for PA 9 to be advertised, he should also talk to Repap in his own riding about why they asked for PA 18 to be advertised. It's because they want a secure supply. I don't think that's unusual in this day and age, when the capital is very expensive and lenders are maybe reluctant to launch into things like pulp mills.

I look at the example of a pulp mill that has been trying to get underway in northern Alberta now for over a year. I forget the amount; the president of it did tell me how much his company had already expended. It's very doubtful if it even will go now, because of a lot of the environmental concerns involved, even though they promised an environmentally neutral pulp mill. They have expended some $50 million to date — the deputy just reminded me — into putting a pulp mill in northern Alberta, and now it's doubtful if it will even go.

So when we're talking about those kinds of dollars and a lot of the doubt, I don't think it's any wonder that lenders want some security of supply so that if they do get the mill up and running, they are at least going to be able to stay running for a duration of 15, 20 or 25 years.

MR. MILLER: I don't disagree that the costs associated with major industrial projects are considerable, particularly in the pulp side. Certainly the Tasmanian experience with Noranda was proof of that. All I can say in response to that is that there has to be a level of confidence established among the public. Government has a major part to play in that, and it can't be accomplished, in my view, by a hands-off approach. It has to be accomplished through a hands-on approach: in other words, demonstrating in very tangible ways to the public that the government has legislative requirements, in terms of the environment, that are acceptable, so that these projects clearly will not impair or be built to the detriment of people either in local communities or to the environment generally.

[ Page 10929 ]

That is part of the problem that has evolved over the last few years in terms of that level of confidence about environmental issues. It has less to do with and it discolours the fundamental argument that I was trying to advance in terms of the economics and the marketplace. We would all like security, Mr. Minister, and I don't think many of us have it in absolute terms. I've never been guaranteed a job; it has always been because I've been able to apply my skills and maintain them. I don't think that the requirements of capital should be any different. But if we have a difference of philosophy, it does surprise me somewhat, given a lot of the rhetoric I hear on that side of the House.

I believe my colleague for Alberni (Mr. G. Janssen) would like to raise a few more issues with the minister.

HON. MR. RICHMOND: just a couple more points on that, Mr. Chairman. I don't really know what the member is trying to drive at here. If pulpwood agreements for security supply were not required, then I'm sure the companies would not be interested in getting into them, because there are a lot of responsibilities that go with them. I should point out, too, that they are a last resort. The pulp agreement is the last source of supply that the manufacturer can call upon, so it's not as if they get a pulp agreement and run out and start harvesting wood.

I know that the member is very sensitive about talking about philosophies. Yesterday he didn't want to be planted on the left side of the fence, so now he's trying hard to scramble to get over to the free enterprise side. If he can do that, that's fine. Maybe he has seen the light and is heading to the individual enterprise side of the fence.

It should be noted that even a pulp mill that's expanding to a 1,000- or 1,200-tonne-a-day pulp mill will have to expend half a billion dollars to accomplish that. To start from scratch, the cost would be over $1 billion, but in an expansion like at Celgar, the cost will be....

MR. MILLER: They're making profits; they're not doing it for their health.

HON. MR. RICHMOND: Of course. Now the member is all of a sudden talking about profit. He is truly becoming a free enterpriser. Welcome over here, Mr. Member. Profit is not a dirty word, which you may or may not believe. It's a very noble aspiration to make a small profit on your investment. But when you lend money for somebody to put $1 billion into a pulp mill, you also want to make a profit and you want to have some kind of security that that half billion or billion dollars is relatively secure and that your mill has a chance of surviving and making a profit. At the same time....

MR. MILLER: Guaranteed profits.

HON. MR. RICHMOND: No, not necessarily. The member should talk to the people in the pulp industry right now when pulp prices are softening and they are taking voluntary shutdowns because of it. There are no guarantees. What we're trying to do is give some confidence to investors so that they can put this kind of money into major projects to employ people and create wealth for the province.

MR. G. JANSSEN: It's not wrong to make a small profit. We've never argued on this side of the House about making that. It is, of course, much better to make a large profit than it is to make a small profit.

The Canadian pulp and paper industry has been very profitable over the last seven years. The years '87 and '88 easily made up for the losses that were incurred during the 1982-83 years. In '82 and '83 they ran up operating losses of $650 million, but they accumulated some $11 billion in operating profits between '86 and '89. I gather that in 1988 there was some $4 billion in operating profits — or more than $10 million for every day. This is from Statistics Canada.

It is great to make a profit, even though there are some mills in British Columbia closing their doors for a week, or two or three. I think Harmac in Nanaimo is down for two weeks now, from an announcement made just the other day, and that's unfortunate. I would suggest to you that doesn't indicate that they are at the door of bankruptcy. It's simply an oversupply question rather than a profit question.

Demand for newsprint is projected to increase, and an excess capacity will be slowly absorbed. We are going to get into those glitches in the market where, because of mill expansions that have been taking place in the last number of years, there is added capacity. That added capacity has trouble being absorbed in the market sometimes, because we may not be planning to the exact tonnage base.

It doesn't necessarily mean that there isn't any money being made, and I hope the minister isn't leaving that impression. I'm sure that the Harmac mill will still make a considerable amount of money this year. The fact that orders may not be where they should be or the increased capacity isn't meeting the supply.... The question of that supply, particularly in the United States where a lot of the market for B.C. pulp and paper is — and the 17 states now in the United States having passed legislation that demands that recycled material be included in their newsprint.... Some mills will have trouble meeting that capacity because of their inability to find recyclable material to include in their processing plants in order to meet those standards that some states in the United States have set.

Less than 200 tonnes a day of newspapers are available from local communities in British Columbia, and something in the range of 30 tonnes a day from Victoria, Nanaimo, Duncan and Port Alberni. Where is the material going to come from to be included in the pulp processes of those mills, particularly the lower part of Vancouver Island and the lower mainland? It may have to be brought in from

[ Page 10930 ]

the United States, where there's also competition for that recycled material, because they want to compete in those markets.

Is the ministry involved? Has the ministry been involved in negotiations or in the planning process with those states that have demanded that a certain percentage of their newsprint material that they buy have recycled material in it? Was that decision made wholly on their own? Were we not part of those discussions?

MR. CHAIRMAN: Shall vote 30 pass?

MR. G. JANSSEN: I'm not getting an answer. Obviously, we weren't involved in that process. Why weren't we involved in that process? The laws were changed in certain states in the United States to add recycled material. We should have been aware of that market change. The ministry responsible for the forestry industry should have been down there making representation as to the implementation. We are a major supplier to that market, if not the most major supplier. What impact does it have on the forestry industry?

Was private industry left on their own hook to decide those matters? Did we not use our influence? I'm not getting an answer from the minister. I gather, again, that his ministry has left it up to other people. Those jobs are in jeopardy. If we can't meet those criteria in the United States, I hope we don't have more shutdowns because of a supply demand and our inability to foresee that question.

The pulp industry. New plants are opening up in British Columbia. Other ones are being renovated. There is some reluctance on some mills to put in investments, because they are not sure of the continuity of supply. There are environmental pressures being put forth, particularly — I'm sure the minister is aware — in tree-farm licence 44, where a number of areas have had moratoriums put on them. One moratorium was put on by the Premier himself just after he toured the Clayoquot Sound area. That task force is now studying that question about where that harvesting should take place. Fletcher Challenge, one of the holders in that area, has failed to come to an agreement on the task force.

That matter has been referred back to cabinet and the Forests ministry so that a decision can be made on their harvesting in that area. I think there now are some 80 jobs involved in that. When can we expect a resolution? Has the minister received it on his desk? Is it still in front of cabinet?

HON. MR. RICHMOND: The answer to the last question is very soon. It has just come to my desk, and we'll have an answer probably in a week or ten days.

On the first part, the member rambled all over talking about things that should be canvassed under another vote. I would remind him, Mr. Chairman, that we're on vote 30, the Ministry of Forests. Maybe he was rambling just until the member for Prince Rupert got back from the bathroom. In that case then, it's my turn.

MR. MILLER: Now I have to talk. How long are you going to be?

HON. MR. RICHMOND: My deputy will take notes.

MR. G. JANSSEN: Why doesn't he just answer the questions?

MR. MILLER: The answers are shorter than the questions.

I wanted to move on to the issue of timber inventory — not just timber inventory but the whole range of values that are contained in our forests. I want to concentrate initially on timber, because I think that's going to be a problem. It is a problem now.

I would note that there has been — and is — a great deal of uncertainty about the quality of the timber inventories in this province. That is compounded by the whole question of land-use allocations and the competing interests for those forest lands. I've already canvassed some of that in terms of integrated resource management and what appear to be some conflicting statements regarding policy in terms of those other values — those non-timber values — and how they are assessed, how they are taken account of in terms of arriving at decisions to harvest.

[5:15]

I would note that the Forest Resources Commission has started a review of existing inventory data in three of British Columbia's tree-farm licences and four of the timber-supply areas. That seems to indicate a lack of confidence on the part of the commission in the information being supplied by the Ministry of Forests. The central issue really is how much timber there is and what the implications are for the current cut levels in terms of the industrial component. The harvest levels have been running very high in this province in the last few years, and I understand we have cut control, which allows flexibility in the....

HON. MR. RICHMOND: Did I miss anything?

MR. MILLER: No, they'll fill you in. I've been speaking slowly, Mr. Minister. I'm sure they could have written it down verbatim.

To continue: the inventory question is a very real one. I'm wondering if the minister would care to comment on the fact that, as I've just pointed out, the Forest Resources Commission felt that they had to go to outside sources to have an evaluation done on a sample basis of the inventory levels in these treefarm licences and timber supply areas.

HON. MR. RICHMOND: You had all that time, and I get one word written on a notepad. Is that all you said while I was away?

[ Page 10931 ]

[Mr. Ree in the chair.]

The member talks about the Forest Resources Commission wanting to verify our inventory numbers. I think that's laudable; I have no problem with that. That doesn't necessarily mean that our inventory numbers are wrong. But we have no problem with them going to an outside source to verify those numbers or to prove that they're not correct.

When you get down to a more specific inventory — species by species by site — there is no question that we could use a more detailed inventory. We are working on it. It's a project that will take about five years. It's fairly costly. It's something we want, and we are working toward it. We are a few years away from that yet.

MR. MILLER: Well, an admission that there are problems doesn't really deal with the question of the adequacy of the inventory. The Council of Forest Industries, in their recent publication.... There are lots of publications; I don’t know if this is as good as.... What's the one that you put out? But they say that the inventories of the coastal timber supply areas are very uncertain. They go on to say in their publication that unfortunately the timber inventory estimates and the subsequent AAC calculations based on this inventory are suspect.

"For some timber supply areas, timber inventory data is out of date, and licensee quota positions have not been adjusted to adequately reflect timber depletion." That suggests a very serious scenario in terms of the manufacturing plants. Could the minister inform us on that subject — first of all dealing with COFI's assertion that the inventory estimates are suspect and then with what the implications are for processing plants? We've seen some closures in the recent past, and I suspect we're going to see quite a few more, given the kind of capacity we have.

HON. MR. RICHMOND: Yes, we have adjusted some AACs downward because of a depletion of the working forest, and there are others — COFI and others — who are saying that our inventory figures are suspect. I come back again to the Forest Resources Commission who — having received that input from COFI and others — are saying that they want to verify the numbers to see if our numbers are correct. I don't have any problem with that.

MR. MILLER: Well, how old really are your inventory numbers?

HON. MR. RICHMOND: British Columbia has 89.5 million hectares of provincial Crown land, 0.9 million hectares of federal Crown land and 4.4 million hectares of private land. For provincial Crown land, the chief land classes are: timber supply areas, 76.2 million hectares; tree-farm licences, 7 million hectares; parks, 4.9 million; other, 1.3 million.

From 1963 to 1981 the Forest Service conducted the forest inventory of management units that were between 0.5 and 14 million hectares in area.

Interjection.

HON. MR. RICHMOND: From '63 to '81. "A unit survey was designed to give for the entire unit an estimate of the total mature volume by commercial species to within plus or minus 10 percent statistical accuracy 19 times out of 20." It sounds like a poll that we would take.

MR. MILLER: It doesn't sound very accurate to me.

HON. MR. RICHMOND: It's as accurate as the opinion surveys we get done. They always quote that "19 times out of 20."

"A unit survey was designed to provide basic forest inventory statistics for use in unit-based timber supply analysis and planning. The unit survey was not designed to provide timber volumes at the same level of accuracy for watersheds and small areas within a management unit or to provide site-specific timber volumes for use in decisions involving other resource values.

"In 1983 the Forest Service started a program to update the existing TSA inventory for areas denuded of timber through harvesting and wildfire. In 1988, in response to the need for additional information on forest stands at greater resolution, the Forest Service started a program to re-inventory the province." This is the program I spoke to you of. "This program is designed to provide detailed descriptive information about each forest stand. The intensity and rate of re-inventory are a function of the level of funding and staffing."

Again we're back to.... I guess we could do the inventory more quickly than a five-year time-plan, but we would have to put a great amount of resources into both computers and personnel for the exercise.

MR. MILLER: That sounded familiar; I think I read that too.

COFI goes on to say — and the minister may want to comment on it; it's up to him — that the schedule for the update is not adequate. It goes on to say fairly clearly: "The Ministry of Forests should be required by the Ministry of Forests Act to maintain a modern inventory system which would be used to recalculate and re-establish TSA allowable cuts every five years and adjust quota allocations accordingly." Would the minister agree with that?

HON. MR. RICHMOND: I guess if we had an unlimited supply of funds, and I could have everything I wanted exactly when I wanted it, yes, it would be very nice to have that; it would be just great.

But we're working towards that. We made a start in '88. We're two years into the program. Another three years or so and we will have it completed.

MR. MILLER: I thought it had less to do with an unlimited supply of funds than with a proper planning process within the Ministry of Forests.

Clearly we have arrived at a point in time where the adequacy of the inventory information is suspect,

[ Page 10932 ]

and that seems to be across the board. I'm quoting from the Council of Forest Industries in this instance, but it covers the spectrum. There seems to be general agreement that the inventory levels are not adequate.

I would note that in the Mackenzie timber supply area, which previously was the subject of an application for a tree-farm licence under the defunct policy of rollover, the company is proposing to spend some $3 million. They had proposed that in their application for a tree-farm licence, which caused me to wonder why the Forests ministry would advertise and encourage a company to apply for a tree-farm licence without the ministry having an updated inventory of the resources within that licence. It seems fundamental that you would not offer to dispose of a large area of forest land in the province by way of a perpetual licence without really having a solid idea of what the resources were within that proposed licence area. That is indeed baffling.

Nonetheless, the company has now said they are going to proceed with the re-inventory. They say specifically that this work must be done. They say it's vital in terms of establishing annual allowable cut. It is also vital in terms of quantifying non-timber values, those other resources within the region. These are timber supply area lands, yet the company is saying they're going to spend money. Is the ministry going to reimburse them? Is it going to be cost-shared?

HON. MR. RICHMOND: Mr. Chairman, they have asked us to cost-share in the inventory that they're doing, and we're considering it. We haven't made a decision yet. They're doing this inventory, of course, for the purposes of investment once again. They want a more accurate picture of exactly what's there, so they're going ahead and doing it.

MR. MILLER: But clearly the land is under the jurisdiction of the Crown. It's not under the jurisdiction of the company, is it?

Interjection.

MR. MILLER: The minister says: "We know that." So the minister is admitting that the inventory there is in the state that the company describes; that it's impossible for the company, prior to doing this inventory, to reasonably establish what their cut levels should be. That seems to suggest a monumental failure on the part of the ministry in terms of their responsibility and in terms of the responsibility you have as the Minister of Forests. How can you say that you're running things properly and that people should have confidence in what you're doing when you don't even know what the inventory levels are on a 6-million-hectare timber supply area, and things are so bad that the company has to say: "We're going to go ahead and do it ourselves"? That's hardly a testament to sound planning on the part of your ministry.

[5:30]

The minister talked about the information currently available, much of it going as far back as 1963. I wonder if there is any explanation. Was it simply a matter of not having enough money? Did the government not have enough money to conduct the inventories that are necessary to set allowable annual cuts in this province?

HON. MR. RICHMOND: I think the member knows he's making some assumptions that are not quite correct. He makes it sound like we haven't updated anything since 1963. He knows that's not true; we do keep updating it.

As for the area near Mackenzie, it was part of the program that we have embarked upon. We would have got to that area and done the inventory, but the company, for their own purposes, wanted it done more quickly. I don't see anything wrong with that. If they have an urgent reason to have it done and it's expedient for them to have it done, then by all means go ahead and do it. We might even share in the cost with them, but to date we haven't made that determination.

MR. MILLER: Well, that's encouraging, Mr. Chairman. The minister said: "We would have got to it eventually." But I would remind the minister that while they were not in possession of that information, they were at the same offering this major perpetual licence. It seems pretty evident to me that you really didn't know what you were doing. I don't know how you can offer those kinds of licences without even knowing the contents on the lands.

I wonder if the minister would comment in terms of the annual allowable cut and the current capacity of the industry — the current industrial capacity. The numbers I've heard — and if you want to correct them, fine — are that our industrial capacity is really in the order of 100 million cubic metres and that our proved annual allowable cut is in the range of 75 million cubic metres — we've been cutting more than that, and our long-range sustained yield is considerably less than that. What are the implications of those numbers, in terms of the many processing plants around the province?

HON. MR. RICHMOND: Mr. Chairman, the annual allowable cut off Crown land is, I think, about 72 million cubic metres. There is more wood than that being cut because of private wood — I forget the number exactly; 16-or-so million cubic metres. Whether we can sustain a cut like that is....

Interjection.

HON. MR. RICHMOND: Yes, there is a lot of argument about whether we can or not in the short term. In the long term I think there's no question that we can. I think we can increase the annual allowable cut, as has been done elsewhere, but it may — and I say "may" because I don't know — come down before it goes back up.

[ Page 10933 ]

There's no question in my mind, from the studies that I have seen and the people I've talked to, that we have an overcapacity for manufacturing in the province, especially in stud mills and in dimensional lumber. I think there's no question that we have an overcapacity in sawmilling. This is why we come back to the argument we talked about a little earlier — or the proposal. The industry recognizes this, and is doing its very best to change directions and get into more value-added products than some of them happen to be in at the moment. They recognize that it's difficult to make money at $180 a thousand for 2-by-4s when the cost of the timber is so high. We're back to exactly what we were talking about around two and a half hours ago. There are tremendous changes taking place — and which will have to take place — in this industry. There's no question that there is going to be a shortage of sawlogs in some areas of this province over the next few years.

MR. MILLER: The minister seems to agree with my earlier contention that a proper price on the resource induces the establishment of the kind of industry that he and I both talked about.

Interjection.

MR. MILLER: We did talk a short while ago about the marketplace, competition, establishment of price through that process and that, in turn, acting as an incentive to improve our industry to a more sophisticated, more value-added level. I'm sorry if I interpreted the minister wrongly, because he seemed to be arguing against what I said. I just wanted to point out that he now appears to actually agree with that premise.

You talk about the short term and the long term. There seems to be an absence of solid information about the long term. I know the theory, but when we got into specific discussions about incremental silviculture and the capability of land, there did seem to be an absence of specific data within the ministry that would allow the minister to stand here and give me some advice on basic questions about levels of investment in incremental silviculture versus the investments in low-site lands and making those kinds of decisions. When you look at the fact that those plants were essentially all established with the government licensing them.... Was it the intention over a period of time that you would deliberately allow that kind of overcapacity to develop in this province?

MR. CHAIRMAN: Shall vote 30 pass?

MR. MILLER: Excuse me, Mr. Chairman. I'm opening my mail here.

HON. MRS. JOHNSTON: The media want to talk to you.

MR. MILLER: Well, isn't that delightful!

MR. CHAIRMAN: Order, please.

MR. MILLER: Please protect me, Mr. Chairman.

To prove that I can do two things at once, I will send this out to a very good place and continue to quiz the minister.

I thought that was a pretty good question. We have arrived at this point in time where we have an industrial capacity that is far greater than our sustainable cut, and I am asking the minister whether or not that was by design or perhaps by accident.

HON. MR. RICHMOND: The reason I didn't get up was that I hardly think it's appropriate for the minister to stand in this House and try to explain why the industry has overbuilt, if indeed it has. In certain areas of the province there is no question it has. I don't intend to stand here and take the blame because we have an overcapacity in a certain type of manufacturing facility in the province. I guess governments in the past — including Social Credit governments, the NDP government.... When you were here, there was a certain philosophy that went along with the forest industry, and for the times it was probably the right philosophy. Hindsight is always a wonderful thing. We can look back and say, "They shouldn't have done this, " and, "They shouldn't have done that." It's easy to cast blame with 20-20 hindsight. But I don't think that we would serve any purpose by standing here and giving the reasons why there is an overcapacity in sawmilling. I know the reasons in my own mind, and I think many of us do, but I'm not going to stand in here and give those reasons, nor am I going to stand here and accept the blame for there being too many sawmills in certain areas of this province.

MR. MILLER: Certainly I'm not trying to pick on this minister, or even unnecessarily pick on his predecessors — either individually or collectively. I am trying to arrive at some understanding of why we are in our current situation, and I have pointed out that the plants were licensed by the government.

Interjection.

MR. MILLER: Well, I think you certainly do, because we have also talked about security of supply. You talked about these people coming to you saying: "We need security of supply; we can't build a plant unless we have security of supply." I don't know if there are any plants built in this province that didn't get a quota, so don't tell me you didn't have anything to do with them. Surely you licensed them. You licensed them every bit as much as you license fish plants.

I'm trying to get at the very central issue here, which is: was there no policy or is there now no policy with respect to some balance between the sustainable harvest and the industrial capacity? I'm quite prepared to make the kinds of allowances that should be made in terms of the changing nature of the industry.

Interjection.

[ Page 10934 ]

MR. MILLER: I keep getting these messages, and none of them really are what I want to hear, Mr. Chairman.

HON. MR. RICHMOND: Then sit down.

MR. MILLER: The question is pretty simple. Do we have that kind of policy in place? Clearly we didn't have it before. We couldn't have had it before, because we've arrived at this position where the capacity of the industry is far greater than the amount of trees. So do we have that policy now? Is there recognition now that there needs to be that kind of balance maintained? Or is it really that industries and businesses fold and perish all the time? The law of the marketplace is that you take your lumps; if you can't keep running, you're going to have to shut down. Just what is the industrial policy, if you like, relative to that question: the balance between the available resource and the industrial capacity?

HON. MR. RICHMOND: Mr. Chairman, it must be late in the day, because the member is jumping from one side of this philosophical fence to the other. He's going from free enterprise back over to socialism. We don't license sawmills, Mr. Member. We never have, and we don't intend to. We issue licences for quantities of wood. If we issue a licence to a person in Quesnel or Prince George or Prince Rupert; and if, say, they have 300,000 cubic metres, we don't tell him whether he can build one sawmill or two or three, or what the capacity is going to be of those sawmills. That's his or her decision to make.

Conversely, we have many successful plants in the province that have no quota at all, and because they don't have a quota, would we tell them: "You can't build a plant, because you don't have a quota"? That's in essence what you're saying. If you're saying that we license plants when we give quota, then you're saying that if a guy doesn't have a quota, he can't build a plant. But we have some very successful plants in the lower mainland that have no quotas, no trees.

MR. MILLER: No kidding.

HON. MR. RICHMOND: No kidding, and they do very well.

MR. MILLER: And they don't need security of supply?

HON. MR. RICHMOND: No, they didn't ask for security of supply. They go out and buy or trade or whatever they do. But they're smaller businesses. They don't have a billion dollars invested. I don't think anyone would invest a billion without security of supply, but we have some very successful small businesses without it.

If we wanted to get into a long discussion of how the industry got to where it is today and why there are too many sawmills in some areas, I guess we could eat up the clock. But I don't really think it's relevant to vote 30. However, if you wish to, we can do that.

MR. MILLER: Well, it's cheering news that there are actually forest companies in this province that say they don't need security of supply in order to attract capital and be healthy, profitable companies. That's certainly very encouraging news indeed. I can only say that I hope it's a spirit that continues to grow in this province and that it will allow the development of a flourishing industry.

[5:45]

However, the reason I asked the question is really very straightforward. I think employees in various parts of the province have a great deal of uncertainty about just what their future is. People are asking: "Is my plant going to continue to operate? For how long? What is our future, both the individual's and our collective future in the community?" Those are very serious questions. When I talk about whether the ministry has ever attempted to address the question of a balance between supply and capacity, it goes to the very heart of that question. I don't think the minister should necessarily make light of it. He should attempt to give the kind of answer that those people I'm talking about can take some comfort in. If we have not had that in the past, do we now have it? If we don't have it now, is it something we're going to have? I think it's a pretty fundamental and serious question. I'd like a pretty straightforward answer.

HON. MR. RICHMOND: You see, now you're coming out from a whole different angle. This is a whole different question than the last one. The last one — and I didn't make light of it.... I wanted to assure you we didn't license sawmills. If you want to go and build a sawmill tomorrow somewhere in this province, be my guest. We don't license or tell you that you can or cannot. Now you ask a whole different question: the security, future employees, all the rest of it. I and this government are very concerned about employees and their future and where the jobs are going to be replaced in the forest industry; that's why we have the small business program and the 16.1 wood. That's why I can stand here today and say that program has created over a thousand new jobs, jobs that perhaps other people in the forest industry who have been displaced because of automation or because of a shortage of wood will go to or have gone to. We know that there's uncertainty in areas in the interior where they've been into bug-kill wood for the last three years, knowing full well that that would come to an end. When we go back to when those licences were issued — and maybe my staff will have to help me with the exact date.... But in the Quesnel-Williams Lake area, in about '85 when those licences were issued, the proprietors of those mills — and the employees, I might add — knew full well that that over-cutting because of bug-kill would come to an end in three, four, five years. And it is rapidly coming to an end.

[ Page 10935 ]

[Mr. Pelton in the chair.]

In the Quesnel area it's now over. And we're trying to soften the blow by putting up some opportunity wood sales and some other sales to kind of ease the comedown from that level of cut. Yes, it's a great concern of mine, but we're onto a whole different subject now. This is why I'm pleased to see people like C&C Wood Products in Quesnel manufacturing specialty siding items, shrink-wrapping them and sending them to Germany and other parts of Europe as a very high value-added product. This gentleman, Mr. Cerasa, won a sale recently, under the small business program, to continue his operation. So those are the kinds of operations that will make up for the job losses.

Slocan's B mill in Quesnel shut down last week. It's a stud mill. The owner phoned me personally to say: "Look, we just can't make any money at today's prices in a stud mill. We're going to have to shut it down." He said: "We're going to look for other products that maybe we could convert that mill to. We're going to bid on some small business sales, and we're going to bid on some other licences that are coming up."

This just points out the dramatic change that the industry is going through, when he just cannot make a dollar selling studs anymore. There's just no money in it. He's concerned about his employees. So am I, and so is this government. So are you, I'm sure, and so are the employees. We're doing everything we can to help this industry change directions and to get long-lasting, secure jobs so that they do have a future.

I think more people will be employed in the forest industry in the future than are now. The employment is growing even as we speak. I think I showed a graph earlier to the member for Alberni (Mr. G Janssen), where the employment in the forest industry now is at about 30 percent of all primary industries, and it's growing. The number of people employed in the forest industry is growing. Some of it's because of the value-added program; some is because of silviculture.

I take very seriously your question about security and the future of this industry, and how we get from an overcapacity in stud-milling and switch that into value-added products. I think it's a very serious item.

MR. MILLER: Given the time, I just want to canvass this specific on this issue, and we'll continue tomorrow. It involves the Kitwanga mill. To illustrate the overall point, we see that in the Hazelton area a licensee basically built a new mill that was capable of absorbing all the quota they had on their licence When you look at it, it seems the objective was to eliminate the older mills and concentrate their production in the single mill, at a very considerable loss of jobs in the region.

As well, overshadowing that whole question is a serious question about whether the level of harvest can be maintained and whether sufficient raw material can be acquired to even keep the new mill running.

Currently the mill has basically been shut down. I've been in contact with the employees fairly recently, and in a pretty high degree of frustration they took certain actions with respect to the mill because of their uncertainty about their future. These 100 some employees are caught in a real bind. Because the mill has not been shut down, they are not eligible to collect unemployment insurance. They basically have no source of income. Neither are they eligible to collect any severance pay that they may be due under their collective agreement.

I am advised by representatives that at least part of the problem is issuance of an allowance to close by the minister. They have made that request in order that the employees can avail themselves of that unemployment insurance.

As I understand it, there have been attempts to put together a joint venture, but there is a very high degree of uncertainty about whether that is possible. They have asked me to ask you whether you are prepared to issue that notice of closure to the mill so that these people can get some income and start to take care of their families. Currently they can't. It's an area of high unemployment to start with, Mr. Minister; it's not a question of going across the street and getting another job.

I would probably prefer that you didn't answer that right now. If you want to, that's fine, but I put the request to you after having discussed it fairly extensively with the people in Kitwanga.

The broader issue outlines what I had tried to illustrate previously concerning no control. That's not in the absolute sense. I don't think we can control everything that happens, whether it's an industrial enterprise or the introduction of technological change in trying to become more efficient. But certainly in a broad sense, as the owners of the resource, we have a responsibility to be more involved in what happens in those regions, so that additional efforts can be undertaken by government, rather than simply allowing discretion to be exercised by a single company or a single corporation as to what's going to happen industrially in a region.

It seems to me that the ministry, the government, has a responsibility beyond that to look at the overall and to try to draw some conclusions or assist in alternative ways: for example, the allocation, as the minister has outlined, of licences in a different form for value-added manufacturing or even instructions to licensees that the plans they are presenting are not all that the government would like to see. For example, instead of one main production centre, maybe two would have been more desirable and would have been just as cost-efficient. But it would have taken into account the needs of the people who live in those regions. There has really been an absence of that kind of broad policy. I intend to go through some more of these tomorrow, Mr. Chairman, so if the minister wants to respond....

[ Page 10936 ]

HON. MR. RICHMOND: On this specific case, yes, I'm very familiar with it, and yes, I'm very concerned for the employees there and their future — and it goes way beyond UI.

If you go back in history, before my time, my predecessor said that they could have those licences, provided they operated a mill at Kitwanga and Carnaby — two of them. It's a case where we do take socio-economic regions into account, so that when there is a community dependent on the one industry, the timber supplier, the licence is tied to employment in that area. For that reason we have taken a long, close look at the situation at Kitwanga, and I have written to the chief executive officer of Westar instructing him to get back to the table and work out an arrangement with the people there and to keep that mill running. I have signed the letter today. If you like, I'll give you a copy of it; I have nothing to hide in it. In that particular case the timber supply is tied to that community, and we have every intention of seeing, if at all possible, that that is fulfilled and that that operation stays viable and running to provide employment for the people there.

We understand, as you have said, that it's a remote area of the province, and you can't just walk down the road or across the street to get another job. There are many areas where we have to tie the timber supply to a community, and this is one of them. So, if you like, I will undertake to give you a copy of the letter I have sent to the chief executive officer of Westar.

MR. MILLER: Very quickly, before I move for adjournment.... Is it the intent that the mill will be operated? I am thinking of the employees. I understand the broader questions, and I really was not happy with your predecessor and the attitude he took about people having to move if they couldn't find work in their communities. But the mill will operate? If there is no immediate solution, the employees are caught in a bind: they can't access UI, they don't have jobs to go to and they don't have a lot of time to resolve that particular issue. I'll leave it at that.

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

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Richmond moved adjournment of the House.

Motion approved.

The House adjourned at 5:59 p.m.