Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, APRIL 28, 1992

[ Page 1025 ]

The House met at 10:06 a.m.

[E. Barnes in the chair.]

Prayers.

Hon. E. Cull: I'm pleased to introduce a grade 1 class from Frank Hobbs Elementary School in my riding, who are visiting the Legislature this morning with their teacher Andrea Chorney. I'm also pleased to say that there are two special guests up there with the class, Sasha and Diana Izard from the family of the Clerk here in our Legislature. I hope that the members will make them all welcome.

Orders of the Day

Hon. G. Clark: It's nice to be back, Mr. Speaker. I'll just say....

Interjection.

Hon. G. Clark: I gather we simplified the procedures in my absence.

I call Committee of Supply, both sections.

The House in Committee of Supply B; E. Barnes in the chair.

ESTIMATES: MINISTRY OF
TRANSPORTATION AND HIGHWAYS

On vote 60: minister's office, $392,000 (continued).

R. Neufeld: I have a question with regard to B.C. Rail. Just to bring you up to date a little bit about B.C. Rail in my constituency, in the early seventies the rail line was extended to Fort Nelson, some 250 miles from Fort St. John. It has been a kind of pawn since then, because it's constantly classed as an extension. There have always been costs related to keeping this extension in operation.

I admit that when it was first put through, it was put through in a bit of a hurry, and there were some construction problems -- not abnormal for the type of terrain it passed through. In the ensuing years it was upgraded to where it operated very well. In fact, it now operates exceptionally well.

In my business, when I lived in Fort Nelson, I received service from B.C. Rail for 12 or 13 years, and it was exceptional. B.C. Rail is the lifeblood of Fort Nelson. If we didn't have B.C. Rail, a number of things could happen. One would be the closing of the plywood plant -- very likely -- because the trucking would not be able to compete; the other would be the movement of a tremendous amount of petroleum products that now originate out of Edmonton, since the closure of the refinery in Taylor. They move to Fort Nelson, and from there they are transferred by truck to the Yukon, to all uses in Watson Lake and to all uses in the Territories -- Fort Simpson specifically -- as far as Fort Norman. That's a long way from Fort Nelson, I can tell you.

The amount of work that's generated just by B.C. Rail continuing to operate into Fort Nelson is tremendous. In fact, B.C. Rail out of the north and south Peace moves some 34,000 carloads of product yearly across the Peace River and south. The amount of economic activity that generates for the southern part of British Columbia, and for British Columbia as a whole, is tremendous. Of course, it means a whole bunch to people who live in Fort St. John and Fort Nelson.

I have been advised that there are questions being asked on the viability of the Fort Nelson extension. This is very serious to people who live in North Peace and specifically in Fort Nelson. I remember that one of the previous administrations was going to close the line. I was part of a group that came down from Fort Nelson the last time. To show how angry they were, they hired and filled a 737 and flew to Victoria to meet with the ministers of the day to convince them of how important the Fort Nelson extension was.

[M. Lord in the chair.]

I wonder if having that hanging over industry and the people who live in that specific community has not had an effect on how much they invest in the community. Of course you can see yourself thinking about investing money in big projects in industry, not knowing for sure whether B.C. Rail is going to stay there.

I think that how they section off the cost to B.C. Rail is unfairly dealt with. It's time that part of B.C. Rail was included in all of B.C. Rail's functions and that the Fort Nelson extension was taken completely out of any conversations or material that we're supplied with.

I would like to get a commitment from this government that they have no intention of closing down the Fort Nelson extension and that they will finally bring into focus that it is part of the B.C. Rail line and not just the Fort Nelson extension. I wonder if I could get that commitment from the minister, please.

Hon. A. Charbonneau: I could do a really cruel thing at this point in time and ask the member to repeat the question now that my officials from B.C. Rail are in the House. But that might be a rather onerous task.

I would like to introduce Paul McElligot, the president of B.C. Rail, and Roger Clarke, vice-president of finance and information services for B.C. Rail.

Your concern is appreciated and understood, but I think that we have to understand the costs involved, which are not inconsiderable. We are subsidizing the extension to Fort Nelson to the tune of about $5 million this fiscal year. That's over and above whatever we're able to obtain in the way of charges -- whatever we can collect on shipping. We have to add $5 million to keep it going, and typically the members opposite are pressing for economic and fiscal responsibility, pressing that we control the deficits and pressing that we find money for other uses -- whatever those other uses might be. In fact, from the opening of the line there have been some $70 million worth of subsidies flow, and I believe there

[ Page 1026 ]

may be capital subsidies above that, which we do not have any immediate prospect of recovering.

[10:15]

Having said all of that, there is no intention and there is no review regarding the possible closure of that line, but I think that it would simply not be fiscally responsible to regard it as a line like any other part of B.C. Rail. By and large we expect B.C. Rail to be a profit centre -- to run it like a business. Quite often I think members opposite, in their philosophy, urge that attitude: government ought to run like a business. If B.C. Rail completely and fully ran like a business, the Nelson extension wouldn't exist. It is only through a government adopting, and the administration before us as well.... I give them credit for establishing a social policy to consciously subsidize something for the benefit of that region of the province, for the benefit of the industry that might want to locate along that line. That is the only basis on which that section of the line can continue to operate.

So yes, you have a commitment that there's no inclination to close it, but no, I would maintain it as a separate element such that we know the profit and loss picture of each element of B.C. Rail.

R. Neufeld: It is interesting that you ask me the onerous task of repeating what I said because now your staff is here. The Minister of Finance opened it, and we have to stand immediately and speak to it, so it's a little difficult for me to stand here and not speak while I wait for you to bring in your staff.

You talk about subsidies for the Fort Nelson extension and the cost of it -- $5 million. It's hardly fair to take that into consideration. Obviously the minister didn't understand what I was talking about, because there's a tremendous amount of revenue that comes out of Fort Nelson. There's a tremendous amount of revenue that comes out of the north that obviously escapes most members opposite -- of what really happens in this province of British Columbia and how it operates. There are millions and millions of dollars -- and you should be aware of all the dollars -- that come out of the north, and specifically the Fort Nelson area. It's an important part of British Columbia -- very important.

There's natural gas revenue that I know is not transported by B.C. Rail, but there is an infrastructure there that must be maintained. All those things that you enjoy down here in the south when you turn your heat up on your furnace -- and you all do down here -- are thanks to Fort Nelson. Maybe you don't know, but the gas plant in Fort Nelson is one of the largest in North America. There are people who live in that community and work out at that gas plant. They need the services that community can supply, and they can only keep them by having the B.C. Rail there to service a plywood plant so that those products that they produce can go to market. The revenue and the payroll generated just from the people that work on the B.C. Rail and live in the community of Fort Nelson are very important to the economy of British Columbia as a whole.

It was not all that long ago that some of the people in the north Peace -- the mayor of Fort St. John and the mayor of Fort Nelson -- were relatively upset with the increase in taxation across the board to everyone, which was driving industry out of those places. They wanted to move out of British Columbia. But I don't think British Columbians want to lose that part of British Columbia; the southern people don't want to lose it, because they're not going to gain anything. Instead of sectioning off B.C. Rail from Fort St. John to Fort Nelson and saying, "This is how much it costs to run it," why don't you just include it as one identity? You did that with B.C. Hydro; you sectioned it off in Fort Nelson. It's constant. There's always a sectioning off, and we're going to say how much that costs up there.

I wonder, if you took the cost of operating a rail from Prince George to Fort St. John in the same way of doing the books here, whether it would have always paid its way from day one and whether it would have never cost any subsidies. I'm sure it would have. To open up areas in the north, where you don't have tremendous amounts of traffic, does cost money. But it doesn't cost all that much, if you include it in the total revenue of the whole province. There are all kinds of spinoff revenues from operating that line. It goes down to the trucking companies that operate out of Fort Nelson and the oil companies that headquarter their operations in Fort Nelson and move that fuel from Fort Nelson north. They move a tremendous amount of fuel. I would say in the magnitude of probably 50 million to 80 million litres a year is moved out of Fort Nelson to different points in the Northwest Territories and the Yukon. All that money goes back to the province of British Columbia.

The other thing I might add is this. As you travel north out of Fort Nelson on up to the border, it's a highway. I notice in your capital rehabilitation program that you list Highway 97 as part of the B.C. system, but that's the Alaska Highway, which is being maintained and rebuilt by the federal government. So all those trucking operations that work out of Fort Nelson, buy their insurance through ICBC and pay British Columbia fuel taxes and fuel permits, operate on a federal highway that's subsidized and kept rehabilitated by the federal government. So you have the added revenue to you that isn't a cost.

I just want to impress upon you that although I understand $5 million is a lot of money -- no doubt about that -- I think it's time that philosophically the government of the day takes that into consideration and puts it into the operation of all of B.C. Rail. That $5 million becomes pretty insignificant if you spread it across there.

I might add that the Ministry of Energy doesn't seem to have any problem with that. They started a new council that's going to cost $2 million a year, and it's just taken into the public Utilities Commission. They're just going to add it to their costs. So we're only talking about another $3 million. Let's be real here when we talk about $5 million and it costing British Columbia taxpayers so much.

I appreciate that you say there is no intention right now to remove the Fort Nelson extension, but I certainly would like the commitment that we finally start running it as much like a business as we can and incorporate everything into one. Then it doesn't become

[ Page 1027 ]

so onerous and so hard on the people and the industries in Fort Nelson as to whether they're going to be viable or not.

For the benefit of your B.C. Rail people, would you like me to go through what I said earlier? No? Okay.

Hon. A. Charbonneau: Before I respond to the member opposite, I would beg the indulgence of the House to make an introduction.

Leave granted.

Hon. A. Charbonneau: I would like the members of the House to join with me in welcoming a grade 7 class from Aberdeen Elementary School in Kamloops and their teacher Carl Gustafson. It's a long way from Kamloops for them to come to sit in the House and observe things for a while. I would ask all members to join me in welcoming them.

A minor point, first of all, and that is with respect to your question about the Alaska Highway. There is a demarcation point on the road, and we take care of this side of the demarcation point; the feds take care of the other side. The amounts that you referred to are our amounts.

With respect to B.C. Rail, I find it a bit curious that when the third party was government they instituted this process of keeping the subsidy for the Nelson extension. They created and put that policy in place. We're following along, for the present at least, on that same policy, and the member of the third party seems to be criticizing the policy that his own party established, which puzzles me just a bit.

I agree completely that the economic activity in northeast British Columbia is important -- no doubt about it. But B.C. Rail is a business. Whether it was the previous administration or ourselves, when we, the government, are asking a Crown that we wish to operate as a business to do something for the larger public policy, for the larger public good, and it is uneconomic for them to do so, it is then fair and proper for them to identify that and for them then to say: "Yes, we will carry that out, but in respect of the fact that it is uneconomic, we seek a subsidy to offset the costs that we're going to incur, such that the dividend that we can pay you as the shareholder will not be confused and lessened by losses that we are suffering at your behest."

It makes eminent sense for any corporation -- and I think most of the members opposite would understand this -- to arrange its business into profit and loss centres. It is not a good idea from a corporate point of view to mix together everything not knowing whether you're making money or losing money on this element or that element or this store or that store. It's absolutely typical good business practice to divide it up into elements, so you know where you are on each of the elements.

To maintain the northeast extension as an element, and to know very well that it is costing $5 million of the taxpayers' dollars to keep it operating and to be reminded of that again the next year and the year after is a good idea. Then we can always make the social policy decisions to keep it operating in the larger good, but we're doing so with our eyes wide open, fully aware of the fiscal consequences.

[10:30]

R. Neufeld: The minister -- obviously we don't know one another from before -- would know that I criticized my own party for quite a number of years, when I was mayor of Fort Nelson and an alderman for some ten years, on the practices of not only B.C. Rail but also B.C. Hydro. I hold no punches there, whether it is my government or not. I'm representing the people who have put their trust in me and elected me to this House.

I'd be interested in knowing the gross revenue of B.C. Rail.

Hon. A. Charbonneau: If you're speaking of the overall figure, not the extension, it is $340 million.

R. Neufeld: It's $340 million without the Fort Nelson extension. Did I understand you correctly?

Hon. A. Charbonneau: The overall consolidated figure is $340 million.

R. Neufeld: I would submit that $5 million out of that $340 million is not going to make that much difference. It's not social policy to keep B.C. Rail open on the Fort Nelson extension, I don't believe. It has more to do with running the business of the province and all the revenue that is generated out of the north that comes to the south. You can't just whack off the province someplace and say to the rest: "We're going to continue to pick your pockets, but we don't want to serve you in any way." I don't think it's a social policy at all.

I still say that the $5 million.... I know this has been said many times before. There have been lots of discussions about what it costs to put in new rail. But as I said earlier, the terrain that B.C. Rail crosses is a little different from what you have just out of Vancouver, through the mountains. There is a tremendous amount of muskeg and that type of terrain that has to be traversed. Possibly putting in substandard rail when it was first put in was the right thing to do -- and then upgrade it. Of course it's going to cost a certain amount to upgrade it.

For the benefit of the B.C. Rail people here, I said earlier that for 12 or 13 years I worked in a business in Fort Nelson that depended on B.C. Rail, and we had exceptional service from B.C. Rail -- beyond doubt. I'm not trying to say that B.C. Rail does not provide a good service to the community of Fort Nelson; it provides an excellent service that people are specifically very happy with. What they are unhappy about is the philosophical part, that possibly this rail line may go, as was talked about once before.

The dividend part is obviously not all that important to your administration anyhow. I notice that, as with a recommendation from the Minister of Finance in regard to B.C. Hydro, you just took away the dividend for last year with the stroke of a pen because of some decision

[ Page 1028 ]

that was made quite a few years ago. The dividend part I have a little problem with.

It would really make it much easier for industries and for those people who live in Fort Nelson, who contribute in all kinds of ways -- through income tax, through all of the revenues that come to Victoria from the north, not just from B.C. Rail but from all the other things that happen up there -- to feel that they are a complete part of the province of British Columbia by finally saying: "Yes, there is no B.C. Rail extension; it's all one together." It would make people up there feel a lot better about the province. I would hope that through the next few years you can see your way clear, Mr. Minister, to make that move. I'm sure that the people of Peace River North, and specifically in Fort Nelson, would be very appreciative of the commitment from your government to include it.

If we are going to section out specific parts of the rail line.... Do you have any other parts of the rail line that are sectioned out, whether they are in the main line or not? Do you have any other ones that are specifically sectioned out like Fort Nelson? We'd like to see not only the cost of operating them but the capital cost and the rehabilitation costs that have gone into operating them. Then maybe people up north can understand a bit better. If you're going to take it out of just the Fort Nelson extension, why don't you take it out of some of the others? I'd be interested in knowing that.

Hon. A. Charbonneau: I will repeat that there is no intention whatsoever to in any way diminish northeast B.C. -- the residents, their hopes and aspirations, their needs or anything else. I guess what I'm pointing out is the benefits of a more socialistic approach to government, because B.C. Rail is a socialist enterprise. It's ironic that Social Credit created it, but that is what it is: socialism. Through the benefits of socialism and the conscious decision to subsidize it, we are giving a great benefit to the people of northeast B.C. and allowing them to develop to their potential and, in turn, to give us great benefits. I would ask the member opposite just where we would be if B.C. Rail was, in fact, a simple private corporation and they were requested by government to extend their line to Fort Nelson. What would they do? They would say: "No, we can't make any money running to Fort Nelson; therefore we won't build a line to Fort Nelson." So we're pleased to carry on the benefits of having a socialist organization -- a Crown corporation -- reach out to northeast British Columbia and participate in the economy of that part of the province. It is a great benefit of socialism, and we continue to support it.

Five million dollars might not seem like a lot to you; I know it would make an awful lot of difference to my bank account. The $18 billion of our entire budget is made up of $5 million here and $5 million there. You take $5 million here, $5 million there and $5 million someplace else, and pretty soon it adds up to real money. We're going to be responsible for $5 million at a time and keep track of those things.

We do keep track of other elements of B.C. Rail that lose money and have to be subsidized. The passenger service up to Prince George is separated out from the normal operation, maintained as a separate entity and subsidized as a separate entity. Some elements of our telecommunications are subsidized and kept track of as separate entities. It is good business practice to do that, and we will continue to do that.

We have excellent management in place for B.C. Rail. They're doing a fine job. Their mandate is to make money for the shareholder, which is the taxpayer of British Columbia through me. We're pleased with the performance generally and with the level of service they have given to northeast B.C. We will continue it, but we will also keep track of all of the costs associated with it.

R. Neufeld: The two entities that you said you section out are passenger service and telecommunications. I appreciate that, and I think that can be quite easily done. But the question I asked was whether you section out any portion of the line like you do for maintaining the Fort Nelson extension. Does that happen in any other part of the rail line of B.C. Rail?

Hon. A. Charbonneau: There are three other segments of line that we keep track of: Dawson Creek, Takla and the rail operation at Roberts Bank.

R. Neufeld: If those are kept out separately, what is the purpose or the reason for sectioning them out separately? Is it so you can maintain a cost on it, the same as you do on the Fort Nelson extension? Are the same criteria used on these three sections as are used on the Fort Nelson extension?

Hon. A. Charbonneau: The other sections of track mentioned, in fact, all pay their own way. We still like to keep track of the different sections to see that each is paying its own way, so that, again, you don't confuse the overall corporate position with the specific areas of profit and loss.

R. Neufeld: Would the minister share with me the costs and criteria used on those sections of line, so that I have that information?

[10:45]

Hon. A. Charbonneau: The information could be made available in confidence. It relates to commercial rates, and we don't wish to show our hand to one and all. In camera, on a confidential basis, the information could be shared.

R. Neufeld: I appreciate that, and I will be in contact with you so I can get that information.

I think that's basically all the questions I have for the minister, other than to say that possibly his interpretation of socialism and what makes the province of British Columbia tick, and my interpretation of socialism and what it does to the province, differ tremendously. I think that B.C. Rail and B.C. Hydro were Crowns that were incorporated by previous governments to service the people of British Columbia. That just shows you that the Social Credit government of the day had a feeling for the people of the province, by opening up those

[ Page 1029 ]

areas of the province, specifically in the north, so everyone could enjoy the benefits. That goes along not only with B.C. Rail but with B.C. Hydro and all the other entities we have in the north.

Hon. A. Charbonneau: I agree that the previous administration did do it in the best interests of the people of British Columbia. But when a government buys out private corporations, takes them over, and operates them under total ownership for the public good, it's called socialism. B.C. Hydro is an example; B.C. Ferries is an example; B.C. Rail is an example. All of the above were created by the Social Credit government, and I'm sure the people of British Columbia are grateful to them for being more active socialists in an earlier phase of their existence than they are today.

L. Fox: I resist the challenge that has been placed before me. But I do have to make some comments with respect to them. I cannot leave them totally unchallenged. Being an individual who has survived throughout his adult life in the business world, I picture the province as one large business. I picture B.C. Rail as an arm of the province in order to generate business. I see it as an investment in the future that we cannot identify as a social service to the north, and I take issue with that. I'm extremely concerned when we have southerners of this province suggest that a service which accesses badly needed resources, and which improves not only the economy of this great province but the lifestyle that all British Columbians enjoy, is a social service to our area of the province. I referred earlier in the estimates and in the budget debate that the budget I see brought forward by this government was a pickpocket budget: it picked the pockets of the northerners and put it in the pockets of the southerners. I see your attitude, Mr. Minister, with respect to providing us with social services, as an element of the attitude that was contained within that budget.

I can well understand the minister's intent to examine portions of his ministry to define areas within rail, and to examine and re-examine whether or not those areas are operating as efficiently as they could be. There are two reasons for doing that: one is the positive mode where you look at your limitations and weaknesses, and you design marketing strategies to improve those weaknesses so that you can meet the challenge of competitiveness that you're attempting to address, as well as the challenge of delivering a good solid service; or there is the other side in which you could be motivated in order to cut that service. You could be looking at weaknesses for the purpose of cutting. I hope when you're identifying these areas of rail and services it's with the idea of strengthening those through the proper development of good marketing strategies in order to deliver a better service to the customers of B.C. Rail.

I will allow you to respond.

Hon. A. Charbonneau: I take and applaud the spirit of the question. We should be striving to make the situation better through better marketing and government policy to encourage development, particularly manufacturing, in the hinterlands, which includes Kamloops as well as Prince George.

You will be pleased to know that the marketing staff of B.C. Rail has been enlarged significantly over the past few years. We are generating more revenue on the Fort Nelson extension, but we still have a way to go. We will continue to strive to develop both a better passenger market and a better freight market.

We are subsidizing passenger service for '92-93 on the Royal Hudson route and the Fort Nelson extension -- both operations and capital -- to a total of $13.2 million. There is no slight effort being made both in terms of the subsidy and in terms of the marketing effort to make sure that these are viable services.

I might make mention of your initial comment on differing with me on the words "social policy." It wasn't social services; I said social policy. But I don't wish to quibble on words. What I meant is public policy. It is public policy that we have subsidies in certain areas, and it is a public policy shared by the previous administration. I have no quarrel with it, and I don't think you have any quarrel.

While I happen to be on my feet I might mention a point that you raised yesterday about your MOTH package. You came back in and said you had been having great difficulties for an hour trying to obtain your package. I went straight down to my office upon adjournment, and there had been no contact from your office at all. I'm quite puzzled. Perhaps you were contacting somebody in the ministry office. They were at the minister's office, and my ministerial assistance assures me that there was no contact whatsoever in the preceding hour.

L. Fox: The lady who was attempting to acquire those was right next door to your office and knows very well where it is. She was not able to achieve it, nor were our members able to achieve it this morning. We do appreciate, however, that we got them at about 9:35 this morning. I do appreciate that.

Anyway, I'm thankful for your positive response with respect to the reasons for evaluating these particular extensions and these particular services. I'm satisfied that at least you're going to look at it from a positive perspective towards marketing those things successfully. That's great.

I want to expand, however, because you seem to be missing my point, with all due respect. The overall net gain to the province through the delivery of service from the BCR is phenomenal. It's phenomenal in terms of the dollars this province gets whether through personal taxation because of jobs, or whether, as my friend from Peace River North suggested, through other developments that have occurred because that line has been placed into those respective areas.

I would ask that it would be constantly in the back of your mind as to what the net gain of resources to this province is from those respective areas besides what your operating losses are, so you always are in a position to examine what the net production is from that respective area in terms of dollars to the province of British Columbia. As I mentioned yesterday, a survey done, with a lot of work put into it, by the North

[ Page 1030 ]

Central Municipal Association shows exactly what the resource flow was in terms of dollars to the southern part of this province from the north central municipal area, which includes from 100 Mile right through to the Alaskan and Yukon border. I think you would be extremely surprised at those numbers, and I invite you to explore them.

I want to get back to it, because I did follow your discussions about creating a positive attitude for doing business. You would have to agree that one of those attitudes would be a strong service area to your railroads. In the case of BCR, it's usually supplied in many instances by the businesses housed within your industrial sites. They're there so that they have immediate access to the railroad, and certainly are instrumental in the delivery of services from the north to the south.

I was extremely concerned, however, when I learned that you recently changed the lease formulas from 8 percent of the assessed value to 10 percent of the appraised value, which has caused increases from 50 to 100 percent in terms of the lease costs to those residents. It's extremely costly to the tenants, and it is limiting their ability to maintain their buildings, expand their businesses and therefore allowing you to expand yours.

I will sit at this time and allow you to answer those concerns.

Hon. A. Charbonneau: With respect to the last part of the question, if you'll permit me, I'll take that on advisement and try to get an answer back to you before the session ends today.

L. Fox: I'll give you some more information.

Hon. A. Charbonneau: If you would, please.

Overall, we've got to keep in mind that B.C. Rail makes money. It doesn't make and lose; it has made money. In this coming year, our net income could be in the $50 million range. It's crucially important that we keep in mind that it runs as an efficient business, because in terms of.... An example is the price of lumber delivered to a market in the lower mainland. As much as 30 percent of the cost of that lumber can be transportation. If we wish to develop our export markets, we have to keep an efficient railway -- an efficient transportation system -- in place. It's going to impact directly on the cost of our products.

To come back for a moment to another of the earlier points in your present question: yes, northeast B.C. contributes. It generates large amounts of revenue for government. But so do all of the other regions of the province: the southeast with coal, mining and lumber; the Island with copper and lumber; the interior with copper, other mining and lumber; and the lower mainland not only with agriculture, but with all of the manufacturing and service industries. We all contribute as a family to the revenues of government. That in no way diminishes the very important contribution that the people from the northeast make.

[11:00]

L. Fox: I specifically talked about the north because it is the head of B.C. Rail. I have spoken in this House on other estimates, and as well have often referred to the rural parts of this province in the same light as I refer now to the northern part of the province. But because the southeast is not served by B.C. Rail, it's not really a subject at this particular time. What I'm concerned about is the service of this railroad to northern B.C. and where it's going.

So let me get back to the industrial site issue, because it's a big issue. I'm kind of surprised that the minister is not aware of it. There has been ongoing dialogue between the financial institutions and the executives of B.C. Rail about their concerns. Presently, individuals looking for financing in order to build their businesses on industrial sites owned by B.C. Rail are unable to achieve long-term financing because of the situation that exists with respect to the lease tenure and the agreements presently in place on your industrial sites.

I'll give you one example that will help you research it, Mr. Minister. That's 1088 Great Street. B.C. Rail on April 10 actually attempted to take ownership of this particular piece of land. I'm not sure now what the status is. When I spoke to the bank this morning, they weren't sure what the status was. But obviously the individual, who had a successful business for twenty years, only to be impacted negatively by an offer to renew his lease for one year -- it taking a year and a half for BCR to respond to this, so he's already six months overdue -- is having a very difficult time in achieving a financing arrangement to keep his business going. So his business is no longer there.

I'm told that this is the situation up and down your line with other industrial parks. I would suggest to you that if the railroad is going to succeed in delivering a very good service, and therefore help businesses to do business in their respective communities, they're on the wrong road. They had better get back to looking at what helped make that railroad succeed in the past, and develop some policies that don't allow this kind of thing to happen. With that added information, I see some notes being passed and I'll allow you to comment.

Hon. A. Charbonneau: Very often we hear members opposite from both parties, both provincially and extra-provincially, talk about the glories of the market system; how the market system solves all problems. Well, the market system includes something called "market price." For years the industrial land along our line has been leased at far below market prices. I'm sure that the members opposite must agree with us hard-nosed socialists who say that businesses should not be subsidized holus-bolus by giving them deals where we are breaking the very fundamental rules of the marketplace. So we're in the process of reviewing the lease rates for this land and bringing them up, over a period of time, to market values. There's that sacred word that the opposition likes to use a lot: "market values." I'm surprised that the member opposite wouldn't stand up and congratulate us on becoming economic realists and embracing one of the fundamentals of their party.

While I'm on my feet, I will also raise another issue of subsidy. When the previous administration, or several administrations back, launched the Dease Lake

[ Page 1031 ]

extension, they were going to run B.C. Rail right up to the northwest corner of the province in order to further the development of that region. After the expenditure of some $100 million, it finally sunk in -- as the railway sunk into the ground -- that you can only extend social policy and subsidies so far. In the end that was more or less hit on the head and B.C. Rail had to take a write-down of $80 million. If I were to adopt, holus-bolus, the philosophy of the members opposite, I guess we would have completed Dease Lake and had a mill or two perhaps up at the far end of it. We would have poured in tens of millions of dollars a year in order to subsidize that area. At some point the previous administration had to make a tough decision. They made it, and I compliment them for making it. They realized their mistake, that you can only push the subsidy argument so far before you grossly distort the marketplace.

So they killed the Dease Lake extension, and we swallowed the loss. It's a good thing that somebody was taking care to track the costs associated with that particular segment of the line. Otherwise the Dease Lake extension could have been simply folded into the overall operation and somebody could have said: "Look, we've made $50 million. What's $20 million or $25 million to subsidize the Dease Lake extension? It ought to be part of the system the same way that the northeast extension should simply be part of the system." That kind of philosophy would have sunk the entire railway. It's one more reason why different elements of the line should be regarded as profit and loss centres, not the overall bottom line but the individual elements. When we do make social or public policy decisions to subsidize a specific section of the line, we should do so in full knowledge of what we're doing.

[R. Kasper in the chair.]

L. Fox: I guess I fail to understand what an extension that was scrapped many years ago has to do with the present lease rates on B.C. Rail's industrial site within the Prince George community. I guess you needed a soapbox, so you took it.

In the terms of you taking the right economic moves, I would suggest, Mr. Minister -- once again with all due respect -- that this budget does anything but that. Let me get back to the issue at hand. It's something that is dear to the hearts of Prince George. Had I had time and known sooner than yesterday that B.C. Rail was going to be here this morning, I'm sure I could have dug up other examples in other communities.

I'm sure you will agree that a strong business section is important to the success of B.C. Rail. I fail to understand how you rationalize a 50 percent or a 100 percent increase -- in that great barrage of words that you just gave me -- and how that enhances business and, therefore, opportunity for your railway, specifically when it's being done at one increase. It's not being phased in. It's being done at one time -- and in fact it drove this individual out of business. I fail to understand how that, along with your other taxation policies, is enhancing the opportunities for B.C. Rail. I would ask that you specifically address that aspect rather than the great barrage about something which is no longer in existence.

Hon. A. Charbonneau: The specifics of the one piece of industrial land that you have made reference to.... I don't believe that it's appropriate to discuss it in this forum, but I'll be pleased to provide you with details about that. The general policy is one of bringing lease rates for industrial land from far below market price up to market price. I'm sure that if the member opposite owned all of this land himself, he would be looking at charging market price to whoever wishes to lease it from him. If he took over this land and discovered that the industries on the land were paying something far below market price, he would regard it as properly what it would have been: a form of subsidy. He would say: "No, a business ought to be able to pay its own way without subsidies; therefore I, as the new landowner, am not going to continue to subsidize them; I'm not going to gouge them, but I'm going to take the leases up to market value." I fail to see how that can be criticized.

W. Hartley: May I ask the House leave to make introductions.

Leave granted.

W. Hartley: Today in the House we have from Maple Ridge some students and their teacher Mrs. Cole -- and a number of adults have come along -- from Maple Ridge Elementary School. They tell me that they followed the last provincial election with great interest. They're here today to visit the Legislature. I believe it's opportune that they happen to be here in the Legislature at the time when we are discussing the Transportation and Highways estimates, as a number of their questions related to the possibility of a bridge to Maple Ridge. Would the House please make them welcome.

L. Fox: Let me take this a little further so that I understand exactly your program. If you are going to appraise this leased land at market value, does this now mean that this building is no longer able to find a tenant -- in fact it has been vacant for some time -- and that the market value has decreased, and therefore the lease rate would reflect the vacant-building status because they can't rent it?

Hon. A. Charbonneau: I'm not prepared to enter into the debate on an individual piece of property. With the ones that you mentioned there are substantial problems on which you can get a more thorough briefing outside this chamber if you wish. We have in B.C. Rail a sizeable, competent real estate complement. It is their business to lease land at fair rates; the leases are negotiated. They are phased in at the end of a lease or introduced at the outset of a new lease, and quite often the increase is phased in over a two-or three-or four-year period.

[ Page 1032 ]

Again, the underlying principle ought to be fully supported by all members opposite: that is, bringing lease rates to market values.

[11:15]

L. Fox: I didn't argue with that. I asked you if the market value dropped because you had vacant buildings -- irrespective of which building. If the building is vacant for an extended period of time, obviously.... I had a couple of these buildings, and I didn't have tenants, so I know what the market value dropped to the minute I didn't have tenants.

Does the lease that you're projecting have within its structure the ability to reflect -- if you're talking market values -- the true market value of a vacant building?

Hon. A. Charbonneau: The answer is yes, we recognize that as one of the pressures in the market. We have renegotiated leases with firms that were in economic distress, and we have decreased their rates in some instances.

But the member opposite would know that just because buildings are sitting empty, it does not necessarily mean that the rates being asked are completely out of whack with market. Corporations simply make a decision from time to time to let a building stay empty until a temporary depression of the market is over, and they can enter into a long-term lease at what they deem a reasonable rate. Sometimes the correct strategy is to let property sit empty if you're anticipating a short-term turndown; that's standard market procedure.

L. Fox: Well, I don't want to continue this debate. Obviously the minister has never owned a commercial building and knows very well that if he did, he couldn't afford to allow a commercial building to sit vacant for any length of time. You put out whatever rents you can get in order to have it occupied. That's probably a little different from a corporation's perspective, but it certainly isn't in the private sector.

Let me get on to another concern I have, and oddly enough, this building thing led into this other concern. Given the fact that we have the president and the vice-president of finance here today -- and I'm certainly pleased they are here -- I would ask what your business plan is with respect to getting into the rubber-tire rolling-stock freight-hauling business?

Hon. A. Charbonneau: B.C. Rail is in the business, albeit not in a large way, but it is something that we promote. We have an intermodal capability, but it represents a very small percentage of the total trucking capability in the province. As you would well know, it's a fiercely competitive area where many truckers are complaining, as a result of deregulation, that they're all suffering equally. There's not a great deal of money to be made in that particular area right now. Of course, one should keep in mind that any expansion B.C. Rail gets into in that sector means that private owners are going to suffer that much more.

F. Garden: First an observation. I've listened with interest to the debate and philosophical things that have been going on. I'd like to suggest to the members to the right of me that if they would talk to their friends in Ottawa and have them do as good a job with the national railways as B.C. Rail has done with the provincial railways, we'd be in good shape.

Based on the cutbacks in the minister's department.... There were two major projects in the Quesnel area: the east-west connector, which I'm not too interested in; and the ongoing plans with the north-south bypass of Quesnel. Will preliminary work continue in these estimates? In the planning there were about three different proposals brought before us by the previous administration, and I thought that was ongoing. Will the planning process for a north-south bypass around the Quesnel area be continued over the next couple of years?

Hon. A. Charbonneau: There is planning and preliminary design work proceeding on the north-south connector; some lesser work is being done in order to keep some options open on the east-west connector. As I have indicated to the member, my preference would be toward developing the north-south connector.

L. Fox: I do want to thank the member from north Caribou for recognizing that the previous administration had done such a great job with respect to B.C. Rail. I appreciate those comments. That's the first positive comment I've gotten out of him since I was elected on October 17.

I want to get back to the rolling-stock issue -- the rubber-tired issue. I know that B.C. Rail has done some exploratory work to find out what the costs of chip-hauling trailers are. I'm well aware that they've had an option on a building within the city of Prince George with the idea of running in competition with Canadian Freightways and other freight carriers that haul in the private sector. I want to know, the people of Prince George want to know and the private sector wants to know if they're going to have to compete against tax dollars in this business in order to stay in existence?

Hon. A. Charbonneau: Trucking is a complementary sector to our primary transportation system. It's something that we've been in for some time, but it's a small component of our business and a small component of the overall trucking. Over the past number of years B.C. Rail has lost a lot of lumber business to the trucking industry. We're in the process of trying to win some of it back, but we'll win it back on the basis of fair competition. We will expect our trucking element to do it and make money. We're willing to compete with the private sector on this. They've taken some work from us; we're going to go back after them and see what we can recapture.

L. Fox: I'm glad to hear you suggest that you've lost there. I shouldn't say glad, but I appreciate the fact that it's recognized by B.C. Rail. They had lost a lot of the lumber sector business, and obviously for various reasons: the lack of marketing, as we talked about earlier; the time factor; and certainly the ability to meet

[ Page 1033 ]

the shipping time-frames and so on. As well there's always the backhaul issue that we have, and I know you'd be aware of that with respect to the interior part of the province. That's fine. I understand that.

What I'm really concerned about, though -- being a businessman I understand -- is capitalization. If we have BCR going out and buying a fleet of trucks, and each truck does not have to substantiate its own cost and expense structure on a particular line, there are some extreme advantages there, particularly if it's backed up by provincial dollars. I'm extremely concerned that government should not be involved in competing on an unfair playing field with the private sector. Given an even playing field, the private sector will outperform government every time, as long as all things are equal. There's no question in my mind. However, if the playing field is not equal and if each one of those trucks is not expected to capitalize and meet its own debt, then we will not have an even playing field.

Hon. A. Charbonneau: We do not cross-subsidize in B.C. Rail, but I have to admit utter fascination with the gist of this last question that each truck should be justified on a profit-centre basis. A few minutes ago you were suggesting that we should somehow meld the Nelson extension into an overall and not worry too much about whether individual.... I'm sorry, member adjacent, same party.

The trucking sector ought to stand on its own. Whatever we're in ought to be able to stand on its own, the same as segments ought to be able to stand on their own. Cross-subsidization would be unfair to the private sector, so we won't do it. But if we can sharpen our competitive wit and deliver a product to a client and enhance our rubber-tired portion and our intermodal portion, and use that to feed our rail portion, you can bet we'll do that.

L. Fox: I can see that the minister and B.C. Rail are committed to getting into a larger portion of the rubber-tired market. We'll have ongoing dialogue with respect to that.

Let me ask one final question. Was it the position of B.C. Rail and of the previous administration to locate the headquarters of B.C. Rail within the city of Prince George? That statement was made, in combination, on a couple of occasions. Has there been any further movement with respect to that? Are there any plans with respect to moving more of the services of B.C. Rail to Prince George in the future?

Hon. A. Charbonneau: The study relating to the relocation has just been completed. I haven't seen it myself. It will be presented to the board of B.C. Rail on May 5. When I have had the opportunity to see it and reflect upon it, I'd be pleased to answer questions related to that.

L. Hanson: I just have a short question. For some time B.C. Rail has been interested in port development at Squamish. Are there plans for any action this year? Strictly design -- what is its status?

[11:30]

Hon. A. Charbonneau: The Squamish estuary committee's study is looking into a number of elements. We have had ongoing discussions with municipalities, and we have had limited discussions with native bands in the area. It is certainly something that I am interested in pursuing. But everything is at a very preliminary stage at the present time.

L. Fox: One final question. I hadn't intended this, but you made the invitation in your answer that you'd be happy to answer further questions. I have to ask you specifically: as the minister responsible for B.C. Rail, what's your position with respect to the relocation policy and to relocating B.C. Rail's headquarters to Prince George?

Hon. A. Charbonneau: I have an open mind on the issue. I'll wait to see what the report says. But as I've said before, we expect B.C. Rail to operate as a profitable business. Any move ought to make business sense, and it ought to fit in, generally speaking, with the operation of a private corporation of this nature.

D. Symons: I've been enjoying the debate back and forth. One thing that struck me greatly in the comments by the minister and then in the comments from hon. members of the third party is that it seems that as you move from one side of the House, you become capitalists on that side and socialists on this side. This party has a constant position regardless of where we are sitting, and we intend to keep that position. We're the free enterprise party with a social conscience. We play both sides together.

I see that there's a considerable expenditure of $13 million in operating subsidies to B.C. Rail this year. What is the nature of this subsidy that we give them? It's listed in the estimates as a contribution to B.C. Rail.

Hon. A. Charbonneau: They are made up of fundamentally three different elements. One element is the subsidization of passenger services on the B.C. Rail service up to Lillooet and up to Prince George. That will be subsidized in the current fiscal year to the degree of $2.89 million.

Rather than just giving the number, let me again refer to the philosophy of it. B.C. Rail did not choose to operate this passenger system; they were instructed to operate it. They have identified that, of course, they will be willing to do so, but it will cost money. So in a business sense, the government decided to have the service operate and to provide a subsidy to cover that deficit so that it does not impact the bottom line of B.C. Rail. B.C. Rail's estimate for the current year, agreed to by Treasury Board, is $2.89 million.

We offer a subsidy of $0.87 million to the Royal Hudson Steam Train Society. With respect to both of those, I might say that Treasury Board has encouraged B.C. Rail to increase their marketing with a view toward the reduction and perhaps eventual elimination of those subsidies. We're urging a business development to overcome them.

Lastly is the issue that I discussed at some length with the member opposite: some $9.5 million for the

[ Page 1034 ]

Fort Nelson extension. That is broken down into two elements: a subsidization of $7.5 million for the operating costs of that line and the subsidization of $2 million for capital expenditures relating to that segment. The total of all the above, then, is the $13.26 million that the member refers to.

Hon. G. Clark: Mr. Chairman, I ask leave to make an introduction.

Leave granted.

Hon. G. Clark: On behalf of the member for Malahat-Juan de Fuca, who is in the Chair and who cannot speak, of course, from the chair, I am very pleased to introduce a group from Belmont Senior Secondary School: the life skills class of grade 12 students and their teacher, Mr. A. Harrison. I would ask the House to make them welcome.

D. Symons: I thank you for that answer. I think you've partly answered my question, and that is: what control does the minister have over the moneys that we contribute to B.C. Rail? It is contributed in the sense that it must go to each of those three votes that you've mentioned.

I'll take your nod as meaning agreement on that. Or did you wish to respond further?

Hon. A. Charbonneau: The process works by the management of B.C. Rail developing their case in some detail. That's presented through the ministry and eventually to Treasury Board, where it is examined again in some detail. Sometimes all of the request is granted, and sometimes the request is pared down somewhat with additional instructions given to work in the direction of the further reduction of future subsidies.

The general process is that B.C. Rail develops the subsidy through their analyses. It is scrutinized by the ministry and by Treasury Board and then approved.

D. Symons: Still on the finances here -- because I see that we're producing something to subsidize certain aspects of operations of B.C. Rail -- I notice on the bottom of page 5 in the estimates that the B.C. Rail revenue coming into government is $10.3 million. So I'm just curious, in a sense. We seem, through the Highways ministry, to give them $13 million and then in another way to get a revenue back into government.

On top of that it seems, from an answer you gave earlier to one of the other hon. members, that there is a rather large profit overall for B.C. Rail. I'm just curious about the way the moneys seem to be going.

Hon. A. Charbonneau: The figure of profit that I mentioned a few questions back relates to profits of B.C. Rail for the end of the current fiscal year.

Interjection.

Hon. A. Charbonneau: Well, it's actually standard gauge.

The other matter is a case of keeping figures straight. Yes, B.C. Rail paid a dividend to the province on their operations, and yes, the province paid B.C. Rail a subsidy to cover losses in some elements of their operation. Doing it that way is just good business, that's all. It keeps clear where the subsidies are going, and it keeps clear the actual profitability of the corporation aside from tasks relegated to the railway by the decision of government, rather than through corporate decisions.

D. Symons: Who is presently on the board of directors of B.C. Rail, and when do their terms expire? I believe a few members were replaced fairly recently, but others have been in for a longer period of time. So could you enumerate who the members are and when their terms are normally going to expire?

Hon. A. Charbonneau: In answer to your question about the board of B.C. Rail, the chairman of the board is David Jiles. Other members of the board are Erik Tofsrud, Gordie Sangha, Harold Halvorson, Bev Ellis, Ed John and Paul McElligott. The first five are new appointees and have a one-year term. There was no term defined at the time the previous appointees were named.

Hon. G. Clark: I just wanted to enter the debate briefly, because I'm curious about B.C. Rail and their association with northeast coal. I think all members remember northeast coal. That's where the previous government sank a billion dollars or so of taxpayers' money, and then the hole was in the wrong place. Remember that? Then, of course, the private companies had great difficulty in that exercise. We have members here representing the area -- the leader of the third party. Every private sector development has written off their investment because, of course, it's not paying back. It's costing us.... Billions of dollars of private sector money have been written off. We have, I think, a billion dollars or so of public money and half a billion dollars of B.C. Rail money sunk into that site. Obviously we're all interested in seeing it continue, but given that the private sector has written down their investment, I'm curious as to why B.C. Rail hasn't written down their assets.

I wanted to ask the minister the question, because it seems to me that investment, if it were done on a private sector model, may be different. I would ask the minister to inform members of the House how much public money was invested in that B.C. Rail line and how much it's carried on the books for. And maybe he could explain to members of the House and to me why we have not written down those assets, as the private sector has, in that very dubious proposition in terms of the investment of taxpayers' money that was wasted by the previous administration.

[11:45]

Hon. A. Charbonneau: I'm pleased to point out to the hon. House Leader that the hole was dug so deep that most of the previous administration is buried in it and can't even be seen at this time.

[ Page 1035 ]

Some $600 million -- can you believe that? -- was invested in that line, and to the present time it has been written down to a value of $475 million. Under the generally accepted accounting practices for railways, the peculiarities of the accounting industry require that write-offs occur to the system as a whole and not to elements of the system. So we're stuck with carrying this enormous ball and chain fashioned by the previous administration, but we will wend our way through life regardless.

F. Gingell: Would you please tell us who the auditors of B.C. Rail are? I just hope it's Peat Marwick.

Interjections.

Hon. A. Charbonneau: First of all, I'll ask whether or not it's Peat Marwick. By heavens, they are not in our pocket. The auditors are Coopers and Lybrand.

D. Symons: The thing I was surprised at in this exchange -- and it just amazes me that the Minister of Finance and the Minister of Highways do not speak to each other -- is that they have to ask in this forum. When they meet in caucus and in cabinet, they don't speak to each other; it's amazing. We're rather friendly on this side; we converse quite frequently.

Back to the board. I'm curious if the minister has any plans. You said there were five new members on the board, and it seems that other boards of other Crown corporations have had quite drastic total changes. Are you planning any changes in the near future to the remaining members of the board?

Hon. A. Charbonneau: There were only four new members mentioned. Three members, including Mr. McElligott of the previous board, were retained. The board is not at its full complement, and in the not-distant future I will be adding members to it.

D. Symons: I'm not sure if you answered my question. You're going to be adding more. Are you subtracting any?

Hon. A. Charbonneau: Mr. Ed John, an aboriginal member of the board, has indicated to me his preference not to serve an additional term; but he very graciously accepted an interim appointment, until such time as I have settled on another aboriginal person to serve on the board.

D. Symons: I have a concern with various boards and the manner in which people are chosen, and you just touched on it with your last answer. I would be terribly concerned that people are chosen because they have some expertise or some particular interest in that, and not because of gender equality or other issues. I think service to the railway and to the province of B.C. should be paramount there. Possibly some interest and expertise in the field would be of advantage on boards.

I have just two questions. I would gather from your answer to the previous one that the answer would be yes to the first one: are you satisfied with the work and the makeup of the board, and the manner in which they are behaving? The second question is: what remuneration and benefits do the members of the B.C. Rail board receive?

Hon. A. Charbonneau: In answer to your first question, I'm more than pleased. The combined expertise and background in transportation -- a range of transportation -- of the new board members is, in a word, tremendous. I would be pleased to provide you with further detail on that. As to the remuneration of members of the board, I'll take that question on notice and advise you.

D. Symons: Is there a planning department? And what plans might the railway have for expansion? In that line, what's coming down the road for us?

Hon. A. Charbonneau: The railway has a strategic planning board of some three people to plot this out. The general plan which we will see through will be to build and to further extend the finest railway in British Columbia.

D. Symons: Are you planning the possibility of commuter trains -- of assisting with the problems in the lower mainland, for instance? That will come within your one....

Interjection.

D. Symons: It may overlap. I would hope that you could use B.C. Rail property and so forth. Might you have any comment regarding commuter trains, possibly from Squamish into Vancouver or Lions Bay, to help bring people in and relieve the pressure on the Sea to Sky roadway?

Hon. A. Charbonneau: The general query on commuter trains or commuter rail can be put to the minister responsible during his estimates, but I can state that there are no plans afoot within B.C. Rail to run commuter services. We do, however, offer a skiers' package to Whistler on an ongoing basis through the winter.

D. Symons: That was a later question, because I was concerned whether that might be a possibility.

You mentioned your little philosophy of B.C. Rail serving the people. Do they have a mission statement as such, and would you share it with us?

Hon. A. Charbonneau: We don't happen to have the statement of the objectives of the corporation at hand, but it's published in the annual report. I would be pleased to provide you with a copy of it.

D. Symons: I'm looking at the $13 million subsidy or contribution to B.C. Rail, and I notice that it appears in the estimates as a contribution only. I'm wondering if you might provide us -- and this may be at a later date -- a breakdown of that by STOBs so that we can see

[ Page 1036 ]

where that $13 million contribution goes -- how much goes to various aspects of wages, purchasing of material and so forth. Could that be broken down in such a way that we can see how it's used?

Hon. A. Charbonneau: The entire amount appears in STOB 82.

D. Symons: I mentioned commuter trains -- I've got that one -- and you've answered about the Whistler ski trip.

We'll get back to the comment that was made earlier by the Minister of Finance regarding Quintette Coal and Teck Corp. and the refinancing of that company. I was rather pleased with the response that B.C. Rail had in the agreement they signed with Teck Corp. I guess it was a lower rail rate in exchange for some later share in the profits. I'm wondering if this sort of innovative approach has been used with other customers and whether this will now be an approach you'll use in order to keep some businesses afloat. There were questions asked earlier about problems with businesses up north. Is this approach going to be expanded?

Hon. A. Charbonneau: Yes. First of all, the idea is available and will be used under exceptional circumstances. I wouldn't want to discuss them in the House because they're a confidential business arrangement in nature.

But I take note of the member opposite's comments on the overall attitude exemplified by this government with regard to how to run business, using northeast coal as an example. The previous administration was quite willing to give away the store with very little attention to decent and proper business practice. We put a stop to that very promptly, and gave the management of B.C. Rail our full confidence so they could proceed to negotiate what they thought was a justifiable and proper package. At the end of the day we ended up with a package whereby the taxpayers of British Columbia will contribute to the salvation of northeast coal, but should things turn around, the taxpayers of British Columbia will also benefit from the upside that may occur. In so doing we have gained tens of millions of dollars for the taxpayers of British Columbia.

J. Weisgerber: I just wanted to ask a couple of questions about this, following up on the rather bizarre exchange between the Minister of Finance and the Minister of Highways. The question was asked: "Don't they communicate in cabinet?" Well, we know very well they do. We know the Minister of Finance quite regularly gives marching orders to most of cabinet, and so we know that in fact they communicate regularly. The question was also obviously one that was set up and was for the consumption of the viewing audience, rather than anything to do with this House.

But now that we're asking questions regarding the Tumbler Ridge extension, I wonder if the minister would be good enough to advise the House of the revenue that B.C. Rail has been able to generate or accept. How much revenue has northeast coal generated over the past six or seven years? I'm interested in both gross and net revenue.

Hon. A. Charbonneau: The whole northeast coal was a sordid and sorry affair of a government being led about by its nose by another country in that other country's interest of establishing an oversupply in the world coal market. This preceding government -- to be unnamed -- took it hook, line and sinker. And to boot, it managed to dig the hole in the wrong place.

The annual revenues from the haulage of the product from northeast coal is less than 10 percent of the cost of constructing the line. So although we have realized gross revenues in the order of $250 million, the only way that the railway has been able to survive is that government -- the taxpayers of British Columbia, more specifically -- absorbed the $600 million capital costs of building the line. In standard business practice, had the cost of that been laid as a burden on the corporation, it would have sunk the corporation.

J. Weisgerber: I move the committee rise and report progress.

Motion approved.

The House resumed; R. Kasper in the chair.

Committee of Supply B, having reported progress, was granted leave to sit again.

Committee of Supply A, having reported progress, was granted leave to sit again.

Hon. G. Clark moved adjournment of the House.

Motion approved.

The House adjourned at 11:59 a.m.

[ Page 1037 ]

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The House in Committee of Supply A; D. Streifel in the chair.

The committee met at 10:15 a.m.

ESTIMATES: MINISTRY OF
ABORIGINAL AFFAIRS

On vote 8: minister's office, $295,507 (continued).

J. Weisgerber: We left off talking about the former government's principles as they relate to land claims settlements. Before I get back to that, I'd like to take this opportunity to talk to the minister about a constituency issue: the request by the Fort Ware school group to travel to Victoria. As the minister is probably aware, Fort Ware is one of the most remote Indian communities in Canada. I had an opportunity to go up to the reserve a couple of years ago. A senior group of students returning to college was down this year. I think they met with the minister as well as with me.

A group of elementary school students, grades 7 to 9, have been raising money in an attempt to come on a trip to Victoria. They advise me that they need about $10,000 in total for the trip down. They've so far managed to arrange their air travel from Fort Ware to Prince George to be donated by a couple of corporations in the area -- Finlay Forest Industries, for sure, and perhaps one other. They've also raised about $6,000 from various organizations around the area.

I understand that their approach to government has been directed toward the Ministry of Aboriginal Affairs. They're anxious to start their trip down on May 11, and are keen to get some assurance from government that there would be a modest amount of help toward that trip. The students are away this week on something called "Sekani awareness," where they go back and live with some elders and spend the week trapping and learning wilderness skills. But I would like to be able to pass along to them an indication, if the minister hasn't already, that government would be able to help them with this modest request.

Hon. A. Petter: I just checked with my officials. I don't have a recollection of receiving the request, and I understand my officials do not either. If the leader of the third party can give me a copy of the request, I'll be happy to look into it. There are some funds within the ministry that can be applied. My understanding is they're generally not applied to travel, but they have been on occasion. I know he would make a case based on the remoteness and the fact that other funds have been secured. I'm quite happy to look at that request and give him and the class as speedy a response as I possibly can.

J. Weisgerber: I'll certainly provide you with the correspondence that I have. I'll just move on, having stressed that I think it's really important. I've been up to Fort Ware. The kids there just don't get out very often. It's close to a three-hour flight to Prince George. Perhaps I'm exaggerating; it's an hour-and-a-half flight to Mackenzie and another half-hour to Prince George. They really are making an attempt to broaden the horizons for those young children. I will pass along to you the letters of request that I received.

I'd like to get the minister's and the government's reaction fairly quickly to the settlement principles that the previous government established, simply as a way of determining the approach that the government is taking to the negotiations. To get back to our conversation Thursday, I'd suggest that each of the parties has to go to the negotiations with some position.

The purpose of my questions today is to try to establish in my mind and, more importantly, to determine for British Columbians the position that the minister and his government are going to take to the negotiations. We talked about the need for final and binding settlements, the need to recognize not only fee-simple land transfers but also rights emanating from contracts, leases and tenures.

The next item is: "Settlements should support native aspirations to be part of the economic mainstream of the province." To me, the sense of that was that a major part of the settlements should see that native communities, aboriginal communities and aboriginal people themselves are given a better opportunity to become self-sufficient, to develop business enterprises, to create employment on reserve and to create employment in native communities, whether they be on reserve or not. I'm wondering what kind of approach the government is taking in this area.

Hon. A. Petter: Let me just say by way of prefatory remarks that in addition to welcoming groups from Fort Ware, I and the member have spoken previously about my visiting Fort Ware. I look forward to doing so and would invite the leader of the third party to accompany me and show me around, so I can expand my horizons as the residents of Fort Ware, hopefully, expand theirs through various forms of travel.

With respect to the principle that's been raised -- that settlements should support native aspirations to be part of the economic mainstream of the province -- as I made clear in my opening statements and at various times, we see treaty negotiations as bringing aboriginal communities to a level of economic self-sufficiency, so that they can participate more fully in the economy of the province. The one thing I want to clarify is that there is an understanding on our part that this must take into account aboriginal aspirations and priorities for what that economic development and participation should be. But certainly, facilitating aboriginal participation in the economy of the province, allowing aboriginal peoples to become more self-sufficient and less dependent -- upon the federal government in particular and governments in general -- is a major thrust of our policy, and I think I've made that clear a number of times. If that's what the statement means, there is no disagreement.

[ Page 1038 ]

J. Weisgerber: I'd be curious to know what strategy the government will use to achieve that kind of settlement, or what position they will take to the negotiations that will ensure the ability to do that. Is it going to be on the basis of a broader land base? Will it be on the basis of sharing resources? If it's going to be on the basis of a resource-sharing agreement, would you look at the sharing of resources in the traditional territory as part of the settlement negotiations? Or are you anticipating a resource-sharing formula on a broader basis? Are you looking at a provincewide resource-sharing formula? Is that the approach the government's going to take?

Hon. A. Petter: The leader of the third party will appreciate that there may have to be different strategies for different first nations. Some are urban-based, some are rural-based. There are different resource components in different parts of the province. Certainly one major component of assisting aboriginal communities to become self-sufficient is to give them a greater degree of control over moneys that are currently administered through the federal Ministry of Indian Affairs and other federal departments. There are various estimates, but one estimate that I have heard is of $800 million per year coming into B.C. for aboriginal peoples through various arms of the federal government. If it were turned over to aboriginal peoples to administer for themselves, it could provide a tremendous impetus for economic development.

Another component of this is federal moneys coming in as components of settlements. The position of the previous government and of our government is that the federal government bears the primary responsibility for the short-term costs -- and what we hope will be the long-term benefits -- of treaty negotiations. There is therefore an opportunity here for British Columbia, through this form of negotiation, to actually get a payback in one area from the federal government of some of the money that has been extracted from this province over the years in the form of compensation, to try to assist first nations to become more self-sufficient -- exercising that primary responsibility. Part of my role as a provincial representative -- and I think it was probably the role of the previous ministers as well -- is to ensure that the federal government does live up to that obligation and that federal moneys are forthcoming for the kind of economic development that will flow from treaty resolution.

In certain areas of the province where there are resources that first nations look to for self-sufficiency, there will be possibilities, as I mentioned the other day, for joint venturing or co-management agreements. There may well be possibilities for gaining access to a portion of the resource base, although that is obviously an issue that will have to be approached while taking into account the rights of third parties and others where that resource base is already spoken for in whole or in part by those third parties and others.

It's impossible to give a cookie-cutter answer, because of the incredible diversity of situations that first nations find themselves in, depending on where they're located and what their own priorities and aspirations are -- whether they're on the coast, and fisheries may be a primary issue, as it is with the Nisga'a. Of course, fisheries have figured very prominently in the Nisga'a negotiations. They may be an interior group, for whom other economic opportunities -- tourism or resource extraction -- may be priorities. It's going to require a very careful approach that is sensitive both to the aspirations of the particular first nation and to the concerns of the surrounding community, if we're going to produce an agreement that is acceptable and economically beneficial to all.

J. Weisgerber: I agree with you wholeheartedly that the federal government has a major responsibility. But I would suggest also that the minister will find, if he hasn't already, that the settlements themselves -- if it's the government's anticipation that they will focus primarily on direct cash payment as the form of settlement -- aren't the direction that native aspirations are headed in. They appear to be heading towards the areas of an expanded land base in one form or another, in one form of tenure or another, in almost every situation. I'm interested in knowing how the government intends to approach that.

There's also the question of resource revenue-sharing. It seems that very early on in the process you have to decide whether you're going to share resource revenue on the basis of revenue generated in the traditional territory or on a provincewide per capita basis. For example, whatever you decide in the first set of negotiations sets the pattern. I'd find it very difficult to say you'd settled two or three claims on a revenue-sharing based on the traditional territory, and then do a flop and say you're now going to do the rest based on revenue-sharing provincewide but you're going to exclude the three territories you settled on a piecemeal basis. Conversely, if you decide first off to settle the question of resource revenue-sharing provincewide in the first two or three sets of negotiations, it would be very tough to then jump to a traditional-territory basis. So I think that if the government hasn't decided, it's going to have to decide very soon on which model it's going to take. I'm curious.

Hon. A. Petter: First of all, with respect to the federal contribution, I think it's important to note that when I'm talking about federal participation, I'm not simply talking about cash contributions. I think it's very important for the province that when we're talking about revenue-sharing, sharing of economic rents, the allocation of tenures -- whatever involves provincial resources -- that must be counted as a contribution. It may well be that the federal government will be looked at to offset some of that provincial contribution, particularly in areas where the settlement involves extensive resource allocation or revenue-sharing that's coming out of a provincial revenue account. I think we still have to look to the federal government and make, as part of the overall settlement, the fact that the federal government bears the primary responsibility. They have to pay, for example, a significant share of compensation costs, if there are any, to third parties, or participate in the revenue-sharing.

[ Page 1039 ]

I just wanted to clarify -- and I'm sure that the leader of the third party didn't intend to indicate otherwise -- that federal participation need not and perhaps ought not to be limited simply to the cash side of the equation. We hope the federal government will be on board and fully participating in the overall settlement. If a share of that settlement comes from provincial resources, we may look to the federal government to compensate the province for having participated in that settlement.

On the other question, I agree that it's a very important issue. It's one that we have not yet come to a firm resolution on. I would very much appreciate the leader of the third party's advice as we go along and develop the policy on it. However, it does have to take account of differences among first nations. A first nation in the lower mainland obviously does not have the same opportunities to share in resource opportunities as a first nation in a more remote part of the province would have and that may mean that there may have to be different responses. But that doesn't mean the government doesn't bear a responsibility to think through these approaches. We are doing so, but we haven't come to a firm resolution at this time.

J. Weisgerber: Certainly it is a complex question. Underlying it, in my mind, would be the desire to see relative equity among the communities at the end of the exercise, so that you don't have the situation we find in Alberta, where under Treaty 8, with large land holdings, some bands have gas and oil reserves that make the community very wealthy, and 20 or 50 miles away there's a community that didn't have the good fortune to have those same resources and finds itself very poor. So we must be very careful of that, as we approach the negotiations.

The next principle -- I'll move through them to try and get a sense of this -- suggests that settlements "should incorporate the principles of fiscal fairness, whereby all British Columbians have access to reasonably comparable levels of...services on the basis of reasonably comparable levels of taxation." There are two issues that have to concern the province, if you support that principle. First of all, it would involve a significant shifting of responsibility from the federal government to the province for the delivery of services like health care, education and social services, unless there is some other mechanism you could suggest that would see a level of service on reserve reasonably comparable to the provincial services being delivered to other British Columbians. It's important to recognize that for all the money that Ottawa spends, there aren't comparable levels of service on reserve, compared with those off reserve. If you had the opportunity to travel around British Columbia and look at the schooling in many of the reserves, you would agree -- if you don't already -- that the level of service provided by Ottawa is not comparable to what we would find in the neighbouring community. So there's an undertaking to provide that comparable level of service, which in many cases will require a significantly enhanced level of service.

The second half of that principle deals with the question of taxation. As we move to settling claims and as we see a shift in control and jurisdiction -- as I believe is inevitable -- over land and resources, we're going to have to come to grips with the question of taxation. That's going to involve taxation of aboriginal peoples to pay for services that they receive from their community. And depending on the level of transfer of resources, it may involve taxation by the provinces on those resources, as you would see in other communities. I'm curious as to the minister's and the government's position on those two areas.

Hon. A. Petter: With respect to the question of comparability, I'm very pleased that the leader of the third party discussed it in terms of comparability for aboriginal communities, because from the way the principle is stated, it's not quite clear which way it's supposed to cut. Presumably it's in both directions, and I'm pleased that's the case.

There is an alternative, in terms of providing comparable social services, to the alternatives that I understood the leader of the third party to articulate. As I understood his alternative, jurisdiction would be transferred to the province, and the province would then provide equivalent levels of service. That would be a very difficult approach to achieve agreement on both constitutionally and in the sense that it cuts very much against the notion of trying to provide aboriginal communities with a greater degree of control over their own destinies and priorities.

I would have thought that the principle that might well address the concern, without having to go that route, is that of fiscal equity. The Yukon agreement, as I understand it, has embraced this principle, in which the capacity to deliver programs on a comparable level with those of other non-aboriginal communities is assured through fiscal equity -- in other words, ensuring that the federal government provides to those communities in addition, taking account of their preexisting tax capacity and tax base, sufficient funds so they can provide those services in a way that meets their priorities, but in terms of fiscal equity and fiscal comparability. It would not entail the transfer of jurisdiction from the federal to provincial governments. It would, if anything, entail some transfer of jurisdiction to first nations governments where appropriate, along with a guarantee that those first nations governments would have the capacity to deliver programs at the same level. Now they may well decide to deliver them in a very different way, taking account of their own cultural and social aspirations and needs. There would be this principle of fiscal equity, and in that sense I agree with comparability. But if comparability means that first nations communities have to accept provincial programs on the same terms as other residents of the province, I don't see that as a likely solution. It would entail a transfer of jurisdiction from the federal government to the province. It would also cut very much against the principle of self-government, which I think most Canadians now want to see now protected in the constitution and elsewhere.

[ Page 1040 ]

On the taxation side, of course the member is well aware of the initiatives taken by his government and the federal government to provide aboriginal communities with a greater capacity to engage in taxation agreements and in their own taxation, with respect to developments on lands that at least previously were reserve lands and were surrendered for the purposes of development of some form or another. I agree with him that the question of taxation must be attended to. But again, I think the question of tax capacity must also be addressed. Just as we have a principle in Canada of equalization for provinces on the taxation side and the social services side nationally, presumably we have to assume that the same principle should be applied to aboriginal communities. We can't expect aboriginal communities to produce the same quantum of tax from a much smaller economic base than other communities, so it's going to require some very careful negotiation and work to ensure that the principle of comparability and equity is made meaningful for aboriginal communities. I hope that can be done in a way that ensures comparability without sacrificing the principles of autonomy and self-determination encompassed in the notion of self-government.

J. Weisgerber: In many ways I agree with you. The responsibility for the ultimate delivery of services has to involve Indian self-government, band government, aboriginal government. But there has to be some careful consideration given to whether or not the province is prepared, on behalf of aboriginal British Columbians, to depend on Ottawa to provide levels of funding on a band-to-band basis that meet those goals. I would suggest that historically Ottawa hasn't been able to do a very good job of that. If you look at services as they are delivered community-to-community around the province, you'll see glaring examples of where funding levels for one reason or another haven't been adequate for the community. I believe that respecting the need for self-government.... I think we're getting into a philosophical difference as to the level of self-government. The involvement of the province with the aboriginal government would appear to be where we differ, because I see the province having a responsibility for the delivery of services. I see the province still having some kind of general responsibility to ensure a level of service. I would very much like to see Ottawa moved as far back from that kind of activity as possible and the province take a more active role in not only the delivery of education, health care and social services, but highways infrastructure -- all the services that British Columbians look to their province for. I think you want to normalize that, so that you don't have a segment of British Columbia's society that looks to a different jurisdiction. That is not contrary to the notion of self-government, at least in my mind, but it certainly injects the province more directly into the equation.

To talk about taxation for a minute, there has been a start made, but so far, to the best of my knowledge, it only involves authority by native government, native bands, to tax non-Indian occupiers of conditionally surrendered land. It's a start, and I think an important start, on the way. But obviously we would like to see, or expect to see, the broader application of the notion of taxation as part of the settlement.

Hon. A. Petter: Let me deal with the last point first, because I did mean to address it in responding, and I neglected to do so. Certainly the question of taxation and resources is important. As part of any negotiation, it must be a question that is attended to. If aboriginal peoples are given a greater participation in the resource base, then the question of provincial tax revenue, and potential loss of that revenue, and of all those issues, needs to be addressed as part of the negotiation. I agree that those are important issues.

I'm not sure it's that great a philosophical difference between us, but let me just respond to some of the comments that were made about the provincial role. There are two overall concerns that I have about the general approach you're outlining. However, they don't suggest it's a non-starter. Let me share them with you.

One is that the federal government is very good at transferring jurisdiction to provinces in such a way as to off-load expenses. I'm very concerned, as are aboriginal groups -- even given the inadequate level of funding that the federal government has heretofore provided -- that here again the federal government may see self-government, or a transfer to the province in conjunction with self-government, as another opportunity to limit their participation in living up to their constitutional responsibilities. I'm sure the member would agree with me that we would have to be very careful to guard against that. Yet I'm not quite sure how you guard against it if you envisage a wholesale transfer of jurisdiction.

The other is the question of the ambivalent relationship, if I can put it that way, between first nations and the federal government. Even though it's true that most first nations are incredibly frustrated with the federal government and certainly with the Department of Indian Affairs, it's also true that there is a belief, as I'm sure the member is aware, that the federal government bears a peculiar responsibility, a peculiar relationship, with respect to aboriginal peoples. Many aboriginal peoples feel that the province does not fully participate in that relationship. I'm aware that there would be strong resistance; there is in the context of the constitutional round already. Some strong concerns are voiced by aboriginal peoples about transfers of jurisdiction from the federal to the provincial government for that reason. We have to bear that in mind, at least, as we look at these alternatives.

[10:45]

On the more constructive side, which is where I think we're going, the vehicle of treaties provides us with a mechanism to address many of these concerns in a way that is responsive to the member's underlying points. For example, treaties, through a provision of principles of comparability on the equity side -- comparability of tax room and resources -- can ensure that the federal government will not off-load either to the provinces or to first nations. In other words, to resist federal attempts to off-load, treaties can become a vehicle, constitutionalized through section 35, which

[ Page 1041 ]

will protect the province's interests as well as first nations interests.

Similarly, there is plenty of room to reach agreements through treaties on how services would be provided. It may well be that some services can be provided directly by first nations. It may well be that other services can be provided through treaty, by the federal government participating with the provincial government and first nations in some way, so the province is effectively exercising uniform jurisdiction. There are various agreements right now in which the province does provide services to first nations under a relationship with the federal government.

Treaties can provide a vehicle for agreements in which first nations communities have a greater degree of autonomy over services they provide. The province may have a role to provide services that are currently being provided inadequately by the federal government, with an understanding that the federal government will make offsetting payments to the province for doing so, or to the first nations, which will then buy the services from the provincial government. Any number of creative solutions can be worked out.

I see the treaties as the major vehicle for doing that, rather than trying to effect some wholesale change of jurisdiction by, for example, changing the scope of section 91(24). I'm not sure if that's what the member was suggesting, but if it was, it seems to me that it's a rather unrealistic goal, given the sentiments of first nations. I would think it's a somewhat dangerous goal, given the federal government's agenda with respect to off-loading.

J. Weisgerber: I certainly would never suggest for a moment that the province should undertake to relieve Ottawa of its responsibilities. The experience we've had with transfer payments would underline the need to make sure that any agreement entered into with Ottawa would protect the provinces and continue to ensure that there was an orderly transfer between governments, whether directly to aboriginal governments or to the province. I don't have any argument with the fact that the treaty would be an appropriate way to solidify that kind of agreement. We should never for a minute lose sight of the fact that what we're proposing to embark on and have now embarked on are tripartite negotiations. This should never for a minute be thought of as simply negotiations between Indian governments and government. We should be bargaining at least as hard -- and perhaps much tougher -- with Ottawa as we are with aboriginal British Columbians.

With that, I'd like to defer to the leader of the official opposition and take an opportunity to come back and pursue this later in the day.

G. Wilson: First of all, I would like to thank the minister and his staff for accommodating the difficult schedule we had in the latter part of last week and the early part of this week. I very much appreciate the opportunity to come back and ask some questions of the minister today.

I'd like to start specifically with the question of negotiations. If I can pick up in part where the leader of the third party left off, hopefully I won't go back over too much material. I do have some questions that may be more substantive in terms of costs. I wonder if the minister could outline -- with respect to the expenditures on professional services outlined under the provision of dollars for treaty negotiations -- specifically what that $170,000 is and where the additional moneys are going to come from to pay for the legal costs with respect to at least one case which is currently before the courts.

Hon. A. Petter: The $170,000 figure in STOB 20, which I take it is the one that the Leader of the Opposition is referring to, is for professional services for negotiations for hiring contractors to engage in -- where needed on a short-term basis -- various forms of negotiation. Legal costs of any kind relating to litigation are not borne by this ministry, but by the Ministry of Attorney General.

G. Wilson: If we can go back to looking at STOB 7, with respect to boards, commissions, courts, etc., where there is no provision for treaty negotiation, presumably any costs incurred with respect to commissions or work around commissions looking at alternative systems or processes for negotiation would not be paid for by this ministry, but would be earmarked for the Ministry of Attorney General?

Hon. A. Petter: Let me answer with a specific. If there are other questions, I'll pick up on them.

The treaty negotiations figure does include a figure for contribution to the Treaty Commission, for example. Part of the Treaty Commission's mandate is to oversee the negotiating process, to coordinate alternative dispute resolution, etc., and that shows up under STOB 82 -- $600,000.

G. Wilson: I wonder if the minister could give us a breakout of that $600,000 with respect to what the intended expenditure is for this year.

Hon. A. Petter: The figure is an estimate, because the Treaty Commission is in the process of being constituted and the budget for it has not been finalized. In general terms, however, I can give you some sense of it. It's to cover the salaries of five commissioners, including a chief commissioner and eight staff; to provide benefits to the same; travel; and some funding for office expenses.

There is also an expectation that the commission will facilitate mediation, and therefore there is a contemplated expenditure for contractors involved in mediation services and other forms of administrative support -- staff training, data processing, etc. -- in the projected budget. I want to reinforce that this is simply a projection.

There is also a component in which the Treaty Commission flowing from the task force report is expected to participate in education -- communication with the public about the whole process of negotiation. So there is a projected allocation for education, and there's also a projected allocation to enable the commis-

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sion to engage in some research, which of course is necessary for the commission to make some of its determinations about the readiness of various parties to negotiate, etc.

G. Wilson: That's a lot to try and do with $600,000. However, I wonder if we can break out, with respect to the proposition of some mediation.... Is it intended that there be mediation on both matters relating to treaty negotiation -- on land as well as on resource? If that's so, to what extent is there going to be direct cooperation on the resource side with other line ministries?

Hon. A. Petter: First of all, I should explain two things. The $600,000 figure is simply an estimate of our contribution. The Treaty Commission is to be funded through a contribution by the federal government as well. So you're right: if you think $600,000 is going to do all that, it isn't. It's just an estimate of our contribution.

I should also clarify that the expected categories of expenditure I've given you are our projected expenditure categories. Those have not been agreed to, because that will ultimately be part of the process of the Treaty Commission -- to set those kinds of budget allocations.

But with respect to the question about the Treaty Commission's role, it is going to act largely as.... I think the best phrase I've heard to describe it is "keeper of the process." It's not going to be engaged in the substantive treaty negotiation process, nor will it be engaged in the process of coordinating with line ministries. It is an independent body acting as a sort of.... I sometimes describe it is as a hybrid between an ombuds-office and a labour relations board. It's there to act as an independent actor to report to governments, and through governments to the people, about the progress of treaty negotiations; to report to aboriginal communities to ensure that all parties are acting in good faith in the negotiation process; to facilitate negotiations by assisting mediation services; and to assist public education about the process and what's going on. The Treaty Commission does not have a role in the substantive negotiation process. It is an overseer of that process.

G. Wilson: I appreciate that, and I thank the minister for clarifying the role of that commission. In looking at how the treaty negotiations are going to progress, one of the areas that has raised considerable concern among both aboriginal people and non-aboriginal people in the province is the negotiation and resolution of questions relating to the resources. Could we turn our attention specifically to the fisheries resource? I am cognizant of the role the federal government plays in the fishery. Can the minister outline what his government's position is on the food fishery, and in particular how it relates to the Sparrow ruling on conservation and matters of priority in the food fishery?

I hope the minister understands that I recognize that a large portion of my question is clearly under the jurisdiction of the federal government. I'm not interested in the federal government's position. However, the resolution of questions on treaty negotiations, especially in coastal communities, is going to involve the fishery in large measure. The fishery is a very important economic driver in the province. British Columbians are anxious to know the government's position on the food fishery and the resolution of that question, and where the minister sees that negotiation going with respect to final resolution of land claims in the coastal communities.

Hon. A. Petter: First of all, I just want to make a distinction between two things. One is what is happening at the Nisga'a negotiating table. Some of the Leader of the Opposition's comments related to federal government participation in the Nisga'a negotiations and, more broadly, to some of the positions they put forward on the food fishery or on fisheries in general. The other is what the province and the federal government are legally required to do as a result of court rulings, such as with the Sparrow decision, quite apart from any negotiations that take place to try to reach a treaty.

[11:00]

With respect to the latter -- which was the main direction of the Leader of the Opposition's question -- the Sparrow decision set out some criteria on the management of fisheries, stating conservation was an overriding concern and that Indian access to the fishery was a priority. It did not address the question of food fishery; rather, it addressed the question of subsistence fishery. Therefore there is no definitive legal ruling from the Supreme Court of Canada at this time on the question of whether or not there is any legal obligation with respect to the food fishery. Insofar as the Sparrow decision goes, of course, our policy is to adhere to that decision within the compass of our jurisdiction. It is principally a federal jurisdiction, but what the Supreme Court has said is the state of the law is the policy we adhere to.

G. Wilson: Maybe we can chop this down into smaller bites we can chew on so we get some flavour for where we're going. I'm particularly interested in what direction the government's position on a food fishery is going to be. The reason I raise this is not only because of the Nisga'a, but because of a number of other jurisdictions where there is access to salmon in various rivers -- as well as those that are involved in both a food fishery and a commercial fishery in coastal British Columbia.

The concern is the government's definition of what constitutes a food fishery and at what point that turns into commerce. Would the minister outline what he sees as the distinction between the food fishery and the commercial fishery, specifically as it applies to aboriginal people?

Hon. A. Petter: First of all, I should correct myself. In my last answer I was speaking of the food fishery as if it meant the commercial fishery. Let me clarify what I was distinguishing. If by the food fishery the Leader of the Opposition means food for subsistence purposes and that kind of thing, then I should correct myself and distinguish that from the commer-

[ Page 1043 ]

cial fishery -- which I think is the terminology he was using.

Two points. First of all, there are some cases in front of the Court of Appeal right now on this very issue. From a legal standpoint, what is the obligation? We are going to await the outcome of those cases to find out exactly what the legal demarcation is for the purposes of living up to the responsibilities that now exist as defined in Sparrow. Beyond that, in terms of general policy, the federal government has been taking the lead in this area. The federal government has put forward some proposals concerning aboriginal participation in the food fishery. We are evaluating those proposals and will be responding to them in due course. We don't have a response to them yet.

G. Wilson: If we can stay focused for just a moment, the Sparrow ruling does regulate food fish. That's what I was coming back to. The distinction between the food fishery and the commercial fishery is causing a considerable problem in the negotiation process. Insofar as we are attempting to move out of litigation and into negotiation -- which the Liberal opposition certainly supports, where possible -- we have to come down to an understanding of the definition of the various levels at which the fisheries take place. Notwithstanding what the federal government may be proposing, I wonder what the philosophical position of this government is with respect to the recognition of the differences between the two. I'm not trying to entrap the minister here. In fact, at some point I suggest that we might be able to get to how we might resolve this question.

Hon. A. Petter: Let me go back to the original distinction I was trying to make. There are two issues here. One is: what is the existing legal obligation flowing from the reasoning of Sparrow, and how far does that go? I really don't want to prejudge what the courts are going to say on that matter. The words "food fishery" are a bit confusing, in the sense that the line of demarcation is probably more between subsistence and commercial. It's all for food, one way or the other.

Be that as it may, the other question is: what does one do at the treaty table in terms of fish as a resource issue? What I'd say philosophically is that the view we're going to bring to treaty negotiations is that treaty negotiations are not simply about giving effect to previously defined legal rights; they're about reaching amicable agreements in which access to resources may in some cases go beyond what is legally required and in some cases be less than is legally required. Trade-offs may be made in order to produce a more stable and satisfactory resolution for all parties, aboriginal and non-aboriginal. The treaty negotiation process is not there to better define the line the courts have drawn but to try to provide an agreement that all parties -- and I include the community at large -- can better live with. In that context the federal government is taking the lead.

The province does have a role to play. Our principal role has been to take the opportunity to bring additional issues to the table, in order to take some of the pressure off the fishery as the only item. That has very much been the situation with the Nisga'a negotiations up until now. We may well have some contribution to make to the debate, although I'm also mindful that the federal government is the major player in terms of advancing issues at the treaty table with respect to fisheries, which falls under its jurisdiction. I'm a little loath to wade into that, at least until we have fully considered their proposals and the reactions to them from the first nations.

G. Wilson: I share the minister's concern about the difficulty of running into a negotiation that ties in only one issue, that being the fishery resource. I'm not sure how one avoids dealing with that on a one-to-one basis, especially in light of the comments made last day with respect to aboriginal rights running with individuals, and individuals having the rights. How does one make the distinction, if you don't address this question as part of aboriginal rights, between an aboriginal person who holds a commercial licence and an aboriginal person who catches fish, puts it in the back of an ice truck and sells it on the corner of the street?

Hon. A. Petter: If I don't understand the question, I hope you'll come back to it. Let me answer in this way. The purpose of treaty negotiations is to reach a resolution of certain outstanding issues with the first nations. We talked last day about how that was collective in one sense; although, depending on the nature of governance of the first nation, it could also give rise to individual entitlements on the part of members of that first nation. The purpose of those negotiations is not to preclude first nations members from participating in the general economic sphere as anyone else would.

This harkens back to our discussion about equality and rights. How does one reconcile those two? It's tough. Certainly I don't envisage the opportunities that are provided to first nations collectively through treaty negotiations as precluding individual members of those first nations, either on or off reserve, from engaging in general economic activity off reserve or outside those various allocations. I don't think the idea here is to ghettoize aboriginal citizens within those territories.

I think that speaks to the question, but I'm not entirely sure that it does.

G. Wilson: Amen to that. We do not want to ghettoize. That's what I'm trying to extract from the government with this line of questioning: their philosophy and direction towards negotiations, and therefore a commitment of dollars to that. If we are to avoid that, though.... If you talk about aboriginal people participating in the commercial fishery, the question I have is that, given the Sparrow ruling, where conservation is the first concern, the aboriginal subsistence food fishery is the second concern and, thirdly, there is the matter of the commercial fish.... How do you start to make a distinction between aboriginal people who are licensed to fish commercially and band members who are simply fishing for food, in terms of their access to the resource and their demand on it, particularly in areas

[ Page 1043 ]

where there may be severe closure as a result of the first concern, which is conservation? How do you say to somebody who has a licence: "No, you can't go out and fish commercially, but members of your band who do not have a licence can go out and fish for food?" Or do you make those distinctions?

Let me just take one step further so I can show you where I'm headed. Why would it not be better to simply dispense with the whole notion of differential fishery status, and look at the conservation of the entire fish stock, to allow some kind of joint management to occur between aboriginal and non-aboriginal people, and get away from this...?

Interjection.

G. Wilson: The member for Fort Langley-Aldergrove is saying "stigma."

G. Farrell-Collins: Segmentation.

G. Wilson: Oh, thank you.

Hon. A. Petter: I guess the problem -- if it is a problem -- is in a sense one that flows from the approach that underlies the Sparrow decision, in which conservation is seen as a primary value but the aboriginal subsistence food fishery is seen as a priority that comes after that initial value. I don't think that that decision, which recognizes basic aboriginal rights as aboriginal rights -- it's true -- and is valued by aboriginal peoples for that reason, whatever we may think, precludes governments from negotiating with aboriginal peoples, third parties and others to try to reach arrangements in which there could be a better allocation.

Maybe the proposal you've made is one such possibility, but those negotiations must take place against the backdrop of the pre-existing legal obligation. That obligation must be met, unless the aboriginal peoples to whom that obligation is owed are prepared to reach agreement on some other system. Primarily, I think this is a dilemma for the federal government. The federal government is going to have to come up with a mechanism which involves first nations, commercial fishing interests and sport fishing interests -- some of which may be aboriginal, some of which may not be -- in order to figure out how to allocate the fishery in a way that's consistent with the goal of conservation but also with that pre-existing legal obligation.

It does really harken back to what we talked about last day: how you reconcile the fact that aboriginal peoples have a very special relationship with the land and a special place in our history -- which is negative, in terms of our treatment of them.... That has given rise to a recognition of particular rights that attach to aboriginal peoples as aboriginal peoples. How does one reconcile that with the notion that society must operate as a corporate entity as well as a whole involving aboriginal and non-aboriginal? That's always going to be a tension.

I'm not sure there's going to be any easy answer to it. The proposal you made is one, but I caution you that it would require the cooperation of the aboriginal peoples themselves. I'm not sure that I hear aboriginal people saying that they are ready to trade off the rights they feel have been hard-won through the courts in the Sparrow decision for some different arrangement of the kind that I hear you describing.

G. Wilson: Mr. Chairman, I don't think it is a question of trading so much as of new management systems that would, certainly in what I'm proposing, enshrine the rights, but in a manner that is more equitable for all users of the resource. I'd underscore and underline the fact that in that relationship I think the aboriginal people would find themselves less frustrated with the two bureaucracies -- one federal and one provincial -- they have to deal with on that matter.

Let me come to what I think is a natural concluding question for fisheries, then. In relation to the negotiation, to what extent...? If we were to move the way that I've just proposed, or something similar to it.... I also can't prejudge how things are going to turn out, but my suspicion is that we are going to have to get away from this distinction between the subsistence food fishery, the commercial fishery and conservation in order to properly manage what is a depleting resource. We're going to have to look at that as one management system. If we were to move in that way, what value does the government place on the proposition of provincial regulation and provincial control over the fishery, which is currently federally controlled, to adequately and better manage the resource? Do you see that as being a useful way to proceed? Or do you believe that, because of the waterways that are currently under federal jurisdiction, the jurisdiction should remain in federal hands?

[11:15]

Hon. A. Petter: I think I'm going to demur, because part of my concern is.... We're trying not to mix the jurisdictional question with the treaty negotiation question. I think there is a case to be made for transferring a fisheries jurisdiction, and a case against it. I think that that would best be directed to the Minister Responsible for Constitutional Affairs. Certainly we're not taking to the treaty table.... I'm taking the jurisdictional pie as a given, and operating from that point of view.

The only thing I would say -- as I said to the leader of the third party previously -- is that there is this ambivalence among aboriginal peoples. It may make a lot of sense to rationalize the resource pie by bringing all these things into provincial jurisdiction, but they are a serious concern. Even though aboriginal peoples may feel that they have not been well treated by the federal government, they do feel that there is a special relationship there that they may not want to sacrifice, and I would just attend to that.

Let me go on to a more positive note -- and say something generally about the proposal that the Leader of the Opposition has put forward. I've been answering in the context of fisheries, but fisheries has a particular history to it. The Sparrow decision has a legal history; it

[ Page 1045 ]

has a long negotiating history, because of the protracted negotiations at the Nisga'a table, which, until fairly recently, involved only the federal government. Therefore there are a lot of sensibilities and positions that have been taken on fisheries.

But as we move away from fisheries and into other resource issues -- ones that do fall under provincial jurisdiction -- if I understand your proposal, there's a lot of merit in what you say. I have talked in my opening statement, I think -- if not, I've certainly talked elsewhere -- about the notion of joint stewardship not only as a way of addressing fiduciary obligation, and the kind of obligation that flows from Sparrow-type decisions and Delgam Uukw-type decisions, but also of rationalizing the overall management of resources in a way that takes account of aboriginal interests, rather than segmenting the resource. I think that's your concern. Get aboriginal people involved in its overall management, to participate in the overall way in which the resource is handled from both an environmental and an economic point of view. That's exactly the proposal that we are putting forward -- it was mentioned in the throne speech -- about joint stewardship. Let's not get fixated on these legal categories. Let's look at the resource as a whole, take account of the special need to address aboriginal concerns, and provide for them. It flows in part from law and in part from political will and moral obligation.

Let's provide for that through a forward-looking joint stewardship initiative involving comanagement, joint venturing, and those initiatives in which we can work together, rather than simply taking what the courts have told us or may tell us in the future, and starting to divide the pie in different segments. If that's what you're saying, I think we're very much in agreement on that. It's tougher to answer in terms of the fisheries, because there is this history -- it's under federal jurisdiction, etc.

G. Wilson: I suspect that what we're hearing from aboriginal people.... I concur that ambivalence is perhaps too weak a description of some of the concerns that some aboriginal people have with respect to moving resources into provincial jurisdiction. I suspect it's less because they have an affinity for the federal government and more because they don't trust the provincial government after a long history of problems. I'm not referring specifically to this one but to virtually every provincial government that has ruled British Columbia since joining Confederation. It seems to me that a proposition needs to be looked at not only on the questions of jurisdiction and resolution but on future jurisdictions and the kinds of joint stewardships that you're talking about.

I'll take that point and move to the task force recommendations for the resolution of comprehensive claims. I wonder if the minister can talk a little bit about what.... I'm not asking that you try to put dollar figures on this, because we're not going to get very far trying to do that. I'm talking more in terms of federal-provincial percentages. I know the history of the negotiation, what is being recommended by the federal government and what the concerns of the provincial government are, and I don't want to revisit all of that. I am specifically interested in what the minister may see as a resolution of questions. There may be a very large land base in some treaties as part of the resolution of questions of jurisdiction, and in other claims the land may be largely alienated through third-party interests. I'm thinking specifically of the Musqueam as a case in point. What resolution does the minister see with respect to the dollars attached to those various claims? Do you have a proposition that we could look at here with respect to what is affordable for the province? I'm not asking you for dollars, because we don't want to fuel the speculative game that's often played in the media. How do we develop a resolution between those two questions? Quite clearly there are going to be very different costs associated with the various claims settled under the task force recommendations.

Hon. A. Petter: First of all, let me clarify that my comment about the ambivalence of aboriginal peoples was directed towards their relationship with the federal government. I'm sure it's more than ambivalent in terms of some of these issues with respect to transferring jurisdiction, as the Leader of the Opposition suggests.

I think that the question you ask is an excellent one; it illustrates the difficulty in trying to work out an approach to provincial participation in cost-sharing. It is one of the reasons why I have resisted the suggestion that the province simply buy on for participating by contributing for the whole resource sector, because we don't know what that will be.

In addition, if we were to agree to that kind of formula ahead of time, it would drive negotiations in the sense that we and the federal government would constantly be at loggerheads at the negotiating table, trying to push one another into larger cash settlements, which would be the provincial position, or larger resource base settlements, which would be the federal position. There is tremendous difficulty in working that out. That is why we have appointed a cost-sharing negotiator to sit down with the federal government and start working out a set of approaches to resolving this issue -- not the actual principles that we apply, but how we go about addressing these very questions.

The other part of the equation, of course, is to get the information internally from government to attach value to various resources that might be brought to the table and to attach value to possibilities of revenue-sharing, which were mentioned by the leader of the third party earlier, so that we can negotiate in a far more intelligent and effective way on behalf of British Columbians as a whole -- aboriginal and non-aboriginal -- in our relationship to the federal government.

The instance you give of the Musqueam in Vancouver, where there is relatively little resource or land base in the vicinity and therefore presumably more likelihood of a cash component being larger -- as opposed to a first nation elsewhere in the province, where there may be more opportunities and more options on the resource side -- illustrates the difficulty of coming out with a one-size, cookie-cutter formula.

[ Page 1046 ]

It's one of the reasons why I have been fairly strong in resisting the federal minister's suggestion that we should simply sign off right now on an overall formula. We don't know where that formula will lead us, unless we're very careful and take account of those kinds of differences ahead of time.

Those are the two points I'd make. I acknowledge the difficulty; it is one that we must address. Addressing it from the view of the province, we must be absolutely vigilant in ensuring that the primary role is that of the federal government. That's one point. We must address it with a mind to the fact that if we do it prematurely, the formula that we agreed to could have an adverse effect on the negotiating process itself. Therefore that must also be part of the consideration in arriving at a particular formula.

G. Wilson: I appreciate the comments. I don't really take issue with much of what you say, except that failing some kind of an agreement to a formula, it would seem to me that we end up drafting a recipe for inaction. The longer we wait, the greater the ultimate cost is going to be to the taxpayer, both in social costs and in real dollar costs.

I wonder what the minister's feeling is with respect to the progression of various claims and the order recommended by the task force. Some are ready to go right now. There is a proposition where.... In at least two that I'm aware of and in one that I'm very familiar with, which is the Sechelt claim, there is even general agreement on how the dollars could be divided in a resource-shared stewardship concept such as you're talking about. What is the minister's position? I don't like to use the word "queue-jumping," but that is effectively what it would mean.

Hon. A. Petter: I agree that we can't simply sit on our hands with respect to the issue of cost-sharing. That's why we have agreed to establish a federal-provincial cost-sharing process, which has already commenced. Federal and provincial negotiators have been appointed. It's going to be a question of advancing that process as quickly as we can, while making sure that we don't advance it to the point where we are signing off on agreements the implications of which we don't fully appreciate or that may have an adverse effect on the negotiating process. I don't disagree with the comments made. We cannot sit back and simply allow this issue to fester.

In terms of the delay which might be caused by that, I've been pleased that the federal government has seen itself clear to saying that now that federal-provincial negotiations are underway, we can get on with establishing the Treaty Commission. I'm hopeful that if progress is shown in the federal-provincial negotiations -- and we're expecting a report in September -- that will enable us to continue on at least some of the negotiations you are referring to as we work out the cost-sharing problems that arise.

I would point out that the practice both here and in other jurisdictions has been to work out cost-sharing formulas on a treaty-by-treaty basis. The Nisga'a framework agreement contemplates a cost-sharing agreement within the context of that one agreement. I suspect in the long run that that is not going to be practicable as we start to get into a much more comprehensive set of comprehensive claims around the province. It's a matter of navigating between a concern that we deliberate, assemble the information and make sure that the provincial interest is adequately represented and, at the same time, that we not use cost-sharing negotiations as a pretext for delay. We will ensure that as much as possible both the establishment of the Treaty Commission and the negotiating process proceed as we, hopefully, start to show progress at the cost-sharing table as well.

[E. Conroy in the chair.]

Those two things can work together. There are still some tensions between the federal and provincial governments on that. I think the federal government is concerned that the province not use cost-sharing as a way of holding back. There's also concern on our part that we not be dragged into a cost-sharing agreement that does not adequately protect the interests of British Columbians, and which does not adversely affect the negotiating process. So it's affecting that balance.

But I think we are showing a commitment to get on with that process by having established a negotiating table, and by appointing a negotiator with considerable experience in these matters, who is working to pull together the information and who has already commenced negotiations with the federal government. There are some time-lines established, and I'm very hopeful that we will be showing some progress toward reaching an agreement on cost-sharing that can facilitate the claims process within the next period of time.

[11:30]

G. Wilson: Do I understand the minister to say that there is a negotiator currently negotiating in Ottawa?

Hon. A. Petter: No, here.

G. Wilson: In Victoria? I wonder if the minister might just elaborate a little bit on that process -- if that's a person within the staff and how that negotiation is undertaken. I think that would be good news.

Hon. A. Petter: There was a press release, and I'm searching to find it. I'll certainly be happy to provide it to the Leader of the Opposition. I think it was a month or two ago, and it was a joint announcement by the federal minister and me appointing negotiators to commence the process of federal-provincial cost-sharing negotiations.

The federal negotiator is gentleman by the name of Fred Drummie. The provincial negotiator appointed by us is Mark Krasnick. Up until recently Mark Krasnick was a senior official with the Ontario government. He had worked under the previous government here in Intergovernmental Relations, and he has worked in Ontario on aboriginal issues. He also has other extensive experience. He brings together, therefore, a good knowledge of federal-provincial matters and a good

[ Page 1047 ]

knowledge of aboriginal issues. I think we were very lucky to be able to secure his services in order to act for us in this one negotiation. He is in the process of moving back to British Columbia, if he hasn't already, and he will carry the responsibility for British Columbia into those negotiations.

I understand there have already been preliminary meetings between the two negotiators in British Columbia. That negotiating process is one that will start to unfold. My recollection is that there is to be an interim report in June with an actual report in September. That actual report in September is to address questions of an approach to cost-sharing -- how do we actually get towards a cost-sharing agreement? -- and not the agreement itself. I think it's an important first step, and I'll be happy to forward that release to you, if you don't already have it.

[D. Streifel in the chair.]

G. Wilson: I would appreciate seeing that, and I think it's good news that we're at least getting down to the detail of trying to work out this arrangement. I'm certain there can't be a very large cost involved in such a negotiation, if we're only talking about one individual. Is that part of the treaty negotiation budget, or how is that worked out within the budgeting?

Hon. A. Petter: My understanding is that the cost is covered off within that $170,000 figure you referred to earlier: professional services under treaty negotiations. That's the kind of contract that we require in order to facilitate negotiations, in this case with the federal government, for the purpose of treaty negotiations.

G. Wilson: Given that we have this negotiation underway, and having now heard from the minister the complexity of trying to come up with a resolution, I wonder if I could go back to my question with respect to the queue-jumpers -- those who would like to get ahead and move to immediate resolution. Is it the minister's position that until such time as this negotiation between the federal and provincial is finished there will be no movement towards a resolution on that question? Or is there a proposition where all parties that are able to come to general levels of agreement on comprehensive claims...? I'm always cautious whenever I use this as an example, because I don't mean to use this as a model. I want this to be underlined: we do not necessarily take the Sechelt as a model. But there you have self-government already negotiated and in place; you've got the specific claims dealt with; you've got a comprehensive claim agreed to; the dollar figure is virtually agreed to. What's to stop a speedy resolution to that one particular claim which would seem to work to the advantage of the individuals -- all the parties -- involved in that negotiation?

Hon. A. Petter: Two points. First of all, as a general proposition, I have made it very clear from the beginning that we do not view the ultimate resolution of cost-sharing work for negotiations as a precondition to commencing negotiations. As I said, in the Nisga'a negotiations cost-sharing is being resolved at the same time, and it's my view that we can do the same thing with respect to other negotiations.

It's the federal government that has had concerns about that, and I think by appointing negotiators we have tried to demonstrate to the federal government that we are serious about getting on with cost-sharing negotiations. We are reassuring them that we are not dragging our feet, that we have an interest in resolving this overall question of cost-sharing as well, and by doing so we hope to persuade them that we can proceed with a Treaty Commission. Once the Treaty Commission is established, I hope to proceed to allow the kinds of groups that you've mentioned to come forward and work through the Treaty Commission process. Presumably if the situation is as you've described it, they would be judged to be in a high level of readiness to negotiate and would be quickly facilitated through the Treaty Commission process, and we would then be prepared to come to the negotiating table.

Even with the most ready group, I think it's going to take some time to get a framework agreement and other measures in place, but we're certainly not using -- and I've never suggested that we should use -- the fact that we may not have reached an ultimate resolution with the federal government as an excuse for not getting on with negotiations. If we have a negotiation that is so ready that we can all agree on the resolution tomorrow, then we can sit down and work out the cost-sharing component around that, I suppose, and work that out as an independent case in the same way as the Nisga'a negotiation. Certainly I'm trying to move all the fronts forward at the same time to the greatest extent that we can.

I don't think we can afford to wait, and I don't think there's any reason we should wait. We're going to be into negotiations. In most cases those negotiations will be over a period of at least a few years, realistically, and I think that it would be unrealistic and counterproductive to suggest the whole process should wait until we and the federal government have reached some umbrella understanding on cost-sharing. That is not the position we have taken.

G. Wilson: That is a good answer, and one that I think a lot of people would be anxious to hear. However, let me take us to the end of one of the most ready cases, if we were fortunate enough to get to that end in relative ease. Does the minister have some answer to the question that is asked of me by a lot of aboriginal and non-aboriginal people: given that we can come up with a resolution and that there is a cost component affecting the province, where does the province get the money from?

Hon. A. Petter: I think it is one of the questions we all want to know the answer to. Part of the negotiating process will be determining the ability of British Columbians to pay, and that is why we are not ready to go to the table and sign off with the federal government until we are certain that we do have the capacity to pay.

[ Page 1048 ]

I think the answer is to look at a variety of different responses. There are opportunities -- as I suggested earlier -- perhaps for joint venturing among first nations as part of a resolution that may require no initial capital outlay or may require some participation over a longer term with first nations. There are opportunities for access to land and resources in some cases, which the province may be able to provide with little in the way of costs. In other cases there will be compensation that might be required from that. Those are some of the tricky questions. As to where it comes from, it's going to come from the provincial budget, I suppose. We're going to have to effect agreements that do not place an unwieldy, short-term burden on the taxpayers.

It's my view -- there are some studies that suggest the same, but I would like to see more -- that if we look over ten or 20 years rather than five years, what we put in in cost as a province is going to come back to us many times over in investment.

There is the other view -- which I have also expressed -- that there are opportunities to get investment dollars, a transfer from other jurisdictions in Canada to British Columbia, in order to resolve these issues. The federal government bears the primary responsibility. I think it's going to take a sophisticated approach in which we look to a number of different means of reaching a resolution to these agreements. Cash may be one, and it may be the one that we'll look principally to the federal government for. Other forms of provincial participation may involve various forms of creative arrangements -- joint-venturing with private partners, joint management or whatever -- and access to land and resources. That's what the negotiations with the federal government and, to some extent, the negotiations at the table are going to be all about.

G. Wilson: The minister put his finger on part of the problem here. The real issue is the province's ability to pay and the extent to which we can have flexibility in the measure by which, in any resolution, essentially we effectively ask the aboriginal people to carry the mortgage, if I can put it that way. We'll make some kind of long-term negotiation. The difficulty with that proposition is that the longer we delay in terms of settlement and the more that there is a subsequent negotiation potential, the greater the overall cost is going to be to the government. What concerns me is that we will dig ourselves into a hole where the only way we can get out is by digging it deeper. I wonder if you have some thoughts and comments on that in terms of final resolution and the question that there has to be some proposition for final resolution so there isn't an ongoing cost.

Hon. A. Petter: One of the things that the task force states as a principle -- and one we strongly endorse -- is the notion of getting certainty. However, I don't think that principle is underlined by amortizing the cost in such a way that taxpayers can be assured that it is affordable and the benefits start to come back at the time that the money starts to go out, so that there is some balance.

I would say this, though. I appreciate the concern, and the province bears a responsibility to reassure people that uppermost in its mind, along with effecting a just resolution, is doing this within the capacity of all taxpayers to bear whatever short-term costs there are in order to produce those long-term benefits.

We ought not to lose sight of the federal role here. The leader of the third party talked earlier about comparability of services. If the federal government committed itself to providing the revenue bases to first nations communities to enable them to provide comparable services to other communities, that would go a tremendous way toward satisfying the aspirations of self-government. The Yukon agreement which was recently reached contained a provision that speaks to that goal.

While we as a province must be careful to reassure our own taxpayers, we must be very vigilant in ensuring that the federal government is kept within the picture and that we go after the federal government not only in respect of settlement costs but in their failure to meet their existing obligations to treat aboriginal peoples to the same level of services that other Canadians enjoy in terms of providing the kind of fiscal capacity to aboriginal communities. So there is that component of it as well.

With that, looking at the clock and noting the hour, I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 11:44 a.m.

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