Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

MONDAY, MAY 11, 1992

Volume 3, Number 1

[ Page 1393 ]

The House met at 2:06 p.m.

Prayers.

A. Cowie: Today in the House we have 25 students from St. George's and their teacher Catherine Mori. St. George's is in Kerrisdale, in my riding. I would ask you to welcome them.

Hon. A. Edwards: I would like the members of the Legislature today to join with me in welcoming the Hon. James Downey, who is the Minister of Energy and Mines and of Northern Affairs and of Native Affairs in Manitoba. With him is his special assistant, Jim Berry. Please join me in making them welcome.

D. Streifel: It is my pleasure today to introduce to the House 13 students from Cade Bar and Nicomen Island schools in Mission. These students are on an alternate program. They are accompanied by Gillian Feenstra, Sherry Jost and Charles Weber. I bid the House make them welcome.

Hon. R. Blencoe: Visiting the House this afternoon are senior representatives of the Commonwealth Games. As members are aware, Victoria, on behalf of British Columbia and all of Canada, will be hosting the fifteenth Commonwealth Games in August of 1994. We are only 829 days away. Today, as part of our preparations this week, we are delighted to recognize key people from the Commonwealth Games Federation. They will be meeting with officials of the Victoria Commonwealth Games Society and all three levels of government. In the galleries this afternoon we have Mr. Arnaldo de O.Sales of Hong Kong, chairman of the Commonwealth Games Federation. We have Mr. Sharad Rao of the Netherlands, honorary legal adviser to the federation, Dr. Ivor Dent, who is vice-president for the Americas and for the federation, and Mr. Barry Nye of Toronto, president of the Commonwealth Games Association of Canada. I ask all members to join me in welcoming them to the chamber today.

P. Dueck: It is my pleasure to introduce about 90 grade 11 students. I'm not sure whether they're here at this time or whether they will be in the galleries later on this afternoon. They are from the MEI in my constituency. They will be accompanied by Mr. Reimer, their teacher. Would the House please join me in welcoming these students.

B. Simpson: I am delighted this afternoon to welcome students from Sir Charles Tupper Secondary School. They're under the directorship of Miss Bryce, their teacher. I ask the House to join me in giving them a warm welcome.

Hon. A. Hagen: Hon. Speaker, it gives me great pleasure to introduce to the House members of your riding and very good friends of mine, Joanne and Don Manley, who are visiting us today.

D. Mitchell: Hon. Speaker, my colleague the member for Vancouver-Quilchena earlier welcomed the group from St. George's School that's here today. I'm going to meet with the class later this afternoon; I'm looking forward to doing that. In particular, one member of the class is a constituent of mine and also a friend. I'd like to ask the House to welcome Taleeb Noormohamed.

In addition, while I'm on my feet, if I could also welcome another very good friend of mine who is visiting the House today. In the gallery, from the great community of Squamish, is Mr. Don Cochrane. Could the House welcome both these individuals today.

F. Garden: Visiting in the gallery is a very important member of my constituency of Cariboo North, Dr. John Havens, of Quesnel. He has been a doctor in our community for almost three decades. He and his wife, Dorany, are very active in the Quesnel Environmental Society. I ask the House to welcome them today.

C. Serwa: Hon. Speaker, I'm pleased to make an introduction on behalf of my colleague from Peace River North. Joining us today in the House is a group of students and teachers who have travelled the furthest. They are from the Toad River School, Mile 422 on the Alaska Highway. The students are accompanied by teachers Tom Fulton and Gary Reichl. They are here to tell us about the celebration of the fiftieth anniversary of the construction of the Alaska Highway. Would the House please make this group welcome.

M. Farnworth: Hon. Speaker, it gives me great pleasure to introduce a number of students from my former junior secondary, Mary Hill Junior Secondary. They are accompanied by their teacher Mr. Sawkins. They are watching in the gallery. I'd ask the House to please make them welcome.

Introduction of Bills

PETROLEUM AND NATURAL GAS
AMENDMENT ACT, 1992

Hon. A. Edwards presented a message from His Honour the Administrator: a bill intituled Petroleum and Natural Gas Amendment Act, 1992.

Hon. A. Edwards: It's my pleasure to put before the Legislature today this bill, which proposes minor administrative amendments to the Petroleum and Natural Gas Act. Specifically, the amendments are intended to clarify the taxation treatment for petroleum development roads, to simplify the administration of Crown royalty collections and interest calculations and to enable the Crown to make regulations governing the proper abandonment of oil and gas wells and the restoration of well sites.

I move the bill be introduced and read a first time now.

[ Page 1394 ]

Bill 39 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

[2:15]

WASTE MANAGEMENT
AMENDMENT ACT, 1992

Hon. J. Cashore presented a message from His Honour the Lieutenant-Governor: a bill intituled Waste Management Amendment Act, 1992.

Hon. J. Cashore: This bill amends the Waste Management Act that came into force in 1982. It refines the act to ensure that it provides a more comprehensive framework for protecting the environment. The bill is a result of discussions with a wide range of groups. These consultations have identified necessary improvements and corrections to the Waste Management Act. The amendments reflect this government's commitment to improved and strengthened environmental standards. I commend this bill for your consideration and urge its passage.

I move that the bill be introduced and read a first time now.

Bill 29 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

REDUCTION IN FOREST HARVEST

W. Hurd: A question today for the Minister of Forests. Last week the outgoing chairman of the Forest Resources Commission predicted inevitable reductions of almost 46 percent in the forest harvests in this province. Can the minister tell the people of the province by what percentage his ministry has reduced the harvest already, and how far they have to go?

Hon. D. Miller: I would point out that Mr. Peel, in responding to the article in the Sun, claimed that the article was misleading. I guess if it was, there's a lesson there about talking to journalists about some of these issues. Mr. Peel was also quoted in the Times-Colonist of Saturday, March 14: "The forest industry should be allowed to cut more trees, not fewer, the chairman of the B.C. Forest Resources Commission said Friday."

The difficulty we have in some of the Forests debates is that information -- and it's fine to hypothesize about some of these things -- that is taken as gospel and is misleading makes it very difficult to have an intelligent debate.

The answer to the member's question is that there is no target with respect to the annual allowable harvest in this province. As the Forests critic, the member should be aware of the process. If he's not, we have offered him a briefing with the chief forester. Annual allowable harvests are determined....

The Speaker: Could you wind up your comments, minister.

Hon. D. Miller: Well, the member asked me about the establishment of the annual allowable cut for the province, hon. Speaker, and I was just about to explain how that is arrived at. That was the specific question that the member asked me.

The annual allowable harvest in this province is determined on a planning-unit basis -- timber supply area or tree-farm licence. It is the responsibility of the chief forester to establish that annual harvest level after examining all the factors that would contribute to it, including the nature of the area, the age-class distribution of the standing timber on the area, the classification of soils, and any constraints that might exist for wildlife or for other aesthetic reasons. At the end of the day, having done that work, the chief forester establishes an annual allowable harvest.

The Speaker: Thank you, hon. minister.

Hon. D. Miller: There is no magic number. You don't work from the number backwards.

W. Hurd: The minister hasn't answered the question. We asked him how much he intends to reduce the harvest in this province.

Perhaps he's got some comments on job statistics. The industry has provided us with the statistics of 39,000 jobs lost across the province, with a 15 percent reduction in the provincial harvest. Since this government will soon be presiding over more job losses than the number of trees, what revenue loss projections and job loss predictions is his ministry making for the forest industry in this province?

Hon. D. Miller: I can tell the Liberal Forest critic that if his party were in power, there would be no jobs. I will quote a letter from the Liberal Environment critic, which says: "There should be no logging in ancient forests in British Columbia." The Liberal Party would shut down 90 percent of the forest activity in this province if the Liberal Environment critic's policy held sway in the Liberal benches. I've never been able to figure out whether that's their official policy or whether it's the policy of the Liberal critic. I don't know what the policy of the Forest critic is.

The Speaker: A final supplemental.

W. Hurd: It appears that we have no hope for statistics from the Minister of Forests, so a supplemental to the Minister of Finance -- minister of defence. With mining hitting a brick wall in this province and with forestry job losses destined to triple, my question -- since the Minister of Forests can't answer it -- is about revenues, upwards of $1.5 billion in lost revenues. How can the minister boldly predict a 3 percent growth rate in the provincial economy when two industries, which generate $15 billion in exports, are in full retreat? Who is going to pay the taxes in his budget, and where is this 3 percent rate of growth going to come from?

[ Page 1395 ]

Hon. G. Clark: Unlike the Liberal Party, we believe there's a future for the forest industry in British Columbia. We don't believe it's a sunset industry. We believe that we can in fact create more jobs and generate more wealth by being prudent managers of the Crown resource, and we intend to do that.

KEMANO 2 PROJECT

L. Fox: My question is to the Minister of Environment, Lands and Parks. The minister will be aware that on Friday a federal court of appeal overturned an earlier decision which would have allowed the Kemano 2 project to proceed. Given that the original agreement was signed in 1950, and in light of the assurances given by the Premier when he was opposition leader and yourself recently in a meeting in Price George, as well as the election promises of the members for Prince George-Mount Robson and Prince George North, can the minister tell this House and the people of the Nechako Valley what this government's position is with respect to this project?

Hon. J. Cashore: This government stands by its commitments. The fact is that the court decision came down at 7 a.m. on Friday morning. We have been in close consultation with our legal advisers in government, and we're also in the process of consulting with the various parties involved in this situation: those who are the subject of the appeal and those who were bringing the appeal to bear. As well, we are in consultation with people along the river and the native people. The type of review that will follow is subject to the discussions that will take place, and is pending a further announcement from government.

L. Fox: The minister is well aware that the issue is much more pertinent on the east end of the river than it is to the west. Can the minister assure me and the residents of the Nechako Valley area that their concerns will be given a higher priority than those of the unions in Kemano, who are concerned about their jobs?

Hon. J. Cashore: The concerns east and west are of importance. I don't think the hon. member should be getting into a divide-and-conquer approach on this simply because that's where his riding happens to be. I'm aware that when this hon. member was the mayor, he took a totally opposite position to the one that he's taking now. This is not the type of a situation where it's good leadership in the province to try to panic into putting forward a process on this that is not the best process. It behooves government to do its consultation properly and to come out with the best possible way of dealing with a most difficult situation.

The Speaker: Final supplemental, hon. member.

L. Fox: If the minister had done his homework, he would have found that the statement he made with respect to my position while I was the mayor of the community is incorrect. However, aside from that, is the minister now prepared to stop the delay with respect to dealing with the water problems in Fort Fraser and thereby live up to an earlier agreement made by government and particularly his ministry to supply that community with water -- as well as the program to institute the much-needed improvement to the sewer effluents entering the Nechako from the district of Vanderhoof?

Hon. J. Cashore: If this member had done his homework, he would know that I made a major announcement with regard to water policy in this province on Friday. We're moving with dispatch to address a number of issues that have to do with water quality and sewage treatment. I would suggest that this member do his homework and inform himself with regard to the important initiatives we are taking. I would be glad to meet with this member to deal with the specifics of the particular situation he's dealing with here. If this minister would like to meet with me in my office with staff, I'd be glad to arrange that.

MINING INDUSTRY

D. Jarvis: To the Minister of Energy and Mines. Windy Craggy is under environmental review. The Tatshenshini is under a parks review. The entire province is under an energy policy review. Do these measures, in your opinion, speed up and simplify the mine development process?

Hon. A. Edwards: It's a pleasure to answer the member's question. Our approach to policy is to involve the people of the province and to make sure that they have the opportunity to have a say about the resources that belong to them. We are very pleased that you are suggesting and noticing that we are doing reviews and approaching policy in a broad, general, inclusive sense.

D. Jarvis: I take it from the circular answer that the minister means no. On March 14 the Premier promised to speed up and simplify the mine development review process: "My government will encourage mine development and the jobs it generates." Does the minister disagree with the Premier, or has she done something that we don't know anything about?

Hon. A. Edwards: I try not to do anything you don't know about, sir. I certainly would respond that the Premier is right. We believe that mining is a very vibrant industry, that it's going to continue in British Columbia and that it's going to be important to the economy. We are following our promise and the Premier's promise to deal with the process of review of mine developments. We had one of the members circulating in the province with our proposal for assessment -- a new process of assessment that will unify the activity that goes on; that will speed it up, we hope; that will be sure to see that the people of the province have their say; and that will co-ordinate it with the federal process. I hope the member will participate in that process.

[ Page 1396 ]

D. Jarvis: Again to the Minister of Energy and Mines. Since taking office, this government has watched mines close, investments disappear and entire towns begin to dry up and evaporate, and in every situation your government's response has been to commission another study. Does the government have any direction of its own, or are they studying that question as well?

Hon. A. Edwards: We study a lot of things over here, but we act as quickly as possible. When we decide to make a move, however....

Interjections.

The Speaker: Order, hon. members. I cannot hear the hon. member's answer.

Hon. A. Edwards: When we do decide to make a move, of course, the Liberals frequently are willing to delay that all for six months. They've already put in two hoist motions which would cause considerable delay and more study for issues that we've studied a lot.

I would like to suggest that there's no way this government is able to influence what happens on the world commodities market, and that is one of the major problems for the mining industry today.

[2:30]

TATSHENSHINI WILDERNESS AREA

G. Farrell-Collins: A question for the Minister of Environment. The opposition notes that the Tatshenshini wilderness area is now tied up for three years in a parks study. Will this latest study be independent of the mine development assessment review process? Will it also be independent of Stephen Owen's Commission on Resources and Environment, which were both announced earlier this year?

Hon. J. Cashore: What the opposition fails to recognize is the masterful job this government has done in putting forward processes that dovetail beautifully.

G. Farrell-Collins: I'm sure the doctors and teachers of this province are thrilled with the dovetailing of this government.

Supplementary to the Minister of Energy, Mines and Petroleum Resources. Is she confident that the mining companies will hang in there for an additional three years while overlapping studies on the Tatshenshini limp to a conclusion with three different timetables?

Hon. A. Edwards: We are sure that we are addressing the very difficult issue of the Windy Craggy mine and the Tatshenshini proposals in the most effective manner possible.

Ministerial Statement

NOVA SCOTIA MINE DISASTER

Hon. A. Edwards: I rise to ask the House to join me in expressing sympathy and condolences to all those who feel the loss of 11 lives in the Nova Scotia mine disaster. We feel this even more acutely in light of a slide in B.C.'s Greenhills mine earlier today in which a life may have been lost.

I therefore propose to send a telegram to the Mines minister of Nova Scotia and the mayor of Plymouth as follows:

"We share your sorrow at the loss of 11 lives in the Westray mine disaster and pray that you will reach the other 15 while they are still alive. Please extend the sympathy of the people of British Columbia to the families of the miners involved. Our hopes are with you, as is our respect for those who deal daily with such risks."

D. Jarvis: We in the Liberal party also wish to express our sorrow over the death of the 11 miners in Nova Scotia. We can only hope with all of you that the remaining 15 will be reached successfully.

C. Serwa: What makes this message so particularly meaningful is that the mining industry has played a significant role in the province of British Columbia. Mining disasters, both in hardrock mines and in coal-mines throughout the province of British Columbia, are part of our history. The methane gas generated from coal-mines, which is what caused the explosion, has affected the minister's area, the Crowsnest Pass area -- Fernie, Natal, Middle Town, Michel -- and the Vancouver Island areas of Ladysmith and Nanaimo. When the message is sent -- and we support that message; we share in the sorrow and the grief -- the understanding is there, because it has been a major and significant part of the early history of British Columbia.

Hon. G. Clark: Hon. Speaker, perhaps by leave I might ask that you convey on behalf of all members of the House the sentiments expressed by all three parties today.

The Speaker: If it's your wish, I will be pleased to do so, hon. members.

D. Mitchell: On a point of order, hon. Speaker. It is with respect to the management of the order paper of this Legislative Assembly. In particular I would refer to the written questions on the order paper, questions 1 to 32.

In this House we are now well into the estimates process -- the review of spending estimates of the government which were tabled along with the provincial budget. We are making progress, but the progress has been limited. We have not had answers, despite repeated statements of the government that we can expect answers in due process. We have not had answers to any of the questions, questions 1 to 32, on the order paper.

I would point out that if this government wishes to save itself some wear and tear, it could answer the questions on the order paper and avoid getting into a lot more serious trouble. So, hon. Speaker, I appeal to you. Our duties and responsibilities as elected members are being impeded by the fact that this government, which claims to be an open government, is refusing to answer these questions. I appeal to the Speaker to give 

[ Page 1397 ]

some guidance to the House -- in particular to the government members of this House -- with respect to the traditions and practices of answering questions when they are placed on the order paper.

The Speaker: It may not be a point of order, but I will allow a comment on it from the government House Leader.

Hon. G. Clark: I was simply going to say that it is not a point of order. Because of the rules of this House, of course, I couldn't interrupt a point of order with another point of order, or I certainly would have done so. All members know that questions on the order paper.... You have question period when you can ask similar questions, or ask when they would be answered. It is certainly not a point of order to raise it at this time.

Orders of the Day

Hon. G. Clark: Hon. Speaker, I call Committee of Supply, both sections.

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

ESTIMATES: MINISTRY OF FORESTS

On vote 41: minister's office, $377,000.

Hon. D. Miller: To assist me in answering as completely as possible questions from the members opposite, I would like to introduce my deputy, Mr. Phil Halkett, and from my financial branch, Mr. John Dowler.

Just to open and sort of put some cast on these estimates, I have just a few introductory remarks. The estimates for the Forest Service are comprised of four votes, 41, 42, 43 and 44: 41 for the operation of my office; 42 for the administration and delivery of Forest Service programs; 43 for the operation of fire suppression in our forests; and 44 to allow the Forest Resources Commission to complete its final task.

The expenditure request for the Forest Service in those combined votes is $530 million. When combined with special account expenditures, the overall total is $624 million. Revenues for this fiscal year, on the other hand, are forecast to be $665 million.

The forests represent more than the source of timber that drives the heart of our economy and creates some 200,000 jobs in British Columbia. Today we view our forests as watersheds, habitat for fish and wildlife, forage for our ranching industry and an essential scenic backdrop valued by visitors and residents alike. Today we are entering an age of limits. Our natural resources, although still substantial, are not as endless as we once thought. Population growth, along with new values and expectations, are requiring us to harmonize seemingly contradictory forest uses.

As my colleague the Minister of Finance has pointed out, British Columbia also has its fiscal limits. Simply put, spending more money is not in itself the answer to the challenges facing us; we have to work smarter with the resources we already have. Only by doing that can we deliver on the forest management commitments we have made to British Columbians.

In preparing this budget, we have carefully reviewed and reset our forest priorities with these natural and fiscal limits as our guide. Our government is committed to fair, balanced and open forest management that builds on trust and creates less conflict. These estimates provide the means to make good on our commitments by creating a better balance of economic and environmental values through public involvement and consensus-building, by doing a better job of ensuring that our forest practices are economically and ecologically sustainable, by getting the Forest Service back into the woods, by being fair with our aboriginal peoples and by getting more value in jobs from our resource.

We have established the Commission on Resources and Environment to begin a process that will lead to a better balance between the economy and the environment. The government intends to move beyond valley-by-valley conflicts. With public input, we intend to reach a consensus on how and for what values our forests should be managed. Our goal is to balance preservation of our environmental heritage with the need for stable forest communities that are home to many thousands of British Columbians.

Let me assure the people of British Columbia that the Forest Service stands foursquare behind the commission. Cabinet has already acted on recommendations from the Forest Service and has redirected timber-harvesting in some areas to allow Mr. Owen time to begin his difficult task.

We are moving forward on several fronts to improve the way we manage forests. Most importantly, I am committed to ensuring our harvest levels are sustainable. To assist in that important objective, we will be conducting a provincial review of timber supply between now and the end of 1994. This review will provide the chief forester with more appropriate information for ensuring the sustainability of allowable annual cuts.

With my colleague the Minister of Environment, Lands and Parks and other resource ministries, an extra $10 million will be spent on updating our inventories to ensure they reflect all forest values and effectively support land use planning. These new inventories are essential to help us review harvest levels.

This government is also committed to developing a forest practices code. The objective of the code is to ensure that the management of our forests is based on sound ecological practices. It achieves the high standards we expect for stewardship. The Forest Resources Commission will soon be making recommendations to me on the framework of a code. The Forest Service staff will prepare the technical aspects and guidelines that will form the code.

We also need to set better targets for the renewal of our economically valuable forests. Thousands of families in hundreds of communities are dependent on our forests. Their long-term future depends on effective forest renewal. We will ensure that private sector 

[ Page 1398 ]

reforestation obligations are met, and will not allow haste to make waste in our reforestation efforts. We have deferred some silvicultural objectives while our inventories are updated and our reforestation goals better identified. This government intends to take careful aim before it starts spending precious taxpayers' dollars. We will renew the forests, but in a cost-effective manner.

It also pleases me to see our new Natural Resource Community Fund bring a stable source of funding to deal with problems facing resource-dependent communities. I know that this initiative will be welcomed by communities facing difficulty from the high dollar and weak commodity prices.

[2:45]

These estimates will ensure that my staff get more mud on their boots. The Forest Service will make 150 percent more inspections this year than in 1989-90 in all phases of forest management, from planning the harvest through to ensuring effective reforestation. Not only will they do more monitoring, but they will also begin to enforce the high standards of forest management our government is setting. This reflects a commitment I made to my staff: I will let them do their jobs, and thereby restore the morale of and public trust in the Forest Service.

We are taking steps to better involve aboriginal people, who have for too long been largely ignored in forest management. The Forest Service is looking at new and creative ways to involve aboriginal people in forest planning and management, and ensure that they gain meaningful employment opportunities. As well, we are committed to getting more value from our resources. To that end, we are reviewing various resource fees. We have also reduced the risk of revenue loss in marking, scaling and log movements through tighter controls.

We must move the forest sector away from a focus on commodity production to value added. We will ensure the small business forest enterprise program works to its potential. My colleague the Minister of Economic Development, Small Business and Trade and others will identify markets, products and processes that can provide opportunities in Far Eastern markets and elsewhere to our small business enterprises. The Forest Service will then provide the wood.

We, as you know, are now faced with a serious trade threat in the form of the U.S.-initiated countervail action against Canadian and British Columbia softwood lumber exports. This interim measure, finding a subsidy of some 14.48 percent, threatens our wood-processing industries. Along with other provinces, the federal government and industry, we will fight and persevere against this unfair American action.

[M. Lord in the chair.]

We are indeed in the midst of change. Our challenge is to recognize the limits of our resources and economy, and start doing a better job of managing our forests. We must work together to create a proper balance of forest uses that recognizes the diverse demands of today and respects tomorrow's needs. We must restore the public's trust, and we must balance jobs in our forests with preservation. There are no easy answers to these complex forest challenges. We all know that there are some hard choices ahead. How we make those choices is critical. They cannot be made in the back room by a select few. Choices this critical must be made collectively, using the best information and involvement processes we can muster. I am under no illusion that the Forest Service can do the job alone. That is why we are working actively with other ministries, with agencies such as CORE and with the public.

The initiatives that I've outlined here today form the basic building blocks for renewed forest management in British Columbia. With that, I'd be happy to try to answer any questions that members may have.

W. Hurd: In response to the opening statement on estimates from the Minister of Forests, certainly the opposition is impressed with some aspects of the budget. Certainly the commitment to inventory is welcomed as being a matter of great concern to the people of the province. But it's also important for us, as we prepare for these estimates, to consider some of the issues in the Forests ministry over the past four or five months. We've seen significant reductions in the annual allowable cut. We've seen concern expressed about continued employment in this industry. We've had expressions of concern by companies in the industry about security of access to timber. In light of some of these issues that we intend to explore in the estimates, it's important for us to consider where the industry is going in this province and how it will be able to fit into the new realities announced by the minister.

It's also interesting to note that in assessing the state of the forest industry, we also have the benefit of the Peat Marwick Thorne review, which had a great deal to say about the management of resources in this province. In some of its findings and conclusions, the report talks about the inadequate information that the ministry has been working on and the fact that we have experienced difficulty in fully implementing integrated resource management. We've exposed ourselves to criticism from the public over policies and actions.

I think the report of the Forest Resources Commission echoes some of these sentiments. The Peel report states that: "Sadly, the state of renewable forest resource inventories in this province is inconsistent at best and woefully inadequate at worst." After reviewing the inventory data, the commission concluded that data on stand dynamics and growth rates is woefully inadequate indeed. As a result, reliable computer projections about the future timber yields in these forests cannot be generated. When one considers the hundreds of millions of dollars spent annually on forest renewal, this failure to provide reliable growth and yield projections is quite disturbing. The FRC report goes on to state that "the commission believes that the current state of inventory information is a disgrace, given the importance of all renewable forest resources to the people of British Columbia. It is imperative that inventory deficiencies be addressed as quickly as possible." The Peat Marwick report essentially says the same thing, but goes further in explicitly stating that the 

[ Page 1399 ]

province will have to incur additional costs to develop adequate resource inventory.

Given the massive onslaught directed at the state of our province's inventories not only by the Forest Resources Commission but also by the Peat Marwick report, my first question to the ministry is: what impact does the decreasing of the Ministry of Forests inventory budget by $0.5 million plus inflation have when even the Peat Marwick report recognizes that additional funds will have to be directed towards developing inventory information? Can he advise us what percentage of the $10 million corporate initiatives or sustainable development fund will be available to the ministry immediately, given the rather urgent state of inventory in this province?

Hon. D. Miller: The member raised some very interesting points in his comments, and I realize he closed with a specific question relative to inventory. It clearly is a very important topic. I just want to make a few remarks before I get to the specific....

With respect to just the timber inventory itself on a provincial basis, I think it's been acknowledged that there's a reasonable degree of accuracy with respect to that inventory. Where we have more difficulty -- and I think this was pointed out fairly well in testimony to the Forest Resources Commission two years ago -- is in terms of the inventory as it applies to a much smaller area. I might add that when you start to deal with the smaller local areas, you also encounter more difficulties when you deal with those other values that we plan for in this ministry and that we think are very important. I've talked about some of them in the past -- the values such as wildlife and maintaining habitat and biological diversity; planning for, for example, fisheries values; the aesthetic values that people hold so dear in this province; the need to ensure that sufficient areas are set aside in one status or another so that their unique qualities are preserved, often for scientific reasons, but sometimes really for aesthetic or recreational reasons. The lack of information in terms of that specific inventory has been acknowledged in the past. We have moved, despite the reduction that you've noted, to combine with the Ministry of Environment, Lands and Parks to equally share that $10 million to get on with more of that inventory work. Clearly, if you accept the premise -- and I hope members are clear in understanding -- that the basis for forest land management planning in this ministry is to plan for all of those values, it is entirely compatible and makes a lot of sense to have the Ministry of Environment as equal stakeholders in that inventory process, so that we're not just looking a timber, but at those other areas as well.

The short answer to your specific question is: we have allocated an additional $10 million this year to be split between our two ministries to do some of that very vital inventory work.

W. Hurd: A question about inventories, then. My understanding is that the most deficient data is on timber supply areas in the province, and that the state of inventory on tree-farm licences is somewhat further advanced. Some would argue that we actually have a fairly good handle on what's available on tree-farm licences in this province. In light of that information, I'm just a little confused as to why earlier this year we had such a drastic reduction in annual allowable cuts that affected tree-farm licences on the Island. Was that the result of areas that were taken out of the TFLs in the past few years, or is it a case of the licence-holders not managing the cut appropriately? What specifically did the ministry identify as being the reasons why the TFLs on the Island were subject to such dramatic reviews? And is there anything in the estimates from the ministry that would allow us to assume that there is going to be some analysis of TFLs as far as inventory is concerned as well as the timber supply areas?

Hon. D. Miller: I want to try to respond to the question on a broader basis and then come to the particular. There has been forest management in British Columbia for a very long time. If you go back perhaps 50 years, I suspect there may have been some acknowledgement that we were not in such bad shape as we appear to be today. But in establishing the management regime at that point -- some 50 or 60 years ago, or maybe even longer -- there were certain premises accepted as fundamental and, in fact, at the time viewed as being very progressive.

I'm sure the member is aware that forest policy in this province has been established generally following a major royal commission: the Fulton commission -- I think it was in 1910 -- the two Sloan commissions and the Pearse commission. Nonetheless we started out with an acknowledged system of forest land management planning which at its basic level said: here is the forest we have available to us, and we should harvest that forest on a sustainable basis -- in other words, over the rotation periods, which vary depending on where you are in the province. We should, at the end of the first harvest, then move into the second harvest or the harvest of the second growth. That's why when you look at any reports dealing with forestry, you will see two numbers: the annual allowable cut and the long-run sustained yield, which was established based on the premise that I've outlined.

But things have changed. We got about halfway down the road when things changed, and we discovered that we had not built in the flexibility to allow us to deal with a range of issues which, in some cases, had not even been thought of, such as the overwhelming demand we face today -- I guess you could characterize it as changing societal values -- for more parks and wilderness to be set aside. There are scientific arguments -- and I really respect them -- that suggest an appropriate amount of our old-growth ecosystem needs to be set aside, so that we can study those areas in terms of their biological diversity and learn from them about how the forests grow and what's contained within them. There is the need now to do far more than we did in the past with respect to the issues of wildlife, so that we have to manage the forest land base to allow those wildlife habitats to remain intact and so we don't have a serious negative impact on them.

So there is a full range of issues that were not factored in at the beginning -- with all due respect to 

[ Page 1400 ]

those pioneers who thought it was important to establish a scientific basis upon which forestry was practised. That, as any student knows, came from some of the European foresters who came to North America and made such a contribution to the development of forest management in North America.

[3:00]

The real difficulty we're having now is that, having embarked on a management regime in the first instance, we've had to make some serious readjustments to accommodate for these new issues. In the main, where you see a fairly significant reduction in annual allowable cut, it is because these new factors are now being put into the equation to determine those cuts. It's very difficult to speak to every particular supply unit, whether it be a timber supply area managed by the Crown or a tree-farm licence managed by the licensee, which requires the chief forester to approve the management working plan and thereby establish the annual harvest.

I think the majority of the conflict we're seeing in the province is because we're having to make these kinds of changes. Naturally enough -- and overshadowing all of that -- we have developed a forest industry in the province that has certain requirements, and as we make these adjustments, it's obviously having an impact. If we didn't make a single change, I think we would still be going through some very difficult times. If you look just at the issue of current allowable harvest versus current industrial capacity, you can see there is a significant gap between the two.

So in terms of TFL 46, the 29 to 30 percent reduction had to do with the factors that I talked about and the fact that the Forest Service has introduced, over the years, new regulations that we think are important. As I said, some of those have to do with wildlife habitat issues and leave-strip requirements along fishery streams. You know that we now have new and improved fish-forestry interaction guidelines to guide harvesting on our coast to look at the areas of biological diversity and green up. For example, new regulations for my ministry do not allow progressive clearcuts but instead require, prior to clearcutting an area adjacent to an existing clearcut, that the original or existing clearcut has to green up to a certain point before you can access the adjoining one. Those are the kinds of factors that resulted in those.

You will also note that there is no particular target with respect to the annual allowable harvest established by the chief forester. There has been a range of reductions: 14 percent in one case; 29 percent in the case that we're discussing; and, in the case of the Mid Coast timber supply area, as much as 34 percent. Each of them is a unique planning unit. They must be managed for their own unique attributes and the unique problems that might be associated with the range of issues that I've touched on. If you want to get very technical and specific with respect to any one of those, the chief forester has already indicated to me that he'd be more than pleased to take the time to go into more specific details with either you, your colleagues or any member of this House.

W. Hurd: Further to the issue of inventory and annual allowable cuts, my question pertained to the link between those two issues and the type of tenure that's involved. I think that when we're talking about tree-farm licences in this province, we're talking about a significantly higher level of forest management and intensive forestry. The annual allowable cuts are surely a function not only of how many trees you have in inventory, but also how many you're willing and able to grow.

Regarding inventories and setting annual allowable cuts for the future, I'm wondering whether there's going to be some analysis by the ministry of the tenure that produces the best level of intensive forest management and enables cuts to be incrementally increased over the period of the normal licence agreement, which in this case is 25 years. I understand the issues you're raising about competing values and about the fact that some of these licences at times don't allow for an integrated approach to resource management. It seems to me that we have a fundamental dichotomy between managing the resource for integrated use and managing it intensively in terms of producing the best possible yield per hectare.

I'm wondering whether, in league with the inventory analysis that it is making a commitment towards, the ministry intends to analyze the various types of tenure available -- even if they're shorter in licence length than a tree-farm -- in the hope of encouraging more intensive forest management of some of these lands, to at least mitigate the effects of some of these rather significant reductions in annual allowable cut.

Hon. D. Miller: That's a good question in terms of a fundamental issue that we need to discuss a little more in this province. First of all, dealing with tree-farm licences.... I've heard it said -- sometimes by the holders of tree-farm licences; sometimes not -- that the general level of management, say, with respect to inventories, is higher than it is on the TSA lands -- in other words, the Crown-managed lands. I don't accept that. In my part of British Columbia, you could point to what used to be TFL No. 1, the first massive tree-farm licence allocated back in 1948, or perhaps '49 or '50 as being one of the more poorly managed forest areas in the province. I don't really want to get into the details of that, but it has generally been acknowledged that the management there was far from desirable. I don't think that any particular form of tenure has a monopoly on good management or poor management. There are certainly tree-farm licences that are well managed, as there are timber supply areas.

The argument around management, leaving aside the nature of the tenure, has been that forest lands need to be managed on an area basis, and I don't think anybody quarrels with that. The argument from the forest licence-holders -- with some of the thinking in the previous administration's foolish approach to the tenure issue, which was simply to reallocate the remaining Crown forest lands into tree-farm licences and to wash our hands of them -- is that because they don't have a particular area within the licensed area, 

[ Page 1401 ]

the management somehow suffers, even though they have chart areas.

Getting back to the issue of intensive silviculture, or incremental silviculture -- which I think is what you're really getting at -- it's interesting to note that any studies I've read say that there has not generally been a higher level of expenditure on forest lands in incremental silviculture, not only on tree-farm licences versus timber supply areas but on private lands. The member must be aware of the managed forest unit classification of private land. Some companies have very extensive private landholdings. Even on their private lands, where there has never been an argument about the right of that company or the private landholder to receive the benefit of their investment, there has never been a significant level of investment into forest land in British Columbia.

Various debates have taken place around that topic. If I can characterize one aspect of those debates, it would go something like this. The natural forests of British Columbia -- which did not receive investment by anyone, but were simply there; nature had provided -- were so extensive that we had not reached the point in the economic evolution of our industry where it made any economic sense to put additional money back into the land base, because of these extensive natural forests. I regret to say some of that thinking is still extant in the land.

The other argument.... There's certainly a range of opinion. Some major forest companies argue that there is no tangible benefit from making those investments; it's not quantifiable. Other companies.... Weyerhaeuser, for example, has a little pilot project on tree-farm licence 35 in the Kamloops area. They say -- and from the numbers that I've looked at -- there is a quantifiable benefit in their particular circumstance by increasing the amount of money they invest, per hectare, in the land. They can point to some obvious gains on the yield side; in other words, they can harvest more timber. I think it's a function of a particular area and, again, things like age-class distribution, etc.

In my view, what has eluded British Columbia is a policy that would see a greater level of investment. We've made a significant investment of the taxpayer's dollar. The first forest renewal program was for $300 million, equally shared between the province and the federal government, and we're now working on a much smaller level. So the taxpayers have made some significant investments in the land base. But we have yet to develop a system whereby tenure-holders are prepared to make the investments that are possible and the gains that are realizable. That's something I'm acutely aware of. It's a complex area. I don't think it's an easy policy to develop. It ties in with issues such as tenure and others. It is certainly uppermost in my mind as an area that needs a lot of work.

We can make the gains. If you look at the Scandinavian countries -- look at Sweden -- they harvest from their forest land base. While it's not quite as high as our harvest level, they have half the land base of British Columbia, and they virtually harvest the same as we do. It's because they put a lot of money into their land. They do that by charging one heck of a lot more for their wood. And there are some differences between us and Scandinavian countries who have their market virtually on their doorstep versus British Columbia that has markets around the world. Obviously some of our costs are extremely high too.

Perhaps I haven't answered all of the member's questions, and been a little too wide-ranging. If I haven't, I'd be pleased to hear from the member.

W. Hurd: Continuing to canvass the issues surrounding tree-farm licences, I'm sure the minister would agree there's an expectation in this province that somehow the tree-farm licence concept, which is the longest license the ministry offers, will protect employment in the communities and will provide some measure of stability and supply. What I'm hearing from the unions, for example, and from people in small-town British Columbia, particularly on Vancouver Island, is that somehow the concept has not achieved that goal, and that there should be some requirement on the part of the companies to guarantee levels of employment in manufacturing facilities that are serviced by tree-farm licences.

I'm sure the minister is also aware that the industry is able to borrow money based on its access to secure timber. One of the biggest measures of security they have is a tree-farm licence. I'm just wondering how he sees achieving some measure of community stability in areas on Vancouver Island where we have seen significant reductions in the cut, which the minister has quite correctly pointed out were unavoidable given the amount of wood being consumed.

I'm just wondering whether the idea of what tenure is best for the various timber supply regions of the province is really going to impact on decisions by the ministry as to how to secure employment and economics in some of these small towns in British Columbia. Are we going to see continued erosions in the cut while the inventory process unfolds? This is a question of concern to many members in this House who represent small ridings in British Columbia.

[3:15]

Hon. D. Miller: I agree with the member when he suggests that there was a quid pro quo -- an understanding that in return for the allocation of these long-term tree-farm licences, the companies who received them had an obligation to provide employment and stability in communities. What's unavoidable is the changing nature of the industry over time. We went along for some time in British Columbia with a fair degree of comfort and a feeling that things really wouldn't change that much. Where there was a large sawmill, there would always be a large sawmill and where there was a pulp mill, there would always be a pulp mill.

I suppose the first real shock for many British Columbians in the forest industry was in 1981, a very, very difficult period -- because of the international marketplace, because of the recession and because of the interest rates, which I think in that time approached nearly 20 percent in North America and worldwide. This caused the forest industry in B.C. to re-examine 

[ Page 1402 ]

their operations. In fact, I recall it vividly because I happened to be working in a pulp mill. At the end of the day, in many, many communities and in many, many companies, there were severe declines in employment. It came as quite a shock to people in the communities that you have talked about. All of a sudden men and women who had worked all of their lives, who had never gone to the state for a penny, were out of work.

That process has continued from that time. If you look at the overall numbers in terms of employment in the forest industry, there has been a decline, and it appears that it will continue; although it is being mitigated, and I'm more and more optimistic in the manner in which it's being mitigated.

The licence-holders do have an obligation. We could go and look at all of them and say that some have performed better than others. In fact, on Friday and Saturday I'll be going to Port Alberni to meet with people in that community to discuss the performance of that licensee, and to listen to the community and their ideas about where they think there may have been deficiencies and where they think there might be more opportunities for employment. I want to talk about that openly with the community and I want to talk about it with the company, because it's certainly my view as the minister, and it's the government's view, that we expect the maximum performance out of licence-holders. We expect them to be aggressive. We expect them to have an investment program. I want them to look into the future and be able to tell me with some -- not absolute -- degree of certainty: here's where we're heading, here's where we think the kind of employment opportunities exist, here's where we think we can add more value to the very valuable forest resource in this province. We'll be looking at those kinds of things.

We will also be continuing to promote the development of secondary manufacturing, the so-called value-added sector, often referred to as remanners. I can tell the member that the section 16.1 sales that encourage the development of that section of the industry are having some impact.

I took great pleasure in touring a mill in Prince George on Friday, a mill that is all of the things I think we talk about when we talk about value-added. It is taking those valuable forest resources -- the very fine wood that's grown in this province -- and producing finished products to send to the German market; making finished wooden windows and doors that are the finest you'll find anywhere.

We're starting more and more to see the development of that industry since the establishment of the section 16.1 sales, which are short-term sales, but which provide entrepreneurs a mechanism to get some financing, to get into the marketplace and to get some leverage in terms of supplies for their milling requirements.

About three weeks ago when I was in Kamloops and met with the association that represents the value-added manufacturers, they informed me that they now -- in that region -- produce forest products with a value that they estimate to be in about the $100 million range, and they're employing in excess of 500 people in that value-added sector. We can see that it's growing; it's developing. I think the market potential is clearly there. We have indicated our desire to assist entrepreneurs on the marketing side. Certainly the Premier's and my visit to Japan has encouraged us that there is more and more market potential. My conversations with individual operators in the value-added program convinced me that there is more and more potential, whether that be in the Asia Pacific markets, the European markets, or indeed the United States market, where we now see that the value of the renovation market is equivalent to the value of the new-home construction market. There will be more and more opportunities. British Columbia has the resource; that is unparallelled. We're encouraging entrepreneurs, through our programs, to get into the business of producing more value.

W. Hurd: Returning briefly to the issue of tree-farm licences and timber supply, I'm glad the minister brought up the example of tree-farm licence 35 at Kamloops. I understand that the proposal put forward by the company would see an approximately 50 to 60 percent increase in the annual allowable cut in exchange for an enhanced silviculture regime. It occurs to me that if that type of incremental advantage were to be gained from other tree-farm licences in the province, would not such a tremendous accomplishment on one tree-farm licence lead the ministry to believe that when it comes to timber supply and annual allowable cuts, there is an avenue for the ministry to pursue to increase the timber supply quite dramatically over the longer term?

The minister has already noted that on one of the votes for silviculture we've actually seen another reduction in the current fiscal year, and I believe what amounts to a reduction in a five-year forest and range resource plan as well. This gets into a philosophical question, but is it feasible for the ministry to ever have the resources to attain the kind of incremental silvicultural advantages that seem to be the case in one tree-farm licence in this province?

Hon. D. Miller: Certainly in the case of TFL 35.... I must say, hon. member, that when I was the forests critic, I used that example in quizzing the then Minister of Forests. The tables have shown -- and I can't recall the specific numbers in those tables -- that they can realize some immediate gains. I'll go back to what I said earlier though. I would caution that that is not applicable in every case. It really is important that people understand that it's a function of the land itself and an assessment of that land in terms of issues like the age class distribution of the stands that exist at this time. There are some areas, whether they be timber supply areas or tree-farm licence areas, where you would not realize immediate gains, simply because increasing.... By the way, I should also say, whether that is incremental or not, that my sense of it is that it is simply enhanced stewardship -- and perhaps there is no tight definition about that.

What Weyerhaeuser is doing in that case is simply a number of things that are fairly basic. They are getting their trees into the ground faster. Rather than wait two years, as normally may be the case, they're getting those 

[ Page 1403 ]

trees in the ground a year ahead of what they would normally do. I think they are doing some spacing, some very modest incremental silvicultural methods or activities, and you can see the gains. In some other areas, to do that very same program would not lead to an immediate increase in the annual allowable cut. Every area is unique, but I would caution the member to understand that. In addition to the policy that I talked about.... In the case of Weyerhaeuser, they would pretty clearly like the Crown to participate with some money. There has not been a policy framework to work within.

On the other side of the coin, companies say: "We're prepared to do it, but we can't ensure that we will be the beneficiaries." Let's say there is an increased yield. Should companies be allocated that increased yield free of charge? Those kinds of policy issues have unfortunately not really been dealt with in the past. I assume the obligation to deal with them myself. The development of intelligent policy takes at least some reasonable amount of time.

In other cases, though, I have to tell you that there are major companies -- I think Fletcher Challenge is one of them -- that argue that from a strict economic point of view, there is no return on investment. They make the other argument. They feel that the Crown may be able to assume the investment, and there might be a gain because the Crown can write off societal costs. In other words, if we do it, and we create some employment, and we're not putting money out on the social service side or on the unemployment insurance side, then that can be deducted from the investment in the first instance. It might make sense there. I don't know whether that's true or not, but I do say that we need to develop some policy that will allow us to get on with it.

The other thing we need to talk about is the economics of it. I'm not certain how widespread the applicability is in B.C. There needs to be some work there. I would like to be able to get a heck of a lot more for our wood products than we currently obtain. If you can't generate the money that you require for that investment program from the harvest and sale and manufacture of the product, then I guess the question you have to ask yourself is: should we do it simply because it's the right thing to do? In other words, should we draw money from sources other than the basic wood supply itself?

I hope I've answered the member's question.

W. Hurd: Just referring briefly to the Forest Resources Commission and the chairman, Mr. Sandy Peel, I am aware that there are some dramatic changes suggested in the tenure system in the province and in the allocation of wood supply. In my reading of the estimates, it would appear that the revenue estimates for the ministry are projected to rise in the current fiscal year. Is that the result of any anticipated change in tenures or in wood supply allocation? The estimates would indicate that we are seeing an increase in revenues. I am just a little bit confused, if that's the case, as to where that money is going to come from with the industry in the depressed state that it's in.

Hon. D. Miller: The answer is no. We have some confidence in the industry. I certainly wouldn't want to be all doom and gloom when it comes to discussing the forest industry in British Columbia. There are certainly producers out there -- sawmillers, harvesters and others -- who are making good use of the resources of this province, are providing jobs and economic benefits in communities and are selling products into a market where they make money.

We have, however, been through some pretty tough times. That's not entirely predictable. Certainly the countervail issue is viewed as a very serious threat. I take that very seriously in terms of what could be the negative consequences and the fact that the countervail action is so patently unfair. If the member would go back and look at some previous reports from the ministry and at some previous estimates, he will note the dramatic rise in revenue obtained from the forest industry, primarily from increased stumpage, and the fact that we shed an old program called section 88, whereby the Crown essentially paid for road building and reforestation, and made those an obligation of the licence-holders. There has been a massive increase in revenue obtained from the forest industry. That was a direct result of the 1986 countervailing-duty action brought by the United States.

[3:30]

It's so patently unfair for the U.S. to be once again alleging subsidy when, in fact, we fully introduced the measures that they wanted us to introduce in 1987. By their own testimony, having done that, we were not subsidizing in any form within this province. Those revenue measures will remain in place. That's why I'm baffled when I deal with people in the U.S. who continue to allege subsidy.

But the revenue side is not related to the broader issue of the tenure system. I'm aware of the recommendations made by the Forest Resources Commission. I have been very careful in my remarks concerning them. I have not embraced the report, for a variety of reasons. In dealing with the major tenure-holders in this province since I have been the minister, I have advised them that it's my view that the status quo in this province cannot prevail, for a variety of reasons. I had previously indicated my unhappiness with the distribution on the industrial side; I thought that we had skewed the distribution. As much as possible I'd like to see the marketplace as the regulator and the price-setter. We'd got to a position in this province where that was not happening. So we have to look at the issue of tenure and the issue of our domestic system obtaining resource rents for that particular resource.

But in doing so -- and I think the hon. member would agree -- we have a responsibility to do that in conjunction with the major players in the industry, both large and small, and we have to undertake that review so that it causes the least possible disruption. The last thing we need in this province, having gone through the gut-wrenching debates with respect to land use and having gone through the very traumatic issues of the countervail, is to simply charge in like a bull in a china shop and say we're going to make everything right that's been wrong. If you take that approach, then 

[ Page 1404 ]

you're only going to cause further economic upheaval. When that happens, those who really pay the price are the people down in those communities in B.C. working in those mills or in the bush and relying on those activities for the economic well-being of their communities.

We do intend to approach it. We intend to approach it in an open manner with a timing that is suitable, bearing in mind that it is a very difficult issue that should have been addressed some time ago and needs to be looked at very carefully.

W. Hurd: Just returning briefly to the revenue picture, is in fact the revenue projected to go up for the current fiscal year in Forests? I realize that people like to call into question the Liberal research these days -- whoever got that impression? -- but our reading is that there's been a increase in revenue of some $66 million projected for the current fiscal year. The issue of whether or not the revenue is actually raised raises some other interesting points, but maybe I could have that confirmed one way or the other first.

Hon. D. Miller: Well, yes, going back to it, we are projecting revenue increases on timber sales, on the small business forest enterprise program; and it's our expectation that the second quarter.... I think there's been some bearing out of that most recently, although it's been a difficult year because of the countervail issue. There's been some difficulty on the market side; it's tended to fluctuate more rapidly than it normally would because of these unknown factors. There was a rush of buying earlier last month and prices went up considerably. They then tapered off again, and most recently -- and I don't know if the hon. member may have seen some of the press reports -- there has again been a rush on the order side.

It's been fairly erratic, but nonetheless we've seen some growth on that side, and so we have forecast some relatively modest increases in growth during the second quarter and the rest of the year. That accounts for the revenue increases. The specific numbers you cited were some $60 million, and we're looking at not quite that, but I believe we're looking at some $23 million; in that neighbourhood overall.

W. Hurd: With respect to stumpage revenue, we're projecting a significant increase for 1993 over 1992. Does that $23 million figure you've indicated assume stumpage revenue increases as well?

Hon. D. Miller: Yes, hon. member. We're looking at some areas of increase and some of decrease -- increases on the non-competitive stumpage; in other words the tenured stumpage. The member may be aware that the system in British Columbia, under the old agreement which we're still following in practice even though that agreement has been terminated, calls for adjustments to be made quarterly based on sales in the previous quarter, so there are quarterly stumpage adjustments made in the province. Our forecast, which is aligned with and extrapolated from growth forecasts, would see an increase in the total billings on the non-competitive stumpage. There's some increase on rentals and fees. We are forecasting some increase on the small business program upset stumpage. We don't forecast an increase -- in fact, perhaps some decreases in other areas -- but, on balance, as I indicated, we're forecasting a growth which would see an increase of slightly less than 3.5 percent in terms of the percentage change when I look at the total revenue side.

W. Hurd: I'm still a little bit vague about the stumpage revenue increases. Our reading seems to indicate either a large increase in stumpage rates during the fiscal year or somehow a massive increase in the harvest level, which we know isn't going to happen.

With respect to the harvest level for regulated timber in 1991-92, our figures indicate that the annual allowable cut was approaching 75 million cubic metres, while the actual amount of timber harvested that corresponds with this figure was only 64.85 million cubic metres. I understand that this information was supplied by the ministry itself. We understand that the commitment level of regulated timber for '92-93 is expected to be between 72 million and 73 million cubic metres. According to the five-year forest and range resource plan, the government expects the harvest level to approximate the commitment level over the program period. As I mentioned, are we assuming revenue increases based on increases in stumpage during the current fiscal year, or are there increases in the cut in some areas of the province? I'm having trouble rationalizing the seeming discrepancy in revenues and in cut.

Hon. D. Miller: Other than the increases that would come about in the manner that I indicated -- in other words, the quarterly adjustments -- there are no programs to increase non-competitive stumpage. The variance in the harvested volumes is really as a result of economic factors. On tenures, companies have the flexibility to harvest to plus or minus 50 percent in any given year of a five-year plan, but over the five years of the plan must be within 10 percent of the annual allowable cut established in the initial management working plan. It's not uncommon to see a variation at a time when the market side is down. If you track that over time, you will typically see that an increase of prices and volumes on the market side will see an increased level of harvesting. But they must be within the target over the five-year period.

I think, hon. member, that that explains your question. There are no plans to increase non-competitive stumpage beyond the system that is currently in place. Any increases would come through increased volumes and the quarterly adjustments that are made.

W. Hurd: Just a brief question about the five-year range and resource plan. The $10 million special fund that is being shared by the ministry is, I understand, being split between Tourism and Energy and Mines, not just between Forests and Environment. Is that the special fund to which you were referring earlier? Are there other ministries that share in the revenue?

[ Page 1405 ]

Hon. D. Miller: I indicated earlier that it was a fifty-fifty split. In fact, there's a fifty-fifty management of the fund between my ministry and the Ministry of Environment, Lands and Parks. Given the thrust of that and the need to do some better inventory on those other values, Tourism would be involved in that exercise.

W. Hurd: Just another quick question regarding the $10 million fund. In the ministry estimates are you guaranteed a certain amount of that funding during the current fiscal year, or is it a situation where the ministry has to apply for funds or give a project list? The ministry having access to the funds is of considerable importance when we debate whether the budget for inventory in the overall budget is actually increased. Is there a figure that we're looking at in terms of the ministry's access to this $10 million fund?

Hon. D. Miller: I can't give you a number here, but I want to reinforce the need to plan on an integrated basis. The harshest criticism that has been levelled in terms of the forestry debates we've had in B.C. is that we don't account for all of the values that are contained within our forests and that we have to manage those forest lands not just with one or two values in mind, but to determine what the range of values is and, beyond that, how we can use those to benefit society.

[3:45]

The fund is managed by this ministry and the Ministry of Environment. I can't give you a precise dollar breakdown. The notion behind the fund, the establishment of the Commission on Resources and Environment and the Cabinet Committee on Sustainable Development is integrated resource management. All the players have to be at the table. Decisions that we make in forestry have impacts in Environment, in Tourism and for water, and we need to have those people involved in the program. At the end of the day, similarly, the program that would see 25 Ministry of Environment biologists established within 25 district Forest Service offices around the province will lead to a better planning capability. That's really at the heart of the issue of forest land management planning -- to have all of the players. We've also made some major commitments with respect to the public.

That's the premise behind the fund. In terms of the precise details, that's an ongoing management issue that is being worked out between people in my ministry, the Ministry of Environment and other ministries as well who feel that they have some bearing or some stake in terms of the issue.

W. Hurd: In view of the fact that 13 ministries have some overlapping jurisdiction on forest lands in this province, no one could argue with the need for further integration.

Since the minister did mention the Commission on Resources and Environment, perhaps I could ask a series of questions about the role of the commission. There has been a generous funding allocation to its work during the current fiscal year. There seems to be a growing perception on the part of the public that somehow the areas that have been set aside, particularly the log-around areas and the parkland study areas, are somehow going to be considered directly by the commission. That isn't the mandate of the commission. I'm just wondering about the financial commitment of the Minister of Forests to this commission and exactly what the ministry anticipates it's going to receive from the Owen commission. Are they going to provide reports on an ongoing basis, an annual basis or when the work is completed?

Hon. D. Miller: My sense about the commission -- I want to give you this in all frankness -- is that their primary mandate is process. If you look at the history of Mr. Owen's decisions when he was the ombudsman -- in particular, a couple of decisions, one relative to the use of pesticides and the other on integrated resource management and dispute resolution mechanisms -- Mr. Owen himself is very cognizant of the process. I also think that at the heart of many of the disputes in this province is a lack of trust, if you like, or a lack of public confidence about the process.

So in a sense Mr. Owen and the commission's prime responsibility is to develop new processes that fit for British Columbia. At the same time, having recognized that we have evolved to the point where there are a number of very contentious areas in the province, Mr. Owen will be reviewing those contentious areas. He will be reviewing all of the information that has been supplied with respect to them and the processes that have been used to arrive at certain decisions -- in some cases, I should say that decisions have not been arrived at yet -- and will be making recommendations to government. Government will then be in a position to make decisions.

Mr. Owen feels very strongly that recommendations from the commission should be made available to the public, so there will be an opportunity for the public to know what specific recommendations the commission has made with respect to any particular area.

I just want to add that I think we should not try to confine Mr. Owen's commission too tightly in its work, nor should we try to confine too tightly or draw absolute lines with respect to the relationship between the Ministry of Forests or the Ministry of Environment and the commission. We are evolving, and I think there's a need to be in constant communication. Certainly that's the message I have conveyed to Mr. Owen and to my staff and in meetings involving a broader group. We need to be in constant communication with respect to our respective roles; this process, as do all processes that are initially started, tends to have an evolution.

There may be precise questions that there may not be absolute answers for. But in the broader context, the commission is absolutely fundamental to examining the land use planning process, to making recommendations to government on that in the larger context, and also to examining areas on Vancouver Island and in the interior that we have in some cases deferred, so that we can make some final decisions with respect to those areas at the end of the designated time-frame.

It's a bit of a new thing and long overdue. I think it's well accepted by all sectors, and it's going to require a 

[ Page 1406 ]

commitment not only on the part of my ministry and the officials in my ministry, but of all the other ministries that have some bearing on these issues, the interest groups with issues at stake, the companies, the working people represented through their trade unions, and organized groups with a strong interest or perhaps a prime mandate to deal with issues such as wildlife, recreation or wilderness. All of us collectively have to bring our best will to the table to make this thing succeed.

I think the will is there, I think it will succeed, and I think that at the end of the day, with an improved public process, we will have regained a degree of public confidence, which is really at the heart of a sound government.

W. Hurd: There are a number of issues regarding the Commission on Resources and Environment that I'd like to canvass. Some of the questions could probably be more appropriately addressed to Mr. Owen himself. As it pertains to the Ministry of Forests, I note from the general terms of reference and duties for the commission that (1) is: "To independently and publicly advise cabinet on legislation, policy and allocation decisions related to all land use issues and processes in British Columbia." I notice, however, that Mr. Owen has said publicly that it's not his role to mediate or mitigate individual areas of dispute in the province or specific issues like the Carmanah or other so-called hot spots in the province. He's made it abundantly clear that it's still going to be up to the various ministries to make decisions on those individual areas. Can the minister assure the province that while the Owen commission is completing its work, decisions on land use matters within his ministry will not grind to a halt, and that we'll still see decisions being made from a forestry perspective for the benefit of the people of the province?

Hon. D. Miller: Yes, we do intend to.

I want to go back and say that if this process is to work -- and it's for British Columbians that the benefits lie -- it is extremely important that my ministry has a good working relationship with the Commission on Resources and Environment. We will still make the daily decisions with respect to forestry issues. It may be that some of those might result in some contention. That's unpredictable.

We have also said that where, in our judgment, it's important that the commission be fully apprised of what we intend to do -- and we're very sensitive to this -- we will consult with the commission. We have no wish to head off on our own. We're very sensitive to the fact that the commission has a particular mandate with respect to process, and we need to have that good working relationship. My staff know that they have to consult. We will make the routine decisions that we always make. As I said, that has been an ongoing process.

I don't think anybody can say that since the establishment of the commission we've made decisions or held up making decisions because of the commission, with the exception of those areas that were outlined as contentious by myself and by the Minister of Environment, Lands and Parks. We intend to do our job, bearing in mind the sensitivity of land use planning and the fact that the commission does exist. It's important that they understand what we're doing as well.

W. Hurd: To continue to canvass some of these issues raised in the general terms of reference, I note item 3: "To ensure the effective, integrated management of the land and natural resources of British Columbia through the coordination of comprehensive natural resource inventories; impartial expert and scientific data and analysis; the proper consideration of economic, environmental and community interest; the land use planning and management of local governments...." Returning to (a) and (b), the comprehensive natural resource inventories, is it your anticipation that the commission will actually be engaged in these types of activities, or will they by receiving this information from the Forests ministry as it proceeds through its silviculture and inventory activities?

Hon. D. Miller: It's my information, and it would seem logical as well, that the information is obtained through the line ministries. Mr. Owen will naturally want to look at the information-gathering process and the information itself. He may want to consider whether it's of sufficient quality that it may need to be looked at again. But the information would be supplied from the appropriate agency.

With respect to the general issue of forest land management planning, although there have been difficulties and although our systems that were established many years ago did not really take into account some of the demands currently being made with respect to preservation of particular areas or other issues, it's not all bad out there. The Ministry of Forests takes its responsibility extremely seriously to plan activities on that forest land base. If you peruse the estimates book or go out to any district office in this province, you'll see how seriously we take it. We plan for wildlife.

Just to illustrate, I commend the very capable people in the Cranbrook district office, where I attended the opening of an expanded office. The displays that the people in that district office set up for the local people and the schoolchildren went right across the board in the full range of areas that the Ministry of Forests manages and, believe me, takes extremely seriously. In some areas we are acknowledged world leaders. It's my fervent hope that if we do our job right, we'll be acknowledged as world leaders in the area of forest land management. I think we really have that within our potential.

[4:00]

We manage for wildlife. We manage for range. Some of the most difficult issues in this province are managing the interaction between range, wildlife, timber and water -- extremely complex management issues carried out by my ministry in conjunction with other ministries like the Ministry of Environment, Lands and Parks. We put out fires for wildlife sometimes, not necessarily to save trees but to benefit certain areas of wildlife habitat. We have a recreation program that is the best-kept 

[ Page 1407 ]

secret in British Columbia, in my view. I forget what it is now -- maybe somebody could tell me -- but it's a very modest budget. We manage a recreation program in British Columbia that accommodates 40 million visitors per year. It's bigger than our parks system -- an outstanding program managed by the Ministry of Forests. When you look at the areas of silviculture and harvesting, there is some outstanding work being done in this province by the Ministry of Forests and by the Ministry of Environment.

I really think that we need to acknowledge areas where we do well. After all, if all we do is be negative and criticize.... Over 4,000 men and women work for my ministry, dedicated British Columbians who are out there trying to work on behalf of the public and protect the public's interest. They're no different from you or me; they care about this province. They need to be given some encouragement when they do a good job. Believe me, there are many areas in this province where they do an outstanding job. [Applause.] I'm pleased that some of the members opposite recognize that.

In some ways, perhaps, we'll feel our way with respect to the commission. We will provide the information we have within our ministries. We will leave it to Mr. Owen, as is his responsibility, to act in an independent fashion in evaluating information and seeing where there may be some deficiencies. He has gathered a very able staff from a wide variety of disciplines and backgrounds -- some from large resource companies and some from the trade union movement. Some were from my ministry, and I'm sorry to see them go, because they were very outstanding and capable people. He has gathered together a very competent team of people in the resource management field. He's a very independent an able person himself. I'm sure if he feels that some of the information we have is deficient, he won't hesitate to tell us, and we won't hesitate to try to improve the kind of information that we give him.

W. Hurd: I certainly share some of the minister's hopes and praise for the commission on resources and the economy. There are some disquieting notes, though. I refer specifically to an open letter which Mr. Owen sent to various stakeholders on March 11, 1992, in which he points out:

"British Columbia is perhaps the world's most extraordinary piece of real estate, and we have a responsibility to manage it wisely. We have failed to do so in the past through our carelessness and our greed. As a result, we have depleted our natural resources and degraded our environment, putting the health and wealth of our society at risk. Confronted with this danger, we distrust our governments and dislike each other; we must change our ways."

There's not much left to say. I'm sure some of the minister's own staff come in for a mention in that general sweeping statement.

Returning briefly to the commission and its work, will the commission advise the ministry of how it intends to proceed, in the way of what hearings it will hold? I assume there is an ongoing dialogue with the CORE group, particularly as it pertains to the log-around areas on Vancouver Island and how swiftly they're dealt with. As we know, the disagreements on those particular hot spots are not likely to go away. I'm sure that some on the other side of the fence on Vancouver Island would agree wholeheartedly with Mr. Owen's opening statement in his open letter.

Hon. D. Miller: First of all, I'd like to correct the member -- not an admonishment -- and simply remind him that it's the Commission on Resources and Environment. I believe you said "the commission on resources and the economy."

The member has really confirmed what I had previously said. It is absolutely fundamental that people in my ministry, or any ministry, who have some bearing on the work of the commission realize that it's a two-way street. There needs to be open communication between the commission and the ministry. If there's any suggestion that what we might be proposing to do would have some bearing or be of some interest to the commission, we have a responsibility to advise the commission, and we will do that.

In the very short time that has elapsed since the commission was established, I believe that Mr. Owen has been working extremely diligently to attract the capable staff that I talked about and to establish a relationship with the ministries. In fact, I've already indicated that a couple of the staff Mr. Owen has hired come from this ministry.

We need to communicate. It is absolutely essential. I know there may be times in the future when incidents might arise where the commission will be unaware of something that my ministry has done, or my ministry may be unaware of something the commission has done. We're human, and those kinds of things happen. But we are making a very honest and sincere attempt to maintain a very good two-way dialogue. If we can do that and if we get the kind of broader cooperation that I talked about earlier between the interest groups, Mr. Owen's commission will be viewed as a success.

Again, as someone who has been involved with government for a long time, at the heart, I go back and say that what keeps our system going is the degree of confidence that the public has in us as politicians. I'm not saying that any one of us is more or less virtuous than the other -- but in us, collectively, as politicians. It is amazing, when you actually think about the democratic system, how important that is, and that without the trust in the system and in the men and women we elect as representatives, our system soon breaks down. We understand that, and we will do our best to work very diligently to move forward and gain more public confidence and to resolve some of these issues that have been outstanding for far too long.

W. Hurd: I suppose there's not much point in revisiting too many other issues on the Commission on Resources and Environment, since there have been no hearings held yet. We only have the terms of reference and a rather excellent board of directors that certainly, as the minister has indicated, bring a wealth of experience to the job they've been handed. Some would say it's a job that they will need all their experience to handle. The Liberal opposition wishes the minister and the Commission on Resources and Environment good 

[ Page 1408 ]

luck, certainly as it pertains to some of the hot spots on Vancouver Island.

Maybe I can return briefly to a general discussion on the budget and, in particular, some of the issues surrounding the forest resource development agreement which, as the minister knows, was hailed a few years ago as a major commitment to reforestation in this province, involving the cooperation of two levels of government -- the federal and the provincial. Our reading of the forest resource development agreement is that there was a projected increase in the second year of the program of some $9 million. In reviewing the estimates, we see that that particular increase is deferred. We're wondering where the increase was deferred to and when it will reappear. We're wondering as well about a few other issues pertaining to the forest resource development agreement. Have any new agreements -- or existing agreements -- been reached with the federal government? Is the minister predicting any cuts in the funding under the forest resource development agreement?

Hon. D. Miller: I suppose it depends on how you phrase it. It's going to be spread over five years versus four, so there is naturally a reduction in the annual amount. Another way of looking at it perhaps could be to characterize it as a deferral. Nonetheless, that is what's happening. There is $24.5 million, as the member will see in the estimates book.

W. Hurd: In terms of the research budget, we've noted that some research was funded through the forest resource development agreement and some through the forest renewal initiatives program. We note that both those programs plus the budget allocation for forest renewal have decreased. Is this sort of a triple financial whammy from Treasury Board, or is forest renewal in this province not a real priority in the coming fiscal year?

Hon. D. Miller: Forest renewal is a priority; there's no question about it. I was being scrummed outside before I came into the House this afternoon, and a reporter said: "You could really use three times your budget for forest renewal." I said I'd be quite happy to get it.

But we all know, as legislators, that the budget is arrived at through a series of taxation measures and revenue from various sources, and that there are limits to the ability of both the taxpayer and those revenue generators to contribute, given some of the economic constraints we face.

In looking at the issue of silviculture, we have approached it from a fundamentally sound basis. That is that our primary obligation is to establish new forests on areas that have been harvested or burnt or for whatever reason denuded. We still have some catching up to do with respect to our backlogged NSR lands. I'm not sure what the absolute number is, but between 200,000 and 300,000 hectares of NSR lands still need to have a new forest -- a young forest -- established on them. Getting the new forest in the ground is the number one priority; and the number two priority is going at that new forest in its respective stages to see how we can increase the kind of growth and yield we talked about in some of our earlier discussions.

In talking to people around the province who have a strong interest in forestry and forest resources, I've gotten this sense that they were very pleased that the government was able to maintain the budget it has for the Ministry of Forests. It does not allow us to do all of the things that we would like to do. We would certainly love to have lots more money, but the facts of life are that lots more money is not available. My staff are working very hard with what they have. If we have to stretch out a program or defer over a longer period of time, then so be it. It may take a year longer or whatever, but the program will be accomplished.

Those are the kinds of ordinary constraints that every member of cabinet has had to face with respect to the budgeting process and the final impact of what we do in establishing a budget, what impact that has on the men and women of British Columbia and their ability to pay their share. Those are pretty tough decisions. I know the members opposite appreciate the process. As I said, I'm pleased in the larger context to have maintained a budget that allows me to do most of what we had targeted for in the previous year.

[4:15]

W. Hurd: In terms of the provincial commitment to the forest resource development agreement, I assume there is a requirement as to what type of projects are eligible for funding, and that's spelled out in the agreement.

Hon. D. Miller: I'd have to get you some details. The primary emphasis in FRDA 1 was backlog; the primary emphasis in FRDA 2 was stand-tending. In terms of the specific programs, I can either undertake to get that later in the estimates, or I would be happy to provide the member with an itemized list from my ministry, whichever he may prefer.

W. Hurd: Just visiting silviculture briefly, in 1988 the past government decided that basic silviculture should be the cost of the licensee, and now I believe they have to develop a ministry-approved silvicultural plan and follow it through. Does the minister know the total cost of this basic silviculture, which is now carried by industry? When will the Forest Service be free of its pre-1988 outstanding commitments? How much of the current budget is pre-1988 commitments on basic silviculture costs?

Hon. D. Miller: In terms of the absolute detail, I don't have it. By the way, that was a move that was long overdue to have licence-holders accept the basic cost of reforestation. It would depend to a large extent on the kinds of areas that are being operated in. You're looking at the cost to industry of accepting that regime. In terms of the individual operator it obviously depends on the nature of the area that you're working in and things like that. We will try to get a global cost here somewhere. I can't get it for you out of the information I've got. Again, any gaps in terms of detail that we encounter in 

[ Page 1409 ]

the estimates I would be more than pleased to make notes of and provide you that by letter after the estimates.

W. Hurd: In terms of the inventory of provincial forests -- and as far as the strategy goes -- since old growth is basically a known commodity, is the emphasis going to be on assessing second-growth stands? If so, is there any plan for a more specific growth-and-yield inventory of second-growth forests, because we know that they grow at different rates? It would seem, in allocating funds, particularly out of the $10 million special fund, that special attention should be paid to second-growth forests in the province. Are the second-growth areas going to be a priority in terms of this inventory of provincial forests?

Hon. D. Miller: They will be more and more a priority. I should say that the research branch of the ministry does do extensive research on those areas, as well as research done at the academic level and by private companies. There is a fair degree of research. I think the issue is really economic, as we discussed earlier, in terms of how you make that investment. There's a lot of research, and that is a constant and ongoing process.

Just to give you some small example of the pretty clear impact of stand-tending, when I was in Cranbrook, one of the displays that the silviculture people in that district office had laid out was to show three examples of, I think, a larch, all the same age and all of different sizes. One was a very stunted, short tree that had mistletoe on it, and this obviously constrained its growth. Another was very long but nonetheless very small in diameter. The other one -- and I think they were all in about the 20-year age category -- was a fairly substantial, good, sound tree. This was to demonstrate, in terms of forest land management, that it's often preferable to get those diseased trees out, to do the kind of spacing that allows higher growth rates or greater mean annual increments.

There's a body of work available that can tell you what you can expect in terms of growth rates using certain incremental silvicultural techniques. I think we've got a lot of information there that would allow us to proceed. What we don't have a lot of is money or a policy that would encourage private investment in that kind of activity.

W. Hurd: To continue canvassing some of the expenditures and issues in the budget, you mentioned that there was an increase in revenue projected in the small business program. Are you anticipating that the program will be expanded, or is that increase assuming an increase in basic stumpage under the small business enterprise program? If it's a change in the stumpage formula, is that an across-the-board increase for the entire small business program or just for certain types of licences?

Hon. D. Miller: We're looking at essentially the same volume. We anticipate that increased competitiveness for the timber being put up for bid will result in additional revenue.

We talked earlier about stumpage. I clearly indicated that non-competitive stumpage increases as a result of the formulas to establish stumpage that we have now. It's nothing new; it's just the existing formula. Obviously that would apply to the basic stumpage that we calculate for small-business timber sales as well. That, coupled with the normal.... It is a very aggressive program. There is aggressive bidding for timber sales. We anticipate that kind of growth and revenue increase.

W. Hurd: Just a quick question about remarks the minister made earlier on the need for an industrial strategy in the forest industry, and in particular the enhancement of value-added opportunities and secondary manufacturing. Are there any program funds available under the ministry operation to work with the Ministry of Economic Development, Small Business and Trade with regard to identifying opportunities in the various timber supply areas and possibly to expanding some aspects of the small business program to encourage greater investment at a time when, as we know, the economy is in somewhat of a slump? It's to the advantage of the Ministry of Forests to foster this type of economic development. With his current budget, is the minister planning to identify any opportunities to work with the Ministry of Economic Development on these types of issues?

Hon. D. Miller: Certainly I have expressed very strong interest in looking at the industrial side of our forest sector. My trip to Japan and Korea convinced me -- I've talked about it before -- that there are increasing market opportunities. I don't think British Columbia suffers from a shortage of entrepreneurs who are able to use their talent and ingenuity to develop products. I talked about the window and door manufacturer in the Prince George area, and there are many others throughout the province. I have had some discussions -- not enough at this point -- with people from the B.C. Trade Development Corporation with respect to how we can assist those, in some cases, very small manufacturers to have access and information about international markets.

I was very pleased to take a well-balanced group of people on my trip to Japan that represented the largest industries -- MacMillan Bloedel -- and that also represented the smallest industries -- an individual who manufactures log homes in Williams Lake. All of them said that they thought there were greater opportunities in their particular sector. So we have made some commitments with respect to that. It's not directly my responsibility as the Minister of Forests, but I have a very keen interest in the industrial side. In the future, when we have more time, I want to travel and look especially at some of those markets so I know where some of those opportunities are.

We think that the smallest entrepreneurs probably need some assistance on the market side more than anywhere else. Our program 16.1 is a good first start in terms of encouraging the development of that sector.

[ Page 1410 ]

This is off the cuff, I suppose, to some degree, but I think that we need to start educating our public. I suspect that a lot of British Columbians don't think we have much of a value-added sector in the forest business, when in fact it's pretty significant. We have some of the best natural resources in the world. Our wood is second to none, and we've got some manufacturers producing the finest finished products that you will ever see.

There is a market out there, and we need to do what we can to assist. So I think the program or the approach that we've taken is the correct one. We will continue to do what we can to work with the private sector and through B.C. Trade and the Ministry of Economic Development to enhance opportunities for that sector. Those people know what they're doing; I wouldn't even begin to tell them what they should be doing or how to do it. They know that, but they could use some help on the other side.

W. Hurd: Revisiting some of the issues in the small business forest enterprise program, the previous government was convinced that small business enterprises could be fostered in this province with a licence arrangement that supposedly guaranteed access to timber to run these plants. As we know, the success ratio was somewhat uneven, partly as a result of the recession, but also as a result of the failure in some cases of the smaller entrepreneurs to follow through on commitments for plants and the actual value-added facilities they had originally proposed to the ministry.

Is the minister intending, during the current fiscal year, to monitor or to audit the success of the small business forest enterprise program in this province in order to determine that the plants the operators claimed would be built will in fact be built? Is there any plan by the ministry to look at the small business forest enterprise program -- in particular the licence arrangements -- and to strengthen it through the licensing arrangement or the tenure system in some way in order to secure the future of this particular value-added segment in the industry, which has had an uneven experience with the existing small business program?

Hon. D. Miller: I think there has been a relatively good experience. It's my sense that when you actively go out and develop policies specifically designed to give a leg up or to promote the shifting of direction -- I'm talking about a shift from a traditional high-volume commodity product to a more value-added type of product and a lower volume, obviously -- there will be failures.

[4:30]

It's the nature of risk-taking in our kind of economy that there will be failures, and I don't think there's anything wrong with that. When little kids get up on their legs, the first thing they do is fall over, right? I don't know if I can equate a child walking with the economy; that's rather unique. I don't know if anyone has tried that before.

Certainly there will be failures. But I'm satisfied that the program has induced some very sound enterprises and that it's growing and building. I cited the case of the Kamloops region, which now has value-added or remanufacturing facilities that produce products to the tune of about $100 million in total value and employs more than 500 people. If you really take the time to go around B.C. and look at some of these plants and the things that they're producing, whether it be log homes, windows or doors, they're attaining an extremely high value for the resource of the province.

It's to be expected that new ideas don't always work; there will be failures. But the program is fundamentally sound. Even though there are failures, the wood doesn't disappear. If we have allocated a sale and there has been an inability to carry through for whatever reason, because the person was too ambitious or their plans were not as well thought out as they thought.... By the way, we give those plans a very rigorous scrutiny; we don't want to set anybody up for failure. If there are failures after you've awarded a licence, I would only point out that it's the normal course of business. The wood then reverts back to the Crown, and we have the opportunity to put that wood out to other 16.1 sales and give other people the opportunity to do the same thing. I'm encouraged by what I've seen so far.

I have a strong commitment to that program. It's producing some very good results in B.C., and maybe it's time we started looking at showing off some of the things we do very well. I would like to think about a major exposition in Vancouver sometime in the following year that will allow all of these small manufacturers to gather in one place and show off the kind of products that we make and invite some people from around the world to take a look at what we do so well in B.C.

W. Hurd: I have some additional questions that I wanted to ask, but I note that the forestry critic of the third party has been patiently awaiting in chambers. He may have some issues that he wants to go through with the member.

L. Fox: It's an unexpected pleasure to have that courtesy afforded to me by the Liberals.

I just want to follow along in the small business program. One of my major concerns has been that the stumpage formula has not been as susceptible to and does not recognize the opportunities that may exist in order to add value to the sawmills. In my understanding of the formula, if a sawmill does add its value, that comes back and later adds value to the stumpage. If I'm not correct in that, perhaps you would correct me, but that seems to be my assessment of it.

Hon. D. Miller: I want to say that we charge a relatively high stumpage in this province across the board. The Americans are out to lunch in suggesting that there are subsidies. No question about it. I visited a mill owner in Prince George not that long ago. Here is a very sound operation, taking wood that is junk -- garbage that nobody else wanted to touch, small junk wood, which is found in pockets -- paying a very high stumpage. Reforesting. Their obligation. Very good, sound little mill, and they're turning that junk wood into finished-wood products -- all the things we want to do in this province. That operator is paying the kind 

[ Page 1411 ]

of stumpage.... The Americans couldn't do what he's doing; they're not smart enough. They wouldn't have the capability or the ingenuity to do what this operator is doing in northern B.C., perhaps in your riding. I want to say unequivocally that any suggestion that we use our stumpage -- our economic rent system -- to subsidize industry is baloney.

My own theory, and I'm sure it's not one that the industry would rush to embrace, is that we induce economic efficiency by having the right charge for the raw material inputs, and we don't do ourselves any favour by having low stumpage. It may have been appropriate at some point in terms of our early development, with the tremendous cost of accessing the interior and northern parts of our province and developing the infrastructure that would allow harvesting and industrial development to take place. Perhaps you could argue it may have been appropriate. But what forces economic change is some pressure. Your feet have got to be a little bit close to the fire; the trick is knowing how close.

That's why we can see value-added manufacturers developing more and more. But we still need to have industrial enterprises that can use the very low-value wood. British Columbia contains vast supplies of very low-quality wood. It's referred to by some as pulp quality. I know we can have debates about that; I know there are some people who, because of changing economic circumstances, are now using what was considered pulp quality to make finished wood products. That's a normal evolutionary process in the forest economy. We need to have those kinds of enterprises, whether they be pulp mills or medium-density fibreboard or whatever they might be, that can utilize low-quality fibre and make a product and employ people and provide the benefits to the economy that they do.

We need a variety of interests. Anybody who thinks that British Columbia has a single homogeneous forest all of the same kind and all capable of being made into the same product doesn't know what they're talking about. We need to have the ability to maintain the right economic rent, and we need to have an industry that's capable of using the profile of our forests. I really regret, in terms of the economic debate, that our friends in the United States -- and I consider them my friends; we share this continent and should be friends and have good trading relationships -- sometimes look at British Columbia and make a dangerous mistake of oversimplification.

L. Fox: I guess I did give the minister an opportunity to get up and sound off against the Americans. I certainly take no issue with the words that he chose to use; I support what he said. But I guess my concern was....

Maybe I can give you a little background on my perception of the industry, particularly in the northern interior, as at this point I don't really have an understanding of the industry in the south. In the interior it's been the smaller independent sawmills that have been the innovators in terms of getting a better value out of the wood. In the past, prior to the stumpage difficulties that have been forced on us by the U.S., there was some incentive for an independent to step out there and spend some money in terms of developing new ideas, new technology and so on, as did the sawmill in Vanderhoof that you just spoke of. There was incentive for him to do that. He was not immediately handicapped by an increase in the stumpage formula because he was now getting more value out of the product. But it seems to me that today the formula and the way it's put in place is kind of counterproductive to those new ideas and innovations that would add more value to the product.

I well understand the 16.1 and the category 2 area of the small business enterprise program and what it has done. I understand some of the difficulties that those entrepreneurs have faced. But I really think it's important that the stumpage formula somehow recognizes the opportunity for, particularly, an independent sawmill to be innovative about what it achieves out of that raw forest product without immediately being penalized for doing so by having a stumpage increase. That was the issue that I was trying to address.

Hon. D. Miller: I think the member is reinforcing what I've said. There needs to be some relative certainty. That debate over how much is always the difficulty and the dilemma that governments face, I suspect. We have to know what we're dealing with. I've already given you my general theory -- and I believe it to be the correct one -- that there's a direct relationship between input costs and the value you add. I don't accept the notion that low input costs provide any inducement to add value. They don't.

It points out too that it's a complex issue. One cannot apply something to one situation and then turn around and say that it applies equally to another situation. We've got to be able to be flexible in this province. What we want ideally is to utilize the resource in the most efficient manner; to plan the extraction of the resource in the best possible manner, consistent with maintaining those other very important issues, such as environment, wildlife and recreation; to have manufacturing plants turning that wood into products that are useful around the world; and to be able to sell them at a cost that allows them to compete in the international marketplaces, which they must do. It's a complex business and begs for some understanding, which is why I get so angry when I deal with issues like the countervail, because I think there has been a complete lack of understanding. It's why I occasionally -- only occasionally -- get angry about some issues in B.C. where I think there has been a failure to understand the situation.

I know you understand the situation with respect to your constituency and the mill there. I know the difficulties. I met with those people last week. I will continue to meet -- as I've done, really, with all sectors in the province since I've been the minister -- to listen to their concerns, to act where I can and to be pretty straightforward in saying where I can't act. I will continue to work with people in your constituency and others to try to resolve these kinds of issues.

[ Page 1412 ]

L. Fox: I want to ask a question with respect to the small business program itself, a program which I really believe is misnamed. It should be called the surrogate program or something similar. I'm extremely concerned about us and about the climate that the program has now developed into. The intent of the program initially was to give entrepreneurs and individuals who wanted to get into the logging business an opportunity to bid on smaller stands of timber, which they could log and market to the local mills. In some cases mills in another community were prepared to pay a higher dollar for it. But it now appears that it's an extension of our present quota section, in that if you don't have a large sawmill that comes in with its arm around you, helps you bid and guarantees you a price at which you can afford to bid, then, as a small business person, you don't have an opportunity to take part in that process.

I would suggest that the surrogate bidding part of that is something that industry would much rather I didn't speak about. But I have talked to a lot of small loggers who are running out of wood, and they're running out of the opportunity to go to work, because they don't have, and can't get, an arrangement with a larger sawmill.

Has your ministry looked into this program? Do you have any recommendations or suggestions as to how we might really make this a small business program?

[4:45]

Hon. D. Miller: There have been a couple of reviews of the program. I'm mindful that the member who preceded you used to wax eloquent about the small business program and the small logger, and I think that Mr. Kempf probably had a fair following as a result of his endeavours and his statements about the small logger in B.C. Like all members, I was so disappointed and upset to see that former member from northern B.C., who purported to defend the forest industry of this province, sitting in front of a congressional committee in Washington, D.C., attacking British Columbia and the men and women such as the ones who work in your constituency.

Interjection.

Hon. D. Miller: But he used to talk about this issue. Maybe I digressed.

Even if you were able to identify surrogate bidding, and let's say you were able to do that -- if you've got any good ideas, let me know, because I don't know if it's possible -- you would still have the same result. People would still bid up the timber to its highest degree. I suspect that there would probably be no variation.

[E. Barnes in the chair.]

Where does the timber go? The timber goes on the market and presumably the highest bidder buys it. If that's the local mill down the road or in the adjoining constituency, and outside the timber supply area, ordinarily.... I know that the member is a free-enterpriser.

Interjection.

Hon. D. Miller: He wasn't arguing against free enterprise.

Normally that means you should sell whatever you're selling to the highest bidder. In the case of the Crown's resources, on the small business side, it would clearly seem to be in the Crown's interest, generally, to sell the timber at the highest possible value. Having sold it at the highest possible value, it sometimes follows -- but not all the time -- that it will then be used for its highest end use. From a theoretical point of view, it's not a bad program. I appreciate the feelings of some members of the small business community. I suspect that that is probably just a normal result of having competitive bidding. When you have competitive bidding for anything, on any given sale there's one successful bidder and there might be five unsuccessful. That's simply a fact of the available timber. If timber supplies were endless, I don't know how you could be competitive. You'd have to have some other system. I don't know if you can identify or correct surrogate bidding. I don't think it would make a difference in the overall scheme of things with respect to the end price that the Crown received on those bids. I'll leave it at that.

I think we've got some others, in terms of the shift, to the transition to the more value-added. We've got an industry that has evolved and has certain demands. We've got some other complexities and problems there in terms of that shift. We're trying to help that along through 16.1 sales. In terms of the direct-bid sales, in section 16 we realize a reasonable degree of revenue for the Crown. We spend a lot of that money going back in and doing the kind of good, sound forestry work, road building, engineering and silviculture that needs to be done, and by and large the program is viewed as a success. There are constant demands that we increase it. We currently dispose of between nine and ten million cubic metres, about 12.5 percent of the provincial annual allowable cut -- about 1,500 timber sales every year and about 2,100 firms and individuals registered in the program to bid on those timber sales.

L. Fox: It's too bad the minister chose to ignore the main part of the problem. I certainly was not arguing that you shouldn't get the highest return for the resource and that the market should be a closed market. That was not the intent at all. I was merely suggesting that under the present operation of small business, the small business man, unless he has large business as a partner, really doesn't have the opportunity to partake in that program. I don't think that was the intent of the program initially. However, I'll leave that at that.

With respect to the 16.1 program, which is a program that has seen some failures -- I think it has seen more successes than failures -- the thing to remember, and for members to remember, is that even if the enterprise that has a particular quota under this program fails, the wood is still there and available for a new entrepreneur to come along with new ideas and perhaps some better management and make it work.

[ Page 1413 ]

I think I heard the minister suggest that an avenue the economic and small business ministry might be able to follow in order to help this particular segment of his ministry would be a marketing arm of government to bring those kinds of value-added items to market, and to help create a market. Many of these entrepreneurs, while they know how to make widgets, have difficulty figuring out where they're going to sell them. In some cases people have actually manufactured items prior to having a market and have been unable to sell them. Do you envision any kind of coordination between your ministry and the Ministry of Economic Development, Small Business and Trade in helping to identify opportunities under 16.1?

Hon. D. Miller: Both the Minister of Economic Development, Small Business and Trade and I share a common view that we can expand that sector over time. I already indicated earlier that I have discussed it with him. I've discussed it with the people at the B.C. Trade and Development Corporation. I thought that we could offer some more assistance with respect to that marketing side. Government always has to be careful about where they come in and offer assistance. That's one of the trickiest policy areas there is. Those entrepreneurs who develop unassisted are generally stronger. If you look at some of the policy failures of government programs over the years, whether it's here or in any other jurisdiction, too much assistance is rendered. The individual or firm doesn't have the capability of doing it on their own. When ultimately government support is withdrawn, as it must be, it doesn't last. Nonetheless, we can do some more work on the marketing side.

It's also important to note that under the 16.1 program, these small entrepreneurs can form joint ventures, in some cases with the major companies that operate in this province. Clearly under that kind of arrangement they would have the marketing expertise -- maybe even the whole marketing system -- available to that joint partner to sell their products via that system. So there are other opportunities besides the government providing some assistance in marketing. Companies really should look at all of those. You might want to canvass the issue in broader detail with my colleague subsequently, since I don't have the mandate for B.C. Trade. We're quite aware -- and you're also aware -- that in the broader political context.... We talked about that in the campaign. Perhaps you might want to canvass that. I think we actually agree, whatever your question was.

L. Fox: One further question in that regard, something that's dear to my heart. Oftentimes when we look at markets, we look outside rather than internally. Quite often we could look at things like import replacement through opportunities. I speak right now of one particular mill that is actually...with the 16.1 wood. I think the minister is aware.... They hired ten handicapped individuals and produce things like survey stakes, the kind of things that could be and should be purchased right here in the province. But they are having extreme difficulty getting that cooperation from government sources in order to tap into the particular areas where they may be able to supply those particular products. Could I ask the minister to check with the other minister to see whether or not they couldn't work together on an import replacement agenda that lists the products purchased by the Crown and by subagencies of the Crown so that we may be able to build within British Columbia rather than bringing products into the province from outside?

Hon. D. Miller: I'd be quite happy to look into that. If you have some specifics, I'd be quite happy to discuss it with you to see where we might be able to do something. Obviously I can't make a commitment, but if you wanted to contact me, I would be happy to look at that.

There are actually B.C. manufacturers who produce almost exclusively for the B.C. market. You may be aware of one that was in the media not that long ago who was experiencing difficulty on Vancouver Island in accessing their raw material supply -- a company that makes cedar fencing, screens and those kinds of things and are sold almost exclusively within the province.

It's a smaller market; it's an operation of scale. I suggest that some of the offshore markets may be more lucrative in terms of the revenue that is generated. But again, if the member wants to give me some information, I'll be happy to pursue it.

L. Fox: I almost enter into this next question with some hesitancy, having heard the comments at question period, but I'm afraid I have to ask the question. Perhaps I'll give you the same soapbox that you can stand on to make the same spiel.

Does the 48 percent reduction in the annual allowable cut, as indicated by Mr. Peel, relate to what his understanding might be of what this government's policy is with respect to the doubling of park lands? Does he figure some impacts of the native land claims into this equation and what that might be on the forest resource?

Hon. D. Miller: I guess you'd have to ask Mr. Peel. I want to repeat, I really don't object to theoretical discussions about forestry issues in this province. In fact, it would be foolish to deny some of those discussions, because out of that kind of process come good ideas. What I object to and what Mr. Peel has said he objects to is that the article said the annual allowable harvest would have to be reduced by approximately 50 percent within a five-year period. There is no basis in fact for making that statement. When I chastised Mr. Peel for it and he said he'd been misquoted and the article was misleading, my chastisement dealt primarily with that kind of theoretical musing in that particular forum. We all strive for accuracy; we can't guarantee it.

[5:00]

There is no target. I've explained how the annual allowable cut is determined; I've explained the factors that are considered in arriving at that decision. I've explained that in the process thus far, while I have been the minister, the chief forester.... Maybe I should just back up a step and say that if you'd look at the Forest Act, the chief forester has the statutory obligation to set 

[ Page 1414 ]

the annual allowable cut. It's not me as the Minister of Forests. I don't wish to go back too far in history, but I suspect that there may have been times when the chief forester was encumbered. My message to the chief forester, who is recognized around the world as one of the foremost foresters, is: you do your job, and you won't have political interference from me. He's doing that.

There is no magic number; there is no target. Some people have suggested that the long-run sustained yield is a target. I've explained how that number was arrived at, what it means and how inappropriate it is to relate current harvest levels with long-run sustained yield numbers. In fact, I believe there's a least one timber supply area where the long-run sustained yield number is actually higher than the existing annual cut.

It's a complex business. When people make statements -- or at least the way they come out -- which appear to be fact, the difficulty is that you then spend your time trying to debate red herrings. There is no target in terms of the annual allowable cut. The annual allowable cut is coming down; there is no question about it. The percentage we will have at the end of a very long review process I can't tell you, because, as I explained the process, it's not something that I set. It's something the chief forester sets. But it will come down.

There will be less timber for harvest on an annual basis. We've got some problems on the capacity side, where we've clearly got excess capacity relative to timber supplies. Those are very difficult issues with the small communities. I recognize that, coming from a small community in northern B.C. It's not going to be an easy issue to deal with, but we know it's coming, so it allows us to get on with planning for those things.

L. Fox: Given the fact that the annual allowable cut is shrinking -- and we've seen evidence of that on a number of occasions over the past few months -- how do you justify the stumpage increasing from $438 million to $490 million?

Hon. D. Miller: I've explained what factors have led us to forecast the numbers we have on the stumpage issue. Is it out of line to suggest, if timber supplies are reduced and there is an excess milling capacity, that stumpage will be driven even further up? There must be some law of economics that dictates that. Supply and demand have an impact on price. I would say that as supply is diminished, price tends to go up.

L. Fox: One final question, and then I will defer to the House Leader for the official opposition. How does the minister envision that the 6 percent extra park land.... I'm not suggesting this is the position of government, but I'd certainly like to know. Those who are promoting it perceive that this would come, in many cases, from the 25 percent of the province that is presently designated as productive forest land. That would be a reduction. If the 6 percent were to be taken out of the 25 percent, you're looking at about a 20 to 25 percent reduction in that geographical mass of land. How do you perceive, should that take place, that we can maintain the AAC?

Hon. D. Miller: I want to take a few minutes around that issue of the plan the Premier unveiled last Wednesday -- protected area status. I remember arguing in a speech I made here in 1987, when I was on your side, that government should try to develop some leadership around the issue of parks and wilderness or designated areas. I argued -- it really was good advice to the former government, which they didn't take, and look where they are now -- that we weren't doing ourselves any service as government by not providing some basic leadership.

We have accepted, and I think the people of this province accept, the target of saying that we can achieve the 12 percent that has been generally accepted as desirable for putting your landscape in some protected status. It could be a park, wilderness area or ecological reserve; there are a variety of designations that we use in terms of land. But how do we get there? Do we sit with our shoulders hunched and ask when the next fight is going to occur, when the next confrontation is going to occur in whichever valley led by whichever group, and how will we deal with that? Or do we do in a systematic way the kind of planning that really hasn't been undertaken?

It wasn't this government but the previous government that initiated -- and I think that as the opposition we contributed -- the various strategies that have now come together in what's called the protected area strategy. The specific issue I was talking about at the time was old growth, arguing that we should take a more technical, scientific view of the issue, identify deficiencies on that basis, and try to apply that same kind of thinking to these other areas in terms of parks and wilderness. Officials went out and conducted a very intensive public consultation and a very intensive internal technical review to allow us at last to come out with a map and present it to British Columbians and say look, here is a map of British Columbia; here are candidate study areas -- and I stress "study." I don't want anyone to be misled that the boundaries they see on that map are the final boundaries that will be arrived at after the areas are studied, but clearly areas will be set aside. Here for the first time is a document we can all work off. We recognize that not every area is going to be without conflicts. Any time you try to change in a province that is fully allocated, problems do occur. We're here to try to mitigate those problems. But here's a document, and if we all work collectively and look at the processes we've established through the Commission on Resources and Environment, we will achieve our target.

I argue that that's leadership. I also argue that it will put B.C. at the forefront. We won't have to put up with so much of the kind of irresponsible criticism that we hear so often from the international quarter.

We can achieve that doubling. We've got a magnificent landscape. Then we deal with the issue of harvesting. The forest industry is in a constant state of evolution. How do we keep that industry supplied? I think the nature of that industry has changed. I don't know if any one of us can say what we think it might be 50 years from now. Particularly in hindsight.... I'm not old enough, but people who are old enough.... What 

[ Page 1415 ]

was it like 50 years ago? It was sure one heck of a lot different than what we have right now. That's the nature of industrial evolution: it constantly evolves. There are a lot of opportunities in terms of accessing timber supplies. There are areas in this province that are currently not in the operating forests, because they're considered economically inaccessible. They're not in.

We've talked about silviculture. We've talked about alternative harvesting systems. If my schedule will allow me to do it, I'm going to get out to see where they're using a balloon as an extra lift on a cable system for harvesting. We're seeing that kind of innovation developed more and more. It's a factor of economics, because wood costs have to come up too in order to allow that to happen. I don't think there's an end to the opportunity here.

Finally, we're going to see more and more of a trend over time to the kind of products that I described earlier -- windows and doors or piano sounding boards; a whole range of products. There's still going to be some commodity. There has to be; it's a big market. Look at the stuff we're selling in Japan now -- the finished products that are now being used in the Japanese housing market. We weren't doing that ten years ago; we're doing it today. More and more we're seeing opportunities.

Some of the wood I've seen in veneers, that in all aspects resembles a piece of solid wood.... The core is not the best wood; it's reasonably good, but it's covered with a piece of veneer from some of British Columbia's best old growth. You use that wisely. We will have all kinds of opportunities over the years to develop and evolve a forest industry in this province. I don't think there are limits.

We may not have every single answer to every specific question in detail about what's going to happen tomorrow or what's going to happen two weeks from now, but I can tell you, from a broad basis, the opportunity is there, the ability is there, the willingness is there and people are getting on with the job all the time, every day in British Columbia.

L. Fox: I wasn't going to ask another question, but the answer begs another question.

You talked about the harvesting within a prescribed area. You didn't really answer my question with respect to how the AAC would be affected by the decrease of 20 percent of our logging area should those parks come out of that 25 percent. I have some concern when you're talking about the modification. I agree that we have to get a larger value and be more diversified within the forest industry. But you have to recognize that 50 years from now, irrespective of where this province is at, there's still going to be a need for trees. If we're going to have a sustainable yield in this province, it's important that at some point in time we identify a mass of land so we can work out what the formula would be with some certainty.

[5:15]

Another point I'd like to raise is: in this diversification of the forest industry, we should be cognizant that the wages paid in these 16.1 opportunities average about $10 an hour, whereas your regular sawmill is closer to $20 an hour. It's those resource communities that presently enjoy that high level of salary. Unless we protect a land mass that can continue to see us operate within a sustainable yield framework, we're going to lose those opportunities. It becomes extremely difficult to build a house and use these doors and windows we're able to manufacture when we're only working for $10 an hour. It has some far-reaching implications, and I would like to see you address those.

Hon. D. Miller: Yes, some good questions there. You're absolutely right.

The wage issue is being dealt with. I think there's an understanding that you're not going to start a little value-added plant with a handful of employees and pay the top industry scale. I was heartened to listen to some of the small manufacturers, who tell me that in the total scheme of things, their wage bill is not their main concern.

When you factor in, in terms of the people we compete with, you have to consider cost right across the board. One of the things that's causing some change in terms of Japan, for example, is that their land and labour costs are much higher than they are here in British Columbia. So we certainly have a competitive advantage in terms of lower land costs and, I suspect, somewhat lower labour costs. I don't know what the average is for very efficient manufacturers, but I don't think that the wages have tended to dominate. Even in the B.C. fishing sector the wage bill, which is for reasonably well-paid unionized people, represents something like 15 percent. I'm hauling this figure out of the air from a meeting a couple of years ago. Because of our highly skilled workforce and because of the resource -- in that case, I was talking about the fish, but let's talk about trees -- we can sell our products competitively into markets where the wage cost might be considerably less than it is here. So you need to consider the range of costs that any manufacturer has. You need to consider what competitive advantages you may have with respect to the nature of the resource, and I submit that the nature of the resource gives us a reasonable competitive advantage.

I think we can progress and develop good-paying jobs. I'm no subscriber to a two-bit-an-hour job. I come from industry. I felt I was worthy of my hire and the labour rate they paid me, which was negotiated by my union. I think people need to be reasonably well paid. I'm not responsible for this, but I have a broader concern, as maybe other people of my age should have in this province, that our children certainly haven't had the same opportunities that we had. I don't know if they will in terms of some of those wage levels. I don't know how people survive, quite frankly, or how they get by on some of the wage levels being paid in this province. And at the end of the day I don't think it does us that much good economically to have that substrata of extremely low-wage people.

I want to talk about timber supplies, because that was raised as well. We calculate a 4 to 5 percent impact as a result of the plan that was laid out on Wednesday in terms of the total annual allowable harvest. But you 

[ Page 1416 ]

know, speaking of 50 years from now, the Sierra Club's going to have to issue a new map, because the one they have now, where it's all white, would be even more misleading. We have some of the most magnificent second-growth stands of forests that you will find anywhere in the world. I was struck by that fact when we made our announcement in Lynn Valley, in the regional park there. It happens to be an area that I....

An Hon. Member: A Liberal riding.

Hon. D. Miller: Well, it may be a Liberal riding. I'll have to think about why that might be a Liberal riding.

But it's an area that I spent some time in as a kid. We used to run around in the bushes out there. That's an absolutely magnificent second-growth forest. I said that on CKNW when I was interviewed that same day to people who sort of can't see anything but doom and gloom -- you know, the world's coming to an end. Take a trip to a second-growth forest in this province. I can take you to some where we have not done a tap. We've never put a nickel into them, and they're magnificent because nature has been bountiful on the west coast of this province.

We will have magnificent second-growth forests. We have some now, but we're going to have far more by the time 50 years comes around. We may not be here to see them, but we can rest easy knowing our future generations will be able to utilize them and maybe more wisely than we have.

D. Mitchell: I have a question for the Minister of Forests on his spending estimates. I am thrilled to see that the minister is now talking about 50-year planning, because after all he, his colleagues, the Minister of Finance and others in the executive council have ridiculed the official opposition for talking about the need for a 60-year plan for provincial economic development. Now the minister is finally coming on-side, and I welcome him today coming on-side with the Liberal vision to the need for long-range planning, especially in the forest industry, especially dealing with the vital resource in our province, the most important resource, the number-one industry: forests. Of course we need long-range planning, and I welcome the minister, and I thank him for coming on-side. It's about time. It's taken him time, and I hope he can bring some of his colleagues on-side as well.

I do have a serious question with respect to the timber supply, Mr. Chairman. It's unfortunate, and it was a very sad day in British Columbia last week when we had the Minister of Forests having to publicly rebuke one of the most senior and respected public servants in our province, the commissioner of the Forest Resources Commission. The minister referred earlier in the debate in this committee today to the fact that he had to publicly rebuke him. That was sad. That's a sad day in British Columbia when a minister of the Crown has to rebuke a senior, well-respected impartial public servant with a long career who made a statement that the minister apparently took exception to.

The statement apparently was qualified later on by indicating.... Apparently Mr. Peel, the Forest Resources commissioner, indicated that it was a worst-case scenario. Of course, if it was a worst-case scenario -- and I think we should accept it as that -- I think we should deal with worst-case scenarios, because after all, there has been historically, in recent years at least, a lack of confidence in the information we have about the forest resource, and we need to restore that confidence. I know the minister is working hard to restore confidence in the forest industry, in the resource and in the integrity of the data we have, but when Mr. Peel, the chairman of the Forest Resources Commission, comes along and indicates that, at least on a worst-case scenario basis, we may have to consider significant reductions in the cut in this province -- somewhere in the range of 46 percent, perhaps almost half -- clearly the implications of that have to be dealt with.

What has it come to in British Columbia, when we have ministers of the Crown quarrelling in public with well-respected, long-serving senior public servants? Why has it come to this? Who's in charge? Who can we believe? Why is this quarrelling taking place? What must it take to restore public confidence in the information and data that we're dealing with about the forest resource -- the most important resource in the province of British Columbia?

Could the minister tell the committee today why it has come to this? Is it possible to clear the air? I know he's indicated that there are studies ongoing, and he can't state with any degree of definitude as to the state of the forests. That's fine, but why has it come to this? Why can't we believe the chairman of the Forest Resources Commission when he indicates on a worst-case scenario basis that we are verging on a state of crisis in the forests? Should we not believe that? Should we dismiss it totally, or what should we believe, Mr. Minister? Mr. Chairman, that's the question to the minister.

Hon. D. Miller: God, that's a very large question: what should we believe? Who should we believe? You know, I'm a pretty basic kind of person, and I don't really like to quarrel. It's not my wont to quarrel with people. I'm prepared to defend the interests of British Columbia, and I'll quarrel with the Americans any day of the week. I'm prepared to say to the Colleen McCrorys of the world: "You're a Brazil nut for saying we're the Brazil of the north."

When I hear inaccurate statements made in public, I'm prepared to quarrel with them and to disagree. I'm just an ordinary British Columbian: pretty plain, nothing fancy. What you see is what you get.

I think we do have a problem with confidence. You weren't in the House, and maybe you would have benefited, had you been in the House, from listening to my discussion of the issue of public confidence and how fundamental it is to our democratic system. Certainly my job has been very difficult. I can tell the hon. member that in the six months that I've been the Minister of Forests, two of the most vexatious and very tough issues I've had to deal with -- one partially resolved and one still a tremendous problem -- were to 

[ Page 1417 ]

do with the forest company that he used to work for as a central executive: Westar.

The member asked me about 50-year planning. He has the temerity, with that kind of history and the mess we've inherited from that particular company, to stand up and ask me about 50-year planning. Mr. Member, I worked for that company. I'm well acquainted with some of that history. You obviously must understand the difficulties we have in northern B.C. at this very moment with respect to timber supply, with respect to industrial capacity, and I don't blame Westar entirely. I would point out that you also worked for them.

I think that the Crown also has a major responsibility there, but the development of an industrial capacity in that section in northern B.C. that (a) was far and away more than the available timber supplies, and (b) was not designed to process the profile of the forest was a travesty. Quite frankly, a travesty! So don't talk to me about planning and don't talk to me about public confidence. We are trying to overcome some pretty sorry happenings in this province, and I think we're having a reasonable degree of success by being open and honest with the public, by saying that not all decisions are easy, by saying that there isn't a ready answer to every problem in our society, but that we're prepared to work with you to develop that by showing some leadership in terms of long-range planning.

I think we're on a good road, and I have a good feeling when I travel around this province, when I talk to the thousands of British Columbians who have been waiting for this kind of look at things. I'm quite open to taking advice, hon. member, but with respect to forestry planning, particularly when it involves companies in which you were a central figure, I'm not prepared to take advice from you.

D. Mitchell: The minister refuses to answer a very basic question, and I've asked him why. I've asked him a simple question as to why it has come to this in British Columbia today, where a minister of the Crown has to quarrel with the chairman of the Forest Resources Commission about facts -- a dispute over facts. The minister points out that I used to work for Westar and that's true, as did the minister also work for the same company. I would hope that the minister will agree that in our own ways both of us tried hard to improve that company's record. I would hope that the minister tried as hard as I did during the years that I worked for the company to improve that company's record. But we'll leave that aside for now because here we're dealing with a question of confidence, and the minister said not to talk to him about confidence. He says that we shouldn't talk about public confidence.

[5:30]

Well, I would remind the minister that part of your job as Minister of Forests is one of public confidence. Mr. Minister, your job is one of the most difficult jobs in public administration in Canada. There's no question about that. The minister was complaining a few moments ago that he has a difficult job, and yes, of course he has a difficult job, no question about that. I would remind the minister that he comes to the Committee of Supply to receive approval for his spending estimates for 1992-93, not to whine, not to complain about how tough his job is. Stop the whining, Mr. Minister. Mr. Chairman, the minister is here to answer questions, not to complain and not to whine about how difficult his job is. We know it's a tough job. We know that's why he was appointed to this portfolio: because he's a tough minister. So a tough minister should answer some tough questions.

Let me move on to another aspect of the commission on resources and the economy -- in this case. The minister indicates that he disagrees with the Colleen McCrorys of the world. The minister has indicated he disagrees with Sandy Peel. He has told us a lot about who he disagrees with. He hasn't told us who he does agree with. Let me ask him, with respect to the Forest Resources Commission report, whether or not there is one particular element of that report that he does agree with. It's dealing with something that he referred to earlier in this committee debate, and it is the role of the chief forester, which is an important role.

The Forest Resources Commission made a specific recommendation with respect to the chief forester of the province. That recommendation dealt with expanding the role of the chief forester. It dealt with the impartiality of the role of the chief forester, and it dealt with the reporting mechanism through this Legislature. The Peel commission report made a specific recommendation. It stated that the provincial forester should be required by legislation to make annual reports directly to this Legislature on the state of the forests. We're talking about confidence in this debate, Mr. Minister. We're talking about confidence in our number one industry, in our most important resource in British Columbia. It strikes me that this particular recommendation of the Forest Resources Commission report has some merit: the idea that the chief forester of the province should report directly to the Legislature -- perhaps as an officer of the Legislature. In fact, you were referring earlier, Mr. Minister, to the commission on resources and the economy.

One of the great disappointments of the official opposition is that that commissioner does not report directly to the House, but rather reports through cabinet. I wonder if the minister could comment on this specific recommendation of the Forest Resources Commission report: the recommendation that the chief forester of the province would report directly to the Legislature, annually, on the state of the province's forests. Is that something that the minister sees some merit in? Is that something that the minister might want to be considering during the period covered by the estimates that we're approving today?

Hon. D. Miller: I hadn't considered it. I don't rule it out, or say that we're not going to do it or we are going to do it.

D. Mitchell: I'm disappointed that the Minister of Forests has obviously not given any consideration to this recommendation in the Forest Resources Commission report. After all, this is the most important report on the state of British Columbia's forests and forest industry to be issued since the Pearse royal commission 

[ Page 1418 ]

some time ago. Clearly, when the minister came to office, he must have considered this report as one aspect, one element, of a policy review that he would be considering; and one of its interesting recommendations -- and it's an important one -- dealing with the chief forester. The minister, on previous occasions, has claimed to give some consideration to the role of chief forester. The minister, on previous occasions has espoused and paid lip service to the independence and impartiality of the chief forester and his role.

The Forest Resources Commission has some specific recommendations. Just for the minister's benefit, I refer to recommendation 31, that "there be a provincial forester at an assistant deputy minister level responsible for all forest-related matters other than fish and wildlife and water management." Recommendation number 32, that "the provincial forester" -- this is a different name than the chief forester; he's reverting to the historical title of provincial forester in the recommendations here -- "assume responsibility for policy, research, regulatory staff from the Ministry of Forests, and the integrated resources and conservation staff of the Ministry of Environment." Finally, recommendation number 33, that "the provincial forester be required to report annually direct to the Legislature on the state of the forests."

These are the three specific recommendations that I'm referring to, and I wonder if the minister might inform the committee today.... He has not given any consideration to this, but can he seek some guidance from his officials? Has the Ministry of Forests given any thought to this particular recommendation from the Forest Resources Commission report, and is there any consideration being given to implement this with respect to expanding the role of the chief forester, improving the accountability line through the Legislature, improving the perception of impartiality and restoring the state of confidence in terms of annual reports to the Legislature on the state of our forests?

Hon. D. Miller: We are spending a lot of time in the ministry trying to improve a lot of things. One is the level of public information that allows groups, including the Liberal opposition, to misconstrue and to not understand that, for example, the chief forester sets the annual allowable cut, not the minister.

In developing forest policy it seems we have an obligation to move, not unnecessarily slowly, but in a prudent manner, to develop policy that is sound, that will stand the test of time, that will hopefully be somewhat immune to political interference. There are no guarantees in that respect. We have not tossed out any ideas, nor have we, at this stage, formalized in a concrete way how we intend to proceed in a wide variety of areas.

We are acting in a very responsible manner as a government in trying to first of all establish this new Commission on Resources and Environment to deal with the very contentious and divisive land use issues that we face in the province. We are aware generally, in some of the debate today and some of the things that any of us that read about forestry...that we may be facing in the future.

I submit that there is no single panacea; there is no single thing that's going to improve things. It's collective, and it's collectively doing that with some support from British Columbians, who, as I said, would ideally have some greater degree of public confidence in how the resources of this province are being managed. In the short six months that I have been here we have put considerable effort into doing just that. I think we are making headway.

It's important to understand the economy that we're operating in, the fluctuations and the very bad and, historically over the last short while, unenviable position that forest companies have been in in this province. It's important to understand that some of the disputes that I talked about -- the Westar situation in the Hazeltons, which I assume the member has some passing familiarity with -- are extremely difficult to deal with. We are making progress, I think, at a good pace, a measured pace.

When changes are brought in, they will be discussed fully with the people of this province, and the opposition will have an opportunity to canvass those changes. But at this given time, with respect to that particular question, the answer is the one that I gave previously.

D. Mitchell: We're here to review the spending estimates for 1992-93 of the Ministry of Forests. And what do we hear from the Minister of Forests? Blah, blah, blah, blah, blah, blah, blah. Blah, blah, blah, blah, blah, blah. This is what we hear, the same words coming out of him. It means nothing. He says it with all the sincerity that I've just suggested. He says nothing. I hope Hansard can record that; if they have trouble, they can refer back to the minister's statements, because he's saying absolutely nothing. He's mouthing platitudes.

Yes, he's got a difficult job. I wish he would stop whining and answer a question. Maybe I need to get more specific with my questions, and I'll do that, because he's clearly not willing to answer questions along this line of discussion. I asked a very serious question and he refused to answer it, so I'll ask a more specific question and see if he can answer it.

Can the minister inform the committee today: during the period since he became Minister of Forests, what is the total volume of logs which he has approved for export from British Columbia?

Hon. D. Miller: No, I don't have the number. I'll be happy to get it to the member.

D. Mitchell: Thank you. I appreciate the undertaking that the minister has made to the committee. The question is obviously dealing with log export policy. It's an area that's always been controversial in British Columbia. In fact, the prohibition on log exports has been in the Forest Act for most of this century. The spirit of the Forest Act has always been that non-manufactured timber should not be exported from the province of British Columbia. The rationale for that and the reason it was put into the Forest Act very early in the century was because we wanted to keep manufacturing jobs based on our forest resource in this province.

[ Page 1419 ]

When the minister was in opposition, he was an outspoken opponent of log exports. In fact, I've got a quote from Hansard that I'd like to read into the record, because it frames the question I would like to ask the minister. This is a quote from March 22, 1989. The minister -- in his previous incarnation as the member for Prince Rupert -- was here that day, and he said to the House: "I can say categorically that as the member for Prince Rupert I'm totally opposed to raw log exports in this province, and so should every member of this House be. That's right. Totally opposed."

When the minister was in opposition, he was opposed to log exports; he made that fairly clear. He made it much clearer than he has been able to in any of his statements to this committee today. Since he has become minister, he has been signing export permits; he has been approving the export of raw logs. My question to the minister is: can he indicate where he or the government is heading with log export policy, given the statements that were made in the past, his party's position in the past and the apparent hypocrisy of the position, now that they've been in government for six months and continue to allow log exports? What's going on here? Could the minister enlighten this committee as to the policy of his government on log exports?

F. Garden: On a point of order. Mr. Chairman, I understand the latitude that we have in these debates, but I just heard a political speech and not a question on estimates. I think the member should be brought to order.

The Chair: Thank you, hon. member. That is not a point of order, in that the member is addressing the minister's area of responsibility. Would the member please continue.

Hon. D. Miller: Mr. Chairman, I want to re-emphasize that, along with all British Columbians, it would be my desire to see the forest resources in this province manufactured in this province.

I want to describe -- I don't want to take too much time, but I think it is important -- the kind of review that was undertaken by the forestry select standing committee of this Legislature. It was a review that really took a couple of years. Ultimately it came back with a recommendation that, at least in terms of the legislative process, we maintain what we have. I'll explain what we have in a moment.

As a former millworker in the Prince Rupert area, I had, at one point in that committee, the opportunity to receive testimony from the opposition House Leader, who at that time was working for Westar. Testimony at that time was that they were opposed to log exports. I had occasion at that hearing to haul out a newsletter that was previously distributed by Westar to its employees -- and I happened to be one -- where they made a rather eloquent argument in favour of log exports.

Interjection.

Hon. D. Miller: So they changed their mind, did they? Well, I haven't changed my mind, unlike the member opposite. I still don't know what his position is.

The member is absolutely right. We have a regulatory regime in British Columbia that is historic, and it has been very effective. It has allowed British Columbia to develop reasonably effective environmental and forest practices regulations to ensure that the work we do in terms of harvesting does not result in degradation of sites. We're constantly striving to do better, and we do not constrain the market. Our regulatory regime is an accepted one in terms of international trade. It allows our domestic manufacturers to access their raw material requirements in timber. It works, and it is defensible and defendable in international terms.

[5:45]

The committee which studied that extensively recognized the wide diversity of situations that allow a degree of exports to take place -- wide diversity, whether it be the market logger in a little camp somewhere up in the midcoast or north coast, or whether that might be, as outlined in the Forest Act, the replacement of an overmature forest in terms of forest management that would allow the establishment of a new and vigorous young forest.

There are a variety of circumstances outlined in that legislation. I'll go back to some of my earlier comments about bringing in change that stands the test of time. That legislation and the regulations attendant to it have historically stood the test of time. They have worked. They have allowed, not constrained the market. They have allowed, really, a very small number of logs, in terms of total volume, to be exported. They have allowed our domestic manufacturers to get in there, compete and buy their raw material requirements. Hon. member, it works, and it works well. I intend to ensure that it continues to work and work well, and that it survives whatever challenges might come from the international level. I would suggest that you do some contemplating on that subject, some thinking about what I'm saying to you. If you want to pursue the line of questioning, carry on.

D. Mitchell: No, I don't necessarily want to pursue this, but there's one important question begged by this. The minister indicated that the work done by the previous standing committee of this Legislature in the last parliament...and I think they did do some good work, and they received wide input. And yes, the minister's correct, I did make a presentation to that committee as well. And yes, the presentation was geared towards advocating a total ban from the northwest on all log exports. We proposed that because of the serious log shortages, and we wanted to sustain jobs in the mills in the north, from Prince Rupert all the way to Prince George.

There are shortages there, and we changed our point of view of our company. I take some pride in playing a small role working for that company and changing the position of that company, which many years ago had actually exported some logs. That company's position 

[ Page 1420 ]

was changed, and I take some pride in playing a small role in that regard.

The minister served as a member of the standing committee, and he recalled that quite well. But the minister says he hasn't changed his position. Then how does that square with the statement that I read into the record earlier? I could read more, and I don't want to waste the time of this committee, Mr. Chairman, and I will not read any other comments, but the minister clearly was on the record as being totally opposed to log exports, and now he's changed his point of view. He says the policy that allows some exemptions to the section of the act that prohibits log exports has stood the test of time, and it will continue into the future.

From what the minister is saying, I take it -- and I just seek some confirmation from the minister on this -- that a policy of allowing some volume of log exports will continue ad infinitum, because it makes sense for some reason. But why it makes sense is the problem, and I'd like the minister to address this in particular. Why does it make sense when the chairman of the Forest Resources Commission says we're going to be facing severe timber shortages and cuts in our annual allowable cut -- perhaps of a great magnitude, at least on a worst-case scenario basis -- when we're facing severe shortages, closures of mills because of a shortage of raw fibre material from our forests?

When we're facing uncertainty, doesn't the old adage that log exports is tantamount to job exports still hold? We're actually exporting jobs when we're exporting those logs. Doesn't the minister's belief hold, as previously expressed on many occasions in a previous parliament -- eloquently, I might state? Would it not be prudent to place a ban on any further log exports at this time until we can fully assess the state of our forests, our log supply, our manufacturing capacity and whether or not we can preserve those jobs? Would it not be right to reassess that policy, which the minister says should continue into the future? Is it not time to reassess this? Can you answer that?

Hon. D. Miller: I didn't object when I heard the word "hypocrisy" from that member's lips a short while earlier, although I note that one of my colleagues did down at the back. But I've got to say what utter hypocrisy, coming from that member. He worked for a company that when times are good, and they've got some surplus logs, makes a pitch that they've got to export those logs so that they can get the revenue. Then when that very same company overbuilds their capacity so there's a shortage of timber, they turn around and say: "We shouldn't allow any more exports." What utter hypocrisy!

The member doesn't listen very well. I'd be happy to explain outside this House -- and I think it might be preferable -- the importance of what I said earlier with respect to our legislation and regulation. It has stood the test of time; I want it to stand the test of time to come. We have a far different system in B.C. than they have in the Pacific Northwest, where they have an outright ban on log exports. Hon. member, I suggest you read just a tiny little bit about the rules of international trade. Perhaps you might be enlightened. They have an outright ban.

We have a system that allows exports to take place, that provides for our domestic manufacturers accessing the raw resource. It has stood the test of time and, I submit, is entirely defendable if at some point in the future there are international challenges. If the member wants some further reading on the issue of international trade and raw resources and how they are impacted these days, then I suggest he go back, get the GATT decision on fish on the west coast of British Columbia and read it thoroughly.

If the member has one ounce of sense -- and I'm starting to doubt it -- he will understand what I'm saying. I don't see a glimmer of light over there, but I've tried my best.

D. Mitchell: The minister is finally starting to reveal to this committee his thought processes and why he changed his position. He's finally starting to reveal how it is that he came from a position of outright opposition to log exports in any form whatsoever to a point where all of a sudden it makes sense, and he's now the minister of log exports. He's now the minister defending log exports. We now know how this dramatic conversion took place from being the member for Prince Rupert, totally opposed to log exports, to being today the minister of log exports. So we have found out how that conversion took place.

Mr. Chairman, we have a lot more to discuss on this important topic, but because the hour is getting late, I would move that we rise, report progress and ask leave to sit again.

The House resumed; the Speaker 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 5:54 p.m.

[ Page 1421 ]

PROCEEDINGS IN THE DOUGLAS FIR ROOM

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

The committee met at 2:45 p.m.

ESTIMATES: MINISTRY OF ENERGY,
MINES AND PETROLEUM RESOURCES

On vote 28: minister's office, $296,000.

Hon. A. Edwards: It gives me great pleasure, of course, to be here today to begin the estimates for the Ministry of Energy, Mines and Petroleum Resources. Before we go further, I would like to introduce the staff who is with me: my deputy, John Allan; chief financial officer, Jennifer Smith; the assistant deputy minister of minerals, Bruce McRae; director of revenue and operations, Joan Hesketh; and the Assistant Deputy Minister of Energy, Peter Ostergaard.

A lot of work has gone into this budget. Believe me, our agreement to exercise fiscal prudency has meant a whole lot of work from our ministry. The help of this staff has made it possible. They have made a major contribution to the revenue and expenditure packages, which has contributed to what we want we do with the budget we presented earlier.

This is the first budget of our new government, and this is my first opportunity as minister to take this vote through. In addition to the general fiscal situation of the province, we have moved quickly to address a number of issues in the Energy and Mineral sectors. Basically, they include dealing with the overall aim of how the government does business. We have dealt with being more consultative. We are looking for more common ground within the province over issues. We're looking at ways of sharing information. We have also looked at paying more explicit attention to the environment. We want -- as we have said very clearly -- to assure a sustainable future for ourselves and all British Columbians. We have looked at how we can work better with aboriginal groups to achieve the goals of the province -- not just government goals or the goals of the aboriginal people but the goals of everyone in the province.

Our overall objective this year, as in the past, is to assure that our very abundant energy and mineral resources are used for the sustained economic and social benefit of British Columbians. As members are aware, the energy and mining sectors contribute $1.5 billion a year to government revenues. This certainly is a substantial contribution to the overall well-being of British Columbians. Both sectors within this ministry, mines and energy, are part of the history and fabric of the regions and communities of the province. More than 25 communities are wholly dependent upon mineral activity, and there are more than 25,000 well-paying jobs spread throughout the province in these sectors. Energy and mineral resources are a large part of our province's exports; $1.5 billion is the value of the exports in metals. We export $1 billion in coal every year and more than $300 million in energy. But, as we're also aware, there's an ever-increasing need to be aware of the environmental consequences of human activity. We have to ensure that they are fully accounted for in our planning, development and management of resources.

Our mandate is to ensure that our abundant resources are developed and used in an efficient, environmentally friendly and safe manner -- one which basically brings social and economic benefits to all regions and communities in the province. In both sectors, our budget lays the groundwork and adapts the ministry to meet new challenges. The need for environmental protection, energy efficiency, conservation and integrated resource management is being joined with a new openness in decision-making and a recognition of aboriginal interests and the need for regional and community stability.

The budget is presented in votes 28 to 31, plus a special account for the Vancouver Island pipeline. The total expenditure is $42.69 million, which is down from the previous year's $67.016 million. This is made up of $296,000 for my office; $37.3 million for ministry operations; $300,000 for revenue-sharing with the Fort Nelson Indian band, which is something special that you may or may not know about; and $4.8 million for the Vancouver Island gas pipeline special account. Both the B.C. Utilities Commission and the proposed Energy Council are cost-recovered from energy utilities and consumers and are reflected in $10 votes. The reduction in ministry expenditure from the previous year is the result of a concerted effort to cut our expenditures and to contribute to minimizing the deficit. We believe that this has not compromised our core programs, and we continue to be able to maintain the very basic functions of the ministry.

On our revenue side, the responsible stewardship of our province's abundant energy and mineral resources provides about $1.5 billion per year in direct revenue to the provincial treasury. As I said before, as part of the budget process some tax rates have increased. For example, the corporation capital tax has been applied to companies and to Crown corporations in this sector.

Some fees for government-provided services have been increased. We are hoping to send the right price signals and to be sure that these things are fair and equitable.

The mining sector, again, contributes $2.5 billion to our export revenue every year. Industry and government face some very difficult challenges: depressed prices; the high level of the Canadian dollar -- even though it's gone down a bit, it's still high; and increased competition in world markets. These are causing concern to the more than 25 communities wholly or partly dependent on mining. A myriad of investors and prospectors in most cities and towns of British Columbia are recognizing and feeling that. The high-tech experts who make up the mining community of Vancouver are recognizing it as well. We are certainly looking to a recovery in the cycle. At the same time, recovery may be slow. We still have a vital need to 

[ Page 1422 ]

ensure that the mineral sector maintains high standards of environmental quality and worker safety.

Coal. We have responded to an independent report on the future of the province's industry by involving all the shareholders. Coal companies, mining unions, communities and environmental groups are all contributing to our coal strategy through an ongoing process.

Mining. Since our government took office I've made a point of meeting and speaking with many groups, associations and agencies. I've wanted to start a dialogue and have invited further consultation to address the industry's issues and concerns. These are being shaped, and I certainly invite your advice and participation as to how we can do that.

Energy. The theme of openness and consultation underpins the budget as well. Our energy outlook and prospects are promising. Compared to elsewhere in Canada, we have abundant supplies of energy. We have fossil fuels, from oil and natural gas to coal; we have large and small hydro; and we have what could easily be considered the most secure energy future of any province in Canada. But the choices for our energy future will not be easy ones to make. We're going to have to make trade-offs between fuels, between users and between regions. There must be knowledge of and respect for the environmental impact of our energy production and use.

Key to a sustainable energy future is a sound energy policy, and this must be developed and implemented in a context of greater public involvement. Therefore the creation of a B.C. Energy Council has been proposed in Bill 18, which is now before the House. There is provision in vote 30 for its financing under a $10 vote, as I said before. The council's mandate will be to provide the vehicle for public involvement both in overall and long-term energy planning, and also to deal with specific issues that may be referred to the council. As you know, the first issue referred to the council will be that of long-term firm electricity exports.

I'm sure you'll want to talk about a number of events or issues. You know the Vancouver Island gas pipeline has $4 million budgeted this year. That is a realistic appraisal of the applications for conversion that will come. This project was reported on by the independent auditor, who submitted his report earlier this year. We continue to assure that that project is carefully supervised.

We are working toward great continued worker safety in the mining industry. We have a new code coming out for the mines. It's the safest heavy industry in the province. We have consulted with the people involved -- the workers at the mines and the companies -- to revise that code after the first three years of operation. We have had all sorts of communication on this code from other provinces. We are working at the forefront of technology, and we have a very good code that we believe will remain at the forefront of what happens in mines across the country.

We have done a lot of work with conservation projects, and I mention not only Fuel Smart, which was a project that we worked from the ministry, but energy management programs that we have dealt with. We certainly expect to continue to promote and encourage conservation of energy. The mineral development agreement is still under negotiation with Ottawa. We keep hoping for a final signing on that -- almost momentarily. Who knows? We may even have an announcement while we are doing our estimates, and I hope that we do have an announcement on the mineral development agreement.

We are doing some different work with the geological survey this year. That particular project will produce a number of maps in the scale of one to 250,000, which will help us to deal with land use decisions. We need to have those maps ready when we're dealing under Mr. Owen's commission, CORE, and when we have some input into land use studies of any kind.

It's regrettable that I have to announce that the requirements of the budget forced us to very reluctantly cancel the power and gas extension program. It was a program that most communities beyond the regular distribution system of gas companies were very interested in, and it was going ahead quite well. Unfortunately, when we had to make our choices, that was one which had to be excluded.

I'm honoured to present this budget, and I look forward to a good, healthy and open debate and the opportunity to answer your questions.

D. Jarvis: This is your third, but it's only my first, so you'll have to bear with me in a couple of instances. I first of all would like to make it quite clear that I have quite a few questions. However, my questions are not for the purposes of entrapment but essentially to find out where we are going, to see where you and your department are going and what your government's philosophy may be, at least at this time. Where you are headed is a very important factor with regard to this industry.

[3:00]

To start out, I would like to make it clear that I have a feeling that fundamentally we do not see eye to eye on every aspect of how to manage the resources of this ministry. I hope we both have the same purpose, but the way we go about it will probably vary a bit from what I believe is your government's agenda and how the previous governments, since 1972, ran this ministry. We know what they did, but I'm not quite sure what you intend to do at this time since taking the reins of power.

We specifically want to know what way you are intending to go. Perhaps we are not really so far apart at all, but we will see as we get on during the next day or so. I hope this doesn't go on for days and days -- I don't intend it to -- but I understand that the third party is out of town, and we don't know exactly when they are going to return. I trust that it is in B.C.'s interest that we are both here, and that we'll agree to a lot of these situations that will result from the discussions we're going to have.

I believe that you should not only be managing this operation as it exists today but that you should be encouraging it towards new exploration and development for it to be a profitable ministry -- in order to raise revenues for both the government and the industry itself. I feel that sections of this ministry have been badly mishandled since the early seventies. Previ-

[ Page 1423 ]

ous governments have really considered this resource industry to be the golden goose, at least for taxation purposes, and as an industry which really does not care about the province or its environment. On this latter point, there have been abuses in the past in many different sectors, and we are all a lot smarter today. I truly believe that this industry, and the workers too, are environmentally aware now of how to manage its business.

I guess the minister is aware that there is considerable dissatisfaction at the present time with what is actually happening out there in the mining industry. From the letters I seem to be getting -- a lot of them are originals sent to you, and I'm receiving the copies -- this is probably due to the rapid deterioration of the industry as a whole. I believe we are now down to...

The Chair: Excuse me, hon. member. The standing orders for Committee A are the same as those in the House. Would you be so kind as to direct your remarks through the Chair.

D. Jarvis: Right. ...approximately 14 or 15 mineral mines in the province that are in active operation at this time. There are few -- if any -- really coming on stream. Some of my questions will be to ascertain the government's agenda, how the government is intending to encourage growth of the industry with respect to new mines and the government's opinion on how this industry can continue to flourish and be a taxable commodity. I feel that at the present time it's being driven into its twilight years -- if I can use that expression. It appears that that is the direction in which we are heading.

We will go into the mining aspect of the ministry first, then energy and finally petroleum. When we look at the summary of estimates, it looks pretty straightforward. There are no large differences or aberrations that I can see for the 1991-92 period, or in a comparison to the 1992-93 period.

The other day the minister mentioned that she had approximately 396 or 398 employees, and I assume that they comprise the administrative, support services and executive management areas, as well as the energy and mineral resource area. Are these employees included under the $21 million item under vote 29?

Would the minister prefer my asking a series of questions all at once or on an individual basis?

Hon. A. Edwards: Unless the member thinks that several hang together, we're happy to answer the questions that he has. So far, I know he's asked me about the full-time equivalents. The number that we have is 391. That includes all the employees of the ministry: regional staff, ministry staff here, the staff in my office -- the whole kit and caboodle.

D. Jarvis: Are there any plans to increase the staff of the ministry in the near future, through commissions, reviews or expansion of the ministry itself?

Hon. A. Edwards: The only increase that we can see in the foreseeable future is the staff that will be hired by the Energy Council, which is under a different type of vote. But that's not a full-time equivalent in our ministry. Basically, the full-time equivalency is likely to stay the same.

D. Jarvis: Vote 29, under item 10, public service or travel. Could you briefly tell me what the $833,800 figure under mineral resources pertains to?

Hon. A. Edwards: That figure is mainly for mines inspectors' travel and geological work that we do in the field.

D. Jarvis: The only other item under vote 29 that would lead me to ask a question is under item 95: "Other Expenditures." It is $1 million for the mineral development agreement, which is in addition to the $280,000 for grants and contributions. Can you explain this amount? I'm sorry I didn't finish my question.

Hon. A. Edwards: Basically, the $1 million is for the work that would be done within the ministry under the MDA, although we do not have an agreement signed. The grants and contributions amount is money given to universities and, I believe, other groups and agencies for research conducted under that agreement.

D. Jarvis: We were talking about the Energy Council. The ministry has allowed $2 million. Where does that come in the estimates -- under what section?

Hon. A. Edwards: As you can see, it's on page 110 under British Columbia Utilities Commission and the Energy Council. Those are $10 votes, so we pass them as a $10 vote. You can ask us questions about them, but the actual amount comes from somewhere else. It doesn't come out of our provincial revenue.

D. Jarvis: Under vote 30, could you explain the purpose of the B.C. Utilities Commission?

Hon. A. Edwards: The B.C. Utilities Commission is a mystery to many of us, I'm sure, but it has a very clear function. It works with rates. It deals with rate reviews, rate setting and, in fact, assures that the rates that consumers pay for utilities in this province are fair and reasonable and go under the rules that the commission lays out to determine the rates. It deals with utilities fairly directly on a continuing basis to assure that they are following the direction that the Utilities Commission gave them with their original rate decisions. At the present time, they review applications for new projects. I believe there are about four of them that have done that. Their work mainly deals with assuring that what the utilities do, whether they're public or private corporations, fits within the parameters of the direction that they got in the first place, and they set those directions as well. I don't know if I was clear enough on that. If you have more questions, I'd be happy to attempt it again.

D. Jarvis: Could you explain the purpose of the B.C. Energy Council?

[ Page 1424 ]

Hon. A. Edwards: I'd be delighted to tell you the goal of the B.C. Energy Council. As you can see, the Utilities Commission deals with utilities in their day-to-day operations and deals with how they are regulated to assure that they do what they have to do. The Energy Council will fulfill the function that has not been fulfilled by a body other than the ministry to date. They will look at broad, comprehensive policy. The lack of opportunity for the public to have input into broad general policy has been very clear through the Utilities Commission and applications for individual projects. You don't have the opportunity to deal with anything but the project in front of you. We wanted the Energy Council to be able to deal with policy in a broad, general and comprehensive sense and to allow the public to have a say in that. As I said before, it will also deal with specific issues and give advice to the minister and, through the minister, to the Lieutenant-Governor-in-Council.

D. Jarvis: Maybe I'm jumping around here a bit, but I'd like to ask again about that Vancouver Island natural gas pipeline and the expenditure and assistance on that. Special accounts was $30 million last year and is now down to about $5 million. Can you just briefly explain to me if this pertains to the fact that the majority of the assistance is concluded, or is it a wrapping-up purpose?

Hon. A. Edwards: That was an amount that the province agreed to put forward for conversion grants to consumers on the island. Over time, as those grants are given out, the amount reduces. We've done a number of calculations to figure out how much it will be this year. You'll see in the blue book it is down to $13 million. Basically, that's what's happening. It's going down as we give out conversion grants. Also, the rate of application for conversion grants has reduced somewhat, and we don't expect there will be as many conversion grants applied for this year. That's our calculation as to how many grants will be applied for this year.

[3:15]

D. Jarvis: After the presentation of the budget last month, I was concerned with the government's comments that the corporations will be asked to pay their fair share. It was my opinion, and that of a lot of businessmen throughout this province, that increasing corporate tax burdens do not lead to a healthy economy -- especially in this province. The existing B.C. mining industry is already heavily taxed. I can appreciate that in order to run a government you have to have taxes. However, the government should also ensure that the revenue base is ongoing and continually growing. It is only through the revenue growth that governments can keep spending money on whatever their agenda may be. It is our opinion that this government's budget has done nothing to encourage mine development, and that can only add more taxes to the corporate capital tax on an industry that is already losing money. This does not give a very friendly signal to an industry that this government is open to and interested in its continuation; rather it gives a signal that this government, through it's taxation system, is continually hammering this industry from all sides. Other governments in this country are essentially taking the same attitude and are facing trouble with the creation of new industries or jobs in the provinces.

The Minister of Mines from Manitoba was in the House today. In their last budget it seemed that they were coming to their senses, and they are encouraging mining and exploration in their province. They have granted such things as a tax-free period and incentives for new development. It is our opinion that if this government does not take a stand at this time, or very soon, to promote growth in the mining industry, we'll be seeing a loss to future revenue. In fact, it may already be too late to halt the departure of a lot of the mining companies. Furthermore, from the time they start staking, it takes at least 10 years to put a new mine into production. We cannot wait until all the mines close and suddenly realize that we have to find another source of revenue in order to turn around and redevelop this industry.

Can the minister inform us in what way her government intends to stop the flow of capital from B.C. to the south?

Hon. A. Edwards: Mr. Chairman, I assume you're going to let us go ahead on this tack, so I'll talk about the Finance minister's problem.

First of all, the corporate tax rate had been tending straight down over the last five years, and that's why we said that we wanted the corporations to bear their fair share of taxation. As the individual taxation rate went up, the corporate taxation rate went down. The people of British Columbia told us that they thought we were right, I guess, because they elected us to government.

We are trying, within the best thinking we have, to assure that British Columbia has a stable economy, which is the best thing that can happen for a mining industry. I believe the people inside the mining industry recognize that is crucial to what goes on here. In order to do that, we have to balance our budget.

We are reviewing within the ministry the competitive position of our tax structure to other provinces across the country, and we're doing that in conjunction with other provinces. Certainly we'll be happy to see what comes out of that and to do what we can to ensure that our tax structure is competitive. I had a discussion this morning with the minister from Manitoba, and he expressed considerable anguish at what it was costing the province to put through their program. Yes, they do have a program. In our discussions with the federal government, we are hoping to persuade the federal government to help rather than hinder us and to in fact do some things that will coordinate the approaches within Canada and not set up one province against another.

D. Jarvis: When you say "with the federal government," are you thinking of going through them, through some kind of a tax-flow situation -- a flow-through?

[ Page 1425 ]

Hon. A. Edwards: Certainly we don't want to repeat some of the problems that came with the flow-through tax situation. We believe that there should be some more inventive ways of addressing the problem. It would be very helpful if, in fact, the federal government were there and working so that we had, in effect, an impact that worked right across the country and didn't work one province against another.

Hon. A. Edwards: Is there any thought to reducing or changing some of what I would call indirect taxes, or non-profit taxes? For example, the new capital tax? Fuel taxes?

Hon. A. Edwards: I think you're getting into budget matters for next year. As I said, we are trying to balance our budget and establish a very stable fiscal situation. We will certainly be looking to what we can do and, while we're doing that, encouraging the resources in this province to be used to their best advantage for the people of B.C.

D. Jarvis: At this time there's no thought of doing anything other than proceeding with the policies on increasing taxation? There's no policy in mind for assistance to the mines or the prospectors, or to encourage business into the province, or to encourage investors to come into the province?

Hon. A. Edwards: You know what was in the budget. We were not able to have a prospectors program. We are hoping to look at the broader picture, and I think it's time to talk a bit about it. We are working internally within the ministry and, as I said, as part of the national government-industry task force to look at what can be done to restore our competitiveness. Part of that is looking at the competitive nature of our tax structure from province to province. But it's broader than that. We're looking very broadly at what can be done nationally. We will be bringing legislation forward to deal with the efficiency of the environmental assessment process, and we did assure that we are committed to making that process more efficient, more timely and, in the long run, less expensive. We have also established our compensation inquiry, which we believe will work to the benefit of everybody involved in a compensation addressed by the Schwindt commission. We are expecting to get better definitions of the boundaries of protected land in British Columbia through the Parks and Wilderness for the 90s process by November, as has been announced. We will have a definition of protected land and what the designations are, which will be helpful for the industry. As we work at that, we are trying to address the broad general question and the broad general environment in which the industry operates.

D. Jarvis: It appears obvious that we have a relatively low power cost in this province, so in order to attract industry it would be an advantage if we could offer reduced water taxes and stop taking the dividends out of B.C. Hydro. This is just another tax on the industry. Transportation is one of the major factors eating into profit margins. We could offer this industry reduced fuel taxes on railways and vehicles. We could stop taking dividends from B.C. Rail.

The Chair: Order, hon. member. I would offer the caution that within Committee of Supply, under standing order 61, we are debating those areas that are relevant to the ministry and to the vote, and we're on vote 28. Would you aid the Chair and tie a little closer? I believe the minister has suggested a couple of times that these areas are not under her jurisdiction.

D. Jarvis: Okay.

Working on the premise that we have low-cost power in this province, have you given any consideration to making our companies more competitive in the world market by reducing their costs of energy?

Hon. A. Edwards: We believe that the whole issue of pricing energy needs attention, and we are looking at full-cost pricing. We're looking at ensuring, when we price our energy, that the full benefits and costs -- socially, environmentally and economically -- are made. I believe that that will not only be helpful to everyone in the province but will be generally quite instructive.

D. Jarvis: I think I brought it up once before, and I was just wondering if you have ever considered the way Sweden is operating: abolishing all the taxes for industrial use through electricity or water power?

Hon. A. Edwards: This socialist government has been here for six months, and the government in Sweden has been there quite a lot longer. We are not in a position just yet to look at many of the things Sweden is able to do that we admire.

D. Jarvis: I'm trying to keep these down to brief questions.

You allowed $550,000 for advertising publications. I want to know if this money is to be spent on advertising locations, public meetings, etc., or to advocate specific points in the estimates.

Hon. A. Edwards: I wonder if the member could tell me where he got the number.

D. Jarvis: It was several weeks ago, so if you'll bear with me, I'll refer back to my notes. It was under 40 in votes 29 and 30. It totals approximately $550,000.

[3:30]

Hon. A. Edwards: That figure, which comes from two votes, is partly for ads that we as a ministry put in various publications that come out for conferences, special events or things like that, as well as the regular notices that we have to put in the paper for gazetting or for advertising land sales that are coming up, and the notices that we have to put out to meet legal requirements.

[ Page 1426 ]

D. Jarvis: You were mentioning that the world market is partly dictating income. The world market is very flat and will be continually driving down the price of zinc, lead, copper and nickel, causing a further recession in the industry and making it tougher for the companies to make a profit. Can you possibly say that there's going to be an increased demand for the job protection commissioner? Could you advise us of the situation with the job protection commissioner? How many businesses -- for example, the coal and mineral mines -- is he presently involved with? How many is he presently looking into?

Hon. A. Edwards: As the member probably knows, the job protection commissioner was involved in Cassiar. He is currently involved in the Cominco-Trail smelter situation. He is currently involved in -- he has not signed off -- the Westar Mining in Sparwood that he was doing.

D. Jarvis: From a miner's point of view, not everything is rosy out there, particularly as we look to the future and see that the world surplus of minerals is increasing. We see the closures of eight mines, the decreased capacity of the copper smelters and the rise of smelter charges. These companies see increases in prices all around. Mines are closing around them. Lots of markets are slowing down, and this government in this budget is increasing taxes. Does the minister have any figures at this time as to the actual amount of moneys made by the mineral mines in this last year?

Hon. A. Edwards: What was the question?

The Chair: Hon. members, through the Chair, if you would.

D. Jarvis: Does the minister have any figures at this time as to the actual amount of moneys raised by mineral mines in this province in this last year?

Hon. A. Edwards: It was because of the clarity of the question, Mr. Chair, that I attempted to go around the system. I'm still not exactly sure if I have the answer to the question. The metal mining sector has a total value of about $1.43 billion. That's what its amount was in 1991.

In response to some of the comments that the member made, I know the member has obviously been hearing some of the problems that the industry is facing, but I regret that the member has not also picked up the general optimism that comes with the mining industry. It's been there for decades, and I hope that the member doesn't forget that mining is a cyclical industry. In fact, what is probably going to happen as we come out of the recession is that the metal prices are going to increase. That's the direction that some of the seers have said they see.

D. Jarvis: It's obvious that the mines are closing faster than they are opening. No one really knows how long this cyclical period will last. It appears -- as I said -- that they are closing faster than they are opening. Thousands of men out there have no where to go because there's no new mine starting. We can't wait until the end of the cycle. We should be doing something now. Do the various mines report their profit and loss statement to you?

Hon. A. Edwards: The mines don't report profit and loss to us. They usually send us a copy of their annual report, but not always. There's no requirement. They may or they may not, and certainly there's no requirement that they do so.

D. Jarvis: I'm not aware of any new mines that are ready to come on stream in this province. Is the minister aware of any mines which may be coming into fruition under this budget?

Hon. A. Edwards: This year, 1992, looks like a barren year for new metal mines. There are a number of mines that have.... One recently announced it was going into the permitting process. A number have gone through the permitting process and are waiting for federal word. Some are under the process of the company's restructuring, and we have high hopes for them. They are at the point where they could go ahead. So a number of mines are out there, but we don't foresee that there will be new mines opening in 1992.

D. Jarvis: I seem to be repeating myself in the sense that I can't see any evidence that this government is starting to make this industry more attractive or competitive, or is making a climate in which mines can be opened up and people can thrive in the province. We are losing our expertise in the research and development aspect of the industry. There, in itself, is a further loss of income to this province.

I'm trying to get a picture of where the ministry is going. I wonder if I could get a few details as to the present status of a few points, because no information has been made available to me at this time. Can the minister give me a percentage factor in relation to the provincial gross domestic product for Energy and Mines, that is spent on transportation costs, for example. I believe in 1990 you spent 5 percent on transportation.

Hon. A. Edwards: I'm advised that the amount that companies spend on transportation is significantly greater in the coal industry than it is in the metals industry. In the coal industry it amounts to approximately 40 percent of the cost; in the metals industry it amounts to probably 20 percent, or something like that.

I would also like to respond to the question that the member put about what mines are in progress, and what mines might be developing and opening in British Columbia. We have a list here of projects that are active in the pre-application or prospectus phase. It includes the Falcon 2 pit at Greenhills operation, which is a coalmine in the Elk Valley; the Bodie Creek Balmer operation, which is also a coal mine in the Elk Valley; the Hedley gold tailings project, where the prospectus review has been completed, and it will probably be going ahead; the Eskay Creek gold project; the Moose 

[ Page 1427 ]

Creek magnetite project, where we're awaiting the submission of an application; and the Kemess gold and copper project, where the prospectus is being reviewed.

Further along, projects that are active in the application phase already include the Windy Craggy copper-cobalt project; the Crystal Peak garnet project; the Mount Milligan copper-gold project; the Stronsay lead-zinc-silver project; and the Mount Polley copper-gold project. All of them are in various stages of the review. So there a number that are there. I guess they are working toward a point which we would call achievement.

D. Jarvis: Through my questions to the minister in question period this afternoon almost the same thing arises. All of these mines, like Windy Craggy, Stronsay, etc., are under different reviews. Now we have the mine development process, and we have the energy review. Can she tell me at what stage which of these mines is at? How long may we expect them to be...? Will they get approval this year, or are we looking at a year and a half or two years?

Hon. A. Edwards: As the member knows, they are all under the same mine development assessment process. We are dealing with some of them at a fairly advanced stage. Certainly the Stronsay, and Mount Milligan are. The Mount Milligan technical review will be completed shortly, and they have to proceed from there. The Stronsay technical review is completed by provincial agencies, and we're waiting for a federal review. We've made a statement on Windy Craggy. We've appointed an investigator to continue an investigation on Crystal Peak. The Mount Polley copper-gold project application review is completed, and we need only further consultation before we issue the mine development certificate. As soon as that's done, the company may apply for it. That needs to be done. As I said before, we don't anticipate that any of these mines will probably get into production this year.

D. Jarvis: If they're all under the mine development assessment policy, what is the difference between that and the review situations we have? Does not one superimpose the other? Doesn't the MDAP govern the whole thing, or are these new reviews going to supersede that? What are they there for?

Hon. A. Edwards: If I understand the member correctly, what he's saying is: for example, what about the garnet project? Why do we have a review? That's part of the process. It is part of reaching the point in the mine development assessment process that they can go ahead with their application for the final getting into operation. Basically there are a number of ways you can go under the MDAP, and certainly with some of them we use different ways of getting public input. We have different ways of ensuring that the review is complete.

D. Jarvis: Let's take Windy Craggy as an example. Windy Craggy went through the process of the MDAP, and it got to a certain point where it was almost approved. Now you take that out of there and create another review. What process are the new people wanting to start mines in this province going to go through? Are they going to rely on the MDAP, and then as soon as they finish that, are they going to go to another review on the whim of the government -- immediately pulled out, put into another review and stalled along?

[3:45]

It appears that Windy Craggy has been here for about three years now. Ostensibly they finished the review and have gone through the federal government's situation. They've spent millions of dollars in this province, and now they're going to be put into.... A Windy Craggy review was brought in. The Minister of Forests brought it up in the House about a month and a half ago. Now there's an Energy Council from all of the province. There just seems to be review after review after review. What can future investors in mines in this province rely on? Is there any specific thing? Are they going to be able to say: "Okay, the MDAP is the answer. We go through that procedure. Provided that we qualify, then we will be able to start a mine"? Or are they going to be expected to go through that procedure, spend some money on that, and then the government's going to say: "We're going to put you under another review situation"

Last Thursday Lands and Parks created another review, saying to Windy Craggy: "Now you're going to have to wait until '95 before we'll give you an answer." What do they have to look for in order to come into this province? What can they expect?

Hon. A. Edwards: First of all, I'd like to correct what I believe is a misapprehension on the member's part. The member seems to think that Windy Craggy was almost approved. Windy Craggy had been in the first stage of the mine development review process, which was the stage for approval in principle, and did not proceed through that stage to stage two. There are basically three stages in the process.

Windy Craggy, at a very early stage, excited the public to oppose the Windy Craggy for various reasons. Because of that considerable broad, vocal and very sincere opposition to the Windy Craggy application, we are at a point where we have made a ministerial statement which indicates that we intend to deal with this in a special way. It is under the mine development assessment process, and we intend to ensure that mining projects are dealt with there.

I might suggest to the member that he be very careful about talking about project reviews and policy processes, because the Energy Council, for example, is a policy process: it does not review projects, and it does not deal with anything on a project-by-project basis. It deals in a broad, general sense with policy.

The Parks and Wilderness for the '90s process is dealing with the parks issue, but it will deal with policy as far as we're talking about designating protected lands. It's a policy issue. Basically I think the member should look carefully to decide whether he's talking about a project review or a policy process.

By the way, we have just put out a guide to the review and certification of mine developments. I'm 

[ Page 1428 ]

conscious of the fact we're not to use visual aids in the Legislature, but this guide to the review and certification of mine developments might be very useful for the member to look at, because it outlines our process.

I want to also say that we have said, in our attempt to make the mine development review process as simple and as expeditious as possible, that we are working to find the best way of dealing with mine reviews, energy project reviews and major project reviews. When they are there, it will be one process. Projects that are currently in the process are going through one process; if we put them all together, they will go through one process. We are not expanding anything by that. We are attempting to make it unified, make it more efficient, and coordinate it with the federal requirements.

D. Jarvis: Then am I safe to say that the energy process you have now announced will have no effect with regard to Apex garnet or Stronsay?

Hon. A. Edwards: The Energy Council will have nothing to do with that; the Energy Council will talk about energy policy. The garnet project and Stronsay are both mining projects, and they are not involved with what the Energy Council will be dealing with.

D. Jarvis: There is definitely a misconception out there as to what the Energy Council is probably going to be doing. The Windy Craggy review is additional to the mine development process, correct?

Hon. A. Edwards: The ministerial statement said that we are looking to a process that will continue the Windy Craggy process within its current mine development assessment process.

D. Jarvis: Mr. Chair, I went off on a tangent there, and I'll be going back to where I was before.

Can you tell me what the mining industry spent in total with regard to all the commercial services, such as transportation and storage, communications, trade and financial institutions? What did the industry spend as a whole in this province?

Hon. A. Edwards: We don't have that information with us. Of course, it isn't government information, but there is a Price Waterhouse report that tells that, and we can get that information for you.

D. Jarvis: Accordingly, I guess, I can get this information later on. What I also wanted to find out fell in line with whatever that gross figure was: that there is a spinoff for every dollar that we spend in the industry. I think the figures that I saw for last year showed that about 58 percent of what was spent by the industry went into the suppliers of goods and services, and I want to know how much of this money went into the support of small communities. I was going to ask you what percentage of this total amount went into goods and services last year. You'd have to take that.... You probably have no idea right now.

Hon. A. Edwards: We don't have those figures at our fingertips, but we can come up with some estimates and give them to you along with the Price Waterhouse figures.

D. Jarvis: Would the minister have the amount spent in salaries for the mining industry for this province?

Hon. A. Edwards: That's also in the same report.

D. Jarvis: There are approximately 14,000 men employed directly in the mining industry. Does the minister have any figures that would show that this figure is rising or falling?

Hon. A. Edwards: I believe there are approximately 15,000 women and men who work in the mining industry. The figure has been falling over the past several years, and that's partly due to what we call increased productivity, I suppose, and probably partly due to situations that the member has been talking about -- some negative impacts on the mining industry.

D. Jarvis: We may be wearing the minister out, getting up and down.

May I add, Mr. Chair, that I wasn't aware that these estimates were coming up today, and I had made a rather specific appointment at approximately 4 o'clock. So at around 4 o'clock I'm going to bow out for a short while, and I hope there will be someone around here to take over and ask a few questions. I'm not getting mad or rude and running out on you.

Does the minister have any figures available with regard to how much the mining companies pay into the province by way of property taxes?

Hon. A. Edwards: I believe we could get those figures from the Ministry of Finance and provide them to the member, as well.

D. Jarvis: There's a misconception out there, and I wonder if the minister could straighten out the matter of the profit-and-loss picture of the mining industry in the province as a whole. I keep hearing a range of anywhere from $95 million to $200 million being lost last year. Does she have that information available?

Hon. A. Edwards: We don't have those figures, and they likely won't be out for another couple of months. It might be fair to assume that it would be a loss. We don't have the figures for the past year, but the previous year and the year before that were the first two years that the coal industry reported losses. The loss in the penultimate year was greater than the previous year's loss. So the trend, as short as it is, isn't so good. We don't know what it will be this year. As I said, we don't know yet what the overall figure is, including metal mines as well as coal mines.

D. Jarvis: When the minister gets those figures, could she perhaps give us a breakdown of how the indirect taxes will go? Can the minister give me the 

[ Page 1429 ]

amount, for example, of the new inspection fee of branch services?

Hon. A. Edwards: First of all, that increase was introduced by the last government, of course. What we did this year was change the way that we account for it. It is expected to raise $2 million.

D. Jarvis: Would the minister be able to tell us what percentage of B.C.'s foreign exports is garnered from the natural resources of mining?

[4:00]

Hon. A. Edwards: Mining accounts for approximately 25 percent of British Columbia's total exports.

D. Jarvis: Hon. Chair, if you wouldn't mind, I'd like to defer to the member for Richmond-Steveston.

A. Warnke: There are a few questions I would like to pose as we proceed with the estimates with regard to Energy, Mines and Petroleum Resources. Perhaps the first set of questions I would like to pose to the minister, if the Chair does not mind, is.... A very quick background is required, because of the nature of the northeast coal project. The northeast coal project has been examined by the parties that now form both the government and the official opposition. We have been extremely concerned about the allocation of moneys for the development of industries. Indeed, I think it is quite fair to say that both of the parties have been somewhat skeptical about pouring money into megaprojects, of which the northeast coal is one. Indeed, the minister has been correct in pointing out that 25 communities have depended on one industry, one commodity.

What comes to mind, of course, are communities such as Tumbler Ridge. We have seen in recent years the impact that this industry has had on the development of communities such as Tumbler Ridge. To a certain extent the government party has been critical, but I think correctly so, in being concerned about such megaprojects and where they lead. Indeed, the government party, when it was in opposition, correctly pointed out the possible negative impact it would have on communities such as Tumbler Ridge.

Therefore the first set of questions I would like to address concerns such projects. Perhaps we could begin with the specific.... I'm sure that the government -- which has, as the minister pointed out, been in government for six months -- has had to come to terms with this particular project and the implications it has for these particular communities, and so forth. I would like to explore with the minister the current state of the northeast coal project and how the government approached this particular project, especially when it came to allocating funds and developing a strategy by which we could look at such projects. We'll start with a specific: the northeast coal project. I'd really appreciate the minister outlining what her ministry has done in terms of examining the northeast coal project since she has become minister. What kind of strategy have they devised? How, in their budget for this year, have they looked at this particular project, and what do they intend to do about it?

Hon. A. Edwards: The member talks about Tumbler Ridge. We were recently in Tumbler Ridge, as the member may know, because we are doing a coal strategy for British Columbia. That is what our ministry is able to do for the coal industry. He referred to the restructuring for the company. But what we are happy to know, as the Mines ministry, is that the two mines in the Tumbler Ridge area are going to go ahead now, going at their current contracts, and are very confident that they're going to be able to make some changes and to participate with us in looking toward a coal strategy for British Columbia over the longer term. Certainly that area, as the second-largest producer of coal in B.C., is very important to our deliberations, our decisions and the public process that has gone into our march toward a final strategy.

A. Warnke: The minister pointed out in some of her preliminary remarks that about $1 billion is revenue for the province from the export of coal. Could you reconfirm that?

Hon. A. Edwards: Interestingly enough, the figure changes. It changes legitimately. It's $1 billion to the companies at the mine sites; it's $1.6 billion if you value it at the port.

A. Warnke: That is an important qualification, especially measured against the export revenues that we get from mining as a whole.

As to the community of Tumbler Ridge, I am extremely interested in the allocation of dollars for the restructuring of the community; and I think this is fair at this particular time, since there is a public impression that Tumbler Ridge has been adversely affected and that it is somewhat dormant. The minister's earlier answer suggests, quite the contrary, that Tumbler Ridge is far from being a dormant community and that it is expanding. I wonder if the minister could get just a bit more specific about the strategy being employed for the community of Tumbler Ridge, in terms of allocation of dollars for restructuring.

Hon. A. Edwards: I'm not sure if the member is using a different word, but there is no restructuring of the community that I'm aware of. The company, Quintette, was restructured. The community has not been restructured. They are participating in our coal strategy process and are looking forward to a longer-term future.

A. Warnke: I'd say that in her answer the minister has pretty well articulated the prospect for the two mining operations in Tumbler Ridge. It's more or less to publicly convey where that community is going.

Now, of course, Tumbler Ridge is not the only one, although we're interested in following through on that. But does the overall strategy -- and the minister did mention that the ministry is involved in developing some sort of strategy -- apply more generally to north-

[ Page 1430 ]

east coal outside the Tumbler Ridge community or similar kinds of coal projects throughout British Columbia? I have a colleague who is interested in another part of it. But could she expand generally on the northeast coal project beyond Tumbler Ridge, and whether her ministry is developing a strategy for northeast British Columbia generally?

Hon. A. Edwards: I am certainly pleased to tell the member about our coal strategy for British Columbia. Mr. Dick Marshall presented a report to us shortly after we came into government. It was called Coal in B.C.: An Assessment of Future Prospects. Basically, it was a description of the coal industry in British Columbia. It had a number of recommendations. We decided that the next step was to distribute this report to all the stakeholders in the industry -- the communities, the workers and the company owners themselves -- and to ask for their response. Then we put out an update, which was called "B.C.'s Coal Strategy News Update," and it came from all the mining communities in British Columbia.

As you know, there are eight coal mines; two of them are in Tumbler Ridge. There are a number of communities besides Tumbler Ridge that are interested in the coal industry in the northeast. More than 200 people came out to a meeting we had in Tumbler Ridge to talk about what we could do to assure the future of the coal industry in British Columbia, because we have such a plentiful and rich resource. That process is ongoing. We expect to have more meetings and we expect then to come up with a strategy. Of course, we hope that that would be integrated with any strategy for other development within the northeast corner of British Columbia, but I'm talking only about the coal industry now and the strategy we have worked toward and put a lot of energy into -- no pun intended. We expect to come out with a strategy that will be concrete and will have the support of all the stakeholders, including the provincial government.

A. Warnke: There is one other question, while I'm on this particular subject. Indeed, there are some other questions I would like to ask, but perhaps we could just stay on the theme of coal, and my colleague could enter in after this one last question. I am also very interested in the provincial government's role in transporting coal to Point Roberts and to the terminal there. To be fair to the minister, perhaps first of all she could generally outline exactly what the transportation linkage is and how her ministry is involved in getting coal from many parts of British Columbia through the terminal, and the use of the terminals and the extent to which the provincial government is involved.

[4:15]

Hon. A. Edwards: Again, there are two major transportation links in British Columbia for coal. From the southeastern part of British Columbia, the CPR takes it clear across the province to Westshore Terminals at Roberts Bank. The coal commodity is the largest that the rail carries. Obviously, without that commodity, there would be a significant difference in what happened to our rail in British Columbia.

We do a lot of talking about transporting coal the other way as well. There are only about eight miles in B.C. from the southeast for that, so if we're going to go beyond the boundaries of the province, we can talk about that too. It certainly is a matter of significance. The cost of transporting coal to Ontario, for example, is the major cost barrier to having a larger domestic market there, where they use a great deal of coal for generating electricity, and where our low-sulphur coal could be a matter of great benefit to them, not only because it would have lower sulphur in the emissions, but also because it would support their port at Lakehead. It would allow a lot of the spinoff industries to operate within the province, rather than using high-sulphur coal and importing the technology to scrub it, and having it all come from the U.S. There's a major Canadian advantage to having western Canadian low-sulphur coal go to Ontario. That's one question, and it certainly involves the impact of transportation and transportation costs on where we sell our coal.

In the northeast, as you know, there are two railways involved. B.C. Rail takes the coal partway there and then it goes by CN Rail to the port at Prince Rupert, where it's loaded onto huge coal ships. That's another huge, long and perilous journey that the coal takes from the mines to its export departure point. The only other coal-mine we have in British Columbia is near tidewater, amazingly. The only problem is that it's very near a fish-spawning river that's very important as well.

Basically, the rail is extremely important to coal and coal is extremely important to the rail. I can't imagine the industry operating without an efficient rail system in B.C. It is a large part of how the industry operates.

A. Warnke: I'm wondering, with the discussion on the downturn of the economy, with regard to the mining industry generally, if the minister could give some sort of assessment on whether coal seems to be following that pattern, and also, as a follow-up from that, on the impact it has in terms of jobs on Roberts Bank. Actually, the minister is quite correct to refer to Roberts Bank rather than Point Roberts, which I believe I mentioned initially. That belongs somewhere else. It's in another country. I'm interested in following up on the job impact on Roberts Bank as well.

Hon. A. Edwards: There are approximately 60 employees at Westshore Terminals at Roberts Bank, and of course the only commodity that they deal in is coal.

D. Mitchell: Mr. Chairman, I'd like to follow up just for a minute, if I could, on this question relating to coal, and the questions raised by my colleague the member for Richmond-Steveston.

The minister has talked about coal and its importance to British Columbia. Certainly coal-mining is a very large part of our mining industry in British Columbia, and it's in a state today that certainly couldn't be described at buoyant, given markets, prices for coal and competitive pressures.

[ Page 1431 ]

We talked about the transportation issue, and certainly that's a major factor for our coal producers in both the northeast and in the southeast. We have a major competitive disadvantage with international competitors in either Australia or South Africa, where the source of the coal is much closer to tidewater -- virtually right at tidewater -- and that's a major factor in terms of our competitiveness. We talked about not only export markets -- offshore markets -- but domestic markets within North America, and Ontario Hydro in particular. It would seem to me that there are some initiatives that the provincial government could be taking to enhance the competitiveness of our coal industry at this critical time, at a time when people are questioning whether or not there is a future for the coal industry in British Columbia. I for one certainly hope that it does have a future, and a bright future.

The coal industry has been lobbying for some time for tax reductions, for some consideration to lowering the taxes on the industry so that we can be more competitive when it comes to looking at our international competition. Also in terms of Ontario Hydro, we should be looking at Ontario markets, or eastern American markets, for our low-sulphur-content coal, which could be used for the generation of electricity and thermal power back east. Certainly there are some efforts that I would hope the provincial government is considering in terms of dealing directly with Ontario Hydro, in terms of marketing initiatives, working with the industry, and also working with our national railways.

I wonder if the minister could comment on these two questions. How is the provincial government, specifically the Ministry of Energy, Mines and Petroleum Resources, dealing with the need for competitiveness for our coal industry both in terms of export markets today -- lowering the tax burden so that we can compete -- and domestic North American markets, in terms of finding markets in the east, Ontario Hydro and others, for our coal from the southeast, the northeast and Vancouver Island? Could you comment on any specific initiatives that you're taking? Are you working with the industry? Are you helping the industry at this critical time?

Hon. A. Edwards: It was a large bite the member offered me this time -- lots of opportunity.

Let's deal with taxes, first of all. As the member may not know, the taxes on the coal industry were reduced considerably about two years ago, and changed from a royalty system to a profit-based tax. So that particular advantage has been given to the coal industry.

As far as the export market is concerned, again we have to refer to coal in B.C. Already we've identified a number of things that could be done. We should mention, first of all, that Canada -- and B.C. in particular -- has very high-quality coking coal. We then run into a problem when the market is going to go up for thermal coal. So we're going to have to deal with that. But there are a number of things that we could do. We've already announced that we will have a feasibility study on a clean coking plant. That was a proposal made in the Marshall report, and certainly it's had broad support already in any talks that we've had on the coal strategy.

We want to establish very clearly that we have a position in the world market as a supplier. To diversify the market it's important that we are able to maintain our industry. I think the buyers know that. We are going to make that point more and more clear. Australia, for example, is our greatest competitor. As you said, they're very close to tidewater; their stripping ratios are probably two to one, where ours may be ten to one or eight to one.

Basically, we want to ensure that our customers know that we're going to provide them with diversity in the marketplace. We're going to continue to consider and put that kind of thing together with our coal strategy.

As far as the domestic market is concerned, I have personally been to Ontario three times to visit Ottawa and Toronto -- Ontario Hydro included. We've been there to deal with that with coal-miners and companies and government people from Alberta and Saskatchewan. Part of that was connected to the western Canadian coal committee, which continues to work. We as a province continue to work with that committee to see if there are ways that we can deal with the barriers to increasing the domestic market.

We are also expecting to be part of an IGCC project that will forward our research on the clean burning of coal. We are taking a number of initiatives that are very specific to the coal industry and very specific to the situation that we see in this province with this abundant resource, which has its own particular problems.

D. Mitchell: Just one further question on this. The coal industry plays a very important role in the total context of mining in British Columbia. The minister has pointed out that our coal is of very high quality. Indeed, our coking and metallurgical coal is known internationally as being of very high quality. The Japanese have recognized that, as have the Koreans and others. Because of its low sulphur content, our thermal coal is likewise recognized by many as having some advantages from an environmental standpoint.

Given that we have a high-quality product, we have severe competitive strains today on our industry. That is evidenced by the fact that many of our mines are not operating at a profit. They haven't done so for many years. We now have labour disputes in the southeast part of the province -- an area that the minister represents -- which must be of some serious concern to the ministry. I'm sure that officials are monitoring those disputes very closely.

All of these are indications that we are in a severe crisis with our coal-mining industry in British Columbia today. To be monitoring it is one thing. To be studying it and to be represented on a variety of task forces is very laudable, and I would expect the government to do no less. But is there anything more that can be done? Is there anything that the minister can indicate to this committee today as we review her spending estimates for 1992-93? Is there anything she can say that might suggest to the coal-mining industry that it indeed has a future in British Columbia? Is there a future for 

[ Page 1432 ]

the thousands of British Columbians working in the industry who are questioning whether or not their jobs are safe, whether or not their companies will survive? The balance sheets of those companies are such that there are serious questions about that, both in the northeast and in the southeast. Is there anything that this government can be doing in addition to what has been done in the past by the previous administration, when two years ago there were some tax reductions geared towards a profit-based tax? Are there any other charges or levies that the government raises against the coal industry that can be addressed that might help, even on a temporary basis, to allow this very important industry to get back on its feet, so we can address the challenges in the offshore markets for our metallurgical coal, and so we can try to find some new markets within North America for our thermal product? Is there anything more that can be done? To say that there isn't anything more to be done is really to paint a very dire portrait for those thousands of British Columbians who are working in this crucial industry. I would ask the minister if she can be more specific.

The Chair: Just before I recognize the hon. minister, I'll offer this caution. Earlier in the examination of these estimates, we got into the area of taxation and levies, which come under the purview of the Finance minister. That was the answer that the minister offered, and it was accepted. I would just caution you to watch the jurisdiction of the minister's office.

Hon. A. Edwards: As far as the coal industry is concerned, if there is anything that can be done, we hope to winnow it out through the process of looking toward a coal strategy for British Columbia. If the House Leader for the official opposition has any specific suggestions that he thinks we should come out with today or in three months, I certainly encourage him to bring those suggestions to us. We are trying to involve everyone who wants to deal with the coal industry. We are hoping that we can find specific measures and a concrete strategy that everyone will understand and that all of us can participate in, so we can make sure that the industry goes ahead. The coal industry is quite sure that if there is a way to go about it, we will probably be able to discover it this way. What we're going to do about it will have to be in the strategy that we work toward and actually adopt. If you have any specifics, I would encourage you to bring them to us. We are working very hard on this coal strategy. It is what we can do for the industry.

D. Mitchell: Certainly we want to work with the government on this. We will bring ideas forward to the minister. I'm saddened by the fact that the minister can't offer greater words of optimism today for the coal-mining industry in British Columbia.

We talked earlier about Ontario Hydro and the role that that major utility might be able to play. Who knows? Perhaps by virtue of the fact that the provincial government of Ontario is now made up of a governing party which is the same as the minister's, maybe she could use some political leverage with her colleague, friends and political counterparts in Ontario to see what can be done, if there's anything that can be done. I think there's a real desperation in British Columbia today, and I would urge the minister to consider every avenue.

[4:30]

Before I take my seat, I would like to ask a question with respect to British Columbia's major power utility, B.C. Hydro. I note with some interest that the British Columbia Hydro and Power Authority is not one of the responsibilities of the Minister of Energy, Mines and Petroleum Resources. I think that's a bit of a departure with past practice in terms of having our major ministry of government that deals with energy not also responsible for the major Crown corporation.

I'm wondering if the minister can explain, for the benefit of this committee, how that works. What kind of extra coordination may be required by virtue of the fact that a different minister is responsible for that Crown corporation? What kinds of communication challenges are required on the part of her ministry and officials of that Crown corporation? Can she shed some light on why she is the Minister Responsible for Energy, Mines and Petroleum Resources, but not the minister responsible for B.C. Hydro? Why has this happened, how does it work, and does it make sense? Those are my questions to the minister.

The Chair: Again, before I recognize the hon. minister, I would just offer the caution of standing order 61. Areas that come under the minister's office are open for debate.

Hon. A. Edwards: First of all, I'd like to finish off with a response to the discussion about Ontario Hydro and the new government in Ontario. Certainly I'd like to mention to the House Leader of the opposition that Ontario Hydro gave a 15 percent premium to western Canadian coals and signed a contract to continue buying western Canadian coal in the past couple of months -- it was about two months ago. That was basically very clearly because of their belief that we should have continued domestic trade, and we should favour some Canadian trade. That was very clearly laid out by Ontario Hydro in conjunction with the Ontario government.

I might also tell him that Mr. Ellison, who is the president of Ontario Hydro, is in Victoria this week, and I'll be meeting with him tomorrow morning. We will be pursuing any other ways that we can continue to increase that trade to the benefit of British Columbia coal producers.

As far as B.C. Hydro is concerned, when we came into government we decided that the best structure for dealing with energy policy was that this ministry deal with the policy, and that B.C. Hydro be put in a different ministry. Then it would be at arm's length from this ministry. This is the ministry that sets energy policy for B.C. This is the ministry that controls.... "Controls" is a bad word. This is the ministry through which the B.C. Utilities Commission works. The Utilities Commission is the regulator of B.C. Hydro, and B.C. Hydro is simply a corporation that will come under 

[ Page 1433 ]

the policy that is set by the government as it's established through this ministry, and will then go to the Utilities Commission to be regulated. With B.C. Hydro operating in a different ministry, it is then at arm's length from this ministry. It's a different approach, and we certainly thought it was one that would make sense.

D. Mitchell: Just a comment on that answer, which I found very intriguing. I take it that what the minister is saying is that this is a new approach to conflict of interest, whereby we now have in British Columbia the Minister of Labour and Consumer Services, who is also responsible for constitutional matters in British Columbia, now responsible for the major Crown corporation, the major power utility in the province, B.C. Hydro. The rationale is that it would reduce the perception of any potential conflict by having the Minister of Energy, Mines and Petroleum Resources, the cabinet minister who's accountable to the Legislature, also being responsible for B.C. Hydro.

Functionally, it doesn't seem to make a lot of sense to me, although if what the minister is saying is correct, then certainly we cannot anticipate the minister who occupies the portfolio that she now does ever again being responsible for B.C. Hydro, because of the perception that there would be a conflict of interest inherent in that position. That's new. That's different. That's something we haven't seen in British Columbia before. The tradition has been for ministers of a particular portfolio to also assume responsibility and accountability to the Legislature for the Crown corporations that fall within their functional ministries. That's always been the case, and we look forward to this great new world that we're entering right now.

Certainly we could never anticipate a reversion to the old system if what the minister is saying is correct. Is what I'm saying correct: there would be perceived conflict of interest, and that is why this relationship will never again exist as long as the NDP is in government in British Columbia?

The Chair: Again, before I recognize the minister, if this comes under the estimates and the direction of the minister's office, then I will leave the discretion to the minister. It appears that we're very closely approaching the guidelines of standing order 61.

Hon. A. Edwards: First of all, I'd like to suggest that the member has taken a number of leaps of what I would call faith, rather than logic. We are doing something different. It recognizes the perception by a number of people that there may be a better way to deal with running a Crown corporation than by putting it in the same ministry that sets the policy and is also responsible for the regulation of that policy. It may change. I have certainly never said that it may be this way forever; I have said that that was the reason we did it. I have said many times that with Hydro now in a different ministry, it does operate in an arm's-length relationship.

D. Mitchell: Mr. Chairman, I think this line of questioning is clearly in order, because we are dealing with the minister's office. I'm asking this question because I'm trying to understand how the ministry, but more particularly the minister, relates to this important question dealing with the matter of energy policy and the matter of B.C. Hydro, the major power utility in our province.

Just one final question on this. Could the minister explain whether or not there are any particular challenges as the minister in terms of coordinating energy policy between her ministry and a separate colleague who has the functional responsibility, the line responsibility, if you will, for the Crown corporation? Does that pose a challenge? Do the officials in her ministry have free, easy and open access to B.C. Hydro, as perhaps they used to when their minister was responsible for B.C. Hydro? Or do they now have to go through a different process when they're dealing with matters of coordinating policy with the major Crown corporation that they have to deal with?

Hon. A. Edwards: I think it's very clear that policy put together by my ministry is policy that is accepted by the full government. If you're suggesting that it's a bilateral thing between two ministries, it isn't; it's government policy that we're dealing with. This ministry is responsible for putting it together and ensuring that it's carried out, and so on.

I might say that we do have quarterly meetings with B.C. Hydro, with the Ministry of Labour and Consumer Affairs and with the minister responsible for B.C. Hydro. But the coordination mainly comes through the Crown corporations committee, and as you know, those of us involved with Crown corporations sit on that committee.

D. Mitchell: The minister opened up a new line of questioning, which I will not pursue because I think it would be out of order, and that is the Crown corporations committee. I would dearly love to ask her about that, but it would be clearly out of order. I will save that for the minister who has responsibility for that committee.

I was asking about the relationship between B.C. Hydro and the ministry and about whether or not it was a bilateral relationship, as the minister described. Maybe another way to put it is: is the tail wagging the dog? Which is which? Who is setting policy? Is the Crown corporation setting policy on important matters relating to hydro power and energy, independent power projects and other things of that nature, or is the ministry?

The minister has indicated that there are quarterly meetings between her, her colleague, ministry staff and Hydro, which seems to make a lie of the arm's-length relationship that was being attempted here by taking B.C. Hydro away from the ministry and the minister's responsibility. That's what we're talking about here: the minister's responsibility and the accountability process.

It remains to be seen whether or not this model that the minister has revealed to the committee today is going to work, whether or not it will stand the test of 

[ Page 1434 ]

time and whether or not there is a reduction of any apparent conflict of interest by virtue of the fact that a colleague of hers sitting around a cabinet committee table is now responsible -- if they are having regular meetings, in any event. I don't know how we eliminate any appearance of conflict by virtue of that, hon. minister. The perception hasn't been dealt with to my satisfaction, that's for certain. I'm still confused as to why B.C. Hydro is not the responsibility of the Minister of Energy, Mines and Petroleum Resources. But that will have to remain to be seen.

The Chair: Order, hon. member. Again, pursuant to standing order 61, the minister has stated several times that B.C. Hydro does not come under her ministry. Could you please direct your questions to those areas that come under the direction of the Minister of Energy, Mines and Petroleum Resources.

D. Mitchell: I am attempting to do that. I think it's inappropriate for the Chair to attempt to shield the minister from these questions, Mr. Chairman.

The Chair: Order, hon. member. Cautions from the Chair are not debatable. It is the Chair's duty and responsibility to enforce and respect the standing orders. Pursuant to standing order 61, the determination has been that the debate is out of the minister's discretion. The Chair can only reflect the debate as it was brought forward. Would you bear that in mind.

D. Mitchell: I will not challenge that ruling, but the minister was certainly willing to answer the question. It was my final question, and it deals with her responsibility for her portfolio. A major event has taken place in the construction of that portfolio, as far as legislative accountability goes. That's why we're here in this Committee of Supply today: to perform the function of legislative accountability; to perform the function of grievance being expressed before supply is granted to this ministry of government. This ministry of government has changed in a functional respect, in the sense of how it reports to the Legislature and in the sense that this minister is no longer responsible for B.C. Hydro.

I'm not debating B.C. Hydro here. We will certainly debate that, when it comes up, with the proper minister. I'm not discussing B.C. Hydro at all here; what I am discussing is how this works. How does it work that the Minister of Energy is no longer responsible for B.C. Hydro? How does it work in her ministry in terms of coordination? She indicated to this committee earlier that the reason for the change was to address the perception of conflict of interest. If that's the case, I don't see how that perception is going to be dealt with in the public's mind, if in fact she's dealing with a colleague sitting around the cabinet table whom she's meeting with on a regular basis to talk about matters relating to B.C. Hydro.

My final question on this matter would be: does the minister believe -- can she tell this committee, can she reiterate her statement -- that the perception issue with respect to conflict of interest has been dealt with by virtue of her ministry and her office no longer being responsible or accountable to the Legislature for B.C. Hydro?

[4:45]

Hon. A. Edwards: I'd like to remind everyone here that I have not used the term "conflict of interest." For some reason the member wants to relate conflict of interest to arm's length. I suggested that we made the move on B.C. Hydro so that we could operate in an arm's-length relationship. The member keeps talking about conflict of interest, which has never been a matter of discussion here.

I would also like to assure the opposition House Leader that this ministry, as I told him very clearly, is responsible for energy policy in British Columbia. If he wants to make assumptions that that is not true, I'm simply not responsible for his assumptions. I believe they have no basis; he has certainly put forward no basis for them. The point is that we are responsible for energy policy. There are a number of utilities in British Columbia. Those utilities are also regulated by the Utilities Commission; we also have meetings with those utilities; we also have access to information that those utilities would and could provide. A lot of what the member has just talked about is based on assumptions, and I would remind him not to make assumptions that he's not willing to back up on some basis.

A. Warnke: I have one question regarding the coal industry that I'd like to address to the minister. In her opening remarks the minister pointed out that her ministry and the government are intending to embark on a coal strategy that involves a number of groups besides the government, obviously. She made reference to coal companies and a variety of other groups contributing to a coal strategy.

In order to get some idea as to the components of the coal strategy -- whence we've come and where we're going -- at the outset, could the minister elaborate on just what she described here as to the number of coal companies that are involved? Which coal companies are involved and what other groups are involved? Specifically, how can they contribute to a coal strategy that is essentially the making of the provincial government? I take it from the minister's remarks that nonetheless the government of British Columbia is outlining a coal strategy and perhaps providing leadership, in association with the coal companies. On the other hand, it's not altogether clear. I'd certainly appreciate it if the minister could essentially outline the coal strategy for the province.

Hon. A. Edwards: I have been trying to say very clearly that we are working with the communities in British Columbia, with the coal companies, with the workers, with the mining unions and the other workers in the mines, and with environmental groups to reach a coal strategy. As a provincial government, we feel that we want participation. We have a report that describes the coal industry in British Columbia; we have had meetings in Sparwood and in Tumbler Ridge; we will have further meetings with other interested stakehold-

[ Page 1435 ]

ers, in order for them to participate. We will then put out a draft strategy and figure out how we will carry out that strategy. When we do that, we will then have a coal strategy for British Columbia.

We do not have a strategy that is driven specifically by this government. We have a lot of ideas. We are taking the initiative to ensure that people have input to me and to other members of the ministry, and we will interact with them while we reach our strategy. We are hoping that the strategy will have some very concrete parts and some parts that every interested party will be able to take part in. We could give you any number of specific suggestions that have been made by any number of people, but right now we are working toward the strategy.

A. Warnke: The remarks of the minister go a long way to clarifying the position, because in her opening remarks, the minister hadn't.... Frankly, given the clarification of the minister's remarks -- it doesn't really matter how it reads in the Blues or in Hansard later on and so forth -- I certainly took it to mean that we have a coal strategy. The key word seemed to be "have." However, the minister's remarks go a long way to clarifying that the government essentially -- perhaps in consultation with the industries affected, the communities affected, the environmental groups and so forth -- doesn't have a strategy. They do not have a strategy. The key word here is "reach." They are "moving towards" or trying to "reach" a particular strategy.

I think it would be very fair to say on our side of the House that we would hope that all of the various groups -- businesses, companies affected, environmental groups, communities and so forth -- do come together. We would hope that somewhere down the line this aspiration will be reached. For that clarification we certainly appreciate the minister's remarks, but at the same time it is definitely something that we will have to contemplate in the future.

There are some other aspects with regard to Energy, Mines and Petroleum Resources that I would like to reopen, hon. Chair, but perhaps some of my colleagues who haven't had a chance to speak on this particular set of estimates would like an opportunity to do so.

D. Symons: My question relates to uranium mining. I am concerned that there has been a moratorium on uranium mining in British Columbia. I'd like to start off by asking what the status of that moratorium is at this time.

Hon. A. Edwards: There is legally no moratorium on mining uranium in British Columbia at the moment. This government has said that it would not use uranium. There are very strict requirements, and there is notice that there would be very strict requirements, on exploration or any of that sort of thing. Basically there is no prospect of anyone mining or exploring for uranium in B.C. right now.

D. Symons: What areas have been explored, and where are the possible minesites in British Columbia, then?

Hon. A. Edwards: There has been no exploration for uranium for six years or so. At the time that there was exploration, I'm told it was north of Kamloops and in and around the Okanagan. Certainly I don't anticipate that anyone would be looking for the grade of uranium that would exist in British Columbia, if you consider what's happening in other uranium mines across Canada.

D. Symons: I find that uranium mining has a great number of potential dangers to it, one of them, of course, being that the uranium can end up in thermonuclear weapons. It's quite conceivable, in the way that the ore is refined and re-refined after it's been used in nuclear reactors, and upgraded into weapons grade.... I believe there are four enriching plants in the world: one in France, one in Britain and two in the Soviet Union. It's quite conceivable that Canadian uranium has gone through every one of those enriching plants and ended up as weapons-grade uranium so that it could be used in nuclear weapons. There's no doubt that Canadian uranium appears in French, British, U.S. and even the former Soviet Union's nuclear weapons.

The problem is partly something called fungibility, where the uranium isn't separated. It's something like putting money into your bank account: you don't get your own money back. So when our uranium is sent to be enriched after being used in nuclear power plants, the depleted uranium 238 is sort of sloughed off, and the other comes back to us enriched for reuse in the plants. But the stuff that's left out isn't accounted for, and it can end up going into weapons anywhere around the world.

I have concerns that we in Canada should be doing something about that. One way of doing that is to have a moratorium on the mining of uranium. You simply said it's not taking place, and I would like to know if this government is investigating it. Do you have studies going forth? Do you have somebody looking into the actual putting in place of a moratorium -- something that will stop uranium mining -- rather than just the thought that nobody's interested in doing it?

Hon. A. Edwards: I assure the member that there are no prospects for people mining uranium in this province. As you know, this government has supported an anti-nuclear.... We're a nuclear-free province, so obviously that reflects our attitude as far as uranium is concerned. The problem with the moratorium on uranium exploration that was in place before was that it also limited exploration for other minerals. I imagine there's another way to do it, but that was the problem with that one.

J. Beattie: I wasn't going to speak today, but as this issue of uranium has come up, I'd like to talk about some of my concerns about uranium -- in reference, actually, to what the minister just spoke about, and its relationship to other minerals. When I served on the Union Board of Health in Penticton, we discussed a number of times the quantity and preponderance of uranium in the Okanagan Valley. As the minister has already commented on, the Okanagan is one of the 

[ Page 1436 ]

areas where there is quite a lot of new uranium. In fact, much of it is found in downtown Summerland. I heard someone talk about downtown Richmond. It's very possible that you have uranium in downtown Richmond as well.

One of the concerns we had was that in doing test drilling in any given area, unless the company is actually drilling for uranium itself, the assay does not have to reflect the amount of uranium in the core sample. It was the concern of the union board of health that drilling could be done, say, for gold, zinc or any other mineral in an area where there was a high concentration of uranium, but because the assay was not specifically directed at identifying uranium, there wouldn't be that knowledge for the public in examining the mineral records through the Ministry of Energy, Mines and Petroleum Resources.

[5:00]

One of the motions that the South Okanagan Union Board of health put forward was that in areas where high uranium content was identified, it should be mandatory when any drilling takes place in these areas that assays automatically be required on uranium content. I only mention this in passing, not necessarily for the minister's comment or reply, because I know it's not policy. I do wish to bring to her attention and to the attention of other members that it was a concern with the Union Board of Health, especially given the fact that much of this drilling takes place in watersheds where watercourses and aquifers can be affected by the drilling.

Hon. A. Edwards: There is a new health, safety and reclamation code for mines in British Columbia which is about to come out. It reflects our regulation and says under section 11.4.3 that "every owner, agent or manager of a mine at a designated site shall, during exploration at the desognated site, ensure that all drill cores taken during exploration, and other excavated or disturbed materials resulting from exploration at that site, are tested as soon as practicable...for gamma radiation to detect if uranium or thorium mineralization is present." I'm not sure if that's what you mean, or if you mean that the public does not have access to that. It looks as though the information has to be made available at the time that there is exploration, very soon after the material is removed from the site. I will take it under advisement.

J. Beattie: If the minister is saying that in all the core samples taken, the gamma radiation must be measured, then I would take that to be a very positive step, particularly for the people of particularly the Okanagan Valley. If we're just talking about core samples that are specifically directed towards uranium mining or exploration, then I think it's basically the same status as it was, in a sense. I was less concerned with the availability of the statistics for any specific site -- just that in general the studies were being done on uranium specifically. If the minister is saying that gamma radiation will be tested in all drill samples, it's a very positive sign.

Hon. A. Edwards: Actually, I didn't put in that there are designated areas that this has to be done in. The designated areas include those areas where we would expect to find uranium or thorium. They're fairly extensive; we think they cover where the possible finds might be. It is designated that it has to be done within those areas.

J. Beattie: That being the case, I wish to commend the civil servants of the Energy, Mines and Petroleum Resources ministry for taking that very positive step. That was specifically what the South Okanagan Union Board of Health was interested in achieving. I would like to commend the minister and her staff.

C. Tanner: Your party is on record, as is ours.... Neither of us like to see fuel being moved down the coast of this province from Alaska to the United States. While I know it's not within the minister's jurisdiction, has the minister made any representations to the Americans to maybe find an alternative method of moving oil from Alaska to the United States?

Hon. A. Edwards: The member recognizes, of course, that this basically isn't in our jurisdiction. There was a proposal from a B.C. company to put the low point in Washington State. We discussed that with Washington and with the proponent of the project. That has now been pulled; it won't happen.

C. Tanner: I happened to be a resident in the Yukon in 1972 when the decision to go down the coast was made by the federal Liberal government. The government of the Yukon did not agree with this. Also, it wasn't agreed with by the member who represented Victoria at that time, David Anderson, who later went on to become the leader of the provincial party. Mr. Anderson's argument was that it should be brought by pipeline from Alaska to the states below us in B.C. At that time, the Barrett government suggested that we should move oil by rail. Has your government given any consideration to that proposal?

Hon. A. Edwards: No, there's been no consideration of that by this government.

C. Tanner: Would there be a consideration in the future? It would seem to me that there is some merit in taking it off the coast. It seems to me that what's being moved by bulk carrier down the coast is an accident waiting to happen. In fact, we've had proof of it in Alaska already. Is rail another alternative that the minister might consider?

Hon. A. Edwards: We're certainly open to any suggestions and any proposals that are good for British Columbia, for our environment, and so on. One of the problems I'll point out is that it's said that the particular oil currently being brought down the coast -- it's not exported if it's going from Alaska to the U.S. -- may last for another five or six years. I don't think we could even build a rail line up there that fast. There are some practical constraints on that proposal, but we're cer-

[ Page 1437 ]

tainly willing to look at any possibilities that make transportation of petroleum products safer.

C. Tanner: I think one of the reasons that the NDP government of the day suggested the movement of oil by rail was not only the fact that it would benefit B.C. but also that they foresaw it as a way of extending the railway and making it more profitable. Of course, they were going to extend it through the Yukon as well. The American oil isn't the only oil available; there's oil in Canada, too, which might be available. Would that make any difference?

Hon. A. Edwards: As you know, there's a pipeline from Norman Wells to Alberta, and otherwise it's all natural gas. However, what we're talking about is a transportation system that involves a lot of ministries and a lot of future policy. We'll certainly be looking at a lot of things, but we haven't made any decisions on anything like this.

[M. Farnworth in the chair.]

D. Jarvis: I believe the total natural resource revenue provided under consolidated revenue is $1.28 billion -- somewhere around there. Can the minister break down how much of this money is collected within her ministry?

Hon. A. Edwards: I have excellent advice this time. The natural gas royalties are expected to be $86 million; petroleum and natural gas permits, fees and tender bonus revenue will be $78 million; petroleum royalties, $57 million; minerals, including, by the way, $8 million in mining tax, which will be collected by the Ministry of Finance, will be $37 million; and B.C. Hydro dividend at the moment is estimated at $147 million. As a matter of interest -- and this is related to our ministry; we're always interested -- the water rentals collected by the Ministry of Environment, as you may know, would be $289 million. This means that the total energy, mineral and petroleum sector revenue is $694 million.

D. Jarvis: Water taxes and rental fees are $289 million. Do you get a further breakdown on that from the Ministry of Environment?

Hon. A. Edwards: I'd like to clarify the figure I'm giving. What I gave you was the amount that the Ministry of Environment will collect for water rentals from our electrical generation utilities and from the mining companies which pay a large water rental fee -- for example, Cominco has a very large rental fee, and some other mines as well.

D. Jarvis: Do they give you a breakdown for each source that comes from -- e.g., Cominco?

Hon. A. Edwards: This information comes from the Ministry of Environment, and I'm not sure if that's what we're supposed to be doing here, Mr. Member. What we have is a breakdown of the amount of water rental that is collected from the mining industry. It's nearly $6 million -- $5.9 million. That's what comes from the mining industry through B.C. Hydro.

As Far As Utilities Go: West Kootenay Power pays $4 million, the city of Nelson pays $200,000, and $100,000 comes from other utilities. But Cominco, which is a large water-rental payer, pays $15.6 million, and Alcan, of course, has a different arrangement -- they pay $5.5 million. That was for 1990.

[5:15]

D. Jarvis: Could the minister please explain to me -- I've had several different opinions as to the Alcan breakdown -- if there's any change proposed in that?

Hon. A. Edwards: As far as Alcan is concerned, a 1950 agreement ties the water rental for the generation of power to supply the smelter to the price of aluminum. It's a formula that works for the power that Alcan uses to smelt aluminum. That will vary depending on the price of the product. For any power that Alcan generates and sells -- for example, to B.C. Hydro -- it will pay the going water-rental rate.

D. Jarvis: When you say it is tied to the price of aluminum, is that in perpetuity?

Hon. A. Edwards: Basically, it is under that agreement, which is still in force and has no term.

D. Jarvis: Can the minister advise me whether there is any discrepancy in the amount of payments between the different categories of users or individual users? Is there a global rate, or do they differ from sector to sector, like the water tax?

Hon. A. Edwards: There are two parts to the charge -- again, no pun intended. A utility will pay an amount based on the capacity figures included in its output and then another rate on the actual amount generated -- in other words, the energy amount, which is the amount that they actually put out. So there are two parts to it, as there are in a lot of energy questions: there is the capacity amount and the energy amount.

D. Jarvis: Are there any outputs that are exempted from the charges, as well?

Hon. A. Edwards: Alcan has a special contract, a licence, as you know. Otherwise, no. No one is exempted.

D. Jarvis: Insofar as the corporation capital tax -- back on that track again -- pertains to your ministry, could the minister tell us how much revenue she expects to generate by this tax?

[D. Streifel in the chair.]

Hon. A. Edwards: As far as we can estimate, it will mean about $6 million to the coal industry and about $6 million to the metal mining industry.

[ Page 1438 ]

D. Jarvis: Would you explain to me how the tax is going to be applied?

Hon. A. Edwards: That's Ministry of Finance business, and I really don't feel that I could possibly go into it.

D. Jarvis: I was trying to see whether it's related to the profits being generated by the particular mine and whether you will be applying the corporation capital tax if it is making a profit.

The Chair: Order, hon. member. The hon. minister has indicated several times that taxation comes under the Finance ministry. If you have any new questions, we'll be glad to have them through the Chair, please.

D. Jarvis: Thank you, Mr. Chairman. Would the minister agree with me that one of the more lucrative forms of taxation in the mining industry is in the non-profit category, especially in the new mining developments and -- I've covered it before more or less -- in the requirement for investing? Would the minister agree with the assertion that the current market conditions are less favourable for metals than they have been in the past and that market conditions could be described as depressed? Do you understand what I mean?

Hon. A. Edwards: If I may, I'll try and tie together what I think the member is trying to get at. I assume he's asking me if I think the mining industry is depressed. Does Gladys Knight have Pips?

The situation I think you're trying to lead to is the effect of taxes that are not profit-based. I would suggest to the member that every corporation deals with taxes that are not based on profits. The mining industry is also trying to deal with a number: sales taxes, property taxes and certainly now the corporation capital tax. Those taxes are inevitably based on something other than profit.

As I say, after we complete our review, we will certainly have a better idea as to the competitive nature of the taxation structure in British Columbia. Right now, as far as we understand it, a corporation capital tax is not unheard of in the country. In fact, other provinces have it, and it has been brought in at various times by various governments.

A. Warnke: Hon. Chair, just along this theme, in the minister's opening remarks she outlined that the combination of the corporation capital tax and increased fees for services was essentially to.... It doesn't really matter whether it's verbatim, but I believe it was something along the lines of "to send out the right price signals." That is an interesting phrase which I would really appreciate the minister perhaps elaborating on a little bit, because it signifies that from her ministry's standpoint, there has to be a shift from something to something: from the composition of taxes applied to corporations, as was the case last year.... We do not have to go away back in the past, just to last year; that pertains to this budget. Obviously the minister has calculated a combination of factors that would send the right price signals, to use the minister's words. I would appreciate it very much if the minister could be more precise in outlining, first of all, whence we've come and where we are going in this particular aspect, and what kind of right price signals she has in mind.

Hon. A. Edwards: The statement that I made about the right price signal was related very specifically to the energy industry. In fact, many people believe that the right price signal -- if we're going to have conservation and make it work -- is a signal that says that this is a valuable commodity. That's basically what I was talking about. Certainly in the energy sector it's very important that we look at pricing as a matter of signalling.

A. Warnke: The minister has elaborated on what signifies a valuable commodity. There's really not that much extra. I'm just interested in a further qualification, however, as to how the ministry determines what is and what is not a valuable commodity, and how the influence upon the price of these commodities sends out a particular signal. I'm not exactly clear, so perhaps by way of illustration, the minister could provide some examples of what commodities she has in mind and how the ministry developed an approach to signal what is a valuable commodity and what is not.

Hon. A. Edwards: I hesitate to give some specific examples, because I'm not really sure what the member wants an example to show. If we're talking about why we're talking about price signals, we want to be very sure that how we put a price on something is related to the value that it really has. In other words, what are the total costs? Under these circumstances, what are the relative costs? We're looking at that, by the way. We're looking very clearly at a method of putting a fair price on our commodities in energy. If I were an economist, I'm sure I would be able to roll off a few words that would say it very explicitly. In the commonest words that I know, we're trying to establish the value of the commodity by giving it a fair price, a price that includes all the values that we recognize are there, and not just some of the values, as has previously been done with our commodities -- in particular, energy. We would put a price on it for that. We want to ensure that all the costs are included.

A. Warnke: The minister, in her opening remarks, made mention of increased fees for services. I would appreciate the minister giving an illustration of the services that she had in mind.

Hon. A. Edwards: I have a list here of the revenue increases for some of the legislation that we have already introduced. The notice-of-work fee will bring us an additional $300,000; the mineral land tax amendment for non-designated mineral land will bring us $418,000; the Mineral Tenure Act, which was put forward in an order-in-council, should bring us $1 million in revenue; the Petroleum and Natural Gas Act 

[ Page 1439 ]

increase is $1.5 million. The total revenue initiatives for this ministry, and this budget, are $3.2 million.

[5:30]

R. Chisholm: I have a couple of questions for the minister. The first one concerns investing in mining in this province. When people or companies invest in a mine which takes a couple of years to develop and the rules change in midstream, do you foresee the government compensating them? Will the government allow them to continue under the old rules or are they expected to go to the new rules? How are we going to attract more development and more money into this province if we change the ground rules on them continually?

Hon. A. Edwards: I believe only a couple of mines have been delayed beyond the average. Those are particular problems. They are under the same review process. Again, we are attempting to assure that the review process is as efficient as possible, that it goes along as quickly as possible and that it is as coordinated as possible. Currently there is a review going ahead called the environmental impact assessment proposal, which was taken around the province by the member for Nanaimo. That is our attempt to look at how the process works and to ensure that we do not have undue delay, that, in fact, we allow the appropriate review technically and the appropriate participation by the public, and that the proponents are dealt with as expeditiously as we can in a fair process.

R. Chisholm: The second part to this question was.... We know that B.C. mining interests are leaving. What are you and your ministry doing to attract investments back into this province? Into what areas are you trying to direct them?

Hon. A. Edwards: It is incumbent on all of us to recognize that mining is a global industry. When minerals are discovered in some country, the significant mining companies of the world -- and the significant companies are worldwide -- will move to where those particular discoveries are being made. That doesn't say that we're not concerned about the fact that there is considerable interest by British Columbia companies in countries other than ours.

What we are trying to do.... I'm pleased to be able to say it again; I'd like to repeat this point, because it's crucial to what we're doing. It's important, and I believe it is recognized by the mining industry as important. We are telling the investors of the world that British Columbia has a stable economic climate and that our fiscal situation is clear and under control. We have done that by assuring.... It has recently been announced that our international credit rating has remained the same. That is very difficult when dealing with the kind of deficit we are facing. That is the most crucial, central, important thing we did. What it means, of course, is that we've had to draw back on some of our spending and, unfortunately, to increase some of our taxation. Those are difficult things to have to swallow, but we're sending that central and crucial message, which is that British Columbia is a stable environment in which to invest.

R. Chisholm: Are there any other incentives, such as tax breaks and that type of thing, to draw investment back into the province? I understand what you're talking about, with the stable....

The Chair: Order, hon. member. Again, we've extensively canvassed tax breaks, and that they are not under the jurisdiction of the Minister of Energy, Mines and Petroleum Resources. Could we carry on with questions that fall under the jurisdiction of this particular ministry.

R. Chisholm: Thank you, hon. Chair. I have to make a comment on that, though. You must realize that people who are coming from the other House don't necessarily know what has previously been asked or not asked.

The Chair: Order, hon. member. Cautions from the Chair are not debatable. Pursuant to standing order 43, the direction is that the member's questions, or those of any members, become repetitious and tedious. Carry on.

R. Chisholm: In 1990 the mine development review committee did a review on Windy Craggy, for instance, and no one has seen the results of that investigation. Again, there was a mine review done by Geddes in December 1990, and no one has seen that. Are those going to be made available by this government? They were not by the former government.

Hon. A. Edwards: The study conducted by Geddes Resources is already public; the other studies will be made public.

R. Chisholm: When will they be made public, hon. minister?

Hon. A. Edwards: We expect to make those studies public when we announce the process that the continuing evaluation will take.

D. Jarvis: The minister is no doubt aware that the technology for extracting more minerals from more difficult or environmentally sensitive situations has increased remarkably in recent years. There is a whole new range of methods that now makes it possible to revisit the old mines and extract the minerals or resources that were previously untouchable. However, the problem is that many of these areas that were first mined decades ago -- when we were much less environmentally aware than we are now -- have sustained some environmental damage which still needs to be cleaned up. If corporations want to go back and take out more of those resources, I assume cleaning up the mess that has already been created would become their responsibility. This makes many such ventures economically unattractive to companies, yet there are resources there for the taking. Has the minister considered 

[ Page 1440 ]

implementing any tax breaks or other incentives to help companies go into these sites, extract these resources and restore the environment of the minesites?

Hon. A. Edwards: We would negotiate with a company that was interested in developing a site that had not been economic if the environmental cleanup would make their new venture uneconomic. However, I would also say that any proposal would have to go through the review process.

D. Jarvis: With regard to the Energy Council, within the body of the bill itself there's a subsection on the council's mandate: "...the council must prepare, with public involvement, and submit a provincial energy plan, at intervals to be established by the minister in consultation with the chair of the council, to assist in developing British Columbia's energy policies...." Can the minister give assurance that any and all such reports will be made available to the House?

Hon. A. Edwards: I'm reluctant to discuss clauses of the bill, which is currently before the House and which the member can ask questions on later. Not that I'm reluctant to talk about the council, because I would like to. However, I would ask him to reserve his question and ask me when the bill comes to committee. At this time, Mr. Chairman, I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 5:41 p.m.

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