1992 Legislative Session: 1st Session, 35th Parliament
HANSARD
(Hansard)
TUESDAY, MAY 12, 1992
Afternoon Sitting
Volume 3, Number 3
[ Page 1465 ]
The House met at 2:08 p.m.
Hon. L. Boone: It gives me a great deal of pleasure today to introduce two very special people in the gallery today: a good friend of mine from Prince George, Donna Sacuta; and with her is her husband, who probably writes to more people in British Columbia and in Canada than anybody else, the MP for Prince George-Bulkley Valley, Brian Gardiner.
V. Anderson: Members and families of the Canadian Search Centre for Missing Children are visiting Victoria, and they're in the House with us today. Would the House join me in bidding them welcome.
L. Fox: It gives me great pleasure today to introduce to this House a very fond member of our family -- in fact, two members of our family: my daughter Debbie and her husband, Ken Dickson. Would the House make them truly welcome.
J. Dalton: I'm pleased to say that today there is a class of grade 5 students visiting in the gallery from Collingwood School in West Vancouver accompanied by their teacher, Mr. Jamie Porpaczy. Would the House please make them welcome.
Hon. E. Cull: Hon. Speaker, my guest today is Mr. George Clark, who is the president of the Canadian Liver Foundation. I'd like to ask the House to make him welcome.
F. Randall: Hon. Speaker, in the gallery today is my wife Aileen Randall, and with her is her sister Audrey Clark from Portland, Oregon. Would the House please make them welcome.
Hon. D. Zirnhelt: I would like the House to help make welcome some people who are in the precincts -- I think too busy to actually be in attendance, although I was checking -- Councillor Lorne Cahoose and Mike Holte from the Ylkatcho band, Cameron Beck from the tribal council that services that band and Dave Neads from the West Chilcotin Community Resource Association. I would like the House to welcome them to the precincts.
F. Garden: Also on the precincts but too busy to be here is a constituent from Cariboo North, Chief Roger Jimmie. I ask that you join me and make him welcome.
AN ACT TO INCORPORATE THE
COQUITLAM FOUNDATION
B. Copping presented a bill intituled An Act to Incorporate the Coquitlam Foundation.
B. Copping: Hon. Speaker, this act creates a perpetual body to receive donations in trust. The net annual income from the donations will be devoted perpetually to charitable purposes, principally within or near the district of Coquitlam. Such charities would include provision for needy people, educational advancement, scientific or medical research, betterment of underprivileged or delinquent persons, promotion of recreational activities, and conservation of human, natural and heritage resources. This is a non-profit organization formed by a group representing people and organizations within the district of Coquitlam. It is virtually the same as foundations of Mission and Chilliwack, which were passed by this House.
Bill Pr401 introduced, read a first time and referred to the Select Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills.
VANCOUVER SCHOOL OF THEOLOGY ACT
M. Farnworth, seconded by the member for Vancouver-Langara, presented a bill intituled Vancouver School of Theology Act.
Bill Pr402 introduced, read a first time and referred to the Select Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills.
SUMMER JOBS FOR STUDENTS
D. Mitchell: I have a question for the Minister of Advanced Education. Students are having special difficulty this year finding summer jobs. Last week the government told students it would eliminate more than 1,600 career-related jobs on campuses. This decision was announced five weeks after the end of classes. Will the minister agree that his government's indecision has hurt the chances of students to find summer jobs?
Hon. T. Perry: No, I would not agree. Decisions were taken in the provincial budget announced on March 26. There was no indecision on our part. We made some difficult decisions, which we would prefer not to have been forced to do, but which lie in the context of a $1.79 billion deficit. That's despite $1 billion in savings to the taxpayers in the budget process, which lie in the context of many other difficulties in employment in the forest and coal-mining industries and the collapse of the town of Cassiar. Throughout the province people are having difficulties. We used our resources in the best way we knew to preserve the most essential jobs for students in the tourism sector. I do not agree with the member that we did not deal fairly with students.
[2:15]
D. Mitchell: Supplementary, hon. Speaker. The minister's answer is simply not good enough. This government knew it had to make some tough choices. Can the minister inform the House why the government did not work with the private sector early on to help replace some of the students' summer jobs that he has cut this year?
[ Page 1466 ]
Hon. T. Perry: Hon. Speaker, we share the opposition's concern, and we would have liked to have done more for students. I hasten to emphasize that we froze tuition fees, we raised the weekly allowances on the student loan program and we have worked very hard to get the federal Secretary of State to eliminate the 3 percent grab-back on student loans. We have allocated those funds which were preserved in our budget, despite taking our share of some of the pain that everyone else in the province is having to feel.
As for the funds we had available for student summer employment creation, we targeted those funds to where we thought they would have the maximum impact not only on student job creation but on the economy of the province, which is the tourism sector.
Although we agree with hon. members that we would have liked to have done more, the reality is that B.C. is facing some serious economic difficulties. Those are shared all across the province, and we have no compunction in saying that...
The Speaker: Could the minister wrap up his remarks, please.
Hon. T. Perry: ...everyone has to do their fair bit.
D. Mitchell: Final supplementary question to the minister. The minister refuses to answer my questions. This government claims that it is on the side of students, yet it has cut the Environment Youth Corps, student venture loans and now the Challenge '92 program. Is that what the government considers to be "on the side of students"? When is this government going to stand up for students in our post-secondary institutions?
The Speaker: The minister for a brief reply.
Hon. T. Perry: I'm not sure if there was anything other than a rhetorical question there. There were problems, as the member well knows, with programs like the student venture capital loan. In one case, students had bought cows to fatten them up for slaughter and called that a business venture. We targeted the funds we had available as carefully as we could to real job creation for students. Yes, we would like to do more, but these are tough times, and we have to live within the closest we could come to a balanced budget.
KEMANO 2 PROJECT
L. Fox: My question is to the Minister of Environment. Yesterday the minister promised a public hearing on Kemano 2. Given that there's significant economic opportunity in the northwest, and substantial concern in the Nechako Valley, can the minister advise this House when we can expect that process to begin?
Hon. J. Cashore: The fact is that the nature of the review will be the subject of an announcement in the very near future.
L. Fox: Given that you made the statement outside the House, the legal requirements now may fly in the face of a consultative approach, which you support. Can we be assured that the process the minister puts forward will be meaningful and not just a consultative charade?
Hon. J. Cashore: The answer is yes.
The Speaker: Final supplemental, hon. member.
L. Fox: Can the minister also tell this House whether or not he has sought legal advice as to what his authority is to order this new review?
Hon. J. Cashore: The answer is yes.
COMPETITIVENESS AND
ENVIRONMENTAL STANDARDS
J. Tyabji: My question is to the Minister of Economic Development, Small Business and Trade. With regard to the Price Waterhouse study on B.C.'s competitiveness, does the minister feel that the environmental regulations governing B.C. companies are tougher than the Americans', and does he think these regulations require capital investment?
Hon. D. Zirnhelt: Do we have half an hour to answer the question?
The Speaker: A brief reply, minister.
Hon. D. Zirnhelt: Sorry, that was a rhetorical reply.
I'm not sure which Price Waterhouse study you're talking about. My ministry did a study on the competitive advantage of advanced manufacturing, and the calculations were verified by Price Waterhouse. I think you'll find that if Price Waterhouse wants to take that much credit in that alone, we stand by the calculations. If you have any other information on that industry, we'd be happy to take it.
With respect to whether or not environmental regulations are an impediment, let me say that environmental regulations protect the quality of life, and that attracts more people here than to other regions.
J. Tyabji: A supplemental. That wasn't an answer to my question. My question is again to the Minister of Economic Development. Does this minister agree that taxing capital which has been invested to increase the environmental standards of a company is not only a disincentive to be environmentally responsible but also puts B.C. at a competitive disadvantage?
Hon. D. Zirnhelt: Again, if you're not satisfied with the answer, I'm happy to take it on notice and give a complete and lengthy reply to your question. We have, in fact, a tax holiday for new investment, and that's really important to keeping industries competitive. They can get those tax credits -- the tax holiday -- by making appropriate investments.
[ Page 1467 ]
J. Tyabji: My final supplemental is again to the Minister of Economic Development. Will this minister admit that despite the findings of the Price Waterhouse study, there is no way that a company doing business in B.C. can possibly be competitive with the U.S. northwest and still adhere to the necessary environmental standards of the province?
Hon. D. Zirnhelt: No.
Interjections.
The Speaker: Order, please, hon. members.
Hon. D. Zirnhelt: We generally don't ask accounting firms to verify environmental regulations. If you are referring to a special Price Waterhouse study, I'd be happy to look at it. But the study stands on its own. We are competitive with respect to adding up taxes, labour costs and those input costs. If you want to provide any evidence, we'll get the Minister of Environment to answer, but as far as I know, our environmental regulations in the advanced electronics manufacturing sector, which is the subject of that study.... It has nothing to do with environmental regulations.
CORPORATE CAPITAL TAX
F. Gingell: While we're on the subject of the corporate capital tax, I have a question for my friend the Minister of Finance. This side of the House was really pleased to note that the Minister of Finance has finally admitted that he made a mistake in one section of the corporate capital tax, as documented in his press release of April 22. Will the Finance minister now admit that the entire corporate capital tax is a mistake and remove this harmful legislation from the order paper before the last corporation turns out their lights and moves south across the border?
Hon. G. Clark: I look forward to the debate on the corporation capital tax, and I hope we have that when the bill is before the House. If the member wants to ask a question in question period on a subject that is before the House, I'm delighted to answer it in any event.
In the last election campaign we said to British Columbians that business would have to pay their fair share. As we went through and inherited this enormous financial mess, we looked at the sources of revenue available, and we said it is only fair that business pay their share. We campaigned in the election for minimum corporate taxes to raise $200 million. The corporation capital tax raises less than that. I'm not happy with any tax increases in this budget. No one on this side of the House was happy with that. But we're trying to protect the central health, education and social programs. The members opposite want us to eliminate the capital tax, but they want us to increase spending, and they want us to balance the budget. The reality is you can't. These are tough choices the government has to make.
On this question of the capital tax, I'll be delighted to debate that at great length when it comes before the House.
FRENCH-LANGUAGE SCHOOL SYSTEM
G. Farrell-Collins: My question is to the Minister of Education. The Premier is quoted today in the media as saying that B.C. is looking at setting up a separate French-language school system." An admirable goal; however I'd like to ask the minister if she can tell us where she and the Premier intend to find the funds to supplement this group.
Hon. A. Hagen: As all members of this House know, there is a task force on francophone education, which is before the public for their advice -- consistent with the constitution, which guarantees rights to people of francophone descent in our province. The government will consider the advice of the public, and will be making its announcement at some time in the future regarding this matter.
G. Farrell-Collins: The minister still fails to answer the question, which is pertinent. I'm sure the teachers and the school boards of this province would like to know where the ministry -- and the Premier, for that matter -- plan to find the funds to pay for this system.
Hon. A. Hagen: Hon. Speaker, as part of this study, working arrangements between the province and the federal government consistent with the constitutional requirements are being discussed. They will then be presented to the public as part of our recommendations on this matter, once the public policy has been reviewed, based on consultation with people in the province.
CORPORATE CAPITAL TAX
W. Hurd: I have a question for the Minister of Finance on the corporation capital tax. Is the minister concerned that while losses mount in our resource sector, companies may be induced to defer expansions to their capital asset base in order to avoid shouldering an even heavier burden of corporation capital tax?
Hon. G. Clark: The best thing that we can do for business and the best message we can send for the investment climate in British Columbia is to get our deficit under control and to show British Columbia businesses that this government means business when it comes to managing the province's finances and cleaning up the mess we inherited from the Social Credit Party.
W. Hurd: This has got to be a first for British Columbia: corporations sliding toward oblivion, based on expanding their assets in this province.
A question again to the minister on the corporation capital tax. Is the minister receiving submissions from B.C. companies -- particularly resource companies that are in a serious loss position -- about how much tax they can expect to pay on their assets in the coming fiscal year?
[ Page 1468 ]
Hon. G. Clark: Hon. Speaker, I haven't been inundated with letters supporting the capital tax, and that's not surprising, of course. Let me make it clear that four other provinces have a capital tax. We're the only province in the history of Canada to introduce a capital tax with an investment holiday for new investment for two years. We don't penalize business that wants to invest in British Columbia. That's innovative. It shows that this government is sensitive to the needs of business, and that it's the most progressive capital tax in Canada.
CANADA HEALTH DAY
Hon. E. Cull: Hon. Speaker, I'm pleased to inform the House today that May 12 is Canada Health Day. The theme of Canada Health Day this year is a timely one. It says: "Your health, your health care system -- protect both." This government is taking steps to do that.
Across Canada right now governments are facing difficult financial situations. The multibillion-dollar health care system is taking up an increasing amount of our resources, making for very tough choices. This government is prepared to make those tough choices. That means new directions, which are outlined by the Royal Commission on Health Care and Costs.
Staying well no longer simply means a visit to the doctor or a trip to the hospital. We have to start paying more attention to social factors: having a job, a clean environment and a decent place to live. All of these are crucial for a healthy mind and body. We are moving to bring health care services closer to home -- into the community and into the hands of British Columbians. As a result, more emphasis is being placed on community and family health, health promotion and prevention.
[2:30]
Hon. Speaker, I mentioned prevention. Today I would like to outline a concrete step that this government is taking to improve the health of all British Columbians. As part of Canada Health Day, I'm pleased to announce that the Ministry of Health, through the B.C. Centre For Disease Control, is undertaking the first phase of a children's immunization program for yet another serious disease. This disease is hepatitis B. By the end of this fiscal year we will make the hepatitis B vaccine available to all grade 6 students in British Columbia. In successive years we hope to be able to expand this program by extending it downward to progressively lower grades, so that eventually all children will be immunized as part of the regular infant immunization program. British Columbia is the first province in Canada to introduce this broad-based program for hepatitis B. Importantly, it's also in keeping with the recommendations of the royal commission, the National Advisory Committee on Immunization and the Canadian Pediatric Society, among others.
It also reflects our commitment to the expansion of our existing immunization program for adults at high risk. A pilot program was begun in May '91, and it has been providing immunizations for about 3,000 people per year who are considered to be in the highest degree of risk for this disease. Beginning this year, as part of our expanded program, we'll be providing immunizations to as many as 10,000 additional individuals who are also considered to be at risk from exposure to hepatitis B, particularly students in the health care profession area.
Our action today is needed because B.C. has the highest rate of increase in reported cases of hepatitis B of anywhere in Canada. In 1980 there were 16 cases reported; by 1990 the number of cases had risen to 887. It's a very significant increase. The cost of hospital care in connection with hepatitis B in 1990 is estimated to be at $1.5 million. We will be purchasing up to 1,000 doses of the vaccine through the Centre for Disease Control, and the immunization program will be expected to start in the next few months.
I want to take a moment here to pay tribute to Mrs. Bobbi Bower, whose daughter, Autumn Lisa Bower, died from hepatitis B in 1989. Mrs. Bower has been a tireless supporter of this vaccination program, and today we have to recognize her efforts over the last couple of years to bring this to the attention of government and the health care profession.
Polio, measles, mumps, rubella, diphtheria, whooping cough, tetanus -- only a generation or two ago these terrible diseases took a real toll on our population, particularly our young people, but with the advent of new vaccinations we've witnessed the miracle of almost completely eradicating them. As it stands now, more than 95 percent of all children in British Columbia have been immunized against these diseases by the end of their first grade of school. Today we take the important first step of adding hepatitis B to the list of diseases that we hope to eradicate in this province, and I think this is a very appropriate way for us to celebrate Canada Health Day.
G. Wilson: It's my pleasure to rise in response to this ministerial statement and say that the Liberal opposition in this House -- and I believe all British Columbians -- welcome this statement from this minister today. This is indeed a very positive step with respect to immunization of British Columbia's youth, and Canada Health Day itself is a very important day for all British Columbians.
We are encouraged on this side of the House every time we hear this Minister of Health and any members of her government say that they are moving toward the implementation of the recommendations of the Royal Commission on Health Care in this province. We believe that we cannot move quickly enough to get consultation -- adequate and proper and effective consultation -- with health care providers in this province, so that we can in fact put in place the recommendations of this commission.
This statement today is indeed welcome. We welcome the extension of this immunization program so that all British Columbians can feel safe that this disease will in fact be eradicated from this province. The rise in number of reported cases that the minister has alluded to today is well-known; it has been well-reported in the media in this province.
[ Page 1469 ]
Let me say in closing that whenever we can take a positive step toward the maintenance and protection of the people of this province with respect to their health care, that is something that we on this side of the House will welcome. Whenever we take a positive step toward the implementation of the royal commission recommendations, we on this side of the House will support that. Whenever we can as a community work together -- all of us, in cooperation and in full consultation -- toward the implementation of new and better ways of delivering health care to the people of this province, we in the Liberal opposition will support that proposition. It is my honour and my pleasure to rise today and congratulate this minister on this statement.
L. Fox: The Social Credit caucus would also like to recognize Canada Health Day and support the theme of protecting our health care system. We understand the importance of the initiatives and the statements made within the ministerial statement and certainly support those statements.
By way of history, I would like to briefly touch on some of the Social Credit's first actions when it formed government back in 1952. One was to introduce a new universal hospital insurance for British Columbians. A decade later the Social Credit government brought into the province the first ever medicare scheme for poor people. In 1968 we were one of the provinces that led the fight in pressuring the federal government to create the national medicare program that we enjoy today. Our commitment to good medical care for all British Columbians continued as we expanded to the point where one-third of the budget for provincial expenditures went to health care. By 1991 the province of B.C. was spending more of its budget on health care than almost any other province in Canada. Throughout these negotiations, legislated wage restrictions and an innovative pension deal, we did our best to keep costs under control and to keep hospitals open for the benefit of all British Columbians.
That's why I'm sad to see the neglect that this government has shown to health care in its first six months. We have suffered an unnecessarily long hospital strike -- a situation that could again blow up almost daily. We have seen the doctors stripped of their rights and denied the basic elements of their negotiated contract.
The minister in her statement makes reference to the Royal Commission on Health Care and Costs. I too make reference to one specific issue within that commission: health care services in rural and remote areas of B.C. What the initiatives have done up to this point, in this government, is cause many of those rural and remote-area doctors to look for employment elsewhere -- other than B.C. I cite you an example in Prince George alone, where seven doctors are looking for employment in the U.S. because they no longer feel they're wanted in British Columbia. We have seen patients shipped out of this province for treatment by the same people who told us not 12 months ago that their government would always treat British Columbians at home. The list goes on and on, but it adds up to one thing: stability in labour relations in the health care field is not on this government's agenda, and without labour stability there can be no protection for our health care system.
Hon. G. Clark: I call Committee of Supply, both sections. In Section A will be the Ministry of Economic Development, Small Business and Trade, and in Section B will be the Ministry of Forests.
The House in Committee of Supply B; M. Lord in the chair.
ESTIMATES: MINISTRY OF FORESTS
On vote 41: minister's office, $377,000 (continued).
L. Fox: It's really too bad that almost three hours has elapsed since the minister got into his huge barrage of political gibberish. Really, I took exception to some parts of it. I have to bring him back to those particular areas. If the minister wants to use the estimates for political harangue rather than to deal with what's in the best interests of the people of this province, I guess he's free to do so, given that he's in charge of the agenda.
However, I really believe that he should feel somewhat bad about the statement in which he downplayed a major initiative that involved hours and hours of volunteer work in the development region. You belittled the policy that was brought forth through the regions, identifying the fact that two ministries didn't communicate, and, by putting words in my mouth, you turned that into what you interpreted as a political failure. I submit to you that it was not a political failure, but indeed a lack of communication between the Forests ministry and the Highways ministry of the day. Hours of work were put in by those locally elected individuals to bring forth a policy, which was given a great deal of respect by the previous administration. I think that it was belittling a process and belittling individuals, which really doesn't befit a Minister of Forests.
Hon. D. Miller: I think I indicated some time ago that I liked this House and I liked the debate. Occasionally I do get overenthusiastic, but that's the nature of the place. Certainly, hon. member, if I have appeared to offend people in the community who have devoted work to programs and policies, it was not my wish to do that, but rather to engage in the kind of vigorous debate that, I think, produces the best results for all British Columbians.
L. Fox: I certainly accept the intent and the fun that we can have within these chambers, and I respect the fact that it is all part of the process. However, being one of those locally elected individuals who works so hard at somebody else's program, I can assume what those people would have felt if they read Hansard. Therefore, I am pleased that you've responded in the way that you have.
Let's get back to the business at hand and talk about the issues of forests. I'm only going to ask you one or
[ Page 1470 ]
two questions, and then I'll turn the opportunity back over to the Liberal critic.
Given your many concerns and statements, not only while you've been minister but beforehand, about the ministry's capability of carrying out the basic functions of monitoring and auditing our forests with respect to our silviculture practices and reforestation responsibilities, are you satisfied, now that you're the minister, that those concerns are being dealt with and that the ministry is able to monitor and audit, so that we can be sure the emphasis is on the correct area?
Hon. D. Miller: I did indicate in my opening remarks that for this fiscal year our estimate is that we intend to do 150 percent more inspections than were done in the previous year. We're aware of some of the previous reports from the auditor general with respect to the auditing and monitoring of activities on tenures. We take that responsibility seriously, and we hope to do more than has been done in the past.
L. Fox: Thank you, Mr. Minister. In preparing myself by going through Hansard of previous years, I ran into a very interesting area. In July 1990, when he was a critic, the minister noted that 20,000 jobs had been lost in the forest industry between 1986 and 1989, even though the allowable cut had been increased by 13 percent during those years. Can the minister tell us how many jobs will be lost by a 20 percent reduction in our forest lands due to the park policy that this government has brought forward?
[2:45]
Hon. D. Miller: I only wish that the government of the day had paid as much attention to what I said at that time as members of the opposition now appear to be. Bearing in mind that the proposed study areas are that, study areas, and given that we included areas that are fairly significant in terms of their forest values, we had estimated a 4 to 5 percent impact on harvest levels as a result of that plan being fully implemented, ultimately until the end of the decade.
I've also taken some pains to describe what I view as opportunities and to portray the rather complex nature of the forest industry. A good example, in terms of the actual increase in harvest but a decrease in jobs, was the result of the rigorous exercise that the industry went through in the early eighties induced by the severe recession at that time, where lots of fat was trimmed by companies at great expense to working men and women in B.C. Generally, I've indicated that there is potential for growth despite the decline in the AAC, for a variety of reasons that I've talked about: more secondary manufacturing; remanufacturing potential in terms of some of our market opportunities in the three major markets -- the United States, Asia-Pacific and the European market -- and the value of our highly prized resource. There's lots of potential.
To some degree the employment levels and the level of economic activity in any particular industry are a combination of factors. The policies that we have to promote, for example section 16.1 sales, and the degree to which capital and entrepreneurs are prepared to take advantage of those potentials that I've described.... There's some pretty good growth in the sector that we are promoting the most, which is valued-added or secondary manufacturing. As we progress in years, I'm confident that we'll see more of that, and we'll also see a changing economic face to this forest industry.
We talked about what the industry had been like 50 years ago and what it might be like 50 years from now. While nobody has a crystal ball, we've learned some lessons historically in terms of economic development. We have to maintain a very high degree of flexibility in our manufacturing capability; we have to keep as one of our guiding principles the need to satisfy the customer, if I can put it that way -- to know and anticipate what demands are. Some of our competitors are doing that in a far better manner than we are. For example, the Japanese are putting much more effort into determining what customers want. We have to be aggressive; we have to be very flexible. I don't think we can develop the kind of monolithic structures that we've seen developed in the past.
I've always said that British Columbians have just as much talent, ingenuity and energy as anybody in any jurisdiction of the world. I've got a lot of confidence that we'll do extremely well. We'll see an increase over the years. We'll see an increasing number of jobs per unit of timber harvested, and that will grow progressively. I've got a lot of confidence that we can do that. I guess overshadowing my remarks is the sort of caution that you can't draw any absolute conclusions based on numbers of today or numbers from ten years ago. You have to look at all the factors I've talked about and at the potentials that exist in looking ahead.
L. Fox: I thank the minister once again for his response, but unless I missed something, it really didn't answer the question. I well recognize that the industry will have to change in terms of getting more value out of the existing forests. I understand that, but I also understand that that change will be over a period of time. It will not happen tomorrow. However, the parks policy that you've announced will be in effect far sooner than the change will be in effect. I know you mentioned 43 or 45 percent, but I couldn't get the words before and after it. What impact will the loss of this parkland on our forest productive land create in terms of lost jobs?
Hon. D. Miller: It's difficult. I did try to answer the question, and I said at the outset that I can't give you a statistical-based figure or number. It's a function of all the things I talked about in my last response. It's also a function of economics. I want to mention two aspects: one is that my sense is that the plan might accelerate the development of more value-added industry in B.C. That goes back to a theory I expressed yesterday: what induces economic efficiency? What causes entrepreneurs in any field to be entrepreneurial, to invest their time and energy in seeking new ways to do things? We don't live in a static situation. It's dynamic. It's ongoing and constantly changing.
My sense of what induces change is the need for change. Take another sector, automobiles, where the North American industry really had developed a good market, relatively good growth from the war years up
[ Page 1471 ]
until fairly recently, steady increases, full employment, unchallenged in the world. Then along came the Japanese. When they first penetrated the North American market, nobody was worrying about it too much: what are these funny little cars running around the road? But it slowly started to dawn on us that people actually liked these funny little cars. They're reliable; they're fuel-efficient; they're sporty, I guess. They appeal to all the things that North Americans like. Next thing you know people started saying: "Look, this big boat I'm driving consumes ten gallons of gas every five miles" -- or whatever it might be. "It doesn't really appeal to me that much. I can buy one of these little things. It goes just as fast; it's fuel-efficient, and it's comfortable and safe, etc." We've heard a lot of complaining out of the North American auto industry, but ultimately what have we seen? We've seen the North American automobile industry recognize this changing market, this other competition for the same market, and now we see those same kinds of cars being built by North American automakers. In fact, a lot of them are in economic partnership with Japan or other countries.
So what induces change in any society or in any given economic activity? If the status quo prevails, there will never be any change. We need to change. We have an industry that's evolved essentially on the basis of relatively cheap raw material, and perhaps that was appropriate in terms of opening up the vast regions in the north that required significant capital investment to open up and establish some industrial infrastructure. But we cannot simply rest on our laurels and say that this will provide for us forever, because we know it won't.
We look around the world at some of the competition. Look at the pulp industry, for example. We have to seriously look at the pulp industry in B.C., which has been a great provider -- it's been a source of significant capital investment -- and say what's our place going to be in the world ten years from now? We can see the development of much lower-cost pulp coming from some of the southern hemisphere countries: New Zealand, Chile, Argentina. Some people said they could never match our quality. Well, next thing you know some pretty smart people on the technical side started working that pulp over; and by gosh, they're almost matching us on quality -- not quite. So when you look at the large gap in price and the small gap in quality, the buyers, whether they be Japanese or whatever, are saying: "Well, look, we can live with this." Next thing you know, if we just sit back and say we'll be okay forever, we won't be. We'll be priced out of the market, and we'll be scrambling. What will that do? It will force change in our industry. That's my sense, albeit a theoretical one, of how things work in an economy. But I think it's quite a practical view.
What I'm suggesting is that if anything, the plan that's been laid before the public of B.C. is desirable, publicly supported and achievable. It will act as a spur to the kind of economic activity that I've described. I also think that it will provide a greater degree of confidence in political leaders -- that we're leading on an issue that's clearly important. It will provide us with a far better message in terms of our international marketplaces. There's some trouble in terms of some exaggerated claims that are made about activities in British Columbia, so we provide greater comfort in terms of our international -- particularly the European -- marketplaces. And it will induce change.
I think it's wrong-headed to simply say that in the past we lost this number of jobs tied strictly to the annual harvest levels and that we're going to lose so many jobs in the future. I think the Liberal critic quoted 39,000; that's wrong. My economic theory is right; we have to be competitive. We've got the brains, the energy and the entrepreneurs, so let's get at it.
[3:00]
Hon. B. Barlee: I would like leave of the House to make an introduction.
Leave granted.
Hon. B. Barlee: I'd like to take this opportunity to welcome the grade 5 and 6 class from Osoyoos Elementary -- deep in the heart of the desert country and my hometown -- and the parents who have accompanied them. You won't find Victoria quite as nice as Osoyoos, but it's a little bigger, so you may enjoy it nevertheless. Welcome here.
[R. Kasper in the chair.]
L. Fox: I wasn't going to continue, but the automobile analogy that you put forward is one that I'm really familiar with, given that I'm in that field of endeavour. I only wanted to carry it one step further. While I don't disagree with some of your theory, the part that I am concerned about is that the present state of that industry is seeing horrendous unemployment and shutdowns, with plants shutting down all over. If that theory carries into the forest industry, then I assume we would see the same immediate kind of problem, where we have the shutdowns before we see the improvement. How many jobs do we lose in the industry while this theory of yours is taking place perhaps many years down the road? I guess that's my immediate concern: the shrinkage of the annual allowable cut, because we've infringed upon it again with a park policy that takes.... And let's face it, they will not take the mountaintops where there's very little timber. The park policy and the people that are asking for that want the valleys and the meat of where some of the best timber in B.C. is.
Obviously that's a concern that I have, but I'll leave it at that and turn it over to the Liberal critic.
Hon. D. Miller: Very briefly, although I'm theorizing, I think I'm absolutely correct. I think any student of that would agree with me. I'll give this one back to you. I mean no disrespect; I didn't realize you were in the car business.
The North American automobile industry did not have to go through what they went through. It was not the government's responsibility to say to the automobile industry: "Get off your backsides and start dealing with these issues." It was up to the people in business.
[ Page 1472 ]
I've heard it said by members of your party -- and maybe you've said it occasionally too -- that it's not government's job to go out there and tell people what to do.
I've said we have opportunities in this province; I've described these opportunities. Surely there are British Columbians out there who are quite capable -- in your constituency and around the province -- of understanding that situation and of getting on with the job, because the opportunities are here. Let's get those people out there who have those ideas and get them to work. Government can't solve all the problems in this world or in this province. That's a maxim I've heard quite often from your side of the House.
L. Fox: Sorry, I didn't want to do this, but I find it rather challenging. I concur that government shouldn't be out there telling individuals what to do. It's government's job to create a positive climate which allows the corporations to achieve the necessary funding and banking and all those other increments it takes to put together an initiative.
I would guess that the reduction that will be caused by the park policy in the forest industry is causing a huge amount of fear in the financial institutions of this province. Those value-added initiatives that you talk about are having horrendous problems achieving financial dollars in order to make their dreams come true. It's all part and parcel of a climate to do business, and that climate has to be positive. Any steps at all by government that take away some of the known securities -- and therefore puts more doubt in the minds of the financial institutions -- is detrimental to the very initiatives that you're suggesting will be created.
Hon. D. Miller: Let me draw a distinction between the need for capital to have some certainty versus the need for capital to have absolute comfort. Absolute comfort produces nothing; certainty allows planning. What have we had at least for the past decade in terms of land use conflict and the central issue of parks and wilderness? We have had battleground after battleground after battleground -- most of them, I submit, where the government didn't even know they were going to erupt.
Now you tell me how a forest company can plan their activities on a land base when they don't know where the next battle is going to erupt? It's pretty difficult. They don't have certainty. Remember what I said: not comfort, certainty. This plan, as we have laid it out, provides certainty. It provides a list of areas and a timetable in which we intend to address those areas. It is clear and laid out for all to see and for capital to look at and say: "At last somebody is providing me with some basis upon which I can plan" -- at least over the time-horizon that we've laid out, which is to the end of the decade.
I'm sorry, I can't accept your notion, which I think is a gross oversimplification. I think that what I'm saying is absolutely correct. We need to provide certainty. What are the ground rules? Where can we conduct these kinds of activities? I submit that it's not just for the interests of forest companies, but it's for the interests of communities, working people in those communities and people in other businesses that are growing in this province. Tourism happens to be one of them.
It is a far better way to proceed than what we have had in the past. Surely, Mr. Member, you would not argue that we should continue with the kind of divisiveness and conflict that has plagued this province and that has robbed our citizens, companies and governments of their energy. Surely you would agree that we should go forward in a positive vein with some more planning.
An Hon. Member: Turn it all into parks.
Hon. D. Miller: We don't intend to turn it all into parks. If you're arguing that we shouldn't create any more parks, then stand up and say so. If that's your position, fair enough -- put it on the table. I don't have any trouble debating that. But I suspect that you'd be in a minority of one, even within your own caucus.
What we're doing is the right way to approach these issues. So far, in my discussions with people in the forest industry and people who represent significant environmental groups, they, and the public in general, are all saying to me: "We agree with you; we think you're on the right track."
W. Hurd: When the minister starts talking about funny little cars, it's time to rejoin the debate and try to focus our attention on forests.
I am particularly interested in the document "A Better Way for British Columbia," which was published during the election campaign. It's like my American Express card -- I never leave home without it. It always comes in handy for question period or estimates debate. It's very versatile.
In light of the debate on the estimates, we need to read into the record some of the commitments made by the current government when they were in opposition and when they were campaigning in this province, and try to orient those commitments to the kinds of numbers we see in the Forests ministry estimates. I note:
"B.C. needs a balanced forest policy to guarantee jobs in our forests for generations to come.
"The forest industry is cutting more and more wood in B.C. while we get fewer and fewer jobs. We will re-establish the link between access to wood and jobs that was secretly removed by the Social Credit government. A New Democrat government will ensure increased processing of forest products to get more jobs in B.C. A New Democrat government will provide fair access for small operators. We will work towards eliminating the export of raw logs. We will establish a broadly based Royal Commission on Forestry to make recommendations on the management, ownership and tenure of our forest lands."
Item 18:
"We will restore and protect our working forests.
"As the auditor general has pointed out, the public interest in protecting our forests has been virtually abandoned by the Social Credit government. The big companies have been left to police themselves in our forests."
[ Page 1473 ]
This is the one I love, Mr. Chairman:
"Social Credit cuts in the Forest Service have been a big mistake. The public's representatives must be sent back into our forests. A New Democrat government will take immediate steps to eliminate wasteful practices in the forest industry on both public and private lands. We will develop, with public consultation, a forest practices act as recommended by the Forest Resources Commission. Our goal is to replace every tree cut."
Item 19:
"We will end the neglect of our forests.
"Without leadership from government, conflicting interests have been left to slug it out...watershed by watershed, in the Carmanah and elsewhere. This has got to stop."
Hon. Chair, in looking at these lofty ideals, I'm having a great deal of trouble finding the reciprocation in the Forest ministry estimates. We note the reductions: management services, reduced; harvesting funds, reduced; research, reduced; inventory, reduced, if you don't consider the $10 million special fund, which the minister acknowledged yesterday he doesn't know whether he has access to or not, because four ministries are going to be sharing in the pie; and finally, fire suppression, reduced as well.
Just a question to the minister: in the light of the "Better Way," where is the commitment to the future of the forests in his estimates?
Hon. D. Miller: I don't have a copy of that document, but it sounds to me like those were excellent policies for British Columbia. I can tell you that we are delivering on all of those promises.
W. Hurd: I have questions pertaining to vote 42. I don't know whether it's the wish of the chair that vote 41 pass, or should we continue?
Vote 41 approved.
On vote 42: ministry operations, $467,914,976.
W. Hurd: Continuing to address the issues on vote 42, I note that there's been about a $2 million reduction in management services in the current year's estimates over the past year's. Can the minister advise us which programs under management services in vote 42 he is cutting to realize the $2 million saving?
[3:15]
Hon. D. Miller: Well, there's been a net reduction of less than 1 percent. We had indicated to the people that we would try to run a more efficient government, a leaner government, and still accomplish our objectives. I think what you see before you is the result of that exercise.
W. Hurd: We're looking for specifics. There's a $2 million cut in the management services budget. Is he saying that the cuts are coming equally from salaries and benefits, operating costs, asset acquisitions, grants and contributions? I mean, we're dealing with a significant reduction in overall spending.
Hon. D. Miller: Yes, there has been a modest reduction; and I indicated the general nature of that reduction. But more specifically, the revenue systems project that had been undertaken by the ministry has come to an end. There had been a modest increase for building improvements and rents, an efficiency-saving reduction of $1.84 million, in terms of that particular item where we see a reduction of 1.82 percent that is the addition of the items that I have just talked about, essentially, efficiency being the main driver. Some increases and some decreases -- most of the decrease attributed to efficiency.
W. Hurd: Continuing further on the questioning in connection with vote 42, I'm just looking at the harvesting budget, which has similarly been reduced by approximately $1 million. I'm wondering if the minister can explain where the efficiencies or cost reductions have occurred under that particular section of vote 42.
C. Serwa: Point of order. There was a wish on the part of the Liberal forestry critic to go from vote 41 to vote 42. Traditionally we debate all of the estimates of the Ministry of Forests on the minister's office vote, which is vote 41. Everything can be debated on that. I would suggest that, since there was not a quorum in the House at the time, we continue the debate on vote 41, which will allow the broad range of forestry issues.
Hon. D. Miller: Point of order. That's been the tradition in this House, and I'd be happy to continue to answer questions notwithstanding the adoption of one of the votes. If we could just agree to that, Mr. Chairman, that would be acceptable.
The Chair: Is that acceptable? Okay.
J. Tyabji: I'd like to call quorum.
The Chair: There is a quorum; there are ten members.
W. Hurd: I still haven't received an answer to where the cuts have occurred under the harvesting budget. We have a significant reduction in operating costs and asset acquisitions. Perhaps the minister can outline to the committee exactly what those two items cover, in view of the significant cost reductions in his overall budget.
Hon. D. Miller: We did campaign during the last election on achieving efficiencies in government -- to do more with less. British Columbians expect that of government. I don't think it's a sin to have a modest reduction in a line item in your budget. In fact, that's something that we should stand up and say that we've been successful at. British Columbians know what it's like to suffer reductions in their income for one reason or another. All of us must have experienced that. We know that despite that, we continue to make do; we become a little leaner -- McDonald's hamburgers instead of steaks. Governments are no different: they should have to put up with the same kinds of conditions that average British Columbians have to put up
[ Page 1474 ]
with. In the case of the management services' 1.8 percent reduction in the budget because of efficiencies, I think that's something we can be proud of. It's something we campaigned on. If I can look at a modest 1.5 percent reduction in the harvesting, knowing that we're still achieving the full program and that people are working a little harder, that's something we're proud of; and go through the line items. We're delivering the programs. Like every ministry, we would like to have more, though more sometimes isn't the answer. Simply throwing more money at problems is not the answer. Providing government ministries with more money all the time sometimes doesn't solve those problems.
We've made some modest reductions in terms of efficiency. We'll deliver our programs to British Columbia. We'll do it in our usual professional manner, and we'll try to overcome any difficulties that the budget constraints have imposed on us.
W. Hurd: I'm very pleased to hear that there's a greater efficiency in the Forests ministry, but I'm having trouble reorienting that with the claim: "Social Credit cuts in the Forest Service have been a big mistake. The public's representatives must be sent back into the forests." I think it's important for me to read into the record some of the functions under the harvesting section of vote 42. This subvote provides for advice, policies and procedures pertaining to valuation, processing, sale and invoicing of Crown provincial timber and wood resources, and the overall monitoring and functional direction of provincial wood supplies.
I find it absolutely amazing that the minister can find almost $1 million to cut out of that vital section of his budget, and stand in the House today to defend those kinds of cuts as being part of a routine efficiency within his ministry. Perhaps I can remind the hon. minister of a statement he made when he was in opposition, when a similar observation was made by the Social Credit Forests minister of the day. The minister said: "Mr. Chairman, I think it's a pretty feeble excuse. We can't do everything for everybody all at once." You said there was a payback, referring to incremental silviculture, and the Forests minister was talking about not having a limitless pot of money. I find it rather interesting, now that he is the minister, that he can talk about significant reductions in almost every area of his ministerial competence and suggest that it's a routine matter of efficiency within his ministry. Perhaps he could let the committee know about some of the discussions he had in Treasury Board when it came to establishing the figures for his ministry operations and how much of a battle he took in there on behalf of the forests of the province of British Columbia.
Where are the reductions in the harvesting budget, besides just general efficiencies? We're talking about a significant amount of money here, some $1 million.
Hon. D. Miller: Obviously I was a very effective critic; I find the new critic is now quoting me. Perhaps they're using my line of attack on the former government as a guide for their line of attack.
Let's deal with it. Let's go back. Send me over a copy of that list, because I'd like to respond to every one of those issues on the list and tell you what we've done. I'll repeat that you don't solve every problem in this world or every problem this government's got by throwing money at it.
I've indicated we're going to be doing 150 percent more inspections. We're going to be a more efficient operation, and we're still delivering the services -- in fact, better services. So don't talk to me about minor, modest decreases in the budget. You can't have it both ways in the Liberal caucus. You can't complain on the one hand that we're not spending enough money, and then complain on the other hand that the deficit's too high. You can't have it both ways. It's a lesson you should learn early if you're going to be an effective opposition.
So we're delivering the programs, and we'll do it with a little less because we're cognizant that at the end of the day it's the taxpayers who pay the bills. They pay your salary, my salary and the salaries of all the people who work for my ministry. We've got to respect the taxpayers' ability to pay.
Just let me get to some of these issues here, because I'd like to deal with some of these problems.
Interjection.
Hon. D. Miller: Well, you might learn something if you take notes. That's my advice to the Liberal Environment critic. She might learn that we should not stop logging in 90 percent of the forest in this province. We should maintain....
Interjection.
Hon. D. Miller: No, you've said it. The opposition Environment critic has been strangely silent; I was expecting her to get up during these estimates and take the opportunity to deal with the issues she thinks are important. Maybe I left that letter somewhere else; I'll have to get a copy.
We have acted with respect to a lot of those policies. We have provided a plan for ending the valley-by-valley confrontation. We have -- and I have as Minister of Forests -- started to restore the link that was in fact secretly eliminated by the former government. You may have noticed, in the TFL licence transfers that I have approved, that we have restored the link. We have inserted a pertinence clause between the forest licence and the milling facility, which the former government had secretly started to undo. We will continue that program, because we think that's important in terms of providing some security for the people in the forest-dependent communities around this province.
We will end neglect of the forests. Does the member think that a forest practices code would be fully developed and brought before the House in six months? Is that the manner in which the Liberal caucus would develop policy? No public consultation, just whip something up in the back room and rush it into the House? We'll take our time, and we'll do the job right.
[ Page 1475 ]
We've already introduced a number of measures with respect to harvesting practices, and they will be dovetailed with forest practices -- fish-forestry interaction policies that now prevent progressive clearcutting and limit adjacent clearcutting until the original clearcuts have greened up, so a free-to-grow forest is established there.
We're meeting the challenge of getting on with the issue of land claims, and I can go through every one of the commitments that were made by this party -- whether it's in my ministry or other ministries -- and tell you how we're proceeding and delivering on our political promises. But overriding it all is the fact that we inherited a budget deficit that even the Liberal Party must have been shocked at. The people of British Columbia were certainly shocked to learn the size of that deficit. If my ministry can contribute somewhat to reducing that deficit by making the modest increases that the opposition Liberal critic seems to think are bad and somehow seems to view in a negative light.... If we can have these modest increases -- 1.82 percent and 1.55 percent for a total cumulative net effect of 0.08 percent -- and still deliver the programs in a better and more efficient manner, then I would like the Liberal Forests critic to get up and applaud us for a job well done, instead of this nitpicking. Maybe we can get on to talk about some substantive forest policy issues instead of this nitpicking over a few dollars.
W. Hurd: Hon. Chairman, it's certainly refreshing to note that the minister has launched some major cost-saving initiatives in almost every part of his ministry and is convinced that none of those cuts will have any impact on the kind of service he's able to deliver in protecting the forests of the province.
[3:30]
Perhaps I can move on to the issue of research, which has featured another significant budget cut. Perhaps he can explain where the efficiencies have occurred in that rather important area of his ministry, and how he's managed to save a total of $400,000 to $500,000 in that critical area. Keep in mind, Mr. Chairman, that we're talking about inflation as well; we can actually safely add 4 or 5 percent to the cuts being proposed in these various sections of the budget when we start to assess their cumulative effects during the coming fiscal year. I'm a bit confused and concerned that these cuts have apparently been made with only minimal understanding or appreciation of the kind of activities going on in some of these subvote categories. I quote specifically on the important job of research in the Ministry of Forests: "This subvote provides for research and research extension activities to supply technology for the care and enhancement of forests in British Columbia, Including initiatives under the forest renewal plan. Research activities support forest renewal, integrated resources management and the development of decision tools. Joint ventures and/or research contracts are carried out with other ministries...." We've heard a lengthy rejoinder from the minister about the value of integrated resource management. When it comes to the nuts and bolts of his ministerial estimates, that particular section has suffered a significant cut. What gives?
Hon. D. Miller: I thought I had explained what gives. The member is absolutely right in terms of the importance of research. There's no question about it. We don't have any dispute whatsoever. There has been a modest decrease, and that's a fact of life. It's not significant. Under ideal circumstances it would be nice to see more money in research, not only from the government side but also a stronger commitment from the private sector as well. It's my view that research is fundamental in terms of making progress on the economic front. Again, I would argue, given the total allocation to research, that that rather modest decrease of something less than $500,000 out of a total budget approaching $20 million is something that we simply have to accept. We can go through this exercise on every item. I can point out to you how in some areas we can have efficiency savings where we can still deliver programs.
I would be quite frank in admitting that I would like to have more money. Any minister in this government would like to have more money, but there are limits. A budget is a balance in terms of the requirements of the province in any given sector and the ability of taxpayers to pay. The Liberal caucus was up in question period challenging the government's establishment of the corporation capital tax. Somehow I can only draw the inference that it's a bad thing and shouldn't be there. If it wasn't there, I can tell you, the cuts in this ministry would be deeper. You can't have it both ways. Fair enough: if you want to go through every line and have me stand up and give you the same answer, carry on.
W. Hurd: I'm certainly glad the minister has brought up the issue of taxation in the forest industry. After all, if there wasn't an industry, the party wouldn't be debating the Ministry of Forests estimates, because we'd have one massive parkland in the province of British Columbia. I note that the industry in this province has faced some major increases -- and not just the corporation capital tax. We've seen stumpage and forest management increases to offset the Canada-U.S. MOU in 1986. These costs rose from some $220 million in 1986 to close to $800 million annually. We've seen the increase in the value of the Canadian dollar, which has had an impact on this industry. Capital spending programs required to meet new environmental regulations in the pulp and paper sector currently exceed $1 billion, and the proposed regulations will require a further $600 billion in investment.
In addition to that, this industry is in a major cyclical downturn; industry loss has set records. At a time when the industry is reeling, you'd think that the ministry would be looking at the future of the resource in this province and would not allow or sustain these kinds of cuts in its daily operations, in favour of putting $10 million into an integrated resource fund which it may or may not have access to over the next five years. We haven't been able to determine what amount of money will be available to the ministry from that fund, and we have a significant amount of money going to the
[ Page 1476 ]
commission on resources and the economy. The nuts and bolts of this minister's ministry have all been cut. To me it makes no sense, and it makes little sense to professionals like the Association of B.C. Professional Foresters and other associations in this province.
What sense does it make to cut the budget in the Ministry of Forests and put it into funds or long-term studies which are not going to help us get on with the job of doing better inventory, better research and better silviculture in this province?
Hon. D. Miller: I certainly have not heard that from the registered professional foresters. If they have any major complaints, they'd better come and see me about then. If you have any documented evidence, then I'd like to see it, because unless somebody is prepared to talk to me directly, there's got to be something wrong with them.
I don't know how much longer I can belabour this point. I've attempted to answer in, I think, very open and candid terms about the budgeting process, the constraints that we face and the challenge to deliver the programs that are required within those constraints. I've identified some of the new programs that we have developed: the establishment of the Commission on Resources and Environment, which is absolutely fundamental, in my view, to making economic progress; and the parks plan.
I note that I'm not certain if the Liberal caucus are simply there complaining for the sake of complaining; I'm not sure that's what you're being paid for. I don't know that we fundamentally disagree. I note, in a letter to the Western Canada Wilderness Committee dated February 18, 1992, written by the Environment critic for the Liberal opposition, a line which says that the province should draw up a comprehensive long-term land use strategy for the province. That's exactly what we're doing, yet I find members of the Liberal caucus up complaining and nitpicking and nattering. So I'm a bit mystified here.
We've answered the questions. We keep getting the kind of repetition that makes this exercise seem somewhat strange to the audience -- I note the young children who are watching us today. I would love to talk about policy, because I think forest policy is a fundamental issue that needs to be debated in this province, and what better opportunity than here in this chamber today. I want to answer all the questions that are asked; I don't want to avoid questions. I like debate, so maybe we can shift gears or something.
I see the opposition Environment critic wants to get up, so I'd be pleased to answer any questions she might have.
J. Tyabji: I'd like to point out that I don't thing things are quite as simple as the Minister of Forests would have us believe. I think that my hon. colleague has been asking some very difficult questions, and perhaps the minister is trying to simplify it so that he doesn't have to answer them. But there's no question that although some of our objectives are the same, there are definitely a few problems with regard to his ministry and some of the priorities that he's set. I would also like it to be on record that we have never once asked for an increase in spending on behalf of the minister. We're just questioning where the dollars are going. Of course we don't want to see an increase in the already absolutely mind-bogglingly big deficit.
I would like to ask the Minister of Forests a few questions with regard to his policy on the old-growth forests. There's a letter that he keeps alluding to. I might mention, for the sake of the record, that we have a land use committee within our caucus, of which I am one of five members. My position is stated very clearly in the letter, and I'd like to know where the minister is coming from. I don't really need the minister's comments as to what our caucus's position is.
The minister, I am sure, has been receiving the same stack of letters that I've been receiving from Germany. My understanding is that there's been a public education campaign undertaken by certain environmental groups in Germany, the result of which has been literally hundreds of letters being received by both me and, I know, the Minister of Environment. The letters I've received have said they've also been sent to the Minister of Forests. The public education campaign has been with regard to the clearcutting of the old-growth forest and the potential for ecosystem destruction as a result of the clearcutting.
As the Environment critic, I would like to have the Minister of Forests' very specific thoughts as to what the plans are with regard to old-growth forests. I don't want to hear what committee has been set up or what's in committee or which reviews. I want the Minister of Forests' plans. I think that's where we differ very much in the Liberals. Our land use committee is not made up of unelected people. We have a land use committee of elected representatives, and we want the Minister of Forests' decision with regard to old-growth forests.
Hon. D. Miller: Actually, I wouldn't mind. I know it's not my role to pose questions to the opposition, and I would never do that, since it's not within the rules. But I must say that I have more than a passing curiosity about the meaning of a statement that reads: "Obviously there is no point in allowing any kind of logging of ancient forests." If that's the collective wisdom of your little caucus group, then I'd suggest you might want to consult somebody from outside the Liberal Party and caucus, because if it is, pretty clearly you need some help.
The issue of old growth is an extremely important issue, and I alluded yesterday to a speech I gave in this House in 1987 on that topic. I would commend the member to actually read that, because it was a very good speech and it outlined a program that I thought made a lot of sense. If that appears to be rather immodest, I apologize. The member may be aware that shortly after I made that speech, the government listened and developed the old-growth strategy. That strategy has been working since its inception to try to come up with some plan. Really, it boils right down to how much of the old growth -- and there's a very complex definition that goes with that term -- is required. How much should we put in reserves and not touch -- remove from harvesting and other activities as
[ Page 1477 ]
well, because it's my view that even human interaction in some cases is undesirable. So that question has really been at the centre of the old-growth strategy.
That strategy and the Provincial Parks and Wilderness for the '90s plan were rolled together in terms of the map that we outlined last Wednesday. So it's a compendium of that body of work that has taken place over the last couple of years. It's both a technical analysis and a public analysis, because the previous administration received input from the public about areas that they thought should be candidate areas. They were subjected to technical reviews, and in the final analysis we came out with that map. There is an extensive report on the old-growth strategy that I would be happy to send to the member, if the she doesn't already have one.
We obviously get into some disagreements in terms of debate -- that's the nature of the place -- but I don't disagree with the statement contained in your letter -- with one statement. I do disagree, however, with your statement that we should not allow logging of any kind in ancient forests. I think that is the height of foolishness.
Your statement that governments have an obligation to draw up a comprehensive long-term land use strategy for the province is exactly what we've done. One of the components of that comprehensive strategy is old growth. It's a fact in this province that many people, when they talk about old growth, automatically assume that we're talking about very, very large and very, very tall trees in valley bottoms. However, there are trees in the province that are hundreds of years old that are about that big in terms of their diameter -- very small -- and it's clearly a function of the climate, the geography, the soil, etc. It's a real mistake to think that when we conceptually talk about old growth, we always think that they are simply those very large trees -- for example, the kind that are found in the lower Carmanah Valley. That's not the case, and in terms of a kind of preservation strategy or set-aside strategy, we have to be mindful of that.
We also -- and I keep going back to this because I think it is fundamentally serious.... You talked about letters from Germany. We do get letters from Germany, and if they're in German I can't read them, but my people translate them, and we make a very sincere and honest effort to respond to them. We think it's internationally important that people try to understand what we're doing here. We face odds, very difficult odds in some cases, in trying to get that message out, which is why I keep coming back to the need for accurate information. Despite the kind of work that my ministry does in responding to those questions, it just takes one situation where there is misinformation to set us back, to set all the work we do back to the beginning.
[3:45]
The federal government recently released a report on the environment. As the opposition Environment critic, the member may be aware of it. That report on the environment made a totally false statement about forestry on the coast of British Columbia. It said that the old-growth forests on the coast of British Columbia would be gone by the year 2008 a totally false statement. I've discussed this issue with the federal Minister of Forestry. I've written letters to him and he agrees with me. I've written letters to the federal Minister of the Environment, demanding a retraction. I've been advised by the Canadian Embassy in Germany, indirectly, that that single report has caused more damage -- in terms of us trying to explain what we're doing in the international arena -- than anything that's been done in the last five years, because it came from the federal government and therefore has some measure of credibility.
These are very difficult challenges. There is a plan to deal with the issue of old growth. We do think it's important that significant areas are set aside. We think it's important from many different points of view, not the least of which -- and perhaps, fundamentally, the most important -- is the whole issue of biological diversity. It's an area that we're starting to become more knowledgeable about. I think we will become more and more knowledgeable about it.
We need those areas that we can look at, that are relatively pristine in terms of the ongoing research that I think is required. We treat that absolutely seriously. It's part of the strategy that I've been defending here in this House this afternoon, about the map that we put out last week. Old growth is part of that strategy. I'm constantly defending that, and I'm happy to defend it, because I think it makes good sense from a planning point of view. The member may not have all the literature that we have produced with respect to that question of old growth. I would be happy to provide her with that and to hear her definition of ancient forests.
J. Tyabji: If we take the minister's word for the state of the forest, it sounds as though there are absolutely no problems at all that he hasn't already tackled. I don't think that's the case, particularly.... I must say this. I have seen old-growth trees. I do understand. You don't have to tell me that some of them come this big and some are bigger. I have been on tours of forests. I have actually walked through forests and seen them, so that part I don't have a problem with.
What I'd like to go back to is these letters from Germany. No matter what, there is a problem in that a significant population overseas feels that there is a problem. That has to be addressed, because these people are saying they will not come here because of what they have seen in slide shows and what they have been told. I'm talking about hundreds of letters, and for every letter that's written there must be a few people who didn't get a chance to write but feel the same way. That's a very real problem, even if it's only a problem of perception. It still must be addressed. I'd like to know what the minister is going to do to address that problem overseas.
In addition to that, I'd like to know what he thinks in terms of the Commission on Resources and Environment. It is supposed to be an independent commission that is going away to study these issues and then report back, I assume, to the House. However, the fact that the government has chosen to pre-empt the report of that commission by giving us a map with parks on it seems
[ Page 1478 ]
to me a total violation of any independence of the commission. How could that commission then come out with recommendations significantly different from those put forward by the two ministers and the Premier? You can't have it both ways. You can't have an independent commission that's supposed to be coming up with something on behalf of the people, and the ministers coming up with a map that they've drawn up and that they think is just wonderful -- and isn't this great? I commend the ministers for taking the initiative in making a decision on their own, but it seems to me that the easy decision is to say: "Here's where we're going to give parks away; here's where we're going to do something nice." They've put all the difficult decisions onto the commission and given them the impossible task of trying to come up with an independent finding, when they've already made some decisions on their own. They're basically pre-empting any kind of independence.
Hon. D. Miller: Dealing first of all with the international issue, I'll get the numbers. I've asked someone to bring the numbers back to me. I suspect, despite the rather gloomy forecast that you have, that tourism is growing in this province at a fairly remarkable rate. I would ask you not to promulgate the myth that there is no reason for tourists to come to British Columbia. There's every reason for them to come to British Columbia. We have, in my view, the best landscape. Mr. Owen described it as the best piece of real estate in the world, and he's absolutely right. I don't like the term "real estate"; I'll use "landscape." We do have the best and most diverse landscape in the world. It is truly a magnificent province. Tourists from around the world recognize that and are coming here in ever-increasing numbers. We have the landscape that can accommodate them and provide them with the kinds of things they're looking for. I'll try to get some specific numbers with respect to that.
When it comes to inaccurate information.... My challenge is to provide accurate information, and I'm engaged full-time in it, and I'm quite happy to be engaged in it. We work overtime providing accurate answers to some of the inaccurate criticisms that are tossed out all too frequently. I want to be careful in saying that. I don't mean to suggest that everything is sweetness and light, and that we don't have problems. I've never said that. I've talked openly about some of the very difficult issues we face. We don't back away from problems. I don't know what the continuing cause of criticism is.
My challenge to everyone, including the Liberal caucus, is to undertake similar actions. Would the Liberal caucus write a letter to the Hon. Jean Charest, the federal Minister of the Environment, saying: "We want you to retract that section of the environment report that is patently false, because we think that it's bad for British Columbia"? Are you prepared to go to that length? I understand the role of critic, and I understand the necessity of having good, tough critics. But I also understand the necessity of having a broader view when it comes to issues that affect the broader public interest. We all have a responsibility to do our best to understand that it is a partisan relationship in here, but also to understand that, as British Columbians, we have a lot in common. When we're threatened by inaccuracies in any way, we should all be prepared to assist in dispelling those inaccuracies.
[E. Barnes in the chair.]
J. Tyabji: The minister didn't answer my question with regard to the map that he put out and how the Stephen Owen commission can possibly function independently when they've pre-empted the report.
Hon. D. Miller: The issue was thoroughly discussed with the commission. The commission is in agreement. They understand the process that led to the development of that map. They agree that the map is indispensable as we try to map out our future -- an unintended pun -- and that there needs to be a document that British Columbians can collectively look at in terms of resolving land use conflicts.
The primary mandate of the commission is process. I was very careful to issue a caution that it would be a mistake to assume that you could write terms of reference that absolutely portrayed every activity the commission should undertake; in other words, put the commission in a box and say: "Here are your limited terms of reference." The Ministry of Forests, the Ministry of Environment, Lands and Parks and other resource ministries that have some role in the planning process need to be sensitive to the commission and have open lines of communication with them so that we all know what we're doing. This is a new road we have embarked on, and it would be a mistake to put any segment in a box and say that that's strictly all they can do. In terms of the broader issues of land use planning, it seems to me that it's a collective of disciplines. We've had some very good discussions with Mr. Owen about that relationship. We have confidence in each other. I believe we share the view I've expressed. I really don't know what more to say. I think the document we unveiled is indispensable, and it falls right in line with the objective laid out in your letter as absolutely essential in terms of developing a long-term comprehensive strategy to deal with land use planning.
J. Tyabji: The minister is saying that he doesn't want to have the commission boxed in. It seems to me that by producing a map with areas on it indicating that these are potential parks, that's exactly what he's doing -- boxing him in with regard to that one land use. How is it that by setting a precedent of showing a map with parks indicated on it...? Once you've set that precedent, what is to prevent the minister from releasing maps in the future with similar indications on them for other lands uses -- for example, forest licences and mining permits? I don't understand why it would be just parks that it would be okay to do this with and not other land uses -- for example, agriculture or forestry. You could easily produce a map by setting this precedent. You could then follow it up by producing a similar map with phasing-in recommendations for forestry and agriculture.
[ Page 1479 ]
I would suggest that the minister has done the exact opposite of what he said. That is, he has gone ahead and boxed in the commission with regard to parks, which is, I think, contrary to the process that was outlined for the commission.
Hon. D. Miller: I entirely disagree. I would certainly recommend that the member talk to the commission, talk to Mr. Owen about his views.
I want to correct one of the things the member said. The document we outlined is not just parks. I thought I tried to make it clear that it's a compendium of the kind of work that's been done with respect to the old-growth strategy, wilderness and parks. Clearly some of those areas will be considered for a variety of categories. There is a difference between a wilderness area and a park. I think that some of those are candidate areas for ecological reserves. So there are a variety of land use designations that remove land from economic activity.... Not totally, because tourism certainly is an economic activity -- and wilderness and recreation. There are a variety of designations. We haven't just produced a plan with potential parks on it. We've produced a plan that has earmarked a variety of areas in this province that are significant in and of themselves, some for parks, one for wilderness.
We've also said that there will be a process. Clearly in some of the small parks, for example, where there's no dispute whatsoever, there's agreement. Government has a responsibility to advise and consult with Mr. Owen, but clearly to proceed. I suspect that most of those smaller areas are non-contentious and there's no.... Let's get on with doing it. Where we have larger areas, Mr. Owen will be a very prominent player in terms of assessing the areas. His primary function, in my view, and one that has eluded us in B.C. in terms of land use planning, is process. We've handed him a very difficult mandate. We've frozen development in some areas, or developed log-around strategies in some areas, to bide some time, to allow Mr. Owen to look at, particularly, Vancouver Island, the Cariboo and the interior.
I don't think that he should be put in a box. I don't think that what we've done has constrained him. That's his view. Given that, I don't really think the member's fears or concerns are well-founded.
[4:00]
J. Tyabji: I'd like to ask the minister about slash-burning. I understand that there are very commendable reductions. However, I'd like to know when he sees the eventual phasing out of slash-burning, what the alternatives are and what he plans to do with the waste wood. I'd also point out to him that I happen to live in an area with a serious inversion problem, similar to Cranbrook's, I understand. During this time of year we have very serious problems with air quality.
Hon. D. Miller: That's a good question. I talked about the fact that we interfere in a massive way with nature, or the environment, when we prevent forest fires. Before human activity, nature's way of replenishing the forests was to burn them. We put fires out.
As I've said, we're very good at preventing forest fires. One of the attendant problems that arises because we're so good is the accumulation of the fuel-loading on the floor of the forest. Unimpeded by humankind, that fuel-loading would contribute to fires; it would be burned up. In some cases, from a biological point of view, that contributed to the reproduction of a new forest. The heat was a necessary component in the opening up in terms of the seedlings and all the rest, which I'm not that good at explaining. Nonetheless, the member nods and seems to acknowledge what I'm saying.
Slash-burning has been a useful tool in removing, to a large extent, some of the accumulated debris that creates a higher fire hazard. As uncomfortable as it has been in some areas, it has been viewed as absolutely essential in terms of good planning. For example, not to slash-burn would simply increase the risk of forest fires, and where you have that urban-forest interface, it would present a devastating impact on the urbanized areas.
I think there is more potential -- and I'm not that familiar with it; you might wish to canvass the issue with the Minister of Energy -- in terms of the burning of wood waste to generate electricity or power. There is some potential there. But, again, I confess that it's not my field of expertise.
From a natural resources management point of view, though, I don't think that it would be desirable to eliminate all the debris that accumulates on the forest floor. Certainly some of it is absolutely fundamental to feeding nutrients back into that forest land base.
Slash-burning has not been generally well perceived. It has been necessary, when you look at it from the points of view that I have described. We're aware of the impact of smoke in certain communities. We can't help but be sensitive to that. But, again, I guess it presents a choice of doing something for the greater benefit. Is it more preferable to slash-burn rather than allowing the accumulation of debris on the forest floor near an urban area, which would ultimately present a far greater hazard to life and limb than would the inconvenience of smoke?
We do try to avoid the inversions that the member talked about. It's significant to note that we also put prohibitions in some areas. One of the things that happens in an area like Smithers, where there are lots of woodstoves as people live a more rural lifestyle and burn wood for fuel and heat, is at some times of the year you have inversions. It's not slash-burning -- although they do slash-burn in the area. It's because people in the area are firing up their woodstoves. I think we can do a lot there. Certainly there have been remarkable efficiencies attained in wood-burning stoves, so we can do a lot to cut down emissions from that level.
I hope that has not been too lengthy an answer. I don't think there is always an easy answer on slash-burning. I've tried to describe some of the constraints and what I think are some of the potential solutions to at least mitigate the deleterious effects of slash-burning, but I suspect that it might be very difficult to simply say we're not going to allow it at all.
[ Page 1480 ]
J. Tyabji: I have to disagree with the minister. When we have forestry practices, obviously we are managing the forests -- or managing a tree-farm, I think, is probably most accurate -- and therefore it's up to us how we choose to manage it. He talked about points of view. I have to say I have a very different point of view in terms of the issue of slash-burning, in that I see it as an air quality issue. With regard to air quality, I think we have very serious concerns, and it's a by-product of this minister's responsibilities.
With regard to the difference between forest fires and slash-burns, the minister is probably aware that they are very different in terms of components. For example, a forest fire tends to blow through very hot and fairly quickly, and it's a fairly shallow burn. A lot of slash-burns will, on the other hand, be very deep, and they take quite a long time; they're much slower than forest fires. There are very different side effects. Because of the depth of burns in some slash-burns, there have been some concerns that the regeneration is therefore hindered. A lot of the pilot projects done for alternative ways to deal with on-site waste, and therefore the management for the regeneration, have been very successful. You will actually get machinery that can come in and deal with the waste. Therefore, as far as air quality goes, you have much improved air quality because you don't have the by-products of slash-burning.
If the objective is to have proper regeneration of the forests and proper management of the tree-farm, I would put to the minister that there are other ways of achieving that than slash-burning. I would encourage the minister to look at those ways and look at the pilot projects currently performing successfully in other parts of the world. I would urge him very strongly, because I think air quality is a critical issue, particularly in places like Kelowna. I agree with him that when you have an urban-forest interface, then you do have very serious concerns.
The minister may be aware of the forest fire we had in Kelowna last weekend. Concerns had been expressed by Fletcher Challenge that there was a potential for a forest fire in people's back yards, and that hadn't been addressed. Therefore, because of, I guess, a mischievous fire that had been set by some students, we had a very serious situation. However, I would urge the minister to look at the alternatives to slash-burning in existence. Some of them are very economically encouraging. They often produce a by-product that can then be sold, and it all ties into forestry management.
The last question I'd like to address to the minister is with regard to alternatives to pesticides in the forests. I know that the Ministry of Forests has made some very encouraging advances in terms of cutting down on aerial spraying of pesticides, although that's a very contentious issue right now, which we won't address. I'd like to ask the minister what he has in place for exploring the organic alternatives that would include, for example, herbaceous weeds being addressed by sheep, by some of the ungulates. I know that his party has been keen on seeing these policies brought forward. I'm sure the minister is aware that they've had great success in the interior, where some of these solutions have been piloted in the past.
Hon. D. Miller: To conclude on the slash-burning issue, I accept the hon. member's comments. I think it may be difficult to totally eliminate or eradicate slash-burning. There is a variety of times and uses when it's undertaken. We have worked with other ministries to mitigate and reduce the impacts, such as by smoke management at certain times of the year when there won't be inversions. I think we made some strides with respect to that.
I don't want to give any absolute answers here, but I continue to say that there's probably an ongoing need at some level -- and we don't use this as the only tool -- to utilize it where it's absolutely necessary. That's going to continue, and I think that, in the main, it deals with the issue of fairly sound forest management. Like all issues, it's important to avoid drawing absolute conclusions. I think that has been one of the worst aspects of the debate around forestry issues. People tend to draw absolute conclusions and to say that slash-burning or clearcutting or a variety of things are absolutely wrong and therefore should never be allowed. That generally leads to false conclusions in terms of forest management. The issues are far more complex than that; they really beg for an understanding of the complexity. That's not to say that you can't and shouldn't push for change. I think we've seen some remarkable change take place in this province, and we will continue to see that.
The member is right that we are looking at alternatives to chemical pesticides in areas where it's appropriate.
Interjection.
Hon. D. Miller: No, Btk is not a pesticide; it's an organic compound.
Interjection.
Hon. D. Miller: Great. So the member supports the Btk spraying. I'm very pleased to hear that -- very pleased indeed. We didn't hear that when we decided to do it. It's rather disappointing to learn that now that it's all over, the Liberal caucus....
Interjections.
Hon. D. Miller: Mr. Chairman, I'm flabbergasted. I think we should put out a news release: "The Liberal Caucus Has Just Admitted They Support the Btk Aerial Spray Program in Vancouver." I say: better late than never.
We're looking at a variety of alternatives such as sheep or mechanical techniques where they're appropriate.
I really can't give you much information today about some alternatives in terms of allowing some of those deciduous species to develop. There needs to be more done in terms of that natural process, particularly if we can develop the commercial opportunities on some of the deciduous species that currently are not in place.
[ Page 1481 ]
People are working on that. The government has funded some of that activity. I think we will continue to see some progress there.
Obviously we're sensitive to the need for change and to not simply -- I talked earlier about not maintaining the status quo -- sit here and say that everything we do is perfect and unchangeable. You don't make progress that way. We're continuing to look at new ways of doing things through research and through contact with the academic community. I'm pleased to say that I think we're making a good degree of progress.
J. Tyabji: Hon. Chair, I could not resist the urge to stand up again. I thought that was going to be the end of it. I have to set the record straight. The Liberal Party is not in favour of that particular aerial spraying.
Can I explain to the minister that there is a difference between an aerial spraying over a populated area and proper forestry management practices? Can I also explain to the minister that he has yet to produce one dead body? What is the body count? Zero. Where are the egg masses? Zero. How much money was spent on this by the B.C. government? Three point one million. Do the Liberals support that? No. Why? Because we are fiscally responsible. We don't believe in flushing money away like that. We do believe that you have to look at alternatives to chemical sprays.
Interjection.
J. Tyabji: Of course we must manage our forests. But what is the point of putting money to a threat that isn't even in existence? You're talking about a gypsy moth threat. Show us the gypsy moth, and we might be prepared to talk $3.1 million. I just have to say for the record that there's no point in putting out any kind of news release unless we put one out that says that $3.1 million was wasted by this government in these tough economic times when they keep saying they have no money. The money should have gone into the Environment Youth Corps. It should have gone into some research and development in your ministry. You could eliminate slash-burning by purchasing some of the mechanical apparatus that I referred to earlier. You could have put the money into investing in the forests rather than spraying something that you haven't even proven is in existence in Vancouver. We could go on and on about this. I think it's a shame that the minister treats it so lightly that he's being glib about it and making a joke about: "Oh well, we support it."
[4:15]
We do support alternatives to pesticides, but we also support responsible spending of money. First you identify the threat; you prove there's a threat; and then you respond. In this case it seems as if there's some kind of scare tactic being used and an absolute waste of money. If this ministry wants to have any credibility with the people of B.C. in terms of fiscal responsibility, they should start off by spraying something that actually exists. I could suggest to the minister that with the amount of gypsy moths that he has produced so far, there are much cheaper ways of eliminating them.
Hon. D. Miller: We've discovered a remarkable degree of sensitivity from the Liberal Environment critic. What's the phrase? Me thinks thou doth protest too much?
During debate on that issue I distinctly recall the Liberal Party saying: "No aerial spray. Spray from the ground." So they're quite prepared to spend the money. I said: "Well, what about those bugs that may be in trees way up there that you can't reach from the ground?" Then one of the members from Vancouver in the Liberal caucus said: "Well, maybe you can get a helicopter and go up and spray them individually." Don't tell me about the Liberal Party not being prepared to spend money. Talk to me about the Liberal Party not being prepared to make a tough decision, because that's what it's really all about. It's one thing to natter and criticize, hon. member; it's another to make decisions. We made the right decision when it came to Btk.
I would also like to inform the member, just before she leaves, that we spend money in my ministry on lots of things that are not, in a technical sense, the responsibility of my ministry. I'd like to advise the member that the fire she talked about....
Interjection.
Hon. D. Miller: We fought the fire -- that's right. We expended money from my ministry budget to fight that fire on municipal land. Fair enough. It's in British Columbia. We fight fires to protect wildlife habitat. We spend a lot of our time and effort dealing with the forest-urban interface in communities that you represent, and a lot of our money. If we took a more hard-nosed approach, we could go back to some of those communities and say: "You pay it." We think it's important work, in cooperation with communities in this province, to manage the land in a proper manner, to be prepared to make tough decisions when tough decisions are required. Perhaps the hon. member may learn that over time.
J. Tyabji: I really resent the implication by the minister that it was his decision whether or not he should spend the money to save those people's homes. Those people are taxpayers to the province of B.C., and when they need protection, it is his responsibility to protect them. For him to suggest that he is being magnanimous by putting out fires that threaten their lives and homes is ludicrous and very irresponsible. The fact that the other fire protection agencies weren't available at the time is the reason the Ministry of Forests was called upon in the first place. For him to try to imply that there was some kind of choice involved is absolutely insane.
With regard to the Liberals not being able to make a tough decision, we won't make a bad decision. If that had come to us, we would have first looked at it to see if there was some justification.
C. Serwa: I rather enjoyed the admission by the Minister of Forests a while ago that government can't do everything. I took a great deal of pleasure in that, but that recognition evaded that minister for the past five years, when he was in opposition. At that time he
[ Page 1482 ]
felt very strongly that government could do everything. So he's certainly learned a lot since October 17. I'm very pleased that his learning is progressive.
I'd like to talk briefly on old-growth strategy. The minister is aware of the importance of mature timber not only to the industry, for harvest, but also, from their concerns, to the general public -- the other users of the Crown-owned resource. I think that we all recognize that old growth is part of the living, dynamic forest and that the climax forest is the end of a progressive tenure of various species of trees. The fact of the matter is -- and it's clearly understood, I think, by everyone -- that if there isn't a harvesting process in old-growth forest, either fire or disease or blowdown or some other natural occurrence will take that timber, and it will be lost. I think the real concern that the public has is not simply in striving to protect old-growth forest as representative of forest classification, and certainly as an environment for part of the biodiversity, but the demand and perhaps the lack of security of individuals is that we're not devising a strategy for the sustained opportunity to create old-growth forests.
We may be looking at a strategy in the interior that may be 200 or 300 years in a rotation for certain types of forest. On the coast you may be looking at a similar length of rotational period. At some point there has to be a decision made that if we value old growth -- and I believe that we all do -- there has to be a formula that determines a certain percentage of the living, working forest should be able to evolve so that it becomes a climax forest, rather than concentrating on, for example, monocultures or a rapid rotational period in that working forest.
Perhaps the minister has given some thought to that, and if he has, I would be pleased to hear his remarks.
Hon. D. Miller: I have had some discussions with people and.... I shouldn't be misleading. They have not been substantive, but in the normal course of events, as the former Forests critic and as the minister, I have talked to people who advance various theories with respect to that. Some simply argue an extension of the rotation age. Some argue, for example, the notion of rotating parks. I think all of those are fairly complex land management issues, and certainly should be thrown into the mix, in terms of the discussion we have about land use planning.
In terms of trying to develop a process and a procedure for land use planning, you have to look at where you are currently, what are the sorts of current issues you face and how you make progress. I think we've come through a very difficult period. There has been too much controversy, too much energy lost in some pretty fundamental debates, without having the ability to go beyond and into some of the complexities that the member is raising. So let's get some order. Let's try to, as I said, lay out a plan that allows British Columbians to participate in the planning process, and restore a greater degree of public confidence. As we do that, we will find ourselves being able to discuss the issues you have raised much more openly, much more rationally and in a much less heated way.
C. Serwa: The area of public confidence is going to depend on some security in the general public that the rate of harvest, for example, is commensurate with the rate of growth in the natural forest. I know that we talk about what we can do with intensive silviculture, although it has never been confirmed to me that it is necessarily a wise investment in capital when you're looking at a long-term rotational period. I haven't seen any of the major licensees, major tenure-holders, really go into intensive silviculture, because it doesn't really make strong economic sense in any way, shape or form.
I guess the lack of public confidence is fundamentally tied to the rate of harvest that has gone on and is apparently not sustainable. The current cut from Crown lands is approximately 75 million cubic metres, and it appears, as you have indicated, that we will have to decrease that cut. And in decreasing that cut, we're obviously going to increase the costs for that fibre -- the Crown should recover more in the way of cost -- and there should definitely be an encouragement of the manufacturers to produce more value-added commodities from that higher-priced fibre. I think we're all agreed with the supposition that increased labour content is used to produce the higher-value-added products.
In order to buy time and get the confidence that you're talking about, we're obviously going to have to make a commitment to give the public comfort that the forests are being well managed and being well looked after and that over perhaps a ten-year period there will be a reduction in costs so that we can live with that, and then perhaps we can be more objective in striving to look at a variable rotational period so that we are in fact creating old-growth stands. We're not doing that with the present concept of rapid rotation, and we're liable to turn the forests of this province into a pulpwood type of economy rather than a sawlog type of economy.
Hon. D. Miller: Certainly the member raises many interesting points. I do think, though, that we need to recognize that it goes back to the rationale for government: what is the role of government? Certainly it is to plan and regulate in the public interest. It has always been my perception that when conclusions are drawn by the private sector, it doesn't automatically follow that they are the correct conclusions for the public in terms of making decisions based on managing for the public interest.
I'm also aware that the private sector will always resist the imposition of costs. It is a natural function of the private sector to resist the imposition of costs. It's government's job to know when it's appropriate and when it's not -- hence the debate we've had about the corporate capital tax. It's interesting that we have never said that the private sector should assume the financial responsibility for basic reforestation or for their own roadbuilding. Your government, which was in power for 20-odd years -- for a three-and-a-half-year period in that larger period -- never turned around and said: "We're going to impose this obligation on you, because we think it's good policy. We think you should pay." The private sector would have howled, complained and said: "You are going to break the bank. You're going to
[ Page 1483 ]
drive us out of the province. We will all flee somewhere else."
Nonetheless, as a result of a separate action -- you know what I'm referring to -- that obligation was imposed. One could argue that in the normal course of events it's quite acceptable; it has been accepted. So that's the trick -- not the trick....
Interjection.
Hon. D. Miller: Is the hon. Liberal Forests critic suggesting that we not require long-term licence-holders to assume the cost of basic reforestation and roadbuilding? I'd love to hear from him, if he's suggesting that we should remove that obligation, because I certainly don't agree. I don't think the Socred caucus agrees with that.
W. Hurd: What are you offering for security?
The Chair: Order, hon. members. Please address your remarks through the Chair and do not speak from your seats.
Hon. D. Miller: I really would be curious if the Liberal Forests critic is going to stand in his place -- and I hope he wants to stand in his place -- to explain his position. He seems to be suggesting that we should say to forest companies: "No, you don't have to replant any more; we'll pay for it. No, you don't have to build your own roads any more; we'll pay for it. We should go back to the bad old days that we had before." Hon. member, if that's not your position, then I would expect you'd want to clarify it.
C. Serwa: The area that I was talking about was not reforestation, but intensive silviculture, which I perceive as being dramatically different from reforestation -- not only tending the trees until they're free-standing, but continuing with the spacing, thinning and all of those other areas.
In any event, it seems to me that because of the political sensitivity of old growth, it may be a question that sooner or later should be referred to an all-party standing committee of the Legislature to tussle with and to bring a recommendation to the Legislature. It's a very difficult question to answer. Governments are rather reluctant to stand firm on that, because it is very controversial from a number of elements. The minister knows that full well. It seems to me that in some cases, biparty or multiparty committees should have an opportunity to bring in recommendations. I know that it is complex. But I still think that if we were all willing to think of the long term and accept responsibility for being part of the decision -- that is, a positive decision -- that would encourage government to think of the very long term. That's an obligation we all share here. I'm going to leave that. Perhaps the minister will respond to that at the present time, and then I'll carry on.
[4:30]
Hon. D. Miller: Perhaps I should have kept going in the argument I was building about private sector versus public policy. Some might argue, for example, that it is appropriate public policy to require licence-holders to do more than basic silviculture. It seems reasonable that somebody could come forward to advance that argument. That's something we would have to debate.
In arriving at a public policy decision on that, of course, we would have to know what the potential impact would be on the private sector, whether those costs in terms of some judgment would be too onerous and whether there is a fundamentally good reason to adopt that kind of policy. I think that's a continuing exercise that every government should go through.
I was really trying to draw the distinction that public policy should not be developed by the private sector. They are but one element -- an important one -- in terms of the broader public interest. Capital has certain requirements; we all understand what they are. We intervene in a general sense. I think we've all collectively accepted the notion that the fight was fought long ago. We are prepared to intervene as government, regardless of the difference in political stripe that might exist in this chamber or other legislatures in the western world. Regardless of our degree of difference, we have come to the conclusion and accepted a number of fundamentals. We're prepared to intervene socially, in terms of UIC, pensions and welfare. We accepted that. We argue sometimes about the degree, but we've accepted it as a fundamental notion. We have a responsibility on the economic side, and I think we haven't done enough work on the economic side in terms of that kind of planning. We've been more the regulators on the social side, and I think government has a larger role to play in terms of good economic planning.
Getting back to your....
C. Tanner: Tell that to the Tories in Ottawa.
Hon. D. Miller: If the Liberal member is complaining about the inability of the Tories in Ottawa to conduct economic planning, I'm sure he'd probably get a lot of support.
As for the old-growth strategy, the member is well aware that we travelled the province extensively. There has been a lot of research into the issue looking at ways to create old-growth characteristics, such as longer rotations and multiple species. There may be an alternative in some areas, where obviously preservation options have been lost because of historical development. There has been a variety of research into old-growth strategy. There are volumes of papers available around that. It's fascinating work, and I frequently find that I don't have the time to do the extensive reading that is appropriate. I think we're making some headway, hon. member.
C. Serwa: Mr. Chairman, I'm comforted to know that we're making headway. I don't know if the other people out there are really comforted to that degree. I was hoping, rather than just headway, that we would make some decisions the people could count on that would be respected by this government and by the
[ Page 1484 ]
industry. Perhaps this would pave the way for all of the tomorrows, so that we develop a strategy at this time that we can live with for a very long time and that will provide good leadership.
One of the other areas I'd like to discuss with the minister is chip-pricing. I want to discuss that because of the effect of the independents producing a large percentage of the chips for the pulp and paper mills, and the type of pricing structure. It appears that, frankly, the obligation for reforestation and the heaviest cost with respect to stumpage are being borne by the solid-wood sector. It appears inappropriate that they should bear the full brunt of the load. I know there's a variability in the economics of the pulp and paper industry, as there is in the solid-wood sector. It appears from the type of pricing for chips per bone-dry metric ton that it is approximately three times what the independents are getting here, if you look at the Sweden picture. They may have some advantages such as proximity to market, etc., but it seems that it's one of the difficult areas for the solid-wood sector and the independents to succeed in in the province of British Columbia. Has the minister looked at devising some sort of formula on chip-pricing that's related perhaps to the retail price of pulp and paper and the tonnes of material ultimately produced, so that there is some support in the silviculture end, so that the independents don't have to bear that full burden as they do now?
Hon. D. Miller: No. The member and I have discussed this at length, when we were members of the previous Forests and Lands standing committee which travelled around the province and dealt with a number of issues -- and, I think, quite successfully. But I do confess that I'm aware of the issue, and I have not turned my mind to it since I've been in office. I consider it one of the issues that need addressing, perhaps in the broader context of our domestic arrangements. No doubt it will be considered.
C. Serwa: It certainly is a very important area, and now that the minister is Minister of Forests and in the government, I guess the ball is in his court. I know that he is well aware of some of the challenges in that particular area, and I'm very pleased that he will be addressing it. I know he's new in this ministry and, as he has stated, there are many challenges. There will always be many challenges, because there are so many groups that have vested interests in that particular Crown resource.
I have another question relating to section 16.1, the small business wood. I believe a formula has been established by the ministry which is important in the final decision on who is successful in bidding for 16.1 wood, the small business wood, for added-value processes. It's not clear in my mind whether a major component is the highest-added-value aspect of the retail product, or whether it involves or relates to the highest amount of labour content in producing that product. Perhaps the minister could clear that up for me.
Hon. D. Miller: We look at a variety of issues, hon. member -- the numerical rating in terms of all of the factors you talked about and the impact in localities or regions -- and try to draw the best conclusion based on that. Achieving the best return is really our overall objective.
C. Serwa: In striving to provide fibre for remanufacturers -- and obviously that primary resource is critical to that added-value sector -- has the minister looked at encouraging primary breakdown plants to supply the necessary sizes for remanners at a cost that they can afford and remanufacture? My understanding is that now the remanners have to pay basically the open-market or world price. In fact, our log market enjoys some cost advantages that are not available in the world log market. Is there any possibility of our remanners having access to a more favourable cost for the cants that they require?
Hon. D. Miller: Mr. Chairman, I would hesitate to want to intervene in the economy in that manner. Certainly we are arguing with every justification. We've provided all of the hard statistical evidence, pile upon pile upon pile, down before the Department of Commerce in Washington, D.C., in the countervail case, that our forest resources are appropriately priced. You realize the implications of suggesting that we would somehow interfere in the pricing of those resources. Certainly it's something that I have rejected. We have a system that allows the owners of the resources, the people in this province.... Some members have quoted the significant increases that have occurred in the revenue that comes to the Crown from the sale or disposal of those resources. It certainly gives me an opportunity to reinforce what we've been saying consistently: there is no subsidy. The implication of following the path that you're suggesting is very perilous.
C. Serwa: I certainly wouldn't suggest that there was any form of subsidy for the logs or the price of stumpage, but what I am saying is an absolute fact. There is a substantial difference in the price of logs in the domestic market and the world market. That's evidenced by the types of structures we require with respect to the export of logs. The world log price is substantially above the domestic price. That occurs in the United States as well, and the minister is well aware of log exports from Washington and Oregon. I'm not saying that there is a question about a subsidy on raw logs; I'm saying that there is a difference between the domestic price and the world market price for the logs. That was the difference I was talking about.
Hon. D. Miller: It raises an important point. I've constantly talked about resisting the urge to draw simplistic conclusions about issues in forestry based on a couple of pieces of information. In this case we're dealing with the export price -- which you have suggested is the world price, and I disagree -- and the domestic price.
[R. Kasper in the chair.]
[ Page 1485 ]
There are a variety of issues that affect prices, or what the market will set a price at. Timber that's bought on the margin -- minor volumes -- will fetch a significantly higher price than other wood. It's the blending of that. I think you can do some statistical modelling that will allow you to blend that and to come to a conclusion about an overall price. I believe it's true on the so-called world market. It's a feature of the country that is buying it. It's a feature of what their particular domestic internal arrangements might be. All those things need to be factored into it.
[4:45]
We should avoid the oversimplified conclusion. Some people suggested that somehow world prices could be attained domestically, and I just think that's the most foolish, ill-thought-out, dumbest idea I've ever heard.
What we have to establish here is that we are collecting a fair resource rent. We have that obligation not only to the people who own the resources -- the people -- but in terms of acquiring the revenue to deal with the planning issues that we've been discussing.
We are constantly striving to improve. I think there will be changes -- I talked about that fairly extensively -- as a result of changes in the annual allowable cuts, which are clearly going down, and other factors which will influence market prices and the range of products we produce.
We should all bear in mind that we've been very successful in Canada, in my view, in building an economy that recognizes the place of the marketplace and, as well, the role of government to act in the broader public interest. We should be proud of ourselves in fashioning what has been described most recently by the United Nations.... I've never seen the exact quote, but I believe it described Canada as one of the best, if not the best, country in the world in which to reside.
C. Tanner: Only if you're male.
Hon. D. Miller: Oh, only if you're male. Well, I don't know where we rank if you're...
Interjection.
Hon. D. Miller: Eighth, if you're female. We're trying in this party, I can tell you Mr. Member, to improve that constantly. We've started with the Minister of Women's Equality, which is a very important component of achieving that. I know the women will soon be ahead of us. I'd gladly trade my first place for seventh or eighth if it would help.
We've done a remarkable job in fashioning an economy that is the envy of the world, and we have to constantly remind ourselves how we did that.
C. Serwa: That was a wonderful story. As a matter of fact, it's the first time I've heard a socialist give a private enterprise lecture on private enterprise. He did it very well indeed. The member is learning very quickly, and perhaps he'll look at his party.
The point I was trying to make is that there are two factors involved in here: price and the accessibility to fibre. The minister is well aware that one of the real bright spots in forestry is the added-value opportunity. We recognize that time is required, research and development of new products, new manufacturing facilities, and the penetration of competitive markets. The fact remains that accessibility is sometimes limited because of tenured wood, so that it is unavailable to the remanners. The reality is also that the primary breakdown plants are the most efficient, and they should be taking and handling the logs and producing the material that the remanners require, rather than somebody setting up a primary breakdown plant as part of a remanufacturing type of facility for added-value products. Perhaps the minister would respond, if he sees clearly the point I am trying to make.
Hon. D. Miller: You're talking about value-added, I think. Good stuff, good stuff. I don't entirely agree with you. If the members would be patient, I'll get to it.
I don't entirely agree with you, because I think there are some logical relationships in the various types of manufacturing facilities. I can think of one, for example, that processes cedar. They require the low-end grade, which normally is only available when the primary producer is producing the high-end grade. If you can see what I'm getting at, the relationship that exists between the primary and the remanner, or value-added, plant is that when the primary is not running, the remanner runs out of supply. I don't think it's as easy as you suggest.
The other point is that I think there is a commodity market. I wouldn't suggest for a minute that we abandon the commodity market entirely. I think it would be a foolish strategy. There is a problem with the value-added accessing their raw material requirements. There's no question about it. The premise behind 16.1 is that we have given people a measure of security -- in other words, something they can attract capital with. You can go to the bank or a financial institution with a short-term 16.1 tenure, and there is some security for the capital requirements.
But in some cases I know.... We've also given the 16.1 operators currency in the form of timber, because in the industry that's evolved in this province sometimes money won't get you anything; it's timber that gets you in the door and it's timber that can be used to go to a major and ask for boards.
Getting back to the issue of price, I talked to one of the value-added manufacturers recently. I won't name this person, but I asked him what he would do if he were sitting in my chair as Minister of Forests. He said: "I would continually keep stumpage prices higher and higher and higher. I can pay a very good price for my raw material requirements -- the boards I require. The problem I've got is getting that primary mill to take the time to take some of those boards off the greenchain and give them to me. I'll buy them."
Interjection.
Hon. D. Miller: I hear "Nonsense!" being uttered from the Liberal benches. Maybe the member from
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Kelowna might want to give them a lesson, since he's been here longer than them.
Interjection.
Hon. D. Miller: I'd be happy to answer any questions from the Liberal side. If they think that's nonsense, they don't know a darned thing about the forest industry.
C. Serwa: I was going to ask the minister a few questions with respect to his staff and the ability to perform more than an audit function in the woods. How do you feel about that? Will there be an adequate number of staff to actually get out into the forest and make an assessment of the logging and the management of the forest?
In conjunction with that question, perhaps the minister would give me his observation on the type of management and the comparative values of it on private land, TFLs and forest licences and compare it to the Crown obligations with respect to small business sales. How would you evaluate the various levels of forest management with those areas?
Hon. D. Miller: I don't think management ability is related to tenure. I think there have been examples of poor management on long-term tenures; there have been examples of poor management on Crown tenures -- the TSAs. We are constantly striving to do better; I think we are doing better. I've seen some examples of very good, clean logging, good harvesting practices, etc., on both types of tenures.
At the end of the day, it's the obligation of the Crown to make sure that those requirements are met, regardless of whether they're imposed on ourselves in the timber supply areas or whether they're imposed on licence-holders in tree-farm licences.
L. Fox: I want to touch on a couple of issues that were raised by the member for Okanagan East and respond to your responses. I am extremely pleased....
There he goes. The minute I said "Okanagan East," he left. I'll carry on. I note that the staff -- the real people -- will listen to the questions.
I was really pleased to hear the minister's response with respect to the controlled burns -- that he couldn't have a broad policy which covered the province as a whole and there were indeed incidences where controlled burns were an effective way of managing the forests. Of course, they reduce possible hazards, and particularly fire hazard if they're allowed to dry and not be burned in a controlled situation.
With respect to that, perhaps the member for Okanagan East didn't understand the need for the controlled slash burns on leased land that is developing into agricultural use. Given those, I have to relate a concern. In the forest district of Vanderhoof, they had a trial program for three years where they contracted with an individual to manage and supervise all the controlled burns in this area, particularly along the lines that the member for Okanagan East queried the minister on. Certainly there were smoke concerns and at times, before this individual was in place, highway closures due to smoke problems. Accidents were created. A lot of the concerns which she brought forward were in fact legitimate, even in my area. But through this individual, they were able to eliminate most of that. The question I ask the minister is: why now, given that this particular....
G. Farrell-Collins: What minister?
L. Fox: Yes, what minister? I really have difficulties asking questions when the minister's not in attendance.
Given that this trial period proved to be successful and that this individual was successful in the goals and objectives that the ministry outlined, why are we now terminating the position and not renewing the contract?
I don't know how I'm going to get an answer.
D. Mitchell: The member for Prince George-Omineca raises an excellent question, and it's obvious the minister has no answer. In fact, he's not even here to answer the question. It's obvious that he has no answers for the questions that have been raised by many members of this committee. He's been offering platitudes and words that have been written for him by who knows who -- possibly by his ministerial staff, certainly by the communications group for the New Democratic Party -- but he hasn't answered the questions. They were excellent questions raised by the member for Prince George-Omineca.
M. Farnworth: It's quite obvious that they're playing charades. The minister had to leave the room for whatever reason, and they could at least.... The question was directed to the minister. I know the members of the Liberal Party do have visions of grandeur, in that one day they may cross the floor to sit over there, but at present the member is not a minister, and until such time the question should be asked of the minister, not of a member of the opposition.
D. Mitchell: The point of order is well taken.
I might at this point allow the minister one final chance. Is he prepared today in this committee to answer the very legitimate questions for the member for Prince George-Omineca?
Hon. D. Miller: I'm happy to respond to the very good questions being posed by the member for Prince George-Omineca. He certainly has displayed knowledge of the forest industry and the issues attendant to it. I don't have the specifics. I will undertake to get to you personally as to why that contract.... As to the questions I've received over here, I haven't really heard a good question yet.
L. Fox: With respect to another initiative that was spoken about briefly by the member for Okanagan East, and responded to very briefly by you, I have some firsthand knowledge with respect to sheep that are being used in the silviculture area within the Vanderhoof district. In fact, it is growing into quite an industry and has proved to be very successful in that particular area. I would just ask the minister, if he is aware of the program, if he would tell us what status it has. I know
[ Page 1487 ]
it's being used as a test as well in order to examine how these may be used. Perhaps he could just give us some background as to where that program is going.
[5:00]
Hon. D. Miller: It's a rather woolly subject, but I'll try.
An Hon. Member: Woolly minister.
Hon. D. Miller: No, wily.
I'm sure we've got some explanation here; we're looking for it. There has been fairly rapid growth in the use of sheep for brush control. I indicated earlier that we want to continue to advance their use. It has been increasing and will continue to increase. It is not, however, applicable in all areas of the province, as the member is probably aware. Again, it raises the issue that it is site-specific in terms of forest land management. It generally comes down to where you are in the province, the particular conditions, forest types, etc. Sheep generally are more appropriate to the interior, where most of the trials have taken place. That doesn't mean that there aren't opportunities in coastal regions as well. So we'll continue to promote their use, to analyze their effectiveness and, as well, to look at all the other alternatives that I talked about earlier -- manual controls and perhaps, in a more research-oriented way, some of the natural systems that may prove to be beneficial in some areas with mixed deciduous stands.
L. Fox: I have another issue that I'd like to address very briefly. One of the recommendations that came out of the Forest Resources Commission -- one of the few that I tend to agree with -- was the recommendation that there should be a community-based planning network, something which I, as a mayor, fought for for a considerable time for my area. I read into that, perhaps, a community-based TSA. I know that the minister is familiar with the Prince George TSA and the makeup and the unwieldiness of trying to get 14 or 15 licensees to agree on a particular set of circumstances that the TSA faces. The communities of Vanderhoof and Fort St. James respectively have been promised over the last several years that the review of the Prince George TSA would take place in '91-92. In the case of Vanderhoof, the request by that community was that the TSA based around Vanderhoof to protect that industry for that community was based on what we know today as block D. Fort St. James was something similar.
I want to know if this process is continuing to go forward. Given the recommendations of the Forest Resources Commission, is this something that the minister sees as desirable?
Hon. D. Miller: Yes. We said at the time we announced the Commission on Resources and Environment that there really was a degree of consensus around many of the land use planning issues in B.C., with particular reference to the need to have more public involvement and without restricting what that is. We have asked CORE to look at that issue, bearing in mind the recommendations of the commission. I certainly have an open mind with respect to how community-based planning could be structured. I'm also quite open on the issue of whether it would be municipally or regionally based planning areas. There has been some success. Our current structure is somewhat limited in allowing that. We obviously want to wait for CORE -- the commission -- to report back to government, because they really have been given that mandate.
L. Fox: It has come to my attention recently, Mr. Minister, that the ministry has banned the use of little four-wheel drive ATVs on forestry roads. Could you give us your reasons why this has occurred?
Hon. D. Miller: Well, we've made a couple of changes -- one in terms of the restriction that the member talked about, and the other in terms of the requirement for liability insurance.
Essentially it's a question of public safety. If you have a snowmobile or an ATV running on an active forest road with the danger of logging trucks coming around the corner, you're pretty clearly looking at a recipe for disaster. So we have brought in new regulations with respect to restrictions and insurance requirements with the broader view to public safety.
L. Fox: With respect to the NSR lands, could the minister tell us how much NSR land is presently in existence, and how this relates to where we were in 1986?
Hon. D. Miller: In rough numbers, there was approximately 1.4 million previously; it's down to the 200,000 hectare range currently. The target is elimination by the year 2000.
Vote 42 approved.
On vote 43: fire suppression, $61,601,248.
D. Mitchell: Vote 43? Are we off the minster's office now?
The Chair: Yes, that's correct.
D. Mitchell: Mr. Chairman, I'm sorry. I was distracted by a chat I was having across the floor with the Premier as he entered the chamber. I had a question on the previous vote; I missed that. I wonder if we could go back; I'm sure we can go through the rest of the votes very quickly, once we get through the question here. By leave of the committee, if I could ask....
F. Gingell: I didn't hear the question called on the minister's office.
The Chair: Just so the member would know, we called the vote on vote 41 some time ago. I just finished calling vote 42; now we're dealing with vote 43. Are there any questions on vote 43? Would the member like to continue, then?
D. Mitchell: Thank you, Mr. Chairman. On vote 43 -- and this relates to all the votes within the Ministry
[ Page 1488 ]
of Forests -- I have just a brief question for the Minister of Forests.
There's a question on the order paper standing in the name of the member for Surrey-White Rock: question 9 on the order paper. We were hoping to have the answer for this prior to the review of the estimates. It would have assisted us. We haven't received the written answer to that yet. Is it possible for the minister to table that while we're reviewing his estimates in this committee? Is the answer to that question forthcoming? Can we expect it now? It would be useful to have.
The Chair: Would the member like to ask another question?
D. Mitchell: I take it from the lack of the answer that we're not going to get an answer to the question on the order paper. This is a little distressing to us as members of the opposition, when we use the vehicle available to us in the House -- the procedures of the House -- to ask written questions, and the government talks about being an open government, but in fact it doesn't provide answers to questions on the order paper. It impedes our abilities to do our jobs as members of the Legislative Assembly, because our job, after all, is to hold the government accountable. So that's unfortunate.
On another question, and it does relate to this vote as it relates to other specific votes, with respect to the election campaign manifesto of the New Democratic Party -- "A Better Way," as it's referred to, the 48 points. This was referred to earlier on at the start of the review of the estimates of the minister. There are three specific points in the 48-point platform of the New Democratic Party in the last election: 17, 18 and 19. The minister commented on the fact that he was proud of these points and I take him at his word on that. Could the minister indicate whether or not he had any input into the drafting of these three points in the 48-point "Better Way"
L. Fox: The minister spoke earlier about the first response firefighting teams and the success that we've had in fighting fires by having these teams quickly dousing fires, and because they're sitting there waiting and are available on very quick notice. Could the minister tell me how many of these there are within the province, just exactly where they're located and what their makeup is?
Hon. D. Miller: I believe there are -- and I'll get a confirmation -- 16 of the 20-person unit crews. I'll confirm that number; that's just off the top of my head. Again, with respect to their specific locations in the province, I would have to get a list to you.
You know that we have several centres, Kamloops being one of the very strategic centres in terms of the air tanker fleet, and obviously some regions of the province are far more susceptible to the outbreak of fire than others. The southern interior, the central interior and northern interior are far more susceptible. In fact, we're looking this year at some fairly high-risk conditions.
It's very, very dry in the southern interior. I was up there for a visit last week. It's extremely dry and all of the conditions, of course, are ripe for the outbreak of fire. Let's hope that doesn't happen. It's often very difficult to predict what kind of a year you may have. Once again I really thank the member for the vote of confidence in the fire suppression program of this ministry. We certainly, as I believe, have developed techniques that make us world leaders.
L. Fox: Another good initiative by the previous administration.
I really wanted to also know the makeup as to whether or not some of these suppression crews are on contract or are they employed on an individual basis by the ministry, or do we contract out to a company with respect to supplying this service?
Hon. D. Miller: Direct employees, hon. member. Again, I speak with some pride: we've added six crews to the native unit crews. It's proving to be very successful. There is a high degree of interest from the native community in terms of participating in those unit crews. It is a remarkably successful endeavour.
I do compliment you, hon. member. It would be foolish of me to stand here and claim that our ability in terms of fire suppression was developed in the six months that I have been the minister; I would never attempt to do that. All credit goes to those who, in a political sense, directed that and the people in the ministry.
In the short time I've been here, I've talked to the branch head. I've learned some of the history about how we've developed these techniques. I can certainly advise members of the House that much of it was due to the personal initiative of people within the ministry who took it on their own hook to try out some of these techniques. Some were developed in the bush way up in the north out of the view of the regulators, whether they be WCB or whatever; people on their own hook, constructing towers and jumping off and experimenting with new ideas. That really was the beginning of the program that we have now. All of us should pay tribute to those men and women in the Forest Service who did so much to advance our ability to the state it is today.
[5:15]
L. Fox: I agree with the minister that it's a true testimonial to the staff.
Am I to understand that there are only six native groups? How many of these crews are totally native?
Hon. D. Miller: I want to retract the previous answer. We have added six for a total of 16 native groups. I'll get the number on the other; it may be 32. But as soon as we find it, I'll give you the answer.
Vote 43 approved.
Vote 44: Forest Resources Commission, $500,000 -- approved.
Hon. G. Clark: I would like to start Municipal Affairs. I understand we could perhaps have the opening statement by the minister and a very brief discussion, and then adjourn, recognizing that the
[ Page 1489 ]
opposition spokesperson isn't here. We anticipate full debate on it. We're not trying to get the estimates passed, but I understand the Minister of Municipal Affairs is on his way here, and the Minister of Forests is about to ensure that he is on his way here. As soon as the Minister of Municipal Affairs arrives in the House, we could proceed with getting on the record the minister's comments, because we have valuable time left here today, and I'd hate to lose it.
I want to commend the members opposite for moving through the forestry estimates and getting lots of excellent questions and debates. I think the members opposite have proven, if I might say, that length and quality of questions are not necessarily connected, and that lots of high quality, good questions from members of the opposition have been canvassed, and those excellent questions did not consume the amount of time that some others have consumed. I think members should be commended for that.
ESTIMATES: MINISTRY OF MUNICIPAL
AFFAIRS, RECREATION AND HOUSING
On vote 54: ministry operations, $159,656,034.
Hon. R. Blencoe: Hon. Chair, it's a pleasure for me to present for the review of this Legislature the estimates for the Ministry of Municipal Affairs, Recreation and Housing for the fiscal year 1992-93. It's obviously an honour for me because this is the first time I have done this, and the first time in the first term of a new government.
The estimates provide, as we all know, details on how a new government will manage the programs that affect British Columbians where they live, in local communities from Golden to Tofino, from Oliver to Fort Nelson. And hon. member, we'll get to your community later on.
A minister's introduction of estimates is traditionally an opportunity to inform hon. members of the minister's many programs and services delivered to the people of British Columbia, and this ministry, particularly Municipal Affairs, of course, delivers numerous programs directly to the grass roots, if you'll permit me to use that somewhat overused phrase.
It's my pleasure this year to carry on that tradition. Many of the programs covered in this year's estimates are ongoing programs of some years standing. However, there are some significant differences. The differences are already becoming apparent in several areas of my ministry's mandate. I'll touch on a few of the major themes now, and then provide some details in a few moments.
First, my ministry is doing its part to make good on the government's commitment to fiscal responsibility and to prudently manage the money of the people of British Columbia. I think we're all involved in that on a daily basis. Revenues to government are down. That's true for local governments and is certainly true for the provincial government. Individually, British Columbians are dealing with the effects of the international recession. We're with them in the concern that government programs and services be managed wisely so that British Columbians in every corner of the province will continue to have a high quality of life. Our options have been limited by the need to clear up the mess left by the former government; nevertheless, we have to be able to address some of the pressing concerns facing local communities.
Last fall B.C. residents voted for change, and they demanded a difference. These estimates, I hope, will help demonstrate how we're keeping our commitment to making a difference for the good of all British Columbians. For example, as I said some weeks ago, we are greening up, changing the approach to the revenue-sharing program with the local governments. When it comes to environmental protection, the time for talking has passed. We have introduced one of the biggest increases -- if not the biggest -- for sewer and water environmental infrastructure change and sewer and water projects in the history of this province.
We're expressing a vote of confidence in regional governments as a method of assessing local government challenges that pay no heed to municipal boundaries, issues such as air quality management that go beyond the artificial boundaries that we draw in our regions and that clearly need a regional approach to resolution.
My ministry is well prepared for its task of renewing and strengthening the bonds between local communities and the provincial government. In my years as a council member for the city of Victoria and as a member of the opposition, I came to appreciate the talent and dedication of the public servants serving in this ministry. Part of the character of my ministry flows from the fact that our people perform so many different roles so competently. A former Minister of Municipal Affairs is across the way from me, and I'm sure he can attest to that, because he worked with them on a daily basis as well. My hon. critic is also there from the third party, who I'm sure, when he was in local government, worked with many of my officials. Today he has a different role to play, of course.
Ministry staff provide advice on numerous aspects of local government administration. They review municipal and regional district bylaws and make recommendations when necessary for statute approval. We provide advisory services and financial assistance for local government planning and development control. Other branches ensure the safe operation of elevators and ski lifts. We provide training for firefighters. We inspect railways for safety. They all work to ensure safety of electrical and gas installations, all under the realm of safety for workers in those important components of our industry in British Columbia.
The ministry supports our local governments in designing and delivering recreation programs for all British Columbians. We help develop British Columbia's athletes to carry the B.C. banner to the Canada Games and to provide a large component of Canada's national teams.
I'm very pleased to say that the staff in my ministry also work to provide housing programs for British Columbians. Through our programs we support local communities in their efforts to make life better for their citizens. Our local communities manage their own affairs, but we stand behind them and deliver the help
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where it's needed, when it's needed. Local governments continue to be an important factor in the development of British Columbia.
In a few minutes I will discuss our programs and the new policy directions. But the days since this new government took office have been very busy ones in my ministry. There have been long days, and I'm sure many of our staff can attest to many long weekends worked by ministry staff and by staff in my office. The first few months of a new government obviously are the most difficult in terms of just finding out where you're going to go, and what the policies are that we're going to put in place.
As a new minister I needed highly detailed information. I needed it in great detail, and I needed it quickly. To improve the programs we deliver to the people in the province, we went looking at program administration from a different perspective. This new assessment has involved finding out, to a greater extent than ever before, what the communities of British Columbia really want, and using their knowledge as the starting point for improvements in the administration.
My appreciation for the professionalism and the high working standards in all branches of the ministry was confirmed time and again. Hon. Chair, the people of British Columbia are well served by my ministry, and we continue to look for ways to improve our service, and cost-effective ways to make the best use of the resources available. Our new responsibility for housing programs is a natural fit in a ministry devoted to local government and community services. Of course, where housing will be developed is at the local level.
Immediately upon taking office, we applied ourselves to laying the foundation that will allow us to find solutions to the housing problems that face British Columbians. We were looking at how we can make improvements in an area of critical concern for so many in British Columbia that comes to our attention on a daily basis. When we looked up -- and everyone knows this -- we saw that the federal government had vacated the field and walked away in a major way from its responsibilities. Quite frankly, it's evident that they are bailing out of housing in this country. The timing was terrible. The housing boom in British Columbia over the past two years drove prices out of range for most first-time homebuyers, particularly in the metropolitan areas of the province.
Victoria and Vancouver remain the least-affordable cities in Canada for housing, a very dubious distinction. Because of high costs and limited returns, virtually the only rental construction in recent times has been through our housing programs that we partner with the federal government. A net in-migration of 30,000 people a year into British Columbia quickly fills the vacant rental units, especially in our metro areas, where most of the new arrivals settle. Yet people from other parts of Canada continue to express their confidence in British Columbia and move here for improved opportunities and a better lifestyle.
[5:30]
The economic and demographic factors associated with the current recession have had unacceptable consequences in terms of housing. Housing affordability problems were serious during the last recession in the early 1980s. Between 1981 and 1986 the number of renters paying more than 50 percent of their incomes on shelter increased by almost 40 percent, and the situation has worsened in the years since.
How has the federal government addressed these issues? It reduced its support for housing programs in a dramatic way, to the point that over the next five years we will lose close to 7,000 units in the province of British Columbia, $460 million worth of construction. That loss, if I may use an analogy, is equivalent to a city the size of Abbotsford or Oak Bay. It is a dramatic reduction in the federal government's partnership with the provinces, and particularly this province.
The committee, of course, is aware of our efforts to reverse that federal decision and to bring the federal government to its senses. We have made repeated representations to the federal minister responsible; but, I have to report to the House and to all my colleagues, thus far to no avail. I have met on this issue with my counterparts in all other provinces, and within this government and within my ministry we continue to seek ways to address the impact of the federal government's abdication of its national responsibilities. We are doing everything we can immediately to protect housing programs.
Accordingly, these estimates provide for a significant increase in our contribution to social housing programs. The increase is not enough to maintain the status quo in building programs, certainly not enough without federal participation. Without federal participation, even the little bit we can do will suffer even more. The programs will be dramatically impacted, as I've already indicated, over the next five years.
In British Columbia we will lose close to 7,000 units: non-profit, cooperative housing programs and native housing initiatives. In addition, 7,800 homes for seniors and families, which could have qualified through the federal residential rehabilitation assistance program, will not be upgraded to proper standards. That is an issue that seems to have been missed in this debate and an area that, in terms of what's called the RRAP program, is a very innovative useful program, particularly for those on fixed incomes -- seniors -- to add to their homes or to fix up at a very reasonable rate.
That shortfall will have to be explained to British Columbians: the families, the seniors and the disabled on the waiting-lists for secure homes. The housing subvote in these estimates provides support for programs administered by the B.C. Housing Management Commission and the Provincial Rental Housing Corporation. It also provides for grants to seniors eligible to receive Shelter Aid for Elderly Renters benefits known as SAFER. Our ministry took SAFER over from the Ministry of Social Services.
These housing programs are essential if British Columbians are to have the basics of a decent standard of living. I am proud to say that this government is committed to and is working hard to meet the needs of British Columbians for affordable housing. A sound housing policy is the basis for a sound social policy. We can't walk away from our responsibilities to our fellow British Columbians, and we won't walk away.
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In terms of housing programs, these estimates allocate $81.4 million. That's a significant increase from the $66.6 million last year. We are determined to maintain our commitment to social housing programs. A total of $13 million has been allocated to keep our social housing programs going; and as well, over the next few weeks I will be in the position to release details of new program initiatives. These new initiatives will be designed to assist non-profit groups in the development of new housing for seniors. They will also assist seniors who are having physical difficulties in remaining in their own homes. It's an issue, I'm sure, that comes to you, my colleagues, on a daily basis, and it certainly comes to me as a minister: "How can we stay in our homes? Please develop programs to help us." We will be reacting to that in a forthright way.
We will help municipalities amend community plans to accommodate affordable housing policies, but I stress quite strongly that it's not enough to fill the gap left by the federal bail-out. The economy of British Columbia has still not recovered from the recession. Our revenues are down, and we've had to make some tough decisions -- we all know about that -- in the interests of protecting the long-term fiscal well-being of British Columbia. In light of the times we live in, and especially in light of the federal abdication in the area of housing support, British Columbia will have to draw on the creative ideas of as many people as possible to make more effective use of the resources available. Accordingly, my ministry will embark on a program of wide public consultation on housing matters. We'll be looking for practical, cost-effective ideas on how to create more affordable housing. It won't be just another study. It will be looking for creative, cost-effective ways to help British Columbians be housed properly. I know there are many organizations and stakeholders ready to participate in a creative and innovative fashion. We think we can introduce programs that will help British Columbians in this area.
We'll be soliciting the ideas of all stakeholders in housing: community groups, pensioners, the disabled, all elements of the housing industry -- the private and the non-profit sectors -- and local government. And we'll be tapping the creative suggestions of individual British Columbians -- and I can attest to that, because in the last six months I must have had a filing cabinet of ideas suggested by good British Columbians who want to have their ideas looked at by government in terms of providing affordable housing for British Columbians.
The housing responsibility has found a new home in my ministry. Housing is a fundamental need of our local communities. Our goal is a solid housing policy, which, as I've said, is the foundation of a solid social policy. One of the difficulties is that.... I don't want to go back over what happened in past years, but one of the things we have suffered from in this province is the lack of long-term housing policy. We have tended to go from crisis to crisis. Government of the time tried, in those crises, to apply money as quickly as possible, without thinking about the long-term benefits or the long-term implications.
It is very important that in the next year we develop, at the grass roots in consultation with all the stakeholders, a sound housing policy for the citizens of B.C., one that is understood, deliverable and cost-effective. Because the government of the day cannot do it all itself, we are looking for partners. Meeting housing needs will be an important job, a big job that is made more difficult, as I have said -- and I say it again -- by the federal pullout. But this government is committed to getting the job done. The commitment to meeting the housing needs of British Columbians is part of ensuring the well-being of local communities, the focus of all work in our ministry.
The estimates before the members allocate $44.4 million to deliver our programs in direct support of local government and community service. As my colleague the Minister of Finance reported, we are changing the way we provide revenue-sharing assistance to local government. As hon. members are aware, local governments are entitled to share in provincial revenues. If my hon. critics want to ask how the formula works, we have the details. It's quite complicated, but it's effective.
Provincial revenues include natural resource revenues. The total value of revenue directed into funds this year declined as a direct result of weak provincial revenue growth. Yet we expect that total actual payments from the fund will increase by 10 percent to a total of $335 million this year.
As you know, part of the budgeting process involves shifting priorities. For one thing, that has meant reducing the level of unconditional grants to local governments. Despite the reduction, this year's grant levels are still higher than the average over the last 10 years -- exceeded only by the last two pre-election years when, in 1990 and 1991, unconditional grants were at a level of $130 million and $135 million. It's our estimation, and the estimation of our treasury experts and financial people, that those levels of unconditional grants were beyond the economic growth of the province and were unsustainable. Our job has been to maintain the integrity of the revenue sharing fund.
Many local governments have asked, and many of the colleagues across the way have asked: why have we taken this action? By reducing the unconditional grants, we've been able to increase the allocation for sewer and water projects this year to $128 million from $97 million last year. Hon. Chair, the government has to assess priorities; assess where it's going to spend the dollars. I think every member in this chamber, if they looked at their communities and the number-one projects that continue to come in for requests.... The requests coming into our office now are for sewer and water, water quality and environmental projects. By doing this we can now start to make a major impact on the projects that require an infrastructure in our communities across this province. We call it our government's greening of the revenue sharing program. Sewer and water projects are vitally important, and they address pressing health and environmental concerns in local communities.
In her foreword to the report of the World Commission on Environment and Development, Gro Brundtland wrote: "What is needed now is a new era of economic growth -- growth that is forceful and, at the
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same time, socially and environmentally sustainable." That's not a message for other people, hon. Chair; that's for us and especially for leaders in local government.
The appropriation for local government and community services includes funding for other important programs. Let me very quickly highlight them as well.
Downtown revitalization is an example -- a very popular program in the province of British Columbia. Communities and local businesses are eligible for grants to give downtown areas not only a new look, but a new outlook. It has proven to be a program that increases the economic viability of our communities. Downtown revitalization is an investment. It puts people to work and draws visitors into our smaller communities to do business.
The vote for local government and community services is where we allocate funding for sport and recreation programs. Of course, we know that in the years ahead a thousand days of sport are coming upon us, when we will have the Canada Summer Games in 1993 in Kamloops, the Commonwealth Games in Victoria in 1994, followed by the Western Canada Games in Matsqui-Abbotsford.
I want to use this opportunity to go on record as saying the government of British Columbia is committed to the success of the Commonwealth Games and to making them the best games ever. We have every confidence in the Games Society, in the sports community of Victoria and in the people of Victoria. The Commonwealth Games will be a memorable event and a benefit to all British Columbians -- indeed, to all Canadians.
[5:45]
Our sport and recreation programs support fitness initiatives for all British Columbians. To that end, the Canada Games in Kamloops will be the first games to fully incorporate events for athletes with disabilities. The games will be setting a standard for all future games in the involvement of athletes with disabilities.
The local government and community services vote is where we provide funding for local libraries throughout the province. If my colleagues haven't got the message already, this is a very diverse ministry. We do a multitude of services at the local level. These facilities provide education, information and entertainment for people at all stages of life -- from youth to retirement. We're committed to maintaining funding for our libraries to allow them to meet their community responsibilities.
My ministry provides still more services to local communities. Our assessment services provide for the operation of the courts of revision and the assessment appeal board. They are important vehicles, of course, for the appeal of property assessments, and through them all British Columbia homeowners have the democratic right to challenge the assessment on their property -- whether it's residential, commercial, industrial or recreational.
The ministry's university endowment vote provides for the management and operation of the University of British Columbia Endowment Lands.
In times of crisis, British Columbians appreciate the value of our protection services, some of which are provided for in our safety and standards vote. This is where we ensure that the women and men who look after many aspects of safety in our daily lives are in fact empowered to do their jobs in a timely, skilful fashion. These are the people who ensure that elevators are safe, and who inspect our ski lifts, electrical and gas installations, railways, pipelines, amusement rides, pressure vessels and boilers. I could go on about the key to safety in terms of British Columbians.
This is also the vote where we provide for the services of the office of the fire commission. Fire protection is a vital service, as anyone knows who has seen the devastation that fire can cause to property and people's lives. Having protection from uncontrolled fires is obviously essential to the security and peace of mind of British Columbians.
It may surprise some members of this House to learn that there are over 400 fire departments in British Columbia. All but a few of them of are composed almost entirely of volunteers. Almost 10,000 British Columbia men and women have volunteered to provide fire protection for their cities, towns, villages and rural municipalities. They're putting their personal safety on the line to protect their fellow citizens. To help them do their jobs better, we'll be investigating ways to enhance their training opportunities. It's part of our commitment to help make our province a better place for all British Columbians to live and work in.
That determination to improve our province extends into all aspects of managing the taxpayers' money in British Columbia. I can assure this House that there is a new commitment to consultation whenever and wherever possible with the stakeholders in local government. The upcoming housing consultation will provide an early example of how we intend to make good on this commitment. I expect to have a report of the consultation by this fall.
In closing my introduction to my estimates, I want to acknowledge the help and expertise of people who make local government work in British Columbia and who make our communities very livable places: the elected officials, the executives and members of the Union of B.C. Municipalities and the men and women working in our local governments throughout this province. These are the people dedicated to the well-being of local communities. And, hon. Chair, I want to acknowledge the thousands of volunteers: our volunteer firefighters; the volunteer coaches; organizers in sport and recreation; and the people working on the various Summer and Winter Games, the Canada Games, the Commonwealth Games, the Matsqui Games. We thank them all, hon. Speaker, on behalf of the government and the people of British Columbia.
I move the committee rise, report resolution and ask leave to sit again.
Motion approved.
The House resumed; the Speaker in the chair.
Committee of Supply B, having reported resolutions, was granted leave to sit again.
[ Page 1493 ]
Committee of Supply A, having reported resolutions, was granted leave to sit again.
Hon. G. Clark: Hon. Speaker, by leave, the final summation statements of both the Minister of Economic Development and the opposition parties could be heard Thursday morning at 10 o'clock, rather than now -- due to the lateness of the hour.
Leave granted.
Hon. G. Clarke: I apologize; the minister is away on Thursday, but I'm sure we'll make appropriate arrangements at that time if it's okay with the members of the House.
I would also like to advise members of the House -- I know members have been advised publicly -- that the House will not be sitting tomorrow, which is an optional sitting day. In addition, we will be coming back Thursday at 10 a.m. With that I move the House do now adjourn.
Motion approved.
The House adjourned at 5:52 p.m.
The House in Committee of Supply A; H. Giesbrecht in the chair.
The committee met at 2:47 p.m.
ESTIMATES: MINISTRY OF
ECONOMIC DEVELOPMENT,
SMALL BUSINESS AND TRADE
On vote 22: minister's office, $326,000 (continued).
L. Stephens: We were discussing WOOF this morning. I'd like to continue with that. One of the statements you made this morning was that there is $7.4 million to invest. A couple of the areas that you mentioned were film and tourism. Are there any other areas that fund will be investing in?
Hon. D. Zirnhelt: I'm going to give you a start on the answer, and if I miss anything I'm going to ask for a fill-in on it.
The Working Opportunity Fund is a private fund, and its guidelines are that it cannot invest in primary resource industries. It is designed for the areas of biggest growth in the economy, which are value-added and manufacturing. Film programs would be some that it would fund, but also we expect value-added wood industry, value-added mineral processing, electronics industry -- anything that is non-primary-based manufacturing or business, including.... My understanding is that some service sectors will be able to be invested in. Not, for example, construction; that's excluded.
L. Stephens: Will there be any accountability of this fund? Will there be an annual financial report, or is something tabled in this House?
Hon. D. Zirnhelt: Accountability is through the administrator of the Employee Investment Act, an official charged under the act who works for this ministry. He makes sure that things are on line; if anything is out of line with the legislation, then he would report it through appropriate channels. If they were doing something illegal, he would seek counsel from the Attorney General's department. That's the accountability. Otherwise, they operate as a company, and the board of directors will see that the investments are in accordance with their terms of reference.
L. Stephens: And their shareholders.
Hon. D. Zirnhelt: Yes.
F. Gingell: Going back to one of the earlier subjects of this morning, you spoke briefly about the Crown corporations secretariat. Could you please advise us which particular Crown corporations under your ministry the secretariat takes an interest in? What are the reporting arrangements with regard to those particular corporations? What instructions have they been given by your ministry?
Hon. D. Zirnhelt: I would like to introduce a member of my staff before I get into answering that question. It's germane to some questioning this morning. I brought Kathleen Costello, who's the businesswomen's advocate. I introduced Barry Smith earlier. I asked Kathleen to come here in case there was another line of questioning about whether or not we were in some way discriminating in the provision of services to either women or men in the small business community. I just wanted to be able to precisely answer and prove the fact that we aren't. Having said that, if there are more questions, I can certainly read a lot more into the record as to what we are doing in that respect.
With regard to Crown corporations, the one Crown corporation is the Pavilion Corporation. Their reporting arrangements are such that under the act they, in effect, report to the minister, but as you know Crowns have their own bylaws and operate as semi-autonomous agencies -- although, if they require funding from government, they do come through government. They are governed by a piece of legislation, which I would be happy to table for you. With respect to instructions, if there is a provincial policy objective in a certain field we have asked them to consider adhering to it. The specific instructions in the budget-making process were for people to examine their finances and try to find ways of cutting costs. In other words, we asked them in effect to go through the zero-based budgeting process. Then we, through Treasury Board, assessed whether or not we felt they could meet those objectives. I think you can expect us to continue that approach into this new year,
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when we finally pass this budget. Last year we started too late to refine the process of getting into detailed instructions for budget preparation.
F. Gingell: So at this moment there isn't any relationship between the Crown corporations secretariat and your ministry or the Crown corporations secretariat and the B.C. Pavilion Corporation. You're still just operating on the original.
Hon. D. Zirnhelt: Yes, there is what amounts to an informal relationship. The Crown corporations secretariat can best be described as staff assistance to the Cabinet Committee on Crown Corporations. Most of our ministers have significant Crown corporations. We see the advice from the Crown corporations secretariat as a different source from what we get from the Crown corporations themselves. In other words, we may want to initiate an inquiry about a certain sector of operation, and we can ask the Crown corporations secretariat what they do for other Crown corporations. Because even within any existing Crown, they may not know all the methods of investigating certain kinds of problems. But the Crown corporations secretariat has no line relationship to the Crowns. At this point the Crowns report to the minister, and to the minister only -- at least the ones I'm responsible for. If it's a matter of policy or expenditure, it comes under the purview of the government branch -- of the cabinet and the public service. Then, of course, we have to consider it as a matter of government policy. But otherwise they run and continue to run under the direction of their boards of governors.
F. Gingell: You mentioned this morning that this year's subsidy was down to $340,000 -- that's the number I heard. Is there any amount in addition to that? Didn't there used to be a capital amount and an operating amount?
Hon. D. Zirnhelt: Yes. To correct the record, the $340,000 was a decrease in the subsidy. The actual subsidy this year will be $4 million -- a significant difference. In addition, there's $1.25 million for the capital program.
F. Gingell: Sorry, I should have asked at that time.
Can you briefly describe the mission statement of the B.C. Pavilion Corporation?
Hon. D. Zirnhelt: I'll read into the record what I can. The Pavilion Corporation has not presented a new business plan yet; I think they're working on it. Basically, it runs the facilities under its charge in an effective way, pursuing the province's goal of attracting and facilitating events that will attract people to the area and generate a flow of money to the facilities. The admission maximizes economic spinoff and reduces government expenditures in those fields.
F. Gingell: I take it, from looking at these figures, that the total subsidy they'll receive for 1992-93 is $5.25 million, which is down from the $5.59 million of the previous year. Has the B.C. Pavilion Corporation ever given you an assurance that they are getting close to breaking through this situation and breaking even? When do you think they might break even?
Hon. D. Zirnhelt: There is a new board that has been appointed, and we will be announcing this, hopefully soon, when the members agree. The new board will be charged with reviewing the business plan of the organization. In discussions with the new chair of the board, I have said that it's a government objective that these corporations be run in a businesslike manner, which means taking the bottom line into account.
As to when this Crown corporation would be weaned, I can't say. Hopefully it will be done progressively, although it might be done in steps. There might be a plateau for a while, but I can't say. I'd be happy to try and find a target date for you, but I doubt very much that we could put on the record here that we are going to have a balanced budget for this Crown by next year. I'd hate to commit to that, and I won't.
[3:00]
F. Gingell: I am really pleased that the new board of B.C. Pavilion Corporation is going to be businesslike and concerned with doing what that corporation should be doing for the province, but also seeing that it's run on a businesslike basis. Can you then assure me that in this instance, the new board of B.C. Pavilion Corporation is made up of business people only, and that people haven't been selected because of sex, race or any of the other attributes used in the appointment of some other boards?
Hon. D. Zirnhelt: You're reading into what I mean by a businesslike approach to things. The board, once appointed, will deal in a businesslike way. The government's approach to appointing boards is to have an appropriate balance that accurately reflects the society. So we do look at gender balance and minority representation in appointing the boards. I think you'll find that we've taken into account those criteria, when this board is announced.
I'd like to add that the facilities that PavCo deals with are the B.C. Place Stadium, the B.C. Transportation Museum, Robson Square Conference Centre, the Bridge Studios, and the Vancouver Trade and Convention Centre and Tradex.
F. Gingell: I don't in any way want to suggest that people who meet those criteria are not necessarily business people. I think that the key, particularly when you're dealing with the Ministry of Economic Development, is that they are people with a good business background and lots of experience.
I would like to move to the question of the trade offices you spoke of this morning. I understand that there are ten of them around the world. I wondered if you happened to have a list handy.
Hon. D. Zirnhelt: I'm getting the list from the book.
I can assure you that the people appointed to the Pavilion Corporation board have credentials. They're not always business credentials. For example, you often
[ Page 1495 ]
need people that have accounting experience or some experience dealing with labour-management problems and that sort of thing. But they have credentials. Enough said.
The out-of-province offices are B.C. House in Ottawa, Seattle, southern California, Tokyo, Seoul, Hong Kong, Taiwan, Singapore, Munich and London.
F. Gingell: Are you contemplating closing any of these offices because of change in world traffic patterns? Are there any locations in the world where you think it is important and urgent for B.C. to have representation?
Hon. D. Zirnhelt: We have been giving some thought to finding the resources for beefing up the office in Seoul. As you know, Korea is probably the fastest-expanding economy in the Pacific Rim. These offices provide a general government-agent-type function, so they have a broad range of intelligence-gathering, trade policy advice, serving our people when they're over there.... We have a commitment to make sure that they are dealing with trade and investment as much as possible, because that's their primary goal, and they shouldn't be caught up in diplomatic functions. Because we're locked into contracts -- and some of these people are long-term employees -- we want to be careful about moving personnel if that becomes necessary.
I should add that we intend to cut the budget of the London office. In fact, we have made a significant cut from $743,000 last year to $628,000 this year. That's because we think that Britain is relatively less important, and, of course, the general European community is becoming more important. Munich really takes on some of those functions, but London still provides our primary entry into the European area.
F. Gingell: This morning you briefly touched on budget reductions. One substantial reduction was travel. Has there been any change in your travel policy -- the approvals that are required before someone travels, whether they may travel within or outside the province, and the class they travel by?
Hon. D. Zirnhelt: I'm going to pull the figures for you, but I think we've had a slight increase in travel. What I was quoting this morning was from one specific function, government management services. The analysis of travel expenditures for this year shows that we'll be spending a total of $2.468 million. I'll try to get the figure for last year for you.
But let me talk about travel for a minute. When we took over, the Premier was determined to take on a big push in the initial year or two to beef up our trade activities. We will be sending ministers on different trade missions to reinforce the investment-opportunity-seeking that we have been fairly aggressive in. As you probably know, even companies welcome travelling on a trade mission with a minister, because it gives them legitimacy. Provided we can sort out who the good guys are to take with us, we're happy to take people. When a minister travels, they're part of a strategic plan to open doors, so there can be follow-up by our officials and by industry afterwards.
I'll get that figure to you, but my recollection is that it's gone up slightly.
F. Gingell: Two things, Mr. Minister. How do you classify between the good guys and gals and the bad guys and gals? Secondly, I wonder what your policy is on staff travel within the province and outside the province. At what point do you travel economy and at what point do you travel business class? Are there any time breaks such as more than three hours, less than three hours -- those kinds of things?
Hon. D. Zirnhelt: The government is currently reviewing its policy. The policy that we sort of inherited was that it was legitimate for ministers and senior officials to travel on business class for anything over three hours; under that, they would travel economy. Personally, if I have work to do when I travel and that's the only four-hour stretch that I have to get briefed, I don't sit beside just anybody. I'll sit in business class and have a senior official with me to review and go through the work, in the space and privacy that's needed to be adequately prepared for business meetings.
F. Gingell: This morning you spoke about government policy on procurement. Of course, we all know there are problems with GATT and with the free trade agreement. Can you tell us exactly what your current policy is and what you're hoping to accomplish next year with respect to the "Buy B.C." question?
Hon. D. Zirnhelt: Again, in terms of written policy that I can put out there, I'll have to give notice on that. Generally, we have a procurement initiative with the western provinces whereby we are seeking to get our share of government of Canada contracts. Our policy is to get our share, and we calculate what we see would be a prorated share for British Columbia.
The other thing is that we make information on government of Canada contracts available through any information network that we can get onto and in our offices throughout the province. If somebody wants to bid on government procurement, they can.
F. Gingell: So your ministry is only concerned with B.C. businesses getting government business, and not with the question of the provincial government's practices about letting out purchase orders and procurement?
Hon. D. Zirnhelt: The first thing I'm going to do is answer another question you asked, and then I'll get back to that, before I forget to read it in. We have a minimal increase in travel from the figure I gave you, $2,468,507, is up from $2,463,775. It's just about a 0.2 percent increase; it's not even inflation.
We are working on the procurement policy of the province, so to say that we have a hard and fast procurement policy would be wrong. With government management services, my ministry is working on policy for the government which will obviously, shall I say,
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optimize B.C.'s advantage with respect to being able to purchase things locally.
It is very difficult, as you know, when we are liberalizing trade between provinces, to give preferential treatment. What we emphasize is the ability of our companies to compete and be realistic in the market place, so that it doesn't require a subsidy or preferential treatment. But I must say that that is under review. We inherited a number of agreements with other provinces. I don't mind saying that after the western first ministers' conference, later this week -- Wednesday, Thursday, Friday -- you could probably expect a communiqué that is the result of about a year's work leading up to a refinement of government procurement policy between the provinces.
F. Gingell: This morning the minister spoke about loans that are available under various economic incentive programs. We listed five of them, and they came to the sum of $78 million. Is this $78 million, or any portion of it, included in your estimates, or are they all part of special accounts that have been authorized by the Treasury Board?
Hon. D. Zirnhelt: All we put through the budget on these is the $10.8 million, which is a provision for bad loans. The total amount of loans is governed by ceilings under the legislation. As you know, I introduced an amendment to the act, which would upgrade the amount available under some of the financial programs legislation. The answer to your question is that $10.8 million of that is booked for bad-loan provision. That would leave approximately $78 million in loans. The difference between $10.8 million and $78 million under the law can be made without booking any amount.
F. Gingell: As you appreciate, we on this side of the room are real neophytes and are having problems understanding some of these things. I was on the right track, I guess, when I said the $78 million is already approved under special accounts or statutory accounts. Am I correct in that it then just takes the Treasury Board to approve the amount that can be expended in any one year, but all these expenditures are in excess of the amounts included in the budget estimates?
[3:15]
Hon. D. Zirnhelt: Depending on the size of the loan, Treasury Board, officials or the minister approve it. There's a hierarchy of amounts. But this amount really is just a provision for bad loans. I think you understand that.
F. Gingell: The $10.85 million, yes.
Hon. D. Zirnhelt: Yes. But the other amount doesn't come through the estimates. They are amounts that are governed by the criteria established under the legislation.
F. Gingell: Are there any other amounts that are going to be expended by your ministry -- other than the $78 million should the particular projects come up -- in this coming year that are not included in your estimates? Are there any other amounts that you can spend through special accounts or statutory accounts?
Hon. D. Zirnhelt: The simple answer is no. But if a large project came along -- a one-of-a-kind project -- that meant we would go beyond the ceiling allowed under the legislation, then we would have to seek approval to do that.
F. Gingell: The $78 million that you have approved now -- is that approved under the legislation, or through cabinet process by the Treasury Board?
Hon. D. Zirnhelt: That amount is approved under the Industrial Incentive Act; in other words, it's approved under the legislation by the act that's been passed in previous Legislatures.
F. Gingell: But doesn't the act approve a very large sum? It doesn't approve $78 million; it approves some other sum. Don't you go year by year and decide how much may come in to the current year? Could you tell me, at the same time -- if that is correct -- the total amount authorized under the Industrial Development Incentive Act? How much is that authorization in total?
Hon. D. Zirnhelt: Could I ask you to repeat that question?
F. Gingell: I think your officials got it.
Hon. D. Zirnhelt: Yes, but that doesn't help me. I won't understand either the question or the answer.
F. Gingell: As I understand it, the way it works is that legislation is put through, and that creates a special account. In this particular case it's called the industrial incentive account. Originally its legislation called for up to $250 million, say, to be spent over a period of time. At some point, outside the process of the Legislature, government makes decisions about how much of that $250 million is going to be spent in this year. Once you get over that, you've got to go back -- not to the Legislature -- but to the cabinet or to the Treasury Board. Please correct me if I'm wrong.
Hon. D. Zirnhelt: It's technically not money spent; it's money loaned. That's why there is the special provision. You have it generally well characterized. We operate under the legislation, administer the legislation, and don't come back with every single loan. That is part of the executive responsibility, as is implementing the budget that we pass. We would be exceeding our guidelines if we didn't book a provision for bad loans. The ratio between good loans and bad loans is something that we might wish to debate, but it's safe to say that we wanted to clear the decks when we came on board and booked $86 million or so last year just so that we don't have to take responsibility for that. We will take responsibility for the ones we make in the future.
F. Gingell: Can you tell me roughly the amount of outstanding loans under this act and first account on
[ Page 1497 ]
April 30, 1992, at the commencement of this year? How much money would you anticipate collecting on those loans during this coming year?
Hon. D. Zirnhelt: The total amount outstanding right now is $197,746,843. The funding level has been $225 million, to be increased to $235 million in this year under an amendment to the act.
F. Gingell: Now I'm really confused. The amount authorized under the act was $225 million and you will be bringing it up to $235 million. There is already $197 million outstanding. That leaves $37,254,000. How are you able to make loans totalling $78 million in this current year? Or do you reduce the $197 million by provision for doubtful accounts at that point?
Hon. D. Zirnhelt: I'll ask the officials to simplify it, so I can understand it precisely.
Further to your question, I didn't completely answer it. You want to know what revenue would be coming in this year. Our estimate would be $4.8 million. But I want to say that the cash flow on these is complicated, because we often approve loans that are conditional, and it takes some time for the conditions to be met. So they don't always flow in the same year that they are committed. It's an iterative process.
F. Gingell: Was any portion of this $197 million approved but not paid out? If you have a limit of $235 million, and you already have $197 million, you've only got $38 million room.
Hon. D. Zirnhelt: You're probably going to try to add all these things up precisely at the end. If you want a quick audit of this, we'll have to provide that. We're trying, with the information available here, to give as accurate an answer as possible. For example, we have, under the industrial incentive fund, $30 million in past approvals that haven't been disbursed. Also under the small business incentive program, there is $5 million in past approval. So there's $35 million in past approvals that haven't been disbursed yet, but could be in this year. That $35 million in past approvals is available, and we've committed it. So it has to be shown there. We have therefore roughly $38 million -$37.5 million by your figures and my figures -- that we could make available under this legislation this year.
F. Gingell: As you are aware, the Peat Marwick Report was somewhat critical of past collection practices on these loans. Was your ministry responsible for collection on these accounts in the past? Are they responsible for the collection now, or has some policy change taken place? What instructions have you given with respect to collection policies?
Hon. D. Zirnhelt: We're the experts at making loans, and the Minister of Finance is the expert in collecting them. The Minister of Finance, with the loans administration branch, is responsible for the collection. There is a process between that ministry and ours where we look at the probability of success of their repayment. Discussion is always going on. In the end, the people responsible to the Legislature are the loans administration personnel. They have to advise the Minister of Finance, who in turn advises Treasury Board, about loans that should be sent for collection.
F. Gingell: Just to clarify one item, did the Ministry of Finance loans collection branch have this responsibility in the year 1991-92?
Hon. D. Zirnhelt: Yes, I'm sorry. I meant to say it was responsible and is responsible.
F. Gingell: You also spoke this morning about the job protection commissioner. Does the job protection commissioner file an annual report with the Legislature?
Hon. D. Zirnhelt: Yes. You may remember, as I did, that I tabled the previous year's job protection report in the Legislature. The current one is in draft form, and I'll table it as soon as we can get it completed.
F. Gingell: When do you think that might be? I'm wondering whether I should bother to go back and read the old one, or just wait for the new one to come out.
Hon. D. Zirnhelt: I'd like the record to be corrected. I didn't table it. It was an annual report of the ministry. I just wanted to check and make sure you were on your toes. In fact, the only one for which I will be responsible will be upon some revisions, I guess. We'll be tabling it, as long as we're still in the House and have enough time to get all this here, but my intention is to table it this spring.
F. Gingell: I'm not sure if we have touched on the question of immigrant investor programs. Appreciating that the policies in British Columbia are different from the policies or standards in certain other provinces of the country, could you please give us your thoughts on the program, whether you feel it is successful, any changes that you think might be appropriate in the present situation that the federal government may agree with, and, briefly, what your hopes for the program are.
Hon. D. Zirnhelt: I was wondering whether I could put together a decent response to you, and I can't. That's because the immigrant investment branch is with the Ministry of Education and Multiculturalism. The Hon. Anita Hagen is responsible for that branch. I would be remiss in trying to answer that question. It's correct that it was part of this ministry, but not since I've been the minister.
[3:30]
F. Gingell: I guess we've missed our opportunity. You keep changing ministry responsibilities around, and we have to play musical chairs.
I have come to the end of the particular questions that I have at this time. I would like to thank you, Mr. Minister, and I would like to plead with you to push very strongly in cabinet for that program to come back to your responsibility. It clearly is an economic develop-
[ Page 1498 ]
ment question. It is not an immigration question. Yes, it is, but the key to it is that it's the right kind of economic development, and that we get our money's worth, and that we do the right things with it. I really would plead with you to try and get that program back in your jurisdiction.
Hon. D. Zirnhelt: We try to minimize turf wars and battles and so on. What we do is work corporately. There's a number of ministers who work together on a different subject, because you never put responsibilities all into one ministry or they just keep growing. At some point there is a difference.
I agree, you could make the argument that it should be there, but I keep close contact with the Minister of Education, and so far its being there has not in any way taken away from its usefulness as an economic development tool. What's really critical is that our immigration policies be consistent and that the program's available to people who come here. Whether they're business immigrants or some other kind of immigrant, it's really important that they get services properly so they can get up and running.
There are cases where immigrants need the full range of services, and those aren't available from our ministry, and we would then have to go to the Ministry of Education to get that service. It's a toss-up. We work carefully, and we really have a corporate strategy in terms of how we relate the different pieces of the two ministries together to service that particular clientele.
L. Stephens: Before we leave the financial and the doubtful accounts, there are a couple of questions I'd like to ask. I was going to save them until the end, but they've come up now, so we might as well deal with them and get them over with.
If you take the total amount to be disbursed, $78 million, and compare it with the amount the ministry is setting aside for the doubtful accounts, $10.8 million, it adds up to about 15 percent. Does the ministry anticipate that this 15 percent would be adequate, given that the Socred administration found that 50 percent of their loans were in default? Or what is this ministry doing differently?
Hon. D. Zirnhelt: This amount of approximately 15 percent is the amount that we are advised by the Minister of Finance would be required. That's under our expectation of the way we will implement guidelines, and an assessment of the loans that will be activated and brought in and put on the books this year. I can't really account for all the reasons that the previous loan programs might have had a higher failure rate, but on our best advice now and taking the Peat Marwick advice on generally accepted accounting principles, we think this is a realistic figure.
L. Stephens: Also, in the 1990 estimates debates with this ministry, the minister said at the time that he would make clear guidelines for the release of information on loans one of the highest priorities. Can we expect some new process for the release of information on loans from the ministry?
Hon. D. Zirnhelt: The freedom of information that we are considering now will make fullest possible disclosure. As I said during the other estimates debate we had earlier on interim supply, short of disclosing commercially sensitive information we'll disclose information about particular loans, if there's some information needed to understand it. The guidelines will be available. I can't speak for the previous minister, but I'd sure hate to make the same mistake.
L. Stephens: I'd like to turn to a specific loan made by the job protection commissioner of $10 million to Fibreco. There were some reports at the beginning of April that grouped the $70 million loan to Fibreco with the $245 million of loans and loan guarantees made by the former administration. They expected this particular one to go bad. I'm wondering what's changed at Fibreco. At the beginning of April there was an additional loan of $10 million to the company, and a week later the Minister of Finance made a statement that the previous $70 million loan was not expected to be repaid. Has anything changed there?
Hon. D. Zirnhelt: I've been watching this loan. This was a calculated decision upon the recommendations of the job protection commissioner that with the restructuring plan we would have a better chance of collecting the $70 million if we loaned $10 million more. That's basically it -- extend the line of credit. It required a drawdown of equity from the other partners, and we'd hate to promise that this is the be-all and end-all for that particular mill. It's a state-of-the-art pulp mill. It's likely to survive if there is an upturn in the pulp market. The pulp market looks a little better, but there is a range of estimates, and we took sort of an average range in assessing the viability of this and said it was worth the risk to increase our exposure. We have taken security on that loan.
I can't answer today whether, in fact, they've drawn down on that loan. Quite often when we make a decision that we will back them, they then go to their banks and say they do have the support here in terms of a loan guarantee or a loan. Often the private sector will find ways to advance the line of credit and only draw if necessary. Quite often you can get businesses resurrecting themselves through restructuring. In this case, I'd have to get back to you to actually tell you if it's been drawn down upon. Last time I checked it hadn't -- but I suspect probably by now they have.
It was a clear decision that the opportunity to collect that $70 million was better if we assisted their cash position at this point. There were concessions by others amounting to significantly more than the $10 million. To secure that we decided we would take royalties, I think the correct term is. If we're going to participate in the downside of this one, which we already have considerably, we wanted to participate in the upside when the market improved.
L. Stephens: Would this be an example of an ad hoc situation? Who would make the decision? Would it be the ministry or would it be cabinet?
[ Page 1499 ]
Hon. D. Zirnhelt: The original loan would be an ad hoc loan -- anything this size. The actual decision is made by cabinet on the recommendation of Treasury Board, who take the recommendation from me, who takes the recommendation from the job protection commissioner. In the end, the buck stops at the government, at the cabinet. That's why an order-in-council was passed.
L. Stephens: That finishes the loan guarantees. We'll go back to regional development -- no, we'll go back further than that to the business information centres that are provided throughout British Columbia through the chambers of commerce. There are 83 of them, or there were. Are there still 83, or is that a program that you're considering expanding?
Hon. D. Zirnhelt: There are in fact 85 of them. We have applications for 22 more. We estimate that a further 10 or 12 will want to apply in the future. For six of the 22, we plan to hook them into the chamber link and provide publications, but not money for delivering referral services or promotion of their area. This is to fill out the geographical area. For example, the Valemount-McBride area doesn't have the service, so that's how we're going to help them in the short term.
We have a modest cut to $760,000 -- that's an $80,000 cut. It's part of the general cost saving. We've tried to share the pain across the programs. We believe it's an important program, and we have asked people to be a little more efficient in delivering it. You know and I know that over time every program builds up and becomes a better and bigger program. Occasionally it doesn't hurt to say: "Be a little bit leaner."
It's a good program, and we will continue to support it. We're just not able to expand it as we would like.
L. Stephens: Are you going to be cutting anything in that particular area -- the chamber link or the BICs programs?
Hon. D. Zirnhelt: We're not going to cut the number, but the four big chambers of commerce will go from a funding of $15,000 in 1991-92 to $6,000 in 1992-93. Those are Prince George, Victoria, Kamloops and Kelowna. In our cuts on the regional side -- generally our services out there -- we tried to leave the smaller ones who don't have other sources of support. The ones in the larger centres that can achieve efficiencies if they're organized with the different component units.... Most of them, for example, would have community futures, for example, centred in their area. If you pull their services together, they still get the service. Maybe it's not as good as it once was, but I don't think there will be a noticeable depreciation in service to the customers out there.
L. Stephens: I'm sure you're very aware that the local chambers of commerce provide a lot of services that are very much appreciated by the business community, and the BIC program has been excellent. I know out in my area it's certainly well used, and we would like to see some additional services in that area too.
I think the businesswomen's advocate program is an excellent idea. I think we all realize and understand that it is difficult for women, particularly financing. They've always had a difficult time. You've mentioned the Federal Business Development Bank and the Women's Equality ministry as providing some services. Could you elaborate a little on what that would be from both of these two programs?
Hon. D. Zirnhelt: We sponsor success conferences for women in business, and that's where we referred to the FBDB and Women's Equality ministry cooperating with those. I don't have the information here on what the Women's Equality ministry provides, but I could undertake to try to get that for you. This is just one of the many things FBDB does to enhance management expertise among potential clients. They have an outreach program.
I suggest that what I do for you is get that information from Women's Equality. Otherwise you can raise that with the appropriate minister.
L. Stephens: You mentioned an investors' program in the businesswomen's advocate, or did I misunderstand you? Is there an investors' program connected to...?
Hon. D. Zirnhelt: I will get the information from the Women's Equality ministry for you.
With respect to a specific program, no, the businesswomen's advocate has no special programs for women. That position itself is the only special thing that we do. She helps them to get access to investment programs. They're the same programs; she just assists in opening the doors to those programs.
L. Stephens: Do I understand you to say that there are no additional programs in this area not already provided by other government services and government departments?
Hon. D. Zirnhelt: You're right and I was right. The businesswomen's advocate just makes sure that the criteria and the programs that already exist for any entrepreneur are available to women in the appropriate fashion. If she runs into a criterion that discriminates against women, then she would be the advocate to change that. I think the best way to describe her position is as a facilitator, to get access. That's the kind of message we hear from women in business, too: "Just give us equal access to the existing programs."
L. Stephens: The suspended programs and particularly the student venture loans: is this something that you're contemplating reinstating or rewriting, coming back in some other form? If so, what would it be?
[3:45]
Hon. D. Zirnhelt: This program is under serious re-evaluation. Our ministry has had it only for a short period of time; as a result it doesn't have the history inside to bring forth adequate information. There is a certain failure rate here. One of the problems we're trying to address is whether this program is available to
[ Page 1500 ]
and is accessed by people from minorities and less advantaged classes. For example, we found that the uptake was often from sons and daughters of entrepreneurs, who probably grew up with entrepreneurial skills. If they're the people accessing it, it isn't getting the effect that it would if it were broadly available to people who might not think of themselves as becoming entrepreneurs. It's that social objective of trying to make the development of entrepreneurial skills widely available. It's on that point plus trying to find some way to reduce the failure rate. If you fail 25 or 30 percent of these people, that's a very poor lesson. Although some would argue it's a good lesson, I would say success is more important than failure in this case.
We have asked the ministry to consult widely with chambers of commerce and other organizations and to give us advice on how we can establish counselling. We think we are prepared, in reconsidering this program, to make the counselling available. But we have to convince government as a whole that we can maximize the success of this program.
L. Stephens: I was going to say something to the businesswomen's advocate and I decided not to, and now this student venture loans.... But I'm going to say it anyway. I would just suggest that perhaps it's discriminatory if we're talking about excluding/including. Perhaps that's something to think about. There aren't any new programs in the businesswomen's advocate. Does it look like window dressing? Maybe. That's something else I thought you might like to think about.
Does the government want to encourage young people in business? Are there going to be any other programs to encourage young people to pursue business courses or programs?
Hon. D. Zirnhelt: With respect to encouraging young entrepreneurs, we are working with the Ministry of Education, and there is a 12-to-20 program available in the schools. We think that catching young people at an early age to think about business on their own is an important option they need to consider and address in terms of getting skills.
On the businesswomen's advocate, the question is: why do we really need an advocate? Some obstacles that women face are a difficulty in obtaining capital -- it's perceived and is therefore seen as real; problems in obtaining business information, training and contacts; lack of support -- both operational and emotional support from family and peers; and negative attitudes in the business world. Those are some of the things that businesswomen themselves have told us. I wonder if you have seen the profile "Women in Business"? I'm sure you probably know it almost as well as I do.
L. Stephens: Let's go back to the businesswomen's advocate then. Do you see that role expanding? If so, in what areas?
Hon. D. Zirnhelt: We see it expanding. In fact, we've put an additional $160,000 into additional education material and seminars and workshops, to remove impediments to women operating businesses and pursuing careers. That's a significant increase.
L. Stephens: Let's go on to the VentureNet investment matching. This has been a suspended program as well. I think you mentioned it in your opening remarks. Is this being reorganized? If it's not going to be available on the BCBN, will it be available in some other form in some other area?
Hon. D. Zirnhelt: VentureNet is not suspended. It's still operating, and we're actively looking at making it available on other systems. It's available in printed form, and we're trying to make it available electronically.
L. Stephens: Through what vehicle would it be made available electronically? Do you have any idea?
Hon. D. Zirnhelt: To make it available on personal computer so it can be accessed that way. The problem with the B.C. Business Network is that it was extremely expensive, and we're trying to rejig the service and find a way. I don't think we've fully provided for the service yet, but I think we're getting there, and we're trying to make the service as widely available as it was before but much cheaper.
L. Stephens: Let's go on to regional development. Would you be able to tell me what the responsibilities of regional development are? Are there any new ones?
Hon. D. Zirnhelt: Let me just go over our basic approach on the regional development front. We have the same number of regions, the same number of regional advisory committees and virtually all of the sub-committees. Task forces that were working are continuing. My instructions are that we should continue the regional consultative process, and if they're doing good things, they should carry on.
At the same time, with the passage of this budget, we will be able to go through an evaluation of the regional structure to look at a number of things. In particular, it will look at the relationship in the regional economy -- whether you can do things regionally or whether the real action is at the local level and, I suspect, the sub-regional level. If that's the case, then we have to make a bit of a shift in both the structure and the method of delivery.
It would be an objective to try and find a way to coordinate all the services at the local level. This is particularly important since retraining is a major function of economic development. Retraining, from the federal government's point of view, is.... They are going to create labour adjustment boards. They already have Community Futures, and they've got FBDB and a number of initiatives -- plus the initiatives the province has. The goal would be to coordinate those, achieve some efficiencies and maximize the resources available at the lowest possible level in the economic hierarchy -- that is at the community level. That's the approach.
There will be some staff cuts. Less money will be available for consulting services to the regional advisory committees, but we will be endeavouring to ensure
[ Page 1501 ]
that if a study is needed for the regional or the local economy, we will either fund it some way or partner the funding in another way with another line ministry.
L. Stephens: There's a 37.5 percent cut in this budget. Where are those savings going to be realized, apart from the staff cuts that you've mentioned?
Hon. D. Zirnhelt: One of the savings is going to be through the elimination of one assistant deputy minister position in the ministry as a whole. I can tell you where we have made the cuts: under total salaries and benefits, we've gone from $2,448,000 down to $1,665,000, which is a decrease of almost 32 percent; the boards and commissions will see a 6.6 percent increase; there's actually an increase in funding for the development regions; travel is down 30 percent; professional services are down 57 percent; information systems and operating costs are reduced to nothing -- a 100 percent cut; office and business expenses are cut 20 percent; material and supplies are cut 3 percent; building occupancy is down 71 percent; we've eliminated any expenditures in office furniture; under machinery equipment and vehicle rentals, we're down 45 percent; total asset acquisition is down about 70 percent. The total regional development budget is down 37 percent.
L. Stephens: It sounds like you're focusing more on community-based development as opposed to broader regional development. Do you have any specific programs in mind, or have you some studies underway to identify programs that may be appropriate for community development?
Hon. D. Zirnhelt: There are some discussions going on between ministries right now. For example, you will realize from the Health budget that there's money going into the healthy community. It's a preventative care approach. Communities that feel they have some sense of control over the future -- that they've got some say in their own destiny -- tend to be healthier. If they're healthier, then they are going to be more proactive in terms of developing the economy.
If we take a cross-government approach, we have to try and look at how we link labour adjustment and the development of healthy communities. For people who are marginalized on social assistance, for example, the job action program has been increased. I think you'd find at the community level -- I haven't added it up, but community by community -- there are generally more resources in social and community development that will lead to economic development.
While we have taken some cuts, it's because we felt that the money wasn't always spent as well as it should be. Pete Marwick made comments to that effect. Over the years some of this money wasn't well spent, and I was not prepared to enter a year without clear direction. This will take time. It is one of those dilemmas; you're not going to tell the communities exactly what to do. We expect them to say: "These are our needs." We send a message out that they need to rejig, retool and rethink the approach to community economic development. There's a lot of activity in the thinking out there in that field. I feel really quite positive that given some time to work through different minimal consultations -- we don't want to over-consult.... On the outside and inside we're having a good, hard internal evaluation at the effectiveness of the expenditures. For example, these regional development councils that spend money on health care really replicated what the royal commission did. Their transportation studies, in my view, should be funded by the transportation ministries, broadly speaking -- that is, not take away from the effectiveness, but why create another pot of money to do things that ought to be done as a governmentwide function?
L. Stephens: I was just going to ask the minister about that sort of undertaking: the transportation plans that were drawn up in '89 and '90 for each of the regions. I was asking if those types of initiatives are no longer going to be sponsored by the ministry. Or will those large regional initiatives continue?
Hon. D. Zirnhelt: Yes. Thanks to the leadership in establishing some of these local mechanisms to provide local priorities, they are up and running. I think the line ministry has, in most cases, taken over or will take over. If they haven't, we would certainly initiate that. My instructions are really that we should have our regional managers talk to the Highways regional managers and get them to support this, because they are a huge ministry that should be able to subsume this function.
[D. Streifel in the chair.]
L. Stephens: Has the ministry identified any problem areas or communities that it feels are facing some really difficult economic times, and has it taken any steps to try and mitigate some of those problems?
[4:00]
Hon. D. Zirnhelt: I'm going to answer that as directly as I can. You know that the Forest Resources Commission released a report that showed that there are a range of resource-dependent communities. We think that there are maybe as many as 11 communities that might qualify under the legislation before the House -- the Natural Resource Community Fund Act. But I wouldn't want to be held to the number of 11, because that is our first take at it, and it's our guess. We don't want to be alarmist about it or anything. We know that there are going to be hundreds of communities that think they're in that situation because they feel uncertain about the future, particularly in the commodities market area.
Let me say that this is ongoing, that the local economic development commissions and councils are always reviewing that. If we determine there is a crisis somewhere, then this is a source of funds that can kick in and assist in the comprehensive planning.
L. Stephens: Would the leader of the official opposition care to ask some questions now? I'll cease and desist for a while.
[ Page 1502 ]
G. Wilson: Mr. Chairman, I thank the member for Langley for giving me an opportunity to get in. My question to the minister has to do with "Competitive Advantage in Advanced Manufacturing," which was prepared by the Ministry of Economic Development, Small Business and Trade. I wonder if the minister can tell us the purpose of the study, why was it done, who did it -- because there is some confusion with respect to the role the accounting firm played in it -- and how much it cost.
Hon. D. Zirnhelt: I think I've got the figures. I'll just review them in a minute. This was designed for the U.S. market, and the green version was an update after the budget. We had the calculations refigured, just to be sure; they were reviewed by the Ministry of Finance and by Price Waterhouse, who verified the calculations. We think the external costs to the government were $15,000. If it helps to show that B.C. is in a strong position, then I think it's well worth the money. We need to ensure that we sing from the same song sheet about B.C. being a good place to invest. I think you want to be careful about the negative stories that it isn't, because that's exactly the sort of thing that might make somebody decide.
You'll notice that it has been reviewed in the business section of today's Sun, which reports on it. There is going to be some argument around it. If you have substantive criticism, we certainly would be happy to address it and make it better. It's designed to be an honest picture of the environment to which we can expect businesses to come and operate.
G. Wilson: Could the minister confirm that this is not a study designed to be a strategy or to try and provide assistance in strategizing the development of the economy in British Columbia; that it is basically a marketing tool, a marketing strategy, to try and encourage investment in British Columbia, but it's not an analysis for any meaningful comparison?
Hon. D. Zirnhelt: We feel that it is an analysis, but that analysis is part of our marketing strategy. It was designed when we were aware that businesses in the Silicon Valley were interested in moving to other places, greener fields, cleaner air. We took the initiative and are continuing it. The previous government did it, and we're continuing to make this available. I think it's generally been well received. We make no pretense that we are competitive in all areas, all sectors -- no country is. No country can boast that. But this is one area where we've experienced about 20 percent growth annually, and this area is going to continue to grow. As you know, if this particular industry gets to a critical mass, it tends to attract other people.
G. Wilson: I don't take issue with taking a bullish and aggressive marketing strategy to try and encourage investment and putting together a sort of glossy package. I don't know how glossy this is as I've only got a photocopy. It's fairly glossy. I think it's important, if we're going to use it as a marketing strategy, that we don't get swept up in getting too confident that this is anything other than that.
For example, maybe I could ask the minister to comment with respect to hourly compensation -- that is, labour costs for hourly workers, electronics manufacturing, which is on the second page under labour costs. Under labour costs it suggests in the appendix that the hourly compensation rates are provided by Statistics Canada. I checked with Statistics Canada today, and they say that the hourly rate in British Columbia is not a little over $12, which is shown on this graph, but is in fact $15.03. Even if we go back to the November 1991 rate, it was $14.91. If you were to work in the salaried portion of the wage in that graph, you would see that the salaried rates were $19.28 in January 1991, and $19.67 in November 1991.
This comes from the statistics on monthly incomes, No. 72-002, employment, earnings and hours, published in January 1992 by Statistics Canada. I wonder if the minister could suggest what Statistics Canada information he's using in this document that would show that our rates are competitive with or lower than Oregon.
Hon. D. Zirnhelt: I'd be happy to try to find out where this discrepancy is from. Our figures were supplied by StatsCan. They were verified by them, and that's what the footnote says. Are you suggesting that it isn't the latest information?
G. Wilson: This is not exhaustive research, by any means. What I'm suggesting is that the Statistics Canada information available in their publication No. 72-002, employment, earnings and hours, which was published in January 1992 and provides a review on a three-month basis of labour costs and hourly workers in the electronics industry -- that is, in the industry being used in this document -- indicates that the labour rates are substantially higher. Interestingly enough, if you were to check the statistics you would see that it also suggests under appendix 1 that Bureau of Labour Statistics statistics are used for the United States wages. In contacting the respective bureau in Washington, D.C., the information they provide us is not consistent with what's in these graphs.
I wonder if the minister might say just how much weight he intends to put on this document, given that we see the Premier making speeches on the basis of it and that it has been used in a number of speeches by this minister as an example of how we are competitive. I've no problem going out and marketing it to get more money. That's great, provided we don't start to believe our own rhetoric if it isn't true.
Hon. D. Zirnhelt: If we were interested only in rhetoric, we wouldn't go to the trouble of producing a publication that could come back at us. There's a number of things -- conversion to U.S. dollars, and so on -- which could be factors in here. But if you would provide us with the information, we'd be happy to get back to you. We didn't bring the tables that this was based on, but I'd be happy to put it on the record. I'll take that on notice and get back to you.
G. Wilson: I appreciate that, and I'll wait anxiously to see it.
[ Page 1503 ]
There is something that we note with interest, and I wonder if the minister might comment on this. The industrial land costs in the outer suburbs of Vancouver and Seattle are compared, and Portland, Oregon is also used as a potential comparative example. I wonder if the minister might comment on why those three centres were chosen with respect to investment potential -- specifically in respect to this high-tech industry -- and why Whatcom County, an area of considerable competition now with B.C. investment and industry, wasn't used as a comparative example?
Hon. D. Zirnhelt: These are areas where there is high-tech investment. I said earlier that I'm not sure about specifics of Whatcom County. They may want to attract this, but it's the larger centres that generally tend to attract it, because they need a wide range of services that are available in conjunction with one another. So it's this matter of a critical mass of companies. It was our expectation that they wanted to relocate to larger centres or near larger centres. When we compare land costs, they would be the suburban land costs, urban land costs or rural land costs. If we're comparing Whatcom County, we would try and get an equivalent type of land base in Canada, which is probably out in Langley or Abbotsford or somewhere. So we're comparing Vancouver, Seattle, Portland and San Jose, California, as comparable sites.
G. Wilson: I think that the minister would agree, though, that it was largely the investment of the high-tech industry that made San Jose, California, what it is today. They were looking for rural investment regions originally for final cheap land values, cheap land costs, as a relation to Whatcom County or anywhere in the lower mainland.
I wonder if the minister might take a look just for a moment at appendix 2, because it deals with corporate taxation. It suggests that the tax burden calculations were produced using the Ministry of Economic Development, Small Business and Trade provincial and state financial simulation models. The calculations for this illustrative case were verified by tax accountants Price Waterhouse. I think there's some confusion as to what extent Price Waterhouse is in fact an author of this or was simply used to check your adding. Could you talk about these models a bit so that we can find out more about what they are?
Hon. D. Zirnhelt: The original model was developed for Finance by Coopers and Lybrand four or five years ago, and it's currently being used. I think the modeling in Finance is pretty good. Let me go back to quoting this and implicating Price Waterhouse. I think we have to be careful in the line of questioning in the Legislature, too, because we are careful to qualify it and don't want to make too much out of it. The point is simply that they verified the tax calculations. When the Premier made his speech.... I don't know the exact words. When I looked at them, I had the impression that yes, he was saying these were verified. It may have left the impression that this was a Price Waterhouse study, but it certainly wasn't the intent. We didn't intend to say Price Waterhouse is telling us we are competitive. That would be folly, because some of them advise the forest industry and would make the argument that we aren't competitive. We'll look at that with some scrutiny so that we don't lead people astray.
I wanted to make a point about Whatcom County. I'm advised that the Silicon Valley industries actually got their start in and around Stanford; they tend to grow there. We're finding a number of industries want to locate in the vicinity of and have some relationship to developments in and around universities, but they can be a short distance away.
Back to the modeling. If you have any more questions about that, I'd be happy to try to answer them. I think we probably have the people here who can assist me in answering.
[4:15]
G. Wilson: I do have some more questions, because it's an area which I have some interest in. I think the people of British Columbia would be interested to see this expanded on a little.
I note -- I think it's important that we note on the record -- that there is a disclaimer included. Not only your ministry but also Price Waterhouse accept no liabilities for anybody who takes this as gospel and takes actions based on this material. I think it is important to note that they were there to count numbers.
Coming back to this modeling, I wonder if in looking at the comparative advantage for investment in one of these industries.... This is an industry, Mr. Chairman -- and I think the minister would agree -- that's substantially larger than I think most British Columbians would believe. It's a fairly significant industry in British Columbia. It's one that's not to be discouraged. I hope you don't take my line of questioning as saying we should be discouraging this industry. To what extent is the component of capital tax and capital corporate tax a part of that modeling? In asking for your answer, I draw your attention to the comparative nominal percentage tax, which is included in here. It isn't numbered, but I think it's on the last page of what I have here. For corporate income taxes -- that is, percentage of taxable income -- provincial/state shows British Columbia at 16 percent, nil for Washington, 6.6 percent for Oregon and 9.3 percent for California, whereas there is a lower tax rate only at the federal level. Is it a component part of your modeling to build in this 16 percent? Of that 16 percent, what would the change be once you introduce your capital corporate tax?
The Chair: Before I recognize the hon. minister, I would just offer for the consideration of the hon. members the requirements of standing order 36: that all honourable members are required to address their remarks through the Chair.
Hon. D. Zirnhelt: The next line deals with the corporate capital tax. It's 0.3, the line below. So the 16 percent doesn't include the corporation capital tax. But this is the introduction of new taxes notwithstanding. This shows that we still have a competitive advantage in this field. So yes, the corporation capital tax is
[ Page 1504 ]
included in the modeling, and don't ask me technically how it's done. I'd be happy to have somebody explain that to you if you like, or you could send a researcher over. What this shows, I think, is that the corporation capital tax doesn't significantly change the competitive advantage of locating here. It may be distasteful to some, but we certainly don't think it's a factor. If it turns out to be a factor in relocation, we're going to have to look at all the tax structure. But, as the Minister of Finance said today and as I've often said to business audiences, we feel, in the end, that we've tried to spread the load of taxes between individuals and corporations. We've tried to enter elements of progressivity into this, so new capital investment is not taxed for the first two years. We feel that B.C. remains a very good place to do business, and will remain so.
G. Wilson: Coming back to the modeling, within the modeling you're suggesting that the reason we're competitive.... I would say the higher rate at 28.84 plus 16 is not competitive with 34 percent, certainly not for the state of Washington. I'm cautious not to get into debating bills that are yet before us, but the corporation capital tax can be anywhere from 0.3 to 3 percent, as I understand it. I wonder why in your modelling you would only take 0.3 percent and not the potential 3 percent.
Secondly, I wonder why, as a part of provincial government policy, you feel comfortable making this argument on the basis of the lowness of a federal tax compared to U.S. federal tax, rather than addressing the high 16 percent provincial tax over which you have jurisdiction.
Hon. D. Zirnhelt: If you look at it, the 16 percent is added to the federal 23.8 to 28.84, for a total of approximately 44; whereas, Washington is 34; Oregon, 34; California, 34. So, there is a disadvantage in that particular line. However, it's the total you have to look at, and that's what's important. The reason the 0.3 percent is there is that these are all small-to medium-sized firms; they aren't capital-intensive firms. They're knowledge-intensive firms. Very few of them have paid-up capital, so the capital tax isn't going to apply.
G. Wilson: That's interesting information. I wonder if the minister might give us some statistics that would verify that companies involved in advanced manufacturing have low paid-up capital. I recognize that there is a high degree of research and development, and the research and development is documented here as a proportion of investment. But it would seem to me that if the Silicon Valley is being used as the comparative model, it would be somewhat important for us to at least have some statistics to provide evidence that the proposed corporation capital tax would not apply.
Hon. D. Zirnhelt: I'm prepared to make what we have available. I don't think we will have all the answers you want, but this is a typical firm. The study can't be seen as the answer for every firm, but it is a typical firm. Each firm is cautioned to go through its own calculations.
I'd like to clarify the point about the 3 percent tax. The 3 percent applies to financial institutions. The capital tax doesn't apply to these firms.
G. Wilson: We can get into that debate. It's 1 percent for credit unions and 0.3 for corporations. We can debate that a little bit later.
It seems to me, if I can come back to what the minister said, that it is the totals that are important. If we add, in the high-case scenario, 28.84 plus 16 plus 0.3 percent and compare that to Washington, it seems to me that 34 plus nothing is not as good as 28.84 plus 16 plus 0.3.
Hon. D. Zirnhelt: Let me say that it's the total of all the business costs. I'm prepared to admit that 44 or 42 -- no, pardon me, 40 -- is bigger than 34. There are other lines where there is a tremendous advantage. Some of it is in the other employee costs and social costs. I'd like to point out, in the footnote on that page, that these rates for non-Canadian controlled private corporations are in effect. The federal rate is lower for manufacturing; it's going down to 22.84 and 21.84 respectively. We can expect those to actually come down.
G. Wilson: Given that there is a considerable movement of Canadian investment south into Whatcom Count.... I would draw the minister's attention to an article in the Bellingham Herald, Sunday, March 29, 1992, written by Mr. Trask Tapperson. It suggests that $120 million has been spent by Canadians to create Whatcom County operations and economic development, and that Mr. David Bell, the top official at Whatcom County's principal economic development agency, agreed that it will continue even with the changes in the dollar and recession in one country or the other. Even under close scrutiny, this competitive-advantage document shows that British Columbians are marginally, if at all, competitive even in this industry, despite what this document purports to say. I wonder if the minister might tell us what programs he has initiated and what's happening in his ministry to stop this flood into Whatcom County so that the kind of industries that are demonstrated in this document might invest in B.C.
Hon. D. Zirnhelt: You said: "...flood of industries." Would you like to elaborate more? I don't know what the nature of this flood is.
G. Wilson: I am quoting from an article in the Bellingham Herald that suggests that an estimated $120 million has gone south of the border. I think the minister would agree that anytime we lose $120 million of investment capital -- leaving the province of British Columbian into Whatcom County -- that it's more than a trickle of dollars. We can debate whether or not it's a flood or a torrent or a rivulet, but the point is that money is heading out of the province in substantial quantities. What are we doing to stop that?
Hon. D. Zirnhelt: If we can, we will give you the figures for those that are moving this way too, because that's only part of the story. It's unrealistic to expect that
[ Page 1505 ]
there won't be some movement back and forth. There are many reasons why people go down there. In lots of cases, it's an expansion of a successful B.C. operation. We are continuing to counsel people on the advantages of being here. We're telling people that we have excellent social programs in B.C. -- medical care for one -- that make it a very desirable place to be. People are aware of some of the things that are going on in Seattle and Los Angeles -- and, touch wood, in B.C. we don't have the same extended problems. While it can happen here, we hope that the quality of life in and around our urban areas will remain superior. Through our offices in the Unites States we are encouraging people to come here. Our local development commission, the equivalent of the Whatcom County economic development commission, or whatever they're called, are the ones that actually do the hustling at the local level. As a province we are probably doing more or as much as the state of Washington. It's the specific county-level economic commissions that we expect to be out there making land available for example, or if it's property taxes, making the services affordable.
You asked about the flood of business, and sure we are concerned. This is not something that you stop. I dare to say that we do not accept that there's any causal relationship between our budget and a flood across the line. You could try to make that point, but you're doing a disservice to the people who move up here. We will provide you with some figures of investment in British Columbia, but you have to realize that the growth in the B.C. economy is from external investment. There's going to be some that move and some that come in here, say from Hong Kong or Taiwan or Korea or somewhere else. When we investigate these we're happy that the competitive position is not the reason; it has to do with location. It's a location question as opposed to one of competitiveness.
[4:30]
G. Wilson: Surely the minister is not saying that location is not one of the principle, competitive advantages that one might have, but will only be maintained as a competitive advantage given that the economic rent -- if I can use a more formal term -- on a location base is going to pay off, because the profit earned from your investment will be sufficient enough to put your money in in the first place. Notwithstanding what's in the text of this document, the figures that are here would indicate that we're not in a competitive position even in this industry.
One of the reasons we are not is because of a high corporate tax demand on companies doing business in B.C. Similarly, there is a real property transfer tax. The taxation with respect to matters on property tax as a percentage of assessed value, land buildings and machinery.... If you get into details on the documentation of these figures, it shows that, in some instances -- I would argue on the property tax question also -- we are really comparing apples and oranges. This kind of promotional stuff might be good political fodder when we're out selling to B.C. business that corporate tax is okay. In fact, we see that clearly it is not. Beyond that, what are we doing not only to stimulate capital investment in British Columbia but to make existing B.C. businesses -- especially small businesses -- profitable in the province? Could we talk a little bit about what the government is doing with respect to existing business, and especially small business, in light of the documentation that's contained in this document?
Hon. D. Zirnhelt: What we're doing with this document is providing, for the people who are here, information that says the tax rates are good here, and therefore they can stay.
Interjection.
Hon. D. Zirnhelt: Well, they are. You look at individual lines. You know better than that....
The Chair: Order, order. Hon. members, again, if you would address your remarks through the Chair, it would aid the process of debate.
Hon. D. Zirnhelt: I'm having trouble getting the learned Leader of the Opposition to understand that he has to add up all of these. I've admitted on the record many times that there are some areas where our taxes are higher. But even if you went back to the pre-budget tax, it wouldn't change the situation. So we inherited relative tax on competitiveness in some of these lines. You know that. So what's your point, really? Mr. Chair, I fail to understand, and I think I have to advise the Leader of the Opposition that I refuse to answer this silly line of questioning. If he wants to stay on a new topic, I will, but the fact remains that we are competitive. If he wants to prove that there's something wrong in this, we're happy to investigate it. So instead of playing games, let's carry on.
In response to some of the line of questioning, there are a number of manufacturing outfits in British Columbia that manufacture successfully for the U.S. market. I'll name one of them: Sonax Acoustics Ltd. They're operating knock-down furniture, such as computer desks and entertainment wall units. They employ 50 people. They export 50 percent of their product to the U.S. Sonax attribute their success in the U.S. market to the quality and distinct design of its products. The firm's relative small size also enables it to provide more individual attention and flexible services to its customers, giving Sonax a competitive edge over its larger U.S. competitors. That's operating in B.C. Through careful selection of its market niche and close attention to customer service, Sonax has built a successful, competitive business in B.C.
Mustang Engineered Technical Apparel Corp. employs 220 people and is based in Richmond. These 25 employees, over the past three years, have consolidated substantially all their manufacturing activity in Richmond and reduced tariffs on its U.S. exports. A desire to improve capacity utilization and other efficiencies all contributed to the consolidation. The company continues its sales and distribution activities for the U.S. market from Bellingham, Washington. Mustang insists that.... Never mind.
Ledalight Architectural Products, Zodiac Hurricane Technologies, Dynapro Systems -- these are all people
[ Page 1506 ]
that are staying. They take some solace in this. They know. We've provided some apples-to-apples comparison, not comparing the wrong things.
With respect to what we're doing, we operate soft services in the small business programs, so that if people get into trouble and they're trying to expand, they could come to us. There's a full range of information services that we can provide. If they look like they have to shut down, there's always the Job Protection Commission that can come in and give them some assistance. So an industry that's going to get in trouble is not going to find services wanting.
G. Wilson: I certainly don't think that when a document is used for a major speech by the Premier of the province to advance a case that taxation on companies in British Columbia is not going to diminish their competitiveness with trading partners in Washington, Oregon and California, the line of questioning to the minister in estimates is silly. I think it's pertinent.
I'm not attempting to badger the minister. I'm just suggesting that much of the documentation on this, on close scrutiny, does not bear up. I pointed out on the very first page, with respect to labour costs, that Statistics Canada make it clear that they don't reflect what is, in fact, here -- certainly not what we've been provided. I anxiously await from the minister some clarification with respect to that.
My final question with respect to this has to do with the energy portion of this document. This is an area where we've had some difficulty in verifying energy costs. As I think the minister will recognize, in any economic development project, energy is a very significant component of the cost equation. I wonder if the minister might elaborate a little bit on the uses, in terms of electricity and natural gas in the industry here, as to whether or not those uses are essentially specific to high industry. Or is he talking about general utility costs? In other words, is this energy cost that has gone into energy-specific production, or is this a general utility cost in terms of average kilowatt-per-hour rates?
Hon. D. Zirnhelt: The easy answer to your question is that they're general utility costs. Again, we would be happy to provide the statistical basis or a full briefing on the components of this study if you would like. I think the general point that the hon. Leader of the Opposition appears to be making is that we're trying to pull the wool over someone's eyes with this somehow, and I don't think we are. I think what we've tried to do is to provide objective information that will stand up under scrutiny. One of your points was comparing costs. Our costs are in U.S. dollars and your costs are in Canadian dollars. There's a 15 percent difference right there. You have to make sure you've computed that accurately. But I'm quite happy to take your costs. If there are errors in the calculations, we'll have to right the situation, but I think you'll find that it was well done.
G. Wilson: This will be my final comment, and then I'll turn it back to the member for Langley. My point in this line of questioning was not to suggest that this document doesn't have some use. I think the difficulty is in putting a marketing strategy together to market a product. It's much like somebody who advertises on television. You advertise the highlights of your product and sometimes you perhaps gloss it and shine it up a bit. I don't think we should try to diminish the attempt to get investment in British Columbia. If this is a mechanism to assist in getting investment, I think that's good, and I would be supportive of attempting to get people to invest. My concern is that we don't get caught up in this as a method or a document to justify increased taxation on either small business or corporations in British Columbia, because under scrutiny that simply doesn't hold water. I would hope that the minister would not use this document in the argument that it demonstrates that competitiveness can be there, because that would be misleading and inaccurate. That was my line on that, and I would very much like to yield now to the member for Langley.
Hon. D. Zirnhelt: In replying to the summation comments by the Leader of the Opposition, I would like to point out, with respect to high-tech, four items that we're doing here: investigating the allocation of privatization funds for merchant banking and venture capital, which would assist this field; working to facilitate the developments of a new electronics park in the province; offering considerable marketing assistance through B.C. Trade; and offering support through the Quality Council of B.C. to ensure that the products are of international quality and that people can take solace in the fact that the Quality Council gives its stamp of approval on products. We work with industry to develop that. With respect to how we intend to use this, it is a promotion piece designed to attract people. We didn't design it to justify anything else that's being done. It's a stand-alone document. It does some other things, though. It says that in spite of some marginal tax increases, we are still a place to do business, and we are not driving people away.
L. Stephens: I just have a couple more questions on regional development. We were discussing it earlier, and you made the statement that the line ministries will now be responsible for studies that were done, like on regional transportation, health, tourism, etc. You also mentioned restructuring the regional development committees. Do they still provide a regional perspective to government policy and planning? If so, what are the areas going to be over this next year in the eight development regions? What kinds of work studies will they be doing?
Hon. D. Zirnhelt: The line ministries will be asked to undertake work -- it may not be independent studies, but certainly work -- that responds to the needs of the region. That's within reason. They're not going to do everything that is commanded of them. The Tourism ministry is now its own ministry, but they don't have field offices. So when it comes to delivering some regional programs, we still do that. We're following through on economic development initiatives that come from a number of ministries, through our regional
[ Page 1507 ]
staff. For example, there's one that crosses over Energy and Agriculture where we do some work. It's an energy production facility from grain.
We would work with the different ministries here and make the information available through our regional office. The line ministries here do some of it. We would encourage other ministries that have planning capability in their regions, like Transportation and Highways, to carry on. I can't say that they're going to pick up everything we did, but through the planning over the last few years, I think there are enough plans there to last for a while. It's going to take a while to finance all the plans. We think that the reprioritization that happens on an annual basis can be expected to continue.
These these regional development advisory councils aren't expensive operations. They do offer an opportunity for people to come together from the regions to discuss general priorities. I was explaining to you that some of these things are much larger. In other words, we have a number of regional development advisory councils in the north, but certain parts of the north -- the central and the coast -- generally work together economically. You could argue that there are eight or nine economic regions in the province, or you could argue that there are hundreds of communities. What I was saying was that, to the extent that there is a priority, we would like it to be on community economic development. We haven't done that yet; we are leaning towards that.
[4:45]
With respect to the regional perspective on planning, we have taken the initiative through CORE, the Commission on Resources and Environment, to do land use planning. There needs to be something complementary to their work that deals with restructuring in the regional economic field. The previous government's concept of regional economic development initially seemed to be putting a big project somewhere. Those tended to be capital intensive and maybe not as cost-effective as they might have been.
I think it's safe to say that we will be attempting to ensure that the line ministries respond to regional priorities. That is a government-wide initiative that takes an awful lot of work. In the first six to eight months we certainly had other priorities. I would like to emphasize the role played by the regional development advisory councils on trying to make sure that there is some regional sensitivity by the line ministries. Our people in the field encourage that. Some of our regional managers, in fact, call together the regional managers of line ministries to talk about common problems and to sensitize them to the wishes of the people in the region.
L. Stephens: Is there more cooperation and consultation between all departments and levels of government in particular regions to deliver service? Is that what I'm hearing you say?
Hon. D. Zirnhelt: I'm saying that is an objective. It's going to take us some time to achieve that, but there is more going on now. The message is out that we expect some economies of scale. We do not want to see the duplication of studies by my ministry when there is clearly a responsibility by a line ministry to do that.
L. Stephens: I'm very pleased to hear that; it's something that's overdue. We'll go on to the economic development commissions. I believe you made reference to funding for 74 economic development commissions outside of the lower mainland. Could you perhaps elaborate on that?
Hon. D. Zirnhelt: I'll get that number for you. The general point I'd like to make is that we capped the regional commissions outside the lower mainland at $40,000. We put a $30,000 cap on the single-town commissions outside the lower mainland, a $20,000 cap on regional commissions within the lower mainland and a $15,000 cap on single-town commissions within the lower mainland.
Yes, 74 economic development commissions are funded. The reason we did that, generally, was to put emphasis in the regions where the economies are in decline or stagnant. In the lower mainland there is a burgeoning economy, so we've attempted to put the resources in those areas that need it most.
L. Stephens: Were any of these commissions consulted on where the cuts would come from, and when?
Hon. D. Zirnhelt: I have to say they weren't consulted as much as we would have liked. What we did was put managers into the field to assess the situation. Through their budget process, we gave them early warning that there was some kind of restraint coming, although we weren't able to tell them exactly what it was. We did what we thought was fair, but I will admit that there wasn't extensive consultation. We didn't have time this year to do that. In cases where there seems to be an inability to function, we've tried to find other sources of funding that might assist the local commissions to do the job that we'd like them to do.
L. Stephens: In many other jurisdictions, private sector funding is relatively high. I wonder if you know what the percentage is in British Columbia and what the policy of the government is to promote more private sector funding of the economic development offices?
Hon. D. Zirnhelt: A rough guess, without having the figures in front of me.... My advice is that approximately 20 percent is provincial government funding. The rest is made up by local government funds and private sector funds. You also asked what we're doing to increase that. I think it's up to the commissions to do that. We will assist in any way we can, but I can't give you the specifics. I'd be happy to try to get some specifics for you on that.
L. Stephens: I know it is a policy, or one that you've contemplated making, to ask the local commissions to become more involved in community development. Do you have any suggestions for them? With the cut in their budgets, how do you see them fulfilling this role?
[ Page 1508 ]
Hon. D. Zirnhelt: I'm prepared to admit that it's a daunting task for them to do more work with less funds. One of the ways they can do it is by bringing in people from the private sector and working through volunteer commissions, which some of them do. A lot of the money is based on a work plan, and before we approve we ask to see their work plan. In developing the work plan, we encourage them to go to Community Futures and to the other ministries that might be available, and try to pull together specific projects that address needs.
A lot of local economic development deals with, "Well, let's get this project or this business here," and hasn't paid attention to the fact that we've got 10 percent to 16 percent unemployed in some of these towns, which becomes a continuous social cost. We would like these commissions to address some of the social agencies that can deal with bringing people back into the workforce, for example, or can do entrepreneurial or life-skills training -- anything designed to increase people's self-reliance. My advice to the commissions is to look to the other sectors of society that haven't been working closely with them. In some cases women's centres have very strong programs, or native friendship centres for off-reserve people or some of the native people.
I find, as I go from community to community, that we don't have an integration of economic development planning. For example, somebody may be promoting a ski hill that's going to bring people in, but there's no offer to the aboriginal people in the area to get involved in subsidiary businesses. Or a town wants to bring in a lot of tourists who want to watch the Indians fish, and it might bother them; yet it's an opportunity to get some interaction between the visiting people and local cultures.
I think it's a matter of trying to work in a more coordinated way. Any of the local funding outside municipalities and the economic development commissions can be drawn in, and I personally would like to see the federal efforts work much more closely with our own provincial and local efforts. I think we achieve economies of scale. My advice is to bring in non-traditional sources of economic development funding, and that would be some of the other groups. For example, it would be possible, under the job action program through the Ministry of Social Services, to stimulate some kind of real economic planning for those people.
L. Stephens: That was my next question. I was going to ask you if these commissions have any kind of job-creating or job-retraining component, either alone, in partnership with the provincial or the federal government, or both, or with the private sector. Is there anything even remotely like that for these local communities?
Hon. D. Zirnhelt: We'd almost have to go case by case. We don't have a provincial program that pulls it together. The economic development approach should do that at the local level.
Community Futures, as you know, does some looking into the future and can access federal retraining planning initiatives. We are in the early stages of the interministerial cooperation within the province. There are discussions going on with the federal government about their role in job retraining. Right now there are discussions as to whether the Community Futures board will pick up the federal responsibility in job retraining and whether there will be separate boards. My view is that we will provide assistance for coordinating the provincial efforts at the local level.
The easy answer to your question is that other than the community economic development program, there is no specific program that brings things together. This was not an approach that the previous government nurtured, so we're starting out amid some budget cuts to try to take a new approach. We're not there yet, but we have begun consulting with a wide range of people working in the field, both traditional economic development commissions and new groups that are starting. There will be a consultation on the June 5 and 6 weekend which will pull these people together to try to come up with a locally based strategy. We will then have advice from all these local groups as to how best to proceed.
L. Stephens: Small business is a large part of regional economic development. Could you share your views on the needs of small business today in the province?
Hon. D. Zirnhelt: We have the answer: it's money, marketing and management. We think that access to money is a perennial problem, and we spoke earlier about that. We will address that in the small business assistance and start-up programs.
Marketing and management are continuing areas. We feel that access to upgrading in marketing and management skills is really important, and we offer marketing assistance through the B.C. Trade Development Corporation by some of our home-based business people. This is a broad category of people who have very small businesses. When they come together some really exciting things happen. If you haven't attended them -- I'm sure you have -- some of these fairs are really outstanding in terms of what they do to make connections for people.
With respect to general marketing services, if a small business person comes into one of our field offices, they will tap into the resources of the ministry and the B.C. Trade Development Corporation in terms of obtaining the best services available. I think in the field of marketing there is quite a bit more that could be done. It's limitless how much we can do. If we identify a shortfall in that field, we'll be working to correct it, but again, not always with the luxury of large amounts of expanding resources to do that.
[5:00]
L. Stephens: I have a few odds and ends before we go on to trade. It was stated that one of the lottery funds would be going into different ministries. I would like to know if regional economic development has received any lottery funds.
[ Page 1509 ]
Hon. D. Zirnhelt: I was looking around, hoping that we would get some of that. The PEETS grants were originally funded that way, and now they're funded through this ministry. We have $1.6 million, and that's up from last year. So we are interested in communications in rural areas in terms of what it means to lifestyle. We're also working on other areas to make communications available to people in the rural areas. But the only one that is lotteries is the PEETS grant.
L. Stephens: Piper Aircraft is a company, as I'm sure you know, hoping to relocate in Kelowna. I wonder if you could tell us what the ministry is planning, or if there is some support for the efforts of the private sector to encourage Piper Aircraft to relocate in British Columbia.
Hon. D. Zirnhelt: We have been working with a number of proponents from businesses that would seek to relocate Piper Aircraft here. As you know, this company has had some financial troubles, some of them related to product liability because of the American culture that sues for any reason. We have been encouraging anybody who wants some assistance from the government to produce a business plan with all of the information. Whenever we see that there's a group that appears to have some equity to contribute, we ask them for some information if there's any indication.... Sometimes it takes groups a while to get their act together, so to speak, before they can approach government.
What's happening with Piper Aircraft is that there's continual daily discussion with the principals. We're attempting to follow every lead. We would prefer to have all the information about the project so we can assess its viability and know exactly what they're interested in. Suffice it to say that we would like to see an expansion of the whole aerospace industry in British Columbia. We have a good industry which is expanding, and we will do whatever we can, short of being foolish with the taxpayers' money.
L. Stephens: Would the minister tell us if his ministry or the government is contemplating a loan or a loan guarantee for Piper Aircraft at this time?
Hon. D. Zirnhelt: The way the government operates on this is that once it is done with due diligence, which means careful assessment of the project, we will then be in a position to assess whether or not a request is valid and worthy of support. I can't really say any more than that. We consider every bit of information that we have on this project. We have a number of information requirements about projects that will assist us in the due diligence. We are evaluating this project, but at this point we don't have a proposal under consideration that would be for X loan or X amount in loan guarantee at this point.
L. Stephens: I have a couple more questions to finish up with the ministry, which is under reorganization at the moment. I understand that a consultant has been hired by the ministry to rethink the organization. Could the minister please tell us what the qualifications of this consultant are and what his terms of reference will be?
Hon. D. Zirnhelt: The reorganization has to do with the development of a business plan and the consequent reorganization that might flow from that. The person doing the work has had considerable experience inside government and out, doing business planning for a number of organizations, and is generally recognized as one of the better-qualified people in the field.
L. Stephens: I understand that the minister has a personal assistant, Mr. Ted Hayes. Could the minister tell the committee what the terms of reference are for Mr. Hayes's employment with the ministry, and what qualifications he has?
Hon. D. Zirnhelt: That particular person reports to the deputy. He generally works in the area, some of which was under discussion here, of the interface between social and economic policy -- the whole relationship between how people who are in marginalized groups work to get skills and how government works between ministries. That person has worked extensively as a consultant in that field with a wide range of groups, and generally works in the field of policy development and coordination.
L. Stephens: Would part of this individual's job be consulting with clients of the ministry in regard to liaising with the ministry and its clients?
Hon. D. Zirnhelt: The way these things work is that people consult for purposes of informing the ministry on what's going on in that field. The general objective would be to assist in the development of policy. Sometimes people don't just read books; they actually go out and talk to people and find out what other agencies are doing. The general purpose is to get us up to speed on what's going on in the fields that are high priorities for us as government.
L. Stephens: I want to make sure I understand what you're saying. It sounds like the ministry is really restructuring fundamentally, and this particular person has been hired to help the ministry formulate a long-term strategy and a long-term plan for the ministry. Is that correct? In so doing, he's accountable -- I think you said -- to the deputy minister. Is this individual a permanent member of the ministry staff, or is he on a short-term contract?
Hon. D. Zirnhelt: I think we have two. I don't think Mr. Hayes is working on reorganization. He may be doing some work with respect to the interface between the social and economic ministries by way of policy development, but that doesn't involve reorganization. There is another person working on reorganization. We would be happy to provide you with some of the terms of reference by way of a private briefing. We don't have it with us, but generally that person is working on the business plan development and reorganization. It would be a ten-to 12-week contract.
[ Page 1510 ]
L. Stephens: My colleague has some questions.
G. Farrell-Collins: First of all, before we get too far, I'm wondering if the minister can give us the name of the consultant involved in the business plan, the reorganization -- the one who has the extensive experience in both government and the private sector.
Hon. D. Zirnhelt: The name is Ev Northup. If you're interested, we can provide a briefing on the details.
G. Farrell-Collins: Perhaps the minister could let us know if any contracts for communications or polling or anything of that nature have been let by his ministry so far this year.
Hon. D. Zirnhelt: I am going to have to take part of that question on notice. To the knowledge of senior management here, we have done no polling. With respect to communications, sometimes bits and pieces of the production is contracted out. But I'll have to take that on notice, because I don't have the details of it here.
G. Farrell-Collins: At this point you are not aware of any contracts in the areas of communication and polling that have been let by your ministry?
Hon. D. Zirnhelt: None on polling, but there may be some minor ones on communications. But we'll get back to you on that.
G. Farrell-Collins: Perhaps you could give us a ballpark figure as to what "minor" is. Is that $5,000, $10,000 or $50,000?
Hon. D. Zirnhelt: The best thing is to get back to you with a list. We don't have a definition of "minor." They would be in the fields where we don't have the internal expertise to do it, or that expertise is overworked temporarily.
G. Farrell-Collins: I assume we can anticipate, at your earliest convenience -- depending upon when the House sits again and when this committee sits again -- obtaining from you a complete list of all contracts that have been let by your ministry for polling, if there are any, and certainly for communications. You said there were none in polling that you were aware of. Are there any other sectors, any other aspects of service, in your ministry that you may be letting contracts on, or any other consulting contracts that may be let?
Hon. D. Zirnhelt: First of all, we're developing a response to the question on the order paper. As you know, we inherited a situation where quite a number of contractors were, in effect, employees. If you sit down and talk to people about this, there's a question of definition as to whether they are an employee by contract or whether they're doing some special work. The answer to the question on the order paper is being developed. I can't tell you when that's going to be available.
[5:15]
We do an awful lot of contract work. For example, we contracted with Price Waterhouse to do a verification of those numbers. We do a lot of contracting to assist the Job Protection Commission in certain analyses that we do. So there's a range of things being done. I wonder if the best way to handle it is to know in some detail the kinds of things you're interested in, and we'll try to provide you the work we have internal to the ministry on that.
G. Farrell-Collins: We're really looking at a fairly complete and exhaustive list of the contracts that are underway and that have been let. I think it's only part of our job as opposition in this whole process of estimates to scrutinize the disbursement of funds and the rationale for them, etc. I'm asking the minister now if he can assure us that those lists will be forthcoming before the estimates for this ministry terminate, so we will have time to canvass them in this process?
Hon. D. Zirnhelt: Well, the long and short of it is that I don't think we're necessarily going to be ready to provide that brief at this point. The appropriate job of Public Accounts is to scrutinize the accounts of the government. The estimates, which we are doing here, are for going line by line through the book and saying: this is roughly enough or not enough; or how is it spent? If your question is, "What are you doing?" or, "How are you accomplishing these objectives?" we'll probably answer: "Some of them with our employees and occasionally through contracts." At this point, this is the place to discuss the lines in the budget.
G. Farrell-Collins: While I am new to this House, I am familiar with the rules and the process. I am aware of the duty of the Public Accounts Committee. I sit on that committee, and I'm aware that it looks at the history and reviews what has been done. That process is fairly complete, and certainly those things will happen.
We are dealing now with the estimates for the upcoming year, which includes since March 31, I suppose -- the end of the fiscal year. We are looking to find out how the government is spending those funds and whether those funds are being spent in the best interest of the public. That is what this process is for: estimates for the upcoming year. In order to know what is in the upcoming year and what the plan is.... We need to know at this time what the situation is within the ministry, in order to ask those questions and to canvass those areas. That is why we are asking the questions. That is our job and duty. If the minister or the ministry is not able to provide us with that information while the estimates are ongoing, it's difficult for us to canvass those issues. There's certainly no opportunity for us to review them, until a year or two down the road in Public Accounts, after the money has already been spent. If there's some way we could accelerate that process, whereby we would have the opportunity to scrutinize those contracts and expenditures while the estimates process is still ongoing, it would be much more conducive to operating in the interests of the public good.
[ Page 1511 ]
Hon. D. Zirnhelt: I'd like to remind the member for Fort Langley-Aldergrove that it's how we intend to spend it, not how we intend to cross the t's and dot the i's. That's what Public Accounts looks at, to see if the money is spent in accordance with the objectives. I'm happy to talk a bit about it. We have a line in the budget that deals with professional services for the whole ministry, and we have reduced that by 6.9 percent. Last year, in the estimates, there was $10.579 million and change. This year there's $9.84 million. There's a whole range of expenditures for funding in job protection, in improving small business services in the development regions. There's a number of areas crossing all the programs that we intend to have, programs we know we have to have available from experience.
I would just remind you what we are debating here -- and there's wide latitude in debating the minister's office -- are the lines in the estimates. If you would like to ask about a specific program, a line item -- say, what we are doing in business programs, or what we are doing through the Job Protection Commission -- I'm happy to respond substantively about what we are attempting to do. I don't think your question about specifics is really relevant, because it's what we intend to do or what the overall thrust of these expenditures are. You can only assess whether that's been achieved, and whether we're within our program guidelines, after the audits have taken place.
G. Farrell-Collins: Perhaps I should clarify myself to the minister, so that he's aware of what I am asking. I'm certainly not asking for a look at what went on last year or at the contracts that continue on an ongoing basis. Because those will be scrutinized in Public Accounts when the time comes. I can be very specific for the minister and ask him very clearly: since he took over as the minister -- in November or December, sometime in that period -- have new contracts for new programs been signed for consulting in whatever way? If that's too extensive a list, then perhaps we'll have to get that some other way.
Hon. D. Zirnhelt: There's a huge list. Suffice it to say that I'm prepared to stand here and defend whether we need $9.847 million in contract services. It's a huge list, and it gets very specific. I think you've done the right thing in putting it on the order paper and as government, we will respond to that in due course.
I tried to explain that we're reviewing the whole issue as to whether people should be on contract or whether they should be full-time employees of the ministry. There are some legal questions around that with respect to taxation and so on. We're approaching it. We have appointed the Korbin commission to look at it and to advise the government on how we handle these things, so that we do it on a professional basis. I'm prepared to say that, in due course, those questions on the order paper will be answered. I can't say when.
L. Stephens: We'll move on to Trade, and we'll get this wrapped up today. There's a slight change in the Trade budget -- 3.8 percent. I wonder if you could tell us what this entails. Also, what are the responsibilities of your portion of the Trade portfolio, and are there any changes?
Hon. D. Zirnhelt: The total in the international division is an increase of 3.8 percent, from $10.619 million to $11.022 million. I can explain where that goes. Under salaries and benefits there has been a reduction of 10 percent; under travel there's an increase of 22 percent; under professional services, an increase of 46 percent, and that deals mainly with the softwood lumber issue. We are spending considerably more to fight the countervail action. Part of that has been absorbed by this ministry, and the Ministry of Forests is spending money as well. We've reduced office and business expenses by 2.6 percent and building occupancy costs by approximately 0.5 percent. Under most of the other things there has been virtually no change; it's just the status quo.
We've reduced our funding in a lot of areas in order to be able to accomplish our objectives of fighting this very significant and landmark countervail action by the United States. Our whole economic development strategy in the value-added wood industry will go for naught if we aren't successful here, so we're giving it our best shot. We've pulled together several millions of dollars to spend legally and through political lobbying and a communications strategy in the United States. We're having some success, although time will tell.
L. Stephens: Has the money that you've managed to get together to fight this countervail on softwood lumber come from the international trade budget? What other ministries or programs did it come from?
Hon. D. Zirnhelt: The short answer is that overall there was a reduction in the international division's budget. We added this million back in, which made it look like the cuts weren't significant. It's really a shifting of priorities. So yes, we are spending relatively less in other activities under international trade. But this became such a major project that we packaged the money that way. We might have been able to cover it off by moving things, but the appropriate way to do it is to argue before Treasury Board that this is a succinct project that requires a focus and clear expenditure objectives. That's what we did, rather than trying to pull it together. The budgeting process was where there was cutting and adding done.
L. Stephens: As far as the international trade division is concerned, is it still the responsibility of the ministry to promote international investment in British Columbia and maintain foreign offices, policy and trade actions and negotiations, and trade and economic analysis of trading partners? Are there any additional functions that this division will service?
Hon. D. Zirnhelt: The answer to all those questions is yes. We do all of those things. There's sometimes an overlap, but it's better described as cooperation between the Trade Development Corporation and the ministry. They are promoting trade, although in the process they do identify people who want to invest. That's because, for example, in produc-
[ Page 1512 ]
ing products, it's often good to have an investor come in who already has a market in another country and will then invest in this country. So there is some overlap and sharing of responsibility. As I say, what we do is we take a corporate attitude of working together with common objectives, so we have a very close working relationship with B.C. Trade.
The international offices are places out of which the Trade Corporation operates when they're overseas. But we're looking at changing them to become trade development offices more, as opposed to general trade offices; it's just a matter of where you draw the line. We're trying to find ways of creating efficiencies, because most governments have trade offices. They may not have general government offices in a lot of ministries. I think we're saying to the international trade people: "We've cut you back a bit. We want to see you out there scrambling for business and investment with less money."
L. Stephens: Have there been any formal value-for-money studies done on these foreign trade offices to evaluate their performance, or is it just what you've said -- that you want to see an increase in their performance?
Hon. D. Zirnhelt: We are in the process of setting the criteria for that. Yes, we're going to be doing value-for-money audits in the foreign offices.
[5:30]
L. Stephens: Has there been any consideration of greater cooperation between the provincial trade offices and the federal offices? Is there duplication between the two, and perhaps one could provide one function and the other office another function? Has there been any discussion on coordinating programs between the federal and the provincial offices?
Hon. D. Zirnhelt: As a matter of fact, at the last meeting of the provincial Trade ministers and the federal Trade minister, we considered a joint paper developed by the first ministers. When they met our Premier, we emphasized that we wanted to achieve some efficiencies. The federal government had previously sought to find efficiencies there. We are working towards closer cooperation. We have not put it into effect in all cases yet, but we are working actively at trying to establish it. Most people are locked into longer-term contracts.
The federal government has a number of economic and trade commissioners in its offices. The embassies do a lot more of the formalities of international relations. There is more protocol involved. Ours are less encumbered by protocol requirements, but it is our view that we will try to work out a much more businesslike attitude by the federal government. In other words, we expect them to give us and guarantee us a level of service that is our due. For example, if we have 40 percent of the trade in the Pacific Rim, we would expect the Pacific Rim federal people to give us approximately that amount of time and effort. It's very difficult to gauge, because the federal government doesn't easily take its direction from us, but we are working along those lines. It will take us some time to arrange the formalities of an agreement. I won't promise we will do that, but there has been instruction from the first ministers to do that, and there has been some progress made.
L. Stephens: My colleague has a question that he would like to ask at this time, please.
K. Jones: I'd just like to take this opportunity to thank the minister and staff for their cooperation in helping to advance the continuance of the Transportation Museum in Cloverdale. I hope that the continuing support, both from the Pavilion Corporation and yourselves, will bring about a successful opportunity for the community of Cloverdale to not only maintain but to enhance a primary tourist attraction and to assist in the economic development of the community. In your field of economic development, the museum will play a major role in enhancing an area that needs a lot of support and is getting it from the community, both through the help of the board of trade and the many citizens who have a desire to put their time and effort into this project. I really appreciate the cooperation and the opportunity for these people to meet with you at various times. Thank you very much.
L. Stephens: I'd like to continue. Thailand and Indonesia are a couple of the Asian countries that seem to be coming along. Has there been any consideration of locating satellite offices in either of these two countries, and in Vietnam as well?
Hon. D. Zirnhelt: Through our Singapore office we worked with a co-op student in Thailand last year, and we're continuing with that this year. We have had discussions with a Vietnamese delegation. We hosted a Vietnamese delegation, and it was quite interesting. They really appear to be on the move economically, and a lot of our industry is interested in going there. At this point we have not decided to open an office, but we would handle Vietnam through our Singapore office.
L. Stephens: I'd like to talk about Vietnam for a few minutes. I was fortunate to have lunch with the ambassador the same day that he spoke with you. There were four different areas in which he felt British Columbia and Canada could contribute to the economy of Vietnam. I wondered if the province, through your ministry, has a plan to encourage some of the business people to become involved in those areas. One was petroleum exploration; the others were transport and the infrastructure, telecommunications, and fisheries. These were the four areas that the ambassador stated would be very receptive to Canadian investment. Could the minister tell us if there are plans underway to take advantage of this?
Hon. D. Zirnhelt: Yes. In fact, B.C. Trade took a very successful mission to Vietnam, and then they hosted the Vietnamese delegation. Every business that went with that trade mission received a contract last year. We're actively pursuing any other lead we can discover. In fact, there is another trade mission planned;
[ Page 1513 ]
I hope it will be as successful. I think the Vietnamese Ambassador was quite enthusiastic about what Canada has to offer in those very fields that you mentioned. We discussed them as well. It was good to see them smiling.
I sure hope that we can handle the balance-of-payment situation they alluded to when they were here. I think that should be part of our strategy as well -- to try and encourage bilateral trade, not just one-way trade. I think we'll find our people exporting services very aggressively in that area.
L. Stephens: Before we leave the countries, I would like to ask the minister if there's been any discussion about eastern Europe, and whether or not British Columbia is contemplating moving into that area at all.
Hon. D. Zirnhelt: I'm glad the hon. member asked that question. We are actually in the process of developing an agreement on science and technology with the eastern Germany state of Saxony. I will be going on a one-week trip to Seville, to B.C. Day at Expo, and will be meeting with industry people at that time in Seville. I will also spend two days in Germany. It's focussed on Germany rather than on the whole of Europe, although we will certainly pick up on what's happening in Europe.
As a province, we are probably working more closely with Saxony than anywhere else. There's kind of a twinning of province and province. In particular, we're targeting the science and technology field. As you know, they have quite a number of environmental problems that they inherited from the previous regime. Being leaders in that field, British Columbia companies have a wonderful opportunity. We will sign this agreement with Saxony, and following that we will see an exchange between business people. Our agent, Mr. Jan Hagen, who's in Munich, is very active in entering in there. We also, of course, monitor what's happening in eastern Europe, but it's very difficult to be everywhere all the time. Our focus really is on Asia, and if there is anywhere we can be really effective, I think it's in dealing with the Asian part of Russia, for example.
L. Stephens: Going back a bit, when my colleague from Delta South was discussing trade, you mentioned that portions of the London office had been cut, and I understood you to say that it had moved to Munich. Is that correct? If so, do you contemplate strengthening the presence of British Columbia in Germany and opening a trade office as a gateway to eastern Europe?
Hon. D. Zirnhelt: I want to make sure I was understood. In London, we cut one of the maintenance personnel and reduced our costs by downsizing the finance and administration part. It's really a management efficiency that we've achieved there. I guess I was talking about the focus of trade activities in Europe. At one point the Commonwealth was much more important to B.C. and Canada than it is now. Europe as a whole is a much more coherent group, and it has common problems. If you deal with trade to the European community, you can deal with all the countries. Their standards are becoming very common. We really have no significant change in the Munich office at this point. It's simply a resource in question. We could spend more, but it would have to come from somewhere else right now.
One of the reasons I'm going is to look at the prospect of trade with the European community, to see if we should expand our opportunities there. For example, if we found that Asia was not going to have the same growth as Europe, it would be foolish not to try and get our share of trade with Europe. The reality is that we're spreading ourselves in different parts of the world, but we don't want to spread ourselves too thinly. For now we're concentrating on Munich as an entry point into eastern Europe.
L. Stephens: Aside from the trade missions you've mentioned, do you have any others planned in the budget for this year?
Hon. D. Zirnhelt: I didn't come here prepared to announce the complete strategy. I don't want to be held to it, but we have a number of commitments -- for example, to return to Japan. We are planning trips to Washington, depending a bit on the way the countervail issue unfolds, although that's not the only issue we have to deal with in Washington. We have already sent several ministers to California and Washington to deal with specific Pacific Rim initiatives. We have already sent one minister to Korea. We are planning another Asian trip that would deal with Taiwan and others. It hasn't been completely planned, but we will be making that available when we have it.
Mr. Chair, a point of order. I wonder if the vote will pass this afternoon. I'm prepared to put the motion at the appropriate time.
Interjections.
The Chair: Order, hon. members. We have a timing difficulty with the main House, as we cannot continue past the sitting of the main House.
D. Schreck: Point of order. The standing orders give us 17 minutes before the main House adjourns. If the parties can wind up debate within five minutes, we can conclude what the parties have informally agreed to today.
L. Stephens: This question is about NAFTA, which, of course, is important to all of us, particularly here in British Columbia. I wonder if you could share with us the ministry's hopes for negotiations with the provincial and the federal government as they pertain to NAFTA, and what we would like to see happen.
[5:45]
Hon. D. Zirnhelt: In NAFTA we are trying to follow the negotiations. What is happening right now.... I had a telephone call with the Hon. Mr. Wilson and other Trade ministers yesterday. We are trying to get a copy of the latest text that's under discussion, and we can't. Because there were leaks last time, they aren't being as forthcoming as they were. We are trying to pressure the federal government into giving us the text
[ Page 1514 ]
so we can evaluate it. But our objective is to enhance trade in a number of areas where we feel we can offer services. We feel fairly optimistic that the dealings with Mexico can help us to deal with the rest of Latin America, because Asia and Latin America are both close to us. I'm hoping that we can have more information on that. As I've said, I've been trying to arrange a briefing for you when we get the information, and we will carry through with that and would be happy to take your views into account. The trade advisory group is considering anything that comes through, but there's not much coming through right now, and that's the problem.
Vote 22 approved.
Vote 23: ministry operations, $88,576,000 -- approved.
Hon. D. Zirnhelt: I move that the committee rise, report resolutions and ask leave to sit again.
Motion approved.
The committee adjourned at 5:47 p.m.
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