[ Page 1323 ]

The House met at 10:05 a.m.

Prayers.

Hon. J. MacPhail: Hon. Speaker, in Committee A, I call Committee of Supply. Just for the information of the House, there will be a continuation of a riveting debate around the estimates of the Ministry of Employment and Investment. In the big House, I call Committee of Supply. For the information of the House, we'll be debating the estimates of the Ministry of Forests.

The House in Committee of Supply B; G. Brewin in the chair.

On vote 36: minister's office, $432,868 (continued).

T. Nebbeling: Mr. Minister, yesterday we spent some time on the Forest Practices Board and their activities last year. Due to the fact that there are indeed fewer people employed by the Forest Practices Board than was intended, my question to the minister is: within the budget of $2.2 million that was allocated, is there a portion that has gone back into general revenue? You were going to get me the answer.

Hon. D. Zirnhelt: We can provide you with how much was spent out of their estimate last year of $2.29 million, but we don't have the information right now on how much was spent. I would venture a guess that they didn't spend the whole thing.

T. Nebbeling: Yesterday we did not hear that you suspected that the whole amount was spent. If I'd heard that then, I would have gone on in my questioning. Considering that this board, in the '95-96 book year, only operated about nine months, and considering that the board did not truly have the expenditure that it intended to have because of the lack of inspectors, as was reported yesterday in the papers as well, I must say that I am quite shocked to hear the amount of money spent by this board on meetings together -- it's just outrageous. If we take nine months, and as stated yesterday, there are approximately six days a month that the board meets and discusses matters of importance, that adds up to 54 actual days that the board has been working together. Does the board employ staff within the $2.2 million? Is there a staff allocation that should be deducted from the amount? Otherwise, we're looking at an expenditure of $36,000 a day every time this board meets, and that to me sounds just outrageous.

Hon. D. Zirnhelt: They have a full-time chair of the board, who operates as the CEO right now, and they have contractors and other staff. So it's not all spent on board meetings.

What I said in my explanation was that to get up and running, you usually expect the leadership of an organization to spend some time working on getting plans going and so on. So they discuss the appropriate levels, job descriptions and those sorts of things. Under that $2.29 million, for example, they were budgeted to have 11 FTEs, but what we're finding is that they haven't been able to get up and running. It's going to take some years, and I make no apology for that. To do it right, they have to get the right people, and make sure it's done right, and that's why my comment is that we're not in any panic situation here. We're doing what has to be done to get up and running, and there are some bumps along the way. I freely admit that. But it doesn't jeopardize forest practices in British Columbia. We have applied a lot more personnel through the system, monitoring and enforcing. This is just simply one part of it, and that's the special independent investigations.

T. Nebbeling: I understand there's a phase-in period. I also understand there are 400 people in the field doing the enforcement work, but I know that is not part of this $2.29 million budget. What I'm saying is that if the workforce that was supposed to be covered by this budget has not been in place, has not done their work, how can this board have expended the full $2.29 million? That would mean it was spent primarily on board meetings. If there is another explanation, then that's what I hope to hear from the minister.

Hon. D. Zirnhelt: We can provide the member with the exact number of board days and so on, but I think the global numbers would be important. You will find they won't have spent that money, and therefore it wasn't all on board meetings. I did offer an explanation that the board meetings were probably more lengthy and more demanding on members, partly because of the problems of getting staff in place when you don't have a strategic plan -- when you don't have a number of things.

We didn't hand them the blueprint and say: "We want you to set up an independent board and this is exactly how you're going to do it." We did give the board some free rein as to how they would develop. Both the Minister of Environment and I have spent hours talking to them about how they're doing and whether they're meeting government's expectations and whether government can help them. The deputy and I have offered assistance to them in getting whatever they need -- classifications.... In fact, they have borrowed staff from other parts of the system in order to get up and running.

[10:15]

I'll provide you with that information. This will come out with the year-end books -- exactly how much is done -- but we can give you an approximate figure. We'd be happy to supply that to you before the estimates are over. I'd like to report out what was spent on various aspects of their operations.

T. Nebbeling: One last question. After what I've just heard, and considering that the board has operated for the first five months of the '96-97 budget estimates -- estimated period -- without any of these inspectors, as it was intended to do, this is where I'm having a problem. There were certain things to be done with the funding that clearly were not done. That applied to the '95-96 estimates and to the budget of $2.2 million. I understand that because of problems in the startup and in finding the right people -- that they didn't jibe.... I'm still surprised that the full amount was spent. But I will get an explanation on that.

What I do not understand -- and what I question -- is why the board's budget is going up to $4.4 million -- almost doubling. In the first five months of the year, where that $4.4 million should be applied, nothing is happening. There's only one inspector, rather than the full force. So how is it that we're still talking about $4.4 million when half of the budget year is almost gone and the expenditure hasn't happened? What is 

[ Page 1324 ]

the board going to do with that money in the next six months to justify having this piggy bank available to them -- because it is beginning to look like a piggy bank, rather than an operating fund?

Hon. D. Zirnhelt: I can assure the member that when we put the budget together, we talked to the CEO and asked what he expected to spend. We would have loved to have put in a figure of $2.29 million, but then we were open to the criticism of under-resourcing it when they got up to full activity. I cannot confirm at this point.... It is still too early in the year to say whether they meet the target; but they may well not meet the target of $4.4 million. But we would be remiss if we put in a lower figure and then they needed it, then the pressure was there to do this independent auditing. The companies want it, interest groups want it out there, and the general public want it. We would be remiss if we didn't resource this board adequately. We feel we've resourced it adequately.

If they can't get their people hired in the next few months, they may well come in under; I don't know that. But we have advised them.... I as the minister, and as one of the ministers to whom the board reports, have said: "Well then, get contractors or use private sector consulting firms or use secondments -- whomever. Use whatever you can to make sure that you get the job done, so that we're not in the situation of not being able to follow up on investigations."

But presently, as I say, there is a CEO who is the board chair. You've got legal counsel. You have consultants who are developing the audit system. There is work going on, and I am confident that they will be up and running and virtually fully staffed, certainly by year-end. But I can't approximate what they will spend. I know there's adequate money there; we're safe on that side.

T. Nebbeling: I heard the minister using a couple of words that just may be the reason that I am digging here a little beyond what the minister would like me to. I believe very much in underbudgeting if it is clear that in a previous year the money was not spent where it should have been spent. So overbudgeting, to me, is a mechanism that most likely is one of the reasons that we as a province are in trouble financially, because we seem to be very generous to these organizations when we really don't have a grasp on how the money is spent. I know there is an accountability system in place, but it is very difficult, especially for a newcomer like me, to find exactly where everything is allocated and get the information. So I am really concerned that this particular board -- and I'd like to have that on the record -- is not monitored well, when it comes to the financial management of the funding. In the two hours I think I've spent on this board and its financial management, I have not been given any indication that there is indeed full accountability and a financial management strategy in place that clearly is based on living within our means.

So I hope that because of the discussion we have had on this board, the minister is going to be very vigilant in looking at the dollars, because I will be doing exactly that, based on what I've heard in the House. I hope I can get the assurance from the minister that from time to time I will be able through him -- and not the Minister of Environment, as was the cover yesterday -- to get the information I need to make sure that indeed that board is working within its financial means in a responsible manner, because that has not been proven today in this House. And I really regret having to say that, because I didn't come here to find this kind of potential abuse.

I cannot see how a board that is only working with half its manpower and that's not doing what it is intended to do -- it is not doing its mandate, it is not hiring -- and that's still spending the dollars it has been allocated to do all these functions, is covered by a statement: "You know, they work hard and they do talk with the consultants, so that merits that expenditure." It doesn't wash with me.

Hon. D. Zirnhelt: You suggest that it's abuse of dollars. I'd suggest to you that it is abuse if they couldn't spend it wisely. They have to account for every cent; they have to have appropriate personnel. I'm saying to you that we're doing something here that probably no one else in the world is doing. Of the 14 jurisdictions studied, we have the toughest Forest Practices Code and we're proud of that, and I think our industries are proud of that. We're trying to make it run and to set up an independent agency here. What I'm saying to you is that it would be irresponsible for this minister to direct an independent board on how to spend their money, and jam them every second week on their financial plan. We will ensure that the money is spent wisely and not wasted, but I resent the word "abuse" being used. If you say underspending is abuse, then I'll turn around and say to you that underspending can be good fiscal management.

T. Nebbeling: I didn't say underspending is abuse. I said overspending is abuse, and I have not been given the proof today, Mr. Minister, that the overspending is not happening. I'm trying to find out if the financial strategy is responsible, or if there are certain things happening within this board where expenditures are made that are not achieving the mandate of that board. We know that the mandate of that board has not been achieved because of the performance of the last nine months. We also know the board has not achieved its mandate because of the performance of the first five months of this particular book year. So my question, Mr. Minister, is: are the actions of this board monitored to make sure that the money is spent in a prudent way for achieving the mandate? That has nothing to do with underspending or overspending. I'm looking for correct spending.

Hon. D. Zirnhelt: The expenditures of this board are controlled by the usual mechanisms: the Financial Administration Act, the auditor general, the office of the comptroller general -- all of those things come into play. I can assure you that I don't accept the assumption that the mandate is not achieved. We know that the Forest Practices Code is being monitored. This board's role is to establish some auditing. The code has hardly been implemented, so you can hardly expect there to be an awful lot of auditing or appeals. But they are handling appeals, and it's just that they don't have an instant turnaround on appeals. So I would dispute that their mandate is not being achieved; I would suggest to you that I'm satisfied that they are achieving their mandate. They do have some growing pains, I will admit. But I can assure you that there are no expenditures that are not appropriate expenditures under the Financial Administration Act, and that are not controlled by what they're allowed to spend it on in the budget, in estimates.

T. Nebbeling: I regret that the minister still tries to paint a rosy picture, because in the newspapers yesterday there was a report of the chair of the board stating that he had only one inspector for this province, when the mandate, and the plan to implement the mandate, required six inspectors. Now, I take it that these inspectors may make anything between $50,000 and $65,000 -- I don't know, I just guess. But if five inspectors have 

[ Page 1325 ]

not been hired to do the job to achieve that mandate, then that says to me there is a fund somewhere of between $250,000 and $300,000 that should have been spent on these salaries. That hasn't been done. What happened with that money? That's why yesterday I asked you if money has been returned to general revenue because that expected expenditure didn't happen. If the minister now says, "No, we have spent the full amount of budget without having these people employed," then what happened to that excess money? That's the reason for my question, and I would like to have an answer.

Hon. D. Zirnhelt: Of course, if it hasn't been expended it will stay with the consolidated revenue fund, which will have the advantage of having the money. Let me tell you that I've been able to get the actual figures for you for 1995-96. The actual figure they spent last year is $1,901,126. That's approximately $400,000 under budget last year.

Now, you keep making the point about there being only one investigator. There are other staff to the board, but yes, there's one investigator. But they have had as many as six in recent months, and they will get back up to six as soon as they can fill their positions. They haven't just had one for the year, and I think these figures attest to that. The year to date, to July 31, is $755,615. So, at the end of the first quarter, they have expended $755,000. You can do the math. I think it's within the realm that they'll be closer this year, but I would not condone them spending money that's not wisely spent. We won't penalize them; we'll look really hard at their business plan for next year when we set the estimates for next year. But I would think this is an important function. We won't underfund it, and we won't overfund it, either. We will try to get it just right, and that's exactly the figure we try to put in here. I hope that helps.

T. Nebbeling: I'm not looking for punishment for anybody. What I'm looking for is to see if I can somehow, even from an opposition perspective, contribute to make things work better, and that's why I'm trying to find, if there are wrongs, what leads to the wrongs, and if we can make them better. So I'm not looking here to punish people, I'm just looking for fairness. In particular, I'm looking for responsible financial management of this government's affairs.

[10:30]

I am really surprised that the information that I was asking for last night was not available. We didn't quit until about 11 p.m., so I don't think the members went back into the office to find out. That the information is suddenly available surprised me a little bit, but I'm nevertheless very grateful. However, it merits another question: if the total budget was $2.2 million and there is approximately $400,000 left, that means $1.8 million has been spent. That leaves $400,000 for these five missed positions. I take it that includes the salary, travel, backup for staff in the offices, and reporting. That is actually the amount of money that five inspectors will cost doing the job for a year, because we have an annual budget. If that is the case -- and I can only translate it that way, that that $400,000 represents what the saving is because of not having these five inspectors -- then I would like to hear from the minister: what is in the planning, including hiring the five people, that leads to the 1996-97 budget having a need of doubling -- considering that we now know that the cost of these five inspectors is only $400,000, and that that includes their backup workers and all the paperwork they have to do?

Hon. D. Zirnhelt: The audit program was developed over the first year. Now they have to bring auditors on. So they spent money on consultants and others developing it, and they're still spending some money on developing the audit program. They are in the process of hiring auditors, so they will be.... There were no audits done last year. This year, I expect, the audit program will take up a major portion of the difference. But I remind you that during part of '95-96 there were investigators -- up to six -- who were on staff at any given time. So they were spending money on that auditing. Yes, the shortfall was about $400,000. They didn't spend $400,000. They expect to make that amount up and spend more, in large part because of the audit program coming on stream now.

T. Nebbeling: It's a shame we haven't got a Hansard here yet, because yesterday we were given a very lengthy explanation about why no inspectors are there, in spite of advertising, in spite of expenditure to entice people to become part of that workforce. So to hear today that indeed there were inspectors.... On what basis were they hired? Were they part-time inspectors? Why were they not offered full-time positions? Really, what I hear now contradicts what I was told last night.

Hon. D. Zirnhelt: The explanation I gave yesterday was that they used contractors. They had secondments. They had some people who worked temporarily. They made do without being able to have themselves fully staffed. I would like to see any organization anywhere, particularly one that's breaking new ground like this one is, up and running and hitting the ground immediately.

The question is: are we moving towards achieving the mandate? And the answer to that question is yes. Part of the mandate is the audit program; part of the mandate is the investigations. Right now, because we only have one investigator, they are a little behind on the investigations. There is no secret there. I've said that, and the chair of the board has said that. I've discussed it with the board. I've offered him assistance in getting himself up and staffed, but the fact of the matter is that they did have staff on during the year. They came in under budget. They didn't have as much staff as we had planned for or that we had provided for them to have on board. They are making the plans; we are providing the resources.

The board itself, through its annual report, has to account for its expenditures. If you want to get into details of exactly how much was spent on each matter, I would suggest to you that when the accounts come out -- because we're now only talking about approximate amounts -- this is clearly something that can be pursued in the Public Accounts Committee, where we are going to ask for line-by-line explanations of the detailed budgets and detailed financial accounts.

T. Nebbeling: Just to finalize this -- because I'm not getting where I want to go -- I don't think I can agree with the minister that we are getting value for the estimate or value for the mandate; I don't agree that we are getting value for the expenditure. Two minutes ago the minister said there were inspectors on staff, so therefore we had that expenditure. Then when I asked about it, I got the answer: "Well, we had some consultants, we had some part-time people, and we had some other people." They are clearly not inspectors. Maybe they functioned as inspectors because you didn't have the right people, but you said you had some consultants. I don't think we have achieved this board's mandate whatsoever. The only 

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reason I've been asking these questions is that, like the minister, I am also looking for something -- and that is, value for money. I think that's sorely missing in the way this board has been operating up to now. I would now like to ask my colleague from Cariboo North....

J. Wilson: I just have one question for the minister on the code. There have been some studies done, and it's estimated that the annual allowable cut could be reduced by up to 15 million cubic metres per year in the province because of the implementation of the code. That's going to cost around $2 billion in lost wealth. Has the minister considered the impact of the code, and has he addressed any means of replacing this with jobs in areas other than the forest sector?

Hon. D. Zirnhelt: This government fully expects, as the economy of British Columbia matures -- and that means moving from a resource-based primary economy more into secondary and service economies -- that there will be some change. We expect that the impact of the code will be a 6 percent reduction across the province -- 4 percent in the interior, more on the coast -- in the AAC. We don't accept that it will be a 15-million-cubic-metre reduction. We're trying to manage the land use planning, the code, all these things, and reduce the overlap, because sometimes there's double accounting.

I think the member is probably referring to a number of the scenarios put forth by Price Waterhouse and others that there's a $2 billion cost. Well, there's a benefit side. The tourism industry is going to benefit from visual-quality objectives and the fishery industry is going to benefit from protecting riparian habitat, so you can put a dollar figure there. We have to think more about not just continuing to maximize each of these particular things, but how they can work together. If you look at an area of the province that has potential for fishing, tourism or a service industry because it's a nice place to live, and a potential for the forest industry -- adding value both in taking better care of the forest and in diversifying through value-added.... When all of that happens together, there is development in different parts of the economy.

We have a plan to develop more jobs in the forest industry from every tree we cut -- the ratio of jobs to trees. We intend to do that. We are promoting mining in the area the member comes from. It's been designated as the mining capital of the province because there is a big-risk development in the copper-mining industry. So, of course, we develop and promote the development of other opportunities.

With respect to what we do to mitigate impacts of the code, we expect communities to come forward with plans. We've provided a program under the forest renewal plan to renew communities, to look at what they can do to diversify within the forest industry, rather than just cutting the trees and shipping out dimension lumber. We've got to add value. I think that's what the public in British Columbia wants. I don't think the public cares, in the end, what they finally see, as long as we've got the maximum jobs out of the resource base.

We as government have said that yes, we want to rise to the challenge of keeping the AAC up by improving our forest practices. Where there's been overcutting.... Historically, it had nothing to do with the code. I use the example of the Kingcome TSA. The vast majority of the cut reduction there had to do simply with overcutting, by any standard. By previous standards, certainly by today's standards, and by standards of the day ten years ago, we were overcutting.

That's a long answer, but yes, we have considered the impacts of the code and are working vigorously to offset any negative impacts. But we should be very quick to celebrate the up side -- the fact that the code is protecting other values out there, the biological and the economic values. I think the public supports that.

J. Wilson: It's good that the government is considering other values like mining and things like that -- when we look at our copper prices today, they're right at the bottom -- and that they support tourism. I'm sure the people at Apex would back that statement up.

Anyway, I would like to delve into the world of FRBC for a little while. I had some questions all lined up a minute ago, and I'll find them here. In the past, we had a silviculture program that was cost-shared with the federal government, and last year was the last year of that program. Could the minister give me the dollar figure of the province's share of the money that was actually spent in the program last year?

Hon. D. Zirnhelt: The answer is the same as last night, and I know we went around and around on this. Last year, the province's budget was $33 million. We are trying to get you the figure on what was actually spent last year, but we budgeted $33 million last year. I venture to say we're probably close, but we'll get the actual figure of what was spent last year. That was the province's share.

J. Wilson: Would the minister have the figure for 1994-95?

Hon. D. Zirnhelt: I don't have the figure, but we'll get it. We often don't have the previous year's figures, because these are the estimates for this year. We will attempt to get that for you, but it will be approximately the same because it was a five-year program.

J. Wilson: Without these figures, it's hard to look at this and project what is actually occurring. The $33 million that was budgeted -- whether or not all of it was spent -- has now, I believe, been reduced from the budget this year. Is there still money budgeted, not through FRDA but from the province, for straight silviculture work?

[10:45]

Hon. D. Zirnhelt: Yes. The total expenditures on silviculture have been reduced from $258 million in '95-96 to $203 million in '96-97. We're still spending $203.2 million this year.

J. Wilson: Is this $203 million money that actually comes out of the provincial coffers, or is it money that is drawn in from the FRBC fund?

Hon. D. Zirnhelt: This is money that comes straight out of general revenues. That could be made up of stumpage and other things, but there is no tracking of it. General revenue dollars are what make up this expenditure. And just so the members knows, the reason we have this budget item here is to maintain areas to ensure compliance with the legislation. So we're regenerating sites that have been harvested under the small business forest enterprise program, for example, and monitoring inspections to check licensee compliance with the Forest Practices Code. We're spending money making sure that the forests are being tended, and in some cases actually regenerating the sites themselves.

J. Wilson: So then, if you're using this fund to do inspection of sites, this type of thing, then it would not be a fund that 

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is actually put out there to do silviculture work with; rather, it is money that is used to more or less run the ministry and provide all of the necessary checks as the harvest proceeds?

Hon. D. Zirnhelt: We can provide you with a detailed breakdown. But let me say that we don't actually plant trees; we don't have tree-planters on staff. So this money would be for tree-planting contractors, and some of the inspection associated with that is a cost that has to be borne by government. There would probably be a separate contract with someone to go out there and do the inspection to make sure that the tree-planting is done right. So the contract for checkers, for example, would probably be in there.

J. Wilson: Would the minister give me the dollar figure for FRBC contracts that will be handled by the Ministry of Forests for '96-97, up to date?

Hon. D. Zirnhelt: The contract this year that the Ministry of Forests has with FRBC for the land-based programs is $199 million. So the Ministry of Forests is contracted with FRBC to deliver $199.65 million worth of programs.

J. Wilson: This $199 million, I would assume, is for contracts that the Ministry of Forests have looked at, have approved and have recommended to FRBC, and then the contracts would have been let by FRBC?

Hon. D. Zirnhelt: This is the target for spending. They will be attempting to achieve that target. Some of the expenditures this year were in projects that were approved last year. There is a cash flow matter here. Some of them are multi-year contracts. We haven't approved, as of this date, $199 million in contracts. You don't start year one with that level of approvals. It would be somewhat less than that, but over the year they will be attempting to target that much in spending, under contracts that may have been from year one or year two or year three of FRBC fiscal years.

J. Wilson: So the $199 million, then, is not necessarily contracts that are let this year. It could be a carryover from one or two years ago, or it could be contracts that they see developing further on in this year that are not let yet?

Hon. D. Zirnhelt: That's correct.

J. Wilson: Does the minister have a figure for the contracts that have actually been let to date for '96-97? These are not contracts that would be carried over or are intended to be let, but actual contracts that have been let for this year.

Hon. D. Zirnhelt: Yes. We'll have that information momentarily. In fact, I'll have the information walk through the door in a minute. So if you want another question, we'll come back to this one.

J. Wilson: When his ministry handles these contracts, can the minister break down, as a percentage of the total, the actual amount of money that goes out in the contract, compared to the amount of dollars retained within the ministry to cover things like inspections of projects, silviculture work -- that type of thing?

Hon. D. Zirnhelt: If I understand the question, you were asking whether or not the ministry tracks its own expenditures on activities to monitor, plan and evaluate what's going on with the expenditure of FRBC dollars. What we do is.... An approximate target of 15 percent of the program dollars that are needed to be spent by the ministry is a direct cost to the ministry. We have year-end discussions when the billings come in and we look at them to assess the appropriateness of the expenditures. If we're spending more than they think we should spend on monitoring, they will probably tell us.

There are some rules of thumb out in the industry: how much is necessary to spend on overheads, on monitoring and planning. But I venture to say that at this stage in FRBC's development, quite a bit is being spent on planning, to make sure we've got the background studies so the projects can spend their money wisely.

J. Wilson: How does the ministry separate the income from the FRBC funds they take in as revenue recoveries in their ministry from the budgeted dollars within the ministry that come from general revenues? How do you separate those two?

Hon. D. Zirnhelt: The ministry work that's done on FRBC is incremental -- that's in addition to their own work that they have to do. Within the contract, we have to provide for how many people will do what kind of work. That is the purpose of the contract between FRBC and the ministry. The accounts are kept clean that way.

J. Wilson: It seems like an onerous task to keep an account clean by telling FRBC: "We are going to hire X number of employees to cover the $30 million we are going to keep out of your money here."

Do the employees that the minister has hired work strictly on FRBC projects, or do they work piecemeal? Do they work for the ministry one day, the next day inspect an FRBC project and the next day they are back working for the ministry doing a quote inspection? How does this work?

Hon. D. Zirnhelt: The answer is, by and large, that they work strictly on FRBC projects. But if we send somebody out in the field to check an FRBC project and there is another project in the area, we ask them to look at it so that we are not sending two people out to inspect two projects in the same area. These are calls that management has to make, and we have to justify to FRBC what we are charging off to them. I think the ministry is paying for its own work, and FRBC is paying for its work.

J. Wilson: So you're saying that it wouldn't make sense to send two people out to do a similar job in the same area on the same day, that one person could accomplish both jobs and do the job more economically -- which is quite true. But does the ministry keep a detailed record of the hours spent by that employee working on FRBC projects and the hours spent working on ministry work and divide it up accordingly? Or is it just one fund that is a melting pot and there is no way of deciding whether the dollars were incremental or whether they were to service the work of the ministry?

[11:00]

Hon. D. Zirnhelt: Accountability comes in not so much on charging out this hour and that hour and keeping infinite records on exactly how much time is spent on this and that. We have a contracted amount to achieve the goals. We have responsibilities under the contract, and the district managers 

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of the ministry have responsibility to ensure that the contract goals are met. They are expected to use full-time staff, part-time staff or whatever to achieve that.

In response to your earlier question about how much of the money has been committed to date and under contract, the figure of $199 million I gave you was the total for both project management overhead and to achieve the project goals. So we set it into goals and overhead. The goals are actually $165 million and the management overhead is $33 million. What is under contract now on the goals side to achieve.... We intend to achieve contracts for $165 million this year. At the moment, as of June 30, there is $40 million under contract, but they expect the full amount to be under contract by year-end. So we expect to have $165 million in contracts on the goal-related part. There will have to be contracts in place for the management overhead as well, but we intend to achieve that goal. That's the latest information I have from FRBC.

J. Wilson: I didn't quite hear what the minister said on actual contracts that have been let, the total.

Hon. D. Zirnhelt: I know the answer, but I don't know the question. Could the member please repeat the question for me?

J. Wilson: I believe the minister gave me two sets of figures, and the one I missed was the amount of dollars on contracts that have been let by Forests to this date for the '96-97 year.

Hon. D. Zirnhelt: As of June 30, Forests has signed $40 million worth of contracts for about 500 projects in the land-based activities. These projects include a watershed renewal program, the enhanced forestry program and the operational inventory programs. Some of these projects, some of the $40 million, would be carryovers from last year. Some of them would be new -- about three-quarters would be new projects this year. That was as of June. Now we're at the end of July, and we expect more and more contracts to be signed each month until we reach that goal.

J. Wilson: What is the projected value of contracts, not just within the minister's jurisdiction under the Ministry of Forests, but the total estimated contracts which will be let in 1996-97?

Hon. D. Zirnhelt: The business plan for FRBC calls for an expenditure of $275 million on programs.

J. Wilson: The minister is going to take $199 million for the Ministry of Forests to oversee. So that would leave $76 million for all of the rest of the licensees, the independent operators who are putting in proposals for FRBC. Is this correct?

Hon. D. Zirnhelt: Perhaps clarification would help here. These figures I have been giving you about what the ministry uses are contracts to administer; in other words, most of that money would be one of the partners applying for the dollars, not necessarily the Ministry of Forests. There may be a research program that the ministry applies for, and they administer that. But the bulk of these dollars are going to go out to licensees or community partners. One of the partners of Forest Renewal will have made the application; it's just that FRBC doesn't administer it all. The ministry has a contract to oversee and administer it, because they're the experts in forest management. Or it might be Ministry of Environment for some of the rest of it; so the Ministry of Environment would have a contract for some of that portion of the $75 million that remains. Somebody has a responsibility to oversee and manage the contracts, but the money will actually flow to the applicants, who will be one of the partners of Forest Renewal.

J. Wilson: I really like the way this money flows.

Of the $275 million they intend to disburse, the Ministry of Environment has indicated they will take out $101 million. If the Ministry of Forests takes $199 million, that brings it up to $400 million for this year. They've only got $275 million; these numbers are not adding up.

Hon. D. Zirnhelt: We'd have to ask the Minister of Environment where that figure, if he provided that figure to you.... But we know our contract with Forest Renewal B.C. is $199 million.

W. Hurd: I want to engage the minister this morning on a couple of more general topics with respect to this set of Forests estimates. In particular, I want to return the minister's attention to a speech given by the previous Minister of Forests to the Price Waterhouse conference last year in Vancouver, in which the issue of a target level for forest harvesting in the province was raised by the government. I'm aware that there has been a considerable amount of interest within the International Woodworkers of America and within companies in the whole idea of a target harvest level in the province that's sustainable over time. I wonder if the minister could tell us what has happened in the interim. I'm aware of the jobs-for-timber accord which was discussed down the hall in the estimates of the Ministry of Employment and Investment, but I wonder if the minister could tell us where we are in terms of advancing this idea of a target harvest level for British Columbia.

Hon. D. Zirnhelt: Well, here's a quick snapshot of the status of those activities. Certainly an element of the timber-jobs accord is getting more productivity that it can contribute. In the end we are looking for more jobs from every cubic metre. But the Forest Sector Strategy Advisory Committee has that before them. Particularly where we have land use plans, in the three regions where they are, there are committees working with timber targets in those areas. There's research going on. In fact, in the case of the Cariboo, there's been a project funded through the Cariboo Lumber Manufacturers Association to look at the enhanced timber production targets as well. So each of the three regions has a committee looking at it.

The other aspect that is relevant here is the innovative pilots, where we're looking at targeting lifts to the AAC that come from innovative forest practices. Those are the elements of where the work is being done right now. We're always open to suggestions -- as you know, there are going to be up to six pilots -- but it is my opinion that the place to engage the industry in this activity is on very region-specific, watershed-specific and site-specific planning that needs to go on. It is not highly advanced; it's a goal. We expect all the partners in Forest Renewal to be working toward that.

W. Hurd: I'm certainly aware that the IWA has been very vocal in establishing as a goal, as the minister describes it, a target harvest of some 70 million cubic metres per annum. I know the union feels strongly, as do companies, that if we 

[ Page 1329 ]

establish that benchmark for a target harvest level in British Columbia, then we could tailor the activities the minister has described to a specific goal.

Since the minister brought up the forest sector strategy group, can he tell us when that group might be reporting on this issue, whether they will be advising the public about the optimum target level for the harvest in the province, and what steps the ministry might take if and when the Forest Sector Strategy Advisory Committee reports? I'm certainly aware of the work this committee did with Forest Renewal B.C. I know that there are people on that committee who feel strongly about the need for a target harvest level in British Columbia. So are we going to see that committee report, in any way, complete with strategies for achieving this target harvest? I wonder if the minister would comment on that first. Then I would have a series of other questions that might flow from it.

[11:15]

Hon. D. Zirnhelt: The commitment at the Forest Sector Strategy Advisory Committee is to be well into this work within the next six months. I'm glad to see the member supporting the goals of the IWA. That's good for this side of the House to hear that from the opposite side.

I don't think we can just pick a figure out of the air. There have been various figures talked about. It would be irresponsible to set a figure and not be able to justify it. But steps are being taken, like the forest renewal activity or plan that came out of Forest Sector Strategy Advisory Committee. When there is a plan in place for the timber-jobs accord, then I fully expect it will be made public, like we did with the forest renewal plan.

W. Hurd: I must confess that I'm somewhat disappointed to hear the minister's answer. I know that over the last five years there's been considerable representation made to government from many stakeholders in the forest industry -- small companies, large companies, the IWA and others -- about the need for a target harvest level. The reason for their concern is that of all the forested regions in British Columbia, the public lands in British Columbia that sustain forest are considered to be underperforming versus other forested areas in the world. The target of 70 million cubic metres per annum off public lands -- which I believe, if I can recall it correctly, was discussed by the previous Minister of Forests at the Price Waterhouse conference -- was actually considered a fairly modest target, given the amount of land available for intensive forest management in British Columbia and given the importance of the resource to the provincial economy.

So I wonder if the minister could give us an idea, since we are seeing the annual allowable harvest in the province ratchet downward.... Certainly I've had occasion in the last couple of years to listen to presentations by the chief forester on the expected impacts of some of the land use decisions that have been made, and I believe that his presentation calls for a harvest level of 60 million cubic metres, or perhaps less, off public lands, which is a huge gap between what we now harvest and what we can expect in the future.

In closing this portion of the debate, I would urge the minister to really step up this initiative to provide a goal -- a ceiling -- for the harvest level off public lands, because I think that once we have that goal in mind, then some of the other activities the government's involved in, particularly off public lands, can proceed at a quicker pace.

Perhaps I can ask the minister the status of the timber supply reviews which were being completed in 38 timber supply areas of the province. Obviously those reviews were critical to establishing a target harvest level, and I wonder if the minister could advise the committee of where we are in terms of those reviews, and how many have been completed to date.

Hon. D. Zirnhelt: The first part of your question really had to do with whether or not people are disappointed that we don't have a target level. I'm saying it would be irresponsible to put in a target level that we don't think we can achieve, because the work hasn't been done. As you indicated, the timber supply review is part of it. Yes, there is a prediction that, if we don't do anything, the level of cut will go down over time because there will be a trough, because the efforts that we've made to improve productivity won't come into fruition until decades out.

The establishment of any target will be made in the context of the land use plans, so until we complete some of the land and resource management plans, we can't talk about timber targets in isolation from other targets. We have targets for protected areas, we are working through how much of the land needs to be set aside for sensitive management, and we're doing a lot of work that hasn't been done. A five-year period is not a very long time to get up to speed on land use planning when the amount of money that could have been consumed by inventories and basic tools to do planning for other targets simply hasn't been there. But we've made progress on that.

Some of these other targets are very difficult to establish. We have to carry on with the land and resource management planning. A larger and larger portion of the land base is being zoned through this process. That's an important building block, as you know. As we learned from the code, we have some targets under the code as to what impacts it might have -- negative impacts on timber levels -- as we work this through; and as we come to learn where we're at right now, we'll be in a better position to establish responsible targets. But I think it's safe enough to say that we want to target something considerably higher than the 59 million or 60 million that the chief forester has said will be the status quo.

So the challenge is there for industry. There is a process there, through the forest sector strategy, for people who think that we can raise the level of cut on some of the land base by enhanced production. So the challenge is there. But I'm not going to agree to a timber target in the absence of some job targets, and the Premier isn't going to agree to that. He's said that to industry, and I think that's the quid pro quo in this debate. Until we see a firm commitment on increasing numbers of jobs per cubic metre of wood cut, we're not going to get a target that's set, and I think to do otherwise would be totally irresponsible.

We also want to see some of the workforce planning done. How can we facilitate the training, how can we facilitate the transition within the sector and out of the sector and into the sector? How can we do that? That's all work that needs to be done. I'm happy to say that Forest Renewal B.C. is looking at it through its workforce committee, so the pieces are going to be there. A six-month target to come up with a timber-jobs accord is a short time frame, but we want to be well into it. I'd say we've got our work cut out for us. Work is slow over the summer -- as you know, it usually is -- but we're going to be cranked up fully in September on this task.

The Chair: Shall vote 36 pass?

W. Hurd: In the fullness of time it will pass, hon. Chair.

[ Page 1330 ]

Thank you for that explanation, but the minister's argument sort of borders on the irrational, to me. He's suggesting that before the election, the government could establish a timber-jobs accord calling for 21,000 additional jobs to be created in the forest industry, and yet we have no target level for the harvest, which really is what sustains jobs in the industry.

Interjection.

W. Hurd: The former Minister of Forests suggests that there's no correlation between harvest levels and jobs. Clearly there is. You can't run a value-added mill if you don't have a log at the primary end. Ultimately the product flows through. I grant the minister that a higher end use can be put to the fibre, and that's an entirely appropriate strategy. But if the harvest level is declining, as the chief forester has suggested it probably will, what inducement would there be for a company to go out, for example, without secured tenure and invest the kind of money they need to invest to create the 21,000 jobs the government is claiming can be created? Since the Minister of Forests has responsibility for the forests of the province and, I suppose, would be involved obliquely in setting this jobs-for-timber agreement -- or at least in monitoring it -- can I ask him where he expects the 21,000 additional jobs to be created? In what sector of the forest industry? How can they be created without some certainty as far as harvest levels are concerned?

Hon. D. Zirnhelt: Well, there are two parts to it. We're assuming that if we do the right things, we can keep the harvest levels more or less as they are. But we have to get more jobs per unit of wood, otherwise we won't achieve targets. It's the government's responsibility on behalf of the people to set job targets, so we set some job targets. We think it's possible and achievable based on performance in other jurisdictions. I would suggest that in some of those jurisdictions, there is more security because there's more private land, but there's less security on the public land. It's all on the wide-open market, so they're achieving it with a different tenure system. I would suggest to you that the licensing system we have here is as much security as they have to do the planning. You have these licences that are renewable every five years for 15 or 20 years, so with that security, we expect that you will be able to create an optimal number of jobs, and we say that that number is higher.

It's quite fair to say back to industry or some of the other stakeholders: "You come up with a target, then." But to my understanding, we've talked around some numbers.... If you go back a few years, somebody used a target figure of 150 million or 120 million cubic metres. There's nothing stopping industry or any group out there from coming up with a different target. But bear in mind that some of the conservation groups are saying that the timber targets we have now are too high -- the AAC is too high to take care of other values. This idea of trying to get some kind of agreement as to what the target levels will be is a difficult task.

We're not there, but there's nothing stopping industry from saying, "We believe, over the land base that's been zoned and would likely be zoned for timber production..." and coming up with X target. I haven't seen that target. I have seen various studies and I have heard of various studies. But the place to bring that discussion to is the Forest Sector Strategy Advisory Committee, and I have challenged them to do that. I said that as the Minister of Forests I understand that it is within my responsibility to address that issue, and I intend to do that.

Under the innovative forest practices trial we have said that that potential is there. I happen to believe that there is potential, but I think that an awful lot of planning will have to go into it -- an awful lot of demonstration before we're sure of that and before the chief forester can be convinced to accept that. I believe in the target process. I don't believe it's easy, but I believe the invitation is there for the case to be made for increased production and the establishment of timber targets to match up with the job targets.

The member asked for the status of the timber supply review. I'd like to tell him that 16 AACs remain to be announced out of the total of 70. We started in '92, and we said that we were to review them all by the end of '96. So 54 AACs have been announced; 16 are remaining, and they will be released by the end of the year. We don't expect any new announcements in the month of August, so in the beginning of September there will be some more.

W. Hurd: I want to return to a few questions about the timber supply reviews a little later.

On the jobs and timber accord the minister talked about, I'm just trying to get it straight. The inference of the minister seems to be that small and large companies in the province will be required to increase employment in order to continue to have secure access to their licences. Is that what I'm to assume? Or is the strategy to create jobs in exchange for participation in an innovative forest program which would allow them to increase the cut on the licence they already hold? I think that's an important clarification, because if I hear that the minister is saying that the government is going to set a job target and if you don't reach it they could take some of the harvest away and allocate it elsewhere.... If that's what I'm hearing from the minister, that's a fairly significant policy change. I want to clarify what we're dealing with here -- whether it's an incentive system or a penalty system in terms of the jobs and timber agreement.

Hon. D. Zirnhelt: I have absolutely no recollection of saying what the member thought he heard me say. The responsibility of the government is to achieve social purposes with the resources that are out there. The social purpose we've talked about here is revenue and jobs from the timber land base. The public wants more jobs; they want secure jobs. The industry says that in exchange for making investments they expect some security. I did say that they have considerable security right now, and I said they have more security than they do in some other jurisdictions.

[11:30]

This government has said that companies should look at what they are providing in return for the security they have now. The argument is being made to put the timber in the hands of other people and they will create more jobs. That's what the value-added sector has been telling us for years, so we have been trying to find ways to achieve both efficiency in the primary breakdown and getting the timber over to the value-added people. We have expanded the value-added sales, and we assess jobs. The number of jobs created is one of the criteria. The challenge before the Forest Sector Strategy Advisory Committee is to look at any target that anybody sets, including environmental targets, and look at the challenges and try to come up with a solution cooperatively. If the forest sector strategy fails to meet that challenge, then government will have to consider its options.

We are saying there's a tough challenge. There's a vision out there of more employment, and we've looked backwards 

[ Page 1331 ]

and said that, in our judgment.... There have been 15,000 more jobs created in the last five years in this sector, and we have every belief that that could happen. There are lots of examples where more and more jobs are being created. But that's the deal. The social contract is environmental protection, sustainability of communities and resources -- and more jobs. When we talk about sustainable communities, we're talking about jobs that are there for the long term. I know the member knows there is a sense that if we only cut more timber we'd have more jobs. We're saying: "Well, if you create more jobs, you get access to the timber and you keep access to the timber."

W. Hurd: As I stand here, I can only reflect that we've been fortunate enough to avoid a recession in British Columbia over the past five years. I'm certainly aware of instances in the last 20 years, where, for example, the five-year cut control provisions in a tree farm licence have required the licensee to log at a considerable loss, to run sawmills at a considerable loss, and to maintain employment in the face of a worldwide recession -- where he has been required by the Minister of Forests to keep a mill open, to keep on logging, even when every economic indicator suggests that that shouldn't be happening.

What the minister is saying is that we have had a bullish market for forest products over the last five years, that the present level of employment in the industry can be increased, and I'm sure that he believes it can be. But I wonder whether he's sending out the right message when he tells a licensee during a bull market: "We want you to add 25 percent, 15 percent, 10 percent, or whatever, to your employment profile given the high commodity prices, or we're going to allocate the licence somewhere else." Is that what I hear the government strategy is? If it is, I would caution the minister that there have been times in the history of this province -- and I'm sure the minister knows this -- when timber hasn't been worth all that much, when logging across the province has been done at a loss. Those days could happen again, and there's always that possibility.

Again, I would also like to take umbrage with the minister when he says that we have security. As the minister well knows, the longest forest licence in British Columbia is 25 years with a five-year renewable term.

Hon. D. Zirnhelt: That's a long time.

W. Hurd: He says it's a long time, but he comes from an area where the Crown issues grazing rights that last a lot longer than that. The life cycle of a tree is 80 years. That's the time it takes to grow a new one. I think the minister overstates the security he talks about, and again I would ask him to consider what kind of job targets we are looking at for licensees. Is it going to be an across-the-board request for an increase? Is it going to be site-specific? Is the government going to analyze each licence they currently have out there and tell the licensee: "We want you to add a certain number of people as part of the jobs-for-timber accord"? I wonder if he could explain the mechanics of how this might work. Are he and his staff going to sit down with each licensee in the province and set a target for increased employment? Perhaps I could ask that question first.

Hon. D. Zirnhelt: Every time I talk to a licensee, I intend to have a conversation about how they're doing. Some of them have said they've already met the targets, and I say the message should be clear. If a licensee isn't meeting some of the targets, they should have a look at what they can do, because the public is going to ask that question; in exchange for access to the resource, they're going to want targets.

We intend to work out a method of doing that with the industry. They may well say that we have to look at certain areas which are more productive, and they may say they want more area security. But these licences are replaced every five years for 15, so some of these licences have gone on for a long time, and I'm saying there is considerable security there. Timber companies are changing hands and they're changing hands at prices that are significantly higher than their assets. So the licence must be worth something; there is value in the licence. I venture that if people are still buying forest companies that have licences, then they must feel there's a future here. As long as there's good-quality wood out there, it will be cut. It will be cut by the people who can put together the capital and forest management plans that meet the objectives of the people of British Columbia.

W. Hurd: As the minister well knows, the only way forest companies can realize increased target levels for jobs is by going to a bank, borrowing money and investing. Clearly, you can't.... With mechanized harvesting and the new methods of harvesting, it becomes very difficult to increase employment dramatically in the woods. Obviously, it involves a company going to the bank and borrowing money to invest in, perhaps, a value-added plant, a new line on the sawmill or some other type of capital improvement on a fixed asset, in order to hire more people.

I just wonder -- and I put this question to the minister as a business person -- if he were to go to the bank and tell the bank, "I have to add a line to my sawmill, because I've got to hire more people to hold on to my timber," whether that would represent a sound business plan for the financial institution. It may work for the government, but I wonder whether it's going to work for the people who, yes, have value in a forest licence -- there's no argument that when you go the bank to borrow money, if you have secure access to timber, it weighs heavily in your favour. But I hope that the minister expects a forest licensee to be investing for the right reasons, which is that they've found a market, they've identified a product that perhaps needs to be produced and perhaps there's an efficiency in their sawmill they can realize. That's the driver for the investment, not the need to hold on to their timber licence. If that's the message that this minister is sending out, then I suspect that it may make some financial institutions somewhat nervous indeed, because they bankroll the industry during good times and bad times. If we're adding a new equation in here, that you have to add a certain number of jobs to hold on to your licence, then that's a pretty significant message to those financial institutions that bankroll this industry.

Hon. D. Zirnhelt: I don't think the financial institutions care about jobs. I don't think somebody putting together a business plan is doing anything but looking at the bottom line. We are saying the owner of the resource has made a simple statement: the purpose of the resource is to support communities and jobs, and the tenure is a means to doing that. I would say that if an entrepreneur puts together a business plan for an expansion, goes to the bank and says, "Here's the bottom line, and by the way, it creates more employment, which is good for the local community; they like it; the public supports this kind of a business plan," then I would expect the lending institution to take that into account.

The need for investment is recognized. We expect, in exchange for tenure -- in exchange for the rights to harvest 

[ Page 1332 ]

-- that people will make the investment and that the investment will yield employment. That's what the deal is about. We're talking about what the social contract is around forestry in the province of British Columbia. We understand that they have to pay attention to the bottom line. We understand that their shareholders want to make money. We understand that. But we also understand that there's been years where some financial institutions didn't care too much about investing in the industry. They didn't think it was a great industry. We say we have confidence in it. That's why the value-added sector has been expanding, and government policy will support the expansion of employment. The bottom line for government is employment, and we've said that. We've said that up front. Industry said back: "Well, yeah, in exchange for that...." Some have said it isn't possible. Some have said it's possible. At the Forest Sector Strategy Advisory Committee, when I discussed that with people, nobody said it was impossible.

It's a challenge, and it's a tough challenge, and I say that this government intends to meet it. I would suspect that forest companies who want to stay in business will rise to that challenge, and they will be trying to drive a bargain. As we came up with a forest renewal plan and a cooperative method, we'll do the same thing with this particular strategy around jobs and about targets for timber production.

W. Hurd: Let me reduce the conversation, if I can, to a more basic level, just so I can satisfy myself about where we're heading. I'm a representative of company A. I come forward to the ministry with a business plan that will add a mill to my stable of mills. I put together a business plan. I identify how many new jobs are going to be created, and in the time it takes to get the plan to fruition, the market goes into the tank, and I can't proceed with the plan because the economics of it just aren't there. Am I going to lose timber if that happens?

Hon. D. Zirnhelt: It's not possible to answer that question, because we don't have a plan in place for the timber. We have put forth a vision, and we've got a mechanism to get to that. Those are the kinds of details that we're going to work out.

W. Hurd: That's a pretty important detail. The minister has just said that he expects more jobs to be created by each licensee as a condition for the security they supposedly enjoy.

Hon. D. Zirnhelt: I didn't say that.

An Hon. Member: Yes, you did. I heard it, too.

An Hon. Member: He puts words in people's mouths all the time, and that's....

W. Hurd: Well, hon. Chair, I'll have to go back and revisit...

An Hon. Member: Look at Hansard.

W. Hurd: ...the Hansard Blues. I'll do that. But I'm sure the minister will correct me if I'm wrong. What I thought I heard him say is that, as a condition of the security that the licensees enjoy, he and his government expect them to increase the level of employment. That's what I clearly thought I heard. If I didn't, then maybe the minister can correct me.

The Chair: I encourage the hon. member to move along on another topic, perhaps.

W. Hurd: I was urged, actually, to raise this matter by the Minister of Employment and Investment down the hall, who assured me that the Minister of Forests was right on top of the jobs-for-timber accord and that I could gain all the explanations that I needed. I guess I have.

I wonder if I could move on to another issue the Minister of Employment and Investment identified as being ramrodded by the Ministry of Forests, and that's the Canada-U.S. softwood lumber agreement. I understand that the ministry is responsible for working with producers to establish a quota system for our exports. As the minister is well aware, there was a period of time earlier this year when producers were forced to curtail production, because they were unaware of whether they were in excess of the quota that was called for under the agreement. I just wonder if the minister could advise the committee what was done to deal with that problem and what role his ministry plays in ensuring that British Columbia's export quota under this agreement is in compliance.

[11:45]

Hon. D. Zirnhelt: As you know, my deputy, who is here with me in the House, played a key role along with industry leaders. B.C. played a key role in negotiating the international agreement, and B.C. continues to play a key role in trying to set provincial quotas. B.C.'s position is very firm: we want a provincial quota. We don't want to leave it to the whims of the federal government, who might be trying to elect more people back in Ontario. So you might have words with your Liberal cousins. I know they're strange cousins sometimes, but if we ever needed a Liberal to be a Liberal, it's now.

Interjection.

Hon. D. Zirnhelt: I left because they didn't have the courage of their convictions.

An Hon. Member: Oh, yeah, yeah.

Hon. D. Zirnhelt: That's correct.

So I think we need help from this member to talk to his cousins in Ottawa and lean on them for a B.C. quota. Where it stands right now is that the federal government is surveying the industry, trying to get a database in upon which we can construct this quota. We expect more in the months to come -- in the month to come, I guess. We are firm on our position that we want a quota for British Columbia that fairly reflects its historical share, and we will resist attempts to do it any other way. Other provinces are not supporting that position, and that's the problem we have right now. But the industry is working very closely with the provincial government on this, and we intend to use whatever political power we have to drive a good deal for British Columbia.

W. Hurd: Perhaps the minister can enlighten me, then, as to why the producers were voluntarily curtailing their exports for a period of time earlier this year. I thought I heard the minister tell me that there is no quota in place -- yet -- for British Columbia exports of softwood lumber to the U.S. And yet the reports at the time seemed to indicate that the producers were concerned about going over some figure and paying a steep tariff penalty as a result. I wonder if the minister could just clarify whether there are any interim measures in place or why producers were reducing their exports earlier this year.

[ Page 1333 ]

Hon. D. Zirnhelt: The problem was that we were getting close to the national quota. There's now a national quota in place and no provincial quota. British Columbia wants to try to live within the spirit of the agreement. We didn't want to push ourselves into a position of exporting beyond the quota nationally, so we tried to live collectively, nationally, within that spirit. Other people might have been trying to drive their exports; we tried to live within the spirit of the agreement, to not drive exports over what they normally might be. So there's an intent to live within the spirit. You can't call that an interim measure. It's certainly what's happening in the interim -- trying to live with it, all the while trying to work out a quota between the provinces.

W. Hurd: I hear the minister telling me that there is no interprovincial agreement with respect to which province will have what allocation under the umbrella of the quota system. Is the minister at all concerned that some other provinces might inflate their exports? Can the minister give us any assurance that he has been in consultation with other lumber-producing provinces -- like Quebec, and perhaps New Brunswick and Ontario -- with respect to what they're doing to ensure that nationally we don't go over the quota that's been established and end up in a rather costly penalty provision under the softwood lumber agreement?

Hon. D. Zirnhelt: As the member knows, the federal government has a constitutional responsibility to deal with the quota and how the quota is rolled out. We're working closely with them on that. The provinces involved are B.C., Alberta, Ontario and Quebec. New Brunswick isn't really involved in this. We have to have a detailed quota arrangement in place by the end of September, so we are in daily contact between the provinces, at the official level, and we are working closely with industry -- quietly, behind the scenes -- trying to establish our position.

I remain ready at any time to work at the political level, if that would help. The advice I have at the moment is that we have to see how things shake down with the negotiations the federal government is leading right now. When we see where that's going, we'll make our next move. We're poised to stand up for British Columbia's interest -- overtly, politically, stridently -- certainly driving a hard deal at the official level.

W. Hurd: The minister will be aware that in the last go-round on the softwood lumber dispute, the value-added producers in British Columbia were exempted, as I recall, from the tariff provisions and the limit on exports. The minister will be aware that under the new system there is real concern that it might apply to across-the-board exports of forest products from the province, and that some of the smaller value-added producers -- who, by the nature of their operations, don't come up with the same volume of product -- might end up being squeezed out by some of the primary producers. I just wonder if the minister could advise the committee what steps he's taking to ensure that value-added producers don't get lumped into the overall quota. I think there's a clear case to be made, based on the last go-around, that value-added producers should perhaps be exempted from the softwood lumber agreement altogether, or at the very least, that they occupy a different position within the overall softwood agreement. I wonder if the minister could tell us whether anything is being done, given the fact that now we're dealing with a time frame of the end of September, to actively protect the value-added producers within the global context of this softwood lumber agreement.

Hon. D. Zirnhelt: The categories are roughly the same as before. They were factored into it last time, and they are factored into it this time. The same categories of product are affected by the Canada-U.S. agreement. We can't change that. That is roughly the same as it was before.

British Columbia has an interest in.... Because of our previous discussion, we see jobs in the value-added sector, so we fully intend to go to the wall for these people. We are; they are part of it. We just have to document how much they have produced historically so they get their share of the British Columbia quota when that shakes out. But it will be fair. It will be fair to the value-added producers.

Hon. D. Streifel: I move the committee rise, report progress, and ask leave to sit again.

Motion approved.

The House resumed; the Speaker in the chair.

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

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

Hon. D. Streifel moved adjournment of the House.

Motion approved.

The House adjourned at 11:54 a.m.

The House in Committee of Supply A; W. Hartley in the chair.

The committee met at 10:29 a.m.

On vote 22: minister's office, $374,615 (continued).

Hon. D. Miller: So we can kick this thing off this morning, I would like to briefly make a statement with respect to issues that were raised in estimates last night regarding the retention of Mr. Laxton on the board of SEPCOL.

Just to run through it, SEPCOL is the company that is developing the Raiwind project. SEPCOL is owned by all of the partners in the project, of which BCHIL is one. As part of that partnership, BCHIL was entitled to appointments to the board of SEPCOL. Last night, in responding to questions from the opposition, I indicated that John Laxton was the chair of SEPCOL, and I think I indicated that our other appointment as a director was Stan Ridley.

After a lot of huffing and puffing by the opposition, I indicated that the reason Mr. Laxton remained on the board of SEPCOL was a request from our Pakistani partners. They saw Mr. Laxton's presence on the board of SEPCOL as a sign of the ongoing stability and viability of the project, a project which 

[ Page 1334 ]

-- the World Bank agrees and Mr. Smith, Hydro's chair, agrees -- is viable and worthwhile. I believe the opposition indicated the same. The decision to allow Mr. Laxton to remain was made by the chair but has my complete confidence.

The public offering for SEPCOL was completed and listed for trading on the Karachi Stock Exchange on July 23, 1996. I can also confirm that the chair of B.C. Hydro, having initially agreed to the retention of Mr. Laxton, has requested the removal of Mr. Laxton from the chair of the board of SEPCOL once that share offering has been completed. I want to reiterate that I support Mr. Smith's action. I'm advised that Mr. Smith spoke to Mr. Laxton this morning, and he has assured Mr. Smith that he indeed will be resigning from SEPCOL as soon as possible.

I want to reiterate that this move is based exclusively on the obligation of B.C. Hydro as a partner in this project, to ensure that the project is in fact successful. There are a variety of partners in this project: the World Bank, ABN, Pakistani partners and shareholders, obviously. The ongoing obligation of any of the partners is to do what is prudent in business terms to ensure that the project is successful. It appears, from all the evidence that I've been made aware of, that this is a very sound project which is supported by the World Bank and clearly supported in terms of the share uptake in Pakistan.

Members may disagree with this, but in my view it was the prudent business decision to make not only in terms of ensuring that the project moves forward to completion and is successful, but in terms of protecting the interests of B.C. Hydro and the shareholders here in British Columbia.

Finally, I want to say that, again, I'm dismayed at the behaviour and the petulance displayed by the member for Vancouver-Little Mountain and the utter disregard and contempt he showed for this House by standing up, casting aspersions on members and then, rather than having the good grace to abide by a ruling of the Chair, simply indicating to the committee that he thought the committee was adjourning -- it was around 10 o'clock -- and he didn't care if he was kicked out; he wasn't going to withdraw. He simply picked up his marbles and exited the committee room. It's the worst display of contempt for this House that I have ever witnessed in the ten years that I've been privileged to be a member of this House.

M. de Jong: I think, first of all, with respect to the statement the minister has just made, that the time for that was months ago. If the government had taken proper action at that point, the minister wouldn't find himself in the embarrassing position that he finds himself in today, where he has to offer what amounts to one of the lamest explanations I've ever heard for conduct which, when we're talking about reprehensible, may come to form the definition of that term around these halls for many years to come.

This government campaigned largely on the strength of its supposed decisiveness and the decisiveness of the Premier, who, at the time these disclosures were made about Mr. Laxton -- about the involvement of B.C. Hydro and Mr. Laxton, his family and friends of the NDP -- touted their decisive action in severing all ties with Mr. Laxton, and how that somehow purged the party, purged the government, of any sins that might have been committed.

The now minister, the minister responsible, acts with dismay and some feigned surprise that the opposition would be outraged to learn that Mr. Laxton remains very much in a relationship with B.C. Hydro -- in fact, as their representative on this particular board. He suggests that somehow the opposition is overreacting when that just happens to slip out during the course of these estimates debates. He acts with dismay when it is suggested to him that the public -- British Columbians -- have been misled by a government, by a Premier who has assured us that that relationship has come to an end, when in fact it hasn't.

He can huff and puff and blow all the smoke he wants, but it won't.... That little game of the minister's, which he plays very ably, won't detract from the main fact that what we were told -- what we've been promised -- just isn't true. Mr. Laxton remains involved. He remains, in effect, the representative in this offshore project. He is seen to be very much a representative of a public corporation and, therefore, of all British Columbians. The minister suggests that it was a difficult decision, but what is clear is that he and his government have put what he terms "the success of this project" ahead of what is morally right. On this side of the House, we don't see that as a particularly difficult decision. What is even more disturbing is that when he is asked what he means by "the success of the project" -- success for who; the shareholders, Mr. Laxton, perhaps? -- he is unable to provide a response.

We've not heard the last of this issue. We've not heard, by any means, the last of what is amounting to and has been revealed to be absolutely scandalous behaviour by all involved. It will be pursued. And there are other matters within the ambit of B.C. Hydro that need to be explored. We'll have a closer look at what the minister has had to say this morning; it's by no means a finished issue. But it is one thing above and beyond all else: an absolute travesty. Let the minister huff and puff, be indignant and cast aspersions on the official opposition House Leader, but it will not detract from the main issue, which is that British Columbians have again been misled.

Hon. D. Miller: I suppose that the members have been practising these kinds of speeches overnight and that we will most likely hear them repeat them ad nauseam.

Just dealing with a couple of the issues raised by the members, I want it made clear that a question -- and I think the Blues do show this -- was put with respect to who the representatives of Hydro on the board of SEPCOL were. I asked my officials and got the answer, and I stood up and gave that answer quite without any hesitation. So I don't know if the member wants to continue to characterize that as having slipped out, but certainly I don't; I had no hesitation in standing up and giving the answer in a pretty straightforward way. Nor did I, as we subsequently debated that, explain why I -- even though I didn't know about it before -- at this point think it was exactly the right thing to do.

It's fairly easy, I suppose, to wrap oneself in some moral position or whatever and say that...

K. Krueger: It's sort of basic honesty.

Hon. D. Miller: I'll just try to make this point.

...the stability of the project, the obligation as a partner in this project that Hydro had, was something that could be totally disregarded because of some "moral issue." Morals are a funny thing indeed. I suppose it's a subject that is easy to talk about but maybe hard to define.

The facts are, I think, fundamentally clear. We were a partner in this project. Certain events transpired in February of this year that caused the government to move very quickly in removing Mr. Laxton from his position. We put Mr. Smith 

[ Page 1335 ]

and Mr. Costello in place to investigate what had happened in terms of the structure of offshore companies and all the other allegations that were made. But we also gave them a mandate to continue to be responsible for managing British Columbia Hydro, a very important utility in this project, and for managing all of the issues that Hydro was responsible for.

B.C. Hydro was a partner in this project, as were other entities: the World Bank, ABN, Pakistani partners. It was a request of one of those partners, in terms of a very important component of this power project -- which according to every account I've ever heard is a very sound business venture -- that there be a public share offering in Karachi. The request from the Pakistani partners was that Mr. Laxton remain on the board of SEPCOL, for the purposes of that share offering. That was a business decision made by B.C. Hydro that I fully support. The facts are that the share offering is complete. It was successful; it was oversubscribed. Having agreed to that for that purpose, I advise the committee this morning that Mr. Laxton is now removing himself as chair of SEPCOL.

C. Hansen: I just wanted to follow up on a comment the minister made -- that the question was asked last night and that it was the first time he was aware of that information, in response to the advice given to him by officials. I certainly respect the minister for that -- that he was frank with the answer when it came to his knowledge last night. But I think the issue that we have is much broader than that. The issue is that at the time, the government distinctly left the impression -- not this minister in particular, but the executive council in general and the Premier in particular -- that Mr. Laxton was removed from involvement.

The Premier was applauded for his decisiveness in that case. What we find when we see actions of decisiveness by this Premier is that it's very important for us to peek under the carpets and snoop through the closets afterwards, because there's still some of the story there. That decisive action, or the impression of decisive action, is perhaps not as complete as they would like us to believe. I think the biggest issue facing us here is that this government has not been straightforward with the public on this whole issue from day one.

We weren't planning to canvass this area this morning; we were going to come back to it later. But I do want to ask just a few brief questions of the minister. When we talk about partners, the whole notion of partnership is people working together. The minister indicated that the Pakistani partners felt it was important for Mr. Laxton to stay on, for stability. My question is: did the government or anybody from B.C. Hydro make representation back to the Pakistani partners as to why, in our opinion as one of the other partners in this project, it would not be appropriate for Mr. Laxton to stay on? Was there any effort made to change the opinion of the Pakistani partners?

[10:45]

Hon. D. Miller: Yes, I'm sure.... I'm not party to, or haven't even been apprised of, all the discussions that may have taken place, but suffice it to say that there were discussions, and the decision was made by B.C. Hydro, based on those discussions, to allow Mr. Laxton to remain. I did indicate that it was not -- and is not, in fact -- entirely a decision that B.C. Hydro has sole responsibility for. There are other partners in the project; there are other partners in SEPCOL. On the balance of all of those discussions, and in view of B.C. Hydro's responsibility to ensure that the project moved forward successfully, that decision was made.

C. Hansen: Were the other partners involved -- the Pakistani partners, the World Bank and the ABN -- fully apprised of the seriousness of the allegations that were made against Mr. Laxton and of the reasons for his removal as chairman of B.C. Hydro? Can the minister advise us of the nature of the representations that were made to other partners regarding the seriousness of the charges against Mr. Laxton and the reasons why it would be inappropriate for him to continue on the SEPCOL board?

Hon. D. Miller: All the partners to this project were well aware of events that were happening here in British Columbia.

C. Hansen: We certainly had another line of questioning planned for this morning. I think we want to get back to that and leave this issue for later discussion. To me, this underscores a difficulty I've had in the last three days regarding these estimates, in that the minister is obviously learning things for the first time as we're in the middle of this process of estimates. I have a real concern that this minister has far too much on his plate, including his acting capacity as Minister of Small Business. Quite frankly, I think he's spreading himself a little too thin and is perhaps not on top of some of these issues to the extent that he should be. With that, I'll sit down. If the minister can respond, then we can change subjects.

Hon. D. Miller: I'm a bit puzzled, because with all the froth and fury that has been exhibited by the opposition, I'm surprised that they would not want to continue to discuss this issue in estimates. This is the perfect opportunity. We're here, right now. I have Hydro officials with me. I'm really quite puzzled, Mr. Chairman.

I'll close by saying that the kind of frenzy they've worked themselves into is a sight to behold. I've never seen this kind of display. Certainly I've never seen a member of this House hold the House in such contempt as I witnessed last night, with complete and utter disregard and contempt for the House, in saying he doesn't care. He'll stand up and call people liars, even though it's an abuse of the rules -- and by the way, he doesn't care, he said. He's not even going to wait for a Chairman's ruling that he has been contemptuous. He doesn't even have the courage -- should I use that term? -- to stand here and wait for a Chairman's ruling; he scoops up his books and says that it's late in the day, that we're adjourning anyway and that he thinks he's just going to leave.

A bit of caution for the opposition in their zeal is that they should be mindful of how this House works. At the end of the day, they should have some modicum of support for the House and this institution, rather than the utter contempt witnessed last night in this chamber.

Mr. Chairman, I am rather puzzled. I'm quite happy to answer any questions the opposition has with respect to this issue. I have officials with me. There are other issues to canvass, but if we're not going to do it now, I don't know. It seems to me that it's pretty difficult to try to manage these issues and to juggle.... I don't know when Hydro officials will be aware....

I thought we had some relative agreement with respect to a sequence of order in terms of how we might discuss various issues under my responsibility, but it appears that we don't. I came here prepared to do that, and I have officials with me, and now I find an opposition party that is accusing me of being unprepared. What they're saying to me and to this chamber is that they're unprepared. They don't want to talk about it. I'm quite happy to talk about it right here, right now. If they have any questions, I suggest that they get on with it and 

[ Page 1336 ]

put the questions. If they don't, then I think they're just playing games. If they think they're here to play games, fair enough.

Interjection.

The Chair: You should have stated the point, member. The member rises on a point of order.

D. Jarvis: Mr. Chairman, I do feel that the minister is just pontificating on a subject that he really doesn't know much about. We are here to discuss Hydro estimates. We have lots of estimates to discuss on Hydro, and we shall return to the error he made in allowing that to slip out. Meanwhile, we've got all sorts of discussion on the bonus system of B.C. Hydro, on their rates, on the independent power projects and on the environmental problems they have, and we intend to continue on that basis. If the minister would stop pontificating because he's made an error and let it slip that there was a problem with one of the ex-CEOs of B.C. Hydro.... We shall return to that subject, but not at the moment, because we have other more important things to do at this stage.

The Chair: That's not a valid point of order, member.

C. Hansen: As I said, we were going to go on to other issues, and we do have a lot of questions, all pertaining to Hydro, the subject area we had agreed to focus on at this stage. We're certainly not going to go against our word, because we don't go against our word.

I have followed the estimates debates that have gone on so far in this chamber during this session, and I have watched the responses and attitudes of ministers who recognize that this whole process of estimates is one of accountability. It's one of our responsibilities to ask the minister and his officials, so that they're accountable for the stuff that's in the estimates, that's being put into the budget, and so that we can adjudicate spending responsibility. When we start getting glib answers and political answers to questions, that is contemptuous of this House. If you think we get into a frenzy, you are right, but it's mostly because of the attitude that we get from the other side of this chamber. With that, hon. Chair, I'd like to pass the questioning on to my colleague.

C. Clark: I do want to stick with Hydro issues. I know the minister has his officials here, and now is the time to get the questions in. I'll start by following up on a question that we put last night to the minister, who didn't get a chance to answer because we didn't have enough time before we adjourned for the evening. I started out asking about Downton Lake and Greg McDade's special environmental auditor's report and the results of that report. In the report, he talks about Hydro misleading the public. He says that in his opinion, Hydro intentionally misled some of the media and misrepresented what happened at the lake in early reports. I'd like to ask the minister again if the minister has identified the individuals responsible for misleading the public and the media, particularly in the early stages, and what follow-up his ministry is taking with respect to those individuals.

Hon. D. Miller: There never was any attempt to mislead. I don't know what the member is talking about.

C. Clark: I hope the minister has had a chance to read Greg McDade's report. He was hired, with a fair amount of fanfare, during the election period. I think there was recognition on the part of the public that Greg McDade has been a leader in the environmental movement for many years and would bring some value to the auditing process that might not have been brought by an internal Hydro investigation, which I think we've probably seen reflected in other internal Hydro investigations.

I'm really just quoting Mr. McDade. He says that Hydro intentionally "made a number of misleading statements to the press and public about the cause of the incident, including minimizing the significance of the damage." This is a very serious issue, of course, because the public counts on the government, in many ways, to safeguard our environmental values. The public also makes the assumption that the government's own agencies will be living up to the rules or the expectations that are set out for them by the public. To discover through the environmental audit that one of the government's agencies has intentionally misled the public -- I'm quoting, again, from the government's own employee -- is a really frightening thought: imagining that government and government agencies are intentionally misleading us and aren't giving the public the straight goods about what's going on. After all, it's the public that pays for government, and it's the public that should have the right to know, the right to ask government to respond to certain situations in a certain way, and they can't ask government to do that. They can't ask government to fulfil their will because they don't know what's really going on in government.

I wonder if the minister could tell us: does he believe that Greg McDade is just wrong about Hydro making misleading statements? If he does, I wonder what evidence he could bring forward that would contradict the fairly thorough evidence that Mr. McDade brought forward in his report.

Hon. D. Miller: First of all, with respect to B.C. Hydro's ongoing investigation into this issue, I want to read the following:

"At no time has B.C. Hydro released any information in connection with the incident which it knew at the time to be wrong or inaccurate. When the 3rd of May press release was issued, B.C. Hydro believed that siltation had been a major factor in connection with the drawdown. As B.C. Hydro further reviewed the incident, it was learned that siltation was not so important as originally thought. B.C. Hydro's response to media inquiries only provided such facts as B.C. Hydro was aware of at the time."

I also want to quote from Mr. McDade at a press conference of Friday, July 14, 1996, where he says: "It does not look to me that it was a deliberate attempt to mislead anybody, but that initial press statement was wrong. Siltation was not a major factor."

It seems fairly clear to me that the member is using one piece of information in a very inappropriate manner and that she might be well served, or be better served, if she were prepared to examine all of the relevant information. We have reports that we're currently going through, and there will be additional.... I believe even Mr. McDade will have a final, conclusive report. It seems a bit presumptuous for the member to simply -- as they did last night in dealing with the Campbell River situation -- lock into one opinion, no matter where it may come from, and assume that that is the only opinion that has merit. The member talks about balance. I'd suggest it might be highly appropriate to get all of the facts, as opposed to conducting the kind of examination that is being conducted now and assuming that she is correct. I've put on the record a couple of very clear statements that have entirely refuted the line of questioning coming from the member.

[ Page 1337 ]

C. Clark: What we're interested in here is finding out what exactly happened at B.C. Hydro. The minister has put some quotes on the record, and I'll do that as well. Greg McDade says in his report:

"The draining of Downton Lake was therefore planned and deliberate, dating from at least September 1995. It was not, as suggested by some press reports and B.C. Hydro's early statements, the result of accident or, except to a very minor extent, miscalculation. It was not caused by a lack of monitoring, or someone being unable to shut down the valves."

Now, the interesting thing about that quote from his report is the footnote that he attaches to it:

"Prior to my investigation, I made some statements to the media to the effect that it looked like 'someone was asleep at the switch,' which were based upon what I had been led to believe, and assumed to be true. I now know differently."

In light of those statements, it's important, it's critical, that the minister direct B.C. Hydro to look into this further. B.C. Hydro is an ongoing operation of a huge magnitude which makes a great contribution to this province and to our provincial economy; but at the same time, it has a lot of negative impacts on the environment. I think it's really important that we ensure that B.C. Hydro operates in a very straightforward manner. It's really incumbent on the minister to determine where the chain of command went wrong -- if that's what happened -- and how these misleading statements were produced by B.C. Hydro.

[11:00]

Hon. D. Miller: I have read into the record in my last response the statement outlining Hydro's position, and I have quoted Mr. McDade. It's very clear that there was no attempt to mislead, yet the member continues to suggest that there was. There clearly wasn't. I don't know what more I can offer. The evidence is there in Mr. McDade's own words. If the member wants to continue to characterize this issue as someone trying to mislead someone, then I'm at a bit of a loss. I don't know how I can respond. I put the facts on the record. If the facts aren't good enough, then I don't know what is.

C. Clark: I too am quoting from Greg McDade's report. I don't know where the minister's information comes from. This is available at the Legislative Library. McDade says: "I now know differently." Apparently the minister isn't interested in determining where the misleading statements might have come from. Apparently he's not interested in going and taking a look at Hydro, and ensuring that statements of this nature are always straightforward and don't intend to mislead the public.

I think anyone who has any memory of the actual occurrence during the election period, and who watched the initial reports that were coming out.... It was clearly characterized as an accident, or something -- it was a miscalculation, and it shouldn't have happened. In fact, what we do know -- and I think even the minister would agree with this -- is that it was an intentional act on the part of B.C. Hydro. It was what they refer to as an extreme drawdown event. Hydro was well aware -- and Greg McDade notes that they had also done it in the past at Downton Lake -- of the impact that this would have on the lake. It wasn't an accident; it was fully intentional. Anyone who looks back at the media coverage at that period of time when the drawdown occurred, when it was finally uncovered and exposed to the public, will see that that's exactly how it was characterized by B.C. Hydro. When Greg McDade says that he too thought it was an accident, but now he knows differently.... I think there would be a lot of British Columbians who would agree with him on that point quite thoroughly. I wonder if the minister could respond to that.

Hon. D. Miller: The danger of doing your research from media coverage is that you quite often draw the wrong conclusions. Mr. Chairman, I want to repeat: is the member interested in the facts?

I also want to say, with no disrespect to the difference, that it's a reservoir. There is a shade of difference, and that really goes to the heart of this issue. Really, it's a broad public policy issue. Perhaps we may want to discuss that in fairly normal terms, because I think it's an important public policy question that we have to deal with -- that is, quite a number of years ago decisions were made to dam rivers for power generation and to create reservoirs behind them. That, clearly, had an impact at that time. Perhaps we were not as vigilant in those days with respect to environmental questions. The real challenge that we all face now is, essentially, managing unnatural systems in the best possible way we can -- in a balanced way, giving due regard to the requirement that we put on those systems, or that the people who came before us put on those systems: the generation of power. It's not, and never will be, I suspect, a simple matter.

To put it in broad terms, obviously, where you have dams and related apparatuses, there is a requirement for the functional integrity of the dam and its related systems, as well as for the safety of the public -- that those be maintained in good and efficient working order. In order to do that, because of the nature of reservoirs, there is a requirement -- and it varies, obviously, across the system -- to reduce water levels in order to effect that maintenance and to make sure that you do have a safe operation, and one that works efficiently. When you do that, you're going to have an impact on the waterflows, and obviously that has an impact on the aquatic life in those systems.

Essentially, what we have been trying to do -- and, I think, in a fairly good way, through the electrical systems operation review -- is work with B.C. Hydro, the Ministry of Environment, Lands and Parks, and the DFO, to see if we can strike that balance, in terms of an operating plan that does take into account these sometimes conflicting and competing interests, in a way that gives due regard for environmental concerns, and for both the efficiency and the safety concerns I talked about, but also for the economic issues attached to power generation. It seems to me that that's a very practical approach to a fairly complex problem, and I have confidence that, working in a partnership way with DFO and the Ministry of Environment, Lands and Parks, B.C. Hydro indeed can move forward in a very progressive way and deal with these issues.

We can concentrate on this one issue, and we can take the tone that somehow there were nefarious dealings; that people were deliberately misleading, and the like. I find that's not particularly helpful. I did say last night that I was somewhat dismayed at the line of attack taken by the opposition with respect to the Campbell River. In other words, they stood in this chamber and, without reservation, accused Hydro of putting their own interests completely ahead of any others -- complete and utter disregard for the fish habitat or anything else. When I responded with the facts, they dropped it. Not one more.... They didn't even have the good grace to stand in this House and say: "Well, perhaps we don't have all the information. Perhaps we should have a better dialogue." They just completely dropped it. There was no reference to Campbell River and the facts that were laid before this House. Now we are pursuing the same line of questioning with respect to Downton. Nowhere have I seen any evidence produced by the opposition to back up this rather unfortunate tone that they're using with respect to what is, arguably, quite a complex issue, as I've just described.

[ Page 1338 ]

I will go back to what I read into the record, which has been confirmed by Mr. McDade. If the member wants to use Mr. McDade, then I think that she may feel some obligation to use all of what Mr. McDade said, rather than being selective. I don't know, but it seems to me that this might be a better way of doing it. Our view, and Hydro's view, is that at no time has B.C. Hydro released any information in connection with the incident which it knew at the time to be wrong or inaccurate; this is important.

When the May 3 press release was issued, B.C. Hydro believed that siltation had been a major factor in connection with the drawdown. As B.C. Hydro further reviewed the incident, it was learned that siltation was not as important as originally thought. B.C. Hydro's response to media inquiries only provided such facts as B.C. Hydro was aware of at the time. As I indicated, Mr. McDade, in a press conference on July 14 at 1 o'clock, said:

"It now appears to me that B.C. Hydro initially blamed this problem on there being more silt on the bottom of the reservoir than they had anticipated. B.C. Hydro now realizes that is not correct. It does not look to me that it was a deliberate attempt to mislead anybody, but that initial press statement was wrong. Siltation was not a major factor."

It seems to me that that's it. It's pretty clear and straightforward, and I don't know what quarrel the member has with what I've just read.

C. Clark: We will see in Mr. McDade's final report how B.C. Hydro comes out on that front. I think, though, there are.... When we examine all the issues with regard to B.C. Hydro -- the environmental issues, Campbell River and Downton Lake -- and when we discuss them in the specific, I think what we intend to do is to shed some light on Hydro's general attitude towards environmental issues and on Hydro's operating procedure when dealing with environmental issues. There's no question; I'm sure we will find many instances where B.C. Hydro has operated in a very responsible manner with regard to the environment -- although I'm sure that most of those instances would be fairly recent, given the change in public attitude towards the environment in the last 20 or so years. At the same time, we are left with some very significant incidents where B.C. Hydro has had an enormously negative impact on the environment. What we need to look at is the chain of command within the operation that allowed that to happen. It's the hope of us on this side that those events won't be allowed to happen again. It's incumbent on the minister to look within the corporation and find out what went wrong and make sure that it doesn't happen again.

One of the other areas that I'm interested in exploring is the way Hydro deals with environmental issues within the corporation. Again, I'll refer to Mr. McDade's report. He points out that there are no policies or procedures at B.C. Hydro which require any environmental assessment to be done prior to extreme drawdown events. Now, I'd suggest that that isn't a very environmentally sound operating procedure. I know that when we discussed this in the estimates with the Minister of Environment, he also expressed some concern about the way Hydro operates with regard to the environment, and he assured me that he was doing what little he could to try to make sure that B.C. Hydro did operate in an environmentally friendly manner. I wonder if the minister could tell us whether he thinks that the way Hydro is currently operating, or the way Hydro is described to have been operating by Greg McDade, is acceptable, or if he plans to require any significant changes in Hydro's operating procedure.

Hon. D. Miller: For the record and for the member's edification, I'd just like to advise members that Hydro has been in existence formally since 1962, some 34 years. I'm sure the member does agree that, yes, society's attitudes have changed dramatically over those last 34 years. Just ten years ago Hydro had one biologist on staff; today they have 30.

For the member, again getting back to the broader issue, you can take an adversarial type of approach and say that Hydro is guilty, which seems to be the kind of tone that the members opposite want to establish. Or you can really look at the issues more broadly, try to see what the problems are and perhaps even be helpful in terms of suggestions.

It's clear that in 1992 the government requested Hydro to conduct a systems operation review. As a result of that, many issues are now coming to light. The Cheakamus study, for example, was really undertaken by Hydro, DFO and MELP. In other words, they did it themselves. There was no attempt of somebody being out there trying to ferret this out. This was Hydro, along with agencies responsible for fish, examining the systems to try to improve their ability, in a cooperative way, to manage the sometimes conflicting values that I talked about. So changes have taken place.

Changes will take place. There is yet to be any sort of finality with respect to the Downton issue. Hydro is doing their report; I expect they'll be finished fairly soon. Mr. McDade is doing a final report, if I'm not mistaken. So it seems to me prudent, in terms of canvassing the issue, that, rather than drawing absolute conclusions at this point about whether people's attitudes are bad or whether it's a fact -- even though the facts are contrary in terms of the misleading statements -- the member might be more usefully employed in exploring the issues on a broad base, without the kind of tone that I'm hearing. But there's very little I can do other than offer this suggestion.

C. Clark: I should remind the minister that it's the opposition's role and prerogative to explore the issues that we feel are important to the public. I'd remind the minister, too -- and I think my colleague from Vancouver-Quilchena pointed this out, as well -- that the estimates process is the opportunity that the public has to put questions through the opposition directly to the minister. Question period is a really short period of time each day to do that. So when the estimates process arrives, it's an exciting time for us -- it's an exciting time for the public, too -- to be able to put questions directly to the minister and have him respond, and then to be able to put another question. The minister would agree that it's a rare time in this House when we're able to do that. We'll take full advantage of our opportunities to do that today, particularly with regard to B.C. Hydro.

[11:15]

The minister -- I thought it was interesting -- referred to a couple of issues. The Cheakamus River, where I think B.C. Hydro was found responsible for knocking out a million pinks in the run...

An Hon. Member: In violation of the water permits.

C. Clark: ...in violation of the water permit.... The number may be wrong; I don't have it in front of me. But they've been violating their water permit for 32 of the 38 years that they've had it, I guess...

An Hon. Member: Back to 1962.

C. Clark: ...going back to 1962.

[ Page 1339 ]

What's interesting to note about that case in particular is that that water permit is one of the few -- 7 percent -- water permits out there that have any environmental or operating conditions attached to them at all. So on the one hand you have the Ministry of Environment handing out the water licences, and the very odd time they attach environmental conditions to them, even in those circumstances where they do that, even when B.C. Hydro is required to live within some environmental conditions attached to their permit, they don't. They didn't for 32 out of 38 years in the Cheakamus River.

I'd be interested in the minister's response to that, because to me this particular case seems to have been a real environmental disaster for the local community. If we think about it on the many rivers where Hydro has permits, it's potentially a very big problem. So I wonder if the minister could respond.

Hon. D. Miller: Hopefully, my staff will find the direct quote from Mr. Ward, who did the report on the Cheakamus. But, really, I find it somewhat offensive.... I assume the member has read the report, and if she has read the report, she will be fully aware that it was absolutely inconclusive with respect to the cause of the loss of the pink run on that system.

The member just made a statement -- declared that the loss of the pink run was entirely due to B.C. Hydro. It is with some dismay.... The report very clearly said that no conclusion could be drawn. I'm not saying that Hydro did not have an impact; I'm saying that the report did not find anything conclusive with respect to that.

The report by Ward notes that the decline in fish stocks in the Cheakamus is an observation, not necessarily a direct correlation to the dam. I think the other issue that could have been a contributor.... A monitoring program on this system since the 1950s indicates that there was no significant change in fish stocks in the Cheakamus until after 1970, following the development in the estuary, dike completion and development of the port of Squamish.

I'm not saying that Hydro was not a contributor. All I am saying is that to stand here and say, without any hesitation, equivocation or any other thing, that Hydro is the sole cause, when the report that the member cites says the opposite, is not doing a service to this debate. It's really the fundamental point I've been trying to make. I don't care how mad you are, or how puffed you are about Hydro issues and that you want just to stay mad and say that it's your job to oppose. Surely you have an obligation to check your facts. You didn't check your facts on the Campbell River.

An Hon. Member: Did you check your facts on Laxton?

Hon. D. Miller: You didn't check your facts on the Campbell River; it's clear. You didn't check your facts on Downton; you are now not checking your facts on this issue. I don't know what kind of debate we are going to have here if all we get are these pointed accusations, these conclusions drawn by the member as fact, when we and she have factual reports that say the opposite. You tell me what service that is doing to this debate, which is a very important public policy debate.

C. Clark: When we talk about the Cheakamus River, we talk about B.C. Hydro failing to live up to its licence for 32 out of 38 years on that river. It exceeded its water permit by 50 percent. When we talk about the fish that were in that river, we have to look way back to before B.C. Hydro started having an impact on that river. I think it would be very, very misleading to suggest that B.C. Hydro doesn't bear some responsibility for what happened there. B.C. Hydro wiped out....

Hon. D. Miller: All of it? Read the report.

C. Clark: I am asking the minister what he is doing to ensure that Hydro lives up to its water licences. The minister's response is always: "Well, it's not all our fault, so it seems to me we shouldn't be held accountable for any of it." What I am asking the minister is.... Surely he is prepared to ask Hydro to take some responsibility for what happened on that river, at Downton Lake, on the Bridge River, at Carpenter Lake and at all the other places where the damage caused by B.C. Hydro has been exposed.

I am just asking the minister if he will take some responsibility for it. If he is willing to take some responsibility for the damage that has been done, would he then be willing to ask Hydro to take some mitigative measures or make some permanent changes in the way they operate, so that there isn't an ongoing problem anymore with B.C. Hydro? That's what I am asking of the minister.

Hon. D. Miller: I did indicate that we are, in fact, doing that very thing. I just want to quote the Ward report. This is an explicit quote from the Ward report: "The Fisheries agencies have not determined if the hydroelectric project has been a contributor to the decline." I know it's not my job to ask questions. I would just make one request of the member: would she stand in this House and retract a statement she made earlier, which was a declarative statement that B.C. Hydro caused the loss of that pink run? Because the facts are clear that there is no evidence to support that. I've never said that they didn't have some responsibility. I'm saying that after a report by an independent person, no conclusions have been reached. Certainly, the estuary development that I talked about in Squamish has been fingered as potentially being one of the factors in the decline of that run. I ask the member if she has the good grace to do that.

Finally, you're right. The report did identify the excessive use of water, contrary to the licence. It also identified that the water comptroller's branch were aware of that, I think. That report was commissioned by B.C. Hydro as part of B.C. Hydro examining, at the request of government, its systems. That report was done with the full knowledge of both the DFO and the MELP people -- the Ministry of Environment, Lands and Parks -- because we do want to get at this issue. It is an important issue.

Many, many years ago, in the forties and fifties, people built dams without regard for these kinds of issues. We are now determined to try to deal with it, to have that balance between using those systems to generate electricity, which is important for our economy.... There's a consequence of reducing that ability to generate electricity, but we also want to manage them for environmental values, to the degree that it's possible, and that's the purpose of the ESOR. I think we've made some progress, and we've shown a willingness and ability to work with those agencies responsible for fish. We have on staff Mr. Brian Hebden, a biologist who works for B.C. Hydro and who is president of the international fisheries society. How can anyone characterize Hydro as simply being an agency that could care less about these questions? There's no evidence that supports that.

B.C. Hydro is currently in the process of setting up a multistakeholder committee to develop a water use plan. By 

[ Page 1340 ]

the way, we are now in compliance, I believe, with the licence for the Cheakamus River. That will be submitted to the government later this year for approval. The water use plan will take into account the electricity needs of British Columbians, the environment, flood protection and other community issues. I think that it's being addressed in a very, very appropriate way, since the issue was discovered as a result of our own investigations.

I did remind the member that I made what I think is a very simple request of her -- to acknowledge that this is not a one-sided issue. There is not one villain in the piece; this is a complicated issue that has repercussions across the piece. Sincere efforts are being made to come to grips with this issue and to establish management systems and regimes that would account for the need both to continue to use these utilities to generate electricity -- so that this economy, which needs that power, can continue -- and to ensure that the environmental issues that are at stake are dealt with, as well.

C. Clark: It's indeed something to have the minister lecture me on good grace, after his behaviour this morning and last night.

My question for the minister was fairly general in nature. I was quoting from the McDade report again, where he says that there are no policies and procedures at B.C. Hydro requiring any environmental assessment prior to extreme drawdown events. He also goes on to say that B.C. Hydro doesn't believe that they need to inform the Ministry of Environment of any actions that are undertaken that might have environmental impacts. He goes on to say that B.C. Hydro biologists tell B.C. Hydro itself that it needs to do studies, and that B.C. Hydro refuses to do them. He says that there's no policy to require B.C. Hydro to abide by MOE's direction on any environmental matters.

What I'm suggesting to the minister in a very general way.... Greg McDade talks about it in his report, it has been talked about by the Sierra Legal Defense Fund, and it has been talked about by all kinds of different players in our communities across the province. What they're saying is that B.C. Hydro doesn't seem to have enough environmental concern within the corporation. What they're saying is that B.C. Hydro needs to catch up to the rest of society, in terms of putting the environment first. It needs to catch up to the societal attitudes that the rest of us hold, and it's badly and gravely behind, in trying to put those concerns at the forefront. So what I ask the minister, very specifically, is: will he ask B.C. Hydro to require environmental assessments to be done prior to events like extreme drawdowns?

Hon. D. Miller: Again, I want to refute the characterization that Hydro somehow doesn't care. I think that they have been.... I think there is tons of evidence, both the stuff that I've cited and other extensive reports commissioned before the ESOR, that indicate that Hydro did in fact show lots of responsibility towards the issues that we're talking about -- in other words, the impact that those systems, those reservoirs, etc., have on fish populations. Even going to the issue of Downton itself, there was a fund. There was a joint committee of MELP and DFO that allocated requests to do studies in certain reservoirs and systems. Hydro put in a request to do a study on Downton, but it was turned down by the DFO-MELP committee for not being a high-enough priority.

It just disturbs me that this sort of general tone continues. I think that there is a lot of evidence to indicate Hydro's sincerity, whether it's having a biologist of the stature of Mr. Hebden, whom I talked about; whether it's the reports that we have that really started before the ESOR; or whether it's the ESOR process itself and the reports that have come out. I just don't accept that Hydro doesn't view this issue seriously and that it has not become better and better over the years in trying to deal with it. We had in place, essentially, a strategy to deal with downstream issues.

I want to go back and finally say, with respect to the Downton issue, that not all the information is in. There have been, certainly, allegations, and certainly.... I don't want to get into the political atmosphere too much, but I'd suggest that perhaps that had something to do with how the issue was characterized during the campaign. But now that that's over, and we've got the opportunity to take a very sober look, and we have people of stature in the environmental community, and others, to examine this issue.... We have reputable biologists to look at it. There will be a final report, and perhaps at that point, when all of the facts are out, more appropriate conclusions can be drawn. To do so now simply suggests that arguments of convenience are more important than facts.

C. Clark: I know the minister likes to characterize B.C. Hydro as being very environmentally conscious and aware. I noticed that he referred to the 30 biologists that have been hired by Hydro. I guess one could look at that, look at the flow chart at B.C. Hydro, and say that really does look like B.C. Hydro is taking a real interest in the environmental impacts it has.

[11:30]

When you look, for example, at the Downton Lake incident, where one of those biologists specifically requested that an impact study be done and his request was ignored.... What's the point in having the biologists? What's the point in hiring people to advise you if you're not going to listen to them anyway? What's the point in hiring environmentalists and experts and people who have a concern for the environment if you're not going to listen to them? Unless all the government is looking for is some good publicity on it -- unless it's just another case of the government saying, "Well, you know, we are concerned about it," doing a press release, making an announcement that they're going to do something, and then nothing getting done. That seems to be, quite frankly, a pattern that's been repeated many times in the Ministry of Environment and in B.C. Hydro with regard to the environment.

I'm really very disappointed that the minister isn't prepared to make any commitments to ask B.C. Hydro to make any further changes to the way they operate with regard to the environment, and that he isn't even willing to ask Hydro to change their policies with regard to the Ministry of Environment and to require them to follow the recommendations of the Ministry of Environment on matters concerning this very important issue. I think that's very, very disappointing. It was my hope, as a result of my discussions with the Minister of Environment in estimates, that B.C. Hydro would be working more cooperatively with the Ministry of Environment, that B.C. Hydro would be saying: "Well, we are prepared to make some very significant environmental changes in the way we operate. We are prepared to go back and change all of our water licences so that they do have environmental conditions attached." But judging from the attitude of the minister, it doesn't seem to be high enough up on his agenda to ask B.C. Hydro to do even these very, very simple things.

Hon. D. Miller: Mr. Chairman, I believe the record will show in a variety of references that I made that in fact we are 

[ Page 1341 ]

on the job and doing just that. But if the member is disappointed, I'm going to say that I am more disappointed, because, based on the evidence and the facts in this discussion this morning, it's very clear that the Ward report did not determine the cause of the loss of the pink run on the Cheakamus. Notwithstanding that, the member stood in this House and said it was Hydro's fault. Faced with the facts and with my request for her to at least temper her remarks, the member is unwilling to do so. So I guess there's disappointment all around.

C. Clark: In my last comments, I was talking about Greg McDade's report specifically. I was talking about his comments that B.C. Hydro needs to follow some basic environmental principles, some basic direction from the Ministry of Environment, who I assume are the experts in environmental protection in this province. I could be wrong; it might be that B.C. Hydro is the leader in environmental protection in this province. That's not Greg McDade's opinion, and given Mr. McDade's fair reputation on environmental matters, I would tend to trust Mr. McDade on that. So when he says that B.C. Hydro has no policy to abide by the Ministry of Environment's direction on environmental matters, I tend to put some credence in that. When he says that Hydro's own biologist requested that a study be done on Downton Lake prior to the drawdown, and that Hydro ignored his request altogether, I tend to put some credence in that. When he says that there were many voices at B.C. Hydro asking for an environmental assessment, asking for an inventory of the fish at the Downton Lake reservoir, I tend to put some credence in that, too. The minister doesn't seem particularly interested in responding to these very specific questions that are raised by Mr. McDade's report. I'll give him the opportunity to do that.

Hon. D. Miller: The record will show that I did say, just a few moments ago, that Hydro had applied to a joint committee of MELP and DFO for funds -- there is a fund to do these kinds of environmental assessments. They applied in the case of Downton Lake for funds to do that study and were turned down by MELP and DFO because it was not considered a high priority. That is a fact. Again, with all due respect, the member stood in this chamber and said: "B.C. Hydro is responsible for the loss of the pink run on the Cheakamus." I read an excerpt from the Ward report. I'll read it again: "The Fisheries agencies" -- not Hydro, the Fisheries agencies -- "have not determined if the hydroelectric project has been a contributor to the decline." I submit that it would cost the member nothing -- not loss of face, not loss of position.... In fact, I submit that the member would gain by standing right now and correcting the record, and admitting that the report was inconclusive. I don't know why she is unable to do that very simple thing in the face of the evidence and the facts. If that's not something that the member is prepared to do, then it sort of raises questions about just what the purpose of this exercise is. I don't know; I think all of us should be prepared to do that.

Interjection.

Hon. D. Miller: There it is; it's on the record. It's there. I've made the request two or three times. I know the member has the report.

Interjection.

Hon. D. Miller: Perhaps the member might be.... The shouting from your partner beside you doesn't detract from the question -- the very simple, clear, easy question -- that I've raised. I'll pass the piece of paper over. Perhaps the member would just like to read that section. She doesn't even have to say whether she agrees with it or not; just read it.

C. Clark: I can understand why the minister is avoiding answering the question, I guess. Or I can speculate as to why he's avoiding answering the question about B.C. Hydro. He will also know that B.C. Hydro -- and this is according to Greg McDade -- regularly fails to inform the Minister of Environment about what it's doing and what environmental impacts its activities might have. So it may not be a surprise that the request was turned down. Perhaps we can assume that it was turned down because of a lack of information provided to the Ministry of Environment by B.C. Hydro. I don't know; he doesn't go into that in his report. I'd be interested in the minister's comments on that.

The fact remains, though, that B.C. Hydro does not have a requirement to adhere to environmental principles. I'd ask the minister again if he would be prepared to direct them to do so.

Hon. D. Miller: I was hoping the mining critic would get up and put some sanity back in this debate. But again, going back to the points I've made, Hydro was not reluctant at all to do these kinds of studies. We submitted an application to the committee to do the study, and the committee of MELP and DFO turned it down as not being a high-enough priority.

I go back to the fundamental issues. I guess having responsibility for issues is a little bit different than being a critic. That's fair enough -- critics have a role in our society. But when your obligation is to maintain a dam and related structures -- for example, gates.... If you go back over the history of this particular operation, it's been a routine part of the operation for the last 40 years that the reservoir has been drawn down to planned maintenance. Would we be derelict in our duty had we not done that? Would we be derelict in terms of both the business side, in making sure that the operation was efficient, and the public safety side, in making sure that the structures were sound? Would that be a dereliction of duty -- not to proceed with a planned maintenance operation on this dam?

If the member was in the chair and she was the one making decisions, and these were the issues, would public safety be an issue that was worthy of consideration? Would the efficiency of the operation be an issue that people would consider? The event was planned, as it has been on a routine basis for a number of years. We notified the Ministry of Environment of our plans in November of 1995. Days before the actual event took place, we were telephoned and told: "Don't do it." And there is a requirement to repair gates, with their safety as an issue. I don't understand: is that something you just completely disregard? "Well, who cares about the safety?" I don't think that that's appropriate; I don't think that's very good behaviour. God, if Hydro had done that, surely there would be members on the other side who would be standing and chastising me, as the minister responsible, for our failure to do what was, in my view, an absolute requirement in terms of a structure that has impacts with respect to its own efficiency and to public safety.

You can't always have it both ways. You can argue one side of the equation -- fair enough. I think that's fine. If you want to argue the fish side, that's great. It is important. But to 

[ Page 1342 ]

disregard any other factors, it seems to me, is not very useful. Hydro's record -- it's on the record in terms of notification, in terms of its previous activity, in terms of its application for environmental studies -- is all there and very clear. Hydro's broader concern about making sure, to the extent that it's possible to, that these systems that are, quite frankly, artificial -- were created.... Decisions were made, long before you or I came along, to build these structures, and we are now faced with changing public values. I think we know much more about environmental issues than we ever knew. But finding the balance in terms of maintaining the operations for their intended purpose -- the generation of electricity, which presumably has its uses.... That is one thing, and trying to balance that requirement against the need to be as environmentally sound as you can be with respect to those other values is indeed a challenge.

We've approached that, I think, in a very open way. We're working with the primary agencies: DFO and MELP. We've examined some of our systems in a fairly extensive way; we take action where we find issues that have not been dealt with properly. Is there a simple answer to these questions? No, there is not. Do we have a very positive attitude about trying to work in a partnership with the agencies, to get better? Yes, we do. Nothing that I've heard this morning, or indeed last night, has made any compelling case to the contrary. I think it's fairly clear what we're about and what Hydro's about on these very complex and important questions.

D. Jarvis: I have a few questions and comments to make to the minister, as well, about many items I want to discuss. Probably we'll have to go all through the evening.

It's quite obvious that there's a general feeling out there in the public that Hydro isn't to be trusted, or that there is a problem. Things do change over the years, and I can reflect back to when this party here, the NDP, back in 1962, when Hydro was first taken over.... I happened to be in the vicinity when they took over the B.C. Electric. I can remember the leader of the NDP at that time.... I forget what party they called themselves at the time -- the CCF, but I can't remember what that stands for -- but I can remember Strachan standing up and saying that they were worried that W.A.C. Bennett was going to politicize B.C. Hydro and that B.C. Electric would no longer be a benefit to this province. In fact, it was Strachan that coined the phrase about the design of B.C. Hydro. The decal they have now was called.... He said: "Now, that is the sign of the double-cross to British Columbians." Most of you people are too young to remember those kinds of things.

I want to ask the minister a few things about power projects throughout the province. This basically concerns the fact that the Premier has put a freeze on the power rates. It's quite obvious that he has politicized Hydro by doing so. Over the past years, there has been a surplus of power throughout North America due to deregulation and the rebundling of power projects throughout North America. We understand, even from information that is supplied to us by B.C. Hydro, that independent power producers have put forward projects totalling.... Over 3,000 projects can come forward to create electricity for this province. In their own report it says that major changes in the industry are occurring throughout B.C., North America and the world, and are causing fundamental restructuring. They go on to say that technological advances have dramatically reduced the costs for power generation.

[11:45]

Why has the Premier frozen the rates when Hydro rates should be falling? For the next two years we will have the same power rates as we're having today, when everywhere else in North America rates are going down. Can the minister tell me why the Premier is being political? To get a few votes he is actually misleading the people of this province. They're thinking that rates are going sky-high, when even B.C. Hydro said in their report that new technologies and the supply of power that's available are pushing prices down.

Hon. D. Miller: Certainly we're all aware of -- if we're old enough or students of history -- and can recall the nationalization of a private company that resulted in the formation of B.C. Hydro in 1962. That would be an interesting debate today, I'm sure.

Given the extensive debate we've just had on the issue of reservoirs and their impact on the fishery, I think that member and I are probably.... I don't know if we come from the practical school -- in other words, if it's sound, let's get on with it -- but I do recall from last night the member essentially agreeing with me. We talked about a mining project in relation to the potential for a project around Fish Lake in the Cariboo. I said I would be pleased to move forward if it was environmentally sound. The member said: "Well that's good to hear, because, you know, they move the little fishies into another little lake -- and I understand from the project that it's going to be an even better and more aesthetic place for the local people to go fishing for the little fishies -- and then we can get on with the mine." That's an exact quote from the Blues from last night, hon. Chair. It does stand, I would say, in some contrast to the line of questioning we've been engaged in this morning with respect to the broader, more complex, issue of artificial systems and fish.

I was pleased to see the announcement by the Premier, prior to the election, of two of the IPPs in the province. I think it's important that where those projects make sense, we do proceed. Certainly the Canadian Forest Products Prince George project and the Stothert Power Corp. project in Skookumchuck were welcomed when they were announced. They will, by the way, create 387 person-years of construction employment and 980 person-years of operating employment. So they do have that potential. In addition to those, there are a number -- I think five -- that are currently in a process.... We put a panel in place to determine whether we can move forward on some of some of those other IPPs.

With respect to the rates, certainly the Premier's announcement could be taken.... I mean, a freeze is essentially a cap, and nothing precludes those rates from being reduced. It is a fact that because of the changes the member referred to in energy markets in other jurisdictions, rates are declining. Just to try to put that in some context, I have here a comparison of monthly electricity bills from a variety of major cities around North America. I just want to put this in context, because I think it's important. This is residential, based on 1,000 kilowatt-hours of consumption: at the extreme high end, in Los Angeles, the monthly bill is $133.28; in Toronto, that moves down to $92.30 per month; Halifax, $89.79; Regina, $81.97; Bellingham -- and we often talk about the competitive 

[ Page 1343 ]

advantage between British Columbia and Washington, and the factors that induce people to locate here -- $81.70; and so on. Of the 12 examples, the high end is Los Angeles at $133, and the low end is Winnipeg at $55.96. B.C. Hydro -- or Vancouver; it doesn't say Vancouver, but let's assume it's Vancouver -- is at $61.16.

I think you have to put the cost in some kind of relative context. Obviously, the more dramatic reductions will take place in those jurisdictions with excess power available. Where the cost is highest.... Quite frankly, we enjoy one of the lowest energy costs in North America, and that's something that we're always vigilant about. We simply put a cap on increases over the next two years.

D. Jarvis: I move the committee rise and report progress and return to this subject later this afternoon.

Motion approved.

The committee rose at 11:52 a.m.

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