(Hansard)
THURSDAY, AUGUST 1, 1996
Afternoon
Volume 2, Number 12, Part 1
[ Page 1345 ]
The House met at 2:06 p.m.
G. Brewin: It gives me pleasure to introduce to the House today Jane and Flip Richards. After a long and illustrious service to her state, Jane is recently retired as the Chief Clerk of the Arizona House of Representatives. Jane was the first American Clerk to become an honourary member of the Association of Clerks-at-the-Table in Canada. She and Flip have spent the last week here in Victoria and are soon on their way to Edmonton to participate in the annual professional development seminar of the association. While Victoria is cooler than Arizona, I'm sure we will give them a very warm welcome to our House.
Hon. U. Dosanjh: I have the pleasure of introducing someone I met on a railway train back in 1980 from Bombay to Delhi. He happens to be visiting British Columbia. He happens to be in the gallery with two of his friends. Jagat Jit Singh is the chap I met in Bombay. Surjit Singh and Surinder Gangar are British Columbians that are accompanying him. Mr. Singh is here with his wife and two children. I want the House to please make them welcome.
Hon. D. Streifel: It's my pleasure today to introduce into the House two individuals that are visiting me and carrying on a bit of business. First of all, we have Dr. Dave Rempel, one of my constituents. He's a principal of an elementary school in my riding. Dave Rempel is a good friend and in fact is, I suppose, the grandfather or granduncle of our swans, Svend, Louis and Victory. Victory, of course, was hatched on May 28.
With Mr. Rempel is Mr. Boris Baev, who is visiting us today from Novosibirsk in Russia. Mr. Baev is the first businessman sponsor for a Russian school group who visited B.C. in November 1989. He has continued to be a strong supporter of student exchanges and is now working with Mr. Rempel on international adoptions, the Canadian Friendship Exchange Society. As well, Mr. Baev is out here scoping out the province for entrepreneurial investment in and around the tourism industry. He is very keen on tourism exchanges between our province and the region of Russia that he's from. I bid the House make my friends welcome.
Hon. J. Cashore: Hon. Speaker, we have visiting today two very good friends from Kelowna, Allan and Betty Richards, and another very good friend, Betty's mother, Aileen McLaren, of Victoria. Would the House please join me in making them welcome.
B. McKinnon: Hon. Speaker, it gives me great pleasure to welcome my brother-in-law Bob McKinnon and his wife, Mary, daughter Stephanie and son Matthew from Camrose, Alberta, who are out to visit sunny British Columbia. I ask the House to make them welcome.
S. Orcherton: Hon. Speaker, in the gallery joining us today are a number of activists and leaders of the Indo-Canadian community from both my constituency of Victoria-Hillside and the greater Victoria area in general. With us today are Mr. Baghwant Jawanda, Mr. Rob Jawanda, Mr. Gurmeet Sandhu, Teja Singh Gill, Pal Singh Birring and Surinder Pal Dhillon. I bid the House make them welcome.
Hon. M. Sihota: Now that the member for Victoria-Hillside has stolen my thunder, I'd also like to welcome both Mr. Baghwant Jawanda and Mr. Rob Jawanda, and the rest of the delegation.
Also, hon. Speaker, in the gallery today is a longtime personal friend of mine, Mr. Hermal Gill, a gentleman with whom I have shared many adventures in my younger days. Would all members please make him welcome.
E. Conroy: Visiting Victoria today are my wife, Katrine, my son Ben, my daughter Sasha, and our neighbour and family friend Cindy Dombrowski. Would the House please make them welcome.
Hon. A. Petter: In the gallery today is a constituent of mine, Julia Robbins. Julia's husband, incidentally, is Peter Robbins, chief of Hansard; so if you're listening, Peter, hello. With Julia in the gallery are Margaret and Mike Middleton, Margaret is Julia's cousin; visiting here from Congleton in Cheshire, England. I'd like the House to make them welcome.
G. Janssen: I ask the House to welcome today a former resident of Port Alberni who is now from Penticton, Kathleen Navrot. I ask the House to make her welcome.
ROLE OF JOHN LAXTON
IN B.C. HYDRO OFFSHORE PROJECTS
G. Campbell: On February 22, 1996, hon. Speaker, the Premier told the people of British Columbia that he had taken immediate action to remove John Laxton and John Sheehan from any involvement in B.C. Hydro. Last night we heard from the Minister of Employment and Investment that that was not true. John Laxton remains involved with B.C. Hydro. He is Hydro's representative on the board of a Pakistani company that is involved in a project with Hydro. My question to the Premier is: why did the Premier allow John Laxton to continue to represent British Columbia and B.C. Hydro after he told us that he'd fired him?
Hon. D. Miller: Well, Mr. Speaker, it's obvious that the Liberals are trying to pump themselves up because they think they're on to something here. You know, they think desk-thumping equates with substance. But let me deal with the question. First of
Interjections.
The Speaker: Order, members, please.
Hon. D. Miller: The Leader of the Opposition is wrong, and if they would sit still for a minute, I could possibly explain. I explained this in the estimates debate last night and this morning, but I see they think they're going to get something out of it in question period, so we'll go through it one more time.
Following the events of last February and the removal of Mr. Laxton and
Interjections.
The Speaker: Perhaps we'll take a supplemental and another kick at this.
G. Campbell: This is an important issue; it's not one to be sloughed aside by this government. In fact, what's wrong is a
[ Page 1346 ]
government that purposely goes out of its way to deceive the people of British Columbia. What's wrong is this minister, who doesn't seem to understand his responsibilities and his accountability to the people of British Columbia, and people are tired of that.
The Premier said in February: "Clearly these were actions, which were improper and may be illegal, by people appointed by this government." He was referring to John Laxton's activities. He was telling people in British Columbia that John Laxton would have nothing to do with B.C. Hydro or public life as long as this government was involved, and that is not the case. Why would the Premier leave involved in this project someone who has broken his word, breached public trust, lied to the public and is currently under an RCMP investigation? Why would the Premier of British Columbia allow John Laxton to serve British Columbia or be appointed by B.C. Hydro anywhere in this world? That is the question.
[2:15]
The Speaker: I note that we had silence for the question. I hope that we will have relative silence for the answer.
Hon. D. Miller: Following the events in February -- as I was about to try to respond on my last question -- and the installation of Mr. Smith and Mr. Costello, they received twin mandates. Number one was to investigate the areas surrounding the establishment of the offshore companies and the investment by members of the board contrary to the Premier's wishes. Mr. Smith has indeed embarked upon that process and has produced a written report that has in part refuted the primary allegations made by the opposition.
Number two, the ongoing mandate of B.C. Hydro is to protect the investment of both B.C. Hydro and the shareholders with respect to this Raiwind project, which is a fundamentally sound project that has a number of partners. At the request of the Pakistani
Interjections.
Hon. D. Miller: Mr. Speaker, I'm not certain that this gang wants to listen to an explanation.
At the request of the Pakistani partners, we were asked to allow Mr. Laxton to remain on the board of SEPCOL, because it was their view that it was important in terms of the share offering in Pakistan.
The Speaker: Thank you, minister.
Hon. D. Miller: We allowed that to happen. In fact, Mr. Speaker, we are not in complete control of SEPCOL.
The Speaker: Thank you, minister. I think you've dealt
Hon. D. Miller: We have many parties on the board of SEPCOL. That share offering was successful, and Mr. Laxton is being removed.
The Speaker: Minister, you have answered the question. I am allowing considerable time for questions and answers. In fairness, I think we must. What is good for one must be good for the other. Therefore, in that spirit, the Leader of the Opposition on a supplemental.
G. Campbell: We don't care what the investors in Pakistan asked for. We care what's happening with the Crown corporation and the public assets of the people of British Columbia. For all we know, Mr. Laxton's behaviour may be acceptable in Pakistan. It was not, it is not and it will never be acceptable in British Columbia. The Premier claimed to all British Columbians that he had taken decisive action in February, but it is clear today that he took deceptive action. My question to the Premier, who claimed to take decisive action, is: how can you let this man represent British Columbia or B.C. Hydro anywhere in the world?
Hon. D. Miller: All the high dudgeon in the world will not alter some basic facts. B.C. Hydro management has an obligation to protect the interests of the taxpayers who own B.C. Hydro and the interests of the shareholders in this venture. They took appropriate action to protect both those interests, as any prudent manager would if faced with these same circumstances.
G. Farrell-Collins: It is disgraceful that, yet again, a minister of the Crown has to stand up and defend a fiasco of the former minister, who is now Premier. John Laxton lied to the people of British Columbia; according to the Premier, he lied to him. He put his own personal interests ahead of the interests of the taxpayers of British Columbia not once, not twice, but several times, and his activities are subject to an RCMP criminal investigation. How can the Premier justify saying that John Laxton is the right person to go to Pakistan and protect the interests of the taxpayers of British Columbia?
Hon. D. Miller: There are others in the business community who will support the actions taken by B.C. Hydro management. What is outrageous is the utter contempt shown by the member for Vancouver-Little Mountain for this House, and it's typical of the juvenile behaviour we've come to expect from that
Interjections.
The Speaker: Order!
Hon. D. Miller: ...as he, last night in
Interjection.
The Speaker: Order. Excuse me, minister. Our practice in this chamber is not to deal with points of order in question period. We'll deal with that after question period. I think the minister had answered the question. I'll go to a supplemental -- briefly, if you would wrap up, minister.
Hon. D. Miller: The absolutely outrageous behaviour of that member
Interjections.
Hon. D. Miller: ...committee last night, referring to members as liars, then looking at the clock and saying, "I don't care, I'm going to leave this place anyway" -- the utter
The Speaker: Supplemental, hon. member.
G. Farrell-Collins: Hon. Speaker, it's amazing to hear the minister scream like a stuck pig when he gets caught with his pants down.
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All the bluster aside, the Premier fired John Laxton -- the Premier claimed to have fired John Laxton. The Premier said he was decisive; all the members opposite said how decisive the Premier had been. Yet he allowed someone who he himself said may have been involved in illegal activities to carry the B.C. flag in Pakistan. There are ethical standards, and there are ethical guidelines at B.C. Hydro. When will the Premier finally put the interests of the taxpayers of British Columbia ahead of his political hide and ahead of his political friends?
Hon. G. Clark: I want to get the record straight, just for members opposite. I did fire Mr. Laxton from the board of B.C. Hydro; I did that immediately. Information was not given to me; instructions I gave were not obeyed. Actions taken were unacceptable to me and unknown to me. I did take immediate action.
After that action, we appointed the former Social Credit cabinet minister Brian Smith as chair of the board, and we appointed a new minister, who sits next to me today. They had the task, then, of unravelling this complex deal that was unacceptable to me and unacceptable to British Columbians. They are in the process of unravelling it. In the course of getting out of this unacceptable deal, we asked the minister and the board to act in a fashion that protects the taxpayers' investment and protects us from lawsuits in the course of unravelling this complex and, in many cases, sordid deal. They are doing it now; there are investigations underway. There is an interim report; there will be a report shortly. The minister, the government and the board are handling this correctly and appropriately to extricate us in a manner which protects the interests of British Columbia.
G. Farrell-Collins: It's amazing how words of decisive action can turn to weasel words so quickly, hon. Speaker -- wriggle words. Today the Premier said that he didn't know. Once again he didn't know; he was asleep at the switch. Well, he fired the last people because of actions that were unknown to him. Does he intend to fire the new people because of actions unknown to him? And that includes the minister sitting beside him, who he's so proud of, and also Brian Smith, who has orchestrated what appears now to be a report that you can drive a semitrailer through.
Hon. D. Miller: Mr. Speaker, the member's actions, I think, have been clear and have been commented on by the voters, and he always seems to miss the mark.
Let's get back to the fundamental issue of managing B.C. Hydro's obligation to manage in the interests of both Hydro, which is owned by the ratepayers, and the shareholders. They were asked to allow Mr. Laxton to remain. I gave that mandate, a very clear mandate, to the management of B.C. Hydro and Mr. Smith. They carried out that mandate, and I confirm today that they have absolute
M. de Jong: Both the Deputy Premier and the Premier have now mentioned Mr. Smith. I'm glad they did, because it was Mr. Smith who, on April 11, in explaining the decision to divest Mr. Laxton and his family of their interests in this venture, explained it on this basis: "We felt we needed to bring some stability to this project." That's why they needed to be divested.
Well, this morning the Deputy Premier said exactly the opposite. According to the Deputy Premier, it was in order to preserve stability with the venture that Mr. Laxton was required to stick around and continue as a member of the board.
The Speaker: May we have a question?
M. de Jong: Yes, we can. Maybe the Premier can help us out here. Maybe the Premier can explain to
Hon. D. Miller: Throughout this, the opposition has demonstrated a clear unwillingness to listen. SEPCOL is a company with many partners. British Columbia Hydro directly has about a 14 percent interest. Some of the other partners are Pakistani companies. At their request, in order to ensure a successful share
Interjections.
The Speaker: Order, members.
Hon. D. Miller: ...we did not take any action to try to remove Mr. Laxton from the board. That share offering was successful. We did exactly the right thing to protect the interests of British Columbians.
The Speaker: The bell terminated question period about four minutes ago.
Hon. J. MacPhail: I call Motion 40 that is on the order paper. It is as printed, and I so move.
[That, under section 69 of the Constitution Act and sections 3 and 4 of the Statute Revision Act, the Select Standing Committee of this House on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills is designated under section 3 of the Statute Revision Act as the committee to examine the Revision prepared under that Act, and the committee is authorized
- (1) to sit and carry out its statutory duties
- (a) during a period when the Legislative Assembly is not in session, or
(b) during the period after prorogation until the next following session,(2) to advise the Lieutenant Governor under section 4 of the Statute Revision Act of the committee's approval of the Revision and its recommendation that the Revision be brought into force, and
(3) following the adjournment, or at the next following session, to report or make any recommendations to the Legislative Assembly that the committee considers proper from time to time on the matters referred to the committee.]
Motion approved.
Hon. J. MacPhail: In this House, I call Committee of Supply, and for the information of the members, we will be debating the estimates of the Ministry of Forests. In Commit-
[ Page 1348 ]
tee A, I call Committee of Supply, and for the information of the members, we will be debating the Ministries of Employment and Investment; Small Business, Tourism and Culture; and Municipal Affairs and Housing.
[2:30]
The House in Committee of Supply B; G. Brewin in the chair.
On vote 36: minister's office, $432,868 (continued).
W. Hurd: I wonder if I could briefly engage the minister in a discussion, or perhaps a clarification on his part, of the contents of a letter which was published in the Vancouver Province yesterday, under the authorship of the Minister of Forests and the Minister of Environment. If I could
An Hon. Member: And a good letter it was.
W. Hurd: And a good letter it was. I'm delighted that the Minister of Environment is in the precincts at this moment, because he may be able to offer some clarification as well. Just to quote two passages from a letter that I assume he signed, the minister indicated:
"Some media reports have expressed concern that we are walking away from Forest Renewal B.C. nothing could be further from the truth. Furthermore, our government has not asked FRBC to redirect funds to the government. Nor have we, as board members, given instructions to that effect."
Just to get the discussion going, I wonder if the minister can advise the committee whether he stands by those written comments that were published under his signature in the Vancouver Province.
Hon. D. Zirnhelt: Of course.
W. Hurd: Thank you for that clarification. I wonder if the minister can reconcile his position with that of the Minister of Environment, who's in the precincts at the moment. The Minister of Environment, who also sits on the board as a member, talks
"The Minister of Forests was reluctant to say whether he told the Forest Renewal board at a meeting last week if he wanted a portion of the fund returned to the provincial treasury. But the Environment minister, another member of the board, said that was in fact the government's position, that money should be returned from the Forest Renewal fund to the government."
I wonder if the Minister of Forests could clarify, since the letter in the Vancouver Province was cosigned by both himself and the Minister of Environment, which version of events of that meeting we are to accept as being factual. The letter in the Province indicates that the matter of diverting funds was not asked: "Furthermore, our government has not asked FRBC to redirect
Yet the comments from the Minister of Environment seem to indicate that, on the contrary, instructions were provided to the FRBC board. The Minister of Environment, when asked if he supported the notion of a general revenue grab, told reporters: "I did indeed. I looked at that and said I don't know what we are going to do with all this. It makes little sense to me as a publicly elected official to see a bank account sitting there that you are not going to use for other purposes."
I'm wondering if the minister can advise us whether he continues to stand by the version of events contained in his letter to the Province or whether the version of events provided to the public by the Minister of Environment is the correct version.
Hon. D. Zirnhelt: The ministers who signed that letter agreed that that's the truth. I'm afraid the member is probably quoting from a Vancouver Sun article where the reporters tried to twist our words and put it in some context to make it look like these two ministers and the Deputy Premier had in fact gone and said: "Give back $300,000 to $400,000." They distorted it by the way in which the letter was written. I dealt with that in this chamber; I put it on the record in question period. We've now put on the record the version of events that we both spoke to in extensive scrums with the media, and I believe that tapes of those scrums will bear that out.
W. Hurd: It's my understanding that the minister confirmed to the House that the issue of rediverting $400 million or so from Forest Renewal B.C. was discussed at the board meeting in question, and it would have been, I guess, a few weeks ago. I wonder if the minister, as a member of the board, can tell us how the issue appeared on the agenda in the first place. Did it come from his ministry, from the Ministry of Environment or from the Premier's deputy minister, who also sits on the Forest Renewal board? I wonder if the Minister of Forests, as a board member now, can advise us how the topic came up for discussion, since he's confirmed in his letter to the Province that neither he nor the Minister of Environment raised the matter or asked FRBC to redirect funds.
Hon. D. Zirnhelt: FRBC staff brought a presentation on the growing surplus and the business plan of FRBC to the board.
W. Hurd: As a point of clarification, the minister is suggesting that the executive members of the corporation were the ones to propose diverting funds to the government. Is that what I'm to assume from his remarks? Is that where the initiative first came?
Hon. D. Zirnhelt: No.
W. Hurd: I'm just trying to clarify the minister's remarks. He indicated that staff presented a proposal at this meeting. Can I directly ask the minister whether the proposal at that meeting involved a proposal to redivert funds from the corporation back to government? Is he saying that the initiative came from staff of the corporation? Is that what I'm led to assume from his remarks?
Hon. D. Zirnhelt: I'll try again to explain what happened, which is in the letter. The board itself, the staff of the board, brought forward a number of roughed-out options -- just ideas of what they could do with surplus funds and the growing situation of accumulated surpluses, which included information on the fact that we've reached the target early for the cushion, the program continuity fund. There were some options presented. The board directed the staff to go back and come forward with elaborated options for consideration at the September board meeting.
W. Hurd: Just one other point of clarification. When the minister refers to staff of FRBC, who are we talking about? Is it the CEO and the president? Is it the executive members? Since
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there are 120 current employees of this corporation -- I believe that's the number -- can the minister advise us who presented the proposal and what staff members we are dealing with?
Hon. D. Zirnhelt: The president, who is the CEO, and senior staff.
W. Hurd: The opposition notes that the Premier's deputy minister is also a member of the board. Can the minister confirm, as a member of the board, whether or not the Premier's deputy minister ever made a proposal to the Forest Renewal board with respect to rediverting the surplus funds in Forest Renewal B.C. back to general revenue?
Hon. D. Zirnhelt: I don't think there's any secret that the deputy to the Premier, who is a member of the FRBC board, has participated in discussions around the question of the growing surplus of the board and the underexpenditures on the program side.
W. Hurd: I'm deeply troubled by the minister's answer to this line of questioning. He is suggesting, first of all, that the option of rediverting funds back to general revenue came from staff. He has now acknowledged that the Premier's deputy minister, who sits on the board, may have raised the matter before and, I guess, has been addressing the issue of the growing Forest Renewal nest egg at a number of board meetings. Given the fact that the Premier's deputy minister is, I suppose, a representative of the Premier's Office and of the government, what assurance can we have that in fact the initiative didn't come from government -- not from the staff of Forest Renewal B.C.? It would clearly lead one to assume that, in terms of influence on the board, the deputy minister's proposal on this matter would certainly at least influence the executive of the corporation to the extent that they may have been asked by the deputy minister in the Premier's Office to come forward with such a report. I wonder if the minister can clarify that for us.
Hon. D. Zirnhelt: Again, this member is very adept at trying to put words into a person's mouth as he sees it and would like the truth to be -- but unfortunately he's wrong -- and then he asks somebody to agree to that, and I won't. I refuse to accept, for the record, that I have acknowledged that scooping money from FRBC was raised by the deputy minister. If you check the record, I said that the deputy to the Premier, along with other board members over the months, discussed the question of what to do with this growing surplus the board has. There have been general discussions. The board staff has come forward with options, and they have been asked to refine the options, which, we said in the letter, include an option of returning some to the consolidated revenue fund.
We have said everything there is to say about what went on with respect to this subject. The reason the Minister of Environment and I chose to write the letter was as a matter of putting it on the public record, so that no editorial writer -- no one on the staff -- didn't have our version of events in their hands, so they wouldn't be relying, like the opposition is, on what people have done by stringing together facts out of context and trying to string together a different story. This letter denies the story that's there -- that we said that we, as board members, took it to the board. That's not the truth; this letter states the truth. I have nothing
You're getting awfully repetitive. We went through this for a week in question period. It's been the subject of a lot of debate. There's no new information on this. It's all in this letter. If you ask the question again, I'll just refer you to the letter.
[2:45]
W. Hurd: I thank the minister for that explanation.
The minister's letter suggests that: "Furthermore, our government has not asked FRBC to redirect funds to the government." That's what his letter says -- "our government." I assume that to mean the Ministry of Forests, the Ministry of Environment, perhaps the Premier's Office and perhaps the deputy minister in the Premier's Office, who sits on the board. I assume that it refers to all the members of government who sit on the board. I guess the Deputy Minister of Forests also sits on the board.
What the minister is asking the House to believe is that the suggestion that funds should be redirected to the government came from the staff or the executive of Forest Renewal B.C., not from any members of the board who may be government representatives. He's asking us to believe that that report was compiled by staff, with absolutely no prompting or urging from the deputy minister in the Premier's Office, the deputy minister in the Ministry of Forests, the Minister of Forests or the Minister of Environment. If that's his story and he's sticking to it, that's fair enough, but
It's not, with all due respect, hon. Chair, a credible position. I find it almost impossible to believe that the executives of Forest Renewal B.C., Mr. Stanyer and Mr. Smith, on their own, would take it upon themselves to generate such a recommendation or report, given the political sensitivity of diverting Forest Renewal funds and given the commitment that the government made. It stretches credulity to the outer limits that they would, of their own volition, have initiated such a report without any urging or direction from any government member of the board. If that's the last point the minister wants to make on the issue, that's his call, but I would suggest to him that it's not a credible position.
Hon. D. Zirnhelt: I would like to add, as I've said before, that in discussions in the spring -- it's interesting to see somebody over there laugh, when he doesn't even know what I'm going to say -- the Premier very openly discussed the growing surplus issue and what to do with it, and the fact that Forest Renewal was not meeting its program expenditure targets -- and to carefully spend the money. So that was new. There was public debate about that.
But it's interesting that the Business Council of British Columbia in its report on the budget would suggest that one of the options for government is indeed to divert Forest Renewal dollars to the consolidated revenue fund. They didn't say the surplus; they said Forest Renewal revenues. So it's not a new idea. This is not some idea that just popped out of nowhere. There's been discussion about this.
I stand by what's in the letter. We've said this before in the House, and we have said it to the newspapers. The fact that some decided there was a different story
W. Hurd: The minister has written under his signature a point: "Furthermore, our government has not asked FRBC to redirect funds to government." He may be taking a very literal interpretation of that. Certainly the information that I've received, from sources I regard as reliable, is that the deputy
[ Page 1350 ]
minister in the Premier's Office had warned the corporation some time ago that the growing surplus was attractive to Treasury Board in terms of solving budget problems. Obviously those discussions may have been of the nudge-nudge, wink-wink variety. But I think the minister is making a very literal interpretation when he says that the government has not asked FRBC to redirect funds. Maybe they haven't put it in the form of a formal resolution, and maybe it hasn't been a part of the minutes of the meeting, but I am sure the Minister of Forests will agree that if the deputy minister in the Premier's Office has been advising the board in discussions that this is a
Again I say to the minister that he may stand by that version of events -- and I have no doubt that perhaps there is no formal motion on the books -- but I would hope that before the board meeting in September, when I understand the decision will be made, the minister will reflect on what he has written: that the government has not asked FRBC to redirect funds nor have the board members given instructions to that effect. That seems to me to be a commitment on the part of the minister, and I would hope he won't raise the matter then, either.
Hon. D. Zirnhelt: We welcome the Liberal's new-found support for FRBC and are happy to see that finally they have woken up and are championing this program.
I stand by what's written in the letter. It's the truth, and that's the end of it as far as I'm concerned.
W. Hurd: I wonder if I could ask a few more questions about the nature of these board meetings. Can the minister tell us the extent to which the minutes or discussions of these board meetings are available to the public? I know it's an issue that we raised during the debate when this corporation was set up. Is his ministry in a position to release any of these transcripts to the public? I am thinking particularly of the board meeting in September, which we're led to believe will be a momentous meeting as the corporation grapples with this mysterious request for transfer of funds from within its own ranks, one assumes. Now that the minister has clarified it, I wonder if he would be prepared, as one of the ministers on the board, to release the transcript or the minutes of all discussions that occur with respect to this particular meeting, which may well be a critical meeting in the future of this Crown corporation.
Hon. D. Zirnhelt: As an individual member of the board, I won't release anything. What happens is that when the board has confirmed its minutes from the previous meeting, they will then be available to the public. That's done like any minutes: they're confirmed at the following meeting.
W. Hurd: Having dealt with Forest Renewal B.C., I want to recanvass one issue that I believe my colleagues have raised in previous discussion. It deals with the ongoing application of the Forest Practices Code. I wonder if the minister could advise the committee what work his ministry is doing in assessing the cost of implementation. The complexities of implementation
I don't know if the minister has had an opportunity to review some of the articles in the latest RPF Forum, which is a summary of the code application by a number of professional foresters in British Columbia. There is a lot of concern, as the minister knows, about costs, about complexities and about the delays in cutting permits and roadbuilding that have resulted. As we move through this transition period, I wonder if the minister could tell us what work the ministry is doing to identify the bottlenecks and the costs, with hopes of bringing them under some sort of control.
Hon. D. Zirnhelt: We did deal with it extensively yesterday, so let me just summarize briefly for you. There is an executive director of Forest Practices Code implementation in the ministry, who oversees it. There are internal committees in the ministry to identify problems in code implementation. There is a ministry-industry committee dealing with engineering costs. There are interministry committees dealing with the Ministries of Environment and of Employment and Investment. We're on joint implementation, because it involves all three ministries. There are ongoing dialogues with industry, which include an open door for them to send to me, or the ministry, suggestions to streamline the code.
W. Hurd: Earlier in the discussion, the minister indicated that a harvest level of nine million cubic metres under the small business forest enterprise program had been achieved. He also indicated that there was an ongoing review of the program. Can the minister tell us whether the costs of meeting code requirements within the purview of that program are also being reviewed by the ministry? Certainly I'm aware that in incurring development costs for the small business program, the registered professional foresters within the ministry are also required to incur the same additional complexities. Perhaps I can ask first whether the ministry has isolated the costs of meeting code requirements within the small business program and whether he has a figure available to the committee today.
Hon. D. Zirnhelt: I have no figure. The code is hardly up and running. Of course, we are looking at reviewing the costs of meeting the code within the small business program. The answer to the first part of your question is yes; and to the second part, no.
W. Hurd: I have to go back and clarify the minister's remarks. He indicated that the code is not up and running.
Interjection.
W. Hurd: Hardly up and running. I'm really interested in a clarification on that point, particularly as it refers to the small business program. The minister knows the ministry faces considerable costs in this program as it is, because of the plans they have to develop for roadbuilding and the preharvest silvicultural prescription they have to do. The cutblock planning is all done by the ministry.
If what I hear is correct, the minister has suggested that even though the ministry itself will be expected to realize the code requirements, he doesn't know what the additional costs will be. Certainly on the private industry side there's a really rigorous attempt being made to quantify the increase in costs attributable to the code. Is the minister confirming that in fact the small business program is running behind the industry in identifying the costs of meeting code requirements?
Hon. D. Zirnhelt: The small business program is finding the same challenges as the private sector in meeting code requirements. There are changes in cutblock size, higher standards for roads -- all of this. I'd like to remind the member
[ Page 1351 ]
that what we are trying to do under the code is in fact what was purported to have been done in the many, many years of neglect in the forest -- that is, true integrated resource management. Some of those standards couldn't be achieved, and that's why the code came in. There was a request from industry to codify the practices so they knew where they stood, so they knew what the rules were.
W. Hurd: The chief forester has suggested that it may be possible to reduce the impact of the code on the annual allowable harvest to 6 percent. I am aware of some licensees who suggest that the figure might be closer to 25 percent. Within the context of the small business program, what has been the impact in terms of the volume harvested within that program as a result of applying the code requirements?
[3:00]
Hon. D. Zirnhelt: It wouldn't be the small business program itself that experiences a reduction; it would be if the chief forester made a reduction based on the impact of the code. If there's an AAC reduction, then there would be an apportionment decision made by the minister on how the AAC was apportioned. If there's a reduction, it may be that the small business program would be reduced accordingly, but that's not something we have experienced yet. I think the full impact of the code will have to be taken into account in successive timber supply reviews. Those that are completed before the code couldn't have taken that impact into account. We would expect that the small business program will attempt to cut and meet its targets within the same kind of cut control that we'd expect resulting from variations in the market.
W. Hurd: When the chief forester makes an AAC determination, can the minister explain whether he has access to the impact of a code implementation? The minister seems to suggest that the chief forester may not in fact have access to that data. I'm aware that although the impact of the code tends to be site-specific, there are some areas where, because of the sensitive-area designation and the implementation of an overall land use plan, the impacts of the code may be much higher. Could the minister describe to us whether there's an attempt being made here to establish a free flow of information to the chief forester, in terms of not only the ministry's findings on the impact of the code on the small business program but also the experience of other licensees who may be, as the minister has indicated, struggling to apply the code to their own licences? When the chief forester makes his AAC determinations, does he have access to any of the impacts of the code implementation, or is that still evolving as we move along?
Hon. D. Zirnhelt: As the member knows, the chief forester accounts for current management practices. And if the current management practices include the code, then he takes that into account. With respect to the sharing of information, of course he has all the information that is available to the ministry.
W. Hurd: In terms of the ministry's collation of information, then, with respect to the impacts of the code, I'm aware that we passed changes to the Forest Act that require licensees to increase the flow of information and provide more data to the ministry. Is there an organized body within the Ministry of Forests that receives information from the various timber supply areas on the code impacts? Is it vetted through the regional manager, or does it come directly to the ministry? Clearly, as the licensees work through the complexities of the code, there are some areas of timber that will not be economical to harvest or that they'll be unable to harvest. That will, I guess, have an impact on their annual harvest. I wonder if the minister could advise us what the flow of information is and whether there is a real effort being made to collect this information in a timely way in order for us to make a realistic assessment of what impact the code is having on AAC reductions in the 38 timber supply areas in the province.
Hon. D. Zirnhelt: The chief forester makes his determination based on all the information that is available in the timber supply branch. The timber supply branch works with district managers and TFL-holders to get the flow of information in, and it is made available to the chief forester to make his determination. Is there a concerted effort to look at the code? Of course there is.
W. Hurd: In terms of the timber supply reviews that were done in the period immediately after '92-93, when clearly the code wouldn't have applied and the land use plans wouldn't necessarily have applied, can the minister tell us whether those are under re-review by the chief forester? How are the code and the land use plans for the Kootenays, the Cariboo and Vancouver Island being determined as to what impact they're having on those initial timber supply reviews? As the minister knows, we're setting long-term annual allowable harvest levels for the 38 TSAs in the province.
Hon. D. Zirnhelt: The chief forester, when he does his next review, will take all new information, so it depends on where he is in the schedule of reviewing that particular timber supply area or TFL. The district-specific information from any study will be available to the chief forester, and some of these studies that have been done are more global in nature. But if it's relevant, he will take it into account, as he will the higher-level plans and subregional plans that have been brought into effect between his last determination and the one that he's embarking on.
W. Hurd: I assume that the ministry is responsible for collecting the information that the chief forester would ultimately base his determination on. Is that correct to assume? I guess what I'm trying to determine here is the ministry's role in collecting the ongoing data not only from its own small business program but also from licensees who, I guess, are collecting information about the code's impact. I just want to clarify: is the chief forester requesting that information himself? Or is that information flowing from the licensees to the ministry, and then on to the chief forester in some orderly way?
Hon. D. Zirnhelt: Part of the ongoing management practices is to solicit this information on the code impacts at the district level. So operators feed it into the district level; it's then made available to the chief forester.
In addition to this being a part of ongoing management, though, there is a special project in the integrated resource branch dealing with the monitoring of code impacts. I think you're finding not only that the code is a living document that needs change, as necessary, but that the ministries themselves are constantly upgrading their management practices so that they monitor and have essential management information available.
G. Plant: I want to change the general subject, probably significantly, and move into the broad area of aboriginal initia-
[ Page 1352 ]
tives and programs within the Ministry of Forests. There's a number of general headings that the questions I have fall under. Perhaps I could begin, though, with a request to have a basic
Hon. D. Zirnhelt: The ministry is organized to do this. The delivery of all programs is done at the district level, so it's a decentralized delivery mechanism. But there's support to that, because it's a new way of doing business. It's a complex area, as you understand, where there are many ill-defined areas of endeavour, like traditional land use and so on. There is a support group to that in the ministry. The aboriginal affairs branch provides the support. It's kind of a staff function, but it provides support to the districts.
G. Plant: Are the people who are directly members of this branch full-time-dedicated to providing the support in relation to aboriginal affairs? How many people are there in this branch?
Hon. D. Zirnhelt: Yes, they are full-time-dedicated, and the number is 21.
G. Plant: Some questions now about the various initiatives and the funding allocated for them, as well as the staffing allocations. I understand that for the fiscal year that's ended, the government's intention was to spend about $18.5 million and utilize up to 220 FTEs in respect of first nations peoples' initiatives and programs. Is that going to remain constant in the year ahead? Is it going to go up or down? What's the plan for this year?
Hon. D. Zirnhelt: This year the intention is to spend $13.3 million and utilize up to 210.5 FTEs involving first nations initiatives and programs at the branch, region and district levels. So it's at all levels, 210 FTEs.
G. Plant: Doing a quick bit of arithmetic, it looks like there may be a reduction of something in the order of $5 million in program spending here. If I'm right, is there an explanation for that? And if I'm not right, then I hope the minister will let me know.
Hon. D. Zirnhelt: We haven't had a reduction. Perhaps you would quote your figure. We're looking for your figure. But we have constant spending; that's the information I have here. There hasn't been a reduction of any significance at all.
[3:15]
G. Plant: The figure I'm looking at purports to come from a summary briefing note that would be just a bit more than a year old, so presumably was prepared in anticipation of the estimates debate last year. The figure was $18.6 million. It may be that that figure was wrong. Perhaps the minister could have another look. If not, we'll settle for the basic proposition that program spending is constant.
Hon. D. Zirnhelt: As far as we know, the spending is constant. But again, if you want to share something hard about where that came
G. Plant: I want to move beyond that. I might be able to assist the minister later with the particulars that he can't find in his documents. I want now to move on, if it's possible to do so, with the documents that the minister has available to him, to explore a breakdown of some of the particular program activities and initiatives, by reference both to the amounts of funding and the staffing. Is there a line item for treaty negotiations for the amounts to be spent in the current fiscal year? If so, what's the amount and how many people are dedicated to that task?
Hon. D. Zirnhelt: Yes, there is a line item on treaty negotiations; it's $0.4 million, 11 FTEs.
G. Plant: I have to beg the minister's indulgence. I got the 11 FTEs, but I didn't catch whether it was $0.4 million or $2.4 million.
Hon. D. Zirnhelt: The figure is $0.4 million -- $400,000.
G. Plant: The next group I want to ask about are people within the ministry who are dedicated to the task of dealing with interim measures agreements and acting as aboriginal forestry advisers. I want to know, if I can, whether there is a separate line item for that group, and if so, what the amounts and the staffing are in relation to it.
Hon. D. Zirnhelt: The funding for aboriginal forestry advisers and interim measures agreements is $4.4 million, and the resources are 43 FTEs.
G. Plant: There are a series of programs, at least in the document I'm looking at, which appear to be programs underway a year ago. If they are united by a common theme, it may be the theme of proactive steps on the part of the ministry to encourage aboriginal involvement in particular forest sector activities. The programs include something called the native orientation program, the forest worker development program, fire suppression, native unit crew program, and something called the native fire prevention technician program.
I'm about to ask a compendious question. We could do it one at a time, if that's more convenient. I wonder if I could impose on the minister to briefly outline what these programs, each of them, is about and the kind of funding and staffing that's going to be associated with them over the course of the year that we're now in.
Hon. D. Zirnhelt: With the first program under interim measures and aboriginal forestry, those funds go to create liaisons between aboriginal communities and the Ministry of Forests to establish protocol for aboriginal involvement in forestry-related planning processes. That's the figure of $4.4 million I gave you.
There is a corporate initiative for traditional-use studies with first nations. As the member knows, traditional uses are defined amongst those aboriginal rights that have constitutional protection of some sort, albeit poorly defined. The funding there is used for operating expenses of the field and headquarter staff so that we can fund first nations people to
[ Page 1353 ]
deliver this corporate initiative for traditional-use studies. In other words, we have to involve them in the traditional-use studies, and do so through this funding. This funding is provided by FRBC and internal corporate initiatives for inventories.
The forest technician training program is funded at a level of $480,000. There are 20 FTEs involved there. The forest technician training program replaces the native orientation program. This is used for salaries, tuition and operating expenses to support and train 20 aboriginal people in a pilot forest technicians training program. That has been announced and kicked out the door in the last couple of weeks.
The fire suppression vote, fire preparedness, is a native unit crew program which involves 134 FTEs and $3.57 million. That's used to fund 17 crews of 20 members each in full-time provincial firefighting teams. Those crews, the native unit crews, employ aboriginal people throughout the fire season and train aboriginal people in firefighting techniques.
Then there's the native fire prevention technician program, which is $450,000 and nine FTEs. That funding is used to employ full-time fire protection suppression technicians. The technician graduates provide support in fire prevention enforcement and awareness.
G. Plant: In the course of his answer, the minister made reference to traditional-use studies. I understand that funding is provided by FRBC, but either I missed the amount of the funding associated with that, or the minister omitted it. I wonder if I could just pursue that a little further. How much money is being spent to support the initiative of traditional-use studies?
Hon. D. Zirnhelt: The funding for the corporate initiative for the traditional-use studies is $2.2 million, and there are four FTEs in the ministry that deliver those programs.
G. Plant: There seems to be a number of potential contexts in which one could make use of traditional-use studies: in the implementation of the protection of aboriginal rights policy, in interim measures agreements or, perhaps, in treaty negotiations. What are the parameters within which these traditional-use studies are conducted? Is it across the board, or is it just for some specific items in particular?
Hon. D. Zirnhelt: The self-interest on the part of the province, which arises out of our obligations to resource management and our constitutional powers there, are the forest development planning for land use and treaty preparation. You could argue that the interim measure -- small "i," small "m" -- is to involve native people in the forest industry, broadly speaking. But to discharge our responsibilities to them, we need to know that if they don't cooperate in providing information about their rights, we are not absolved of the responsibility to know what those are. When we discharge our forest planning responsibilities, we are aware of their rights on the landscape. But we try to embark on these studies cooperatively so there's a mutual advantage; we are able to achieve our objectives of managing the resource, all the while respecting their rights.
G. Plant: If I understood the minister's answer correctly, the two areas within which the ministry funds the undertaking of traditional-use studies are in planning and in the context of treaty negotiations. So I take it that traditional-use studies, done under what the minister has described as planning, are studies done as part of the development of planning for harvesting operations. That is, it's part of the discharge of the ministry's obligations, in the way that the minister has described them, but it's done in the context of particular planning for particular places, rather than in the air -- if that distinction makes any sense.
I guess what I want to know is whether the ministry is funding the undertaking of traditional-use studies in a way that is focused in relation to particular planning activities, as well as treaty negotiating, or whether there's just some sort of broad project here to fund traditional-use studies as and when people may want them to be done.
Hon. D. Zirnhelt: It's the former, not the latter.
G. Plant: I'm wondering if the minister could now explain how, from an organizational point of view, employees of his ministry participate in the treaty-negotiating process. Perhaps I should just continue by clarifying the scope of that question. I'm not asking right now about participation in the Nisga'a process. I'm asking about participation in the B.C. Treaty Commission negotiations that are underway.
Hon. D. Zirnhelt: Yes, the participation is on an information and analysis basis as support to treaty tables as part of a government team approach. They participate as part of what you might have heard described as the regional government caucuses -- the caucuses of officials who are there to support the treaty processes. The participants are from the branch, regional and district level, so all three levels participate.
G. Plant: Could the minister either explain a little bit more what he means by information and analysis, or at least, alternatively, give some examples of the kind of information and analysis which these individuals are providing in the course of their work?
[3:30]
Hon. D. Zirnhelt: One good example would be analysis of the impact of various land selection models that might be taken to the treaty table.
G. Plant: Are these people also providing technical support in terms of identifying particular forest types and all the technical stuff around what kinds of trees you find where, and that sort of thing? I guess, to put it another way: are these people part of providing the information base within which the negotiations take place?
Hon. D. Zirnhelt: We would provide information in the form of maps, and so we would support interpretations of tables that might be generated, say, under a timber supply review or for some land use planning process that might have been undertaken. Whatever information is out there, they would interpret and be available as a resource to the tables.
G. Plant: I take it that these people are simply there as an information resource, and they are not there as part of the decision-making process that goes on in the context of the negotiations on the province's behalf. Or do I have that wrong?
Hon. D. Zirnhelt: Well, in the development of a mandate for the negotiators, decisions on mandate will come from cabinet, so they will feed information as necessary up through
[ Page 1354 ]
their line management to the cabinet table. Sometimes a question is revealed at the table and they may need some clarification on mandate, in which case they would come back and feed it through the ministry system to get up to cabinet level. But they're not there deciding the mandate with the negotiators.
G. Plant: The minister's answer, I suppose, exposes part of my interest here, which is to understand who's providing the expertise and the insight that leads to the development of the mandate. I understand that the mandate, when it is created, is a creation of Treasury Board. Much as I might like to inquire into that process, I'll not attempt that here.
One of the questions and concerns that stakeholders and others outside the treaty-making process or direct participation have had is with respect to the hierarchy of decision-making and input within the various ministries of government. It's not clear to me if the Ministry of Forests is there simply to assist the treaty teams that are assembled by the Ministry of Aboriginal Affairs by providing technical support, or if the Ministry of Forests actively engages in mandate development and the kind of policy-related stuff that would call on its expertise as the managers of the forest resource. I am not sure which it is, or if it is some other variation of that. I wonder if the minister could shed some light on that.
Hon. D. Zirnhelt: At all levels there is interaction from the executive on down, from cabinet on down. The people behind the table, supporting the negotiators, respond to the Aboriginal Affairs negotiators who lead the process. So they are part of the team, and if there is an impact that has policy implications, then of course they would feed that back through the bureaucracy, and we would try to get a policy clarification or something like that.
With respect to advising on impacts, clearly information about third-party interests would be part of their responsibility too. It occurred to me that that may be one of the interests out there that needs to know that their information is available to treaty negotiations. We ensure that that happens. It would be the responsibility of Ministry of Forests personnel to tell the treaty negotiators what obligations there are on the land.
G. Plant: The treaty process, under the auspices of the Treaty Commission, has moved the parties over the last couple of years -- or the parties maybe have done it all by themselves, I suppose -- with a reasonable degree of dispatch, first through the first three stages, the initial stages, of the six-stage treaty process, which are, generally speaking, process-oriented. If the latest annual report of the B.C. Treaty Commission is right, we are on the verge of quite a number of stage-four negotiations over the next year or so. That will, I suspect, mark a significant change for all the parties involved in each of these negotiations as you move from process issues to the substantive issues. I am sure that from the vantage point of his ministry, the minister and his staff have had occasion to continue to develop the processes that work for this ministry in terms of their participation in and development of the whole treaty-negotiating process.
I'd be interested in the minister's general comment about whether, from his perspective or from the perspective of his ministry, the process is working, and if it's not, about what he'd like to change over the course of the next year or so, and where he sees this going, admittedly only looking from the forestry perspective, in the treaty process in the next year or so.
Hon. D. Zirnhelt: I am sure the member understands that it is a challenge. He has laid it out well. There have been process matters that have been dealt with, and now stage four does present a formidable challenge. Without ramping up and giving a blank cheque to the people who resource these tables, we're going to have to work very smartly with respect to the utilization of resources, and we have devoted millions of dollars to it. As you know, we're cross-pressured in trying to get resolution so we have certainty on the land both for aboriginal people and for other parties on the land. It will be a challenge -- that's the word -- to manage the expectations and the progress that we would all like to achieve with the limited resources we have. But there are far more resources than have ever been spent to resolve these issues. I'm sure you can appreciate that it takes tens of millions of dollars across government to do this, and of course we would like to see considerable dispatch in coming to agreements.
But as I look ahead, which was the invitation -- and I think it's a fair enough
G. Plant: Thanks to the minister for that answer. I want now to turn to the specific case of the Nisga'a agreement. There are a number of forest-related issues that arise in the context of the Nisga'a agreement-in-principle. I note that the Minister of Aboriginal Affairs is taking a keen interest in this debate, and that's fair enough -- I'm sure that's what he was doing.
The first issue I want to ask about is the promise, if you will, by the provincial government, hedged with certain qualifications, to make available to the Nisga'a a forest licence tenure that could have up to a 150,000 cubic metres of annual allowable cut. I have a number of questions about this, and some of them may just bespeak my ignorance on the point. Is it contemplated that this is a licence granted on new ground or that this is a licence that would be made available by, in effect, taking it from somebody else or taking land that is already licensed to some other entity?
Hon. D. Zirnhelt: As most ministers do, they're busy trying to prepare their answer before they've heard the question. I just want to let you know that the Minister of Aboriginal Affairs made a major contribution to this debate. He said that if he had all the resources of the Ministry of Forests, he could settle treaties all over the place very quickly. But I'm not about to let him get away with that.
With respect to the Nisga'a, as you know, any participation through a forest licence in the neighbourhood of 150,000 cubic metres would be from the existing base of cut. It would be under the Forest Act, and the agreement is a side agreement to the treaty. It is not to be constitutionalized, so it's simply under provincial jurisdiction. It's an economic add-on, as we call it.
G. Plant: I wonder if the minister could say what the value of the add-on is in terms of both the potential jobs that might be made available and the gross revenue, if I could put it that way, that would be produced for someone who had a licence up in that part of British Columbia with an AAC of about 150,000 cubic metres.
Hon. D. Zirnhelt: Just to remind the member, we aren't creating another licence. They would have to acquire an exist-
[ Page 1355 ]
ing licence. They would pay stumpage as any other licensee would pay. So it's a question of transfer of rights under the Forest Act as opposed to the creation of a unique form of rights. With respect to the value, that value would be determined by economic negotiations between the parties.
G. Plant: I guess this is part of my lack of understanding of what was intended here. When the minister says -- correctly, I'm sure -- that it's not a creation; it's more like a
What I'm interested in knowing is: is it the intention of the province to put up the money on behalf of the Nisga'a to make the licence available, or is it simply an administrative undertaking by the government to say: "If you want to buy a licence, we'll make it easier for you"?
Hon. D. Zirnhelt: I wouldn't go so far as to say: "If you want to buy a licence, we'll make it easier for you." We would facilitate the purchase, sure. But we expect them to use the cash they have to buy economic opportunities. So they'd use the cash portion.
I used the word "add-on" not in the sense of adding quantum of value, but in the sense of packaging around the treaty environment to make economic viability a reality. If we don't achieve that through the treaty process and through government policy, we aren't going to achieve the social and economic objectives of security for those communities. I hope that clarifies it.
[3:45]
G. Plant: Let me take it a little further to see if I understand it correctly. In the minister's answer, he touched on a theme that he's heard public debate about and I've heard public debate about: what is the overall value of the treaty to the Nisga'a if it's implemented? What is the overall cost?
People begin that analysis by looking at the capital transfer payment, the $190 million. Then they look at the transfer of, or creation of, the land base known as Nisga'a lands and try to calculate what the aggregate cost is or the aggregate value of the lands and the resources that are expected to belong to the Nisga'a after the treaty.
There are people out there who would say that in addition to the land value and the resource value that are encompassed by the value of Nisga'a lands and the $190 million, you should add the economic value of a gift, in effect, of a 150,000-cubic-metre forest licence. What I understand the minister to be saying is that that analysis is incorrect, if I could put it that way, and that that's what the minister meant when he said it's not really an add-on in that sense. It's an add-on in a different sense. Do I understand the minister correctly?
Hon. D. Zirnhelt: Yes, you've understood it correctly. We expect, parallel with discussions at the treaty table, that there are a number of undertakings the first nations will make. I could give you the example of them undertaking to purchase private property -- ranchland -- in order to acquire those rights, that space, because private land isn't on the table. They think they need that to make their future work for them.
So you're right, there is a misunderstanding out there. We are allowing the market forces to determine the value, but it will be money that they spend out of the cash quantum. So that's fixed.
G. Plant: Now let's deal with the second half of the whole Nisga'a AIP thing. If the treaty were negotiated in a final form, in a way that is contemplated by the AIP, what would be the implications for existing licence holders? I'm particularly interested in whether the ministry has undertaken any analyses of the anticipated loss of revenue -- stumpage revenue, in particular -- from what will amount to the transfer of Nisga'a lands to the Nisga'a, lands that currently have some forest tenures on them.
Hon. D. Zirnhelt: The question about the loss of revenues on land that becomes Nisga'a land is part of the ongoing discussions with the federal government on the cost-sharing agreement. Those discussions are ongoing because forgone revenue is something we're discussing with the federal government.
G. Plant: I'm confused a bit by that answer, because I thought there was agreement with the federal government about cost-sharing. I recall that at some point, the lack of agreement on cost-sharing was regarded as a hurdle to the completion of the negotiations of the AIP. So in that context, I'm not sure what it is that's not yet worked out with the federal government. I wonder if the minister could give me a slightly fuller explanation of the problem.
Hon. D. Zirnhelt: Well, I'll try. The cost-sharing agreement has been worked out with the federal government for treaties in British Columbia. What we have to work out is the application of the cost-sharing agreement to the Nisga'a agreement. That work has not been completed.
G. Plant: Would it be correct to say, then, that there is not a specific cost-sharing agreement between the province and the federal government relating to the Nisga'a?
Hon. D. Zirnhelt: I want to bring it back to my responsibilities, which are that we provide analyses to the Ministry of Aboriginal Affairs. So just conferring with my colleague, when his estimates come up, I would invite you -- and he's inviting you -- to pursue it at that time. It's out of the realm of my responsibility.
G. Plant: From his perspective as Minister of Forests -- and sitting in that dark corner -- I take it, then, that what he doesn't know yet is what the cost-sharing agreement is, as it may affect the interests of the Ministry of Forests.
Hon. D. Zirnhelt: When it comes to determining the impact on the forest resource, I'd have to say that there will have to be an AAC determination -- an allowable annual cut determination -- for the Nisga'a land. That's as a basis; we don't know what the impact is.
As you know, AAC determinations are much more broadly based, with inventory data from a random sample which covers a large area, and we don't have the detailed inventory information. But there will be an AAC determination made for the settlement area. The agreement-in-principle for the Nisga'a requires that British Columbia and the Nisga'a use their best efforts to determine what the AAC for those lands will be, because it has to take effect after the final agreement.
What the province intends to do is apportion any AAC impacts equitably across the licensees. If there's any AAC
[ Page 1356 ]
reduction because of a park or any other land use decision, or whatever, it's been the policy of government to distribute the impact equitably. You were asking earlier about impact on third parties.
G. Plant: I want to ask the minister some questions about a different topic. In March of 1995 his ministry promulgated a policy called protection of aboriginal rights. We're about a year and a half down the road from the announcement of this policy. I want to ask the minister for his general observations about the success of the policy to date -- or failure, from his perspective -- and I also want to impose on him to let me know if there is any formal review process or assessment underway with respect to this policy. If so, could he perhaps outline what the basis of that review is?
Hon. D. Zirnhelt: Yes, I'd be pleased to update you. Let me start by a general comment that we're generally pleased with the way the courts have responded to the way in which it implemented our policy. I think it has in fact vindicated the need for the policy. We feel that we've made considerable progress by having that policy in place and managing to it.
Since March of '95 -- only recently, though -- we have initiated an evaluation of the aboriginal rights policy, of how it's going. We're also undertaking an analysis of what are referred to as log-around areas in forest districts, due to aboriginal issues being addressed. Where there was a dispute, the ministry would choose not to log in an area because of that. We're analyzing what the impact of that is, and we're preparing comprehensive cultural heritage resource operational guidelines, which include guidelines to do with culturally modified trees, traditional-use studies -- which we discussed earlier -- archaeological overviews, archaeological impact assessments and cultural heritage overviews. All those are being undertaken to support the policy.
G. Plant: The first thing the minister referred to in the recitation of review initiatives or assessment initiatives was something he called an evaluation. How is that being undertaken? Is it expected to result in a formal review in writing? If so, does the minister anticipate making the results of that evaluation public?
Hon. D. Zirnhelt: Yes. We've let a contract to do this extra work. The process will involve interviews of two districts per region, and the licensees are being invited to participate, as well as first nations. We have the support of the Council of Forest Industries on this initiative.
G. Plant: The minister referred a few minutes ago to something called log-around areas. Does the ministry keep track of or have an inventory of problem areas like this? The question that arises is: how many of these are there right now in British Columbia?
Hon. D. Zirnhelt: I'd like to be clear. The log-around study includes areas where logging has been deferred because of aboriginal issues, but there are other reasons why we might be doing it -- environmentally sensitive areas. It's part of an overall policy, but this is the reason for the study. We're not exactly sure how many are out there.
We do know, though, that the logs are flowing. Come breakup last year, the log yards were full, and they were able to meet the market demand for their timber. We have been getting the timber out, so log-arounds haven't created an overall impact. We do have a substantial amount of cut permits out ahead. It's not as much as industry would like. Anywhere between eight and ten months of cutting has been permitted, so we're managing with these disruptions. As we refine our land use planning processes, we can often incorporate a lot of the same values and needs to do landscape planning that incorporates respect for all the users of the land, including aboriginal users.
G. Plant: I should have asked a question about the evaluation that the minister described a minute or so ago, which he indicated had the support of COFI. Is that going to result in a report that the minister will make public? I didn't quite get the answer to that specific question.
Hon. D. Zirnhelt: That's very clever questioning on the part of the member. Because you've asked, of course it will be public.
G. Plant: That's an invitation to ask questions that staggers me for a moment. Rather than take advantage of it immediately, let me ask about the study of log-around areas, which I understand is also underway. Is it intended that the results of this study will be made public in due course?
[4:00]
Hon. D. Zirnhelt: Yes, the information will be available, but it's a long way from being complete. We don't expect it to be done next month or the month after; it may take a considerable length of time. As I've said in previous answers, this isn't impeding progress out there. There may well be a problem. We're trying to get a handle on it, and we'll feed the problems back either into negotiations -- greater measures -- or into land use planning processes, or we'll deal with the issues. The information will be available when it's completed.
G. Plant: I suspect that the questions I want to ask now are being looked at by the contracting party undertaking the evaluation of the aboriginal rights policy. I'll ask a few of them anyway. Let me ask one compendious question.
The policy has a number of steps that ministry officials are expected to follow during the course of planning procedures to take into account. The first is to identify the existence of potential aboriginal rights and then, if necessary, to take steps to accommodate them -- involving consultation or heritage studies, and so on. There's a process that the ministry says it will go through in order to achieve the objectives of the policy. The policy itself has some time lines for things that have to be done during the course of the policy. When you follow through the time line, you find that the basic intention is that some decision is supposed to be made, roughly speaking, about three months after initial notification to a first nation group that there may be an infringement on aboriginal rights. What is the ministry's experience over the last year and a half with respect to whether or not the time lines in the policy are being met by ministry staff?
Hon. D. Zirnhelt: Well, it's a mixed experience, but generally positive. Sometimes we will negotiate a change to the time lines, but we try to manage to the time lines of forest development planning. In the case of Clayoquot, it's a 60-day period. Considering all the other complex steps in forest development planning, I think it's a reasonable objective to follow the forest development planning time lines.
G. Plant: I was actually not interested in exploring whether the time line was reasonable, which I suppose is an
[ Page 1357 ]
interesting question. I was more interested in exploring what the ministry's experience is in adhering to the timetable it has set for itself in this policy. I'm going to put the question again, if I may, to the minister. This is not a philosophical question about whether or not there is a reasonable time frame here for planning decisions. It's more a question of: how often is the timetable being adhered to?
Hon. D. Zirnhelt: Yes, I did say it was generally positive. In other words, we are meeting the objectives that are set out there. In some cases, we ask for shorter time lines; in some cases, we give them longer. We are permitting millions of cubic metres of wood every year, so that attests to the fact that it is working. I'd have to say that it's a success.
G. Plant: One of the things that is critical to the success of this policy -- I suppose in the long term -- is participation by first nations in the various steps in the process which involve them. I think members of the public who have followed court cases -- at least, some of the early ones -- would be under the impression that there were a considerable number of first nations who were sufficiently uninterested in this policy that they were generally ignoring the ministry's attempts to involve them in it.
I'm afraid it's a hopelessly general question, which you can probably answer with a hopelessly general answer that I'm sure will reflect well on the ministry, but the question is: what is the ministry's experience with respect to actually getting active participation by first nations in the implementation of this policy? Are there places where it works better than others? What are the minister's plans to fix the problem areas?
Hon. D. Zirnhelt: I'm just sitting here hoping that I don't get into a situation where the member opposite knows more about our policy than I know myself. I'm afraid that could happen. He knows what I'm speaking of.
What I could say -- and it's not hopelessly general, because I think there's some truth here -- is that where we've been able to establish memorandums of agreement on process with a first nation, the policy works well. It also works well where we've been able to engage cooperatively in traditional use studies and those kinds of things. Where we've been able to achieve that, the process works well. Where there's a more sovereigntist approach taken, or a litigious approach -- one political, one legal -- it doesn't work well. But even in those cases, as the member knows, the courts are finding in our favour, and I hope that continues.
G. Plant: I want to refer for a minute or two to a publication by registered professional foresters called the RPF Forum. The May-June 1996 issue was largely taken up with a discussion of whether or not this particular policy is working. I am going to take the advantage of reading selectively, but that suits my purposes, and I am sure it will suit the minister's.
One of the writers, on behalf of an industry association in the context of the Cariboo-Chilcotin and the Lillooet areas, says this:
"The largest problem currently faced by licensees is the inconsistency with which district managers have chosen to implement the policy. Currently there are situations where a licensee might consult with a specific tribal council in three different forest districts, and the process of consultation is different for each area because each district manager has implemented a different procedure. This is not only confusing for plan proponents, but it must certainly be cumbersome for the aboriginal groups in question. Consistent application of a process based on the basic legal requirements for consultation is key in order to avoid mounting frustrations. The Ministry of Forests, Cariboo region, is attempting to address this problem by initiating dialogue between licensees and the ministry."
The problem identified here is inconsistency. It seems to me to be a potential inconsistency arising not just because of the possibility of one tribal council with interests in three different forest districts, but also because of the possibility of different tribal councils within one forest district having different needs. Of course, forest companies aren't necessarily well-equipped to deal with that. I'm inviting a comment from the minister on this comment -- whether or not it is in fact the experience of the ministry that there is a problem with consistency.
Hon. D. Zirnhelt: I think it's true that there is a problem with consistency. There have been lots of discussions as to whose responsibility it is to undertake the consultations and in-depth studies. One of the reasons we're doing the evaluation is to try to ensure some consistency.
To put it into some perspective, I don't think that this policy is creating anything near the problems, if I can call them that, with code implementation. For example, if there is a problem getting permits out, there's probably more a problem in learning to live with the code than there is in learning to live with the aboriginal question on the land. So just put it in that kind of perspective. It may not be comforting, but I know from personal experience that that question has been put in the context of land use planning and so on. There are larger issues out there that the professionals have to deal with.
[J. Doyle in the chair.]
Bringing it back to that particular discussion, we're aware of that, we're dealing with it, and the people who are here with me deal with it on an ongoing basis. I think the individual points to a problem that we are on top of. You can be sure of that; I stand here and say we are.
G. Plant: Well, that's reassuring. With that reassurance and all the expectations that it creates, I'll move on to a different subject: the interim measures agreements. I hope to not get caught up in terminology.
I'm not interested today in revisiting the entire history of interim measures agreements and memoranda of understanding as aspects of forest planning in the context of first nations. I'm more interested in getting a bit of a current status report. How many negotiations with first nations are currently underway which are intended to result in interim measures agreements, consultation protocols or memoranda of understanding? How many have been negotiated to conclusion of an agreement over the last half-year or so?
Hon. D. Zirnhelt: We have 11 signed, and nine are being negotiated.
G. Plant: I take it that the 20 agreements or understandings that are encompassed by that answer are under the purview of the Ministry of Forests.
Hon. D. Zirnhelt: Yes, the 20 are Ministry of Forests agreements.
G. Plant: Are the 11 signed agreements publicly available? As to the nine that are currently under negotiation, is the ministry consulting with the potentially affected third parties with respect to each of the negotiations, and is a list of those nine negotiations available to the public?
[ Page 1358 ]
[4:15]
Hon. D. Zirnhelt: Yes, absolutely. We are discussing the nine with the third parties, so I think our intent is to involve them. We have to have an agreement that's workable, and since they're basically process documents, it brings comfort.
I'd just like to add that with these kinds of agreements, along with the policy that we discussed earlier, we're in much better shape than we would be without them, because we would probably find more litigation than we do now.
G. Plant: I wonder if I could explore a couple of aspects of the ongoing negotiations. Part of the task here is to ascertain how the provincial government is spending public money. I guess I'll start with this question: does the provincial government provide funding support for the first nations involved in the nine negotiations that are currently underway?
Hon. D. Zirnhelt: We cost-share this with the Ministry of Aboriginal Affairs.
G. Plant: Under the ambit of the 11 interim measures agreements or memoranda of understanding the minister alluded to that have recently been signed, and under the potential ambit of the nine that are being negotiated, is the province funding traditional-use studies? Is this one place where traditional-use studies are being used?
Hon. D. Zirnhelt: Under an agreement, a traditional-use study might be something they wish to discuss or manage, but the funding for the traditional-use study wouldn't come under this; it will come from some other source. It wouldn't be the same funding as what funds the management of the agreement.
G. Plant: But the other source in relation to other traditional-use studies might include the ministry programs the minister referred to earlier. Am I right?
Hon. D. Zirnhelt: Yes, the two sources are the inventory programs of government -- there's a number of them -- and FRBC has agreed to fund some of the traditional-use studies.
G. Plant: In conclusion, I thank the minister's staff for assisting in answering these questions, and I also thank the minister for his forthright and direct answers.
T. Nebbeling: Although I have some questions on how the aboriginal issue impacts on communities that rely on the resource of our lands, I would like to focus in the next little while on jobs, the inevitable loss of jobs that is associated with the annual allowable cut reductions in the various timber supply areas, and the initiatives by the government to compensate for these losses by a number of programs and initiatives of the ministry.
I'd like to talk about a number of things. The first thing is that there's a clear difference in the analysis approach towards what the real impact of a reduction of an AAC is. Whenever the chief forester announces another AAC, immediately we get reports from the ministry that the impact on job losses will be X number. I would like to know what formula is used by the ministry, by the chief forester's department, if indeed an economic assessment is part of the presentation of the annual allowable cut reduction. What mechanism do you use to establish the loss of jobs related to the annual allowable cut reductions?
Hon. D. Zirnhelt: When the chief forester puts out the documents on which he bases his eventual determination, the socioeconomic impact studies are done. They basically use so many jobs per cubic metre and work from there with a conventionally used multiplier effect. Once that document is out, the public or anyone can challenge the figures and discuss them. I know there are people who make submissions, and from personal experience I know there's a wide variation of commentary. Ultimately, the chief forester uses that information when he makes a determination, because there's often a direction from the minister that will suggest that we want to see as much community stability as the allowable cut will supply.
T. Nebbeling: The number of jobs per thousand cubic metres that you indicated is used as a standard to establish the impact on the job market in any given area. That's different for the coast, I take it, than for the interior. What is the number for the coast and the number for the interior? I have some other questions on the counter-voice of the communities that often comes up with different numbers -- how that correlates.
Hon. D. Zirnhelt: We could try to get some clarification on that for the member, but there's no one number for the coast and the interior. It varies with the timber supply area. I would give you the example of the Queen Charlotte Islands, where there is virtually no manufacturing. The job impact there is quite different than in areas where there is manufacturing. While the job impact across the province may be the same, it has different regional impacts. But we'd be happy to get you the factors that have been used in the various studies that have been done.
T. Nebbeling: I'm a little surprised to hear this, because prior to the election, the Premier announced his target of 21,000 forest jobs. He clearly identified a number per thousand cubic metres; he didn't differentiate between different areas, but in general. So there must be a general number. I think he was going for two jobs per thousand cubic metres. There must be a factor there right now that is easily accessible and shouldn't require a research department to get together to find.
Hon. D. Zirnhelt: As I said in my opening speech, the 21,000 jobs would come from a ratio of 1.7 jobs per thousand cubic metres. We are currently at about 1.4, which is up from the 1.2 we had five years ago in 1991. The difference between 1.2 and 1.4 is about 15,000 jobs. If you go to 1.7, which is a 0.3 increase, that equates to roughly 21,000. It's different with different manufacturing, and when I say we refine this, we take the best available information and refine it down to the socioeconomic impact analysis that's done for each TSA. I'd be happy to provide you with those studies that have been done on the some 46 timber supply areas. You will see that it is only slightly different in the various areas.
T. Nebbeling: I appreciate the offer by the minister to provide me with some of these socioeconomic studies, but I've got a whole stack of them already, and I've gone through them. I know there is a variation in calculating, but I am always surprised to see how low the job impact is when the chief forester presents his needed cuts, be it 10 or 15 percent for '96, and that the communities come up with a much higher number. I'll give you an example, and then I'll move on to the next part of the issues on jobs.
When the cut was announced in the Kingcome, the chief forester announced that the AAC for the Kingcome would be
[ Page 1359 ]
reduced by 25 percent, which represents 400,000 cubic metres. At that time there were approximately 100 real job losses -- primary jobs, not secondary jobs. The industry that looked at the same 400,000 cubic metres came up with a number where it actually created 640 direct jobs and induced another 1,280 -- almost 2,000 jobs in total, but the direct jobs were 640. How is it possible that there is such a discrepancy between these two numbers?
Hon. D. Zirnhelt: I haven't seen the study. It would be very interesting to know if there is a study to back up that estimate, but I would suspect it's different assumptions, and this debate goes on. Whenever we release one of these estimates of socioeconomic impact analysis, industry is saying the impact is more, and you have the conservation community providing data that says it's less. In fact, there was a report released that said we were overestimating the job creation and hence the job reduction.
But I want to give you an example where the impact was actually studied. Your colleague there for Cariboo North knows the area. The AAC was reduced approximately 10 percent after the beetle-kill cut ended in the Quesnel area, but the employment actually went up 102 percent. So it is dynamic out there.
What happens is that a lot of these models are straight-line linear relationships, and they don't take into account that communities, sectors and industries are always adapting. So the worst-case scenarios are rarely achieved. I think it's sort of always a worst-case scenario. Communities have a tremendous capacity to respond. There isn't a community that can't show you how they can create more jobs out of the timber base that's there, and it's usually through value-added or maybe through more stewardship activities on the land.
T. Nebbeling: I do agree with the minister that often it is a worst-case scenario from one side. At the same time, I hope that the minister will agree that the other side often comes with the most optimistic projections. Ultimately, I think we're going to find that the truth lies somewhere in the middle.
One question that comes to mind immediately is: when you start focusing on how to deal with these problems, these job losses, and when you start creating a remedial program around these job losses, are you going for the worst-case scenario, are you going for the middle ground, or are you going for your very optimistic numbers?
[4:30]
Hon. D. Zirnhelt: We will be governed by what the realistic opportunities are for job creation in the particular communities. Take northern Vancouver Island, where 90 percent of the timber flows out of some of those communities. If they can capture a small amount, it will probably provide all the jobs that ever were there in those communities. So we are concerned about something of the magnitude of the Kingcome. We have put the challenge back to the communities and the partners up there, the forest licensees, to come up with some imaginative way to get around it, but a realistic way. They may come up with strategies that will really mitigate or minimize.
You are asking me a theoretical question: do I take a low, medium or high estimate? I could go for the medium, but I wouldn't accept that. I would target the maximum job creation we can get. That's one of the reasons why we've engaged the industry through the forest sector strategy to try to look at what's possible and try to realize that.
T. Nebbeling: That's an interesting point you're looking at. Well, first of all, on your point that if a percentage of the timber coming out of a certain area could remain in a community and that community had the mechanisms to deal with that timber, you could have a remedial effect as far as the job losses are concerned, I agree with you. Then the minister tells me also that he is looking at Kingcome. What are you doing right now in the Kingcome timber supply area that indeed follows up on what you just told me? What will make it possible for the job losses, be they 400, 600, 800 or 2,000 -- whatever the real number is -- to be covered by the initiatives of the government?
Hon. D. Zirnhelt: I can't name you a particular project or a particular plan, but I can tell you that the MLA for that area is taking a leadership role to bring the parties together. The local government in the area, the mayor, is actively engaged in discussions. Forest Renewal B.C. is at the table. The union -- they are mostly union jobs that are affected -- is at the table. The company is at the table. So you have the community, the workers, the company and two branches of government -- Ministry of Forests and FRBC. They're all there, with the local economic development commission, and they've been invited to apply for funding to do the study for what can be done there.
Already there are applications in to Forest Renewal B.C. by the company to employ a number of people. In one I'm aware of, the proposal is out. It would propose to hire 12 people in a particular activity that deals with, I believe, commercial thinning. So already the community is engaged. I'm really happy to report that I shared the anxiety that the member reflects on behalf of the communities in my previous portfolio, two times away, in Economic Development, where we tried to make the resources available at the community level, to look at what's available within the forest sector and what's available outside the forest sector. I don't think it's an option to continue overcutting, because that then will detract from other values, and as you know, the tourism business couldn't thrive if we didn't take into account sustainability, nor could our forest industry survive.
So once we find a definition of sustainability, then we try to optimize the number of jobs that are available. That means as many as we can get out of forestry, as many as we can get out of tourism, as many as we can get out of fishing, or whatever. I think it's going to be an ongoing process, because a lot of the changes that are taking place are structural in the economy; they have to do with a level of investment that's needed, and processes needing to be upgraded so that we remain competitive. We do have high wage rates, which help sustain our communities and our families, and we have the highest standards, we think, in the world -- certainly in the 14 jurisdictions we studied. Those combine to set us on a foundation which -- albeit a high-cost foundation -- is a secure foundation upon which to build, as I say, the optimal number of jobs.
T. Nebbeling: Two points on that response, and then we'll come to my question. During the presentations in the last two days on the forest industry and the need for a reduction in
The point I want to make is that as a band-aid element, every time that this cut has been mentioned, tourism has been thrown in as the alternative, or a potential alternative, to deal
[ Page 1360 ]
with that economic downturn. First of all, I should say, coming from the tourism industry, that I think many who work in the tourism industry will have a problem taking that statement by the minister, because of the lack of real support for the tourism industry, and of the promotion of the tourism industry as an alternative industry and a job-provider, to the extent that it would be effective.
The second point that the minister keeps making is that he's very proud about the fact that we have the highest standards when we look at the 14 other jurisdictions that have a forest practices code. For members who are not aware, when we talk about jurisdictions, we talk about other countries. Coming from Europe -- I know Germany has done its part; I know Finland has done its part; Sweden certainly has done its part -- I can tell the minister one thing: in all these jurisdictions, with all the values that a forest practices code has to be considered for, and all the values that have to be protected -- be it the environment, be it the forest, be it the animals in the forest -- there is one thing that the other jurisdictions have done and where this jurisdiction is really failing, and that is in the value of the people whose lives depend on the forest industry.
I think the forest industry is right now under tremendous pressure, in part because I don't think the people value has been really acknowledged enough and early enough. When we see the pride of the government over the implementation of the Forest Practices Code, I often see also the anger, the fear and the hardship in the communities because people do not know if they have a future. Wives are sitting at home not knowing if the paycheque will come in and put food on the table. They do not know if the logger's child can go to university or to college, because they're not certain that there will be a job. They do not know if they can pay for the loan for the truck which gets the timber out of the forest.
The people factor is very important. Now, we're beginning to focus on that a little bit, but I still don't think it's enough, and I still don't think that what is done is effective. This was really a comment directed toward what the minister stated there.
As we cannot use the Kingcome and the 400,000-cubic-metre reduction in annual allowable cut, maybe we can use another area where we do have some experience, where indeed a cut was implemented. Maybe we can get some background on the consequences of these cuts. I'm talking about Clayoquot Sound. Because the Clayoquot has seen considerable reductions, can the minister tell me how many jobs have actually been lost in that area up to today?
Hon. D. Zirnhelt: The member can say there isn't enough consideration given to the people who are affected. I kind of resent that comment, because, if pressed, he would have to concede that what he'd like to see is short-term overcutting. That would mean not taking into account the children of those people who are concerned today. Getting to sustainability is the best thing for the people today, for the people tomorrow and for generations to come. It is fundamental to the security of communities and families that we look at what is the long-term sustainability of cuts.
The instructions from government are that there are socioeconomic objectives which must be taken into account. If it was strictly about timber supply -- what is a sustainable supply coming from that land base -- the cut in some cases would be lower. I'd like to think about getting to sustainability that takes into account the people in the communities, to give them time to adjust, and where there is time to adjust, the reduction would be much less than what it would ordinarily be. I would like to put that on the record.
Of course it's a concern. I think every member on this side of the House is concerned. They go back and they talk to these people who are working in the woods and whose jobs are dependent on it. We're not in a position to guarantee everybody the same job they've had forever. As I said, there have been big changes in the forest industry over the past decade, where we saw 40,000 jobs eliminated, in large part because of technical change. This government has shown its concern for the interests of everybody by putting into place the forest renewal plan, by making sure that the timber reviews are done and by the programs which are in place to mitigate and to facilitate the change. I think that's a mature and positive approach. It does involve the government in an active way. We're not just allowing free enterprise to determine what happens. They're a partner, but we as government feel there's some leadership, and we put the resources into communities.
With respect to the Clayoquot, I don't have a figure for you here. The Clayoquot is a unique circumstance. It isn't an AAC determination - type reduction. The reductions and dislocation there have to do with a land use decision. The international eye was on this area. We have put a scientific panel in there, and the central regional board is to govern it. This is a constructive alternative to 100 percent protection. The member knows that there was considerable debate. He also knows that we have done what we can to put a training program in there for people while they're waiting for cutting permits to come through, and it's our expectation that there will be a small fraction, albeit a fraction, of the people who work there. There's no question about that. We're under no illusion, and that's why we have agonized through to try to minimize the impact.
T. Nebbeling: The minister complained earlier that another member on this side was putting words in the minister's mouth, and I don't want the minister to do it to me as well. To deal with the people factor when we talk about all these initiatives from government, I never gave any indication that I believe that the only solution is just to continue to cut. I do not concede that. I believe there are many other ways.
What I do feel when it comes to people is that they are very often excluded from the process of dealing with the issues that will be imposed on communities because of government initiatives. The Forest Practices Code is only one initiative, but there are others as well that have exactly the same impact: the loss of jobs. We're going to talk about that later on, so I don't want to do that right now. I think you know where I'm coming from. I'm talking about the spotted owl issue and about the protected-areas strategy.
[4:45]
If you go to the communities of Squamish, Pemberton, Lillooet, Boston Bar, Chilliwack and all the smaller communities in between, and you talk to the people there, hon. minister, I guarantee you there is one sense that they all share. As I said earlier on, that is uncertainty. It is particularly strong because they are kept out of the process that determines how big the elimination of the harvestable working forest will be, to deal with these government issues. It is not something I am trying to make up. It is out there. If you happen to be in an area that does not have these initiatives to deal with, then maybe you don't hear about it, but I am in an area where it happens, and I am confronted with it on a daily basis.
I still want to go back to Clayoquot, because, regardless of the fact that this is a reduction that is not caused for a trad-
[ Page 1361 ]
itional or standard reason, be it an AAC reduction ordered by the chief forester or something else, the fact is that timber has been lost. Part of the working forest has been lost, and with that a number of jobs disappeared. I'm really surprised to hear the minister saying now that he doesn't know how many jobs have been lost, because I believe that number has been in the press a number of times. So I ask again: does the minister have an idea how many jobs have been lost? Maybe that is an easier question to answer.
[G. Brewin in the chair.]
Hon. D. Zirnhelt: I think the member really wants to get in a political debate as to whether or not we should be doing land use planning and
We get sustainability for communities and for workers by trying to get our land use planning in place. With respect to the lower mainland, there is a table there, and never in the history of British Columbia have we had so much participation by so many, to the point of burnout. If we were to have had this debate a year ago, we wouldn't have said there's too much going on, there's too much involvement and our volunteers can't keep up. You can't have it both ways. We have opened up processes, and we have established tables, not just general meetings in one community or another to deal with the issue. We have a table where the various interests are represented, including the communities of the lower mainland, and they have a responsibility to come back to their constituents to talk about impacts of various scenarios. If that isn't happening, I would invite the member to ensure that his community does deal with the impacts and with the representatives on that lower mainland planning committee, because the human impact has to be assessed.
I happen to know from the briefings I've received that there are people talking about mitigation strategies. I think we have to look at the other side of it. If we do nothing with respect to protecting the spotted owl, if we do nothing with respect to setting aside protected areas, we will have continued conflict. What these tables and processes attempt to do is find some general level of agreement.
I think you're talking to the people who feel threatened, but I think if you go into communities, an awful lot of people are feeling very positive about the future of their communities. But you can play on some anxieties, and you can talk about worst-case scenarios. I think what you do is say: "We have some problems. We have to set aside the land use disputes, and then build a secure economy on that. It's going to be tough, but we can live through it. We can work through it. We have processes. We have some options." I think that's the promise of Forest Renewal. We do have tools to mitigate job loss, but we have to keep in mind that there are job losses for other reasons. This is just one more economic problem in which we are asking communities to share in planning for the mitigation.
With respect to the lower mainland, there are going to be job losses if we don't deal with the land use planning issues, if we don't deal with the treaty-making, if we don't deal with the issues in front of us, if we don't get a handle on the timber supply. If we hadn't brought in the Forest Practices Code, we would be the subject of considerable international boycott, and that would result in job loss. In order to deal with it, we have to get our act together, as they say. We have to protect the values in the forest. We have to support initiatives like the Forest Practices Code. We have to say that we can deal with it. There are ways of dealing with it, instead of just dwelling on the negatives. Because there's a lot of positives out there, as I've said. There are 15,000 more jobs in the forest industry than in 1991. They may not be exactly in the same place or exactly in the same industry, but they are there. The Forest Practices Code and land use planning bring with them additional potential for job creation.
T. Nebbeling: I certainly am not trying to have a political debate here. I'd like to state that first. I'm trying to talk about the needs of the people that are affected by the decisions made by the minister's ministry.
The minister is saying a number of things that I don't accept.
Interjection.
T. Nebbeling: I'd like to carry on.
I don't accept them, because I would be insulted if I thought that the minister spoke with knowledge. The fact that the minister is new is the only reason that I accept his making certain statements, as he just did.
When he says that the communities have a right and a way to have input on issues such as the protected-areas strategy through participation on
I was still talking about Clayoquot Sound, and I was still asking the minister for the numbers of jobs lost in Clayoquot Sound because of a reduction in the annual allowable cut. So far the minister has stood up and told me that I'm politicizing this issue. Then he starts talking about the lower mainland. So can I ask one more time: what is that number? And if you don't know the number, then maybe I can give it to you.
Hon. D. Zirnhelt: I don't have a number. I will attempt to get one for the member, but I don't have a number.
T. Nebbeling: I think the number is in the order of 170 jobs lost, and of that number, a group of people have been given training through a program initiated by Forest Renewal funds. Does the minister have any knowledge of this training program?
Interjection.
T. Nebbeling: That ain't much.
With all these great initiatives the minister has been talking about for a while, in trying to convince me that the ministry is very much involved in making sure that the people who are affected by job losses are taken care of -- maybe not
[ Page 1362 ]
by getting the same job, as the minister keeps telling
Hon. D. Zirnhelt: Some people have moved out of the area. Some stay there in the industry or continue to work in the industry. Some are on training for work in other aspects of the industry. Some are working in other aspects of the industry in the Clayoquot Sound area now. To the extent that they have applied for training programs, FRBC has responded.
T. Nebbeling: Yes, some did leave; some found some work; but more than some are out of work. These people, I've been told, have actually gone through a six-month training program and were cut off at the beginning of July. These people are now walking the streets. Are we just going through a routine by giving them an opportunity to train for something, but at the end of the training there are still no jobs available? What is the minister proposing to do today to have jobs at the end of the training program?
Hon. D. Zirnhelt: I can inform the member that the MacKay crew is working from that area; they are working outside the Clayoquot Sound area. The people who were working on those training programs are back on them. It was expected that there would be employment with MacMillan Bloedel at the beginning of July. Those jobs weren't there, through no fault of the government. When the FRBC board became aware of that, they extended the contract, so there is an attempt to give full, year-round employment and training for those workers. If you were to phone those people
T. Nebbeling: Can the minister explain what these programs entail? What have these students of the forest, who are now being put into a new training program, learned in the last six months? What are they learning in that new training program?
Hon. D. Zirnhelt: As we understand it, the basic training deals with computer literacy: some generic kinds of computer skills that can be used to diversify and to leave the industry, as some of them get a little bit older. There is training for watershed restoration work and forest renewal work. Those are the basics of what they're being trained for.
T. Nebbeling: Are we talking about 25 people right now? One crew is gone, so the number of students of the forest has been reduced. It is about 25 people, I believe.
Hon. D. Zirnhelt: I'd be happy to get that detail. We don't have every detail about every program, but I've asked for somebody to bring that information. I think it is in the neighbourhood of 40.
T. Nebbeling: It's interesting that the minister said that these students of the forest, as I like to call them, are in general older students. I don't think we are talking about 20-year-old individuals; we are talking more about 35 to 40 years of age.
Part of the program was to become knowledgeable about watershed restoration -- I believe he just told me that. Forest Renewal B.C. stated in their application procedures manual this year -- and I am reading a part of the manual -- that they were not accepting any watershed restoration projects in the Pacific region for 1996 because of lack of staff to administer the projects.
I think it is pretty bad when, in the second year of Forest Renewal B.C., they are already eliminating one of the major mandates that was stated under the Forest Practices Code: the restoration of watershed. They are training people for six months who are ready by July, because that was the end of the study program. At the same time, they are not accepting any watershed restoration projects. Why even bother getting these people into an education program, unless it is -- like I said earlier on and, as I suspect, in many cases -- a band-aid to keep people off the street and pretend that they are gainfully employed or studying to become gainfully employed again?
[5:00]
Hon. D. Zirnhelt: It's hard to take criticism of the forest renewal program from a member whose party didn't support the program in the first place; that's really hard. You take your role of criticizing what a government that is socially responsible is doing, and try to pick it to pieces. In fact, this time I'm happy to inform you that you have kind of struck out. I'd like to say that while we're accepting no more new applications, there are already applications that have been approved and some that are in the process of application. What appears on the simple surface isn't always what's true in fact.
There are projects approved and there are tens of millions of dollars being spent in the Pacific region. There are lots of projects that have been approved this year that will roll out this year and next year. I am really hopeful, and I'm sure you'd be supportive of matching those people with those projects. We just have to find the mechanism to do that, and we just happen to have brought in a bill that will help us to do that -- Bill 12.
T. Nebbeling: I think the minister actually tried to throw in a political statement when he said that we, as a party, have not supported Forest Renewal B.C. What we did support, however, was the idea of collecting an additional stumpage fee from the forest industry and taking that money and returning it to the communities where that money was collected, so that the communities could actually become partners in this exercise of creating sustainability not only for the forest but for the communities and for the workers -- economic and social stability. We don't agree with the government taking the money and pretending to be very cautious in spending it. What we see happening now is what we feared then and stated as a party: that once that fund was built up, it would most probably disappear into a direction that had nothing to do with forests. That is exactly what we see happening. The papers are writing about it every day: "Forest Renewal funds, up to $400 million, to be considered for going into general revenue, to offset deficit." That is what we feared then, and that is what is happening today. Had the government listened to this side and accepted the concept of letting communities run the funding and manage the funds, then we would have had effective use of that fund. That would have been supported.
I'm happy to have been able to make that little statement. I certainly have more questions than this, but I think I'm going to ask my colleague to take over, as he also has some questions to ask the minister.
M. de Jong: I was listening with interest earlier this afternoon when the debate tentatively turned towards the
[ Page 1363 ]
issue of Forest Renewal B.C., the manner in which that entity operates and, more particularly, the designs -- if any -- that the government has on the accumulated funds presently within that entity's control. I should say that my hope at the time was that we would hear some responses that would preclude what I felt would be the need to ask further questions. That is not the case. In fact, what I did hear has prompted me to think of additional questions, because I don't think we received anything approaching the level of clarification we require.
Hon. Chair, I wonder if I can start by asking the minister what his concept and notion of the function of the FRBC board is. He can talk about mandates, but what is his notion of what the purpose of that entity is?
Hon. D. Zirnhelt: The board's responsibility is to deliver on the mandate, the objectives and the funds under Forest Renewal.
M. de Jong: That mandate is laid out in some of the legislation, but what I want to hear from the minister, in his words, is the function he sees for that collective, for that board. It's there to service people in the communities that rely on the forests, presumably. I want to hear from him what he sees as the function of that board in that respect.
Hon. D. Zirnhelt: I have already answered that question.
M. de Jong: Can the minister indicate who presently sits on the board?
The Chair: Hon. member, we have canvassed this significantly and extensively with other members, so the minister may wish to have some other questions addressed to him.
M. de Jong: I would ask the minister this: when specifically did he become a member of the board?
Hon. D. Zirnhelt: I don't have the exact date of the order-in-council, but it was just before the last meeting.
M. de Jong: The last meeting that the minister is referring to was July 11, as I understand it. Is that correct?
Hon. D. Zirnhelt: I believe that was the date, yes.
M. de Jong: Would the minister indicate, if he can, who sat on the board as cabinet representatives prior to his appointment?
Hon. D. Zirnhelt: Immediately prior to me, it was the Minister of Forests, the Minister of Environment and the Minister of Highways.
M. de Jong: The minister indicated earlier this afternoon that he attended one meeting; he has, I think, indicated that that meeting was on July 11. Is that the fact, that he has just attended the one board meeting?
Hon. D. Zirnhelt: That's correct: one board meeting.
M. de Jong: Can the minister indicate in a general way how these meetings are conducted, where they take place and how often they take place?
Hon. D. Zirnhelt: Typically, these board meetings take place in Victoria or Vancouver, although occasionally in other communities. They meet as a rule every second Thursday, although they do miss August.
M. de Jong: Every second Thursday. Are the meetings, or portions of them, open to the public? Or are they in camera meetings?
Hon. D. Zirnhelt: They're not open to the public.
M. de Jong: Can the minister indicate to us the process by which an agenda is set for the meeting? Who sets the agendas for these biweekly meetings?
Hon. D. Zirnhelt: The chair, the executive and the staff set the agendas.
M. de Jong: Am I correct in assuming that any member of the board, if he or she desired an item to be placed on the agenda, would refer the matter to the chair or executive director, and that's how it would find its way onto the agenda?
Hon. D. Zirnhelt: Yes, I believe that would be the procedure.
M. de Jong: Has the minister, either prior to the meeting he attended or in anticipation of a future meeting, requested that an item be placed on the agenda?
Hon. D. Zirnhelt: No. And I'm enjoying the fishing expedition.
M. de Jong: Maybe I should confirm this, as well: the next meeting is scheduled for when? Is it in September?
Hon. D. Zirnhelt: It will be the second Thursday in September.
M. de Jong: Are the agendas for past meetings available to the public?
Hon. D. Zirnhelt: I've explained before that the minutes of the meetings are available once they've been confirmed, so presumably with the minutes will go an agenda. I see no reason why they wouldn't be available.
M. de Jong: Is the minister, then, in a position to undertake to provide copies of the agendas for meetings that have taken place during the last 12 months?
Hon. D. Zirnhelt: No.
M. de Jong: Now I'm a bit confused. The minister has indicated that he doesn't see why they wouldn't be available, and in the next response he says that he's not in a position to make them available. Maybe the minister could clarify that.
Hon. D. Zirnhelt: If the member had been listening to the debates, he would know that you would make the request of the board of the FRBC -- of the executive director, CEO or chair of the board -- and they'll be made available after the minutes have been confirmed.
M. de Jong: I'm asking the minister if it's his position that agendas for previous meetings should be available to the
[ Page 1364 ]
public. I think he said his position was that they should be, but he goes on to say that he can't, as the minister responsible, guarantee that they will be. Am I hearing correctly?
Hon. D. Zirnhelt: I'm not sure what you're hearing, but what I'm saying is that if you want the minutes of a meeting, which probably include the agenda, they're available from FRBC directly. They don't need to be made available through my office.
M. de Jong: The minister, I understand, attended his first board meeting in his capacity as a board member on July 11. Was the question of rebating money to the province raised then?
Hon. D. Zirnhelt: I've said all I intend to say on it. Our position is in the public. The Minister of Environment and I signed a letter to the paper, and it's crystal-clear what our explanation is.
[5:15]
Hon. M. Sihota: Hon. Chair, may I have leave to make an introduction?
Leave granted.
Hon. M. Sihota: Hon. Chair, attracted by this scintillating debate, riveted by this cross-examination and visiting the gallery today is the former leader of our party, Mr. Bob Skelly, joined by his wife, Alexandra. Wearing those shades will not result in him not being noticed. Could all members please give him a warm welcome?
M. de Jong: The minister has the option of not answering specific questions, but I have the option, I think, of asking them. The question I have relates to the reports we read. When the minister says that it's crystal-clear, I hardly think it's crystal-clear when you've got one minister of the Crown reported as saying one thing and another minister of the Crown reported as saying quite the opposite. The explanation the minister gives now -- and I heard that earlier this afternoon -- was that he and his colleague the Minister of Environment were misquoted. That hardly qualifies in my books as a crystal-clear explanation of what took place.
The minister was in attendance on July 11, when the issue of what he terms a rebate to the government came up. My question to him is: how did that issue arise? Was it an oral presentation? Was there a memorandum, a written proposal?
Hon. D. Zirnhelt: As I explained for the public record before, and therefore for the press to report any way they wanted, we clarified -- I say it's crystal-clear -- that neither the Minister of Environment nor I took the idea of taking $300 million or $400 million, as was quoted in the press, and returning it to general revenues. What I did say to the board in some general comments, which I've said here publicly, is that there is concern over the accumulated surplus and about the delivery, and that the government is undertaking a program review. All of this is crystal-clear, and I have just reiterated that. Earlier today, I made that clear in my explanations, and I think we're going over the same ground we went over before. I actually left the meeting to come back to the Legislature before any discussions were concluded on that subject. The subject was what to do with the fact that they had achieved their objectives with respect to setting aside a cushion and trying to deliver on the program objectives, and what to do about accumulated surpluses. That was the nature of the discussion. As I've said earlier, the staff of the board introduced into discussion, as I understand, a number of options, and were told to go back and work on those options.
M. de Jong: That's all very interesting, but the question really was: was there documentation presented in support of some of the options that the minister has just referred to? Were memoranda dealing with the issue presented to other members of the board?
Hon. D. Zirnhelt: There was an oral presentation by the CEO.
M. de Jong: Can the minister then confirm that, prior to his departure from the meeting, there would have been no documentation tabled in support of the presentation made by the CEO?
Hon. D. Zirnhelt: I saw no documentation.
M. de Jong: Has the minister seen any documentation of that sort since?
Hon. D. Zirnhelt: No.
M. de Jong: I'm having a bit of difficulty accepting that there were discussions relating to the possible transfer of a significant amount of money, literally hundreds of millions of dollars, and the minister is saying that at the meeting where that very subject was discussed, and since, he has seen no documentation in support of that sort of proposal -- or that option, as he puts it. Is that what he's saying -- that this is all going to occur and has occurred to this date on a purely verbal basis?
Hon. D. Zirnhelt: I'm not aware of any, but I would expect that the directions were for such to be prepared by the staff.
M. de Jong: The minister is suggesting that perhaps such documentation exists, and he hasn't seen it. I guess my question to the minister is: as the minister responsible for this agency, does he think perhaps that should be a priority for him, when the possibility, at least, of transferring significant sums of money from that entity is being discussed? Does he think he should be somewhat more diligent in determining whether or not that documentation exists and possibly reviewing it?
Hon. D. Zirnhelt: I don't think this minister has to take any lectures on diligence from the member who spent a week in an accusatory manner toward this member, assaulting his integrity.
Interjection.
Hon. D. Zirnhelt: Yes, that member. And he's proud of it, I'd have to say.
The question of diligence around this would be this: I'm aware that the board has asked for work to be done on options to deal with the accumulated surplus and with the fact that they are still ramping up their program expenditures. In other words, a review of their program is being conducted, they're
[ Page 1365 ]
looking at options, and I would expect that there would be some kind of formal presentation. I don't know what the nature of that presentation will be, but the staff have been instructed to come up with options. I would expect there will be some documentation at the meeting in September.
M. de Jong: The minister is an able politician and, I'm sure, wouldn't have allowed himself to be placed in a position where somewhere down the road, evil-spirited opposition MLAs like myself could suggest that he hasn't done everything within his power to protect that agency, which is within his jurisdiction. With that in mind, maybe I could ask the minister whether or not he has checked minutes and agendas of past meetings to determine whether the issue of rebating moneys -- and I use that term because it's the term that he has used in the past -- to the government has been discussed at previous meetings.
Hon. D. Zirnhelt: I have no reason to check for that, because it was my understanding -- and I take the explanation that was given -- that it was discussed around other subjects, like accumulated surplus, the business plan, and that sort of thing, in conversation at one or more board meetings.
Interjections.
M. de Jong: Well, I'm going to ask the minister, only because I'm now intrigued, given some of the mixed signals that seem to be emanating from across the way: can he provide slightly more particularity with respect to the nature of his knowledge of the context within which those discussions took place at board meetings previously?
Hon. D. Zirnhelt: I don't think those discussions are germane to the estimates that are before us.
M. de Jong: I beg to differ, hon. Chair, when we are discussing the budget for this ministry and the Crown corporation which falls within this minister's jurisdiction. If the minister doesn't want to answer those questions, let him say so. I will suggest to him that the relevance of the question is clear. He may not have the information; then let him say that.
Hon. D. Zirnhelt: I do consider it relevant that we discuss the objectives of Forest Renewal B.C. and the challenge it has in meeting the objectives we set out, which are manifold. We're happy to discuss the objectives of FRBC and how they intend to achieve their objectives. In so doing, I hope we get into a discussion about the purpose of FRBC, which is to return moneys to the regions and to reinvest in the renewal of the forest, and to do that in the most proficient way they can. The board is charged with the responsibility to do that. And yes, they do report their business plan through me as the minister, and I will table it when I have it available.
M. de Jong: Does the minister agree that the ability of this agency to fulfil and deliver on its mandate is perhaps related somewhat to the funds that remain within its accounts?
Hon. D. Zirnhelt: Yes, it is.
M. de Jong: Well, maybe we can cut to the chase on this point, at least. The minister has spoken reluctantly -- and it was reluctantly. Maybe I should ask the minister
Hon. D. Zirnhelt: The purpose of what?
M. de Jong: For four days, as I recall, the minister was asked questions about whether or not the issue of transferring funds out of Forest Renewal B.C. had been discussed. He's an able politician, and he offered all kinds of cutely packaged answers about how the objectives of the Forest Renewal B.C. program would be respected and delivered upon. But he wouldn't answer the fundamental question. Purposely, he wouldn't answer the fundamental question about whether the discussions about the transfer of funds out of Forest Renewal B.C. had taken place when he knew they had and when he knew that that was the question people wanted answers to. Why was he reluctant to provide a straight answer to that simple question?
Hon. D. Zirnhelt: I did provide a straight answer to the question. The question was about whether or not some money was to be transferred and whether the government directed that. In fact, no, the government didn't direct that that happen, and I've clarified it for people so they know exactly what happened. We did say that the subject of surpluses, the subject of achieving the
The question is: how is FRBC doing in reaching its mandate? Those are what the discussions were about. If the questions were on that, that's what I answered the questions on. If the questions were about whether the government directed the FRBC board -- which was implied by the line of questioning -- then the answer is no. The government didn't direct it. I've now put that on the record, just in case there was a lack of clarity. I answered all those questions with the press, and I answered the questions forthrightly here. I stand by what the written record is.
[5:30]
M. de Jong: Of course, that's the only portion of the written record that the minister agrees with, because he has already indicated that either he or the Minister of Environment has been misquoted. I presume, therefore, that he doesn't count that as a part of the reliable written record he depends upon in defence. It is a selective written record. The minister and I can differ about which portions of the record we want to rely upon, but his suggestion that this issue is crystal-clear in the minds of all parties just doesn't withstand scrutiny.
The minister always returns to this question of surpluses, and he talks about the fact that discussions took place regarding what would happen to the surplus of funds. Could the minister define for me what he means by surplus?
Hon. D. Zirnhelt: It's this member who keeps returning to the question of surplus. When I use the word "surplus" in this context, it means the difference between achieving the expenditure objectives of the business plan, which include a
[ Page 1366 ]
program continuity
M. de Jong: Here's the difficulty I'm having. I sat here on June 15, 1994, when the now Minister of Finance said, in defence of creating this
Hon. D. Zirnhelt: It has become obvious to the board that they aren't able to achieve that level of expenditure over the first five years, but it is the expectation that over a five-year average, when the program is up and running, they will be able to spend in the order of $400 million a year. That's the target level of expenditure. So for simplicity's sake, that was seen as, over five years, $400 million a year. If you ask if it was a mistake that we thought they could be up and running and spending $400 million the first year, then that was right; that must have been overly ambitious. It became clear to the board that they couldn't reach an expenditure level of $400 million in each of the first five years.
M. de Jong: But by that definition, by virtue of the minister offering that explanation as the reason for the shortfall in expenditures, he must necessarily agree that the unexpended portion of the funds don't represent a surplus -- by that standard. The undertaking given at the time was such that $2 billion would be spent over the course of five years. It hasn't been, and now, magically, that qualifies those unexpended funds as a surplus. By the minister's own twisted logic, I don't see, hon. Chair, how he can defend that contention. But here's his chance.
Hon. D. Zirnhelt: The board undertook to spend wisely, and the board has determined that they can't wisely spend $2 billion in the first five years.
M. de Jong: Just prior to the date that the now Minister of Finance stood up in June 1994, on April 26, 1994, the now Minister of Social Services, who spent a brief and destructive period of time as Minister of Forests during the halcyon days of budget projections earlier this year, had this to say:
"In the first five years this plan will invest some $2 billion directly into forest renewal. This money will be dedicated, by law, to the forest workers and communities. That money can't go someplace else. We won't let the Liberal opposition tell us to spend that money on goodies in their ridings. That's going right back into the forest industry, where it belongs."
Everything I have heard from the minister to date suggests that the member for Mission-Kent, now the Minister of Social Services, was mistaken when he said what he said back in April 1994.
Hon. D. Zirnhelt: I think it was clear that the intent was to try to achieve a level of program spending of $400 million a year. What has been revealed since is that clearly this is more than a five-year project. It's going to be an ongoing program. I would say that when it's up and running, over any given five-year period, the resources will be there to achieve something like those program targets. The money has to be spent wisely. It has to be spent on the purposes that have been defined, and right now there's quite a debate raging as to whether or not we can wisely spend the $400 million a year. The question, then, is: if you can't spend it wisely, what do you do with the money? As I have freely admitted, that has been the discussion around the board table: how do they achieve the objectives that have been ambitiously set for them by government?
M. de Jong: We all talk about accountability in government; it's become something of a catchword around these precincts. I'm going to put it to the minister that by virtue of all that he has said in defence of what has taken place around the FRBC board table and what will undoubtedly take place in the weeks and months to come, when the member for Mission-Kent promised that the first $2 billion that was received by FRBC over the first five years of this program would be dedicated to forest workers and forest communities -- that when he made that promise on April 26,
Hon. D. Zirnhelt: Was there a question there?
M. de Jong: Let me preface it with a question: does the minister agree with me that that now -- for, minimally, the reasons he has articulated -- represents a promise unfulfilled?
Hon. D. Zirnhelt: I would say that the promise to expend $400 million a year, over a five-year average, when the program is up and running, would seem to me to be a promise. How it was
We have a very good, conscientious board, and they are pushing the edges of unwise spending if they flow more dollars out than are there. They have determined that what is necessary for the long term is a program continuity fund of approximately $400 million. That was in their business plan last year. In response to the overall direction that government has given, the board has come back and said: "We expect to take longer than was intended to get to a program expenditure level of $400 million." It will be approximately $400 million in a continuity fund that we would like to have there -- a rainy-day fund. Beyond that, they have identified something surplus to that. So the board has been asked what they can do with respect to the surplus. The board has asked its staff to come up with options.
I have to say that my colleagues and I. . . . I spoke about this program. I'm very proud of the program, noting that the Liberals voted against it and now seem to be championing this particular program. I have to say that this government initiated it in good faith, given the limits of our ability to ramp up spending, and that we intend to meet the program expenditure objective of $400 million a year on a continuing basis. In years when the revenues don't reach $400 million a year, there will be a rainy-day fund they can reach into.
I hasten to add and remind the member that the revenues have been in excess of what was projected as well. We projected $400 million a year in revenues and $400 million a year
[ Page 1367 ]
in expenditures. In the very first year, revenues were higher than that, and they have been higher than that, I believe, on two occasions.
M. de Jong: Well, we won't even get into the revenue game because, on the one hand, Forest Renewal revenues are higher than they were anticipated, and Ministry of Forests revenues, on the other hand, are lower than anticipated. That all is the subject of discussion, when we talk about the budget.
The minister expressed some confusion -- and again, he's a very able politician and went on at some length, I think, to purposely deflect the focus of the question. I don't want there to be any confusion, so I'll make the reference a specific one. On April 26, 1994, reported at page 10272 of the British Columbia debates, the member for Mission-Kent said: "In the first five years this plan will invest some $2 billion directly into forest renewal." That was not an averaging; that was not a statement of general principle. That was, I think the minister will agree, a promise to invest $2 billion in the first five years. Does he agree with me that that is a promise unfulfilled?
Hon. D. Zirnhelt: No, and I suggest you can ask the minister himself about that.
M. de Jong: Is the minister then saying that he expects and is indicating that $2 billion will be spent in the first five years?
Hon. D. Zirnhelt: The latest indication in the business plan from Forest Renewal B.C., which targets that, is that they won't reach that objective.
M. de Jong: Leading to a return to the original question: does that statement, the promise that was contained in that statement -- and others by other members of this cabinet, by the way -- represent an unfulfilled promise?
Hon. D. Zirnhelt: No.
[5:45]
M. de Jong: Why not? There's a promise to spend X number of dollars. The minister and I have gone about an hour now during which he's explained to me why that's no longer possible, and when I put a very simple proposition to
Let the record show that the minister wouldn't answer a point-blank question about a broken promise. It was a simple, straightforward question on a statement made by the now Minister of Social Services and by the now Minister of Education. The now Finance minister made a similar promise, a similar undertaking, when he was selling the deal. It isn't happening, it apparently isn't going to happen, and the minister refuses to acknowledge that it's a broken promise. An undertaking given at the time the program was being sold just ain't happening.
Before I leave the subject, hon. Chair -- and we've danced around
The question I have for the minister, who is a member of the board, as the minister responsible, is: when the discussion does take place, as apparently we're told it's going to, what's his position? Does he believe that those funds should be taken?
Hon. J. MacPhail: Future policy.
M. de Jong: I hear the Government House Leader talk about future policy. It's not future policy when we're talking about this year's budget and the revenues that are accumulating and that remain within that agency. It is far from future policy.
Hon. D. Zirnhelt: I beg to differ. It is future policy, but that's not the question. The question is: what is the money there for? What is the promise of Forest Renewal? The promise of Forest Renewal is that we reinvest some of the money that comes back, because there is money that is
Interjection.
Hon. D. Zirnhelt: Well, the members don't have full knowledge. I know the member for Cariboo North sees this as his education. He could do a little more research, and he would know that there's some money taken off -- he shakes his head, but he will remain forever ignorant if he does that -- for the administration of the program; it goes into consolidated revenue. That was always part of the original promise. So some money from Forest Renewal stumpage goes into general revenue.
We promised to spend wisely; we promised to develop an agency that has the full participation of the partners of Forest Renewal; we promised to develop programs that would put money back into the communities. We promised money that would go into economic diversification; we promised workforce development within the industry; we promised research. We made many promises, and we are working at keeping those promises.
The member knows how cynical the people will be when they understand that he's now trying to champion this wonderful agency that has an embarrassment of riches at the moment, when he knows his party didn't support it. They didn't support it -- how cynical that is! You have to admit that is the most cynical kind of support for a program: to vote against it when he had a chance to support it -- vote against it and then pretend that somehow he's the champion of the people. Members of his party say: "Don't spend it on environmental restoration. Don't spend it on the communities." I can quote his own member, the member for Surrey-White Rock,
[ Page 1368 ]
who says it's not right to spend it on the value-added industry and on communities. Now we hear that these people somehow, through the election campaign, when they found out that Forest Renewal was popular with the people, became the champions -- and we welcome that. We welcome the opposition into the fold of Forest Renewal.
M. de Jong: The minister talks about cynicism. We can walk down the path together to the point where it is abundantly clear to the whole world that the government hasn't fulfilled its promise, and the minister won't take that last step that says: "Yes, we broke a promise." He won't take it, and he talks to me about cynicism. It's very difficult to take him seriously, quite frankly.
Interjection.
M. de Jong: The Government House Leader is showing a second wind here that we missed through much of the afternoon.
The minister referred to this as future policy when we talked about the accumulated moneys. Let me put this to the minister in the past tense. He's already attended a meeting where this has been discussed. He's already been part of that discussion, at least for the part of the meeting that he was at. What was his position at that point, when the issue about removing moneys from the FRBC fund was canvassed? Was that an option that he was prepared to consider and is considering -- past and present tense?
Hon. D. Zirnhelt: I'm happy to indicate to you again, which I've done many times, the position I took. The position was that the public of British Columbia are concerned about the delivery of funds. Some want more spent on forest renewal in their communities. Some want to make sure it's spent wisely. There's a debate around appropriateness. I said there's concern about that, and I indicated that with an accumulating surplus, the public would be concerned about things like debt management, balanced budgets -- those kinds of concerns. That's part of the context in which Forest Renewal has to consider this accumulated surplus.
Let me make it clear to the member opposite that the partners who created Forest Renewal -- and government was one of them -- are reflected on the board of Forest Renewal. The board has been charged with delivering on that notional promise of spending $2 billion over five years. I would say to you that that board has not achieved that objective in the first five years; they have not delivered on that hope. But it is the full expectation -- a requirement -- of this government that, if it's humanly possible and if it's fiscally
G. Wilson: Noting the hour, I have a couple of very brief questions that I want to put specifically to the minister. One of the
An Hon. Member: What a sellout!
G. Wilson: I'm hearing: "What a sellout!" It's interesting that the Liberals take the position that the FRBC money, it would appear, belongs to the major forest companies. That's wrong. Those dollars that are generated from FRBC are made off the public forestry and should go back into reforestation programs but also should go into watershed management, watershed restoration programs, and so on. The jobs that are being created -- and there are
My question is this: to what extent is the minister prepared to designate dollars on a first come, first served basis to local employees? We had a bill that came in here, which I sought to amend, that put together an opportunity for those moneys to go on a local-hire basis.
Interjection.
G. Wilson: I know that the member for West Vancouver-Garibaldi has had lots of opportunity to get into this debate. If he could just offer the same courtesy to other members, that might be useful.
To what extent is the minister prepared, at this point, to look after those local-hire opportunities? There's a real concern that if the major forest companies get their way and those dollars are deemed to belong to them, much of the work that will be done will not in fact serve local communities to the extent that it might otherwise have done.
Hon. D. Zirnhelt: Let me answer this question this way: we expect to return the resources to the local communities in the form of project approvals. As far as I am concerned, the local plans that can evolve from all the partners in a local region will give advice as to who should be employed. I know that local communities would like to see, to the extent possible, local people hired to do those jobs. I think that's an underpinning of the program, and I support that. I supported that debate here. We wanted that returned to the regions anyway, proportionally, as the funds came out.
G. Wilson: I have one question with respect to that. In many local regions, there's often an IWMP at work, or you may have an LRUP program at work. There are all kinds of community-based programs and organizations at work that identify necessary projects and then find it difficult, once they are identified and agreed upon, usually by a fairly broad base of community support, to access the FRBC dollars necessary to put those projects into place. I wonder if the minister can tell us whether or not policy is being amended now to give priority to the LRUP and IWMP process that has already had a very strong, significant base of community input, both from the forest sector as well as from others that may be in local government or involved in a peripheral way in other issues.
Hon. D. Zirnhelt: I don't have all the details for the member, but I understand this to be the case: we are reviewing who can be the major applicants. In some cases you do have watershed-specific plans that indicate an appropriate spending of money, but the FRBC has not been planning-based, in the sense that they don't have comprehensive plans or a blueprint. They have been application-driven, so they have been assessing applicants for their suitability. It would seem to me to make sense that one of the criteria is: is there a local resource management plan in place into which this expendi-
[ Page 1369 ]
ture would fit? I would say that if they aren't moving in that direction, it's probably a matter of time. They are reviewing it, I understand.
I'd like to 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. J. MacPhail: I move that the House stand recessed until 6:35 p.m. and thereafter sit until adjournment.
Motion approved.
The House recessed at 6 p.m.
The House in Committee of Supply A; W. Hartley in the chair.
The committee met at 2:43 p.m.
On vote 22: minister's office, $374,615 (continued).
G. Farrell-Collins: Can the minister tell us who from B.C. Hydro currently sits on the board of BCHIL and BCHI Power?
Hon. D. Miller: I'll give the full board of B.C. Hydro International Ltd. The chair is Mr. Costello, the president is Mr. Ridley, and the secretary is Ms. Barnett. Members of the board are: Mr. Ridley, S.M. Singer, Brian Smith, Mr. Costello and Ms. Barnett. For BCHI Power Development Corporation, which is 40 percent B.C. Hydro and 60 percent IPC, the president is Mr. Ridley, and the secretary is Ms. Barnett; from Hydro on that board are Mr. Harrison, Ms. Barnett and Mr. Ridley; from Dominion Securities, Mr. Cullen; and from IPC, Tony Knott, S. Lee, G. Laycraft and C. Wright.
G. Farrell-Collins: Thank you, hon. Chair. I
Hon. D. Miller: I have a correction on B.C. Hydro International Ltd. On the board I did say Ms. Barnett. That's incorrect; she is the secretary.
[2:45]
G. Farrell-Collins: It's an interesting response, because I had a corporate search done of B.C. Hydro International Ltd. as of July 22, 1996, and it lists as the directors: Michael Costello, Stanley Kwok, Sharon Manson Singer, Stanley Ridley, Brian Smith, Darlene Barnett, James Gemmill, Debbie Lamming, Stan Ridley, John Shaw and John P. Sheehan, chair. Can the minister tell me why that still exists?
Hon. D. Miller: That is out of date; this is as of July 31. With respect to the July 22 list that you read out, I'm advised that you have both directors and officers. Clearly, notwithstanding their listing, Mr. Sheehan had left, his employment had been terminated. Mr. Kwok had resigned prior to that. I'm not sure why, administratively, that continues.
Interjection.
Hon. D. Miller: Yes, it was in anticipation of making these changes.
G. Farrell-Collins: I find it interesting that the change of Brian Smith on the list of directors was made at some
Hon. D. Miller: Any confusion appears to be administrative in nature.
G. Farrell-Collins: I guess we can explore that if we choose. It appears that, also for some administrative reason, Mr. Laxton was left on the board of SEPCOL also. Can the minister tell me what time yesterday the change to the board was made?
The minister said that the changes were done. My document is out of date because it changed as of July 31, which to my recollection was yesterday.
Hon. D. Miller: The advice is that Mr. Sheehan resigned in March; Mr. Kwok, I think, more recently. I can't remember the date exactly. It was Hydro's belief that it had been filed, hence my inclination about it being administrative in nature. This list that I read is as at July 31. That doesn't automatically assume that it was done on July 31 or even July 30. I don't know if we have an exact date, but it was filed in March. The resignations were filed in the spring.
G. Farrell-Collins: I'm confused as to how Brian Smith could have been put on the board and the other people, the officers, not taken off the board at the same time -- unless there's some process that puts people on faster than it takes people off. Can the minister tell us when the filing of Mr. Smith's appointment was made and when the filing of Mr. Sheehan's resignation was made?
Hon. D. Miller: We can certainly try to get that date, but I'm advised that the changes with respect to directors normally take place as they occur -- in other words, it would be filed as there is a change and, with respect to the officers, on an annual basis.
G. Farrell-Collins: Thank you. We'll come back to that in a little bit.
I'd like to ask the minister if we can get back to where we left off last evening and a few minutes ago, with the minister
[ Page 1370 ]
and the Premier telling us that it was the Pakistani partners who requested that Mr. Laxton remain on the board of SEPCOL in order to provide stability. Can the minister tell us which of the partners requested it and in what way it was requested? Was it done in writing, was it just a phone call, was it relayed through Mr. Laxton or did it go directly to Hydro?
Hon. D. Miller: I've not had an opportunity for extensive discussion with Mr. Smith on that point. But suffice it to say that the request was made, and again I'm not certain whether it was in personal discussions or correspondence or what have you. That responsibility really did rest with Mr. Smith, and as I became aware of that yesterday, I confirmed my confidence in Mr. Smith's decision.
G. Farrell-Collins: I'm surprised that the minister would confirm that confidence before he had a chance to really talk in any extensive way with Mr. Smith and determine why. The reason I say that is that Mr. Smith's report had an interesting quote in it. It was in defence of the then minister, who is now the Premier, and that minister's claim that he didn't know anything about the way this deal was structured. He didn't know it was in the Cayman Islands. He didn't know who was on the list of shareholders. He didn't know any of this stuff. So I found it interesting when I read this quote from the report and then put it in the context of what just happened. I'll read it to you. It says that Mr. Blank, who was then the minister responsible and is now the Premier, "should have satisfied himself as to the appropriateness of the process for conducting the IPC offering or selecting the investors, and should have known who were to become B.C. Hydro partners in the Raiwind
It went on to give a pretty damning indictment, I think, of the Premier. It stated that the operation of this deal was amateurish in nature and that it was not transparent or clear. Given that one would think the government would have learned from that chastisement, saying that they did not ask and they were not told -- they should have been -- I would ask this minister whether he feels comfortable with his response to this whole issue and whether he asked and knew. The minister is now trying to tell us that he didn't ask and he didn't know. Does the minister think he's fulfilled his job in overseeing this issue?
Mr. Smith obviously somehow cut a deal with John Laxton to allow him to continue on the board of SEPCOL, for whatever reason. We've still to determine what that reason was. Somehow there was a deal cut. Here we have Mr. Smith writing a report, saying that they weren't asked and they weren't told, and then chastising the then chair and the Premier for not having that exchange of information. Now we have a new minister and a new chair who wrote the thing, telling us that he didn't tell the minister about this interesting arrangement with John Laxton.
The last chair was fired, supposedly because he had received a directive from the minister saying: "Thou shall not purchase shares, nor should any members of your family." He was fired because he went out and purchased shares indirectly through his family and through private holdings in offshore companies in order to hide them.
Well, the Premier said that Mr. Laxton should be fired, and the new chair went about cutting a deal with Mr. Laxton to keep him on the board. Isn't there some parallel there? Don't you feel that Mr. Smith has done very similar things to what Mr. Laxton has done, in the nature of not responding to a clear directive given by the minister? The then minister said: "You're fired." The new chair that he appointed went and cut a deal with the person who was fired, in direct contradiction to what the Premier had said. Now I ask the question: was the "You're fired" part out there just for publicity? Was this deal done on the side, after the fact, or was it something that Mr. Smith did all on his own?
Hon. D. Miller: The member, I think, used the phrase "cut a deal" three or four times -- Mr. Smith cut a deal with Mr. Laxton. That is absolutely and fundamentally not true. The challenge faced by Hydro was enormous when this issue became public. There was a great deal of turmoil. There was an investigation launched immediately into, essentially, the events that transpired here in British Columbia, around people who bought shares and around the structure of offshore companies. Those were very serious events, and they were dealt with, I think, in a very straightforward and serious way. At the same time, the publicity that was generated as a result of those events, I think, created enormous challenges for Hydro in attempting to ensure that the ultimate goal, the Raiwind power project, did succeed.
There were some difficulties here with respect to the ability of Hydro, which is desirous and has acquired at least some rights to about 43 percent of the
At the same time, we wanted, for a couple reasons, this project to succeed. One is that Hydro's reputation is important internationally. I suspect -- in fact I know -- that it would have been the height of irresponsibility for Hydro to simply do what the opposition has advocated, which is to essentially take the easy way out and say: "Let's wash our hands of this whole thing, regardless of the consequences and regardless of the implications for our international reputation."
In saying, "Let's meet that challenge of moving forward, to see that this project succeeds," Hydro and Mr. Smith engaged, I think, the very best advice available from the business community here in British Columbia. They sought their advice in terms of how they should proceed, and that was their mandate. I think they handled the situation quite well.
One of the challenges they were faced with was the request from the Pakistani partners that Mr. Laxton remain on the board of SEPCOL. Hydro does not, in a direct way, have the ability at this time to even put directors on SEPCOL, because of the problems I talked about in terms of the IPC issue. Nonetheless, we would have preferred that Mr. Laxton leave. Unless that
So that's really the context in which B.C. Hydro was operating -- a very difficult and very challenging atmosphere,
[ Page 1371 ]
and not having the complete ability to do what they wanted to do, having to work with others and going through the attempt to get ownership, if you like, of the shares that people had acquired here in British Columbia. I would say that throughout that, they have acted in a very professional manner, with integrity, and I hope that the project, which I think is important, is successful.
[3:00]
We have to move on, once we've sorted this issue out, to determine whether or not it's in our interests, as a matter of public policy, to pursue these kinds of ventures. No one is claiming that it has been a very smooth ride; in fact, it's been a very rocky ride. Individuals have suffered; reputations have been damaged. Some of those, obviously, have been self-inflicted. So that's the kind of atmosphere that we're operating in -- nothing more, nothing less. I guess we could cover all the old ground again, but I've tried to lay it out in a fairly straightforward way.
G. Farrell-Collins: I don't want to leave the minister with an illusion that we're going to get through this really quickly. There will be some questions, and I assume there is still some information coming from last night, when the minister said he would get back to us.
The minister said -- and I was listening with interest to his comments -- that Hydro's reputation is really important internationally, and therefore we didn't want instability in Pakistan; that was one of the reasons we left Mr. Laxton on the board. I agree 100 percent with the minister that B.C. Hydro's international reputation is important; it's critical. We have a company with incredible talents, abilities, expertise and experience that can be marketing itself around the globe, and when we have people who are representing us internationally, it is crucial that they not be subject to an RCMP criminal investigation at home.
I would say to the minister that for all the reasons he stated, Mr. Laxton should have been fired immediately from the SEPCOL board. To state that the reason for leaving Mr. Laxton on the board was to make things better for B.C. Hydro or was to improve B.C. Hydro's reputation internationally is the height of ridiculousness. I can't imagine the rationale that the minister uses to arrive at that conclusion.
The minister says that all the publicity that surrounded this on February 22 created a challenge for Hydro to make this deal succeed. I would suggest that it did just the opposite, because before this became widely known from all the explanations by Mr. Laxton, it was difficult to find people to purchase shares. On February 23 and 24, however, the phone was ringing off the hook at B.C. Hydro with people who wanted in on the deal. You don't get 24 percent return on investment in very many mutual funds or GICs these days, and when you're guaranteed by the World Bank and you've got all these creditors lined up, it's a wonderful thing to have in place. For the minister to say that the publicity created a challenge for B.C. Hydro to succeed is a little ridiculous.
I want to come back to two points. First, the minister didn't really answer the question about whether or not he felt that the same test Mr. Smith applied to the former minister, now Premier, and the former chair, Mr. Laxton, with regard to exchange of information -- i.e., they didn't ask and they weren't told, or "Don't ask and I won't tell you" --
So I have to ask myself: why didn't Mr. Smith put it in the report? I don't want to ask why he didn't tell the minister; I assume he did tell the minister. I want to know why there wasn't that exchange of information, if that's what the minister is saying. Why is it that this information never appeared in the report, apparently never came to the attention of the minister and apparently never came to the attention of the Premier? If that in fact is the case, it would seem to me that Mr. Smith and the current minister are as negligent in their duties as the former chair and the former minister, because this minister didn't ask, and the current chair didn't tell. I would like the minister to comment on whether or not he sees the parallel there; whether or not he feels he had some duty to monitor this process and this review, to monitor what was going on at B.C. Hydro; and whether or not he feels that the current chair of B.C. Hydro had a duty not only to monitor the situation but to inform the minister of the situation on an ongoing basis.
Hon. D. Miller: Just for the record, there is no 24 percent guaranteed rate of return in this project. By saying that, I have no hope that the opposition will stop; nonetheless, it's for the record.
The chair and the B.C. Hydro management had an obligation to try, under very trying and difficult circumstances, to ensure that this project succeeded, and I think they took quite appropriate steps in that regard.
G. Farrell-Collins: Let's set aside whether or not the decision to keep Mr. Laxton on the board was an appropriate one and we'll come back to it a little later. I have a very simple question to the minister: whether or not he feels that he failed in his duties to ask the questions, and whether or not, in his report, Mr. Smith failed in his duties to tell the minister what was going on, in the same vein that Mr. Smith chastised the former minister and the former chair for their communications.
Hon. D. Miller: No, Mr. Chairman.
G. Farrell-Collins: I guess that was then; this is now. The responsibility that existed with Mr. Smith's report to inform the minister and the responsibility of the then minister to ask now don't apply. It only applied for the day the report was written; it didn't apply beforehand, because they didn't do it. It didn't apply after that; it doesn't apply now; it only applied for one day. Does the minister agree with Brian Smith's report that the minister has a duty to ask and the chair has a duty to inform?
Hon. D. Miller: I did say from my seat -- and I'll repeat for the record -- that if the member wants to stand and ask my opinion and then doesn't like my opinion, he should not take too much offence.
G. Farrell-Collins: I'll ask the question again. Does the minister agree that he has a duty to ask and the chair has a duty to inform? Does he agree with those comments made by Brian Smith in his report?
Hon. D. Miller: I have a duty and an obligation to provide direction for an operation that I'm responsible for,
[ Page 1372 ]
and I did that. I have confirmed that I'm quite happy and confident in terms of what Mr. Smith and management of B.C. Hydro have done in this event.
G. Farrell-Collins: Did the minister give instructions to Mr. Smith on his becoming the chair of B.C. Hydro, to keep him informed about things that go on at B.C. Hydro which the general public and the minister responsible might like to know, thereby allowing the minister to give direction to the corporation?
Hon. D. Miller: If you're running a large corporation, you should be able to have some degree of confidence in the people you assign that job to. I do have confidence. I discussed the mandate of the corporation with Mr. Smith and Mr. Costello. Clearly I've gone over and over this ground. In terms of Mr. Smith's report, that was not something I had involvement with -- only to respond as the minister when that report was handed to me.
In terms of the obligation of Hydro as a business entity and an important utility in this province, the mandate that I gave to the corporation was to deal with this very difficult issue that had been created because of the investigations and the revelations here in British Columbia. I think they have pursued that with diligence. They have sought the very best business advice; I think they've had the top people in British Columbia. I met with some of them, advising them in terms of how they should act to maintain the reputation of Hydro and to ensure that this project moved to a successful conclusion, thereby protecting not only the reputation of B.C. Hydro internationally but the financial interests of the shareholders and the Crown. I think they've done that under very difficult circumstances.
G. Farrell-Collins: I think the minister is right in his comment that when one hires somebody to head up a large corporation like B.C. Hydro, one should have confidence in him and one should be able to trust him. Certainly, in the case of Mr. Laxton, that was not the case; it didn't happen. I would have thought that the government, the minister, the former minister and current Premier would have learned something from that -- to make sure that they keep an eye on what was going on at the Crown corporation, at least for a little while, given, as the minister said, the difficult circumstances and the challenges that they were facing. It would seem to me that the minister might like to keep abreast of that type of information.
It would seem to me that the chair of B.C. Hydro -- and now I guess we can draw in the president, if that's who the Premier feels is also responsible -- had an obligation to keep the government apprised of what this deal with Mr. Laxton was. It would seem to me that there would be some communication back and forth with the minister.
Can the minister assure me that there never was any communication from Mr. Smith or Mr. Costello or any senior management at B.C. Hydro with regard to Mr. Laxton continuing on in his capacity on the board of SEPCOL? Can the minister assure me that there was no communication from B.C. Hydro to the minister or his office with regard to John Laxton's continued work with B.C. Hydro?
Hon. D. Miller: I think I did answer that. There was no communication. I cannot recollect being advised at any time. It came up in estimates debate last night, and when it was conveyed to me by one of my officials here, in response to your question, I stood up and relayed the information to this chamber without hesitation. I want to say -- and I have confirmed, notwithstanding my lack of knowledge of that -- that it was entirely appropriate. It was the right thing to do, and they have my full confidence in terms of trying to sort out what I have repeatedly said is arguably a complex and difficult situation, given the circumstances surrounding it.
G. Farrell-Collins: I find it interesting that the minister, within moments of knowing, moments of finding out, that Mr. Laxton still continued with SEPCOL, was in such an informed position that he could stand up and in the same breath say that he had utter confidence in the decision of the chair and the president to continue Mr. Laxton in that position on SEPCOL.
What information did the minister get in those brief seconds, as he was standing, that would give him such iron-clad assurance that the chair and the president of B.C. Hydro had done absolutely the right thing with regard to keeping Mr. Laxton on the board of SEPCOL? What was it? What bit of information, what nugget of gold was it that came to the minister's attention in the brief seconds when he found out that Mr. Laxton continued on the board and said so in this House? What extra little bit was it that explained to him, that gave him such positive assurance that the right decision had been made?
Hon. D. Miller: To use an overused statement, it doesn't take a rocket scientist to figure this out. We have British Columbia Hydro, a very important public utility with an international reputation, a company that has been advising on international projects in an advisory capacity, in a technical capacity, for many, many years and is now involved in a joint venture under very, very difficult circumstances and trying to do the best job it possibly can to see that this project is a success, that our reputation is maintained, and that the shareholders' interests, both the private shareholders' and the Crown's interests, are protected. They did. And it's very, very obvious what any prudent business would do. They acted with responsibility to the obligations they had, and I think they've probably done the right thing. It doesn't really take too much thinking to figure it out.
G. Farrell-Collins: Well, I can tell you what would have gone through my mind, if I was sitting there and somebody beside me suddenly, out of the blue, allegedly informed me that Mr. Laxton continued on the board of SEPCOL, and if my concern was the protection of the interests of the taxpayers of British Columbia. I would be outraged. In fact, probably before I stood up, I would have given a direction to the person beside me to fire him so that I could stand up and say: "I've just been informed that he's still sits on the SEPCOL board, but I can tell you that I have just fired him." It's as simple as that.
[3:15]
Why would the minister think for a minute that the right person to protect the interests of the taxpayers of British Columbia, the right person to protect the interests of the ratepayers of B.C. Hydro, the right person to protect the reputation of B.C. Hydro International was the very person who abused the Crown corporation and who abused the talents, expertise and the energy of that Crown corporation for his own personal interest by purchasing controlling interest in a corporation that now allowed him to control not just one deal but all future international deals with B.C. Hydro? He's the last guy on the earth I'd pick to oversee the public interest.
[ Page 1373 ]
The dealings that he's been responsible for are subject to a criminal investigation by the RCMP. "Let's pick him; he'd be a good one. Let's pick him and send him off to Pakistan to represent the public interest and to protect the public interest of the people of British Columbia."
What about Mr. Costello? Maybe he could have gone. Mr. Ridley's there; maybe Mr. Ridley could have taken on that job. Is there no one else in the entire province of British Columbia who could have done the job -- someone the minister would have had trust in; someone who didn't have a record of lying to the public, of lying to the minister, of lying to the Premier with regard to his holdings; someone who didn't have a record of going behind the back to seize control of Hydro International's international investments for his own interest; someone who didn't have a record of offering a deal only to his personal friends and insiders; someone who didn't have a record of deceit and deception? Is that the type of person about whom the minister, in that flash of a second, realized: "Oh yeah, that was a great decision, he's absolutely the right person to do that job"? Is there nobody else in all of British Columbia who could take over that role? What about Mr. Ridley, what about some of the other people in the corporation? Is there no one else? What about somebody who's just got a sense of ethics to take over the role?
Why is it that the minister and the Premier felt that this person who was so ethically bankrupt, who was so deceptive with the people of B.C. and had abused the largest Crown corporation and had gone directly against the orders of the minister and the
Hon. D. Miller: Well, Mr. Chairman, we are going around in circles. I do know that the member who spoke of his outrage has a tendency toward outrage, either feigned or real, that strikes very suddenly. We've seen those kinds of eruptions.
But I really have covered the ground. The decision was made. I've indicated that in an absolute sense, it didn't come to this; we didn't have the right, if you like, to fire him outright. We could have expressed our desire to see him leave. We did not do that, in view of the request from the Pakistani partners. The business is completed, the transaction is completed, and I really think that Hydro is making their very best efforts to see that this project succeeds.
G. Farrell-Collins: Is the minister telling me that B.C. Hydro, the government, the minister and the former minister who is now Premier did not even ask that Mr. Laxton be removed from the SEPCOL board?
Hon. D. Miller: Let me rephrase that. We told them that because of events
G. Farrell-Collins: So let me get this straight. Because of what had gone on here, because there was a criminal investigation, because of the deception that had taken place, because of the repeated lies, because of the slow extraction of the truth from Mr. Laxton, because of him allegedly failing to follow -- as the minister put it -- the orders of the Premier, and because Mr. Laxton generally all around wasn't a terribly good guy to do business with, we talked to those people, the partners in Pakistan, and said: "We'd rather he wasn't on the board." They came back and said, "Well, we'd rather you didn't ask us to take him off the board," and we said: "Okay, he can stay on the board." Is that the gist of it?
Hon. D. Miller: Again, to try to simplify it, I'm advised that they asked us not to make any attempt to remove him from the board until the share offering was complete. We did that, and the share offering is now complete; it was successful. In the context of Hydro trying to manage without having, if you like, absolute authority with respect to various companies, and to ensure both that Hydro's reputation was maintained and that the project
The Chair: Before I recognize the member, a caution. I was about to make the caution anyway that the Chair has heard the same positions put forward by members, so perhaps members should reflect on that and move to new information.
D. Jarvis: Point of order. This morning, when we tried to move on to other subjects, the minister insisted that we come on to this subject. That is where we are now, and I think we should be staying on it.
The Chair: Once again, that's not a point of order, hon. member.
G. Farrell-Collins: I always find it amazing how the minister is able to direct the Chair to make rulings. I guess we'll just have to watch
The Chair: Hon. member, could you take your seat, please. I just want to make members perfectly aware that the positions put forward by the Chair are not to be argued against.
G. Farrell-Collins: I didn't argue against it; I merely made an observation of how quickly the Chair responds when the minister raises an issue with regard to how the rules should be implemented.
Hon. D. Miller: Point of order. I've commented previously about the offensive nature of that member with respect to the rules and procedures of this House. For the member to stand and suggest that somehow any member of this committee is telling the Chair what to do is extremely offensive. Certainly as a member of this House, I would like to see that comment withdrawn.
G. Farrell-Collins: I'd be glad to withdraw it because I didn't make it.
The Chair: Shall the vote pass?
G. Farrell-Collins: I think it's important that we canvass the particulars of how the request was made, who made the request, and how the government and B.C. Hydro responded to it. I would suggest to the House, the chamber, that the tediousness and repetition is coming from the answers of the minister, not from the questions that are being asked. Let me ask a very clear question of the minister. Who specifically was
[ Page 1374 ]
it, by name, from the Pakistani partners who raised the issue of concern and asked for Mr. Laxton to remain on the board of SEPCOL?
Hon. D. Miller: We're going nowhere. The facts are that there was a request; we acceded to it; it's out there. There's clearly a difference, and I think nothing further is being served by trying to respond to these idiotic questions.
G. Farrell-Collins: I think it's critical that we find out who it was, because we don't know who of these Pakistani partners it was that made this request. We don't know what relationship Mr. Laxton has to those Pakistani partners. We don't know whether Mr. Laxton owns shares in those Pakistani partners' firms. We don't know what influence Mr. Laxton exerts on those people. We don't know how many shares on the Pakistani stock exchange Mr. Laxton himself held, if any. If he did, obviously there was a personal interest in making sure that the offering continued and that the offering was successful. It was not a public interest, and certainly not on behalf of B.C. Hydro -- because we know Mr. Laxton didn't operate on that basis -- but merely a potential personal interest of Mr. Laxton, if he did indeed own any of those shares. So I think it is important for the minister to let us know who it was -- which firms, which representatives from which firms -- that expressed the extreme desire that Mr. Laxton continue to play a role on the board of SEPCOL.
Hon. D. Miller: I certainly agree that there is a lot the member doesn't know.
G. Farrell-Collins: Well, now we get there. I suspect that the reason we're not getting an answer from the minister is that there is something that needs to be aired that the minister is not willing to air. I think the exchange of information back and forth between the partners of SEPCOL, between the people as shareholders of SEPCOL and B.C. Hydro, needs to be cleared up. We need to find out what influence Mr. Laxton had in the request from those people, and I think it's appropriate for the minister to give us that information.
In the absence of the minister, I move that the House recess until his return.
The Chair: The committee will recess for four minutes.
The committee recessed from 3:26 p.m. to 3:31 p.m..
[W. Hartley in the chair.]
G. Campbell: The minister has consistently referred to the third-person plural pronoun "they" having required that Mr. Laxton remained involved with SEPCOL. Can the minister tell us explicitly, specifically and individually who they are?
Hon. D. Miller: No, I can't. The decision was made by Mr. Smith. He has that information.
G. Campbell: Can I get that clear, hon. Chair? The minister is saying he can't tell us who they are -- because he doesn't know or because Mr. Smith won't tell him?
Hon. D. Miller: Mr. Smith advised me that he had taken this position with respect to the request, and I accepted that as being the appropriate thing -- obviously in a very short space of time -- and I think it was absolutely the right thing to do.
G. Campbell: Today in the House the Premier said that he had given the responsibility to both this minister and Mr. Smith to clean up the situation at B.C. Hydro. That means, in our system -- at least, I understood that it meant -- that the minister is responsible and accountable for the actions of the Crown corporation under his purview. That's why he's here today in estimates with us. All we would like to know are the facts.
It is not satisfactory, I would suggest, for the minister to tell us: "Gee, I don't know. Again, I don't know." The minister has a responsibility to know. So my question is to the minister: if he does not know who they are, will he provide us with the information immediately as to who they are? Will he go to the phone and call Mr. Smith, get Mr. Smith to give him the names of who they were that asked for Mr. Laxton to remain involved in this project?
Hon. D. Miller: I think the central issue is that certain events took place -- in other words, Mr. Laxton remained on the board of SEPCOL. Clearly the opposition doesn't like that, and that's fair enough. But the decision was taken by management and Mr. Smith that that was appropriate. It was important in terms of Hydro trying to ensure, in the very difficult circumstances that I've described, that the project move forward. Clearly one of the important events with respect to that project was the share offering on the Karachi exchange, so I think that's the central issue. Management took the decision they did, and I think, as I said, it was the right thing to do.
G. Campbell: The difficulty I have is to simply accept. We could have simply accepted that because Mr. Laxton was the chair of B.C. Hydro, everything he had done was the right thing to do. Who is watching Mr. Smith? Who is auditing what Mr. Smith is doing? Who is auditing, on behalf of the people of British Columbia, what is taking place with B.C. Hydro and this project?
It seems to me totally legitimate to simply say that we've been told, yesterday night and today, that some "they," either imaginary or known, said that Mr. Laxton had to remain involved, and I have a whole series of questions as to why that would be. But it's difficult to even pursue this in the public interest if we're not told who they are. Mr. Smith must know who they are. Mr. Costello must know who they are, and therefore the minister can know who they are. I'm asking the minister if he will let us know immediately who they are.
Hon. D. Miller: I'm sure there are a great deal of opinions about whether this was the right thing to do or not. I've put my opinion on the record, and I assume, from all the huffing and puffing, that the opposition disagrees with that decision. There may be others in the business community who think that it was the right thing to do. We did it, and it was important to maintain the integrity of that project, and, as I say, I think it was the right thing to do. In terms of business dealings on a daily basis, I don't expect to be informed of every happening every day. It's enough to know that decisions are made. You put your confidence in the people you put in place to make those decisions, and they've done the right thing.
G. Campbell: This is a sort of catch-22, I guess. The fact of the matter is that I don't know how the minister can know he's done the right thing until he has the facts. He couldn't possibly have the facts, because he's not willing to share them with us. This minister is normally known for coming and explaining to people what his position is. You know, I don't
[ Page 1375 ]
mind if we have a difference of opinion. That's what we should be having. That's fine. Big deal -- differences of opinion happen every day in politics. What about the facts for the public? That's all we're asking for.
On the surface of it, the minister is certainly correct: I disagree with the decision. There's no question about that. I totally disagree with it. I think that the Premier tried to leave British Columbians with the idea that he disagreed with the decision. Let's put that aside for a minute. That's opinion. We're going to get to informed opinion when we get some information. The first piece of information we'd like to know is who "they" are. Who is this imaginary "they"? How can we even know there's a "they"? It's just a third-person plural pronoun right now. Let's give it some shape. Let's be concrete about it. Who are they? That's the question I'm asking the minister to answer. Who are they who made this recommendation to Mr. Costello and Mr. Smith that we had to keep John Laxton, because of his incredible knowledge of B.C. Hydro, involved in this project? Who were they?
I guess we can go on to a second question. What did they say that Mr. Laxton was going to bring to this project that would offer this incredible stability that we've been talking about?
Hon. D. Miller: Hon. Chair, I've been up and down, and I think I may have responded to this question probably a dozen times in the last short while.
G. Campbell: Hon. Chair, the problem is that the minister has never responded to the question. It is a simple question. It is a straightforward question. Who were the "they" that gave Mr. Smith and Mr. Costello the advice that we had to keep someone who was under criminal investigation involved on behalf of the province of British Columbia and B.C. Hydro? Who were they?
The Chair: Perhaps you could put a different question to the minister.
G. Campbell: I'll try to put a different question. Maybe he'll give us a different answer. Has the minister read B.C. Hydro-IPC Review: Interim Report, dated April 23, 1996?
Hon. D. Miller: Yes.
G. Campbell: Has the minister read to page 16 of that report?
Hon. D. Miller: If I could have a moment, Mr. Chairman. I haven't committed it to memory.
G. Campbell: The minister has read to page 16. Can he inform me whether the Crown entrepreneurial activities standards and guidelines are still in place in the province of British Columbia?
Hon. D. Miller: Yes.
G. Campbell: So then it would be true to say that in terms of any involvement of a Crown corporation in any project in the province, it is necessary that they meet "provincial social, ethical and environmental standards."
Hon. D. Miller: That's what's written there, yes.
G. Campbell: So does it meet the province's social, ethical and environmental standards to have someone representing the province who is under criminal investigation and who, the public has been told by the Premier, has acted probably illegally and who, in fact, the Premier said, has certainly acted improperly in terms of carrying out the public trust? Is that part of what the ethical standards are of this province today? I'd like the minister to answer that.
Hon. D. Miller: Mr. Chairman, I think it goes really to the issue. Certainly I'm not happy about what happened with, if you like, B.C. Hydro's first foray into an international project. The original intent obviously was not met, and as a result of that, activities came to light: board members, spouses, etc., buying shares. The government took action, but that created a dilemma, call it what you will. It created the situation where B.C. Hydro was still quite heavily involved in the project and, under the circumstances that I have described, was trying to operate to ensure that the project succeeded, not an easy task at all. We, for example, tried to acquire the ownership -- or at least a majority ownership -- of IPC and were unable to do so. That clearly restricted to some degree our ability to act.
Notwithstanding that, the management has pursued, in a very challenging environment, that objective: to see this project through. Is it perfect? Absolutely not. But the conditions that surround certain things sometimes aren't perfect. You have to deal with current reality. You know, I think those are tough decisions you sometimes have to make, and the decision was made in order for this thing to move forward and succeed. So again, Mr. Chairman, I've tried to outline that in terms I thought the members might understand, but I don't seem to be getting anywhere.
G. Campbell: I refer the minister to page 18, where it points out again that in terms of investment standards, in order for us to invest, we must "adhere to ethical business practices." Does he think Mr. Laxton is a representative of ethical business practices, as known in the province?
Hon. D. Miller: Mr. Chairman, I have refrained from offering any personal opinions of individuals who have been involved in this issue. There are ongoing investigations, and it's certainly not my place to do that.
G. Campbell: Let me ask, then, something that isn't under investigation, which is a known fact. Mr. Laxton, when he was initially confronted with his involvement in this entire matter, claimed no personal involvement for himself or his family or his close associates. We then learned within a week that, in fact, he himself, his friends and his family had hundreds of thousands of dollars of personal involvement. Is that an ethical standard that cabinet has set, where someone can say one thing one week about a public activity and prove
Hon. D. Miller: Those facts are all laid out in this report.
G. Campbell: Again, if we go to the report, is the minister satisfied that the report is now complete, or can the minister tell us when he expects the final report to be coming forward?
Hon. D. Miller: I understand that Mr. Smith is trying to have a completed report in September, but I'm not sure if it's the beginning or the end.
G. Campbell: Will the final report include specific testimony from Mr. Ali Mahmood and all the activities with regard to SEPCOL?
[ Page 1376 ]
Hon. D. Miller: I am not certain of that.
G. Campbell: When we had this report done by the chair of
Hon. D. Miller: I can't recall specifically. When this report was delivered in the first instance, it was delivered simultaneously to me and by Mr. Smith to a press conference. So it was really a simultaneous thing.
[3:45]
G. Campbell: The critical component here, in view of what we have learned in the last 24 hours, is:
"The review team did not have access to the accounting or business records of SEPCOL. This information is located in Pakistan. Also, the team did not interview any of the executives, management or accounting personnel for SEPCOL. The team has asked Mr. Ali Mahmood, the principal Pakistan partner, to attend and be interviewed, but Mr. Mahmood has not yet made himself available in Canada."
My question to the minister is: are we or are we not going to get to the bottom of what has taken place in SEPCOL? Will we know who the shareholders in SEPCOL are? Will we know who the partners in SEPCOL are so that we will start to understand who asked for Mr. Laxton to remain involved in SEPCOL over the last five months?
Hon. D. Miller: This really goes to an issue I tried to talk about yesterday in more general terms. I think one of the issues, clearly, is that this is Hydro's first attempt at being involved in a project offshore. I've had some brief discussions about this in a general way, but when you are dealing with some countries, we find conditions in those countries not exactly the same as they are here. In other words, the challenge or the question -- and I think this is a legitimate point that needs further debate publicly -- is that, notwithstanding that things are different, should we still pursue these joint ventures knowing, for example, that some regimes that you might deal with are, say, less than democratic? I think that's one of the questions I've certainly started to ask as the minister now responsible for Hydro.
It appears on the surface that this is the kind of business that is good; it will bring benefits to British Columbians. But there have been other examples, I
We haven't got to that point yet. Hydro's mandate is to try to get this issue onto some kind of solid footing -- manageable, managed -- and we have to turn our mind to whether or not we want to pursue further joint ventures offshore. There are opportunities, some in the private sector. One of the press people asked me this morning: why aren't you pursuing more? There is millions of dollars' worth of work. But this, it seems to me, has brought home that question, and it's one that we need to debate. Are we prepared as we move forward, understanding our ethical and environmental commitments, to run the risk? I think there is always a risk of dealing with countries where the standards aren't the same as ours.
Mr. Smith, I think, has outlined -- I can't recall exactly the language -- the difficulty he has faced in terms of trying to get that information. I suspect that that same condition might prevail in other countries. I'm not familiar enough with them. That, really, to me is the policy question that we have to face. In the meantime, despite all the difficulties -- and, quite frankly, the embarrassment -- that Hydro has faced in this affair, the management and Mr. Smith have to come to grips with this project and taken steps that they think are prudent, from a business point of view, to ensure the project is successful. I think they are doing that to the best of their ability.
G. Campbell: I have actually experienced Third World countries myself in the past. You can always go and say: "Well, we are going to fall into whatever their standards are." Our issue is: what are British Columbia's standards? What are our ethical standards? If there are difficulties, if there is embarrassment, if Hydro is having problems, there's one reason: Mr. Laxton. Mr. Laxton put together a deal which was specifically designed to hide the facts from British Columbians, which was specifically designed to take advantage of British Columbians' investment and provide it to some insiders and friends, and that was simply wrong in terms of British Columbia. What we're doing right now is trying to say: "How do we prevent this from ever happening again?"
Frankly, what is happening here is we're being stonewalled. We don't know who the so-called "they" are. Frankly, Mr. Smith doesn't have a great deal of experience in international investing. How does he know? And what is he trying to hide? What is the minister trying to hide? Who are they? What are the ethical standards that they bring to this issue? Not very good ones, as far as we can tell from British Columbia, on the surface. We haven't been given one reason, and there's not one reason I can think of, that Mr. Laxton needs to be kept involved in this project. It's just sort of: "Well, I think it's okay." It's not okay.
The issue for the minister remains, not whether we
So we get back to the question: who are "they"? What did "they" say? And why did "they" think that it was important that we have someone who had lied to the public, who had been involved in a breach of trust in terms of what cabinet had directed, who had been involved in a breach of trust in terms of what the public directed, remain involved?
I can tell you, I was involved in a Third World country for some time, and on a regular basis people would come and ask me for things -- which they didn't get; which we didn't deliver. It may have meant we stood in line a lot longer than everybody else. It may have meant we didn't get things done as quickly as we wanted to have them done. But I can tell you we were never ashamed of what we were doing. We don't know whether we should be ashamed or not until we know who "they" are, what "they" said, why "they" said it, and what "their" standards and ethics are.
And so, hon. Chair, I go back to the minister, and I simply ask the minister for the undertaking that, in terms of the final report, we will know everything there is to know about SEPCOL. We will know everything there is to know about the mythical "they" that have recommended that Mr. Laxton stay
[ Page 1377 ]
involved. We will know everything there is to know about the standards that the mythical "they" have, so that people in British Columbia can see what took place, can recognize, as the minister himself has admitted, as the Premier himself has admitted, that there was a mess that took place in B.C. Hydro; that it was a scandal. Certainly it was a scandal. It was a disgrace. It hurt the corporation. It hurt the people of British Columbia. It hurt public life in British Columbia. Let's be sure it never happens again. The only way to be sure is to get all the information.
My question to the minister is simply this: as the minister responsible for B.C. Hydro, for maintaining its integrity, will he undertake to this committee and to this House, that he will provide all the information with regard to who "they" are, what "they" said, why "they" said it, what "they" believed in, and all of the information with regard to SEPCOL, so that we can make sure this never happens again?
Hon. D. Miller: I could quarrel with some words, but I don't disagree with the Leader of the Opposition. I don't think anybody's happy about the events that transpired here at all. Certainly the management, as I said -- and I think we've got to respect the managers that are in place under very trying circumstances -- are trying to make sure that, really, our obligation, in an economic sense -- and I don't put that, in any sense, above ethical questions -- must be maintained. Otherwise, things could be worse. And it is very, very difficult.
But I don't fundamentally disagree that we have to come to grips with these issues. It's not good for any of us, opposition or government, when these issues arise. No one is heartened by events, and I certainly hope, as a minister, that we can bring some stability to Hydro's operation, and certainly some confidence in Hydro by the public, and by everybody -- by the opposition as well.
Mr. Smith is in charge of his report. As I indicated, he gave it to me at the same time as he gave it to the media. I think Mr. Smith understands that his mandate is to get all of the information that he possibly can. And I think, clearly, the major issue that government and B.C. Hydro need to determine is whether or not we want to continue to pursue these ventures -- sometimes it's not easy, and there are these kinds of pitfalls -- given that we tried to establish an ethical framework to move forward in. But nobody is happy, and I think the Leader of the Opposition and I probably share the same end goal.
G. Farrell-Collins: The minister used slightly different words last evening and today with regard to whether Mr. Laxton can or can't be fired. In his view, is it within the purview of the government of British Columbia, through B.C. Hydro, to actually fire Mr. Laxton from the SEPCOL board?
Hon. D. Miller: In terms of the structure and ownership, that decision would be made by BCHI Power. Our position is 40 percent, and the other shareholders are 60 percent. I guess the conclusion from that is: does the government or B.C. Hydro have absolute authority? I would say that technically the answer is no.
G. Farrell-Collins: Was Mr. Laxton fired from BCHI Power in any capacity, on the board?
Hon. D. Miller: I'm advised that Mr. Laxton resigned at our request.
G. Farrell-Collins: At the same time that Mr. Laxton was requested to resign from BCHI Power, was he requested to resign from SEPCOL?
Hon. D. Miller: I think the general position taken with respect to Mr. Laxton was that he resign from all companies in this affair, and that leads us to the issue of the
G. Farrell-Collins: I don't want to belabour the point, because the minister says he doesn't have the information. I would expect that by Tuesday the minister will have had an opportunity to talk to Mr. Smith about who "They" are -- capital T -- and we would be able to have a much clearer explanation of what the flow of communication back and forth was from "They" to B.C. Hydro and back to "They." I would think that by Tuesday we should be able to have that information available. I'm sure the minister will be speaking to Mr. Smith in more detail over the next few days to find out exactly what has gone on here, and why, and fill in some of those gaps in his knowledge which he has about this.
Can the minister tell us if Mr. Laxton ever approached Mr. Smith requesting to stay on the board of SEPCOL?
Hon. D. Miller: I'm not certain, and that may fit into the Tuesday category. My information is that at the outset our position was that he leave all the boards, including SEPCOL.
G. Farrell-Collins: Did Mr. Laxton at any time express reservations about leaving SEPCOL or any of the other boards? Or did he do it freely, once he'd been fired from Hydro?
Hon. D. Miller: Again, I can't confirm that. But going back to the response to a previous question, it is clear that he did resign from total power at our request. I'll endeavour to see if I can get a response to that.
[4:00]
G. Farrell-Collins: I guess, when we come back on Tuesday, we can examine that. I'd like to ask a quick question. If the government were to expropriate the shares of IPC and compensate in some fashion, at perhaps par value or original value, would it not be easier for them to take control of this issue, and steer it in a more stable fashion towards a successful conclusion?
Hon. D. Miller: Certainly, the simplest way to control IPC shares would be through expropriation. It's not a route that I particularly like, which is why we made the decision to try to buy back the shares.
G. Farrell-Collins: Clearly it has been a goal of the government and B.C. Hydro to regain the control they currently do not have of their international operations. Apparently the government and B.C. Hydro have been attempting to do that in a number of ways -- by trying to secure at least a further 10 percent of the whole, or in this case, at least a sixth of the shares of IPC, to then establish a controlling interest in this venture.
The minister has said that they
Hon. D. Miller: While we're waiting -- and we may not come up with anything -- I advise members that I want to be
[ Page 1378 ]
somewhat cautious on this question in view of the potential court case. Suffice it to say that whatever the
G. Farrell-Collins: I heard a statement last night that was given to the minister -- just barely -- and it sounded a little different from what the minister said. I don't know what it was. I'm trying to look for what the legal term is. I'm not a lawyer. I'm just curious to find out what that term was, so I have a sense of what sort of arrangement there is with those individuals, and if the minister has it, I'll be glad to hear it.
Hon. D. Miller: I'm advised that "beneficial interest" might be the appropriate term.
G. Farrell-Collins: Could the minister tell me how many shares have been sold back to B.C. Hydro outright, if any?
Hon. D. Miller: None of them have been sold outright. They are subject to the approval of the IPC board, which we have not obtained.
G. Farrell-Collins: I'm going to be very careful in my next question not to tread upon the case itself. But I do want to ask the facts about some action the government or B.C. Hydro has taken in response to their effort to try and secure the assets, the shares, of IPC. There is a case, and I'll refer to it; it's just there. I'm not going to get into the case itself at all. There is a case between IPC and a series of shareholders of IPC with regard to their agreement with Hydro regarding beneficial interest.
In the writ there is a statement that was made, and it's in quotations. Essentially, the government or B.C. Hydro has
Hon. D. Miller: Yes, I can confirm that it is the case.
G. Farrell-Collins: Let me get this straight. Rather than expropriate these shares and just regain control of this at a par value and bring this back into B.C. Hydro, we're now going to go through a protracted legal process whereby we're not only going to enter into long-term, very slow negotiations with the shareholders of IPC, but we're also going to wrap this whole thing up in another court case
Hon. D. Miller: I understand that the arrangement is that those people who have agreed have simply agreed to be represented by our legal counsel, which we don't anticipate to add any significant costs.
G. Farrell-Collins: Let me be clearer, then. I want to make sure we've got this right. The shareholders of IPC, if they choose to come to some agreement to grant beneficial interest of their shares to B.C. Hydro, essentially commit that they will transfer their shares to B.C. Hydro, and that B.C. Hydro will take on their legal case for them in defending them against any possible action from IPC itself. Is that correct?
Hon. D. Miller: We are just trying to explain this. If there is an action, obviously B.C. Hydro would be a party to that action -- for example, a lawsuit. In that respect, those shareholders who have agreed to transfer their shares to us would be represented by us in any lawsuit that might ensue. Again, I'm not certain of the financial consequences of agreeing to that, but in looking to purchase shares, it was thought, I conclude, that this was an appropriate device to give some comfort to those who were prepared to transfer their shares.
G. Farrell-Collins: Was that offer to grant an indemnity something that was done in writing, or was it something that was just sort of offered? If so, can we get a copy of the offer?
Hon. D. Miller: I'm advised that a copy can be made available.
G. Farrell-Collins: I'll come back to that in a few moments.
I must admit -- and I admitted it at the time -- that I think some people got involved in IPC for all the right reasons. They thought it was a good investment and had no specific interest to get involved in something that went sour. They did it for all the right reasons. Others, I think, were there and were approached for other reasons. The minister doesn't agree with me on that. But that's fine, I'll stand by it. I find it interesting, though, that they're all being granted this sort of legal immunity from any sort of action that's taken against them. I suppose we can deal with that a little later.
The minister said that Mr. Laxton, as it stands now, technically can't be fired unless the government chose to, or could somehow, achieve more than 50 percent of the shares of the company -- or control, anyways, of the board positions -- so they could make that decision on their own. The minister last night and again today talked about a letter. I can't recall -- I'll have to check Hansard -- whether it was going from Mr. Smith to Mr. Laxton or from Mr. Laxton to Mr. Smith regarding his resignation from SEPCOL. Can the minister refresh my memory on what it is?
Hon. D. Miller: Yes, there is correspondence. I've spoken to the media about that. I've made copies available. It's out there.
G. Farrell-Collins: I didn't get a copy, and that's fine. Perhaps if the minister has one available, I could ask for a copy. Seeing that I don't have a copy, I'll have to ask the question: is that a letter from Mr. Smith to Mr. Laxton requesting his resignation?
Hon. D. Miller: Essentially it is. I can't recall the specific language, but essentially it is, yes.
[ Page 1379 ]
G. Farrell-Collins: Can the minister tell me if Mr. Laxton has responded? I don't know if there's another letter out there. Can the minister tell me if Mr. Laxton has responded in any way to that letter?
Hon. D. Miller: I'm unaware if there has been a formal response. It may be that Mr. Smith has talked to Mr. Laxton about that letter, but I'm not by any means certain. In fact, I don't think there has been a formal response at this point.
G. Farrell-Collins: There seems to be some contradictory information. Last night we were told the share offering in Pakistan closed some time in June. Apparently Mr. Laxton -- although I didn't hear it from him myself -- has told the media who have spoken to him that the offering has not closed yet. Can the minister tell me what the actuality is on that?
[4:15]
Hon. D. Miller: Yes. I was also struck by that. The information I have been given is that it has closed, and that it cleared the regulators and listed about July 23. Although people have spoken to me about what appears to be a slight contradiction, I have not received any technical advice on that or any confirmation in writing on that question.
G. Farrell-Collins: Just as a possible explanation, is it possible that the offering could clear the regulators and be listed without having been fully subscribed?
Hon. D. Miller: Again, the information I was given was that it was oversubscribed.
G. Farrell-Collins: I suppose this is a good example of why Mr. Laxton shouldn't be where he is, because on the one hand, we're getting a story from him that it hasn't closed yet, and on the other hand, we're getting the story from the ministry and the Crown that in fact it is oversubscribed, it has closed, it is now listed, it has cleared the regulators and it is all done. Again, it raises real questions in my mind as to what Mr. Laxton is up to. Of course, that is if the media is correct in what they heard Mr. Laxton say to them. I guess we're yet to find that out, and I assume that on Tuesday we'll be able to have clearer facts around that. Perhaps the minister can tell me if it's his intention to communicate with both Mr. Smith and Mr. Laxton before Tuesday to try to clear up some of these questions which remain unanswered.
Hon. D. Miller: I've never communicated with Mr. Laxton and I have no intention of doing so, but as far as Mr. Smith is concerned, it would be my intention to try to communicate with him.
G. Farrell-Collins: Perhaps it's appropriate that he not speak with Mr. Laxton, although he does still represent us on the board. Can the minister assure us that he will give Mr. Smith a direction to attempt to communicate with Mr. Laxton to clear up some of these statements and find out what the true situation is, certainly with regard to facts and also with regard to what the true situation is in Mr. Laxton's mind as to the status of the offering in Pakistan and other issues?
Hon. D. Miller: There are those kinds of details, and I certainly do hope that I can get some clarification over the weekend.
G. Farrell-Collins: With regard
Hon. D. Miller: I did not put that question directly, and I'm not aware that it has or hasn't taken place. I did mention it to some of the other parties -- the World Bank, ABN. But I will attempt to see if there has been any communication with any of the other parties.
G. Farrell-Collins: I'm glad to hear that the minister will do that. I guess that's why I caution the minister and why I question how he's able to say with such adamant assurance that he's comfortable that the board and the chair of B.C. Hydro made the appropriate decision in keeping Mr. Laxton on, if he's not aware of whether or not there was any protest from any of the other partners involved in this deal. I would think that before endorsing a fairly controversial decision by the chairman and the president of B.C. Hydro, he would have consulted or at least asked the chairman or the president whether or not they had checked with the other shareholders, the other people whose interests Mr. Laxton is supposed to protect, about whether or not they were comfortable with Mr. Laxton remaining.
I would think that it would have been a little more appropriate for the minister, before jumping to the defence of the chair and the president of Hydro, to have made some sort of inquiry as to whether or not that had taken place. There may well be other partners -- the World Bank and others, as the minister mentioned -- who didn't have a clue that Mr. Laxton was still there, weren't aware of it and weren't consulted about whether it was appropriate for him to continue. I would think that the World Bank would be a little upset about someone whose activities are under criminal investigation by the RCMP in Canada continuing to be involved in a project that they're dealing with. I would think that they would be concerned. I do recall comments, although they were somewhat contradictory, by the World Bank in February with regard to the way this deal was structured and who may be involved -- Marshall Islands partners, etc. -- and their concern about some of those locations and the way this type of deal could be structured. I would think, given the fact that this deal is under investigation by the RCMP as a potential criminal matter, that they would be concerned that the World Bank's name is attached to that.
I would have thought that the chair and the president of B.C. Hydro would have at least consulted with those people to determine whether they were comfortable with Mr. Laxton remaining involved in this deal, given what was going on. I will be very interested to find out whether or not that consultation took place. As I said, I'm surprised that the minister didn't ask those types of questions before he endorsed the decision of the chair and the president of B.C. Hydro.
Of course, as far as accountability goes, the minister is responsible for B.C. Hydro, responsible for the people on the board, responsible indirectly, through them, for the president and, in fact, the whole corporation. It's difficult, once the minister throws his support behind the chair and behind the president, to then pull the rug out from under them once he
[ Page 1380 ]
finds out the facts and perhaps finds that he is no longer comfortable with the decision that was made. I guess that's why I'm surprised at the speed with which the minister threw his support behind the chair and the president, not knowing the facts, not knowing who "they" were, not knowing what correspondence went back and forth, not knowing whether or not Mr. Laxton has shares in those companies, what influence he exerts on the members of the boards of those other companies, whether or not he purchased shares on the exchange, what his personal interest may be, whether or not the other shareholders or the other partners involved worldwide were comfortable with it. I think it was perhaps a hasty decision. We'll see what the outcome of it is and whether the facts, if we ever get them, support the confidence the minister has placed in the chair and the president of B.C. Hydro.
I want to ask a question of the minister. I asked it last night, and I hope that in the intervening period we've been able to ascertain whether or not it's the case. Can the minister confirm whether or not Mr. Laxton has been back and forth to Pakistan, in his role as a board member of SEPCOL, in the period from February 22 until today?
Hon. D. Miller: Just before I respond to that, with respect to the other partners, I was also struck by what eventually turned out to be a series of somewhat contradictory statements from the World Bank. In fact, we had officials in one continent contradicting officials in another continent; that's a matter of record. I suppose even World Banks are subject to that problem.
Finally, notwithstanding whether anyone else was consulted, I guess the real issue, in terms of this project succeeding, was the success of the offering on the Karachi exchange. While we have not got complete information about that, it does appear from the information I've been given that in fact it was a very successful, oversubscribed, share offering. I would hope that's one more factor in ensuring that this project moves forward in a successful way.
Now I've forgotten the question the member asked.
G. Farrell-Collins: My question was whether or not Mr. Laxton, in his capacity as a member of the board of SEPCOL, has been back and forth between British Columbia and Pakistan in the period from February 22 until now.
Hon. D. Miller: I don't know how often Mr. Laxton went, but I do know that he did go to Pakistan. I can confirm that he was not representing B.C. Hydro. There were no bills authorized or paid by B.C. Hydro. Beyond that, I don't know how many times he went or, indeed, what he did there. He did not go as a representative of B.C. Hydro.
G. Farrell-Collins: I would assume he couldn't directly go as a representative of B.C. Hydro, because he wasn't directly representing B.C. Hydro; he was indirectly representing B.C. Hydro as a member of the board of SEPCOL. Can the minister confirm whether or not he or the staff have undertaken to ascertain whether or not the expenses for Mr. Laxton's trips back and forth between British Columbia and Pakistan were billed to SEPCOL and therefore indirectly to the taxpayers of British Columbia through B.C. Hydro.
Hon. D. Miller: Again, Mr. Laxton was not there as a representative, directly or indirectly. Any travel or activities that he undertook there were presumably his and we really have no knowledge of that. We do know that he was there because someone observed him there, but apart from that we have absolutely no knowledge of his activities. Now, there may be
G. Farrell-Collins: I think it's easy to figure out what it was. It may not be 100 percent, but it's pretty likely that Mr. Laxton was in Pakistan acting on behalf of SEPCOL, or as we know, probably acting on behalf of himself. Certainly that is what one would expect him to be doing in Pakistan, unless he had other deals on the go at the same time, which would lead me to a whole series of other questions about what Mr. Laxton was doing the other times he was in Pakistan when we were paying for his trips.
I'm surprised, actually, because I asked the question last evening. I thought that in the intervening period the staff or the minister would have been able to talk to Mr. Smith and determine whether or not Mr. Laxton had been to Pakistan, what he had done there, what his role would have been with regard to SEPCOL when he was there and where those expenses would have been billed to. Can the minister tell me whether or not he gave direction? Can the minister tell me whether or not he gave direction to staff to determine that?
Hon. D. Miller: Can you repeat the last part?
G. Farrell-Collins: Yes. Can the minister tell me whether or not he gave direction to staff last evening to determine whether or not Mr. Laxton had been to Pakistan, how he got there, where the billings for his travel went and who he was representing when he was there?
Hon. D. Miller: That was discussed not last evening, but this morning. I confirmed this morning that, indeed, Mr. Laxton was in Pakistan. My first question was: did we in any way have any involvement in that? I was advised that we did not. We did not pay for any of the bills, there's been no communication with respect
The reason I say I want to check with Mr. Smith is that there was an exchange between Mr. Smith and Mr. Laxton. I think the member is correct: why else would Mr. Laxton go, except in connection with SEPCOL or the project itself? So let me see what I get with respect to that.
G. Farrell-Collins: I just ask the minister that when he's seeking that information, perhaps he ask a broader question, because sometimes -- as we learn here -- the answer depends a great deal upon how the question is phrased. I just ask the minister, when he seeks that information, that he ask it in a broader sense -- not just whether or not B.C. Hydro directly paid the bills, but who it was who paid his bills. Was it SEPCOL, a company in which the taxpayers of British Columbia have an interest? Was it one of the other companies along the chain that links to B.C. Hydro, and if so, what were those expenses and when did they occur? I'll leave that with the minister and hope that that will help us determine what actually occurred.
The minister said there had been some communication or connection between Mr. Smith and Mr. Laxton. Did he mean to say that those two have spoken as a result of last evening, or was it sometime before that that this discussion he referred to took place?
Hon. D. Miller: Honestly, I can't specifically recall if Mr. Smith advised that he spoke to Mr. Laxton this morning, but
[ Page 1381 ]
there has been communication between them. I communicated earlier that we did agree with the request, but subsequent to
[4:30]
G. Farrell-Collins: Can the minister tell me who was overseeing Mr. Laxton's involvement on the SEPCOL board on behalf of the shareholders of B.C. Hydro?
Hon. D. Miller: I'm advised that the SEPCOL board hasn't met since February. As I understand it, SEPCOL is the company that's building the project, if that's the correct characterization. But since February there has not been a meeting of the board.
G. Farrell-Collins: Maybe I'm just naïve, but can the minister tell me how a company that was facing the challenge of a public offering in Pakistan that crucially required the involvement of
Hon. D. Miller: I'm certainly learning more about boards. There are two points to make. The board had met and made what was required: the fundamental decision with respect to this project and getting the share issue on the exchange. B.C. Power, in fact, has the specific contracts for the project.
G. Farrell-Collins: B.C. Power?
Hon. D. Miller: SEPCOL has the contract, but Power is the one that administers the job.
G. Farrell-Collins: BCHIL?
Hon. D. Miller: Yes.
I'm advised -- again, this is advice I've just received -- that the requirement for SEPCOL is to have two meetings a year.
G. Farrell-Collins: Can the minister tell me when the last meeting was and when the next one is scheduled?
Hon. D. Miller: There may have been one in February. I can't confirm that. We don't have any records here.
G. Farrell-Collins: Maybe it's just unusual or maybe it's just the way it looks, but it would seem to me, given what occurred and that one of your main partners -- shareholders in the company from which all the expertise is coming -- has just had its chair and its president terminated, and the project itself, perhaps, as the minister said, put in jeopardy, that the people who hold the contract would want to get together and talk about that. Whether or not they met as a formal board is a good question. A similar good question would be: if they didn't, why didn't they meet as a formal board? If they didn't, what sort of a meeting took place where they could all agree that the shareholders of SEPCOL would request of the government of British Columbia that Mr. Laxton be allowed to remain as their representative on their board? It would seem to me that there must have been some coming together of minds on that. If they have to meet twice a year, one would assume -- although I don't know what their constitution is -- that those meetings would occur at about six-month intervals. It would seem to me that they're either pretty darned due for a meeting or they must have had a meeting in February. The assumption I have of every six months may be erroneous, but I guess we'll find that out. I just find it odd that that issue wasn't raised.
I'll get back to my question. Who at B.C. Hydro is responsible for overseeing Mr. Laxton's activities with SEPCOL? Who does he report to?
Hon. D. Miller: There is no reporting relationship or overseeing relationship. Again, getting back to the issue of SEPCOL, I'm not certain myself. I don't know how those arrangements work. I do know that the share offering went forward; it was taken up. The project is proceeding, so presumably something is working somewhere.
Again, I just want to kind of stress this point that the request was that Mr. Laxton remain because -- I know this brings laughs when I say it -- from their point of view he represented stability with respect to the project. We sort of went along with that. But clearly there was no reporting relationship to Hydro or anyone else, as far as we were concerned, by his remaining on the SEPCOL board.
G. Farrell-Collins: I guess that's an even better reason for getting him off the board and putting somebody on who you do have some reporting structure with. You know, to allow Mr. Laxton to stay on that board and to manage this project, given what's taken place, with absolutely no reporting structure -- no accountability, no knowledge of his whereabouts, no knowledge of what he's doing, who he's talking to, how he's selling these shares, what information he's giving when he's trying to sell these shares, what representations he's making on behalf of B.C. Hydro in the international market while he's selling these shares -- seems to me the height of incompetence on behalf of the board of Hydro and indeed, I guess, the government and the minister. To allow someone who we know we can't trust to remain in a position with no accountability, no reporting structure, no information as to his whereabouts or what he's doing is absolutely ridiculous.
Do we have any idea what he's been doing for the last period of time since February 22? Does anybody here in this room have any idea what he's been doing? Does anybody on the board have any idea what he's been doing for the last five and a half months or so?
Hon. D. Miller: Really, I presume and think it's correct that the Karachi securities
[ Page 1382 ]
I don't disagree, and I've indicated that Mr. Smith has made it clear, that we would like Mr. Laxton to leave. I can't confirm that he has left.
G. Farrell-Collins: Mr. Laxton for the last five and a half months has had unfettered ability, unfettered responsibility,
P. Reitsma: Authority.
G. Farrell-Collins: . . .yes, authority to represent British Columbia Hydro internationally through the SEPCOL board, to go out and sell shares in Pakistan, to make representations about B.C. Hydro, to make representations about what they do -- to act as the Hydro representative. He was the only contact that the people who buy those shares on the Karachi Stock Exchange would have who would link them back to B.C. Hydro. When they look at the offering memorandum, the offering in Karachi -- I haven't seen the one from Pakistan, although Heaven knows I've tried to get it, if there is
He's the province of British Columbia, and nobody has any idea what he's been doing, what he's been saying, how many shares he has sold. We don't even know. He says they're not all sold; we say it's oversubscribed. He says it's not closed; we say it is closed. There's a good indication of why he shouldn't be out there freewheeling. You've got this maverick guy out there with B.C. Hydro written all over him. The B.C. flag is probably in his pockets and those little pins you give out, and he's out there representing us, and nobody has a clue.
Would Mr. Ridley, as a member of the SEPCOL
Hon. D. Miller: I thought we had reached some understanding with respect to some information that we would try to get. I can get back into it as well, and I have not been doing that. I assume, Mr. Chairman, and I think this is a reasonable assumption, that everyone's primary interest was that the project proceed. If indeed there was selling of shares or convincing of shareholders, it was on the basis that this was a project that was sound.
As much as Mr. Laxton might be distasteful to members
G. Farrell-Collins: Let's just leave Mr. Laxton aside for a few moments, if we will.
Can the minister tell us what role Mr. Ridley has been playing on the SEPCOL board as far as overseeing this project is concerned? I assume because he's there that he's our guy. Technically, because he still works with B.C. Hydro, he's still in the loop. What role has he been playing in making sure that this project is successful? What role has he been playing in making sure that everything has been going according to plan?
Hon. D. Miller: I think he has a variety of functions: monitoring the project, I'm advised, giving the kind of assurance -- given the events that happened here in British Columbia -- that it was Hydro's intention to fully move forward on the project as the engineers and managers. I think he's really our guy there, if you like.
G. Farrell-Collins: What sort of reporting structure is there for Mr. Ridley? Is it something that goes on on an ongoing basis? Does he report to the board with regard to what's happening with SEPCOL? If so, is it on a monthly basis, a bimonthly basis? How often does that happen?
[4:45]
Hon. D. Miller: Mr. Ridley is president of BCHIL. He reports, obviously, to the BCHIL board on a regular basis, to both the president of Hydro, Mr. Costello, and the chair.
G. Farrell-Collins: And Mr. Ridley has no knowledge and has not reported any knowledge to the board and to the staff here and to the minister of what Mr. Laxton has been doing for the last five and a half months?
Hon. D. Miller: The advice I received was that Mr. Ridley saw Mr. Laxton in Pakistan but had no contact with him, was not engaged with him in any way with respect to this project.
G. Farrell-Collins: Given that they're both on the board of SEPCOL, wouldn't it normally be understood that they would talk to each other -- speak about what the strategies were for the plan, speak about how the offering was going, what they were doing to try and ensure it was fully subscribed? Did no discussion take place between Mr. Ridley and Mr. Laxton, our two representatives on the board of SEPCOL? No communication between them at all -- is that correct?
Hon. D. Miller: As I previously indicated, our information is that there has not been a board meeting since February. There's not been that communication.
G. Farrell-Collins: It's hard to understand how you could let that happen: that you would have an ongoing share offering in Pakistan on the Karachi exchange, you would have one member of the board of the company in which the offering was being made reporting back -- we don't know when or how or in what forum -- to B.C. Hydro International's board and to the chair of the board of B.C. Hydro and not have any communication between Mr. Laxton and Mr. Ridley.
[ Page 1383 ]
It would seem to me that if there was anyone who was appropriate to oversee or monitor or keep in touch with what Mr. Laxton was doing, it was Mr. Ridley. Why would Mr. Ridley not be aware of what Mr. Laxton was doing? They were both our people on the board. They were both there obviously -- or according to the minister, anyways -- engaged in the same goal: the success of the project. It would seem to me they would at least talk to each other. If Mr. Laxton's services were so vital to make sure this thing was a success, then one would think, given Mr. Laxton's role sort of up here and Mr. Ridley's role sort of down here and that he was just a representative of B.C. Hydro but not essential to the deal being successful, that Mr. Ridley, in his attempt to be accurate and thorough and timely in his reporting back to B.C. Hydro and to BCHIL, would have communicated with Mr. Laxton to find out how the offering was going. I suspect that's why we have a difference of opinion as to whether or not the offering has closed and whether or not it has been oversubscribed or undersubscribed. Was Mr. Ridley not asked to monitor the project in any way and let us know how it was going and let us know how Mr. Laxton was performing?
Hon. D. Miller: I indicated, I think, in one of my last responses that in fact that's one of the things he has been doing and that he no doubt was communicating with the officers of SEPCOL. I don't know if I can tell you much more. I think I've tried to be open about what I think took place or the advice I'm given about what took place.
G. Farrell-Collins: I appreciate the minister's candour, but I'm trying to get my mind around what the accountability structure was. We've now been told that Mr. Ridley's role was to be that conduit of information through to BCHIL and the chair of B.C. Hydro and that he did in fact perform that. But the only report we have of what went on was that at one point he saw Mr. Laxton in Pakistan. He didn't say he talked to him; he didn't say he asked him what he was doing; he didn't say he asked him how the project was going or how the sale was going; he didn't say they chatted about the strategies to sell the shares on the exchange -- nothing like that, just that they saw each other.
I find that really hard to accept. Without casting aspersions -- and I don't want to -- I question whether or not the information is accurate or whether or not Mr. Ridley has in fact done the job properly of making sure that the project and the best interests of British Columbians were at heart. When you have someone like Mr. Laxton who, despite all the ongoing concerns we've had and despite the firing of Mr. Laxton from the other boards, being allowed to continue on SEPCOL. . . .
We gave indication that we wanted him off. They came back and said: "No, we really need him here." I would think that the minister would have said: "Hang on a second. If it's absolutely essential that he be there, if I can't think of anybody else in the whole province of B.C. who can do that job, and it's absolutely critical that he be the only person who can do that job, then okay." I'm using the minister's logic. I don't agree with him, but I'm just trying to think through what the chair of B.C. Hydro would have thought. "Okay, I'll leave him on that board, but I can tell you, the next person into my office is going to be Stan Ridley, and I'm going to be asking Stan Ridley to make sure that he keeps a close eye on that guy. He's already proven he can't be trusted, and he's already proven that he's not above and beyond blatantly lying to the people he needs to report to and the people of British Columbia as a whole -- publicly. He's already proven that he's not trustworthy to do a proper business deal. He's already proven that he's not trustworthy to administer it in an open and transparent fashion. He's already proven that he's not the kind of person we really want, but if for some reason, whatever that may be" -- and I still don't understand it -- "Mr. Laxton is the person required, the only individual on the planet Earth who can put this deal together, then okay. But I can tell you, Mr. Ridley, you'd better keep a pretty close eye on him, because if he screws up, it's you who's in trouble."
It would seem to me that there would be some sort of accountability there. To say that the only knowledge we have of Mr. Laxton in the past five months is that he's been visibly seen in Pakistan, and that's
The chair of B.C. Hydro, I would say, rather than deserving an unreserved vote of confidence from the minister, should be called on the carpet to explain why he would allow someone of that proven reputation to continue to spearhead this deal to represent and protect, as the minister put it, the interests of the taxpayers of British Columbia with absolutely no reporting structure, no accountability, no observation at all. I just can't imagine how the minister could have allowed that to happen. If he says he didn't know, and we were to give him that, then I can't imagine how Mr. Smith, as the chair, could have allowed such a thing to happen and how he could have allowed that to go on without reporting it to the minister. I can't understand how the minister could so unreservedly give his vote of confidence to Mr. Smith, given the lack of observation and the lack of supervision of someone like Mr. Laxton, who's there, in the minister's words, to protect the public interest.
Hon. D. Miller: Mr. Chairman, I think it's ground we've covered. Again, going back to it, there was desire on the part of the Pakistanis to have Mr. Laxton's name kept on SEPCOL, presumably on the prospectus as well. Mr. Ridley indeed is on SEPCOL, but Mr. Ridley is an engineer. His job is to monitor the project. He did give assurances that B.C. Hydro would in fact be honouring commitments that had been made. Mr. Ridley reported back to Hydro that he had seen Mr. Laxton. I'm not sure if they talked or not. Mr. Laxton was not under any orders from Hydro. There was no reporting from Hydro; he had no involvement. I don't know if Mr. Laxton knows anything about engineering; it was the project that was Mr. Ridley's responsibility. Mr. Laxton, again, seems to me
G. Farrell-Collins: I know that my colleagues have questions on other issues; perhaps we can give this issue a bit of a break. Hopefully some of the information that we requested will be forthcoming. Perhaps we can pursue it again this evening or on Tuesday, and try to get some answers to the questions that have been asked.
If I can throw one question over to the minister, perhaps when he speaks to Mr. Smith, either this evening or over the weekend, he can ask him why he didn't feel that it was
[ Page 1384 ]
appropriate or necessary to include, in his interim report, the fact that Mr. Laxton continued to work as a representative of B.C. Hydro on the SEPCOL board. I'd be interested to find that out. I'd be glad if that information could come to the committee.
Hon. D. Miller: I will certainly see if I can get that question to Mr. Smith. I'm not sure that I will be talking to him tonight.
D. Jarvis: I'm trying to think of what we were talking about when we left off. I believe that the minister said that we are very fortunate in B.C. in that we have the lowest rate of power. He was comparing Vancouver to L.A., a few other places in the States and all the rest of it. But it was like apples and oranges, because he really should have been comparing it to a local area in Canada. When you look at it, Alberta is not far behind us. Winnipeg, Manitoba, has cheaper power than Vancouver does, and so does Montreal, Quebec. In any event, I wanted to ask the minister if he could tell me what the net profit of Powerex was for '94 and '95.
[5:00]
[H. Giesbrecht in the chair.]
Hon. D. Miller: We're still looking for previous years, but the plan for '96 is revenues of $77.8 million and expenses of $73 million, for a net of $4.8 million.
Interjection.
Hon. D. Miller: The forecast is now somewhat higher, for revenues of $67 million and expenses of $54 million, for a net of $12.8 million.
D. Jarvis: I'm surprised, Mr. Chairman, that they do not have the financial statements of Powerex for '95 or '94 with them. It's surprising. But maybe we could come back to that later.
I want to know if the minister could tell me whether the CEO, Mr. Peterson, has a substantial severance package in his present contract as the president of Powerex.
Hon. D. Miller: Without the details, I'm advised that the answer is no.
D. Jarvis: I was just wondering, then, if he doesn't have it when he's the president and CEO of Powerex, why he would have had such a substantial severance package when he was ostensibly just an employee of B.C. Hydro about three or four years ago. When he left, the present people at the table negotiated a nice severance package of about $165,000 or something along that line.
Then he was gone for eight months, and then appeared again as a consultant for a couple of years. During that time, I guess he earned another $200,000-some-odd, and then became president. That's the reason I was asking what kind of a severance package he had now, seeing as he required a severance package to leave for no apparent reason. If he had
Hon. D. Miller: The advice I get is that Mr. Peterson was a long-term employee of Hydro, and when he did leave, he received a package that was consistent with the packages available at that time. Presumably some of these were shaped by awards made by the court. When he was rehired as the president of Powerex, it was on a contract basis, initially month to month. I can't confirm -- perhaps I can when Mr. Costello comes back -- whether or not that's changed, but it was on a month-to-month basis.
D. Jarvis: I had some notes here, but I seem to have lost half of them. I wanted to get into the bonus aspect of B.C. Hydro. I understand that it's a common thought out on the street that if you're ever unemployed, the best thing is to be an unemployed vice-president of B.C. Hydro; you always seem to do well. Can you tell me if there was a bonus system paid this year to the vice-presidents of B.C. Hydro?
Hon. D. Miller: I understand that there is a bonus plan, yes, and bonuses were paid. If the information is correct, it's in the range of 20 to 24 percent.
D. Jarvis: On the bonuses, going on that aspect again, how does B.C. Hydro measure bonuses in an objective way? I'm trying to find out how they measure vice-presidents and/or CEOs. Is there any way in B.C. Hydro
Hon. D. Miller: There is an evaluation process that's split between corporate goals and the business plans of Hydro, but there is an evaluative process that people have to go through in order for these to be determined.
D. Jarvis: I wonder if the minister could explain to me what is part of this process? He has said that there is a way of evaluating, but I would like him to be a little more objective, if he would, and explain what it is. Is there a criterion of steady employment, all year? Or does the company have to reach a certain level in profitability
Hon. D. Miller: Again, there is a contract with measurable goals for vice-presidents, and that is used, obviously, as part of the evaluative process to determine these bonuses.
D. Jarvis: Therefore the minister cannot give me any substantive reason why they should be paid a bonus other than saying, "Yes, they have a procedure," when we don't know what procedure is used to measure the type of bonus they would have. I have to mention that I appreciate that these are gentlemen who probably do deserve a bonus. I'm not saying they're not. I just want to find out which way
Hon. D. Miller: We'll see. We don't have the written material with us, but if there is some, and I assume there is, we will certainly try to get it to the member. But there is a system and a process, and I think it's quite aboveboard to determine the bonuses that are paid.
D. Jarvis: The minister is sitting there with a couple of vice-presidents. I find it difficult to believe that there wouldn't be some way that they would know. They are the minister's staff, and they should be able to advise the minister as to how bonuses are measured. Does B.C. Hydro say you must reach a certain level in profitability, or do you get paid regardless, or is it on the length of term that you've been with the company?
[ Page 1385 ]
Hon. D. Miller: Again, I really have indicated, in general terms, that there is an evaluation or assessment process. It is based in two parts, which are split fifty-fifty between corporate goals and the goals of the various business units. There are contracts that the VPs enter into in terms of what accomplishments are reached in those units. Really, it's a modern business: it's evaluated, and bonuses are determined based on those criteria.
D. Jarvis: I assume that the minister will send me something to clarify what he has said.
Hon. D. Miller: I've already said that.
D. Jarvis: That's appreciated.
One more question on bonuses: does a bonus count as part of the moneys earned to qualify for a pension?
[5:15]
Hon. D. Miller: Bonuses are pensionable earnings.
D. Jarvis: Did Mr. Peterson and Mr. Sheehan get bonuses this year?
Hon. D. Miller: Not Mr. Sheehan. Mr. Peterson's contract provides for a performance bonus, and there was one.
D. Jarvis: Did Mr. Eliesen get a bonus from B.C. Hydro this year?
Hon. D. Miller: I don't believe he did. He's not employed by Hydro. In fact, he's employed in a different capacity in a joint venture with the private sector -- Westcoast and ABB.
D. Jarvis: Did B.C. Hydro pay any salary at all, a bonus or a consulting fee to Mr. Eliesen?
Hon. D. Miller: The advice I get is that the answer to that question is no.
W. Hurd: I wonder if the minister could clarify for the committee the nature of Mr. Eliesen's current duties with Hydro or its subsidiaries, and if he could advise us whether Mr. Eliesen's pension plan, which he negotiated upon taking over the corporation some years ago, remains intact, and whether he is continuing to contribute to it in any way. I wonder if he could clarify, first, the role Mr. Eliesen's playing with Hydro and its subsidiaries, and also the status of his pension plan.
Hon. D. Miller: Mr. Eliesen is really working at pursuing power development projects in China, but my staff just advised me -- and we don't have confirmation yet -- that there may be a reimbursement from Hydro to B.C. Trade. I answered the question no, and I've just now received conflicting information, so I'll try to get some clarification of that to the last member's question. As I understand it, essentially, the work that Mr. Eliesen is engaged in with Westcoast and ABB is to pursue opportunities for power development projects in China.
W. Hurd: With respect to Mr. Eliesen's severance and pension entitlements from Hydro, I assume then the minister's advising the committee that technically he has not left the employ of the utility, and that his severance and pension entitlements remain intact in his new position.
Hon. D. Miller: It's a bit awkward because staff from the Ministry of Employment and Investment aren't here, obviously; but my understanding is that there was some publicity in the newspapers about Mr. Eliesen's pension. I can't recall the details and will attempt to get some more information, but I think I can confirm that he is in fact eligible for pension benefits.
W. Hurd: I think the minister's memory of the controversy is actually quite good, because I think Mr. Eliesen was entitled to a million-dollar pension after a very brief period of service with the utility. That's why I am asking whether the entitlement that was a source of considerable controversy at the time has followed him into his new position, or whether Hydro has taken any steps to negotiate with Mr. Eliesen in terms of his pension entitlement. I am just seeking clarification on that because as the minister correctly pointed out, it was revealed shortly after Mr. Eliesen had come from Ontario Hydro to take over B.C. Hydro that he had successfully negotiated a huge pension entitlement that would have approached a million dollars, I think, over his lifetime.
Hon. D. Miller: As I indicated, I had forgotten the details. I did see briefing material on this some time ago. I think the member is correct that there were pension rights. They may have been accumulated rights from previous employment, but I believe there are pension rights. I'm not aware of any attempt to try to negotiate those away or any other efforts there. Presumably they are legal rights that Mr. Eliesen is entitled to.
W. Hurd: The minister has indicated that Mr. Eliesen is currently engaged in Hydro ventures in China. Would that include participation in the Three Gorges project? I wonder if the minister could clarify where that project stands, Hydro's involvement and whether Mr. Eliesen is involved in that initiative in any way.
Hon. D. Miller: No, I can't
W. Hurd: I have one other additional issue to raise with respect to Powerex, and it relates to the ongoing court case involving Powerex and industrial customers in British Columbia. I am aware that the matter has proceeded through to trial, and the courts have found in favour of the B.C. Hydro corporation. I certainly understand that the ministry or Hydro may not be able to talk about the specifics of the case, but as I recall, the concern expressed by the industrial customers of Hydro and the basis on which they proceeded was that a contract that Powerex had signed with Intalco -- an aluminum company in Whatcom County, Washington -- was not available for public scrutiny. Obviously Hydro felt strongly enough to pursue this issue through the court system and was ultimately successful. My question to the minister is whether that is a blanket policy of Powerex in terms of not divulging any contractual arrangements for sale of power to companies in the United States.
Hon. D. Miller: The ruling was made not by the court, but by the National Energy Board. That's now a fairly com-
[ Page 1386 ]
mon issue with respect to deregulation, where railways can now enter into confidential contracts with customers. That didn't used to be the case a dozen years ago, but the deregulated atmosphere has allowed railways and other utilities to enter into those kinds of arrangements. It's a business arrangement, and as with most business arrangements, of necessity, certain aspects have to remain confidential. The NEB has those rates in a copy, but they have ruled that there is no requirement to make them public.
W. Hurd: So it would be theoretically possible for B.C. Hydro to sell power to an aluminum company or a smelter or another business in the United States at a lower rate through Powerex than it would provide power to them in British Columbia. Is that a possibility? I'm going on memory now with respect to this whole issue, but I believe the concern of the industrial customers of Hydro was that they could potentially find themselves competing with a firm south of the line that would succeed in buying cheaper power from Hydro than they could garner in British Columbia. Is it theoretically possible that Powerex might, inadvertently or otherwise, assist a competitive company in the United States by selling them power cheaper than it would be available in British Columbia?
Hon. D. Miller: Powerex is competing in the marketplace, and their mandate is to sell electricity. While it's a very complicated issue with respect to domestic and bundled rates, etc., in theory it could well be that power could be sold for rates that are lower than current domestic rates.
D. Jarvis: I was under the understanding that the U.S. federal energy regulatory commission says that you have to open up your contracts, that they are open to the public. Am I correct?
Hon. D. Miller: Only transmission costs are subject to disclosure. All of the other costs can be confidential, and obviously the NEB
W. Hurd: I just want to briefly pursue with the minister the philosophical underpinnings of this particular issue. I know, having had the opportunity to debate the minister in the past on the merits or lack thereof of the free trade agreement, he's always spoken with some concern about the relationship between Canada and the U.S. -- British Columbia in particular -- on trade issues and how the United States sometimes approaches those issues.
I wonder if he is personally comfortable as a minister with the potential scenario that a utility owned by the people of British Columbia, with a mandate for social and environmental concern or
[W. Hartley in the chair.]
Hon. D. Miller: There is significant change taking place in North American markets. Powerex obviously has a mandate to try to market electricity, and they must be competitive in terms of doing that. When we look at it, we have some criteria with respect to undercutting domestic markets, but within those constraints, it might be possible, at least on a theoretical basis, for Powerex to enter into contractual relationships for power at lower cost, but certainly not at the expense of domestic users. Powerex, as I indicated earlier, is out there in the market competing with other marketers of power and returning a dividend to British Columbia.
[5:30]
W. Hurd: My last point on the issue relates to the case that did go forward to the NEB, as the minister has corrected me. I suspect that the reason Hydro's industrial customers in British Columbia wanted to access the terms of the sale to Intalco, in this case, was that they wanted to know what they might be competing against. As a business operating in British Columbia and competing against an aluminum company in Whatcom County, in this case, that type of information would obviously be useful and of importance in determining their own costs of production, particularly when they were competing, potentially, with that company, perhaps even in the same marketplace in the United States and also in British Columbia.
I also want to ask one other question relating to how Hydro's rates are set when they make an application for a rate increase to the B.C. Utilities Commission. It's my understanding that the process is that the commission makes a comparison with other utilities that are operating in British Columbia -- Westcoast Energy, for example, and West Kootenay Power and Light. I know that another concern of the industrial customers of Hydro has been that when it comes to allowing a rate increase by B.C. Hydro, those aren't particularly fair comparisons. In the one case they might pay property taxes, for example, or have a lot of other fixed costs that Hydro might not have to face, and therefore the effect of a rate increase at Hydro would be much higher than if it were offered by a company that faced a different set of economic variables.
I wonder if the government has given any consideration to working with other ministries, perhaps to changing the terms of reference of the B.C. Utilities Commission, to provide a more fair and equitable method of assessing Hydro's applications for rate increases, because they are such a huge player in the province, and really are almost a monopoly in many respects. I wonder whether there's any consideration being given by the government to a fairer or more equitable way of assessing Hydro's right to apply for rate increases in the province.
Hon. D. Miller: The direction really was to look at the rate of return on what was comparable -- or what is most comparable -- to Hydro, and that is determined to be B.C. Gas. So those are the rules. I'm not aware of any other work that's being done with respect to any changes in that.
W. Hurd: I guess what I'm driving at is the issue that arose a few years ago when Hydro, amid great controversy, recapitalized some of its assets that the industrial customers of the corporation felt had already been actually paid for out of previous rate increases and out of payments that had already been made. I understand the case ultimately went to the courts, and I never did hear how it got resolved or whether it has been resolved. But as I recall, Hydro recapitalized its transmission lines, I believe, and included them in the equation for justifying a rate increase before the B.C. Utilities Commission. Maybe I could ask the minister if he could
[ Page 1387 ]
advise the committee what happened with the court case involving the major industrial customers of Hydro. I am aware that some of the major forest companies were involved in that joint action. Was it resolved by the courts, or is it still out there to be resolved?
Hon. D. Miller: No, apparently there was not a recapitalization; that wasn't an issue. It is a complex issue when you are talking about these questions. It has to do with the definition of equity in what is essentially a monopoly. I am further advised that the court case did not proceed.
W. Hurd: Despite the fact that the case may not have proceeded, can the minister tell us whether the corporation has studied the position of the major industrial customers of B.C. Hydro, and whether any of the complaints that they raised with respect to that particular rate
Hon. D. Miller: I gather the issue around rates goes back to April 1993. I am also advised that Hydro has worked with their industrial customers and has developed industrial service options, which have been filed with the Utilities Commission. So Hydro has been working with the industrial customers to provide those kinds of options.
W. Hurd: Just two other issues. One relates to the ongoing issue of dealing with wood waste in the province and cogeneration facilities. I'm certainly aware that Hydro has established a benchmark for the price they will pay for power from co-gen projects, and I believe it was in the range of 4 cents a kilowatt-hour. Given the fact that during the Environment estimates in this committee room, we identified a serious problem where wood waste was being landfilled in British Columbia because beehive burners have been phased out in the interior and the major forest companies don't really have anything to do with the wood waste material but stockpile it, I wonder if the minister could advise whether the corporation is considering revising its purchase policy downward. First of all, can he confirm that the price they're willing to pay has to be 4 cents a kilowatt-hour or less before they will proceed? And can he advise the committee what steps Hydro might be taking to help alleviate this environmental problem in British Columbia as well as providing an alternative power source?
Hon. D. Miller: I understand the RFP on those IPPs went forward with a cap over a maximum of 3.8 cents and that many of those have come in lower. We have announced that we are proceeding. I did deal with this earlier with two IPPs, one in Prince George and one in the Skookumchuck area. There are an additional five projects that are being reviewed by a panel. I expect to receive some information in the next month with respect to our ability to move forward on additional IPPs.
W. Hurd: The minister will be aware that the 3.8 cents a kilowatt-hour does represent a barrier to some regions of British Columbia which may, by virtue of the moisture content of the material they are using, find it difficult to justify a plant at that rate. I'm just wondering, since Hydro does have an environmental and social policy direction, whether in some cases it might consider purchasing power at higher rates in order to deal with this environmental problem and find a more suitable use for wood waste. Is it the case that the 3.8 cents per kilowatt-hour is cast in stone? Is that the policy of the corporation, even given its environmental mandate?
Hon. D. Miller: I appreciate the member's argument. It essentially has to do with social costing and allowing people to build projects, partly for their own use, but partly to sell some of that power into the grid at a higher rate than Hydro can generate it for. That presents somewhat of a conundrum with respect to the issue of rates, because I think I've heard people over there arguing for lower rates. On the one hand, there's a bit of an argument for allowing IPPs to go forward at a higher cost, but at the same time let's ensure that we keep our rates low. We're trying to move forward on that. We take it seriously. We have announced some IPPs, and we're considering others. There were 48 bidders on the RFP; ten were short-listed, which represents about 1,000 megawatts. You need to maintain a balance, but there is a clear cost. If you're going to accept higher-cost power into the grid and make a commitment to buy it over time, then you're going to pay more for it than what you pay to generate your own power. That's where social costing comes in. You do look at issues that are important to the forest sector. The least-cost projects are the ones that make the cut. Obviously there would be economic implications if you simply said, "Yeah, we'll take every one," because that would drive the cost of power up.
W. Hurd: I have a request for direction from either the Chair or the minister with respect to questions about Columbia Power: would it fall under the mandate of the Minister of Employment and Investment? I'm aware that when we debated these estimates last year, Mr. Sivertson, who was the president of Columbia Power at that time, was in attendance to answer questions about the trust and the joint initiative. I wonder if the minister could advise us whether there will be representatives of Columbia Power here at any point in his estimates, or whether it now falls under the mandate of another ministry.
Hon. D. Miller: It falls under the Ministry of Agriculture, Fisheries and Food.
D. Jarvis: I find it difficult sometimes to appreciate the fact that B.C. Hydro is a tax-supported Crown corporation, basically, and they're in competition. They now say that they're prepared to buy power from independent power producers; you say that right in your report. Yet you talk about a list of 42 proposals that were thrown at you about two years ago now. I guess it's about all of that; I can't remember the exact date. You went down to a shortlist of about ten. I guess the Skookumchuck one and the one in Prince George bring it down to eight. Now you say you have five. Are you negotiating at this time to bring at least five into the marketplace?
[ Page 1388 ]
[5:45]
Hon. D. Miller: No.
I just want to be clear that B.C. Hydro is not a tax-supported entity at all; it's a commercial Crown. It pays a dividend to the Crown; it's not tax-supported. That's important to note.
All I was really trying to say in a general way was that on the one hand, people see IPPs as being desirable, but their cost of generating power is generally higher than B.C. Hydro's. The consequence of allowing high-cost IPPs, all of which want to sell whatever is surplus to their needs onto the grid, is that we will have more costly electricity. Therein lies the conundrum. That's why we've taken some time to try to develop a very comprehensive and intelligent set of criteria for when IPPs can move forward. We obviously seek the least cost, but there are social objectives and regional objectives included in those criteria. There are currently five IPPs that are subject to a panel process. I've talked to some of those proponents, who are quite happy with that panel process, which we expect to report fairly soon.
Mr. Chairman, given the hour, I would move that the committee rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 5:47 p.m.