[ Page 1641 ]

The House met at 10:05 a.m.

Prayers.

Hon. J. MacPhail: In Committee A, I call Committee of Supply. For the information of the members, we will be debating the estimates of the Ministry of Employment and Investment; Municipal Affairs; Small Business, Tourism and Culture. In this House, I call Committee of Supply B, and for the information of members, we will be debating the estimates of the Ministry of Labour.

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

On vote 42: minister's office, $403,000.

Hon. M. Sihota: I should advise the Chair that by way of understanding between the House Leaders yesterday, we have agreed that we will entertain a few questions on Education that were left over as a result of the debate we had yesterday.

A. Sanders: I'm sorry to start the day with leftovers, but that seems to be my life these days. I just want to do closure on Education. I thank the deputy minister and assistant deputy minister for answers to the questions that I have asked. The minister has also provided me in this sitting with the opportunity to ask questions that have not been covered in the material presented. I do appreciate it, and I will take the opportunity to do that.

In education -- K to 12 specifically -- we looked at a number of issues. I believe that we've gone through most of those in a certain amount of detail. There are some areas that we have to work on a little harder in government. I think specifically we need to work harder on the ministry communicating with communities in a way that is effective and timely, so that communities can get on with whatever jobs they have to do in terms of capital freezes and amalgamations in areas where there are changes for September. I urge the ministry to promptly answer letters from constituents who are facing those issues and trying to make decisions in the very near future.

We've also gone through the goals of education funding, collective bargaining, capital freezes, the accreditation of schools, reporting, the reading and writing achievements, school completion and student preparedness for employment -- which I feel government is making some good initiatives in. I do appreciate that and feel this will be something we will be picking up on next year to see whether the objectives have been met.

I would like to see implemented some way to critically analyze whether these programs are making a difference. Of all the programs we have discussed, the one area that needs to be worked on is that we need to have objective measurements for the initiatives we are undertaking. I specifically mentioned the Stay in School initiatives, the gender equity initiatives, and the Skills and Training programs. There should be some concrete numbers from this ministry when we do this process again in a year's time, so that we can look at these and decide whether or not we have put our money in the right place to make change for British Columbia's students.

I will not speak specifically about the colleges, institutions and universities, Skills and Training, and the CAPP program -- we did discuss all of these over the last two days. The most important areas to come from our discourse over the past couple of days have to do with funding -- in areas where I'm still not sure where funding is coming from. Specifically, how much are we going to be spending on francophone schools? What is the outline of that? How much is that going to cost? That is not outlined in our budget for 1996-97, but it will most definitely be an expense for this year, and we're going to need to look at that in order to ascertain what we should be budgeting for in the year following.

I'm still waiting for information on the $30 million which goes to Youth Works that I have not been able to locate. The press releases said $80 million; all I can see is $50 million for that, and I would appreciate that gap of $30 million being closed for me, from a numerical point of view.

The $23 million we need to come up with this year and next year again are not in our estimates. Those are very large figures. We need to have some critical, objective way to find where those funds are going to come from. Even though the budget is large, it's a very large amount of money, and I think the taxpayers deserve that.

The other issue we have talked about in education that is important, and I'll be looking at critically in the next year, is the $454 million off-loading from federal transfer payments and the minister's comments that we will not be using education as a funnel for those funds to be drawn from. The total amount of money that we're talking about here, for which I am looking in the estimates for some more objective criteria on where we're going to get it, amounts to half a billion dollars. This is a very significant figure. This will be one of the things that the assistant deputy ministers and myself can go over and make sure that there is a mutual understanding of where those funds come.

Other than that, I feel that the process is complete. I appreciate the information given, and I look forward to continued good dialogue between the minister and myself, as well as the ministry staff.

[10:15]

Hon. M. Sihota: I do thank the member for her comments and the opposition for their input as we go through the process of dealing with this dominant public policy issue of education. There are challenges. There will be many, many of them that are identified during the course of the dialogue in the House.

Some of these initiatives like Skills Now are new. Obviously, there will be greater opportunity to assess the success of what we've done in terms of Youth Works, B.C. Benefits and the like.

Universities and colleges. I suspect that the accessibility parameters that government has established and how we manage that will be something that will obviously be worthy of review next year.

The K-to-12 system. I think, again, the most effective question that was asked was the one about goals. I suspect that ought to be the question that we'll start with next year, in seeing whether or not those goals were realized.

On a couple of technical points. About the $30 million, I actually had that answer; I just didn't bring it with me. We'll 

[ Page 1642 ]

get our ADM over in Skills Now to give the hon. member that. On the question about the objective indicators, I do think that's the one we really need to work on in the K to 12, of the three of you mentioned. That's really where we've got some work to do.

One other issue that I want to reply to is the francophone issue. Really, as we go through the process of working out with the francophone communities what we intend to do, we will have a better indication of what we're going to be faced with there. Of course, there is litigation right now that may colour this entire matter.

With that said, I thank the hon. members for their comments with regard to education. I should advise hon. members that I have staff here from both the Workers Compensation Board and Labour. They will now make their way up here. It's up to the opposition which way they want to start. It doesn't really matter to me. We can start right now, then, on Labour.

J. Dalton: I guess my introductory remark would be to welcome the officials, some who very kindly gave a briefing to some colleagues and me so we would have a reasonable overview of the Labour ministry. In a way, it's probably a good thing that we've moved from Education, Skills and Training, because I think there was a bit of confusion. Maybe some of the questions we'll be asking the minister will clarify some points. Maybe there's a bit of confusion in the roles when you have one face but wear two hats. If we think back, hon. Chair, predecessors to the now Labour minister held the portfolio of Skills, Training and Labour. I guess before that it was Advanced Education and Labour.

Hon. M. Sihota: Labour and Constitutional Affairs.

J. Dalton: Whatever. Now we have a stand-alone ministry. But we don't have a stand-alone minister, if I can put it that way; we have a minister who is wearing two hats and is acting in two capacities. I'm not suggesting that those things are mutually exclusive. In fact, I think there may be, deliberately or otherwise, an opportunity for the minister and the cabinet to seize on the dual role that this minister has now taken on. For example, later on I'll be asking some questions about the B.C. Labour Force Development Board we were talking about in the Education portfolio. I didn't want to jump in at the time and point out the technicality that we probably shouldn't have been debating it then. It's in these estimates, as the minister is acknowledging. But that doesn't matter, because I think there are some real opportunities to take initiatives from one ministry and fold them into the other.

Even though I guess labour has traditionally been perceived.... When we have a socialist government unfortunately back in office -- if I may say that, and not unkindly -- it's of course always perceived that labour has to be sort of them versus us. I think, for example, of a front-page article in the Vancouver Sun during the election campaign that was suggesting that the Liberals would "gut the Labour Code." Well, of course, that's the sort of inflammatory thing that comes out of the politics of labour relations, and I would be the last one to not acknowledge that obviously there are political issues folded into labour relations. I'm hoping that we will extract from the minister an approach that will recognize, as I say, the opportunities that certainly exist when this minister has two portfolios, one Education and the other Labour.

I'm wondering if the minister, though, could perhaps assist the committee by telling us if information is available as to what the decision-making process was when the Premier created these two separate portfolios but put the same person in charge. The reason I ask that is so that we can have an understanding of the possible dual roles the minister has taken on and if he feels comfortable with those, because I think our important function here will be to get an understanding of what the Labour minister -- as opposed to the other portfolios he may have -- sees as his function. When he walks into his office in the morning -- I don't know whether he turns left into the Education office or right into the Labour office -- or maybe he goes straight ahead. So perhaps the minister could assist us with that.

Hon. M. Sihota: I think the best answer I can give you is: only the Premier knows. He asked me into his office and told me that he wanted me to take on two sets of responsibilities, and he told me what those responsibilities were. Traditionally, the view that I take is that it's a privilege to serve in cabinet, and that's enough. I don't think it's my purview to negotiate with the Premier over any other options. I received no special instructions with regard to the Labour portfolio, or for the Education portfolio, other than the usual: "Do your thing." That, I think, gets to your next question.

My thing in Labour is as follows: we introduced a new Labour Code in the fall of 1992. In my view, it is a document that has proven its worth. We have enormous stability in labour relations in British Columbia. We have toned down the confrontational kind of approach with regard to labour relations. We have put an emphasis on preventative mediation, and the evidence of the success lies in the fact that last year, I believe, we had the fewest days lost to strikes since the Second World War.

I think that the Labour Relations Board has proven to be that which it was suggested it couldn't be: a neutral body made up of people from all sides of the labour spectrum. It has delivered decisions which have been fair and balanced and that met the challenge I placed in front of the board, knowing full well at the time that the selection of the chair in 1992 would have been a matter of controversy, as it was, but being confident that the result, as it also was, would be a board that was perceived by both business and labour to be fair and balanced. I think that is something that has occurred.

With regard to mediation, the mediation division was given a role to engage in preventive mediation, and I think the success of that lies in the fact that we've been able to avoid disruption.

I think the ultimate measurement of the success of the Labour Code comes from the economic performance of the province. There were concerns expressed at the time by the opposition that investment would divert from British Columbia in light of this code which would result in heavy unionization in the province. The fact of the matter is that investment in this province by the private sector has increased every year since 1992, particularly capital investment. As all members would agree, we have the strongest economy in Canada, demonstrated again by the Dominion Bond Rating agency last month coming out and awarding British Columbia the highest credit rating in the country. So investment has occurred in British Columbia.

At the same time, the fear that every worker and every business in British Columbia would be carrying a union card has also proven to be untrue -- a fear that the opposition suggested. My recollection of the statistics is that around the time of the 1992 code, about 37 percent of the workforce in the province was unionized. The number of unionized workers 

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has indeed gone up since then. However, the percentage of workers in the total economy that are unionized has decreased to about 35 percent. I would say that it has been relatively stable.

We also have new employment standards legislation. That legislation is fresh. It is my view that it ought to be allowed the benefit of evolution and experience before we contemplate any material changes to that legislation.

We do have some challenges. The challenges in this portfolio are with regard to workers' compensation. Quite frankly, in my view, I erred in not establishing a royal commission when I last had the opportunity to serve in this portfolio. We will be proceeding with the royal commission on workers' compensation to change the system, which I think many don't have the requisite level of confidence in. We will be proceeding on that, I would hope, no later than September. I think that will start the process of dealing with many of the concerns that show up at all of our constituency offices.

We made a commitment during the election campaign with regard to the minimum wage. It is my intention to carry out the commitment that the Premier made. That commitment will be fulfilled and realized.

I suspect that over the course of the year.... It's within the range of contemplation for me right now to look at employing the provisions of section 3 of the Labour Code to look at updating the code. I don't expect massive or material changes. Again, the code has had a life experience of three or four years now, so there is a need there, in my view, to update the document. There will be some tinkering. I've been giving a lot of thought to who I will ask to do that. I have ruled out the same kind of process I had for the initial code, because that was to develop the whole body. Since this is a fine-tuning mechanism, I am in the process of approaching some people who I think can do the fine-tuning work.

I really think that the operative word with regard to this component of the government operations -- namely, the Ministry of Labour -- is stability. I don't intend to make any significant or massive changes in the area of labour relations. Clearly, there will be some changes in workers' compensation, the minimum wage and the like, but generally we have brought forward a regime which has served the province reasonably well, and it will continue. I said none of that to the Premier when he asked me to take on the job, but I don't think that his views and mine differ much on that issue.

There's one other challenge I should have mentioned, and that is, of course, the construction industry. We did have a report from Mr. Kelleher and Mr. Ready, and that is on my desk. So we will have to deal with the challenges of that legislation.

That is really where I would forecast the agenda to be in the Ministry of Labour.

[10:30]

J. Dalton: The minister has touched on a few of the central issues that I had expected would be very high in his profile as to what approach or direction the Labour ministry itself will take. There are a few items that the minister has commented upon that I want to come back to and expand on a bit, and when appropriate, my colleague from Richmond East will be dealing with the WCB issue itself. On that issue, as we all know and as I believe the minister commented, we get an avalanche of calls in our offices on concerns about the WCB. I might make just one comment on that. I'm not convinced in any way, shape or form that a royal commission is the answer to that, because I perceive these things as more of a time and money consumer than necessarily.... Let's get on with it and identify it. But I'll allow my colleague to expand upon those thoughts later on.

I was interested in the minister's reference to the Labour Relations Code, which was brought in during the fall session of 1992, as he said, as being fair and balanced. Maybe the experience overall would to some degree reflect that. A little later on, I want to question the minister, but I'm not going to do it right now. I just want to let him know that I would like to raise the issue of the recent appointment of a vice-chair of the Labour Relations Board. He'll know to whom I'm referring. I don't know that that is totally fair and balanced. Perhaps in the minister's context it is, but on this side of the House, naturally, we would have to take a different viewpoint.

In that regard, I recall that I was recently going through some previous estimates on labour-related issues. Funnily enough, this gentleman's name popped out of the discussion in 1993 during that controversy, and now we're revisiting it in 1996. I don't know that we've made any advancement in that particular area, but I will return to it later.

Two days ago, on August 6, the Minister of Education -- and now, of course, we're dealing with his Ministry of Labour estimates -- was asked a question about essential service designation for education. As he will know, hon. chair, it's certainly Liberal policy that we would revise the Labour Relations Code to designate education as an essential service. I'm just using this example to wonder whether this minister sometimes may be potentially in a conflict of interest when he is taking on these two separate ministerial roles: one in Labour, one in Education.

In his response to the discussion about essential service designation, the minister pointed out that there was a hearing before the Labour Relations Board. I believe it came out of North Island, if I'm not mistaken. There were several school strikes in the spring, in the month of April 1993, as we built up to a special emergency Sunday sitting of the House -- which I believe was April 30 -- to deal with the school strikes. Two days ago, the minister suggested that the Labour Relations Board had made a decision on the essential service designation. I don't believe that's true, but maybe the point could be clarified before I proceed with the other points in the illustration I'm making.

Hon. M. Sihota: What happened in that case was that there was a dispute in Vancouver. An application was made, and during the time that the application was being made the strike was settled. As a result of that settlement, the decision in itself became an academic exercise. In that case, Mr. Lanyon didn't rule whether it was essential or not; he didn't have to, because the strike was over. But he did lay out the criterion that would be applied in making an assessment of this nature in the future. That criterion is now there for the benefit of the public and of future applicants, should they wish to pursue the matter.

J. Dalton: I thank the minister for that clarification, because that was three years ago, and sometimes you forget the source -- correctly, it was Vancouver that made the application. But, of course, there were several school strikes that precipitated the emergency session and resulted in this essential service application being more of an academic exercise than a real one.

I wonder whether we would see more time delay, if the issue were to confront this or any other government in 

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the future and we don't address the issue of education in particular as an essential service. That would be the first point I would make. I'm sure the minister will recall that many weeks were consumed in this House. Questions were fired day after day at the Education minister and at the Labour minister about the resolution of the school strikes, which I as a parent find.... I was going to say offensive; maybe that is overstating it. I recognize the need for withdrawing a service due to labour relations issues, but there are some services, I would suggest, that should only be withdrawn in very extreme circumstances.

Firstly and secondly, I would hate to think of more disruption than we saw in a multitude of school districts in 1993. If this issue were to arise again, I wonder whether the Minister of Labour would not potentially be in conflict with his other role of Minister of Education. When time is of the essence, and it truly is with a school strike.... I understand a school district like Vancouver putting an application before the LRB for essential service designation, but that takes time. I'm wondering if the Minister of Labour and Education should not take more of the lead on this, instead of sitting back and saying: "Well, we're going to allow this thing to run its course, and maybe we're eventually going to have to call a special session of the House to deal with the issue. Or we'll ask the Labour Relations Board to proceed on the application and make a designation." If indeed that's our objective, there's no guarantee that an application that's been presented would be successful. Perhaps the minister could give us his views as to whether he thinks there might be a potential conflict when that very important issue might arise in the future.

Hon. M. Sihota: I'm not persuaded that it necessarily is. Whether you have your Education hat on or your Labour hat on, at the end of the day the operative consideration is: what is in the best interests of the students? That applies without a hat on. Any determination you make is in the interests of students. That's why I stood before this House and at one point introduced the legislation that the hon. member referred to.

Let me also say, with regard to his other comment, that I do not take the view that it would be appropriate, in advance of that kind of application coming, to intervene by a legislative enactment declaring it to be an essential service. I fully appreciate that the opposition has taken that view; that if the opposition had won the election they would presumably have brought forward an amendment to the code which would have defined education to be an essential service.

Rather, it is my view that the full range of options ought to be available to the minister leading up to and during the course of a dispute, should there be one. The reason for that is that the fact that the minister is armed with a range of options is often a pressure valve on the parties that brings about a resolution. The tools in your back pocket could be mediation, arbitration, a combination of mediation and arbitration, placement of the deputy or the assistant deputy into the dispute, and perhaps even legislative enactments. I prefer to have those in my back pocket, because my experience has been that having those tools in my back pocket tends to have an effect -- shall we put it that way? -- on the thinking of the parties when I summon them to meet with me as we move towards potential disruption. I think one of the reasons why we have been able to avoid disruption in that sector is that whoever has occupied this portfolio has those devices in their possession.

J. Dalton: I can appreciate the minister's approach to this. He and I have had occasion to discuss this and other topics over dinner, so I understand where he's coming from. I don't want to belabour the point, no pun intended, but obviously education is not.... Well, I think, for example, of the recent strike with Safeway Stores and Save-On-Foods and Drugs. By the way, I must say, as an aside, congratulations to his deputy for doing a first-class job. I think probably the right approach was taken by the ministry, and certainly by the deputy in particular, in not jumping in precipitously. Obviously Safeway and Save-On-Foods provide a very important service for the public. I think, for example, of where my in-laws live in Williams Lake. They were almost forced to have to drive to Kamloops to do their shopping, because the only two significant food stores in Williams Lake, Safeway and Save-On, were closed. I think the other one is Overwaitea Foods, not Save-On, but it's the same thing.

This was not my purpose in getting to my feet right now, of course, but congratulations for handling that issue in probably a meaningful way, given the issues. But I don't think we're prepared to concede that education is to be equated with food stores. That's probably, as the minister has pointed out, a philosophical-political approach. One side of this House naturally is going to take a different viewpoint on that than the other, but it does concern me that time is really of the essence when you're dealing with children's education. I'm not so sure that the minister walking around with all these options in his back pocket is necessarily going to make parents such as myself terribly happy if we see that our children are not in class but are kept out of school because of picket lines -- or it could be a lockout, of course.

Now, the next thing I would like to deal with comes back to some introductory comments that the minister made about stability and the non-confrontational nature of the Labour Relations Code. I think we certainly have to go on record and ask the question: why is it that the minister, for the second time...? I'm referring now to Hans Brown's reappointment as a vice-chair of the Labour Relations Board. When you consider, predictably, some of the controversy in 1993 when he took on the portfolio.... Well, that's fine; we dealt with that issue then. But in the context of Mr. Brown having resigned from the board in March, I believe -- I've got it here somewhere, but this year's close enough -- to head up and chair the NDP re-election campaign.... Then, almost before the ink on the writ was dry, Mr. Brown is, surprisingly enough, reappointed as a vice-chair of the Labour Relations Board. It would seem to me, given the political background of Mr. Brown.... That's the first point I'll make. Second, I think we should know what credentials he brings to this job that someone with a less political profile wouldn't bring to it, and whether the minister's decision to reappoint Mr. Brown was a wise one in the context -- as he's told this committee -- of a Labour Relations Code that is "fair and balanced." It would seem to me that the reappointment of Hans Brown is not truly -- in my context, at least -- a fair and balanced approach to dealing with labour relations issues.

Hon. M. Sihota: First of all, let me thank the hon. member for his comments with regard to the Save-On and Safeway situation. The gentleman responsible is not a deputy minister but an ADM in labour relations, Don Cott. Mr. Cott is seated to my extreme left, and I'm sure that Mr. Cott....

Interjection.

Hon. M. Sihota: Yes. I'm sure Mr. Cott appreciates your comments. I'm not inclined to give him a promotion yet today, but you never know in the future. Also seated next to me is 

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Mr. Martin, who is our ADM, labour programs, and behind me is Mr. Terry Bogyo, who is with the Workers Compensation Board.

With regard to Mr. Brown, in some ways the appointment was easier to make this time around than it was in 1993, for the simple reason that in 1993 he had no background with the Labour Relations Board as an adjudicator. The opposition raised the issue of his ability to be impartial, given his political background, as they did with Mr. Lanyon, who is also a well-known New Democrat I appointed to the chair of the Labour Relations Board -- someone who had sought the nomination of the NDP, I believe, in the Castlegar constituency.

[10:45]

Certainly, with Mr. Lanyon and Mr. Brown -- but let's deal with Mr. Brown, because that's what the question was -- Mr. Brown delivered approximately 100 decisions and sat through about 150 different matters between 1993 and the time that he stepped down to work on the election campaign. It is known, I think, to the opposition and to myself that not once was there any suggestion that his decisions were biased, partial to the labour movement, or ideologically driven. I think that demonstrates that Mr. Brown was able to deliver fair and balanced decisions, sever himself from his political affiliation and conduct himself as he needs to as an adjudicator. I think that, in my mind, was an operative consideration in deciding whether to appoint Mr. Brown. What made it easier in 1996 as opposed to 1993 was the mere and essential fact that he had this history, one which the opposition itself could not question, due to the balance he showed as an adjudicator.

Secondly, I think it would have been a loss to not have his 22 years of experience in labour relations. It's not as if Mr. Brown has been the provincial secretary of the NDP for that time period. Rather, he has worked professionally in the area of labour relations, and that experience is essential at that level. It's not easy to find people who are prepared to serve as vice-chairs of the Labour Relations Board; I know that. I've been trying to fill a couple of vacancies over the last two weeks. It's not easy, largely because of issues like remuneration. For someone to go from a private law practice into being a vice-chair is just financially not as attractive as it once was. Mr. Brown was available and seemed to me to be an appropriate choice.

I want to make a third point about Mr. Brown. The opposition can't have it both ways. They can't be critical of some people in the public sector who remain at work but in their off-time work for a political party, and say, "That's not acceptable," but then be critical of those who leave their full-time work with no guarantee of a return...

An Hon. Member: The same as us.

Hon. M. Sihota: The same as us.... and go and work during an election campaign.

I want to emphasize that there was no commitment made to Mr. Brown that he would be back in that position. I evaluated it and, based on the strength of the decisions that he had made, it seemed to me that it was appropriate to reappoint him, knowing full well that there would be comment. Those kinds of appointments generate comment. I only wish that we had the same kind of comment when we appoint people like Herb Dhaliwal to the board of directors of B.C. Hydro, or other well-known Liberals to other positions. That fact gets lost from time to time.

All I can say is that you try to be careful in these appointments. I think the reason why the Labour Relations Board has worked and been accepted by both business and labour is that it has had that balance, albeit some have taken occasion to be critical of the appointments that are made. I try to think them through, and in this case I had no difficulty reappointing Mr. Brown.

J. Dalton: I might add that obviously, as I said earlier on the time factor, there didn't seem to be any difficulty whatsoever in the reappointment of Mr. Brown. I wouldn't pretend that I was convinced in any way, shape or form that there wasn't some kind of commitment that he might be reappointed, which in fact happened.

I have two other points that I want to make on this topic in a more general sense. First, was there a shortlist of people available before Mr. Brown was reappointed? If so, did they have similar qualifications to Mr. Brown -- maybe not wearing the obvious political hat that he brought to the job?

I agree with the minister's point. What you do between nine and five -- or whatever the vice-chair of the Labour Relations Board works during the week -- and what he or she does on the weekend, or otherwise, is a separate issue. Quite right -- even we, I think, have lives. If there's anyone watching this stuff -- and I don't know why there would be on a Thursday morning on a nice August day.... I think even MLAs hope that we do have lives outside the precincts.

If there were other individuals available, can the minister tell us how many? There is another point I want to make. I'll put this in now, because I think the minister can field both questions at the same time. He's mentioned his search for other individuals to fill other vacancies. Can he update the committee as to what those vacancies are and how that search is proceeding?

Hon. M. Sihota: If there is any evidence of the fact that we have lives outside these precincts, I'd sure like to see it. I certainly haven't seen or felt it for at least the last two weeks.

J. Dalton: You get to go home every night.

Hon. M. Sihota: There's nobody there. They have checked out for the summer. They are at some campsite. I couldn't even locate them this morning; I don't know where they are.

There were other names that I pondered. There was one individual who was unsure as to whether or not that individual wanted to be reappointed, so I kept a spot open there. Since then, the individual has indicated a desire to be reappointed. Since that individual has been there for some time, I don't think it's an issue.

There are two vacancies. I did look at a number of names that potentially could fill those vacancies. So far, there has been, as I said, difficulty getting people to do it, largely because of remuneration, not because of any perception about the board. To the best of my recollection, none of them had the 22 years of experience that Mr. Brown had. I had three vacancies at the vice-chair level -- those were the vacancies I was referring to -- and I wanted to get at least one filled with Mr. Brown. I have two other vacancies left at the vice-chair level. I have had discussions with a number of people from the employer sector as well as from the employee sector with regard to those positions. The decision I've made is that they'll be filled equally, employer-employee, so that the balance of employer-employee remains.

J. Dalton: We look forward to the announcement of these vacancies being filled so that the functions of the Labour 

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Relations Board can carry on with as little disruption and with as much continuity as possible.

The minister's comments reminded me of something I believe he stated publicly the other day, which was about having difficulties trying to find a commissioner to fill the royal commission role for the WCB. As you will probably discover later from my colleague's questions, I suppose it's all related to remuneration and the time commitment, as well. Heading up a royal commission is obviously, of itself, a time-consuming and somewhat onerous task to take on for anyone.

The minister gave an indication earlier of something I was happy to hear, because I was going to ask him about it. I will put it back on the record now. Under section 3 of the Labour Relations Code, there is the opportunity for a committee of special advisers to undertake a continuing review of the code. We are now almost four years into the Labour Relations Code. I would agree with the minister that it is certainly long overdue that we have a review.

The section, as the minister knows, provides for an annual evaluation. It does say that the minister may conduct an annual evaluation; he is not obliged to do so. But I think it is long overdue that this evaluation be conducted. Perhaps the minister could just expand a bit as to what timing he sees being involved, what people might be involved in the evaluation process, and whether he might even invite some opposition assistance with regard to that.

[S. Orcherton in the chair.]

Hon. M. Sihota: It is my preference to have one person do it as opposed to three, and not give it the profile that the previous process had, simply because that elevates the sense of expectation and probably will generate a large volume of changes, which is not my intention. My intention is to fine-tune the legislation, and my intention is to seek out someone who has had experience working with the code and therefore is in a position to be able to give advice as to how the code should be updated.

Yes, I have canvassed some potential names in that regard at this point. Not for reasons of remuneration, but largely because it's August, people are not yet prepared to make a commitment, but I suspect that I will have a commitment. I would be astonished if the person who comes forward is someone who doesn't enjoy the confidence of all the stakeholders, both business and labour. I think the opposition can certainly have its say to the individual with regard to the section 3 committee.

Again, I'm not interested at this point in getting into what could be an ideological debate about the bill. We had that in 1991, and I think, with the government being re-elected, we're going to continue with the sort of ideological underpinnings of the legislation. If they are practical suggestions, then that's a different matter. For example, what I would call ideological is what we do with votes, whether we have secret ballots or we don't, and what we do with issues like double-breasting. There are a number of fundamental ideological issues. I don't have any desire or appetite to revisit those issues.

J. Dalton: I agree with the minister's comment that some of these are ideological, but they also have a practical and real need to have them driven, from the point of view that they create real day-to-day issues that business has to face. I hope that we won't necessarily dismiss an issue because it may be more politically or ideologically driven. They have an impact on business. I'm sure the minister hears daily from business as to the impact of the Labour Relations Code.

The other one I would like to draw the minister's attention to is the comparable section, section 7, in the Employment Standards Act. I know the Employment Standards Act -- as the minister said in his earlier comments -- hasn't been with us very long, but certainly business, small business in particular, has some very real concerns with the impact of the Employment Standards Act. I wonder if the minister may, even at this date, have it in mind to invoke the comparable section in that act -- whether we could look forward to an annual review.

I say this more from the point of view of the economic impact on, say, the restaurant business, to cite one example. They have some major concerns as to the impacts and the overtones in the Employment Standards Act. I think it's important that the minister have the opportunity to hear those through the evaluation process that section 7 of that act or section 3 of the Labour Code presents. To some extent, I would suggest that the minister could even take away some of the politics that are naturally built into these issues. Could the minister tell us whether he has it in mind to invoke section 7 of the Employment Standards Act -- if so, hopefully in the near future -- for an evaluation process?

[11:00]

Hon. M. Sihota: I have no intention of invoking section 7. I have every intention of meeting with some of the sector groups who may be impacted by some of the determinations of the act and discussing that with them. I'll do that more on a sectoral, private meeting approach than a section 7 approach. I do think it would be premature to do section 7. I think it would be appropriate to do the meetings with some of the sectors of the economy that are impacted by the provisions of the Employment Standards Act.

J. Dalton: The previous comment of the minister alluded to the fact that he wasn't likely prepared to entertain an evaluation at this relatively early time in the experience of the Employment Standards Act. I'm not surprised by the response, but I might just leave this thought with the minister on this issue. It's fine for sectoral representation, and I think it's very important that any minister's office be as open as it can be, to hear from all affected groups: small business, big business, labour union, non-union, etc. But the fact is that sometimes the track record of this government in consulting -- and I use that term sometimes in quotes -- and listening to, in particular, the business sector that this act impacts upon.... I'm not so sure that representations to the minister will necessarily produce what I would like to see as a more objective approach: the section 7 evaluation process. However, we're not going to belabour that point. Obviously, it's not going to happen this year, but maybe we can come back and revisit the issue next year when we will have had another six months' or a year's experience with the impact of the Employment Standards Act. I leave that thought with the minister.

There's one aspect of the Labour Relations Board that I would like to get into now: the question of how many applications for certification are processed each year and the size of the business, the average -- for example, what number of employees are seeking certification. The reason I ask that.... For example, I have the 1993 year-end report of the LRB. I think it would be of use to this committee so that we could track what the experience has been from these figures through to the current.... Obviously we won't have 1996 figures. But if the minister would be able to update the committee as to what the experience has been since 1993, we could draw some comparisons from that.

[ Page 1647 ]

Hon. J. MacPhail: I ask leave to make an introduction while the minister is preparing for that important question.

Leave granted.

Hon. J. MacPhail: Somewhere in the chamber today.... I'm trying to see whether my good friend is here or not. If she isn't, she'll probably hear me anyway. Merrilee Robson is a community activist in Vancouver-Hastings. She has done a lot of work around women's issues, health issues and housing issues. I want the House to please make her welcome, wherever she may be.

Hon. M. Sihota: We don't have those numbers, but I can tell you there are about 300 to 400 a year. Certifications have gone up, and certifications have tended to go up in companies with ten employees or less at a faster rate than others. I must say that is contrary to the prediction I made in this House in 1992, when I thought that they would go up for companies in the 20-and-up level and wouldn't have that kind of effect on the ten-and-below level. Nonetheless, that's where I think the most growth has been. Sorry, 80 percent of the applications for certification are in companies with 25 employees or less. That's probably a reflection of the economy, too. We're seeing more of these kinds of companies coming on stream; hence the certifications.

J. Dalton: Perhaps through this committee I could just ask the minister and his officials, when the updated information is available, if I could receive a copy. I just thought that would be of interest. In response to what the minister just said about the 1993 report and the number of employees, zero to ten.... There were 222 certifications. That represented 46 percent of the total. So I think what the minister has told the committee reflects that that pattern has pretty well been consistent since 1993. The average bargaining unit size was 22 employees, which I believe; I would take that. Again, if we could have these figures in our hands as soon as possible, we'll be able to see if in fact these patterns have been more or less consistent since this 1993 report. I thought maybe we might even see an increase in the smaller businesses. The comment the minister made is quite correct: there are more home-based and small mom-and-pop-type businesses, obviously, as people struggle to keep ahead of the taxman -- or the taxperson. This government has a great track record, of course, for extracting money out of people's pockets. It would certainly be of interest to me to receive that information.

There's one more issue that I would like to deal with during this segment of our questions. Then I will turn it over to my colleague after this to deal with the Workers Compensation Board issue, so that we are not keeping officials here unnecessarily beyond the lunch period. It's the minimum-wage issue, and the minister made some introductory comments about it. During the election campaign the Premier made comments -- or maybe hinted -- that the minimum wage could be increased to as much as $9 an hour. Of course, there was an immediate outcry from small business in particular. Does the Minister of Labour have it in mind to deal with the ongoing issue of the minimum wage? If so, what might we expect either over the next few months of 1996 or looking into the 1997 calendar year?

Hon. M. Sihota: What the Premier meant to say was, if I can use a famous quote.... There will be increases in the minimum wage, no doubt about that. You can anticipate that that would happen during the course of this fiscal year. I have not yet taken to cabinet a submission indicating how much we will be interested in increasing it, but there will be an increase. The government is fundamentally committed to increasing the minimum wage, and that commitment hasn't deviated since 1991, when I started to increase it materially about every six months.

I will give more notice, as much notice as I can, to the sectors that are most directly impacted, so that they can prepare for it. I accepted that argument on their part. I also think that we can be creative as to when we bring about the increase, so that it doesn't trigger in at a time when, just because of the time of the year, the cash flow for a company drops down. I think we can do it when cash flows are tending to go up; I think that's something to look at in terms of the design of the timing. But there will be increases, and they will be material; they will be in the range of the increases that we have brought in over the past four or five years. They will be done, in my view, the same way they've been done in the past. We will do them in a fashion that they're digestible. We'll take a look at what's happening with the economy, at the growth and economic activity in the economy, and we'll make a calculation as to what is digestible.

I know that no matter what rate I bring in, it will be criticized by somebody for its either being too little or too much. That's fine. I have to be able to live with the decision I make, and the decision I make will be one which responds to the needs of ordinary people trying to make it from paycheque to paycheque. That's what I'm going to think about, because it is awfully tough, if not impossible, to make it on a minimum wage from month to month. I know that in my constituency, as I made my way through Esquimalt during the election campaign, the statements that the Premier made were well received on the doorsteps. Many people stopped me and said, "Look, you guys haven't done enough, and you need to do more," in terms of the minimum wage.

It seems to me that there's a silent group out there who don't have lobbyists, who don't always have access to the halls of power, people who are occupied with just trying to make it from month to month and who expect government to stand up for them, to be on their side and to be attentive to their concerns. The hon. member knows me well enough to know that I've always taken the view that it's my job to defend those interests and to promote them, and I'll do that in this House. So if there's going to be a bias -- and I'll be upfront about my bias -- for the time that I have the privilege of being in this portfolio, my bias in terms of increasing the minimum wage will be for those people who have placed their trust in this government and in myself.

J. Dalton: I'll just make one comment as a follow-up to that, and then my colleague can deal with the workers' compensation issue. I can understand the minister's approach, naturally, particularly from a political and a philosophical point of view. The minister knows full well that the Liberal opposition would not agree with that point of view. What I just want to point out to this committee is that there's an economic reality out there. Small business in particular, which is the engine of the B.C. economy these days -- when we're getting away from the primary industries and having to rely more on service industries and tourism, on people who start up business and employ others and bring them into the business as employees.... This government has to appreciate that the potential economic impact.... I agree, the minister's going to have a hue and cry out there that he won't believe, depending on what figures he has in mind. Maybe he'd like to share those with the committee if he does have any in mind.

[ Page 1648 ]

[G. Brewin in the chair.]

The other point I would make.... I'm thinking more of the young people now who are in high school, early university or post-secondary opportunities, who want part-time jobs. There could be a really adverse effect from the imposition of an unwarranted minimum wage that becomes too high and uneconomical to business. They won't be able to employ these people.

My son is now going into grade 12, and he's very happy. He has the opportunity for a part-time job at Grouse Mountain, which is very convenient to our home. He enjoys it, and it is a great local opportunity. I am not sure that Grouse Mountain is going to be able to afford my son too much longer.

I would like this minister to consider some form of job entry provision that will veto a minimum wage, so that people in high school and early university, who are scratching to get their tuition together or put food on the table -- many of them -- would still have employment opportunities that will benefit them, without business having to say: "We're sorry, but because of this government's approach to the minimum wage, we can no longer afford you even though we would like to." The minister knows full well that that is just one example of the impact that could be visited upon small business in particular. I think the minister has to therefore understand that sometimes political and ideological approaches aren't necessarily what is best for this economy. I just want that point to be recorded. Now we'll allow workers' compensation questions.

[11:15]

L. Reid: I wish to begin my remarks this morning regarding the Workers Compensation Board by quoting from the Nanaimo Daily Free Press of January 31, 1996: "`I have been in office for nine and a half years,' said Clark. `The number one problem in my constituency is the Workers Compensation Board.' " This individual is now the Premier of this province.

What I intend to do this morning, in the time I have for this debate, is set the stage and craft an argument for increased government accountability for the Workers Compensation Board. I intend to reference a number of documents this morning in terms of the need that has been identified. A number of these documents come from the Workers Compensation Board. I'll begin with Occupational Safety and Health in British Columbia: An Administrative Inventory, from October 1992.

I wish to reference the commissioner, Charles Tysoe, who said in 1965: "...acknowledge that administrative bodies, which are possessed of more or less absolute power, will tend to lapse into a laissez-faire attitude and be content with things as they are, unless someone is constantly looking over its shoulder." What alarms me is that all the calls, all the committees and all the reports have continued to this very day to call for monitoring, surveillance of the organization and a focus on service in the organization. Certainly there have been some attempts made, and I acknowledge the attempts that have been made.

What continues to alarm me to this day is the lack of measurement around the attempts, the lack of accountability. Certainly I, as many other critics before me have done, will spend some time later on the actual numbers and on where the organization is in terms of dollar return.

The bigger issue before us today is service to people. I appreciate, reading through a number of these documents, that it is a challenge and that one of the challenges the organization has set for itself is service -- I acknowledge that. What alarms me is that it doesn't seem to be the number one priority. When any agency has a monopoly, as this one does, the client, in our view, has to be the priority. It alarms me that all of us in this House have constituency issues and constituents who have had extreme difficulty with the Workers Compensation Board. But that concern doesn't render down to some useful guidance for the organization, some useful accountability structure. That continues to be an issue.

The minister will be aware that this caucus was involved in an analysis of the Workers Compensation Board. That analysis is now approximately two years old. We made some recommendations that were well founded and that certainly were not irrelevant areas for us to address. With many other reports, implementation has always been the downside and has always been something that has been overlooked. Very few of these reports -- and I am prepared to cite from many of them today.... Implementation has been missed. The report has been received, but the implementation aspects, frankly, have been missed. It seems to me that if we are going to be committed to politics as a method of serving people, as a people business, this is the forum.

I appreciate that the minister will probably rise to his feet and say that this is an independent Crown corporation. I won't take issue with that, but I will suggest to the minister and to this House that when the agency has required intervention and an ongoing, more intense look, it is this House that has responded. The legislation of this House spawned the organization. So again, hon. Chair, I intend to make the case very strongly this morning that we do have an ongoing accountability for the organization, an ongoing responsibility. I intend that this minister, by the end of this morning's discussion, will share that commitment and the concern that indeed we can't allow it to go on any longer.

All of us have constituents who have had their lives absolutely demoralized by their interactions with the Workers Compensation Board. Certainly I know that every member in this chamber today has had issues where it's been just fruitless to try and make a difference for our constituents. There are some very fine people working at the Workers Compensation Board. I don't intend to malign them in any way. I intend, in this morning's discussion, to suggest that somehow this system must be brought into line so that it always remembers why it was created -- that is, to serve British Columbians, to serve the people, not any other master.

It seems to me that there are some things we can do and put in place for the future. The administrative structures that have been put in place at the Workers Compensation Board have not been there for all time. Certainly if we are now at a juncture where we can evaluate some of those structures, I would welcome the minister's comment on what happens next. I certainly intend to spend some time this morning on the terms of reference for the royal commission. If the minister has some insight on that, as well as on who may be appointed and when that may begin, perhaps we can start there. I would ask the minister to kindly comment.

Hon. M. Sihota: I can't say that I disagree with the hon. member's concerns, because as MLAs, we see them all, as I said at the outset. You know, it's funny. You go to the board and talk to them, and somewhere in the neighbourhood of about 95 percent of the people get accepted and responded to. So one gets the feeling that everything is fine. Then you walk into your constituency office and you sure don't have that view. It's two different worlds out there.

You know, there's a kind of nice thing about having a second chance at a portfolio sometimes. It has never hap-

[ Page 1649 ]

pened to me before. As I said in my opening comments, I don't think I deployed the royal commission when I should have in 1992, because the Social Credit government brought forward a new accountability mechanism in terms of a new board, high-powered business and labour leaders. Both of those groups came to me and said: "Look, give this thing 18 months to work." At the end of the day, I agreed to their submissions, but I also advised them that I would try to make some other changes. Those changes included: (1) bringing on a new chair of the review board to deal with the backlog there; (2) making some changes to who was on the review board; (3) establishing workers' advisers in different communities around the province, so they could then be advocates for the workers who couldn't afford advocates; and (4) expanding coverage, bringing in new regulations and dealing with the lingering issue of spousal benefits. I thought it appropriate to give it a chance to work. We also extended it to farmworkers. That was historic, but it wasn't enough. The problems, as we see them as MLAs, still persist, so there are going to be changes -- big changes.

I agree with the hon. member. I don't say that in any derogatory way to the people who work there. I say that because I don't think the system is as functional or as responsive as it can or should be. I am as frustrated with the regime that workers face as the hon. member is. Maybe that quote about the laissez-faire attitude is appropriate; maybe it's not. I don't know, but I know this: there will be a royal commission. I have canvassed some possibilities in terms of the royal commission. With regard to that issue, I'm not in a position today to make an announcement, but I hope to make an announcement very soon. I want either an individual or a group of individuals who are change agents to be on that commission, and I want them to work within the time lines we've set. In other words, I want to get on with the job. I don't want this to be a two-year royal commission that doesn't seem to end. I want some recommendations on my desk before the end of this year in terms of an interim report.

I have it in the back of my mind, on the implementation point -- and I understand what the hon. member says -- to have legislation before this House in the spring that deals with at least the recommendations that are before me before the end of the year, because I'm not at all interested in having, nor do I believe I'll ever have, a third chance at this portfolio. The legislation is going to happen, and I'm going to drive it. It's as simple as that.

I hope that conveys to the hon. member my sense of agreement with her on the frustration, first; second, the sense of mission that we have here; and third, the fact that there will be a commission and the terms of reference will be very broad. In other words, they'll have a mandate not to leave a stone unturned.

L. Reid: I thank the minister for his commitment. Please know that we will do all we can on this side of the House to assist in ensuring that organization is depoliticized.

There is a reference in The Workers Compensation System of British Columbia: Still in Transition. This is just brand-new, hot off the press. I believe the date is March 21, 1996. It pretty much analyzes the previous structure. Again, if I might commit this to the record:

"The board of governors was suspended by the Minister of Skills, Training and Labour in July of 1995 due to widespread perceptions of counterproductive interest-group squabbling and ineffective decision-making. While there are various interpretations of this action, it remains true that the stakeholder communities were deeply divided over certain legislative and policy issues and the governance of the WCB, and their differences could not be bridged, even by the most skilful leadership. At this point, the experiment that put representatives of workers and employers at the table to govern the WCB together must be regarded as a failure."

That is one of the most profound statements in this text, and it would alarm me if we were to return to that particular structure. It seems to me that what we're looking for is stewardship of the organization. We're looking for someone whose sole interest is service to British Columbians, to deliver on the mission, not to recraft this structure so that again 18 months or two years from now we're having a similar discussion. I hope the outcome of the royal commission puts in place a structure where people are stewards of the organization, the compensation system, which is what British Columbians value, not the monolith that they can't get a grip on. They have no desire to continue to see the organization as it has been in the past.

If I might again set the stage for a number of comments: "If the WCB is going to become a high-performance organization, the collective bargaining relationship will need to become a more cooperative, mutual relationship that focuses on final organizational outcomes rather than narrow self-interest." Again, this is taken from The Workers Compensation System of British Columbia: Still in Transition.

I've read all the material presented by the individuals from the Workers Compensation Board very thoroughly, because it seems to me that the work has been done. It seems to me that a compilation of many of these reports would replicate what the minister is looking at in terms of a royal commission The work is here, hon. minister, and it seems to me that a very skilful person -- and I trust that that skilful person will be appointed -- will be able to draw from the work that has been done. It seems to me that the costs of even these reports have been significant. I will again ask that the minister provide the opposition with the costs of all of the reports that I've named this morning: Occupational Safety and Health in British Columbia: An Administrative Inventory and The Workers' Compensation System of British Columbia: Still in Transition. What were the costs of production of these two items? Again, I can receive that information at a later time.

One of the other issues that always comes to the fore around how decisions are taken at the Workers Compensation Board comes back to rest in the area of policy. Again, I will reference this document: "There is still no unit at the WCB that is asking the critical policy questions, the why questions, and then gathering the information and doing the analysis required to answer those questions. We believe that this is a major deficit." When I go back through all the previous royal commissions and their reports, each one allows that to stand as a priority, yet there has been no movement on putting that in place.

"Internally, the WCB is in desperate need of the analytical capacity to explain its own performance. Ultimately, the WCB cannot take control of its destiny unless it can define its own problem areas and ways to resolve them. Without an effective policy research function, the WCB is dependent on others to define its failures." These are profound statements, but these are the statements that I think have defined the organization over time and that I think would be the first ones that a royal commission should address.

[11:30]

Even though this report has been touted as being fairly positive, there are a number of very critical areas that in our view could be easily addressed. Could I ask the minister to ensure that the royal commission looks at these reports as starting points? It seems to me that what government tends to 

[ Page 1650 ]

do is duplicate and recraft, when in fact probably the essence of this discussion this morning is who will be responsible for implementation. I know the minister touched on the royal commission. What concerns me is whether or not the minister has given any thought to who might be responsible for the implementation of any recommendation which would flow from the royal commission. Would the minister kindly respond?

Hon. M. Sihota: If your concern is with regard to implementation after a royal commission.... The hon. member has been a member of this chamber for some time now and knows that as a member of this chamber she can exert all sorts of pressure on ministers to make sure that implementation does occur and that there is a follow-up on a royal commission. I would invite her to do so.

L. Reid: I thank the minister for the invitation. What I would ask the minister to consider is whether or not the person he appoints as the commissioner for the royal commission would also be the person he could ask -- would ask -- to stay on and take some responsibility for the implementation.

Hon. M. Sihota: That may make it even harder for me to find somebody who would do it, but that's something I won't rule out. To be honest with the hon. member, if I were to select a judge to chair the commission -- I'll be very candid about this point -- there's no chance that will happen. So if I'm to give weight to the comment that she's made, then that would drive me to an option where it would be a non-judge or non-judges that would make the recommendations in terms of the change. It would be instructive, given that background -- because quite candidly, I haven't made a determination -- to hear from the opposition if they believe it has to be a judge. It will impact on my thinking if the opposition takes the view that this matter of implementation is a paramount consideration.

I don't disagree with the hon. member. I suspect that she's probably looking back on Gove or Seaton and extrapolating that experience. So if she's making the point that that is very important, and that we must have that person around to proceed with implementation, then I just don't think you can have a judge. Now, I'm not partial to a judge -- I'll be honest with you there again. I'm not sure if that has to be the case in terms of a royal commission. But I'd be interested to see if the member, either as a member or as a spokesperson for caucus, is wedded to the person being someone from the judiciary.

L. Reid: I appreciate the minister's candour. I think it's absolutely critical that the person be credible in the eyes of all stakeholder groups -- no question. We have tended to look to the judiciary to spawn the most credible.... I'm not convinced that a judge could not stay on and be responsible for implementation, because a retired judge would have the time and, frankly, probably the ability, if the selection process elicits a superb candidate. In terms of the public perception, would it need to be a judge? Certainly I have documents today that have been received from members of the public who absolutely believe it needs to be a judge, a member of the judiciary.

It's an interesting question. I would need to believe that the person had the absolute highest level of credibility for any kind of recommendation to be considered valid; otherwise, it will be just another report that sits on a shelf. I probably haven't provided much guidance to the minister on that question, but it seems to me that he should not rule out a judge if indeed he's looking for someone to also take responsibility for implementation, because I believe the right person could do both. I think that skill set is probably evident in their background. Does the minister wish to comment?

Hon. M. Sihota: I want the hon. member to understand that from the time that I have been in this portfolio up to today I have struggled with this very question. There isn't anybody out there who would be prepared.... I agree with the hon. member. She makes a valid point in terms of implementation, and I've thought about that and want her to understand very clearly that I have not been able to locate anyone. If they're retired, they kind of like retirement, you know. They don't mind coming out of it for a little exercise, but not a lengthy exercise. Implementation is a critical component and a long-term exercise. I have not been able to find anybody who will do that.

I don't require a position from the opposition. They can convey it to me, but they should do it soon, because I'm going to make some decisions soon, knowing full well that they might be criticized. But look, that comes with this job. I think I've got a fairly good track record in terms of people we've appointed who may have initially received some criticism but have delivered, and I go back to the discussion we had about Mr. Lanyon earlier on. But I have to say that is a real issue right now. There isn't anybody where you can have your cake and eat it too. I want the hon. member to know that. She doesn't have to say any more; she can reflect on it and then give me her advice -- I'd be happy to hear it. We're here obviously for a while, so she has a number of days to give me her views. I'd be most interested in hearing what the opposition has to say.

L. Reid: I thank the minister for his offer -- and yes, I would very much be interested in having the discussion. I understand that the minister has settled on the appointment of a single commissioner, but maybe an expansion of that would allow both parts of this discussion to be realized: that someone, the judge, if you will, does the actual reporting out and the co-commissioner does the implementation. It seems to me, and I think the minister and I are both on the same wavelength here, that you can't separate that out and expect the implementation to be flawless. You have to have an understanding of why those recommendations were made in order to know how best to implement them.

The minister himself referenced the Gove inquiry, and I referenced the Seaton commission. Both of those will have very troubling times, and Seaton extremely troubling times, around implementation. So it seems to me that we probably can put our heads together and come up with perhaps two people, if not a single person, who would cover off both those areas of concern. I don't wish to be standing in this chamber 18 months from now wondering what might transpire in the best interests of injured workers.

The minister referenced his time line for the royal commission as having at least interim recommendations before him by this December -- four or five months from now -- and having legislation before us by the spring session, which is seven or eight months following that, so I would assume June or July of next year. That seems workable, but it would depend entirely on the selection of the individual. So, again, I'm delighted to have ongoing discussion with the minister, because I do believe that two things can happen at the same time in this House and make reasonable sense.

I wrote to George Morfitt on July 19 of this year, asking his office to conduct a performance audit of the Workers Compensation Board, and specifically in relation to the 

[ Page 1651 ]

deployment of human resources in the organization. My concern in writing was that I do not believe that any kind of accountability frameworks exist in the organization. It seems to me that if Mr. Morfitt could refine or identify those, that would be a good thing for injured workers and a nice building block for any kind of royal commission. I don't believe that this is in any way contrary to the direction this minister is headed in.

It seems to me that what we want to look at is how best the organization reports out. The organization reports out on all kinds of dollar-and-cents figures -- the number of days and the number of dollars. But it's very difficult to get a handle on the pain-and-suffering issues that are rampant in the organization. Again, I admit that those are subjective issues in lots of cases. I will spend some time later this morning on some responses I've received from various groups in the province, on their best suggestions on how to improve the organization.

I'm suggesting in my letter to George Morfitt that it might be appropriate for his office and the royal commission to work in concert. I would very much be interested in the minister's response to any kind of performance audit of the Workers Compensation Board, because that kind of humanizing of the organization -- asking them to look at how best to report out in terms of the public, in terms of the human factor -- is a good direction for this organization to take. Could the minister kindly comment?

Hon. M. Sihota: At this point I'm not inclined to have Mr. Morfitt do the job that.... It's up to him, if he wants to do it. If we were to pull him out from being auditor general to do something like that, I don't think that's on.

In terms of a performance audit -- and I understand what the hon. member is saying about pain-and-suffering issues and so on -- at this point I'm not inclined to do that. I'm certainly inclined, however, to take her comments as a member of this chamber and as the critic for the opposition, and make them available to whoever it is that conducts the royal commission for their consideration, because their terms of reference will be broad.

L. Reid: Just to clarify, the request was that Mr. Morfitt work in concert with the royal commissioner, in no way to replace the work of the royal commissioner, but certainly to work as a building block.

One of the other concerns that has come to me is the revolving door at the Workers Compensation Board in terms of the plethora of new appointments. Certainly I believe that the addition of Maureen Nicholls will be superb; I think she's a very fine, professional public servant. My question regarding Maureen Nicholls, Vince Collins and Claude Heywood refers to funding for those individuals. My understanding is that the Workers Compensation Board is totally funded by employers. So I'm wondering, in that these individuals are on secondment.... How does it work in terms of government payment? Is it something that is collected back from the Workers Compensation Board? Or do these individuals become employees of the Workers Compensation Board for the length of their term?

Hon. M. Sihota: The board pays their remuneration, so it's recovered in that sense. It's not a cost to government; it's a cost to the board.

L. Reid: My second concern is with the fact that the individuals are basically on secondment, I understand, for one year, with the possibility of a one-year renewal. When we talk about continuity in the organization, particularly around the announcement of a royal commission and the minister's contention that the implementation is equally important and will take upwards of two years -- and, in my view, probably closer to three.... From the beginning of the royal commission to the first phase of implementation, I believe we're talking probably two and a half to three years, in that these individuals are in place for one year with an option for renewal for a second year.

What seems to be the issue at the Workers Compensation Board is leadership -- that, frankly, nobody stays long enough to steward the organization. Can the minister, hopefully, make some kind of commitment that there will be some long-term senior management at the Workers Compensation Board who are prepared to stay more than one or two years, because that is a huge concern?

Hon. M. Sihota: I'd like to have leave to table an LRB document that's entitled "Certifications Granted by Size of Bargaining Unit." I think there's a reason for why I want to table that.

The Chair: Hon. minister, I think you could just share the information with the hon. member.

Hon. M. Sihota: I only have one copy. Really, I'm trying to get it copied so it can go to the hon. member.

It's a bit of a dilemma. I want a royal commission, and that commissioner may make all sorts of changes with regard to accountability, structure and management regimes. You don't want to appoint someone for five years and then have a recommendation come in that is then frustrated by the appointment that one has made. That's why the one-and-one options.

Maybe it's ambitious on the part of government to think that within the course of that one year, we can bring forward legislation. We'll see. I didn't want to frustrate the royal commission. I suspect that the royal commission will have something to say about this issue of management and the revolving door -- a concern which, I must confess, I share with the hon. member.

L. Reid: I support the minister; it is a bit of a quandary. Yet the minister will know that since 1973 there have been approximately 12 heads of that organization. They're not staying five years; they're not staying two years, in lots of cases.

It seems to me that the official opposition task force report was titled A Crisis in Leadership, and that has been borne out by a number of other reports -- certainly reports that have emanated from the board itself, where that is a concern. If the minister believes that concern can be put to rest as a result of a royal commission, I will accept that. But again, if we're having the same discussion in two years' time and the doors continue to revolve and people continue to leave that organization at this pace, my contention is that the organization will continue to flounder.

[11:45]

If I can simply put my comment on the record, it's a huge concern to the Liberal opposition that no one is taking the stewardship role of the organization very seriously. Again, a number of these appointments will be made by orders-in-council. That is a huge responsibility to lay at the door of the minister, but it is one that I know he accepted when he 

[ Page 1652 ]

accepted the role. It seems to me that what flows from the royal commission may indeed spawn some new appointments. If some thought can be given to the longevity of these appointments, this member would be very appreciative.

Another new position that's been created at the Workers Compensation Board is that of the internal ombudsman, Mr. Peter Hopkins. It's our understanding that he came to his role on April 15 of this year, so he's relatively new in the role. We respect the need for the role to have been created -- no question. The concern is around confidentiality and workload. This individual will not be able to handle the number of cases that are already before him, let alone return phone calls and have the meetings. I'm wondering if it is truly a commitment on behalf of the Workers Compensation Board to offer a ombudsman service, or if it's simply a band-aid. Mr. Hopkins, I think, is eminently qualified to do the job. The job will outgrow him, and has, in terms of the number of requests he's had for his service. He simply cannot get through the huge numbers of people who need someone to help them navigate through the Workers Compensation Board. Could the minister kindly comment?

Hon. M. Sihota: Nobody at the Workers Compensation Board is interested in going through an exercise for the sake of optics. If there is going to be an internal ombudsperson appointed, as is the case, then it has to be done in a substantive way. The ombudsperson will prepare a budget, and he will take it to Mr. Parker for approval. I'm sure that Mr. Hopkins, in designing that budget, will take into account workload issues. Given the nature of the office, if he is being frustrated, clearly he has the ability to get that message of frustration out, at which point there will have to be a reaction. But this is not something that's just created for the sake of creating something or to give the appearance that the board is reaching out. That's my view of it. The hon. member knows it, and I'm sure Mr. Parker will read about it.

L. Reid: I welcome the minister's comments, and I will certainly keep him apprised if the optics of the situation change in any way.

The second issue I want to raise with respect to Mr. Hopkins is around the confidentiality issue. As the minister is aware, if you were to approach the provincial ombudsman's office, Dulcie McCallum's office, the information that you would share directly with that office would not be open to requests under freedom of information. The same parameter, if you will, does not exist for the internal ombudsman. I think the minister can appreciate that that's a huge concern for clients, for customers, of the Workers Compensation Board. They cannot share their information if indeed it is going to be open to public scrutiny, because this is often very private, very personal information.

My question to the minister: is he in a position to put in place the same statute limitations, if you will, around the internal ombudsman of the Workers' Compensation Board as are currently in place with the provincial ombudsman's office?

Hon. M. Sihota: My plan would be to seek the advice of Mr. Hopkins about that matter.

L. Reid: I appreciate the minister's intention to do that. I can assure the minister that this is an issue that Mr. Hopkins will happily bring to your attention, because it is certainly an issue in terms of individuals coming to meet with him. I raised the issue with Mr. Parker some weeks back and have not had a response, so it will be very interesting to see if the minister's interest will spark an early response.

In terms of the individuals around the province who have asked a number of specific questions, I am prepared to put those on the record today. One of the first ones is regarding the Criminal Injury Compensation Act. There has been lots of discussion over the years -- and it is found in all the reports written on the Workers Compensation Board -- that housing this responsibility within the Workers Compensation Board may not be prudent any longer. It may in fact rest better within the Ministry of Attorney General. I trust that the minister will have a comment about where the best future place for the administration of that act might be.

Hon. M. Sihota: There is a committee of the Workers Compensation Board and the Attorney General's ministry that is looking at that issue as we speak.

L. Reid: I'm sorry, hon. minister. Did the minister say they have the issue before them now?

Hon. M. Sihota: Yes.

L. Reid: Does the minister have any idea when they might report out? For the record, the minister is saying no.

In terms of a particular issue as it relates to criminal injury compensation, this was in the Vancouver Province on July 31, 1996, regarding a gentleman by the name of Brian Williams, who is a Brinks guard. He was shot in the performance of his duties. What this article suggests and what seems to be the scenario today is that, because it was a criminal injury, he is not entitled to Workers Compensation Board compensation. It seems odd that someone, in the delivery of their work and while performing the duties of an employee, would somehow fall into a different category if they were injured on the job by someone who was a criminal. The article states specifically: "He doesn't rate criminal-injuries compensation because his physical disabilities were work-related. Workers Comp has said he's got a 10 percent disability, but the system doesn't acknowledge...." I don't need the minister to respond specifically to this case today, but could he at some future point give some guidance as to why the criteria would somehow limit this individual's access to the process? Because through no fault of his own, he was injured by someone else. That seems to me to be a huge gap in the process.

Hon. M. Sihota: I am somewhat perplexed by that situation, because people now have the option of pursuing criminal injury compensation or workers' compensation by way of statutory amendment. We can't resolve individual cases on the floor of this House, but perhaps the hon. member may wish to discuss that directly with WCB, because I'm advised that there is an option available.

L. Reid: I certainly appreciate the minister's reflection that there are options available. It brings me to my next point: whether or not the Workers Compensation Board is a service organization. I would suggest to you that it is not their focus, because most individuals don't realize they have an option -- whether or not it is communicated in plain language, and I would certainly submit that's the case in most scenarios. I can assure members of this House and members of the public that the greatest workload for a constituency office is deciphering correspondence from the Workers Compensation Board. It is totally frustrating -- and I know the minister shares my concern in this regard -- that there seems to be a lack of commitment on behalf of the board to communicate in plain 

[ Page 1653 ]

language to individuals who need to understand what their options are. If those individuals must come to a constituency office for assistance in navigating the process, the system is far too complex. I don't know if the minister is aware or not if there is any attempt or direction of the board to communicate more clearly with constituents. Could the minister kindly comment?

Hon. M. Sihota: I don't find the letters that bad. What bothers me is the volume of them. It takes a while to get to the point, but to be frank with you, I don't find them that hard to follow.

I am concerned with people who are not proficient in English and their inability to fully understand how to access the system. Recently the board has started to produce videos of materials in Punjabi and Cantonese -- and another language is French -- in order to provide more assistance in that regard. There is some movement in that context. I don't think moving to a regime of plain language is going to solve much, because I've never found the language to be all that difficult. I do agree with you: I have to say that doesn't detract from your point about customer satisfaction or customer service. Clearly, as MLAs, the majority of us are left with the impression that that's not there to the degree that one would expect. That's a problem. So on that point I certainly don't have any disagreement.

L. Reid: I would simply ask this minister to look at the correspondence from the vantage point of someone who is not a lawyer. I appreciate that you don't find it all that tough, but I can assure you that a lot of our customers, clients of the Workers Compensation Board, do not have eight or ten years of advanced education. I think my point is valid, and I trust that the minister will fold that into his thinking.

In terms of a number of concerns that have been raised by individuals around the province, the Canadian Injured Workers Society, based in Prince George, has listed a number of issues for consideration. The first one that they would ask this minister to consider is around the appeal process. In their words:

"We ask for immediate government intervention in the form of a repeal of the WCB appeal process forced upon those WCB claimants suffering from chronic injury whose conditions have plateaued. It is standard practice for the WCB to suspend the provision of benefits in such cases, and the claimant is left marooned with no income while the appeal process progresses, often for a period of years. It is essential that both benefits continue during the appeal process. The onus should be on the board to prove the claimant is not entitled to the benefits, not upon the claimant to prove that he is entitled to these."

I would ask the minister to comment, because I know that he too probably has cases in his office where the process has lagged on for three or four or five years. In fact, I have, in 1996, cases I began in 1991. I have to wonder every day what those individuals are living on, because I know that this process is sapping every cent they have. So I think this is a legitimate concern, and I would ask the minister to comment.

Hon. M. Sihota: I know there are cases like that. I had one in my office that was older than I am, so that tells you something.

Interjection.

Hon. M. Sihota: Maybe it doesn't tell you that much, eh?

The point that I would make there is that the issue of appeal is certainly not one that.... It is one that should go to the royal commission. There's some concurrence with regard to that concern, but it ought to be the kind of matter that's dealt with by the royal commission.

L. Reid: Noting the hour and those that have entered the chamber, I would ask that 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. M. Sihota moved adjournment of the House.

Motion approved.

The House adjourned at 11:59 a.m.

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

The committee met at 10:11 a.m.

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

Hon. D. Miller: Just to start, I have with me Mr. McElligott, President and CEO of B.C. Rail, and Mr. Allan Owen, the comptroller.

P. Nettleton: Thank you for this opportunity to ask what I hope are some relevant, helpful questions in terms of discussing -- in general terms, as well as some specifics -- B.C. Rail and a number of the companies that fall within B.C. Rail. Thank you, Mr. McElligott, for being available for such questioning. I don't think there is any question in anyone's mind that B.C. Rail is indeed a success story, and you certainly must be credited with the success of B.C. Rail, in no small measure.

Hon. D. Miller: He'll be after a raise soon.

P. Nettleton: That's right.

I've arranged things topically, so I'm hoping they flow rather smoothly. One question which doesn't really fit within the questions that I've arranged topically was given to me by a colleague, and I'll begin with that, if I may. Has B.C. Rail been given a target for hiring under the various summer job programs? The question that follows from there is in regard to the original target and current target.

Hon. D. Miller: The target was about 390, and I gather we're around 200 at present.

[ Page 1654 ]

P. Nettleton: I would like to begin with WesTel. Briefly, WesTel is a new telecommunications company operating in British Columbia with its own digital microwave and telecommunications facilities. I understand the WesTel system was built initially for railway purposes -- that is, to communicate with train crews and work gangs, monitoring operations, signals and safety devices. What are the long-term objectives for WesTel in terms of growth and expansion into existing as well as new markets?

Hon. D. Miller: It is one of the group of companies, and B.C. Rail's objective for that company is to compete in the marketplace where business opportunities arise, using the infrastructure the member talked about. In that regard, I think the company has been fairly aggressive in pursuing opportunities. I'm not sure of the exact nature of all of those opportunities. As I said, they are using the infrastructure to provide those kinds of services. I think there are some initiatives with respect to some businesses along the north line, the Highway 16 line. So the company will continue to pursue those kinds of business opportunities to contribute to the bottom line of the B.C. Rail group.

[10:15]

P. Nettleton: Do these long-term objectives in terms of growth involve additional capital expenditures?

Hon. D. Miller: Yes, they will. Not to get specific about what they might be, but clearly, as business opportunities expand, obviously one of the things that goes with that is capital infrastructure or infrastructure. That is a competitive market. It's changing very rapidly. We've seen a recent ruling by the Canadian federal government with respect to B.C. Tel and the cable service, which I think is good news. By the way, we supported B.C. Tel's application to get into that service. In a very competitive market, obviously there are opportunities for good, sharp operating companies.

P. Nettleton: On that note, I noted an article in the Vancouver Sun this morning which talked about the federal cabinet giving the green light for cross-competition between the telephone and cable television industries. Does that have any bearing at all on WesTel in terms of its operation?

Hon. D. Miller: No, not directly.

P. Nettleton: What additional capital expenditures has WesTel committed to from its inception? That is, which expenditures have been made which otherwise would not have been made -- that would not have been necessary -- if WesTel had not targeted markets for its services outside of those services associated with B.C. Rail?

Hon. D. Miller: There has been about $15 million worth of capital expenditures, roughly, since about 1992, when WesTel was first created.

P. Nettleton: WesTel has approximately 30,000 residential subscribers. Where are the majority of these customers located, and who would be the main competitors? What would be their competition?

Hon. D. Miller: They are dispersed across the province. There is no particular cluster.

P. Nettleton: I was under the impression that the main cluster was in the northern part of the province, but you say there is no cluster. Am I'm mistaken in my impressions?

Hon. D. Miller: As I advised, they really are dispersed. We don't have the information here, but we would be pleased to get a breakout and send that along to the member.

P. Nettleton: WesTel sees itself as a small regional carrier in British Columbia, I understand, where it owns facilities and where 70 percent of long-distance traffic originates and terminates. I understand that BCR estimates that a 4 percent share of B.C. traffic is needed to break even. What percentage of traffic does WesTel estimate that it has currently?

Hon. D. Miller: With about 3 percent, currently, we are in a positive position -- more than break-even.

P. Nettleton: I suppose this is just a general question. Is there some danger that BCR may commit to capital expenditures not required for its rail business but which, however, are necessary for telecommunications markets? This would be technology which may be obsolete in a rapidly changing market. As I say, it's just a general question.

Hon. D. Miller: I think those are the issues that any operating company in the business has to look at. As I said, it's a competitive environment. Notwithstanding that, one of the advantages of this kind of environment is that for the good operating companies that are ahead of their competitors and aggressive in the marketplace, there are opportunities. I appreciate the general nature of the question, but I think that, of necessity, it requires a kind of general response.

P. Nettleton: I'll move along to labour, if I may, and ask roughly three questions in regard to labour. As the minister is aware, in July of 1993 there was a strike at B.C. Rail. I understand that the losses of net profit as a result of this strike were somewhere in the range of $30 million. The strike terminated with the signing of a new three-year contract. The first question would be: roughly, what were the terms of the collective agreement between BCR and its employees? I know that the minister is not in a position to get into specifics, but just in general terms, what were the terms? I suppose one of my concerns, for instance, is when this collective agreement expires.

Hon. D. Miller: We currently have a renewed two-year contract. The wage increases are very modest.

P. Nettleton: Same as the freeze -- zero?

Hon. D. Miller: Zero.

But I want to say generally that the company is working in a very progressive way on those issues around relationships, which I think are the fundamental issues in any company. I know from my former position as Minister of Labour and the involvement I had at that time that progress is being made. The relationship is improving.

Certainly there's a recognition that the employees of the railway are valuable in terms of its success. It has indeed been a success. That credit goes throughout the system and throughout all the employees, not only to Mr. McElligott in senior management but to people who run the railway, if you like. There's a two-year contract in place right now. There was a labour dispute some years ago; that's behind us. Things are moving along very nicely.

P. Nettleton: Thank you, hon. minister. When, if I may ask, does that new two-year contract expire?

[ Page 1655 ]

Hon. D. Miller: Year-end of '97.

P. Nettleton: One more question in regard to labour. Are all employees of B.C. Rail unionized employees? If so, what unions do they belong to? Are there contracts involved in terms of these additional employees and additional unions? I guess that's my question.

Hon. D. Miller: I don't have the list of all of the unions; I think I remember some of them by memory. There are seven unions amongst the 1,600 unionized employees; the bargaining is done through a joint council. There are 600 non-union employees.

P. Nettleton: So the new two-year agreement which expires in '97.... Given that the bargaining is done by way of a joint council, all of the agreements, then, would expire in '97. Is that correct?

Hon. D. Miller: That's correct.

P. Nettleton: Just ending on labour, are there any other major issues on the labour front that you foresee?

Hon. D. Miller: The company is continuing to pursue with the unions issues around bargaining and the structure. There are issues still before the labour board with respect to the joint council and how that operates. I think progress is being made with respect to having a bargaining structure that works both for the company and for the unionized employees.

P. Nettleton: Moving along, if I may, to Vancouver Wharves. Vancouver Wharves was purchased in 1993 for $15.75 million and carried a debt load at that time of $60 million. Approximately 50 percent of the debt, I understand, was attributed to facilities built to handle lead and zinc from Cominco's Red Dog mine in Alaska. That struck me with some interest on a personal level, having done a paper on the Red Dog mine in an international law course in university. The other half of that debt apparently relates to facilities that handle pulp, sulphur and potash. A question of interest to me on a personal level is whether the Red Dog mine is still operational.

Hon. D. Miller: Yes, it is. Cominco is doing work to see if they can extend that. They're interested in additional throughput, so.... I didn't know the member had done that kind of work. But yes, it is.

P. Nettleton: Is there anything that we should be aware of in terms of the agreement between yourself and the Red Dog mine? Is there any threat that the closing of the Red Dog mine, for instance, would be a threat in terms of the long-term profitability of Vancouver Wharves?

Hon. D. Miller: No, really -- just referring to my previous answer.... In fact, the opposite appears to be true: the company is doing work to see if it can't extend that and they are interested in additional throughput. So, no, that's not the case.

P. Nettleton: Vancouver Wharves, I understand, handles five million tonnes of sulphur, potash, methanol, etc., for 20 major companies. I know there are a number of contracts involved. Are these contracts generally negotiated on a yearly basis, or how are they negotiated?

Hon. D. Miller: They're multi-year agreements, long-term and generally structured so that we recover our capital costs plus operating profits.

P. Nettleton: I'll move right along, if I may, to BCR Properties and deal with that in a little more detail. Is the portfolio of BCR Properties limited to B.C. locations?

Hon. D. Miller: Yes.

P. Nettleton: What is the focus of these properties? For instance, are most of the them holding properties, revenue-generating, or what is the focus of BCR holdings?

Hon. D. Miller: Primarily railway purposes. About 60 percent are rights-of-way; roughly 20 percent are for shippers. As well, the company is engaged in commercial developments with the private sector.

P. Nettleton: There are always risks involved in real estate ventures, from both the philosophical and practical point of view. How is real estate investment approached with a view to risk-benefit analysis?

Hon. D. Miller: I could say that minimizing risk and maximizing profit would probably be a good operating philosophy. With respect to the commercial side, I think they are doing rather well in Prince George and Squamish in working with the private sector on developments that are of benefit to both of those communities.

[10:30]

P. Nettleton: Where is the headquarters for the real estate division of B.C. Rail?

Hon. D. Miller: At the headquarters building in North Vancouver.

P. Nettleton: What is the number of staff directly attributable to the real estate division of B.C. Rail?

Hon. D. Miller: There are 15.

P. Nettleton: How are the purchase-lease decisions made in that department?

Hon. D. Miller: As with any business, a business case is made. It's cleared with the executive and given final approval by the board prior to proceeding.

P. Nettleton: How significant are BCR lease properties with Northwood, Canfor, Fletcher's and others in terms of generating leasehold revenue and securing business for B.C. Rail freight traffic?

Hon. D. Miller: They are critical. I'll use another example to illustrate. Members may be aware that Canfor is going through the process to construct a new MDF plant in Prince George, and obviously we have land that will be critical with respect to using B.C. Rail to ship that product. We weren't as successful in Quesnel with respect to the West Fraser MDF plant because it wasn't located adjacent to the rail line or the property that we had the ability to control, and that product was going by truck. That's not to say we have given up on that; there may be future opportunities to provide that service. 

[ Page 1656 ]

But you can see the relationship between our properties and that kind of development and product for the rail line.

P. Nettleton: In terms of the sale of BCR properties over the course of the past and/or current fiscal year, have there been any significant sales of BCR properties to generate revenues?

Hon. D. Miller: It's a relatively small part of the portfolio. But in terms of the disposal of non-strategic lands, it has contributed about $8 million.

P. Nettleton: Following along the same line of questioning, have there been any significant purchases?

Hon. D. Miller: We don't have any specific numbers with respect to purchases, but I did mention the Prince George commercial development. Our properties are about 98 percent leased, and they are contributors to the bottom line of the rail group.

P. Nettleton: I have one question dealing with first nations issues. An issue that is of great importance to British Columbians generally -- and of some concern to BCR, I'm sure -- is the whole question of native land claims. What is the policy of BCR with regard to native land claims as they impact on BCR properties and operations?

Hon. D. Miller: The railway right-of-way is fee simple land. In that respect, the member might be aware that the policy of this government is to not include those fee simple lands with respect to aboriginal claims. So there are no overriding issues, if you like, with respect to that. Notwithstanding that, B.C. Rail is aware of the impact of lands that traverse aboriginal areas and has done some cross-cultural awareness programs. We want to work with aboriginal groups that B.C. Rail may have some relationship with. But as to the central question, it's fee simple land and it's used for railway purposes.

P. Nettleton: In the past, we have seen various first nations, the Gitxsan and others, resort to blockading BCR traffic. I have two questions flowing from this issue. The first concerns the economic impact on BCR of such events. The second question is: what steps have been undertaken to prevent this type of occurrence in the future? Could the minister perhaps respond to that question?

Hon. D. Miller: Blockades do arise from time to time. Again, I think the broader issue for government, whether it's B.C. Rail or other private sector companies being impacted by those, is that our position is that they have no place in British Columbia -- regardless of who puts them up, by the way, whether it's aboriginal groups of anybody else. We'll take steps as we did in Penticton, ultimately pursuing that issue right through to the courts and obtaining injunctions.

More broadly stated, I think there's a growing realization that this government, which is committed to negotiating the question of aboriginal claims, will not tolerate road blockades as part of the process. It doesn't work. I think there's a pretty simple message for those who think that blockades bring attention and solution to problems: very clearly, that doesn't happen. The member may be aware that with respect to the Gitxsan and the ongoing treaty negotiations, they were broken off by the province on the basis that blockades were continuing to happen, and our view was that while they were going on we were not prepared to negotiate. That issue went to the Treaty Commission. I'm not exactly certain where it is, but I don't think negotiations have resumed. It's a pretty simple message: you can't negotiate and blockade at the same time; it's not on.

P. Nettleton: Finally, on this issue, have any of these first nations been approached with joint ventures within disputed or traditional territory in terms of economic development?

Hon. D. Miller: Yes, we're certainly open to that. There was a joint venture with the Anderson Lake band on a selective logging operation, where both the band and B.C. Rail realized some income from that, and we're quite prepared to look at other opportunities, where the opportunities exist.

P. Nettleton: Looking now at BCR ventures, philosophically I understand that BCR is committed to proactively developing new rail traffic opportunities, and joint-venture investment in resource development projects along BCR rights-of-way. Aside from the joint venture centred at Chetwynd, are there any other projects on the horizon at this time?

Hon. D. Miller: Yes, there are. I'd prefer not to discuss those. Obviously, when you're exploring opportunities with the private sector those are confidential in nature, and any broad discussion may be detrimental to those discussions.

P. Nettleton: I appreciate the minister's concerns in terms of discussing this in any more detail; however, I will ask one further question, if I may. What region of the province are these ventures likely to fall within? For instance, are they likely to fall within the northern region of British Columbia, as opposed to, say, the lower mainland?

Hon. D. Miller: Exactly. The northern region, I think, has the greatest potential with respect to that. And it's a good policy, really, to pursue joint ventures that not only result in economic activity that's of benefit to the region, but result in increased traffic for the railway.

P. Nettleton: I also understand that initiatives are modelled on successful railroad precedents -- for instance, U.S. railroads directly involved with resource development along their rights-of-way, and CP's Fording Coal, a successful coal-mine. Is there a downside, or are there risks associated with following the lead of some of these competitors, in that they are, perhaps, somewhat dissimilar? Are there any risks associated with following their leads?

Hon. D. Miller: No. There are always risks in business. The obligation of the corporation -- and we talked about that with respect to some of the earlier discussions -- is to make sure that there's a good business case and to have that vetted by the executive and approved by the board. So, no, I think there are always risks in business, but if you approach it carefully and do your job well, then those risks are minimized and the benefits are maximized.

P. Nettleton: A full two-thirds of BCR revenues are tied, I understand, to the forest industry, and I understand there are a number of concerns about the long-term supply of forestry product. I won't get into that in any detail here. However, needless to say, the long-term revenue picture for BCR involving forestry products appears to be, at this time, somewhat uncertain.

[ Page 1657 ]

Another 20 to 30 percent of revenues are derived from coal contracts. In 1997 and 1998, key coal contracts in northeastern British Columbia are to be renegotiated, and revenue from these contracts, I understand, is expected to be significantly lower than under the current contracts. Can the minister comment on these issues?

Hon. D. Miller: I think you have to look at where the railway is physically and look at the potential for traffic. You realize that it is essentially resource-based, and in that respect I did talk about the new MDF plant that will come on in Prince George. There is a brand-new $100 million oriented strand fibreboard plant in Fort Nelson. There is no question that those markets are cyclical. For example, pulp has had a pretty tough year; I understand that is coming back. So you are tied to some degree to the cyclical nature of certain resource sectors. There is no question that the '98-99 renegotiation of the northeast coal contracts is something that.... It's not only the railway, but everybody is keeping their eye on those communities up there, communities along the north line and my own community of Prince Rupert with respect to the port. But I don't think we are approaching that with any sense of doom. We are looking at that and we are looking at other opportunities.

[10:45]

It seems to me that over the long term the forest sector is a good one to be in. My own view on solid wood is that it's very promising over the long term. Pulp, which is.... People in the pulp industry can't figure that one out, but I still think there is potential there. We are also finally coming into the kinds of new products we should have been in a long time ago; MDF is one of them. British Columbia is late to the game with respect to MDF, and given our resource base, it makes some sense to develop capacity which utilizes waste chips and sawdust.

So I am very bullish on forest products over the long haul. That is just my own view; I haven't talked to Mr. McElligott about that.

P. Nettleton: I would like to talk about diversification, if I may. I know that this policy has led to some criticism of BCR. It has been argued, for instance, that in a number of areas it is unfair that a Crown corporation compete with the private sector. I know that Mr. McElligott is certainly familiar with that criticism in the areas of trucking, real estate development and so forth.

B.C. Rail signed a major contract with Northwest Energy in 1992 to haul fuel to a power plant in Williams Lake, and there were no direct links to B.C. Rail. This represented the first time the Crown corporation had entered the trucking business proper. Does B.C. Rail continue to operate these types of trucking contracts? Generally, how do you respond to some of the criticisms that have been levelled at BCR in terms of the whole question of diversification?

Hon. D. Miller: Quite frankly, I don't pay attention to those criticisms. We've got a railway that contributes just shy of $50 million to the revenues of this province. It's our railway, it's out there competing in the private sector doing a very good job, and it is doing the job it's mandated to do. It's a competitive world if.... It would be completely wrong, for example, in terms of the operation of this.... Although there may be some who argue for privatization, I'm not one of them. I'll just leave that hanging there, Mr. Chair.

P. Nettleton: Would you like me to respond to that now or later?

Hon. D. Miller: If you are out there in business, then you're out there in business. It's not only a business venture; you have to go back to the origins of B.C. Rail and its intended purpose. It's obviously a rail line that is considered critically important to the communities it serves. To fetter that railway in terms of its profitability -- in other words, to say, "You shouldn't be out there competing in trucking" -- would be completely wrongheaded. It is doing everything it should do -- being very aggressive and competitive -- and it will continue to do that.

P. Nettleton: Moving along, if I may, the minister has mentioned a number of times the Prince George office complex. I'd like to touch briefly on that. This is of some interest to myself, coming from the riding, as I do, of Prince George-Omineca. So it's with some interest that I have watched that office going up. Is the office complete? Have long-term tenants been secured?

Hon. D. Miller: It's on target with respect to both completion and signing of tenants. We're looking at October, generally, as an opening, and I understand that it's.... I haven't been there; I haven't seen it. I mean, I've been to Prince George lots of times, but I haven't seen the building. I understand it's the first of its kind in Prince George, and it obviously is something that the community must be pleased about.

P. Nettleton: Yes, I'm certain that there's no argument with the construction of the office complex in terms of the residents of Prince George and their response to the building of the complex. I am interested, however, in the availability, generally, of office space in Prince George. Was there some need for additional office space? What was the rationale for building this complex in Prince George?

Hon. D. Miller: It was a commercial opportunity. It was pretty clear that Prince George is a growing and dynamic community, thanks in no small part to government expenditures, whether that be a new university, a courthouse, I believe, or a correctional facility. In fact, we thought for a while that the place was going to sink, with all the money pouring into it. It's just really a bustling place, thanks to the activities of this government over the last five years.

It sort of reminded me that I used to go through Prince George a lot back in the mid-sixties, and it was a pretty bustling town then. If you recall, the forest industry was really kind of opening up the interior in the early and mid-sixties with the construction of new mills. It was a very, very dynamic place. I sort of got that taste the last time I was in Prince George. I kind of felt a twinge of the sixties again. This place was just kind of booming.

G. Abbott: I hope a little of that's going on in Prince Rupert, too.

Hon. D. Miller: Well, Prince Rupert will do fine; it's doing fine. It's got able representation, Mr. Chairman.

I'm also interested, I should say, and we obviously are early in the mandate, but....

Interjections.

Hon. D. Miller: Early in a long mandate, and then another one after that.

I think, generally, that I'm very pleased with the kind of entrepreneurial activity of the railway in the north. I would 

[ Page 1658 ]

say that all northerners would support that. I think all of us who represent northern constituencies have common interests, notwithstanding, perhaps, some political differences. I'm interested in engaging all members from the north, really, to see what we may pursue in terms of broad objectives for development in the north. In that respect, I've already had some brief conversations with the member for Peace River South, and look forward to an opportunity to talk to all northern members with respect to any ideas they may have about development and trying to look strategically at that sector, that region, to see how we can promote further economic expansion, more job creation and more economic activity to the benefit of all citizens in the north.

P. Nettleton: Yes, partisanship aside, I do appreciate the minister's comments with regard to northern development and the reinvestment of moneys in the north. I think that all British Columbians have a stake in the economic health and welfare of the north -- there's no question.

If I may touch just briefly, then, on the whole question of taxation, B.C. Rail pays a variety of both provincial and federal taxes, including income tax, hotel room tax, motor fuel tax and social service tax. It is, as the minister knows, however, exempt from property taxation under section 398(1)(a) of the Municipal Act. Bill 55, Miscellaneous Statutes Amendment Act (No. 3), 1995, amended section 1.5 of the B.C. Railway Act, making it legal for BCR to pay annual grants in lieu of municipal taxes. The first of these grants, as I understand it, are scheduled to be paid out to over 20 municipalities and districts in July of this year. My question is to the hon. minister. Have these cheques been mailed out, and will payments be made on an annual basis at the same time each year?

Hon. D. Miller: The cheques have not gone out. They will go out prior to the end of the year, and obviously, under the act, B.C. Rail will make those grants payable on an annual basis. But I should say we're not tied to July.

P. Nettleton: I understand that the payments for 1996 are on an interim basis, that a proposal for a permanent grant-in-lieu program is ready for cabinet discussion in the spring of '97 and that there are a number of issues that must be taken into account when implementing a permanent program. These include questions about the method of assessment to be used, what tax rates will be used to calculate grants, and how new inventory will be treated. Could I perhaps have an update on the progress of this proposal?

Hon. D. Miller: I'm not familiar with the document that the member refers to, which may be under my ministry and which appears to be going to cabinet. Notwithstanding that, the decision was made to provide for B.C. Rail to pay grants-in-lieu, and they will do that. There are broader issues, obviously, quite apart from B.C. Rail, that we'll canvass, I assume, under the Municipal Affairs ministry with respect to railway taxation and the impact of that bill on the two primary railways in the province.

P. Nettleton: Just an aside, if I may -- and I'm sure the hon. minister will indulge me -- decreasing taxes for a railway stimulates job creation and investment. I'm just curious. Shouldn't the same logic be applied to lowering other taxes -- for instance, the corporate capital tax? Does the minister have any comment on that?

Hon. D. Miller: Again, with all due respect, these issues fall properly under the Ministry of Municipal Affairs. One needs to look at the particular issues that we're faced with in British Columbia as an exporting province, goods that we receive from other parts of Canada and the changes that have taken place as a result of federal policy and how that might impact.

Clearly, British Columbia wasn't consulted about the change in the Crow. British Columbia wasn't consulted about the loss, and I think northern communities were sold short by the federal government -- and, quite frankly, by the lack of representation of federal MPs in the north on the issue of the loss of the equalization formula under the Crow rate. Now what used to be considered equivalent mileage from prairie shippers to the port of Vancouver and the port of Prince Rupert has disappeared. With the longer mileage on the north line, that has increased the freight costs for goods moving across that north line. All of us have a stake in the continued flow or throughput of products, primarily the grain products that come from the prairies.

So British Columbia can't, in the face of those kinds of changes, sit still and pretend that we don't have an interest in ensuring that our transportation systems and our ports are fully utilized or utilized as much as they can. Therefore we made a decision. Again, with due respect, I'm sure we'll canvass this more broadly in Municipal Affairs, where it's properly housed.

[11:00]

P. Nettleton: Something which the minister alluded to earlier in our discussions was the whole question of privatization. As the government attempts to bring its fiscal house in order, it has a number of tools at its disposal. One suggested by the Business Council of British Columbia is to pursue privatization initiatives. B.C. Rail, a Crown corporation that has consistently made a profit in the last 15 years, is at the top of the list of assets to be sold. Have there been any further studies commissioned since the big three -- Westar, Whistler and Roundhouse -- in regards to privatization?

Hon. D. Miller: It doesn't surprise me. I think some people always reach for that solution. I think that's wrong, quite frankly. I want to be quite clear here. It's not that I'm opposed to either privatization or commercialization; I'm not. In fact, we have a commercial Crown in B.C. Rail which contributes $47 million and has done very well.

I think issues around privatization and commercialization should be approached with some degree of intelligence -- not on the basis of, "Let's sell it off because we need the cash," but "Should we be in business?" and those kinds of questions -- and a much more rational approach to the question of privatization. I can't think of any compelling reasons right now that would prompt me to start chasing down the privatization of B.C. Rail. I'm not opposed to the concept; I'm just saying that it doesn't appear, on the face of it, to make that much sense. Nor do I think there's any public will with respect to that.

I can't recall the position taken by members opposite on that question. Of the two parties, I think there's been.... Maybe people have changed their minds on that subject. I don't know; I just don't have a history in it. I'll leave it at that.

P. Nettleton: If I may follow up, at the risk of being repetitive, why was privatization rejected? I understand that the aforementioned reports are not a matter for public record, but what data, in general terms, persuaded the government to reject privatization? In a nutshell, what was it about the data 

[ Page 1659 ]

that was compelling, in terms of rejecting the whole question of privatization?

Hon. D. Miller: Again, not having been the minister in the past when those issues were discussed, I'm not totally familiar with all the debates that may or may not have taken place. Suffice it to say that that decision wasn't taken.

P. Nettleton: There have been a variety of estimates as to the value of B.C. Rail if it were to be put on the block today. What value would you attach to the properties owned by B.C. Rail and its subsidiaries at this time?

Hon. D. Miller: I don't think it would be wise to start dealing hypothetically with the potential value of the railway on the marketplace. Let's say we decided we wanted to do it.... I just don't think it's the kind of conjecture we want to get into.

P. Nettleton: I'm just going to review, if I may, some facts. The minister can certainly correct me if I'm wrong. On June 14, 1984, the provincial government effectively assumed the major portion of outstanding debt of B.C. Rail through a one-time grant of $430 million. This was used to retire the debt to the purchase of provincial bonds in a sinking fund. By the year 2005, the provincial government will have paid $971 million in interest on these bonds, an average of $46 million over the course of 21 years. The current debt of B.C. Rail, as I understand it, now sits somewhere in the range of $328 million. Given the costs associated with servicing the debt, does it make economic sense to retain BCR as a Crown corporation? Is it not worth considering privatization, if only as a means of reducing this debt?

Hon. D. Miller: Well, not to relive history, but really, if you look at the report and look at the assets relative to debt, I venture to say that we're the best operating railway in Canada -- I don't know about North America, but certainly Canada. Again, I think we've talked about the issues of privatization. It's certainly not something that I'm pursuing. I don't think any compelling reasons have been brought forward, nor is there, as I say, a public will with respect to that. I don't know if the member is advancing that, but I'm certainly not, and the government is not contemplating that. That's not to say that we have, as I said in response to an earlier question, any inherent bias against looking at the issues of privatization and commercialization of commercial Crowns. I don't really know if you want to go back and forth too much, but I don't.

P. Nettleton: I don't want my line of questioning to be construed as an advancement of privatization. I think it's more a matter of exploring the issue and taking advantage of the opportunity to ask some pertinent questions which flow from that whole issue. I've got a couple of quick questions, and then I understand the hon. member for Peace River South has some questions for the minister. Briefly, what was the rate of return on shareholders' equity for 1995? I believe it had been estimated at 5.2 percent.

Hon. D. Miller: It was 4.3 percent.

P. Nettleton: What are the employee counts for 1995?

Hon. D. Miller: Just referring to the 1995 annual report: employees, 2,480; debt-equity, 22:78.

P. Nettleton: Finally, what was the net loss for all passenger services, be it Prospect or Hudson charters, etc?

Hon. D. Miller: It was in excess of $4 million -- about $4.5 million.

P. Nettleton: Thank you, hon. Chair, thank you, hon. minister, and thank you, Mr. McElligott.

J. Weisgerber: Well, as tempted as I am to get into the debate around privatization, perhaps we'll leave that for closer to the next electoral event and do that again and see whether it works as well next time as it did last. What I wanted to talk about today particularly -- and I know my colleague from Peace River North will want to talk about some issues particular to Fort Nelson, so I'll stay away from that issue -- is grain handling and grain shipments with B.C. Rail.

I happen to believe that changes to the Crow rate and things that are evolving in northern British Columbia and northern Alberta have caused a real opportunity to present itself in the area of grain shipment. The minister, I'm sure, is aware that there is enormous potential to use B.C. Rail in conjunction with the port of Prince Rupert to take some congestion out of the port of Vancouver, expand an underutilized facility in Prince Rupert, and, most important to me, provide a centre of activity in the Peace -- in Dawson Creek particularly -- for grain shipments from the Peace River region, both on the Alberta side and on the B.C. side of the border.

The minister may not be aware that at one point in our history, perhaps 30 or 40 years ago, Dawson Creek was the largest grain-shipping point in the British Commonwealth. That speaks for itself. But changes to the Crow rate, to rail systems and to grain handling changed that somewhat, even though Dawson Creek continues to be a major grain-shipping point.

Today I'd like to pursue the opportunities that I believe exist in re-establishing Dawson Creek, particularly, as a major grain-shipping point in this province and in western Canada, and in using B.C. Rail this time as the primary shipper. That wasn't the case in the past. CN used the shipping point in conjunction with the Crow rate benefits, and grain travelled that way. I think there are a number of issues that have to be addressed in order for us to maximize the opportunity that exists there. First and foremost is the question of CN rates from Prince George to Prince Rupert. I expect also that port fees probably play somewhat of a role in that.

Maybe before I get off on a long tangent here, perhaps the minister could advise me. I know there have been some negotiations with CN. I know that the rate differential between shipments via B.C. Rail to Vancouver and Prince Rupert has been reduced, but we're still shipping grain to Vancouver at a lesser rate than we are to Prince Rupert. I wonder if the minister could tell me if any talks are ongoing. Is he optimistic about the ability to negotiate with CN for a better rate to Prince Rupert? This may be an interesting question for the minister: is it in the interests of B.C. Rail to ship to Prince Rupert by way of CN? Or is it in B.C. Rail's primary interests to use their trackage for the full shipment to Vancouver?

Hon. D. Miller: It is a very interesting topic, and one that is dear to my heart as the representative of that northern constituency where the port of Prince Rupert is situated.

I think there are a number of factors we have to look at. I want to say that yes, there is an interest to B.C. Rail to be engaged in the shipment of northeast grain -- probably through both ports, but I think there is an interest with respect 

[ Page 1660 ]

to the port of Prince Rupert. Going back to some of our earlier discussions, B.C. Rail is a company that is aggressively pursuing business opportunities. To that extent, the railway is.... As the member is aware, the decision by the federal government with respect to the Canadian Wheat Board and the control of those cars has been made, although I can gather that there are some final policy questions to be determined by the federal cabinet in terms of disposition of those cars, because having the cars gives the railway more flexibility. That, as I understand it, has been a bit of a source of frustration for Peace River farmers in terms of car availability and those kinds of questions. So, yes, we're looking at the acquisition of more capacity.

On the rate side, I do know that Prince Rupert Grain has been working with CN on that rate question. Again, I'm not standing up and complaining about the changes to the Crow. I talked about what I thought was a failure of representation in that debate. It would have been easy to mount a pretty vigorous argument that at the very least the equalization formulas -- both for federal government interests.... I mean, the National Harbours Board are going through some changes, but the port of Prince Rupert has a federal interest, obviously, as a huge amount of federal money has been put into that operation. And obviously they should have an interest in making sure that this port remains viable and that we can, over time, increase throughput.

[11:15]

I know that Prince Rupert Grain has worked with CN on the rate question. They've brought down the rates, because in a deregulated environment they have the opportunity to negotiate. Any increase in volume would contribute to some easement on the rate question. There's no particular problem. As always, we've got an entity here in B.C. Rail in terms of trying to make arrangements with other entities -- CN Rail. Obviously there are negotiations between those two.

There are other related issues around the movement of grain. Port fees became a bit of a red herring in the argument, certainly in Prince Rupert, about why grain shipments have been decreased.

The other point is on the market side. I mean, clearly the people who grow and sell grain are also influential with respect to where those markets are. There are some current problems on the market side -- opportunities as well, because of some of the diseases that have hit some of the crops that go out in eastern Canada, and because of potential for increased shipments to China. So there are conditions there that could result in increased grain throughput and Peace River grain through the port of Prince Rupert.

But it really requires people to work on this, with that as a concentrated kind of goal. I talked earlier about my desire to move in a broader way in the northern region, looking at economic opportunities. It's very early days in that respect; I don't have a strategic plan at this stage. However, I have people in my ministry working on some conceptual framework for that, because unless you establish targets -- that's been my experience as a minister -- and unless someone champions a certain issue in government, it tends not to happen.

I mean, we can say what we like about northeast coal. I'm sure there have been lots of papers done -- I know there have been -- on whether that was historically a good deal or a bad deal. But the simple fact remains that had it not been for Don Phillips there wouldn't have been a deal, because he pursued it with the kind of dogged determination that was an example of how to pursue projects.

I'm aware of that, as a minister. I am very interested in looking at our northern strategy. This is a key issue that needs to be explored further. The conditions are there for things to happen, but it involves a lot of players. I can't say I've gotten deeply enough into it at this stage, really, to say much more than I have today on that question.

J. Weisgerber: There are a few issues that you can certainly help me and the people who are interested in this on. The issue of railcars is critically important. The federal government has indicated an intention to dispose of some 13,000 cars. I believe B.C. Rail was acquiring or may have acquired about 50 cars and was negotiating for some further 250. Perhaps the minister could tell me what has been acquired and what is currently being negotiated for.

Hon. D. Miller: Yes, I did allude to that in my previous response. B.C. Rail has 50 cars, but they're not Wheat Board cars. They're new cars. We have made it quite clear that we would like to acquire 200 cars from the federal government.

J. Weisgerber: Between cars that are owned, leased and otherwise available to B.C. Rail through arrangements with CN, CP, the federal government, etc., can the minister advise what kind of a fleet of cars B.C. Rail has? What kind of numbers does B.C. Rail have available, and what numbers would they like to have available?

Hon. D. Miller: I'll ask Mr. McElligott to respond to that.

P. McElligott: If we're successful with the federal government, we will acquire 200 cars. We were hoping to get them this fall, but now it looks as though the process is going to be delayed. The federal Minister of Transport retained CIBC Wood Gundy to advise the federal government on the process for disposing of those grain cars. We were hoping to have ownership of the cars this fall. If we were to get them, there would be those 200 cars, there would be the 50 cars that we brought on the property last year and a small fleet of about 18 or 20 that we had prior to then, so in total, we would be just short of 300 cars.

We think there's potential to grow by an additional 50 cars, because we see a tremendous opportunity in that region, as you do, to move more grain. With the change in the federal legislation, our routing over B.C. Rail is actually 200 miles shorter to the port at Prince Rupert than a routing that goes all CN. We see a tremendous opportunity and have been working very hard to enlarge the car fleet. If we can't get access to the federal cars this fall, we will make alternative arrangements ourselves to go into the States or elsewhere and lease equipment.

J. Weisgerber: It seems to me that at some point the Alberta government also got involved in providing cars. Are you at all familiar with a scheme that was introduced in the 1980s, I think, that had some tax implications for people who invested in grain cars? Has that been explored here at all?

Hon. D. Miller: I gather not, Mr. Chairman. Following up on Mr. McElligott's response to a question, in addition to the shorter mileage, the port of Prince Rupert is a day-and-a-half sailing closer to the Asian markets. It's kind of a peculiar arrangement. Of course, looking at ownership of the terminal facilities in Prince Rupert, which is Sask Wheat Pool, I think that originally the Heritage Fund in Alberta kicked in a fair amount of money. There's a mutual interest in both 

[ Page 1661 ]

Alberta and Saskatchewan for expanded use of the terminal, but there are also some peculiarities because Sask Wheat Pool is involved in the Roberts Bank proposal. Someone jokingly said that Clarence Roth's biggest problem was that his board were his competitors.

There are some mutual interests. I have had some initial very brief discussions and a letter from the Saskatchewan minister responsible indicating that they have an interest and a commitment to the port of Prince Rupert. That's very superficial -- no disrespect -- at this stage. Those are areas that with respect to this broader strategy I want to know more about. It could potentially involve discussions with responsible ministers in both Alberta and Saskatchewan.

J. Weisgerber: I have a couple of other areas that I think are at least peripherally related to this and may or may not fall under the purview of B.C. Rail and/or the minister, given the fact that we have the minister responsible for Employment and Investment as well as for B.C. Rail, a minister of some influence in the government. I wonder if the minister could indicate whether they have explored at all the issues of a direct-load terminal in Dawson Creek. Currently grain goes either through the elevators or is loaded direct onto what are referred to as producer cars, whereby producers contract for a car or cars themselves and load them almost independently.

There is some thought that there is an opportunity there for a central terminal, perhaps operated by B.C. Rail or by an independent entrepreneur. Combined with that is a cleaning plant. Things like weeds, seeds and others, which can make up a fair volume and which are now cleaned in Vancouver, could be done in the Peace if there was enough critical mass to make it viable.

I am looking at the minister to know whether there have been explorations, either through his ministry or through B.C. Rail, into that kind of opportunity.

Hon. D. Miller: I'm not aware of any, but these are indeed the kinds of issues that I want to explore. As I indicated, I asked staff in my ministry to come back to me with some paper in terms of this broader strategy, and those are the kinds of ideas that seem to me the very ideas that we need to look at.

If you look at the broader issues of grain, you've got, I presume, independents in the Peace versus the kinds of organizations that exist on the prairies -- whether it's the Saskatchewan Wheat Pool or private operators like Cargill. I guess there are also some challenges with respect to marketing -- who does the marketing, those kinds of questions -- that I'd be very interested in exploring. I'm not aware of any work to date, but I'd be very interested in exploring that.

J. Weisgerber: There is a group working under the sponsorship of the Ministry of Agriculture who are doing some work in this area. There may be an opportunity to work in closer cooperation with them, and I'd certainly be happy to be involved in that.

I just have a couple of other things. Consistent with that initiative of encouraging truck shipments from Alberta, there has been a longstanding agreement which allows farmers from the so-called Peace River block -- which extends on either side of the Alberta-B.C. border for about a 50-mile radius -- to come into Dawson Creek, with grain particularly, without having to concern themselves with interprovincial licences, etc. I think that goes back to the days when Dawson Creek was a major grain-shipping point. What has changed is the style of the trucking operation. When that was introduced, if farmers had a three-ton truck, they thought they were a large farmer. Now the farmers in my part of the world.... I know of one who has seven or eight B-trains that haul his grain only -- a trucking fleet simply to haul his own grain. So the distances that can potentially be serviced by B.C. Rail out of Dawson Creek have grown quite dramatically.

I think there's an opportunity for us to try and expand the market area that we could attract grain into Dawson Creek from. It could be limited to farm trucks -- although one would never, meeting them on the road, believe historically that farm trucks would look like they do in the Peace. I think that's another piece in this puzzle if we're going to maximize the opportunity that exists there. That probably speaks more to the minister's role than a direct involvement by B.C. Rail.

Hon. D. Miller: Again, it's not an issue I'm familiar with. But looking again at the broader question, it seems to me that pooling volume may be an essential ingredient if you're looking at that being a major shipping point. I don't know if you could ever return to the glory days. Clearly the issue of volume and how that volume gets to loading facilities is an issue as well. Again, I'll just say that I'm happy to pursue that particular point.

J. Weisgerber: Finally, I can't finish this conversation, given its tenor, without asking whether or not B.C. Rail have had any second thoughts on their decision to close the office in Dawson Creek. It was, I think quite honestly, a strategic error to consider it for the savings that may have been achieved by the closure, because the whole implication of closing the Dawson Creek office was to suggest that, in fact, the business was something other than grain. The only contact that a grain shipper would have with B.C. Rail would logically be through Dawson Creek. I think that another part of the puzzle, or another part of this strategy, has to be a consideration of reopening an office, an entity, an identity, for rail in Dawson Creek in the grain community.

[11:30]

Hon. D. Miller: I know that if I was from Dawson Creek, I'd stand up and make exactly the same argument. But the railway makes strategic business decisions. We expect it to operate in a private sector manner, and it does, and it returns a dividend.

Going back to whether that was interpreted as a signal, far from it. I mean, I'm just starting now as the minister responsible. I've tried to lay out in general terms some of the ideas I have with respect to a broader strategy of northern economic development. If we can realize some increased economic expansion in the future, it might make good corporate sense in business terms. But that's a decision made obviously by the corporation with respect to the running of the business. So it may be that in the future that makes some sense, and we'll see where it takes us.

T. Nebbeling: I have a couple of questions. I heard the word "privatization" mentioned when I walked in -- and I have whispered it. What I would like to know from the CEO of B.C. Rail is whether, prior to the past election, there were any discussions held by the CEO in his office on the privatization of B.C. Rail.

Hon. D. Miller: No, Mr. Chairman.

T. Nebbeling: When I talk about B.C. Rail, I am talking about B.C. Rail the Crown corporation. Of course, there are 

[ Page 1662 ]

other divisions within that umbrella group, including real estate, trucking and communications. Have any of these divisions been discussed by B.C. Rail in the concept of being considered for privatization with other partners or potential partners?

Hon. D. Miller: No. Prior to the member arriving we had a fairly broad discussion around the issues of privatization. I don't think we need to recanvass it; it's there.

T. Nebbeling: I appreciate what the minister said, because I was not aware that it had already happened. There have been some rumours -- and we should not be dictated by rumours -- that prior to the election Mr. McElligott was involved in some discussions. As I stated very clearly, they were rumours. I had not got that confirmed, and I was hoping I could hear something more.

Another issue that I would like to ask the minister about is the sudden involvement of B.C. Rail in the development of shopping malls and other commercial enterprises, especially in the Sea to Sky corridor. Can the minister give me a background of how these new developments are being financed?

Hon. D. Miller: They are commercial operations. Again, that's an issue we did discuss. I referred to how those decisions are made: through the operating company, up to the executive and to the board. There are commercial opportunities, and we will take advantage of those opportunities, using existing BCR properties and looking at other opportunities as well.

T. Nebbeling: I refer to one particular development in Squamish. There are two competing shopping malls being developed, one by the private sector and one by B.C. Rail. I know how the private sector is trying to get their financing in place; I have not been able to find out how the B.C. Rail shopping mall has been financed.

Hon. D. Miller: We have a commercial Crown with several divisions, one of which is property development, and I like to think.... Again, I'm fairly new with respect to the ministry responsible for B.C. Rail, but from what I've heard -- and, actually, from what I hear from the opposition -- there seems to be a general acknowledgement that this is a very efficient company that has good business sense. We finance those from cash flow from the divisions, the various operations, and we're doing exactly what we should do.

The issue came up: are we somehow, or should we be, competing with the private sector? We have a mandate in this commercial Crown, and we'll be out there competing in the marketplace. Good healthy competition creates opportunities.

T. Nebbeling: I agree with the minister that good healthy competition is a good thing. I do not think that the taxpayers' money being used to compete with the private sector.... I see the minister shake his head when I mention the term "taxpayers' money," but I believe if there is profit made in these Crowns, these moneys go back to general revenue and do not stay within the Crown corporation as a fund to be used at the discretion of the board of directors. Am I wrong?

Hon. D. Miller: You're absolutely right. It's a commercial Crown. It returns a dividend of $47 million to the Crown, which helps reduce the tax burden on individuals. I've had lots of experience with good commercial operations that are owned by the public. In fact, my hometown of Prince Rupert owns its telephone system. They make a lot of money, and that money goes back into reducing the tax burden on its citizens. There's absolutely nothing wrong with that. There's absolutely nothing wrong, with respect to anybody's philosophy or anything else, with these things taking place.

T. Nebbeling: So now we're back to the question that I had in the first place, and that is: how is that shopping mall in Squamish being financed? Is it internally from the division that is responsible for real estate development, or are the funds moved over, for example, from the B.C. Rail operation itself to do that?

Hon. D. Miller: I did respond in the affirmative. It is cash flow from the division.

T. Nebbeling: Well, okay, I will accept that as the answer, but I still believe that the profit made by the Crown corporation should flow back to general revenue so that we can deal with the deficit rather than trying to use that money to compete with the private sector, thereby undermining private sector opportunities.

Hon. D. Miller: Mr. Chairman, that's dead wrong; that is not what happens. We have a railway that the people of this province own, right? It's a commercial operation, and it returns a dividend to the people who own it, the taxpayers, and as a commercial operation, it runs in every respect like the private sector. To suggest that we should fetter their ability to compete in the private sector simply means that we're inviting a reduction of the dividend that flows to the taxpayer. It wouldn't make any sense not to be out there and to be competitive as a commercial Crown. It would be folly, so why would we even want to pursue it? It's not a cross-subsidization issue; it's due to their divisions. We've got an operating company that has made some very strategic business decisions in terms of initiatives that it can pursue on the property side, the telecommunications side and the shipping side, and it appears to be doing quite well.

T. Nebbeling: I will go on to another subject quickly. Still, I do disagree with the minister philosophically about the role of government in the enterprise sector.

I just have one quick question before I get to my last subject, and it is on the telecommunications side: how much profit did it make last year?

Hon. D. Miller: We don't report or detail the results on the individual business divisions, for good reasons.

I'm not familiar with the community of Whistler, but did any government money ever go into that operation to prime the pump? I don't know the history, but I suspect that probably a ton of government money....

T. Nebbeling: I'm so happy to be able to educate the minister a bit, now that he is Minister of Municipal Affairs. The investment in Whistler made by the provincial government in total is $28 million, so that is a ton of money. The return so far, not counting property tax, real estate tax and sales tax, but just the return on the land, is about $64 million. So I think this is a healthy balance between the input and the output, and that's doing proper business.

Hon. D. Miller: Mr. Chairman, I think the member's just defeated his own argument. He's suggesting that it's quite 

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appropriate for the taxpayers to shovel $28 million into what arguably should be completely the responsibility of the private sector so that the private sector can actually go in there and make money. I'm puzzled; I'm perplexed. Why is it okay in that instance but not in others? I don't understand.

T. Nebbeling: We may be drifting, but I'd like to give the minister further education. It was the provincial government in 1975 -- not the municipality or the people of Whistler but the provincial government; an NDP government, by the way -- that declared Whistler's status and, because of that, made an investment in Whistler. That was not solicited by the 250 people who were living there. That was an initiative by the provincial government. That's what they did. So it's clear that only when the private sector jumped in really big time did Whistler become what it is today. Prior to that, it was governed by a board appointed by the provincial government. We could carry on with this one for a long time. Whistler will always be a benefit to this province.

The total of the profit margin of the telecommunications division is not in the public numbers, as you have just told me. But this public number is that B.C. Rail, as a Crown corporation, made $46 million profit. I would like to know what percentage the money that has been spent on these real estate developments represents out of what you handed over to government as profit for last year.

Hon. D. Miller: It would be relatively small. I don't know if we could extrapolate an exact number here, but if it's something that we can, I'm sure that we can pass that along to the member.

T. Nebbeling: Okay.

This is definitely the last on this. The principle of using profit from one section of B.C. Rail for the purpose of another division of B.C. Rail which has nothing to do with the railway development is, I believe, wrong, and I want that on record.

I would like the pertinent information on the financial status of the shopping mall development in Squamish. It has meant that another shopping mall went under financially, or didn't get built at the time when B.C. Rail started to compete for development rights.

The last question I have is a safety issue. Perhaps the minister can give me some background on what has been done to avoid the potential of explosions because of propane transportation by B.C. Rail, especially through residential areas.

Hon. D. Miller: Obviously there are regulations with respect to transporting that kind of freight. The railway has gone to heavier rail, continuous rail, electronic monitoring -- obviously I'm not going to detail everything here -- a variety of things to ensure that freight is carried in a safe manner. With respect to the shopping centre development, it was supported by the city council and the chamber of commerce. It's a tremendous success, it's already two-thirds leased and it appears that the private sector is very supportive.

I hate to be presumptuous -- in fact I hope I'm not presumptuous -- but is it reasonable to assume that we are going to reach a conclusion with respect to B.C. Rail prior to lunch? I don't know if there's....

T. Nebbeling: I will be quick for the minister. There is a real concern in North Vancouver and West Vancouver about the railway line that passes apartment blocks and buildings within a distance of 20 yards. With the increase of propane transport through these corridors, there is a concern that the law of Murphy -- that if something can go wrong it will go wrong -- will come to fruition one day and that impact would be incredible for these areas. The damage and devastation will be incalculable. Is B.C. Rail looking at any alternative ways of transporting these kinds of products away from the residential areas through ferries and other vehicles, such as CP is, I believe, doing already?

[11:45]

Hon. D. Miller: No, that's not the case. I have talked about the kinds of safety initiatives, and overall, I think, rail is considered to be one of the safer modes of transportation with respect to those products. It's always a problem, I guess. The railway is built, and then along comes the other development, as is frequently the case. There are lots of examples around the province where the other development doesn't like the industrial side of things. Those are challenges that we all face, but we're not contemplating any alternatives.

T. Nebbeling: We're talking about the well-being of 60,000 people in total, so I think it is something that will maybe change over time, and the question of who was there first will really not apply any longer, especially considering that there are alternatives in dealing with getting through these particular residential corridors. The one area that is of concern, of course, is North Vancouver-West Vancouver, and I would suggest that it may behoove B.C. Rail to study at least the possibility of transporting via water in order to circumvent these particular areas and get their load to go back onto the railway line, as there is a docking facility.

Hon. D. Miller: Mr. Chairman, the speed of the railway through those areas is very modest -- 20 to 25 miles per hour. There have not been any accidents. The member talks about the safety of 60,000 people. I want to stress that there isn't one shred of evidence to suggest that safety has ever been compromised with respect to the transportation of propane or other commodities.

B.C. Rail will continue to operate in a very responsible manner, paying attention to the very high safety standards in terms of how they operate those units. Clearly they are aware of the corridor they have to run through, but these are obviously decisions.... I assume that taking traffic off the railway, putting in another mode of transport and then putting it back on the railway at some point -- or not -- requires double and maybe even triple handling. There's a price to pay, and the customer pays the price. There's not always a nice, neat, pat answer to some of these questions, but I want to repeat that there is no evidence to suggest that safety has been compromised in any respect with the transportation of these goods.

T. Nebbeling: There is a fair amount of documentation available for the minister and for B.C. Rail to suggest that there is a safety issue, a serious safety issue. In other jurisdictions, the speed, for example, is not 20 miles per hour but less than that. In spite of all the safety measures, things do go wrong. Mississauga a couple of years ago is a good example, because they indeed had propane tanks exploding there. That was outside the residential area, so there was no damage to people or much to property, but had that been in a residential area, it would have blown away blocks of neighbourhoods. So 

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I think we have to face reality, and I will provide B.C. Rail with documentation that I've been given about what potential safety risks we are taking.

Hon. D. Miller: The member is right that, with the best of regulations, etc., things do go wrong. I think there was a ski-lift incident in Whistler that was probably a testament to that.

As disappointed as I am that we have not concluded B.C. Rail in this extensive two-hour discussion this morning, because we have many more issues to discuss, I would move the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 11:50 a.m.

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