[ Page 4879 ]

The House met at 10:07 a.m.

Prayers.

Orders of the Day

SUPPLY ACT (No. 2), 1997

On section 1.

I. Chong: Bill 49, Supply Act (No. 2), 1997, has no warrants attached. There is no opportunity to engage in a thorough review of the sections, because there are none.

At present we are engaged in canvassing the spending estimates in all the ministries that are still unresolved at this time, and we will do so vigilantly and we will do so thoroughly, because that is our job and that is what we were elected to do. What this bill does is merely allow the government to spend money for another month without proper debate or scrutiny.

We would not be having to deal with this piece of legislation if the government had adopted a legislative calendar, an agenda, a schedule, as was indicated several times last evening when we were debating second reading of this bill. I believe we made our point last evening that a legislative calendar is required so that supply bills of this nature are not brought forward in this manner.

This bill is a request for a substantial amount of money, $1.68 billion, to be approved in this manner. Of course, the opposition remains concerned that this kind of action continues. It is appalling and unacceptable.

Hon. Chair, I just want to close with some comments. The members on this side of the House will continue to examine the spending estimates of all the ministries, and we will go through them in every detail.

Section 1 approved.

Preamble approved.

Title approved.

Hon. A. Petter: Hon. Chair, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 49, Supply Act (No. 2), 1997, reported complete without amendment, read a third time and passed.

Hon. J. MacPhail: I call Committee of Supply in this House. For the information of the members, we will be debating the estimates of the Ministry of Forests.

[10:15]

ESTIMATES: MINISTRY OF FORESTS

Hon. D. Zirnhelt: I'm pleased today to introduce the budget for the estimates of the Ministry of Forests.

The forest industry continues to be the backbone of our province's economy, and our forests continue to be our greatest economic and environmental resource. British Columbians want and expect our forests to be managed with a view to the future. They expect us to meet today's needs without compromising the needs of future generations; to manage our forests with an ethic of respect for the land; to balance economic, productive, spiritual, ecological and recreational values to meet the needs of all British Columbians and our communities; to conserve biological diversity, soil, water, fish, wildlife, scenic values and other forest resources; and to restore damaged ecosystems. My ministry has a role to play in all of these areas.

As minister, my responsibilities include the Ministry of Forests itself; Forest Renewal British Columbia, a Crown corporation with the mandate to invest in B.C.'s forest sector, in forest workers and in communities that depend on our forests; the Forest Appeals Commission, which is an independent tribunal established under the Forest Practices Code to hear appeals of decisions made under the code; and the Forest Practices Board, which was established under the Forest Practices Code act to carry out audits and investigate complaints regarding forest practices.

Through these agencies, my ministry and other ministries, the government is working hard to maintain a healthy forest sector and fulfil our stewardship responsibilities on behalf of all British Columbians.

My ministry's mandate continues to be to encourage maximum productivity of the forest and range resources; to manage, protect and conserve the forest and range resources; to plan the use of the Crown's forest and range resources in consultation and cooperation with other ministries and agencies of the Crown and the private sector; to encourage a vigorous, efficient and world-competitive timber processing industry; and to assert the financial interest of the Crown in its forest and range resources in a systematic and equitable manner.

While the mandate remains the same, the way we achieve it has changed significantly. The role of the Ministry of Forests today is very different from that of the past. There was a time when this ministry focused almost solely on getting timber harvested, but over the past decade, management of our forests has become far more complex. A wide range of interests have come forward, and decision-makers must now consider these diverse interests in all the resource decisions and make sure legal obligations under the Forest Practices Code are met.

[ Page 4880 ]

Social and economic changes in our province are having a major impact on forest and rangeland use management. These include social change such as urban expansion; expectation of greater social equity; aboriginal aspirations, including treaty negotiations; increased interest in recreation; and environmental change. There's concern about our ability to sustain the economy and the environment; there are threats to biodiversity, fish habitats and aesthetics.

Under economic change, industry is restructuring, and there's economic diversification going on around the world; there's globalization. There are major trade disputes between countries. There are questions around timber availability, about mill automation and, above all, about sustaining jobs. Our greatest challenge is to strike an acceptable balance between the many interests out there, taking into account these trends and our statutory obligations.

Today my ministry is concentrating its focus on the role of planner, approver and watchdog of industry performance in the forest. Basic and enhanced silviculture has been appropriately consolidated under Forest Renewal British Columbia, a Crown corporation. The ministry is responsible for a variety of forest resource policy, practices and inventory activities. These include planning, land information management, aboriginal issues and research.

In the area of forest operations, the ministry approves forestry plans and works with ranchers to make sure that the use of rangelands is appropriate, and it carries out a variety of activities related to recreation sites.

The ministry's small business program sells timber to independent business, promoting value-added and testing innovative new management and marketing processes. Compliance, enforcement and audit activities focus on ensuring that licensees are complying with the code and taking appropriate action when the code is breached. Resource development activities include the development of recreation sites and range enhancements.

The B.C. Forest Service and our province are fortunate to have one of the best fire suppression organizations in the world. This is an extremely efficient and world-class organization, one that British Columbians can be very proud of.

The B.C. Forest Service protection program has an international reputation, particularly for the rapattack program, and its training and management expertise. The commercial value protected by the program includes the $17.7 billion forest sector and approximately $25 billion worth of housing and other developments outside urban areas. Our province's expertise in fire suppression will become increasingly important in the future, as the Forest Service expects a continuing increase in the number of fires. This expertise was recently shared with representatives of more than 30 countries at the International Wildland Fire Conference in Vancouver last month.

I now want to turn to a recent announcement that will have a major announcement on the ministry -- the jobs and timber accord, which was announced in Prince George last Thursday. During the past year, negotiations took place between government and industry. Discussions were also held with labour, communities, and environmental and small business groups in the forest industry. The goal, as expressed by the Premier back in March of '96, was to create 21,000 new jobs. The jobs and timber accord is the result.

In the accord, government and forest industry both recognize the linkages between a sound forest economy, a sound environment and stable communities. The creation of new, economically viable jobs and the sustaining and enhancement of existing jobs are key priorities for the publicly owned forest resources of the province, as we are generating more value from every tree harvested and making investments that increase the growth yield and the value and availability of timber.

The accord recognizes that an economically viable expansion of the forest sector can only occur if government and the forest industry work together. This can be accomplished without lowering environmental standards. Government and industry remain committed to the principles of environmental sustainability. The accord is about getting more value and more jobs out of our forests without lowering these environmental standards.

To accomplish these goals, the jobs and timber accord contains a series of challenging initiatives that will lead to jobs -- thousands of new jobs -- in the forest sector. The accord includes commitments to create 20,400 direct jobs and at least 17,400 direct jobs over the life of the accord. In addition, 2,000 jobs will be created through Fisheries Renewal, using the funds from Forest Renewal. Some of the initiatives that achieve these results will be: increasing the lumber supply to secondary wood industries, through a fibre transfer program that will enable small businesses to create jobs; investments to renew our forests through Forest Renewal B.C. and the improved delivery of Forest Renewal funds and programs; increased industry investment in improved technology and higher-value-added products; improving industry's access to their full allowable annual cut allocation; and new forest sector industry and union agreements on work arrangements.

To oversee the progress towards the job creation targets, government and industry also agreed to create a jobs accord advocate, who will work closely with forest sector partners. This individual will establish the tracking and monitoring systems for job creation. In addition, a forest worker agency will be created by Forest Renewal B.C. to assist displaced forest workers to find new employment opportunities in the forest sector.

The accord is a significant accomplishment that will benefit the province as a whole. In its implementation, the accord represents many challenges for government generally and for my ministry specifically. The accord represents new ways of doing business and new ways of creating opportunities. The Ministry of Forests is committed to implementing the accord and will be marshalling its resources to ensure delivery of its commitments and the creation of thousands of new jobs for British Columbians.

Another initiative that has had a major impact on my ministry is the Forest Practices Code. The code was introduced two years ago, and it was a critical milestone for our province. It is a comprehensive framework for integrated resource management. It established sustainable forest practices in a firm regulatory framework for the management of the provincial forests.

The code was established because, without action, commercial forestry in British Columbia would have been at severe risk provincially, nationally and internationally. Today, two years after the introduction of the code, we are introducing legislative amendments to make it more efficient and effective, reflecting two years of practical experience. These improvements reduce unnecessary administrative burden in the Forest Practices Code and introduce changes to clarify and improve code enforcement powers.

[ Page 4881 ]

Specifically, the changes reduce the number of operational plans that must be prepared, reduce unnecessary duplication of information and make it possible to tailor code requirements for small-scale salvage operators and woodlot licence holders to fit the scale of their operation. We are not reducing standards.

These changes will also distinguish between operators who contravene the code through negligence and those who do so unintentionally despite taking all reasonable precautions. None of these changes will compromise environmental standards.

The budget reflects a significant change to the ministry's role. With basic and enhanced silviculture consolidated under Forest Renewal British Columbia, the ministry now focuses on policy planning, enforcement and monitoring forest practices. As a result, the ministry's budget is 23 percent smaller than last year, and we have 15 percent fewer full-time-equivalent staff.

My ministry's budget was prepared in the context of the province's overall fiscal situation. During times of tight resources, it is essential that government be clear and consistent in its budget priorities. For this government the key priorities are those that have been highlighted by British Columbians: health care and education. My ministry's budget is $152.122 million less than last year. To achieve these reductions, the ministry reduced budgets and the size of headquarter staff branches by almost 14 percent.

Ministry field operations were streamlined by reconfiguring eight district offices, eliminating four field offices, reducing the size of regional offices and finding administrative savings, for a total savings in full-time-equivalent personnel of about 8 percent.

In addition to restructuring headquarters and field operations, the ministry will find savings in a number of other areas of administration. First, the allocation for direct firefighting costs has been increased by $20 million, to more closely reflect average annual firefighting costs, while expenditure recoveries and some reductions have allowed us to find savings of $5 million in fire preparedness.

In 1997-98 the budget for reforestation and maintenance of pre-1987 backlogged sites and for reforesting sites destroyed by fire, pests or disease has been removed. Forest Renewal B.C. has assumed responsibility for all silviculture, except for the small business program, which will still be funded by the ministry.

In 1997-98 and in the future, the ministry will be focused on resource stewardship, maintaining a healthy commercial forest industry and protecting the forest resource. At the same time, Forest Renewal B.C. is investing stumpage revenue to create employment and long-term benefits for workers, their families and forest-dependent communities. With these roles now clearly defined, both agencies are in a strong position to fulfil their responsibilities.

The ministry faces the challenge of working with a reduced budget and fewer employees. Production processes within the ministry are being reviewed to make sure we are being as cost-effective as possible in making land and resource decisions, reviewing and approving operational plans, issuing cutting authorities, monitoring licence performance and protecting our forests.

The ministry is also working to improve the small business program, which currently serves 1,750 loggers and 350 sawmill clients, with 1,700 sales each year. The ministry is moving towards a stand-alone model with clarified regulations to streamline the administration of sales. The small business bid proposal policy is being revamped to provide greater flexibility to meet government employment objectives.

Other administrative processes are being reviewed to identify bottlenecks and duplication that might be causing delays in the issuance of timber sales. The goal is to promote value-added production and create jobs through the innovative new management and marketing processes used by small business operators.

Over the past year we've accomplished a great deal, and now we're eager to look ahead to implementing the jobs and timber accord, to moving towards a new way of delivering Forest Renewal B.C. land-based programs and to making much-needed changes to the Forest Practices Code. Over the next year the ministry will grow in its new role while continuing to fulfil its mandate. The overall goal is to protect and improve our forest sector and the forest resources of our province, which depend on the ministry. This budget allows us to do just that.

[10:30]

I've listened to the words of the minister. First of all, I must say that he has continued to prove that he's a good master of giving a picture, but not necessarily one that truly reflects what is happening out there in the forest, in the communities that depend on the forest and to people who today may not be working in the forest but who thought they had a future in the forest. They will have to look for other opportunities, through education and other ways, to divert away from the traditional jobs that they otherwise would have been pursuing.

My first point is that there is very little emphasis on the education of future generations that will not work in the forest. One thing on which I do agree with the minister is the fact that, indeed, fewer people will work in the forest. Obviously, that is why the jobs and timber accord is still a puzzle to me. But we will get to that point later in the estimates debate.

One point the minister made at the end of his statement was that all that is done is done to achieve government objectives. After being in this House 14 months, I still have not really figured out, when it comes to the forest industry, what those objectives are, besides extracting large amounts of money as taxation.

I hope that the objective is not what I saw as a statement in a manifest that came from a group for an independent socialist Canada. The objective of that group was that the development of a socialist consciousness on which can be built a socialist-based state must be the first priority of the New Democratic Party. Seeing that often the unions or the labour congress has a finger in the direction where this NDP government is going, I am a little bit concerned that there are manifests floating around that have statements of that nature in mind. So when the minister says "government objectives," I do not expect that that particular statement is part of the objectives.

[ Page 4882 ]

For the last year and a half I have been watching very carefully what is happening in the forestry industry in the province. I have been spending a lot of time in the communities throughout British Columbia that depend on the forestry industry for their livelihood, for their economic and social well-being. I've seen many hardship cases created in these communities because of the policies of this government.

I said in my opening statement that I am always amazed to have the minister paint a picture of the forest industry that is so different from the picture that you really see when you go through communities throughout the province. That sense of optimism and that sense of pride that the minister so strongly tries to represent. . . . Those emotions are just not there. If they are there, they are very rare, and I have not seen much of them, unfortunately.

Like the minister, I have always recognized that the forestry industry is essential for an enormous army of forest workers. It is just as essential for an enormous army of people behind these workers. These are the families, the wives that are at home, who in the past thought that buying their home in a community was fine. There was security in that decision. These are the kids who expected to have an education that would also give them a future. In general, up to a couple of years ago, that was the feeling in the communities that depend on the forest industry. It is also the industry that provides the government with financial means to build schools, hospitals, courthouses -- if we still are trying to build courthouses -- and provide funding for our large social system.

When I go to the communities, many of these objectives, these securities that were there in the past, don't seem to be there any longer. Definitely, the impact of the many decisions by the minister and his ministry when it comes to the forest industry. . . . Many of these decisions have had a devastating impact on thousands of families who did think that they had a future. In many cases today, I've seen the rug of that future being pulled out from under them.

I do not share the optimism of the minister; I do not share his sense of elation that things are so well in the woods and so well for British Columbians. It always surprises me that the minister, who must be, just like me -- or actually, to a much larger extent -- exposed to that same group of people, who say: "What did happen? Why is the minister talking about jobs? Show me these jobs, because I don't have a job. I had a job; I had a good job. I no longer have a job. . . ." The minister must be confronted by many people who say: "The minister may say I have a job, but to me a job represented about eight, nine, ten months of work in the forest that provided me with a good income. That was the history of my job. Today my job is three months. If I'm lucky, I get four months. In that four months' time I, as a worker, have to earn enough to see my family's well-being covered for the rest of the year."

If I travel to the interior or through the northwest or up the coast, that's what I hear: "The minister might think I have a job, but I certainly don't have the hours I used to work, so my disposable income is considerably less. My job is not the job it used to be." That is again because of the policies and the legislation that have been introduced and passed in this House in the last couple of years. So the decisions have had a tremendous impact on the lives of many people, and very few will share the optimism that the minister has expressed when he speaks about what the forest industry is all about today when it comes to social and economic well-being.

It is one of the puzzling things in the jobs and timber accord. . . . And I'm not going to speak on the jobs and timber accord yet or ask questions on that. Like I say, the minister must be really aware of the fact that people are no longer getting the hours they used to get. They do not have year-round employment. They may have full-time employment under an artificially created definition by the ministry, where if you work X amount of hours a year you are supposed to be a full-time worker.

Considering that, the minister must know -- like I do, and like his deputy minister, assistant deputy ministers and people working in the districts do -- that people are not getting the working hours any longer. So how can we have a jobs and timber accord presented the way it was presented? The number I have heard is a PR -- public relations -- exercise of $1 million to get the people in this province to believe that this is indeed the messiah's message for a better and more prosperous future.

How can the minister tell these people -- who have got four months of work a year, and in that four months of work often have to rely on overtime to make that little extra to get them through that period -- that with the new conditions, they're not going to get the full amount of hours that they used to get? "With the new conditions we're going to see how we can cut your overtime so you cannot make that extra amount." How can the minister say that this is good for the workers? We will come back to that.

I get to hear from a lot of people that they're extremely concerned that that little bit of extra money has disappeared. Maybe I shouldn't talk so much about it, because I'm giving the minister hints of where I will be going when we get to the jobs and timber accord. But this is only a very small, puzzling detail of the little information that we have been given that makes up the magical job creation elements in the jobs and timber accord. How can the minister tell a person with four or five months of work that he or she has to give up a number of hours? I hope the minister is not going to give me this answer: "Well, the hours that will be reduced will still be paid out by the government of British Columbia topping up salaries" -- because that would be a real scary thing. But we will talk about it a lot more.

Having travelled to 30 or 40 communities at least -- actually a lot more; the last two weeks I have been to about nine or ten communities -- the message I get in all the communities is. . . . People are not shaking their heads; they're not still doing that. They used to shake their heads and say: "I don't what they're doing, these guys. What is this all about?" They've given up doing that. They are now just saying: "They've done it to us, and it is because of this and this. All of these elements on their own may not have cost my job, but when you put it all together -- excessive stumpage rates, the Forest Practices Code -- it certainly did."

So the minister is saying: "Well, we're going to bring in some amendments that will reduce the cost and make it easier to access timber licences." We'll see. I don't know how much costs will be saved. If the rules are going to be used in a clear manner, it may indeed reduce the time to apply for a licence. I have a fair number of questions on that, as well.

One of the reasons the Forest Practices Code has not worked -- the minister is well aware of this and so are his assistants -- and mostly likely will not work in the future, either, is that it is extremely vague. I have met a lot of people within the ministry itself who just give me that message: "Listen, if I look at the permit application, I can go this way, but somebody will criticize me for that, so I won't go that way. That means I have to go the other way. But if I do that, somebody else will criticize me. So my conclusion is, as a 

[ Page 4883 ]

ministerial worker, that I'm not going to make any decision." And that's part of the reason. "How can I justify not making a decision? Well, I'll find another little angle that I can use to come back and say that before I make a decision, I want an answer on this new little twist." That has been part of the reason that we didn't see any progress in expediency when it came to forest licence applications and the process of getting from applying to issuing the licence.

So it is maybe not a surprise when I say that the forest industry today is, to me, not at all in the rosy situation the minister tries to portray. As a matter of fact, it is much more puzzling how a province that has a forest land mass of, I believe, approximately 16 million hectares, of which we only use a portion for the forest industry -- something in the order of 20 million hectares or maybe a little bit more. . . . With such a land mass and such a large mass of land already set aside for purposes other than forest harvesting, that we have this debate going on in this province, that we have this turmoil, that we have the hardship and desperation in this province when it comes to the people who thought they had a future in that industry. . . .

[10:45]

You know, if anybody asked me how we got into this tailspin, the crisis that the forest industry is in today -- and I hope the minister is not going to deny that we are in a crisis -- I could only say that it is because of the policies and the legislation that this government, this minister in part, has introduced in this House. This has all happened since 1991, so let's agree up front, Mr. Minister, that we're not going to blame previous governments that we there in the eighties and corporations that operated in the eighties and the seventies and the sixties. We all know things were wrong there, and we all know things had to get better.

The process of getting companies to accept new rules and new directions and new conditions in how we deal with the forest is no longer an issue; that's accepted. I think the forest workers today are much more involved and informed about how to be in the forest. I think forest workers are environmentalists today. That may not have been the picture in the past, but today they are. So the troubles that we see today in the forest industry and in the forests and in the communities are really related to what has happened since 1991, and the minister has to take responsibility for that.

The next point that I'd quickly like to address before we get into the estimates and the business plan and some of the assumptions that are incorporated in the business plan for 1997-98 are based on information that comes from the past, no doubt. . . . Before we do that, I'd also like to express my strong belief that in spite of what the government is saying and in spite of what the minister is saying as far as the participation of the industry in the jobs and timber accord is concerned, I have spoken to too many people -- and I will not mention names -- who do not necessarily reflect that statement that the minister made when he spoke about the jobs and timber accord.

He said: "We have negotiated with industry and other parties." The feedback I've had is that there has been very little negotiation and there has been a lot of mandating. From time to time, when parties were not willing to see it the government's way, immediately the threats were thrown up: "Well, if you don't do this, this is the consequence." So you may have partners in the jobs and timber accord, but I don't think they were willing partners, and I don't think they are partners who truly believe that the objectives that the accord set out to achieve are achievable. I think most of these partners are in a situation today where their action is dictated by a type of bullying from the government side. But it's also an attitude of: "Well, it can't get worse than it is today."

We see in companies today a lack of willingness to invest. It is quite interesting to see, in some of the details that we now have on the jobs and timber accord, that the major companies that are supposed to be the investors in the industry and in this province under the jobs and timber accord are really not going to make such a big investment. They are not really going to create the jobs that the minister is talking about. The jobs are going to be created in other sectors. The details of that will certainly be discussed in much detail at the time when we come to that section. I believe some of my colleagues want to talk about that, as well.

In general, I do not share the minister's sense of optimism, and my party does not share that sense of optimism. We do not believe that the new direction that, according to the minister, is going to create the new jobs is an accord; it is an edict imposed on the industry. We do not believe it is achievable, and in time, during estimates, we will explain why we don't believe it is achievable. If the minister can convince us differently, so much the better. I'm open to a good message. I haven't heard one when it comes to the forest industry for a long, long time. I've heard messages, but they're not based on facts. My messages have been collected by going to the people who are impacted by the minister's decisions.

Having said all that, I hope also, through myself and through my colleagues, that when we discuss the 25 different areas that I have picked for discussion during this debate, from time to time I will be able to make some suggestions that the minister can incorporate in his thought process at least. I'm not going to tell the minister that he has to incorporate it in future bills. There has been, as long as I've been in this House -- and it hasn't been long; it's only been 14 months -- much reluctance about suggestions that make sense from this side of the House, not just in the minister's ministry but in general. Any commonsense recommendations coming from this side have been pretty well put aside. I suppose there's a political reason for that; nevertheless, I hope I'll be able to make some suggestions from time to time that the minister will at least give some thought to, and if it merits debate, so much the better.

I will now actually go into asking some questions. Where I would like to start, Mr. Minister, is the foundation that has given the government the comfort that indeed they could come out last week and explain to British Columbians, and beyond British Columbia -- because I even saw ads in Ontario newspapers -- and say: "We will create 21,000 new year-round, full-time forest sector jobs."

I'm mentioning the number 21,000. This announcement made a week ago was just a rehash, a repeat, a retry of an announcement that was made in March of 1996. The Premier, at one occasion, proudly announced to the world that. . . . And he didn't just announce this by making a statement. He actually had folders and brochures and all kinds of written 

[ Page 4884 ]

and printed material to show the world: "Listen, I as the Premier make a commitment right now that by the year 2000, five years from now, I will create 21,000 new, year-round, full-time jobs." As we know, that hollow promise, like all the promises that the Premier made, was broken. We didn't see any new jobs created.

In 1997 we're going to try it again. And this time we're going to actually spend a lot more money to promote the message in the hope that if we repeat the message, ultimately people are going to believe it. As long as we keep smiling when we say the message, even though we know it is not workable. . . . So in 1997 we're back again with the old routine of "I promise" and "I can deliver" and "I can do it."

I look at the Premier, and he's got a spark in his eye again; he's got a smile on his face. People who were skeptical the first time when they heard the message say: "No way. You can't do it." By the time the Premier repeated it ten times, people are going to say: "Well, maybe there is something to it." And by the time the Premier repeated it 50 times, still with that spark in his eye, still with that smile on his face, people are going to say: "Well, maybe." And they believe it again. Like in 1996 -- prior to the election many promises were made, and all of them were broken. The Premier is already starting his next campaign. He's beginning again to make promises that ultimately he's not going to deliver.

The funny thing is that he is careful. Before the election, he was going to deliver. "Once re-elected, I will deliver." And then, of course, he broke every promise. He was going to deliver his balanced budget. He was going to deliver jobs. He was going to deliver schools. He was going to deliver hospitals. And the very first thing he had to do was say: "Sorry, it was not a balanced budget, like the previous one. Sorry, I can't build you your schools. Sorry, I can't build you your hospitals. Sorry, we're going to shut down your courthouses." They promised that it would not happen. So in 1997 we are doing it again.

This time, however, the Premier said: "It's going to take me five years, to the year 2001." He has set the benchmark already. And I'll bet you that there will be an election before that time so that he does not have to be accountable for another broken promise. That no doubt will be the case when this program is finished.

However, the point I'm getting to is the fact that the Premier at the time and then in 1996 used some study, some information, to justify that our timber did not deliver the number of jobs per thousand cubic metres that is the case in other jurisdictions. For me to understand the jobs and timber accord, I really have to get a good grasp of what information the government had in order to make the assumption that we can, without disruption, create these 21,000 jobs. If the minister permits me, Madam Chair, I will be focusing for a while on that commitment and on the foundation that has created the level of comfort in the government.

Maybe the minister can explain what kind of studies and what kind of background information were available to the government to commit to this province and to the people working in this province that 21,000 new jobs are a viable option.

Hon. D. Zirnhelt: I remind the member that when the announcement was made that we would be developing the jobs and timber accord and we targeted 21,000 jobs, it was based on the simple formula that we want more jobs per cubic metre. We wanted to get it somewhere near halfway to what other jurisdictions had in terms of the number of jobs out of the fibre base that they had.

The forest sector strategy committees led, first of all, to the creation of Forest Renewal B.C., and many of the work groups examined employment levels that were created in various sectors of the workforce. Then we had backgrounding that informed discussions. There were a number of working groups that were working and conducting dialogues. Industry submitted their own study of the economics of their sector.

We decided that we would try to refine various parts of the forest sector that we could create jobs in, and broke it down into a number of areas. The representatives of the major licensees believed that it was doable, and government believed that it was doable, but there were all kinds of provisos: "If we don't have a recovery in pulp, it will be difficult. If we don't achieve the commitments that each other has made, we will have trouble creating jobs." But it is our intention to keep people to the commitments made in the accord.

There are a number of areas itemized in the accord where we expect the jobs to come from. I'll use one example, and that is the small business sector. The small business operators, remanners, have told us that they can use more wood. We have looked at it, and it looks like they could use a lot more wood. We came up with the amount of about a 70 percent increase. So we've taken percentages on the coast and in the interior, and we've made those percentages targets for the sector. Now we will facilitate the business arrangements. It's our sense, in discussions we've had with the small business sector, using the multipliers, using the jobs per cubic metre that are industry norms, that we will achieve the objectives.

[11:00]

Like I say, $2 billion of taxpayers' money is the only certainty. I don't want talk about how that money will go back into the industry, how it will come back into the communities, who will be responsible for managing that money -- what that will do. These are questions that will not come until next week, I presume, because this is going to go on for a long time.

What I'm talking about, and where I'm going to want to focus for a while, is on the foundation for the Premier to meet with certain groups and say: "Okay, I'm going to mandate. You are going to create these jobs." What information did he use? That's the question I'm asking. I know, as the minister knows, that he has looked at various scenarios in other jurisdictions, and I would like to hear from the minister which jurisdictions he used and in what manner he collected all the information and analyzed it.

The first question to the minister, again, is: what was the foundation for the Premier -- and the Minister of Forests as well? He is in partnership with the Premier here, so ultimately he will also be responsible and accountable to the people of this province for spending $2 billion on a deal that, as the 

[ Page 4885 ]

minister just said, is quite dicey -- because we know that prices fluctuate. I'm especially concerned when he talks about the price of lumber to the States, for example, because that's at a pretty good level today. Pulp is at a decent level. It is not where it should be. It could go up, but I can guarantee that in the next five years pulp will come down, as well. That's the cyclical reality of that market.

But let's please stick to what I really want to focus on, and that is the foundation of all the claims that the Premier has made, justifying the numbers in the jobs and timber accord.

Hon. D. Zirnhelt: The member talks about $2 billion. Most of the money is FRBC dollars. They're not incremental dollars, not additional dollars, and we do expect private sector investments. I couldn't give you a figure of what that would be, but the industry undertook to create 2,000 direct jobs through direct investment.

Essentially, the work proceeded this way. There was a challenge put out. A target was set, and it was based on an analysis of the number of jobs that other jurisdictions were creating -- and that was more than ours. So we said: "We can do better. Let's challenge our industry and government to do a better job."

A number of task groups were charged with developing a database and an understanding of the industry. There was one on fibre targets that looked at how you might create jobs by various increased levels of investment. There are no hard and fast conclusions, but I think the sense is that if we set some targets and start activities happening now, perhaps we can increase the fibre flow.

There was a task group on forest sector employment that looked at statistics and recommended that we use a survey of employment payroll and hours and Price Waterhouse data to track general trends in the sector. So we had a baseline, and we agreed that that survey would be the baseline and that it needed to be improved over time. As you know, log truck drivers are in transportation; they aren't in the category of forest sector employees. So there are some weaknesses. We also had a group looking at policy leverage and linkages to existing structures within the industry, and it looked at the kinds of things we could do to ensure that we got more jobs.

So a lot of the principles in the accord and a lot of the elements of the accord reflect the discussions that took place after that, and it is appropriately characterized as a negotiation. Industry ultimately creates the opportunity to invest, or has the opportunity to invest, and has the wherewithal to invest in jobs and create the employment. Government, as the landlord, has a responsibility to the shareholders of the forests -- the citizens of B.C. -- to set some policy objectives. It's clearly our responsibility, and we've challenged that.

That's the difference between us here and those people over there. On your side, you would just simply say: "We will reduce taxes and hope that a few jobs will trickle to communities." We're arguing that a complex set of policies can be brought into place, and industry has agreed that they will do everything in their power to achieve the goals of the accord.

In the front of the accord it recognizes the necessity of the industry to be globally competitive, and it recognizes that there is a world economy out there. I think that's fundamental. Each of us has a different role to play here. We've agreed, given our different roles, that we will each do our part to ensure that we get this number of jobs. So it's a good-faith undertaking by two parties.

T. Nebbeling: Again, very frightening words -- good-faith undertaking -- when the government puts $2 billion on the table, based on a good-faith undertaking. I'm sorry, I don't think it is a responsible government position to spend that kind of money on a good-faith initiative or undertaking, or experiment -- that's a third word to be used. The minister says: "Listen, this is incremental taxation; this is Forest Renewal B.C. money, so it doesn't come from the taxpayers." Man, has he changed his tune!

I remember the minister constantly emphasizing the fact that this was taxpayers' money. And if we, during the period that this government was considering a money grab, taking $450 million out of FRBC money, money that was supposed to go to the communities to create new opportunities, to create new infrastructure so that communities could get through the transition period of fewer jobs in the forests that is inevitable. . . . But it was always the argument for this government to create Forest Renewal B.C.

To say today that this was an incremental charge, that it was not taxation or not tax money. . . . It was tax money, according to the minister last year, when he wanted to transfer $450 million out of FRBC into general revenue. The only justification was that it was tax money. To hear the ministry now say, "Oh, it is incremental. . . ." I'm sorry, but it is $2 billion that was coming through another set of taxation and into government coffers. I don't buy that incremental element at all. This is money that should benefit all British Columbians under the guidelines that were set out in 1994, when FRBC was announced by the minister.

I really regret that I didn't bring the speech that the then Minister of Forests made, because the whole emphasis was that this money was going to be used for a very specific purpose, and it was certainly not going to be handed over, as we see now, to the labour congress, for them to manage it for their membership only.

However, having said that, I'm not yet talking about the timber accord. I'm not talking about FRBC delivery working group. I'm not talking about the stumpage working group. I'm not talking about the jobs working group or the regulatory issues working group, which the minister is trying to get to. I'm talking about the basis of all these different discussions that took place prior to the announcement, and the material that was collected to create the foundation for these groups to say, "Yes, with this information in hand" -- whatever it was; it came from other jurisdictions, which we now know -- "we believe we can create 21,000 new jobs. We believe we can take $2 billion and throw it towards creating 21,000 jobs, in a responsible manner" -- not as an experiment, as the minister just named it; not as a good-faith exercise, as the minister just named it; but with a sense of certainty that it is a valid investment of taxpayers' money to create 21,000 new jobs and give certainty to 21,000 new families.

That's what I'm looking for: the information they gave these five working groups to work with, to come to the conclusions that were ultimately represented in the jobs and timber accord. I'm going to continue to ask for it, because it is the foundation of what is being used to justify the $2 billion expenditure. It is the foundation that has justified the Premier making, for the second time, the announcement that in spite of the broken promise from last year, he can still do it.

I think the people of this province have the right, and I have the right, in order to assess the business plan of the Ministry of Forests, to know what the basis was. I cannot judge anything the minister says if I don't have that.

Once again, what was the information that was given to all these organizations that were going to assist the Premier in 

[ Page 4886 ]

justifying the 21,000 jobs? I see the deputy minister is just handing some notes, and maybe we are going to get to the answer now. It is really a shame that we can't get any further on this one.

Hon. D. Zirnhelt: The member pretends it's a simple matter. I've told him that a group of good minds, the stakeholders. . . . It's not just the government. Let me take you to the Forest Sector Strategy Advisory Committee that kicked this off. That was the broad consultative group of partners, major licensees, minor licensees, small business remanufacturers, interior and coast operators, pulp unions, solid-wood unions, environmental groups, communities, first nations. All were represented; all assessed the information and came up with the direction.

They had committees that worked over all kinds of studies. Anything that was available, they looked at it. They discussed what the base description was, and I told him we used one set of figures for base employment. But they looked at the "Industry on the Brink" study; they looked at the Price Waterhouse figures when they came out. There are many studies, including annual reports of Price Waterhouse, that are being looked at. When all is said and done, there is no one study that tells you exactly everything. I don't really understand when you ask: "What is the base?" I mean, there is a base in time of statistics of employment that are, in part, inadequate and won't do for everything that we need it to do. Independent employees are not counted, for example.

But when I said there's a good-faith undertaking. . . . We felt that the incentives in the accord were sufficient to bring people to create these jobs. Let me just remind you that this is not empty; it's a good-faith undertaking. We accept the principles, but there are some things in here that people have agreed to. And of course, government has the power to influence what goes on here.

Let me just say that with respect to Forest Renewal funds, they were there and were to be expended. You use a figure of $2 billion. I'm not sure how you arrived at that. I would be interested. . . . But we know that we've committed up to at least $300 million, if we can spend it cost-effectively, from FRBC on the land-base programs. We know that there are some other incentives in here with respect to what FRBC will spend in terms of inventories, and so on, where there are benefits other than in the forest industry. We've said that we will put incentives there for new work arrangements.

[11:15]

So the incentives are there for them to, for example, be exempt from a 5 percent reduction in the AAC on the sale of a licence. To be eligible for that, they have to comply with the principles in the accord. To be eligible for accessing unallocated provincial timber supply, if it comes available, they have to undertake to follow the principles of the accord. And to have available to them funding for innovative forest practices or to be eligible for an agreement, even if it doesn't require funding, they have to undertake to agree to the principles of the accord. To be eligible for carrying forward undercut volumes, where job maintenance or creation can be demonstrated, also requires that they agree to the accord.

So there is more carrot than stick in here. The industry knows that the government is the landlord. The government can, whenever it chooses, if it's good public policy, make changes to the legislation. We felt that we could work within existing legislation and that with the good faith that's there and with the relationship built between government and the major licensees, they would take this in the direction that was mutually agreed on -- after, I have to say, very tough negotiations.

T. Nebbeling: The minister asked me a question, and I don't mind breaking with tradition -- because I'm supposed to ask the questions. It's the only time that I can ask questions and expect an answer. But who am I not to break with tradition? The minister asked me how I came up with the $2 billion to go into the jobs and timber accord, so let me quickly break it down. It's also for the benefit of the people who are listening in the gallery, so they understand where we come from. The government has committed $300 million a year for five years; that adds up to $1.5 billion. Then the government has committed to five years of topping up union wages in the order of $50 million a year. Five times -- add it up. Now we are at $1.75 billion.

Interjection.

T. Nebbeling: Thank you, member.

There are other incentives where the companies will indeed save money, including the 5 percent clawback that no longer will have to be given up by companies at the time of transfer of licences from one company to another company. That represents a considerable amount of money as well. That would come to the government; the government could put it in a small business. Then there's the $20 million that the companies are going to get to invest in new equipment, to entice people and jobs as well. When you add up all these elements, you're getting very close to $2 billion. You may be a dollar or two off, but that is really the foundation.

The minister then says: "Well, wait a second, we were going to spend FRBC money anyhow." Yes, I know, but it was going to be spent under considerably different conditions. It was not going to be spent on a jobs accord that dictates that only certain people can have access to that annual $300 million, and one of the conditions for a large chunk of that money is the union status. So that is where I come to the almost $2 billion.

I'm going back to my question, if you don't mind, because we are not talking about the group that created or endorsed or was muscled into agreeing with or was muscled into accepting a good faith type of arrangement with the government. I'm talking about the information. I asked you before, and I think now I'm going to help you, actually, because obviously the Premier knows a lot more than the minister does when it comes to what gave him the sense of security, the sense of comfort to indeed demand 21,000 new, full-time, year-round forest sector jobs.

In 1996 the Premier, when he made the announcement, had pamphlets printed and everything and stated that he had made a comparison with Oregon and the state of Washington, and that in the state of Washington the number of jobs per thousand cubic metres, as he heard them, was the justification to demand that the industry in this province was going to provide exactly the same ratio of jobs as the state of Washington and the state of Oregon have, according to his information.

[ Page 4887 ]

That's where I want to go. The Premier used the information when he spoke to the Forest Alliance three weeks ago in Vancouver, and again he used the example of the states of Washington and Oregon as his justification to impose the demand of creating 21,000 jobs on the industry. So can I at least have confirmed that the minister is aware that the Premier has used these two states as the example?

Hon. D. Zirnhelt: We are beyond continually looking at other jurisdictions. We recognize that things are different in British Columbia. The challenge was to get closer to the ratio of jobs per thousand cubic metres in Washington and Oregon. There are a number of studies and publications that suggest what those are. I don't want to make anything more of it except to say that we are here with the given employment. Our analysis would show that it's less per thousand cubic metres, so we went from there. We decided we would look at the figures. This is what the various working groups did under forest sector employment. They tried to compare; they looked and they said: "Well, it looks like we are lower." The challenge was there, put by the Premier, to see if we could come up with this, and the accord is the result. We can argue numbers until we're blue in the face, but the challenge is there to come out, and we believe that the major licensees have bought into this. We certainly know that the value-added manufacturers, who we've had a table with, are excited about the prospect of more wood for their industry, and that the principles are sound. We've got a lot of work to do. It is not a blueprint; it is a strategic direction.

There is no question that industry is bound to the accord. Government will bind industry to the accord. That's the intent; we make no bones about it. We are the landlord, the trees belong to the people of the province, and the cutting licences are there for a purpose. They're there for creating employment, fundamentally. That's where we come from. Industry wants to make money. We recognize that they have to have a return on their investment, and we recognize that in the accord. It's a marrying of different objectives.

T. Nebbeling: The fact is that on a number of occasions the Premier based the whole justification for demanding and imposing -- and I use the word "imposing," although I would like to use a stronger word -- job ratios per thousand cubic metres on the industry, with all kinds of enforcement tools, as the minister just explained, based on the ratios from the state of Oregon and the state of Washington. It did not have the merit of information from all kinds of different angles and directions. The Premier, including three weeks ago in front of the members of the Forest Alliance, stated that it can be done: "We can create these jobs. I'm committed to these jobs, because in the state of Washington and in the state of Oregon they have these ratios. So if they can do it, we can do it."

The minister has already alluded to a number of documents and studies that were used by the various groups to advise the Premier. I'm sure the Premier didn't sit down and do this all on his own. I'm sure he had advisers. I'm asking: what kind of data was used by the Premier to convince this province that the 21,000 were justified, now that we know that his source was these two states in America? I would like to know who advised the Premier to come to these conclusions.

Hon. D. Zirnhelt: In this business we get information from a lot of sources. We get it from our officials, we get it from the newspapers, we get it from all kinds of sources. The Premier has been aware of the forest industry for the many years he's been in this House. There were all of the reports from the Forest Resources Commission. There are all kinds of sources of information, and that's what we do as political leaders. We take this information, and we make our own judgments that they are close to telling the truth or are enlightening us about certain things. It's well known that there are more jobs per thousand cubic metres in those states; it's no secret. I can't tell you how many sources there are. We would be happy to provide you with a couple of sources that would document that for you.

The fact remains that it's made on the basis of judgments that we have made as political leaders, based on the various studies. There are too many articles. For years in the learned journals, the popular journals in industry, columnists and op ed pieces have been cranking out estimates.

I'd just like to correct the record for the member when he tries to get his $2 billion of investment. I still rest my case that there is very little in there that is incremental. There is the $20 million that we have suggested is available as an incentive to pay for payroll costs of a third of the cost of creating. . . . It's not to top up wages but as part of the payroll costs of employment and the new work arrangements we expect to be bargained between the companies and the unions involved.

We expect that there is no figure here attached to the clawback of 5 percent. I don't know if the member was putting a figure on it, but the 5 percent that has been in law can, we have said, stay with the companies. We don't attach a figure on that, and it isn't government money. If those companies don't get to keep the 5 percent and create employment with it, it will go to somebody else. Usually it's the small business program, which can also create employment.

We know from various analyses that we've done how many jobs are created in the value-added sector. A large part of the accord deals with jobs in the value-added sector. We take a ratio of jobs per thousand cubic metres. I can also provide that to you. That's how we come up with the figures: by looking at the amount of volume that we intend to put in that sector and that we have agreement from the major licensees that they will put into that sector, and then calculating that number. Again, you can argue these one way or the other. You can say it's too high, too low, just about right. At some point you've got to commit to something, and we believe that these are targets that we will do our utmost to achieve.

You say: "You promised 21,000 jobs. You promised, you promised." He didn't promise to deliver them this year; it's by the year 2001. That was the commitment. You say: "You broke a promise." Well, that's an absolute fallacy. He said he wanted to develop a target; he set the target. Yes, we promise we'll work towards that target, and we'll be judged. We've put a timber jobs advocate in there, who will track the numbers and give reports out. What more can you ask for? An independent. . . ?

P. Reitsma: What's the baseline? There were 5,500 jobs lost last year.

Hon. D. Zirnhelt: That's wrong, absolutely wrong.

T. Nebbeling: It was 5,212, to correct you.

Hon. D. Zirnhelt: Wrong, wrong.

[11:30]

[ Page 4888 ]

come when we talk about jobs in this province. We are still just trying to figure out how the government found its base to make the assumptions. We now hear that there is no scientific calculation; it's assumptions at a cost of $2 billion. The minister may try to belittle that amount, but at the end of the day this government will sign cheques -- through agencies, directly through the Minister of Finance; I don't care -- worth $2 billion.

I don't want to get into the 5 percent clawback and what that represents in value to the government. If it came back to the government and went into the small business enterprise program, it would have a higher return than when it stays with the buyer of the tenure. I am not going to get into that, because then we are going to spend months here, and I don't think that's what the minister wants. But the bottom line is that there's value to all these elements. The bottom line is that this government is going to sign cheques on the order of $2 billion for a good-faith project.

What I'm going to come back to is the foundation. I just don't understand how the minister can say that they will create 21,000 new, full-time, year-round forest sector jobs -- and that's the Premier -- based on what has happened in Oregon, because the ratios they have in Oregon are higher than we have in British Columbia. And then he goes on that it will also be based on what happens in the state of Washington when it comes to the forest industry, because the ratio of jobs per thousand cubic metres in the state of Washington is higher that what it is in British Columbia.

That's the foundation that the Premier says is giving him the justification for playing this poker game with the wealth of this province, and I think he's got a lousy hand. I really believe so. But time will tell, like the minister said. At the same time, I think the people in this province deserve to know why he dares to play poker, why he thinks he has still got a better hand, although he may have two twos and a three. Why does he believe that? What information has led him to believe that, or what group has advised him? Maybe that's what we have to do. What group advised the Premier to say last year. . . ?

An Hon. Member: Caucus.

T. Nebbeling: If it came from caucus, then we may as well send the money and dump it in the Pacific, because the caucus. . . . I'm not going to get into that debate.

To the minister, again: what is the group that gave him that solid information -- after studying all these different publications, all the scientific documentation -- that said, "Mr. Premier, you're on solid ice when you go out and commit to the people of this province, three months prior to an election, that they will see 21,000 new jobs, not as a good-faith exercise, not as a good-faith commitment, but they will see, as a commitment, 21,000 new jobs," and not before the year 2001, as the Premier just said, because it was the year 2000 that was the target year? The first year of the whole exercise, in spite of what the Premier tries to say here, did indeed show 5,212 jobs lost in the forest industry, according to Stats Canada -- which uses the same information that the Premier is using, and that is payroll, hours of work and employment. So whatever happens. . . .

Madam Chair, I would appreciate it if the caucus meeting could be held somewhere else, because I'm trying to speak to the minister, through you, and they're having a heavy debate.

The Chair: I would like to caution hon. members. Order, please. The conversation level is getting a little high. If you wish to have a conversation, there are other places to do that.

T. Nebbeling: I've already put my question to the minister. I'm not going to accept his denial that this is all based on good faith. The Premier presented it to the people of this province as a good-faith exercise or agreement. He was very factual when in 1996 he announced 21,000 jobs to be achieved by the year 2000, not the year 2001. He has already, again, broken that promise, by saying 2001 this time. Was there a group, then, that advised him? Was there a body? What was the documentation that gave him that certainty of committing $2 billion to an exercise that we now find out is nothing else but a good-faith exercise?

Hon. D. Zirnhelt: The simplicity of your arguments, sometimes, really astounds me. They really do. The $2 billion that you're talking about, if you add them up. . . . And you have to justify that. The FRBC dollars are identifiable; they were committed. There are only 5,000 jobs attributed to that amount of money; the rest of it has to come from moving fibre. You can quibble about the year 2000 and 2001. I don't think the public of British Columbia care about that. But in over four or five. . . .

Interjections.

Hon. D. Zirnhelt: They don't. To shake your head and say they do. . . . Then nobody will make any statement anywhere, if somebody says that we have to have every "t" crossed exactly. Give me a break. There is a visionary statement here, an objective that that side doesn't have the courage to make themselves. They have no forest policy, no suggestions of what to do in the forest industry. We have said that there is a vision, there is an objective, there is a target, and we're going to work together to achieve that on certain principles.

We have to look at Oregon and Washington, because British Columbia wood is going down there and being reprocessed. We want more of that to be processed here for jobs for British Columbians.

Interjection.

Hon. D. Zirnhelt: We're not exporting wood to Alberta to be further reprocessed. We're importing wood from Alberta to be processed. The member over there will have his chance. The mutterings from the other side, hon. Chair, are sometimes very disturbing. I'm trying to have a dialogue with the person here.

You talk about 5,500 jobs lost. I have to say to you that that same labour force survey that you're using has restored virtually all of those jobs. In fact, if you take May's figures, we're back to 100,600 jobs. Your little game of playing a loss of jobs is misleading the public of British Columbia. In any given month, there are ups and downs and inadequate data in the surveys, which do have some changes. We have agreed with industry, and we've done that through a committee. . . You say that you want to know what group. The Forest Sector Strategy Advisory Committee has been the advisory group to government, and it was co-chaired by the Deputy Minister of Forests, the former CEO of Weyerhaeuser Canada and the president of the IWA. They worked as co-chairs of the committee and reviewed a lot of the information. It was agreed that we'd use the survey of employment payroll and hours. Back in March of '96 the employment in the forest sector -- bearing in mind that it doesn't include log truck drivers and self-employed people -- was 86,184. In March of '97, by that same survey, the employment level was 85,038. That's one measure. It is not an entirely adequate measure, but that's the baseline of employment that we've agreed to use, recognizing its inadequacies.

[ Page 4889 ]

T. Nebbeling: This is beginning to be really interesting. First of all, now we know there is a committee chaired by the Weyerhaeuser chairman or president or CEO; I don't know.

The numbers that the minister throws at us in order to defend the jobs in '96-97, where Statistics Canada through their data division says: "Sorry, British Columbia, on an average over the whole year, lost 5,212 jobs. . . ." I say on an average, because obviously closer to Christmas the unemployment levels are higher. More people are out of the woods then than when we talk about June and July. And if we can't believe StatsCan, who can we believe? But that's not the point.

I will come back on this particular point after we have the lunch recess, because -- and I may be wrong, but I'm going to check it -- the Premier announced that the baseline. . . . I am really surprised -- and I suppose this was an announcement made a week ago -- that we talk about the baseline today as the day that the announcement is made, the day that we start counting to achieve the 21,000 direct new jobs by the year 2001.

The Premier announced that we're at only 85,000 jobs. I may be wrong, but I'm going to check this. The Premier stated. . . . I am pretty sure that last year the jobs were 105,000 -- and this year only 85,000. On different occasions he has made the statement: "That's the baseline -- 85,000." If the minister says that in May the jobs were 100,600, what happened here? There's a difference of 21,000 jobs. I will come back to this.

We can check Hansard for the number you mentioned, Mr. Minister. You don't just wave it away. I will come back to this this afternoon. We're going to be here for another seven or eight hours today, and next week we're going to continue -- maybe tomorrow.

Interjection.

T. Nebbeling: Let's put it this way. I've got about 600 questions, and I haven't had the answer to my first one yet. We have spent two hours wasting time, because you knew the answer from the moment I started to ask questions. I asked: where did you get the information that gave you as minister and the Premier the justification to tell the people of this province that there was a commitment made by this government, your government, in 1996 to create 21,000 new full-time, year-round forest sector jobs -- at a cost of $2 billion, as we just found out?

I don't care if you don't believe that FRBC money is regular tax money. It was money that was earmarked for a purpose, but the purpose that you are throwing it towards is not the mandate of Forest Renewal B.C. It's only a portion of it. It is taxpayers' money. We have discussed this before. You were going to take $450 million because it did belong to the people of this province -- your statement.

It was also your statement, of course, that you are the government, and because of that you can do whatever you want -- as you just said again five minutes ago when you were defending your decisions: "We are the government, so how dare you question what we're doing."

Well, we're going to have a lot of questions to ask. Hopefully we're going to get the answers a little bit more expediently than we're getting them now. My first question is: where did you get your data from? We now know, after an hour and 45 minutes, that it came from a comparison with the state of Oregon and the state of Washington. You used their ratios against 1,000 cubic metres, so we're doing good. . . .

Interjection.

T. Nebbeling: Exactly. Why didn't you tell us straight away if you knew it? Did one of the assistants have to run out of the House and come back ten minutes later with two envelopes to give you these answers? I've only been here 14 months, and I know it, but you didn't give me the answers before, Mr. Minister. So if you knew it, why couldn't you just tell. . . ? We are not trying to just exchange information here; we're trying to get to a reasonable presentation of what this Forests ministry is going to do in the coming year in a manner that is responsible, reliable and effective.

I think it is for the public at large -- not just for us 75 elected people here in the House -- to know what's happening in the province. That's why we have to have this exchange. That's why, from time to time, you'll have to answer a question that you may think is common sense but is not necessarily knowledge to everybody else. So that is going to be the approach I'm going to go with. It may take three weeks; it may take four weeks. I'm fine. I've only brought half of my binder, so I'm ready.

Maybe, then, in order to get some. . . .

Interjection.

T. Nebbeling: Look at it. The gentleman used to be a shelf filler at Safeway, so he constantly tries to make the moves.

The Chair: That comment is not in order. That's referring to an individual member of this assembly, and that's not appropriate.

T. Nebbeling: I agree with you, Madam Chair, but when the member identifies me as a stair-pusher, as he just did, I think a comment from the Chair is also in order then. As there was no response to that, I made a little, maybe off-the-wall, response as well.

The Chair: We're all discussing vote 37, and that's what's on the agenda. Whatever the side conversations are, they are not part of the debate per se.

[11:45]

An Hon. Member: You are a shining example.

T. Nebbeling: No, no. I'm not putting myself. . . .

Interjection.

T. Nebbeling: Madam Chair, can we stick to. . . ?

The Chair: Hon. member, we're on vote 37.

T. Nebbeling: Exactly. Let's stick to that, otherwise we're never going to go anywhere.

[ Page 4890 ]

What I would like to hear from the minister -- as he now has referred to a committee that assimilated all the information and came to some sort of conclusions, which then in turn were directed toward the Premier, I take it -- is: who were the members of this committee?

Hon. D. Zirnhelt: Gerry Armstrong, Dave McIinnes and Gerry Stoney.

T. Nebbeling: And the chair of this committee was the chairman of Weyerhaeuser?

Hon. D. Zirnhelt: Those were the three co-chairs, and they had working groups underneath them.

T. Nebbeling: Just to make sure that we know we're on the right track, I'm talking about the working committee that was involved in getting the data on what happens in Washington in the forest industry, what happens in Oregon in the forest industry. I'm not talking about the working committees once the decision was made by the Premier to mandate 21,000 new jobs into the forest industry at a cost of $2 billion as a good-faith exercise. I'm not talking about these committees. I'm talking about the committee that accumulated all the information, that then conclusively came to a resolve and that was then presented by the Premier as a viable objective to work with.

Hon. D. Zirnhelt: The member wants to know who is on the Forest Sector Strategy Advisory Committee. There are probably 20 people on it. Looking at statistics, the committee went around and around on this. They did research and discussed it and settled on an agreement that they would use the figures from the survey of employment payroll hours, and that's what they agreed would be the only database that they could use.

I don't know what the member is getting at. The working groups included members of government ministries -- federal and provincial -- and involved industry, and labour groups submitted research staff and so on. So there were a number of people. We can provide you with a list of those people. I don't have it right here. But in the end, what is significant is that what people agreed on was the statistical underpinning to the numbers, and they agreed on this SEF information -- StatsCan.

I'm just telling you that using those is an adequate baseline, and 85,000 or 86,000, depending on which month you pick. . . . We go back to March '96, and the figures then were 86,000-some. I'm saying that the figures that you choose to use, which was a survey as opposed to just phoning up and asking people what they do and what their role is in the industry, and it's dependent on their answer. . . . Those are figures you chose to use to try to pretend that there was a permanent loss of 5,500 jobs, and I'm saying that's wrong. You've said it hundreds of times in this House and outside, and it's misleading the public. If you go by the other labour force survey information that has our employment in and around 100,000, we're now at 100,000. . . . As of May '97 it was 100,600. So using that set of statistics, over the year there has actually been an increase.

Other measures may show slight decreases. But when breakup was over, when pulp rebounded a bit, employment levels bounced back up. We've agreed with industry that we have a common baseline, and I think that should suffice. I've told you what that is. I told you we would announce it when we announced the jobs and timber accord. Industry agreed with that, and we'll use that. Hopefully the jobs and timber accord advocate will find other more refined measures, because I would like to see them counting logging truck drivers and self-employed people in the industry.

T. Nebbeling: It's quite amazing how the minister is trying to get away from information data-gathering that was used by the Premier to justify his 21,000 new jobs. I'm not talking about baseline, and the minister knows that. I'm talking about how you found justification to use the job ratios that are, according to what the Premier is saying, reliable numbers for the state of Washington and for the state of Oregon and what kind of material justified the Premier to say that we can use these same ratios in British Columbia. I hope it means it's a doubling of jobs, so therefore there are. . . . Not the doubling of jobs, but it will create 21,000 new jobs. You cannot just come in and say that because in one jurisdiction they achieve this, so we will achieve the same by edict. That's what's happening here.

I'm not asking the baseline number, because we get to the baseline when we talk about the jobs and timber accord. I'm not talking jobs and timber accord; I'm talking about the data that was the foundation for the Premier to push 21,000 jobs, which in turn was based on what the Premier's findings were, having studies from the state of Washington and the state of Oregon, on ratios per thousand cubic metres. So I'm not talking baseline; I'm not talking jobs and timber accord. I'm talking about the data that created the foundation for the Premier to convince the people of this province, in 1996, prior to an election, that he would create 21,000 jobs.

Interjection.

T. Nebbeling: In about four minutes, I suppose.

Hon. D. Zirnhelt: I'm not sure where the member is taking his questions. When the Premier made his announcement a year ago in March, he released a backgrounder and a press release. It was nothing more, nothing less. He didn't release any studies. I'm trying to tell the member that people who are knowledgable about this industry, like many members on this side of the House, have been studying and watching the industry. They've read ratios in various publications and newspapers. There's all kinds of information, and it is well known. I don't think anybody disputes that there are more jobs achieved particularly through further remanufacturing, some of them on the forest management front -- both as government employees looking after the forest and as people out working for companies, managing the land.

We have targeted both areas. We want to see more employment. We've put a challenge to people, and we've itemized where we think they're going to come. If we achieve the 21,000 jobs, which we're determined to do, there's going to be all kinds of spinoff jobs -- some 17,000 spinoff jobs, and that's a very conservative estimate. We've chosen to be very conservative. We haven't even used a 1-to-1 ratio overall. We've done that, and we've set these as targets. That's exactly what they are, and they come from a lot of data.

There isn't any one study that we're going to give you that definitely says: "This is the exact number." All we're saying is: "We don't care what happens in other jurisdictions. We know they've done a better job of getting more jobs per cubic metre, and we intend to do that here in British Columbia." And it's quite right that government will ask that of the industry -- that we somehow tie. . . . We say to them: "As a condition of using your licences, you create stable employ-

[ Page 4891 ]

ment." We're saying that we want more employment, and we submit that it's by agreement between partners that we achieve these numbers.

T. Nebbeling: I think these are going to be very interesting estimates. I hope we're going to be having more of the members opposite come in the House, because during the other estimates there was nobody here. Obviously we're watching.

The minister just made a statement: "We don't care what happens in other jurisdictions. We don't care what the numbers are." Well, I'm very sorry, but he's contradicting the Premier, who. . . .

Interjection.

T. Nebbeling: We are talking about the statement made by the Premier of this province to justify his expenditure, his commitment. . . .

Interjections.

T. Nebbeling: Well, bring the Premier in. Bring the Premier in, and we'll show the brochures.

The Chair: Hon. member, would you take your seat. The minister, on a point of order.

Hon. D. Zirnhelt: This is tedious and repetitious. If he wants to ask the Premier during his estimates, he can ask the Premier.

The Chair: Thank you, minister. I'm sure the member will take that into account.

T. Nebbeling: Well, I'm happy about the fact that at least the minister recognizes he just doesn't have the answers. But it is a very shameful thing for a person who's been working in the Ministry of Forests for so long. However, having said that, there was obviously some group that took that information, which, from some source, came to the minister. . . .

Hon. D. Zirnhelt: This is tedious and repetitious. I've answered the question about what group.

The Chair: Thank you, minister. I'm sure the member will take that into account, as well.

T. Nebbeling: Yes, I will. Can the minister confirm that there has been no group advising the Ministry of Forests about the real situation in the states of Oregon and Washington as far as their employment numbers related to harvest yields, as far as where the lumber that goes into the reman, into the mills, comes from? Is the minister confirming that there has been no committee advising the government on that?

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

Motion approved.

The House resumed; the Speaker in the chair.

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

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

Hon. L. Boone moved adjournment of the House.

Motion approved.

The House adjourned at 11:58 a.m.

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The committee met at 10:15 a.m.

ESTIMATES: MINISTRY OF EMPLOYMENT
AND INVESTMENT
(continued)

G. Farrell-Collins: I'd like to spend a little bit of time, if I may, going through the announcement the government made today -- which is fairly timely, I think -- which will deal with the Premier's and the government's plan "to trade jobs for cheap power" -- I believe that is the way it is being put. Perhaps the minister can give us an overview, seeing as the first we've heard of it was in the press this morning. Maybe he can give me an overview of what the government's plans are, and we can examine those in some detail.

Hon. D. Miller: I certainly don't want to offend the rules of the House, and there will be a bill brought forward for debate in the House on that topic. I don't mind discussing the concepts in broad terms without getting into any definitive discussion relative to future legislation.

In general, we've characterized the arrangement as Power for Jobs. The member is aware that under the Columbia River Treaty downstream benefits we have 1,400 megawatts of power being returned to British Columbia over time that will maximize in the year 2003-2004. Notionally, what we're proposing is that we utilize some of that power to attract new energy-intensive industries to our province and offer that power at favourable or market rates. In addition to that, we propose that existing industrial customers, as well, be given the opportunity to have a portion of market-based power available to them, on the basis that they will create new job opportunities or, in some circumstances where firms are in distress, maintain or prolong existing jobs. That's the general outline of the thrust of the initiative, and the legislation will enable this initiative to move forward.

G. Farrell-Collins: Being mindful of the fact that there is legislation that will likely come this afternoon, I understand the minister's concern about getting into the specifics of how it's going to be done. But certainly I think we can have a little bit of a discussion about why it's being done and why other things aren't being done.

I'm glad that the government finally recognizes that the cost of power has a direct impact on the number of jobs 

[ Page 4892 ]

created in the economy. What I'm shocked to realize is that it took the government this long to figure that out. We have had, for some time, a restructuring of energy markets taking place right across North America that B.C. Hydro, quite frankly, has virtually ignored in any meaningful way, as far as the impacts on our domestic economy, our provincial economy and our provincial consumers. Hydro, through Powerex, has tried as much as possible to take advantage of the opening up of the energy markets across North America, and at the same time has refused to lift its head from the sand and realize that it would have some impact on our ability to protect our own markets and maintain a monopoly on the grid, on supply and on virtually every aspect of power in British Columbia.

I guess the question I have for the minister is: rather than try to go out there and pick the winners -- i.e., pick who is going to get the cheap power, based on job creation indicators or promises of job creation -- why wouldn't Hydro just take the downstream benefits, look at our international market and the demand internationally for our power, look at the demand domestically for our power, and make a conscious decision to open our grids to create a competitive environment for power in the province and to let all the industrial consumers in the province take advantage of lower prices -- right from the mom-and-pop operations, small-scale manufacturers, medium-sized manufacturers and industrial users, up to the large industrial users? Why not reduce the cost of power to the job creators of the province across the board and proportionally, so they have an equal chance to compete for that power -- an equal chance to take advantage of cheaper power and create jobs in the way they know best? Why would we have the government go out there and decide who has the ability to create the jobs and try and give select reductions in power prices to those consumers?

Hon. D. Miller: It's a good question. I think you have to look at the issue in some relative context.

First of all, British Columbia and British Columbia industries have had access to some of the cheapest energy costs in the world, simply because we have a hydroelectric system that primarily remains -- and will remain long into the future -- a significant asset in terms of power generation. While new gas-fired technology has allowed new alternatives with respect to power generation, on balance, regardless of that technological change, hydro still remains a significant asset over time, in our view. If you look particularly at the existing industrial base relative to the comparative advantage they've had over other jurisdictions, they have indeed had very cheap power over a long term.

We haven't ignored the changes in the energy markets. I think Hydro responded in a positive way to industrial customers through the introduction of real-time pricing in February of last year, which allows current industrial firms to have RTP -- which is not firm power; it's interruptible power. . . . Notwithstanding that, to get a certain amount of their load above a base load at real-time pricing. There have some industries that have taken more advantage of that than others.

At the same time, the whole energy market field is changing. We have put in place a process through Dr. Jaccard, the former chair of the Utilities Commission, to examine and report to government on changes that ought to take place in British Columbia to meet that changing energy market -- more market access. We've done it in a pretty careful way, and that's a responsibility that we have to British Columbians.

As we look to the future, we should never forget the past. The previous government, not of our persuasion, essentially nationalized a private company to develop B.C. Hydro, and B.C. Hydro has been an engine of our economy -- a significant driver of our economy. As well as that, it has provided British Columbia citizens with very firm, low-cost consumer power rates -- postage stamp rates -- so that regardless of where one lives in our province. . . . You might be living in a small community in a far-flung region, where the cost of getting that power to the community is very high. Notwithstanding that, we have postage stamp rates; I think that's something that the member would appreciate. But as we rush to embrace the market, we can't forget that sometimes the market has its own imperatives that don't necessarily deal with those kinds of questions. Through the Jaccard process and through a stakeholder group that has been assembled -- representing a cross-section of interests from industrial, consumer and other interests -- we are attempting to come up with some fundamental policy with respect to how we grapple with that change.

The downstream benefit. The view we take is that that power is the government's; it is not B.C. Hydro's. The government will make decisions about where that power is allocated, perhaps using Hydro and other mechanisms as a vehicle. Notwithstanding that, it's power that has come back as a result of our negotiations. If you like, it has zero cost attached to it. It will be delivered, 1,100 megawatts, to the border at Blaine. We think that it's reasonable that we utilize that power to try to attract energy-intensive industries to our province to try to create new jobs and expand the economy.

So I think things are moving in a very good way. We're not ignoring the fact that the market situation is changing. In our press conference, we've just had representatives of the industrial sectors, the mining sector, the forest sector. As well, we had a gentleman from Alumax, a major aluminum producer internationally -- in Canada, the U.S. and other countries -- who has expressed some interest in seeing whether or not this and other factors might induce that company to come into British Columbia to build another aluminum smelter.

I think we're doing what we ought to do. I think we're using it in a prudent way. I think we're examining those market questions in a prudent way, as well. Hopefully, we'll keep moving forward on that basis.

G. Farrell-Collins: I will examine the Bonneville negotiations in detail, probably later, but I do want to comment on one thing the minister said: that the power is arriving at Blaine at really no cost to us. I guess the other side of the story is that we were told we had a multibillion-dollar deal to sell that power. That fell through because of what we talked about before -- what I believe is really incompetent management of that issue by the gentleman who now sits in the Premier's chair -- and I think most people would probably agree. That's another issue which we'll come back to later.

The minister still hasn't answered the gist of my question: why would the government choose to go out there and pick winners in particular fields and give them a special discount in order to create jobs? Does the minister not believe that the market itself -- and I'm not talking about the power market; I'm talking about the marketplace in general, small and medium-sized businesses -- should be entitled to that? In some businesses, power is not a big cost to them; it's the cost of turning on the lights every morning. Other businesses rely a great deal upon power and would be required to pay hefty prices.

I also think that we shouldn't forget the past. One shouldn't forget the fact that this government has drained 

[ Page 4893 ]

hundreds of millions of dollars out of the coffers of B.C. Hydro and put Hydro in such a financial position that the debt of B.C. Hydro is going up. . . . Over time, the government has been draining hundreds of millions of dollars from B.C. Hydro's revenues in direct taxation. What the government essentially has done since it came to power is go into B.C. Hydro, suck the cash flow out of it, which has made it more difficult for Hydro to pay down its long-term debt, and put Hydro in a more difficult position. B.C. Hydro just had its credit rating downgraded, something which doesn't help B.C. Hydro, something that doesn't help the economy of British Columbia, something that doesn't help the job creation in this province.

[10:30]

At the end of the day, we are going to have a restructuring of the energy prices in this province. Whether the Premier or the minister wants it or not, it will happen. It will have to happen, because the market will eventually dictate that. We cannot continue to put up borders around the province and hope that the rest of the world is just going to ignore that and allow us access to their markets.

I suppose we could put up walls around British Columbia, continue to have a monopoly in this province, continue to have inflated prices for power and try and run an economy that way without trying to sell our products internationally, to the United States and to the rest of the country. But unfortunately, what would happen -- actually, probably fairly quickly -- is that we'd be slapped with some pretty severe sanctions. Even if that didn't happen, eventually we would become so inefficient and unproductive that our products would be of no value anywhere. All one has to do is look at other countries that tried to put those barriers up around themselves.

So why doesn't the government take a different view on creating jobs in the province and announce a reduction in the cost of power across the board for industrial users that will allow them to create jobs in their own way? It may not be 50, 150 or 1,000 jobs in one particular megaproject, but it will be one or two jobs across the board. Quite frankly, at the end of the day, it would probably create far more jobs and longer-lasting jobs than the megaprojects and the announcements that the Premier will get out of this.

Are the Premier and the minister trying to do what's right for the economy? Or is he trying to do what's right for his publicity and what's right for his public perception? I would say that the government is looking for the cheap announcement, the photo op and the television ad rather than looking for what's best for the economy, what's in the long-term best interests of the people of the province and what's in the long-term best interests of creating jobs, making all our businesses more competitive internationally and making our economy healthier.

Hon. D. Miller: Just for the record, Hydro's debt is down this year, probably about 2.5 percent.

I really think that governments historically -- because Hydro is a Crown; it is a creature of government -- have expected that a reasonable dividend would flow back to the taxpayer. I would think that's a policy that any government in B.C. would want to maintain.

I think the difference the member is proposing, if I could characterize it, is that rather than a discrete industrial strategy, where we look at the power we have -- the 1,400 megawatts -- and utilize that as a tool, as part of an industrial development strategy, we simply take the marketplace approach, which is to reduce rates right across the board and hope, by doing that, that the market will respond in a variety of ways to produce the kinds of economic benefits that I think we both would like to see.

My own view -- and I think the better view and the government's view -- is that you have to use the levers at your disposal. What are our comparative advantages, to the extent that we have extremely low-cost, market-priced power -- and we're not giving it away, by the way; it's at market price -- as one of the tools, if you like, in the toolbox? To look at the potential for expanding our industrial base in areas, particularly in new areas, where we either don't have those existing industrial bases or where we can add to them in a significant way is a far superior strategy. As well, British Columbians can't help but notice that we do market, because we do have a hydro system. At any given time in the system, there will be surplus power generated which brings in a good export dollar. We are in fact marketing some of that power at very competitive rates to industries in the United States.

I think the strategy of using that in a more focused way is probably the better way to achieve an anticipated result in terms of an industrial strategy, as opposed to: "Well, let's just cut the rates and hope that the marketplace responds."

G. Farrell-Collins: I guess it's a fundamental difference in philosophy. The Premier and the government believe that the people that are best able to manage the economy and create jobs in the province are the Premier and the minister. I believe firmly, particularly given the track record, that that is not the best way for the government to be expending its funds. We don't have an economic strategy in this province; we haven't had one for a long, long time.

Quite frankly, the minister was right when he said that B.C. Hydro had acted as an economic engine for the province in the past. It has, in fact, done a great service to this province in building our industrial base, in somewhat broadening our industrial base and in putting us in a position where we do have -- or have had in the past, anyways -- a fairly strong resource-based economy.

But as the minister likes to say and the Premier likes to say, despite the fact that our economy continues to be significantly based in the resource sector, the trend is for other 

[ Page 4894 ]

sectors to grow faster than the resource sectors. Certainly just by saying that in the past the cotton gin was a great development and revolutionized the textile industry -- much like hydro was for British Columbia's industries in the sixties and in the period of rapid industrial development in the resource sectors -- doesn't mean that the philosophy that existed then is one that's going to take us into the next century.

Clearly we in British Columbia have a choice as to what it is we're going to do with one of our big assets: our ability to store power in reservoirs, which is something that a lot of other jurisdictions, a lot of other areas, would die for. It puts us in a good position, it's a great asset for British Columbia, and it can continue to be an economic engine and economic driver for the province.

What it should be used for, one would think, would be to put all of the businesses, all of the corporations, all of the small businesses and industries in this province on a very good competitive footing internationally. What used to be cheap power delivered to British Columbians has meant, because of the restructuring of the market -- which isn't going to go back; it's not going to reregulate itself into high prices and power barriers across North America -- a permanent change that's taken place in the energy sector. It has provided dramatically cheaper power than what our industrial customers pay in British Columbia to our competitors.

People in Washington State, people in Alberta, people right across North America have an economic advantage over British Columbia, a competitive advantage over companies in British Columbia, because they have access to market power -- something that British Columbia doesn't have. I think what the government has tried to do is say: "We'd like the good old days to remain forever. We'd like the energy sector not to be deregulated. We'd like the energy sector not to become competitive. We'd like other industries and technologies and innovations not to occur in such a way as they help to contribute to lower the price of a commodity. We'd like the good old days, where we were the only ones who had power and we used that to our advantage." Well, that's changed, and it's not going to change back.

We have a new reality out there in the energy sector, and it is that of a deregulated, highly competitive, technologically advanced power system, where energy flows back and forth across North America at the flip of a switch. For us to refuse to accept that, to refuse to understand that and to refuse to react to that is shortsighted. The government continues to think, with this announcement today, that everything is going to change back in a few years. "In five or ten years, it's all going to come back. Everybody's going to reregulate their market. The technology is going to go away. We're going to be back to the good old days, where those who had hydro power were at the pinnacle." That's not going to happen. We have to realize that.

Unfortunately, over the last few years, Hydro, particularly under the leadership of the government, has taken the attitude that it's going to go away. "We can just fudge the rules. We can go to the Federal Energy Regulatory Commission in the United States and tell them a story, and they'll buy it." Right up until December of last year, Mr. Shaffer and his people were still telling everybody that everything was going to be okay. I remember getting on the helijet with the Premier when he reamed me out for being so negative about what had happened, and here we are seven months later and reality has set in. I'm not sure that the government has yet responded appropriately to the reality of the energy market.

The fact is we're not going to continue to have access to be able to sell our surplus power across North America unless we open up our own markets. What the government is doing with this announcement today is continuing to hope, continuing to dream, continuing to think that we're going to get the good old days back again, where W.A.C. Bennett is back in the Premier's chair. He's just got an NDP card instead of a Social Credit card in his pocket. He can go out there and have this big industrial strategy for British Columbia: "Go out there and do the megaprojects." We heard him -- was it this week or last week? -- with the jobs and timber accord, say: "This is like six or eight megaprojects." It was the biggest thing he'd done in his life. Well, the reality is that that one won't work, and this one won't work, either.

In the long term, this announcement is going to distort the market in British Columbia. It's going to give some advantage to some corporations for a period of time. They will then build up in response to that and create a distorted structure within their own corporation. And when eventually this government is dragged kicking and screaming into the twenty-first century with the realization that energy market reform isn't going to go back to the good old days of the 1960s, they are going to be faced with companies that are distorted -- have distorted structures and distorted production methods. They're going to have to compete one-on-one with the guy across the street who is in a different position.

I think the best thing the government can do is finally get its head out of the sand, get rid of the advice it's getting from Mr. Shaffer, which I think has been erroneous on virtually every count where it's been given, and realize that the market won't go back to the way it was. The market has changed. Put the rates out there for everybody, and let those companies and businesses compete amongst each other, not just in British Columbia. Get competitive, get skilled, bring in new technologies, take advantage of the cheaper power and get out there. Let's not just compete in British Columbia but let's get out there into Washington State, Oregon and Alberta and start beating the living daylights out of some of these other guys.

British Columbians have some great skills and abilities. We have some great talents. Why aren't our businesses out there competing the way they should be? Why do they have to engage in a fight with the government and with a Crown corporation over selling cheap power to Intalco across the border? Why is it that our domestic companies here in British Columbia have to end up siding with Bonneville Power in order to get the Crown corporation in British Columbia to wake up to the reality that the market is changing?

Instead of trying to go back to the 1960s and do megaproject deals one-off out of the Premier's Office, giving him the opportunity to travel around the province and be Mr. Megaproject, does it not make sense that we're out there looking at the reality of the market and creating the opportunity for all the wisdom, skills and abilities of a variety of corporations and businesses across British Columbia. . .to compete as they know best, not just with each other here in British Columbia but internationally? We would have some of the best people in the world, instead of a bunch of people based on handouts from the government.

Hon. D. Miller: Well, we do have, I believe, in the general residential-commercial sector, about the second-lowest rates in Canada. If you look at those rates relative to other jurisdictions -- the U.S., for example -- the rates here in B.C. are about a third of those in California and places like New England. So I'm a bit puzzled by the contention of the member.

Secondly, I've met personally, on a number of occasions, with the major industrial customers. Again, we 

[ Page 4895 ]

touched base this morning. They were on the stage with the Premier and myself as we announced Power for Jobs. We also had with us Mr. Peter Aylen from Aluminex, who lives in Washington and is expressing some interest -- no commitments, but some interest -- in a major new smelter here in our province, and we're going to be doing some work on that. The industrials, as well, have expressed to me their support of the Jaccard process. They've said that directly to me, and I have no reason to believe that they're not sincere in that.

[10:45]

G. Farrell-Collins: I think the minister is patently misguided and wrong once again in his philosophy.

Hon. D. Miller: It's hard to put a patent on that.

G. Farrell-Collins: That's right, because the Premier has already got it.

The reality is that we're not giving these people a leg up. The reality is that the market out there. . . . We're not helping our businesses by saying: "Okay, now we'll give you the market rate." If we deregulated and opened it up and had this thing available, they'd all have the market rate, because the market rate would be the market rate, and that would be all that's offered.

For the minister to say that we're helping these guys out by giving them the market rate is ridiculous. It's nonsense. You're not helping them out; you're giving them what the market rate is. You're not helping them out by not giving everybody the market rate; it's the other way around. I'm shocked, quite frankly, that the minister doesn't get that. I don't know how we're doing a big service by only giving them the market rate; I don't get it. The market rate, if we deregulated, would be available to everybody, not just the big industrial users. I know the minister wants to comment, and I'll give him a chance to do that in just a second.

I guess the problem with the minister's philosophy is this: he can stand up and tell us about all the business CEOs who stood on the stage with the Premier and dutifully bowed and did whatever they do at these little signing ceremonies -- much like they did at the Forest Renewal ceremony, where they all said what a wonderful thing it was, only to find out somewhat later that they were betrayed, not only by the Premier and the Minister of Forests but by the minister who stands opposite me now, as far as raiding those Forest Renewal funds. They made a commitment in legislation that nobody would ever touch them. I think the quote was: "No greedy minister, not now and not 20 years from now, will ever put his hands in Forest Renewal's pockets." It was a great speech when the minister gave it. It applies today. Unfortunately, he wasn't right.

Hon. D. Miller: No, I was.

G. Farrell-Collins: Well, it turns out the minister wasn't right, because the government has already taken $100 million out of Forest Renewal to put into silviculture stuff that the Ministry of Forests used to do. If that's not a raid, I don't know what is. I believe it was called a sideways shift in resources. It's amazing the way government can come up with ways of explaining things and putting nice words to them.

I'm sure there was a nice analysis. I didn't see it, but I'm sure I'll see it today -- although you never know. The media is getting a little jaded with these announcements from the Premier that never come to fruition. I'm sure there was a nice stage, and the various CEOs were standing there saying how wonderful it was going to be. I'm sure that they want to be the first ones to get in there and get that little competitive edge over the rest of the people around British Columbia, who are at an economic disadvantage because of the lack of market rates for B.C. Hydro power.

I'm sure they're all anxious to get a piece of the action, because again, it's a protected piece of the action. It's not going to be available. If they can get in first, if they can get their foot in the door first and wiggle around and squeeze through before the door slams shut, they'll be at an advantage for a period of time. They'll have an economic advantage, a competitive advantage over their competitors for a period of time.

What about the rest of the businesses out there? What about the rest of the drivers out there who would like to have access to market rate power, too? They'll have a short-term economic advantage, but the minister shouldn't think he's doing them any big favour. All he's doing is giving them the market rate that's out there. If the minister were to open up the markets, which is what's happening across North America, everybody would be entitled to the market rates. So the minister may think he's doing them a big short-term favour, but in reality he's doing a disfavour to all the other businesses, all the other industries, out there who don't have access to market rates.

The minister's philosophy is fundamentally flawed. For the Premier to stand up and do that, it's almost like Austin Powers is now Premier. He's going to go back to the 1960s, where you subsidized businesses one-off, hoping that their little megaprojects would create jobs and photo opportunities for the Premier. The reality is that on an ongoing basis, day by day, the rest of the businesses and the rest of the industries in British Columbia become less and less competitive. People across the borders, across North America, have an economic advantage, because right now, today, they have access to market rates and our people don't. For the minister to think that he's doing a big favour is simply misguided.

Hon. D. Miller: I was going to start by asking the member if he'd actually seen the movie.

G. Farrell-Collins: Actually, I have.

Hon. D. Miller: I'm intrigued. I was considering going.

[ Page 4896 ]

I've dealt with some of the industrial leaders who were here this morning and others over the last decade. Really, in terms of some level of respect, I don't know any one of them who is a shill, and I know a lot of them personally. So just in terms of respect, I don't think they're the kind of people who rubber-stamp things.

I'm curious about the issue of the market. It seems to me that this is, if you like, the pivotal issue with respect to what appears to be some fundamental differences. I've said, as well, that we're talking about making power available at the very market rates that the member seems to think are good. We also have a process to deal with the whole broader issue of regulatory reform or opening up that market.

But the marketplace can be fairly harsh. In other words, what we've had in B.C. is an entirely regulated market for a good number of years. Because of our natural advantage -- hydro power -- industries in B.C. have had an advantage that industries outside of British Columbia have not had. We have had that advantage. The world is changing now, and I agree with the member that you can't put up barriers at your border and simply suggest that somehow in your jurisdiction you can remain aloof to those kinds of changes. You have to be prepared to meet those, and that's why we established the Jaccard process. Hopefully we'll see some recommendations for change.

I am curious about the issue of the marketplace, because the member seems to be advancing the notion that we should simply, in a broad and wholesale way, open up and entirely deregulate the energy market here in our province. I want to know whether or not, in fact, that is his position.

G. Farrell-Collins: I'm glad to answer the question, but I expect that if the minister would like to be on my side asking questions and I on his side answering them, there's a way to resolve that. Let the public speak, and we'll do that -- and speak, perhaps, having been told the truth first.

I assume that the minister knows what's going on out there and what the comments of the opposition are. I would assume that if he's briefed, that is part of what he's briefed on. I have said numerous times that certainly we need to be responsible in looking at what the overall impact is of the energy restructuring taking place across North America. Quite frankly, the difference between the minister and I on that is that I think it should have been an ongoing process over the last five or six years, rather than something we're now rushing to deal with.

The minister talked about Hydro and how he accepts the fact that the market is changing. Well, I would put it to the minister that Hydro certainly doesn't and hasn't. I have got a response here from B.C. Hydro to the then Minister of Energy with regard to Mr. Jaccard's first review or first attempt at looking at energy markets. It's amazing. It's like it's written by somebody sitting at an old, steel desk in some basement at B.C. Hydro with his hand-driven pencil sharpener on the desk and his pocket protector in his pocket. It's so out of date and out of reality.

Look at this; look at some of the things that were said here. This is a remarkable one. It's on page 1, a submission by B.C. Hydro to the Minister of Energy, Mines and Petroleum Resources on the electricity market review report by the BCUC. It was a summary, and on the bottom of the first page:

"There was one overwhelming conclusion that stood out from the hearing. Unlike other jurisdictions, there is no immediate crisis in the electricity market in British Columbia. . .demanding resolution."

"There are some ideologues and theorists who believe there is only one answer to appropriately structuring electricity markets, and that answer should be imposed as quickly as possible, and wherever possible. Other than these theorists and ideologues, no one could bring forward an immediate need for change in structure or identify any significant way in which the industry, at it is currently operating in B.C., is yielding practical results that are undesirable."

Well, holy smokes! Someone finally turned the light on in that guy's office, I hope. I mean, did nobody see this coming? Is that what B.C. Hydro's philosophy has been for the last five years -- that there are these extreme ideologues and theorists out there who have these theories that B.C. Hydro somehow is going to have to finally get its head out of the sand and respond to the energy restructuring that's taking place across North America?

For the minister to say that B.C. Hydro is preparing, that they're getting ready for it. . . . The fact is, they haven't. B.C. Hydro has not been preparing for this. B.C. Hydro has been doing everything possible in its power -- with its back to the future, looking forward at the past -- to see and strategize and try to determine how exactly it's going to stop the future from happening. I love the line, "extreme theorists and ideologues" out there.

Well, that's the reality. The market is out there. I know the minister doesn't have a lot of faith in the market. That's where he comes from politically, and I accept that. I don't agree with him but I accept that. He has very little faith in the market. But whether you have faith in it or not, it's there and you can't ignore it. We sell and we have a commodity that is completely and totally interchangeable with everybody else who is supplying it. We have some advantages: some technological advantages, some geographic advantages in the fact that we have water storage, which is a great asset. But the reality is that nobody knows when they turn on the light switch in Arizona whether it's Arizona power or B.C. power that's coming through to light up their light bulb -- and they don't care. All they care about is what they're paying for. So for us to somehow believe that we can look at the past and go for it and expect the past to continue is ridiculous.

So I ask the minister: why has it taken B.C. Hydro so long to wake up to the reality that every other jurisdiction in Canada -- and, quite frankly, in the United States -- woke up to a long time ago?

Hon. D. Miller: Well, I noticed that the member carefully avoided answering the very simple question that I posed. He may wish to.

G. Farrell-Collins: I thought I had; I apologize if I didn't. I said I believe that the market is there; we're going to have to respond to it. We should be careful in examining all the implications of what's taking place, but we should have been doing it for the last five years, not for the last five months.

Hon. D. Miller: That still leaves me searching for the degree of difference. I suppose, again, going back to issue of the market and just using one example -- the residential and consumer rates that British Columbians enjoy relative to, say, California and New England -- the member is aware that if 

[ Page 4897 ]

the marketplace establishes those rates, that potentially. . . . I guess any other example of deregulation, whether it be transportation, telecommunications or whatever, will result in an increase in consumer rates, primarily for basic services. If the impact or the result of this opening up of the market, which the member ascribes to, is an increase in residential rates for electricity, is that an acceptable outcome for the member?

G. Farrell-Collins: As I said, I'd be glad to trade places with the minister. All he has to do is resign, and we'll get on with it. These are his estimates, not mine, but I'm glad to comment on the minister's comments. The reality is we don't know exactly what will happen to residential rates in British Columbia. We need to look at that. We need to examine that, and we need to look at what the implications are going to be. But the reality is that we haven't been doing that.

[11:00]

As I said, I believe we also have to be careful and examine what the impact is going to be. Maybe we have to look at other jurisdictions, other examples. We also have to be cautious that we aren't misguided and adopt merely a different set of ideologies and a different set of theorists in doing so. But that needs to be done. It should have been being done for the last five or six years, and it hasn't been. Hydro has only now awoken to the reality, and here we are: panicked, sending letters to the BCUC asking for quick ratification of changes to B.C. Hydro so that we can respond to the impact of the marketplace.

I know the minister hates the marketplace. I know that if he could have his way, there wouldn't be one. He'd just be able to decide who gets what and how they get it and who's going to produce what jobs and who's going to produce what commodities at what prices. Quite frankly, I believe history has proven that method to be a failure, but the minister may still believe it has merit. I suspect there are one or two countries left in the world where, after he loses the next election, he could probably find work -- one of them being Cuba. And look at some others, where they would probably be thrilled to take advantage of his philosophies and his wonderful dissertations on centralized power and authority and job creation dictas. But I believe history has proven that method wrong.

I do also believe, however, that the marketplace isn't always 100 percent right. There are errors in the marketplace, and we should be cautious, and we should look at that. I believe the minister would obviously agree with at least part of my much more moderate approach to the marketplace than his, but we'll see what he has to say.

The problem here, though, is that the minister has yet to give us any explanation why we are now put in a position where Hydro has to send panic letters to the BCUC about imminent damage to the financial position of the corporation, because the government hasn't shown the leadership required to make sure that British Columbia leads the market change, as opposed to reacting to it at the last minute.

Hon. D. Miller: What I glean from that is that the member is a bit reticent about putting all his faith in the marketplace. Yet he made a speech earlier in which he extolled the virtues of the marketplace, so I'm left a little bit puzzled on that score. Now he talks about being cautious and prudent as we examine these questions. Indeed, that is exactly what we're doing, so I wonder what the difference is.

I repeat: if the end result of allowing the marketplace to determine price is that there is an increase in the rates for residential consumers in British Columbia, is that acceptable to the Liberal Party of British Columbia? If it is, they should say so; if it's not, perhaps they might want to outline how they would then interfere in the marketplace to protect residential rates. I don't know that you can have it both ways, but it appears that there has been a bit of an attempt. I think it's a fascinating topic, and I wouldn't mind exploring it a little further.

G. Farrell-Collins: The minister can wait for the election and wait for the platform. He still hasn't answered my question, and I'll ask it again: why has B.C. Hydro refused to deal with the oncoming restructuring in the energy market for the last five years and put itself at grave financial risk, according to its own letters to the BCUC?

Hon. D. Miller: The member's refusal to engage on that question here is very interesting. Perhaps we might develop some forum outside the estimates where we wouldn't have to get into, "It's not your job to ask me questions and to have a debate in front of members of the public on these very important questions," because I personally would think that the public of British Columbia would want to know that any government that's in power has as one of its priorities maintaining to the degree possible the kind of very low-cost rates available to electricity consumers here in our province.

I know that's particularly true of some of the more remote regions of our province, where people are at great distances. The cost of the construction of transmission lines is significant relative to the population base. Certainly they ought to know that if there is a party in British Columbia that wants to threaten or jeopardize their access to these very low-cost residential rates -- one-third lower than other competing jurisdictions in the U.S. -- then I think that is a matter of public policy that the public would rightly be quite interested in. So I think it's a very interesting topic. I suspect that if we ever get into that forum, the member would start hedging, as he has done here today. Who am I to predict those kinds of questions? But I suspect that's true.

I think Hydro and the government are proceeding in a very prudent way to deal with the issues of the changes in the energy markets. The market, in my view, is not really a true marketplace; it is evolving. Even within some of the U.S. jurisdictions, the kinds of debates that are taking place are taking place here in British Columbia. I know they are taking place in other Canadian jurisdictions.

It is not simply a matter of governments' or utilities' refusals to deal with reality. It's a matter -- whether it's here in British Columbia or in Ontario or Quebec or in some of the states within the United States -- of governments and utilities looking at these questions very carefully and trying to look to the future, not avoiding the issues of the marketplace and deregulation. Rather, they are doing it in a way that is sensitive and protects the primary requirements in their respective jurisdictions. We are taking that approach in B.C. Hydro in terms of the application to FERC. We're taking that approach in terms of the Jaccard process on the broader questions, which will report to me as the minister responsible.

I think we are taking an entirely responsible approach to these questions, one that is supported by the major industrials 

[ Page 4898 ]

-- to name one group -- and others that are engaged in the stakeholder process, that are representative in the stakeholder process. There was a very good document -- not really a substantive report in terms of moving forward, but an overview document -- put out by Mr. Jaccard as the first report. It's an excellent primer, if you like, on the topic of a more open, market-based system. It identifies what other jurisdictions have done to try to deal with these kinds of questions.

I think that the approach and the process we have put in place are the right ones. Regardless of the final outcome of that process and recommendations to government, I don't anticipate that these are questions that have simple answers. These are very complex questions that require governments to be very prudent in terms of outlining this new era that we're entering. I think that any political party in our province would undoubtedly take that very same position.

G. Farrell-Collins: I must say that it's like night and day hearing the minister's comments as opposed to reading the documents and submissions from B.C. Hydro to the BCUC. I would advise the minister to either get up to speed on what's happening at Hydro or get Hydro to get the minister up to speed on what they've been doing for the last six years, because they're not the same thing.

The minister makes comments about keeping rates low for everybody in British Columbia, and the way to keep rates low is to be competitive. The way to keep rates low is to make sure that you've got a corporation that isn't top-heavy, that has real leadership at the top that is forward-looking instead of backward-looking, that is prepared for market change -- and in fact leads market change -- and is put in a good position. That's the way a Crown corporation is financially and fiscally able to deal with issues like the ones the minister raises about residential usage in remote areas. There are opportunities for the government to deal with that, because anybody having to get a product to a remote area, whether it's B.C. Hydro or someone else, is going to have to go through the same process.

The government and B.C. Hydro can look at ways to mitigate rate increases for remote sectors, as we've done historically. I'm talking about a competitive advantage for industrial competitors -- people who have to create jobs. If the minister remembers, that's where this came from. It came from the minister's announcement today about jobs for cheap power. What I'm suggesting to the minister is that making cheaper power available to all industrial consumers, rather than the hand-picked ones of the Premier and the minister, would put us in a more competitive position long-term. It would make Hydro more competitive, make our corporations and industries more competitive, and therefore make our ability to mitigate regional disparities in residential use that much easier to achieve.

However, the minister should realize that if the government refuses -- as it has for the last six years -- to deal with the reality that's facing it, refuses to deal with the reality of what's happening internationally, refuses to deal with the reality of what's taking place at the Federal Energy Regulatory Commission and continues to pay consultants large sums of money to give bad advice, then we're going to end up in a position like we ended up in a week and a bit ago -- with panicked letters to the BCUC from B.C. Hydro demanding quick passage of what they want in an effort to avoid, if I recall the quote, "significant financial hardship." I can't remember the exact words, but essentially, the letter said that there would be significant financial damage or harm done to B.C. Hydro and its ratepayers.

If the minister thinks that's something he can be proud of. . . . If the minister thinks that after six years of government, having that type of a letter being written by B.C. Hydro to BCUC is something that he and his Premier, who was the minister responsible before, and the other minister -- the member for Esquimalt-Metchosin -- who was the minister responsible before that. . . . That's three of the Gang of Six. If that's the best and the brightest the government has, and if at the end of the day Hydro is left sending panicked letters to BCUC in order to protect its financial position, I don't think that's something the minister can be proud of. I don't think it's something the Premier should be proud of.

This corporation -- the jewel in the crown of Crown corporations, B.C. Hydro -- has been under disastrous leadership ever since this government took over. I can't even count. . . . I'd have to take my shoes off, I think, to count the number of board members, the number of senior executives who have gone missing, who are now retired at the Black Sea, doing whatever it is they do now that they've been toasted from B.C. Hydro. It's been a disaster, and I don't think the minister can be proud of the job that B.C. Hydro has done in preparing itself for market change.

In fact, for him to stand up now and say that B.C. Hydro is being prudent and is planning and looking forward is a joke. It's a cover-up for bad leadership at B.C. Hydro and a refusal to deal with the realities that were staring at them down the barrel of a gun. They refused to deal with them and refused to plan for them. As a result, we've again put B.C. Hydro in a precarious financial position, at the risk of ratepayers and the people of British Columbia who own the Crown corporation. The government doesn't own it; the people own it.

[W. Hartley in the chair.]

We've put B.C. Hydro at a disadvantage because of bad leadership right from the top -- including the minister, the Premier, various CEOs and board members that have been at B.C. Hydro over the past numbers of years. We now have B.C. Hydro in a difficult position. Its credit has been downgraded. It is unprepared for market change. The minister and the Premier now are forced to try and set up a big smokescreen with this ridiculous jobs-for-cheap-power plan that won't work over the long term. It's an ad hoc, quick, knee-jerk response, looking backwards instead of forward to try and mitigate the problems that B.C. Hydro has.

If I go back to the same B.C. Hydro report that was sent in response to Jaccard's first review, on page 10 it says: "Further, a two-tiered pricing system may raise questions under federal competition law and international trade law. Those issues were not addressed."

Can the minister tell me what B.C. Hydro has done with its think tank and the consultants it's paying vast amounts of money to, to respond to what it said in 1995, less than two years ago, in response to suggestions that B.C. Hydro was in fact going to have to open up its market? I'll quote it again for the minister. This is B.C. Hydro talking: "Further, a two-tiered pricing system may raise questions under federal competition law and international trade law."

If that's what B.C. Hydro was saying then, why is it that today you flip open the clips and you see a leak to the Vancouver Sun about legislation coming down later today that talks about two-tiered pricing for industrial users? There are federal competition laws that the province is going to have to deal with. There are international trade agreements that the government is going to have to deal with.

[ Page 4899 ]

Can the minister tell me what he has done to prepare B.C. Hydro to respond to those accusations?

[11:15]

I think that a close reading of the answer which he's just completed. . . . It seems to suggest that he has narrowed his view somewhat. He's proposing that there be competition only at the industrial level. I believe that a very good, close reading of his answer will illustrate that that's exactly what he said.

I guess I'll throw the other question back, the most obvious question: how, then, if his central thesis is that the marketplace will dictate and cannot be avoided, then hedging because he's fearful that if there's a negative consequence for residential consumers, he doesn't want to be portrayed as supporting that. . . ? How then, if the marketplace is going to rule, does the member propose to protect -- what mechanism would be used to protect -- residential customers from the vagaries of the marketplace and possibly dramatic increases in electricity costs to the individual homeowner in British Columbia? The member hasn't addressed that.

I simply said, in response to the issue, that we take those issues very seriously. We are doing a number of things. We are first of all making energy available -- electricity that is ours; it belongs to the people of British Columbia. We flooded valleys, built dams in British Columbia. People had to move their homes and all the rest of it. This is our legacy. That energy is coming back to us -- the 1,400 megawatts. What we're saying, very simply, is that we think it's useful to utilize that energy to try to create more jobs here in our province. That's fundamentally something I would have thought the members would support.

Secondly, we're saying that we're not afraid of the future, but neither are we foolish with respect to the future. We don't say: "Oh well, the marketplace will take care of us. We'll simply throw it wide open to the marketplace regardless of the consequences for Hydro as a public utility, regardless of the consequences for future dividends to the taxpayers who own Hydro, regardless of the consequences of the impacts, or potential negative impacts, on residential and commercial consumers." I would think that the public, faced with the choices being presented by the opposition and not just the statements but the actions being taken by this government, would prudently side with the approach we're taking. It's reasoned, prudent and careful.

We are dealing with the issue of access on the wholesale side into the U.S. through the application to FERC. We need and have applied for wholesale transmission rates through BC. We'll see where that goes. I think we're being entirely reasonable. We do run a hydroelectric system where there are, from time to time, because of nature and the way that hydro systems are operated, surplus amounts of electricity and energy that we sell in the export market. That has brought in, I think, about $163 million, or something in that range. There is a potential for increases there. Those dividends flow to Hydro, to the taxpayers of British Columbia. I think we're operating that company in a very reasonable manner.

I do regret sometimes that the choice of language used to describe British Columbians, whether they be management people at B.C. Hydro or other organizations, and British Columbians who make a commitment to sit on boards -- in this case, we're talking about the Hydro board -- is unfortunate. I think you can have a legitimate, tough debate around policy questions, around issues, and I don't think that in doing this you have to characterize or try to do character assassination -- in this case, describing the board members in language that I would never use. I think it shows a complete and utter lack of respect for British Columbians who, in my view, want to do their very best.

I recently appointed people to the new Hydro board -- people like John Stubbs, the president of Simon Fraser University, and Jim Sinclair from the United Fishermen and Allied Workers Union, and others. These are not people to whom we should show that kind of disrespect or use that kind of language in a kind of cavalier off-hand way.

I would simply plead with the opposition to afford some respect to individuals. You can have a vigorous debate about policy questions, but it doesn't have to be on the basis of slandering individuals who are not here. I don't mind a tough debate, but I just think that's really an unfortunate way to proceed. I would make a plea to the opposition that they try to show some level of civility and respect to individuals who are simply trying to do the very best they can.

G. Farrell-Collins: First of all, the minister has talked about the various people and players and board members who have been on board. I believe the word I've used in the past was "incompetent" -- certainly to the previous board. I believe Mr. Smith, the current chair of the board, would agree with me on their failure to oversee the activities of B.C. Hydro with regard to the Pakistan project in any meaningful way. Despite my desire to do so, I'll avoid taking lessons on statesmanship from the member opposite, because I've read Hansard for the numbers of years that he's been in the House, and I believe I have very little to learn from him in that regard.

I come back to my question to the minister, which was a clear one. How does the minister reconcile the announcement today with B.C. Hydro's statement in its response to the first Jaccard report, where it says: "Further, a two-tiered pricing system may raise questions under federal competition law and international trade law."

Hon. D. Miller: I wasn't responsible for Hydro a couple of years ago, and I really can't comment on it. I have outlined what we in this government are doing now. I'm the minister responsible. The action's we've taken are there and they're clear, and if the member wants to ask questions about them, he should.

G. Farrell-Collins: Indeed I do, because the minister is now responsible for B.C. Hydro. He's responsible for it today, and I assume he'll be responsible for it at 2 o'clock, when he tables legislation. My question to the minister is: how does the minister intend to respond to his new two-tier pricing policy, given what Hydro has said in the past about federal and international regulations on competition and pricing? Can the minister tell me what plan B.C. Hydro has, under his leadership, right now, today, to respond to the inevitable allegations that are going to come forward of unfair competition and unfair pricing? Can the minister tell me how he intends to respond to that?

Hon. D. Miller: Our view is that nothing that we are doing in using energy that is owned by the citizens of this 

[ Page 4900 ]

province -- which will be returned to them over a period of years from 1998 to 2004 -- has any trade implications. If there are allegations, I would hope that we would see the Liberal Party onside for the first time, instead of what they have been doing -- for example, their very soft position on the thing that Greenpeace is doing on our coast. I think it's a travesty that the Liberal Party has taken a very soft position on Greenpeace, that they won't stand up for British Columbians and that they seem to want to feed into the people who want to lie about what's happening in our province.

Just listening last night, I was very disappointed. We have a group within this province who are lying. They're blatantly lying. They've made an allegation to the United States in terms of how we manage our hydro systems; it's a blatant lie. They're trying to impair our economy, and almost everything this opposition does gives comfort to those who would attack British Columbia. It's very disappointing that they can't understand the need to put aside partisanship and recognize that they also have a responsibility, as a political party of British Columbia, to support British Columbia.

One only has to examine Hansard of last night. It was one of the more disturbing events in my time in this House in terms of doing estimates -- the language, the character assassination. It was absolutely atrocious. I'm sure that the enemies of B.C. -- those who would attack us, who would lie -- will take comfort. I'm positive they'll take comfort. I know we'll be seeing the uninformed remarks of the opposition show up, being used by these organizations like Greenpeace and others, and that's very difficult. It makes our job doubly hard in our province. I would only hope that there would be a bit of prudence on the part of the opposition when it comes to discussing these kinds of questions, because they're only giving aid and comfort -- maybe they're doing it quite consciously -- to organizations that do not have the best interests of British Columbia at heart. That, I think, is very, very unfortunate.

G. Farrell-Collins: I'll resist the invitation to engage in a debate about people lying in British Columbia. I'll resist the opportunity to engage in a debate about people not telling the truth. I'll resist the opportunity to engage in a debate about deception that's taken place in this province in the last year. I know that if the minister were to bait me into engaging in that type of debate, he'd find that he had an awful lot of explaining to do, and I'd probably end up in violation of the standing orders of this House. I have a lot more work I'd like to do with the minister today, so I won't engage in that debate about lying, deception and misleading comments that have been made by a variety of British Columbians, particularly in a little over the last calendar year, with regard to a whole range of issues which I could discuss. I'll resist engaging in that debate and merely say that I think the public, in hearing the minister's comments or reading them in Hansard, would be less than impressed with his outrage about truthfulness. I'll leave it at that.

However, in response to the minister's comments, he says that Greenpeace and others will be ecstatic and will undoubtedly relish comments made by opposition members. I would suggest that the environmentalists around the country, and even the extreme environmentalists around the country, North America and the world, wouldn't have to go to comments by this opposition. All they'd have to do is go to comments about the forest practices in this code by that member and the NDP when they were in opposition. They'd be more than happy to find a litany of comments with regard to the way this province has handled various issues.

I have to say one other thing in response. It certainly hasn't been the Liberal Party over the last six years that has been cosying up in bed, with foot-warmer going, with the environmentalists; it's been this government. It's been this government that acceded under Mike Harcourt, the previous Premier of this province -- with this minister as Minister of Forests, in one case -- that has buckled under to the demands of the environmentalists to the point of driving the economy. . .of driving the forest sector in British Columbia almost out of business. It's now this government that has to go into the House and table some 200 amendments to its Forest Practices Code.

I remember the debate on the Forest Practices Code. I remember it well, because Wilf Hurd, who is no longer with us, who was the Forests critic at the time. . .

The Chair: Excuse me, member. I really must caution members in regard to relevancy in these debates.

G. Farrell-Collins: Hon. Chair, these are issues raised by the minister. I expect the same interjections by the Chair with regard to the minister. . .

The Chair: Member, could you take your seat, please.

G. Farrell-Collins: . . .as the members of the opposition.

The Chair: Order, member!

G. Farrell-Collins: If the Chair refuses to do that. . . .

The Chair: Order, member! I have cautioned all members in regard to relevancy. There is no question of that from you to the Chair. That is not in order.

G. Farrell-Collins: Hon. Chair, whether it's in order or not, there are other venues to raise those issues.

My question is to the minister. If he goes back and looks at what this government's response has been to the environmental movement, he will find that it was the opposition that was standing in this House day after day, week after week, dealing with the impact of the Forest Practices Code that this government was going to bring in. It was the opposition Liberals who raised those issues about impact -- the impact it would have on jobs in the forest sector. It was the members opposite who went through the last campaign erroneously telling people that the members on this side had no concern about the jobs in the forest sector. It was the members opposite who went around and did what the minister referred to earlier with regard to the truth and talked to people about the position of the opposition with regard to the forest sector. It is this government that cosied up with the environmentalists to the point where they have over the last five years driven the forest sector into the ground, so that they have to come back with rescue plans, with millions and millions of dollars, trying to cover up the damage they've done over the last number of years.

[11:30]

[ Page 4901 ]

in this province, failed to stand up to the environmentalists, and instead brought in draconian forest legislation that caused a massive job loss for thousands of members of that member's union. So I don't think anybody on this side has anything to learn from the minister with regard to taking a stand in favour of British Columbians and opposed to extreme environmentalists across North America and the world.

I ask the minister the same question I asked him earlier: what has the government done -- and I'll wait until the minister is ready to listen to it -- to prepare for the inevitable charges that will be brought forward by others that the announcement that the government is making today is. . . . I'll quote from the Hydro statement of response to Jaccard's first report, where it says: ". . .a two-tiered pricing system may raise questions under federal competition law and international trade law." What has the government done, what has B.C. Hydro done and what has the minister done to be prepared to respond to those charges when they come? What impact study has the government done for when those charges are finally brought before the province of British Columbia?

Hon. D. Miller: Well, to continue, I'm looking for a copy of Hansard from last night; it would be useful to illustrate my point. But when we have the Sierra Legal Defense Fund, whose complaint is outrageous -- blatant lies -- running to the United States and to NAFTA, alleging that we are deliberately destroying fish as a conscious act, that B.C. Hydro is deliberately doing this. . . . That's something that could jeopardize the economy here in British Columbia. And then, when we had the members opposite agreeing last night. . . .

An Hon. Member: Answer the question.

Hon. D. Miller: Read Hansard from last night. Read the Environment critic for the Liberals last night, who said in a variety of ways -- in absolutely atrocious ways -- that Hydro has a deliberate policy based on greed to go out there and kill as many fish as they possibly can. And those sentiments are the basis for the action by the Sierra Legal Defense Fund and others. That's what they're saying. That's why they've gone to our competitors in the marketplace and want a ruling against British Columbia to impair the economy. It's not the truth. And then when the opposition critics echo those comments and get even more aggressive, we know that the opposition complaints are going to turn up. They will be used by those people, who have a different agenda, to attack and impair the economy of our province.

I really do believe that all of us, despite the political differences that may exist between our two parties on matters of policy question. . . . Surely at the end of the day, we're all British Columbians and ought to understand that if there's not some cohesiveness in terms of operating in our own interest, then it's a pretty sorry day. To give that kind of aid and comfort to those who are running to jurisdictions outside of British Columbia in an attempt to impair our economy for whatever reason is very unfortunate. I think the public of British Columbia. . . . Well, I can use a word to characterize it: I'm sure they will be disappointed. But there may be others who will use even stronger language.

The Chair: Members, I again must caution both sides. We've strayed far from debate on the estimates, and I again caution both sides to contribute to a process that's going to reach a decision on the estimates.

G. Farrell-Collins: I can't agree more with you, hon. Chair. I've asked the minister three times now how he intends to respond when the allegations come forward -- and they are supported by B.C. Hydro's own documents -- that in fact the government is engaged in a two-tier pricing system that may raise questions under federal competition law and international trade law.

The minister doesn't have to go to the opposition to make up stories and find allegations that somebody in British Columbia isn't defending British Columbia's interest. All he has to do is look at Hydro's very own document, which says that what the government's doing won't wash -- the government's own document, hon. Chair. And if the minister wants it, I'll find it for him, and I'll hand it over to him. It's page 10 of Hydro's first response to Jaccard's first report.

I'm going to ask the minister the question for the fourth time: has Hydro prepared a response for the inevitable allegations that are going to come forward that what the government has done is create a two-tier pricing system that may be subject to federal competition law and international trade law? Can the minister tell me what his people have told him? How is he prepared to respond to those allegations? We can rehash last night's debate. I'm sure we've got weeks and months to do that here, and we may well end up doing that. I've asked the minister the same question now for the fourth time, and if the minister answers the question, then we can get on to other matters. It's the minister, quite frankly, who is filibustering his own estimates, and I suspect it's because he doesn't have an answer for the question and is unable, quite frankly, to defend the announcement he made today.

Hon. D. Miller: We don't anticipate any negative consequences as a result of the announcement today.

G. Farrell-Collins: I'm afraid I can't believe the minister. Hydro's own document says: ". . .a two-tiered pricing system may raise questions under federal competition law and international trade law." How does the minister respond to Hydro's own document that says the opposite?

Hon. D. Miller: I'd just repeat my former answer.

S. Hawkins: That's why we're in trouble.

G. Farrell-Collins: The member for Okanagan West says that's why we're in trouble. That's exactly true. That is why we're in trouble. That's why Hydro has had to send off a panic letter to the B.C. Utilities Commission, saying: "Please help us get this stuff through right away, because if you don't, there are going to be major severe financial implications for B.C. Hydro, the owners of B.C. Hydro, the taxpayers and the ratepayers." That's why we're in a difficult position -- because the minister doesn't read his own stuff.

The document, "A Submission to the Minister of Energy. . . ." It says: ". . .a two-tiered pricing system may raise questions under federal competition law and international trade law." Hydro's own documents are saying that, and the minister has the gall to stand up today and announce a two-tiered pricing system with absolutely no plan, no strategy whatsoever to deal with the implications of federal competition law and international trade law. Can the minister tell me if any study has been done by B.C. Hydro in anticipation of this announcement to ensure that such is not the case?

Hon. D. Miller: As indicated, we do not anticipate any negative consequences along those lines as a result of today's announcement.

[ Page 4902 ]

The Chair: The Chair needs to caution members in regard to repetition. We have had questions put to the minister. There's nothing in the rules that says a minister must answer questions. The member has made his point on this and perhaps would like to pursue another line of questioning.

G. Farrell-Collins: I asked the minister a question. I asked him a different question last time than I had asked him previously. The question I asked the minister, and the question I ask him now for a second time is -- and the Chair can keep track if he likes: what study has the government done to give him the confidence that he can make the statement he just made? What supporting documents, studies and analysis does he have? When was it done? Who did it? What's the content of it that allows the government and the minister to stand up and say, contrary to what Hydro said earlier, that they expect no repercussions? What is he basing that answer on?

Hon. D. Miller: I can only repeat that we do not anticipate, as a result of the announcement this morning -- which for the first time provides a broader access to Hydro's existing RTP program and ultimate access utilizing the downstreambenefits power that is owned by the province -- that it will raise any particular trade issues. It doesn't raise any particular trade issues, so I've answered the question a number of times.

G. Farrell-Collins: The minister has now answered the very first question, but he hasn't answered the question as to what it is that gives him confidence in that. For the minister just to say, "We don't anticipate it. . . ." I don't think he anticipated, quite frankly, that B.C. Hydro was going to be in the difficult financial position it's in today. I don't think the minister anticipated -- and, quite frankly, I don't think Hydro anticipated very well -- the impact of market change in such a way that they now have to respond to a financial crisis at B.C. Hydro. I don't believe the minister or the government anticipated that their Raiwind project was going to be run by a bunch of gangsters. I don't believe that the minister anticipated a whole bunch of stuff.

My job isn't to take comfort in the assurances of the minister that he has no anticipation that there are going to be any problems. My job as a critic, despite what anyone in this room may think, is to ask the minister questions and get that assurance for the public. This is the public interest we're attempting to protect. Quite frankly, if the minister had answered the questions that the member beside me asked about the Raiwind project, and if not he but the Premier had answered those questions and done an investigation, B.C. Hydro wouldn't have had the problem with the Raiwind project. If they'd answered the questions that this member and other members have raised with regard to energy restructuring in the past, if they'd responded to them in any meaningful way, we wouldn't have B.C. Hydro writing panicked letters a week ago to the BCUC. So my question to the minister isn't whether or not he anticipates. . . . I understand he doesn't anticipate that. It would be surprising if he anticipated anything. He doesn't anticipate that there's going to be any reaction.

Can the minister tell me what assurances he can give to the general public -- the people who are the ratepayers and who have been put at risk by this government's leadership, according to B.C. Hydro itself? What is he basing that decision on? He says he doesn't anticipate any international action regarding trade law. He says he doesn't anticipate transgressing any federal competition law. Can the minister tell me on what basis he's making that assertion, so that the people of British Columbia, who pay Hydro's rates, can have some assurance beyond just the word of the minister?

Hon. D. Miller: Under the regulatory framework, what we're doing is allowed. I'm not the technical expert. I'm giving the member the advice that I've received. I think it's sound advice. We do not anticipate any trade actions as a result of the announcement this morning. I don't know what more I can do. I'm not a lawyer. I'm not a trade expert. I'm telling you that that's the case. If the member continues to be concerned, I appreciate his concern, but really. . . . How many times have I answered this question, Mr. Chairman? Quite a number, I believe.

G. Farrell-Collins: I believe we are nearing the end of the morning sitting of this chamber. Perhaps the minister can question the lawyers, the trade experts and the policy experts who are with him. I know that he doesn't have any of those qualifications; neither do I. He is in the privileged position of having those people available to him. Indeed, thousands of employees of B.C. Hydro are available to answer questions on his behalf.

So if the minister is telling me that after making an announcement this morning, and as he is about to table legislation this afternoon, he has yet to have any supporting evidence or documents -- other than the word of the people who have given him advice -- as to whether or not he's going to be put in a difficult position with regard to international trade law and domestic competition law, then I think he's got a little bit of a problem on his hands. He has access to those people, and I would hope that he would have an answer from them.

The reason I'm asking the question is because I think it's important. In December, Marvin Shaffer wrote a wonderful op-ed piece in the Vancouver Sun, chastising me for having the temerity to say that our international exports were at risk, in that the value of the downstream benefits was at risk because of the FERC decision. He wrote a wonderfully lucid argument as to why I was wrong and he was right, only to find out that over the period of the next few months several decisions based on the rationale that he used for justifying his op-ed piece were defied by the Federal Energy Regulatory Commission in response to B.C. Hydro. The misunderstanding that Mr. Shaffer and the government said that the Federal Energy Regulatory Commission had with B.C. Hydro's submission was in fact not a misunderstanding they had but, really, a misunderstanding Mr. Shaffer and the government had with how that would be brought into force. Now we're left in a panic position.

[11:45]

Noting the time, I move the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 11:46 a.m.

Copyright © 1997: Queen's Printer, Victoria, British Columbia, Canada