[ Page 4947 ]

The House resumed at 6:37 p.m.

[The Speaker in the chair.]

G. Brewin: In the gallery -- oh, he's now joined the Hansard staff -- is my grandson Christopher, who's visiting here from Ottawa. He's 13 years old, and he's here with his mom, Laura Colleen. It's a great pleasure to have them here. Would the House please make them welcome.

Hon. J. MacPhail: In Committee A, I call Committee of Supply. For the information of the members, we'll be debating the estimates of the Ministry of Employment and Investment. In this House, I call Committee of Supply. For the information of the members, we'll be debating the estimates of the Ministry of Forests.

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

ESTIMATES: MINISTRY OF FORESTS
(continued)

T. Nebbeling: It's nice to have been out of the House for a little while, so that tempers could come back to a level where we can focus on the estimates of the Ministry of Forests again.

Before we recessed for half an hour, it was actually interesting to get into a little bit of a debate -- because of the member from Port Alberni -- about support for the jobs and timber accord. I should say that because of many discussions I've had with people over the last six or seven months, I've been quite skeptical when statements were made that this jobs and timber accord has been supported by so many people, especially when the people are said to be mayors, CEOs, unions and other participants in the industry -- especially mayors. Of course, when I talk about mayors. . .mayors of forest-dependent communities.

Earlier on, the member from Port Alberni expressed his chagrin about the fact that I had not necessarily thought that the mayor of Port Alberni was jumping with joy because of the jobs and timber accord, but that most likely the community of Port Alberni was given something to pacify the community and the mayor, thereby getting her -- in this particular case it is a female mayor -- to say: "Okay, the jobs and timber accord is fine."

I asked the minister if something had indeed gone to Port Alberni to get that reaction from her, because. . . . I don't want to speak for the mayor; I should say that having spoken with a number of mayors and to a group of them. . . . At one of these meetings, the mayor was actually present, and she was certainly not standing up and endorsing what was happening. I'm not saying that she spoke against it, but she was not in any way, shape or form saying: "This is going to be the thing that will make the difference for Port Alberni."

Of course, as the mayor she has been very active in trying to undo some of the damage that has been caused by various actions of this government when it came to the protection of the landmass around Port Alberni and the reduction of fibre supply to the mills in Port Alberni. So the mayor is known to be a strong fighter for her community, and I had the feeling. . . . And I asked the minister. . . . The minister hasn't answered that question: did Port Alberni get something? Was a promise made -- you know: "This is coming your way, so be kind"?

Over the quick dinner that I had -- the half an hour that I had -- I was thinking about this. And I thought: "Well, I don't want to leave false impressions here. There may not have been something of that nature, but I should hear that." So first of all, I don't mind asking the minister again: has Port Alberni been promised something funded by the provincial government? I've asked it twice before; he's refused to answer. If he cares to answer it now, fine. If not, then I'll go on.

What I would then like to ask the minister instead. . . . When the jobs and timber accord was announced a week ago, the Premier went to a number of communities. I would like to hear which communities he went to, because I don't know where he went. I'd also like to know if the MLAs on the government side also made an announcement about FRBC making donations or contributions to projects in their areas when they went home. Maybe the minister can give me an answer on these points: the communities the Premier and the minister went to, if FRBC was committed to fund certain projects, and if the other MLAs on the government side went to their communities to bring good tidings -- a little premature Christmas.

Hon. D. Zirnhelt: Well, I think the member should maybe phone the mayor of Port Alberni. He's really suggesting that she was bribed or somehow. . . .

T. Nebbeling: I'm not saying that.

Hon. D. Zirnhelt: Yes, you did: "Was she offered something to be supportive?" It's exactly what you meant, and I think that's an insult to the president of the Union of B.C. Municipalities.

And he suggested that the companies did not negotiate in good faith -- that they didn't give a mandate to their negotiators, who initialled the deal and agreed on the language. He's suggesting that the companies negotiated in bad faith. I say to him that CEO after CEO has been up speaking about the accord and how good it has been to work with the government. They've never had a government that would sit down with them and work on a strategy that would end up creating more jobs.

[6:45]

What happened on Friday -- the day after the timber jobs announcement -- was that the investment plan of Forest Renewal B.C. was announced. There were a number of ministers, MLAs, board members and senior staff of FRBC involved in announcing the regional breakdown of investment plans.

T. Nebbeling: The minister, being responsible for FRBC. . . . I'm not going into FRBC yet, because it wouldn't be fair to the minister, as he will have his staff here. Nevertheless, 

[ Page 4948 ]

the minister should be aware whether indeed in some of these communities last week projects were announced as approved. I want to pursue that one a little bit further.

[G. Brewin in the chair.]

As far as the statement by the minister about the mayor of Port Alberni -- or any other mayor, for that matter. . . . "Would have been bribed" -- I didn't use that word. I would never say that word. But I do know that it makes it very difficult to oppose something at a time when you are given something that is of great value to your community and that will indeed help the community to create some jobs that are really needed.

Port Alberni has been fighting for so long to get something that truly could turn into new jobs, and it's for that reason that I ask. Call me silly for being skeptical, but I've asked three times. Did FRBC fund anything in this community? Has something been approved?

Three times and no answer -- the silence is noted. I don't care if the minister feels that I translate that into the wrong emotion for the people that may have been recipients of some FRBC money to create some opportunities. I will take joy in that and congratulate these communities if that happened. I'm just asking the basic question.

Was something left behind, was something committed, in Quesnel? I don't know. I'm not saying it was; I'm just asking. Was there anything left behind in Williams Lake? Maybe yes, maybe not. I would like to know. I think I have the right to know, by the way.

The same thing for Kelowna: when the Premier went there -- and the minister, I think, went there as well -- was any project approved that Kelowna has been going after for a long time, or maybe for a short time? Was there a project approved in that area? Maybe not in Kelowna -- maybe outside. Was there something approved in another ministry -- a hospital component? I don't know. Was something presented to the town?

The same for Merritt -- I know that the member for Yale-Lillooet had some article in the paper where he announced that a number of projects in his riding were going to be approved, including some bridges. I don't know if that was part of the message that was delivered last Thursday or Friday when the Premier did his tour de force through the province to announce this jobs and timber accord.

Castlegar, same thing: I was in Castlegar, and it was amazing. On the TV screen, for 24 hours, the MLA from Castlegar was announcing that she would attend a function where a cheque was going to be handed over. In this particular case, I think it was for an addition to a school. I know that cable TV, channel 11, had permanently posted, for 24 hours, that the MLA from that area would be presenting at that location, or would make a major announcement -- which I think turned out to be a cheque for an addition to the school. Was that part of the strategy? I don't know; I'm asking.

Golden? Same thing. Golden, God knows, needs help. Nobody would, in any way, shape or form, deny anything that comes toward Golden. That town has suffered; that town still has tremendous needs. Was something brought to Golden? Great.

Kamloops again. The minister said: "We were in Kamloops." Well, I don't know what happened in Kamloops. I'm asking, once again, the question: was there something left behind that made the people in Kamloops feel real good because they were getting something out of FRBC or another ministry, which just happened to be announced on the same day and at the time that the jobs and timber accord was introduced to that community? I don't know.

I come back to Port Alberni to make the tour around. I don't know if the minister went there; I don't know if the Premier went there. But the member for Alberni was very jubilant last week and actually asked me if I would like to come to Port Alberni last Saturday to be there for the festive occasion. He didn't tell me what it was, so I'm only second-guessing that maybe there were some good tidings, some gift brought to the community -- like I said, a pre-Christmas occasion.

That it all happened at the time, or could have happened. . . . I'm not saying it happened. I'm saying, Mr. Minister: would you please tell me if that did happen? It is your ministry that is responsible for providing these fundings, and I expect that you, as the minister, would know about this. I'm not saying these things happened, but the minister should be able to tell me.

I don't know if he's getting angry at me for pursuing this one. But I think it is very important, because so much has been made of the fact that some of these mayors have stood with the Premier, with the minister, in joining in the happiness about this jobs and timber accord, which primarily, for small industry, is not a viable document.

Once we have dealt with the questions that I've asked the minister -- I know it is a lot, and if he wants I can go one by one -- I'd like to talk about the jobs and timber accord -- not about the details, because that's going to take a lot of time, but more about the impression that the reception of the jobs and timber accord has created in the province. We can stick to the activities of the announcement and also what happened in the communities where these announcements were made.

Hon. D. Zirnhelt: On Friday, the day after the jobs and timber accord was announced, there were regional announcements following the overall provincial announcements of the overall provincial investment plan of $625 million. The Premier announced the overall investment plan, and then there were a number of simultaneous and later announcements of the regional investment plans. In some of those cases there were some examples given of projects that had already been approved, but I'm not aware of specific announcements that might have been made all over the province. There were lots of examples that were given. Those people whose projects have been approved should know now and should have known for some time.

I just repeat: have your research department dig out the press releases. The contents of the announcements were documented in the press releases. In the case of each region, the regional investment plan was announced. It wasn't an announcement of all the projects. There were some illustrations given of approved projects. In Port Alberni, when I went there I did not announce any project; but, as I said before, I'm sure Port Alberni will get their share. Regional equity is a consideration when the decisions are made about where the dollars are allocated.

T. Nebbeling: Maybe you can help me a little, then. First of all, the minister said $625 million in total was announced. Maybe I misunderstood that. So at the same time that the jobs and timber accord was announced, $625 million was spread among projects throughout the province. Is that. . . ?

[ Page 4949 ]

Hon. D. Zirnhelt: The jobs and timber accord was announced on Thursday. On Friday, the following day, the provincial investment plan was announced by the Premier in Kamloops. That same day, and in the hours that followed that, there were announcements of FRBC's regional investment plans in the regions.

T. Nebbeling: Of the $625 million that was announced under the plan, how much was earmarked exclusively to fit within the guidelines of the new jobs and timber accord, and how much was under the old guidelines that FRBC is supposed to be working under?

Hon. D. Zirnhelt: The question, as I understand it, was: how much of the $625 million is part of the jobs and timber accord? That part of the jobs and timber accord that relates to FRBC and initiatives of Forest Renewal B.C. is up to $300 million, or 70 percent of the total expenditures directed to the land-based activities. This aspect of the accord, and the jobs that will, hopefully, be permanent jobs that industry undertook to create with long-term agreements, will require that there be long-term umbrella agreements announced. There may be some of those agreements already signed.

If there's an umbrella agreement and the multi-year agreement creates full-time jobs, then that would be counted as part of the accord. There will be a phasing-in. But the new delivery model of FRBC, where the vast majority -- up to $300 million a year to go into long-term projects, creating long-term jobs -- will unfold over the next year as agreements are reached with companies on the creation of those jobs. . . .

T. Nebbeling: To recap what the minister is saying, $300 million of the $625 million that was promised or handed out or committed throughout the province last week at the same time as the jobs and timber accord was announced was for projects that are related to the new structure of funding under the jobs and timber accord, and $325 million was then promised or committed under the old guidelines, if I can put it that way, under the old structure of FRBC. I put it to the minister that. . . . Well, first of all, does the minister agree with that -- that $325 million is being committed that is not related to the jobs and timber accord?

Hon. D. Zirnhelt: No, I don't agree with that. It's a complex announcement, and I appreciate that it might be hard to wind through this. The commitment under the jobs and timber accord for up to $300 million in permanent, land-based, multi-year programs administered by the company will require legislative change to have FRBC contract directly. The accord speaks to having land-based jobs directly contracted, and we have yet to pass some of those amendments in the House to do that.

This year, of the $625 million -- which is more than the normal, which we expect to be around $400 million a year -- we expect. . . . The commitment there is $390 million for land-based activities this year, but it's in that category that will ultimately level off at around $300 million. That's the part of FRBC's budget investment plan that's dedicated to the accord. Not all aspects of the accord are up and running yet, because we don't even have the legislative provision there yet. We do have a few umbrella agreements, and we are intending to negotiate innovative forest practices agreements, which was provided for in legislation.

Where we can achieve the objectives of the accord, the mechanisms of the accord, comfortably and efficiently, we will do that. We will wrap up the commitments under the accord as soon as we can, but we expect that it will be some time next year. The intent is to have up to $300 million in land-based programs committed, and that will be the permanent commitment that will lead toward the 5,000 permanent FRBC jobs.

[7:00]

The minister accused me before of hinting at suspecting the government of having bribed the mayor of a particular community -- in this particular case, Port Alberni -- something I have never indicated in any way, shape or form. The minister should not be surprised at all that there is a kind of skepticism after so many communities had Forest Renewal B.C. promised in the previous year, and then in February of this year they received letters that the projects were either cut down or were totally eliminated.

On the same day, the jobs and timber accord was being brought to the public of British Columbia at an incredible cost. Maybe the minister can also explain to me who is paying for this PR exercise. We have been told this tremendous cost is a million dollars, but now that we start adding it up, I think it's going to be a lot more than that. I have no proof of that. The million dollars is pretty well confirmed, but I don't know about the rest.

At the time the government is going into the province to announce this magnificent jobs and timber accord -- the salvation of the industry, the creator of futures for generations to come -- the government is, at the same time, trying to find support to stand with them and say: "Yes, this is a good thing." And at the same time, approximately $235 million over and above the $390 million that the government is spending on the jobs and timber accord this year -- once it has been approved through amendments to the act -- is being handed out.

The minister should really not be surprised that I'm skeptical. It is very easy for the minister to eliminate that skepticism by explaining here in the Legislature whether these communities that were visited got something out of it. Did they get a chunk of money under the FRBC requirements? What other communities got chunks of money? What regions got chunks of money? Give a rundown and eliminate that skepticism, because at this point, I suspect -- I have no proof, but I feel -- that the government, beyond its generosity to the people that they brought in to announce this deal, went beyond that element of generosity, and hundreds of millions of dollars were actually used to pacify and get some people on side.

This may offend the minister. It may upset the minister that I'm saying it, but I've asked three or four times for an explanation of what kind of money has been put into these communities at the same time as the jobs and timber accord was announced, and I didn't get an answer. Now I find out that, indeed, $235 million was spent over and above the 

[ Page 4950 ]

money allocated for the jobs and timber accord for the first year -- this year. I know that there are four more years to come, so the total of that commitment will come close to $2 billion dollars.

I'm not talking about the money that goes with the jobs and timber accord. I'm talking about the other $235 million that came as presents to communities in British Columbia, and I question the timing of bringing that money to the communities. Can the minister give me more detail on the $235 million and whether part of that was left in the communities the Premier visited?

Hon. D. Zirnhelt: I think we should wait until we have the FRBC officials here, and I'll tell you which projects were approved in which regions. We didn't announce a list of projects. We announced the investment plan, which was targeted expenditures. You know, the problem is that you say you're skeptical, that you don't want to believe it because it's such a great idea and that we actually have a strategic plan and people are actually up there supporting us for it. I think you reflect an attitude that is a bit of a problem, and the problem is that you have to take some things at face value.

We rolled out the numbers. He says: "Was something promised to a community?" Well, nobody said: "Port Alberni, you're going to get $13,256,000.81." Nobody is going to say that. The decision-making for projects depends on who applied. The moneys aren't directed "to communities," meaning municipal governments; the money is spent outside municipal boundaries. They are spending on watersheds, a long way from any community, but most of the people who are working -- all the people -- live in some kind of a community. We heard from communities that they didn't want the money put into general revenue to be spent on schools and hospitals, so we promised to put it back into the forest land base, and that's what we've done.

The $235 million is in the non-land-based programs. They go to the value-added sector, workforce training, the woodlot program, the inventory program, the research program. All of those things -- with the exception of moneys that might go for research and development in the major universities -- are out in the regions, whether it's Abbotsford or Prince George or whatever.

I can't tell you about the distribution of it, but I can say that we announced the percentages of the budget that were for each region. No, there was no attempt to target specific communities and say, "Will you stand on the stage?" because community leaders were not on the platform. This is about industry and government announcing the accord that they had reached. So the community people who were speaking were whoever the press had gone to. They volunteered their comments. They're not cynical; they want to see it happen. We said that we've got to work on it. It's going to take some time to roll it out.

The government listened to the communities about the need to create more jobs in the sector because of the troubles the industry has had. We've recognized it; we've admitted where there are troubles. But to say that the industry is in a tailspin is absolutely wrong. There's actually a concerted growth. Exports are up. We're logging the same amount. There is change in the industry -- yes. The accord recognizes we need to have viable industry. There is going to be change. The fundamental promise to communities, if you will, is that we return the dollars, based on need somewhat.

The FRBC board makes the budget, and it's based a bit on demand and a bit on need and other factors. There are multiple objectives of FRBC. It is our hope that the regional investment strategies -- as they mature and are developed with public input, with community input -- will go to those jobs that create the best investment in the land base.

T. Nebbeling: A couple of words that the minister actually uses to describe (a) what I should be doing and (b) what is wrong with me really surprised me. I have an attitude, I hear now. Some people have said it before. I have never understood it, because my attitude has always been to have an open mind and, at the same time, not buy a load of goods that looks good on the top but under the surface contains a couple of apples that are not ready for consumption.

The minister also said: "You should take this at face value, and your attitude clearly shows that you really can't take this at face value." Well, let's talk about what we have taken at face value and where it got us. It was this minister who said, when FRBC was being raided -- or attempted to be raided, and what was first denied and then agreed was taken as a gift: "We don't really want it, but FRBC insists, so take the $450 million. Who are we, as a government, to say no?" Then when everything went sour, this minister stood up and said: "What are you guys talking about? Of course this is legal; of course we can do that. We are the government. That means we can do what we want to do."

When FRBC was introduced to British Columbia and the Premier stood on a little knoll with the leaders -- the CEOs -- of the industry, endorsing FRBC because that was going to be salvation for the workers and for the families behind the workers, it was all based on that statement that we as a province bought at face value: "Not one job will be lost because of our policies, because of our regulations, because of our legislation. Not one job will be lost. That's why we created FRBC." People working in the Clayoquot took on face value that that has to be the truth. We know what has happened with these people because they took it at face value, because of their CEOs standing behind the Premier. The message was: "Oh, we all endorse it, including the communities."

Face value has cost a lot of people a big price, and a lot of people are skeptical today. You can't blame them, because they took the government at face value, and they took the words at face value. They had an attitude that if the Premier of this province comes to us and he has the CEOs of the major companies standing with him and he has the mayors of the communities endorsing it, of course FRBC, at face value, is a plan that will work for them. That was the attitude of the people working in the Clayoquot. That was the attitude of the people working in the northwest, who are about to lose about 9,000 jobs unless FRBC is going to do what it was supposed to do. That also means saving jobs -- not just creating jobs, saving jobs. Face value is no longer a consideration in this province when it comes to announcements made by this government. People with an attitude of being skeptical is the consequence of the actions of this government.

Yes, if I have an attitude because I'm skeptical, well, so be it. Nevertheless, the fact remains that we have $235 million more spent by this government and announced on a day when the Premier of this province is seeking endorsement for a plan that the industry says is unattainable. Those are the forest industry representatives. These are the smaller. . . .

I will read excerpts of the statement by the industry representatives in a minute or two, but I am more interested in knowing another thing. The Premier said that there were no mayors there; there were just some CEOs, and they were just thrilled to be there. They all made statements -- "This is the 

[ Page 4951 ]

greatest thing since sliced bread" -- not unlike what happened when FRBC was announced. Everybody bought into it because of face value. Was the mayor of Port McNeill in Prince George? I would like to know that from the minister, because he said that there were no mayors.

Hon. D. Zirnhelt: I'm glad you finally asked a question.

The mayor of Port Alberni was in Prince George. The mayor of Port McNeill was there. There were a number of mayors invited to Prince George to be there for a meeting, for an early morning briefing, but they weren't on the stand when the announcement was made. That's the point.

The Premier made the announcement about FRBC the next day. It was the day after, so the $625 million was not put out there as an enticement to mayors to come to Prince George. There had been several meetings with the mayors and teleconferencing to bring them up to date on the progress of the jobs and timber accord discussion.

[7:15]

There are various levels of commitment, by the way. There are approvals in principle, which aren't promises. They just say: "You qualify, and if the money's there, we will fund it." So we've increased every program in every region, and we've more than met the target for expenditures. That's good news. We're quite happy that there's a large business plan this year. It will create in the neighbourhood of 9,000 person-years of employment, which are much needed out in the regions, and they're welcome. It's honest, on the part of mayors, to welcome the level of expenditure.

I've heard lots of mayors speak positively about the money coming back to the regions. We're pleased that they're there, standing up for their communities. They're there backing us as we tell Greenpeace that they should stay home in their own back yard, that they should leave people in British Columbia to decide on our forest policy here.

The commitment about jobs and the Clayoquot and so on. . . . It is a struggle to create employment. That member says they support the protected-areas strategy. They don't say what they would do to create jobs for displaced people. They don't have a clue. They suggest that we should take FRBC money and spend it in the northwest. Well, the northwest will get their share. But 9,000 jobs would take the whole budget of FRBC. Instead the money is being spent for bridge financing. There is money being spent in that area to keep people working, and they will get as much as FRBC can spend in that area. But there are other tools; all the tools that government has available are being used to try to stabilize employment.

There's a fundamental breakdown in the private sector up there. That's the problem. It is not government policy that is creating the problem. But if the member is suggesting that we should be subsidizing the banks with FRBC money, then let me just remember what his leader said when he was up there. His leader said they should take the money and give it to Repap so they could pay the creditors. Well, it turned out that of that $15 million made available from FRBC for loans, $11 million would have gone to the banks. That's how ridiculous the policy is that sometimes comes from the mouths of those on the other side -- ill thought out. They think these simple statements they make are great policy.

It's fine that they should stand up for the people; we're the ones who are delivering. We delivered in Golden, we stepped up to the table in the northwest, and we'll do it wherever we can. We will spend money in the communities as best we can. We won't employ everybody who wants a job, because there isn't enough money to go around. But we will dedicate three-quarters of the targeted $400 million a year to go into land-based permanent programs. So it isn't a job here, a job there; they're full-time jobs. It's the spirit of that that people are celebrating and supporting. Mayor after mayor is doing that. They understand. They're not cynical about the dollars coming back; they know that it's helping people in their communities.

T. Nebbeling: I see a repetition of the actions of the minister. Whenever I have seen the minister with his back kind of against the wall, he always seems to have a little sheet lying around that he can quickly refer to, and he just repeats the message to get away from that wall: "The members opposite don't have an answer. The members opposite are the friends of the banks. The members opposite this, the members opposite that. . . ." Every time the minister is uncomfortable because of the issue we're debating, that is his only weapon. He hopes he can get away from the issue we are debating. I find it very sad that the minister is trying to use the old tactics that were used during the election, that have tried to be used here in the House and that, let's face it, have been discredited to a large extent. He has one tool of giving an answer without having to answer what we are talking about, and that is, as I just said, his little spin sheet saying: "Oh, these members, they don't have an answer."

Well, I'm sorry; we do have answers. Believe me, the statement that you just made about the banks -- that in order to be saved, Repap needs the whole budget of FRBC, which is a billion dollars and some change right now, I believe -- is so utterly wrong and is so reflective of not understanding what's happening there.

You, as the minister, know that there is a proposal that does include FRBC money, bank money and union cooperation. You know it is there. It means that the banks are willing to come up with another $150 million on top of the $400 million or $500 million they are already owed on this business; they're willing to come in. The union has to come in and allow layoffs over a three-year period that most likely can be achieved through attrition or some early retirement. And FRBC could be a partner, with $150 million, to refurbish the Prince Rupert mill so that indeed, because of the refurbishing of that mill, that company can be back in the black over a three-year period.

It is not impossible to say we will participate in that three-pronged approach to save 9,000 jobs. It is possible to get that money back once that mill is back in the black. You are financing other projects right now. So there is a way out of the Repap situation. There is a way of saving 9,000 jobs.

Two weeks ago your deputy minister was in Terrace -- he's sitting next to you, so I'm not talking behind his back -- and your deputy minister, meeting with some people over there, was asked: "Why are you not coming to our rescue?" These were the people, workers. The answer was: "It's not my mandate to save jobs; my mandate is to create jobs." Why on 

[ Page 4952 ]

earth can we dare to talk like that when we know there is a way of saving a whole region from going into bankruptcy, into oblivion or into a status where nobody has a job? It is Terrace, Prince Rupert, Stewart, Houston, Hazelton and Smithers -- all these communities.

I'll bet you that the Premier didn't go through these communities last week to show some goodwill and some money. I'll bet you that the minister wasn't there last week to show some goodwill and some money. So don't tell me that this exercise of going around the province, first of all with $390 million of FRBC money under the jobs and timber accord, and a further $235 million out of FRBC just to play Santa Claus with -- because that's how it's beginning to look. . . . I think it's just not serving this province, and it's not serving the communities. It is just another PR tool to get some people to say, who otherwise may not: "This is a great deal, this jobs and timber accord." That is the point that I was trying to make.

So that is in response to what the minister just said about what we would do as the B.C. Liberals. We would not allow 9,000 jobs to go down the drain, 9,000 families. . . .

An Hon. Member: You haven't said anything.

T. Nebbeling: I've said it all to you. I've given you the scenario, and the banks have asked your government. . . .

Interjections.

The Chair: Hon. members. . . . Take it easy, everybody. Everybody just stay cool.

T. Nebbeling: Oh me, I am fine. I'm digesting my food. I'm in a good mood, Madam Chair, so don't worry about me.

The Chair: Excellent.

T. Nebbeling: Hopefully, the minister will keep his cool.

I will happily go into further debate with the minister when we come to the jobs that are no longer available in this province and how that matches the promises made by the Premier on his. . . . I was going to call it his tour de force, but it deserves a different name which I can't mention in this House. . . .

What I would like to ask the minister, then. . . . I believe you accompanied the Premier when he went to Quesnel. There was a reception at the municipal hall there, and during that reception there were speeches made. Did you or the Premier announce any FRBC funding for that town or that area, or projects that would be honoured?

Hon. D. Zirnhelt: The answer is no.

T. Nebbeling: The other point, before I go down the list. . . . There was talk about there being no mayors as part of the presentation in Prince George. We now know that the mayor of Port McNeill was invited to accompany the Premier to Prince George. I don't know if he was on the plane of the Premier or if he was on another plane, but he was on the invitation by the provincial government to come to Prince George. Did it bring Port McNeill into this package of $625 million? Is Port McNeill going to be seeing any money coming towards that area?

Hon. D. Zirnhelt: Instead of listening carefully, the member is trying to put words in my mouth. I said that mayors were invited. They were there for a breakfast briefing before. Actually, I said that there were no mayors asked to get up and speak at the event. Although, I'm sorry, I did misspeak myself a little bit: the mayor of Prince George, because it was in his town, actually welcomed us. That was it. I don't remember all his words. But no, we didn't deliver something to the city of Prince George at that time. There was no connection made to specific things for specific communities that we went to. I hope that allays your concern a little bit.

Just with respect to Repap, the simple assertion that you have a solution doesn't, I think, actually cut it. You said FRBC should be used to help keep 9,000 jobs. I am saying that FRBC was there to fund some projects but not to put money into a new business plan. We continue to work with the job protection commissioner to find a permanent solution.

The people up there know. When I was up there with officials from the ministry, we explained what we'd done with respect to stumpage, with respect to the code. The people we met up there who work there -- the creditors, the loggers and so on -- I think were genuinely appreciative of what we'd done and said so in a public meeting that you were at. They understand that the ball now is in the courts of the banks and that there does have to be investment capital. I think I heard you say that $150 million of FRBC dollars should go into the capital, but if you didn't say that, then I was mistaken.

T. Nebbeling: First of all, when I was talking about the mayors not being present in Prince George, it was because the minister didn't say that they hadn't spoken. The Premier said -- and Hansard will show that -- that there were no mayors on the platform. That's different. I don't know if there were mayors on the platform. I didn't say that they were speaking. The fact is that a number of lower mainland and upper Island mayors were invited to come with the Premier. To say that that was for a briefing. . . . I find that a little bit thick, because three weeks before the event these mayors attended a meeting under the auspices of the UBCM. There were about 30 mayors there, and they were given a briefing on what was happening with the jobs and timber accord and how FRBC was going to be channelled into achieving the goal. So the briefing had taken place. I dare to say that the mayors that were invited, like the mayor of Campbell River and the mayor of Port McNeill, were there to -- not through words but through being there -- kind of endorse the plan.

When I asked the minister if, when he was in Quesnel, he as the minister or the Premier indicated that funds would come to the area from FRBC for projects, he gave a very good answer. He stood up and said no. That's great. That's what I want to hear. Then I asked if the community of Port McNeill or that area is receiving any funds from FRBC out of this $625 million kitty. I got a different response. I get a response of: "No mayors spoke." I didn't say that they did. I get the response about Repap: our solution is simplistic, and it doesn't work. I get the response that there are 9,000 people, that FRBC is not supposed to be there for that, and that we will spend it on creating new opportunities.

[7:30]

[ Page 4953 ]

very ill before we jump in." That's this government's attitude when it comes to health care. I think that's great. I support that.

I can tell you that the patient called the northwest is very ill, close to being terminally ill. I think the only way we can save this patient is by doing something now. "No," says the minister, "we're not going to jump in; that's not our business." So we're going to let the patient die. Then, of course, all these patients -- the dead bodies -- will qualify for a resurrection attempt with government money through FRBC, because suddenly these are displaced forest workers, these are displaced millworkers. Suddenly they will comply with the rules and the regulations under which FRBC, according to the minister, can be spent. So he's basically saying: "Let it all go to hell, and then we'll come in and try to save it" -- at a higher cost, I can guarantee you, than by trying to become a partner in a plan today.

The plan is there. The banks have tried to sell it, and the responses so far have been no. I think there's still a chance to save the patient, but it has to be now. If we wait, the consequences to our social system and the social consequences to the people living in the northwest will be so much more horrendous and so much more expensive for this government -- not only from a financial perspective but also as a true statement of what this government is all about. It's like the deputy minister said: "It's not our business to save jobs; we're in the business of creating jobs." That is FRBC. I don't agree with that.

However, I'll come back to Port McNeill, because the minister did not answer the question of whether Port McNeill or the area around Port McNeill was getting anything out of the $625 million.

Hon. D. Zirnhelt: I really would like that member to maybe document some of the things he has said. I know of no such statement by the deputy minister.

What we said when we were in the northwest was that the government has done certain things. We've stepped up to the table. We have done things that were asked to be done that made sense, and the ball is now in the courts of the banks. They have to move. We are in discussions continuously.

I would remind the member, when he was crying doom around Golden, that the people in these communities understand that you have to have a viable business. What did the people in the northwest -- the unsecured creditors -- tell me? They understood that there had to be a viable business; there had to be a major restructuring going on.

These things take time. It's easy to sit on that side of the House and say: "Step in and fix it." I'd really like to know what he means by that. We have stepped in already; we have put things in place. We're very active. I would agree: if you can keep an operation alive, fine. You still have to deal with the debt. It's a horrendous debt for anybody to take on. The approach we always take is that if you can stop something from collapsing, that's always best. You can't always do that. But you can't always be the first in with the deep pocket, either. As I said, the banks effectively own it, and they have some responsibility as owners to help recreate the business forum that will give those people in the northwest some long-term security.

But I remind you that the Premier was in Golden just the other day to turn the sod for an LVL plant. Who would have thought it last December, when that side was crying doom and not being specific? We were there. These things take time. We move slowly and carefully, especially when we're dealing with taxpayers' dollars. We are going to be careful with the taxpayers' dollars.

But what I heard from that other side was that somehow FRBC was the solution today, and I've said that the statements in the past about FRBC being the solution were faulty. I've pointed it out. Their solution would have gone, essentially, to the banks: $11 million of the $15 million would have gone to the banks. Their leader said clearly: "Give the money to Repap, and let Repap pay the creditors." Who are the creditors? The banks are. What an inane statement! What an irresponsible statement! You won't find those kinds of statements coming from this side.

On the one hand, you pride yourselves as being free-enterprisers -- right? But the moment there's trouble, it's the government that's going to go in and save the jobs. You want to open up the purses of the government, use taxpayers' dollars to save the communities. Well, you can't just ride in like a white knight; it's not that easy. It's carefully. . . .

Interjection.

Hon. D. Zirnhelt: Another member over there is yattering about us creating the problem in northwest B.C. The government did not create the problem in northwest B.C. The people up there know that. It was not made easier by the Forest Practices Code and some higher logging costs, and we've essentially fixed that. Government is not the problem. There was bad management in the past, and there's pulp prices, and I submit that those are the problems. It has nothing to do with government policy.

But government policy is positioned to help where we can help. We will be careful. These things take some time. It's a ten times bigger problem than it was in Golden, but I just point to the fact that in Golden we found a solution. That company now is doing reasonably well and is creating 70 more jobs in a new investment, and government was there.

T. Nebbeling: See, I'm still waiting for answer on my question on the FRBC money. Out of the $625 million. . .

An Hon. Member: Ask a simple, straightforward question.

T. Nebbeling: . . .has any gone to Port McNeill or the area, or not? That was the question, and I will finish my reaction to the minister with that statement.

Hon. D. Zirnhelt: Point of order.

The Chair: Hon. member, take your seat.

Hon. D. Zirnhelt: I understand that a question was asked, and I would like to answer it before he drones on. Can I answer the question?

The Chair: Yes.

Hon. D. Zirnhelt: Was there any money from the $625 million for Port McNeill? We did not announce any in Port McNeill when I was there. Some of that money will be spent in Port McNeill. It will be spent in virtually all of the regions of the province. I've said that. But no, I didn't announce any specific projects when I was in Port McNeill.

[ Page 4954 ]

T. Nebbeling: Were there any projects approved in the Quesnel area? The minister said no, but maybe he wants to rethink that. Is Quesnel being excluded from any funding?

Hon. D. Zirnhelt: Let me get this straight. Was there any project approved in Quesnel? Not when we were up there. The day after we were in Quesnel, I was in Williams Lake. I said, in Williams Lake: here is the regional plan. You know, you'd have the answers to all of these questions if you'd read the press releases. That's why government puts out the press releases. The announcements are documented.

T. Nebbeling: I think we keep hitting on the problem of communication. The minister believes that I read all of his press releases. He sends about 900 of these things a year, I think. I'm very sorry; I don't read his press releases. If the minister would do what I think other governments do, traditionally. . . . That is, they inform the critic of a ministry about what they're doing, but not through a press release. I don't read them. I don't see them. If I don't know what you did, there's the reason. If I want to get involved with press releases, that's easy for me. I become a reporter. That's a different story.

Anyhow, to me it is clear that most of these communities that had the privilege of a visit by the Premier, the minister or another MLA had a little announcement in the paper that some funds were coming towards their community. Great for them. I'm not saying that it is not great that that is happening. It is the timing. It didn't happen four weeks ago. It didn't happen eight weeks ago. It didn't happen two months ago. It happened on the same weekend that the Premier did his tour de force through the province.

Okay, that was a quick question between the stuff I really want to talk about. We have spent some time on that. Did you have some questions? Okay, then I can go on.

Interjection.

T. Nebbeling: No, you don't have to heckle. We're going back to where we were before, and that is to the North Island. Because of the little blowup this afternoon with the member for Port Alberni, I got focused on the North Island. I certainly think that the North Island is a good example of the things that have gone wrong, that could have gone wrong and have gone wrong when it comes to jobs in British Columbia's forest industry.

We earlier identified that between March 1996 and March 1997, we lost about 3,400 jobs in the harvest sector of the forest industry. Can the minister tell me how many of these jobs were on the North Island?

Hon. D. Zirnhelt: No.

T. Nebbeling: When the minister thinks he can say something non-controversial, he has a quick response, and that's good, because that way we're going to go through the four binders that I have here for tonight -- and there's another six in my office. So far, I've only gone about four pages, so be ready. Can the minister tell me how he collects his data on the North Island on displaced forest workers that are going through his agencies seeking assistance either for being re-educated or for finding another job opportunity?

Hon. D. Zirnhelt: Well, as it turns out, we have a job commissioner on the Island. He reports monthly, and he reports figures. We'd be happy to give you what figures we have.

T. Nebbeling: I believe this job commissioner operates out of Nanaimo?

Hon. D. Zirnhelt: Yes.

T. Nebbeling: I'm asking because I wanted to make sure we were talking about the same individual. I believe this job commissioner was appointed. . . . The forest job commissioner, I believe he is. Yeah? I believe he was appointed after we adopted Bill 12, which gave the government the authority to create this job agency. Can the minister tell me, since Bill 12 was, I think, given royal assent on July 27 last year, what this job commissioner has done in setting up an infrastructure to indeed assist displaced forest workers and what kind of operation he is running?

Hon. D. Zirnhelt: First of all, the jobs commissioner was put in there after the land use plan, not after the legislation creating the forest worker agency. The position was established in June 1994, and his primary job is to work with FRBC, companies, unions, first nations people and communities to secure stable jobs. In October of '96, the forest jobs commissioner assumed additional responsibilities with FRBC's forest worker transition program, and then, at that point, the costs of running it were split between FRBC and the ministry. So his job is to assist people, refer people and try to line them up with jobs. He has made an attempt to set up a registry, and out of some of that experience we expect to be able to build the forest worker agency.

[7:45]

Hon. D. Zirnhelt: Yes, the forest jobs commissioner was created in June 1994, and the legislation that provided for the creation of the forest worker agency was last year. And I said that we built on his experience of referring people for training and trying to place forest workers; we built on that experience as we conducted discussions around the forest worker employment agency.

T. Nebbeling: My colleague from Cariboo North wants to ask some questions now, so after he's finished I would like to come back to this particular agency and the job and go into a bit further detail about where we're going with that one.

J. Wilson: I'm going to dive off here perhaps in a little different direction and go back to where I was earlier today, with regard to the job creation program. We got into some of the small business forestry enterprise program and its ability to create 3,900 new jobs. We covered off 1,500 jobs, and I would like to pick up there and look at the remainder of the job creation within that program. Could the minister give me a breakdown of where he sees these jobs coming in or originating?

Hon. D. Zirnhelt: We expect the 5,000 jobs to be made up from the small business sector by some kind of reapportionment within the small business program to the value-added program. We expect the diversion of some 500 million to 700 million board feet of sawn lumber from the majors to the remanufacturers. And if it's made available, the remanufacturers, by taking the fibre, will then create the jobs.

[ Page 4955 ]

J. Wilson: I realize there are a lot of ways of doing value-added; there are dozens of them. I don't know if the minister has a list of all these. If he does, would he be willing to lay out. . . ? We can develop them as time goes on. Some have probably never been thought of at this point. But basically we must have a number to start with and how they. . . . We have plywood and all these things, and they are all different in value-added.

Hon. D. Zirnhelt: The value-added, as you know, does include everything from chopsticks to wooden boxes -- whatever. There's way too long a list. I don't think anybody's collected the list anywhere, but there may be one. I do know that we had an independent study done on the demand and what might be an appropriate amount of fibre that goes to the remanufacturing industry, based on, I guess, surveys of existing operations. They said that one billion to 1.3 billion cubic board feet of sawn lumber is what the sector demands now. I'd have to say it's latent demand. I mean, it can become manifest as people come forward. So over the life of the accord, we expect this 18 percent and 16 percent -- coast and interior -- of sawn lumber to be made available, then the value-added people will come forward. As you correctly pointed out, there may be products we haven't even thought of.

J. Wilson: When the minister says we are going to put 16 percent of our dimensional manufactured wood onto the value-added market, does that not narrow the spectrum of value-added plants that can use this wood? Does it not narrow it considerably -- the number of ways it can be used?

Hon. D. Zirnhelt: Under the terms of the accord, it's up to the remanufacturer and the major licensee to determine what form the fibre would take and what type of fibre is available. It would be supply and demand trying to be matched up there.

In addition to that, there are existing log sales and log flows in the small business program. Every time we advertise a value-added sale, people can come forward and become new entrants into the business. So I expect that new entrants and established operators will be ready to move forward now that this is available.

But if somebody wants 2-by-12 cedar to make mantle pieces out of and the majors are only cutting fir, you can't expect them to produce cedar. To match it up is quite a job. That's one of the reasons why we will put regional facilitators in place. That's an idea that came from industry, and we thought it was a good idea. It's there to help match up. If we're going to get the jobs, there's going to have to be a lot of imagination, a lot of entrepreneurship shown to take up that tremendous volume of fibre.

J. Wilson: Perhaps I don't quite understand this accord. It says that the 16 percent will be dimensional lumber. It doesn't mention that there will be an additional supply of fibre other than the sawn lumber that will go over to the value-added plan.

In order to acquire the additional fibre, whether it be peeler logs or some particular species of wood, the only way they would be able to attain it at this time is through a small business sale or through an allotment from the unused portion of the small business program. Is that what will happen? Or will there be an exchange of wood from, say, a major licensee to the value-added plant without remanufacturing it? That plant may need that fibre in a different form. They may want to go to a major licensee and say: "Look, we don't want any dimensional lumber in this operation. We need a special type of logs." Is this a way around it?

Hon. D. Zirnhelt: The perfect example is log-house building. The majors now supply and will get credit for supplying whole logs. Nothing stops a major licensee from making up their quota of 16 percent and 18 percent respectively by supplying round logs. Some of them supply round logs now, and some of them trade. There are all kinds of arrangements. So nothing stops them from doing that. We don't, under the accord, require them to supply round logs. We agree that it would be sawn fibre, but nothing stops them from providing round logs.

The second page of the four-page handout on the jobs and timber accord explains, under "Small Business Reallocation," that the ministry will allocate substantially more wood within the small business forest enterprise program to small secondary-manufacture businesses. So I think that's an answer to part of your question.

The other part of the answer, though, is that under the accord the industry will retain its status quo practices regarding the disposition of logs to the sector. So they can't roll back the amount of logs that are there; they have to keep the present practices in place.

J. Wilson: If we look at the value-added sector here, it is a fairly labour-intensive part of the industry. At times it is questionable as to whether there's a profit margin there or not. At this point, what is in place to facilitate the construction or the development of facilities so that this value-added program can get off the ground and get started?

Hon. D. Zirnhelt: I would like to remind the member of my earlier comment that there isn't a blueprint for every detail here. We have to work on implementation.

You asked what, at this point, is in place to set up facilities for value-added programs. Well, I said that we will. We have to describe the jobs and hire the people to do the facilitation. So that will be part of the infrastructure; there will be somebody there to help the market work. But at this point there is no blueprint as to exactly what plants are going to produce where. The market and the entrepreneurs out there will decide that. "Since there's going to be this timber available, I'm going to go to a major and ask for a share of it" -- so there will be quite a bit of competition, I'm sure.

We don't intend to interfere, but we will facilitate business relations and business agreements between the value-added sector and the majors.

J. Wilson: There is going to have to be a very major capital investment to get this thing up and going. At this point, who if any players out there have made their intentions known that they are interested in getting into this program?

Hon. D. Zirnhelt: We are in discussions with the small business remanufacturers, and right now we're talking about fibre flows. They said the thing that's constraining their business is a secure source of fibre. So we've now identified two sources of fibre that will allow them to grow. There is a loan program under FRBC that they can avail themselves of, and many of them have successfully gone to the banks.

As for businesses sitting waiting for this to happen, there may be a list out there. I could probably look around and try 

[ Page 4956 ]

to find some. There are people coming through the door all the time saying: "If I had fibre, this is what I would create." So my response is that yes, there are people out there, including existing operators that would like to expand.

[8:00]

Hon. D. Zirnhelt: Yes, we expect that kind of thing will make up a major part. But it's everything from laminating to. . . . You know, there's just no end to the kinds of projects that we expect to be produced out there, but there will be lots of resawing and assembling into windows, doors, that kind of thing.

J. Wilson: It leaves a couple of questions in my mind. If you set up an operation like this, has the ministry considered the economic aspect of that type of value-added. . . ? Have they looked into it in any detail, other than making a statement saying: "Yes, here's some fibre. You can go and resaw this"? Have you done any economic analysis with regard to this type of operation to find out the viability of such a program?

Hon. D. Zirnhelt: We could look, but we're not in the business of doing viability studies for individual operations. But I think it's been known that the industry has grown as fibre has been made available to them. There certainly is lots of demand. One would assume, then, that the entrepreneurs have gone through the viability state, or they wouldn't apply for wood, or they wouldn't apply for a loan, or they wouldn't be up there trying to make a business arrangement. The viability of individual businesses. . . . We allow that to happen. We have some background information on the value-added industry. But, as I say, the study suggested that there was demand out there. The assumption is that there are viable businesses to be had and to be developed.

J. Wilson: The business of resawing lumber at times can be a rather questionable operation. There are ways to make it viable, but it sort of has a way of stifling the entrepreneurship and the free enterprise system.

Now, if you wish to set up one of these little value-added plants and take this dimensional lumber and resaw it, you end up with a bit of a problem, because for every thousand board feet of dimensional lumber that you purchase and resaw, you end up with a small portion of that which is high-quality wood, which brings a premium price. The rest of it will go as a lower-grade product, and the market there is not really lucrative.

The main market for this type of product is in the United States. We do have some local market, and we do have some interprovincial trade. There is some market there, but the majority of this market lies in the United States. In order to ship this, you have no problem marketing your quality wood that you've taken out of it. But what remains has to be marketed, and there are very few dollars in it.

If you are in a situation where you do not have a quota in order to market your wood, your product, you won't go into business. What has been allotted for this type of enterprise starting up and having access to quota, so that they can ship across the line?

Hon. D. Zirnhelt: There is market in the United States, but the best market -- because that's limited -- is in Japan and Europe. The federal government regulates the quota process. We don't have a quota to allocate. So if they need to export, they'll have to either have quota now, purchase it, use somebody else's quota, find an alternative market in the U.S. or pay the penalty of the. . . . But we don't control the trade agreements, and we don't control the quota.

J. Wilson: I realize that we don't have a lot of control over the quota, but we do have a portion of quota that is sitting there, I believe. This is my understanding. There is quota there that could possibly be used in a situation like this.

We all know that the Japanese economy is not building; it is coming down. Our Japanese markets are already in trouble; they're already under severe pressure. We have dimensional products being produced in the interior, and they are under pressure in that Japanese market. These are specialty products. We can't depend on that overseas market to get rid of all of this lumber that we produce through these value-added mills.

So I will put my question again to the minister: how much quota in this province will be made available to remanufacture plants, so that they can get up, get going and be independent, not committed to someone out there that has control of them?

Hon. D. Zirnhelt: The wood was there and being exported before. So it was going somewhere before. So there's existing. . . . There's not a whole lot more wood being produced. It was in 2-by-12s, and now it's 1-by-2s or something. They're smaller. But they all add up, minus the sawdust, to about the same volume. So there's about the same amount produced and the same amount exported. Those who have operations. . . . If you remanufacture it, you still have the same volume. I mean, I don't know. . . . We're not manufacturing more wood by remanufacturing. In fact, there's a little less, because there's sawdust taken out of it.

J. Wilson: I don't know if the minister has ever been through one of these mills and actually witnessed what goes on.

Hon. D. Zirnhelt: Maybe a few more than you have, John.

J. Wilson: I have been there, and I've seen it.

Interjection.

Hon. D. Zirnhelt: You're sent to test me, all of you. You're enjoying it.

J. Wilson: Hon. Chair, I assume that I've got the minister's attention here.

There is a little more than just the sawdust that goes out the back door in these mills. There are a lot of short pieces of wood. They get chipped, whatever. They go back into the system. If you end up purchasing, say, a million board feet of dimensional lumber and pumping it through a value-added mill, you will not come out with just the sawdust that's less than what you purchased. It will be a considerable amount less. All of that rot gets sawed out of them. There's discoloration in it. There's a lot of waste in one of these mills, which means that your profit margin is pretty slim.

[ Page 4957 ]

Unless you have quota, you aren't going to be operating. You don't make $100 for a thousand board feet in this type of operation; it's virtually impossible. We lost quite a few jobs in this industry last year. They shut down because they were short a quota, and they couldn't get quota. These were plants that were up and going. They were doing okay without that quota in place.

That brings us in a bit of a circle here. If I'm an entrepreneur and I wish to get into this business because now I've got 16 percent of the dimensional lumber produced to allow me to operate on, that's great. But what am I going to be saddled with in order to operate? Can the minister tell me?

Hon. D. Zirnhelt: Under the accord, the obligation on the major licensees is to deliver up the wood. If they're exporting it now, they may have to say: "Well, when you remanufacture it, you can export it on our quota." There's any number of arrangements that can be made. You seem to be getting at some of the waste wood and lower-value products. It's my understanding that the Americans can take all kinds of the lower-value products. There are any number of combinations of markets and products that people can make. We expect the marketplace to assist people to do that. If somebody's got an export quota for something, or they've got a contract to Japan -- as I've heard about many businesses -- they can take as much as can be supplied to them. What the problem appears to be, in all the studies, is that what's stopping industry is the availability of basic fibre.

J. Wilson: I think there may be a couple of other things stopping the industry. There is a way of doing it, and the only way at present, that I'm aware of, is if we work under the umbrella of a major licensee that has sufficient quota to take care of that 16 percent that they will move over to value-added. Now, this is not. . . . This makes the value-added mill or the value-added facility totally dependent on that major licensee. It's good for the major licensee, because it extends their quota; it stretches it. The more you can stretch it, the more you can produce. So that's good in that sense. But where it falls down is that it ties the value-added producer up, to where he has to make a commitment to this producer or that producer for his supply of wood. Am I correct here, Mr. Minister? Or am I way off base?

Hon. D. Zirnhelt: I have, I think, an imperfect understanding of your analysis and your question. To the extent that I understand it, you have suggested that there is a dependent relationship between some of the value-added people and the majors, and to some extent that is correct. Yes, major licensees can own up to 49 percent of remanufacturing facilities and qualify for the value-added program, but we expect there will be success to the extent that the value-added manufacturers can find long-term relationships with the major licensees. They'll be able to go to the bank with these lumber supply agreements; they'll be able to count on delivering a market.

Supply and markets are probably the two biggest problems. We're trying to deal with the supply side of it. With respect to the markets, there is always a bit of quota held back for new entrants. There are people going out of business, as you pointed out, and that quota is forfeited. There are people who undersell and move into different markets -- that's the American quota -- and that's forfeited. There is always a small amount, but it is just a small amount. It's not enough for the whole of the industry -- of the U.S. quota that's held back by the federal government. People can apply, go through the process and perhaps qualify to get some of that quota.

[8:15]

Hon. D. Zirnhelt: There are two ways. They can apply to the B.C. committee that advises, that has been established -- an industry-B.C. government committee -- and that can make recommendations to Ottawa, or they can apply directly to Ottawa.

J. Wilson: It's nice to see that the quota isn't in the hands of the IWA, anyway. I guess that's one break we get.

The minister mentioned a share of 49 percent that the major licensees could consume of the value-added, remanufactured portion. Can he expound on this a little bit as to how much of that is now under the control of major licensees or how much is available?

Hon. D. Zirnhelt: I'm not aware of any studies as to what percentage of value-added companies are owned by the majors; those are private business arrangements. We would only know if someone has applied for a small business sale. And they would have to disclose the ownership, because the majors could only own up to 49 percent. But I don't think anybody knows how many there are, and I only mentioned it because it does point out the fact that there are long-term relationships between remanufacturers and majors, where the control is in the hands of the remanufacturers, but they do have access to business relationships with the major licensees. And because the major licensees are minor shareholders, not majority shareholders, they can apply for 16.1 sales to augment their log flow.

J. Wilson: We don't know what percentage today of this value-added portion, this type of value-added, is controlled at the present time? We don't know that figure? And if we don't know it, how are we going to know when we reach the 49 percent?

Hon. D. Zirnhelt: The reference to 49 percent was simply to the ownership of companies. A company can be owned 49 percent by a major licence holder and still qualify, because 51 percent is owned by somebody else -- it is dominated by value-added. Therefore they qualify for the 16.1 sales. Major licensees on their own don't qualify. What portion of the small business program or what portion of firms, we don't know.

J. Wilson: If it works on a share basis, it could very well be 100 percent that is controlled at this point -- at 49 percent. This brings in another question I had. In order to get established here, we are going to develop a quota system within a quota system within the small business program, because, if I understand the minister right, he says you can take your commitment from your supplier to the bank and you can bank on it. That becomes a quota. Is that what we see happening?

Hon. D. Zirnhelt: No, a fibre supply agreement is a contract, and it would presumably have some value as bankable, or against which the banks would loan. We're not looking at a quota system within a quota, that I'm aware of. I just don't follow that.

J. Wilson: It's probably a poor way to word this. It wouldn't be a quota, but it would be a bit. . . . In order to 

[ Page 4958 ]

operate, you have to have an agreement in place. An agreement may cost you some money in order to get that agreement. We won't label it "quota," then. It works the same way: once you get that agreement in your hands, it's a signed agreement, and it becomes valuable. What price will be extracted in order for the 51 percent shareholder in this operation to get that agreement and have the guarantee of that agreement? I mean, not anyone can come along and. . . .

We'll say that you end up with a facility that's constructed, it works for a couple of years, and then the partners disagree. Another value-added mill isn't going to start up across the street or down the road somewhere and come in and pick up that piece of paper, because there has to be security to go with that, and it's going to have to be reasonably long-term security.

The way I look at it, that becomes a quota. It's not a quota really, as the term implies, but it is security and is worth something. Now, is there going to be something here that will. . . ? Are there going to be certain requirements on the company or individual that wants to get into this value-added business? Is he going to have to make commitments to get his fibre supply?

Hon. D. Zirnhelt: I would imagine there won't be any contracts for fibre purchase unless the value-added person agrees to take it and pay for it. There might be a schedule or whatever and a time frame or something, but there will have to be agreements entered into. We're not in a position to put preconditions on those. There is nothing more than is in the accord, saying that the majors agree to make 16 percent of the sawn fibre available. We expect that the market will decide what the price is, but they have to make them available at world market prices.

J. Wilson: I tend to be a bit skeptical, and maybe I shouldn't be, but my understanding is that the value-added sector that is going to create these jobs comes under the control of a board set up by the union to monitor -- or it's controlled in that way -- where this money goes. Are they not in charge of. . . ?

Hon. D. Zirnhelt: No, there's no board whatsoever that I'm aware of. We haven't agreed to any board. We have agreed that there would be a facilitator in place to help match up buyers and sellers, and that's all. I said that's an idea that came forward from industry as a mechanism to try and ensure that there was somebody dedicated to finding the small operators who need to know where to go and to try to facilitate the market working there between buyers and sellers.

J. Wilson: Yes, I understand that. It's something where, if the thing is going to work at all, you have to have someone coordinating the product with the market. In a lot of cases, value-added operators are not big operators, and they don't have the personnel to run all over North America to find markets, whereas someone who's set up could facilitate this. They have the demand, they have the supply, and it would work quite well.

I guess the problem that I see arising is that in most value-added, we are working with something very labour-intensive. There is very little margin in it. As a rule, we don't have a high level of wage, here. If anything should enter the picture that will bring those wages up to where they would be in line with, say, someone working in a primary facility on a production line, then you're not going to have the margin in the industry so it will be able to survive at this point. Has the ministry considered these things? These are some of the economic considerations I was referring to earlier.

Hon. D. Zirnhelt: When we sat down with the remanufacturers, they told us what their primary problem was, and that was fibre. They wanted access to fibre, and the rest -- leave it to them. They do have problems sometimes getting financing, so there's a loan program in place. As they identify problems, we set about to try to solve them for them, but still, they will have to go out and ultimately make their business deals, and the government doesn't have a direct role in the business arrangements.

Yes, some of them might be marginal, and others are probably doing fine. There are going to be business failures in value-added as people find their way. There are going to be market niches that open up and market niches that close. There is going to be imperfect ability of people to get into those markets, but FRBC will be helping the remanufacturers organizations to do the marketing so that they know more about the market.

If the value-added industry says that marketing, production costs, production methodologies, equipment or whatever is a problem, there is a resource out there -- the value-added program of FRBC -- that will speak to the priorities of the industry. When they come to us, we take their highest-priority problems and deal with them. They told us it was fibre, so we're making substantial amounts of fibre available to them.

J. Wilson: That sounds fair to me. It makes some sense.

At what point in the next time frame here, the next year or whatever, will that portion of the cut that is now uncut have to be harvested? At what point is that going to come into the market? I don't know the percentage exactly, but I know there is a considerable amount out there right now.

Hon. D. Zirnhelt: The commitment is by the year 2001. That's kind of the time frame. Just to give you some idea, in Prince George we've advertised 900,000 cubic metres of the undercut. We've awarded a licence in Port McNeill. There has already been one more advertised, so there will probably two, or one about to be advertised. There's going to be quite a bit of this coming up. The small business people are working on it right now to make it available, so by the end of the year a substantial portion of the undercut will be made available and certainly all of it within two to three years.

J. Wilson: Then we're not looking at that undercut being utilized each year as we go along. You're going to phase this in. It's not as it says in the document here, but you're going to phase this in over the next three years. Is that what I understand you to say?

[8:30]

We undertook as government, under the accord, to deliver the undercut both for the major licensees and here. As 

[ Page 4959 ]

a result, we've got a challenge ahead of us, and that's one of the goals we've set for the ministry -- to get this out, as much as we can, this year and hopefully all of it by the end of three years.

J. Wilson: I realize that we don't do things overnight, and it takes time to get these things up, approved and on the road. A year or a year and a half is certainly very reasonable, and we're moving right along there.

When this cut comes in. . . . We can't predict this 100 percent, but it would appear to me that we have a backlog at the present, which has been building up for more than one year. If we take that plus what will be built up in the current year, are we not looking at a considerable portion of fibre to hit that market two years down the road?

Hon. D. Zirnhelt: Across the province there's about two million metres historically undercut, and that's on a one-time-only basis. Then there's about one million metres in the small business program that's undercut on an annual basis. So there's two million coming on on a one-time-only basis, there will be the million that's there as long as there's the AAC, and then we will be phasing in the 16 percent and 18 percent sawn and fibre for the remanners. There will be a kick-start initially. There is more fibre available to get these up and running. The majors will then have to move out of some of their traditional markets and make it available for remanners.

How smoothly that will go is up for anybody to guess, but I expect that as we start with initial high volumes for the small business program and have that taper off to the annual undercut, we are progressively adding from a reapportionment within the small business program from other categories into the 16.1 -- and the majors are making it available. The fact remains that whether the supply goes in bumps and waves doesn't matter. In the end the average will be considerably greater -- at least 70 percent more.

J. Wilson: If we take three million cubic metres, what percentage is that over the total cut?

[E. Walsh in the chair.]

Hon. D. Zirnhelt: Just for information, last year, in 1996-97, there was no undercut in the small business program. We actually have moved in the space of a year to sell the full amount. There is the accumulated undercut that will be available on a one-time-only basis. I wasn't sure where your 300 figure came from.

J. Wilson: It was three million cubic metres. I just wonder how that would fit into our annual cut at present if you put that in and worked it out as a percentage.

Hon. D. Zirnhelt: That three million is compared to a 70 million cut overall. In the small business program there's 9.3 million in total. So a three million figure is about one-third more that's available in the short term.

J. Wilson: So the total volume on this three million is going to be something like 4 percent of the total production of the province. Is that correct?

Hon. D. Zirnhelt: The backlog is about one-seventieth, but the small business program as a whole is about 15 percent of the overall cut in the province -- that's the 9.3 million. So 9.3 million of 70 million should be about 13 to 14 percent.

J. Wilson: It seems like we started into this. . . . Things may not go according to Hoyle. There could be some glitches in the program. Has any consideration gone into the fact that if the value-added portion doesn't come on stream as planned. . . ? As we're harvesting the additional fibre, we have to do something with it. In order to market it. . . . It won't go to a value-added program because it may not be up and running at that point. That means it goes into the marketplace, which for the most part is going to have a tariff put on it. Have we considered the cost back to the industry if this should happen? If you add the tariff at $100 a thousand board feet on that 13 percent, at present that cost alone with the undercut is roughly around $7 a thousand. . . . I believe that's what it's costing right now because of the tariff. So if you add 13 percent onto that, have you worked out a cost figure that could be there to industry?

Hon. D. Zirnhelt: The 13 percent is simply the amount of the logs, of the total allowable annual cut that's available to the small business program. Some of that small business program goes through the majors. They buy it, put it into their own stream of activity. Some of it is exported to the U.S., and some of it is exported to Japan. I don't have here the amount of the remanufactured products that get exported to various places, but we do know that if there is a growth of remanufactured products, either they have to substitute for products going into the States at present or they will find other markets.

J. Wilson: I guess what I'm trying to get at here is that whether it's small business wood or whatever designation you put on it, it ends up going into a system that's being sawed by the major licensees for the most part. Some of it may go here and there, but most of that small business wood will end up in the major licensees' yards as dimensional lumber. That in turn has to be shipped. They can't sit on an inventory, hoping that a year down the road they're going to sell it locally to a value-added plan. They have to ship that wood. They can't sit on that inventory. If you take your small business allotment and put it into the total picture, it would appear to me that it is not going to be just a few cents change; it is going to be a few dollars in additional cost that will be placed on the shoulders of industry.

Hon. D. Zirnhelt: I really don't follow. I'm sorry, I don't follow.

J. Wilson: Okay, I'll try and paint a very simple picture here. If I ship 100 carloads a month across the line, I'm not cutting my maximum cut. I'm 10 percent under. However, I'm only paying $7 a thousand board feet penalty on the wood I ship at the end of the year. That's what it'll add up to. Sure, we've got a little leeway in there. We can back off for a few months or take it into the next year. But there is a penalty for all of the wood that you overproduce. If we add a larger percentage into the system, which may not be a huge percentage -- it may be 4 percent or it may be 8 percent more wood that has to go on the market -- that means the wood that I have to ship across the line is going to increase. What will be the additional cost to the industry if this should happen?

Hon. D. Zirnhelt: Well, we expect the undercut will not come in in one day; it will be phased in. So it will be brought in. But I think you assume that most of the additional production will go to the United States, and that can't happen, because there are limits -- unless they can pay a penalty. So we expect people to find other markets. They'll have to grow in other markets. I mean, there's no guarantee that there are 

[ Page 4960 ]

purchasers out there, but we take what the remanners say, which is that if they could get more solid fibre, they could find the markets.

J. Wilson: I understand what the minister is saying, but to put in a system that, to me, is basically inflexible. . . . In the next two years, we are going to put the majority of that undercut on the market. We don't know whether or not we will have enough value-added plants up and running at that point; I really doubt it. I think it's going to take more than that; it may take three years to do it. That means we are going to end up with a short-term glut on the market that is going to hurt, and it's going to hurt big-time.

The point that I'm trying to make is that it would appear that when you did the homework, or whoever -- not you, Mr. Minister, but the people who did the homework in this deal. . . . They may not have taken this into account so that that undercut should be flexible and not have to force a harvest on it until we get those value-added plants up and running. This is the point that I've been driving at here. Is this going to be considered? Or has it been considered at this point?

Hon. D. Zirnhelt: We believe there is additional capacity out there for remanufacturing. When we bid a sale in Campbell River, there were 26 applicants, all of whom thought they could sell the fibre, and there are currently some plants that are down because they can't get fibre. So hopefully the marketplace will work, so those that need fibre will be able to pay the price to get it. I expect that any of these sales will be actively bid.

[8:45]

I was just wondering if the minister could give some indication of how some of the small producers could actually get more lumber quotas or any kind of softwood lumber quotas that go into the United States, whether there's a way for any new producers that want to get into the business or whether some of the producers that are there now can increase their access -- or what the means of doing some of this is.

Hon. D. Zirnhelt: Because there are limits going into the United States, people would be advised to try to find an alternative market. But having said that, I think, as you know, they can apply the support of the British Columbia advisory committee, made up of government and industry, or they can apply directly to the federal government.

Every year there are people going out of business and there is quota becoming available. Right now most of the remanufacturers have some quota; some of them feel they don't have enough. There will be some ebb and flow of quotas across Canada, but I'm sure the Canadian government will hold us to approximately the same share of the quota that we have now. So if there is some major licensee that has quota now and they happen to be in a timber supply area that, for example, is having its cut reduced, quota may become available there, because as we know, we are shrinking the cut in some areas and raising it in other areas, and all over we expect there to be a greater flow of fibre.

We expect people to explore different markets. They would be advised to find markets other than the United States unless they currently have quota, have a reasonable expectation that if they apply to the federal government, they can get it, or can make an arrangement with a major who already has some quota. Because if we're taking the 16 percent to 18 percent that's currently being exported somewhere -- some of it to the United States -- and if it goes through a reman now, there is still quota available -- or it might be available. Maybe that will be part of the agreement. As the majors have to supply their 16 and 18 percent of sawn fibre to the remanners, they may provide quota along with it. It may be mutually advantageous for them to do so.

B. Barisoff: Maybe the hon. minister could explain to me how a small producer. . . . If a major gives up some of that quota, is that advertised somewhere? Is there a way that a small producer could find out whether there is quota available? How would he find out where he could get access to this, other than by writing to the federal government?

Hon. D. Zirnhelt: We're not aware of any system, but it seems that the mechanism that has developed is through the wholesalers. They seem to know where the quota is being fulfilled, where it isn't being fulfilled and who's trying to market. It appears that there is a market developing there -- or at least a matching of people with quota to those who want it.

B. Barisoff: Could the hon. minister indicate to the House whether there are any timber licences that have not been given out? I know that I've had some complaints from people who have timber licences sitting there waiting. They feel they have the availability to create work, yet they can't seem to get final approval on their timber licences. Could you indicate whether there are any and how many there might be?

Hon. D. Zirnhelt: There are a number that are scheduled for announcement in the next few days. I understand there are more coming for approval. We're aware of them, and I approve them as fast as I can. As long as things are ready, as long as it looks like we've got a good decision and we can make it and make an announcement, we'll make them as soon as we can.

B. Barisoff: Could the minister indicate to me how many licences are going to be approved in the next week, two weeks, three weeks or whatever it might be?

Hon. D. Zirnhelt: I don't have that number with me. I can let you know.

B. Barisoff: That's probably the extent of my questions. While I have the floor at this time, I'd just like to thank the minister for the amount of time that we have spent on a couple of small producers in Okanagan-Boundary that his ministry has helped me with. We've been trying to deal with this softwood lumber quota. I know it's a nightmare, but I would maybe like some indication from the minister whether there's a possibility of some type of overhaul to that system, where small producers in the interior of British Columbia could have either a better access or a better means of getting information on what takes place.

I've got some new people who want to get involved in the system, and I think the problem still lies with. . . . It's not the access to timber as much as it is the quota. Being that we're right next to the United States, which is our biggest trading partner, that's probably where most of this lumber can go. 

[ Page 4961 ]

Some of it happens to be dry timber -- and I've talked to the minister about it -- that the big forest companies actually push up in a pile and burn. It seems unfathomable to me that we would be burning timber or dry logs that we could actually utilize. I was just hoping that maybe the minister could indicate whether there is any possibility of looking at some better system of allowing some of these people access to that American market, or at least access to getting it done.

Hon. D. Zirnhelt: I think there are two parts to your question. One is whether it would be a revamping of the system. The system hasn't been there long enough to really settle down, and it's going through some adjustments. As to whether the federal government would entertain revamping the system, I don't know. I don't think we know enough about it yet. But I do have a bit of a background around the B.C. Softwood Lumber Advisory Committee, and I think I'll send that to you for information.

With respect to the dry logs that are being pushed up and burned, companies are assessed penalties for waste. If you know of something, please let me know, because we don't want to waste any fibre. In the region you come from, and in all regions, it seems there is lots of demand for it. People seem to think they can process and market product, so there certainly shouldn't be any burning. I hope that the Forest Service finds out if it is good saw material. If it's rotten or whatever, perhaps it would be burned, but if there is material out there, we've got to find a way to get it to people who could use it. It would surprise me, with the economics of the industry, that if anybody has it, they would burn it when there's a potential sale for it.

P. Reitsma: Before I proceed, a bit of change of venue. Is the minister able to deal with some of the learning centres coming under FRBC? Or will that be done when the officials are there?

Hon. D. Zirnhelt: I think we should wait until the FRBC officials are here, because they'll have the details.

R. Coleman: There's a number of questions I'd like to canvass with the minister tonight. The first one is that. . . . I'm referring to some reports from the Council of Forest Industries and some other reports, also to some stuff from Forest Renewal B.C. and some reports from the ministry itself. The first one comes from a Council of Forest Industries report that outlines that in B.C. the forest industry counted for 97,500 direct jobs and a further 195,000 indirect jobs in 1995. The forest industry is obviously a major source of livelihood affecting something like 292,000 British Columbians, which in 1995 was up 1.6 percent over 1994 and represented 18 percent of the total provincial labour force. Could the minister tell me what the status of those jobs was in 1996 -- increase or decrease -- and in 1997, if he has the statistics, and what percentage of the total provincial labour force the forest sector now takes up?

Hon. D. Zirnhelt: We had an extensive discussion about jobs. You're simply asking for information. You're quoting from something and quoting percentages. I have no idea what your question was.

R. Coleman: Well, then I'll try and be more specific with my question. In 1995 the B.C. forest industry accounted for 97,000 direct jobs. How many direct jobs did it account for in 1996?

Hon. D. Zirnhelt: The figures that we're using for the baseline of the jobs are from the survey of employment payroll hours. Pick them up. In the month of March 1997 there were 85,038. I suspect it uses different facts than COFI uses. My guess is that COFI used Price Waterhouse figures, which are a different set. We had an extensive debate here, but let me just say that when we agreed with industry what the baseline would be, what would we use as the basis. . . . Those unfortunately don't include self-employed people; for example, logging-truck drivers aren't in that. So we've agreed that there was a base in March 1996 of 86,184; and in March of this year, just for reference purposes, there were 85,000 -- there were somewhat less. But it is up and down; it varies through the year. So we will use the annual averages that come out from the survey of employment payroll hours. That's the one we're going to use for the purposes of measuring the success of the accord. But there are various sets of figures out there. So there is no one official figure used by the ministry. We put out various statistics, so you can get them on the web site and so on. It's more indicative of the size of the industry in the province, and we say 80,000 to 100,000 jobs plus indirect and induced jobs are significant. It's a major employer.

R. Coleman: In your answer you mentioned the monthly figures in March '96 and March '97, and then you mentioned an annual average figure. Could you tell me what the annual average figure is in one of those two years?

Hon. D. Zirnhelt: Yes. Under the survey of employment payroll hours, the annual average for '96 was 88,100.

R. Coleman: Out of that 88,100, could the minister tell me how many of those would have been direct jobs in the value-added sector?

Hon. D. Zirnhelt: No, but we could try to get it. It's lumped in. All sawn wood is there. It's called wood, and again, it varies by month. We have it broken down into logging and forestry, paper and allied, then wood. We can try to get that figure for you, but the tables we have right here with us don't have it.

R. Coleman: I would like that breakdown, because I'm kind of curious. I'm looking at some of these other statistics, which the minister obviously doesn't agree with; they were done by somebody else. Other than these averaging per year. . . . One of the things about the jobs and timber accord is the large increase in jobs that is expected in the value-added sector. The baseline for that would obviously be an indicator of just how much of a percentage of growth in this one sector that we're expecting.

The information I have is that probably 50 percent of the jobs are in logging and lumber in this province, and the balance is broken down into a variety of other sectors, which include market pulp, newsprint, value-added, plywood, the ministry itself, silviculture and other operations. I'm just wondering what percentage of increase we are looking for from this one sector to achieve the number of jobs that were in the jobs and timber accord.

[9:00]

[ Page 4962 ]

make this much available to the small business sector, this is the general multiplier that's accepted, whether it was Price Waterhouse's multiplier or our own calculations here.

I just don't have those working papers with me, but I'd certainly be prepared to try to supply you with what we have. It was simply using a factor of so many jobs per thousand cubic metres, and as we make that much lumber available, we can expect to create that many more jobs.

R. Coleman: Would the working papers also have included, at the same time as you did those, so many jobs per thousand. . . ? Did you also take a look at the market availability for the product, which is the end product, either in value-added or whatever it is? When you just take that and say we're going to create however many thousands of jobs in a sector because we're going to create this many jobs per thousand cubic metres of wood available to that particular sector, do we know that at the other end the sector can (a) actually produce it, in that they have the capacity to produce it, and (b) once they produce it, there is a world market available to sell the product?

Hon. D. Zirnhelt: We did go over some of this, and let me try to encapsulate the discussion from before. The small business table -- the remanufacturers sitting down with the government -- said that they can use a lot more wood. Now, how much more wood? There is a study that shows that they could use about 1-1.3 billion board feet. That's based on surveying what those people themselves think can be done.

I think there's no question that they will have to grow the market for the products. The people bidding on sales, those people who say they can use it. . . . We will take them at their word and make the fibre available and have them prove the market. There appears to be pent-up demand, because we can have huge numbers of people bidding on every sale. Obviously they bid based on the fact that they think they can market it. So we have reasonable expectations, because there was a study done on the sector that indicated they could use about that much -- 1-1.3 billion board feet.

R. Coleman: Could the minister give me a couple of examples of the products that there is so much bidding on? What kind of product are we talking about producing that everybody is saying that they need this extra board feet for?

Hon. D. Zirnhelt: Yes. There are four areas that I could name off the top: log homes, windows and doors, panel products and flooring. Those all have demand.

R. Coleman: I just want to canvass for a minute, then. . . . I have some concerns about the wood availability and how we're actually managing the forests in the province that I'd like to sort of go over. I guess the first thing that I have concerns about is the amount of land that is available, in reality, that has commercially available forest in the province. I'd like to know, first of all, what the ministry's position is. How much research has the ministry done on the amount of parkland that has been set aside that would have been valuable forest land -- marketable timber -- versus the amount of land in the province that's really non-commercial land?

Hon. D. Zirnhelt: I'm not sure anybody has added them up. But when we have tables on land use planning, quite often that information has been made available to people. In some cases, the parklands have not affected the cut at all. It's a determination that the chief forester has to make, as you know. He assesses what of the remaining land base can be dedicated to forest production. I mean, we can look and see what available information we have, but as I say, as this is calculated region by region, timber supply area by timber supply area -- and there's no one place -- we'd have to pull it together.

R. Coleman: So it's the chief forester who takes a look at the property of the province and says, "This is what is available for parkland, given our commercial forest available to us," and not the Ministry of Environment and not Crown Lands? It's actually the Ministry of Forests, not Environment? I'm kind of curious as to why the bill for creating parkland comes from the Ministry of Environment, and not from the Ministry of Forests.

Hon. D. Zirnhelt: No, I spoke of two processes. One was the land use planning process. I said that any given table that has the various stakeholders there would look at the available land that's untouched for parkland. The tables I'm familiar with do calculate how much timber is in there -- people have an idea. The other actual process is that once a land use decision is made -- the amount of land that is available -- the calculation of what it produces is a calculation made by the chief forester.

R. Coleman: Could the minister tell me what the Ministry of Forests' statistics are with regards to how much commercial and private forest land is available in the province today? What percentage of our land base is that, and what percentage is other non-Crown land, which is non-commercial forest land that we can't log? Also, how much of it is actually in parks and other protected areas today?

Hon. D. Zirnhelt: In answering your previous question, the information on parks should probably be addressed to the Minister of Environment. There's approximately 100 million hectares of land, of which 25 million is in forest land available for commercial harvest.

R. Coleman: I guess the question that I have is that as we make these decisions -- and we're making these decisions on a resource that affects the future of our children in the province. . . . There's obviously the commercial land base of the parks, and I won't get into the mineral base of the parks with regards to this land. The statistics that I have available to me -- and I don't think they're a lot different from yours -- are that the other Crown lands are 57.9 percent non-commercial forest lands. The commercial Crown and private forest lands only amount to 27.4 percent of the land base of the province.

My concern would be that you get an exponential thing if you give up the wrong type of land. How are we doing in each of the forest regions in the province with regards to the availability of harvestable land? How are we doing in each of those areas?

Hon. D. Zirnhelt: We'll be happy to supply that to you in time.

R. Coleman: Going back then. . . . There was something that you were going to supply me with a few minutes ago, and now this. I look forward to receiving it, so I can review it and do a comparison to the other things within the industry.

The interesting thing, I find, about this particular industry is its huge contribution to the province itself, as far as gross 

[ Page 4963 ]

domestic product, its impact on jobs and its impact on the province as a whole. Without this industry, one would probably be safe to say that we would be in deep trouble in this province. There are obviously some concerns over the health of the industry.

I was looking at a recent study that was done. There was a link between commercial forest land which is accessible in B.C. to the forest industry, and jobs, communities and government revenues that depend on the B.C. forest industry. I was kind of surprised that according to that report, with a loss of 1 percent in the commercial forest land in British Columbia, the loss of productive forest land would be 260,000 hectares. If we lost 260,000 hectares of land, that would compute into 2,925 direct and indirect jobs. I was wondering if the minister could tell me how much productive forest land presently sits in the park inventory that we have in the province?

Hon. D. Zirnhelt: I answered that question. You should ask the Minister of Environment. She has the inventory of parkland.

R. Coleman: In addition to that, as we look at a 1 percent reduction -- and I think this has to be a concern to the ministry and the chief forester, because we have to look down the road in this industry -- not only would we lose the 260,000 hectares, we'd lose 710,000 cubic metres of allowable cut. That would be lost wages of $101 million, and more importantly from the government side, that would be the loss of $43 million in government revenues.

We have to be very aware of that fact. As we move through this industry and look at it, I think we have to be very cognizant of the fact that as we move productive forest out of availability to the industry, we're actually putting an industry in crisis. . .

Interjection.

R. Coleman: . . .one that's very important to the future of our province, and I think it's very important to realize that.

I notice that I'm getting heckled by a member that has a very strong forest area, and I could probably go into his statistics if he wishes.

I'd like to just move on for a minute to a couple of things before I move it back to one of my colleagues. I've read a number of guidebooks and information on the Forest Practices Code, and I'm kind of curious about these. I guess the first question is: does the minister know how many of these exist? How many different copies of these types of reports exist within the ministry -- number-wise?

Hon. D. Zirnhelt: I'd be happy to provide you with the exact number. They are being produced all the time. We don't have that information right here, right now.

R. Coleman: I must admit that the ones that I've seen. . . . These are the ones that come through my in-house mail that I've received in the last year -- a substantial number that sit about this high on my table. I haven't brought them all into the House tonight. I have a concern about that, because I know that we're trying to do something about the regulation of the jobs and timber strategy in regards to a lot of this. I assume this is what we're dealing with, and that would be my next question. When we talk about reducing some of the -- for argument's sake, for lack of a better description -- red tape to the industry so that they can obviously create these jobs, is some of this included in that?

Hon. D. Zirnhelt: That's very doubtful. Industry has asked to know what the rules are, and that's why there's been a formalization and a direction given. There's no secret about it -- for the economic balance between various resource users, we need to do a better job of planning, a better job of integrated resource management. Guidelines are critical to that. When we talk about reducing red tape, we're talking about reducing information that's not essential to good resource management. The guidebooks are essential to good resource management.

We are fundamentally reducing the number of plans required and the duplication of information and the duplication of process and advertising of information. We're reducing the process around planning by going from six to three plans. I don't think we'll be getting rid of any of the guidebooks, but guidebooks are just that -- guidebooks. They can be changed as we have more scientific knowledge.

The member would admit that a healthy forest requires a healthy biology out there. In order to protect the biological processes in the forest, we need some guidebooks as to how we can harvest and manage. The guidebooks are welcomed. They're part of creating some certainty and a higher level of forest management, which allows us to defend our practices in the marketplace, which are continually being challenged. By having guidebooks, by having processes in place that assure good planning, we are creating more certainty for the industry.

R. Coleman: I agree with the minister that there has to be planning. I also agree that the control and management of the ecology is important. I have two guidebooks here. Could the minister explain to me the difference between a class A lake in the lakeshore management guidebook for the Nelson forest region and the lakeshore management guidebook for the Kamloops forest region? Are we just reproducing information, or is there actually a difference between and a reason for these different classifications of lake in these two categories?

[9:15]

R. Coleman: I agree with the minister again that one size doesn't fit all, but if I read these different guidebooks, it doesn't take much to realize that they have basically been written as the same thing, and they're a reproduction of mainly the same material. Maybe there's a different title page, I suppose, so I don't know where the one size is in this particular area. This is one area that I would recommend that the ministry look at to see if there is duplication or whether, in fact, we do have a different situation with regards to that classification.

I guess my biggest concern with it is that guidebooks are great. In another portfolio that I dealt with, which has to do 

[ Page 4964 ]

with housing and what have you, there's one guidebook that runs that whole industry. Maybe this is a more complex industry than that one, but it seems to me that any company that's operating in this industry must have to have a huge staff just in order to figure out what the different guidebooks say. A lot of them in policies and procedures are repetitive of other policies and procedures. When you can get down to the meat and potatoes of the actual guidebooks, you can take away a lot of stuff that's probably been done on some form of a word processor, from what I can see. That leaves me with some concern, because obviously there are printing costs to that, there are management costs, there are delivery costs, and there are other costs relative to that.

I want to move on to something of interest that I would like to know how we're doing on -- if I could just move the minister over to the value-added strategy. With regards to this particular strategy, a number of things came out of the report I read that I wonder if he can give me an update on. One of them is a small item, but it's one that I find to be a curiosity. It was that Forest Renewal B.C. has invested $75,000 to study the potential for making use of tree tops and stems under ten centimetres in diameter. In the past these parts of trees were considered refuse and left behind. The study was undertaken to find new resources of wood fibre for value-added manufacturers and existing mills in the Nelson forest region. Could you tell me the status of that study?

Hon. D. Zirnhelt: No. If you want some answers to some of those questions on the floor of the House, provide them ahead of time, or wait until FRBC comes and asks the questions. We would be happy to try to get that. There are some 8,000 projects under FRBC, and I dare say I wouldn't be able to answer the question. If I had the officials here with the catalogue of projects, we could probably get that for you. I'd be happy to get that for you.

R. Coleman: Maybe we could go on, then. If this is the case, is the minister telling me that this particular report is not one that he is familiar with and he therefore doesn't know the contents of the report and its recommendation, the B.C. value-added strategy, which is obviously going to affect those thousands of jobs in the forest industry that we're projecting will come forward out of the jobs and timber accord? It's a small item, but if I ask you a question about the trained workforce, access to wood or getting it up and running, or if I ask you about learning to work together, the global marketplace, prosperous communities or the conclusions of this report, am I also going to be told that I shouldn't be asking these on the floor of this Legislature and that I'm supposed to ask them somewhere else? Basically, it would be nice if you could tell me from what environment I can get all the answers to these questions.

Hon. D. Zirnhelt: The member is expecting a minister with a couple of officials here to give him all the answers to all the questions. I'm saying that when you get into detailed, technical questions under FRBC, ask those when the officials are here. We'll try to have the information here. We have people watching. But we agreed that we would discuss FRBC.

There are probably lots of reports that I haven't read for some time. I'm quite prepared to get you the answer. This is to debate policy and the estimates of the ministry. That doesn't happen to be the estimates of the ministry right now. You can ask any question you want, and we'll try to get you the answer. No, I don't happen to have a status report on everything in that book. We can sure get it for you.

R. Coleman: My frustration is that I'm trying to debate the estimates of an industry, and I'm asking the minister about some of the more simplistic facts with regards to the industry as far as the amount of commercial timber that's available for harvest, which creates a stability within industry, and how much of it is moving out to other sectors. I don't find those to be very ridiculous questions with regards to an industry when you're trying to establish whether its future is strong or not. Maybe I'll just go on to another item with regards to the industry, and maybe the minister can help me with that one. So far it looks like I'm going to be receiving a very large binder of information from you.

In the province there is a substantial amount of tree-planting that goes on in silviculture, and I think it was somewhere around 100 million trees. I was hoping to just quickly put my thumb on that to save you some difficulty. Could the minister tell me what percentage of the reforestation that takes place in the province is done by government, what percentage of it is done by industry and what the reforestation numbers are expected to be in the year 1997-98 -- or an example of what it was in 1996-97?

Hon. D. Zirnhelt: To answer one of your last questions, there are 46 guidebooks, and with respect to the FRBC stuff, we'll try to get you the status of that. On a general basis, we can talk about the trends in the value-added industry. We've studied them, and the industry itself has made considerable demand on fibre supply. We, for our part, have helped make fibre available to them. With respect to the number of trees planted -- the percentage of reforestation by government and industry -- again, we'll try to find those figures for you.

R. Coleman: I'd now like to go to the five-year forest and range resource program, which on this one is not Forest Renewal. It's the Ministry of Forests, British Columbia. It's a five-year forest and range resource program. This particular report goes from 1996 to the year 2001, and in the second paragraph of the report it refers to the Premier announcing a goal of creating 21,000 more forest sector jobs through the jobs and timber accord.

I'm assuming that the first year of this particular plan is a year behind, because obviously, the jobs and timber accord was just announced last week and this report was written a year ago. Could the minister confirm that we now have to backdate this report, to take it from 1997 through to the year 2002, to make it applicable to the industry today?

Hon. D. Zirnhelt: No, I don't think we would update that book. We now have a plan, and in the next plan we would probably put in more of the detail we now have. We've used employment in March 1996 as a baseline, and it was five years ahead of that. That's the target -- 21,000 by that time.

With respect to answering your question, the Ministry of Forests spent $60 million in '96-97; small business program, $37 million; FRBC, some $55,000; industry, about $150 million. If you want to compare the ministry, it's about $97 million -- just under $100 million -- and industry spends $150 million. That was in '96-97.

R. Coleman: The five-year resource plan -- I won't keep saying forest and range resource program, because there's no sense in repeating that; I'd be saying it in my sleep tonight -- states that the Forest Service is now helping implement regional land use plans for Vancouver Island, the Cariboo and the Kootenays, and a subregional land use plan for the Kamloops area.

[ Page 4965 ]

Another dozen subregional land use plan processes, called land and resource management plans, or LRMPs, are currently underway through the province and will eventually be prepared for most of the province. Obviously, the other dozen would be in process. I'm wondering what the status of that process is, and I'd like to know the status of the implementation for Vancouver Island, the Cariboo and the Kootenays, and the subregional land use plan for the Kamloops area.

Hon. D. Zirnhelt: We do assist in implementing the land use plans. I would just say to you that the land use coordination office that supervises land use planning is under the Ministry of Environment, so I encourage you to ask some of your questions there.

The Cariboo plan is being implemented. There are five subregional plans being developed there. The Kamloops LRMP is being implemented. We are not implementing any subregional plans on Vancouver Island yet, and in the Kootenays the implementation plan is almost complete. We hope, in the weeks to come, to announce the implementation strategy for the Kootenays land use plan.

R. Coleman: Could the minister give me just a brief description of what is basically included in one of these land use plans we're implementing?

Hon. D. Zirnhelt: I can offer you a status report on 18 land and resource management plans. That's the number there are now. We can provide that to you in some detail. What's involved in a land use plan? Well, the three regional plans have zones. They're basically a system of zoning and a system of guidelines for interpreting a set of objectives for each zone. It's a question of each zone being a description of what can happen in that zone, what the allowable uses are in the zone. There are generally some objectives, in some cases targets, which inform and advise other levels of planning such as subregional planning, landscape unit planning or five-year development planning.

R. Coleman: If I could draw a parallel, these plans would be similar to an official community plan for forests, where I would assume we're identifying within each area the environmental issues, the water issues, the allowable cut issues, how far a setback as far as view lines and what have you. I would assume that, and I'm sure the minister will tell me if I'm wrong.

I guess the second question is: is there a public input process in each one of these plans, as well?

Hon. D. Zirnhelt: The analogy with local land use plans. . . . They're similar in the sense that the concept of zoning is applied to virtually unoccupied land -- although in some cases it is. The public input process varies a bit, but all of them had stakeholders at the table when they were being formulated. In some cases there was resolution. In other cases there was not; there needed to be some kind of subsequent negotiation. Certainly there has been massive public involvement. I know that in the case of the Cariboo land use plan, there were probably 600 people involved in the lead-up to it. Fifty or 60 people were there for days on end trying to formulate the plan and doing the background work. So I would say that it's massive. When any of the documents come out -- often between a conceptual plan being put down and the implementation strategy being developed -- reports are produced, are available to the public and are widely distributed.

R. Coleman: You know, when we walk through a discussion in this Legislature about the planning that's going on in our forests, how far we've probably come in the last 20 years and how far we came over the 20 years previous to that in this industry. . . . I'm sure the ministry must find it very frustrating to see some of the things that go on with Greenpeace in some of the areas of this province -- they accuse us of having bad forest management practices and tell us that we don't plan our forests, don't renew our forests and all the rest of it -- particularly when we've gone to such extremes, probably even further than any jurisdiction in the world. Yet we seem to get attacked because somebody has chosen small British Columbia for the environmental attack versus taking on the big boy who might be raping some forest somewhere in a larger country or one that is more economically influential.

[9:30]

My understanding is that almost every area of forest that's been cut by the commercial side of the forestry and all private lands have been reforested in this province and that we're basically reforesting as we cut. I think that's a remarkable accomplishment. Some people that look at our forest farming practices -- which is what we're doing, we're farming; it just takes longer to grow the product -- say it's better than most places in the world. I think it must be frustrating, when you go through this process with 500 or 600 people in an area like the Cariboo and make the decision and get the consensus at the table, to have to deal with this frustration.

I'm just wondering, having said that, if the ministry itself has any counterattack to the type of strategy that's being foisted on us by other areas of the world with regard to people like Greenpeace. They've renamed one of our own forests. . . . We didn't call it that; they decided to call it the new name. I won't even justify it by giving the name of the forest in this House, because they named it, not us. I'm just wondering if the ministry has a counterattack planned so that we can show people that we're planning our forests and what we're doing.

Hon. D. Zirnhelt: I wouldn't say a counterattack plan, but we certainly respond. We would respond appropriately. First of all, we wouldn't overreact if the attacks aren't having any effect in the marketplace. We wouldn't go full out and appear defensive. We have done our work ahead of time.

We supply backgrounders on individual areas that are hot spots, which talk about how the code is being implemented and how the land use planning processes are taking place. For example, the backgrounder we have on the midcoast would explain that we now have a table. It has met already. The first nations are there. There are some representatives of environmental groups; Greenpeace has chosen not to participate. Certainly all groups had an opportunity to be there. We explain this. Having these processes, as you refer to them, may be the most complex or most involving of the public in the world. We're proud of that fact. The public input process is important in our defence as we explain our practices.

What we do specifically is ensure that this information is available in our embassies, because that's usually the first place people go. We make an offer to anybody who has an inquiry about a particular protest of logging practice, and we supply information, whether it be the compliance record of 

[ Page 4966 ]

the company or details of the five-year development plan or the subregional plan or the application of the code. We go to whatever length is necessary to do this.

Much of the work has been done. By addressing the regions in which there's the most controversy, we think we have laid aside most of the significant problems that were there in land use planning. I believe that we will continue to provide backgrounders, an articulation of the elaborate planning process, and the opportunity for public input on cutting permits, on five-year development plans, and so on.

R. Coleman: I liken an organization like Greenpeace not coming to the table to Chicken Little running around and saying the sky is falling but never looking up in the air. I think they should maybe do a little more research into what we actually do in this province.

I'd like to move on, because you did mention the first nations briefly. As I go through this particular report, it says the Forest Service is playing a critical role in the treaty negotiation process and basically meeting the government's legal obligation to aboriginal people and establishing a healthy working relation between the Forest Service, first nations and affected parties. I know we're about to receive a report with regards to the public hearings and what have you on the aboriginal treaty situation from the Aboriginal Affairs Committee. I'm wondering if the minister could tell me what role the Forest Service would play in presentations to that committee or that they're playing now with regards to any treaty negotiations.

Hon. D. Zirnhelt: I'm not aware of a presentation to that committee, as such. I'm sure that if information was asked for, we've provided it. But two things. . . . On backup to treaty negotiations, there is a technical committee, a caucus of provincial officials that backs up all the treaty tables in providing information, so that when first nations start to talk about the expression of their rights or negotiation of rights beyond the borders of current reserves, or when they're talking about land selection, we provide information, mapping and that kind of service.

With respect to the rights of first nations -- the constitutionally guaranteed rights -- we follow the instruction of the courts, which means we've got to provide in our forest development planning some addressing of the issues that they bring forward. We have to show that we have provided for their rights. We do that through a consultative process that we have developed. We have people in our regional offices that make sure that our districts are discharging our fiduciary responsibility.

R. Coleman: I had the opportunity about nine or ten months ago -- I think it was in September of last year -- to be called to a small producer in my particular riding who was dealing with softwood lumber in volumes that were allowed across to the United States. He referred to it as a quota that they were allowed to have. Once that quota had gone, it went out, and they'd actually been cutting and trimming lumber, getting it ready to go and delivering it for seven, eight or nine months. Then they received their quota, and they were already past their quota and were basically faced with shutting down their plant, because they had nowhere to go. I would assume that's got something to do with the softwood lumber situation and the 14.7 billion board feet free of export charge. I'm just wondering. In this report, we were still working out the details on implementation of the agreement. I'm wondering where we're at with this one. It seems to be one of those ones that just keeps coming back or festering and changing, or what have you. I'm just wondering what the status of it is right now.

[G. Brewin in the chair.]

Hon. D. Zirnhelt: I provided your colleague from Boundary with the status, and I'll be happy to provide you with that status, too. We're in the second year of the quotas. British Columbia got about 59 percent of that 14.7 billion board feet. The quota is allocated by the federal government. It's been allocated; some of it's been reallocated. People who feel they don't have enough can apply to a British Columbia committee or they can apply directly to the federal government. Ultimately, it's the federal government that makes the decision. They are open to advice from the British Columbia industry-government committee.

I don't think all producers feel they have enough, but we ship record sales into the United States. Obviously there was the market or the ability for people to afford to ship, or I'm quite sure they wouldn't have. But there is a bit of movement as some people don't fill their quotas. And it is always in a process of being reallocated. But basically, people have to use it or lose it. I explained it. As I understood, there was a bit of. . . . The lumber brokers knew who needed quota and who had lumber to sell. They're playing a bit of a brokerage role with respect to matching up people who need to export with people who have quota.

R. Coleman: I guess that basically what we're having is. . . . I think it was described to me a little bit differently. But those who had quota left were basically saying: "Here's the premium you're going to pay me if you want to use my quota for your product." And a tidy profit was being made by some people without really ever having to trim any lumber. Would that be a fair description of my understanding?

Hon. D. Zirnhelt: Well, I don't want to make an official analysis of what's going on, but we certainly frown on any kind of black-marketing that's going on in that area. But it is something that is regulated by the federal government, as you know. I would suggest to you that under the jobs and timber accord, at the coast here, 18 percent of the sawn fibre has to go to the remanufacturers. In some cases it may be that it's advantageous to the seller to provide some of their quota or allow export under their quota licence. So there's all kinds of business arrangements that will probably be made. As to what the federal government can do with respect to unfair practices there, or black-marketing in quota, it's certainly frowned on. I can't answer for what the federal government would do to stamp out any kind of irregularities there.

R. Coleman: I wasn't referring to a black market quota. I guess you could call it that. It was more of: "Here's my numbers. You pay me; I'll pay them. Here's my premium." And I think the lumber goes out.

Before I get into some sustainability questions with regards to the resource itself, I found something rather interesting about this particular industry. It's such a huge industry in the province, yet I think there are some things people don't know about it. I guess one of the things. . . . When I was going through some of the stuff with the jobs and timber accord, I'm sure I saw reference to making power available to the industry at an affordable rate to reduce the cost of production, etc.

The thing I found interesting about it was that when you get to kilowatts per tonne of product, the lumber industry is 

[ Page 4967 ]

way down there with regard to the number of kilowatts per tonne required to produce their product. If I could give you an example, aluminum is 73,080 kilowatts per tonne, bricks are 2,320 and lumber is 580. Can the minister tell me just how much he sees the availability or reduction in power costs having an impact on the industry as a whole?

Hon. D. Zirnhelt: There is nothing in the jobs and timber accord that relates to this. The Power for Jobs program that the Minister of Employment and Investment announced would be available, for example, for a new mill of some kind, but it can't be used to allow competition; it can't subsidize competition.

We don't think this Power for Jobs deal is going to have that much effect on this particular industry. As you say, it's a relatively low consumer. A lot of them have their own power production from waste wood. So we don't think there's any significant relationship there. There may be some. I suspect it's more in the mining and smelting industries.

R. Coleman: Thank you for that clarification, because that certainly does make a lot more sense to me, actually, than the way that application was basically laid out to me.

With regards to the protected-areas strategy, basically in this report we're trying to get to a goal of designating 12 percent of B.C. as protected areas by the year 2000. There were a number of priorities listed in the report, and I'm wondering how we're doing with the priorities. I realize that we're not at 12 percent yet, but effectively we're getting there with some legislation that we'll be debating in this House shortly.

Basically, the priorities were to "revise the list of study areas through gap analysis and an assessment of resource impacts." First of all, I'd like to know how the revised list is and if the minister could explain to me. . . . I can understand "assessment of resource impacts," but could he explain to me what a gap analysis is?

Hon. D. Zirnhelt: My officials in Forests may assist in providing base mapping and information about trees. The gap analysis looks at the basic ecosystem types and subtypes. I would suggest that those questions should be directed to the Minister of Environment, because she will have the statistics there.

With respect to the progress generally, I'll see if I can help. We're at 9.4 percent of the province in parks now. In any given subregional plan or regional planning process, the gap analysis is done and then it's available for decision-making. When we go into an LRMP and we say there are some 18 of them that are either completed or in progress, each one of them will have had a gap analysis done for it, as I understand it. If there's a planning process in place, we make sure that that gap analysis is available. So that would be the priority.

As I said, I can give you the 18 -- provide it to you -- and then perhaps you can get details on the status from the Minister of Environment.

[9:45]

Hon. D. Zirnhelt: The intent is to show that we have good representation of all the ecosystems. The protected-areas strategy had a number of objectives, and one of them was to, as best we could and depending on availability, represent all the ecotypes in the province. So when the gap analysis is done, you might look at some particular subsection of an ecosection that might be totally preserved. If there's only so much of that type in the province, 100 percent might be preserved in an existing park, for example. So you can't create any more preserves in that area.

In an ideal world you'd have 12 percent of each ecosection. We can't do that, because in some cases the impacts are too high; in other cases it isn't available. For example, a gap analysis in the Okanagan would look at how much of the grassland is available, and you'd find that a lot of it's in private land. Certainly the low-elevation stuff is probably in private land and not available except through purchase. So you take each type of ecology in an area and figure out what percent of it is already preserved and what percent might be available.

The objective, just to be clear, was to try to find representative ecological regions to become protected.

R. Coleman: So we're not just talking about forests here; we're talking about grasslands, and we're talking about other ecosystems that are affected by land use. That comes back into this land use planning, which our friends at Greenpeace don't understand at all, by the sound of it.

The interesting thing about that is that when you mentioned grassland in the Okanagan, having been raised in Penticton and having lived in the Okanagan and hiked that area, I never, ever thought any of that stuff was grass. Some people did, but it always looked a little bit more like desert to me.

I think I know where we are with this. I'd like to know now where the first nations are as far as their role in the strategy of the land use process. This particular report says that we're going to encourage them to be involved. How involved are they? Do we have that type of cooperation at the table with the first nations in this particular planning process, or are we still somewhere over that with regard to the aboriginal issues?

Hon. D. Zirnhelt: That has been a problem because to some extent they saw it as settling land claims amongst the various users, so they didn't come to the table in a lot of cases. But recently we've been more successful in encouraging them to sit at the table. We can't compel anyone to sit there, and they feel that there's another process -- the treaty-making process -- that will resolve their issues. But we do encourage them.

I'm happy to report that on the midcoast we have an agreement for the first nations to participate. That will help us in saying to the world and in saying to Greenpeace: "We've got the first nations at the table, and they're participating." That's helpful for us internationally, and it's helpful for us in the small communities up and down British Columbia.

We have also been successful in having them participate in some of the northern tables, in particular around the Cassiar. We're in the process of establishing those tables, and they have agreed to participate. Of course, up there they're the majority of the population, and they reflect a diverse range of people that are involved in various aspects of the economy. So we've made substantial progress in that respect.

R. Coleman: Just briefly, while we're on the topic, what's the Ministry of Forests position on the commercial forests in 

[ Page 4968 ]

the province that are owned by private industry -- the privately owned lands -- with regard to successor rights and any relationship with the aboriginal people? Does he see those being protected no matter what? Does the Ministry of Forests have a position that the private land that these companies own and that is deeded to them today will be protected?

Hon. D. Zirnhelt: The Ministry of Forests takes the position of government, which is that private lands are not on the table. That's not to say that private lands might not be packaged somewhere outside in a private, commercial arrangement. But we don't put private forest lands on the table.

R. Coleman: I think that's probably good news to the people who own the land, because they're obviously doing some sustainability planning and what have you of their own.

I have a number of other items, but I don't think I can finish them in the time allotted, so I move that we 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. U. Dosanjh moved adjournment of the House.

Motion approved.

The House adjourned at 9:53 p.m.

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The committee met at 6:46 p.m.

ESTIMATES: MINISTRY OF EMPLOYMENT
AND INVESTMENT
(continued)

G. Farrell-Collins: I think one of my colleagues walked off with my notes, but I can wing it for a while.

I understand that the minister and the member for Peace River South canvassed the Williston Lake and the Bennett Dam, and I won't go into that any further than what's been done. Can the minister tell us what the physical status is of the rest of the dams that are in our fleet of dams, if I can put it that way? I understand there have been a few problems with some of the others, and I'm just wondering what the current status is on them.

Hon. D. Miller: There was a minor problem at the Coursier Dam about five years ago. But just as a general statement, the dams -- the physical plant -- are in good condition. We have an ongoing dam safety program. There's nothing I can report of any significance relative to the state of the facilities.

G. Farrell-Collins: Can the minister assure me that there have been no problems at any of the other dams, certainly within the last two years, as far as structural problems with the integrity of the dams themselves?

Hon. D. Miller: The consensus from officials is that there's nothing untoward or anything like that that I can report. It appears that the structures are in good working order and good repair.

G. Farrell-Collins: Can the minister tell me. . . ? As I said, I don't want to get into, to any great extent, the Bennett Dam or the Williston Lake issue, because I know that's been canvassed. But I do want to ask the minister: what sort of ongoing monitoring of these facilities is done to make sure that we are monitoring not just the visual aspect of it -- does it look okay? -- but structurally and geotechnically, that particularly the earthen dams are in good shape and continue to be in good shape and that we're monitoring them on an ongoing basis?

Hon. D. Miller: Just as an overview, we do operate 61 dams in 43 locations. We do have an ongoing dam safety program, initiated in 1982 -- monthly and semi-annual inspections of all dams, as well as a comprehensive checkup for each dam every five to ten years. Operation, maintenance and surveillance requirements to ensure the safety of the dams on a day-to-day basis are identified and activities monitored. We do follow the dam safety guidelines -- all those damn safety guidelines -- of the Canadian Dam Safety Association.

G. Farrell-Collins: It's like Danny can swear and not have to withdraw it.

Hon. D. Miller: A little levity at this hour is not bad, eh? It will be interesting how it comes out in Hansard.

Since 1980, Hydro has invested over $130 million in safety improvements to its dams. Internationally renowned experts in various fields of dam engineering are retained to advise. We are recognized as a leader in the world in terms of our safety program. We have an excellent safety record.

If problems are discovered, corrective action has been taken. I do have some numbers on the Bennett Dam that we could read into the record. But that problem has now been corrected. So it appears that they're in good operational order.

G. Farrell-Collins: I'm just wondering how. . . . I was up in December, and I toured the facility of the dam. I was quite impressed with the work the engineers were doing and their efforts to make people feel comfortable that they were doing everything they could do. They all seemed extremely professional and quite concerned and to be doing good work.

But it did seem to me that this was a fairly significant occurrence. You know, it's a big pile of dirt, and that was a pretty big hole, to put it bluntly. I'm just wondering how it is that it got to the state that it did without us (a) being aware that the sinkhole was occurring and (b) being aware that within the actual earthen dam structure itself there were these big steel tubes, essentially, from my understanding of it, that 

[ Page 4969 ]

subsequently rusted out and contributed to the erosion. It seemed to me at the time that people were sort of taken aback and surprised by the structure of the dam -- that those tubes or cylinders were even there.

So I'm wondering what sort of internal monitoring there is of the structure within, not just how it looks from the outside. Is there any seismic work done on an ongoing basis? Have we gone back since this one occurrence and reviewed the structure of the other dams in the province to determine if there are similar problems elsewhere? I guess the question is: how were we surprised? And what are we doing to make sure we're not surprised anymore?

Hon. D. Miller: I suppose, as one of my officials said, that on a relative basis the sinkholes were rather small -- relative to the size of the dam; it's a big dam. But that work has been completed. I'm not certain what more I can say.

We obviously take the issue of safety of the operations very seriously and have had an ongoing program continue that's recognized internationally. Obviously that's a priority with Hydro, as it with other Crowns. From time to time, issues arise or incidents happen; and you get on them and deal with them. That was the case here.

G. Farrell-Collins: I'm not going to affix blame or try and lay blame here. I'm merely trying to determine what the process was -- how it is that this happened and that we were unprepared for it. As a result of that, is there something we've learned that we can then apply to other locations, other dams? Is there something we can learn from that? I'm not trying to affix blame; I'm not going to attack the minister with this; I'm not trying to be controversial. I'm merely trying to find out what we've learned from this and what we intend to do to rectify it in the future.

Hon. D. Miller: There will be, at the end of the day, a final report, if you like, an analysis with respect to what happened at the Bennett Dam. We have inspected other dams. The Mica Dam, an earthen dam, does not have any of the pipes that the Bennett Dam had. In any engineering endeavour, you continue to learn from your operational experiences. Hydro will continue to do that.

G. Farrell-Collins: When I was at the facility, it was clear that there had been some erosion into the drains. At the time I was there, it seemed that the people, the engineers, were still uncertain whether that was something that had occurred shortly after the dam was built and then it stabilized, or whether it was something that had occurred over an ongoing period of time -- without either decreasing or increasing in intensity, but rather a continuous gradual erosion of the dam -- or whether it was something that had occurred all of a sudden near the end. At the time I was there, I know they were monitoring it to try and establish some baseline data and determine if there was any change in the percentages, the amounts of silt. Can the minister tell me if that has been determined yet -- whether or not that erosion occurred in any of those three scenarios that I just outlined?

Hon. D. Miller: Just some facts. . . . The sinkhole remediation was completed. Compaction grouting, a highly specialized technique involving injecting a mixture of silt, sand and gravel under controlled pressures to stiffen the loose material, was used. There was a successful compaction grouting trial completed in one of Hydro's facilities in the lower mainland, which showed that the procedure could be done to the required depths. The eighth and final grout column at sinkhole 1 was completed near the end of May. The roadway was built below the dam crest level.

With work now complete, crews are backfilling the roadway. All water injection tests -- 15,000 U.S. gallons per minute and approximately 30 to 60 normal seepage flows pumped into the drain -- are completed. The drain responded very well, and it is confirmed that the drainage blanket is capable of handling very large seepage flows.

These tests, combined with the very successful remediation of the sinkholes, confirm the overall safety of the dam. A core team comprised of representatives from Hydro's provincial emergency preparedness team and the RCMP was established, and Hydro is working with municipal governments within the Peace watershed to help update their emergency response plans. A joint industry-province mitigation plan has been implemented to ensure that local mills can operate and that we have dealt with the water level.

So I really think it's been very, very comprehensive. Obviously from an engineering point of view, any lessons that are learned will be applied across the entire system, where applicable.

G. Farrell-Collins: I thank the minister for that information. I want to just get the answer to the question that I asked, though, which was whether or not it had been determined how the silting in the drain had occurred; whether it was something that the engineers felt happened some time ago and stopped; whether it had not occurred, and then occurred just recently and was still underway or had stopped; or whether it was something that had occurred over a long period of time in sort of an equal way.

[7:00]

But I think, really, going back to it, the primary question is the safety and integrity of the systems in British Columbia. I think we are satisfied that there is a very vigilant safety program in place. We'll continue to learn and to apply across the system anything that we learn out of this experience.

G. Farrell-Collins: I just want to say that in the short time I was there, I was impressed by the professionalism of the people that were there. They seem to be quite eager to solve the problem, and I'm glad they managed to rectify it. I'm sure it was a tricky one, and I believe that when the reports are finally done, it will be of benefit to people right across the world who have similar structures, if they encounter similar problems in the future. Hopefully, there won't be any. But if there are, I'm sure we've learned some things from this.

One last question in this area is: can the minister tell me what specific changes have been made to the dam surveillance system that occurs in all of them, as the result of this incident? Have there been any changes? Or are we convinced that what we've been doing all along was sufficient?

Hon. D. Miller: I'm just looking for the reference. I believe that there was a reference here to a surveillance pro-

[ Page 4970 ]

gram that was put in place. Without details, we'll simply respond that there was an additional surveillance program that was put in place as a result of this.

G. Farrell-Collins: I know my colleague from. . .

Where are you from? West Vancouver-Capilano?

D. Jarvis: North Vancouver-Seymour.

G. Farrell-Collins: . . .North Vancouver-Seymour has some questions. I usually refer to him by his first name. I know he has some questions he'd like to follow up on, something we discussed earlier today. I'd like to yield to him.

D. Jarvis: I wonder if I could go back and clarify a few points that you mentioned before, when you were talking about exporting surplus power from British Columbia. You mentioned that we export to Alberta. As far as I was aware, we have never exported to Alberta, we've always imported -- and only when we need to, when we're short in British Columbia. I wonder if you could clarify that.

Hon. D. Miller: Yes, we do. Alberta has made some changes in terms of the establishment of a pool, and we do, apparently, sell in and take out of the pool. They don't have a hydro system; we do. It's to our advantage. I think there was a hypothetical question posed in terms of: "If we couldn't have access into the United States, where would we be?" I suggested that one opportunity was Alberta but that it was fairly limited. So it's fairly small, but we are active in that pool.

D. Jarvis: Basically, then, Alberta is not a customer, per se; it's one of our marketing sources. It's an exchange of electricity when they need it and we need it, etc. It's a flow-through back and forth, is it not?

Hon. D. Miller: Yes, they're transactions in and out of the pool.

D. Jarvis: In regards to measuring electricity, I'm of the old school; I like to deal in kilowatts. When you start talking gigawatts, it does expand it quite a bit. Can you tell me how many kilowatts we actually export into the United States?

Hon. D. Miller: We're just doing our conversions here. It's 9,000 gigawatts, which presumably would be nine million kilowatts.

D. Jarvis: That's about 90 kilowatts.

Interjection.

D. Jarvis: The minister is suggesting that we export about 900 kilowatts. No, you couldn't be; that's completely impossible because. . . . I'll ask that question another way. Could the minister please tell me what the demand peak of kilowatts that we produce here in British Columbia amounts to?

Hon. D. Miller: Just for clarification. I'm sure we can stumble through the technical calculations, but if there's an end point, or a point in terms of where the member might want to go, maybe we could deal with it without actually having the number converted to whatever the units of energy are.

D. Jarvis: I was trying to ascertain if, in your integrated electrical plan of a few years back, there's been any major change in our peak supply of power. That old plan showed that you had a negative position, as far as kilowatts, up until about 1998. I'm trying to find out where that change was when we suddenly had a surplus that provided the opportunity for us to export.

Hon. D. Miller: Normally we have been a net importer, except for last year. I did explain earlier that unanticipated issues -- the sinkhole, the drawing down of Williston, etc. -- provided opportunities for additional generation and export.

D. Jarvis: Well, I'm going to go on another tack then. I want to know if the minister could tell me how much cogeneration is produced that B.C. Hydro is now purchasing.

Hon. D. Miller: About 5 percent of the capacity. I think I used the number 5,200, so roughly 5 percent of that.

D. Jarvis: In your integrated electricity plan -- unless it's been changed -- you didn't show anything, naturally, for the drawdown of Mackenzie. Can you tell me how much that you drew down from Mackenzie? When you look at your integrated plan, when you talk about megawatts for example, you're always in a negative position, for the next three years. You produced a plan here and a dependable capacity, and it's in a negative position. I don't see any indication that you were going to draw down from Mackenzie.

Hon. D. Miller: Without having the precise numbers available, the member might appreciate that it gets into some detailed calculations. Suffice to say that the circumstances created the ability to generate electricity that was surplus to our needs, and we took advantage of that and exported it. I'm not certain where the member is going on the question. I'm just trying to get a sense of what issue he is exploring, as opposed to asking for statistical information about where various energy came from and those kinds of questions.

D. Jarvis: Well, I thought I had explained it, but I guess I didn't do it carefully enough or well enough. If you go back into your integrated electricity plan, and you look at your revised dependable capacity charts, you'll see that for 1996 you showed a balance of minus 204 megawatts production in British Columbia. The next year you showed a minus 387. It's not until we get up into 1999 that you show that you come anywhere near balancing. Maybe it would be easier if we worked on the premise of how many megawatts you exported. I'm trying to find out how much surplus we have in the way of megawatts versus what else you produce throughout British Columbia -- or the total amount that you produce. What is the percentage of it?

[7:15]

Interjection.

Hon. D. Miller: With all due respect, it isn't. Maybe we could set up an engineer or somebody who understands these questions from a technical point of view and have a discussion there. But it is not a technical forum, and I hope the member appreciates that.

D. Jarvis: Fine. Well, it all started when you mentioned that we were exporting to Alberta. That raised my inquisitiveness.

[ Page 4971 ]

I wonder if the minister could tell us how many cogeneration plants have now been approved for British Columbia and if he could name them for us -- if he has a list there.

Hon. D. Miller: Is the member after co-gen or IPPs?

D. Jarvis: IPPs

Hon. D. Miller: There are 28.

D. Jarvis: I'll ask a double-barrelled question here. I understand that the minister is going to send us some information on Elk Falls. Did I understand correctly before that you were going to send us some information regarding the status of it and what they were going to be purchasing the power for -- the cost of it, what their purchase price was? I would also like to know what they have done with regard to an IPP in Port Alberni.

Hon. D. Miller: We can provide the status on Elk Falls, and there's no decision about Port Alberni.

G. Farrell-Collins: I was exploring earlier a line of questioning that started out with Intalco, but it was going into other sales that the government has. We had a little bit of a discussion about why we were selling power cheaper outside the province than we were within the province, and we covered that fairly well. My understanding is that Powerex has been involved in some sales to Mexico. Is that correct?

Hon. D. Miller: Yes, one sale.

G. Farrell-Collins: Can the minister tell me whether or not the sale. . . ? I assume that it's not power being generated in British Columbia and transmitted all the way down to Mexico, although I suspect that's feasible. I assume that it's power we wheeled or we purchased elsewhere and then sold to Mexico. Can the minister tell me what the structure of that deal was?

Hon. D. Miller: Yes, there is an arrangement with the Comision Federal de Electricidad, CFE of Mexico. There are some joint bids; Salt River Project and Powerex jointly bid for one block, but it's two-thirds the size of the total RFP. This is a complex supply arrangement. In April of this year Powerex was awarded a contract to supply energy to the commission. The contract was signed in mid-June, with deliveries in July. This is a sale in foreign commerce, therefore FERC power marketing authorization was not required. We've received a permit from the U.S. Department of Energy for the export from the U.S. into Mexico, a two-year authorization using the U.S.-Mexico cross-border transmission lines of San Diego Gas and Electric. It's the first time a Canadian company has sold electricity to Mexico. The sale will be at market-based prices and is worth just under $2 million for Powerex. The sale is from the B.C.-U.S. border to the U.S.-Mexico border and, as I indicated, transmission to Mexico has been arranged with U.S. companies.

G. Farrell-Collins: I didn't hear, or maybe I did hear, but I just want to confirm that it's correct. The minister said that a FERC permit was not required in order to export to Mexico through the United States. Is that correct?

Hon. D. Miller: Yes.

G. Farrell-Collins: Does Hydro or Powerex foresee Mexico as being a market that's opening up to us, and is it something that we're putting a fair bit of effort into? Or is it something where this is probably a one-off, where we are unlikely to have access to any other market in Mexico? Which is it? We have some good opportunities there. Is this an expanding market for us, or is it unlikely that we'll be able to pursue further sales to Mexico?

Hon. D. Miller: No, I gather it's more of a pilot-type arrangement. Obviously the invitation was extended to Powerex, and they investigated that and were successful.

G. Farrell-Collins: I just want to ask the minister if there are other opportunities. Is this something that Hydro and Powerex are excited about? Is it a big deal to make this sale? Will it lead to future sales, or is it sort of a one-off thing that was nice to do and nice to make money on but that's probably the end of it? I'm just curious what our opportunities are outside of the United States market.

Hon. D. Miller: There's certainly not a focus of our energies with respect to the Mexican market. I presume that if opportunities arise that look attractive, we will take a look at them. For Powerex, the focus really is in the northwest.

G. Farrell-Collins: Can the minister give me a distribution -- a rough estimate, I don't need exact figures? Percentage-wise, the minister said that most of our interest is in the northwest -- 80 percent of our export sales are in the northwest. How broadly across the United States are we able to sell and deliver our power?

Hon. D. Miller: We'll verify the percentage; I don't have exact numbers into the northwest and California.

G. Farrell-Collins: Are all the sales that Powerex does of B.C. power? Or are we also purchasing power on the market and wheeling it to other jurisdictions without that power ever coming to British Columbia? Is that something Powerex can do, and is it something that Powerex is doing?

Hon. D. Miller: It's not exclusively B.C. We do buy and sell from a variety of sources.

G. Farrell-Collins: Can the minister tell me how big Powerex's part is -- that is, as far as revenues? Is it a 5 percent portion of what we do, or is it half of the sales we make? I assume it's not half but somewhere in between. The reason I ask that is I'm just curious about what expertise Powerex is developing in the international transfer and sale of quantities of power. Is it something where we've developed a base of expertise within Powerex that we can then export as technology or as skills, as opposed to just exporting power?

Hon. D. Miller: Our sense is that Powerex has developed, and will continue to develop, a fair amount of expertise in this business, which involves not just the sale of surplus British Columbia power but playing in the market in terms of purchasing, reselling, packaging, those kinds of things. I'm not certain how I'd actually rate them in that sense, but I think people have a fair amount of confidence in Powerex. I think they do a commendable job and obviously bring a substantive return back to the ratepayers.

G. Farrell-Collins: I do have some other questions with regard to the export of power, but the member for Oak Bay-

[ Page 4972 ]

Gordon Head has some questions that she'd like to ask on Hydro's corporate donation policy. Perhaps she could do that now.

I. Chong: As the member for Vancouver-Little Mountain expressed, I do have some questions regarding B.C. Hydro. In particular, I'd like to ask about the corporate donation policy. Can the minister advise what corporate donation policy is in place with B.C. Hydro? If he could share with us how that actually works.

Hon. D. Miller: The policy is being reviewed, but I'll just briefly outline it. It will focus on projects that address education, the environment, aboriginal communities and the arts. Education is vital to the economic well-being of B.C.; the environment responds to the impacts of our dams and power lines; aboriginal addresses the uses of lands and natural resources needed to produce cheap and reliable electricity; and arts contributes to our cultural development. Apparently the board is taking a look at that corporate policy.

I. Chong: I appreciate that. As Culture critic, I suppose this is where my questions are derived from. Can the minister advise what amount is set aside each year, or whether it's a calculation as a percentage of gross or net revenues?

Hon. D. Miller: The formula has been 0.15 percent of operating sales, and there is a proposal to convert that to 1 percent of our export revenue.

I. Chong: Can the minister just give an example of what that has been in the past, say, two or three years, or perhaps in the last fiscal, and what this year's is projected to be?

Hon. D. Miller: Approximately $1.3 million.

I. Chong: So $1.3 million was allocated for last year, presumably, based on its operating revenues. Is that $1.3 million strictly cash, or is that a combination of cash and services or in-kind services?

Hon. D. Miller: I believe it's just cash.

I. Chong: Can the minister advise whether there are in-kind services provided which are not included in the corporate policy calculation per se? If there are, are they tracked?

Hon. D. Miller: The only in-kind would be people on loan to the United Way. The rest is cash.

I. Chong: Well, $1.3 million is an awful lot of money -- perhaps not for a corporation the size of B.C. Hydro, but it is a lot for cash corporate donations. Can the minister advise how the amounts are determined? Is there a report? Is there a financial standing on that? If there's a committee, can the minister share with us who serves on that committee and who is appointable to it?

Hon. D. Miller: There will be an annual report. It's in draft form, and it really does explain it all.

I. Chong: Did the minister say that there is an annual report for a previous year? Are there annual reports that are done every year, or is this the first year that an annual report has been drafted?

Hon. D. Miller: We do have an annual report in draft, and as soon as it's finalized, it'll be available.

I. Chong: Then I suppose I will have to wait with eager delight until that shows up.

In the meantime, can the minister advise as to the structure of the committee -- if there is in fact a committee -- that is set up to hear applications for contributions?

[7:30]

I. Chong: Just for clarification, then, it would be a subcommittee of the board. Can the minister then advise how many sit on that committee and perhaps the makeup of that?

What I'm trying to determine, hon. Chair, just to let the minister know, is that. . . . In the past we have been trying to ensure that those sitting on boards, those making decisions, especially affecting things such as education, the arts, aboriginal items and the environment. . . . We have been trying to ensure that there is diversity and representation.

We've heard that very clearly from this government, so I'm just trying to get a clear understanding that for this particular committee, with $1.3 million of allocated money, there is a cross-section and good representation from the people who are the most likely recipients of these moneys. So if the minister can possibly give us some names of these people and perhaps their backgrounds, that would be most appreciated at this time.

Hon. D. Miller: There were four members of the board. I won't read the names because they're past members, and obviously. . . . I did indicate that the thing was under review. There are allocations by regional managers -- in other words, people who are close to what's happening in their regions -- so they have some discretion in terms of making allocations. There are employee contribution programs where Hydro employees do contribute to various funds. Again, those are allocated out. So Hydro appears to do a fairly reasonable job of making allocations to a variety of cultural and artistic organizations.

I. Chong: I am pleased to hear that, and I guess that as a corporation Hydro does in fact make efforts to be a part of the community. However, I have had some concerns expressed about this; that's why I'm canvassing it at this time. I will wait for the report to come out to get further clarification.

But the minister just mentioned -- that's what's caught my attention -- that there are also Hydro employee contributions which are funnelled through this committee, I suppose, to dedicate that. Can you just clarify whether the Hydro employee contributions are exclusive of this $1.3 million corporate amount? The $1.3 million corporate amount, I presume, is strictly Hydro's amount and has nothing to do with the employees. Is that correct?

Hon. D. Miller: In addition, Hydro employees make contributions. In fact, they are the single largest contributors in the lower mainland to the United Way -- $400,000. They also contribute to special projects, such as Canuck Place. Those employees make those decisions. So there's a variety beyond the corporate donations.

[ Page 4973 ]

There are a variety of other ways in which Hydro and its employees contribute to worthwhile causes. Some 618 recipients, I believe, of various donations and grants. . . . We can certainly arrange a full briefing for the member if she would be interested. Just let us know, and we'll set somebody up to fully brief her on this.

I. Chong: I will in fact take advantage of the minister's offer of a full briefing, but just a few more questions at this time for my benefit, in the event that I don't get that briefing as quickly as. . . .

Of the 618 recipients. . . . Is there a ceiling that is set -- perhaps not this year, but in any year? Is there something in the corporate policy that says $50,000, $10,000 or $20,000? How is that determined?

Hon. D. Miller: Well, nobody knows. It doesn't appear that there's a cap, but it seems to be well distributed.

I. Chong: It appeared that the minister was getting his briefing; perhaps I should have come around and listened for a few minutes.

I'm just curious as to how these things are tracked. I recognize that the committee will make these decisions, but the reason that I ask is that as I understand it, the Crown corporations secretariat assists in establishing policy for Crown corporations. They set that policy for donations, and I believe they have a recommendation that that policy is somehow tracked, and at this point. . . . I have made some inquiries; my assistant has tried to determine how that tracking is done, yet nothing has been relayed back to us. So if the minister, with his staff now at his disposal, is able to share that with me, it may save me the time of having to make a further call or save some time when I am finally briefed.

Hon. D. Miller: I'm not sure what the policy is, but apparently it's in conformity with the policy.

An Hon. Member: That's the craziest answer I've ever heard in my life.

I. Chong: I also have to listen to that more closely, because I'm not sure if that was an answer or just a way to have something written in Hansard. I'm not sure, but. . . .

I'm not trying to be difficult, but I would appreciate it if the minister could indulge me for just a moment and perhaps. . . .

Hon. D. Miller: We could indulge you for three hours.

I. Chong: Fine. Just a little bit more. I understand, as he said, that it's probably in line with whatever the policy is. But the problem as I understand it, is that there's a set rule, but nobody is tracking to find out whether the set rule is being followed. This is coming straight from the Crown corporations secretariat. We did make some inquiries. I did not try to set the minister up -- although if I could I probably would. I'm just trying to understand why the Crown corporations secretariat would establish a policy, make recommendations and. . . . Apparently no one is following those recommendations -- and not just the minister's Crown corporation.

G. Farrell-Collins: That's because nobody knows what they are.

I. Chong: That's probably the problem, as the member for Vancouver-Little Mountain says.

And there are other Crown corporations. I have to forewarn you: there are other Crown corporations in the same predicament, which means you are all following the same policy of not following a policy of tracking. Perhaps not under this ministry, but apparently all the other Crown corporations are required to track their corporate donation policy, and no one is doing it. So you're all consistent in not doing it. I'd just like to find out, if possible, what the staff is doing towards that.

Hon. D. Miller: I want to say that I can confirm here today that even though I don't know what the policy is, I'm absolutely convinced we're following it. [Laughter.] If there's any question about that, in front of everybody today I'm going to issue some instructions: I want to make sure that you are following the policy. Having said that, I know that my instructions are always followed.

An Hon. Member: Apparently.

Hon. D. Miller: Once we find somebody who knows what the policy is, I'm sure we'll also discover that we've been following it.

I. Chong: I guess I'll have to accept that at this moment. The minister has been very kind and jovial up to this point. I guess he's comfortable in saying that a corporate donation policy is in place and is being followed. If he is assuring me at this time -- he said so, and it's now recorded in Hansard -- that he will look into it and offer instructions in that regard, then I will accept that. I appreciate that, and I will look forward to what other information is made available -- unless the minister is now willing to share that information, which it appears he is.

Hon. D. Miller: Actually, it's been confirmed. We have found a note that in fact says that. . . . It doesn't describe the policy, but it says we're following it. I'm very pleased that the corporation has been so. . . . It is sticking to the rules. They're following my example.

But seriously -- and I was trying to be a bit humorous there; I guess it's the lateness of the hour. . . . I'm getting punchy after. . . .

An Hon. Member: Have you had dinner?

Hon. D. Miller: I've had dinner, but it hasn't helped.

But really, just to illustrate, I think corporations do have a responsibility. Looking across the piece, around education, environment, health and welfare, community sports and recreation, and arts and culture: Ballet B.C. school program, Nanaimo and District Harbourfront theatre, Vancouver Opera, Prince George Symphony, Green Thumb Theatre, Bard on the Beach, Salvation Army Red Shield Appeal, United Way, Quesnel and District Seniors Society, Mission Community Services Society, North Peace Leisure Pool, Vancouver Life Skills, scholarships, University College of the Cariboo, Canadian Native Arts Foundation, University of B.C., World Wildlife Fund, Pitch-In British Columbia, the Evergreen Foundation, Friends of Boundary Bay, Fraser Valley Cancer Centre, Nanaimo District. . . . The list goes on and on -- 600 recipients, I think.

The corporation is trying to exercise its corporate responsibility. We are making a contribution to the North American Indigenous Games, which are being held here in the Victoria 

[ Page 4974 ]

region this August. There's $75,000 for joining forces with Health Canada, Indian and Northern Affairs Canada, the first nations of B.C. and the Vancouver Grizzlies basketball team to launch Spirit Nation -- which is a youth club to promote healthy lifestyle choices -- through the National Basketball Association's Just Say No and Stay-in-School programs. It seems to me that this illustrates a heck of a lot of thought by the corporation and by people responsible for these kinds of allocations. I'm very pleased that they are playing that role.

I. Chong: I do thank the minister for sharing a brief glimpse of the number of organizations that are benefiting from this.

I do agree that corporations have a role to play. They have a responsibility to be a part of the community. But this is a public corporation, a Crown corporation. There is also public accountability, and we do receive questions -- I know I have in my particular constituency office -- when we have seen B.C. Hydro being a corporate sponsor. It's not so much a complaint as some people just wondering how they get on this list, as well. They've inquired as to the corporate donation policy.

When we started making some inquiries about it, we found that in fact there was something in place. We weren't given what was in place, which was unfortunate, and also we were not told as to whether it was cash. . . . I apologize, we were told it was in cash, but we were not told how the process was occurring. We were also told it was currently under review. As I say, my assistant was able to determine that the Crown corporations secretariat had made and established some recommendations -- I don't know how many recommendations; I'm still waiting on that -- and also that those recommendations have not yet proven to be followed. So that raised some concerns.

With that, I would just like to thank the minister for his indulgence in this area. As Culture critic, as I'm sure he understands, I want to be sure that I can advise those who come to me as to what is available. I would certainly be most appreciative of any information he could forward on to me, whatever he's shared now, and the little piece of paper that was flipped to him by staff seems very interesting as to some directive. I would certainly like to be able to have that for my files to make my job easier, as well. So with that, I thank you.

G. Farrell-Collins: Well, I'm keeping the Hansard from that set of questions and answers. That was truly enlightening. I just want to ask a quick question before you put all the paper away. The minister mentioned the World Wildlife Fund. I'm just curious what the donation was and what it was for -- that's all.

[7:45]

G. Farrell-Collins: I'm sure that will change her views completely. I wouldn't count on it, but we'll let her do that.

I want to finish up through not all of Hydro, but certainly the area of energy supply and Powerex, by reviewing some of the projections that were made in the 1995 integrated electricity plan.

I'm looking at page 5, which may be helpful if you have it there. There is a projection for energy production right up until the year 2014-15. I understand there have been some changes in the government strategy with regard to this plan since such time as this document was put out. I'm not aware if there's an update, if the government has updated any of the data or material on this. Perhaps the minister can tell me what changes there have been with regard to the added capacity, particularly the Revelstoke units 5 and 6, the Mica unit 5, Seven Mile unit 4, the Stave Falls replacement and Burrard repowering.

In addition, there's a note 4 saying "Other," which is a significant increase, a significant amount of power in the nature of 300 to 895 megawatts in the year 2014. That says that those numbers are assuming dependable capacities supplied under contract from other private power producers. Can the minister give us a bit of an update? I know there have been decisions made to scale back some of these projects. What is the status on those?

Hon. D. Miller: Yes. Earlier in a discussion, I think I made a commitment to send to the member -- within, I believe I said, two weeks at the outside -- an updated report on these issues.

G. Farrell-Collins: The ones the minister mentioned at the time were Elk Falls, Revelstoke, Stave Lake, Burrard, and Purcell was another one I believe he mentioned. There's the Mica project here, the Seven Mile amongst others and in particular the "Other" in note 4. I assume the others are Elk Falls and those.

Can the minister confirm that he will give me an update on all of these items, as opposed to just the ones that were mentioned previously? Just so I'm clear on what I am expecting, and therefore what your staff can prepare, it would essentially be a revised revision of the revised 1995 energy plan with regard to, particularly, the other producers over and above current items. I would appreciate getting that. That would give me a little better projection as to what our production capacity might be over the next ten to 15 years.

Hon. D. Miller: We will. We've taken notes. We'll refer to Hansard to ensure their accuracy and give an update on the items listed in the plan.

G. Farrell-Collins: To shift away, perhaps, from the particular energy items -- energy plan, electricity plan. . . . I have a few other items that I'd like to deal with, which I'm sure the minister isn't quite as eager to discuss, but I would like to discuss them anyway. There was a freedom-of-information request which the opposition put in and received. It was the subject of some comment earlier in the session. It dealt with the amounts paid to Mr. Marc Eliesen in the time since he left his position as the head of B.C. Hydro. Can the minister tell us, now that we have opportunity for perhaps more detailed questions and more detailed responses, exactly what Mr. Eliesen has been doing since May 4, 1994?

Hon. D. Miller: It's not technically under Hydro. He has been working with the consortium of Asea Brown Boveri and Westcoast, pursuing energy projects in China. But it's not under Hydro's estimates.

G. Farrell-Collins: Perhaps the minister can tell me, then. . . . My understanding is that he has been working with. . . . I can bring it up under B.C. Trade in the Premier's estimates, if he'd rather I do it there. I can certainly do that, but I seem to recall it was the minister who responded. If he'd 

[ Page 4975 ]

rather I do it with the Premier, I'm more than happy to do it at that time. But if the minister is prepared to answer questions on this, as he has in the past, then I'm glad to continue to ask them now.

Hon. D. Miller: I am going from memory now, with respect to the specific projects. But as I recollect, there was the successful acquisition of a project that, in dollar terms, saw a return that would equate to whatever our cost has been for Mr. Eliesen. He was picked up by the B.C. International Power Group -- which, again, is a consortium of B.C. Trade, Asea Brown Boveri and Westcoast Transmission -- and has been pursuing potential power projects in China. I understand, as I say, that there was some. . . . I don't have a note on the specifics of the project, but some success was realized with respect to that which saw some benefits back to British Columbia.

G. Farrell-Collins: I'll have to obtain the actual press report -- I believe it was -- of a story that was talked about. . . . I believe it was done by Mr. Beatty at the Vancouver Sun. He talked about the project that had been done in China. I can't remember the figures. I can throw some out, but to the best of my memory, I think it was about $1.5 million that accrued to the consortium. To my understanding, that was in fact the only project that had actually generated revenue for the consortium. And that was it. I think it was just $1.5 million -- somewhere in that figure. The reason I'm asking is because we have the freedom-of-information request, which itemizes the payments to Mr. Eliesen over a period from May '94 to October 31, 1997, which come to a total of $1.497 million. So that's $1,497,000. If I remember correctly, the entire revenue from the project he'd been working on was $1.5 million. If that's correct, this appears to be nothing other than a make-work project for Mr. Eliesen in order to cover the costs of keeping him on salary, for some strange reason. Can the minister confirm if that's correct?

Hon. D. Miller: I don't have a specific note to confirm the numbers. I think I read numbers into the record of the House in question period in response to a question. So if the member has received written information, then I can only assume it's correct information.

G. Farrell-Collins: I'm sorry. It's a response that came from the minister's office. I thought he would have had it, but I'd be glad if I can take a minute to get a photocopy of it. I can do that. That's not a problem.

Interjection.

G. Farrell-Collins: For the matter of discussion, it might be good for the minister to have it, because there are some questions I'd like to ask.

At the time Mr. Eliesen left B.C. Hydro, the public was told, and we were told, that no pension and no severance were being offered to Mr. Eliesen. It appears from this document that Mr. Eliesen had a base salary over that period of time which added up to $678,307 -- in that range, approximately $680,000. He had pension and other benefits, all paid by B.C. Trade, of $755,000 -- really, three-quarters of a million dollars. And on top of that, he received an incentive bonus. I wonder how the minister reconciles the comments at the time Mr. Eliesen left B.C. Hydro with the facts contained in the documents that came from his ministry.

Hon. D. Miller: Again, I wasn't responsible at that time. But as I recollect, his contract was simply picked up by the consortium. I believe that was the arrangement.

G. Farrell-Collins: That was certainly the line that was given. I don't think the facts reflect that, because at the time, if one looks at the period in question, it appears that in fact the funding for all of this -- the portion that came out of B.C. Trade and B.C. Hydro -- was a total of approximately $1,124,000, as opposed to the $1.5 million that was paid in total. Rather than having a balance where one would think, if the consortium picked it up, it would have been a third, a third and a third, it appears that in fact the taxpayer was on the hook for over two-thirds of the total.

In fact, the partners in the consortium picked up only about $364,000 out of the $1.5 million. So I guess that's difficult for me to reconcile with what was said at the time -- that Mr. Eliesen had just left Hydro with no pension, no severance, no nothing and had gone to work for this consortium and that they in fact were going to pick up the tab. I would have thought that the three partners, being equal contributors to the consortium, would each have paid a third. However, it appears that that wasn't the case. Can the minister tell us how he reconciles the public statement that was made by his predecessor with the actual facts?

Hon. D. Miller: Well, I don't have to try to reconcile anything. The consortium picked up the contract. There was an arrangement, clearly, between the members of the consortium with respect to an allocation of costs between them. That, presumably, is in the information the member has. He appears to be saying that. I don't know what more I can say.

G. Farrell-Collins: I guess it's not for the minister to say; I guess it's for me to say -- that is, the fact that what was said to the public at the time that Mr. Eliesen left B.C. Hydro simply wasn't the reality. The reality turned out to be something quite different. Mr. Eliesen's package was not picked up a third, a third and a third by the people involved; there was not an equitable distribution of the costs. There was in fact a pension and severance package given to Mr. Eliesen at the time he left B.C. Hydro, contrary to what we were told. It just proves the point that, once again, what the people were told turned out not to be the reality. I guess we can leave it at that and move on to another subject, if the minister would like to do that.

I'll go on to another topic, if I may. That is the Smith report, which was done on the Raiwind project. I do have some questions about the final report itself, because it left. . . . We had an extensive debate about this last year, and at the time we did there was a whole series of questions that remained to be answered. Mr. Smith assured us that the report was merely a draft -- the one we had at that time -- and that indeed those various questions would be answered later, in the final report. I must say that despite my comfort or discomfort with the actual findings, what I can tell the minister I was extremely uncomfortable with was the fact that a lot of the questions that had been raised in here and that we were assured would be answered in the report were never even touched upon. I think there is a series of questions that need to be answered about that.

But I want to deal with a couple of issues in particular on what's happened since last year, when we were all here and had our discussion. B.C. Hydro has sold its shares in IPC to SNC-Lavalin, and they've taken over the project, in my understanding, virtually in its entirety as far as British Columbia is concerned. The other shares that belonged to the other shareholders of IPC, where there was a forced sale. . . . They've all sold their shares to Lavalin, and it now controls the project.

At the time when the Raiwind project became public, one of the concerns I had was the clause in the agreement that 

[ Page 4976 ]

allowed IPC to control and, essentially, have right of first refusal for any other foreign project that B.C. Hydro was to engage in. I had a concern about that, because it tied us and the future of B.C. Hydro -- and our ability to market it internationally -- to one group of investors. Can the minister tell me if, in the deal with SNC-Lavalin, B.C. Hydro was able to get out of that agreement that locked us into ensuring that any future projects were offered to that group -- IPC at the time -- or whether we in fact continue to be locked in as we were previously?

[8:00]

G. Farrell-Collins: There was previously, under the IPC agreement, a provision whereby any future projects were to be offered to IPC first. The question I have is whether or not that changed with the sale of the IPC shares and the Hydro shares to SNC-Lavalin.

Hon. D. Miller: That's correct. There was -- the member is correct -- but there is not now. We do have the option in the future, but there's not a lock-in provision with respect to future products.

G. Farrell-Collins: So the minister is telling me that in selling the shares of IPC, the ones that Hydro acquired from the other IPC shareholders -- and I believe Hydro also sold its own shares to SNC-Lavalin -- they've freed themselves from any contractual obligation to offer a first refusal to IPC for any future developments offshore. Is that correct?

Hon. D. Miller: No, we sold the shares that we had repurchased. The member might recall that in fact we were prohibited from soliciting. Nonetheless, we did obtain some of the original shares, and those were sold to SNC. We retained our 40 percent position.

G. Farrell-Collins: Can the minister tell me how it is that Hydro managed to get itself out of the lock-in provision? Was that negotiated as part of the sale? Is there a contract out there that clearly and explicitly states that there's no lock-in? Or are we just being assured by your staff that that is in fact the case?

Hon. D. Miller: Yes, it was renegotiated.

G. Farrell-Collins: Could the minister commit to make available the new shareholders' agreement?

Hon. D. Miller: That's contingent on agreement by SNC.

G. Farrell-Collins: I have a bit of a problem with that answer, given the history of this project. We had a deal that was done by Mr. Laxton and his son-in-law Richard Coglon, which is the subject of both an RCMP investigation and a number of investigations by the Securities Commission. Given the dismal performance of Hydro in monitoring that project initially and given the comments in Smith's report, however timid they are, it's quite clear that Hydro was less than diligent in doing its duty of protecting the public interest. Therefore I think it's important that the people of British Columbia have some assurance, other than that given them by the minister and the chair of B.C. Hydro, that everything is fine with this project.

We have yet another deal -- this one done with a single entity, as opposed to a number of individual shareholders -- that we are supposed to assume is done in the best interests of British Columbians. One of the concerns that I and others had at the time was that B.C. Hydro, with all its skills and abilities and its international reputation and contacts, was essentially putting up all of the marketable assets in this agreement, and all the other people were providing was a small amount of cash and really very little risk for what they were getting.

Now we have Hydro and the minister trying to assure us that there's been a new shareholders' agreement drawn up and that it rectifies the problem of first refusal that was there in the past, and the minister is telling me that we have to check with the partner to determine whether or not the government and Hydro can be accountable for that decision. I think Hydro and the minister owe an explanation to the public -- to give an assurance over and above that given to him by his staff that in fact the case is such that B.C. Hydro has negotiated itself out of that lock-in provision and therefore is able to engage in subsequent agreements without necessarily having to consult SNC-Lavalin. I would suggest that it's probably unlikely that SNC-Lavalin agreed to that change, although they may well have. I would like to see the agreement.

It would seem to me that part of the value of the IPC shares is the fact that they're welded to B.C. Hydro's reputation, experience and expertise. If that's not there, then part of the value, obviously, is the Raiwind project itself. But another part of the value of those shares was the fact that they were tied so closely to B.C. Hydro and its technical and reputation assets, if I can put it in those words. Quite frankly, I don't think it's acceptable for the minister and for Hydro to say that they're not willing to disclose that new shareholders' agreement in order to verify some of the comments that we heard so far in the first question. Essentially, have we got out of that deal? I think there needs to be some verification of that other than just assurances, given the track record of Hydro on this case.

Hon. D. Miller: Yes. I did say we would check with SNC. It may be that it is relevant.

G. Farrell-Collins: I certainly hope it is, because if it isn't, then we're sort of back where we started and we've got another problem. We've got a Crown corporation that's not being accountable to the public, particularly in an area where there are some serious concerns.

As an aside, the minister knows full well that in an effort to take advantage of an attempt by the Premier to say that he had dealt with this issue, he also announced that he was establishing the Select Standing Committee on Crown Corporations, to be chaired by an opposition member which would be able to examine Crown corporations. I know that we're now some 12 months past the last election -- it's more than that actually; it's about 13, 14 months past the last election. That committee has yet to meet; that committee has yet to examine one Crown corporation. Certainly something that this committee could do would be to sit down and go through this project and look at what has been agreed to by SNC-Lavalin and the government. If that needs to be done in a confidential basis as far as third-party information goes, then I'm sure members of the committee would be willing to examine that and see if that's a possibility.

Certainly there are other ways for the government to ensure that they are being accountable and that everything is on the up and up this time. I don't think the minister or the 

[ Page 4977 ]

government should be threatened or intimidated by that, but rather that they should take that as an opportunity, quite frankly, to ensure that there is accountability within the Crown corporation. Because the minister is obviously extremely busy, as his predecessor was, with the number of Crown corporations and various departments in government, and he can't always watch every single thing that the Crown corporations are doing, although he is ultimately directly accountable to the public for them. I think it would be a good idea for that to happen. It doesn't have to be a threatening thing. It could be a way of making sure that the public is holding the Crown corporation accountable for its actions.

I'd like to ask the minister why it was that this. . . . First, let's talk a little bit about how the Lavalin deal was done. Can the minister tell me where the idea first came for SNC-Lavalin? Were they approached by the government? Did the government approach them? Was there a third party involved in bringing the two parties together? What were the dynamics of these two partners getting together in order to solve this problem?

Hon. D. Miller: Yeah, the SNC corporation did approach Hydro. We were not in a position to take any action. In fact, I think we were prohibited from doing anything. Obviously they subsequently approached the other shareholders, and that was how the deal originated.

G. Farrell-Collins: Can the minister tell me what role Mr. Denhoff played in securing the initial contact and then the subsequent agreement on this deal with SNC-Lavalin?

Hon. D. Miller: No, I can't.

G. Farrell-Collins: Could the minister tell me if his staff can tell me, or can they tell the minister and then the minister tell me what role Mr. Denhoff played?

Hon. D. Miller: No again, and they can't either. I think he was at a meeting, but I'm not sure what his capacity is with SNC.

G. Farrell-Collins: As the minister responsible for employment and investment and for the infrastructure program. . . . Mr. Denhoff is responsible. . . . I believe his title is something like chairman or vice-chairman of western operations or western opportunities with SNC-Lavalin. He's out here in British Columbia and not only working with this ministry. . . .

Hon. D. Miller: A busy guy.

G. Farrell-Collins: Oh, I'm sure he's very busy.

He's not only working with regard to the Hydro deal but also with regard to a Lions Gate Bridge proposal, among other things, so I'm curious as to what his role is. Perhaps when we resume this a little later, one of the members will have determined that.

Can the minister tell us why it was that this project, this sale to SNC-Lavalin, was done without a board of directors in place? Why was it done just at the direction, I assume, of the president and the chairman?

Hon. D. Miller: Well, there was a sequence there in terms of the expiry of the old board and the interim in terms of the appointment of a new board. The BCHIL board was in place, and they approved the deal: Mr. Smith, Mr. Costello and Mr. Ridley.

G. Farrell-Collins: Thank you. I'll come back to that in a few minutes, if I may.

[8:15]

Hon. D. Miller: My understanding is that he did resign late fall. We're looking for an exact date, but I believe it was the late fall -- December.

G. Farrell-Collins: Thank you. I heard December '96 as the time frame.

Can the minister tell us if there was any severance or other items paid to Mr. Shaw upon his departure, or was it completely a voluntary departure? Was there any buyout? I assume that he's to receive some pension. Can the minister tell us what his pension benefits are, if any?

Hon. D. Miller: Voluntary. No severance, and too young for a pension.

G. Farrell-Collins: He got out while the going was good, I guess.

In fact, my understanding is that Mr. Shaw is now working for SNC-Lavalin. Can the minister tell me if he feels that's a surprising move or if Mr. Shaw had anything to do at all with the negotiations or the sale of IPC or Hydro shares to SNC-Lavalin?

Hon. D. Miller: Apparently he had nothing to do with it. I have no idea whether it's a surprise or not. I'm easily surprised, and somehow that doesn't get me going.

G. Farrell-Collins: Can the minister tell us if Mr. Ridley is still involved with Hydro or its subsidiaries?

Hon. D. Miller: Mr. Ridley, in May, ceased and resigned as B.C. Hydro's representative and director. He is now employed by SNC and continues to be the president of BCHIL Power in overseeing the project. I assume his expertise was sought on a continuous basis. He's been granted a leave of absence from B.C. Hydro for what appears to be a period of five years, with an option for an additional five. He is employed by SNC and retains his position with respect to the project.

G. Farrell-Collins: Can I ask the minister if that surprises him?

Hon. D. Miller: Again, I don't know whether surprise is the emotion that needs to be generated or not generated. Clearly the individual was involved with the project on a fairly intensive basis and obviously had developed some expertise. That's been retained by the major partner.

G. Farrell-Collins: I believe I heard earlier, in response to an earlier question, that Mr. Ridley was involved in the negotiations of the sale to SNC-Lavalin of Hydro's held shares. Is that correct?

[ Page 4978 ]

Hon. D. Miller: Yes, that is correct. I did earlier cite that he was on the board of BCHIL. So yeah, he was involved.

G. Farrell-Collins: Let me get this straight, then. Mr. Ridley, who was working for B.C. Hydro, was our representative on BCHIL. I believe he was also our representative in Pakistan, if that's correct, on the SEPCOL board. Correct me if I'm wrong, but my recollection was that he was our representative on SEPCOL. He used to work for B.C. Hydro. He's taken a five-year leave of absence.

Let me put it in this order. As a representative for B.C. Hydro and a representative of the people of British Columbia, the one individual. . . .

Excuse me, could I ask the Clerks to. . . ? I'm just trying to phrase a question here; I'm sorry.

He played a role for B.C. Hydro in trying to protect -- or supposedly trying to protect -- the public interest in negotiation with SNC-Lavalin for the purchase of Hydro shares. Upon advising B.C. Hydro to sell the shares to SNC-Lavalin, he then got a leave of absence from B.C. Hydro and went to work for SNC-Lavalin. Is that correct?

Hon. D. Miller: I fail to understand what. . . . The member seems to be getting a little bit exercised here. I can't quite figure out why.

G. Farrell-Collins: I'm asking. I just want to know if it's correct.

Hon. D. Miller: Well, I did indicate what his current position is. He presumably has the expertise that's required on the project, and he's in that position now. Got a problem?

G. Farrell-Collins: Yes, it's a problem. It's a problem because Mr. Ridley, all along the way, is supposed to. . . . Particularly in negotiations with SNC-Lavalin, he was involved in accepting or rejecting the share offer, was involved in accepting or rejecting the amount of money that SNC-Lavalin was willing to pay for the shares, was involved in determining whether or not it was a good deal or a bad deal, was involved in negotiating the shareholders' agreement, which the government refuses -- up to this point, anyway -- to let us have a look at.

Mr. Ridley was involved in representing -- or supposedly involved in representing -- the public interest, Hydro's interests, in negotiations with a private corporation. And the minute the contract is signed, he got up from that table, walked around to the other side and was immediately employed by the partner he was just opposing at the negotiation table. How is anybody in the public supposed to think that Mr. Ridley had the best interests of the taxpayers of British Columbia, the shareholders of British Columbia and the owners of B.C. Hydro when he was on this side of the table, when within minutes he ends up on the other side of the table representing the very firm that he just sold their shares to?

Hon. D. Miller: The member is pretty loose with his lip, in my view. The gentleman involved had a senior position with the project. There was a transaction, in terms of that being sold to SNC. There were other firms with integrity -- Dominion Securities -- legal people and people from Hydro involved.

What's the member getting at here? Always this rush to make innuendo, these accusations that somehow there's a dirty deal somewhere. For all the kerfuffle, for all the noise. . . . You know -- more heat than light. But carry on; it's what we expect.

G. Farrell-Collins: What people expect is for the people who manage B.C. Hydro. . . .

Interjection.

The Chair: Through the Chair, please, members.

G. Farrell-Collins: Thank you, hon. Chair. I appreciate your intervention. I hope the minister will in fact behave himself.

The fact of the matter is that the people of British Columbia expect their Crown corporation -- their largest one, in particular -- to be treated with respect. They also expect the gentleman who's charged with overseeing it to do so in a competent manner.

The predecessor to this minister didn't do so. It resulted in a significant problem for the government -- and more importantly, quite frankly, a problem for the taxpayers of British Columbia -- in the Raiwind project, which was a fiasco as far as the way it was managed. The Premier's and the minister's own choice to head up a review said as much, although probably could have said a lot more.

So for the minister to expect that somehow, without question, we should just assume that everything is on the up and up, given that there is an RCMP investigation and a number of securities investigations ongoing. . . . In fact, there was a review done, as good as. . . . I'm glad it was. I noticed it was in a white document -- a review of the project, done by Mr. Smith. Somehow, now that one of those investigations is complete, everything's fine; everything's been taken care of. Everybody's happy. We should just take the minister's word for it that everything is on, as he says, the up and up.

I'm not saying that anything in particular has been done wrong or that anyone has behaved dishonestly. But what I am doing is my job, which is to ask the minister questions so that he can be accountable for the operations of B.C. Hydro. For the minister to ask me, as the opposition, just to assume -- given the track record of this -- that everything's fine is ridiculous. If he wants to get upset and rant and rave and accuse me of spreading malicious rumours or innuendo, then he can do that. But I think the public, the people of British. . . .

Interjection.

G. Farrell-Collins: Well, then, I don't know why the minister tries.

If the people of British Columbia thought the minister and his predecessor were competent at doing their jobs, then they would, hopefully, have some track record to base that on. They don't; they don't have a track record to base that on. As a result, they expect people to ask questions.

If the previous minister had answered the question and done his job as the minister responsible for B.C. Hydro when the member for North Vancouver-Capilano first asked the question almost two years ago, we wouldn't have had this problem. But he acted the way the minister is acting right now -- full of indignation, self-righteousness and anger, without looking at the substance of the question.

The fact of the matter is that Mr. Ridley was part of this deal from day one. He sat there on the board at SEPCOL. He 

[ Page 4979 ]

was involved in all the negotiations. Nowhere along the way, as far as I can tell from reading the report, did he raise these questions and issues that were of concern to the public when the information subsequently became public. It may have been that Mr. Ridley just didn't see what was going on. I don't know what, exactly, his role was in all of this.

What seems difficult to me is the fact that Mr. Ridley played a role in approving the deal to bail the government out from this project, to bail B.C. Hydro out from their difficulties on this project with SNC-Lavalin, and then turned around and came under the employ of SNC-Lavalin, the very company that he was negotiating with probably five minutes previously. I think there's a problem with that, given the track record of this agreement.

If this had been lily-white from the beginning, if everything had been done on the up and up, if there wasn't an RCMP investigation, if there weren't a whole series of securities investigations, if there hadn't been an entire review done of B.C. Hydro as a result of it, I would probably give the minister the benefit of the doubt on that one. I'd probably sit down and move on. But we're not operating in that type of a venue. That's not the case history here; that's not what's happened in the past.

So for the minister to be offended by these questions, I think, is a little sanctimonious. The fact of the matter is that the people expect some answers; they want to hear what they are. When I hear that Mr. Ridley has done this -- has moved from one side of the table to the other side -- it raises a whole series of other questions. You know, the minister can get upset about it if he wants, but he'll just have to deal with that.

Can the minister tell me how it is that the dollar figure that was arrived at for the value of these shares in Raiwind was negotiated? Was it just pulled out of thin air? What justification was used? Was there any sort of evaluation of the shares done? Because my understanding is that the only place they were traded was on the Karachi exchange, and in fact, they were trading well above the level in rupees that would have translated into. . .something well above the $1.50 (U.S.) figure that was eventually negotiated. Indeed, there were some shareholders of ITC that weren't happy to have to submit to the sale at $1.50. Can the minister tell me what method was used to evaluate those shares? Because the only place they were being traded in an open market was in Karachi.

Hon. D. Miller: My information is that RBC advised that it was a reasonable deal.

G. Farrell-Collins: I'd be intrigued to know how that figure was arrived at, how RBC determined that. I'm sure that the legal department at Hydro, certainly the people who sat on the board, must have asked the question: "How do you get that? What are you using to evaluate these prices?" They were there. They were the ones responsible at the table to determine whether or not that was fair value. I would assume that they didn't just say, "Is that fair?" and RBC said yes, and they went along with it. There must have been some explanation as to how they arrived at those figures. Can the minister tell us what type of valuation process RBC used other than just telling the legal department that everything was okay and that that was a good figure?

Hon. D. Miller: They're professionals. They offered their opinion; we accepted.

G. Farrell-Collins: I assume that the legal department of B.C. Hydro is professional; I assume that a whole bunch of people that were involved in this deal are professionals. But there should be some accountability or some explanation as to how that figure was arrived at other than just that it got two thumbs up as opposed to two down or one down, and one up. Maybe the minister, or the staff, can take some time and see if they can find out just exactly what the basis was for the evaluation, other than an A-Okay from RBC Dominion.

Can the minister tell us what his involvement was in the sale of the shares to SNC-Lavalin? Was he involved? Was he apprised? Was he merely advised? What role did he play in the approval of the sale to SNC-Lavalin?

Hon. D. Miller: My officials kept me apprised of the ongoing events.

G. Farrell-Collins: Did they happen to apprise the minister of how they valued the shares, other than that SNC-Lavalin gave them two thumbs up?

[8:30]

Can the minister tell us what disclosure was made to SNC-Lavalin about the deal? What documents were given to them? What information was given to SNC-Lavalin in order for them to do an evaluation of what they wished to offer? It's customary, when these types of deals are done, that there's a sharing of information. Can you tell me what SNC-Lavalin was privy to?

Hon. D. Miller: They did their own due diligence.

G. Farrell-Collins: I assume they did due diligence. I can't assume B.C. Hydro would have done due diligence on just about anything, but I would assume that SNC-Lavalin would have. Can the minister tell me what constituted the due diligence that SNC-Lavalin did? What documents were they entitled to see? What documents did they see? What information was disclosed to SNC-Lavalin on this deal?

Hon. D. Miller: Well, you'd really have to ask them. They're a separate company. We're not responsible for their due diligence. They did it. We supplied documents at their request. They did the due diligence and made the deal.

G. Farrell-Collins: Can the minister give me a list of the documents that were given to SNC-Lavalin in order for them to do their due diligence at their own direction?

Hon. D. Miller: They're a private company who did their own due diligence. There may be some confidential documents; I'm not certain of that. But neither am I certain of any obligation that we have to provide any information relative to the activities of this company in terms of their due diligence, their decision to do what they wanted to do.

G. Farrell-Collins: I was hoping I'd get that answer from the minister, because it makes it a lot easier politically. The fact of the matter is that B.C. Hydro is a public company, owned 

[ Page 4980 ]

by the taxpayers of British Columbia. The question I'm asking is: what B.C. Hydro documents, which the people own, were given to SNC-Lavalin in order for them to do their due diligence?

I could care less what their due diligence was; I care, but they're not going to tell me. What I do care about is what information B.C. Hydro gave to SNC-Lavalin in order for them to do their due diligence. Those documents -- that information -- belongs to the people of British Columbia. And I believe the minister does have an obligation to let the people know what information they're making available to a third party.

Interjections.

G. Farrell-Collins: I'll ask the question very simply for the minister. We have, in this province, some laws. We have, in this province, a Crown corporation. Now, that Crown corporation is using those laws in many cases -- particularly the Freedom of Information Act -- to deny access to all sorts of information to a lot of British Columbians who would love to know that information, who would love to know how the Crown corporation is behaving or misbehaving, if I can put it so boldly, with regard to their funds. And that information has been denied to the general public under the Freedom of Information and Protection of Privacy Act.

My question is: how is it that that information, then, falls into the hands of a corporation as it does its due diligence of an investigation? Why is it that SNC-Lavalin can have access to the shareholders' agreements, can have access to documentation, can have access to what I understand, if I overheard correctly, was a list of documents, when the public does not have access to those documents?

Hon. D. Miller: The member's exhibiting signs of paranoia. I don't know if I can help him at all.

G. Farrell-Collins: Well, the minister is exhibiting signs of incompetence. And I don't know if I can help him, as much as I try. The reality is, he has a Crown corporation. He has a predecessor who did a disastrous job of protecting the public interest. With the questions I've asked this evening, I am no more convinced that this minister or the people at B.C. Hydro are any better now at protecting the public interest than their predecessors.

That's my job. The minister might not like that, but that's my job: to ask those questions. I know that if the minister was here and I was there, he would be asking exactly the same questions -- if not tougher, probably. And I'm sure he'd be proud of that.

The reality is that there are whole boxes of information with regard to the Raiwind project -- boxes of information that were supposedly made available to Mr. Smith in their entirety -- that have not been made available to the general public and probably not even to the previous shareholders of IPC, but that were made available to SNC-Lavalin in order for them to do their due diligence.

I find it surprising that SNC-Lavalin had access to those documents in order to do its due diligence. But the public doesn't have access to those documents in order to do their due diligence of watching over the Crown corporation and making sure that at least somebody is watching out for the interests of the public if the minister and the board aren't. If the minister has trouble understanding that or thinks that somehow that's steeped in paranoia, then I think he's got a problem, not the opposition. I'd be more than glad to take that issue to the public and deal with it there. The fact of the matter is that this government has mismanaged the Crown corporation, and I don't seem to see any change in that.

Certainly there is a list of documents that were made available to SNC-Lavalin. On behalf of the people of British Columbia, I'll ask the minister again: will he make those documents, or at least a list of them, available to me and to the public so they know what documents were shared with SNC-Lavalin that have yet to be shared with the people of the province of British Columbia?

Hon. D. Miller: Again, SNC is a private company. They did their own due diligence. In terms of commercial confidentiality, they obviously required certain documents. To the extent that we could supply them, we supplied them. That was the transaction.

I don't know what more I can say, Mr. Chairman, except that I will be back very shortly.

The Chair: We'll take a five-minute recess, with the agreement of the committee.

The committee recessed from 8:39 p.m. to 8:52 p.m.

G. Farrell-Collins: Maybe in the future we can set a time when we recess, rather than just the length of time a cigarette takes to burn. It would be helpful for everybody involved, I assume.

Can the minister tell me if any of the information that they supplied to SNC-Lavalin in order for them to do their due diligence was supplied to any other company that was interested in purchasing shares from B.C. Hydro?

Hon. D. Miller: No.

G. Farrell-Collins: Were there any other companies that expressed an interest in purchasing the IPC shares from B.C. Hydro?

Hon. D. Miller: No, there were no others. There was some interest shown, but no other company came forward, so the deal was done with SNC.

G. Farrell-Collins: The minister said some people expressed interest but didn't come forward. Can he tell me what the difference is between that. . . ?

Hon. D. Miller: There were some inquiries as to whether our shares were for sale, but we were unable to conduct any transactions. SNC went to the other shareholders on their own. There were effectively no other offers.

G. Farrell-Collins: Can the minister tell us if Hydro considered selling their shares on the open market and, if so, why it was determined not to go that route?

Hon. D. Miller: We couldn't sell our shares.

G. Farrell-Collins: If I recall correctly, the Crown managed to secure a number of the IPC shares prior to any injunction coming into force. Can the minister tell me whether, at any time, B.C. Hydro considered getting out of the project in its entirety, before or after that injunction or indeed before or after the sale of the IPC shares to SNC-Lavalin?

[ Page 4981 ]

Hon. D. Miller: Again, we were unable to dispose of our shares. We did have a beneficial interest in some shares, but they were not technically owned.

G. Farrell-Collins: Those are with regard to the IPC shares. B.C. Hydro did, however, have shares of its own in the project. My understanding is it was a 40 percent share. Can the minister tell me whether Hydro ever considered selling its 40 percent of shares on the open market?

Hon. D. Miller: No.

G. Farrell-Collins: It always amazes me. It's sort of like watching one of those comedy routines where someone asks a very long question in a language, and they get a very long answer which in translation turns out to be: "No." One asks a question, and a scurry of briefing takes place which results in a one-word answer. I sometimes wonder how much information is actually transmitting, or if people on the other side are just speaking in another language where "no" is a really long, long word. I suppose the easiest way would be to get one of those little parabolic dishes on my desk, and I could hear what was said, but I don't think that would work.

We've put in a freedom-of-information request for a whole series of documents. We've been denied those documents, first because of the Smith review and now because of the RCMP investigation. Can the minister tell me whether or not Hydro obtained any sort of dispensation from the RCMP before they showed their documents to SNC-Lavalin?

Hon. D. Miller: We're not certain. Mr. Smith was here, and he dealt with the special prosecutor relative to that matter, but we're satisfied that what we did was okay.

[9:00]

Interjection.

G. Farrell-Collins: Well, I would love to have faith, believe me, because if I had faith I'd be at home sleeping right now instead of here asking these questions. The minister probably would too.

The problem is that there is an investigation ongoing. There are documents which aren't being made available to the public -- that aren't being made available, essentially, to anyone other than the RCMP. And SNC-Lavalin comes in to do due diligence in order to make a purchase of the shares. They're the only ones -- as far as the minister has said, anyway -- that were allowed to see those documents.

My question is whether or not there was approval given for SNC-Lavalin to look at those documents by the special prosecutor or by the RCMP. It would appear to me that the government has gone to absolutely great lengths to ensure that the documents, the information, isn't made available or public in such a way as to damage any ongoing investigation. But SNC-Lavalin walks in and says: "Hey, we'd like to buy these shares. Can we look at your books?" -- and the documents are made available to them. I find that unusual. Can the minister tell me whether there was approval obtained by the special prosecutor or the RCMP to make those documents available to SNC-Lavalin or whether that was just the decision of the chairman and the various people involved without that approval?

Hon. D. Miller: I just answered the question.

G. Farrell-Collins: No, he didn't answer the question, because the question was: can he assure me that in fact it took place, not whether or not he thinks it took place, which was the answer he gave me the first time. If he can assure me 100 percent that that approval was received, I'll be reassured. I'm not sure he can do that. If he can, I'll be glad to move on to my next question.

Hon. D. Miller: I hope the member doesn't have difficulty sleeping tonight, because I can't give him the assurance.

G. Farrell-Collins: That means we'll have to come back and go through a bunch of questions again at a later time to get the answer, and I hope Mr. Smith will be available at that time so we can get the actual answer. We can probably make arrangements to do that with the minister's staff at a later date.

Can the minister tell us what was the final cost of the review of the IPC deal done by Mr. Smith?

Hon. D. Miller: It was $1.75 million.

G. Farrell-Collins: Could the minister give us a further breakdown of those costs, please?

Hon. D. Miller: BDO Dunwoody accountants, $307,000; Considine and Co., $274,000; Ladner Downs, $241,000; Smith, $186,000; office and other expenses, $740,000.

G. Farrell-Collins: So the minister is telling me that from May. . . . I'm trying to think when Mr. Smith first began his review. I believe it was in February, the end of February or the beginning of March. So in a 12-month year on the Hydro report itself, Mr. Smith received $186,000. Just as an aside, can the minister tell me what Mr. Smith's billings were as the chair of B.C. Hydro, which were over and above the $186,000 for the review?

Hon. D. Miller: We're checking to see whether we can get that figure now.

G. Farrell-Collins: Perhaps while we're waiting for that other figure, the minister can give us a breakdown of the $186,000 sum paid to Mr. Smith in that period of time.

Hon. D. Miller: It's not broken down.

G. Farrell-Collins: I believe I heard the minister say that it wasn't broken down. It's broken down somewhere; it's just not broken down right here, I guess. We'll come back to that at a later date, and perhaps we can get that breakdown at that time.

Hon. D. Miller: Some time in August.

Interjection.

G. Farrell-Collins: That may be optimistic.

[ Page 4982 ]

Hon. D. Miller: Could be. Maybe September.

G. Farrell-Collins: That may be optimistic, too.

The minister gave me a number of figures for the various people involved. I didn't catch the last figure, which I think was for various miscellaneous expenses, office space. Is that correct? Can the minister tell me what that was and what the figure was?

Hon. D. Miller: Office and other expenses, $740,000.

G. Farrell-Collins: That one I would like a breakdown on, because it's about half of the total -- 40 percent, anyways -- in the sort of "Other" category. Does the minister have a breakdown of that figure here, over and above just the $740,000 figure?

Hon. D. Miller: No.

G. Farrell-Collins: Can the minister give me an assurance that perhaps next week when we resume the estimates I would be able to receive a breakdown of the total of the $740,000 figure?

Hon. D. Miller: We'll certainly attempt to do that.

G. Farrell-Collins: I'm sorry; I'm having difficulty hearing the minister. He's just not loud enough. Perhaps he could tell me what the answer was again.

An Hon. Member: Yeah, speak louder.

Hon. D. Miller: I said that we'd certainly attempt to do that.

G. Farrell-Collins: It's a bad day, Mr. Minister, when your own people are heckling you.

Can the minister tell me if there are any other. . . ? At the time we were at this last year, there were a number of other projects that were in the works: the Malakand, Swat River, etc. Can the minister tell us if Hydro is currently involved in any of those project, or any other projects?

Hon. D. Miller: There are other equity projects. Consulting fee for service. . . . To illustrate: we were awarded an energy efficiency consulting project in Brazil, a $2 million project through CIDA.

G. Farrell-Collins: Is the minister telling me that Hydro has backed out of the Malakand and Swat River projects? Is that correct?

Hon. D. Miller: Malakand may be a project that proceeds, but if it does, it will be SNC's decision with respect to investments, not BCHIL's.

G. Farrell-Collins: I'd like to know how that structure works, because previously it was a 60-40 with IPC and Hydro -- the shareholders -- and they were welded together and went out and did these various projects. In fact, Mr. Mahmood was quite upset that Hydro appeared to be backing out of those two other projects. So can the minister tell me: when he says that it would be a decision of SNC-Lavalin, would Hydro then still be a 40 percent partner in that, or are those options that SNC has bought out from B.C. Hydro?

Hon. D. Miller: It's hypothetical, but if it did proceed, all of the equity, risk, etc., would be SNC's.

G. Farrell-Collins: Just to clarify the first part, then, has SNC-Lavalin purchased the options from BCHIL? I mean, those options were there, jointly held. Is the minister telling me that in purchasing their IPC shares and in renegotiating the shareholders' agreement, SNC-Lavalin is now entitled to 100 percent of the Malakand and Swat River projects?

Hon. D. Miller: Those rights to pursue those projects are SNC's. If they want to invest, take those risks, that's their decision.

G. Farrell-Collins: I understand that. What I'm trying to understand is how they arrived at that, because there was an agreement, a memorandum of understanding, in place before, and the option on the Malakand and the Swat River -- both projects, it's my understanding -- were held 40 percent by Hydro and 60 percent by IPC. My understanding, from what I heard in response to my earlier questions, is that Hydro maintains a 40 percent share in that structure. Has SNC created another entity? Are they themselves free and clear of the joint corporation and have now in some way purchased the option or arranged or negotiated the option on both those projects, free and clear of any portion for B.C. Hydro?

Hon. D. Miller: It is the agreement between us and SNC that we will not participate in an equity basis or make those kinds of investments. That's the agreement we have.

G. Farrell-Collins: Is that part of the shareholders' agreement, or is there another agreement over and above the shareholders' agreement which clarifies that issue?

Hon. D. Miller: It is part of the agreement.

G. Farrell-Collins: The shareholders' agreement?

Hon. D. Miller: There's a master agreement. It's part of the master agreement.

G. Farrell-Collins: Can the minister tell me, for my naïve self, what the difference is between the master agreement and the shareholders' agreement? I wasn't aware there were two.

Hon. D. Miller: As I understand it, there's a master agreement that sets out the principles, and there's a shareholder agreement. I think it's actually contained. . . . I'm now advised that it's contained in both of them.

[9:15]

Hon. D. Miller: No, it was part of the agreement in terms of us withdrawing from participating in future projects.

G. Farrell-Collins: We were told and the public was told by a number of people involved that in fact the Malakand and 

[ Page 4983 ]

Swat River projects were probably likely to be far more lucrative than the Raiwind project, which, if all indications proceed as they are, may well provide a substantial return over time. It would seem to me that the 40 percent share of those options would have a value attached. Is the minister telling me that those values, those options, were surrendered to SNC-Lavalin free of charge?

Hon. D. Miller: It's all hypothetical with respect to what future values are. We made an agreement. We consciously wanted to get out of future commitments. That was part of the agreement with SNC.

G. Farrell-Collins: So in addition to purchasing the IPC portion of the Raiwind project as part of the deal for the $150 million (U.S.), they also received, free of charge, the options on any subsequent projects or memorandums that have been signed by B.C. Hydro. Can the minister tell me who it was who fronted the costs? Who provided for the expertise and the upfront costs to negotiate the memorandums of understanding on the Malakand and Swat River projects?

Hon. D. Miller: If there are costs associated with feasibility on those projects, they are reimbursable to BCHIL. We did make a profit on the deal with SNC of about $1 million.

G. Farrell-Collins: That way I guess you're only $750,000 in the hole in paying off the Smith report. I guess we've got a little way to go.

My question is with regard to the Swat River and Malakand projects. There was obviously advance work done. There was work done upfront to seek out and negotiate the agreements, the memorandums of understanding, for the two of those, as there was with the Raiwind project. The costs for the Raiwind project proved to be fairly substantial. Can the minister tell me what costs BCHIL bore in order to set up and arrive at the memorandums of understanding for both the Swat River and the Malakand projects? What was the cost involved in arriving at those memorandums of understanding?

Hon. D. Miller: It was $67,000 in Malakand.

G. Farrell-Collins: Can the minister tell me what the figure was for the Swat River project?

Hon. D. Miller: About $23,000.

G. Farrell-Collins: Can the minister tell us if there was any other work done by B.C. Hydro in searching out projects that haven't come to fruition -- ones that we may not have heard about yet or agreements that have not yet been met? What was the total expenditure provided for searching out international projects across the globe with regard to B.C. Hydro?

Hon. D. Miller: Yes, a variety of projects had been looked at -- some in Pakistan, a couple in India, one in the Philippines, one in China -- with development costs totalling $733,000. Again, the provisions that I referred to earlier apply to any one of these.

G. Farrell-Collins: Would the minister be willing to give me the names of those projects and the associated costs with them, please?

Hon. D. Miller: Yeah, we can send that out.

G. Farrell-Collins: Did you want to send those over now, or did you want me to. . . ? I mean, he could just read them to me; that's easy, too. I'd like to pursue the line of questioning, if I may.

Hon. D. Miller: Malakand, Pakistan, $67,753; Gabral, Upper Swat, Pakistan, $7,697; Kalam, Central Swat, Pakistan, $7,697; Madyan, Lower Swat, Pakistan, $7,698; Tarbela Extension, Pakistan, $20,000; Farakka Barrage, India, $8,838; Manera Bhali, India, $100,825; Ilaguen, Philippines, $14,146; Hongjiang, China, $498,369.

G. Farrell-Collins: Could the minister tell me a little bit about the project in China: what the project was, how much work was done on it, who was involved in scouting out that project?

Hon. D. Miller: I have very scant information: a hydroelectric project, $250 million (U.S.); a 180-megawatt, run-of-the-river hydroelectric project, location, Hunan province. That's all that appears to be here. It was determined, I guess, after investigation that it wasn't worth pursuing.

G. Farrell-Collins: That's not a lot of information for half a million dollars. Can the minister tell me who was involved in searching out that project in its initial stages and their involvement? Was this all done through BCHIL?

Hon. D. Miller: I don't have the personnel's names, but it was all done through BCHIL.

G. Farrell-Collins: Can the minister tell us what the time line was when this project was first considered? Was this looked at for six months or two years or five years? It seems to be substantially larger than any of the other projects. In fact, for the Swat River project, which is referred to quite often as another project that IPC was part of, the figure is $23,000. This one in China is about half a million dollars. It's a significant investment to make and then decide that it's not feasible. Can the minister tell us over what time frame this project was being investigated?

Hon. D. Miller: We don't have exact information for the years '93, '94 and '95.

G. Farrell-Collins: So the minister is telling me, then -- I just want to clarify this and sum it up, if I can -- that there were seven or eight projects out there where B.C. Hydro invested a total of some $733,000, I believe the minister said, investigating these various projects, only one of which to date has come. . . . I don't even recall if the Raiwind was one of them; I think it wasn't. But only one project so far -- in this regard, anyway -- involved a lease going forward to the project phase. Does SNC-Lavalin now have the options on all of these, if they wish, subsequent to reimbursement of the costs to B.C. Hydro?

Hon. D. Miller: The MOUs on most of those, I gather, have expired. Notwithstanding that, if SNC wanted to go back, relook at them and pursue any of them, any sunk costs that we've got in them would be repayable.

G. Farrell-Collins: Has all the technical information on these projects been given to SNC-Lavalin?

[ Page 4984 ]

Hon. D. Miller: Well, we're not precise on that, but presumably if they wanted to pursue those we would make any information we have available to them. We're not certain whether or not the explicit information was given to them. But I presume if they wanted it, we would make it available.

G. Farrell-Collins: Does that mean that all of these projects. . . ? I would assume that under the master agreement and the shareholders' agreement -- the minister said it was probably included in both -- that IPC, now SNC-Lavalin, had the right to pursue any or all of these projects of their own accord and that, under the master and the shareholders' agreement, Hydro would not be part of those investments. It would be a decision that SNC-Lavalin would take and, if I remember the minister correctly -- and he can correct me if I'm wrong -- all of the capital risk would be taken by SNC-Lavalin. Is that correct? Do all of these projects fall under that? Are they all in the same category as the Malakand and Swat River projects?

Hon. D. Miller: Yeah, if they wish to pursue any of these and do, then the arrangement is as I indicated. On the equity side, it is their responsibility. The work has to be done out of their centre of excellence in Vancouver, and they must offer us one-third of the engineering work on a fee-for-service basis.

[9:30]

Hon. D. Miller: Yeah, I think that may be correct. I can't confirm that absolutely, but I think that may be correct. Just to put some further information on that, it's clear that there was a mandate to pursue international projects, and they clearly looked around the world at a variety of opportunities.

G. Farrell-Collins: I just want to be clear, because up until this point there have really been three projects that it was known that Mr. Laxton and IPC were involved in: the Raiwind, the Swat River and the Malakand. There is apparently a list of another series of projects; the most significant of them -- the one in China -- were sought out and developed under Mr. Laxton's leadership. Can the minister tell me if Mr. Ridley was involved in all these projects, too? Obviously he wasn't only involved at BCHIL and subsequently at SEPCOL. Can you tell me if this is part of the projects Mr. Ridley worked on also?

Hon. D. Miller: I would assume that as president of BCHIL he had some involvement in this, but I can't speak to what it might have been.

G. Farrell-Collins: I'd like to just talk a little bit about the Raiwind project. Can you tell me who sits as Hydro's representative on SEPCOL now?

Hon. D. Miller: Yes; from Hydro are Dave Harrison, CFO, and Don Swoboda.

G. Farrell-Collins: Can the minister tell me what the. . . ? I didn't hear the titles for both of those. I think he mentioned the title for the first one but not the second one.

Hon. D. Miller: Mr. Harrison, chief financial officer, and Mr. Swoboda, senior vice-president for power supply.

G. Farrell-Collins: Can the minister tell me if either of these gentlemen were involved in the project previously in any way? Or have they just. . . ? Are they new to the project? Also, when were they appointed to their positions on the board?

Hon. D. Miller: Mr. Harrison in November '96; Mr. Swoboda just recently -- he's new.

G. Farrell-Collins: I'm sorry; does the minister have a date for Mr. Swoboda? Can he also tell me what these two gentlemen did before they took on this role? Has Mr. Harrison always been financial officer over the last four or five years? Has Mr. Swoboda always been power supply VP over the last little while? Are these people new recruits to the. . . ? I don't know the names. So are they new people to B.C. Hydro?

Hon. D. Miller: Mr. Harrison has been there 20 years. He's been the CFO for three. Mr. Swoboda has been there for 30 years, and in his current capacity for three years.

G. Farrell-Collins: Can the minister tell me who the current board members are for BCHIL? While you're telling me the names, maybe you can also tell me when they were appointed so we can save ourselves a round of questions.

Hon. D. Miller: There are Mr. Costello and Mr. Smith, who have been on. . .and new members who actually have been appointed and will be confirmed at the next board meeting are: Mr. Swoboda, Mr. Stubbs, Mr. Green, Mr. Lavalle and Bob Fairweather as an outside director.

G. Farrell-Collins: Can the minister tell me what role B.C. Hydro is playing now in the Raiwind project? What is our role there?

Hon. D. Miller: We are continuing to perform the functions we previously were, in terms of project management and those kinds of functions.

G. Farrell-Collins: So we still have a 40 percent equity position, I suppose, as far as the IPC-B.C. Hydro portion goes. At this point, though, there are no projects where B.C. Hydro has any international equity other than the Raiwind project. There are no other projects. Is that correct?

Hon. D. Miller: Yes.

G. Farrell-Collins: The minister mentioned earlier a project -- I believe he said it was in Brazil. It was a maintenance contract or a management contract. Are there other international projects where Hydro is involved, perhaps in non-equity positions, but in contracts, maintenance, etc.?

Hon. D. Miller: Not perhaps, my officials wanted me to say.

G. Farrell-Collins: Not perhaps?

Hon. D. Miller: Not perhaps; we're not.

"EPRI-CIDA phase 2: CIDA funded a training project with the federal Ministry of Electric Power in China. BCHIL is working with the ministry's electricity research group to increase the knowledge and productive capability of the government utility's staff. Project revenue to March 31, 1997, is $3.6 million and is forecast at a $165,000 for fiscal 1998, which is the final year.

[ Page 4985 ]

"CIPM, Xiaolangdi phase 2. BCHIL through a CIPM joint venture is providing consulting services for the construction of the 1800 megawatt project" -- big project -- "in China. The project revenue to March 31, 1997, is $783,000 and forecasted at $300,000 for fiscal 1998.

"Ertan 500 kilovolt transmission line, phase 2. BCHIL is providing consulting services as part of a Canadian consortium of Dessau International and Hydro-Québec International for the Ertan 500 kilovolt transmission line in Sichuan province in China. The project revenue to March 31, 1997, is $235,000 and is forecast at $100,000 for fiscal 1998."

G. Farrell-Collins: Just one last question before we rise for this evening. I'd like to know if the minister can tell me who is on BCHIL's power board? Who are our representatives on that?

[9:45]

G. Farrell-Collins: I had one more question that I forgot to ask earlier. I asked who our representatives were on SEPCOL. Can the minister tell us who the other board members of SEPCOL are?

Hon. D. Miller: For SNC, Triendl and Blanchette. Did the member ask for more than that?

G. Farrell-Collins: Who's on the SEPCOL board?

Hon. D. Miller: Right. No, but you wanted the whole. . . . From any source.

Sorry for the delay. From SEL: Mohammad Akram Khan, Mrs. Sughra Mahmood, Sultan Kurji, Ali Mahmood, Dr. Mohd Yusuf and Mumtaz H. Syed. I've given the other names; I've given Triendl and Blanchette.

G. Farrell-Collins: I move the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 9:50 p.m.

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