[ Page 5015 ]

The House met at 2:06 p.m.

Prayers.

J. Weisgerber: In the gallery today are a couple of friends. Mr. George Oxby is joined here today by his daughter Caroline Meredith. Caroline was our Reform B.C. candidate in North Vancouver-Seymour last time around and is currently serving as communications director for the party. Would you please make her and Mr. Oxby welcome.

S. Hawkins: Visiting the Legislature today is a group of people and patients from the community of Chemainus. They are here to express their concerns regarding the Chemainus Health Care Centre, and they sincerely hope that they will be heard.

I'd like to introduce just a few of them -- I won't do them all: Sandra Hayden, Raundau Fenton, Darlene Kelt, Linda Tucker, Sergie Zalay, Ray and Doreen Mallard and the rest of the group. Will the House please join me in making them welcome.

B. Penner: Joining us today in the Legislature are my cousin Cliff Dick and his wife, Marlene. They have recently returned from two years in Cambodia, where they worked for an international development agency known as Hope International. Hope International is based right here in British Columbia.

When I visited Cambodia earlier this year, Cliff and Marlene were very gracious hosts to myself. Today it's my opportunity to return the favour. I ask that the House please join me in making them most welcome.

T. Stevenson: I would like today to introduce Rick Graham, who is the director of marketing at the Vancouver Public Aquarium. All members probably received a picture in their office today of the aquarium truck, the Aquavan, which will be visiting tomorrow. It will be here throughout the day, but will be open to MLAs from 12 noon to 1 p.m., sitting right out front. I hope each will take the opportunity to visit that tomorrow.

Along with the rest of the House, I would like to make Mr. Graham welcome.

A. Sanders: In the gallery today is a friend of mine, visiting and planning to live in British Columbia: Karen Schwarz from Vienna, Austria. Would the House please make her welcome.

F. Gingell: In the gallery is Gordon Adair -- although I wasn't sure, because he's had his hair cut. I didn't recognize him, but it has been confirmed that it is he. I would like all members to join me in making Gordon Adair welcome.

Oral Questions

REPORT ON MAVIS FLANDERS CASE

My question is to the Premier: what does he intend to do about this minister, who misled the House?

Hon. J. MacPhail: That question is appropriate for the Minister for Children and Families to respond to. I'll take it on notice on her behalf.

The Speaker: I would remind Saanich North and the Islands that the question was taken on notice. If there's a new question, however, please proceed.

M. Coell: Mr. Speaker, the Morton report said that in January this year a worker from Kiwassa confronted Mavis Flanders about her suspected drug use. The Morton report says that the worker let the ministry know again that they suspected Ms. Flanders of using drugs. The minister told us that no one had contacted the ministry. There are now two contacts about Ms. Flanders. . . . The Morton report says the complete opposite to what the minister said in this House. What does the Premier intend to do about a minister who isn't here to answer questions and clearly misled the House?

Hon. J. MacPhail: Hon. Speaker, these are questions that are appropriate for the Minister for Children and Families. I will take them on notice.

G. Plant: Mr. Speaker, on April 21, I asked the Attorney General whether the reports of the children's commissioner would be released to the public at the same time that they were delivered to his office. The Attorney General answered: ". . .the current practice is. . .that it is made available to me and the public at the same time." The Flanders report was dated June 12 but was not released to the public until June 27. My question for the Attorney General is: will he explain what possible reasons he had to hold on to the Flanders report for 15 days -- until a Friday, when the House would not be sitting for four days?

Hon. U. Dosanjh: Hon. Speaker, I received this report on June 12. In keeping with the recommendations of the children's commissioner to forward this report to the agencies and individuals impacted for their review and response, I forwarded the report to those agencies on June 13. I told them that the usual procedure that the ombudsman recommends is 30 days for review and response, but that I would be inclined to release this report sooner than that, because it's a matter of public interest that this report goes out. The report was eventually released in two weeks, on June 27.

G. Plant: Mr. Speaker, we had an extensive discussion about this in estimates, and the Attorney General repeatedly made the point that when the children's commissioner reports, she reports simultaneously to the Attorney General and to the public. The Attorney General put his credibility on 

[ Page 5016 ]

the line when he assured this House that the children's commissioner is independent because she reports to his office. He talked in this House about restoring public faith in his office and promised that the buck would stop with him.

My question is to the Attorney General: how does he expect public faith in his office to be restored when he sits on a report for 15 days and then releases it?

Hon. U. Dosanjh: I have a copy of the covering letter from the children's commissioner in which she recommends that in keeping with the practice of the ombudsman, I provide 30 days to impacted agencies to prepare for review and response. I indicated to her, as well as to the agencies, that I would not give them 30 days; I would give them less than 30 days. She indicates. . . . Let me read, and I quote. . .

Interjections.

The Speaker: Order, members. Let's hear the answer.

Hon. U. Dosanjh: . . .from the children's commissioner's letter of June 12:

"This fatality review is like no other we have completed at the Children's Commission. It is a minister's referral to me as chair of the Child and Family Review Board, conducted in accordance with your stated terms of reference. As such, it has not followed the usual procedures of this office in our child fatality reviews, which is to provide our reports to all affected agencies, ministries and practitioners. We adopted this approach at the request of the ombudsman, who was concerned that to not offer such an opportunity to affected agencies may compromise the fairness of our reviews."

That was the recommendation of the children's commissioner. I, in fact, did not follow that recommendation to the fullest. I used my discretion to allow the agencies affected to prepare for a response and issue the report at that time. This report came to me, and it has been released as it was.

[2:15]

Interjections.

The Speaker: Order, members, please. Let's hear the question.

G. Plant: On April 21, this is what I said, and this is what the Attorney General said. I said: "The current practice, as I understand it, is that when the commissioner reports, she reports simultaneously to the Attorney General and to the public. Is that a correct restatement?" The Attorney General said: "Yes." So the question for the Attorney General is: how does he expect to restore and build confidence in this office, if he can't maintain a practice for longer than eight weeks?

Hon. U. Dosanjh: If the hon. member says or implies that this report has in any way been altered, I want the hon. member to stand up and make that accusation in this House -- and outside.

However, let me say that yes, I said that in the estimates; yes, in this particular regard, I have followed the recommendations of the independent children's commissioner. The children's commissioner, in fact, says: "It is my recommendation to you that the ministries, agencies and practitioners referred to in this report, who are the subject of our recommendations, be given an opportunity to review the report and consider their responses to our recommendations." I followed that independent recommendation of the independent commissioner, and that's the end of the matter.

M. de Jong: I have some difficulty accepting the Attorney General's indignation from a government that has a track record for altering documents and reports. The government. . . .

Interjections.

The Speaker: Order, members. This is a very serious matter, and we must hear both questions and answers.

M. de Jong: It's serious enough that this opposition leader and members of this opposition have time and time and time again offered to work with this government. What do we get in return? A government that has a report for 15 days. They knew this day was coming for over two weeks, and today the minister responsible isn't in her seat prepared to answer questions. That's appalling!

Let the Premier answer this question. This report is chock-full of inconsistencies between what happened and what the minister told this House happened. Why hasn't the Premier got his minister in the seat answering the questions she should be answering as the person responsible?

The Premier's very good when it comes time to appeal to British Columbians, to appeal to opposition members to work with his government. But there's a quid pro quo for that: if you want the opposition to work with you, you better be forthcoming with information. Two weeks they've had this report.

Why should we have any faith in this Premier? Let the Premier answer this question: why should we have any faith in a man that hides his minister away when the going gets tough? Yes, there are tough questions for this minister. Why isn't she in the House, prepared to answer those questions?

G. Campbell: Hon. Speaker, you said earlier that this is a serious matter; there's a report here that points out how serious this matter is. Frankly, this government's response to it is appalling; this Premier's response to it is appalling. The minister responsible, who is supposedly going to inform this House so we can work together to protect the children of the province of British Columbia, absents herself so we can't get straight answers on a very, very important issue.

In this independent report there is a complete contradiction to what the minister told us in this House, and this Premier, at the end of the day, is responsible for the responses of all of his ministers to all of the questions that are asked. The minister told this House that the little boy was returned to mom after a court order with mandatory conditions for supervision, which included ten weeks of alcohol and drug counselling, which she successfully completed; family or parent classes, which she successfully completed; and drop-in counselling and visiting with social workers, all of which she successfully completed.

[ Page 5017 ]

We sat on this side of the House trying to solve a problem, and this minister, who is today absent, said to us that this mother successfully completed these programs. This report says that is all wrong. There is not one shred of evidence that she successfully completed anything.

My question to the Premier is: what does he intend to do to restore the public trust in this minister and her protection for children, and how does he intend to answer for this report and its condemnation of how the minister reacted?

Hon. G. Clark: The minister will be in the House to answer all questions by opposition members in due course, but until such time I'll take the questions on notice on her behalf.

The Speaker: The question was taken on notice.

G. Campbell: I appreciate that, Hon. Speaker. I'd like an answer to a number of questions with regard to this report, and as long as they're taking them on notice, I assume that the government is actually going to pay attention to them and may come back with answers.

When we were reaching out and saying, "How can we protect the children of this province?" the minister stood in her place and said to this House: ". . .her family" -- this is with regard to Ms. Flanders -- "and the people who were working with her were very shocked at what happened." I can remember the tone of voice of the minister when she said that the family and the people who were treating her were "very shocked at what happened, had no idea that this could happen to her, were very pleased with her progress and were pleased with the services she had accessed." Once again, the facts belie the minister's statement. There was no shock. Time and time and time again workers were told and the ministry was told that this woman had a substance abuse problem, a drug abuse problem, IV abscesses on her arms. She had a serious, serious problem. Nothing was successfully completed. The services were halfhearted at best.

My question is to the minister and to the Premier -- first, to the minister: how can she report something that is so opposite to what in fact has taken place? To the Premier: what does he intend to do to restore the integrity of the services of the Ministry for Children and Families in their primary objective, which is to protect the children of British Columbia -- not the ministry, not the bureaucracy, but the children of British Columbia?

Hon. G. Clark: I want all members of the House to know that I have complete and total confidence in the Minister for Children and Families. The ministry is a new ministry which was formed, beginning in September of this past year. . . . It is doing heroic work in working to integrate all the services for children throughout government, as per Judge Gove's recommendation. It is challenging. There are clearly problems, and this report points them out; I understand that. We accept responsibility for that on this side of the House, and we're working hard to change it.

With respect to specific questions the members have raised, they will all be answered by the minister when she's in attendance in the House.

The Speaker: The bell terminates question period.

Tabling Documents

During this year Forest Renewal will invest $625 million in the forests of British Columbia and in the people and communities that rely on them.

The Speaker: Excuse me, minister. Is this the tabling of a report or a ministerial statement?

Hon. D. Zirnhelt: Tabling a report.

The Speaker: Minister, if indeed there is a speech to go with it, I must construe that as a ministerial statement and therefore allow others to respond. But if you wish to proceed, please do so.

Hon. D. Zirnhelt: Hon. Speaker, I hereby table this business plan before the Legislative Assembly, as per the BC Forest Renewal Act. It now stands referred to the Select Standing Committee on Forests, Energy, Mines and Petroleum Resources.

Hon. L. Boone: I have the honour to present the annual report of the Motor Carrier Commission for 1995-96.

Point of Privilege

The Speaker: Thank you, member. I appreciate the notice.

Orders of the Day

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

ESTIMATES: MINISTRY OF FORESTS
(continued)

T. Nebbeling: Just to recap what we did last week, we focused in particular on the background that has led this government to consider a jobs and timber accord. It had its foundation, I believe, in comparing British Columbia with the states of Washington and Oregon, where a higher job ratio per thousand cubic metres has been achieved than we have seen in this province. We have not gone into the details of that 

[ Page 5018 ]

document much, primarily because the minister did not want to acknowledge at the time that it really was the foundation. However, the goal the government has set to achieve in the next five years when it comes to job creation is indeed to bring the ratio of jobs per thousand cubic metres to a par with the states of Washington and Oregon.

[2:30]

What I would like to start off with today -- and I don't know how far we're going to get -- is to look a little bit more at the actual jobs and timber accord. Up to now, Madam Chair, you may recall that we haven't really talked about any of the details that the jobs and timber accord includes: its general principles, its job principles, its objectives. We know about the 21,000 or more jobs, of course. But what are the principles that lead the government to believe that it can achieve that goal?

What I would like to do is to take the jobs and timber accord itself and look at some of the assumptions that have been made. In order to do that, I would like to start by asking the minister about who the participants actually were that made up the committee, which at least created the base of the exercise that was trying to find the right way to put this accord together. I know that the committee was called the Forest Sector Strategy Advisory Committee, and my first question is: how many members were there, and who were the members on that committee created around March 1996?

Hon. D. Zirnhelt: Let me just make clear again what I think I made clear the other night. It wasn't the Forest Sector Strategy Advisory Committee that brought about the jobs and timber accord. I can give you the list of people who are on the Forest Sector Strategy. . . .

T. Nebbeling: Madam Chair, I really couldn't hear the answer, because of what is going on on the government side. There are all kinds of caucuses happening, and it's really loud. So maybe you could ask people who want to caucus to do it in other areas, because I would like to hear the answers from the minister. It was virtually impossible to do so.

The Chair: Hon. members, order. There's a little too much conversation in the chamber just at the moment.

Hon. D. Zirnhelt: In March 1996 and the month thereafter, the issue of the jobs and timber accord was discussed under the rubric of the Forest Sector Strategy Advisory Committee, which was the same committee that brought recommendations to government on the creation of Forest Renewal. It's an ongoing committee dealing with major issues in the forest sector. In March 1997 the Premier asked that his deputy undertake detailed negotiations with the major licensees. The major licensees organized themselves into a CEOs' group that designated various negotiators to negotiate with government. Various people were brought together on a needs basis to discuss some of the technical issues behind the strategic elements in the proposed jobs and timber accord.

If the member wishes, I can list the people on the Forest Sector Strategy Advisory Committee: John Backhouse, who was the mayor of Prince George at that time; Peter Bentley, chair of Canfor; Peter Beulah, president of Greenwood Forest Products; Clark Binkley, dean of forestry at UBC; Tom Buell, chair of the board of Weldwood of Canada; Trevor Buddo, Tyee Timber Products Ltd.; Bob Findlay, president and CEO of Mac-Blo; Mark Haddock of Forest Policy Watch; Jake Kerr, chairman and CEO of the Lignum group of companies; Bob Lind, director of the Interior Logging Association; George Malpass, president and CEO of Primex Forest Industries; David McInnes, Weyerhaeuser Canada Ltd.; Brian Payne, western vice-president, Communications, Energy and Paperworkers Union of Canada; Esmond Preus, Truck Loggers Association; Bob Sitter, president and CEO of International Forest Products Ltd.; Gordie Steele, president of Riverside Forest Products Ltd.; Gerry Stoney, the then national president of IWA-Canada; George Watts, chief of the Tseshaht band in Port Alberni; Carl Winget, regional director-general, Canadian Forest Service; Garry Worth, national president, Pulp, Paper and Woodworkers of Canada.

T. Nebbeling: I hope the minister doesn't mind that halfway through I stopped writing down all the names. First of all, was this committee headed by the deputy minister? Was that what the minister said? If so, who was this deputy minister?

Hon. D. Zirnhelt: This Forest Sector Strategy Advisory Committee is chaired by myself. We have a facilitator in there to assist in the proceedings of the committee. The Forest Sector Strategy Advisory Committee discussed the jobs and timber accord. It had a number of working committees and then basically reported out. At that point, the Premier designated his deputy minister to head negotiations of a bilateral nature with the major licensees. Given that most -- or a significant amount -- of the job creation could be expected to come from that area, they had to be involved, because a significant amount of timber -- about 85 percent -- is controlled by those major companies. They would be the ones to negotiate with on a bilateral basis: government to major licensees. The jobs and timber accord is essentially an agreement between the major licensees and the government of British Columbia.

T. Nebbeling: At this point I'm not going to argue with the minister about the responsibility of the majors, who, as he so clearly has stated or recognized, do control 85 percent of our timber -- or work 85 percent of our timber. I don't think that that 85 percent control has been translated in a fair percentage of the total jobs that, under the jobs and timber accord, will have to be created. As a matter of fact, I think the majors, God bless them, got off fairly easily: 5,900 jobs out of 21,000 jobs. Considering that 85 percent of the timber is controlled by the 17 or 18 majors, I don't think that that is justification to have a committee where pretty well all the CEOs of the major companies are participating.

In a sense, we give the majors a certain advantage there, which is maybe justified. But it certainly should not have gone at the cost of dozens of other smaller companies, which often 

[ Page 5019 ]

are the backbones of communities and which have not been participating on that level. However, when we talk about this committee, what was the role of Gerry Stoney, who was at that time, I believe, the IWA president? I don't think he was mentioned by the minister as one of the participants on this particular committee. Maybe it's one of the names I missed.

Hon. D. Zirnhelt: Yes, I did mention Gerry Stoney, who was then the president of IWA-Canada. He sat. . . . There was a co-chair process. This wasn't a standard committee-subcommittee process. There were working groups. What happened was that three members of the Forest Sector Strategy Advisory Committee -- Dave McInnes of Weyerhaeuser; John Allan, who was then the deputy of land use planning and coordination; and Gerry Stoney of the IWA -- were the co-chairs of the working groups. They organized the activities of various analyses, sort of, that took place and the investigations of various aspects of the accord, which I reported on fairly fully in our first discussion.

I can tell you that John Allan, who was then the deputy of LUCO, was replaced by Gerry Armstrong, who was the Deputy Minister of Forests, a little bit later in the process.

T. Nebbeling: Just to get a feeling about the group that really was responsible for getting the ball rolling, so to say, and to bring some of the ideas into the discussion, I'd like to focus a little bit more time on this particular committee. I think it is important we understand that if indeed the government creates a committee that will look at or will be responsible for creating a plan that will fundamentally change how companies in this province are creating jobs and on what basis they are creating jobs. . . . Coming from the free enterprise sector, I've always believed that with the investment that I made in my companies -- at the time that I owned a number of companies -- I had the right, because I made the investment, to set some targets for starting. Knowing that this committee's main objective was going to be to find a way to take away, in a sense, the right of companies to determine how many people are functionally needed to harvest a certain amount of timber out of the woods. . . . At the time, of course, although the minister is not happy admitting it, the focus was truly in trying to match what happened in the state of Washington and what happened in the state of Oregon as far as jobs were concerned.

[2:45]

Last week we talked briefly about the Portland initiative. Basically, at the time -- I think it was 1991 or 1992 -- Oregon and Washington saw a reduction in harvestable timber or annual allowable cuts that pretty well displaced 65,000 workers. Then President Clinton -- who still is the President, of course, in his second term -- actually went to Portland and met with the industry, met with the environmental movement, met with the native people, and we had the Portland initiative. At the end of the day, $2 billion was committed to those states -- to those industries, to those groups -- to recreate, in a sense, the forest industry as it was before. The result of that $2 billion investment that was promised -- and I don't know if it was ever spent -- is that there really hasn't been much change from what the industry used to be, in particular because of the elimination of a dramatic amount of forest land.

So what happened there is not unlike what is happening in British Columbia. The government, through following the recommendations of environmental groups, decided to take away a lot of the annual allowable cuts of those states. The government came in and said: "Okay, here we go. Here is $2 billion to just save the bacon here." We see the same happening here. Our forest industry in this province, because of annual allowable cuts, has been severely hampered in achieving the goals that forest-dependent communities had not so long ago and achieving the goals that forest workers had for their families not so long ago -- because of exactly the same reasons.

Because of the environmental agenda of the first term of this government, we have gone a little bit too far to one side in setting lands aside without really looking at the impact on people. I think that in 1996, when the Premier announced his idea of creating these jobs and he used those two states as examples of where he would like to go, it was really cynical, because they haven't gone anywhere. These jobs have not been recreated. The communities that used to be timber-dependent communities are still viable communities. The only thing is that the people who used to live there no longer live in those communities. The white fence pickets are still white, the houses are well maintained, but people have bought those homes for second homes. And that's particularly prevalent in Oregon.

So at the time that this group got together and the members were appointed, was this whole discussion that I just briefly put in front of the minister as what I hope would definitely have been considered at the time you picked those two states. . . ? Was there discussion on the changes that had happened in these two states that might no longer justify the hope that for every thousand cubic metres that came out of the forest, they could create 1.7 jobs -- or whatever the ratio was? You have it there. Was it considered that to replace timber that no longer came out of the forest, there actually had to be a lot of lumber or timber coming out of other states into Oregon and Washington to keep the mills going? I believe the number is up to 35 percent. Was that considered at the time, when this committee started to talk about how indeed this province can create 21,000 jobs without violating the principle of whether the forest can accommodate it? Or is it just an exercise by mandating these jobs?

Hon. D. Zirnhelt: The situation in those states is quite different than it is here. There were massive withdrawals down there, yes, and subsidies from the federal government, you said. We considered British Columbia. While I don't want you to get stuck at some point in history when everybody else has moved on, what really happened was that it was well known that the number of jobs per cubic metre in those states was higher. That was prior to any major land use change, although there's probably a direct relation between the amount of timber and the number of jobs. That's why we talk in terms of the ratio.

We moved on from there. There was lots of discussion about what happened in other states, but the committee itself suggested. . . . The working group recommended to the major committee that we not bother getting into interminable discussion about how many jobs, because every state collects data differently and so on: "Let's concentrate on British Columbia." 

[ Page 5020 ]

So the larger group, the Forest Sector Strategy Advisory Committee, said: "Let's move on." Government said -- and I reported to government -- that there would have to be bilateral discussions; there were too many parties to try to get an accord with all those stakeholders around the same table. We needed a different process. Then we encouraged the various sectors to entertain discussions directly with another party, should they think it was necessary.

Government thought it was necessary to work with the major licensees -- who are, by the way, responsible for more than just a few thousand jobs. The vast majority. . . . They have in some ways a major responsibility, either through planning, cutting the timber and getting out -- the development plans; that's some of the undercut -- whether it's through major investments or whether it's through some of the small business wood. . . . They have to provide the wood, and that's doing something. Providing the wood to small business is a major concession on their part. They are responsible for creating the jobs under FRBC, the more year-round jobs that we're talking about. Certainly the alternate work arrangements will come from the agreements that the major licensees negotiate.

So to say that they're only responsible for a small number of the jobs is wrong. They are involved in approximately three-quarters, plus or minus a little bit, of all the jobs. They will have a major hand to play in all of those. So that's why it was essential that we sit down and work with the major licensees. What the 17 to 18 companies did. . . . Some were in and some were out, but for the most part, those people representing approximately 85 percent of the licensed wood in the province came together, and they had a negotiating committee. I can tell you who was on it: George Richards of Weldwood, Bob Findlay of Mac-Blo, Gordie Steele of Riverside, Bob Sitter of Interfor, Ike Barber of Slocan and Jake Kerr of Lignum. Those representatives were a committee designated to give a mandate to government and on their behalf to facilitate negotiations with government.

T. Nebbeling: I don't want to get stuck on any particular item of the jobs and timber accord, because if we do that, then we're going to be here until November. So I certainly want to move on, as well. However, I do need to emphasize to the minister that it was the Premier of this province who still stood in front of the industry in Vancouver four weeks ago during a meeting with the members of the Forest Alliance. During his speech, once again, he made the point very strongly that if they can do it in Oregon, if they can do it in Washington, then we can do it here in British Columbia. I agree with the minister: those states are totally different; comparison with those states should never have been made. They're not only different because they have situations that we are experiencing now, but they are driven by other factors.

Where they are different, of course, is that at the time that the group got together and started to talk about how they could achieve these ratios in this province. . . . At that time, 35 percent of the timber. . . . I think it was 35 percent. Don't nail me on that. It could be a little bit less, but it's a large amount of the timber that comes to the remanufacturers, to the mills. It had not created one job in these states -- not one job, except transportation. It hasn't created a logger's job in these states; it hasn't created a faller's job; it hasn't created a job building roads; it hasn't created silviculture jobs; it hasn't created reforestation jobs. The point is: as states they may handle X amount of millions of dollars of timber, but if these jobs to cut the timber down are in other states and it is just shipped to these manufacturers, then this job ratio based on 1,000 cubic metres handled in these states is just not a real number.

So for the Premier to say initially in 1996: "Listen, I'd really like you guys to have a look at that, because those people over there know what they're doing. They're doing the right thing, and I don't think we are capitalizing or creating enough job space on what we do over here. So go for it. . . ." I think it is very important that before we look further at this committee, its role and its direction, it is recognized that maybe that was the very first mistake this government made. If indeed much of the debate by the various committees and working groups -- and we're going to get into that one, as well -- was still with that idea that the Premier had a year or 14 months ago, then we have a fundamentally flawed jobs and timber accord. I would not have pushed so hard for this had it not been for the Premier repeating four weeks ago that that was his example.

Obviously, in spite of last week's refusal of the minister to get into a debate, what has happened in these two states has made a major impact. For that reason alone I would like to see how that particular ratio objective that we are talking about today, which the Premier has mentioned -- I think 1.7 jobs -- has, from the day this committee was created and had meetings, discussions and talks with other stakeholders. . .how that Washington-Oregon objective was transplanted onto this province from that day and how much it motivated him.

It is very important that we get it out of the way before I go on, because if indeed the minister says. . . . No, I'm not going to answer the question for you. I'd really like to know: was it part of the initial discussion by the group that, I believe, was appointed? And to what extent did that type of discussion and these objectives flow through the whole 14- or 15-month process which 14 days ago led to having the Premier make the announcement in Prince George? Was it there or wasn't it?

Hon. D. Zirnhelt: I just caution the member to not make too much out of the comparisons, because the Forest Sector Strategy Advisory Committee was prepared to move on with the goals that they were charged to get on with by the Premier. He had a number of goals. One was 21,000 more jobs. Another goal was more jobs per cubic metre as a fundamental way of doing it. For illustration purposes, he used some comparisons -- a rough comparison -- with other jurisdictions. In fact, the two jobs per thousand cubic metres in the northwest states may be seen as low by some, although I understand that in California, for example, it might be as much as three and in European countries it's as much as three. Suffice it to say that we understood that with the direction towards value-added, we had moved from 1.2 to 1.4 jobs per thousand cubic metres in British Columbia. And the Premier set a target of 1.7 for the first five years. Hopefully, beyond that, we'll get 40,000 direct jobs, which would put us in comparison to them.

[3:00]

[ Page 5021 ]

T. Nebbeling: Can the minister tell me the ratio of jobs per thousand cubic metres on the coast?

Hon. D. Zirnhelt: I would ask the member to please repeat that. I was looking at my notes.

T. Nebbeling: I think the minister was trying to second-guess my question, Madam Chair, by looking at numbers.

One of the problems I've had from day one. . . . See, I had a very straightforward, quick question, but now I'm going to illustrate it a bit more. One of the very big problems I had with the approach this government took in establishing a viable ratio for British Columbia -- which obviously, when you added up all the numbers, suddenly created the 21,000 new jobs -- was the fact that as a province, we have a variety of terrain that the forest industry has to work in.

If we go to the coast, as the minister knows, it is a hilly and very often steep type of terrain, and it is labour-intensive to get into the areas. For that reason, I believe, it has a much higher ratio than, for example, when we go to the interior, where we have flat land and huge amounts of forest, sometimes with good timber and sometimes with decadent timber, but conditions of harvesting are considerably easier. Does pursuing the goal -- where we've said we're going to go for a ratio of 1.7 jobs per thousand cubic metres, as the minister just said -- apply to the interior as well as to the coast?

Hon. D. Zirnhelt: No, it will be a provincial average. Conditions are vastly different in various parts of the province. It is a provincial average we're looking at.

T. Nebbeling: I'm getting a bit away from my questions and the build-up to come to a certain point. But if it is a provincial average, I don't think the minister will argue with me when we say that the job ratio on the coast is -- or it used to be, at least -- about 2.4 workers per thousand cubic metres, and in the interior, it is approximately 0.9 workers per thousand cubic metres of harvested timber. If I have these two and I take the average, I'm very close to 1.7.

It looks as if the suspicion we had with the baseline. . . . I don't want to confuse the debate right now with throwing in the baseline, as well. The confusion we had last week was when we discussed this whole matter, when we as opposition and I as the Forests critic just could not understand how the minister and the government were very comfortable in saying they had an idea in 1996 -- maybe November 1995, but now it's 1996 -- and they announced at that time that they were going to target 21,000 new jobs for this province.

Since that time, incredible amounts of discussion have taken place with all kinds of people, and we will get to all these people. But at the end of the day, when the announcement was made in June 1997, the government was saying: "We're going to use the number of employees who were in the forest industry at the time the Premier had the idea." I believe that was 85,000 workers, but if we took the number of workers in the forest industry today, it would be considerably higher.

When you start with a low point, knowing that there are already thousands more workers in the field in our opinion -- and the minister is arguing with me on that one, of course -- and when we look at StatsCan and at the Price Waterhouse studies that have been done on what the actual jobs are -- not by looking at StatsCan's numbers but actually doing polling with the companies -- the numbers are considerably higher. You would almost think that by keeping a low number, there is already a gain of so many thousands of jobs that can be announced in the year 2001.

That's why I'm suspicious about the numbers the minister has given us to consider. When he says that the objective of the government is to create a working ratio of 1.7 as an average for this province, I would say that we're already there. We have 2.4 on the coast and 0.9 in the interior. That's an average of 1.7 or 1.6, so we're very close to that number. It gives me concern now, hearing that the minister is looking for an average. I didn't know that.

Having said that, I would like to go back to the committee. I'm happy the ministry is together. It's not fair, Madam Chair. There are three opposite, calculating together, and I have to do it all on my own. It's okay. I was trying to be light. I would like to ask the minister about the Forest Sector Strategy Advisory Committee, which is responsible for creating the framework for the employment objectives. Has this committee worked together with the cabinet policy secretariat?

Hon. D. Zirnhelt: The only connection was through the communications side. Once we were going to communicate the accord, there was some work done by the communications people from the cabinet policy secretariat. But I'm trying to. . . . You know, the member wants to be the last on the record. Instead of asking a question, he reasserts something. I want to clear the record, lest the public be misled.

You have to have a weighted average if you're going to add up and try to find an average number of jobs for the interior, so you've got to take a volume and the jobs created. I don't know where your numbers come from -- perhaps you can give a source -- but our statement is that we're going to compare apples and apples, not apples and oranges, as you suggested.

I can tell you something about averages. If you go back to the starting point -- the baseline -- in '96 and if the harvest was 75 million and the jobs were 88,000, that ratio is 1.17, close to 1.2. It's not the 1.4 we talked about, because the Premier did use the labour force survey numbers, which were quite different. But if we use the ones that we agreed through the Forest Sector Strategy Advisory Committee should be used -- the survey of employment payroll hours -- then the ratio we're targeting by the year 2001 is 1.45. We expect it to go from 1.17 to 1.45, assuming the volume stays constant. Now, the volume can go up or the volume can go down, but it's certainly going to change.

We're not trying to split hairs. We're still trying to get, all told, that 21,000. I mean, I hear that our estimates are low in the value-added side and that we could do way more than what we're targeting, so the ratio will go up, regardless. You can make points all you want, but nothing is served by us trying to split hairs on the numbers. Suffice it to say that it has to increase by something like 0.3 of a job per thousand cubic metres to get to our 21,000, on average, through sectors and through regions in the province.

T. Nebbeling: The minister just quoted a base of 75 million cubic metres for last year, 1996. Is that the annual allowable cut that was permitted, or is that what the minister has on record as having been harvested?

The reason I'm asking this is, obviously, that I have considerably lower numbers. and if the numbers of the minister are indeed correct -- and need to be correct to get these ratios. . . . In my estimate, although the allowable harvest for 1996 was 70.5 million, only 65 million was cut or harvested because of delay in issuing permits and licences. So can the minister confirm that he works on 65 million, which was the number according to all the statistics, or 75 million, because that's what was maybe the target but was never achieved?

[ Page 5022 ]

Hon. D. Zirnhelt: I've used two figures. I don't know where the 65 would come from, but the 70 million is the AAC on public lands. I believe that when we use, for the purpose of creating employment in the sector, the public land, which is the AAC in the public land. . . . Actually, the harvest from both public and private land gets the total.

But again we could get into splitting hairs. Let me suggest that we're not trying to fudge the figures to show more jobs created than are being created. We have agreed on a baseline. We have said the timber jobs advocate will ensure that there's a report out on a consistent basis, comparing apples to apples.

T. Nebbeling: I really have problems when he says: "Let's not get sticky; we're not trying to fudge the numbers." It is important that we know exactly what the numbers are.

I have here a study which says that of the 70.5 million cubic metres that was the annual allowable cut, only 65 million was harvested. This year, as part of the jobs and timber accord, we're going to add another three million, I believe, to it, to get more fibre to the mills. That's a great objective.

But the thing is that if the minister's numbers and his ratios are based on 75 million. . . . Well, sorry. That is five million cubic metres more than we actually have in this province. If it is based on 70 million, which is the real annual allowable cut, then his target numbers are totally wrong. The numbers just don't add up. That's why I'm a little bit sticky on this one: "We're not trying to fudge the numbers; we're not trying to mislead with the numbers."

The minister has studies and I have studies that show a certain annual allowable cut. It shows certain jobs. It shows them in the sectors that they are, be it in lumber, plywood, veneer, market pulp, newsprint, printing papers, company logging, contracted logging, other operations, value-added or provincial government silviculture. All these numbers add up to a ratio which is different than the minister has. Furthermore, the annual allowable cut that the minister has said is 75, and now he says 70. . . . What is the number of the allowable cut? Is it 75 or 70? You used both numbers.

Hon. D. Zirnhelt: If the member would like to check the record, I was very clear on what I said. The AAC is plus or minus 70 million, to round it out -- 70 million. The actual amount harvested, on which the statistics are produced by StatsCan, was 75 million. That was the actual harvest number. To be precise, the AAC is 70,000,860. That's what it is at the moment.

T. Nebbeling: That's the number I have. Like the minister said, maybe. . . . Can the minister then tell me: did he include in the 75 million that he mentioned earlier on. . . ? Does that include managed private forest land?

Hon. D. Zirnhelt: Yes, it does. The total harvest is on both the public and the private lands.

T. Nebbeling: So you've included the public, or the managed private forest land. Does any of this jobs and timber accord apply to these lands?

[3:15]

T. Nebbeling: But that would be on more of a voluntary basis rather than on a mandate as it applies to the forest companies that work on Crown land, I believe.

Hon. D. Zirnhelt: As you know, some of those forest lands are part of tree farm licences and so on, managed together, as it were. But you're basically correct: yes, they do it on a voluntary basis. There isn't the same kind of cut control that there is on the public lands.

T. Nebbeling: Then the ratios are on the 70.5 million. Considering that last year we didn't even harvest the amount of timber that could have been harvested -- and I believe the minister is very much aware of that -- again, it's the 65 million cubic metres as the base on which the jobs today are created, not the real base -- rather than the 70.5 million.

Hon. D. Zirnhelt: As the cut goes down, the ratio goes up; so it's simply mathematics. What we've said is that we will compare with where we were at a point in time. So you can run the numbers any different way. But if you run them consistently from the baseline and five years out, you should get a true measure of what has been accomplished. That's the intent.

T. Nebbeling: Five years, the minister just said. When we spoke last week, the target was still for the jobs to be achieved by the year 2001. When I had some questions on that, the minister. . . . When I expressed some doubts about that, because if we start spending the money this year and it is a five-year plan, then ultimately we come to the year 2002. . . . The minister confirmed or just said that indeed it is a five-year plan, starting from now. Would the minister then agree that the jobs and timber accord objective has indeed gone up to the year 2002?

Hon. D. Zirnhelt: No, it hasn't. Unfortunately, we're one year into the plan. It took us a year to come up with a strategy to achieve the goals. In the meantime, you know, we've been trying to increase employment through the small business program. But there's been a number of efforts made to enhance employment in the meantime. But it's to the year 2001.

Just to make sure the numbers are clear, it's 20,400 jobs, plus 2,000 Fisheries Renewal jobs by the year 2001. That's four years from now.

The Premier, at the same time as he announced 21,000 as a target, indicated -- and I can quote from his press release -- that he would like to see a total of 40,000 by the year 2005. He's talking direct jobs. We don't have an agreement with industry to run the accord that far. So what we are doing is we're saying that there's 21,000 approximately -- 20,400 -- direct jobs in forestry and another 2,000, plus 17,000 indirect jobs. So there is a figure of 39,000 to 40,000 jobs out there that we expect to be created, when you add up the direct and the indirect jobs, by the year 2001.

T. Nebbeling: I come back to the question I actually had before we went off on this little search for what the actual annual allowable cut is in the province and how that creates a ratio today. That, then, has to have an increase of 0.3 to get to where the minister wants to be in the year 2001.

We were talking, actually, about the Forest Sector Strategy Advisory Committee. We have looked at the members. I didn't have the time to add them all up or write all the names 

[ Page 5023 ]

down. But somewhere I would like to hear from the minister how -- although the minister. . . . When I asked him the question -- did this committee work in any way with the cabinet policy secretariat? -- I believe the minister said no, maybe some initial directions. But considering the role of the policy secretariat, with Mr. Gunton at the helm and especially his communications team that the minister has already said was part of bringing the message out of the jobs and timber accord, I'm a little bit surprised. Maybe the minister can explain to me or can tell me who the members are, then, on this cabinet policy secretariat. I keep hearing names coming out of that group that has ultimately been working on the jobs and timber accord. Maybe there is some crossover there that I'm not aware of.

Hon. D. Zirnhelt: To be clearer on the bilateral table between the major licensees and government, the representation at those negotiations was the deputy minister to the Premier. He was assisted by various people, who had responsibility for a number of areas. There was a group looking at regulation, and that was headed by John Allan. That was the support team to the negotiations. Lee Doney, from FRBC, was dealing with the new delivery model for FRBC and other associated forest renewal issues that the major licensees wanted to talk about. Roger Stanyer, the chair of the board, did the work around and assisted the Deputy Premier on the job side. Bob Plecas, who was deputy for Children and Families but who has had considerable experience in the forestry field, was asked to assist on matters of stumpage issues to the extent that there were some discussed at the accord. That was the main technical committee.

When I mentioned the involvement of the cabinet planning secretariat, I said that their role was really around dealing with communications. Primarily, there were two individuals for that. Although I don't think it's appropriate to get into what individuals do. . . . Individuals have their jobs assigned. They are functions. They work within an organization of government that provides a service. Evan Lloyd and Dave Hall were the two people. They had some support staff here and there, but they were the people who were primarily responsible. From time to time people would be brought in for various aspects, but those were the people who were dealing with the communications aspect of the jobs and timber accord.

T. Nebbeling: The minister mentioned the deputy minister to the Premier. Is the deputy minister to the Premier involved with the cabinet policy secretariat or not?

Hon. D. Zirnhelt: Yes, the deputy minister to the Premier is in the Premier's Office, not in the cabinet planning secretariat.

T. Nebbeling: My question was: is the deputy minister of the Premier's Office involved with the cabinet policy secretariat? The minister says yes and then continues to indicate no. Is he involved or is he not involved with the cabinet policy secretariat, either as an adviser or whatever else his role may be? Is there a role within that cabinet policy secretariat. . . ?

Hon. D. Zirnhelt: We should clarify a few terms here. CPCS is the cabinet planning and communications secretariat. That is a secretariat. The deputy minister to the Premier is in the Premier's Office. Like all things, these matters are often done by teams. I did indicate to you that in fact the Deputy Minister for Children and Families was called in, to use his expertise from time to time -- anything but full-time. He was certainly there making a contribution. It was really a matter of the deputy minister to the Premier pulling in a team of people who would assist in preparing negotiations.

T. Nebbeling: I have no doubt that this is indeed a team effort. However, the minister keeps referring to other work groups who got involved at a particular stage in the deliberation on the jobs and timber accord and how we could make it happen. I'm still focused on the original forest jobs strategy committee. We know who the members are. We also know that the cabinet policy secretariat is, in part, using the time of the deputy minister to the Premier. The minister has gone to the direction of communications.

I'm much more involved, at this point in my estimates debate, with which policies were created to achieve the objective of the jobs and timber accord and who was responsible from the government side in that dialogue. It is justified to say that the members of the task force -- if you want to call it that, the forest jobs strategy committee -- were solely responsible for creating the terms and all the conditions under which the jobs and timber accord was ultimately brought to the people in this province.

Government liaison has been taking place. I'm trying to find out who was responsible. Who was the person who played that role? Was it the deputy minister to the Premier, was it somebody else in the Premier's Office, or was it the cabinet policy secretariat that channelled information to the forest jobs strategy committee? It's quite a simple question. Was there a role for the deputy minister to the Premier in setting the policies, the terms, the direction of what this job strategy committee ultimately created that was then presented to the province as the jobs and timber accord?

Hon. D. Zirnhelt: We are getting into a lot of detail in the process. I'm happy to do that, and I'd like to try to reiterate it. The Forest Sector Strategy Advisory Committee worked through a number of working groups. They reported out orally to the committee, for the most part. There were various documents at various times. In March of '97 the Premier, at that forest sector strategy committee, said that he was going to direct his deputy minister to undertake negotiations with the major licensees. At that point the process changed a bit. Then there was another group -- and I mentioned a number of senior officials -- who worked to advise the deputy minister to the Premier.

T. Nebbeling: It is then indeed a fact that Mr. Gunton, the deputy minister to the Premier, was involved with the process of setting policies, setting directions and setting guidelines that then were presented to the forest jobs strategy committee. That was the first question: did Mr. Gunton participate? I suppose what the minister has told us is that, indeed, he did that. That is one of the concerns I've had for a long time.

Nobody really knows who steered the ship called the jobs and timber accord. We are constantly being told by the minister and the workers in the Ministry of Forests that this jobs and timber accord is truly an exercise of the stakeholders, that it is an exercise controlled by this forest job strategy committee. Be it so. If that was indeed the case, believe me, I would feel a lot more comfortable. But seeing the finger of Mr. Gunton in this whole process gives me more reasons for suspicion that this jobs and timber accord justifiably has not been signed by the CEOs, who were in on the strategy primarily to safeguard themselves from, I suppose, being mandated. Some of them may not believe they can achieve these jobs as a goal.

[ Page 5024 ]

[3:30]

Hon. D. Zirnhelt: If the member examines the record, I think I've been clear, although perhaps I could have been more clear than I was. I at no time ever suggested that Mr. Gunton was involved in negotiations. I said: "The deputy to the Premier" -- that's Doug McArthur. Doug McArthur is the deputy minister to the Premier and heads the Premier's Office. So he has been the one. The cabinet planning and communications secretariat had two people working solely for the purposes of communications, and only in the latter. . . . As we get close to. . . . I just want to make it clear that it was on that side of the Premier's Office that the negotiations were headed.

T. Nebbeling: Now we know Mr. Gunton in no way, shape or form has been involved in creating the policies of the jobs and timber accord. It was his deputy minister, Doug McArthur and, I believe, a whole other team, but Mr. Gunton was not part of it. Mr. Gunton did not participate in discussions. Mr. Gunton did not meet with the forest job strategy committee.

I am happy that we now have that on record, because there has been confusion on who really was leading the charge here. I have stated now to the minister that I believe that he has given me that answer. If the minister doesn't counter it, then I'll take it that that is indeed the case.

Hon. D. Zirnhelt: Yes, it's correct. Doug McArthur handled the negotiations with the major licensees -- that bilateral table between government and the licensees. I would like to make the record clear, though, that parallel to this or alongside it, we were undertaking changes to the Forest Practices Code, which sometimes came up at that table. But we had a separate process, a different process which we initiated some time ago to streamline the Forest Practices Code. When it got close to conclusion, we did undertake consultations with the environmental community, and Mr. Gunton was involved for a short period of time in discussions about code changes.

We had discussions with a number of stakeholders. Mr. Gunton did have a role there, but not in the accord itself. I just want to make that clear, because sometimes there's confusion between the changes to the Forest Practices Code and the accord. I want that to be clear so we're not saying: "Aha, he did have a role." His role was somewhat different, and it was merely of a consultative nature around some of the issues associated with streamlining the code.

T. Nebbeling: Let me be clear so that I also understand what the minister is saying. Since March 1996, when the whole debate within the stakeholders group started, the forest jobs strategy committee held meetings -- regularly, I take it. Only then, at the end, did the government decide that, indeed, the Forest Practices Code did not do what it was supposed to do. But that was clearly not the statement of the government until April 3, when the minister made the announcement that the KPMG report clearly showed that the Forest Practices Code had a negative impact on what happened in the forest industry.

So Mr. Gunton never, ever participated with this job strategy committee until after April 3, when you made your announcement, Mr. Minister, that because of the report by KPMG. . . . Although you didn't see many fundamental changes, there was going to be some consideration given to finding a way for the industry to indeed find some relief in the cost of preparing their applications for timber licences -- code requirements having added between $12 and $90 per cubic metre, depending on the area.

Mr. Gunton -- one more time -- never participated in the job strategy. When he got in on the jobs and timber strategy, it was only to make some statements on the code. I think it is important, because the code and its changes are part of the jobs and timber accord. The code's relaxation or changes in how the code will be managed in the future -- we're going to spend some good time on that this coming week or weeks. But in the meantime, the changes were the only thing that Mr. Gunton talked about to the committee and informed them on, basically.

I don't even get the feeling from the minister that there was a negotiation going on. It was more like: "This is what we will do to make their life a little bit less miserable, and these are the issues that we can change to make the accord more workable; it will save you $1.24" -- or whatever the amount is. After that Mr. Gunton left the meeting, and everybody else continued to come up with the final plan. What was then the plan was presented by the Premier in Prince George two weeks ago.

So we talk the same language. When you speak, you give me the idea that that is what happened. I just want to see that confirmed for the record, that there was nothing else there.

Hon. D. Zirnhelt: Well, that's generally correct, although I don't think the member exactly explains the process that went on. But yes, you're generally correct.

Mr. Gunton did not participate in the discussions between the government's negotiating committee on the jobs and timber accord and the industry. He didn't participate in those discussions. His role was something separate in the revisions to the Forest Practices Code, where he did have discussions with some of the conservation stakeholders in the province. So I think that's clear.

T. Nebbeling: As the minister said, the process that I explained was not necessarily the way it went. Would the minister then give me the process -- what Mr. Gunton's input was and how that process happened -- because I don't understand. I thought it was very clear. I understood that the minister said all he talked about was some of the changes in the Forest Practices Code. That must have happened after the KPMG. . .on April 3. If Mr. Gunton spoke to that committee prior to April 3, what did he talk about? If it was the Forest Practices Code, why was he involved in that debate when the KPMG report didn't come out until four or five days before April 3?

Hon. D. Zirnhelt: I'm having a little trouble deciding what the role of the KPMG report was in this whole discussion. The KPMG report indicated some confirmed costs of the code. That was of interest to industry; that was of interest to the public in British Columbia. My guess is that Mr. Gunton 

[ Page 5025 ]

had discussions in and around the release of the KPMG report. There is no relationship between the KPMG report, that I'm aware of, and Mr. Gunton's involvement. The KPMG report was just one stage in the process.

We were already reviewing the Forest Practices Code. There were proposed changes and then there were consultations by government, both with industry and other stakeholders, including environmental stakeholders. Mr. Gunton was involved in discussions with some of the environmental stakeholders, conservation stakeholders, in and around April-May, in that area. It wouldn't have mattered when the KPMG report came out, because I think it was generally acknowledged by government that there were impacts. I think there was agreement by industry and government that we didn't want to undermine the environmental objectives of the code. So a lot of dialogue had already taken place in and around the KPMG report.

T. Nebbeling: The only reason I brought up the KPMG report was to identify a date when Mr. Gunton could potentially have had meetings with the forest jobs strategy committee. The reason is that I'm trying to see if Mr. Gunton was involved before the particular date that the report was released by KPMG. So that is the reason for introducing that report component.

I didn't know that it was going to lead to another question. I will come back to where I was going with the committee. If the minister acknowledges today that the provincial government was already in the process of looking at the Forest Practices Code, because they knew that things were not working the way they were supposed to be, this contradicts many of the public statements the minister has made. He was often confronted by groups of people -- I have been present once in a while, so I know that it happened -- just pleading, not demanding, for something to be done with the Forest Practices Code: "It's killing us. The cost of the Forest Practices Code is killing us. The delay is killing us." I've got the clippings here, if the minister wants me to read them out, but that won't be necessary. The minister always said: "That's nonsense. We are proud of the Forest Practices Code. We continue to be proud of it. It's the right thing for this province. We are an example to the world."

This happened right up to the KPMG report. If the dialogue was already happening in the Ministry of Forests that there was something fundamentally wrong, then I really question why this government spent $1.7 million, I believe, over a short period of time to have this report prepared by KPMG. It basically confirmed what everybody in the business has shown the minister in the last couple of years: that the Forest Practices Code created job losses, because of the delay in the issuing of permits. The Forest Practices Code did not, as it was intended to do, set no more than 6 percent of land aside; it was a much higher percentage.

I'm not going to drag on too much on the Forest Practices Code, so you don't have to bring in all the paperwork on it. But it does surprise me to hear now that the government, knowing that all of these things were wrong and clearly being in the process of re-evaluating it, still went ahead and had an outside audit or consulting company reconfirm what the industry had been saying and what the government must have known somehow was wrong. They may not have known exactly that the cost of the Forest Practices Code on the industry is $12 per cubic metre, but they knew something was wrong with it. After this little revelation, I would suggest that the KPMG report was a waste of money. The minister didn't need to go to the expense of $1.7 million to hear these conclusions. So I'm really surprised to have heard that. This is something we will obviously come back to when we get into the Forest Practices Code, but that's not going to be for a while.

In the meantime, I have my answer now. Mr. Gunton did not participate in anything else, other than talking about the Forest Practices Code and the need for changes. He spoke more to the environmental stakeholders than the stakeholders on the forest jobs strategy committee. If the environment was the only issue Mr. Gunton was really focused on seeing some changes in, and on getting all stakeholders onside, then obviously there was no need to talk to the CEOs about what he thought could be done. I can understand that he worked with the environmental movements because they have to be onside.

[3:45]

Having said that, I would now like to go a step further. The forest jobs strategy committee consisted of this group. . . . Oh, sorry.

The Chair: On a point of order, hon. minister?

Hon. D. Zirnhelt: We will have trouble here if you rebut, then I rebut, and we go on and on and don't leave it. But when you sum up what you say I said and it's a distortion -- we went into that before -- I have to correct the record before you go on to your next question. So there has to be a separation. . . . At some point, we say that's the end of the debate, because I can't leave standing on the record for all time some of the things you said, particularly about me. So I would like a chance to respond before you get to your next question.

Interjection.

Hon. D. Zirnhelt: May I respond? I do have the floor. I don't know where the $1.7 million came from for the KPMG study of the cost of the Forest Practices Code. I'm going to get it for you, but it's nowhere near that. You're out orders of magnitude. We did the KPMG study to affirm where and how. . . . I made all this very clear, if you read my press releases and statements. I made it clear that we wanted to know where the costs were coming for the code. Was it in planning? Was it in administration? Just what were the aspects? Was it in engineering? Just where were the costs -- increased logging costs or whatever? We wanted to get as good a handle as possible on it, because industry was giving 

[ Page 5026 ]

us a blanket figure that was by their admission unaudited -- maybe unauditable. Certainly we had to get as close to audited figures as we could in order to find out how they were accounting for the increased costs. We recognized up front that there was a problem in the overbureaucratization of the code.

I ordered the review of the code in August, long before industry presented us with their costs. All there was were concerns around the code. But we had to find out where the concerns were. So in August I ordered a review of the operational planning regulation which is the guts of the code -- how the code is going to be rolled out. That's what I ordered, not a review of the environmental standards, not a review of the costs of the code, but a review of the way in which the code was being implemented. That was back in August.

You will not find one shred of evidence where I denied that the code was costing money. So to say that I admitted that it was causing some problem. . . . Government admitted up front that there was a cost to the code. I don't remember the exact figure, but I do remember that industry put in a cost figure and that when we audited it -- when we had the KPMG study -- it was somewhere in between. It wasn't as low as what government had said; it was not nearly as high as industry had said. It was something in between. At least then we had some agreeable information upon which we could conduct our discussions about the state of the industry. It was somewhere around December, months after I started the review of the code, that the industry submitted their own study called "Industry on the Brink," or something like that. They had posed the increase in logging costs and so on. We admitted from day one, from the first meeting I had with the Forest Sector Strategy Advisory Committee, that we would look at the economics of the industry. I was completely up-front about that. We first of all had to agree on a common information basis and what was the source of the problem so we could tackle the problem.

T. Nebbeling: I'm not going to read into the record clippings from newspapers of interviews done in many communities that depend on the forest industry. I will forward them to the minister, and I promise to do that. We will see from time to time the denial of the Forest Practices Code impact on the industry as far as cost is concerned. But just as important -- and the minister did hint at this -- it was not just that the direct cost was a big hurdle to overcome, but the process, which used to take about three or four months -- maybe five months -- from the day that the logger went into the Ministry of Forests district manager's office and applied for a license, became 14, 16 or 18 months long. That has caused a dramatic cost to the industry, because just sitting back, waiting and not being able to go in and harvest at the time you thought you were going to be harvesting -- sometimes having to walk away from the cutblock because the market has changed and lumber prices have come down, so it is no longer viable to harvest the timber that was supposed to be coming to that particular logger. . . .

We are now getting into one of the reasons that, indeed, we had a three-million- or maybe five-million-cubic-metre shortfall last year from timber that was allocated under the annual allowable cut. Nobody got it out of the forest. Why not? Well, the regulations and paperwork -- the six-foot mountain of bureaucracy that every applicant had to overcome -- did not allow people to go in. Some of the reasons that people couldn't go in were that cutblocks were cut up into three or four sections. That demanded more roadwork, so more cost. Some companies couldn't afford it.

That the planning system -- or the review of what was happening -- started in August is one thing, and I appreciate that. That the financial consequences of everything which was going wrong because of the Forest Practices Code -- and I've mentioned all the different areas before, so I'm not going to mention them again -- was just not a factor in the minister's thinking at the time. . . . I'm not putting thoughts in his head. I believe that he must have known there were financial consequences because of the Forest Practices Code's lack of implementation -- lack of licences being available. That he had to do a study for that with KPMG. . . . It was surprising to hear that this review was happening, anyhow.

The cost of the study, I heard, was $1.7 million; it can be, maybe, $700,000 -- I don't know. Those were the numbers that I heard. Most likely it is somewhere in the middle. However, what I would like now to. . . . Okay, do you want to respond again? I'm not saying that I'm putting words in your mouth, Mr. Minister; I'm not trying to do that.

Hon. D. Zirnhelt: I am trying to get some numbers on the actual harvest for you. The year before the code was brought in in '95, the cut was 65 million cubic metres of Crown timber, and it went up to 66 million in '95-96, and then back down to 65 million in '96-97. I'll get some earlier figures, but I think it's fairly flat. The code certainly hasn't helped us get out the timber in the intervening two years, and that's why we want to get to the wood-ahead principle.

Just to answer the question of the cost of the KPMG study, the contract was worth $122,000, but the final billing against it is still to be determined. So it's less than 10 percent of that $1.7 million figure -- okay?

T. Nebbeling: Well, considering the numbers the minister just gave about the actual harvested timber -- the 65 million, 66 million, then back to 65 million -- that, indeed, says what I said before. We have an annual allowable cut that, on Crown land, is 70.8 million, as the minister stated earlier on, but only 65 million was taken out. That shows that it's five million cubic metres less. That represents $350 million in stumpage -- that's about 4,000 jobs. So the cost of the code is reflected in part by just the numbers I stated. Had the code not been there, most likely the industry could have gone in faster, thereby taking the timber out at the time that, indeed, the lumber was receiving a price in the market that was better than it is today.

When the minister mentioned 65 million, just to be clear now, does that include the privately managed land, or. . . ? This is just the Crown land. Okay.

Now, I think we have gone over this one. When we talk about FRBC, no doubt. . . . You wanted to say something on the privately managed lands?

Hon. D. Zirnhelt: I just wanted to make sure that I was giving you the Crown timber amount. The private timber land figure for the same years, '94-95, was $9.273 million. In '95-96 it went down to $8.777 million. In '96-97 it was $7.07 million, so there is for some reason. . . . I don't have an analysis of the decline. But just to be sure. . . .

The reasons we're not getting the cut out. . . . Some of them are administrative. We need personnel to get out small sales, particularly for small business, and we haven't been able to get out all that cut. Some of the wood in the cut is pulpwood and wouldn't be harvested in depressed markets. There are various deferrals because of planning -- land use issues. Sometimes there are first nations issues, where we're 

[ Page 5027 ]

going to implement the Delgamuukw instructions to us -- as we take his instructions. A better job has to be done in consultation. So there are any number of reasons, and we are, of course, always trying to remove those reasons.

T. Nebbeling: I'm going to help the minister now. One of the reasons I believe that the reduction in timber, percentage-wise, over the last two years is higher than on Crown land is that the owner of the private land obviously can pick and choose when he will take his timber out. Considering that the last two years we've had a dramatic decline in prices with pulp or timber, I think that may well be one of the factors that has led to a lower cut, percentage-wise, on the privately managed forest lands than on Crown land.

What I would like to do now is go back to the committee, and we can start with the Forest Sector Strategy Advisory Committee consisting of the CEOs and a number of other representatives: the union, the environmental organizations. . . . Is there an environmental organization component on the Forest Sector Strategy Advisory Committee?

Hon. D. Zirnhelt: Yes, there was. There was a representative of Forest Policy Watch. That was the group that was represented.

T. Nebbeling: We know who the members were on the Forest Sector Strategy Advisory Committee. That committee worked for a period of time in isolation, I suppose, with your ministerial workers. Then we went into the second phase of the accord's development, and that is when certain task groups or work groups were formed. I think there were four work groups, and I would like to have the minister explain to me each one, what they were actually created for and who the chairs were of the various work groups that were created.

Hon. D. Zirnhelt: The deputy has stepped out for a minute. He has that information, but let me just be clear. There were four groups backing up the government's negotiator with the major licensees. Those were four loose groups headed by four individuals. I mentioned those; they were on regulation, forest renewal, jobs and stumpage -- four senior officials. There were, I believe, three groups working with the forest sector strategy, and there were three co-chairs of the working groups. It was a very loose, organic kind of organizational model; it wasn't a strict hierarchical thing.

[4:00]

As minister, I encouraged any other groups or stakeholders to conduct bilateral groups to explore ways in which they might have common interests or to help reach the objectives.

T. Nebbeling: If the minister wants to wait a couple of minutes until the deputy is back, because what I would like to start talking about is the working group that dealt with the regulatory issues. . . . For that reason, I clearly need names and all the procedures that happened in that group.

Hon. D. Zirnhelt: If there's something that I'm unsure of, I can pick it up when the deputy gets here. But yes, the deputy actually was the person that advised. There wasn't so much a working group on regulation; it was that the Deputy Minister of Forests was advising the deputy minister to the Premier on regulatory matters, and there were discussions around the code, on the cost of the code and on a number of things which might be done.

But as we've said, we did have a separate process that dealt with the amendments to the Forest Practices Code, which was the review of the operational planning regulation and which has started off separately.

T. Nebbeling: This so-called working group. . . . Could the minister give me the names of the members of that group, or was it just a deputy minister who declared himself a group and then started to advise? I thought that there was actually a group of people created who were obviously knowledgable about the regulatory system and that from time to time advised the Forest Sector Strategy Advisory Committee.

Hon. D. Zirnhelt: I used working groups to deal with the forest sector strategy, which was the first stage. Then, when we got to negotiations, I suggested there were four people that were advising the deputy minister. I don't believe I called them working groups. They were just people who were involved in collecting information, preparing positions and advising our chief negotiator, Doug McArthur.

T. Nebbeling: I have different information. I have the information that there actually was a working group named the regulatory issues working group, and that they indeed got together and discussed matters that then were shared with other parties, obviously. But now, if the minister says that there was no group, I'll take that as an answer.

Hon. D. Zirnhelt: Yes, there was a regulatory issues group -- call it a working group. Bob Sitter from Interfor sat on it, and the Deputy Minister of Forests sat on it. To be clear, it was a group; they co-chaired a group.

T. Nebbeling: So there was a group: there was Bob Sitter, CEO, and the Deputy Minister of Forests, who at that time I believe was Gerry Armstrong.

Hon. D. Zirnhelt: No, that working group always was headed by John Allan, who was the deputy. It wasn't struck until after he was deputy.

T. Nebbeling: Well, if there's a co-chair, or if there are two co-chairs, then there must be more members. Could the minister give me the names of the other members that participated in that regulatory issues working group -- from the stakeholders, from the government itself, or was the deputy minister the only government representative?

Hon. D. Zirnhelt: I'm never sure where the member is going with his questions or exactly what he's getting at. The regulation working group had three members of government on it, and there were three members of industry that were on 

[ Page 5028 ]

it. I'm a little afraid that if I give you some names, then you'll say, "Well, who advised them?" and then we'll go down the line, and we'll never know the answer to those questions. We know who is charged with the responsibility.

But if I knew what your point was -- what's the outcome. . . ? I don't think this is process here. If you're leading somewhere and questioning the process, I think we should deal with the process.

Sometimes these things change, as to who is brought in when you need expertise. But working groups are just that: they are groups put together, on a temporary basis, to achieve something.

On the government side, we had John Allan, the Deputy Minister of Forests; Larry Pedersen, the chief forester; and Janna Kumi, the ADM of operations. So we had three senior people from the Ministry of Forests. From industry, we had Bob Sitter, Dennis Rounsville, Don McMullan and Brian Gilfillan, who is a staff person to them, I believe, from COFI. They brought in technical people on a needs basis. But in each organization -- government and industry -- I'm sure there were people backing them up. I'd rather not get into listing what lower-level officials were doing, when we should be debating the issues here.

T. Nebbeling: The minister is asking where I am going with all this. Well, I'm on my way to the jobs and timber accord. We haven't touched that yet. But this jobs and timber accord has been described by the Premier of this province as the most important thing he has done since being elected. He has named this document the most important thing he has ever done, and I believe it is very important for this province.

I will know, before we get to the jobs and timber accord, who the people are that were involved -- not only in creating the rules but how they got to these rules. I really want to know all these different groups of people who had input in this so-called most important thing for the Premier. It's something I'd really like to know.

If there are people involved that, God knows, maybe shouldn't have been there -- if that happened -- I want to know. I will find out. That's why, when I asked the first time about this working group, and I got an answer from the minister. . . . When the minister says: "Well, it's not really a working group. I wouldn't call it a working group. There were two people, the deputy minister and Bob Sitter. . . ." Then I have to ask another question, then I have another question, and now we find out there are about eight or nine people on that.

I'd like to know that. I think I have to know in order to really assess what's going to be the debate between the minister, myself and my colleagues here when we get to the jobs and timber accord and all its policies and stipulations. That's where I'm going; I'm on my way to the jobs and timber accord. But it's going to take some time if I can't get straight answers.

Now the minister is getting quite agitated, I think. And I'm sorry, because I don't want that. I tried to keep, you know, the mood. . . .

Interjection.

T. Nebbeling: I am a nice guy. You know me; I'm a really nice guy.

Hon. D. Zirnhelt: Point of order. I have answered every question you've asked as forthrightly as I can. I'll tell you that sometimes you don't ask the right questions. But I can't anticipate, unless you're very clear.

The Chair: Hon. minister, that may be a debating point, but a point of order is not directed at a member. It would be directed through the Chair.

T. Nebbeling: When this so-called regulatory issues working group was. . . . When was this group put together? In particular, I understand that the people from the government side. . . . I know them. If you could give me the background of some of the other people. . . . I know that one of them is COFI, but I don't know who the other two are. Could the minister tell me?

[T. Stevenson in the chair.]

Hon. D. Zirnhelt: Let me make the point that government picks their people and industry picks their people. I don't think we're getting into discussing whether personalities are adequate and whether they were the right people. I just want the member to know that I'm not going to get into the discussion about individual members of the public service or comments about individual members of the industry. Suffice it to say the people who were appointed by industry are Bob Sitter of Interfor, Dennis Rounsville from Crestbrook, Don McMullan from TimberWest and Brian Gilfillan, who is from COFI -- whether he was a member of their committee or staff to their committee, I don't know. But he played a major role. I think he was staff to the committee. Those people represented the two parties to the bilateral discussion: one government and one industry. It was the first week of February when that committee was established.

T. Nebbeling: The regulatory issues working group. Can the minister tell me: did they go over existing regulations in the Forest Act, in the code, or was the intent of this particular group to come up with some regulatory guidelines that would actually make the jobs and timber accord a reality? I think the deputy minister gets the gist of the question.

Hon. D. Zirnhelt: As I understand it, each party had issues they had to deal with or wanted to deal with. The list was narrowed, and like any negotiation, it focused on a number of issues that it was felt could be dealt with. So they ended up focusing on the work that had commenced back in the previous August, dealing with the operational planning regulations and associated legal points. They did canvass a number of regulatory issues. I don't have a list. I don't know if one exists. Suffice it to say that they did narrow in on the operational planning regulation and associated regulations.

T. Nebbeling: I was just given a note: "Government is on the side of the angels" -- as we all know. I don't know who gave it to me, but that's a nice position to be in.

However, it is not sufficient for me to sit back and let the minister dictate my questioning. As I stated, before we go into the jobs and timber accord, not only do I want to know who the people were who created this document, I also want to know. . . .

Interjection.

T. Nebbeling: This is the problem. The minister keeps saying: "I don't get the question." Well, obviously not. He's in 

[ Page 5029 ]

dialogue with everybody else rather than listening to my questions. What are some of the regulatory recommendations that this group came to the Forest Sector Strategy Advisory Committee with?

[4:15]

With respect to the kinds of things that came out of this committee, this committee did not report to the Forest Sector Strategy Advisory Committee; it did not meet again on these issues. We were talking about what ended up in the negotiations. Some of the aspects that were negotiated were the idea of two years' wood ahead, going from six plans to three plans, gated approval. . . . Those were the kinds of things, a number of things that would make sure that we implemented the code in a more expeditious manner.

T. Nebbeling: Let me assure the minister that we on this side care very much for the communities. I myself have been to 40 or 50 forest-dependent communities, and I know the minister goes there, as well. If you go by the mood right now of the people in these communities, I would suggest that the treatment given to the members of the opposition when they come to the communities to really show that they care for what is happening to the lives of these forest-dependent families. . . . There is no doubt that we are on the side of the angels, and no doubt that the government's angelic presence of the past is no longer there. People do not see the government necessarily being on their side when they judge what is happening in the forest today, when they judge the government's action by what is happening to their families today.

When we talk about angels, we have to talk about everything. Families in forest-dependent communities that I meet today are shaking their heads; they don't know what has happened. They don't understand what has happened. Families that have made an investment in the community, who dared five years ago to buy a mortgage so that they could have their own home, who invested in their homes, who invested in the community by staying there. . . . These families don't look at the government as a bunch of angels any longer, because they no longer have that certainty. They don't know if they can pay the mortgage; they don't know if they can take care of their kids; they don't know if the kids can go to school. That's the uncertainty that the once-called angels have brought to all these communities.

So when I'm here and I'm asking questions. . . . From time to time I know that the minister doesn't like the way I ask questions, and from time to time I know he has difficulty giving me the answer that I am seeking. It is not that I just speak for myself as the Forests critic. I'm talking on behalf of the tens of thousands of people today who are dying to get an answer out of this government: is there a future for me? I go to these communities and I say, "Yes, there is a future for you. It's going to take some time, but ultimately we will make the changes that will give you that certainty once again. We will give you the change that will give you certainty for your child's future. You will be able to stay in your community. You will not, like communities in Oregon and Washington, just pick up your belongings and leave and see your house become a second home for some professor living in San Francisco." The house there looks great, but the people who used to live there are no longer there.

That's not going to happen in this province. That's why I get aggressive in my questioning from time to time. It is because I know that the people watching TV or the people who have been asking for answers and not getting them are the people I try to represent. I don't want to be an angel; I don't want to be angelic. But I don't agree that the government is seen by anybody as being in that category, either.

Having said that, the minister says there were some regulatory changes to the code. Now, I thought that the code, and the whole debate as we discussed it a little while ago, was not part of the jobs and timber accord presentation -- was not part of the creation of the jobs and timber accord. I thought there was a review done by the government -- that's what the minister said -- starting in August last year to see if indeed the impact of the code on companies and on the workforce was as severe as the industry tried to portray it. The minister felt that the truth was lying somewhere in between what the industry thought was happening and what the government thought was happening, and there was an impact.

Now, these regulatory changes. . . . To see the code change from a little bit more of a workable document. . . . Why were they part of this whole jobs and timber accord approach? I didn't get the idea that that was part of it. Can the minister explain why that is suddenly now in the guidelines of the jobs and timber accord? Why is it now part of the deliberations of the jobs and timber accord?

Hon. D. Zirnhelt: There's no secret. Things are sometimes more complex than they appear on the surface. They were a parallel process. I indicated that there was a parallel process, that I began the review of the regulation. At that point, cost became a focus. We knew that it was part of the cost of doing business, so the regulatory issues became one of the things discussed between government and industry, since we had a table there discussing how we're going to get these jobs. Industry would say: "Well, if the regulations were a little more simple in terms of the planning, and if we could get the wood ahead, then we could create more jobs." There's nothing more complex than that, and that's what happened. So, as I said, there were parallel processes going on. If you want to read the jobs and timber accord and look at it, there is an implication that we have to review the regulations in order to get the wood out. So we've moved on that.

I just want to reassert for the member, in case there's any doubt, that it is out of caring for the people in communities and out of the need for certainty that we brought about some of the processes of protected-areas strategy and land use planning -- all of those things. Without that, the situation would be worse -- was worse. In my own region, 40 percent of the land was tied up in deferrals of one kind or another. When we got in there, we launched a regional planning process through CORE and, ultimately, through negotiations that led to more certainty.

So when you go into those communities, you do talk to people who are still upset -- there are always people upset with regulations -- but you ask them, "Should we get rid of it," and they'll very quickly say: "No, we want the regulations. We want it to work more effectively." So we've moved to simplify it. When I go to those communities today, they say: "We're glad you moved on changing the code. We're glad you moved on streamlining the code."

We are concerned about that. And in the interests of families and individuals working there -- so they can have 

[ Page 5030 ]

the certainty -- we're saying that we know there will be technical change, we know there's been overcutting in some areas, and we know there are going to be impacts by some land use decisions, but that we all support that. What we're going to do is try to create more jobs so that there are more to go around. That's the intent of the code. It's because we care for communities and individual families. People want to make investments, get on with the rest of their lives and make career choices -- young people make career choices. We know, then, that people who are planning, whether they are the tourism operators, agriculture operators or miners -- whoever -- have that certainty there.

Having said all that, we intend to create more jobs to go around, and that was the whole purpose of the accord. Just to make it very clear, we can only achieve that through some kind of regulatory streamlining, so the accord itself does imply that we have to get the wood out. To get the wood out, we do have to streamline the regulations.

T. Nebbeling: I hope that the minister will have these changes in regulations available when we go into the Forest Practices Code during the estimates and that we can indeed discuss what really has caused this tremendous hardship on thousands of people. I agree with the minister that nobody set out to create something that was going to hurt people. I don't believe that for a second. I know it was well-intentioned. We have to recognize that at the time that this code, this regulatory document, was put together -- and I believe it was the first forest practices code for this province -- there were many different rules and regulations and they were all over the place.

So the fact that the government put all these different regulations from different ministries together in one document was honourable, and everybody agrees with it. Everybody you talk to today will say that we needed something because of all those different rules and regulations all over the place. Nobody knew exactly where to find the kind of answer needed to have to prepare a harvest plan. Everybody supported it, including the people living in the forest-dependent communities, because they expected to get a code that would be workable. They expected to get a document so that they could say: "Okay, I'm going to go and do this land, and I have to apply for this licence. Here are the following steps I have to take. I do it and that's it; I get my permit."

That's where the code failed. That's where the code started to kill jobs rather than create jobs. And that, of course, is the reason that a lot of companies, after 16 months of waiting for the licence, decided: "To hell with it; I'm gone. From the day I started, I was supposed to get so much for my lumber, so much for my timber, but prices have gone down, so I'm only going to get this. It's going to cost me more to harvest than I will get at the end of the line when I've done my work."

So the code has not been the positive thing it should have been. It was welcomed. Nobody, but nobody, wants to go back to the practices in the forests of the sixties and the fifties, contrary to what some of the environmental groups try to say we are still doing. We know we have improved, but the price has been severe for a lot of people.

I agree with the minister that people recognize there is a need for a code. I agree with the minister that there is a lot of change needed with that code. I don't think -- I hope not, at least -- the minister will say during these estimates that he is as proud of that code as he was a year ago. I remember so well. A year ago I was getting messages from throughout the province: "Things are not right; things are not working. Can you do something?" And when I brought it up during estimates last year. . . . It was my first estimates; I was new at this; I was a rookie. I am a man of very few words, so I just asked the minister. . . . [Laughter.]

What is this?

An Hon. Member: I'm laughing at the minister.

T. Nebbeling: I hope so. Point of order, Mr. Chair -- they're snickering! Are they supposed to be doing that?

Anyhow, having said that, I think the minister and myself are in agreement that the revision of some of the regulations is in order. Hopefully, it will create a code that is indeed a workable document, so that the people who need to work with it do understand it -- they don't today -- and it will cut through the red tape of bureaucracy so that they can get permits within a period of time that's realistic.

I needed to say that, because I do not want to be just a messiah of doom and gloom, as the minister may have thought five minutes ago when I spoke on the code. There is a need for it, and I will always support a code, but it has to be a workable code. It cannot be what it is today -- a job-killing code. Having said that, I would like to have my colleague from Okanagan take over for as long as he wants to take.

R. Thorpe: I just have a very few questions. Unfortunately, I wasn't here on Friday. Quite frankly, I found myself turning the TV on at home and watching this great discussion between the minister and my colleague from West Vancouver-Garibaldi. I wasn't really going to ask questions, until I reviewed Hansard of Friday. The area that I'm particularly interested in has to do with the advertising and communications secretariat's involvement in the forest jobs. . . . I read the Blues quickly this afternoon. My first overall question is: did the minister confirm that $1 million was the amount of money spent on the advertising to launch this new accord?

[4:30]

R. Thorpe: Could the minister break that million dollars out in round terms between print, radio and TV?

Hon. D. Zirnhelt: I don't have that breakdown here. That would be in the estimates of the Minister of Finance, because he is responsible for that budget.

R. Thorpe: So I understand. Out of that million dollars that was spent or committed -- we'll get to where it has been spent or is going to be spent in a minute -- is the minister now saying that none of those costs are allocated to his ministry or to FRBC, that they are absorbed totally by the communications secretariat?

Hon. D. Zirnhelt: The Ministry of Forests contributed $200,000 to the contract, and it was spent under the Ministry of Finance through the CPCS communications budget.

R. Thorpe: Would the minister confirm, then, that under his vote 38, I assume, under STOB 40 -- or is it 42. . . ? Where is that $200,000 charged?

[ Page 5031 ]

Hon. D. Zirnhelt: We'll just confirm it. It is STOB 40, yes; that's where it comes from.

R. Thorpe: Looking at STOB 40, then, that leaves the ministry with only $358,000 with respect to advertising for the rest of the fiscal year. Would the minister please advise the House what he anticipates the $350,000 is to be spent on?

Hon. D. Zirnhelt: There is advertising around the Forest Practices Code. For example, if there are to be changes, we would expect to do some advertising around that. I'll have to get you a list of the programs, of things that would be advertised. But it's the general ministry advertising budget that we're talking about.

Here are some of the key issues: the production and printing of the Forest Practices Code guidebooks, for example; forest education. Some of it would be spent on international forestry communications, educators and international stakeholders. We have to send brochures over or somehow get information to international stakeholders or customers -- embassies, for example. We would make pamphlets available to them on alternate harvesting practices -- for example, how many trees we plant in silviculture practices in Canada. This would also cover the annual report printing expenses.

R. Thorpe: If the minister, as he originally stated, could supply that complete list, I certainly would appreciate it.

I'm wondering also if the minister could advise us what kind of relationship there is in taking money out of STOB 42 and transferring it over to 40 for general advertising uses? What is your practice in that area?

Hon. D. Zirnhelt: Advertising under STOB 42 would be things like advertising a forest licence in the newspaper or in the Gazette, and 40 is other advertising. To transfer from one STOB to the other would take Treasury Board approval.

R. Thorpe: Yes, I realize it would take Treasury Board approval. I'm sure the minister's aware that it takes CPCS approval also. I'm sure the minister's aware of that. But if he isn't, now he is. That's for any amounts over $100,000.

I am a little bit confused here on this point, though, because under CPCS's document -- which I have a copy of -- it indicates that they don't necessarily spend their own money. They provide advice and spend other ministries' money.

So back to the $900,000 -- or approximately $800,000 to $900,000 -- that you've now acknowledged goes through CPCS. Can you explain that to me -- how that would happen? Please, I really wouldn't like an answer that goes back to Finance, because as you know, those estimates are over. I have to believe that there has to be some kind of dialogue and agreement between ministries on where this money is going to come from to fund these different programs. I'm still confused about this $800,000 that seems to be out drifting around, when in fact I know CPCS's total budget is only $1.8 million.

Hon. D. Zirnhelt: Putting together a budget for an initiative like this is complex, and you don't always know the dimensions of it when you initially plan your budget. I would expect that because the jobs and timber accord is an important initiative of government, it's going to benefit all of British Columbia; it's going to benefit a number of the revenue-generating aspects of government. There's a lot of benefit to this, so we expect there to be interest by the government as a whole. So that would be the role of CPCS: to advise, assist and help manage a complicated and important initiative.

We believe that the public has a right to know. We expect the public, communities and companies in communities -- a lot of them small ones -- to find out about the jobs and timber accord and to help make it a reality by being involved at a regional level. That's why we think it's important to communicate the jobs and timber accord.

As I said, the details of what's expended through the Ministry of Finance is a matter for them and their estimates. There is a request in for this to be produced under FOI. We're busy preparing the documentation, and we will release it as is required. But if you'd like to tell me the nature of your concerns, I'd be happy to try to debate them and give answers to you in general terms.

R. Thorpe: Well, I would like to share my concern with the minister. As the minister knows, in previous lives the minister and I have sat across the table on issues and negotiated different things. I guess my concern here -- that's why I read the Blues today -- is that this refers to the Ministry of Forests. It's a major, major forestry thrust. It's important to the future of British Columbia; it's important to the people that work in the forests today and to the people that are currently unemployed; it's important to the young people of our province. Therefore I would expect that this lead ministry would have its hands totally on this project and would know the details completely.

I had a concern as I read some answers, and now as I'm starting to get some personal answers -- because when you read things it's kind of hard to understand the bantering back and forth. . . . Is the Ministry of Forests really leading the charge on this, or is somebody else off in another room leading the charge? The minister asked what my real reason was for following this line of questioning, and that is my reason. I want to know: is the Ministry of Forests responsible, and if so, how come they don't have their hands around this project and have the details related to the costs and some of the other questions that I want to ask?

Hon. D. Zirnhelt: As I said to the member before, this is a major government initiative. The Premier has taken a major role in it; his deputy minister has taken a major role; we have; FRBC has. It's right across government. It's a high priority for government as a whole. If we look at the resources that we have to communicate what the government's intent is here, what the agreement that we have with industry is, and if we look at the resources that we have as the Ministry of Forests and at the resources that CPCS has and what government has, we combine those, and we come up with a program to communicate with the public, through the various media, what the nature of the accord is.

R. Thorpe: I accept the answer because I know this particular member. I know he's a person of solid backing who works very hard. But I guess I'm concerned that it doesn't appear from the information I've received so far that the Minister of Forests, in this key ministry on the future of British Columbia, has full and complete knowledge on the thrust of this advertising initiative. If that is the case, then I suggest that the minister just say: "Look, somebody else was responsible for it. I didn't have my hands on it; I didn't know what was going on with it. Therefore I can't answer your questions." But when it is a major thrust to create in excess of 21,000 new jobs in British Columbia in the area that the Ministry of Forests is responsible for, I would expect, and I'm sure British Columbians would expect, that the minister responsible would know 

[ Page 5032 ]

these kinds of details. I don't know if the minister wants to comment on that before I ask some other questions. I'll just sit down and see if the minister wants to comment.

[4:45]

R. Thorpe: So even though the mandate of CPCS is to support ministries and to assist, with this particular project they have taken it over, for all intents and purposes, and the minister is saying that he is focusing his primary responsibilities on the jobs, the creation of the 21,000 new jobs. Am I correct in boiling it down to that?

Hon. D. Zirnhelt: Not quite. You've put your own inflection on it. We are involved. There will be a team of communications people from the Ministry of Forests and from CPCS and others, as necessary, to work to make sure that the communications side is being done. We're taking advice and some leadership from CPCS in that; there's no question about that. As a matter of fact, we've been operating without a permanent director of communications for some time in the Ministry of Forests. We are staffing it, however. So some of it has to do with which personnel or where, at any given time. I don't think there's anything more to it than that.

But our job is to make sure that we get the jobs out now, and part of that is being interested in knowing that people in communities have some idea of what's in the accord. People have to read what's in it; people in small businesses in the forest industry have to read it to know what's in it. So communications is a very important aspect of it. We remain interested in it, and we're part of the team.

R. Thorpe: As part of the team and having knowledge of their role on the team. . . . I'm sure that, if I could use a football analogy, when everybody is in the huddle, everybody has to know the overall play or they can't play their part. Therefore people have to know whether it's a screen or a hand-off or whether the guard pulls, the tackle does this, etc. Therefore in this program, other than the benchmark of creating 21,000 new jobs, can the minister tell us what other measurements and benchmarks were put in during the development of this communications plan to see, in a post-audit, whether they've been successful or not?

Hon. D. Zirnhelt: The accord itself is a strategy. That was the front end of the process, and communications is part of that. The back end of the process is the implementation; we're working on that now. We're working on that with industry and other stakeholders, and we anticipate getting at it as soon as we get out of here, actually. The key team involved in developing the implementation plan is sitting in here in estimates. Once we're out of estimates, they will dedicate themselves to the implementation.

R. Thorpe: Perhaps it's my fault -- of course, I do wish you and your team well when you do get out of here and out of estimates -- but my question on benchmarks and quantifications and post-audit against those benchmarks related more to the expenditure of $1 million on the communications plan. Can you confirm that there were key benchmarks established, as there are in most major campaigns like this? Once you've done that, could you share with me what the key benchmarks were?

Hon. D. Zirnhelt: We don't have the contract here; it will be released. I guess what I would say is that an awareness. . . . We don't know how many people are aware of the jobs and timber accord now, but in general terms I would expect the public to be aware that there is a jobs and timber accord and of what the major elements of it are. That would be the purpose of the communications strategy.

R. Thorpe: I'm sure that the minister wouldn't be surprised that I do understand the overall concept of a communications strategy, as I'm sure the minister is aware of my background before I came to the Legislature. My question is: were measurable benchmarks established as part of that $1 million plan, so that you and government. . . ? I mean, we're spending the taxpayers' money. We're spending the dollars of hard-working British Columbians to tell them what a wonderful world we live in and how we're going to help them in the future. Were benchmarks established as part of this $1 million expenditure?

Hon. D. Zirnhelt: As I said before, that contract is with the Minister of Finance. You'd have to ask him details about that contract.

R. Thorpe: I don't know. I certainly don't want to get upset and carried away and talk for hours, but it says here in their own documentation: "Cabinet Policy and Communications Secretariat Management Framework. . . ." I mean, it's their document. It's not mine and it's not yours; it's theirs. They say that they're there to assist and to provide advice. It doesn't say that they're there to be the people that decide on everything. Quite frankly, hon. Chair, I'm amazed at the apparent lack of details. The ministry either is not aware of them or is not prepared to share. To me, if it's about sharing and if it's about really getting out of here so you can get out in the field and implement your programs, you will want to share that information so that we don't have to stand here for hour on hour and try to dig and probe.

If there were no benchmarks established, why don't we just say: "There were no benchmarks established"? The only benchmark we were establishing was that the Premier's positive rating may go up, because I see that his picture seems to be on most things. If there were no benchmarks established, please just say: "There were no benchmarks established."

Hon. D. Zirnhelt: I can't say there were, and I can't say there weren't. If you want an explanation on the contract, it was not our ministry that let the contract, and therefore you should direct your question to the Minister of Finance.

R. Thorpe: The minister here has said that he does not know the details and is not aware of the details, yet $200,000 is coming out of his budget. I really hope that not too many taxpayers are listening right now, because they should be appalled.

To a government that has increased debt by $11 billion, $200,000 is not a lot, but to forest families in Golden and 

[ Page 5033 ]

other parts of this province, $200,000 is a lot of money. Quite frankly, knowing the hon. member's background, I think $200,000 is a lot of money to people in his riding. So I'm appalled. I'm appalled that this minister does not know the details of the $1 million and now appears not to know the details of the $200,000 contract.

I'm going to defer now to my friend from the Cariboo, who's going to ask some questions. I'm going to have to come back to this area later, because this lack of sharing financial information is very, very disturbing.

Hon. D. Zirnhelt: The money will be accounted for. We are focusing on the job side of it, as I said. The lead on the communication strategy part of it was in another ministry, and they are accountable for it. The member can ask the question of the appropriate minister. I'm saying that I'm accountable for the dollars. We undertake to be responsible for our budget. Yes, $200,000 is being spent. Yes, it is a lot of money. But this ministry works extremely hard on things like the future of Golden, the future of Skeena Cellulose. We work every day with communities to ensure that the public gets good value from the dollars we spend.

We do spend money from time to time on communications, and yes, we do know where it goes. But the accounting for that and answering the detailed questions on contracts are properly with the ministry that has the contracts. We're working together with them. I can assure you that this ministry is getting full value for the dollars, and the public can rest assured that they are.

In due course, the various documents associated will be released. But we couldn't tell the public right now or give them an auditing of various contracts, because we are still accounting for them and the billings need to come in. You end up with a budget, but you need the billings to come in.

R. Thorpe: There's something the minister said -- and to my colleague from the Cariboo, I'm sorry -- but the fact of the matter is that you can share the contracts because you've let the contracts. The ads are in the paper. They're being mailed out all over British Columbia. You can share the contract if you care to share the contract with British Columbians. British Columbians would like you to share that.

I would just like the minister to let us know why he can't share the contract now. People understand that when the billings come in, there may be adjustments here and there. People accept that. That's how they run their families; that's how they run their lives; that's how they run their small businesses. But I would ask right now if the minister would undertake to release the $1 million contract that's being spent on this project.

Hon. D. Zirnhelt: Yes. There is a request in under freedom of information. There is a process, legislation, by which information is released. It will go through that. That which is appropriate to release will be released.

I just remind the member that the public is interested in employment that comes out. They would like the government to spend money wisely. I can assure you that we will spend the money wisely in the interest of creating jobs through the jobs and timber accord.

J. Wilson: I'd like to get into this issue of jobs a little bit here. I see there's mention of 3,000 new jobs from new work arrangements. Could the minister lay out in detail exactly what they're talking about here?

Hon. D. Zirnhelt: I said it before, but I'll just reiterate it. The new work arrangements are those arrangements that are made between the industry and their employee groups. We expect them to be negotiated and implemented through collective agreements. The government itself will pay up to $3,500 per employee annually for the life of the accord or the collective agreement, whichever is shorter. This is a pilot project for us contributing the money.

[5:00]

J. Wilson: So it is worked out on a. . . . You've broken the $20 million down into 3,000, I guess is my understanding. If someone is asked to take early retirement, how will that impact on their retirement package? Will part of this $20 million go into bringing their retirement package up to where it would have been had they worked, we'll say, an additional three years? Will it be a direct benefit to those people, or will it simply go to the company to help offset the payroll costs when they hire another employee?

Hon. D. Zirnhelt: I wouldn't rule out the possibility that something like that might be negotiated. What we have focused on here is the 3,000 jobs at $3,500 a job, which is $10.5 million each year. Therefore there's other money that can be used. But we expect that $3,500 per job to be a portion of the payroll costs. If you reduce overtime and create more employment, there is a cost, a payroll cost, and this is designed to be an incentive for that.

J. Wilson: Okay. If we use this money to offset the additional payroll costs, that equates to more people being hired to do the same job that is now being done by the present workforce. Is that how this will work?

What I understand the minister to say, hon. Chair, is that if we remove the overtime, then that, in effect, will create these additional jobs. This is how we're going to do it. We're going to take the money that's been put up by the government, the taxpayers, to cover things like WCB, UI and benefits -- medical, dental and whatever -- and all the rest of it that the company is carrying that becomes an additional cost each time an additional person is hired.

Hon. D. Zirnhelt: There may be reduced hours. There may be more paid leaves for training or other purposes. There may be job-sharing. There may be early or phased retirement. Those are all arrangements that will lead to higher employment. We anticipate that as you increase the number of employees, the payroll costs will go up. Therefore government has said that it is prepared to participate in the payroll costs -- up to a third of the direct payroll costs associated with hiring new employees.

J. Wilson: I assume, then, that this will be something that is done on a voluntary basis by the workforce. Or will it be something that is imposed on them by the government?

[ Page 5034 ]

Hon. D. Zirnhelt: By their nature, collective agreements are entered into voluntarily by the parties. We expect there to be negotiations. There is no magic. We've said that it's up to the employers and the employees to bargain these new work arrangements.

J. Wilson: From that I would have to conclude, then, that this is going to be strictly related to the IWA and that any other people in the workforce out there will not become part of this agreement.

Hon. D. Zirnhelt: They could if there was some way they could negotiate a collective agreement with their employers. But there are at least three major employee groups -- the two pulp unions and the IWA -- that can enter into discussions with employer associations and bargain these agreements.

J. Wilson: I guess I should rephrase the question. Other than being a member of a union or a member of a collective body -- and there are some out there, I do realize, where the membership does have some collective bargaining rights even though they're not unionized. . . . But a large part of our workforce isn't in that situation. They are people who work for, say, contractors -- silviculture workers, etc. -- and I'm wondering if there is anything there that is going to include this group of people in this process.

Hon. D. Zirnhelt: No. I think the accord is clear that the terms of alternate work arrangements. . . . They will only apply where or if new work arrangements are negotiated and implemented through collective agreements.

J. Wilson: I think we've gotten the answers we need on that.

Last week, when we were on the estimates here, the minister brought up the possibility of establishing a log market. I would like to explore that a little further to find out what exactly he is referring to or what he has planned.

Hon. D. Zirnhelt: I don't recall talking about log markets. I talked about the marketplace out there in terms of what happened to sawn fibre. I said that the industry agreed that they would provide sawn fibre, but that they would maintain the current log supply agreements. They can get credit for that if they're supplying logs to remanufacturers; they can get credit for that under the agreement here.

I'll quote from page 7: "The industry will retain its status quo practices regarding its disposition of logs to this sector." So if they add more logs to the reman, if it's incremental to what they're supplying now, they will get credit for that in terms of the employment that's created, or against the sawn fibre. Someone would have to work out a ratio or some way, but there will be an equivalency calculated somehow.

J. Wilson: I believe that where it came up was when we were discussing the small business allotment of wood and ways of creating new jobs. I'll be glad to dig out the quote from Hansard and bring it to the minister. He did refer to the possibility of establishing a log market. I thought at the time that it was a rather interesting or maybe good approach to doing something here. I can see that it may not materialize.

Another question I had, with the small business wood now being fairly well under control, and we've got sales coming up, etc. . . . If we don't utilize that wood, then it will go in as some type of forest licence at the end of the year. What is in place here for wood to be available for community woodlots, or woodlots, say, for native bands that have been looking for some way of becoming sustainable? Is there going to be a portion set aside that can be used for that?

Hon. D. Zirnhelt: Under the accord, there is an objective to create more employment for first nations; there's no question about that. That's always been an objective of Forest Renewal B.C.: to get broader participation in the industry as timber becomes available. It's up to the minister to apportion it in certain parts of the program, and it's up to the small business people to try to use it to maximize employment in areas where we need employment. The accord itself doesn't speak to this, but we're still committed to the doubling of the woodlot program. Where we need to, we will reapportion wood from either the district managers' or regional managers' reserve or other programs as necessary, because we remain committed to that.

There are going to be three pilot licences of community forest tenures. That will be developed, having analyzed the community forest licences that are out there now. They are not area-based; they're volume-based licences. So we expect that there will be three pilots. Not every community will have a community forest licence. But as wood becomes available, a decision is made as to what program it goes into. So if a community is having trouble getting employment or maintaining the flow of fibre to a particular mill, then we can put it into a program that suits the profile of the industry in the area if we want stability.

So there's a number of levers other than the accord itself. But the accord just speaks to getting more jobs out of the small business program, which means getting more fibre to the value-added sector.

J. Wilson: I appreciate that. If there's not a reserve there that. . . . Say, for instance, a project is deemed to be necessary for a community by a community. It seems we should have some reserve set up so that this wood could be available on an ongoing basis. And the way I see this operating, it may not be. The apportionment in one year may all go one way or another. There is the possibility of, say, some smaller things like community forest licences not materializing. Would the minister tell us where the three pilot projects are and who they are with?

[5:15]

Hon. D. Zirnhelt: We haven't selected the three communities. We want to work with communities and community forest licence holders now on what the form and nature of that licence should be. We want them to help define it and also want to get them to help us define what the selection process should be.

J. Wilson: So then we actually. . . . I'm confused here now. We don't have three pilot projects. We're looking to establish three pilot projects. Is that the way it is?

Hon. D. Zirnhelt: Yes, the three pilot projects will be established. They haven't been established, but they will look at concentrating more on the appropriate licensing type. As you know, a number of things are being called community forest licences, but they are forest licences. They use that provision of the Forest Act, and it is a volume-based tenure as 

[ Page 5035 ]

opposed to an area-based tenure. I suspect that when we consult with people, they will speak to the need of having an area-based tenure, but that may not be the case. We haven't precluded it, but we're saying that we understand there's great desire on the part of a lot of communities to have these. So we're prepared to pilot them, and the pilot will have to be defined in consultation.

J. Wilson: Has the government got a group together from the various communities that are seeking these licenses to discuss all of the needs and how they should be drawn up? Or is this a government initiative that is done within government itself?

Hon. D. Zirnhelt: Earlier this year there was a meeting around community forests: what they are, how they are working, how they could be formed. We had senior officials at that meeting to hear what people had to say and to participate in the debate, and we anticipate further discussions with communities and community forest licensees about the form and nature of the pilot of tenure that we have to run. We may end up having to amend the Forest Act, for example, if they come down with recommendations of types of operations that we can't conduct as the Forest Act currently is written.

J. Wilson: Do we have a time frame to have some idea of when we can see something put in place, where actual work commences or a charter is granted to a community?

Hon. D. Zirnhelt: We are committed to doing this over the life of the accord, which is, as you know, four years. But we have a number of licences out there that really are community forest licences: for example, the Mission tree farm licence, the Revelstoke tree farm licence. Nootka Sound, Lake Cowichan, Kaslo and Creston are areas that have them. And there's been a discussion around. . . . As you know, if we have different provisions for salvaging in the act, we might be able to have a salvage licence in the community of Likely, for example. But it depends on the need. So analyzing what's going on out there will have to take place. As far as a time frame, we're going to get on to it. It's part of the accord, we have to work on the implementation strategy, and we'll be on that. We don't have hard and fast time lines right now. We will get at it as quickly as we can.

I don't think the community forest licences themselves are integral in terms of multiplying the number of jobs. I think they are important for jobs in certain communities, because it speaks to the need of having a community-based licence as opposed to one for a timber supply-based area licence. It may speak to the stability of jobs as opposed to adding more jobs, because that fibre could perhaps create more jobs if allowed to flow from one community into another region.

We'll get on it as soon as we can, but I can't give you a hard and fast time frame. We understand that there's going to be demand out there and that communities will want us to get on with it right away. There's only so much we can do, but we will be on it as soon as we can get to it this fall.

J. Wilson: The other question that we've asked was on some of the first nations who have been showing a considerable interest in establishing some tenure, and that wouldn't be too far removed from what these community licences would be. Are there any resources being directed to this area?

Hon. D. Zirnhelt: Yes. There is one tree farm licence in the Fort St. James area that is in the hands of a first nation -- Tanizul Timber has it -- and there are quite a few first nations that have 16.1 licences and some other forest licences. We're in discussions with the First Nations Forestry Council, because the first nations communities are anxious to work with other stakeholders to become part of the forest industry.

We consider licences when there is volume available, and we consider the various needs of various communities in an area. We will continue to work with first nations people so that they can participate in the economy of the region and somehow get some benefits from timber that's being extracted from their traditional territories.

J. Wilson: The question I will no doubt be asked, other than about getting some return from the resources that go out of there, which could be through jobs, silviculture work or that type of thing, is whether tenure would actually be allotted on the same basis that it would be to a community if they went and applied. Will they get the same. . . ? How would I phrase this? If you look at a community that applies for a licence -- we'll say it's a native band that's somewhat in isolation from all other communities, and they are a community within themselves -- will they be given the same opportunity, and will the same rules apply when they come in and apply for a licence to have tenure over some wood?

Hon. D. Zirnhelt: The ministry identifies the opportunity, and then it's advertised. People are assessed based on the terms and conditions of the proposal call, really. If somebody says they want a community forest licence, and they come in and apply though there's no wood that's been advertised, then it's there as an expression of interest. It might be considered when we look at opportunities that might come up, should some timber become available. There is no process now to apply for community forest licences, although a lot of people have done that.

J. Wilson: When this wood becomes available, is the opportunity there, say, to put in for a 50-year forest licence on a piece of land out there, or will it be a short-term thing? These are some things we should have answers to.

Hon. D. Zirnhelt: We won't be able to say with any certainty until we've done the consultations, but some of the community licences are out there. In fact, a tree farm licence in the hands of a first nation is renewable. Tree farm licence No. 42 in the Fort St. James area is renewable. I think there are any number of variations. I'm not sure if you're still on first nations participation, but if you are, there's no licence called the first nations licence. There's a full range of types of licences out there, and everybody who has the licence of a certain type has to be running their licence according to the terms and conditions of that licence. They vary, depending on the nature of the wood, the nature of the opportunity that was made available and the terms and conditions under which the opportunity was advertised.

J. Wilson: The ministry has done a lot of work, as you're well aware, to try to get the costs of the code down through a reduction in the paper trail or by reducing the volume of paper required to permit a sale or whatever. Do we have an actual figure on what this will save the industry cost-wise through, say, going through three processes now instead of six? What is the actual dollar amount that we're looking at?

Hon. D. Zirnhelt: We do know what costs were attributed to the code, and we do know that some of it was in 

[ Page 5036 ]

roadbuilding, some of it was in more particular care being paid to other resource values and impact on soil and water, for example. We don't know how much this is going to mean to industry, although the Forest Alliance of B.C. has indicated that $300 million to $400 million will be the savings to industry from the code amendments.

We didn't negotiate a final figure with industry. It's almost impossible to do that because, although we're confident of the information that's been developed, it wasn't of such a level that we could actually pinpoint it, as the cost of the code was different for almost every licensee. Some of them were already doing code-plus work, and their costs didn't increase. There's a full range of people -- from those who found the code very expensive to those who didn't find it particularly expensive. So no, we haven't put down a figure of cost per metre. But if industry has been saying the code is onerous, then we expect there to be substantial savings.

J. Wilson: I've had quite a few figures thrown at me in the last few months, and it varies on the area or the region. It goes anywhere from $5 to $7 to $8 a metre that they have to be able to cut out of the cost of applying the code in order for them to get to a point where they're going to actually be able to operate without costing the company money.

What I see happening here is that we're going to spread this across the board, and even if it works out to. . . . Well, if it saves $300 million and we have a $70 million cut, I guess that works out to something like $4 a metre. But in all those cases where we have companies that have a higher cost of doing business, it will probably not be sufficient to get them out of trouble or take enough pressure off that they can operate and still come up to the environmental standards that we expect of them.

Should this be the case, is the ministry prepared to look at reasons or specific conditions where we could maybe make further cuts? Or is it going to be applied broad-brush right across the province -- and if you can't make it under this and you go under, that's too bad?

[5:30]

J. Wilson: I'd like to ask the minister a couple of questions in regard to silviculture. Under the jobs and timber accord, we are going to create more jobs. I'm wondering what the impact will be on existing silviculture contractors. We have roughly 12,000 people in this province that make their living, or part of their living, from silviculture work. When this jobs and timber accord comes into effect, how will the silviculture contractor today, who has a trained crew that may do some work for a major licensee for a couple of months, and then he may get a contract from FRBC to pick up some enhanced silvicultural work. . . . He uses the same crew, they just go from one job to another, and it fills in their year fairly well.

When this takes place, how is this contractor going to be able to operate without having to hire two separate crews? Can the minister explain?

Hon. D. Zirnhelt: Under the jobs and timber accord, there's nothing done to the silviculture work that the major licensees put out. There's $150 million that the major licensees have in basic silviculture that they are legally obliged to. The accord is silent on that, so no impact. What the accord says is that we expect licensees, out of all the work that they do, whether it's through FRBC, or however they want to do it. . . . They've undertaken to create some 5,000 permanent forest-worker-type jobs. I expect, therefore, that there will be competition between displaced forest workers from manufacturing and logging and some of the people in silviculture who got into enhanced silviculture.

So the enhanced silviculture work that is budgeted through FRBC -- not what's budgeted through companies that they do on their own, but that enhanced work. . . . Up to $300 million of it for the land-based programs will be the subject of job creation by trying to round out that employment for individuals and through various sectors of the forest industry there. Those jobs will become more permanent jobs, and they will be people who go from one phase to another.

There has been talk in the industry for some time about full-phase or multiphase contracts and multiphase employment. When Forest Renewal was initiated, we envisioned a new type of forest worker rather than the specialist that goes around spacing. As we get into more enhanced work, we expect those to be community-based jobs as opposed to contractors floating all over.

J. Wilson: With the past track record, I wouldn't want to depend on enhanced silviculture contracts coming up to feed my family on, that's for sure. But they do have a place. They fill in some of the periods when you may not have a basic silviculture contract up and running. I think that once we separate them, we're going to create two entities out there in the workforce that are basically doing the same job, but they won't be able to cross lines.

The minister said that we are putting $300 million a year into a program here and that part of it will be used in enhanced silviculture work. For the upcoming year, the figure that FRBC is going to put out there to create employment is $625 million. Is that additional $325 million not short-term employment for this upcoming year, as opposed to long-term employment, which is the $300 million that's been proposed for each year of the four years? How does this work together to create long-term jobs when it's only going to be there for one year?

Hon. D. Zirnhelt: Under the accord, we said up to $300 million in the land-based programs to create these 5,000 permanent jobs. In addition, if FRBC spends another $100 million -- up to $400 million -- then that would be outside the jobs under the accord. Some of that money might be spent on training, and some of the people in the new forestry work might be being trained or retrained. There may be some 

[ Page 5037 ]

crossover from the land-based programs to some of the other programs. This year the land-based programs are more than $300 million. I'll try to get that figure. But this is a year of unusually high expenditures. We expect the short-term jobs there this year to be created out of the $625 million, and as we create more permanent long-term jobs, the number of short-term jobs will go down. For the amount spent, we will be trying to create a maximum number of long-term jobs. But up to $300 million is to go into long-term contracts, umbrella contracts, with those companies that have agreed to create the long-term jobs. So it's a dedication of a portion of FRBC's budget for that purpose.

J. Wilson: A long-term job in a lot of cases is a whole series of short-term jobs. I don't quite understand that explanation, because if you take $300 million and put it into the system in one year and take it away the next year, it's not really a transition -- unless, of course, the minister is saying that we will have all these long-term jobs in place within one year. The transition won't be smooth; it'll be rocky.

I've seen mentioned somewhere in here that out of the $300 million that is coming out of FRBC to create these long-term jobs, $120 million per year will be spent on land-based projects. Is that correct?

Hon. D. Zirnhelt: Yes. The $300 million is for land-based programs, and watershed restoration is land-based. But the enhanced forestry part, I understand, will be in the neighbourhood of $120 million this year. It could go up with the business plan. The idea is to spend the money where we anticipate the best investments to be made.

Let me give you a breakdown. This year, Forest Renewal is going to be spending $101 million on enhanced forestry, $103 million on watershed restoration, $102 million on resource inventory and $22 million on recreation. Those are all land and environment projects. That totals $433 million this year, whereas last year, for example, they spent $318 million. But that's in a year of unusually high expenditures. We expect that figure for enhanced forestry, watershed and resource inventory and recreation to be down around $300 million, on average. Under the accord we commit that much and attempt to get the 5,000 jobs out of it. Industry has agreed to organize employment in the enhanced forestry, silviculture, inventory and recreation areas -- forestry work of an enhanced nature. They undertake to create up to 5,000 jobs that way.

J. Wilson: Is the $120 million going into enhanced silviculture work alone? Is that the figure we will see? Is it my understanding that this plan we have here is simply a one-year plan? Or is it going to stay in effect for the four years? The way I read it is that $120 million a year will be allotted for enhanced silviculture work.

Hon. D. Zirnhelt: I'm not sure where the member is getting the $120 million. If he would tell me where he's getting that figure, I'd be happy to try to comment on it. I'll just let him know that we don't have the Forest Renewal officials here. I've got some basic information. When we discuss Forest Renewal in detail, we'll have those officials here. But perhaps he could tell me where he gets the $120 million.

J. Wilson: It's one of those things that you seem to catch out of the corner of your eye when you're reading this over. I just can't seem to locate it. But it is here, and I can find it. I read it at one point, but. . . .

I realize we're not into Forest Renewal here, but it would appear that maybe there's been a slight variation from the original plan that Forest Renewal presented, which everyone bought into in regards to the percentages of money that would be allotted for certain work.

Hon. D. Zirnhelt: Just to let the member know, I'm not sure where the $120 million came from, although I do recall that figure being provided to me at some point. It was to distinguish between what government is spending on silviculture -- and you have to define that -- and what industry is spending on it. For example, this year the small business enterprise program will spend approximately $36 million under the small business program and another $7 million directly under the ministry; whereas FRBC will spend $130 million, and we expect industry to spend $150 million. That's in silviculture itself. But, of course, we add into the land-based programs a number of other types of activities.

So we expect that the new forest worker, in these 5,000 jobs that are created, to be multi. . . . There are many things. It could be recreation for six weeks and then moving to commercial thinning. They could move back, then, to brushing and weeding. The sky is the limit in terms of what they do, as long as it's land-based, as long as there's an agreement that that's a good investment in the land base and that it's appropriate work for the displaced forest workers. The idea is to create these jobs so we have a larger pool of more permanent jobs.

[5:45]

Hon. D. Zirnhelt: Well, a type of recreation project that might employ somebody would be trail-building. That might be something that's done in an area that can be worked on when it's wet, and the people who work on it might be people who can't be working on watershed restoration for that moment or who can't be logging in that particular area.

We don't have a blueprint. We expect industry. . . . They've undertaken to come up with the descriptions of these jobs, what has to be done, and we have undertaken to create umbrella agreements, long-term agreements, so that they have some ability to plan these jobs, do the inventory, do the survey work, do the planning work. They won't have to go from year to year and start and stop, start and stop. A lot of wasted energy is spent in the starting and stopping.

So that $300 million in umbrella funding will go to long-term jobs, and they will be long-term contracts -- up to five years, I believe.

J. Wilson: This money that is put out is going to be under the control, basically, of the union, and it will be directed to the employers to come up with projects that they feel are necessary and important to the industry.

Unless they come up with enough work proposals. . . . Where are you going to go if this doesn't materialize? Who are you going to rely on to create the jobs, to create the projects out there if industry isn't able to do that?

Hon. D. Zirnhelt: These 5,000 jobs will be created by industry. Industry will help organize those projects. They will 

[ Page 5038 ]

describe the projects. We expect that they will be doing that with their workers. If they're trying to create jobs for displaced workers, then they'll have to consider the talents of the displaced workers. Whether they're union or non-union, whether they're from the traditional silviculture industry or from the manufacturing or logging industries, they will have to consider the circumstances.

The particular method of placing people will be negotiated between the industry and the IWA. On the coast, they've agreed to begin discussions around the Island Highway model. In the interior, all that's been agreed upon is that they won't use that as a starting place; industry won't agree to that. So what still has to be negotiated is the method of hiring and placing people.

There are a number of givens, but one of them is that we expect the jobs themselves, the description of the jobs, the description of the work and the planning of the work to be undertaken under the supervision of the companies. The contracts might be with a group of companies; they might be with forest worker agencies; they might be directly with companies. We expect that there will be a lot of umbrella agreements with major licence holders that have undertaken to create these jobs, describe them, plan them and supervise them.

J. Wilson: If I'm an individual and I have a good idea on a project that needs to be done out there on the land base and it has its merits, how do I get my foot in the door so I can be heard and maybe get something approved so I can carry on, like we have in the past? We've had some good projects that have operated, and they've done a good job. I see that as vanishing with this jobs and timber accord, because now you've taken all this money, and you've put it in the hands of the companies that have to create these jobs. Individuals, it would appear, no longer have that opportunity to come forward and come up with some innovative idea of what should happen.

Hon. D. Zirnhelt: It isn't the complete budget; it's $300 million of the $400 million, roughly. Seventy percent will be dedicated to long-term jobs.

The problem is that we have failed so far to create a large number of full-time jobs. That's the problem. We've been working on that. The delivery model of waiting for individuals to come forward has not had results. Whether it's the approval process or the application process, we've failed to meet our expectations, and we're determined to change that. So we've said that we've examined the delivery model, and the individual application-based model won't go to creating these long-term, multiphase jobs. But there's still the rest of the money, and if somebody has got a heck of a good idea, they can still submit it.

We expect the bulk of the money to go to the creation of long-term jobs. There's no secret to it. We've been criticized for not creating jobs for displaced forest workers. So we're going to say: "Well, the original purpose of forest renewal was to help that; it wasn't there to be something for which anybody and everybody can apply." They still can, and some of them will still be approved, so we're not taking away from that. But we've said that a major chunk of it has to be delivered to long-term planning, because we expect it's usually the companies. It's not ideas we're short of; it's the capacity to deliver -- the capacity to plan, deliver and supervise in a cost-effective way.

There has been criticism about the cost of implementation, and we've got thousands and thousands of contracts out there. It costs money to supervise them. So while there are lots of ideas with merit -- and I still hope a lot of them will be approved -- that's not how we're going to bank on getting this transition out there. We expect the transition to be facilitated by the people most in the know about the land-based programs. We expect them to take advice about forest renewal from regional advisory committees out there. They will give advice on what the priorities for the work will be, because in the end, the board of directors of Forest Renewal has to able to say to the taxpayer that those are the best investments; it's taken the best advice, and this is the best way to move towards creating the long-term employment.

J. Wilson: It would appear that you're damned if you do and you're damned if you don't, but that's all part of being a government.

My understanding is that Forest Renewal is going to try and put up $400 million; $300 million of that will go into land-based projects, and the other $100 million has already been earmarked for things like retraining, value-added research -- this type of thing. There are other envelopes that have already got their eyes on this $100 million. And it doesn't necessarily have to be $100 million. The way I understand it, it may be less than $100 million that's left over.

The minister has said that there is money available or that could be available for things like projects that someone wants to get going, and it could involve a land-based project. But the way I see things, I'm still not convinced that that money is actually there and will be used. Because of this possible $100 million on top of the $300 million, there is no commitment to reach that $400 million. It's all up in the air; we will try, but it doesn't say we will reach it. What window of opportunity is left out of that $100 million for someone to come along and get their foot in the door and say: "Look, I've got a good idea. I would like to have this considered and to see it go ahead, because it is something that is well worth investigating"?

I heard the minister say that that is available and it's in that $100 million. But can he be a little more explicit and say where in that $100 million of funding we can actually get some room to be heard, to have a project approved and to get it going? There are other envelopes in FRBC that are going to use up that possible $100 million.

Hon. D. Zirnhelt: There's no question that there will be tough competition for the rest of the dollars. But you can't have a wide-open program -- let everyone apply with a good idea and still meet the needs of forest workers and the forest. So we've developed the new delivery model. By and large, the land-based program will be delivered through long-term contracts with major licensees. There will be substantially less opportunity for individuals.

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

Motion approved.

The House resumed; the Speaker in the chair.

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

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

[ Page 5039 ]

Hon. U. Dosanjh: I move that the House at its rising stand recessed until 6:35 p.m., and thereafter sit until adjournment.

Motion approved.

The House recessed at 5:57 p.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

The committee met at 2:37 p.m.

ESTIMATES: MINISTRY OF EMPLOYMENT
AND INVESTMENT
(continued)

G. Farrell-Collins: Can the minister tell me what the total cost to B.C. Hydro for the Raiwind project has been to date?

Hon. D. Miller: Just in the interest of time, we are looking for a number. There has not been any change since last year. It's the equity investment in the project. As soon as we get a number, we'll supply it.

G. Farrell-Collins: The next few questions I intend to ask are probably equally as detailed, so the minister may want to take some time with them, too.

I'd like to know if B.C. Hydro has been able to determine who the other shareholders are in the Raiwind project -- who our partners are in this project -- other than what we had already determined to date.

Hon. D. Miller: The investment to date: BCHIL's investment, $8.1 million. Just by way of context, the total project is $119 million. There is no new information I can offer with respect to any of the owners or participants in the project. There are thousands, I believe, as a result of the share offering, which we discussed ad nauseam last time. I hope that tries to answer the member's question.

G. Farrell-Collins: It answers one -- and that for a year. It doesn't answer the second one. I would have thought the government would have made some effort to obtain that information. Certainly our members from B.C. Hydro that sit on the SEPCOL board would have access to that information, one would presume, and would be able to report that information back to B.C. Hydro.

Can the minister tell me whether or not he has undertaken to determine who the shareholders are, whether Mr. Smith has undertaken to determine who the shareholders are and whether Mr. Costello has undertaken to determine who they are?

Hon. D. Miller: The short answer is no, there is no ongoing work to try to determine who these. . . .

[2:45]

One of the reasons I'm asking, obviously, is because throughout Smith's report it refers to the eagerness of Mr. Laxton to participate in this deal -- not just to make the deal happen, but also because he realized that there was potential for a large financial benefit some time in the future. Certainly the closeness that Mr. Laxton developed with Mr. Ali Mahmood would also indicate that Mr. Laxton continues, probably right up until this day, to want to be a player in this type of project.

Certainly while one door closed to him at IPC, the question remains whether or not Mr. Laxton really cashed in his shares and then used them to buy shares on the Karachi exchange, thereby going in the back door, to be part of a deal that he tried to engineer here. Obviously there's nothing illegal about that, but perhaps something the public would be interested to know is whether or not Mr. Laxton, with all his inside information he garnered while chair of B.C. Hydro, was put at an advantage in his ability to buy into a project elsewhere, knowing the ins and outs of it, having been a board member on behalf of B.C. Hydro.

I guess we'll have to determine some other way, if the minister or Hydro is not willing to try to determine the extent of Mr. Laxton's involvement in this deal outside of the provincial boundaries. I do believe that something like that is something the government should know. Mr. Laxton has obviously proven himself to be less than forthright, less than honourable in his handling of this deal, and I would think that would be exactly the type of person we would rather not have as a partner. I would think that Hydro would choose to try and determine whether or not that was the case.

Last year the minister provided a prospectus to us, which was issued in Pakistan. At that time I raised a concern with the chair of B.C. Hydro that it appeared that the company which was the auditor was also a board member, was also a significant shareholder and was also the accounting firm for the company -- all of those things at the same time, which would seem to me to be something unusual, certainly within our securities guidelines and rules. At that time, about a year ago, there was an undertaking to look into that and get back to us. Can the minister tell us if that's been done in the past 11 or 12 months?

Hon. D. Miller: I can't remember the individual's name, but I am advised, first of all, that he's no longer on the SEPCOL board. Secondly, a check of the accounting firm revealed that while he had a previous connection, that connection had been severed. So there was no relationship between the accounting firm and the individual.

G. Farrell-Collins: Is the minister telling me that since the issue became public or since the offering on the Karachi exchange was completed, the individual has severed himself from the project? Can he tell me to what extent the individual is still involved in the project?

Hon. D. Miller: Just to confirm my previous answer, the connection with the accounting firm took place previous to this. That is my information. Secondly, he's no longer on the SEPCOL board.

[ Page 5040 ]

G. Farrell-Collins: Can the minister tell me what the current status is of BCHI Power and whether or not Hydro has any plans to continue as a player in that? Are there any other plans for any other projects over and above what we talked about yesterday, or does Hydro intend to stay with the corporation at all?

Hon. D. Miller: Well, we aren't looking for more. . . . Gee, it must have been a long weekend; I'm sure it wasn't just yesterday that we spoke about these topics. The question was: what was the role of BCHI Power? Was that the question? Perhaps he could confirm that, Mr. Chairman.

G. Farrell-Collins: I just wanted to know the status of BCHI Power. We did talk about some of the other firms, but I wanted to know the status of BCHI Power. Is Hydro considering divesting itself of that in its entirety and merely being an operator of the Raiwind project, as opposed to an equity shareholder?

Hon. D. Miller: BCHI Power has an ongoing role with respect to the project, and that will be maintained. As a general policy, we're not pursuing any more equity participation in these types of projects.

G. Farrell-Collins: I'd like to move into a slightly different area of this issue. Mr. Smith's report talks about how Mr. Laxton hired his son-in-law, Richard Coglon, as a legal adviser to BCHIL. If I recall correctly. . . .

Actually, I can quote it from here. B.C. Hydro's corporate policy states: "Outside counsel cannot be retained directly. This can only be done legally with the approval of the Ministry of Attorney General, which approval is obtained by legal services." Can the minister tell me if that approval was obtained?

Hon. D. Miller: I can't confirm at this point.

G. Farrell-Collins: I would think that almost a year and a half after this issue became public and almost two years after Mr. Coglon's initial involvement, somebody would know. I understand that Ms. Barnett was the one who would have had to have been involved in that.

I would ask the minister a more precise question, perhaps. Is he telling me that two years after the fact, B.C. Hydro still doesn't even know whether or not it followed its own guidelines in the hiring of Richard Coglon?

Hon. D. Miller: I said that I can't confirm.

G. Farrell-Collins: Well, thank you. I guess that answers the question. Two years after the fact, approximately two years after Mr. Coglon came on board with B.C. Hydro, the minister cannot confirm and senior staff cannot confirm whether or not the proper legal and policy processes were followed in appointing Mr. Coglon.

It would seem to me that there are policies in place that are to be followed. The minister tried to assure us last week that there is a policy -- and the government and Hydro follow it -- in another matter that relates to B.C. Hydro, and we're were supposed to just take his word for it. I find it quite amazing, actually, that at this point, after as many investigations as there have been and after Mr. Smith's report is completed, the minister still can't determine from his senior people at B.C. Hydro whether or not their own policy was followed.

Can the minister tell me whether or not the senior people at B.C. Hydro were aware at the time that there was a policy in place that required them to obtain the approval of the Attorney General?

Hon. D. Miller: I assume that they were aware.

G. Farrell-Collins: I'm not asking for an assumption; I'm asking if the minister can confirm whether or not they did in fact know that there was a policy and a requirement in place for the Attorney General's approval of any outside counsel for B.C. Hydro. Can he confirm, yes or no, whether the senior legal people at B.C. Hydro were aware of that policy?

Hon. D. Miller: I said that I assume they were aware. That means they were probably aware.

G. Farrell-Collins: Well, hon. Chair, sitting behind the minister -- although I know it's not necessarily the way you do it -- is somebody who should know. It's a yes-or-no question. Was B.C. Hydro aware, in its legal department, that there was a requirement to obtain the approval of the Attorney General in order to approve the hiring of outside legal counsel? Yes or no?

Hon. D. Miller: The member should assume that they were aware. Okay?

The Chair: The Chair is finding this repetitious.

G. Farrell-Collins: Well, thank you, hon. Chair. I appreciate your input on this and your comment. It's of great value to me.

My question is to the minister. I'd like to make a statement first and then ask my question. If we were to assume that everything the minister said is the way it is -- just as if the minister were to assume that everything he's told by the people that his party appoints to chair and to run its Crown corporations is the truth -- then I would expect that what could happen to this government is that they could find themselves in a situation where the chair of one of their major Crown corporations could go out, break the securities laws, perhaps break other laws, involve the Crown corporation in a major at-risk program without proper approvals, without following proper guidelines, without following the securities laws in this province and actually get the government in trouble and put the people's investment at risk. I would assume that if the minister were only to assume that what he's told is fact, he would find himself in that position.

It's astonishing to me that after two years, the minister can't tell this House, can't tell the people of this province -- with all the advice and support of the senior people at B.C. Hydro -- whether or not they're in the habit of following the guidelines, whether or not they're in the habit of following the laws and whether or not they're in the habit of following B.C. Hydro policy.

Can the minister tell me why I should assume that B.C. Hydro has done anything proper, accurate and aboveboard, and has followed guidelines and policies with regard to this issue? Can he give me the confidence that I should have so that I can assume that everything was done properly, given the track record on this issue?

Hon. D. Miller: Based on what I've seen so far, there's probably nothing I could say that would give the member that assurance.

[ Page 5041 ]

G. Farrell-Collins: Given what the public has seen so far, I would agree with the minister.

Interjection.

G. Farrell-Collins: No, I didn't misinterpret it; I interpreted it quite accurately, I would think.

Darlene Barnett was the vice-president and general counsel for B.C. Hydro at the time. Can the minister tell me whether or not she approved of Mr. Coglon being appointed outside counsel to B.C. Hydro?

Hon. D. Miller: There you go: page 45 of the report, Mr. Chairman. There's the answer.

[3:00]

Hon. D. Miller: Well, the issues are canvassed in the report. It does provide extensive documentation of a variety of these questions. I think, in that case, it was at the direction of the chair that Mr. Coglon was retained.

G. Farrell-Collins: So that was done without the approval of Ms. Barnett. She raised her concerns, refused to approve, and the chair directed it to be done anyway. Can the minister tell me who it was that, after receiving the direction of the chair, actually drew up the papers and made the appointment of Mr. Coglon as outside counsel to B.C. Hydro? Was that done by Mr. Laxton himself, or was that done by the legal services department of B.C. Hydro?

Hon. D. Miller: The instructions were from the chair, and they were acted upon. There may be some investigation with the Law Society on this question; I'm not certain.

G. Farrell-Collins: I'd be surprised if there wasn't. I guess we'll see what role everybody had with regard to that appointment and whether or not people exerted their duties as lawyers and as people trusted with the guardianship of a Crown corporation.

Can the minister confirm whether or not. . . ? How can I put this? I want to ask it slightly differently. The minister said that at the direction of the chair and over the opposition of the senior legal people at B.C. Hydro, Mr. Laxton directed that Mr. Coglon be appointed outside counsel, and that was done. It still, under policy, requires that approval be obtained from the Attorney General ministry. Can the minister tell us whether the chair simply overrode that policy and ignored the requirement to get approval from the Attorney General?

Hon. D. Miller: There is an extensive report on this topic. In addition, there are ongoing investigations. I believe the RCMP have an investigation underway. I neither have the answer to that question, nor am I aware of whether or not that would have any impact on those investigations. So I can't respond to the question.

G. Farrell-Collins: I guess we'll have to wait, once again, for the word from the RCMP or the Securities Commission or the Law Society for the public to finally determine what exactly happened in this case. Who knows? Perhaps it will extend for the five years that the Nanaimo Commonwealth Society issue has extended. Somewhere in the murky future, perhaps before the end of the century, people will finally know the truth. I hope it happens sooner rather than later. Quite frankly, I'm surprised that even at this point, almost two years -- certainly a year and a half, anyway -- after this issue became public and a good two years since it became quite active, the minister and his senior people are still at a loss for answers to questions that don't involve any of those multitudes of investigations.

I want to go back to the report in another section. It's page 34, if the staff is interested. Mr. Smith's report says: "No independent due diligence investigations were conducted by B.C. Hydro at any time on the backgrounds or credit-worthiness of Mr. Mahmood and the secondary Pakistan partners."

Can the minister tell us why it is that engaging in this type of a multimillion-dollar project -- hundreds of millions of dollars -- in choosing and selecting our partners, there was no sort of determination as to whether or not the person we were dealing with was able to carry out their part of the bargain? Certainly there was large capital at risk for B.C. Hydro. What investigation does Hydro do to ensure that the partners in its projects are able to carry their load, as well as B.C. Hydro being able to carry its load?

Hon. D. Miller: Well, I can't. . . . The report does touch on that issue. I can't speak for what happened -- what is it? -- two or three years ago. There is an investigation ongoing; we've had our own in terms of a public report, now.

G. Farrell-Collins: On the one hand, the minister uses time as a factor not to answer questions because insufficient time has passed; and on the other hand, he uses time as an argument for not answering questions because too much time has passed. Does the minister have any idea what day, between three years ago and two years from now, will be the right day to ask the questions in order to get the answers -- that is neither too early nor too late? Somehow I doubt that, because it appears to me that the minister is not interested in answering the questions. He's not interested in finding out at all what the truth was in this case. It's amazing to me that, after the time that's elapsed, the minister is still unable to get the answers to so many basic questions.

The Smith report leaves more questions unanswered than it answers. We went through this extensively -- I think the minister used the term "ad nauseam" -- last year. It's now a year later, and the minister still doesn't have answers to the questions. Does the minister expect us to come back a year from now and go back through it again, ad nauseam, trying to find out what the truth is, what the facts are? Is there no obligation on behalf of B.C. Hydro and on behalf of the minister to stand up and defend, or apologize for, the actions of this Crown corporation and the actions of the minister responsible? He may be uncomfortable with that, but it's certainly something that he should be prepared to do.

One of the questions that has bothered me, which was not touched upon in the report, is accountability. At the board meetings where this issue was discussed, at significant board meetings, not only were the board members available, not only were senior staff members available and present, but indeed the ministerial assistant to the minister responsible, 

[ Page 5042 ]

Mr. Adrian Dix, was present. Can the minister tell me at how many of the meetings, where this issue was raised, was Mr. Adrian Dix present?

Hon. D. Miller: No. There is a report. I think it touches on that. But I don't. . . .

G. Farrell-Collins: Well, hon. Chair, the problem is that the report doesn't touch on that. It's amazing in its absence. It's one of the key issues about accountability: whether what the now Premier, the minister responsible at the time, said, in his knowledge of this report, was in fact the case. Mr. Dix, his ministerial assistant, is somebody he spoke with on a daily basis, someone he lives with when he's in Victoria and somebody he obviously works very closely with. His job was to attend the board meetings of B.C. Hydro, to be present. One would expect him to report back to the minister. Otherwise, there's no reason for him to be there. I find it shocking that at this late date. . . . Certainly Mr. Smith's report didn't answer that question. If the staff can find where it says that, I'd be glad to find it. I've read it cover to cover, and I never found it anywhere. So if the minister can determine that, it would be most helpful to us.

Can the minister tell us -- with the records from B.C. Hydro that are at his disposal on an ongoing basis and that should be sitting behind him right now, in anticipation of these questions -- which meetings of the board and the subcommittees of the board did Mr. Dix attend and which meetings did Mr. Dix not attend, with regard to this project?

Hon. D. Miller: There's a comprehensive report; it's public. There's an ongoing investigation -- or maybe even more than one. So these matters are being addressed.

G. Farrell-Collins: Well, that answer leaves me with two options or two possibilities. One is that an answer to that question is in the report -- which it is not. Therefore it has to be the second option: that Mr. Dix's attendance or non-attendance at the board meetings is subject to further investigation. Can the minister tell me whether that's correct?

Hon. D. Miller: The Crown is not involved. If there's an investigation underway by the RCMP, I know absolutely nothing about it.

G. Farrell-Collins: I come back to my first question, then. Which meetings did Mr. Dix attend? Which meetings did he not attend? The report is silent on that. If the report is silent on that, then there must be another source of information -- namely, the minutes of the board meetings of B.C. Hydro. That is information which is readily available to the president, readily available to the chair and readily available to the minister.

Can the minister tell me which meetings Mr. Dix attended? Can he get the minutes of the various Hydro meetings from behind him and find out for me which meetings Mr. Dix attended and which ones he didn't? That's not classified information; it's not secretive information. It's not something that should be held from the public. Certainly the minister can tell the public -- can tell us, can tell me -- which meetings Mr. Dix attended. Is he simply unwilling to? Or is he telling me that B.C. Hydro no longer has those records, that in fact those records are no longer available?

Hon. D. Miller: For whatever time, there was an extensive report. It's a public report; it's on this issue of the power project and the activities of the organization. It's there for all to see. There are additional investigations. I don't know what they are investigating. This is not a courtroom. This is not who was where, at what time, and all the rest of that. We're talking broadly about an issue that's been canvassed very thoroughly. There is a public report. It covers it very succinctly. I don't know; we're just sort of going over old ground here.

G. Farrell-Collins: The fact of the matter is that the report does not touch on this issue. In fact, despite its omission from the interim report, despite the fact that these very questions were asked of the chair of B.C. Hydro -- who also happened to be doing the report a year ago in this chamber, despite Mr. Dix's involvement being speculated upon and questioned in the public venue time and again, we're now, a year later -- and having seen the final report that came out in March 1997. . . . There is no comment in this report about that issue, despite the assurance given to this House a year ago that that was a matter for investigation. So one has to ask the question: why, after a year and a half of investigation, is the involvement of the chief political person, on behalf of the then minister, the now Premier, silent? There is no comment in this report about his actions, about his involvement. That's shocking to me.

Hon. D. Miller: You're easily shocked.

G. Farrell-Collins: The minister says I'm easily shocked. I suppose he's not shocked; he's not surprised. Maybe he was involved in it; I don't know. I don't know what the minister knew about this project. I don't know what he knows today, quite frankly, with the answers that he's given. Either he doesn't know or he doesn't want to answer the questions. Either he hasn't read the report or he doesn't care. Either he hasn't read the report, doesn't understand or he just doesn't want to disclose to the public. He's keeping something from the public.

Mr. Dix was the chief political operative of the minister responsible. He's now the chief political operative of the Premier. He's principal secretary. Rather than being demoted for not doing his job in monitoring this for the Premier, he's been promoted. That raises a lot of questions. Either he didn't do his job -- and you'd think the guy would be punished in some way or at least. . . .

[3:15]

G. Farrell-Collins: The minister can get up on a point of order if he wants. He knows what the rules are as well as I do. Either the individual did not perform his duties at B.C. Hydro -- in which case you would think there would be some accountability -- or he performed his duties all too well, and that's why he not only has been retained but has in fact been promoted. He now oversees the political operations of the entire New Democratic Party and New Democratic government. So for the minister to tell me that there is no further comment in the report, he doesn't know or doesn't care. Quite frankly, he doesn't simply say he doesn't know; he just said he won't tell me what the answer is to that question. You would think the minister would know, after that length of time, what the involvement and the activities of Mr. Dix were. Can the minister tell me whether he attended any board meetings?

Hon. D. Miller: Mr. Chairman, some people find it easy to make allegations -- I've noticed there's a tendency on the 

[ Page 5043 ]

opposite side of the House -- without anything to support them. They'll freely characterize someone as not being capable of doing their job or having some nefarious interest. They've routinely characterized organizations like Hydro and others as being, I think, greedy or only interested in killing fish. They do it constantly and repetitiously. I guess the fruits of their labour, so far, have been some pretty negative reviews on their performance. Now, whether they've been able to add that up -- one plus one equals two. . . . And thinking about the style they have, I suspect they haven't. Some people, when you give them one and one, come up with 13 every single time. So I think that's what we're dealing with here, and we're getting awfully repetitious in doing it.

The Chair: The Chair would like to caution members that we are debating the minister's estimates and also that there's nothing in the rules that requires an answer to questions put to a minister. So the member, having put the same question a number of times. . . . It may be a good idea to move on to another line of questioning.

G. Farrell-Collins: Thank you for your guidance, hon. Chair. It's most valuable. There's also nothing in the rules, I would assume, that precludes a member from asking the question in a different manner, in hopes of finally eliciting a response from a minister. B.C. Hydro falls well within the purview of this minister's responsibilities, although he appears not to know it. Therefore the questions I ask of the minister, despite his protestations and his directions to the Chair, are well in order. I have a number of questions that I'll continue to ask the minister, in hopes that he might have an answer to one of them.

I asked the minister a question, quite clearly: is he aware of whether or not Mr. Dix attended any board meetings of B.C. Hydro? That would seem to me to require a simple answer: yes, he is aware, and there were some; or yes, he is aware, and there weren't any. The third option is no, he's not aware and therefore can't tell me one way or another. I think that's a pretty simple question and something the minister certainly should be able to answer. For the Chair's edification, it's only the second time that I've asked that very question.

The Chair: Before we proceed, I'd ask the member to review standing order 9 before he asks further questions. Since he knows the rules, he won't have to go out and look it up.

G. Farrell-Collins: Thank you, hon. Chair. I'm glad the Chair is aware that I do know the rules.

I would also perhaps advise the minister opposite that standing order 9, as well as giving indication to members not to challenge the Chair, probably also gives indication to the members not to direct the Chair how to chair the meeting, which could also be construed as a challenge. If the minister is uncomfortable with the way the Chair is chairing the meeting, then I would suggest that he raise that on a point of order rather than in quiet asides and direction to the Chair -- which, unfortunately for the Chair, lends an indication that there is a bias.

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

As time passes, I'm growing very aware of how far away we're getting from the estimates. I would ask the member to please either pursue another line of questioning or stay within the minister's estimates.

G. Farrell-Collins: Thank you. Perhaps I could ask guidance of the Chair. If I were to ask questions about B.C. Hydro and the Smith report, would that be within the purview of the minister's estimates?

The Chair: I'll try once more to caution members that once questions have been asked, they need not be asked again in a repetitious manner.

G. Farrell-Collins: Thank you, hon. Chair. I appreciate your guidance. I was asking for guidance in another area, and perhaps the Chair can give it to me: whether or not it's his feeling that if I were to ask questions about Mr. Smith's review, that would fall within the purview of the minister's estimates. I'm only asking for the Chair's guidance.

The Chair: The Chair has already given cautions in that regard. If you are going to ask questions that are not repetitious, then of course you are in order.

G. Farrell-Collins: I assume that I can ask the questions in slightly different ways, in the hopes of getting answers to them from the minister. I know that that's probably difficult, but I don't see in my reading or understanding of the standing orders where that's out of order. So I will continue to ask questions of the minister.

Can the minister tell me what Mr. Dix's role was -- not whether he attended or not, or which meetings he attended or didn't attend -- as a representative or an attendee at B.C. Hydro board meetings?

Hon. D. Miller: Those are general issues which were the subject of the report I have talked about. I was not the minister at the time, so I can't comment. The report is there for all to see. If the member doesn't like it, that's one thing. But it's there.

G. Farrell-Collins: Can the minister tell me what role his ministerial assistant or his political staff plays in attending the board meetings of B.C. Hydro? I assume that one or more of them does.

Hon. D. Miller: To the best of my knowledge, they haven't.

G. Farrell-Collins: That's interesting. It's amazing that Mr. Dix was there and attended so regularly, and the minister's political staff doesn't. It's one of two issues: either the previous minister was far more informed about the goings-on at B.C. Hydro, despite his reluctance to admit it, or the current minister chooses not to be terribly informed about B.C. Hydro, which would be a good indication of why he has such difficulty answering the most basic questions regarding the agency.

I'd like to pursue an additional line of questioning with regard to the BCHIL question. On page 48, it says that the shareholders agreement between BCHIL and IPC relating to the management of BCHI Power provided that if the four directors nominated by each of them could not agree on a ninth director, that director would be determined by ordinary resolution -- meaning IPC would carry the vote. Can the minister tell me whether there has been any change in that, with the agreement now with SNC-Lavalin as opposed to IPC?

Hon. D. Miller: The appointment is by mutual agreement. I don't believe there's language that speaks to impasse, Mr. Chairman.

[ Page 5044 ]

G. Farrell-Collins: It's a simple question. There was wording in the agreement which did involve a resolution in the event of an impasse, and it was quite clear. The question to the minister is: has that changed?

Hon. D. Miller: I'm further advised that if there is an impasse -- and we're certainly not looking for one -- then the matter rests with the shareholders.

G. Farrell-Collins: So nothing has changed. SNC-Lavalin still has the ability to appoint the ninth director and therefore has the ability to control the board. Is that correct?

Hon. D. Miller: Yes.

G. Farrell-Collins: Can the minister tell us whether the equity involvement of SNC-Lavalin and B.C. Hydro has changed? It seemed to me that B.C. Hydro had previously put up about 60 percent of the capital and received about 40 percent of the voting shares, and the reverse was true for IPC. Can the minister advise us if, in renegotiating the deal with SNC-Lavalin, there was any attempt to recover control of the corporation, as opposed to leaving it in the hands of the private sector?

Hon. D. Miller: There's no change in the 60-40 split.

G. Farrell-Collins: So when B.C. Hydro had the opportunity to renegotiate the shareholders' agreement, there was no attempt to create a more equitable split. I believe there was some comment in the Smith report, although it doesn't spring to mind exactly where, about B.C. Hydro losing control of this project, despite having been the larger investor as far as capital goes. So is the minister telling me that there was no attempt to rectify that through the renegotiations of the shareholders' agreement?

Hon. D. Miller: Yeah, I think there was some concern expressed in terms of future projects, given the share split, but that's not a concern now.

G. Farrell-Collins: Can the minister tell me why that's no longer a concern?

Hon. D. Miller: Because, as I have responded to previous questions, I indicated that we're not going to take equity positions in future projects.

G. Farrell-Collins: The problem is that there's still an equity problem or concern with regard to this project, because there is at least one project that B.C. Hydro is involved in -- that is, the Raiwind project. Was there no attempt in doing the deal with SNC-Lavalin to regain control of the corporation in order to ensure that there was some control of the investment of the B.C. shareholders -- a 50-50 split, perhaps -- or something more amenable to the people that put up the vast majority of the funds?

Hon. D. Miller: We expect to recover any investments made in the project.

G. Farrell-Collins: One only has to read the answers to the questions that are asked to understand why Hydro got itself into this problem in the first place. There seems to be very little willingness to be particularly concerned about it, to be forthcoming in areas where it may be uncomfortable for the government, to ensure that there are accountability provisions in place, to ensure that the board that's being appointed by the government has some knowledge of energy issues, and to investigate the previous scenario and find out what was right and what was wrong over and above the somewhat cursory examination done by Mr. Smith.

There seems to be no effort whatsoever to find any sort of accountability or to rectify the problem, with the exception of Mr. Laxton's head on a platter, which he volunteered -- he said, to paraphrase, that he'd be more than happy to fall on the sword for the good of the party -- and also the firing of Mr. Sheehan. It is my understanding that that continues before the courts as to whether or not that was a proper or a wrongful dismissal. That's something that I'm sure we'll find out about if it actually goes to court, as opposed to having the government trying to quietly settle it out of court. We will see what happens there.

[3:30]

If one is to believe Mr. Smith's report and its findings about the various roles of the people at B.C. Hydro, it appears that a number of people were aware of the project yet failed to ring the bell -- or failed to ring the bell loud enough that somebody came to answer. One can only assume that either they did ring the bell and were told to stop by some of the political people involved or they just failed to do their job in following through on it. I think that is an ongoing problem that B.C. Hydro has and that B.C. Hydro will continue to have until there is an examination of that and until real changes are made at the senior levels to ensure that there is accountability, that there's some leadership and that we have a board that knows a little bit about the industry and is able to provide some of that leadership.

I have a few more questions that I'd like to ask the minister specifically, following up a bit on some of the questions we raised the last day. The minister made public to us that there was an approximately $500,000 (U.S.) investment in China. The minister promised to get back to us with a little more detail on that and a breakout of how those funds were used. I'm wondering if, after almost a week, the minister has managed to secure that information.

Hon. D. Miller: Just to give a bit of the history, BCHIL was pursuing, with various governmental agencies in China, the potential for hydroelectric projects in China -- BOOT projects -- and in November of '94 signed a series of MOUs, including an overall enabling agreement with the Ministry of Water Resources. This took place while attending the Team Canada meetings in Beijing. It really was an overall agreement to examine or explore options on small to medium-sized projects. Eight projects were identified.

BCHIL assembled -- I don't have names -- a blue-chip team of principal sponsors, including the Asian Development Bank and the Chinese Ministry of Water Resources; retained the services of a reputable legal counsel, Baker and MacKenzie; and developed a financially and technically attractive package of agreements, which could have acted as a template for future project development in China. As indicated last week, that had a cost of about $500,000.

[ Page 5045 ]

G. Farrell-Collins: What I was actually looking for was a breakout of the costs. As far as Hydro is concerned, $500,000 is certainly not a large amount of money, but I'd like to know what those funds were spent on. It was significantly larger than any of the other projects that reached similar status, and I'm wondering why that one was so expensive.

Hon. D. Miller: I've tried to give an overview of the scope of what was looked at and the costs. There may be some issues of commercial confidentiality that I'm not aware of, but if they are matters of public record, we'll be happy to send them. I'll ask Hydro to review that and forward anything that's forwardable.

G. Farrell-Collins: Given the number of documents I've received from Hydro on this issue, which I think is zero, I look forward eagerly to getting that document, because it would be a first after some time. Hopefully, it will actually come to fruition, despite the assurances that have been given me in the past about information. Oh, sorry. It would be the second. I apologize. The minister did send us the prospectus from the Karachi exchange last year -- which was most informative, I might add.

Hon. D. Miller: That was as good as the one for that hotel in Vancouver. What was that called?

G. Farrell-Collins: Sorry, I'm not following the minister, but that's fine.

The China project. The minister says that Baker and MacKenzie was brought in as outside legal consultants. Can the minister tell me if that was at the direction of the chair or if that appointment was approved by the Attorney General?

Hon. D. Miller: No, I can't at this time.

G. Farrell-Collins: I'd be more than happy to give the minister a little time to turn around and ask his staff if he can make that determination. It would seem to me that they would be eminently qualified to give the minister an answer to that bit of the question.

The minister said that the MOUs in China were signed in September of 1994. Can the minister tell me whether or not Mr. Laxton was one of the people who again spearheaded this project and attended the signing with Team Canada in China?

Hon. D. Miller: The consensus seems to be that people think he was on the Team Canada tour.

G. Farrell-Collins: I have a number of questions, which I will follow up a little later. I have another meeting of LAMC that I need to attend, and I know the member for Port Moody-Burnaby Mountain has some questions she wishes to follow up on, however brief they are. I'll try and make my time in the other committee as brief as possible, and perhaps in the intervening period the minister could come up with some of the answers to the questions that have been asked.

An Hon. Member: Take all the time you need to do a good job.

G. Farrell-Collins: I know the member for Yale-Lillooet is anxious about my participation in that meeting, so I'm sure he'll help me, if need be. I'm sure he has lots of Hydro questions he can ask the minister in my absence. It has a real impact on his riding.

Interjection.

G. Farrell-Collins: Thank you. That scares me.

The Chair: Through the Chair, please, members.

G. Farrell-Collins: I guess the question I have is why the projects that took place in China and these other ones we went through last week appear to have gone through the process of obtaining outside legal counsel, other than Mr. Laxton's son-in-law, and how it appears, at this early date of examination, to have been a policy that was followed in developing these projects. Memorandums of understanding were signed, and outside legal people were brought in. It appears at this point that a reasonable process was followed.

I'm at a loss to understand why the Raiwind project occurred the way it did. Was it just that Mr. Laxton had taken his time in the intervening period to perfect his craft, or had he merely learned in the intervening period to throw his weight around Hydro a little more? The minister can't tell me whether or not the Attorney General granted approval to Baker and MacKenzie's appointment in this involvement, which would then indicate, if that was the case, why it did not happen with Mr. Coglon.

It seems to me that there is a policy of B.C. Hydro on the appointment of outside counsel and that it should be followed. In fact, it appears that it was followed in a number of cases anyway. But who knows? It would seem to me that the appointment of Mr. Coglon would have raised all sorts of concerns that would have certainly been brought to the minister's attention or at least to the attention of his representative on the board in the form of Mr. Dix. But I am supposed to accept assurances from the minister that that didn't happen, that everything was going along fine with these other memorandums, and then all of a sudden, the last project -- the Raiwind project -- broke down.

Or perhaps I have a misunderstanding that in fact the Raiwind project was only the first of all of these projects to come to fruition and that if the issue hadn't been made public, to this day Mr. Laxton would be playing fast and loose with B.C. Hydro and making huge gobs of money at the expense and the risk of the taxpayers of British Columbia -- something which I think the minister would probably not approve of. But I don't know that.

I know the member has a few questions. I will try and be quick in my other meeting and return a little later for answers to some of those questions.

C. Clark: In the annual environmental reports that B.C. Hydro puts out, I note that some of them are quite detailed about the amount of money being put into environmental expenditures and some are less detailed. So I want to ask the minister if he could first tell me what the estimated expenditure for environment by B.C. Hydro is this year.

The Chair: The Chair appreciates a question on this year's estimates and recognizes the minister.

Hon. D. Miller: I'm not sure what her definition of environment is, but it is about $28 million.

C. Clark: And I'm not exactly sure what B.C. Hydro's definition is, simply because the statement of environmental expenditures for this year isn't nearly as detailed as previous ones have been. I know that the one I have for 1994 is very 

[ Page 5046 ]

detailed. It goes through the programs and initiatives, including air quality and fish and water resources, details them by project and classifies them by area as well.

I wonder if the minister could provide us with a more detailed accounting of where the environmental expenditures are being made so that we have some grounds on which to compare it.

Hon. D. Miller: There are some broad topics; conservation programs, social resources and beautification projects, which fall under social; hazardous materials and waste management, which is probably operational; land and wildlife, dealing with investments in the right-of-way maintenance -- land improvements, those kinds of things; fish and water resources; government and public affairs; project studies and compensation programs -- so across those broad topics.

C. Clark: I hope the minister would agree to provide that on paper for us so that we can make that comparison.

I notice, then. . . . I guess if we're down to $28 million. . . . In the annual reports that I have, in 1993-94 it was $40 million; in 1995-96 it was $30 million, and we're down again. I wonder if that's perhaps because there's a different accounting practice being employed. Or is that simply because less money is being spent on environmental initiatives?

Hon. D. Miller: It's changing definitions, etc., but expenditures have increased. Using the headings I answered the previous question with, we've moved from a $25 million forecast -- which I think is available somewhere for '96-97 -- to $28 million. So you can see that there's been an increase.

[3:45]

Does that accounting include Power Smart and the corporation's initiatives in that area?

Hon. D. Miller: Any loan programs would not be shown under the expenditure column. So no, I don't think Power Smart is included in that.

C. Clark: Could the minister give us a comparison of the money being spent internally on the Power Smart program this year as opposed to last year -- whether there's been an increase or a decrease?

Hon. D. Miller: Power Smart expenditures show a decline this year over last, from $27.5 million last year to $24.1 million this year. But I think a lot of that is due to the cost-recovery nature of some of the programs. So it's not a major decline, and as I say, I think it is primarily due to the cost-recovery nature of some of the Power Smart programs.

C. Clark: I wonder if the minister could be a little more specific about that. Is he saying that the net recovery is greater this year than it was last year? I wonder if the minister could be more specific about what he means when he says that.

Hon. D. Miller: That's correct. On the revenue side, we're forecasting $3 million this year versus zero last year.

C. Clark: When I look at the environmental reports as well, they refer to -- although they are very brief more recently than they were in the past -- a number of initiatives that are being undertaken on the environmental side. They refer, for example, to corrective action plans that the corporation is planning to take on the environmental side after it has undertaken an analysis of its operations. I wonder if the minister can tell us the status of those action plans, how many of them are underway and where they're underway.

Hon. D. Miller: Perhaps the member might be a little more specific. We're a bit puzzled here as to what the question is.

C. Clark: I'd be happy to be more specific. In each of the environmental annual reports I have access to, there is a reference to corrective action plans that will be undertaken to address some of the things that are going on at operations. I just want to find it in the annual report here, so I can perhaps refer staff to that specifically.

What I'm asking is what those corrective actions plans are. Is that referring to something that will come out of the electrical systems operating review? Is that referring to the Ward reports or some outcome that might come from there? I'm just trying to get some detail about what that means, because I was confused, as well, by what was said in the annual reports.

Hon. D. Miller: It could be any of those, but unless the question is more specific. . . . We do a lot of work on our systems, and we take action. I think I cited some last week on spawning channel construction and those kinds of things that we do in terms of managing for other issues besides power generation. It's very difficult to zero in on any particular plan, because we do it systemwide.

C. Clark: To be more specific, the Ward report, for example, referred to water use plans being formulated. I wonder if the minister could tell us the status of those plans, how far along they are and where they are most likely to be put into place first.

Hon. D. Miller: We are doing water use plans. I think I referred to that last year as well. Anyway, the ten developments that have been identified as first priorities for review over the next three years are: Cheakamus, Campbell River, Bridge River, Stave River, Walter Hardman, Shuswap, Puntledge River, the Buntzen Lake development in Coquitlam, the Ash River development and Jordan River. There has been one developed for the Alouette.

C. Clark: Can the minister tell us about the water use plans that were suggested by the Ward report? I recognize that the Ward report is far from finished. Their work needs to be. . . . Only a third of the dams have been looked at, and even they have suggested that their work is far from complete from the analysis they were able to do in their reports. Can the minister tell us if the state of the water use plan includes a multi-stakeholder process? I know that's something stakeholders have been asking for and something I think the corporation was considering at one point.

Hon. D. Miller: I'm advised that there was a meeting last Thursday of the stakeholders, the environmental groups, DFO, etc., on this question.

[ Page 5047 ]

C. Clark: Can the minister tell us what the outcome of that meeting was? I didn't quite get that from his answer.

Hon. D. Miller: No. [Laughter.] The joke was that the people here were in estimates, so they weren't at the meeting. It was to finalize a framework to move forward with the groups, I think, in terms of wanting to complete the work on the water use plans.

C. Clark: Does that include a water use plan for the Keenleyside Dam? Will the framework include a multi-stakeholder process for that dam in particular?

Hon. D. Miller: No. It's a storage dam, and any plans in terms of converting that to generation are with Columbia Power.

C. Clark: The reason I ask specifically about the Keenleyside Dam, as I'm sure the minister and his staff will be aware, is because the B.C. Wildlife Federation has written a letter to the minister suggesting that a proper water use plan for that dam would make their complaint to the Commission for Environmental Cooperation entirely unnecessary, saving litigation on the many sides that are going to be involved in that. I have to express my disappointment that there won't be a water use plan for the Keenleyside Dam.

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

C. Clark: Oh, sorry. Perhaps the minister could clarify. My understanding was that there wasn't going to be a water use plan for the Keenleyside Dam, because it was considered to be a storage facility. That was my understanding of what the minister said. Perhaps you could clarify that, if that's not correct.

Hon. D. Miller: I simply indicated that for any plans in terms of powering it, the responsibility would rest with Columbia Power, not with B.C. Hydro.

C. Clark: Okay. Well, we'll leave it at that, I guess.

This may perhaps also be outside B.C. Hydro, but can the minister tell us what the expenditure level would be for the Columbia basin fish and wildlife compensation program? Would that fall under the purview of the minister?

Hon. D. Miller: There's a budget of $3.2 million that's expended by the Columbia basin fish and wildlife group. I can't remember the exact title. That's presumably distributed in the region.

C. Clark: The Ward report is far from completed; their work still has to go on. Can the minister tell us when that is expected to be finished or when it's expected to be restarted? When do they expect that the remaining facilities that haven't been considered and the information that wasn't considered in the first report will be considered?

Hon. D. Miller: I'm not quite clear, again, on the member's statement that the Ward report is not complete. We did discuss the Ward report on the Cheakamus, and to some degree, I guess it did not draw conclusions about certain issues like fish populations. Is that what the member is referring to?

C. Clark: More specifically, I'm looking at the Ward report, "Water Diversions and Storage at Ten Sites: Review of Licenced Operations, Progress Report." The opening letter says: ". . .we do not feel that our analyses are complete, and this should be treated as a progress or draft report only." I take that to mean that the people who prepared the report don't believe that the analyses were complete. If the minister differs with that, I wonder if he could tell us.

Hon. D. Miller: Ward and Associates were commissioned by the Ministry of Environment, Lands and Parks, so we don't have an obligation to them. We don't have any contractual relationship with them, either current or ongoing. To some extent, the broad answer is that while the work was initially commissioned and allocated to Ward and Associates, to some degree we've moved past that in terms of this commitment to water use plans on all of the systems that I identified, the ten priority systems. That work will go forward with the stakeholders.

C. Clark: I appreciate the minister's comment that no contractual relationship exists. But certainly an interest exists on B.C. Hydro's part, exists as the licensee. I imagine that B.C. Hydro has had some input or certainly has a view on whether the report should proceed.

Amongst the things that the report identified were some serious deficiencies in the information -- their ability to collect information. The way that B.C. Hydro keeps its information and accounts for its water storage and diversions certainly suits some purposes, but it doesn't suit the other purposes which B.C. Hydro is being asked to meet. So in that respect alone, I think, B.C. Hydro certainly has an interest in the Ward report. Could the staff, through the minister, or could the minister give us an idea of what B.C. Hydro's view is of going ahead with looking at the other 20 or so sites that need to be looked at?

Hon. D. Miller: We have made a commitment. Again, I appreciate that the Ward report that has been discussed -- on the Cheakamus, for example -- couldn't draw conclusions on certain things. I don't know whether the member's view is that or not. But you're also saying the Ward report criticized Hydro for not having certain practices. Now, we're moving beyond that, I think, in terms of the water use plans for the ten priority systems that I just outlined.

[4:00]

Hon. D. Miller: I think any report is examined seriously. We do have 31 or 32 fisheries biologists at Hydro. We are doing the work that I talked about. So any suggestions there relative to how Hydro maintains information. . . . If they're helpful in terms of Hydro respecting its obligations to fish, then we'll certainly take them under advisement.

I've quoted sections of the Ward report in the past that the member seems to disagree with. But, you know, they state 

[ Page 5048 ]

quite plainly that there has not been a reason found for the decline in certain stocks on the Cheakamus River. Notwithstanding that, I'm positive. . . . I could be wrong, but I'm positive I heard the member say that she disregarded the Ward report in that regard and that it was a bunch of nonsense. I think she said something to the effect that she knew that Hydro deliberately went out to kill those fish because of greed. Now, perhaps I misheard.

C. Clark: Yes, the minister certainly did mishear. I don't think I've ever said the word "nonsense" in this House.

But can the minister tell us. . . ? Of course, in the Ward report he identifies a number of facilities where B.C. Hydro has significantly exceeded its licence for water diversions: at the Bridge River, 109 percent; Strathcona, 106 percent. The minister can refer to the report, certainly.

We know that B.C. Hydro had been paying the water comptroller for the additional water that it had been taking, outside of its licence, for many years. Can the minister tell us if B.C. Hydro had also been paying for the extra water that it had been diverting in excess of its licence over that number of years at the other sites that were identified in the Ward report?

Hon. D. Miller: They've paid for the water they've used.

C. Clark: I'll take that to mean that B.C. Hydro has paid for all of the water it has taken in excess of its water licences throughout the last many years.

Can the minister tell us how B.C. Hydro determines -- keeps track of -- where it's exceeding its water licences and exceeding the diversions that it takes on the flows?

Hon. D. Miller: I've just confirmed that it's not people watching the water; it's metered.

C. Clark: So B.C. Hydro, I take it from that, always has an accurate knowledge of exactly how much water it's diverting at all times and provides that information to the water comptroller on a regular basis, along with the extra money if there has been extra water diverted. Is my understanding correct on that?

Hon. D. Miller: Yes, there's a system of determining how much water is used. And that's paid for.

C. Clark: I appreciate the full and frank answers the minister has provided this afternoon. Can the minister tell us if the. . . ? I'm going to go back to the annual environmental reports. In them, they talk about the environmental audit -- this is in the 1996 report -- of the fish management program. Can the minister advise us of the results of that audit?

Hon. D. Miller: It's ongoing.

C. Clark: Can the minister advise us when the corporation expects to have the audit completed?

Hon. D. Miller: Possibly in six months.

C. Clark: Can the minister advise us whether an interim report has been prepared? Or if not, will he make that report available to us when it's finalized and completed?

Hon. D. Miller: There's no interim. I assume we'd make it public -- the audit.

C. Clark: In relation to this report again -- it may or may not be related, and I assume it might be -- has B.C. Hydro undertaken any comparisons of its fish and water flow policies against fish and water flow policies in other jurisdictions? I'm thinking particularly about Washington State, Oregon and those nearby markets.

Hon. D. Miller: As a major utility, there's obviously an exchange of information between Hydro and other utilities. But at the end of the day, Hydro is responsible for the system here in B.C. That's the one they have to manage.

C. Clark: Okay. Can the minister provide us with any paper or any studies that the corporation has undertaken that outline any comparisons they might have done between the jurisdictions?

Hon. D. Miller: I pay somebody to scrounge through the files, Mr. Chairman. There's an overwhelming preponderance to have studies. I have never been asked for so many studies in all the years I've been elected. If the Liberals ever came to power, the consultant industry would triple overnight.

C. Clark: I don't think that's possible, given what's happened to the government consulting industry in Victoria since the NDP took power in 1991. Every New Democrat who's not employed in the government directly is certainly employed in the government relations industry.

I'm almost at the end of my questions here. I'll close up a couple of loose ends that I have. Can the minister tell us. . . ? This, again, is from the 1994 report that I have. The strategic fisheries study which we talked about -- does that have DFO and MAFF. . . ? Is that a multi-ministry project that they're undertaking?

Hon. D. Miller: We're working in cooperation with all of the agencies.

C. Clark: I can wait until staff have found it in their material; I'll wait with bated breath while they look to see. The next part of the question is: what is their contribution, and how much money is involved in that? What's the level of their commitment to the study? I imagine that's going to be in there, if it's in there at all.

Hon. D. Miller: Again, a little confusion. We've done a major study. We have been working with other stakeholders. We did initiate the electrical system operating review. We're working through the ten projects in terms of the water use plans that I talked about. In fact, maybe the member might want to meet with a senior biologist, to run through all of the minutiae of the work that we're doing and who we're doing it with.

C. Clark: I appreciate the minister's offer. I'll probably take him up on it.

Hon. D. Miller: You haven't yet.

C. Clark: I haven't yet. I certainly appreciate the offer, though, as soon as it comes along. I have, of course, taken up the corporation's only offer to me so far, which is a tour of Burrard Thermal. I'm looking forward to it a great deal. It will be my second tour of the operations -- my first official one. I'm pleased that the offers are coming in fast and furious at the moment. That's certainly a sign of good things to come.

[ Page 5049 ]

I will leave my questions at that and thank the minister for his frank and full answers today. It was certainly more productive than it has been in the past. I will hand over the questioning to the member for Vancouver-Little Mountain.

Hon. D. Miller: I just want to again say that B.C. Hydro does take its responsibilities seriously. I know that the member will be delighted to actually sit down with Hydro for the very first time to try to get an understanding by talking to the very good people we have there. That will also, I'm sure, inform the member's questioning in the future with respect to how Hydro operates. Perhaps we won't see a repeat of the allegations that were made that Hydro is greedy and wants to kill fish at will. I hope it is a very productive session.

G. Farrell-Collins: I want to ask the minister, if I may. . . . My understanding is that Hydro had signed a memorandum of understanding with a company called Golden Eagle and the JVG Group of companies. Can the minister confirm whether that's the case?

Hon. D. Miller: The answer is yes. We're just trying to get some briefing material, if the member has other questions flowing from that.

G. Farrell-Collins: I'd rather wait, because the questions will probably follow.

Hon. D. Miller: There was a memorandum of understanding with the company during the mission to India in January of 1996. BCHIL did not become involved in any commercial ventures with the company as a result of that MOU, and it has lapsed.

G. Farrell-Collins: Can the minister tell me what the substance of the MOU was?

[4:15]

G. Farrell-Collins: Can the minister tell me whether it was another one of the projects that Mr. Laxton was involved with?

Hon. D. Miller: I can't speak to the level, but he was on the Team Canada trip.

G. Farrell-Collins: The minister previously outlined for me a number of potential projects -- I don't have them handy, although I'm sure they are here -- that Hydro was involved in. There was the Malakand, three on the Swat, the Tarbela in Pakistan -- if I'm correct -- another one in India and the Hong Jiang project in China. Was it one of those that the minister was referring to, or is this one over and above the ones that the minister mentioned last time?

Hon. D. Miller: There were no expenditures on this; therefore it wasn't part of the list that I read the other day.

G. Farrell-Collins: The minister is telling me that there were zero expenditures to arrive at a memorandum of understanding with regard to a power project. Is that correct?

Hon. D. Miller: We do sign memorandums. I've signed a memorandum with the government of Indonesia, I think it was. But not really. . . . It's just a cover document. It is just really a kind of a meeting. If there were potential projects to pursue, in the case we were talking about, government to government or private sector to government, then. . . . But MOUs don't always entail a great deal of work. They can be just an agreement to look at cooperative business opportunities or government-to-government opportunities, or whatever.

G. Farrell-Collins: I'm not sure if the minister answered my other question, which was about the substance of the project. Where was the project? When was it supposed to go on board? What type of project was it -- that sort of thing?

Hon. D. Miller: Again, I've just confirmed that that was the case. I understand that there had been a request for information to be released. But from their point of view some of that is confidential and can't be released.

G. Farrell-Collins: I'm not looking for a detailed prospectus. I'd just like to know what type of project it was. Where was it? I think those are pretty basic questions that the memorandum of understanding would contain and that could probably be answered quite readily without compromising any sort of third-party interest whatsoever.

Hon. D. Miller: Again, nothing was pursued. These kinds of things do happen. But no projects were pursued, and no expenditures were made on any projects.

G. Farrell-Collins: I understand that. The minister says that the project didn't go ahead. That's fine. It doesn't mean I'm not entitled to ask what the project was. All I'd like to know is: what type of project was it? Was it a management project? Was it a construction project? Was it an engineering technical advice project, a service contract? What was it for? Was it a dam? Was it a cogeneration facility? What was the general gist of this memorandum of understanding?

Hon. D. Miller: The advice I'm getting is that it was general in nature. It wasn't identified as a specific project. But I wasn't the minister at the time. Other people were involved. It's not uncommon to enter into those kinds of things, particularly around the trade mission concept. There are always lots of MOUs signed. You always have to be clear to draw a distinction between an MOU and an actual project at some future point.

G. Farrell-Collins: Is the minister telling me that there was no specific project attached to this memorandum of understanding?

Hon. D. Miller: I repeat: there was no particular project. It was to look at opportunities. Apparently, one project was discussed -- I'm not certain that it was in the MOU -- in Bihar, but nothing has come of that.

G. Farrell-Collins: All I want to know is whether there was a specific project attached to it, or whether it was just a general: "We like each other. We have skills, you have contacts. Let's go out and see what we can make of it." Can the minister confirm that that was essentially the general nature of the agreement? Was it: "There may be some mutual interest here. We can help each other. Let's go out and see what we can find"? Was it that type of memorandum of understanding, without any specifics?

[ Page 5050 ]

Hon. D. Miller: I'm not certain how I would characterize it. I've tried to be fairly general, and clearly it was not an MOU to investigate one particular project: "Let's go look at this one." It was described to me as more general in nature in terms of. . . . Perhaps one project was mentioned, but nothing has come of that subsequently, so I don't know what more characterization I can put on it.

G. Farrell-Collins: You mentioned there was one project that was at least discussed, which was in Bihar. Can the minister tell me what that project was about?

Hon. D. Miller: Apparently it was a hydro project, but we're not certain. Nobody here has the megawatts.

G. Farrell-Collins: If I'm correct, I believe the minister said that that was done when that memorandum of understanding was signed. Was that in September '94, or was that at a later. . . ? I'm sorry -- I do recall the minister saying January 1996.

Can the minister tell me how long the memorandum of understanding was to remain in force? I understand nothing has happened with it, and I think the minister said that it had since expired. Was it for one year, 18 months, eight months? Do you have any sense of when that was? We must have, if we know that it has expired or lapsed. There must have been a date attached to it, I would think.

Hon. D. Miller: Yeah, I did say that. I think someone on my staff said it and I repeated it. I'm not certain if it has expired or not. We don't have a copy of it, so we'll see if we can get one. But nothing was acted on, anyway.

G. Farrell-Collins: Golden Eagle is a company whose name has turned up in other ministries as far as being involved with them in potential projects, potential joint ventures, etc. Can the minister tell me if Hydro has any idea who these people are or what they are offering as part of their memorandum of understanding? Mr. Mahmood obviously brought some fairly significant political connections and knowledge of the industry and potential for industry growth in Pakistan when he came on board with the Raiwind project. Can the minister tell me what specific skills, contacts, etc., this group had that they offered to Hydro that made them so attractive as to sign a memorandum of understanding?

Hon. D. Miller: No one from the staff here was involved, and they can't give me any sort of characterization of the company. But if it's something we can obtain in the next short while, I'll be happy to pass it on.

G. Farrell-Collins: I'll await that. I also understand that there was a freedom-of-information request put in on this which has been upheld. If nothing has transpired and there was no specific project mentioned, it would seem to me that the information -- as the minister characterized it in his answer -- is relatively innocuous. I can't understand why that information would not be made available, but I'd be glad to get whatever information the minister has. I wouldn't think there would be a huge cost for this documentation, given that if it's merely a memorandum of understanding with no further follow-up, there's probably very little documentation involved. I would hope that perhaps that information could be forthcoming in the next little while. It would certainly be helpful.

I want to come back to a few more questions following up what we discussed last week. In response to questions last week, it was said that Mr. Ridley's involvement with Hydro has sort of ceased and that he is on a five-year leave of absence where he is now essentially working for SNC-Lavalin on the Raiwind project. The minister said that he had a five-year leave of absence, with the potential for an additional five years. Can the minister tell me whether during this leave of absence, pension credits or accrual of his years of service at SNC-Lavalin will be folded into B.C. Hydro as pensionable years?

Hon. D. Miller: The employer portion is paid by SNC. Obviously he pays his own contributions, and he has rights in the pension plan he was under with B.C. Hydro.

G. Farrell-Collins: Mr. Ridley has left to go to work for SNC-Lavalin. However, he is still part of the B.C. Hydro executive pension plan. His employer portion is paid by SNC-Lavalin, and he pays his own portion. So that means that his pension will continue unencumbered as if he were still working for B.C. Hydro. Can the minister indicate whether he is collecting any other benefits from B.C. Hydro?

Hon. D. Miller: Just to confirm, it's the regular employee plan; he wasn't a member of the executive. The arrangement is that he is on leave, with an option for a further five years after that. The employer contributions, which would normally be paid by Hydro if he was an employee, are paid by his employer, SNC. He pays his own employee premium. There are no other benefits flowing.

G. Farrell-Collins: Can the minister tell me what benefit Hydro gets out of this arrangement?

Hon. D. Miller: I would suppose the most is the continuity in the project. Mr. Ridley was in a senior position with respect to the project, and I assume that this was seen as a positive -- obviously by Hydro and by SNC as well.

[4:30]

Hon. D. Miller: SNC is the majority partner, and they wanted him kept on the job. Presumably, if they decide to pursue other projects after this, they have someone with expertise. We're not going to. I think that is the reason.

G. Farrell-Collins: It seems to me that both Mr. Ridley and Mr. Shaw have left to work for SNC-Lavalin and that essentially all the people that were involved in this project are now either unemployed -- or certainly not working on the project -- or are working for SNC-Lavalin on the project. Can the minister tell me who it is who has maintained the continuity and the accountability for B.C. Hydro's interests in the Raiwind project?

Hon. D. Miller: Well, he is employed, but he reports to the boards -- BCHI Power. So you can appreciate that we're not going to pursue these kinds of projects. Mr. Ridley was in a prominent role with respect to this one. It was the wish of SNC to retain him; it would have been ours, as well. So we think both our relationship with the major Canadian firm and with Mr. Ridley in the job, and the reporting requirements to the boards, are adequate with respect to our interests in the project.

[ Page 5051 ]

G. Farrell-Collins: But it seems to me that Mr. Ridley now works for SNC-Lavalin; he doesn't work for B.C. Hydro anymore. What happens to Mr. Ridley and B.C. Hydro if an issue comes before the board where the interests of SNC-Lavalin and the interests of B.C. Hydro diverge? Perhaps it puts B.C. Hydro at more risk than the government would choose; or perhaps SNC is too passive in its arrangement, whereas Hydro may want it to go further. What if an offer came to sell the project or an offer came to purchase the project from another individual? It would then be up to Mr. Ridley to be part of the decision-making as to whether or not that project was sold. The interests of SNC-Lavalin and the interests of B.C. Hydro might diverge at that point. Who is it who is qualified and available to represent Hydro's interests in that event?

[P. Calendino in the chair.]

Hon. D. Miller: I think you can construct any hypothesis. We each have a mutual interest, SNC and ourselves, in seeing this project concluded successfully. Mr. Ridley is in a key position to make sure that happens. So I don't know where there would be a divergence of views.

G. Farrell-Collins: I just gave the minister an example of where those views may well diverge on boards. They often diverge at the executive level of the company when an offer to purchase, for example, comes forward and one group of shareholders would like to sell while the other group would rather not. The interests of one may be furthered by the sale, and the interests of the other may not be. Perhaps the two major shareholders diverge on the asking price. The question is: who is going to represent B.C. Hydro's interests in that decision-making when it is clear that Mr. Ridley reports to the majority shareholder, SNC-Lavalin?

Hon. D. Miller: I think his role is to make sure that the project gets constructed and that the agreement we've got in place now to participate with SNC is executed. He's an engineer. Any issues, broader policy questions, presumably would come up in a different venue: at the board.

G. Farrell-Collins: My point, though, to get back to it, is that it seems that the skill set, the people with any knowledge about this project, are now all working for SNC-Lavalin. There doesn't appear to be anyone working on B.C. Hydro's behalf that has an intimate knowledge of this project in the same way that Mr. Shaw and Mr. Ridley do. So I come back to my main question: is there anyone with any experience and any intimate knowledge of this deal who is representing B.C. Hydro's interests? That job was done before by Mr. Laxton and Mr. Ridley and Mr. Sheehan and a few others. All of those players are now gone. They are no longer employed by or representing B.C. Hydro. So who has the intimate knowledge of the deal and represents B.C. Hydro's interests?

Hon. D. Miller: Mr. Bob de Leeuw is on-site; he's employed by BCHI Power. Again, I repeat that when you're in an agreement with a company, you both have an objective that is very mutually inclusive, in that it's to see this project completed.

G. Farrell-Collins: Well, that was obviously the mutual goal that IPC and B.C. Hydro had also. They both wanted to see the project complete and be successful. Obviously that wasn't sufficient; it wasn't nearly sufficient.

I'm sure that Lavalin, being the good corporate citizen it is, will certainly perform in the best interests of itself, its shareholders, and in so doing, with the excellent reputation it has, will follow all the laws and guidelines that are required.

Hon. D. Miller: I hope you wouldn't suggest anything else.

G. Farrell-Collins: I'm not. In fact, I'm suggesting exactly the case that they will represent their interests and will do so in an upfront manner.

The problem is that previously we had another company, by the name of IPC, that we hoped would do the same thing and that obviously had. . . . There was a symmetry of interest; they both wanted to see the project completed. When that broke down, because in that case a group of individuals had their own interests perhaps ahead of the interests of B.C. Hydro, we had a breakdown and a problem. Can the minister tell me what it is that he's going to say in the event that this becomes a further problem?

An example we had was the actual sale to SNC-Lavalin, where obviously the interests of SNC-Lavalin were to get the best deal for their shareholders -- i.e., get the project at the lowest price. The interests of B.C. Hydro were to unload the project for a reasonable price and get the best price for their people. Obviously there was a conflict of goals there. It seems from what the minister said last day that Mr. Ridley was B.C. Hydro's representative in recommending that Hydro accept the deal, the offer. He was certainly a key person. He was on the board and was a key person involved in the decision. Now Mr. Ridley is working for SNC-Lavalin.

Hon. D. Miller: Yeah. So?

G. Farrell-Collins: So at the time when the negotiation was taking place, there was obviously a difference in goals.

Interjection.

G. Farrell-Collins: The minister gets plenty of opportunity to respond, and I hope he will. It's always so enlightening when he doesn't have answers to questions.

But there was obviously a divergence of opinion, at that point in time, on the value of the asset. One would think there would be. Each of them is doing their job in the best interests of the person that employs them. Now we have them again; we have two companies. They've settled on the price.

But in the future there may well be another instance where an offer is made to them to sell the project in its entirety. At that point in time, B.C. Hydro will have to determine whether an asking price is suitable to them, is satisfactory to them. SNC-Lavalin would have to determine the same. In so doing there may well be divergent opinions again. Yet all the people with the expertise have gone to work for SNC-Lavalin. There's really nobody on the side of B.C. Hydro that plays that role.

The individual -- Uncle Bob, I think the minister referred to him as, who's now on-site, if I remember correctly or if I heard correctly, in Pakistan. . . . Can the minister tell me what his background is? Has he been with the project since its inception? Does he have the expertise, the financial expertise? Is he a project manager? Is he an engineer? What has been his role throughout this project?

[ Page 5052 ]

Hon. D. Miller: Engineer, project manager -- apparently he's an expert on thermo-engineering. So I think he's qualified.

G. Farrell-Collins: So the minister is telling me that when further issues come before BCHI Power and they have to make a determination on which direction to go, he's perfectly comfortable that the interests of B.C. Hydro are represented. There will be no difficulty in assuring that B.C. Hydro's interests are well represented and that the people of B.C. are not taken advantage of in any way, shape or form. He's giving me that assurance, is he?

Hon. D. Miller: I don't know the person individually; personally, I don't know him. He appears, from what I've just been told, to be a well-qualified, capable engineer. I'm sure he will do his very best for his employers to ensure the mutual interests that we and SNC and others have -- to see the project completed and operational and to produce the kind of results that are favourable. You can construct any weird hypothesis that you want. But presumably we've got technical people on the ground who will do the job they're assigned to do.

G. Farrell-Collins: There's certainly no disrespect to Bob, but if Bob has been on the project since its inception, it seems to me that Bob wasn't in a position to do that which the minister assures us he'll be able to do during Mr. Laxton's tenure. Either he wasn't in a position to pursue the best interests of British Columbians or he is unable, given his position within the firm, to express his reservations in a meaningful way, such that they come to the attention of the governing party and can be rectified. So I would say we're probably left in exactly the same position we were in previously, except that those people who really do have an intimate knowledge of the project, who were not blown out by the changes that took place at the senior levels of B.C. Hydro, now work for our partner as opposed to us.

I'll leave it at that, with the exception of one last question. Can the minister tell me whether Hydro was aware at the time Mr. Ridley was involved as part of his capacity of reviewing the offer from SNC-Lavalin that he was also prepared to leave and go work for SNC-Lavalin?

[4:45]

Mr. Chairman, I appreciate that the member has tried to ask a lot of questions. I don't feel any pursuit of issues is one that should not be undertaken by the opposition. But I must -- if indeed the member is finished with this particular topic -- try to put a few things on the record to try, I guess, in a limited way to defend or stand up for the qualifications and integrity of people who are employed either by Hydro or its affiliates.

There is a very unfortunate tendency to use -- both in the language and the tone -- language that conveys the impression either that these people are not competent and they've not done their jobs properly or they're in it for something else, for themselves. . .threaded throughout all of the questions. This pervasive tone somehow suggests that these people, who are qualified technical people in their own right -- I assume people of integrity -- are doing less than what they ought to do. I just want to put on the record that I don't know these individuals, but I do give them the benefit of the doubt.

I think, as I said earlier, there could be at least some passing recognition that it's pretty easy to do that in terms of your language, the tone of your language and things you say about people who are not here. It's very simple and easy to do. But surely one ought to think before one does that, maybe register just a little bit of what one is putting on the public record, what one is saying about people one doesn't even know. . .and have no reason to suggest aren't anything but competent and capable people. Just for those people who are constantly slanged in this process, I want to offer my support.

G. Farrell-Collins: I think once again the minister is perhaps a little testy on the topic and tries yet again to do what he's well known for -- that is, to put words in others' mouths. It would be helpful if he put more in his own mouth and actually answered the questions. If he had done that -- and, in fact, if his predecessor had done that -- and had actually tried to pursue the line of questioning in the information without a false sense of outrage and indignation, then perhaps we wouldn't find ourselves in the position we find ourselves in now.

Certainly if one can start right at the top, at the Premier's Office, for the list of people who were incompetent, ill-qualified and in it for the best interests of the Premier, not of the people of British Columbia, then I would argue one can also move that down to the present minister, who has yet failed after a year to do the proper analysis and investigation and to know the answers to the questions. He may find that difficult to take; he may find that discouraging; he may be disappointed with that. But that's something he's going to have to deal with, not me.

Second of all, I would merely raise to the minister a list of people who came eminently qualified, according to him and according to his predecessor, to their various positions in B.C. Hydro -- who were, we all thought and hoped, involved in protecting the interests of British Columbians, the shareholders of the firm which they represented.

One can start with none other than the chair of B.C. Hydro, Mr. Laxton, a longtime friend of the former Premier, a longtime party supporter of the New Democratic Party, a longtime financial contributor to the New Democratic Party, and someone who proved that he was in fact in it for no one else but himself, through his activities, through the method by which he operated, through the way he intimidated people, through the way in which he behaved as the chair of B.C. Hydro, through the way in which he took advantage of his position of authority at B.C. Hydro to force his personal, private agenda upon the people of British Columbia and the major Crown corporation.

One can then look at Mr. Sheehan, who one would think the government obviously doesn't have faith in, given that they fired him without any compensation -- fired him for cause, as it's normally referred to. That case currently rests before the courts; we'll certainly find out more facts about that. One could also look at the eminently qualified lawyer of great stature, Mr. Coglon, who was hired at the direction of the chair, Mr. Laxton. Despite the fact that he wasn't qualified and despite the fact that he was the son-in-law of the chair, certain senior individuals at B.C. Hydro allowed that appointment to go through. Whether or not it was ever taken to the Attorney General for approval -- which is what the Hydro act states, I believe -- the minister still can't tell us.

So when you look at that, coupled with one of the previous presidents of B.C. Hydro, Mr. Eliesen, and the money that we continue to pay him for, quite frankly, the poor work 

[ Page 5053 ]

that he did as president -- such that he was removed by the now Premier of the province after being hired by the former minister responsible, who is the member for Esquimalt-Metchosin. . . . He was referred to as the Mario Lemieux of power projects. I expect that reference was to his salary, not to his competence, but I don't know that for sure.

So when the minister gets offended and indignant when we raise legitimate questions about how the deal is structured today, who it is who is speaking on behalf of British Columbians, who it is who is speaking on behalf of shareholders and who it is who is going to stand up and be accountable for the actions of the Crown corporation, I find it discouraging, quite frankly. I would have thought that the minister would have been asking those very questions himself.

It appears that he's not, and so I suppose one can add to the long list of people that I've just referred to the name of the member for North Coast, who to this day, after being responsible for the Crown corporation for over a year, still doesn't know the answers to basic questions, still doesn't understand the current status of the project, still has no long-term understanding of what it is that's gone on in the past and what he's doing to deal with it in the future, and who has failed on a number of occasions to make sure that the interests of British Columbia continue to be represented -- or, I should say, start to be represented -- in a meaningful way so that the shareholders of B.C. Hydro are protected.

If the minister finds it uncomfortable to have to answer those questions -- if he prefers, rather than absorbing that into himself, internalizing it and responding to it in an accountable way, to try to deflect and rationalize it and say that we are merely alleging that other people are not competent -- then that's something that he can deal with. But the questions need to be asked. Quite frankly, if the minister would ask the questions himself, we wouldn't end up in the position we are in today.

I'll leave it at that. I think a lot more needs to be found out about this. I suppose, as the various investigations, including the criminal investigations, the securities and exchange investigations, the Law Society investigation -- which the minister advised is probably underway -- and probably others, which I would expect are probably going to be more thorough than the report done by Mr. Smith. . . . We'll wait and see. I expect that a year from now, give or take, we'll probably be sitting in exactly the same position, asking similar questions to, if not this minister, another minister, who will probably, I suspect, be as ill-informed as this one has been.

Hon. D. Miller: Well, again, I repeat, Mr. Chairman, that it's easy to use innuendo to smear. . . . The opposition happens to specialize in that, and I guess the latest public opinion results are an indication of how well the public receives that kind of approach.

G. Farrell-Collins: All I can say is that the latest public opinion polls maybe do indicate that. His party continues to rank at the bottom of the pile, after deceiving the people of British Columbia in an election campaign and after making sure that the people of British Columbia can't trust anything this government and this minister say ever again. I suspect the fact that the Premier continues to be viewed as someone who is less than forthright, whose comments the people can no longer trust, is an indication of the behaviour of this minister and his predecessor, now the Premier of the province, and is a good indication of the New Democratic Party's reputation in the minds and the hearts of British Columbians. I suspect that having been bitten once by the dog of deception, the people of British Columbia are less likely to vote for that dog next time.

Interjections.

The Chair: If the members of the committee wish to have a very short recess, I'm in your hands, since the minister is absent.

G. Farrell-Collins: I am more than happy to accommodate the needs of the minister. The member for Delta South has some questions that he'd like to ask. Perhaps, in the future, the same courtesy will be extended to members of the opposition.

F. Gingell: Earlier this year, back in March, there was a special directive passed as an order-in-council, which adjusted special directive No. 2. I'm sure that members of the committee will remember that special directive No. 2 deals with the issues of how much money B.C. Hydro can pay to the government in the form of a dividend. Special directive No. 2 details some limitations to the amount of dividends that can be paid.

My first question to the minister is: why was the April 3, 1997, special directive passed?

Hon. D. Miller: It simply accommodates the rate freeze. That's the simple answer.

F. Gingell: That answer does bewilder me somewhat, but I appreciate that this is a somewhat complicated subject. Could the minister explain to the committee in what way this allows the rate freeze to be effective?

Hon. D. Miller: The rate stabilization is effectively suspended. I said it accommodates the freeze; I should have said it accommodates the dividend. So it suspends the rate stabilization fund to accommodate the paying of the dividend.

F. Gingell: That makes a little more sense. Would the Chair agree that a rational person could arrive at the conclusion that the purpose of the special directive in April 1997 was to take as big a dividend out of B.C. Hydro as possible, even though the government had made a decision to freeze residential hydro rates?

Hon. D. Miller: Clearly the dividend requirement that has been imposed on the Crown -- it's not just Hydro but other Crowns as well -- is larger than it has been. But given the general fiscal issues that the Crown was facing, that the government was facing, it's our view that that is quite acceptable in terms of challenging those Crowns to come up with the kind of dividend that has been forecast. After all, government ministries are making do with a heck of a lot less people, lower budgets and those kinds of things. So we'll see. I suppose the accounting comes at the end, as it must, with respect to these questions. Hydro has enjoyed some increases on the export side. But notwithstanding that, that's the challenge that's been put forward to the corporation and one that they'll have to meet.

[5:00]

Hon. D. Miller: No, it doesn't impact on those other areas.

[ Page 5054 ]

F. Gingell: I take it that answer means that the previous restrictions on the amount of the dividend -- meeting the test that they do not reduce the debt-equity ratio below the specified amount -- are still in place?

Hon. D. Miller: That's correct.

F. Gingell: So basically what has happened is that there was a small amount -- $300 million or so, if that's a small amount -- of funds in the rate stabilization account prior to this special directive, and it was moved back into funds available for the purposes of payment of dividends. I may not have the amount right, but is that basically what happened?

Hon. D. Miller: With these discussions I may have lost the focus of the member's question. I apologize for that. You're right: it is a complex topic. I think the answer is that money would have -- if I'm going to your question. . . . If I don't, repeat it. Money which would have been deposited into the rate stabilization wasn't; it was used instead as a dividend to the Crown.

F. Gingell: B.C. Hydro has a March 31 year-end. I don't happen to have the 1996 financial statements here. Was there any balance in the rate stabilization account at March 31, 1996?

Hon. D. Miller: I'm advised that there are no funds -- zero.

F. Gingell: So in the spring of this year the circumstances were that there was no money in the rate stabilization account -- no profits from earlier years had been set to one side for rate stabilization. The government made announcements, conveniently at the time of an election, of a residential rate freeze, and a further special directive was put through cabinet to make available profits that would have been put to one side for rate stabilization to be used, in fact, for the purposes of paying a dividend. Does the minister feel that's a proper way to run a Crown corporation of such great importance to the people of British Columbia?

Hon. D. Miller: The rate stabilization account is used, in theory at least, to protect consumers from shocks on the rate side. Since there was a freeze announced by government, that isn't a problem.

F. Gingell: Perhaps the minister would like to think about that answer and respond again.

Hon. D. Miller: To the degree that. . . . The corporation is in good shape. We did confirm that the debt cap remains. I think the performance of the corporation has been good. So I don't think there's anything that can be pointed to as a result of the change by government -- that anything untoward is happening with respect to Hydro. I think their debt is declining; I can't recall the number. So the ratepayers have the protection of a rate freeze. We've put in a larger obligation in terms of a dividend. But from a financial performance point of view, I think the corporation is in good shape.

F. Gingell: Is it the position of the minister that the advice that he got from his officials at B.C. Hydro was that just regulating a rate freeze and getting rid of the rate stabilization fund was all that was required to keep B.C. Hydro in good financial condition?

Hon. D. Miller: Again, I would point to the position of B.C. Hydro -- their financial performance, if you like -- looking at those issues like debt, performance and profitability. It seems to me that they are doing well. We've had an unusual fiscal climate over the past year or year and a half. Government is trying to address that. I don't see that either the dividend requirement or the three-year freeze on rates will have a detrimental impact on Hydro's position as an entity.

F. Gingell: I'm sorry, but this is the most astounding discussion I've had in my six years in this Legislature. I understand there are senior executives from B.C. Hydro advising the minister, and they're talking an absolute load of nonsense. What happens is this: in simple terms, B.C. Hydro expends money every year, has a budget or money that it spends, and that money is spent to provide a stream of electricity that is sold to customers. The purpose of the rate stabilization fund is that if those expenses go up, or if that stream of revenue comes down, there are funds that are put on one side to help cover the shortfall, to enable rates to be stabilized.

[W. Hartley in the chair.]

Making a statement that hydro rates have been frozen for three years does nothing: it doesn't produce any cash; it doesn't put any money on one side. . . . I was going to say for a rainy day. I guess in Hydro's case, it would be for a dry day. It doesn't do a thing. In fact, Hydro has restricted its options by putting this freeze on. You have moved B.C. Hydro into a box whereby it is not in a position to increase its revenues. If its costs go up, it has to buy electricity from some other source to supply domestic markets -- except by what? Well, I guess you could increase non-residential rates. But the government regulating or decreeing a rate freeze does nothing positive or gives no protection at all.

This is the moment you should be putting money in the rate stabilization account to give you some reserves for a dry day. Yet you're doing exactly the opposite: stripping the money out and freezing rates. I honestly find it difficult to accept that that's the advice that came from the senior executives of B.C. Hydro. If it did, Mr. Minister, I think it's time you should think about that. That's the most disturbing statement I've heard from a commercial Crown since I came to Victoria in 1992.

Hon. D. Miller: Again I would cite the performance of the utility, both with respect to their debt, which is declining as I indicated, and their equity, which is increasing. You know there are lots of calls to change things at Hydro. I believe it was just last week that your colleague was suggesting that there should be a fairly dramatic reduction in energy prices. Presumably, hon. Chair, that's something that they would want to implement if they ever got the reins of power.

I'm sorry to have startled the member for the first time in six years. I'd hate to be responsible for that or any negative consequences that might arise out of that, but. . . .

F. Gingell: B.C. Hydro must have some contingency plans for what could happen in the future. We all know that there's nothing so uncertain as tomorrow's stock market. Surely B.C. Hydro has some contingency plans for what happens if there's a turndown: an increase in costs or a reduction in revenues, a leak in a dam, or whatever may happen -- or a sudden spurt in the price of natural gas that may affect B.C. Hydro's costs. Could the minister advise the committee what contingency plans B.C. Hydro has prepared for such an eventuality?

[ Page 5055 ]

Hon. D. Miller: Well, certainly the utility does financial planning -- and, I think, prudently. I cited a couple of statistics in terms of the equity position improving and the debt being reduced. There have been other saving areas -- interest costs, obviously. Ironically, while there was a cost attached to the two sinkholes, it did in an indirect way -- and obviously you don't plan these things -- allow for additional generation and export. So on the export side, you could see some increases. I think on balance the position of the utility is good. Obviously you have to stay on top of that.

F. Gingell: Does the minister have any concerns that B.C. Hydro's export markets may be affected by regulatory action within the United States on the use of U.S. transmission lines that might negatively affect export sales?

Hon. D. Miller: No, I don't think that's the case. I think the issue is trying to gain further opportunity. But I don't think it would be negatively impacted.

F. Gingell: So is the level of B.C. Hydro's export sales at this point -- which I understand is substantially up from earlier years -- safe from any action that the U.S. power regulation agencies could take?

[5:15]

F. Gingell: Is B.C. Hydro in a position to raise its rates to non-residential consumers to compensate for lack of growth in residential revenues to cover their costs? Are they in a position to do that without going to the British Columbia Utilities Commission to obtain all the necessary permits and approvals for rate changes?

Hon. D. Miller: No, they would have to seek regulatory approval. But last week we announced the Power for Jobs proposal and tabled legislation. What we do foresee is that Hydro would use. . . . They did initiate real-time pricing about a year and a bit ago to provide their industrial customers with the opportunity to pick up a certain percentage above their baseload of packages of energy at lower market rates, and that will continue, and hopefully, expand. Ultimately, we have DSBs which we could use in a different way. So it's not contemplated that we're going to try, if you like, to obtain more on that side. We hope to obtain more industry, actually.

F. Gingell: Perhaps for the purposes of the committee, the minister could just advise the committee: when we start getting power back from the Columbia downstream benefits agreement, is there any in 1997, or is the first year 1998?

Hon. D. Miller: It's 1998, and I believe it's 125 megawatts -- somewhere in that range.

F. Gingell: I know that the minister will forgive me; we can't all keep up on all subjects. Where will that power be delivered to? And is the infrastructure being built, or has it been built to deliver it back to British Columbia?

Hon. D. Miller: I believe the requirement under the agreement is for the bulk of the power -- I say the bulk, the vast majority -- to be delivered to Blaine. Why it was considered to be a reasonable agreement was that Hydro does not -- or the government, if you like, because it's not Hydro's power; it's the government's power, the people's power -- incur any line charges for the delivery to Blaine.

F. Gingell: It's not hard to imagine issues that will come up not only with the Americans but with other countries in relation to a Power for Jobs-type arrangement. The World Trade Organization is supposedly in operation now. Has any opinion been sought by the government or by B.C. Hydro as to whether such a subsidy arrangement would offend the rules of the WTO?

Hon. D. Miller: It's our advice -- and again, we did discuss this last week. . . . I don't say that to avoid a discussion, but rather. . . . We tend to get into these in a very narrow way, like: "Give me your studies. If you don't have half a dozen studies that high then you haven't canvassed the issue." I simply say as the minister: the advice is that it will not offend.

I also want to say that in the world of trade one can proceed and think that they're doing everything right, only to be challenged by a competing jurisdiction. It's not uncommon. Here in British Columbia, for example, we pursued the countervail duty on softwood lumber in 1992 and 1993 quite vigorously through the free trade panel process and all the rest of it. We won; we won the argument. The binational panel said that we were not guilty of offending trade rules. Notwithstanding that, the U.S. turned around and launched another one.

What I'm really trying to get at is this: there is nothing absolutely definitive. You do check to make sure that you are not offending those rules, and we've done that. There's nothing definitive or nothing that would prohibit a country like the U.S., for whatever reason, deciding that they're going to launch a trade challenge.

If I can be a little bit critical in my role as minister, I would say this: it seems to me lacking in common sense just a bit for the opposition party in our province -- who I know have to pursue the government with zeal -- to also put out a release suggesting that this might be a violation of international trade. If you don't think those things wind up in the hands of people who may be looking for excuses, then you're wrong. Sometimes, in terms of the desire to attack the government, the opposition might want to think just a little bit, maybe two or three moves down the road, before they get the gun into position and fire, because at the end of the day it might not be helpful.

I recall back in 1986. . . . Do you know who the U.S. were citing as their authority on the fact that British Columbia subsidized its softwood lumber? Jack Kempf, the maverick Socred from Omineca who was shooting his mouth off all over this province. Every time a British Columbia politician or tradesperson or technical person from Forestry went down there, what did they get? Jack Kempf's words read right back to them. So just a small caution to the elder statesman of the opposition.

[ Page 5056 ]

F. Gingell: This minister makes me feel old sometimes; he ages me.

Just to go back to this issue, it's easy for me to say, but in the countervail issue we were right and the Americans were wrong. The Americans are as protective as anyone else in the world. It seems to me that it would be foolish for the government to proceed on a course of action in which they make contractual obligations without having the certainty that it wouldn't blow back in their faces. My question was only whether or not you have received advice and you have feelings of comfort that this isn't something that can blow back. You can have something blow back at substantially greater cost than the benefits that were to be originally gained from it. What I hear the minister saying is that you do have that assurance, and you do believe that such arrangements will be defensible in a reasonable manner in front of the World Trade Organization.

Hon. D. Miller: These kinds of things -- industrial incentive rates -- are available in other jurisdictions. For the public, I guess the fact that we're selling surplus energy produced in British Columbia at market rates in the U.S. -- Powerex's deal with Intalco, for example -- is certainly, from a practical point of view. . . .

I'm not suggesting for a moment that the world is a practical place or that other jurisdictions looking at trade issues are practical, but I know that the member and I are practical. It's easily explained to the citizens of the province that if we can sell surplus power generated here in B.C. at market rates in Washington State for an aluminum smelter, then we ought to be able to do the same thing at home. I would think that that sounds like a practical argument, but. . . .

F. Gingell: You may have to send it down to the States and bring it back. There will be some more line loss and some more hot air coming around.

To finish off these estimates, I've got one last question. I'm really pleased that the president of B.C. Hydro is here. I would like it if I could get a commitment that giving access to the beach in Tsawwassen through B.C. Hydro land, off English Bluff Road, is a matter to which B.C. Hydro is strongly and firmly committed and that it will not back down under any circumstances.

Hon. D. Miller: Without having spoken to the president, I can tell you that he is quite prepared to sit down and have a discussion with you, Mr. Member, on that local issue.

C. Hansen: We were under the impression, until about an hour ago, that we were going to move on from here to B.C. Transit. I think that may be in doubt, as what was communicated to me within the last hour is that we may in fact move on to BCBC. Given the questions over that and given the hour, I won't move the motion, but I would invite the minister to.

Hon. D. Miller: It's hard, being stuck in here. I don't know if BCBC officials are available. Certainly I would think they would be, following the dinner break. We've got a half-hour here, and I hate to not be productive.

Interjection.

Hon. D. Miller: Well, Mr. Chairman, I've been working on a very minor kitchen renovation project in my home in Prince Rupert for the past seven months. It's actually getting close.

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

Motion approved.

The committee rose at 5:28 p.m.

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