[ Page 5057 ]

The House resumed at 6:34 p.m.

[G. Brewin in the chair.]

Hon. J. MacPhail: I call Committee A, and for the information of the members, we'll be debating the estimates of the Ministry of Employment and Investment. And in this House, I call Committee of Supply B. For the information of the members, in about a minute we'll be debating the estimates of the Ministry of Forests.

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

ESTIMATES: MINISTRY OF FORESTS
(continued)

T. Nebbeling: Earlier on this afternoon, before recess, my colleagues diverted from the questions I was asking by going back to the advertising, comparing costs and how it is broken down. But I would like to go back with the minister for awhile to the regulatory issues working group. I do that because, while I was listening to some of the answers from the minister in response to the questions from my colleagues, there was some mention about the Forest Practices Code and the need for some changes in the regulatory system.

What I'd like to ask the minister is: since February of this year, when this working group was talking, were they at all focused on the regulatory changes that will be needed to accommodate, in particular, the operation of the new land-based delivery system without some of the rules that have guided the delivery of FRBC money up to now? I can't see how, without this committee having gone over some of these regulatory issues, the change can be put into effect. So did this particular group discuss any of the issues related to the relaxation of the Forest Practices Code to accommodate the new land-based delivery system?

Hon. D. Zirnhelt: Under the new land-based delivery model, the code will still apply, as it does today. The regulatory groups didn't discuss the delivery of FRBC. In fact, it was the FRBC group that discussed the delivery, because the board of Forest Renewal had instructed work to be done, and they hired Lee Doney to oversee that work to streamline the delivery of FRBC. So the streamlining of the delivery of FRBC was separate from the streamlining of the delivery of the Forest Practices Code.

T. Nebbeling: Is the minister saying that the group that was going to look at regulatory issues in the Forest Practices Code did not get involved in the regulatory changes to the Forest Practices Code that will be needed in order to accommodate the new delivery? I'm asking this question because the new regulatory system that was approved, I believe, by the board of FRBC in January or February of this year -- or at least a move toward a new form of delivery. . . . I would find it strange that a working group like FRBC -- delivery working group, as the group is called -- would actually work in isolation from the group that was put together to deal with regulations. So maybe I misunderstood the minister, but I got the feeling that this FRBC delivery working group was actually working in isolation and making recommendations, as opposed to FRBC.

Hon. D. Zirnhelt: I believe there was a high degree of awareness of what various groups were doing. The Ministry of Forests is responsible for the legislative changes that are in Bill 47. In the process of developing the changes in the legislation, we consulted with various groups, including FRBC and other stakeholders. It wasn't necessary for the regulatory subcommittee to discuss this, because there was already a group on the FRBC delivery. Most of the FRBC delivery model just required a change in who the contractor was and how it was going to be delivered on the ground. It didn't require regulatory change for the most part.

T. Nebbeling: Did the FRBC delivery working group meet with any of the environmental groups that also met with the regulatory issue working group?

Hon. D. Zirnhelt: I don't think so.

T. Nebbeling: Does the new land-based delivery program -- or direction system or whatever you want to label it -- include how silviculture programs will be managed in the future, as far as the approval of programs is concerned? With that, I'm going in the direction of what the minister has talked about before, and that is that the requirement of permits to get the silviculture plans approved have been considerably relaxed. Is that not requiring a change in the Forest Practices Code, as well, to accept that relaxation of paperwork applications, providing of plans? As the minister stated the other day, there is a reduction from six plans to three plans when it comes to silviculture applications. Was this done just by the FRBC delivery group, or did a regulatory issues working group have anything to say on that, as well?

Hon. D. Zirnhelt: Yes. The regulatory issues working group dealt with a reduction in number of plans. The fact that one of those plans was a five-year silviculture plan meant that there had to be some changes. The ministry itself dealt with the changes to the legislation that was required to achieve the silviculture objectives in a different way.

T. Nebbeling: Maybe before I go on -- because I certainly have some more questions on the role of this committee -- can the minister tell me who the committee members were and what role they played, either in the bureaucracy. . . ? Or, if they were members from the stakeholders group, who were they?

[6:45]

That particular change to the regulations took advantage of mailing out to various stakeholders and receiving written comments. There is, when we deal with some of the regulatory changes within the Ministries of Employment and Invest-

[ Page 5058 ]

ment, Forests and Environment, a steering committee of assistant deputy ministers that makes recommendations to ministers and, ultimately, cabinet.

T. Nebbeling: The members that the minister named before were members of the regulatory issues working group. I was looking for the members of the FRBC delivery working group, which was headed by Lee Doney. Maybe they are the same members as in the other committee. If that is the case, maybe the minister can explain that.

Hon. D. Zirnhelt: To my knowledge, he didn't have a committee, but I'd be happy to ask him if he had a committee working with him. He was charged with the responsibility, and for any reporting out to the Forest Renewal board, he was there and gave the reports himself. But I'll find out if he had a committee working with him.

T. Nebbeling: I always have a problem when a group consists of one. In the paperwork that I have, this particular group was certainly identified as a group and not just as a consultant or as somebody who was writing a report basically single-handedly. Maybe the minister can explain to me why. . . . Or maybe -- rather than why -- it is the Forest Renewal board that was involved in creating this new land-based delivery system. I can't see that just one person on his own creates a whole new plan that is no longer based on spending targets but is more focused on getting a regional involvement into it -- which I believe will be an improvement.

This is a pretty impressive undertaking if this individual, Lee Doney, has indeed done all this work on his own. It's not something that you just do by sitting back for an hour or two and saying: "Well, I think this is the right way to go."

So I'm really surprised to hear that this individual has done this whole change in focus of how the land-based delivery system, which will manage approximately $300 million a year for the next five years -- that it is the brainchild of just one person and that no discussion has taken place on it with other opponents or other opinion-makers, so that the plan works for all and not for just the management team that will deal in the future with FRBC money.

Hon. D. Zirnhelt: Well, Mr. Doney had extensive consultations with people who have thought about this. But remember that it was the board of Forest Renewal that first analyzed how they were doing and, through strategic planning exercises, came up with the idea that we should go back to a simpler delivery model. So it was the collective wisdom and knowledge of all those people on the board, and there was a full range of stakeholders represented there. There were all the advisers to Forest Renewal and their executive, their program directors, and so on.

So there were discussions. Mr. Doney would have held discussions with the ministries -- at least the Ministries of Environment and Forests. He would have had discussions with licensees about how this might be done. The Forest Renewal staff had had discussions about umbrella contracts, for example -- umbrella agreements, multi-year agreements -- so there was a whole history that was then available to Lee Doney.

As I said, I would get information. I suspect he took advice from a number of sources and did go and consult more widely than with just the board of FRBC. But there were many discussions where he would be reporting to the board. So we had quite a range of stakeholders advising him.

Now, when he developed the new model, that work was then available for the purposes of the jobs and timber accord discussions. So government then took the new delivery model to industry and explained that this now was the way we intended to achieve the original objectives of FRBC.

T. Nebbeling: I'm still baffled that this is indeed -- if it is -- the exercise of one person who may have spoken to others but not in an official capacity, like: "Your voice is recognized as being a contributor to the new land-based delivery system."

Did the minister actually say -- and I'm going to be careful not to put words in the minister's mouth -- that staff of FRBC has been involved in advising Mr. Lee Doney and putting together this new document, this new direction? Maybe the minister can clarify that. I thought he said that.

Hon. D. Zirnhelt: Let me explain in my words what I think happened. Mr. Doney was given the responsibility to come up with a new delivery model. In the process he was to discuss it with FRBC staff, who have had some considerable experience now in administering contracts and in the design of the existing delivery model -- similarly with the Ministry of Environment and the Ministry of Forests, both of which have had experience now in the delivery of forest renewal programs. So he did have advice.

He is a special adviser to the board, so as such, he had access to all the staff of the board if he needed information. It wasn't just single-handedly producing background reports or whatever; he could have information brought to him. We're talking about a person who's been in, roughly, a deputy minister capacity in a number of organizations and agencies and, as such, has considerable experience. He worked full-time on this for the better part of six months. It's quite conceivable that he could produce a product that would be suitable to undertaking a new direction.

T. Nebbeling: So far I get the feeling that it has actually only been FRBC's staff that added, no doubt, to the wealth of knowledge that Mr. Lee Doney had on FRBC, on how in the past the funds had been distributed and on what basis. I'm not doubting the deputy minister's knowledge, but I do have a problem with the idea that. . . . So far I've only been given the feeling -- and we may expand on this -- that FRBC's staff has been advising the deputy minister in creating a new document that basically has to undo a lot of the damage that has been done in the first three years because of the wrong type of delivery system, including the fact that you may be involved with a three- or five-year project but you've only got funding for one year guaranteed, and then the next year you have to apply for the second portion and hope that you get that money.

The other thing, of course, is that in the past I think there has been very little continuity in regard to the delivery of funds to projects. By that I mean that projects which were undertaken would be cancelled a while later. This was often done by the staff that was also involved in advising Mr. Doney. I would have expected that there would have been a much bigger role in this process. I would have expected that that would have been the members of this working group, which now is really not a working group; it's just a one-man show that entices the opinions of many people.

Nevertheless, I get the feeling that the authority to create a document is with Mr. Lee Doney. Sure, it will go to the board, and the board will have another look at it. I do not get the feeling that there have been independent opinions 

[ Page 5059 ]

brought into the whole discussion of how we can make FRBC a better body to deal with the financial management of the stumpage -- the super-stumpage that was given to them with a very clear mandate.

As we said last week -- the minister, at least, said last week -- in order to implement this land-based delivery system, we will have to have some amendments to the act. I believe you made that point last week. I truly have a problem when a group that hasn't done a great job, to put it mildly. . . . The board of FRBC has been the only conduit to channel the information that Mr. Lee Doney as the consultant, the adviser, the creator of this new land-based delivery system has been able to accumulate. How did he accumulate it? Again, from the same people that work in the organization who haven't done a great job. So I am looking for an element in the whole delivery that is not directly involved with FRBC. Has that happened?

Hon. D. Zirnhelt: The independent look at things has to work for and be contracted by somebody. The board of directors of FRBC was not happy with discontinuity; they tried to get things up and running quickly. And you know well, and I know, that it's difficult to spend this kind of money wisely, quickly. So the board of FRBC drove to get the money spent. I guess the question is: how could we administer it without creating an entirely new bureaucracy -- a huge bureaucracy?

The idea was developed that to get it up and running, we would have the Ministries of Environment, Forests and maybe Skills for the training part as agents of convenience who had some knowledge of this type of work to administer it -- that that would be a cost-effective and doable way of getting up and running. To hire all the staff and so on separately and independently would be a difficult way to get it up and running.

The board was also concerned about the fact that we needed to go to a more planning-based model, as opposed to a project-driven model where you just wait and see what projects you. . . . In some regions, we weren't getting applications; some licensees in some regions weren't applying. Today we still have a bit of a problem with getting an even spread.

Prior to the negotiation phase over the jobs and timber accord, Lee Doney met with the stakeholders of FRBC. He was taking advice from stakeholders. He reported to the chair of the board -- not to the CEO, not to the senior bureaucrat of the board, but to the chair. This was advice independent of the board, independent of the administrative staff of FRBC.

During negotiations on the jobs and timber accord with the CEOs, Lee Doney was joined by the CEOs to agree on a new delivery model. We wanted to know that it was doable, so we had to have advice from all those people who advised the CEOs. They actually went and looked at their experience in the field. We were drawing on a lot of wisdom out there in the private sector, the public sector.

Mr. Doney was not working alone; he had advice. He had people who were experienced in all fields -- private consulting, government work, private industry work -- so he had advice. If he had a problem that was not resolved or where there was no agreement, he would problem-solve until he had a solution. I think he was providing an independent assessment -- a model, the objective of which was to be able to deliver the program in the most cost-effective manner.

[7:00]

To come back to the point I'm trying to make, when we talk about the stakeholders, too often we only hear the voice of the so-called CEOs of the major companies. FRBC was also supposed to serve the communities, whether it was for recreational opportunities or for finding new ways to bring new elements into a community so that people that are displaced have an opportunity to go into a new direction, be it through education or through new opportunities with a value-added project.

In the whole debate that we have heard so far, I haven't often heard the voices of these communities. Very rarely have they been enticed to speak up. When we travel through the communities and meet with the community leaders, that is often one of the really big problems that community leaders have with Forest Renewal B.C. -- that not much of that money is actually earmarked for real community redirection. By that I mean new opportunities for younger people who will not go, like their dads did, into the forest industry, but who nevertheless have to find something in that community that can keep them there.

As much as the Premier at the time promised that Forest Renewal B.C. was introduced as the tool to make sure that nobody would lose a job -- or at least if there were a job lost there would be a new opportunity created -- I don't think we very often spent much time thinking about the next generation that we want to keep in the communities where they live as well. It was not just economic sustainability that we were seeking for forest-dependent communities, but also social sustainability. That's why communities often complain that there is very little money out of the total amount that FRBC has available. It's clearly coming toward that objective.

So not hearing the minister saying -- when Lee Doney goes around and tries to entice opinions -- that communities have been involved in this whole process, as well, is disappointing. Maybe it is an oversight that the minister can clarify: were communities asked to give an opinion? I would like to hear that.

Hon. D. Zirnhelt: The communities do have a representative on the board. The mayor of Lumby is on the FRBC board. I don't recall any concern raised that Mr. Doney wasn't consulting sufficiently. Remember, the exercise was about trying to deliver the land-based programs more cost-effectively.

As you know, if you define communities -- regional district or municipality -- they don't have any expertise, particularly in land-based program administration. Nor do they offer it, to my knowledge. I can't recall one letter from a community. It's really about money -- right? If it's about money, then they would like money, and they would like to have a say in how it's spent.

[ Page 5060 ]

I guess the job of FRBC is to find an equitable distribution between the program areas. There is more that is going to be spent in the communities' envelope this year. But as we concentrate on the land-based programs, more money is going to be spent there. Don't forget that one of the intentions of Forest Renewal is to renew the forest -- the biggest concern.

There are two concerns that weren't being met adequately. One was sufficient money being invested in the land base to get more productivity so that there would be jobs down the road, jobs protected and jobs created, more fibre produced and so on. That was a weakness. We weren't getting enough of that in the ground, because there were all kinds of debates about the economics of that.

The communities program is there. It's larger than it was before, and when we were discussing what the forest worker agency would do, there was lots of discussion with communities. Anytime there's a consultation, you can't sit and study forever. We had to have a new delivery model that met the needs of the program of FRBC and met the needs of communities.

The needs of communities were to have more stable employment and to have investments in the forest base, so that part of the program was what Lee Doney was concentrating on. It was the delivery model for the land-based program. He was not charged with assessing the delivery model for the rest of the programs. The board did not ask him to do that.

The delivery of the rest of the programs, the priority areas and so on, is decided after consultations through an advisory process in the communities, which is wide-open. It's wide-open for people who live in the forests, in the small unincorporated communities and in the larger incorporated communities. They were all invited to come and tell the Forest Renewal board how they could give input into setting priorities for Forest Renewal.

T. Nebbeling: It's interesting that the minister says that we really haven't heard dissatisfaction from communities. I think you started your statement with that. I'm surprised.

I would not take the town of Lumby as an example of how communities get benefits. The mayor of Lumby is on the board -- I know that -- and I'm sure she stands up and fights for her area from time to time. However, there are another 174 forest-dependent communities that do not have their local elected leaders on the Forest Renewal board. Being on the board, being there when this stuff is dished out, will make a difference. I mean, it would be naïve to think that the mayor of Lumby is not from time to time going to say: "Now I want my community to get something. I spend a lot of time on this board, which takes away from the time I should be spending in my community, so in return I expect something." And that's fine; I have no problem with that.

However, when the minister said that we haven't really heard from the communities about not being satisfied with what is coming their way, we in the standing committee on forests spent almost three months debating exactly that issue. In spite of some of the members opposite thinking that many of the letters received from mayors, councillors, community organizations. . . . It was perceived that it was an enticed type of letter-writing campaign. No, what these letters really reflected was the frustration in the communities that do need to rechannel the opportunities in these communities, and they were just not getting the responses that they needed to have.

I think the communities are disillusioned with what has happened in Forest Renewal B.C. They have asked the board to travel. They have asked the standing committee on forests to travel to some of these communities and have a dialogue, so people feel that it's truly a system where they are being heard, as well.

It was interesting to note that Roger Stanyer, the chairman of the board, in one of his very first interviews, which he did with Truck Logger Magazine, made it very clear that unless communities were involved in the process, unless the voices of the communities were heard and responded to in the appropriate manner, FRBC was doomed to fail. These are his words, not mine. If the minister hasn't seen that, I have a copy of the magazine that I can provide him with.

What that says to me, now that we are looking at a new way of delivering the land-based delivery system, is that FRBC has indeed failed to deal with that very specific purpose, that very specific need -- and that is hearing the voices of the communities.

That's why, when the minister was talking about the so-called stakeholders' group that had been enticed to respond, give information and look at the new direction, I was interested that communities were not named in that. That's why I bring it up. I do not think any land-based delivery program that is ignoring the social and economic well-being of many communities throughout British Columbia. . . . If that is not part of the deliberation, then it's not going to be perfect.

It was also telling that the minister said: "You know, we have to look at the new delivery system, because there are areas we don't even get applications from." The minister has to look at why an area would not apply for FRBC funding. Can it have anything to do with the paper mill -- the enormous amount of bureaucracy you have to overcome, the application system? If the minister truly looks into that, then it becomes clear quite easily that up to now a lot of people, with smaller projects in particular, were disillusioned or discouraged by the system that was in place and is in place right up till today: how to get FRBC funding for a project. I hope that will certainly change here, as well.

What I'm saying is that if the community role had been recognized earlier by FRBC, and if the voices had been heard of the communities and of community leaders and especially of the elements that would have worked to create social and educational well-being, then FRBC may not have needed this dramatic change that the minister is talking about and that will be undertaken in the near future. Hopefully, somehow we can still have this dialogue with communities.

I don't know if the minister wants to respond to that. I think it is quite serious that the mandate of Forest Renewal B.C. was clear: to have the voices heard of all parties, all stakeholders. The communities have clearly been left out of that process. Even at a time when it became so clear that they were left out of the process and when on all sides hands were raised that said, "Can you listen to us, give us an opportunity to say what we have to say in order to also have the benefits from FRBC?" the response was very negative from the FRBC board, from the standing committee. That voice was just not being considered. Maybe the minister wants to respond to that, and then I would like to talk about the native community, as well.

Hon. D. Zirnhelt: Go back to where you started this conversation. I would caution the member about insulting some of the community leaders. The mayor of Port Alberni is very insulted by the statements you made in this House -- 

[ Page 5061 ]

very insulted. And now you're suggesting that the mayor of Lumby, who doesn't represent Lumby on the board. . . . I said she was the mayor of Lumby. Now you dare to suggest that perhaps she's there and will get a little something for her time. It doesn't work that way. She represents communities on the board, and everybody else on the board lives in communities. One of the major licensee representatives lives in Prince George. Another one lives outside Cranbrook in a small community. These people live in communities, so that community voice is there.

I can tell you haven't been at the Forest Renewal board. There's a community subcommittee that advises the board. Yes, you wanted a road show for the Forest Renewal committee. Forest Renewal has an input, and it isn't just the standing committee that is for community input.

Yes, we did listen to communities. Communities were concerned that money would be taken from Forest Renewal funds and put into general revenue. We said that we listened to the concerns of communities. Yes, they said that they didn't want that to happen. They didn't want it to go into general revenues; they didn't want it to be spent on schools and hospitals, etc., although some did. They wanted it to go back into the forest land base. They didn't say to put it into the communities program, into economic diversification; they said to invest it back in the forest land base. They also said to do it in the most cost-effective way, and so we needed a new delivery model for the land-based programs.

[7:15]

I would submit to you that they are all being listened to equally and that they all have access to the Forest Renewal board and to a very open community and regional advisory process. The very smallest of communities are not represented by any of those people who wrote to you -- those are the organized communities. But the timber comes out of a little valley where there are 50 people or five people, and it's not organized. Those people aren't organized into a voice. They do have a voice now, though, through the regional advisory process. They were invited to participate in how we constructed that advisory process. So I would submit to you that FRBC has responded, and it is making an adjustment as is necessary. They're spending $625 million, and all of it is going to benefit communities in one way or another. Whether it's a university town, a small town or a large town, they'll all benefit from the expenditure of the money. I'd say it is a boon, and they are involved and their voice has been heard.

T. Nebbeling: I cannot let the statement by the minister about the mayor of Port Alberni and the mayor of Lumby go by. When we talk about estimates and money and where it is going, I find it quite sad that we see this kind of manipulation of facts being used by some members in the House to entice somebody to get extremely angry. I don't know if the minister saw the article in the Alberni Valley Times. If he had seen it, he would have been shaking his head. If I had been the mayor of Port Alberni, I would have been fuming, because the member from Port Alberni used language you will not find in Hansard. You will not find the word used by me as a quote. It is bribery and blackmail when it comes to the mayor of Port Alberni. The whole article by the member from Port Alberni is bribery and blackmail -- the mayor is bribable and she can be blackmailed. It's a very offensive piece of misinformation by that member.

When I spoke today to the newspaper, they did agree that these words were not mine, because I did send them Hansard. I also sent Hansard to the mayor of Port Alberni. Although I haven't spoken to her yet, because I've been here, she did say to the paper: "Well, it looks like it was political bombast more than anything else." So I think the member from Port Alberni has done this mayor a tremendous disservice by trying to put words in my mouth, something that the minister really doesn't like when I do it to him, but I don't do it to the mayor of Port Alberni. For him to have used the words that this is how the member for West Vancouver-Garibaldi -- or from Whistler, as he says -- feels about the mayor is more than offensive.

Having said that, I am now going to continue with what I was talking about. I believe communities have been shortchanged; let's put it that way. I think we have talked about it many times, and many times the minister, through his chairman of the board of FRBC, has tried to wave it away as nonsense. Even tonight again, the community role is not so important. It was all focused on the sustainability of the forest. Well, I believe Forest Renewal B.C. is supposed to do more than the major objective: the sustainability of the forest. It has to continue or to create a sustainable work base for communities.

At the same time, the minister is also very much aware that in certain areas it is inevitable that jobs will be lost. Take the North Coast, with the removal of Clayoquot, and if we take away Kingcome or take a 24 percent AAC reduction, it's inevitable that the harvest sector is going to have jobs lost and that these people cannot go back to other areas where they can continue to harvest. When we talk about the people in Tahsis that have been laid off, these people will not go back into a mill. When we talk to the people in Gold Bridge, 70 workers in the mill there have been given notice and told: "Next year, you're up." They will not go back into a mill. We have to create new opportunities. Not everybody will go into the forest to do what the minister said this afternoon -- that is, build trails, do pruning or spacing or some silviculture activities like tree-planting. Not everybody will be doing that. The people that cannot go back into the traditional sector they've been working in have to find an opportunity. There are kids that are living in the community. They were supposed to be taken care of as well, be it through education or new elements of added value, but it just isn't happening.

I think it is fair to say that had the minister or the chairman of the FRBC board done in the past what the chairman of FRBC says is most critical -- that is, dialogue with the communities, so the reality of what happens in a community is right up front, people know about it. . . . If that had happened, then I don't think we would see what is happening now -- that is, total discontent with this government's policy 

[ Page 5062 ]

and how it has managed Forest Renewal B.C. and how Forest Renewal B.C. was almost pilfered by this government through the transfer of $450 million from FRBC into general revenue to offset the deficit.

All these kinds of attacks on FRBC took place, and nobody was able to say: "Listen, it won't happen; it's wrong." It's only when we as the opposition were definitely involved, mobilizing thousands of people in the end to say: "This is happening to FRBC. If it's okay with you, fine; but if you think it's wrong, you better speak up." Then in September, when the announcement was made that FRBC felt they had a surplus which was not a surplus -- it's proven how it was not a surplus -- these voices suddenly roared over this province. Even people who didn't think for a second that this government would dare to take that money just shook their head and said: "They did it. This is going straight against the well-being of the working men and women of this province." So this system has not worked. This system has not worked financially; this system has not worked creatively to find opportunities for people. It could have been avoided if FRBC had done what it was mandated to do -- that is, operate with consultation with communities. Unfortunately, it hasn't happened, and what is even more bothersome now is that we're going in a new direction, and it is not happening again.

Can the minister answer my next question: have the aboriginal communities been asked for their opinion on the new direction, and what has been their involvement in coming to the new land-based delivery system?

Hon. D. Zirnhelt: There is a first nations representative on the board of FRBC. To my knowledge, he has been very active in participating in discussions about the delivery. But other than that, we didn't have a special consultation process with first nations. But I would remind the member that in the advisory process to FRBC, community leaders speak to the regional staff of FRBC all the time, and they speak to board members of FRBC all the time. So the communities do have a voice.

I can't let the member leave on the record that somehow the way to implement a $300 million land-based program is just by asking communities how they think it should be done. I think there needs to be some knowledge about how you run a watershed program, how you run a spacing program. My point was simply that very few communities that I'm aware of have anybody on staff that has ever run any of those kinds of programs. There may be some if they're running a community watershed or something like that. We hear from them, because they would have been partners in watershed restoration.

They have the option to partner up. Communities have had opportunities through the years as one of the stakeholders, one of the partners, to work with other partners to propose applications. The first nations also have some input. They have advisers; they have concerns.

Everybody wants more money spent in their sector and their community. There just isn't enough to go around. The people you spoke of, the smaller projects here and there. . . . There just isn't enough money to go around. There are going to be disappointed people and people who are turned down.

But the money is being spent -- for two years now. Two of the four years, we will have been at capacity or at the targeted amount or beyond it. So one, two, three, four years of running it. . . . We're up and running. FRBC is effectively getting the money out there. I'd suggest to you that any community that looks at it is pleased with the money that's coming in there. It's run, in my view, with a low administrative overhead.

It's running in response to a wide range of interests out there, not the least of which is what's needed in the forest itself. There is a wider range of interests than just "communities." There are people who live in communities. The forest industry people, the labour people, all the people advising, the local economic development groups -- all live in communities, and some of them have no connection to municipal governments. We are listening to communities. There's vast community input. Every MLA has input to the communities and can write and try to influence the direction. But I say to you that the communities committee itself has people on it that advise the board of FRBC on how the communities program itself is spent. So there's more or less community input into different levels of program.

When it comes to the first nations input, we fully expect to listen to them. We've had discussions with both the first nations groups. I personally have briefed them on some of the new directions and heard from them. There's a wide range of opinion on what we should be doing there. Most of them expressed concern that more money go into the areas from which the timber is extracted, and that means their communities. It's totally understandable that they would see that they should get a piece of the action. I can tell you that 25 percent of the funds, approximately 25 percent of these programs, do go to people from first nations. The details of this I would like to get into when we are discussing FRBC.

T. Nebbeling: I agree with the minister that this type of detail should come when we really have the FRBC team here. I'm happy you say that, because I was almost tempted to go into one or two projects that I know were community-driven, were basically cut off at the pass when it came to actually going into a restoration project with some workers and were given a fraction of the money that was needed to do these two projects. I'm talking about the Squamish-Lillooet area. However, I'm not going to go into that detail, because it wouldn't be right, not having the right staff here.

But what I would like to ask the minister is: in the past three years, which the minister still feels should be considered quite successful -- or if not the minister, then certainly the chairman of FRBC. . . ? What kind of monitor system is there in place to gauge the level of success of FRBC for the first three years that it has been in operation? How was it done, on an annual basis? Was there a system in place to monitor the activities of FRBC? Or was it just working in isolation and giving an annual business report and like that? How do we ensure that the money that is spent is indeed being spent in such a manner that (a) we can document it and that (b) at the end of the day we can say, "Hey, listen, this was a good job" -- or a bad job or whatever -- but that at least we have the power to come to a conclusion about the activities? What has happened in the past three years on that?

[7:30]

I just remind the member that one of the purposes of having it before a committee would be to ask those questions, to get into those kinds of questions. It is a Crown corporation; there is a committee. And there's a wonderful opportunity to talk about systems of accountability and monitoring. So while I'll get into some level during this debate, I think most of it that relates to the functioning of the systems that are in place 

[ Page 5063 ]

today and so on could properly go through the legislative standing committee. There is a great opportunity there to get into the details of how the Crown corporation monitors itself.

But as for me, as a minister I am concerned about the higher-level issues -- that of work towards jobs for displaced forest workers, major investment in the plan or in the land-based programs. Those kinds of things are the things that we constantly query as members of the board. I, as a member of the board, receive reports on a monthly basis as to how they're progressing towards achieving their objectives.

T. Nebbeling: I'm going to walk away for now from FRBC and its new land-based delivery system, because I think we could spend two days on it and still never, ever touch what really happens with FRBC, the funding and how it has gone. So my stopping now on FRBC doesn't mean that I will not come back. I hope the minister understands that.

What I would like to do now is focus a little bit more on the jobs and timber accord, because clearly the information that I'd hoped to receive from my initial question -- that is, these so-called working groups, what their role had been not only in advising the forest sector strategy committee but also in creating new directions, and what kind of debates had happened in these groups to come to conclusions that now are going to be incorporated into the jobs and timber accord. . . . I had hoped that it would have happened.

I didn't really get much satisfaction on my questions about the regulatory issues working group, because I still do not know if some of the new regulatory rules that will apply to the jobs and timber accord were just done by this committee without consulting with other groups that would have to live with the consequences of some of these new regulatory systems. Of course, I'm talking about the FRBC delivery working group as one. Later on I'll come back to the stumpage working group; I believe there was one like that. There was also a jobs working group.

But what I would like to shift the focus towards for a moment is the jobs and timber accord itself. Much has been said in the last four or five days, and more has been said in the last 14 months, on what the jobs and timber accord is going to do and how it will indeed create new opportunities for displaced forest workers. Later on we're going to have, no doubt, a debate on who should be included in the definition of displaced forest workers and who will be excluded from it. I'm thinking in particular about certain sectors of the silviculture industry. The minister has an answer to that. But I think we can have a good exchange on that one as well, because I don't see it as black and white, the way the minister or the Premier has presented it to the province.

Just to illustrate it, it's interesting to see that the silviculture industry for ever and ever has made it very clear that its industry consists of 18,000 people -- full-time, part-time. They have made the announcement time after time; it is documented. The Premier last week in an article said that 12,000 silviculture workers didn't have to worry. It's interesting to see how the minister is already taking away 6,000 jobs by talking about 12,000 jobs. That truly contradicts the statement of the combined organizations that work in that field. But I'm not going to talk about that today. We're going to get to that later on.

What I would like, then, to get from the minister is an idea that once this jobs and timber accord is in operation, in action, and all the regulatory requirements have been fulfilled so that it can start paying money out to entice or to create new jobs -- I shouldn't use the word entice -- how is the government action going to be monitored? How are we in this Legislature going to have an opportunity to constantly -- or at least on a regular basis -- find out how this is happening, if it is successful? Is there going to be a monitoring system in place that will keep a constant eye, a vigilant eye on what happens in the industry, how it is happening? Is everybody on board? Who's not on board? Is it a fair system? Is it a rotten system -- whatever? Is there a monitoring system in place that will go parallel with the introduction of the accord?

Hon. D. Zirnhelt: Well, the nearest parallel would be the job protection commissioner. He reports on specific projects and so on to ministers through the year, and then he has an annual report. So there is a reporting mechanism.

The jobs accord advocate will be created. It will be that office that has the ongoing responsibility to respond to government and to industry. It will monitor the effectiveness of the jobs and timber accord and will be an advocate for the provisions of the accord. So that person will need to have access to the information from industry and government, and there will be an annual report on progress. It will report to cabinet, and it's our intention to make the reports public.

T. Nebbeling: There's a job protection agency, you just said, and there is a jobs advocate. Or is it one and the same?

Hon. D. Zirnhelt: No, I said that this will be similar in the way it reports out. I said the nearest model would be the job protection commissioner, who reports out on how many jobs he's protected and saved through economic plans and so on -- his activities through economic mediation. It's similar. Don't try to say it's the same or anything. There are similarities there.

The accord spells out that there will be an advocate, which we will create. I said that person will report to cabinet, and the annual reports of the timber jobs advocate will be made public, much as the reports of the job protection commissioner are made public.

That side of the House has confidence in the job protection commissioner; I expect that they will have confidence in the jobs accord advocate, as well. There's a very open process. This has to work for the public of British Columbia. In order to do that, we expect there to be a reporting out on the numbers, and we expect them to work consistently from an agreed-upon baseline.

T. Nebbeling: When we talk about the job protection commissioner, I agree with the minister that Mr. Kerley has done a remarkable job. He's doing a job under intense pressure. It's a job that we should have hoped would not have been necessary in 1997. That's why, in the past, this position was only an appointment for a couple of years, and then the job would just disappear because there was no further need for it.

The problem, of course, is that throughout this province there's so much upheaval in the forest industry because of the Forest Practices Code, the protected-areas strategy, CORE. There's much upheaval because the product that goes into the mills, be it a pulp mill, be it a sawlog mill. . . . To get a product to the mill, the cost is higher than what the end product will deliver in return. That has caused many smaller operations in particular to shut down.

So the job protection commissioner is exactly what his title says. He is there to protect jobs. These are existing jobs, jobs that are under attack, jobs that could be lost unless there 

[ Page 5064 ]

is going to be some assistance from the government to assist continued economic viability wherever these jobs are going to be lost.

We see it happening in the Terrace area. In spite of the jobs commissioner's very best effort to save thousands of direct jobs, it will ultimately lead to about 9,000 lost jobs in total, with indirect jobs as well. We see the job protection commissioner working every day to the fullest to see if he can save any of these operations in the Terrace, Prince Rupert, Hazelton, Stewart and Smithers areas. In spite of that, because of the cost of the product that goes into the pulp mill and the price that is received at the end for the product that is produced there, the Prince Rupert pulp mill did close down. There were 161 people laid off, and these were direct jobs. The community of Rupert is just devastated because they know that the fallout from these 160 jobs, which ultimately will be 250 jobs, is tremendous and is felt through the whole community.

That is the job protection commissioner's role: to reduce much of the impact of what's happening in the industry. It's unfortunate that in 1997 we still have a need for that. Many of the initiatives undertaken by this government in the last six years were not only to reduce the annual allowable cut, to set aside land for other purposes -- which we support -- but to do so in such a manner that FRBC money, which was in super-stumpage and add-on stumpage, could protect these jobs that could be at risk of disappearing. Obviously it is not working. So now to hear that the jobs advocate is going to do the trick. . . . I quite honestly don't understand it, because I didn't think the advocate was actually involved in creating sustainability for existing jobs. Last week we talked about it. You know, when a council member in Terrace asked the deputy minister why FRBC money was not coming in larger amounts to the area in order to save the whole industry and thereby save the jobs, the answer was: "Well, we're not in the business of saving jobs. We're here to create new jobs." That's going to be the role of the advocate, so I do think it is a different type of job.

I would like to have the minister explain or take us through how he believes this jobs advocate will indeed be able to create jobs effectively, especially in these places where we're losing jobs on a daily basis. I mentioned job losses earlier when I talked about Tahsis, when I talked about Gold Bridge -- small places. There is very little opportunity to replace the jobs that are gone. Not even the job protection commissioner has been able to do anything there.

I cannot see how, when we're going to monitor FRBC money, having an advocate who is solely responsible for creating new jobs and making sure that new people are hired in operations that are part of the jobs and timber accord, he or she can, under that label and in that position in the long term, do what FRBC was supposed to do -- that is, not only keep people at work but replace the jobs that are lost because of government regulations in such a manner that there is sustainability in these communities. Maybe the minister can walk us through how this advocate is going to do his job and how we can make sure that we get regular reports from the advocate.

[7:45]

But if you look at the evidence, the wood is being cut -- relatively stable. The number of jobs is relatively stable; there are some ups and downs. Pulp markets in the world are a problem. That's structural change. Therefore I expect that the pulp sector will be going through structural change.

You mentioned Gold River; you mentioned Tahsis. Some of these have to do with the changing nature of the marketplace out there, and markets. Of course, we expect industry will have to change. And no, the jobs advocate. . . . Nobody will keep every job exactly the same. Some jobs will go, and others will be created. On the whole, we want more jobs. We've said that very clearly.

I'd like to correct the record a bit. The member has suggested that the deputy minister was in Terrace and had said something like: "It's not my mandate to save jobs; it's my mandate to create jobs." I have no idea where that comes from; we can't figure out where that came from, because the deputy minister hasn't been in Terrace for a long time. He certainly wasn't with me.

You may have been referring to the Deputy Premier, I don't know; I don't think he was in Terrace. I'm not aware of any comment to that effect. If it's a secondhand reporting of a comment, I don't recall that it was made in my presence. So that's a little clarification around that. I just want to assure you that the deputy minister has not been to Terrace as the Deputy Minister of Forests and didn't make a statement like that.

It's everybody's job -- timber advocate, companies, government, stakeholders, everybody -- to try to maintain as many of the jobs as we can but also to create new jobs. The timber jobs advocate is a position that we agreed with industry should report both to industry -- and that will be by way of a public reporting out -- and to government. It has the responsibility to establish accounting mechanisms to monitor job creation and assess progress towards achieving the job targets.

That advocate will monitor ongoing employment and job creation in the forest sector. Where there are outcomes in jeopardy, he will undertake reviews and propose remedial measures. So I expect that he will concentrate on implementing the accord. He's there to advocate for the accord, to advocate for those lines in the accord that say that we attempt to get more jobs out of more timber going to the remanufacturers or through new investment or through other initiatives by the small business sector.

We have to work on implementation. This accord is just what is here, just what's written down. We're now working on the implementation strategy. So some of these details will be there -- the methodologies and so on, number crunching. The advocate will have to work on developing his methods of operation. We don't say: "Here's the blueprint; you run with it." I think we've said everything that's been agreed upon with industry that can be said now.

T. Nebbeling: When the minister says, "We've said everything that has been agreed on with the industry," I know that he knows. . . . I'm very skeptical because it is that same 

[ Page 5065 ]

industry that did not sign the accord. If they had agreed on everything, why wouldn't they have signed? As I said before, the accord is a goodwill exercise; it is a good-faith document. But there are no signatures from any of these CEOs representing the industry, who came on board and said: "Okay, we believe this is the right way to go, this is the right thing to do, and this is workable." If they had felt that way, they would have signed it, I'm sure.

Having said that, I quickly want to come back to the serious part of the whole debate, of course, which is about the viability of the industry. Where are we going to put our money, where are we going to put our emphasis, and where are we going to find ways of reducing the number of lost jobs as much as possible?

The minister mentions the structural changes in, for example, the pulp sector. Of course there are structural changes. There are cyclical changes, there are structural changes, but we can deal with that. How we can deal with that is by getting a dose of reality incorporated into how we deal with the industry. As long as we think we can front-load costs onto the product that has to go into the mill, to the extent that what the product at the end is going to be and has to be sold on the global market -- that that product can just not compete with the suppliers from other countries. . . .

I don't care if the answer is because in other countries the wage scale is lower or they have other reasons why they can produce it cheaper. That's not the point. The point is that we have an industry that's been a very viable industry. We can specialize and produce that pulp or paper that is not created in other countries. So there is a way of dealing with that structural change.

Yes, the Indonesian product is cheaper -- we know it -- and so are some other countries. But once you know these facts, you have to get real and say: "Okay, how can we undermine that competitor?" The Indonesians said: "We're going to build a billion-dollar pulp mill. How can we undermine British Columbia?"

I would suggest that the key lies in what we have talked about before, I believe, and that is to set the upfront cost of the product -- the log, the timber -- to reflect the marketability of the product that it creates. If we are going to go into a market type of system and adjust. . . . When the prices are high you charge a high price, and when the prices come down you have a different price. That's the first step in that direction. That will make sure that our product will indeed be marketable on a global level. That will make sure that the pulp mills can continue to do their work, thereby securing the jobs. If we do that, then we are at least going in the direction where I believe we ultimately have to go. We have to become market-driven when it comes to pulp.

I know that the answer is immediately: "With the softwood lumber deal, we cannot touch any of the cost upfront, because it's seen as a subsidy." Well, I think we have plenty of ammunition now and proof that by having these costs driven up the way they have been driven up, it is kicking Canadians out of a job. The Americans just have to accept that the stumpage has to be revisited and that the stumpage has to be brought in line with what the global market can allow the end product to cost -- that is a given.

The second part, of course, is the overregulation of the whole industry. We're beginning to try to look at it. We haven't got the details yet, but through the Forest Practices Code amendments I hope to see some lesser regulation. That's the second part of why our industry is in this very structural turmoil. Our regulations are such that we cannot compete any longer, because again, it drives up the cost.

I'm waiting to go into debate on the Forest Practices Code to see how much relaxation we can give the industry without violating our environmental standards. There are many different ways that we can achieve the objective of reduced regulation and still stand up as champions for our environment. That is most likely what we have to become -- champions of our environment rather than the defenders at all costs, because that has certainly created the so-called structural change that the minister talked about.

That structural change is avoidable. Once we go into that different mode of market competitiveness -- global market competitiveness -- and lesser regulations, then I have no doubt that the investment will also come back again to this province. With the investment, we can take some of these mills that today, because of their antique state, their aged equipment, can no longer compete in the markets, either because of the costs that the old equipment causes the end product to cost. . . . With upgrades to some of these mills -- and, I think the minister will agree with me, substantial upgrades, so we need investment -- they can be made much more productive and thereby add a new component to becoming competitive in the world market and continuing to support jobs. The bottom line, regardless of what we do, is that if we cannot use FRBC money for saving the industry from the elements I just talked about -- and it doesn't mean that we just tell the company that here's $100 million or $50 million or whatever it takes. . . . We can create partnerships with part of the FRBC money to save these jobs, as well.

I talked about this last week, so I'm not going to repeat it. But I truly hope that when we talk about the structural change of the industry, we will start incorporating some of these ways so we can make a difference in how the product produced in these mills, be it lumber, pulp or paper, can compete on the global market. That's where the key lies to our success in the forestry industry.

We will talk a lot more about this global competitiveness when we talk about added value. I'm going to talk on that later when we speak about the objectives of the value-added sector to create 5,000 jobs, but in return there is more timber going toward it -- some 700 million cubic metres, I believe. I haven't got the number here, but when we discuss it I will have the correct number.

While whatever we make with the lumber is great, if we cannot get that lumber into the global market at the right price so that people want to buy our windows, our doors or whatever we make with that lumber. . . . Other countries -- like Sweden and Finland, in particular -- produce exactly the same value-added products and produce them at a much better price. When we cannot compete with countries like Poland, we have to realize that they have a lot of Western infrastructure today to produce value-added products that we Canadians will have to compete with. If we can't get the price of that value-added product down when we go into the global market, there won't be any buyers. In spite of more timber, if there are no buyers to buy the product because it's too expensive, where are we going? It may be a nice solution on paper. It might be a nice solution to say: "Hey, this is how we do it, and doesn't it make sense?" Of course it makes sense -- but only if we are in a global, competitive market strategy.

[ Page 5066 ]

That is not happening, unfortunately, but hopefully, we can come to that one day. I think many of the problems that have caused the jobs commissioner's role to be such an important one can hopefully be dealt with in that manner, and we will then indeed have job opportunities in mills that are financially viable, selling products that are competitive in the global market.

Having said that, coming back to not really having been able to monitor the FRBC in the past -- besides the activity on the Forests standing committee, of which I have obviously been a member for only one session -- I really believe in a system where whatever government does, we look at input. We have now created the input, with more timber and more money. We look at what that money is going to do, and then at the end of the day, we have to be able to look at the output and say: "Yes, it did make a difference toward what we tried to achieve."

Hearing from the minister that the jobs advocate will report to cabinet once a year and then we'll get a report, well, that doesn't give me much comfort. These reports are often two or three years old by the time they arrive in the Legislature, and I think this has to be a much more hands-on type of approach. The way we totally and constantly channel all the actions of the various groups that will be involved in creating the 21,000 jobs, and where it is happening and where it is not happening -- to me, that is the key.

[8:00]

At the beginning of this year, the people on a large number of projects had done their homework. They had spent two years doing ground analysis. They had two years of consultants advising what had to be done in the restoration projects, in particular, and then this year, when the money was supposed to come to actually get people to do restoration work in the forests -- sorry, there was no money. Most projects were given a portion of what they were asking for.

I have pointed this out to the minister before, and the answer was: "Well, you know, if we give everybody what they want, we're all going to go broke." My point is that if a two-year study shows that an influx of, say, $1 million dollars has to be put into a project to restore the area that was under study to its fullest recoverable status, and if the consultants and the experts say it's going to cost a $1 million, you can't turn around and say: "We're going to give you only $500,000 or $300,000 or $200,000." I mean, that is two years of wasted work, and I have pointed that out before.

I would also like to hear from the minister, as this is a living document, how we are going to monitor the work of the government and government representatives to make sure that this section is also done in the most expedient and most financially responsible way possible.

Hon. D. Zirnhelt: I'm really at a loss. I'm trying to connect the long dissertation about a world-competitive forest industry. . . . And we are. Some of our sawmills are the best in the industry; some of our pulp mills are the best in the world. We do have a world-competitive. . . . I didn't hear any solutions coming to the problem.

The jobs advocate reports to cabinet through the Minister of Forests. From time to time, the jobs advocate will be asked for progress on setting up his systems and will be given assistance if he needs assistance. The jobs advocate will report out on government's role in getting out the wood ahead. It would simply be a matter of the annual report reporting on the accord. Since there is something in the accord about wood ahead, then he will report out on that.

There's something there -- whatever is in there that says it -- about what government shall do and that the advocate will report on it. There's no magic. He'll report on it, and he'll report through the minister. It's like any other objective we set. There will be an annual report that indicates progress toward the aspects of the accord.

T. Nebbeling: Well, then maybe the minister can go a bit more deeply into this advocate role and the number of staff that this particular position will require, because we are looking at a $15 billion industry. That's the forest industry. The advocate will be very much involved in making sure that industry meets its obligations under the accord, but at the same time, I'm asking how the government's action is being monitored.

To illustrate why I think it is so important. . . . I was trying to hint at it earlier on, but maybe I have to go into a bit more detail. After three years of FRBC operation, after three years. . . . The FRBC was saying in the first year: "Hey, listen, we didn't spend a lot of money relative to our objective of $400 million a year for the five-year period that it is supposed to go, but we needed the first year to get our feet wet." Nobody really argued with that. It was a bit of a shame, because communities and companies were hoping that they could start tapping into FRBC money. It was announced with so much spectacle by Premier Harcourt that the money was going to be available immediately, and it was going to go back to the forests and the environment and the communities. It was going to go back to the communities and the areas it was taken from. So the first year was a bit of a washout.

The second year there was a little bit more money. I think $250 million was committed, and $148 million was actually spent -- correct me if I'm wrong, but I think it was in that kind of area. Again, FRBC fell way behind their objective of $400 million. Had there been a real monitoring system in the second year to ask what happened, I think. . . . Not the Select Standing Committee on Forests, because from experience it is very hard to get any true information on what happens behind the scenes -- the more prodding you do, the less cooperation you get. There should be an independent agent who would have monitored what this government Crown corporation was doing with the money, because they did take in money: $435 million in the second year, I believe. They took in the money, but they didn't pay it out. Why not? FRBC said: "Well, we're still trying to organize ourselves, and we still have to get more data." Less people felt comfortable with that approach, but we gave them another year.

Well, I don't know how much has been spent in the third year or how many cheques have really been signed, compared to the promises that were made in '96 and were supposed to be honoured before March '97. I don't know how many cheques were signed, but the fact that it took three years to get to that baseline of $400 million a year -- or close to it, as 

[ Page 5067 ]

hopefully the third year was. When we are at FRBC, we will be talking about what has actually been spent before March 31, 1997.

Had we had an independent agent watching what happened, I think FRBC would have been a lot more effective in seeing its objective being achieved. The other thing, of course, that it would have done if we had an agency watching over. . . . If we can watch over government and all the other components that make up the society of British Columbia -- and the government is doing a good job at doing that -- why shouldn't we watch what happens in our own home? Had we done that, I believe the 40 percent cost, which was not directly going into the forests, would never have happened. I think it would have been a much lower level.

I know the minister is writing fiercely, because Price Waterhouse did a study on the actual cost of the Forest Renewal B.C. operation and came in with a much lesser number -- and we will discuss it during the FRBC estimates, as well. But if you look at how Price Waterhouse in their analysis came to the cost of the operation of FRBC and at how much money was spent on paper and on consultants and on more paper and on more consultants, they excluded a huge number of sectors from being considered as a cost of FRBC. I've got the study. Unfortunately, I didn't bring any FRBC documentation files with me; otherwise, I could quote some of them now. But the list of elements that make up the cost of FRBC. . . . According to the study, the cost is less than the 40 percent which even the minister acknowledged as being there. It was wrong, it was a waste, and it had to change. The 40 percent, of course, was acknowledged by the chairman of FRBC with a shameful face saying: "Yep, we have to do better, and we will do better in the future." Well, I believe that if FRBC, the Crown corporation, had had an agent watching over it, that kind of waste of money -- money that should have gone into the forest, into the environment, into the communities -- would have been caught much earlier, and then it would have done us all well.

I put a much stronger emphasis on monitoring the government than just focusing on the industry. I'm not saying that the industry should not be monitored as well. I think this is a very important type of undertaking that the government is taking on here. The reason for me believing in this type of monitoring is that if there is waste, and if we are not meeting our obligations or the challenges of the accord, then we had better know it quickly and early. Therefore I don't think that this so-called monitoring program by the government, which will be a report once a year to the cabinet, is going to have any value. Before it comes to the Legislature, we may be well ahead in the second or maybe the third year. Sometimes these reports seem to disappear. I would ask the minister if there is still consideration for a broader monitoring program at this stage, so that we can have a good idea what happens on a quarterly or a yearly basis, maximum, and take action so that the second year will be better than the first year and the third year will be better than the second year.

Hon. D. Zirnhelt: On the issue around how you get an agency up and running, I would suggest that there are various ways of doing it. I don't think there's any perfect way. You have to make some adjustments. You never end up with a complete blueprint on day one. You know, you talk about FRBC; you talk about it endlessly. But when we did finally study it, we found out that its costs were well within the range of costs that industry uses, and industry's own consultant did that. We ordered that review, because people on that side of the House were using figures like 85 percent being spent on administration, like somehow the money that was contracted. . . . They said it time and time again. The leader over there said it; people said it time and time again -- misleading the public. So we examined it. Do you know what the opposition was including? They were including in the 85 percent or the 40 percent money spent by the Ministry of Environment -- contracted by them. Somebody has to be responsible for the money. You don't just write a cheque out the door and expect somehow that the money will be well spent. There have to be financial controls. There's the auditor general; there's the comptroller general; there's the Financial Administration Act; there are people in all of these agencies with the function of comptroller. All of these are there for the agencies.

You can tell us that there is a better way to get FRBC up and running, and that's fine. I'd like to hear some specifics. There never were any -- none whatsoever, other than to say: "Give the money to communities." The communities didn't have studies on watershed restoration. For you to say that you study watersheds for two years or whatever. . . . We would be damned if we went into a watershed and destroyed the watershed, as happened in Oregon. Some of that work that was done to restore watersheds was countereffective. We have to do proper studies. You might spend $200,000, and they might identify $1 million. It doesn't mean that it has to be spent next year or the year after or over three years. This is a long-term project. We can spend billions restoring watersheds. So this is going to take some time.

You talk about the money that was promised. They went through a process where they said: "Your project meets the criteria. It's approved in principle, subject to financing, subject to budget." Then the next year, other community areas, other watersheds had proposals. This was all sifted through, and then a strategy, an investment plan was created. I would submit to you that over the three years FRBC has got up and running quite effectively. It won't do for the future for long-term contracting, because we use ministries.

[8:15]

In this case, the jobs and timber accord will report on a daily basis to cabinet through the Minister of Forests. I will be making reports on an as-needed basis. But there will be an annual report that will be published, and we can chart the progress that way. And we'll talk about jobs during the estimates. There are other ways of carrying on discussions and asking for accountability. I'm sure that in each community people will be watching what jobs are created and which jobs are lost as industry goes through changes and as elements of the accord get played out.

T. Nebbeling: I was almost tempted to give the minister the real solution to how that Crown corporation can operate a lot better, but he would consider that opportunism, because I 

[ Page 5068 ]

would consider calling an election to see if there is another government that is willing to take that challenge. If we would be that government, I believe we would do a hell of a better job.

Having said that, the minister really begins to make some kind of fun of what is actually part of the jobs and timber accord when he talks about monitoring: who is going to monitor; how are we going to monitor; should we monitor a Crown corporation? Then the minister goes on by saying that the monitor should be monitored. That's an interesting thought that the minister has there. I say this because if we look at the Forest Practices Code and why the Forest Practices Code has not been able to do what it was supposed to do, which was to create a viable forest, a sustainable forest, with a sustainable environment and with guidelines that are workable, operational. . . .

One of the problems with the Forest Practices Code is that once one had checked something, then somebody else had to check what was checked by the first person. When the second checker didn't agree with what the first person said, he or she would send everything back, and new elements would be brought into the proposal. They would be answered. The first checker, the first monitor, would then send it back again to the second monitor, who would then go over it. This game went forward and backward. As a consequence of that, they would see the Forest Practices Code causing licence applications to take up to 18 months, when before it was four, five or six months maximum.

The minister has obviously worked with this whole monitor system before when he said that the monitor should be monitored. That's ludicrous, of course. If you have an independent agency that monitors a Crown corporation's actions and makes recommendations -- not to be negative but to be positive -- to improve the operation, then maybe the auditor general's role in the end is to make sure what the various monitors of these agencies, these Crown corporations, have recommended. I don't think you can belittle the way monitoring systems are going to be needed to make sure that the effectiveness of the programs is guaranteed.

I take this seriously. Like I say, the minister may not take lightly the fact that I bitterly complain about the effectiveness of Forest Renewal B.C. and about the waste of money in Forest Renewal B.C. That was acknowledged by the minister; that was acknowledged by the chairman. Again the minister is shaking his head no. I have the paper clippings. He was in Williams Lake and was asked: "What is this 40 percent?" He said that it was a shame and it should never have happened and we have to do better. I was at a meeting at the truck loggers convention in Vancouver, where this issue was raised. The chairman of FRBC was there, red-faced, saying: "We have to do better and we can do better." I know we can do better and I know the intent is to get better.

What I'm saying is: if we really had a good monitoring system, what happened with this Crown corporation with that incredible budget -- $400 million collected each year for five years is $2 billion. . . . If that monitoring system had been in place, it would not have taken three years to get to the realization that a lot of money was wasted that should have gone into the ground.

Having said that, I would now like to go back to the jobs advocate and ask the minister -- as I did before, but I didn't get an answer: how many people will it take to run this agency? As I said earlier on as well, this jobs advocate will be monitoring an industry of well over $15 billion. I don't think this can be a one-man show. This is not a job where the advocate jumps into the fray if there is a concern about jobs being lost. This is upfront thinking with upfront approval systems to make sure that when timber is going to a major or to a minor, certain conditions are being met.

It's another form of bureaucracy, unfortunately. We're going to have more paper shuffled because of this. But it is important to know how big this agency is going to be. How many people will it employ? What is the budget for this agency? I would expect that there is a budget.

Hon. D. Zirnhelt: We're working on an implementation plan for the jobs and timber accord which will involve the advocate. It will be minimal. It will be as small as we can get away with to do the job. If it were a huge monitor, I'm sure we'd be criticized. If it's too small, we'll be criticized. So we're going to try to get it just right. It won't be huge.

I'm not going to give you any numbers, because you'll say, "You said this," and I don't want to get into that ridiculous game. So we're working on the implementation. Don't try to press me for details that don't exist.

T. Nebbeling: Thank you very much for that little warning: "Don't try to press me for details that don't exist."

Fourteen months after the Premier woke up in the middle of the night and said: "By God, I've got it! I'm going to create 21,000 jobs. . . ." The minister acknowledged a number of times that this was an idea that the minister had in March of 1996. "Nothing is organized; it's just an idea. I'm going to create 21,000 jobs." This is going to go into history, because the Premier also declared that the idea he had was the very best and most important thing he'd ever done in his life. Waking up in the middle of the night: "I'm going to create 21,000 jobs." Well, that was 14 months ago.

The whole success of this jobs accord depends, to a large extent, on enforcement by this advocate. This is a scary thought, by the way, because of the consequences of having to report what you're doing in your company well in advance. I can see some very negative things happening, and we will be talking about that when it comes to companies having to report to the jobs advocate if they have to lay people off. As it has been described to me, at least, that is one of the elements that is guaranteed under the jobs advocate's job description: if you want to lay off people, you have to go to the jobs advocate and get approval from the jobs advocate. It's a scary thought; however, it's there. The government has decided. . . .

Hon. D. Zirnhelt: It's called monitoring.

T. Nebbeling: Well, there are two things: there's monitoring and there is controlling free enterprise. There is that control element. I think monitoring as an agency objective is good, because we want to know, for a change, that the money that is spent on these programs is spent properly and does have the result that the objectives set out to achieve. However, that's not the point.

This jobs advocate is going to demand a look at the size of the job. He will look at the mandate of the job: create 21,000 jobs, monitor the jobs, and at the same time, if anybody wants to get out of the deal, do everything to make sure that it is the only way to deal with the situation. At the same time, that same job will demand some good analyses of corporate viability. It's only in that way that the jobs advocate can judge if laying off some staff is justified under the information presented to him. So this is not a little job; this is a huge, huge bureaucracy. I really am surprised to hear, after all that time -- 

[ Page 5069 ]

14 months of planning all these different agencies, work groups, committees, referrals, opinions, solicitation -- that the minister can still not say what the jobs advocate will mean as far as the size and the cost of running this agency. This is not going to be another job protection commissioner who can travel throughout the province from one hot spot to another trying to save and secure some viability in desperate situations. And like I said, Doug Kerley has done a tremendous job; we really compliment him.

But this is a different type of job. This job is going to demand a lot of upfront work, and it cannot be done by just one or two people with the impact that this jobs and timber accord will have on all companies, small or big. So once again, has there been any talk in the ministry, in any of these work groups, to find a level of need that that jobs advocate will create as far as jobs and as far as the cost of this agency is concerned?

Hon. D. Zirnhelt: Yeah, the jobs and timber accord was a huge undertaking, and as we trimmed our budgets the ongoing operation of government was really taxed to spare senior leadership in the ministry to come up with this. But we did it, and we had to do it with industry, and that is a significant accomplishment. So for the member to just blithely say: "I'm surprised we don't have a blueprint. . . ." Well, we would be criticized for not consulting here, there and everywhere if we had a blueprint and this was somehow all laid out -- that there is no room for flexibility or anything.

So the way these things happen, you develop your strategic overview and your plan first. That's what this is. Then we work on the implementation, and we will work as quickly as we can. This is not a one-year project. It has taken a year and a bit to get this far.

You used words around "approval" of layoffs. Let me read to you what the accord says on page 11:

"Layoff Procedure: It is recognized that companies may on occasion have to permanently reduce their workforce."

"[Government recognizes] that companies may on occasion have to permanently reduce their workforce. In situations where a company intends to permanently lay off more than 25 workers, it will give notice to the jobs accord advocate of potential layoff four months in advance of any intended action. The company involved agrees to meet with the [jobs advocate] and explore consideration of alternatives to the proposed measure, human resource planning, employee counselling and retraining, notice of termination, severance pay, entitlement to pension and other benefits, including early retirement benefits."

T. Nebbeling: For a jobs advocate job description that hasn't got a blueprint, that's quite a bit of knowledge from the minister about what he believes the job entails when it comes to job layoffs.

Can the minister then tell me, now that we are entering into an area where the minister does have some knowledge. . . . If a mill has to close down for, say, two months and will have to lay off people for that period of time -- 400, 500, 600 people -- does the jobs advocate get involved there?

[8:30]

T. Nebbeling: That's a nice idea -- that there might be an opportunity for some of these workers to enter some other opportunities such as the land base management projects.

But nevertheless, my question was: if a mill has to shut down. . . ? West Fraser in Terrace shut down last year for a month, and then they extended it, the reason being that they were losing money and that it just wasn't happening. Would West Fraser have had to go to the jobs advocate in advance, saying: "Hey, listen. This is our reality. This is our situation. We have to lay off 500 millworkers for a couple of months"? Or can they just do that?

[J. Doyle in the chair.]

Hon. D. Zirnhelt: I may have only implied no. I'm sorry; I should have said no right at the start. I was trying to be helpful and suggest. . . . The advocate would get involved if they were permanent layoffs. Therefore, not when it's temporary layoffs.

T. Nebbeling: That's an interesting situation, because I believe that right now there are some areas in the northwest where mills have not opened. Not in the Golden area, but near Golden, there are one or two mills still closed down; they've been closed down now for four or five months. How would these millworkers be given an opportunity to get into alternative types of work during that period if there is no prior notification that indeed the mill will shut down for a period of time? Sometimes it is a month, but then sometimes it gets extended and extended and extended, and the bottom line is that the millworker hasn't got an income and is just suffering from the same consequences of the shutdown that he is suffering from today or yesterday.

So if the jobs advocate is only there to dictate to industry how many jobs they have to produce at a certain time for whatever reason, then I fear that much of the hardship that is caused in the forest industry today and in the last couple of years since the implementation of all the plans introduced by this government. . . . People are constantly kicked out of the forest for a period of time. This jobs advocate is obviously not going to do anything for these workers. That's the one I'm really hoping will be dealt with as an issue: what do we do with these forest workers who are not really out of a job? They have a job; the only thing is they can't access it for a period of time. How are we getting these people to tap into the opportunities?

On the north coast it may be easy because there are strong IWA representatives, but when you go into the northwest there are a lot of loggers, especially, who are not unionized. How would they tap into this? There must be an agency somewhere that they can go to and say: "Now I need three months of land base management work. What is available for me?"

Hon. D. Zirnhelt: If it's a temporary displacement, then they wouldn't be displaced forest workers. So, employment insurance is there as part of the safety net. As I say, there may be an umbrella agreement that the company has with FRBC or the forest worker agency. If we were needing people and there weren't displaced forest workers by the definition of dis-

[ Page 5070 ]

placed forest workers, then perhaps that person would qualify for other employment. I don't think we can simply expect the advocate to guarantee that every mill will operate all year round, every year, because there is the market and there are temporary shutdowns for market. . . . This isn't designed to be the answer to all of those woes. The accord is designed, really, to try to create more jobs generally in the sector.

T. Nebbeling: It's 8:30; I have one and a half hours. I think it will just get me to where I want to be, because now I'm really concerned with this whole jobs and timber accord, hearing what the minister just said. If we go back to what FRBC was created for, the announcement made by the government at the time, it was to deal with people who for whatever reason were going to be kicked out of the forest, temporary or full-time, because of the Forest Practices Code and because of other codes.

The minister is shaking his head. He's says no, that's not true. It was the initiatives that have been taken by this government over the last five or six years that all had an impact on how and when people could go into the forest. Each and every one of these initiatives had impact on denying people access to certain forest areas, be it the protected-areas strategy, the Forest Practices Code, the CORE system, the Clayoquot Sound special management designation or AAC reduction as set out by the chief forester. All these government initiatives kept people out of the forest, sometimes for a permanent period -- these are the people you're talking about, Mr. Minister -- and sometimes for shorter periods of time.

When I travel through the communities -- and it doesn't matter if it is up north or in the interior or northwest communities that depend on the forest industry -- the biggest hardship is created before they get the final chop for this permanent layoff. The biggest hardship that many of these community members experience is based on the fact that where they used to be able to work eight to 10 months in the forest, they are now, if they're lucky, getting four or five months, which means their disposable income has to be earned in that short period of time.

So when we talk about a jobs and timber accord, that is not in any way, shape or form taking responsibility for what is really a problem in the forest industry. That is that the people who have a job don't have a real job any longer. The majority don't have a real job any longer. These people are just being excluded from this, all because the money that is available has to go to create these 21,000 new jobs -- competing for the little time that people have today in the forest industry when they have a job. To eliminate that particular group of people is. . . . I won't call it criminal -- that's not the right description -- but it is truly showing that this jobs and timber accord really is not for people who work in the forest industry, for communities that depend on the forest industry. It is purely an accord that is created to save the Premier from some egg on his face, because the Premier should have really focused on how we can get these people that have a job but no longer a full-time job, not even according to the definition in here. . . .

These people are not going to have the benefit of getting protection under this jobs and timber accord by having the jobs advocate also making sure that they, one way or another, get into the system of getting alternative work produced for them. That is to me the biggest joke of what I've heard so far in these estimates.

You know, when we go through this jobs and timber accord -- and we haven't touched much yet -- I constantly will keep in mind that this jobs and timber accord is really not created for forest workers. This is not created for the forest workers that are in the forest today. This is purely created to honour the commitment that has been made by the Premier. The people that need the protection there, the existing forest workers, are not getting it.

A guy who gets five months this year and maybe next year gets four months, that's the person who should be able to qualify for some of that land management work that is going to be done. That's the forest worker who should be able to get an extra two or three months, so he can get back again to a job that is indeed providing him and his family with an income that sustains them for the rest of the year. Just to hear the minister say these are not the people that this jobs and timber accord is all about is a crying shame, because these are the people who need that help. These are the people that are expecting to get something out of this. These are the people who initially were the target groups that FRBC was supposed to be created for. These were the people, the workers, that worked in the forest for companies that created that extra surcharge to make sure there would be work for these forest workers. They're standing on the side, the minister tells us tonight. I think once that becomes really part of the whole debate. . . .

Is this jobs and timber accord truly an accord for the forest workers? I say no, it leaves them out in the dark. They're not going to get that extra time -- we just heard that -- unless they go after it, I suppose, on their own initiative. But there is nothing in this accord that says people who used to work eight months now only work four or five months because of the restrictions that the Forest Practices Code applies to them.

I give you an example. In the interior during certain periods of the year, if it rains for two hours, all the work gets shut down -- forest workers out. Why? The Forest Practices Code dictates it, because the land gets too impressed or too soft for humans to walk around and for equipment to be on the land. That's a consequence of the Forest Practices Code. That keeps people out of making a living.

So these people not having the advantage of this new jobs and timber accord -- this $2 billion investment by the government into the industry -- is a shameful thing. It's an appalling thing. I think it is the one thing that will haunt this minister or this government for a long, long time, because the people who make that money for FRBC funds are the ones who were expecting to get something back from it. So I am really surprised and quite shocked that the minister just blatantly says that is not what it is created for. It is just for new jobs and new jobs alone, and these are the jobs.

Hon. D. Zirnhelt: Can I ask the member to occasionally break so that I can respond? I have talked about this. You do twist what I say. Your question, if you check Hansard, was: "What happens if a mill shuts down for a month or two?" I said the jobs and timber accord was not created to deal with that situation. That's been going on and will go on. Maybe some of these agreements could help, depending on the agreements the industry has.

But let me remind you what Forest Renewal was created for: to get reinvestment back in the forest land base so there's more productivity; to restore the damage of the past; to get more productivity in the future -- we admit it would be 40-50 years. But that will keep these communities going and make sure that there are jobs there for the children of the people who are working there now.

You talk about people being out of work four and five months, etc. You know, the wood is coming out. I gave you the 

[ Page 5071 ]

figures; it showed you them before and after the code. In between, a bunch of land use plans came in. The same amount of wood has been coming out. We intend to get more out. The accord is about getting more wood out, as well. Government is committed to that.

That will help those people who can't work because it's too wet. But if you dare suggest that by destroying soil when it's too wet by working on it, somehow you're taking jobs away from people by not allowing them to work under those conditions, then I say to you: look at the other side of it. We're maintaining soil productivity. We're maintaining the productivity. We're maintaining the access to the woods when they go under the right conditions. If you talk to loggers and ask them, "Should you work on the wet soils?" they'll tell you no. If they're not allowed to go in, and the evidence is that we're being too gentle, we can actually go in more when it's wet. We'll make those adjustments. Nobody has brought any criticism like that to me.

But go back to your original question. Your question was: what happens when a mill is down for a month or two? I said the normal processes are there for people there. We're talking about displaced forest workers.

I would just encourage you to maybe shorten your monologues a little bit. Focus on a question. I'll try to give you a direct answer. But don't think you can try and twist everything I say so that somehow you're on record as taking what I've said and making it into something that it was never intended to be, because I don't think that's what we should be doing here. I think it will work better. I'm unhappy for you to filibuster my estimates. You can talk all the time. But if you want answers, then give me a chance to answer. I'd be happy to do that.

[8:45]

Then I went on by saying it is the implementation of government initiatives such as the protected-areas strategy and the Forest Practices Code that is in part responsible for forest workers being unable to do their full-time work any longer. And the minister shook his head and said: "That's not true." I gave an illustration of how the Forest Practices Code keeps people from coming into the forests or keeps them out of the forests. As an example, I gave the situation of when it rains for two hours. Nobody is talking about whether it is right or wrong. I'm just saying it is the Forest Practices Code that was introduced by this government that created the rule that people were out of the forest after a certain amount of rain had fallen on the forest land. It was an illustration.

So what we now see happening is that the little time that is available for the forest worker to go into the woods. . . . Now the forest worker will have to compete with that new army of so-called forest workers who are displaced forest workers in other areas. These forest workers are going to have to compete with hirees under the jobs and timber accord because it is mandated. So the five months of work that is now available to the workforce they will have to somehow share with these newcomers that this jobs and timber accord is going to mandate companies to hire. Instead of 50 people being kicked out of the forest, there may be 70 people kicked out of the forest when it rains too hard. It is just a matter of how many people can find viable jobs in certain areas where the forest industry is critical.

When I use the Forest Practices Code as a reason -- that it has killed jobs, that it has killed opportunities for people to get a year-round occupation, an eight-months-a-year occupation or a seven-months-a-year occupation -- the minister shouldn't say: "How dare you make that an example!" The truth is, that's what's happening in the forest. You don't have to go to the interior, you can go up to the north coast -- same thing. There's AAC reductions and other elements that have kept people out of the forest. The people who are working in the forest do not get their eight to ten months any longer.

If the minister is not aware of it, then I regret to say that his officials should inform him of that, because that is happening. I'm just appalled to hear that these workers, with the little time that they are getting, are not going to get the protection of the jobs advocate, that these workers are not able to say: "The moment I'm kicked out of the forest and only get four or five months in my traditional work area, then automatically other opportunities kick in." That's what I would have thought the jobs advocate would have done, but it isn't happening according to the minister. If it is, please tell me, because I'd feel a lot better.

I don't think I'm off the wall when I say that I'm really appalled and quite shocked to hear that the people who have a job today -- albeit a meagre job -- are not part of the consideration for the jobs and timber accord. That's just the way I feel and that's the way I feel I have to express it. And I'm not filibustering here. I'm just getting very emotional when I hear the minister making statements as he just did. I'm going to continue to stand up for forest workers and forest-dependent communities to make sure that they do get their fair share of this money. Because that was for them: Forest Renewal B.C. was to create new job opportunities for the existing forest workers so they didn't have to walk the streets of Ucluelet, Port Alberni or other forest-dependent communities. So much for that.

I think my colleague from Kelowna could take over for awhile.

J. Weisbeck: Just to change the direction somewhat here, there have been some media releases in the last short while. I guess the first one I've got here is from March 30. This particular article states: "60 Days in Jail for Taking Scrap Wood." This particular gentleman was charged for taking half a pickup-load of cedar blocks. The second article I have here is from the Hope Standard; again, it talks about some theft of cedar logs. Unfortunately, three old-growth cedar trees were taken during the winter. The RCMP forest crimes unit reports that illegal operations in the Hope area have removed, at a conservative estimate, $90,000 worth of cedar this past winter. Similarly, along the Coquihalla Highway and some of the roads coming off the Coquihalla there's been considerable loss of cedar. I guess I'm wondering how serious this problem really is.

As well, I'm reading a memorandum here from the RCMP which talks about how serious they think it is, because 

[ Page 5072 ]

they've gone to the point where back in 1995 -- this is dated January 27, 1995 -- they changed their name from the log theft unit to the forest crimes investigations unit. They felt that "log theft unit" was misleading. They felt that the unit was now involved mainly in complex, large-scale frauds, thefts and timber rights issues throughout the province. So as I said, I'm really wondering. . . . I'll ask the minister, after one little statement here, just how serious this problem really is. In another memorandum dated November 2, 1995, the evaluation branch talks about a conservative estimate of 4.3 percent or $80 million worth of revenue being lost through unauthorized or mismarking of timber, fraud and outright theft. During the course of the work done by their 20 revenue inspectors, they often uncover incidents, both criminal and quasi-criminal, resulting in the need for them to consult FCIU members.

My question to the minister is: how serious is this problem? Is this value of $80 million in fact a realistic number?

Hon. D. Zirnhelt: We don't exactly know the extent of the problem. You know, we could spend a lot of time and energy trying to get the last degree. We know it was significant. The auditor general looked into our enforcement mechanisms and recommended in particular that we deal with off-hours enforcement. The auditor general had a long series of recommendations, and we're acting on virtually every one of them. There are some that may take some time to act on, but we're trying to find ways of coping with this issue.

As I say, the auditor general looked into it. I don't recall that he was able to put a figure on it, and he's a pretty good authority. There are 11 recommendations and work is going on now to address most of them, as I've said. The revenue controls have been improved. The auditor recognized that in his report this year -- recognized that the ministry has take positive steps to improve their revenue controls.

There are some inherent risks that he recognizes, which you can't totally eliminate. Let me tell you what some of those are. As you know, the Crown forest is very large -- most of the province. We can't have people everywhere, all of the time. There are 150,000 kilometres of forestry roads that are open to the public, so they can't patrol every road to prevent theft; nor is it reasonable to close a lot of these roads.

The forest industry itself is very large; it operates continuously sometimes on a three-shift basis. We check with industry regularly and without notice. By following the recommendations of the auditor general's report, we think we can crack down on a lot of the theft of timber. But as you correctly point out, there are people who are repeat offenders, and we are attempting to work through the RCMP to ensure that we get the evidence necessary to prosecute those people.

J. Weisbeck: It is my understanding that FRITs, the forest revenue investigation teams, are basically made up of foresters with really not a lot of experience in investigation. If this is as serious a problem as it appears to be, I'd like to know why we only have four RCMP officers throughout this whole province to handle the investigations.

Hon. D. Zirnhelt: I think perhaps the easiest answer is that the RCMP are pulled and pushed different ways and they deal with crimes to people. The theft unit is a specialized unit that will go in where there are trouble spots and advise the RCMP and the ministry -- as far as I understand -- on how we can carry out investigations in a better way.

You could always have more people doing everything, I think. I go back to the fact that the auditor general has had a look at this issue and has made some suggestions. One of the responses we have made is to be able to use DNA testing. We're trying to make that operational right now. There are some ideas out there. It has been piloted. So we're taking steps to make the work of those officers more effective.

J. Weisbeck: It is my understanding that these four officers are really overloaded, and that they're really picking and choosing the cases they're investigating. Really, it's basically only the very, very large cases that they are investigating. So I still don't feel right about the answer in the sense that you have a huge problem here, and we've got four people that are capable of investigating these crimes. I'm wondering whether there has been a suggestion from the ministry that they probably should have a bit more help out there.

Hon. D. Zirnhelt: It isn't just four RCMP. In every region we have forest revenue inspection teams, and there are training programs for them. So there is a lot of help out there in trying to get on top of the problem.

J. Weisbeck: I guess my argument was that I'm being told that these people aren't qualified to do investigations. They are basically foresters. I understand that the process is that all reports come in from the various forest districts, they're sent to Victoria and Victoria makes the determination of which ones are going to be investigated. So some investigations never get referred. My question would be: how many investigations are actually sent in and how many are actually investigated?

Hon. D. Zirnhelt: We'll try to get those details for you. We don't happen to have them with the officials we have here. That's one of the reasons why we encourage your critic to tell us what areas of questioning. . . . We line up the people. We have to take some of these on notice, because no one person has all of the information at their fingertips.

All I was saying was that the auditor general looked at our revenue system, including inspections and so on, and made a number of recommendations. He is pleased with the progress. If you had policemen out there that didn't know anything about the forest, you'd have a problem, too. So you have foresters out there that might not be cops. It's a combination of skills that's required.

As you know, there are laws of evidence and so on. The collection of the information can be very costly and extensive. We can spend as much money trying to collect the money. . . . I think it's a question of whether we have the right balance. I can say that better minds than mine. . . . The auditor general has said he is pleased with the progress that we've made. He made a number of other recommendations, and we are tightening up by following his recommendations.

J. Weisbeck: You made a comment that you spend more money than you would collect. I guess that I have a difficulty with that. When you consider that if it actually is $50 million of revenue that is lost to this province, and consider stumpage fees of $25 per cubic meter, that's a ton of money. We're talking millions and millions of dollars. I still don't feel comfortable that the ministry is appreciating the seriousness of this.

I understand, again, that the investigations come to Victoria. Who makes the decisions on what gets investigated?

[9:00]

[ Page 5073 ]

not the Victoria level. They decide with regional Crown counsel which ones they can pursue. It's at that level, not the Victoria level.

J. Weisbeck: What sort of qualifications do these individuals have to make that decision, from a legal point of view?

Hon. D. Zirnhelt: Crown counsel have legal training. Most of them have been called to the bar, so they have legal training.

B. Penner: I rise at this stage of the estimates debates to ask the Minister of Forests -- if he feel it's an appropriate time and if he has the appropriate staff with him -- a number of questions related to the softwood lumber quota issue, in particular as it relates to a matter in my constituency in Chilliwack.

A number of weeks ago -- I believe it was about two weeks ago -- I did have an opportunity to speak to the minister directly about a local issue affecting a company known as Fraser Pacific Forest Products, which established itself last year in Chilliwack and has run into trouble exporting to the United States because of a shortage of available quota.

I recognize that British Columbia did do pretty well compared to most provinces in Canada in terms of its share of the quota allocated across Canada. I believe -- the minister can correct me if I'm wrong -- that British Columbia received about 59 percent of the available quota in Canada, or at least for provinces west of Quebec. However, one of the areas that seems to be a hardship is for those companies that are just getting started, not the major players like MacMillan Bloedel or International Forest Products that have an established track record of exports to the United States. The companies that are innovative, that are small and just trying to get started are having difficulty. There seems to have been very little in the way of quota reserved for them, the newcomers. This poses obvious problems to them.

In certain sectors of the industry we read in the newspapers that the mills are able to pay the penalty if they ship in excess of the quota. I believe the penalty is $50 per thousand cubic feet up to a certain level, and then $100 per thousand cubic feet after that.

I'm told the company in Chilliwack was started last year with a promise from the federal government that they would be given sufficient quota to operate their mill at an economical rate that is at a level that would pay for their overhead, pay the employees' wages and still make a decent return on the investment. The investment in the case of this company in Chilliwack is about $3 million.

I wrote to the minister a couple of weeks ago with some of these details. Just for the record, I'm taking this opportunity to ask generally what, if anything, the province is able to do vis-�-vis the federal government in terms of trying to extract or free up a bit more quota for the newcomers, the new producers on the market. I know that it's been about a year now since the quota agreement has been in place. It's my understanding that there's some refinement taking place, that there's a bit of an overhaul and some fine-tuning going on. I wonder if the minister could just bring us up to date generally on what's happening there, what role the province has and what, if anything, he could do for individual producers trying to extract a bit more quota from the federal government.

Hon. D. Zirnhelt: I'd be happy to supply the member with a written report, which we did supply on Thursday or Friday, I think it was. In any event, it was during the debates.

I have to acknowledge up front that new entrants have a particular problem if they expect to ship to the United States, because there's no question that the United States intended to limit exports. I can't speak for the federal government, but they did have a holdback of about 2 percent for new entrants. Whether that's big enough or not, you could argue, but they would be curtailing existing operations. Like the previous debate we had here, I think the idea of grandparenting existing operations was to a large extent to make sure that those with already licensed wood and so on had a market for their product. They grandparented the existing operations.

Having said that, if there is a new entrant, they can apply. A committee in British Columbia, which does send on advice to the federal government, meets once a month, or the industry can apply directly to Ottawa. Some of them are accepted, and some of they aren't. There is quota being turned in. There is no easy answer for new entrants. It will be a struggle for them to find a piece of the U.S. market unless they can pay the $50 or $100 per thousand board feet, which is the penalty they have to pay once we're over our quota.

As you correctly pointed out, British Columbia did get a significant portion, and we feel reasonably pleased that we got our share. We would always like more, and we will be doing everything we can as a government to make sure that the federal government does not create more opportunities for other regions of the country. Having said that, we have to recognize that the reason they made the holdback of 2 percent was in large part for the new entrants, we think, because there was an expansion of industry as some second growth was coming on in provinces like Ontario.

We'll have to continue to fight for every scrap of the quota we can here in British Columbia, precisely for companies such as those you mention who are producing new products. They're innovators, and they're coming on, but they'll have to find ways to work with brokers and existing operators who have quota if they can't get it this way. There are two ways: apply to the B.C. committee, or go to directly to Ottawa. If they apply to the B.C. committee, they will make a recommendation to Ottawa.

B. Penner: I would like to ask the minister just a few more details about this committee in B.C. that is established to review requests for more quota. I wonder if the minister could explain who is on that committee. That's the first I've heard about the committee. Is it ministry staff, industry representatives or some combination thereof?

Hon. D. Zirnhelt: The committee is chaired by John Allan, who is the Deputy Minister of Forests, and it has been chaired by the deputy minister regardless of who is in the position. On that committee are representatives of the major licensees, the independent remanufacturers and the brokers.

B. Penner: I'm just curious whether the term "brokers" is wide enough to include those in the wholesale lumber business. Are there representatives from that sector? My understanding is that many of the people in the wholesale lumber business felt that they were left out because they themselves weren't given specific quota. It's assigned, I guess, to the original producer of the lumber and not to the wholesaler, and I think there are probably some sound public policy reasons for that. I say that without full knowledge of all the details, but I guess there has to be a decision made at some point on who gets the quota and who doesn't. Are the wholesalers part of this group that considers requests for additional quota?

Hon. D. Zirnhelt: Yes, they are members of the committee.

[ Page 5074 ]

B. Penner: In the last couple of days, I've been able to speak to a number of people in the forest industry, and some of them come from the wholesale lumber sector. Rumours continue to persist that have to do with companies out there who are selling excess quota, effectively on a black market, to those companies that need the quota to make their shipments to the United States in an economical manner.

I know that when I spoke to the minister a couple of weeks ago, I believe -- I don't want to speak for him -- he gave the indication that the provincial government certainly is not encouraging a black market in quota. Before going further, I'd like to say I thank the minister for taking the time a couple of weeks ago to speak to me on his own time about a number of the questions I had.

I wonder if the minister and his staff have been able to do any kind of evaluation or if they have any reports about whether this black market in quota does exist. I've been hearing rumours to the effect that it does. If it does exist, is it becoming a problem or does it in fact somehow help those companies that need the quota to get it in a more timely fashion?

Hon. D. Zirnhelt: The B.C. committee is strictly advisory, and it has only data that is provided to it by companies voluntarily. It doesn't go out and initiate investigations. The federal government has that responsibility, and with respect to any suggestion that there's black market trading in quota, it's certainly discouraged. We discourage it. The committee discourages it, and I'm sure the federal government does. We just don't know what's going on in the marketplace and whether it would constitute a black market, but we're certainly going to watch as closely as we can. I would just remind you that the federal government has developed the quota system, and that we as a province merely give advice to them.

B. Penner: One of the other rumours passed on to me the other day was to the effect that British Columbia has been given a certain amount of quota by the federal government to essentially hand out as the provincial government sees fit. That's contrary to my understanding of the arrangement. I wonder if the minister can confirm or deny that rumour. I told the individual that I didn't think that was the case but that I would seek clarification on his behalf. Again, just to summarize, the question is whether the province of British Columbia has been given a certain amount of quota from the federal government to essentially hand out to forest companies as the province sees fit.

Hon. D. Zirnhelt: Yes, the British Columbia committee has asked for a bit of quota. We've asked for it so we would have a bit and could deal with particularly troubling situations. So far, we haven't heard any response from the federal government.

B. Penner: If I understand it correctly, the province has asked for some quota, but to this date, the federal government has not actually followed through on that request and supplied the province with any quota.

Hon. D. Zirnhelt: Yes, that's the case, although we don't expect them to. They wanted to hold the quota; they wanted to hold it back themselves to distribute as they see fit. That was the way they set it up, but we nevertheless made the request.

B. Penner: It has now been about one year, give or take, since the quota system was fully implemented. I'm wondering if the province is involved directly in the review that I understand is now taking place and in some of the retooling. I can understand that this committee that meets on a monthly basis would probably be having some input.

I'm wondering if the minister or his staff are getting directly involved, if they have any specific recommendations after one year of observing this quota system and if they're making any specific recommendations that they're at liberty to share with us about how the system could be improved. I totally acknowledge the minister's comments, and I agree with him that obviously the intent behind the push for the quota from the U.S. side was to limit our ability to export to the United States.

I can say that our party is opposed to the quota system, although we effectively have had a gun put to our heads by the Americans. We're a party that believes in free trade, and certainly we oppose actions by U.S. lumber companies to restrict our ability to compete in a fair and equitable manner. That said, I'm just wondering if the province has any particular views on how the quota has worked in the past year, acknowledging that it's probably something we have to live with for at least the next four years.

Hon. D. Zirnhelt: We are in regular contact on a daily or weekly basis with Ottawa, and we have made recommendations. During the first year of the quota system, the B.C. committee made several recommendations to the federal minister on administrative and transferability issues, on company-specific allocations or reallocations from the federal hardship pool and from turned-in quota, and on other issues.

There have been a number of recommendations. We have a number of letters to the federal government making recommendations, and we are happy to share those with the member if he wishes.

[9:15]

Just to go back to the issue of the reported black market in the quota. One specific example I was given -- I don't want to be too specific, I guess -- was of a wood manufacturer of a certain type in the Richmond area that took pieces of wood and essentially made pallets from them. Because the wood was then in pallet form, my understanding is that it was not caught by the quota requirement -- it was sufficiently value-added that it was no longer caught by the softwood lumber quota. For some reason, this individual was given a quota by the federal government -- perhaps their staff didn't look closely enough at the particular business's requirements. Effectively, this manufacturer in the lower mainland was given a gift or a bounty in the form of this quota which he is now attempting to sell to those people in need -- specifically, the company I referred to in Chilliwack.

This leads to the other issue, I guess. At what point -- maybe it's not clear -- is a quota required in order to ship lumber? And how refined does the lumber have to be, or how much value has to be added to the lumber before it's no longer caught by a quota and no longer just considered a softwood lumber export? I think this is an important point, and several people have asked me about it in light of the jobs and timber accord announcement, which is promising jobs based on more value-added work in our mills. The question is: "How will we secure a market for that lumber if we're 

[ Page 5075 ]

caught by the quota requirement?" I presume that what the province and the minister are hoping is that these mills will add sufficient value and do enough additional work with the lumber, making new products from it, that it is no longer just a raw material or a raw product, but actually a finished product that is not caught by the softwood lumber quota.

Hon. D. Zirnhelt: It's my understanding that there were mistakes made and there were people who should have. . . .

Interjection.

Hon. D. Zirnhelt: There were mistakes made. Companies that should have got quotas didn't, and some that did shouldn't have. So you're right, there are examples like that. They're trying to sort that out right now.

What happens with respect to what the threshold is? Basically, remanufactured goods can go into the United States free of the quota determination, but basic sawn timber can't. What happens is that every now and again there's a challenge both from across the line and from here to the U.S. officials who make these determinations, and they're continually evolving. When a product hits that they wish to stop, then there's a determination made. There is quite a bit of information on this, and we'd be happy to supply that to you. We don't have all the details here with us right now.

B. Penner: I'd like to thank the minister for that comment and also for sending over so quickly the documents we referred to in the last series of questions. Thank you very much for that assistance.

To move to a different topic, when my colleague from the riding of Okanagan East was asking some questions about theft of timber from our forests, he made mention of the many thousands of kilometres of logging roads that are essentially supervised by the Ministry of Forests. I realize that it's a vast network. I'm wondering if the minister or his ministry has any specific policy about the general public accessing Ministry of Forests-supervised roads.

I'll make my question more specific. An issue has arisen in Chilliwack around the sport known as paragliding. This sport, for everybody's information, is somewhat similar to hang gliding, except that instead of a fixed or a stable wing, what you have is essentially an inflatable or a packageable wing similar to a parachute only it's in the shape of a wing. You can put in your backpack, pull it out and launch yourself essentially like a kite off a slope.

There is a site above Bridal Falls in Chilliwack, near the Trans-Canada Highway, which became known among the paragliding community as the codeine launch site above Popkum Pass. For a number of years, it became increasingly popular in the paragliding community. In fact, it was written about in magazines catering to the paragliding industry in the United States and Japan, where I'm told that there are 100,000 people who now call themselves paragliders. They like to travel and check out new sites. For two years in a row, Chilliwack hosted an international paragliding competition. It drew several hundred participants to Chilliwack. The site they used was up above Bridal Falls and the Popkum Pass road, which was "maintained" by the Ministry of Forests. I say maintained in quotation marks, because the road was often in various states of disrepair.

I'm told by people in my community that members of the local paragliding club approached the local office of the Ministry of Forests, because they wanted to make some improvements to the launch site. But before spending the money to do that, they wanted to make sure that the Ministry of Forests wasn't going to effectively kick them off the area and prevent them from using it. Apparently, based on some form of understanding, about $4,000 was spent by the paraglider club in terms of improvements to the launch site and some improvements to the road itself.

After some bad weather last fall, my understanding is that the Ministry of Forests decided to close the road which accesses this launch site, effective early 1997. It's at about the 4,600-foot level, above Bridal Falls and the Popkum Pass logging road. This may be too specific a question for the minister to answer now, and I can appreciate that. I'm just wondering if the ministry has any specific policies about public use of access roads maintained by the ministry, and whether or not any other issues similar to this one, having to do with paragliding, have come up in the past.

Hon. D. Zirnhelt: Perhaps what's happened here, as near as we can tell, is there's something unsafe about the road or it's too costly to maintain. So the ministry, unfortunately, may have had to make a decision to close the road. But this is what's happening as budgets get tight. We can't maintain all these roads, and so some of them are closed. But I can assure you that they do try to look at the various uses that are there. The problem is that some of these uses. . . . While you indicated it contributed in some way to maintenance, it doesn't often happen that the people using Forest Service roads contribute to the maintenance. So it goes back on the ministry whose purpose is to maintain roads in part for recreation in the forest land, but mostly for access to the timber and for timber management purposes. So this is one of those things that is unfortunate.

More and more, we try to make a decision before the road is opened: does it access other resources, and can we maintain it being open for access to those other resources? I can assure you that it's the ministry's intention to try to be very judicious about any road closure, but again, there's only so much money to go around. We'd be happy to try to track that issue for you and get some kind of response.

With respect to a specific policy, I think it depends really on the purpose of the road and the condition it's in. If it's an old road, it may be more costly. That's why we're asking for new roads to be built to a certain standard. But if you want to know the actual policy, it's that all roads are open to the public under the Forest Practices Code, unless there is a risk to health, life or safety, in which case it's no longer open.

B. Penner: I imagine that the explanation from the local office concerned would probably be to do with health or safety. Just thinking off the top of my head, I do recall an incident a number of years ago where there was an accident along that road. I can confirm for the minister it is a fairly old road. I hiked up there many years ago as a child, and I believe that area was logged probably more than 30 years ago. So it's quite an old road. I believe it's been maintained all of this time, essentially as a fire access road for present-day purposes as well as for recreational purposes. It is one of the ways that hikers can access the Mount Cheam hiking trail, via a shorter route than driving all the way up the Chilliwack River valley.

I thank the minister for his comments, and I would appreciate any information his staff could give. I don't want to impose too great a burden on his staff, because I know they're busy, as well. So I will make some inquiries myself, perhaps at the local forest district office -- something I haven't had a chance to do yet, frankly. I just received some letters on this 

[ Page 5076 ]

issue in the last couple of days. If the minister's staff find out anything, I would certainly be appreciative of receiving it. I'll see if I can check at the local district office in Chilliwack and see just what exactly transpired there. At this point I'll listen to the minister's comments, and then I think one of my colleagues will take over.

Hon. D. Zirnhelt: We will make the inquiry on the particular incident because we have staff who can do that quite easily. We'll try to bring an answer tomorrow. I'll pass it on to you directly or through this process.

I did want to respond to the member for Okanagan East. There were some questions about enforcement. Just so you know, the enforcement branch will publish its second report on enforcement on July 15. This report will have details on trespass and theft offences under section 96(1) of the Forest Practices Code. So there is more meat coming. I don't have that report. I haven't received it, but we will have it, and it will be public.

K. Krueger: Sorry to jump around a little on some of these issues. Earlier, our critic was discussing with the minister the issue of the jobs and timber accord and silviculture employees who are presently unemployed. I do have quite a few of those in my constituency, as well, many of whom have been waiting for contracts for quite some time. I wonder if the ministry has experienced any difficulty with quality of workmanship from the existing silviculture workforce, or if there would be any reason, with regard to quality control, that the ministry would have concerns about the workforce that's presently there.

Hon. D. Zirnhelt: We're unaware of a general concern with workmanship. On a contract-specific basis there may be some contractor that's not up to snuff on it, but generally it's not a problem.

K. Krueger: The number of jobs that the people in the industry in my constituency give me is that there are 18,000 trained employees in the silviculture industry in B.C. As I say, a fair number of those in my constituency are unemployed. I wonder if the minister could just illuminate me and some of my colleagues about the reasons that the actual contracts have been so slow in coming. Some of them have been waiting for many months. They say that their employees' EI entitlement has run out or is running out. It just seems to be a kind of feast-or-famine situation.

Certainly there was the whole discussion about whether or not there was a surplus in FRBC, and now the target numbers have been released for the jobs and timber accord. I know that a lot of people are breathlessly hoping that they will be included in the work that's allowed. Could we just have some general outline of what the process has been thus far for independent silviculture contractors who may not be involved with the IWA or any unions, and what their prospects are in the current scheme?

[9:30]

As for the hope for people you say are displaced, there are a number of people in the silviculture industry who don't have work, and part of the reason may well be that the FRDA funds have been cut back in the last few years. There's no federal-provincial agreement, and it wound up two years ago. That may be where some of the displacement has come from.

With respect to whether or not there's any logjam, I'm not aware of any. I would be surprised if Forest Renewal has not now begun to sign up all those contracts with respect to anything in the investment plan that was announced last week. You refer to 18,000 in British Columbia. Forest Renewal sponsored the study. It is in draft form, and we don't have the final report. So we haven't completed an analysis of it.

We asked the silviculture industry to tell us a bit about who they are, and as you know, displaced forest workers include in this definition displaced silviculture workers. Whether you're union or non-union, if you're displaced as a forest worker, you qualify for FRBC-funded projects. That's the model we intend to use. We are moving, though, toward more multi-year contracts to get away from the very problems that you're citing here.

K. Krueger: My thanks to the minister. Another issue that the minister and I had some interaction over in the last session -- he helped me on a specific case, and I appreciated it very much -- was with regard to salvage log operators. Throughout my constituency, there seem to be areas where wind has blown down timber, and people tell me that it's either drying and becoming a fire hazard, or it's in danger of becoming a home for the beginnings of a bug infestation. There are people who have made a good living salvage logging in the past.

Under the requirements of the Forest Practices Code, they've told me that where in the past they would have a chap in a Forestry pickup drive up and look at what they wanted to do and write them a permit on the spot, presently the requirements have been so rigorous that they have essentially been locked out of the woods, from their point of view.

I did work through a real-life example of that, where for months. . . . As I said, with the help of the minister and one of his ministerial assistants, I was essentially just trying to clear the way for them to go and work. They were on welfare and didn't want to be. Eventually, one operator took matters into his hands and proceeded to pull out some salvage logs without a permit, and he was charged. The happy ending was that people did end up working. This is in the Vavenby area.

[G. Brewin in the chair.]

My understanding at the time was that there was a kind of pilot project underway in some regions of the province -- but not really in our region -- with regard to salvage logging and, perhaps, including more of it under the small-business plan. I wonder if the minister could give us an update on the outcome of those pilot projects, and the future for salvage loggers.

Hon. D. Zirnhelt: There is a report just out. We did undertake pilot projects in eight districts. You're right; with 

[ Page 5077 ]

the advent of the code, in particular, forest managers had to sign off on the extraction processes -- harvesting -- so that there was no damage, say, to understorey, and there was a way that if somebody messed up they could be brought to task for that. That was the whole purpose of the code.

The problem was that they were to be treated the same way as any other licensee, even though they don't have the full spectrum of responsibilities. So what we are doing is that we have in the Forest Amendment Act now tabled, Bill 47, a provision for simplified preharvest silviculture prescription. In other words, this is a much more simplified process to develop a plan for timber salvage. There's probably more work to be done.

We expect that the report of those eight pilot projects will be available for circulation in the next couple of weeks, and we'll have comments from anybody who wishes to comment on it. Since we were debating this -- a year goes by very quickly -- there have been a lot of salvagers working out there. We've got a lot of information now, and I am personally very interested in this. I think it's a tremendous job opportunity for people -- and they provide a wonderful opportunity -- in taking fibre that would otherwise be wasted. So we're anxious to hear the experience in any region. But I think this legislation is good news for the log salvagers.

K. Krueger: That certainly sounds good to me. I apologize for jumping around between issues. I have various concerns that individuals in my constituency have raised.

I recently toured a value-added plant that's really got rolling. It's called Paul Creek Slicing, and it takes white pine cants and slices them down 30 slices to the inch and ships the veneer -- after gluing it together -- to Quebec and other places, to be applied to furniture. It's a tremendous operation -- just booming -- and they are hoping to put in another slicer. They employ a lot of single moms. They have a really happy workforce, and things seem to be going great guns.

One of their problems is that the material they specialize in isn't readily available throughout B.C. I understand that quite a bit of it is cut in the Kootenays and gets shipped to Idaho. Apparently, there's a fairly long-term relationship with customers in Idaho, and a person can understand why the mills would be anxious to preserve that. But has there been discussion within the ministry about a right of first refusal to B.C. value-added firms before products such as those white pine cants get shipped out of province?

Hon. D. Zirnhelt: We're aware that many good manufacturing plants can't get sufficient supply. So the manufacturing diversification initiative -- the wood fibre transfer program is another name for it -- in the jobs and timber accord will see us move dramatically to increase, by about 70 percent, the raw material -- either cants or raw log equivalents -- from the major breakdown plants to the remanufacturers.

The other thing is that through the value-added program and the small business program, to some extent we're trying to target existing operators. So instead of bringing in new people, they will get more supply to those who need it. Where we're aware of this kind of problem -- and it would surprise me if the district manager wasn't aware -- they would then try to make the appropriate size of sales available, targeting the existing industry, locally. We do want to stop exports; we do want to round out employment in existing operations and extend them where we can.

With respect to the situation in the Kootenays where the pine would be shipped to Idaho, hopefully we can get around some of that. But as you rightly point out, in long-term supply agreements -- particularly if they are themselves a manufactured product -- we can't control the export of a partially manufactured product like that. It does show a weakness. We can't always get the right product to the right place.

But I would think that we would look at industry as a whole. In the Kamloops region they will now be required to supply some kind of material. It wouldn't surprise me that cants or partially broken-down material might be available -- flitches or whatever -- to this particular operation, and that would qualify as some of the sawn timber that we've asked to be made available: the 16 percent of sawn lumber that we want the majors to make available to plants like that in the interior.

K. Krueger: Would there then be a thrust in the future toward ensuring that value-added manufacturers in British Columbia have a right of first refusal before fibre that hasn't been broken down is shipped across our borders?

Hon. D. Zirnhelt: The member may be aware that under the Free Trade Agreement we don't control partially sawn wood cants, and we are unable to put our own export controls on that. About 1 percent of the logs do get exported from B.C., but they go through a very rigorous test by both producers and consumers to test whether or not there's a local market, and if there is a local market we won't give them an export permit. But the partially sawn material is different. What's happening now is that we expect the 16 percent in the interior to pick up a lot of that and make it available.

K. Krueger: Hopping once again to another topic, this one involves a custom that apparently is fairly recent -- at least, it only came to my attention last fall in my constituency. It is known as cutting water bars in existing roads in the bush country. It has been particularly annoying to some volunteer people who have, over the years, installed and maintained radio communication towers, and they find that a number of the roads they use to service these being cut by water bars.

I'm not sure what the purpose is -- whether they are the beginning process of decommissioning roads or what sort of public consultation is common before they're put in. I gather they lead to water running down those bars and making very deep cuts in the roads so that eventually people can't get their vehicles through them. I wonder if the minister could explain to us what's going on there.

Hon. D. Zirnhelt: I am familiar with water bars, and you're right: it's to divert the water off the road so it doesn't accumulate velocity as it goes down and cut deeper and deeper. Sometimes the water bars can be filled with stone so that you can still get vehicles over them but they can carry the water through. My officials tell me that the radio communication people should visit the district manager and see what could be done. I'm sure they will be accommodating, if there's any way possible. But we are concerned about erosion, and the water bars are engineered to try to stop that cumulative velocity. I know it's a problem, but I have also seen it in places where they can be partially filled with stone -- bigger stone on the bottom and smaller stone on the top -- and actually get a bridge effect but still allow water drainage.

K. Krueger: I take it that the bar is designed to control the erosion and essentially make it the road in certain places, rather than allow the water to find its own course.

[ Page 5078 ]

Hon. D. Zirnhelt: That's correct -- to allow it to cross the road at a place where it won't erode once it's going down, but also to stop it from picking up more and more material as it goes down, and then gouging, with terrific velocity.

K. Krueger: Another issue that I'd like the minister to update us on, if he would, is the woodlot program. I had some interaction with the minister during the year, because constituents were concerned about changes in the woodlot program, where existing woodlot operators were allowed to expand the size of their woodlots. I wonder if the minister could just update us on the present philosophy of the woodlot program. What need is it intended to fill?

[9:45]

There are presently two initiatives underway. One is them is to top up the interior woodlots, because they were the same size as those on the coast, and there were inequities as to the volumes coming off. So a couple of years ago, the size of the woodlots in the interior went from 400 hectares to 600. As licences come up for renewal, they're designed for expansion. Of course, the idea was to create significant employment for the operators. That's why the size came up, because there was a tremendous variation from the coast in terms of the volume. You could have 3,000 or more cubic metres at the coast and, say, 1,000 in the interior. So, you know, it was inequitable. So it partially redresses the inequities.

There is the overall goal of doubling the woodlot program -- doubling the numbers of the woodlot program. We're making progress towards that, although I don't think we'll reach the goal that was originally intended. Some of the goals of the woodlot program -- I've mentioned increasing the amount of private land under sustained management -- are: to improve the productivity of small parcels of Crown forest land, to provide the opportunity for private citizens to participate directly in small-scale forest management operations, to promote local employment opportunities and to promote excellence in forest resource management.

K. Krueger: When the minister referred to the goal of doubling the program, was that doubling the number of actual woodlots, the amount of land involved in them or the number of operators? I just want to clarify that.

Hon. D. Zirnhelt: It was in October '94 that Minister Petter announced the doubling of the number of woodlot licences from about 500 to 1,000 by mid-'97, which is about now. But that goal was reviewed and found to be unattainable. So the goal was revised to advertise approximately 350 new woodlot licence opportunities in the three-year period ending December '97. To date, there have been 159 woodlot licences advertised. We expect to achieve the goal of advertising about 350 woodlot licences by December '97. So the goal was revised.

In addition, there would be the top-up program. So doubling the actual number of woodlot licences was the original goal, revised somewhat. I think we'll continue to work towards that. It's a very popular program, although it has a lot of competition and gets neighbours fighting against neighbours sometimes. We're always looking at ways of improving.

K. Krueger: In the top-up program, when the maximum size was expanded, how many woodlots did the expansion. . . ?

Hon. D. Zirnhelt: We don't have the number here, but it's my understanding that most woodlots, when they come up for renewal, have been taking advantage of this. But I can get the numbers for you and will be happy to supply that to you.

K. Krueger: I sense some restlessness here. I just have one more question.

Hon. J. MacPhail: No, no -- keep it going.

K. Krueger: Shall we?

Hon. J. MacPhail: Yeah, I love it. I missed a few hours. I'd like to keep going.

K. Krueger: In the area of the woodlot program, the people that I've been talking to have the idea that the ministry's intent in creating the woodlot program. . . . I heard the goals that the minister enunciated. This one wasn't mentioned, but I wonder if there's any foundation to it, that the intent was to support families, ranchers, people who already make their living off the land and allow them, as the minister said, to contribute some of their own property into the ongoing base of timberland for B.C. but also to provide a constant source of income. That would support those types of operations so that each year, presumably, they would supplement their ranch income. Was that one of the goals, as well?

Hon. D. Zirnhelt: It certainly was the goal of the original farm woodlot program. Then it slightly changed. It offered non-farm people, but landowners who had land that could be forest-farmed back into production. . . . If you look at the goals of the woodlot program, the goal that you're talking about is covered in a couple of ways: (1) to increase the amount of private forest land under sustained yield and to improve the productivity of that land; and (2) to offer opportunities for private citizens to participate directly in small-scale forest management operations. But I don't think there's any criterion that says you have to be a rancher or a farmer. It does allude simply to the fact that. . .it points towards the private managed forest land which you're prepared to add to the program.

K. Krueger: I did say one question, but this expands on that a little. One of the complaints of these people I talk to is that some people are securing woodlot licences and then not actually harvesting on an annual basis -- rather, waiting till the market is particularly good and then retaining the services of a logging contractor who will come in and take five years' cut all at once. Is that a violation of the woodlot program as the government intends it to be used?

Hon. D. Zirnhelt: No, it's not a contravention of the regulation. The cut control is a five-year cut control. In a sense, it allows them to play local markets. It's sort of better for the individual if they can play the market a little bit.

But obviously, somebody can't harvest once every five years and do nothing for the other four years. So it has kind of got away from the original intent. I don't think we imagined that people would wait five years and take all their cut at once. But it is not against the regulation.

[ Page 5079 ]

The other thing we're finding is that on 1,000 cubic metres a year or so, it's not economical to set up an operation every year. So some people wait and then do several years at once. It's one of those things that you can't overregulate, and we didn't overregulate it. But for the most part, I think people create it on an annual basis. They play the markets a little bit, which is good for the market, but it's also good for the individual to maximize profits. But because they aren't attached to manufacturing facilities, there is no dependency that's been created. They kind of play a bit on the margins.

T. Nebbeling: I would like to come back to the advocate's role. Now that I've had my colleagues asking some questions, bringing back some level of coolness in the Legislature, I'm sure we can deal with this issue without too much emotion. It's unfortunate, when we rise and ask questions, that these questions often have to be repeated and as a matter of fact have to be posted to get an answer. That's unfortunate, because we could spend a lot less time in the Legislature going over these estimates if the answers were just given, as the minister has the answers, no doubt.

Earlier we talked a bit about the advocate's role, although we didn't really go into a job definition for the advocate, because the minister didn't feel that there is a job definition at this stage. What is there today is that the jobs advocate will play a role in brokering and arranging agreements with the forest companies on how much and how many jobs they will produce. In return for that, I suppose, they will be given some funding when funding is needed, or they will be given some additional allowable cut if they happen to be in an area where some of the new, innovative programs that the government introduced last year would be viable as an enticer for a company to consider employing more.

In the past, we had another agency, the forest jobs commissioner. Maybe, first of all, before I go much further with the advocate role, the minister can give me a bit of background on what the forest jobs commissioner's role has been. When we started, I thought it was a recent type of agency that had been created, but since we started the estimates I did find out that indeed this jobs commissioner has been working for a fair amount of time on providing certain services to forest workers on behalf of the government. I am not aware at this point -- and that's why my question is going to go in that direction. . . . I'm going in that direction to get a bit of a definition of what the forest jobs commissioner's role is, what it has been since the agency was created and also how the forest jobs commissioner will fit in with the whole job situation in the jobs and timber accord.

The reason I'm asking that is that there must have been a history of the forest jobs commissioner. I was under the impression that this particular position -- or positions -- was going to be part of the new jobs and timber accord, accommodating the organizations and the elements of the forest industry that the jobs commissioner had been working with. In particular, the silviculture industry seems to have had a fairly good rapport with the jobs commissioner.

The role of the jobs commissioner now is quite fake to me, and my first question of many in this particular area is: how does the jobs advocate work together with the forest jobs commissioner? Is there a chance that the forest jobs commissioner's job disappears? Maybe the first question first -- how these two different agencies interact with each other, obviously pursuing opportunities for displaced forest workers, be it through study or through other activities.

Hon. D. Zirnhelt: The forest jobs commissioner, in some parts of the province -- in the case of the Cariboo -- was there to deal with jobs that would disappear, and happily we can report that there weren't very many jobs that disappeared. He got involved in other things, was looking at transition in the industry, and has been involved in forest worker transition programs, generally being a resource to facilitate some of the change that's going on.

[10:00]

With respect to the relationship between the forest jobs commissioner and the timber jobs advocate, we will, as part of implementation, look at what role there might be for the resource jobs commissioners or forest jobs commissioners -- there may well be a role for them. They would certainly be part of the general government team. But the timber jobs advocate will not replace the work there. We're talking about a provincial role, and the resource jobs commissioners are in the regions, so there will have to be a regional expression of the jobs and timber accord. It'll have to be regionalized and localized and made relevant to various different firms and licensees who operate across the province and across the regions.

I would expect that the forest jobs commissioner will be one of the people who we're talking to as we come up with the implementation plan, and just how they fit in will be defined. But right now let me just leave you with this thought: the timber jobs advocate is responsible for the overall plan -- there are some new elements here -- and the resource jobs commissioners have the responsibility to carry on and continue dealing with the implications and effects of the implementation of the land use plans in particular.

T. Nebbeling: When the whole discussion on the jobs and timber accord arose last year, I was always under the impression that consideration was given by the minister -- or by other parties that were involved -- to creating a type of blueprint. And as we know now, because of what has been said in estimates, that blueprint is still pretty vague.

I always had the idea that the forest jobs commissioner was going to play a much larger role in this whole timber accord. That is obviously not happening. I'm not saying that his role will be diminished, but it seems, at least on the coast -- and I don't have a good feel for what happens in the interior yet, but I'm sure we will get it. . . . I thought that rather than seeing a new works agency created under the auspices of Forest Renewal B.C., this forest jobs organization was going to step in to fulfil a role that may well now become an agency that will be driven and managed by the IWA.

Again -- I have stated this before -- I have no problem with the IWA. But I do have a problem with the IWA becoming the manager of an incredible amount of money annually -- hundreds of millions of dollars -- to further the cause of the forest workers, first of all, but certainly because of the statements made by the president of the IWA, Mr. Haggard, on a number of occasions. He wants control of that fund of the FRBC for the land-based management program under the control of the IWA come hell or high water. The people who will qualify for this funding, the projects that will qualify for this funding, the companies that will qualify for this funding -- they will have to be union jobs.

There is a real, fundamental problem with making that a mandated situation. I do not believe that FRBC ever, ever was 

[ Page 5080 ]

earmarked for union members only. I do not believe that the mandate of FRBC is such that they can actually allow a non-government body -- which is what the union is; it can be a partner with government, but it's still a non-government body. . . . I do not believe that the mandate of FRBC allows them to hand over the authority and the power that goes with having these funds to only a portion of the people or the organizations or the companies that can apply to be funded by the FRBC. Because of its restriction on the annual amount that will be disbursed for the land-based management plan. . . .

So I really am disappointed to see that the forest jobs commissioner -- who, I believe, would have been in an excellent position to actually take on that management, because with the experience of the last couple of years that his agency has worked, that this jobs commissioner has worked, the commissioner would at least have the background; he would have a good sense of what's happening and what could be done with that money. . . . To see that not happen, or potentially not happen, is very disappointing. Can the minister tell me at this point why he has indicated on a number of occasions that the IWA role, through the work agency, is the preferred formula to be used to disburse the money -- why that is the case and why an independent but working-for-the-forests type of commissioner could not have fulfilled that role?

Hon. D. Zirnhelt: Well, I just want to clear the record. There is no transfer of large amounts of money to the administration of the IWA. I can't remember the member's exact. . .that they should become the manager of large amounts of money. That is not what is intended here.

FRBC has a responsibility to get jobs to displaced forest workers. Displaced forest workers can be both union and non-union. As recently as last Friday, the Deputy Minister of Forests had discussions with the forest jobs commissioner on Vancouver Island about how there can be a dovetailing between the job of the timber jobs advocate and that of the forest jobs commissioner.

But this is a little more complicated, as well. Under the accord, we have to get a massive amount of wood to the right people. We think it needs to be facilitated. I mentioned to you that industry themselves have suggested that there should be some regional coordinators that would facilitate the value-added side to the transfer of wood. So there's another party that has to play a part in implementing the accord.

What may well happen is that when we finalize discussions around the shape of the forest worker agency, the jobs of the resource jobs and forest jobs commissioners may well be folded into the agency. It's quite conceivable that there would be a role collapsing the forest agency in the Vancouver and coast regions into the forest jobs office. To an extent, he is beginning to play that function of matching up jobs, although he certainly hasn't been. . . . The role is not as well developed as it might be. We expect that there have to be the jobs created first, which he can then fill. If there's been a weakness, it's been that industry and government together haven't been able to create these extra jobs under FRBC that are full-time that truly displaced forest workers can be put into.

T. Nebbeling: I'm not going to argue with the minister right now if the job agency that has been proposed is going to be more effective or less effective than the forest jobs commissioner. I do believe, however, that the forest jobs commissioner at least -- although it is a government agency -- has a sense of neutrality and is ready to stand up and try to find opportunities for everybody.

When the issue of this whole debate on who is going to manage the forest worker, who's going to somehow channel the funds that come from FRBC for land management programs, who's going to be controlling that. . . . And the minister says: "Well, not much of that money will be under the control of the job agency; that will be part of the FRBC structure then." I'm surprised, because I thought that the $1.5 billion for the next five years has been set aside, that that money was exclusively going to go towards land management planning or planned types of projects. The minister himself stated that he was seriously considering a hiring formula for the agency, comparable to the Island Highway construction association. It has technically become the employer for all workers, and it negotiates the generous contracts.

That's the reporting in the paper on the role of the IWA when it comes to the disbursement of the $300 million a year. And I truly do not think that philosophically it is right. I've said before to the minister that I do not believe the mandate of FRBC allows that kind of a transaction to happen. So maybe the minister foresees another amendment to the act to accommodate this, but it really is a serious concern of mine and, I know, of my colleagues.

The minister took quite a light attitude on the issue of silviculture workers being displaced. Like one of my colleagues said earlier on, the industry itself has been very clear that the employment number for silviculture workers is 18,000 people involved on an annual basis. We know that some of them are part-time and that some of them are full-time. Since last week, the Premier is already talking about 12,000 silviculture workers. It's really a concern to me, because it's almost as if in the mind of the Premier 6,000 people have already been eliminated from having a chance to work in the forest in an industry they have worked in before.

When the IWA president, Dave Haggard, came to the association's annual conference here in Victoria, on February 18, if I'm not mistaken, he addressed them and made it very clear: "If you want a piece of the FRBC pie, the only way is by organizing yourself and unionizing yourself. As long as I'm involved" -- that is Mr. Haggard speaking, not me -- "I will fight for every cent that comes out of FRBC to go to a union job." So there is a type of mind-set in the people who may well become the managers of that fund. The minister said earlier on: "Well, that's fine. The silviculture worker that had a job in the past can apply for this work -- no problem. If there are jobs available, he or she will get that job."

First of all, I hope the minister will now agree that if the IWA runs this program, they will insist on the IWA label and that this worker becomes an IWA member. But what is worse is that this can be a person who has been working in the silviculture industry for years. I haven't seen anywhere in the discussions the president of the IWA has had with other parties where he indicated that he would allow these silviculture workers to jump the queue and go to the top of the line. As a matter of fact, what I have heard is that if you're a new member, you have no seniority, so you're really at the bottom of the ladder. Considering that there are only so many jobs available in that area, the chance that these 18,000 workers -- even if they were unionized or organized -- would get a job is practically nil. They're so far down the ladder of seniority that by the time that $300 million is spent on advanced silviculture activities and watershed restoration projects, there is no way that these people are going to have jobs. So it is not fair to say that under this scenario the silviculture workers of today are going to have an opportunity to become silviculturists with or without an IWA label tomorrow. For that reason, I had hoped that the government, which is trying to be fair -- and I'm sure the minister would like to be fair as well to all workers. . . .

[ Page 5081 ]

[10:15]

Hon. D. Zirnhelt: I hardly understood a word you said.

T. Nebbeling: That's why I asked for some water in the House. Debate's going on all over the place. It obviously leads to the minister not even being able to understand what is being said here. I've spoken in the same tone of voice as I did earlier on. I've not reduced my voice; I have not increased the level of my voice. The minister had no problem understanding me before. I'll happily go over the whole scenario once again, if that would give him more comfort, so that he can indeed answer my question.

Hon. D. Zirnhelt: I can hear; I cannot understand. If you'd ask a simple, direct, short question, I'd answer it. You've been speaking for seven or eight minutes; it's so convoluted. It seemed to me to be like déj� vu. We just went through this last week. I really don't know what your question is. Please ask a short question, and I'll try to give you an answer.

T. Nebbeling: I'm surprised to hear the minister saying this is like déj� vu. We never talked about silviculture workers last week; we never talked about the IWA-only signs on FRBC jobs. We never talked about the forest jobs commissioner; we never talked about Mr. Haggard. So I don't understand. Déj� vu means that it's been said before and that I see it again. So my fundamental problem is that the minister has a tool. . . .

Interjection.

T. Nebbeling: Is the minister ready?

My question was previously asked, and I will not repeat all the elements of why I think the need for a new Island Highway construction association type of formula to provide job security to the people that are looking for -- well, for the displaced forest workers. . . . I don't think it is necessary to go over the whole argument, but I would like the minister to answer why the forest jobs commissioner has not been the agency or the position that actually could, in a much more neutral way. . .a much more for-all-workers type of agency and operation, be a choice or formula to make sure that money from FRBC that goes into the land management programs will indeed be handed out and approaches will be funded on the basis of fairness for all forest workers. I do not believe that that fairness is there, because the previous statement I made. . . . I think the minister has a good idea where I'm going.

Hon. D. Zirnhelt: Well, the forest jobs commissioner in the Island area has a responsibility to manage the forest worker transition program. That is what his job has evolved into. The member asked me a bit about that last week. I explained what his role was. We also talked about whether silviculture workers would qualify. They do; they are displaced forest workers.

You said the FRBC does not have the mandate to spend money on these year-round jobs. I remind you that Bill 12, the forest worker agency legislation, gave a mandate to a forest worker agency -- yet to be defined -- to be defined through consultations. We've had those consultations, and we've tried to refine it. We've got to the point where there's got to be a way of assessing people -- whether they're qualified, whether they have the job, whether they need training, whether they're local or not. We've given this job to the forest worker agency. It's in law; the law is the mandate for the forest worker agency to do that job.

T. Nebbeling: I participated in the debate on the creation of that job agency. Certainly I'm very much under the impression -- I was then, and now -- that this job agency is going to be participating in controlling jobs for displaced forest workers. But that meant all forest workers.

Although at the time there was talk about it -- through the IWA, which would play a role in this particular approach -- I do not recall at any time that it would be a requirement for a worker, in order to participate in any project that is funded through FRBC, that union status had to be part of that forest worker's job curriculum.

That's where we're going. That's where we're going because of what the president of the IWA is saying. That's where we're going because of what the minister himself announced in the press in May 1997. We are going to use this controversial highway model, an ad hoc agency called the Island Highway construction association. These are not things that I'm coming up with.

I don't know if the mandate of Forest Renewal B.C. indeed allows the government to hand over the control and authority of these funds to an agency that is not a government agency. Like I said before, the IWA may be a partner of the government, but it is not a government agency. I always have been under the impression when it comes to government issues that the government always has the right to control whatever issue is being discussed.

I'm not going to spend much time and explain, but when I was involved in the Sea to Sky corridor on the Squamish forest committee, there was a project that we were trying to create. It was a local resource use plan; it was the first local resource use plan. At that time, rather than the government committing to the whole plan, it became a gentlemen's agreement. Why? Because the government could not authorize or delegate its powers to other parties. This was a municipality, and it couldn't do it. So I cannot see how the government can authorize and delegate here its funding to a non-government body -- and the powers that go with it. I thought the government couldn't legally delegate its powers to other parties; that is part of being a government. Is the minister aware that this may be the rule? Or if I'm totally wrong, maybe the minister can explain what the minister can do under Bill 12, which determined that an agency would be created.

[ Page 5082 ]

Hon. D. Zirnhelt: The exact role of the agency has not been defined yet. The law authorizes it to be an agency for assisting in the hiring and placement of individuals, of displaced forest workers. That's what the bill provided for last year. The dollars would flow from FRBC for the land-based programs, we expect, to companies through umbrella agreements.

There may be an employer of convenience, as there is in the case of the Island Highway project. The Island Highway provides or pays the salaries, pays the benefits and so on, and provides the workers to the contractor. It has a number of objectives like local employment, managing an apprenticeship program and dealing with training for people who otherwise might not get jobs because they aren't trained for that job.

So it's not a matter of passing control out of the hands of government, it's a matter of the funds flowing from FRBC to the contractors, whoever they are. It might be the forest worker agency; it's possible that they might be the employer. But it's not passing the control of funds to the IWA. We don't anticipate that they will be the employer. We expect companies to be employers. They've agreed to undertake to create these jobs, but they may agree that there are various ways of becoming collective employers instead of individual employers.

There are any number of ways it can go. All that's been decided through the jobs and timber accord is that the companies will go to the table accepting that as a model on the coast and the Island. In the interior, they have agreed that it won't be that model; they want another model for the agency.

I think you read too much into what the president of the IWA says. I assure you that both union and non-union displaced forest workers have an opportunity to qualify for FRBC work. We do expect that work to be covered by some kind of collective agreement so that we have agreement on safety, on wage rates and on a number of other matters. But those have to be negotiated.

T. Nebbeling: I feel revitalized, so I'm pretty happy that we can still go on and look at this issue, because I think it is important. On the one hand, the minister is saying: "We haven't decided yet what we're going to do. It is still up in the air; it is an option." But then he turns around: "Well, on the coast we're going to use the IWA." Obviously there was a decision made there.

Before I come back to the forest jobs commissioner, then, can the minister explain to me, when it comes to the interior and the northwest, or the non-coastal areas, how the funds will flow to these areas? If indeed, because of the jobs and timber accord, there is a need and a vehicle to channel that money, who will be negotiating that? Will the Ministry of Forests be negotiating with interior companies, or will it be other bodies?

[10:30]

T. Nebbeling: I believe the funds that will flow to the North Island will also be through contracts for five-year periods, so I don't see that there's anything different there, unless the minister wants to correct me. But I'm looking for the body that will be used to channel that money through and that will negotiate with the companies in the interior, in the northwest or wherever else they are -- the Kootenays, the Boundary-Kootenay. What body will negotiate on behalf of FRBC, not only on how this money is channelled but also on how this money is going to be monitored -- we talked earlier about the need for monitoring -- so that we will indeed see on a quite regular basis how the funding from FRBC is being used in the most effective way? There must be a body somewhere that will be responsible for that and will negotiate it.

If FRBC directly, as a Crown corporation, is going to do that, contrary to what is happening on the coast -- where, as I already stated earlier, we have IWA being the agent -- who will do it in these areas? We know that the money will go there on the same terms, with the five-year planning and so on, but somewhere there must be an agency involved to set the terms. The IWA can use the union label as a demand for companies to get the funding, but considering that in the interior and the northwest there are a lot of non-union operators, who will negotiate with these non-union operators?

Hon. D. Zirnhelt: Nowhere is the IWA the agent, not at the coast. . . . I want to make that clear. I didn't say the IWA was the agent. FRBC will do its own negotiations with companies as to what the umbrella agreements will be. The umbrella agreements will fund jobs, and the placement of people in the jobs will be done through the forest worker agency.

All we can say is that what has been decided to this point is that the employees, through the IWA, and the companies, through whatever bargaining agency they have, will look at the Island Highway model as the model to start from, adapting it to their own needs through negotiation. In the interior, the companies have not agreed to that. In fact, they've agreed -- and it's stated up front -- that they do not want the Island Highway model and that they have to have some other model that respects the nature of their industry in the interior. We expect that there will be negotiations between the CEOs of the companies. We expect it to be part of the negotiations as to how we might fit displaced forest workers into the jobs that are created through this umbrella funding.

T. Nebbeling: When negotiations take place, there have to be at least two parties. The minister said that it is kind of settled on the Island, and that in the interior, the individual companies have made it very clear that they do not want the Island Highway kind of formula. Ultimately, the union -- let's put it that way -- will look for the ultimate use of the FRBC money. Even if it goes to the interior, the union is obviously going to try to see how it can negotiate itself into the interior operators as well -- the operators who are applying for FRBC money.

Once again, if indeed FRBC money will go to land management programs for displaced forest workers with that stamp of being organized on it, then it is very important to name who the CEOs of the companies in the interior will face at the time an arrangement is made. How can the government guarantee that displaced forest workers will indeed have firsthand control or firsthand rights to the jobs that will be created there? Again, the minister has stated who will negotiate on behalf of the industry in the interior, but he hasn't given me the other side of the negotiating table, which is just as important.

Hon. D. Zirnhelt: I agree. There has to be somebody on the other side of the table, and in the interior, it would be the IWA. They will negotiate on behalf of all forest workers.

[ Page 5083 ]

T. Nebbeling: So the minister is saying that the IWA will negotiate the flow of money from FRBC to the industry in the interior?

Interjection.

T. Nebbeling: I thought he just said that it would be the IWA that will negotiate with the CEOs in the interior. My question is: who will be sitting opposite the CEOs of these interior companies that will have to negotiate with another body as to how that money is going to come from FRBC to the companies, with the terms and conditions that most likely are synonymous with or identical to the ones that are on the coast? Well, on the coast we know that it is the IWA that is doing that work. The minister just said it will be the IWA. Maybe he misspoke. But they were your words, not mine, Mr. Minister.

Hon. D. Zirnhelt: There does seem to be a communication problem here. I will repeat. When you asked who will be dealing with the flow of funds, I said it will go from FRBC to companies or their representatives. That's clear -- absolutely crystal-clear. Then you asked: "Well, what's the form of the worker agency, and who's going to deal with the collective agreements?" I answered that we expect there to be negotiations between the companies on the form of the agency and how we will deal with the placement -- not on the flow of dollars, not on how much goes into each area.

We expect industry to negotiate with FRBC on multi-year contracts. Earlier in the debate we talked about the new land-based model and what it was. It was setting up so that we don't go through government agencies, like the Ministry of Forests, the Ministry of Environment or the Ministry of Skills and Training, but that we go directly to umbrella agreements, long-term agreements. That's what places the funds there.

There may be some nuances negotiated as the companies themselves organize to create these jobs. They may form some kind of a holding company; they may ask the forest worker agency to be the agency of convenience. But that hasn't been settled. We've asked that the form. . . . So that we deal with this problem of how you get displaced forest workers and how companies can help round out the employment for people that may already work for them or for people who work for them who may be displaced. . . . How do you do it? You create as many long-term jobs. There's a lot of work to be done on how this rolls out, and we've got a process to arrive at how that's going to happen.

T. Nebbeling: I'm very happy that the minister just said that we have a process to arrive at how that will happen -- these objectives that the minister just stated. I'm asking the minister, then, to share that process with me. Who are the parties that will be part of that process? And maybe the last question on this one: is the union going to be involved in the negotiations with the interior organizations, or are they excluded from it?

Hon. D. Zirnhelt: I did answer that. I said yes, the IWA will be negotiating with the companies the form of the model for the forest worker employment agency. It's clear; it can't be any clearer than that.

T. Nebbeling: This is the first time that I have confirmed from the minister that the IWA will be negotiating a structure, a body, an agency or whatever you want to call it that will be used in the long-term planning of the channelling of funds to the interior. Well, the minister is shaking his head again. Do I misunderstand it again? Is the IWA involved in creating this route of how the money comes to the interior or not?

Hon. D. Zirnhelt: Yes, you are misunderstanding. I said that the form of transferring dollars under the accord will be umbrella agreements between Forest Renewal British Columbia and the companies. But they may choose some other form. They may choose to associate with one another in some way. But the terms and conditions, the wage rates, the working conditions, the priorities of placement, etc., have to be negotiated. We also said how that will be done. But we have said that the priority hiring system provides for the hiring of local displaced forest workers first and ensures increased employment for native people in forest work, followed by a local hiring process for qualified local people. Those are the terms and conditions of the accord. We expect there to be discussions on exactly how that will be done.

We've said it's the Island Highway model which has worked. That will be the model that will be at the table when we expect negotiations to take place. In the interior it won't be that model, it will be something other than that. We don't know what that is yet. Industry hasn't proposed what that will be and the unions haven't proposed what that will be. There's no one else representing displaced forest workers out there; there's no other union, there's no other collective organization. If you want to bring the working people to the table, you have to take the organized working people, and that's what we've decided to do.

T. Nebbeling: I think the minister is giving the government much less credit than it deserves, because I believe that the government could indeed be negotiating this deal. I don't think it needs the IWA. If that is indeed the case, then obviously I would expect, I would guess, that the IWA is going to make one thing mandatory: that is, again, whoever we send your way has to be a displaced worker with an IWA ticket or another union ticket.

The minister shakes his head. He says no, and I'm really happy to see that. Maybe the minister will then confirm here that not one industry component in the interior or anywhere else in British Columbia outside the coastal area, not one company, in order to become beneficiaries of FRBC funds over the next five years or 15 years, will have to accept union status as part of the conditions of getting the money from the provincial government that they're entitled to in the first place -- because it is for all British Columbians, not just for parties that the minister thinks it should go to. Can the minister confirm that that will not be part of the negotiations?

Hon. D. Zirnhelt: I thought I understood, until your last part of the question. There's nothing in the accord and nothing in the negotiations that will automatically certify any companies in the interior.

T. Nebbeling: I am sure there is nothing in the accord of that nature. However, is there anything in the accord that says: "No union demands or no organizing or unionizing of your interior operators will be a requirement in order to participate in any FRBC-funded programs that could come to a mill, to an operator, in the interior"?

Hon. D. Zirnhelt: We have said that those details will be negotiated between the IWA and the companies. We will facilitate. If they can't come to an agreement, government will take the recommendations of a mediator; but we have to have 

[ Page 5084 ]

a mechanism to get the jobs to displaced forest workers, union and non-union. I can't give any more clarity, because there is work to be done on the particular models up there.

[10:45]

To me, it violates the rule of FRBC. I don't think FRBC has the mandate to delegate that kind of power and put these kinds of requirements on funds that have been collected for a collective purpose, not just for an IWA-supported purpose. So I'm really fearful that this jobs accord is going to cause even more turmoil, when we see that the interior companies that will need FRBC funds in order to create these jobs will have to sit opposite the union, and the union can pretty well dictate how it is going to happen. I put good money on the fact that the first command will be: you unionize, you organize.

I can say that because I attended the meeting in Prince George on April 3, where the same president of the IWA, Dave Haggard, was one of the speakers to the remanufacturers in the interior -- I believe there's 350 to 450 members. Mr. Haggard did his speech and made it very clear that if anybody thought that they had a choice. . . . If they wanted to tap into FRBC money, if they had a choice between union or not, depending on how the workers felt, they had something else coming. And Mr. Allan was there, so he can confirm that Mr. Haggard made the statement -- and I've got the written script here, as well. He made it very clear that the workers didn't have a choice. He made it very clear that the operators didn't have a choice. You want FRBC money, you unionize, you organize. That was the message, and the only message that Mr. Haggard left.

Now you're telling me that Mr. Haggard's organization is going to negotiate the framework if a company wants to tap into FRBC: how this will be done, what conditions will be applied to the company. It is just another form of an incredible membership drive for the IWA, where all sense of fairness, all sense of reality and all sense of neutrality of this government has dissipated. This government is responsible for all workers in this province. It is all the workers in this province in the forest industry that collectively work for companies, which have also returned money to FRBC to serve the community as a whole. This approach is just another element of the jobs accord that will keep us in this House for a long time, because there was never, ever -- and the minister hasn't given me any indication that there is -- a condition set out that FRBC money can only go to companies where the IWA or another union has a foothold in that company. That's what the minister is saying.

Because of what I've said earlier, there is just no hope that a company that which needs FRBC money or wants to participate in hiring people for value-added projects can do it under the same terms as they have now. There is no reason why the government cannot make an agreement directly as the government, through the Ministry of Forests, through FRBC. There is no reason that Forest Renewal B.C., through its management team, cannot make an arrangement with a company in the interior, a non-union company that has no desire to unionize, a company that has employees who don't want to join an union. There is no reason for Forest Renewal B.C. not to make an arrangement so that this company will work within the guidelines that are set out in the jobs and timber accord -- with one exception: the requirement to go union in order to be a partner in the program.

I am really surprised that the minister. . . . Again, I had to prod and try all kinds of angles to get the answer to this question. I'm surprised that the government is being so blatant in trying to get its union to get the big benefit. When I said in the past that this is the best-financed union membership drive I've ever seen anywhere -- and I've seen some in Europe before I came over here. . . . I mean, this is a $1.5 billion membership drive for the union, because there is not a company which will tap into the $300 million that will get away with not having that union status.

The minister may call this, saying: "Well, it's a little bit early to make these statements." But the fact of the matter is that it's the only way Mr. Haggard will be a participant in supporting the flow of money to these companies -- with the condition that he indeed gets every worker on his side.

What I really have a problem with is that it's so blatant. I just can't understand how the minister, through this act, can really eliminate thousands of jobs that, even if they became union, wouldn't ever come to the trough. They wouldn't have an opportunity to work, because there would not be enough.

Can you imagine if every silviculture worker joined the IWA, which the IWA wants? According to the Premier, it's 12,000 workers. I think there are different numbers, but the Premier said 12,000 workers. For these 12,000 workers to get into the jobs that the minister is saying are going to be financed by Forest Renewal B.C., that is 12,000 jobs that are going to compete with the existing IWA jobs or non-union jobs. It becomes one big mess.

I'm amazed how this government is willing to sacrifice basic principles. A government is for all people; a government is for all workers. I am surprised that the minister is sitting there saying: "Well, this is the way it is." How on earth this government is willing to hand over control of an industry to the union -- why? Are we at payback time? I don't know why.

But I tell you it is not healthy. It is going to scare off even more investors. The very few that are still considering British Columbia would certainly be scared. This is going to be a counterproductive jobs and timber accord because of that element alone, that union demand on non-union companies.

The minister has agreed that this is indeed going to be the way, because there is no hope in hell that Dave Haggard would negotiate with anybody who was not upfront. He has announced it in his statements in his speeches. I think that once this is going to be more public, we're going to see an outcry.

Hon. D. Zirnhelt: We heard virtually the same speech from this member last week. It's getting quite tedious. He's expressing his opinions. We understand he is opposed to the involvement of the IWA; we hear it. I explained and answered everything last week. I really don't have anything more to add to it.

The Chair: Thank you, hon. minister. I draw the member's attention, of course, to standing order 43, with which I'm sure he is totally familiar.

T. Nebbeling: I appreciate the little reminder. However, I can't let it pass without asking the minister what day it was 

[ Page 5085 ]

that we went to such an extent into this discussion. The minister made the statement earlier on that it was d�j� vu; he had heard it all before; we have gone through it. I know the deputy looked for the Hansards. I wonder how many pages we discussed this particular issue, where. . . .

This all started with the forest jobs commissioner, if you recall, because the forest jobs commissioner is still there. There's still money allocated to his agency or his job. By going through the jobs commissioner's role in all this, we got to what's happening with another agency that has been created.

I've asked the minister: please give me that moment of d�j� vu that he had last week, where we went through all this. Then I may refresh my own memory, as well, because I have no recollection that I actually talked in detail about Bill 12, the forest jobs commissioner, his role and the great thing that at least that agency is a neutral agency that stands up for all forest workers, not just IWA forest workers. That agency would indeed also be able to create opportunities for workers in the interior, or could negotiate with companies for workers in the interior, without having the union put its demands up front on the table and from there on negotiate on that union basis. I ask the minister if I can hear this discussed in the detail that we have been discussing today.

Hon. D. Zirnhelt: When I made the comment not too long ago, I was talking about the forest jobs commissioner. On page 15 of the Hansard Blues of June 26, we discussed the job of the forest jobs commissioner. That's an example.

If you want to ask specific questions, I will try to answer, but I encourage you to be short and to the point so that I can concentrate and get something more than your opinion on the record. I've think you've got your opinion on what should happen on the record. If you have a question, fine. If you just want to get your opinion on the record, then talk all night if you like. But if you want to ask me a question, ask me a pointed question.

T. Nebbeling: I had a pointed question. It was ignored by the minister; it was talked around. My question now and earlier on was: why create an agency that will give the IWA control over every job in this province when it comes to jobs created by the jobs and timber accord? Why not use an existing agency that has proven to be effective financially and is goal-oriented? It has proven it, and that's the forest jobs commissioner. There are a number of them throughout the province. Why not them?

Hon. D. Zirnhelt: First of all, I made it clear last week that the only part of the jobs that are created. . . . Three-quarters of the jobs come from industry other than through the forest worker agency -- right? Three-quarters of them. And what happens with the agency is totally irrelevant to those jobs. All 20,000 jobs won't be created through the forest worker agency; 5,000 of them will.

Interjection.

Hon. D. Zirnhelt: Well, if you go back and review what you said in this lead-up, you were talking about all the jobs created under this.

Interjection.

Hon. D. Zirnhelt: You were. So I'm trying to answer that, and the answer is that they won't.

The Chair: Hon. members, I'd like to remind members to speak through the Chair, please. I'm just reminding everyone.

T. Nebbeling: Thank you, Madam Chair. I don't think I've risen once without first addressing your presence and my message to the minister or my question to the minister through the Chair. I've been very good at observing that rule, so I'm sure you were not talking to me.

We've heard about the role of the IWA, and I know we're talking about the 5,000 jobs. Maybe what we should do is go into the jobs commissioners' role: where they operate, what they actually do and what the budget is for this particular exercise.

Madam Chair, considering that everybody is coming in, I would like to move that the committee rise, report progress and ask leave to sit again.

[11:00]

The House resumed; the Speaker in the chair.

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

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

Hon. J. MacPhail moved adjournment of the House.

Motion approved.

The House adjourned at 11:01 p.m.

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The committee met at 6:40 p.m.

ESTIMATES: MINISTRY OF EMPLOYMENT
AND INVESTMENT
(continued)

R. Coleman: I would like to start tonight's estimates by thanking the B.C. Buildings Corporation for their cooperation for the last year. In the past year I really haven't had any difficulty getting any information out of the corporation. As a result, you'll find that my questions this evening are somewhat shorter than they were last year with regard to the corporation, because I don't think it's necessary to go over old ground. Since the corporation -- particularly the president, Dennis Truss, and Denis Racine, one of the vice-presidents of the corporation -- has been extremely helpful whenever we've had a question, I don't think there's any necessity to go through it.

[ Page 5086 ]

But I would like to spend some time going back on some of the things from last year and sort of bringing us forward with regard to the estimates process to see how we're doing with regard to the corporation, particularly with regard to the status of the five-year plan -- how we're making out with the dividend situation, the profitability of the corporation for this year compared to years in the past, and the expansion of scope.

I want to start out first of all with. . . . We had a discussion last year during estimates, if you recall, about the corporation being a very professionally run corporation, that I had canvassed it through the industry itself and found it to be so, and the fact that the corporation was one that was actually very highly regarded. At that time we talked about the expansion scope of the corporation, and I'd like to deal with that to start with. Basically, I wonder where that might sit, first of all -- to having BCBC as a vehicle to maximize the effectiveness and efficiency of the planning, implementation and management of all provincially funded real estate. That discussion took place, I know there's been some work done in the past year, and I wonder if you could give me the status on it.

Hon. D. Miller: I thank the member for his remarks relative to his ability to have access to and get information from staff. I think that's the way it should be, and I'm pleased that it is working.

First of all, I think the corporation is the body that's charged with the responsibility of essentially running -- using the member's language -- what is a fairly efficient real estate-property management company. The obligation to provide the kinds of services to government ministries, with new opportunities now arising in terms of offering the kinds of services and expertise we have in the corporation to other entities -- school districts, those kinds of things -- will give us even more of an opportunity to show that in fact it is a very efficiently run organization.

In terms of that plan the member talked about, I think there were goals in terms of efficiency and effectiveness. I think they have to a large degree been realized. To some degree, I think the challenges are on the fiscal side. We've imposed a larger dividend payment on the corporation, to look at reducing costs where that is practical, a $10 million cost-reduction target in terms of the cost of government accommodation, and looking at issues like the integrated workplace strategies. So I'm speaking broadly about a number of goals: to improve the efficiency and effectiveness of the model, the human resources strategic plan. In fact, I'm quoting from a letter that was sent to the member earlier this year.

My analysis or reading of the kind of information that I receive is that the strategic plan the corporation put in place has resulted in the kinds of results that I think -- I would hope -- the public and members of the Legislature would be satisfied with. I have given some hint about some of the future issues the corporation does have to address.

From a fiscal point of view, I think that the province has been reasonable. So that's some broad response to the member. But if there are specific issues around that plan that you want to pursue, we'd be happy to try to answer them.

[6:45]

I'm speaking more in terms of where we are with some form of special project with regard to some form of accommodation for a school, for a university, for a hospital, what have you. That was the expansion of roles that I was alluding to -- taking the corporation to another level for services for government with regard to some standardization of construction and management of properties.

Hon. D. Miller: We are speaking to the ministries. We haven't identified specific projects or pilots, but we are canvassing that subject with the ministries. I'm not certain when we might have something more definitive on that.

R. Coleman: I hope the ministries are paying attention when BCBC comes a-calling with regard to this. I reviewed a couple of reports last year with regard to school construction, for example, whereby in particular school districts we were asking secretary-treasurers to handle construction of a multimillion-dollar facility when we had the expertise sitting in Victoria.

The other side of it was the expansion. In the estimates with the Ministry of Housing, I noticed that there seemed to be one weakness within that operation with regard to private-public partnerships and the strength and knowledge of the private-public partnerships. I just wonder where BCBC sits with regard to P3s and whether there are any on the burner -- whether there's any plan or if they are looking at anything that we might be able to sort of use as a model for other P3s.

Hon. D. Miller: The member is aware of the Selkirk project, and there is a team at BCBC to look at that. They also participated in the large-format theatre project at the Royal B.C. Museum.

To a large degree, though, I think P3s, which is a very important topic. . . . As a result of a report given to government on P3 policy, we have established an advisory committee. We have said, ostensibly, that there are three projects that might qualify. We are examining those generally through my ministry and the Ministry of Finance, with the assistance of the reference group that we've maintained, to see if any of those would move forward.

In terms of P3s, I think it's important that P3s can be a variety of things -- a variety of configurations. There's not one standard model that says: "This is a P3 and nothing else." It could be a government contribution; it could be entirely off-book. There is a variety of those things, and as we move forward, I think it's important that we do some projects that are different in nature, in their uses of their applications and in terms of the permutations available under private sector-public sector partnership.

To the extent that BCBC, given their mandate, is also in a position to look at some of those -- and in fact has been involved in the Selkirk project -- probably simply means that there's a body of expertise now within the corporation so that, with the right kind of projects, they can be in a position to be a leader. So it would depend to a very great degree on just what opportunities might present themselves.

R. Coleman: Is the corporation preparing sample models of different types of P3s that work or that you're seeing are workable types of plans that other ministries could use -- i.e., housing, relationships into care and that type of facility? Are you standardizing some formulas with regard to that, like you've done with a number of other things, or is this pretty much in the early stages of that particular discussion?

Hon. D. Miller: As I indicated, I think it is early. The corporation has done some work, though, in terms of looking 

[ Page 5087 ]

at various models. Their expertise would be available, generally, to government. I'll use the term "government." Individual ministries, ultimately, are responsible for their capital plans, but we do try to provide guidance jointly, through my own ministry and the Ministry of Finance, as we did with the capital freeze and the ultimate number of recommendations that came out of that in terms of issues like standardization and those kinds of things that we think provide opportunities for more efficient use of capital dollars.

R. Coleman: For a few minutes, I'd just like to go to some of the goals of the corporation. Your first objective in your annual report is to reduce the cost of government accommodation. Basically, you want to achieve a $30 million annual saving by government by 1999. I'm just wondering: how are you doing today with regards to that particular objective?

Hon. D. Miller: Just to confirm the numbers: we did have a goal in '96-97 of $20.9 million and managed to achieve $21.7 million. The target this year is for an additional $8 million. So we exceeded target slightly.

R. Coleman: The second objective -- I don't want to belabour the first one -- is to improve the efficiency and effectiveness of the BCBC model. Basically, there were three areas: you were going to align your resource to meet the needs of your changing business; you were going to establish a defined investment strategy outlining options for alternative delivery and external equity participation; and you were going to redefine the roles and responsibilities of government central agencies.

The first one -- the aligning of resources -- is fairly self-explanatory, and I don't think we need to spend any time on that. When you're redefining your investment strategy, however. . . . I wonder if you could expand a bit on what's in the annual report with regards to the investment strategy.

Hon. D. Miller: In the view of the corporation, the implementation of that is underway. Again, not to be repetitious, we did indicate some of those measurements, if you like, in correspondence with the member: the human resources strategic plan, completed and approved by the board, which looks at a variety of areas; the performance measurement system -- the link between strategic planning and operations -- has been developed and implemented; a review of the corporation's organizational structure was completed in two phases -- more streamlined organization and improved alignment of responsibilities. We did have some discussion as well on the P3 model and the work the corporation's done there.

R. Coleman: As we move along here, I just have a couple of questions relative to last year's estimates with regards to revenues and what have you. The first question I would have is: what is the dividend in 1996-97 that you're anticipating paying to the provincial government?

Hon. D. Miller: Sorry -- was the question about the dividend for this fiscal year we're in now or the previous? We paid a $10 million dividend for the previous, 1996-97.

R. Coleman: That was the question. What's your anticipated?

Hon. D. Miller: The Crown, in the budget documents, has indicated a $49 million dividend for this fiscal year.

R. Coleman: Last year, when we were in estimates, we went through a brief discussion with regards to anticipated additional revenues from regionalization of health care. There was a substantial amount of money that was basically estimated, which was going to give an additional set of revenues to the corporation with regards to that. It had to do with consolidation -- the changing of offices and subsuming of leases -- and providing management services and other services from the corporation to those clients. If I recall, it was somewhere around an additional $8 million or $10 million in revenue. I'm just wondering how we made out with regards to that anticipated increase in revenue from that particular changeover.

Hon. D. Miller: I'm not quite clear on the savings number. I was going to say $3 million, but it might not be that high. Essentially, the decision by the Ministry of Health to examine New Directions and to delay implementation put things on hold for some time. So I think you're now seeing the implementation roll out around the province. I think that this year will be a better year to evaluate any savings.

R. Coleman: Could the minister then tell me what the anticipated savings in this particular fiscal year are with regards to this? This actually had some impact on the financial plan of the corporation with regards to additional revenues that were anticipated from this last year. If we didn't achieve them last year, I'd like to know what we did achieve and then what we anticipate to achieve with the next fiscal year.

Hon. D. Miller: Again, because of the delay in making a final decision -- and also an amended decision, quite frankly -- on New Directions. . . . In other words, where it was previously anticipated that a regional board would have more authority in some parts of the province depending on their success or lack or success. . . . In my own area, for example, the decision was to have the community health councils as opposed to the regional board. In other areas it was the reverse. So we're working with those boards now, but we would anticipate the transfer of about $18 million to $20 million from the ministry to the new entities. I can't give you a projected number for what we anticipate might be savings as a result of working with these groups to try to rationalize space requirements and those kinds of things. I did say that we. . . . Although $3 million is too high, there were some marginal savings last year.

[7:00]

In the year ending March 31, 1996, your retained earnings were $138 million, and in '95 they were $116 million. The cash position at the end of the year, however, was $9 million versus $21 million, and I remember going through some discussion with regard to cash positions a year ago.

I'm wondering, and I'm a little concerned: is the $9 million cash position a strong enough position for the corporation to be in at the end of the fiscal year? Does it allow you enough to carry on your operations and the capital delivery you may need or whatever it is you're going to be doing in 1997? Could you just sort of give me a quick understanding of whether there's something you need to address here? You have obviously taken this into account at some point in time, but could you just give an explanation of that change in cash position versus retained earnings?

[ Page 5088 ]

Hon. D. Miller: We anticipate retaining a very strong balance sheet. It's the view of the corporation that they do have a good, strong balance sheet, and with increased earnings potential, it's our view that things are well.

R. Coleman: We previously had a discussion with regard to ownership versus leaseback on properties and the percentage that the corporation held in assets versus the percentage of property that was held by lease. I wonder if the minister could tell me if there has been any substantial change in that in the past year.

Hon. D. Miller: No. On a relative basis, it's about the same.

R. Coleman: I realize there are some smaller properties, but do we presently have any major properties on the market, or is the corporation holding its real estate assets?

Hon. D. Miller: There were two major sales, really: the Dogwood Building here in Victoria and the Rithet Building, which I gather is not finally transacted or completed but is in the process. Some office space in Duncan and the old Highways property on Bridgeport Road in Richmond are also on the market. Those are the major ones. There are some minor, smaller properties.

R. Coleman: I know that through some of the cutbacks that took place and the changes in ministries, particularly with regard to Social Services and Attorney General, there has been some off-loading of properties over to BCBC. That was one of my concerns when I met with the corporation. They felt comfortable that they would be able to absorb these properties and not take a direct hit in a major way as far as costs are concerned.

That was a few months ago, and I am curious how it is working out now. After having had the opportunity over a few months to receive some properties back and a chance to do your cash flow projections with regard to the costs to you of those properties in the long term, I'm curious just how that off-loading from various ministries, because of the changes of the properties coming back, is affecting the corporation.

Hon. D. Miller: The feeling is that there will not be a major impact. Just looking at the position of the corporation prior to this -- 24 million square feet in 3,500 buildings in over 260 communities, with a historical vacancy rate of 0.8 percent over the last 20 years -- you can see and you understand why. . . . I mean, the corporation is there to serve a particular market. It's not speculative, if you like.

In other words, it's not operating in the private sector, where you might at any given time have a higher vacancy rate because of market conditions and those kinds of things. In the scheme of things, looking across the province at the spaces that were vacated, it's not felt that this presents a particularly onerous problem for the corporation either with some of those released spaces or in finding new tenants and dealing with that. I don't have a percentage, but it's not considered to be significant for the corporation.

R. Coleman: With regard to projects, what major projects are we anticipating in 1997 with regard to the corporation? I want to get an update on a few of the other ones that are in various planning stages as well, because when I went through them in estimates with some other ministries, they weren't really quite sure of their status, and I was told to ask you. I will undoubtedly do that.

However, last year we had a number of major projects that were on the go and that were in the planning stages, and I'm wondering what we have coming into the ground this year with regard to projects.

Hon. D. Miller: Major projects, some of which are underway already, are: the B.C. Centre for Disease Control, St. Ann's Academy. . . . By the way, I was just chatting with Mr. Truss earlier. Like a lot of people, I drive by that building, but I haven't taken the time to go in. I understand that that will probably be one of the more significant heritage restoration projects, and I would anticipate, hopefully, some significant recognition of the work the corporation has done there. If I'm still the minister, I certainly would look forward to participating in any ceremonies, as I'm sure people in Victoria will. There's some work in Robson Square for the Attorney General ministry and some work as well in the provincial law courts on Main, in terms of creation of additional space.

R. Coleman: I agree with you on St. Ann's, and maybe you will still be the minister, unless you're giving us a hint that you're going somewhere else, leaving the country or some other thing.

With regard to the St. Ann's restoration, anytime you get into a very difficult restoration of a heritage building, you can run into some costs. We touched briefly on the budget last year, but that was a year out, and we're getting fairly close to completion over there. It says it is expected to be mid-1997. I'm wondering: how are we looking on that particular budget? This is part of the Victoria accord, as I understand, which was a $100 million planned project over a number of years. I'd like to know how we're doing, budget-wise and completion-wise, with regards to the project.

Hon. D. Miller: We anticipate an announcement on St. Ann's very soon. I don't know who normally does those things, whether it's me or somebody else. I don't want to steal anybody's thunder, so I'll leave it at that. We'll probably be adjourned for the summer by then, in a week or so -- just an attempt at humour, Mr. Chairman. We all need a little humour.

The original estimates were around $17 million, and we think that we'll come in at about $1 million under: about $16 million.

R. Coleman: I guess summer's pretty good in October in Victoria, is it?

When I was doing the estimates of the Ministry of Health, I got into some discussion with regards to Riverview. There seemed to be some confusion on the status of a number of the processes going on at Riverview. First of all, I understand that there's one project to be completed there. If I'm not mistaken, that's the Forensic Psychiatric Institute on those lands. Last year, in March of '96, there was also a fairly comprehensive outline of a plan for land use at this particular site, which dealt with the data collection and analysis in identifying the community objectives and priorities. The third phase was developing of planning principles, the fourth was preparing land use concept plans, and the fifth was the selection and approval of a land use plan. When I canvassed the ministry, the ministry wasn't sure exactly where those plans were and what status we were at with that particular site. I wonder if I can just get an update from the corporation.

Hon. D. Miller: The forensic unit was actually at Colony Farm, an adjacent property. At the request of the Ministry of 

[ Page 5089 ]

Health, the planning process has essentially been put on hold for a time, while they review their requirements with respect to mental health. So we're going to await the results of that review in the ministry before we restart or pick that planning process up again.

R. Coleman: There were some correctional institutes, too, that had some planning money identified for them -- they were youth corrections -- when we were dealing with interim supply. There were some funds paid back to the corporation from the Ministry of Attorney General. My understanding of the explanation of those funds is that these were planning funds and design drawings funds that had been expended on behalf of the ministry, which were now paid back because the projects were not going to be proceeding or had been put on hold -- whatever the case may be. The funds were going back to. . . . BCBC was basically being paid for its services, I would assume. I wonder if that's correct.

Hon. D. Miller: Yes, it is correct.

V. Anderson: I just want to inquire about one location, and that is the correctional unit that was at Hudson and Marine in Vancouver, which has been used the last two winters as a shelter. The community has inquired on a number of occasions about the future of that facility, with a desire for community use. Each time they inquired, they were advised that once the plans were made for that facility, they would be advised whether it might be available or not. So I'm wondering if there is any further update on that building at Hudson and Marine, which is a B heritage building, the former nurses residence, prior to Pearson Hospital.

[7:15]

V. Anderson: If I understand you correctly, then, it's up to the community to approach you, and you'd be willing to be approached at this time.

R. Coleman: There was a new Social Services building planned for Kelowna, which was being built on a long-term lease-design-build type of arrangement. The building wasn't going to be occupied by Social Services. I'm just wondering what the status of that particular facility is now with regards to tenanting or whatever the case may be.

Hon. D. Miller: Another branch of Human Resources will occupy the building, and properties that were leased to provide that space will be let go.

R. Coleman: I wonder if the minister could tell me how the corporate marketing plan, designed in 1995-96, is working out.

Hon. D. Miller: The corporation anticipates that working with the regional health boards and the Ministry of Health and looking at the opportunity for pilots -- in other words, selling the service outside the corporation's current mandate -- will be pursued this year.

R. Coleman: Could the minister advise on the status of the Glendale lands?

Hon. D. Miller: The property was rezoned in April, and the planning can now proceed. The concept is to make better use of what is underutilized land -- sell a portion to the adjacent Camosun College, some to the district of Saanich as an extension of Layritz Park -- and to look at some of the existing buildings for conversion to other uses on the site. So there are some benefits to the community, and with the rezoning, I think that planning is proceeding.

R. Coleman: My next question deals with. . . . For some reason I've just gone blank on the property. Is it Woodlands that is being dealt with as a movie site right now? Maybe you could just give us an update on that particular property -- its planning and the status of its use right now.

Hon. D. Miller: On this site, the Willow Clinic has been redone, I think, and will continue to be used to provide tertiary care for people with mental disabilities. There is, I think, some movie work going on there now. There has been some arrangement to do a bit of that. Finally, there is a planning team. The corporation, in conjunction with the city of New Westminster and the public, is looking at the entire site in terms of a mix of both public and private uses. That process is ongoing. I haven't received any kind of reports in the last week or two. I think it's of some interest in the New Westminster area.

R. Coleman: There was some involvement, I believe, with regards to some commitment of space to a failed project in Vancouver. I'm just wondering if the minister could tell me the status with regards to BCBC's relationship to the Woodward's site in downtown Vancouver. I think there was about 20,000 square feet that BCBC was looking at leasing at one point in time. Obviously you had a need for that space. If that project is not going to go ahead, they're going to need to relocate to some other location or find a space. I'm just wondering what the use of this space was. Obviously you weren't the anchor tenant, because there was substantially more space than that in the particular project. Was your only involvement with regards to the space, and what was that space anticipated to be used for?

Hon. D. Miller: The corporation was prepared to take some space in a renovated Woodward's site. Again, that initial proposal, at least, did not materialize. I think there are some other efforts, which we are not involved in. We would be prepared, as part of the mix, to assist in making it work if we can. The corporation is still open to taking some of the space.

R. Coleman: In one of the reports that I have from the corporation, the corporation had signed a memorandum of understanding with Public Works and Government Services Canada with regards to some outside work and was also seeking some relationships with some of the work done for it by municipalities and local governments. I'm just wondering about (1) the status of the memorandum of understanding, if anything has come out of it, and (2) anything that's happening with local governments and municipalities at this point in time.

Hon. D. Miller: Yes, we did sign that agreement, and we are continuing to pursue projects with both the RCMP and the Department of National Defence. We've done some work with municipalities in Vancouver and Nelson for operation and 

[ Page 5090 ]

maintenance types of service agreements and in Coquitlam and Surrey for cleaning, operation and maintenance. So there are initiatives that the corporation has pursued outside of, say, the provincial mandate.

R. Coleman: The corporation has a financial planning, reporting and analysis department. It provides services to the corporation management -- obviously to the board of directors -- and to some provincial government ministries. I'm just wondering how many ministries are taking advantage of that service from the corporation with regard to planning, reporting and analysis.

Hon. D. Miller: The operation is really internal to the operation of BCBC. I'm not sure where the communication problem is, but it's not to go and provide those services to other ministries.

R. Coleman: The document I have comes from the finance group of BCBC, and it says that one of the major roles of this department is "to prepare financial statements and performance reports for the corporations management, board of directors and provincial government ministers." It says "ministers," not "ministries." Is there no service being provided from the corporation to the ministries? Or is this just a mistake on this particular summary?

Hon. D. Miller: Again, I think it's a minor part; in other words, they do provide some service in terms of reporting to the Ministry of Finance. But if I was to characterize it, it's not there as a service that's being marketed or sold to each ministry.

R. Coleman: The corporation also provides some advice and service with regard to corporate management design and maintenance of effective and economical information systems. Is this just your own client base that you're providing this to, or are other ministries taking advantage of this advice and technology from you?

Hon. D. Miller: Again, it's really internal, but to the degree that some ministries seek information to help them do their own analysis of space requirements, that is available.

R. Coleman: I just want to make the minister aware of a couple of other services that this particular corporation has. Obviously their communication, their strategic planning and that sort of thing are very important to not only them but other ministries. I don't know if the minister's aware of it, but BCBC has one of the most comprehensive web sites of any I've ever seen. I want to bring it to the minister's attention mainly because I want other people to be aware of it. In actual fact, there are some categories on here that are very valuable to industry outside of BCBC themselves, and I would like people to be aware of it. Basically, they have a set of CCS -- client comfort systems -- new-construction-bid guidelines on there that are actually very valuable if you're trying to put together a proposal.

[7:30]

It also bodes well. . . . Again, back to what I was saying earlier with regard to construction, when the corporation has this much expertise, they should be doing the construction of schools, they should be doing the construction of health agencies, and they should be doing the management of these facilities for government. I believe there are substantial dollars -- millions of dollars -- to be saved. I also believe they could probably be giving some advice on specifications even with regard to things such as social housing, with regard to how we can get a better value for our dollar on the specifications there, because in that area we're only using a fairly standard CCDC contract. I wonder if the minister has any comments in that regard.

Hon. D. Miller: I made a joke about it. I was generally aware that there was a web site, but not with the level of detail. . . . It's heartening to this degree that. . . . There continues to be, to some degree, a generalized view that perhaps governments or government agencies aren't all that efficient compared to the private sector. It appears that the corporation, in terms of the kind of information that they've made available, is going, one might even say, beyond its mandate, and that's always nice to hear about. So we'll take the compliments, and I'm sure that is something that's pleasing to the ear of the executive people that are here today.

R. Coleman: Other than the fact that I just want to ask one more question with regard to the assets and liabilities of the corporation and long-term debt. . . . The long-term debt went up by about $40 million last year. I'm wondering if we could get just a short explanation as to what the long-term debt is attached to with regard to the additional long-term debt we've accumulated in the past year. Are we anticipating any download of debt from government, from a ministry to the Crown corporation this year -- a movement of debt from another ministry over to the Crown corporation?

Hon. D. Miller: In a relative sense, I did speak earlier about what I characterized as the sort of balance sheet of the corporation being pretty healthy. It's not anticipated that there will be anything significant with respect to the debt-equity ratio, which I guess is as good a measurement as any, or a downloading of debt from government to the corporation. They've been handed a challenge like other Crown corporations, but I think that's fair and reasonable.

R. Coleman: I could go through a number of additional mundane questions with regard to this corporation. However, I don't see the necessity of it, simply because I have come to the conclusion, after working with the corporation for the past year and having my answers provided to me on a timely basis, that the estimates process is more time to just sort of review the direction of the corporation. Since I've already had the opportunity in a briefing to go through the strategic plan, the five-year plan, the financial statements and the annual report of the corporation, I have obviously reached a level of comfort with this corporation's planning processes and its fiscal management and what have you. Also, considering the fact that it has very long-term, stable management which has been in place in the corporation for a long time, I think that we 

[ Page 5091 ]

may have here the model for Crown corporations and the model for the operation of a Crown corporation. Frankly, I think that my reason for taking the hour was just to touch on a few things, to let people be more aware of the fact that this corporation is well run. It's very well run.

I'd like to reiterate that they should be moving into an expanded role with regard to government so that they can provide the services we need with regard to construction management, particularly in institutional facilities like schools and hospitals and those types of facilities.

I'd like to reiterate to people that are watching this corporation that the services they provide with regard to what they put on the Internet are very valuable and that their tendering process and documents for tendering processes should be used by other levels of government with regard to how they go about it -- their requirements for bid bonding and what have you -- because all of that is very structured with this particular organization.

I'd also like to say that on their corporate relations, their management and their relations within the corporation, they are very strong. Frankly, I'm very impressed with BCBC, and I think we should be thankful that there is a Crown corporation functioning this way. I know we concluded that after about three hours last year; I don't think it's necessary to do that this year.

I would like to say that if the minister wishes to take a break prior to B.C. Rail, we can certainly do so rather than take you through a number of questions with regard to a corporation I'm already comfortable with.

I think I'd like just for Dennis and company to take to their people that I think you're doing a great job and that the corporation is doing a great job. I look forward to a very strong working relationship with you and the minister in the next year to continue this relationship so that this process can be as smooth next year as it is this year.

Hon. D. Miller: Absolutely. It's like a symphony is playing in the room.

I'd really like to thank the member for his words relative to the staff. I think that is important. Obviously the member does his homework very thoroughly with respect to BCBC, and I know he meant everybody in the organization from the minister on down.

So, Mr. Chairman, perhaps there's no formal motion. I do have B.C. Rail staff. I think they've just arrived in the buildings. If we could have perhaps ten minutes to get them here, we'll be back here as quickly as we possibly can.

The committee recessed from 7:38 p.m. to 7:55 p.m.

[W. Hartley in the chair.]

The Chair: We will reconvene the committee, and we'll be discussing the B.C. Rail estimates.

P. Nettleton: Once again it's a pleasure to be here. It's hard to believe that a year has flown by -- almost a year in any case. We've been able to tear Mr. McElligott away from his very busy schedule. As I say, it's certainly a pleasure to be here and review some of the activities of B.C. Rail and the B.C. Rail group of companies over the last fiscal year.

Again, it's been a good year in terms of generating much-needed revenues for a cash-hungry government. One of the things I would like to do initially, if I may, is review a subject which I think we had reviewed last year in some depth -- or we certainly touched on it in any event -- and that's the whole question of privatization. If the minister would bear with me for just a few moments, I have a series of questions dealing with privatization. I thought we could move forward topically and deal with a number of questions.

Perhaps the hon. minister could advise this House as to the status of any plans to privatize B.C. Rail.

Hon. D. Miller: There is no status; there are no plans.

P. Nettleton: Does the minister have any plans to privatize segments of B.C. Rail, be it WesTel Telecommunications, Vancouver Wharves or BCR Properties?

Hon. D. Miller: No.

P. Nettleton: Have there been any presentations to B.C. Rail and/or the province on the issue of privatizing B.C. Rail recently?

Hon. D. Miller: No, there have not.

P. Nettleton: Merrill-Lynch, Nesbitt Burns, Richardson Greenshields, Payne Webber and ScotiaMcLeod all made presentations to the province and to B.C. Rail regarding the privatization issue in 1995 -- Nesbitt Burns making multiple presentations, as I understand it.

Could the minister advise the House if any presentations on privatizing B.C. Rail have been made since the fall of 1996?

Hon. D. Miller: Not that I'm aware of. I'm certainly not aware of any proposals. I guess, to some degree, it was a bit of an issue in a political context last year. We're not contemplating any privatization initiatives.

P. Nettleton: Has the ministry or B.C. Rail undertaken any public opinion polling on the topic of privatizing B.C. Rail over the course, let's say, of the past couple of years to get some sense of where the public is at in terms of privatization?

Hon. D. Miller: There may have been some in the past, but there's nothing current.

P. Nettleton: The minister has indicated that there has possibly been polling in the past. I would think that Mr. McElligott would be in a position to comment on whether in fact there has been polling done in regard to privatization and, if so, when that was done and details of that sort.

[8:00]

P. Nettleton: Thank you, minister. We'll end our review, if you will, of privatization of the B.C. Rail group of companies.

I'd like to review, if I may, Vancouver Wharves. Looking at the revenue side, I understand that Vancouver Wharves has lost its potash contract, unfortunately, to a port in Oregon. Could the minister provide some detail as to how this loss occurred and the impact to the bottom line of Vancouver Wharves?

[ Page 5092 ]

Hon. D. Miller: Yes, the competing bid -- not just from the port, I understand, but from U.S. railways as well -- did succeed. It's the marketplace, I guess. That will have an impact on the revenue side, annualized, of probably $1.5 million to $2 million starting in July of this year -- this month.

You know, I think that's a broader issue that we need to. . .not just with respect to potash, but it's a broader issue in terms of the movement of goods through Canadian ports -- grain, particularly, although we may get into that at some point in the estimates. There's really been a loss, in my view, of a national transportation policy.

It's one thing to say: "Let's open it up to the marketplace." But there is potential for losses, I think, both through producers. . . . I know through talking to some of the agricultural people in Saskatchewan and Manitoba that there is a feeling in some of those provinces that there's not really a commitment to a Canadian transportation network and Canadian ports but rather: "Where can we get the cheapest price?"

I think it's fair to say that U.S. ports have been massively subsidized. We've seen the federal government essentially sort of vacate the field when it comes to transportation policy. I don't think that the major grain transport in southern British Columbia is impacted; I think grain transportation in northern B.C. is impacted. Perhaps we'll talk about that at some point, as well.

So it was up for competition, and there was a decision to move to Portland, which means that perhaps if the federal government continues to play this role, it's going to have to be a stronger presence in terms of the provincial role in ports and transportation and by more of the ports and the railways working in a closer relationship.

P. Nettleton: Yes, following along the same lines, if I may, it also appears that 1996 revenues and net contribution were down as a result of shipments of potash -- which the minister has canvassed -- and sulphur, liquids and lower handling rates for potash and pulp. I'm wondering if the minister would be in a position to comment on this -- again, generally -- and on the projections for 1997 in terms of expectations.

Hon. D. Miller: Primarily -- again, just a generalized statement -- the decline, really, on the earnings side has been on the rail side, not on the related business groups under the B.C. Rail group of companies.

P. Nettleton: In fact, as I suggested in my question to the minister, I think implicit in that question is some recognition that the difficulties associated with the decline in revenues were indeed attributable, at least to some extent, to lower handling rates for potash and pulp, etc., rather than to the business side, as the minister rightly suggests.

On the business side, however, is a question for the minister: is it true that Vancouver Wharves has a view to construct a specialty agricultural products facility requiring a capital investment somewhere in the range of $40 million?

Hon. D. Miller: Yes, it is correct, but it is contingent upon a customer base. In other words, we wouldn't do it on spec.

P. Nettleton: I didn't understand or hadn't understood that it was contingent on a customer base, so presumably a study of some sort has been commissioned or is likely to be commissioned. Perhaps the minister could provide us with some detail as to when that is likely to happen and how likely it is to proceed.

Hon. D. Miller: Well, opportunities are being pursued with a variety of shippers, and ideally we would be in a position by the end of the year to make a decision one way or the other.

Interjection.

P. Nettleton: I'm sorry -- did I miss something? In any case, it is a rare pleasure to have the Premier of the province here. I know he's been somewhat intimidating -- but a pleasure, nonetheless.

In any event, perhaps the minister could comment generally on business developments within Vancouver Wharves and specifically on the completion of a long-term contract for the storage and handling of South American concentrates. It's my understanding -- I believe there's some reference to it in the business plan -- that it's to be completed in 1997. Is that the case?

Hon. D. Miller: Yes, the shed. . . . There was a $10 million project completed -- a 15-year contract for shipments, really, throughout the world.

P. Nettleton: So that has been completed? Is that the case?

Interjection.

P. Nettleton: Yes. Thank you.

As well, generally on business developments related to Vancouver Wharves, perhaps the minister could comment on the engagement of an engineering company to advise on the proposed new specialty agricultural products facility, the capital associated with the review of construction and the potential benefits to Vancouver Wharves. I believe there was some reference to that in the business plan.

Hon. D. Miller: Yes, the corporation did retain the services of a consultant with extensive experience in the agricultural sector. And that, as I said in response to an earlier question, is an opportunity that we'll continue to pursue in terms of one having to go out there and meet the producers and try to put deals together.

P. Nettleton: I'm just wondering, in terms of the costs associated with the review, if there's any sense of what costs have been incurred in terms of this review or are likely to be incurred in terms of the overall review.

Hon. D. Miller: Well, we don't have an itemized accounting of the expenditures to date, but clearly the member appreciates that when you're pursuing business you have to engage people who have the kind of expertise. . . . I don't have the consultant's name, but those are the kind of investments you make in order to continue to be in business and expand your business.

P. Nettleton: Fair enough. Again, I wonder if the minister would please comment on the capital cost estimates for Vancouver Wharves' B.C. Rail yard, as per the conceptual layout -- which I understand has been prepared recently. Is that not the case?

Hon. D. Miller: It could potentially be a $40 million project.

[ Page 5093 ]

P. Nettleton: I understand there is some move to consolidate sulphur piles, which are presently split between Alberta and B.C. My question, which ties into this move which I understand B.C. Rail is committed to, is: is there additional capital investment required in so doing? And if so, what are the potential benefits? Perhaps the minister could comment on that move.

Hon. D. Miller: Efficiency, really. There are other factors in there, as well: loop track. Clearly you appreciate that a consolidation of sulphur in one location frees up other areas for additional types of development.

P. Nettleton: I wonder if the minister would just comment on the additional capital investment required to consolidate the sulphur piles if, in fact, there is additional capital investment required. I'm just not clear on that.

Hon. D. Miller: The broad plan -- which is, as I indicated, about $40 million -- includes all of that: trackage, consolidation. All of those are considered.

P. Nettleton: That's helpful. Vancouver Wharves has a number of multi-year agreements, long-term, generally constructed to recover capital costs plus operating profits. How has this subsidiary performed over the past fiscal year? And is there any likelihood of difficulty in terms of these multi-year agreements? Lastly, are there any significant agreements due to expire sometime soon in reference to these multi-year agreements in Vancouver Wharves?

[8:15]

P. Nettleton: Dealing, if I may, with B.C. Rail properties, moving along from Vancouver Wharves. . . . How did this subsidiary perform in 1996 when contrasting its actual revenues in business unit contribution with its objectives?

Hon. D. Miller: It met its objectives.

P. Nettleton: As I recall from estimates last year, I believe the minister indicated that in terms of the disposal of non-strategic lands, BCR Properties had contributed $8 million at that time. I wonder if perhaps you could contrast that to 1996 -- again, as I say, looking at the disposal of what has been called non-strategic lands owned by BCR.

Hon. D. Miller: It's about the same level -- in the $8 million range.

P. Nettleton: Perhaps the minister could comment on BCR Properties' 1997-2001 strategic plan as to potential investment, firstly, in income-producing assets and, secondly, in sites with development potential from the company's existing portfolio.

Hon. D. Miller: The property division is pursuing the objectives. As I said last year -- and the member may be aware -- the office building complex in Prince George is one example of that kind of investment. The 60,000-square-foot retail mall in Squamish is another. I understand they are going well; they are 80 percent leased. So they look for opportunities to get a return on properties either with private sector partners in the kind of ventures that I've outlined. . . .

P. Nettleton: I appreciate the minister's reference to the mall in Squamish and the office structure in Prince George. Particularly as a resident of the Prince George region, it has certainly been of benefit to Prince George and the outlying communities.

But my question to the minister is really on the 1997-2001 strategic plan. Presumably, it does not include those ventures which were committed to some time prior to the development of the plan -- that is, the 1997-2001 strategic plan. I'm just looking for information, if I may -- without asking the minister to divulge commercially sensitive information or information that perhaps it wouldn't be in the interests of BCR to divulge -- as to BCR Properties and potential investment, and income-producing assets and sites with development potential from the company's existing portfolio included in that 1997-2001 strategic plan.

Hon. D. Miller: The plan is an outline, and the corporation is pursuing those opportunities to generate additional revenue -- $10 million to $20 million -- and will continue to do that. I don't think there are any projects, specifically. If there are any of a commercially sensitive nature, I wouldn't speak to them, but any major projects, like the two that I did talk about. . . .

P. Nettleton: If I may, I'd like to move along to WesTel. Perhaps the minister could comment on WesTel's five-year plan, which involves, as I understand it, expansion into the business telecommunications market -- in their own terminology -- with a view to establishing a greater presence as a regional carrier. Perhaps you could have some comment on that five-year plan -- that is, the five-year plan of WesTel expanding into the business telecommunications market.

Hon. D. Miller: As a telecommunications company, they will continue to operate in what I think is not only a more competitive environment but one that offers some new opportunities. Some of those have come by with respect to participating with other private sector entities -- again, nothing that I can speak of here. The corporation has been profitable over the last four quarters in '96. I think they've moved to a better position than they were in the past, and it may be that some of the proposals out there might come to fruition. In the meantime, they are continuing to pursue business opportunities under the regulated framework of the CRTC.

P. Nettleton: As I say, I take note that there is a five-year plan, which presumably must involve some detail in terms of the expansion into the business telecommunications market. I noted earlier that there was some reference to a greater presence as a regional carrier. Would there be greater emphasis on one region rather than another? If so, what region might that be?

Hon. D. Miller: If I were to say a region, it would be the north, primarily. They are in business now, and I think they recently did a deal in terms of supplying some services with the Northern Savings Credit Union. So they're out there in the marketplace providing services and trying to grow the business. But probably the north would be one region where there would be the most benefit as a result of that growth.

P. Nettleton: Perhaps the minister could also comment, if he will, on the costs and potential benefits -- this is just a 

[ Page 5094 ]

general question -- associated with the enhancement of customer service, technical support, product lines, geographic presence and network reliability.

Hon. D. Miller: They are all important in growing a business. Speaking for the northern region, I guess the more companies that are prepared to look at doing business up there and have the expertise in terms of their infrastructure and marketing, the ability to offer service and the like, then the better off we are. In some cases, I think we've waited inordinately long to get service extensions in some of the smaller communities. We were trying to address that through other processes -- the electronic highway and the like -- but I think that having a company operating in the field, aggressively pursuing those, is good for the communities along the northern line.

P. Nettleton: I couldn't agree with the minister more. A further question. I note that since its founding three years ago, WesTel revenues have tripled. I wonder what capital expenditures or costs are associated with the increase in terms of WesTel's share of the market, which, as I say, has tripled over the course of the last three years.

Hon. D. Miller: In the initial stages, the development costs don't have a return attached to them. That has turned to the degree that it's been profitable in 1996 and is projecting as being profitable for 1997. But annual capital investments in the $5 million to $10 million range are required and will be required in the future, as well, as opportunities to expand come along.

P. Nettleton: The minister may have answered my question in a roundabout way. The minister indicated last year in estimates that WesTel had committed to an additional capital expenditure from its inception -- which I believe was in 1992 or thereabouts -- of about $15 million. I'm just wondering if there has been any change in this in terms of additional capital expenditures that WesTel has committed to over 1996 above and beyond -- let's see -- 1992 to '97, in that $5 million to $10 million range.

Hon. D. Miller: No, I think the forecast was accurate. Obviously, as opportunities arise. . . . For example, if there is an opportunity with some other major company in the sector to do things like joint ventures, we're open to any of those opportunities. To the extent that they might require larger capital investments to realize a return, those are the kinds of business decisions you make. You run your risk assessment and your ability to generate cash flow and those kinds of things. It's been a period of growing the business. It's been successful to some degree in that it was profitable last year and is projected to be this year as well.

P. Nettleton: I wonder if, again, the minister might comment on a strategy that has been developed by Mr. McElligott of B.C. Rail in reference to WesTel. I understand that the strategy involves a switched voice and data telecommunications service to B.C.-based business and residential markets. Perhaps you could just provide some brief commentary, if you will, on that strategy.

Hon. D. Miller: Perhaps Mr. McElligott might like to expand on that.

P. McElligott: WesTel is trying to grow its business base in the province. It started very small, with principally B.C. Rail and a handful of private-line clients, before the company was formed. Then it entered when the CRTC ruled on and permitted competition in the switched long-distance market. WesTel very quickly mobilized, and it's growing its business base each year. In fact, it has doubled in the last year. The idea is to compete in switched voice and data products, with an emphasis principally in the interior of the province where there is less competition. WesTel, because of its reputation for service and its affiliation with B.C. Rail Group, is warmly received in these markets.

[8:30]

Hon. D. Miller: Primarily it's because of the lack of infrastructure in other companies, principally B.C. Tel. I did refer to areas where service levels are not that great. Although B.C. Tel has it in its two-year plan, I believe, to complete the fibreoptic link between, say, Prince Rupert and Terrace, it has not been done. B.C. Rail, by virtue of its infrastructure, is in a position, particularly with these other companies that are now trying to come into the marketplace. . . . It's just really an area that has not been developed as well as it ought to have been, for historical reasons, and they see an opportunity in that region.

P. Nettleton: A final couple of questions dealing with WesTel. I understand that a 4 percent share of the B.C. long-distance traffic is needed to break even. Obviously WesTel is doing just that. Last year the minister indicated that WesTel's share of the market was about 3 percent, and I'm wondering if there was any change in 1996 -- since last year -- in terms of WesTel's share of the market.

Hon. D. Miller: It's getting close to 5 percent now.

P. Nettleton: I have one final question on the restructuring of WesTel's sales force. Perhaps Mr. McElligott would be in a position to comment on why this was seen as necessary and how this was done.

Hon. D. Miller: Mr. McElligott would be more than happy to.

P. McElligott: We moved to an industrywide compensation scheme, gave the sales force some incentive compensation. We were having problems retaining people because of competitive offerings at Fonorola, Sprint and other companies. We also needed to increase our sales presence in the interior, out of Prince George in particular. We added sales reps. We added sales reps in the Okanagan and needed to replace some on the Island. It was just getting ourselves beefed up in the regions, in terms of numbers of people, and aligning our compensation structures so that they were competitive with other telecommunications companies that WesTel has to compete with for human resources.

P. Nettleton: Thank you, Mr. McElligott, for that information. I'd like to move along to B.C. Rail Ltd. In the context of BCR and B.C. Rail and Group profitability, year-end figures were down somewhat from those of 1995. Giving credit where 

[ Page 5095 ]

credit is due -- namely, to Mr. McElligott and the management of B.C. Rail -- it nevertheless did turn a very handy profit. But focusing on the figures, which were down from those of 1995, I'm just wondering if perhaps you could comment on an item referred to as a factor in this decline -- namely, corporate reorganization.

Hon. D. Miller: The principal issues impacting rail are those which have to do with the shipment of primary commodities in B.C. There has been an impact on other systems, as well. There's no question that the northeast coal shipments were less than projected. Pulp and newsprint in particular had an impact on the railway -- 13 percent below projected forecasts -- coupled with issues like field prices, which have also had an impact in other areas, like ferries. The combining of all of those has led to a loss on the revenue side or the income side. With the railway there are some changes you can make. If you've got a fleet of trucks, you can take some trucks off the road. You still have a lot of your fixed costs in terms of running a railway; they don't vary as much. There's not as much flexibility in terms of reducing fixed costs.

P. Nettleton: I had hoped to get into some more detail very soon in reference to primary commodities and the difficulties associated with primary commodities as they relate to a decline in the overall group profitability. However, I'm just wondering, in terms of corporate reorganization, how corporate reorganization in and of itself is tied into group profitability, which, as I say -- at the risk of repeating myself -- is down from that of 1995.

Hon. D. Miller: The reference is to one-time costs to effect a reduction in the workforce -- primarily on the management side, not the worker side. So there are normal costs associated with that -- severance, those kinds of things -- but leading to a longer-term saving.

P. Nettleton: I wonder if I may also draw your attention to a comment on profitability within the same context on competitive inroads made by the trucking industry, hauling U.S.-destined product across the border to meet quarterly import quota deadlines.

Hon. D. Miller: The member may be aware that the agreement now with the United States on softwood lumber is a managed-supply kind of agreement. Initially, there was a great deal of confusion on how it would be allocated. You might recall that there were some broader debates across Canada in terms of the allocation of percentages to each province. Beyond that, there were discussions by individual shippers as to what their quota was. All of that created a bit of confusion in terms of the shipping end of it.

Perhaps you could expect that, given the issues at hand, but I would expect that it would be returned to some normalcy -- as much as there ever is normalcy in that. It has to have some time to work. Even with the quotas in place, because of circumstances like price and demand, you saw companies still shipping into that market, even paying $100 per thousand, obviously getting it on the price side. So those all have an impact, but that particular impact was even more problematic, given the managed supply and all those kinds of questions.

P. Nettleton: Given the problems the minister has detailed -- and quite rightly so -- how is it that the trucking industry fits into this difficulty in terms of product moving across the border, with reference to import quota deadlines?

Hon. D. Miller: Again, it goes back to the quotas imposed. As I said, there was confusion about allocation of those quotas. There's also a feature in there, which is "use it or lose it," so some of those producers had to move very quickly. In terms of arranging your shipments, you can appreciate that you can move much more quickly in the trucking sector, even though you're perhaps going to pay a higher rate. But if you have to use that quota or lose it, then you're going to pay whatever you have to pay to get a truck. To the extent that there are trucks available, you can get them. But the railway runs on a fixed line and has to make arrangements with respect to cars and those kinds of questions. So just in that period of confusion, trucking had a bit of an edge in terms of their flexibility.

P. Nettleton: Thank you, minister. That's very helpful.

In 1996 the pulp market was depressed, and in the 1996 annual report reference is made to the uncertainty which is expected to continue into 1997: "Tied to depressed pulp markets, wood chip consumption by pulp mills was reduced, thus impacting rail revenue." It is my understanding that the pulp market is somewhat cyclical in nature. I wonder if perhaps the minister could comment: is there any significant development that he sees within the pulp market, be it increased international competition or other factors, that suggests that rail revenue may be in some difficulty over the long term -- that is, rail revenue tied to this market?

Hon. D. Miller: No pronounced difficulty in the long run. I think it is a very competitive marketplace, and increasingly so. It's a very difficult industry to predict, quite frankly. It used to be fairly routine. You could almost plot the cycle of pulp. Going back many years, lumber was almost countercyclical, so that they tended to balance each other out. You never got a real shock in any one year. Sometime in the eighties they started to move together, which nobody could anticipate. Then pulp took a very dramatic turn two years ago, going to $1,000 a tonne in a very short period of time but, as well, dropping down the other side, probably in about the same short period of time.

There was a dramatic swing on the price side. Again, it's hard to explain, given the capacity that was available in the world. As someone who kind of watches that just for something to do, I didn't foresee that climbing that quickly or dropping as quickly, nor did anybody. It's starting to come back, to some degree. We'll have to watch that very closely, but over the long haul, I don't think it will have a major impact. There may be issues like strikes and things that do happen, but it won't have an impact over the long term.

P. Nettleton: This is where I may be in some difficulty and may need the assistance of Mr. McElligott in terms of the technical nature of these questions. Could the minister comment on the installation of loop track? I believe that's the correct term to describe track, and I understand that the immediate cost associated with the installation of loop track is somewhere in the range of $30 million. Is that the case?

Hon. D. Miller: I would ask Mr. McElligott to answer that question.

P. McElligott: The reference to loop track is for the Vancouver Wharves project. Instead of a traditional operation where we had separate rail tracks going in for each receiving area, we would basically reconfigure the entire yard and run loops in the railway industry. Loop tracks tend to be far more 

[ Page 5096 ]

efficient then the individual loading bays. So if the project proceeds -- it hasn't yet been given the go-ahead from our board -- we would run a series of loops so that Vancouver Wharves would be capable of handling hundred-car unit trains, and it would greatly improve the day-to-day efficiency of their operation. If it proceeds, it would be a $30 million capital project.

[8:45]

Hon. D. Miller: We did discuss this earlier. I believe we stated that it is the Vancouver Wharves loop track that we were talking about.

P. Nettleton: I don't recall having specifically dealt with loop track, unless it was tied in with the facility we talked about before in some detail. Perhaps that's the case -- the agricultural products facility.

Hon. D. Miller: The loop track is one component of that overall project that we've been talking about.

P. Nettleton: Is it not also the case that $25 million to $30 million must be spent annually as sustaining capital -- for instance, to change from channel rail to heavier rail -- and that to defer maintenance of this sort is to increase the risks in terms of the safety of operations and ultimately to jeopardize the economic viability of rail operations?

Hon. D. Miller: There have to be certain annual expenditures made. I think the forecast is for about $25 million annually over the next five years.

P. Nettleton: I wonder if I might just have two minutes to consult with the member for Peace River South.

Interjection.

P. Nettleton: I'll give the minister and Mr. McElligott a break from my voice and defer to the hon. member for Peace River South.

J. Weisgerber: I'd like to ask the minister some questions around the work he's doing with his northwest transportation corridor. I'm very much interested in the idea of increasing traffic not only to the port of Prince Rupert but through Dawson Creek, and making that line, that east-west connection, something that works not only for the people on the west coast but for the people in northeastern British Columbia and the people in northwestern Alberta.

I have a sense that there is an opportunity here to bring some costs down, to move some volumes perhaps over shorter distances. And I recognize the inherent conflict that exists within B.C. Rail -- that is, the main B.C. track going from northeastern British Columbia to southwestern British Columbia. I suspect that as good managers, they're interested in keeping commodities on their track as long as possible. There's that interest, but I think we're also dealing with a Crown corporation with some provincial interests. That, no doubt, provides an interesting set of conflicts or dichotomies within the corporation itself.

Having said that, I'd like to first of all get an update as to where B.C. Rail, the minister and others are in terms of reducing the interline or interchange charges that occur primarily in Prince George but that are a factor at the Dawson Creek end as well. I know that the minister's had some talks with B.C. Rail, and perhaps it would be instructive for all of us to know where that's at today.

Hon. D. Miller: This is very important topic for northern British Columbia, and one that I've spent a fair amount of time trying to deal with. The member is right. It is imperative for any company in the private sector, in this case a railway which is a commercial Crown with other components -- and let's just deal with the railway business -- to maximize the return on their investment. We would never ask anything else of the private sector, although we occasionally say, "Well, what about your social responsibility?" -- and those sorts of things.

So the challenge, and with B.C. Rail under provincial jurisdiction. . . . CN Rail has a very good transportation corridor right through to the port of Prince Rupert, but one that was, and continues to be, underutilized; it's between 30 and 40 percent capacity. These railways intersect at least at two points: one up in the Dawson Creek area -- I think in Dawson Creek, if I'm not mistaken -- and the other at Prince George. And the question really is: how can the transportation system itself, regardless of ownership, be used in a more rational way, particularly when you have the issues around the northeast?

My broader interest in that. . . . I spoke a moment ago about what I thought were some of the problems that we face nationally. I think there has been, to some degree, an abandonment by the federal government of a national transportation policy. What do you want to see? I don't say that just to be critical. I think that in Canada, generally, there's been a weaning away from protected systems and more exposure to market systems in a variety of areas. I'm not necessarily objecting to that in principle. But if the end result of that policy -- the elimination of the Western Grain Transportation Act, the loss of the Crow rate and, in the case of the north, the particularly unfair result, in my view: the loss of the equalization formula. . . .

At one time, under the Western Grain Transportation Act, the railway mileage to the port of Prince Rupert and to the port of Vancouver were considered the same. I'm not sure what point of origin was used for that measurement, but they were considered to be equivalent. Therefore the freight costs for shipping along the north line were the same as they were to the port of Vancouver. With the loss of that equalization formula, that added, I think, an additional 140 or 180 kilometres to the route. You can appreciate that, multiplied by the freight rates, it created a handicap or a barrier to the use of the northern corridor and the port of Prince Rupert.

So how do you address this? You've got the larger issue of grain transportation. You've got the classic finger-pointing that's taken place for many, many years between the Wheat Board, the farmers, the railways, the ports. Even now, as late as last week, there was some talk of the Wheat Board suing the railways.

Looking at it all, the conclusion you came to is that you couldn't hope to try to take on these problems, extending over four provinces, involving a federal entity, the Wheat Board; two private entities, the railways; the farmers -- all of that. You'd rather pick on some pieces that might be resolvable. So I started to initiate some discussions with people in the federal government -- Transport Canada. I had some meetings with Peace River agricultural people, some conversations on the 

[ Page 5097 ]

phone. And I really came to the conclusion that if B.C. Rail and CN Rail could determine if there was an advantage to both of them by looking at some commercial arrangements, maybe that's where the solution to that problem rests.

In fact, I think there are some commercial opportunities or advantages to both of the entities. As a result of my urging both B.C. Rail and, in meetings I had with Mr. Tellier, the head of CNR. . . . The two railways are now engaged in a process of, presumably, fact-finding and negotiation to see whether or not the rail lines could be used in a way that benefit northern British Columbia particularly. In other words, if they had a commercial arrangement between them in terms of the transfer of freight from one rail line to another, could that solve some of the problems?

I was then contacted by someone representing the Alberta government and very quickly followed up with a meeting with the Minister of Transportation and Utilities in Alberta, Mr. Walter Paszkowski, who is a northern Alberta-Peace farmer, I believe. So he's familiar with the industry in northern Alberta. He's the minister of transport -- recently appointed. He's also very much interested in a broader strategy that Alberta is pursuing to develop more value-added opportunities in the agricultural sector. In that regard, he's interested in the opportunities that might be there for containerized shipment of value-added agricultural products, presumably done in Alberta.

So things started to come together in terms of a synergy or a commonality of interest. I did have one subsequent meeting with Mr. Paszkowski and Mrs. Black, the new Economic Development minister from Alberta -- coincidentally in Prince Rupert -- two or three weeks ago. We have a group of officials of my ministry and the Alberta government now working together on some of these transportation issues.

As well, my colleague the Minister of Transportation here in B.C. announced an extension of the hauling-distance regulation for grain in the Peace from 60 kilometres to the Alberta border, if I'm not mistaken. That's one of the issues that we are discussing. I think Alberta would like to see that expanded. There are other. . .not side issues, central issues -- the Watino bridge, the CN bridge in northern Alberta, which the Alberta government would obviously like to see redone.

All this might produce, I hope, the opportunity to take more goods down the B.C. Rail line and transfer that to the CN main line and out the port of Prince Rupert. As we continue to pursue this, perhaps more of a commitment to use the CN line to ship grain, particularly, and other products through the northern port. . . . So it's really a northern strategy.

We've started the process. I'm very pleased, in fact, thus far. I think things have moved fairly well. We haven't got anything that we can lay on the table and say, "We've got an agreement, and this will be the express result of that agreement," but it's all aimed at trying to get more activity in northern B.C.

In talking to the Peace agricultural people, I'm told that it is their view that more value-added manufacturing in agriculture could take place in the Peace with the kind of network I'm talking about, so I'm eager to pursue that as well. I expect the work will continue over the summer. I would hope that by the time we get to the Premier's summit on northern development later this fall, we might have something substantive to report in terms of progress. It's a strategy that has northern B.C. as its focus -- but with some realistic objectives in terms of increasing not only commodity throughput along the north line but attracting more through the B.C. Rail access line up to the Peace River. We'll see.

[9:00]

I would just like to pursue for a minute the notion of the capacity on the rail line. I'm thinking now of CN's line from Prince George to Prince Rupert. I first thought that B.C. Rail should pursue the purchase of the line. That was my first reaction: "Why don't we just buy the line from CN?" Well, they've got a line from Edmonton that's a national railway, and if they've decided they don't want to sell it, I can understand that. But I'm wondering. . . .

It seems to me that in the world of hydro, in the world of natural gas, owners of facilities sell capacity on the line. I don't know whether anywhere in North American rail activity a company might buy running rights on a railway without actually taking over ownership of the rail line. You can buy capacity on hydro lines; you can buy capacity on pipelines. I'm just thinking that perhaps -- looking at a corporation where there is a very low user rate on their line -- there may well be some things that we can pursue along that line.

Certainly we're going to be faced, as a province, with a continuing challenge at northeast coal. We're going to be under increasing pressure to bring the price of the coal, not necessarily at the mine. . . . The Japanese are interested in the price of coal in Japan, so that takes into account port charges, CN's charges, B.C. Rail's charges, as well as putting substantial pressure on the mining company itself to bring its costs down. So as I look at this problem -- and I do want to get back to addressing the agriculture problem. . . . One of the biggest and perhaps one of the most urgent issues is to deal with that problem.

I know CN has been under pressure; I know B.C. Rail has been under pressure. But I'm wondering if perhaps that couldn't be the catalyst to strike a new deal in order to make sure that that volume coming out of northeast coal can be maintained and perhaps even increased. I know that B.C. Rail has some new joint ventures in a mine that's opening near Chetwynd, and there may well be other opportunities in that same area.

Before we get into grain, could the minister comment a little on these issues that I've raised with respect to northeast coal and the challenges, from B.C. Rail's perspective, in starting to bring down some of those costs?

Hon. D. Miller: I think the member is fairly accurate. Northeast coal does present a challenge not in the short term with respect to the kind of rate structure for haulage but in the 

[ Page 5098 ]

long term, primarily because it appears that after 2003, there's no intention to try to renew any contracts with the JSI. Now, there are some other mines. B.C. Rail is part of at least one. They're not significant tonnage relative to the current or the new tonnage out of northeast coal -- 4.6 million, I think.

There's also the potential for some Alberta coal. There are some major developments in Alberta, some controversial developments. Notwithstanding that, the problem goes back, in my view, to this issue of underutilization. I mean, if you're struggling with a rail line that's at 30 or 40 percent capacity, it's pretty difficult to start to bring your rates down. On the other hand, if you've got a rail line that's at 70 or 80 percent capacity, then it seems to me that you do have more flexibility. So one of the spin-off advantages to just simply increasing volume wherever you can find it -- in grain, coal, you name it -- would be to provide more flexibility to deal with issues like northeast coal. It doesn't make sense to me; it doubly doesn't make sense to me as a northerner. I know that while there's been a huge growth in the south, we've got undercapacity which could be filled up. It just requires a commitment by various entities -- railways, farmers, wheat boards, federal government, all the rest -- to achieve that.

I think if we can get that up. . . . Going back to the issue you identified about current practice of some businesses joining, if you like, utilities -- electric utilities, gas utilities, those kinds of things. . . . It's ironic, you know. I think B.C. Gas was at one time owned by the public through Hydro, but things come full circle. The federal task force -- the northern corridor task force, I think they were called -- made a recommendation that the railbed between Prince George and Prince Rupert become a common bed. It's much like the rulings on communications -- and energy as well -- that are now looking at the infrastructure as common, with a transmission tariff that would be paid, set by a public utility commission or something of that nature.

We're looking at a slightly different model, which is a commercial arrangement between the two entities. I happen to favour that one, because if you're in business together, well, it's sort of like being in bed together, you know. . . . That's why I like the commercial model. The same way we were quite prepared to buy. . . . B.C. Rail would buy the CN line, but they don't want to sell it.

I like the idea of ownership on the port side. You've got a vested interest in making sure that your port facilities are used. That's one of the issues nationally in grain, quite frankly. We've got an underutilized facility in Prince Rupert and we've got overutilization in the south, but who cares? The terminal is full. It's good for the owner of the terminal, even though the farmer ends up paying more because ships have to wait longer to get the grain in their holds before they sail off, and it takes a day or day and a half longer to sail there.

To me, the commercial arrangement is critical, and I think that is probably the best way to proceed. We'll wait and see what the outcome of these discussions is. But to the extent that both entities can conclude or negotiate, that neither side would lose anything and the people of northern B.C. might gain, it's worth pursuing.

J. Weisgerber: I think there's an interesting difference between coal and grain. I don't want to ignore timber and timber products, because I know that they're important to B.C. Rail and they're important to the northeast. But the difference that I see between coal and grain, being similar in many respects in the way that they are bulk shipments, is that coal seems to be pretty much locked into a port and a port facility: northeast coal, Prince Rupert; southeast coal, Roberts Bank. With major coal contracts there doesn't seem to be much thought about realigning ports -- not so with grain. Grain is much more individually owned, much more individually consigned.

The minister raised the point about grain terminals being overfull in Vancouver and underutilized in Prince Rupert. I think part of the problem for that may well be the issue of cleaning grain. I've always felt that we should clean grain closer to source. But at least if you clean grain in Vancouver, aside from some environmental dust problems, there is in the Fraser Valley a reasonably close-at-hand market for the seed cleanings. I think that's not the case in Prince Rupert. If you haul wheat seeds and other off varieties of grain all the way to Prince Rupert and then clean it there, it seems to me that now you've got a problem with what to do with the cleanings, which should be a profit centre. So I'd like to see. . . .

Hon. D. Miller: Give it to cattle.

J. Weisgerber: One answer might be to raise cattle. Then you could just ship the hay and the cows in so that they could go along with the grain, and then you could ship the meat back somewhere else. I suspect, with all due respect, that there is a better mousetrap, and that would be to clean the grain someplace where there are cattle, where there is hay, where there is straw and where there might be a market for the beef.

Very seriously, one of the great opportunities that is untapped is the opportunity to set up a major grain-handling facility, and I think Dawson Creek is the logical choice to do that. As I like to remind people, at one time it was the largest grain-shipping point in the British Empire. There's a historical use of Dawson Creek as a major grain-shipping point. While the loss of things like the Crow subsidy and the other subsidies that have been in place historically in Canada provide some pain, they also, I believe, provide some marvellous opportunities with respect to attracting the northern Alberta grain products. No longer does it make any sense to ship grain to Edmonton, perhaps south to Calgary and then to Vancouver when, with a reasonably short trucking distance, you could put grain onto B.C. Rail in Dawson Creek and ship it either to Prince Rupert or to Vancouver.

I think that logically, then, the kind of economic development that I like to envision for the northeast would be that a major grain-handling facility with a cleaning capacity be the nucleus of a rather dramatically expanded agri-industry base in the Peace region generally.

I think there are opportunities for things like malting barley -- malting houses or malting barns is how I believe they refer to them. As the beer market grows around the world and the appetite for good-quality malting barley increases, there's an opportunity there. The containerization of various agriculture products, intense compression of hay products, palletization and those other things are all ideally suited to that northern agriculture economy, where land is relatively cheap and where hay crops and grain crops grow very efficiently. I'd like to see a strategy. I know that the minister and I have talked before about this being part of this overall northern economic strategy that the minister and others are working on.

I'm wondering if there has been any thought about B.C. Rail becoming proactive in developing that agri-market in the northeast. I'd suggest that with the land holdings, there's an 

[ Page 5099 ]

opportunity for some joint ventures. Prudently we would find people who have national or international expertise in those areas, but I would very much like to see them partnered up, if that's possible.

[9:15]

I guess the challenge here -- and we're going to find the answer to this -- is that I don't know that there's been much of a planning look at the regions of the province. I mean, we talk economically. I've been involved in a lot of this stuff in the very brief time I've been a member of cabinet, but we're trying to bring together people and organizations involved in endeavours where there is a linkage to see if we can emerge from that kind of process with a common goal or a common vision -- call it what you will.

From my point of view, probably the most successful one that I was involved with was the skills summit organized by former Premier Harcourt. After a couple of days at BCIT with leaders from the academic side, students, business, government and others fully engaged, what emerged out of that was a consensus document that said that we should do certain things in terms of our education system, particularly post-secondary. That was translated into the Skills Now programs -- 35 different programs under the heading of Skills Now, a lot of which addressed. . . . I was pleased with that, because almost everybody we went back to said: "It was more than just talk; you've actually translated this into some action."

The question I have about northern B.C. is: is it possible to bring together people from business, from the community, from the leadership side and the trade union side, aboriginal people who are interested in jobs and others -- without limiting that list that I've just described -- and in that kind of forum come out with at least the beginnings of that kind of shared economic vision?

I think there's too much disconnectedness in the north. I don't think there's enough of an understanding of the relationship, or potential relationship, between the Peace River area and where I live in Prince Rupert. I just don't think it's there.

The reasons for that are historic. All of our linkages are north-south; our transportation linkages are north-south. You know and I know that it's more difficult for me to get from Prince Rupert to Prince George than it is for me to get from Prince Rupert to Vancouver, and that's true no matter which point in the north you look at. Your linkages are not east-west with each other; they're north-south.

Unless you do that linkage as a region or get that understanding, I don't think you're going to develop your region. I think you're going to continue to do it in the old way: it will be piecemeal. Occasionally a big project will come along. For a variety of reasons, Ike Barber will show up and say, "I'm going to build a $100 million OSB plant in Fort Nelson," and that's great. But there will be no strategic, cohesive, broad economic vision that everybody can buy into and then collectively work towards in some fashion. That's really what we would like to achieve.

That means that those kinds of ideas that you've got won't be something that some agricultural producer in the Peace River has on his own and is trying to get people to pay attention to, but it might be something where the port group in Prince Rupert might say: "If that happens, we've got a better opportunity." In other words, you get more people working on the same thing. That's the idea of trying to do this. I think there are more ideas, quite frankly. You've cited some and I've cited some. There are others that we probably haven't talked about that are out there and that we could make part of that mix.

So I'm interested and B.C. Rail is interested. Their history as a corporation is not to simply run the train down the track but to look for opportunities for investment. They're in investments in the coal side and the property side and are quite prepared to do others and to play a meaningful role in northern B.C. -- and in the central part of our province, as well -- as a catalyst that is part of that economic change.

J. Weisgerber: Yes, I think there are two ways of approaching this whole economic development, particularly in underdeveloped regions, where you just kind of hope it happens. You just hope coal markets are good, somebody finds a mine, somebody else finds a market, somebody else finds a transportation system and somebody makes a sale, and you've got a deal. You hope that maybe somebody starts selling malting barley, somebody else comes along and provides a place to malt it, and somebody finds a way of transporting it, or you can provide a central kind of core infrastructure.

When the much-admired W.A.C. Bennett, with his vision for northern British Columbia, pushed B.C. hard through to the Peace, it sure wasn't with a guaranteed market at the other end. It was a vision for development, and too often we move away from that. I'm excited about the opportunity for that kind of activity again. I raise it in these estimates, because in this situation B.C. Rail can be a key component in a rather dramatic expansion in northern and central British Columbia, which is very much needed.

Part of that, in addition to the things that we've talked about, is as simple as needing grain cars to move grain to that underutilized terminal. We know that the federal fleet of grain cars is being dispersed. We know there are some thoughts about some kind of pooling of those grain cars for the benefit of all railways.

My sense is that B.C. Rail hasn't always been dealt with particularly positively in those kinds of arrangements with national railways. I expect that they tend to be a little bit snobby from time to time and perhaps think of things with a bit of a different perspective than we do. I know that many, many producers and producer groups in the northeast would like to see B.C. Rail move aggressively to acquire enough cars to make this happen. I wonder if the minister could provide us with an update on the grain car situation.

Hon. D. Miller: That's right, there has been a request for, I think, 200 cars to be allocated to B.C. Rail as a result of the disposition of. . . . I forget how many in total -- whatever. But there has not been a decision on that.

I do think, just to add some additional thoughts, perhaps. . . . As I've met with the province of Alberta, part of my strategy has been to try to identify common objectives on the theory that if it's just B.C. alone. . . . Again, the fight's a little harder. You have to get the railway's attention; you have to get the federal government's attention. If it's B.C. and Alberta. . . . Well, it's a little louder voice, so people pay attention a little easier than they ordinarily would. If you can add some other prairie provinces in there, then I think that's all to the good.

I also think that we ought to take advantage of what appears to be a recognition by the federal government of western issues. We have had a cabinet seat added in B.C. I 

[ Page 5100 ]

think that's good, and I said positive things when that happened. I see that Anne McLellan was retained in Alberta in a very high-profile, very difficult role for an Alberta minister: Minister of Justice. Notwithstanding that, it seems to me to indicate some confidence in Ms. McLellan as a key member of the federal cabinet. She's from Alberta.

So I think you have to operate on many fronts. I would certainly encourage other members of this House or other political parties to carry the message, if you like. But that's a conscious and deliberate part of my or the government's strategy, which is to try to make this. . . . As I say, the more people that are together on this, particularly B.C. and Alberta -- and particularly in the Peace River -- I think the better the odds are that we can actually achieve something.

J. Weisgerber: Before I turn things over to my colleague from Peace River North, I'd just like to pursue one other issue that is out of context with our discussions so far. That has to do with a rail spill of sulphur along the Misinchinka River up in the Pine Pass area. I know that there has been a lot of discussion, public debate, around that issue. I believe an environmental appeal is currently underway. The people who are most keenly concerned and affected by this are people living along the track in the area. I'm wondering if there is any thought of holding. . . . I'm not sure whether B.C. Rail or the Ministry of Environment has the responsibility for determining where the environmental appeal hearings are held. I don't, quite honestly, expect the minister or B.C. Rail to engage themselves in a debate around the various elements of the spill, but I do think we could take an active role in trying to ensure that the people in Mackenzie who feel most directly affected have access by way of holding some or all of the hearings in Mackenzie as opposed to Prince George, which I suppose has obvious logistical advantages for everybody but the people who are concerned about it and who would like to sit in and hear the discussions.

Hon. D. Miller: I'll ask Mr. McElligott to. . . . But I ask him not to take sides between Mackenzie and Prince George.

P. McElligott: I think that this particular issue. . . . The decision has been appealed to the Environmental Appeal Board. The corporation has made a decision to proceed with that, but in the interim to remove the spill, put it into rail cars, bring it down to Vancouver Wharves, stockpile it and see if we can't find a home for the sulphur elsewhere. Our concern is that if it lies exposed too much longer, there will be a risk of environmental contamination. There's absolutely no doubt in our minds that the safest, most environmentally friendly way to dispose of it is to seal it and bury it. There's all kinds of evidence for that, and we will pursue the appeal to get a decision to that effect. But in terms of this particular spill in the Mackenzie area, work crews are being mobilized today to go in and pick it up.

J. Weisgerber: That's an interesting development. I think I'm pleased to learn that. As I say, I know there are all. . . . I've read the arguments on both sides with respect to burying it, carting it away. Now, having this new bit of information, I'm almost tempted to pursue it. What do you do with it when you get it to Vancouver? That was B.C.'s original argument, but again, my reason for raising this issue is to try and make sure that people affected with these kinds of concerns have access to the appeal board hearings. I wonder whether B.C. Rail has been active in attempting to have the appeal hearings held in Prince George, whether they'd like to have them held in Vancouver or whether they would be willing to support some or all of the hearings being held in Mackenzie to give local people access to the debate.

Hon. D. Miller: The decision probably rests with the Ministry of Environment, Lands and Parks or the board itself in terms of its autonomy. I will say that Mr. McElligott is quite prepared, if that has not already taken place, to have someone from the railway go to Mackenzie to explain our view on this question -- what we're planning to do and all those kinds of things. If that hasn't happened, I'll make a commitment that we're prepared to send somebody in there to talk to the community at a community meeting or whatever. The member might advise us in terms of Reform.

[9:30]

R. Neufeld: I appreciate the discussion on the grain cars, the allocations and those kinds of things. I'd just like to pursue it a bit further. I don't want to beat a good thing too far, but do I get a sense from the minister that there is a possibility that B.C. Rail will be able to acquire 200 cars from the national fleet? This question has come up for a number of years now -- that we have to somehow get a hold of some grain cars. Maybe the minister could expand a little more definitively on that for me, please.

Hon. D. Miller: No, I didn't want to leave a wrong impression. I'm not saying that I'm confident that will take place. In fact, I'm a bit unhappy about the time it has taken. This allocation issue has been around -- for what? -- two years now. Have they made any decisions? What happens out there on the prairies, in the federal cabinet or on the Wheat Board? I will say that B.C. Rail will take whatever steps they think are advisable with respect to having sufficient cars available over time to meet their operational requirements -- whether that's leasing or other opportunities -- but they will pursue that. It makes sense.

I'm just trying the recall the total number of cars. Somehow I think 2,000, but I could be wrong on that number -- 13,000 cars. Surely a request for 200 cars from a major carrier like B.C. Rail is quite defensible. I encourage the member to write a letter to the authorities who are in charge -- the new federal Minister of Transport, the minister responsible for the Wheat Board -- and stake out a position on this.

R. Neufeld: You certainly don't have to encourage me, because I've written some letters already -- and quite a while ago.

The other issue surrounding grain cars is the acquisition by B.C. Rail of some 50 new hopper cars. Is that complete? Does B.C. Rail now own some 50 new hopper cars?

[ Page 5101 ]

Hon. D. Miller: We believe that is true.

R. Neufeld: It's no wonder I can't get a definitive answer on the 200 we're trying to acquire from the national rail lines. We don't even know exactly whether we've got the 50 that we're really buying or leasing within B.C. Rail, but I see the minister nodding that. . . .

Interjection.

R. Neufeld: Yeah, okay. Give or take ten cars, we have the 50 cars.

The minister stated earlier that there is no real strategy in the northeast to a lot of issues, and some of the northwest transportation stuff is going to bring some head to the thoughts that go around the northeast about moving grain and all other kinds of products out of the northeast. I would say that probably the difficulty the province is incurring, with people in the north maybe having a different viewpoint of the province, is that our natural tie is specifically to Alberta and not the rest of the province. That's not because they don't want to be part of British Columbia, but our natural tie is to Alberta. It always has been. Our grain farming is exactly the same as they do in Alberta. They're huge grain farms. Our oil and gas industry, which is centred totally in Alberta, is a big part of our economy.

Part of the problem is just the natural barriers -- the Rocky Mountains, for instance. As the member for Peace River South commented earlier, we didn't have a road or a railway from southern to northern British Columbia until 1958. It's no wonder that people in the northeast feel a bit alienated from the rest of the province.

Since I've been elected, I've been harping on buying railcars -- or at least getting railcars for grain out of northeast. It has taken five years, but at least to the credit of B.C. Rail, they went out and purchased or leased some 50 cars. There is some movement towards that. It's not just railcars and those kinds of things; there are roads that enter British Columbia, and I'll name one. Right at Goodlow -- I can't remember the road number -- there is a road that comes from Alberta, a major highway, and it ends at the British Columbia border. Then we have a little narrow trail in British Columbia to Fort St. John, which has a road ban on it for about three to four months of the year.

There is a lot more to look at in trying to get grain moved into the Peace country and get it on rail than just buying hopper cars or getting some agreement with CN for Prince George to Prince Rupert. There is some other infrastructure that's badly needed in the northeast to bring that grain not just through to Dawson Creek but through to Fort St. John and on rail in Fort St. John and down south. I know the minister is not in charge of Highways, but he certainly plays a part in the cabinet that's looking at the greater picture, and the greater picture is some other infrastructure besides rail or railcars.

I wonder if the minister is aware of those kinds of impediments that we face in the northeast in trying to move grain from Alberta through Fort St. John and Dawson Creek. It's no different whether you're going to either community. The road infrastructure is poor, at best, to try to move that grain by truck so that we can get it by rail down south and into the port of Prince Rupert.

Hon. D. Miller: I can't say that I'm aware of every impediment on the transportation infrastructure side. By the way, B.C. Rail, in addition to the 50 cars I talked about, also has another 87 through lease. Again, there's got to be a more cohesive approach to these questions. Or you, as the member, and people in your constituency might beat the drum for road improvements, but it's not connected to a larger strategy. To the degree that it can become connected to a larger strategy, you have more support.

Now, I don't think that the. . . . When I look at the potential that might come out of this northern forum, if it's simply a shopping list to government that says, "Here's the list," and there's a price tag attached -- and it's huge -- and if that's all that comes out, then I don't think it will be very productive. There has to be a strategy and a vision produced that you can deal with over time. We're trying to deal now, prior to that, with some of the fundamental impediments that I can see. Hopefully, as we get success. . . . You get more success. The more you build up industry, employment bases and population bases, the easier it is to attract transportation infrastructure dollars and the more voice you have.

By the way, I'm quite surprised. Given the taxpayers' support in the northeast part of our province, I don't know why they'd feel alienated. I mean, they're a long way away, and I suspect it's probably got more to do with that. But gee, there was a lot of money -- I think. There used to be an MLA up there named Phillips, who managed to convince a lot of people to put a heck of a lot of the taxpayers' money into infrastructure. We're trying to deal with some of those problems right now. There's been a bit of a fair share program in the past, you know, but there's not been much strategy. So let's get on with that. You can take that out and use that to get support for other initiatives.

R. Neufeld: I thank the minister for his comments. I guess there was a time when there was a strategy for the northeast. That was, maybe, back in Don Phillips's days -- and those kinds of things.

But in the past six years, the strategy for the northeast has certainly waned an awful lot when it comes to investing in infrastructure in the northeast -- and rightfully so. You say that that was the end of the investment and all kinds of infrastructure in the northeast. That's about when it ended: in 1991. Since then it's gone downhill tremendously badly; I can attest to the minister quite assuredly about that -- and I agree.

Getting away from that, there has to be a bigger picture taken, a bigger idea of what we can do in the northeast to put in the infrastructure, so that we can encourage some of that movement from Alberta through British Columbia instead of the other way around. That's what we're encouraging today. We're moving it from British Columbia to Alberta. Those are good-paying jobs. The minister knows full well. I won't go back into those parts of the estimates that we went through before. But we are losing quite a few jobs to Alberta, because we're not looking at the northeast in the manner that we should.

I want to go on a little bit to the rail line from Fort St. John to Fort Nelson. The minister is aware that in the last year the Fontas bridge was washed out. I'm not trying to attach any blame or anything like that. I mean, those things happen, the same as the slide that's taking place right now. Because the Fontas is fairly remote from either Fort Nelson or Fort St. John. . . . I just wonder what's in place to look ahead to situations such as that, when we have a heavy flood and a lot of deadfall going down the river and backing up against the bridge. I'm told -- and again I'm not trying to attach any blame to anyone or anything -- that B.C. Rail was made aware, quite a bit ahead of time, that there were some prob-

[ Page 5102 ]

lems coming at the bridge on the Fontas River. I just wonder what kind of emergency situation we have. Do we have someone at the Fontas, for instance, that monitors it? Or do we just rely on whoever happens to be in the area at the time? How is it handled? Maybe the minister could tell me.

Hon. D. Miller: There are regular patrols of the line. People have the history of trouble spots. We don't station people on a permanent basis at those locations. Rather, they travel on a regular basis and try to head off trouble. It's tough country up there, as the member well knows. Ask people in Highways about some roads that have been rebuilt I don't know how many times, which continue to slump and have those kinds of failures associated with that kind of geography. It's tough country, and we work very hard at trying to maintain that line. It's an important line.

R. Neufeld: I'm informed, and again I'll say on the record. . . . Again, I don't have this in writing, but I'm informed that B.C. Rail was notified a long time ahead that there were a lot of logs backing on the Fontas bridge and that actually nothing took place until one or two of the piers went out. There are people who live at the Fontas who have lived there most of their lives and have a pretty good idea of what takes place on the river in high flood time. I would just say to the minister -- and then I'm going to leave this issue -- that maybe there has to be a little bit more communication between those people who live at the Fontas and know what happens with that river and the office at Fort St. John or Prince George -- whoever would handle those kinds of calls.

[9:45]

Hon. D. Miller: First of all, with respect to the program in terms of inspections and those kinds of things, I'll arrange to have someone in a senior position at B.C. Rail come and brief you about the history of that situation.

Interjection.

Hon. D. Miller: Look, it doesn't make sense on the face of it. If the railway neglects to do what they have to do to maintain it, then they lose the connection, and there are other costs associated with that. It's only prudent for the owner to maintain the asset, to not let it deteriorate. Obviously, the investment in the asset over time, on an annual basis. . . . That's part of those business decisions you make about how much revenue you're generating and how much you can afford to put back in -- those kinds of questions. But we'll arrange for that briefing to take place.

As well, the related expenditures on an annual basis that do go into that portion of the line. . . . I don't have the numbers here. You've suggested, or you've heard that there's been a decline. But as I say, I'll have someone in a senior position provide you with comprehensive information on that.

R. Neufeld: Okay, I'll leave those issues and wait for that update.

One other issue I have with the Fort Nelson. . . . The subdivision and the rail yard itself, the major frontage road in the industrial park, is in Fort Nelson. In fact, there are probably five or six major bulk plants. It services the forest industry. In fact, there's an awful lot of heavy traffic on that road. I've been approached by operators along that piece of road that they would like to work, somehow, with B.C. Rail and put some asphalt on that piece of road. It's not very long, but it encompasses an awful lot of traffic from the highway. As I said, all the truck traffic that goes through Fort Nelson usually stops there for fuelling-up purposes and for hauling the logs and everything.

I know this has been an issue for many years, having lived in Fort Nelson. I just wonder if the minister could arrange for someone to also be able to brief me a bit on the possibility of some kind of joint development between the users of that frontage road and the BCR, to develop some asphalt on the frontage road.

Hon. D. Miller: Again, I'm not familiar with the issue. I'll ask Mr. McElligott to take a look at the issue and instruct staff to have some discussions. That's without making a commitment that we're going to do anything -- but to explore the issue.

R. Neufeld: I guess I'm pretty well done with my questioning. I'm not sure what's taking place. I know you were having some meetings with the House Leader here. If you want to just take a few minutes' break to find out what's going to happen. . . .

Hon. D. Miller: The member has raised some good questions from that point of view, and for any that I haven't answered tonight and have made a commitment to, we'll try to get him answers.

Mr. Chairman, I understand there is some brief discussion taking place. Perhaps we could just stand back for a minute, and we could make some progress.

The committee recessed from 9:51 p.m. to 9:59 p.m.

[W. Hartley in the chair.]

P. Nettleton: The members from Peace River have stolen some of my thunder, in terms of some questions relating to the movement of grain from the Peace River region as well as the development of an overall regional strategy for the north, in terms of economic development as it relates to B.C. Rail. So I won't canvass those issues again.

[10:00]

Hon. D. Miller: Yes.

P. Nettleton: Dealing, if we may, then, with BCR Ventures. . . . BCR Ventures was created in 1995 to develop new rail traffic opportunities through joint venture investments and resource development projects throughout the B.C. Rail 

[ Page 5103 ]

system. I wonder if the minister might comment on the successes to date of current active investments and proposed developments to this end.

Hon. D. Miller: The only active project to date is with Pine Valley Coal. Feasibility studies are due very soon, which will be the basis for determination of whether to proceed or not.

P. Nettleton: In the fiscal year 1995-96, B.C. Rail's purchasing department spent $166.2 million in British Columbia, $89.6 million in other provinces and $21.2 million for products and equipment that could not be acquired here in Canada. I wonder if the minister could contrast these figures with those of the most recent fiscal year. Perhaps that's not possible, given that we haven't reached the end of the current fiscal year, but he may have some indication as to how those figures will match with the current year.

Hon. D. Miller: The most recent expenditures should be in the relative order of magnitude of the ones you've cited.

P. Nettleton: I understand that B.C. Rail currently employs some 2,500 unionized workers. They abolished 200 non-union positions between 1990 and 1995, as well as a 50 percent reduction in the overall number of jobs in the last 15 years. Is this a strategy by B.C. Rail to match the leaner crews of its competitors -- namely, CN-CP?

Hon. D. Miller: I think any operating company in the commercial sector has to be competitive. No one likes to reduce their workforce, but it is agreed that that allows some efficiencies. Those are the kinds of things that the company -- not a specific mandate to reduce employees -- obviously has to look at.

P. Nettleton: In 1995 the passenger arm of B.C. Rail lost $4.5 million. Has this trend continued into 1996? Has there been, or is there likely to be, some move to alter passenger service or in some way address these losses?

Hon. D. Miller: It's a service that some people rely on. We want to look at how we can maintain that but look at revenue opportunities as well. We've just started a dinner car, the member may be aware. I haven't had dinner on it yet, but there's a write-up -- I haven't even had a chance to read it -- which apparently makes it fairly attractive. We're moving a lot of people -- I think about 350 people in an evening. So we're looking at those kinds of opportunities for revenue enhancement.

P. Nettleton: In reference to the Pacific Starlight Dinner Train, I'd like to briefly canvass something, if I may, and that is the relationship with the British Columbia chapter of the National Railway Historical Society. As I understand it, B.C. Rail has leased cars from the society on the Royal Hudson for some years, this being a non-profit society which, as I understand it, refurbishes rail cars and in turn leases them to a number of railways, including B.C. Rail. This is a relationship that has worked well, in that BCR has not had the capital investment associated with the purchase of such cars; further, the society has arranged the staffing of the cars, which has allowed B.C. Rail not to assume the liabilities associated with staffing.

Apparently in November 1996 there was a verbal agreement for another one-year contract. This was consistent with the practice, which had been that a written agreement had always been entered into sometime after service had actually commenced. For the past two years there has been a parlour-class dining service. As well, the society had conceived the concept of a diner train and since 1987 had been working to this end, in cooperation with B.C. Rail. This involved providing B.C. Rail with cost estimates, price estimates and other details with a view to acquiring further working relationships with B.C. Rail. I understand that B.C. Rail has subsequently informed the society that the deal is dead. Indeed, as I've been instructed, it was at the initiative of the society that their inquiries led to this disclosure. Apparently B.C. Rail had purchased eight cars from an American owner -- which is now public knowledge, I believe -- in Yakima, Washington: Washington Central Railway. Further, this purchase had been arranged, so I'm told, without the benefit of a public tender. I'm wondering if perhaps the minister might comment on that series of decisions.

Hon. D. Miller: Any disputes relative to the initiation of this service will have to be dealt with between parties that may feel they've got a grievance, not here. When you're purchasing this kind of car -- they're not universal. . . . BCR made a decision, and it appears to be paying off.

P. Nettleton: As I understand the minister, then, the minister has taken a position that he's not prepared at this point to discuss any of the details in terms of the history of this agreement between B.C. Rail and the historical society, nor is he prepared to discuss in any detail the involvement of the society in terms of developing the business plan, which B.C. Rail subsequently decided to develop on its own. Is that the case? Is that the position of the minister?

Hon. D. Miller: If there are disputes arising out of the operation of B.C. Rail, then those issues have to be dealt with directly through B.C. Rail. As the minister I'm not taking a hand in that. There may be some correspondence addressed to me, which I'll respond to, but. . . .

P. Nettleton: I'm somewhat perplexed in that if this was a matter of litigation before the courts, certainly it would be something that would be understandable in terms of the minister's reluctance to discuss this in any detail. However, B.C. Rail, I would remind the minister, is a Crown corporation. If there are some difficulties, particularly with, as is the case in this instance, a non-profit society which has been involved in a relationship with B.C. Rail over the course of a number of years, it seems to me rather perplexing that the minister is not prepared to discuss them in any detail. It may be that the minister is not familiar with the details of this dispute, if you will. If that's the case, I would accept that the minister could perhaps bring himself up to speed in terms of the difficulties associated with this ongoing working relationship. Again, I'm somewhat perplexed that the minister is not prepared to discuss this in any more detail.

I'll move along, then. I propose to canvass in some detail, after having read the Northwest Transportation Corridor Task Force, the whole question of transportation as it relates to B.C. Rail, reaching from the Peace River to the port of Prince Rupert, which I believe is the hometown of the minister. I listened with some interest as the minister discussed, in some detail, the whole concept of developing an overall northern strategy, and that was certainly informative. It would be to our advantage -- that is, for those of us who live in the north -- to develop an overall economic strategy, again, as it relates to B.C. Rail.

[ Page 5104 ]

I have a number of questions in which I refer to table H7, which is the provincial net debt summary. I've taken the liberty of quickly showing this to Mr. McElligott during the break -- I don't have a second copy of this with me. I have a number of questions for the minister. Table H7 of "Budget '97 Reports" details the provincial net debt summary. In this table it shows a revised debt forecast for B.C. Rail of $403 million in 1997. This is an increase of $77 million. Perhaps the minister can give some account of this increase.

Hon. D. Miller: It is generally the investments made by the company to grow the business -- some of those issues which we canvassed earlier.

P. Nettleton: As I understand it, the revised debt forecast, then, is tied into capital expenditures. Table H7 of "Budget '97 Reports" suggests that the trend for B.C. Rail has been to assume more debt in order to engage in capital expansion. The minister has confirmed that that is the case. Does the minister have any concerns that the dividend request will limit B.C. Rail's ability to make capital expenditures?

Hon. D. Miller: No. We accept the fact this is a commercial Crown that operates in some discrete areas -- rail transportation, trucking, WesTel, investments in property. Some of those investments have had a benefit generally throughout the corporation in terms of its operation; some of them have had a very specific benefit. Presumably in the city of Prince George, for example, the office complex is something that's deemed to be of some benefit. A shopping centre complex in Squamish. . . . Those are investments which do produce returns, but any company has to make those kinds of investments in order to continue to be in business.

I have no intention of being facetious at all. The corporation, as we've done with other Crowns, is going to be challenged by the dividend requirement. But what's wrong with that? Nothing. If government agencies, ministries. . . . My ministry took a terrible beating, a terrible blow -- cuts all over the place. We lost staff; we laid off. . . . It wasn't easy, by the way. Do it some day: lay off a bunch of people.

Everyone is struggling because of the fiscal circumstances. Why shouldn't Crown corporations do the same? If they've got to struggle to meet it, well, they've got to struggle to meet it. That's the way it goes. So I have all the faith in the world that Mr. McElligott and his team will respond to the challenges that we impose on them.

[10:15]

Hon. D. Miller: You can look at it any way you want.

P. Nettleton: There seems to be a fundamental contradiction occurring here. On the one hand, in estimates the minister has stated that the plan is to balance the budget, while on the other hand, he has attempted to extract more money from B.C. Rail by making them assume greater debt. I wonder if the minister could explain what his strategy is regarding Crown corporation debt, when you translate it into a dividend for the provincial treasury.

Hon. D. Miller: I am always, always perplexed -- perhaps I'm misconstruing, and if I am, I apologize in advance -- by this notion that government takes money into itself. It's being peddled a lot by politicians these days who think they've got something to gain. Government is a vehicle. It's a vehicle for the people both in an organizational sense and primarily in the very real way that the face of government is the services that are provided to the public. They're provided through revenues obtained -- some through taxes, some through fees, licences, everything else. It's allocated to programs that go to pay for our education system, our health care system and our transportation system. I've not gone through any of my estimates without somebody standing up on the other side and saying we should spend more money. The members from Peace River were rightly championing: "Spend more money up in our region -- on highways, on this and that and the other. Spend more money on railway maintenance. Spend more money; spend more money." People think. . . . You know, there's sort of a suggestion that the government takes the money and squirrels it away somewhere. It's nonsense; it's stupid. Government raises revenue and uses that to provide programs.

You can argue that we should spend more or we should spend less. I do recall -- it wasn't that long ago, the last election. . . . It was a year and a little bit. My memory of a lot of things is hazy, but I do recall some salient features of that campaign which was, if I'm not mistaken -- no disrespect. . . . I think there was a policy put forward by your party to cut spending by $3 billion. How were they going to accomplish that? Would they have looked at the Crowns and said: "Are we getting enough? Are these Crowns working the way we think they should be working? Should we say to them: 'We're going to ask you for a little more'?"

I don't know. The idea that we're raking in money somewhere is foolish. We have Crown corporations. Their only reason for being is a public policy one; otherwise, they wouldn't exist. In which case, I guess we might say: "Well, we might increase taxation." So there are all kinds of ways, but it's only for one purpose, and that's to provide programs and to finance these estimates -- which seem to go on for a while.

P. Nettleton: Earlier in the estimates the minister stated that the government must keep their eyes on debt to ensure that it has been invested in investments like new highways. I think the minister has talked about highways in some detail. I'm just wondering what steps the minister is taking to ensure that B.C. Rail does not just assume more debt in order to pay a dividend to the provincial treasury.

F. Gingell: Well, it will assume more debt, to pay a dividend.

P. Nettleton: Certainly it will. Surely the minister wants B.C. Rail to invest in capital projects, not just lost causes. Perhaps the minister could comment on that.

Hon. D. Miller: Mr. Chairman, after lo these many years when others were in power, did they do anything about trying to utilize B.C. Rail in conjunction with CN Rail that improved the position of the north? I don't think so. I'm not aware of it. We're trying to utilize the Crowns in a way that benefits the public of British Columbia, which owns the Crowns. If we can achieve that. . . . I know that in the member's riding. . . . Prince George-Omineca, is it? I'm sure that his constituents would be quite appreciative if we can actually do something to increase business up there, utilizing B.C. Rail.

P. Nettleton: Certainly.

Hon. D. Miller: Absolutely right. They might have to make some investments to do that. Now, what you have to be 

[ Page 5105 ]

careful of is that your colleague will say: "Aha! That's debt that the government imposed on them to get a dividend." You and I might say: "Those are investments made by a corporation to improve the business opportunities in your constituency." That would be an interesting debate, but we'll see.

F. Gingell: Would the minister accept, first of all, that B.C. Rail presently owes money, and in this coming year, it's going to borrow some more? If it hadn't paid a dividend of $10 million in the year ended December 31 1996, they would owe $10 million less. Would you hear that -- that the debt would be $10 million less?

Hon. D. Miller: Well, yes, I can accept that that's one premise.

F. Gingell: I'd like to suggest to the minister, with due deference, that it's the only premise. B.C. Rail, other than those strange preferred shares they used to have some years ago -- which are all redeemed now -- haven't paid common share dividends to the provincial government, to my knowledge, for many years. Is that true?

Hon. D. Miller: For many years, historically, you're probably correct. There was the $10 million -- and $4 million this year.

F. Gingell: When you look at the total package of a government, there isn't $10 million that suddenly came from somewhere. B.C. Rail has all kinds of places to spend money: investments to make, railcars to purchase, rail to upgrade, buildings to build, shopping centres in Squamish -- wherever, whatever -- offices in Prince George.

So all this dividend did was reduce the amount of the deficit. The accounts of the province are consolidated; all these debts are debts of the people of British Columbia. In the end, it doesn't make any difference. It's purely and simply a $10 million exercise to make the deficit look smaller and to move that debt from being direct debt to being debt of B.C. Rail.

If the $10 million dividend had not been paid, the $10 million would still have been spent in the programs of which you spoke: education, health, transportation, building roads and stuff in the north -- whatever. That $10 million would have just finished up as direct debt. Instead, it is going to be debt of B.C. Rail. And that's the only difference; it's just a way a picture gets painted. So in 1996 there's $10 million. What's the dividend that's paying for 1997? Or has that been determined yet?

Hon. D. Miller: Fifty-six million dollars.

F. Gingell: And there isn't anything that B.C. Rail is going to do this year to pay off all of its debt. So we can make the assumption that at the end of the year, B.C. Rail will owe $56 million more than it would have done if it hadn't paid this dividend. Correct?

Hon. D. Miller: Again, it ignores the sort of operational issues around B.C. Rail. They make a number of investments and will continue to make investments to produce a return. We talked earlier about the potential for a $40 million investment in new facilities -- track, etc., -- at Vancouver Wharves. Those kinds of investments produce a return. You don't argue in a vacuum. There's got to be a context to any discussion.

I know what the member is saying and probably could construct an argument that satisfies him. But debt is something, in the case of a private sector company, that is necessary in order to stay in business, in order to continue to produce returns. We can see the results of, for example, a non-investment policy in the pulp mill in my hometown. It's a basket case now, because the private sector employer who owned it didn't make the kind of investments that you have to make if you're running that kind of facility.

We are also a Crown. It's not a completely private sector entity. Members have stood in this chamber not too long ago and argued that if it didn't have that imperative, then it would be just like any other private sector company, and there would be no rationale to maintain it as a Crown. Where's the public policy, the goals, in terms of trying to retain the entity as a Crown corporation?

Undoubtedly, throughout the history of B.C. Rail, they've made expenditures that have reflected policy initiatives of the Crown or, in some cases, of people in particular regions. The member for Peace River North wants them to pave an access road. That is the kind of mix of decisions that the entity will make. The fact that we've asked for a larger dividend, as we have with others in these times, is the challenge that's going to be part of their operational mandate. They know what it is, and they have to deliver.

F. Gingell: I would like to suggest to you that the important thing from B.C. Rail's point of view is to be financially viable. B.C. Rail has a cash flow of some $85 million or $90 million a year. So first of all, they will look after that debt service and then, having ensured that they have serviced that debt and that their working capital is in some acceptable position, they will look after their investments next. You don't have to borrow money if you can use your retained earnings. If you can use your profits and cash flow to buy new cars and new things, the company and the people of British Columbia will benefit doubly, will have the income from the equipment, and we won't be paying interest to the money lenders. I simply don't accept the premise that it's necessary for B.C. Rail to pay a dividend until they are in a position where they have an excess cash flow. They should look after that issue first.

Some of the things that I mentioned in passing were such things as working capital. The working capital of B.C. Rail is a negative -- or was, at December 31, 1996 -- of some $30 million, I think -- yeah, $30 million. I would have thought that the board of directors, before they pay a dividend of $56 million to the government, would say: "Hey, executive, management, we shouldn't be having a working capital deficit of $30 million. The first $30 million of this year's profit should go in at least to. . . . Well, the first $50 million of this year's profit should be brought into getting ourselves a positive working capital." When I look at the expenses of the organization, the annual amount, and I see the amount of the accounts payable, I wonder whether you're paying your accounts in 30 days. Maybe that's a good question. Are all your accounts payable being paid in 30 days?

Hon. D. Miller: We pay our bills on time. I don't think there are. . . . Any principles with respect to that are being followed by the railway.

[10:30]

[ Page 5106 ]

depreciation, so you take those things out, and you look at what the ongoing monthly expenses are for fuel and maybe property tax assessments and those kinds of things. . . . Well, there won't be any accrued property tax at this point, because we're at December and property taxes are assessed on a calendar year. But you have accounts payable of $122 million, so there must be some very significant items in there that are outside the ordinary course of business. Could the minister advise the committee what those items are?

Hon. D. Miller: We don't have the finance person here, but Mr. McElligott has confirmed that we do pay our bills in a timely way. Part of that might be explainable by the. . . . If you're in the freight business and there are multiple carriers in the chain, you end up collecting at the front end and ultimately have moneys owed to subsequent carriers over a two-month period. So whether that accounts for the full amount. . . . I'm not saying that it is, but that's one explanation with respect to money that might be retained but in fact is owed.

F. Gingell: The accounts receivable only amount to $62 million, and the accounts payable amount to $122 million. I really would like to follow up on this issue. I wonder if it could be arranged that Mr. McElligott could get a response from the finance people tomorrow morning and we could deal with it tomorrow. All of a sudden I have some concerns that B.C. Rail is using its creditors' money to operate, and I'm sure the minister is as interested and as concerned about that as I am. I certainly think that's an issue that should be followed up. I would have asked the question earlier, but the day moves along. Would that be acceptable to the minister?

Hon. D. Miller: I understand that we do have an agreement. I'm quite happy to have the CFO, or anyone else that Mr. McElligott thinks could assist, made available to the member to follow up any questions he has relative to that.

We did commence on a broader topic, and that is the position advanced by the opposition that somehow we're foisting debt onto the Crowns. I tried to respond in a way that said these Crowns are unusual. This Crown in particular performs a function that could be performed completely in the private sector. Yet it is retained for public policy goals as a Crown corporation and in that sense is a creature of government. We have inflicted dramatic cuts in ministries; we've told them to try to deliver the same level of service with reduced staff and reduced budgets. That's been a call on their creativity to do that. In my own view, imposing greater obligations on the Crowns is just as valid as doing it internally. The end result of that will be the financial performance that is tabled following the financial year, and those figures are available for public scrutiny.

In the meantime, this railway and its operating entity is performing a valuable service for many parts of British Columbia. In terms of the investment in. . . . Whether it's the potential for a new coal mine investment, property development investments or looking at playing a key role in terms of trying to increase transportation of goods in northern British Columbia, they're doing what they ought to do, but they're operating as a commercial Crown. I understand the member's premise, but I think we've previously agreed that we would complete these this evening.

F. Gingell: Those agreements, of course, are ones that we would like to maintain and keep. But when issues arise, you sometimes don't fully appreciate what is happening. I mean, here we are, having a discussion about a proposed dividend of $56 million. B.C. Rail made a profit last year of $36 million. The next question is: is there an expectation of substantially increased profits in B.C. Rail in 1997 for the year ending December 31, which would give you reason to believe that B.C. Rail could pay this dividend out of current earnings?

Hon. D. Miller: Again, as a government, we have imposed this obligation on B.C. Rail and other Crowns with respect to the dividend requirement. The operating entities are obviously looking to all opportunities. One of the opportunities in B.C. Rail, for example, may be property that's surplus to their long-term requirements. All of those are being examined at this point. There's no specific plan that can be tabled as to how the corporation will achieve that, but all that is being looked at.

F. Gingell: One notes that in other commercial Crown corporations, the provincial government accepts and puts certain restrictions around dividend payments and such things. For instance, in B.C. Hydro, we discussed earlier, too, there are special directives, which deal not with working capital but with debt-to-equity ratios. Are there any restrictions here? Are there any basic policy concepts that surround this amount of $56 million? How was that amount arrived at?

I presume there was some advice from B.C. Rail. That $56 million was an amount that they could afford and that they would write a cheque for. I'm wondering if the minister could advise the committee if there were any policy restrictions that deal with these issues, like the special directives in B.C. Hydro, and if the $56 million was a figure that B.C. Rail came up with and said: "Hey, this is what we can afford for this year."

Hon. D. Miller: No, there are not those constraints, given the pattern of rate-setting, etc., with B.C. Hydro through the public utilities commission. The transportation sector has been deregulated, and there are commercial tariff arrangements between carriers and shippers.

F. Gingell: During the course of the budget debate, there is an item in this year's budget of $170 million that's going to be raised from the sale of various assets. On the evening of the budget debate, the Minister of Finance mentioned B.C. Rail in passing and mentioned that they were perhaps a source of some of these assets that could be disposed of. I seem to remember that the response from B.C. Rail was one of shock, and they didn't know that such a discussion had been going on. I was wondering if in the intervening three-month period of April, May and June, this issue has been sorted out and if there are any non-working assets or excess assets of B.C. Rail that are slated for disposition.

Hon. D. Miller: I indicated that that's one of the areas the railway is looking at, but it has not developed any definitive plan in terms of what that might amount to. I'm not certain about the comments of the Minister of Finance. I think they were misconstrued, and the individual in question who commented forgot that he was working for a Crown corporation.

F. Gingell: And has since been decapitated, no doubt. But surely the Minister of Finance doesn't just pull a number out of the air: $170 million for the sale of assets. There must have been -- surely there must have been -- some discussion with B.C. Rail about assets that are no longer working, assets that are considered excess to their needs and that could be sold.

[ Page 5107 ]

Am I to understand that the response is no? Was there no discussion? B.C. Rail were not involved? Did we just decide that we could sit in an office over there somewhere in the west block and make a decision about what assets B.C. Rail might have that would be excess and what value they might amount to?

Hon. D. Miller: Well, Mr. Chairman, no. Discussions always take place between the Crown corporations and government. Discussions have taken place and will continue to take place.

F. Gingell: And you're not going to tell us any more than that, Mr. Minister.

If I may just slip off onto another subject, that's Vancouver Wharves Ltd. I noted that in 1996 volumes had dropped fractionally and tonnes moved per man-hour had dropped fractionally -- very, very small. I was wondering if the minister could advise the committee what the profits were for the year ended December 31, 1996, which are part of the $36 million profit.

Hon. D. Miller: I understand that the corporation has not historically segmented its operating results. There may be reasons for that with respect to the commercial nature of those operations. I understand that is the case.

F. Gingell: I would suggest, with due deference to the minister, that a commercial corporation that is in exactly the same business will be required to publish segmented information in its annual report. I fail to see how it could be in any way negative to B.C. Rail's competitive position. Vancouver Wharves is a deep-sea facility that's at the end of its own rail line. I appreciate that they compete with others. But business corporations are required to include segmented information for all of their business sectors. If you look at an individual oil company, it splits up crude oil production, transportation, refining and marketing -- although refining and marketing are often in one. But I do think that the issue of what B.C. Rail should properly disclose to their shareholders, which is all the people of British Columbia, could be revisited.

I wonder if the minister could. . . . I mean, I didn't hear the minister sort of suggesting that this issue has been looked at by him recently. It's just historical practice. B.C. Rail hasn't owned Vancouver Wharves for very long -- only two or three years. It is an issue that I think should be looked at. I wonder if we could get assurance from the minister, no matter what the result of that review will be, that consideration would be given to having a commercial Crown disclose information as though it were a commercial corporation.

Hon. D. Miller: I'm not that familiar with the auditing standards, nor do I accept the member's statement, absolutely, that were this to be a non-Crown operation but just simply a commercial operation, they would have to do certain things. I'm not certain that is the case. In fact, the external auditors -- in this case, Coopers and Lybrand -- do not support that. They support what we do now. So if I were to follow up. . . . I'm certainly interested in some of the rationale. I think that instinctively, it's the commercial nature of the operation and the linkages between the entities that are probably the reasons. But I think there are probably good and valid reasons. I'm quite prepared, and I'll give a commitment to the member that I will undertake to become more informed about why that is.

[10:45]

Just going back to the financial statements, I haven't had an opportunity to look at them in any depth, but one thing that immediately pops out is that there's a $50 million sinking fund bond that's due in July 1997 -- in the current year. There is virtually only $7.5 million in sinking funds available. I would presume that that applies to more than that one bond. So that bond falling due in 1997. . . . I would have thought that it would have been shown as a current portion, current obligations on long-term debt -- note 3. They are only included in there to the extent of $9 million, so it obviously does not include that $50 million sinking fund bond, and I wondered why. I wonder if there must have been some discussion about rolling over debt and paying off debt that comes due. I don't see it described in the notes to the financial things. I wondered if the president is going to advise the minister what the status is with that $50 million item -- because it was probably due yesterday.

Hon. D. Miller: Yes, I'm advised that would simply be rolled over. But again, not having the CFO here to provide more explicit explanation. . . . So that's the explanation I can offer at this point. If there are more details, I will ask that those be conveyed to the member as soon as possible.

P. Nettleton: Just a few more questions, if I may. I'd like to return the minister's attention to the $56 million dividend. Perhaps the minister could indicate what information was utilized by his government to produce the $56 million dividend figure.

Hon. D. Miller: Well, without getting into a lot of detail, analyses were done, discussions took place and decisions were made to arrive at that number.

P. Nettleton: Does B.C. Rail have the ability to pay a dividend similar to the request made this year and in future years, without compromising the corporation's plans for asset development through capital expenditures?

Hon. D. Miller: Again, I've tried to talk about the broad mandate of B.C. Rail and some of the things they're looking at. We have confidence that the railway and all its entities can meet the challenges that we've imposed and, as well, meet the challenges of operating in the public interest to try to create more jobs and opportunity, particularly in northern B.C.

P. Nettleton: Has the minister responsible for B.C. Rail either authorized or requested the sale of B.C. Rail assets in order to pay for dividends?

Hon. D. Miller: I answered the question earlier: the answer is no.

P. Nettleton: What particular capital investments are liable to be cancelled or delayed on account of paying this dividend? And particularly -- I noticed the minister mentioned the north -- I'm just wondering what impact the payment, the extortion of this amount, will have in terms of reinvestment in the north.

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Hon. D. Miller: I did outline that the corporation is looking at an investment in a coalmine in northern B.C. Is it the member's wish that they abandon that?

F. Gingell: That's not what was. . . . It's typical of this minister. What we're concerned about on this side is that by you extracting a $56 million dividend that's only a shell game -- that's all it is, and it's a transparent shell -- you are putting in jeopardy the ability of B.C. Rail to expand and create jobs and to do all those good things that B.C. Rail is known for doing -- not only in northern British Columbia but in all parts of British Columbia.

We are concerned that the $56 million, the negative working capital position, all jeopardize B.C. Rail's options. I know the minister says that he has confidence in management. I have confidence in management, I guess, but I'd have more confidence if I heard management stand up and say: "Yes, we volunteer to pay a $56 million dividend because we had this line of credit arranged and we're rolling over this bit of debt. Our capital expenditures for this year are going to be this much. We anticipate that our cash flow is going to be so and so, and at the end of the year B.C. Rail is going to be bigger and stronger" -- and so on. But I don't hear that being said.

All I hear being said is that the government made the decision to pull $56 million out. I think we have complete agreement that if they didn't do that the province would be borrowing $56 million more, because it wouldn't change the amount of expenditures through the consolidated revenue fund. You're just moving debt from the CRF to B.C. Rail. The people of the province are liable for it, anyway, I would imagine. I would presume that this debt is going to have provincial government guarantees sitting behind it. So we're concerned that to paint a pretty picture that accomplishes nothing, you are putting B.C. Rail at a disadvantage. The concern is real, and I'm surprised the minister doesn't share our concern.

Hon. D. Miller: Through the course of these estimates and outside of this estimates process, as the minister I certainly have talked about B.C. Rail achieving certain things and they are. They are prepared to look at a significant investment in northern B.C. in a new coal operation. They've made investments in Prince George, in Squamish and in other places. They are looking at a potential investment in Vancouver Wharves. They are doing all of the things that I would have thought the opposition wanted them to do.

F. Gingell: And in years when they didn't do it?

Hon. D. Miller: On top of that, we are challenging this corporation to play a more significant role in transportation issues in northern B.C. That looks like it's moving forward, for the first time, with both CN and B.C. Rail currently in a negotiated process to try to come up with those kinds of solutions.

So the members have made their point. I realize the point they've made. It has not been lost on me, but I think they've made it. I don't know how much more they could make it, how much more pointed they could be in making it. I think they've done it. We have a difference, where I think it's going to rest.

Interjection.

Hon. D. Miller: Don't think that I don't have a deep and abiding interest in whether it's B.C. Rail or any other entity that's under my purview. I do. There are lots of things that have happened in the past that we're dealing with. We've got stability of operation on the Hydro side as a result of those events a couple of years ago. That needs to be addressed, and it is being addressed. We've got an organization that's moving forward to try to deal, for the first time, with some of these modern challenges it's going to face.

So the opposition is generally saying: "Why have you, bad government, imposed this unfair obligation on these poor Crowns?" Well, I'll tell you why. Because they're Crown corporations, and they're going to be challenged just as much as we're going to be challenged in government. So we'll await the results of that. But I have a lot of confidence that they are up to it, and we'll see what happens.

P. Nettleton: In any event, I think that more or less concludes our line of questioning for this evening. I would say, however, that the line of questioning as it relates to the $56 million dividend should not be construed as a personal attack on the minister, for whom I have an immense amount of respect. I'm new to all of this, but I suspect that someone somewhere has handed him a figure. They've pulled it out of the air and said, "Mr. Minister, you'd better look around for X amount of dollars," and he in turn has turned to B.C. Rail and handed them an amount that there is no question will have an impact on B.C. Rail's ability to reinvest, be it in joint ventures, working capital or what have you. So it will have an enormous impact on the northern and interior communities of this province, and may ultimately affect the commercial viability of B.C. Rail.

Those are my concerns, and I'm certain the minister shares those concerns, but at the same time I think it's unfortunate that B.C. Rail has borne the brunt of what is obviously a bit of a cash crunch.

I thank the minister for his patience, and I thank Mr. McElligott as well. I look forward to estimates on B.C. Rail next year. Perhaps at that time we can have some answers in terms of the performance of B.C. Rail and the impact of this dividend on B.C. Rail.

Hon. D. Miller: I'd like to say just in closing that I thank the member for his questions -- and his colleague for his, as well. I seem to be plagued: all the revenue enhancement ideas that are under my ministry are the subject of fierce criticism, even ones that allow people to have a little bit of fun while they're losing their money.

Mr. Chairman, I don't know what the order is here. I assume there is the potential to get rid of some of these votes but to retain one that allows the final discussion tomorrow on the. . . .

Interjection.

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

Motion approved.

The committee rose at 10:58 p.m.

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