[ Page 7957 ]

The House met at 10:05 a.m.

Prayers.

Tabling Documents

The Speaker: Thank you for that information, Attorney General. Are there further reports to present?

I'd like to let the House know that the Chair will bring forth a statement at 2 o'clock this afternoon about yesterday's proceedings.

Orders of the Day

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

ESTIMATES: MINISTRY OF FISHERIES

(continued)

D. Jarvis: I want to say, first of all, that our critic is away for the moment but shall be returning soon. So don't look too disappointed.

In any event, I want to revisit some of the topics I had talked to the minister about several weeks ago, I guess. He had made a statement when I asked about having a full moratorium on the fisheries. He said that it would impact the species to the point where a lot of the species could be wiped out completely. I just wonder where that information came from and if his source of information was aware that. . . . I come back to a situation up in Alaska, a few years back, in which there was a combined trawler and a net-fishing strike, and the sockeye in Alaska -- up in that Bristol Bay area that's serviced by about four or five different creeks that come into it. . . . It's quite a big run. They all had a strike, and it was a high cyclical period for the fish coming back. Up to that time they had been catching four million to five million fish a year. That year, with the high cycle of fish coming in there, they had more sockeye than they'd ever had before. Consequently, they're now having runs of anywhere from 20 million to 40 million sockeye a year. Biologists are now starting to change their attitude with regard to opening a whole fishery up, and the impact of different salmon breeds on top of other salmon that come in isn't what it used to be.

I wonder if the minister could tell me if the scientists that he gets information from have given any consideration to something like that. We have several little incidents that we can count. Back in 1913 we had the slide in the Fraser River -- Hells Gate. Fish are remarkable animals -- if you can call them an animal species. They got through. Then in about 1941, we had the problem up in Horsefly. They were down to around 1,000 fish going up the Horsefly River, and then the conservationists got together and stopped the fishing. They're going now, but that's alluding to one of the biggest runs we have now. So I am just wondering if the minister can tell me exactly why they. . . . Is it just a thought being thrown out -- that they are against a full moratorium on fishing -- or is it just a 50-50 weighing situation? Or have they given thought to what the impact would be on the basis of examples like the Alaskan one I was telling you about?

[10:15]

The one response I can give is on the slide in Hells Gate. There is not a lot of mystery around why the fish survived that disaster when the railbed collapsed into the canyon. Stó:l\mo natives in the area physically picked up the fish and carried them over the slide to preserve the runs for the future. It's well documented in their oral history and tradition, and it's well documented now in our written history that that's how those fish runs in the Fraser survived that disaster. It was the quick action by the first nations in the area when nobody else would act. The Stó:l\mo nation, with their hand-woven baskets, carried the fish over that slide to preserve the run for the future. That's why we have a fishery still available in the Fraser system.

Hon. S. Hammell: I'd like leave to make an introduction.

Leave granted.

Hon. S. Hammell: In the gallery there are 85 grade 5 students from Harold Bishop Elementary School in Surrey. They're accompanied by Ms. MacLeod, their teacher, and I would ask that the House join me in making them feel very welcome.

D. Jarvis: In response to the minister's statement about my statement being very broad, I was trying to clarify how broad his statement was. When they were asked about a full moratorium, zero catch of the fish, he said that a full moratorium would have a great impact on fishing in British Columbia, in the sense that the fish travel in homogenous groups, if you want to say it that way -- that the sockeye, coho and chinook sometimes travel together and go up the rivers together, and when the coho, for example, laid their eggs, and sockeye would come in behind them and disturb the nests and the gravel beds, it could impact so that a whole fishery would be decimated. That is a very broad statement, and I want to ascertain who he got that information from. Is it from the British Columbia government's bureaucrats in the Fisheries ministry or from biologists that they bring in?

I was talking specifically about the Bristol Bay situation in Alaska, where, as I explained to him, they had an extensive

[ Page 7958 ]

The other thing I was going to say was that if he wants more specifics. . . . I mentioned the Horsefly run. The other one is the Babine Lake. I haven't been there so I'm not particularly familiar with what's happened lately. But I understand that there are such heavy runs of sockeye into Babine Lake that they're piling on top of each other, and that the Fisheries ministry of British Columbia -- or maybe it's DFO -- has allowed purse seiners into Babine Lake to pick up the extra fish just before they die. They still have a little bit of life in them before they completely rot in the lake and go upstream. That's where my specifics were coming from, and I want to know what the minister's generalities -- to me they were generalities. . . . He said flat out that a moratorium would decimate and possibly cause a species to become extinct.

Hon. D. Streifel: We're getting close, I think, to what the member was referencing. My comment at the time -- if I can drag it out of the historical cavern someplace in the back of my noggin -- had to do with overescapement of sockeye in the Skeena system, where there was a larger number of spawners than the beds could accommodate. They spawned on top of each other's reds, destroying the primary spawners that were there first -- at least, destroying their egg beds and compacting too many fish in one place. This resulted in disease transfer and really a wipe-out of a number of fish. That's put excess pressure on the survival of some runs. We've come up against problems of enhancing -- particularly with sockeye runs, where we have enhanced to a large degree the number of fish available to come back to spawn. It has also applied excess pressure on the weaker stocks that aren't as numerically prominent, for instance: steelhead, coho and perhaps chinook in some areas, where they'll run together with an enhanced run. An intensive fishery on an enhanced run would cause a larger bycatch of other species of fish. Again, this puts additional pressures on the survivability of those species.

The member also referenced Bristol Bay. I'm not sure if the member is aware that projected returns weren't met in Bristol Bay fishery. I believe there was approximately 25 percent of the expectation of the returning spawn in the Bristol Bay system. The member might not know that.

D. Jarvis: I still haven't got an answer, but I still don't think that zero fishing could have that much impact on the survival of a species of fish. From the inquiries that I made of different biologists, there's competitive evidence to show that that's not happening.

I wonder how the minister garnered his opinion. Is that through his own Fisheries ministry here in British Columbia, or have they done research with scientists from other areas?

Hon. D. Streifel: I would ask the member to clarify his thought process: why he thinks that history didn't happen, why he thinks those fish in the Skeena system didn't die, didn't suffer disease transfer and didn't overspawn. Because it's historical fact. The member has presented that he thinks that there would be no problem. I would ask him what his thought process is based on -- which scientist, which biologist, is the member working with that would prove history wrong?

D. Jarvis: I'm not trying to get an argument going here as to who has or hasn't the best biologist, and all the rest of it. What I'm trying to say is: he made a statement a couple of weeks ago that zero fishing would wipe out a species, and I want to know who is referring him to that type of information. When I brought up the Skeena aspect and the Babine Lake. . . . As I said, I haven't been up there in the last little while so I can't give specifics as to how many fish went up and how many didn't. All I know is that they had a surplus of fish go up the Skeena in the last few years. So many are going up that they were allowed to bring in seiners and take them up into Babine Lake. They're possibly still there. For the run that's going in there. . . . There are more than enough sockeye salmon going in there to go into a lake and purse-seine it, and still that Skeena run is surviving. Presumably, it's a growing river, taking out the factor that the Yankees are overfishing it. All I'm saying is that it seems to be that if there are sufficient quantities going up -- an overabundance of what is required -- then they're not causing an impact on the spawning grounds on that run. There's no evidence of the Skeena run being decimated.

Hon. D. Streifel: Hon. Chair, I'll try this one more time. I would ask the member to read my comment that he is attributing to me, and then I would be pleased to debate it. I've explained to the member; this is the fourth time up now. My explanation is that comments were centred on specific runs and specific river systems. History has proved it; federal and provincial biologists and officials witnessed the tragedy. Some runs have recovered. The member may like to know that it's not the same fish that come back every year to spawn. They run in cycles, anywhere from three- to five-year spawning cycles, with different salmon. In fact, the run this year may be lower than the run last year. It may be higher than the run next year. It may be lower than the run the year after. So the spawning of these salmon is cyclical.

The member is trying to wrap some anecdotal discussion around what possibly might have happened. I'm trying to respond. This is the fourth time up, and I think this is the last time for me on this issue. In fact, it did happen that some runs have recovered. The damage was done to a specific year or a generation of a run of fish in some of these areas. That's what my comment around an entire shutdown on the coast. . . . It may in fact do more harm than good in some areas.

It demonstrates the need. . .we have to develop more stock-specific harvesting methods, area-specific, working on different stocks. Some stocks this year have to be let through completely. But that still doesn't negate the fact that British Columbia's position is that a complete shutdown would be harmful to some stocks in some areas. Nor is it necessary, in that there are anywhere between 15 million and 19 million fish to be harvested off the coast of British Columbia. There are different species of salmon in different areas. That's my reference.

I don't know where this is going. I'm not getting up to debate anecdotal evidence. The member may think something might have happened sometime in the past, but he's not sure what's going to happen in the future. It's a waste of this House's time.

D. Jarvis: I'd like to bring up the fact that I appreciate the minister giving me the grade 4 lesson on geography and fishing. Everyone knows that the same fish don't come back and spawn again. It's only the lack of fish, in case the minister didn't know.

[ Page 7959 ]

"A complete moratorium for five years might create a worse problem than a slowed-down, spot-selective fishery on the coast, which would require a gear change. . . . The problem with letting all the fish go was experienced in the North Coast not too many years ago when the sockeye run was allowed fully on the spawning grounds, and there were too many fish to spawn. Some of these fish spawned at the same time the endangered coho. . . ."

[10:30]

D. Jarvis: Mr. Chair, he made a statement back on April 30 that he was unable to back up, because he could not answer the question that I was asking, which was on the basis of the statement that he made that it happened several years ago. I just want to clarify what his statements were, rather than have him lecture us with a grade 4 or grade 5 geography lesson as to what fish do and what fish don't do.

I'm wondering if the minister has ever seen the impact of fishing on the Pacific coast. Has he ever been out to the fishing grounds and watched what happens there? When the salmon runs that aren't caught by the Yankees come down, it's like a small city from Calvert Island right down to Kingcome Inlet. Every boat you can think of is out there fishing on the coast. Then swing across to the top of Johnstone Strait, and you'll find that there's a wall of nets up there. By the time the fish get down to the southern part, they're hit by the sport fishermen plus all the trollers and gill-netters. They then get into the rivers, where they are affected by the aboriginal fishing all the way up to their spawning grounds. If the minister had ever seen that happen, he would understand what I'm trying to get at: that the impact of fishing and mismanagement over the years, both provincially and federally, is what has caused most of the problems to the fishery, not the fact that the fish have overspawned or made other species extinct.

The minister's quite aware -- or should be aware that. . . . I'll give him another example where his. . . .

Interjection.

D. Jarvis: The minister is shaking his head, saying he doesn't want to hear examples, but let me tell you, Mr. Chair. . . .

Hon. D. Streifel: I said you're wasting time.

D. Jarvis: It's not a waste of time. I'll tell you something, Mr. Chair -- if I can explain it through you. It's not a waste of time when we're talking about a resource in British Columbia that perhaps this government and this ministry are responsible for. Take the steelhead run up in the Atnarko River. Now, the minister is always talking about how the degradation of the fish in this province is caused. . .when it comes onto the land. Mining, forestry or the residential housing in the area is endangering the rivers. The Atnarko run of steelhead is now down to. . . . Something like 20, 30, 40 or 50 fish went up last year. In previous years there were as many as 12,000 steelhead that went up. The Atnarko River runs through Tweedsmuir Park, a pristine park that has no mining, no fishing and no impact of community living on it, and the run has been decimated. It's a pristine waterway, nothing affects it from the shore. Obviously the problem is the catch down at the ocean -- down the waterways, at the entrances of the rivers going up that channel up to Bella Coola.

I am trying to get some kind of conclusion out of this minister as to a way that we can perhaps solve this problem. I realize that in about 20 minutes or so the federal minister is going to make an announcement, whether it's a zero moratorium or 10 percent allowable fishing or even some variation of that. Obviously this minister hasn't any say as to what's going on in that aspect. I can appreciate that. I'm wondering if he can answer me with regard to the Atnarko steelhead run -- which I understand is fully provincial and has nothing to do with the federal government -- and why that run has been decimated.

Hon. D. Streifel: The member may wish that all of this was provincial jurisdiction, but in fact it's not. I'll touch on where the province is involved. There are very complex reasons for the drop in fish stocks in some areas. Some have to do with habitat at one end. The member points out here that we're dealing with Tweedsmuir Park, which would suggest that we probably don't have a habitat problem. We do have, or we did have, some bycatch problems on this steelhead run -- open-ocean bycatch problems, ocean survival problems. In 1994 we were able to effect an agreement with all the parties, including the first nations, that the river would be closed. We are in the middle of conducting -- we're partially through; we're almost finished -- a $500,000 stock assessment program that will work towards development of a recovery plan for the steelhead in this system. The end of that is where our involvement is, and that's the action we've taken.

D. Jarvis: On a different aspect, then, I'd like to ask the minister if he could tell us what this government's position has been with regards to the negotiations with the Americans. Although they're not directly involved in it, I assume they're sitting there on a sidebar. Has this government suggested at all that the coho and perhaps the chinook be declared endangered species? If Americans would declare those fishes as endangered species, perhaps we would have a better opportunity to curtail especially the Alaskan fishing. As he's probably aware, the U.S. Endangered Species Act is a very draconian act. It's more like the Criminal Code. Once it's declared on a species, I assume even Alaskans wouldn't fish them. I am just wondering if the minister has brought that subject up.

Hon. D. Streifel: I'll try this with the member. The member referenced both chinook and coho. Is the member wanting a broader answer, like the chinook in the south and the coho in the north, or the coho-chinook in the south as well as the circumstance with Alaska? He's into four or five different areas and regimes. I wouldn't mind some clarification. If we split them out and discuss them one at a time, I'd be pleased to help him out.

D. Jarvis: Well, I haven't had the opportunity to ascertain what specific runs are endangered in British Columbia, but I would assume that in most cases it's the northern runs, where Alaskan fishing is predominantly causing the greatest predation or danger to the fish. As far as my question, I don't care whether it's south or north, really; it's just that we know we have a danger out there with regards to chinook and coho. I don't think it really matters specifically to me whether they're in the north or south. I just want to know if they have brought that aspect forward to the United States or if they have asked the federal government to bring that forward, and what the

[ Page 7960 ]

Hon. D. Streifel: The member is bouncing all over the place. It's irrelevant whether he cares whether we're talking chinook or coho, north or south: there are distinctly different runs of fish. I can't give him. . . . Actually, his relief is on the way; perhaps we'll get down to some debate now, welcoming the critic into the room.

In fact, we've worked with Washington State. The member talks about endangered stock. At this time in British Columbia the coho and chinook that he's referencing aren't in that circumstance, with the exception of some of the Thompson coho and specific runs. But his question was on a broad application; it's very difficult to sort out. I'll try a different approach to the answer.

First of all, on the north: if Alaska does not stop catching our fish, we'll be facing the question that the member puts forward. Are we prepared to declare endangerment or to discuss extinction? That's what is on the table if Alaska doesn't stand down on the interception of our coho. It would be an absolute last resort for us to move in that direction at all.

On the south, specifically with chinook runs but with some coho, the American federal government has declared endangerment or has put a warning flag on the chinook. We've cooperated with the United States, particularly the jurisdiction of Washington, to pass through to them chinook from our fishery, to preserve their runs. That's the action we're taking, and for us, our primary tool for management of our fish and for building our conservation regimes is a Pacific Salmon Treaty that works for British Columbia's interests and for the interests of the fish. That will permit us conservation and enough fish to come through to conserve and a fair and equitable share, based on the Strangway-Ruckelshaus principle.

The Americans have to stand off our fisheries for a while to allow our fish to come through. We support the provisions of the international law of the sea. As the country of origin, where the fish come from and return to, we have the primary catch on them. Off and on, we've had a working relationship with the Americans for some time on sharing some of the resource. It's built on some historical relationships around the Columbia Treaty and what happened there when dams were built, and other kinds of things which are not anywhere near this minister's jurisdiction nor in the history of this ministry. But in fact those are some of the working relationships we have with our neighbours, and what we need is a Pacific Salmon Treaty. We need the federal government to get to work and develop a Pacific Salmon Treaty based on some principles of fairness and equity and on the law of the sea, so British Columbia will have fish for an economic future, for a conservation future and for the survival of both fish and communities on the coast. Maybe that helps the member.

D. Jarvis: All I was asking for was a very simple statement as to whether or not they had ever approached the aspect -- yes or no -- of declaring, for example, whether coho and chinook were endangered species. If they had asked the Americans to declare that, then it could possibly solve one of our problems. But if we've made an agreement with the Americans to protect their chinook and give them their fair share as they go through, we're not using all the methods available to us to negotiate with the United States. It's quite obvious that that is what's happening.

[10:45]

I'll turn it over to the member for Powell River-Sunshine Coast.

G. Wilson: I'm always delighted to get into this discussion of fishery, because it's an area that's near and dear to my heart and certainly to many people who live in my constituency, as I represent a long coastal constituency. I'm hearing from a number. . . . In fact, last night I was up at a meeting in Lund that I wish the minister had been able to come to, because it was one of the finer examples of community work in coastal communities, where people were desperately trying to pull together initiatives to try and get things going -- in this case, extending the breakwater.

One of the questions that they're asking -- and there are many commercial fishers -- is. . . . They want to know what exactly is going on at the negotiating table now. They read in the newspaper that our negotiators went down there and that they got pulled back. They read now that they're back at the table again. I guess there's a lot of confusion out there as to what exactly the role of the province is with respect to the negotiating position and to what extent the province is actually directing the discussions that are taking place at the negotiating table. I wonder if the minister might elaborate a little bit on this, because there's an awful lot of people whose livelihood is dependent on the outcome of these discussions and who are quite confused as to exactly what the role of the province is in these sets of discussions.

Hon. D. Streifel: I can appreciate the member's confusion on this issue. The more I talk to the public in British Columbia, the more I find there's general confusion on the relationship that British Columbia has with the Pacific Salmon Treaty. The member is well aware how difficult it was for British Columbia to be included -- for Ottawa to include British Columbia in even an advisory capacity. I would explain to the member that, no, British Columbia does not lead these negotiations. We are in an advisory capacity. As I understand -- with our chief negotiator, my deputy, Bill Valentine, and the other team that's there with Dennis Brown, the Premier's adviser on salmon issues, and other members of my ministry and others -- we are, I would think, in a minimal advisory capacity to the federal government as they attempt to develop a Pacific Salmon Treaty.

The question about how, why and when our team came home last weekend before the negotiations ended, I think, has been poorly reported. It's not necessarily a shot at the media or whatever, but it was poorly reported as to why. As I understand the circumstances, Canada was moving to make some accommodation for the Americans on salmon in the south. We've already talked about the need to pass through their chinook and coho stocks to keep them off their endangered lists and to work on accommodation of the sharing of our sockeye run in the Fraser. As Canada moved towards an accommodation point, the U.S. also moved away from that accommodation point to keep the gap as wide as possible. We found that this was extremely frustrating for us. British Columbia's position is fairness and equity; Ruckelshaus rec-

[ Page 7961 ]

In the north, as I understand -- I'll get a jerk on my sleeve if these numbers have changed from last Friday to today -- the Alaskans were asking for half, 50 percent, of the available sockeye from the Skeena system, but for no word, no discussion, no movement on coho. This was untenable for British Columbia. The Premier was in contact with the committee, and I was in contact with the committee. The committee felt that they didn't want to be part of a sellout of British Columbia's interests. They asked to come home; they asked for advice: "How do we do this?" The Premier's decision was to meet them face to face, to put a face on the discussion of the dynamic at the table, the circumstances at the table and the jeopardy of British Columbia's continuance.

The decision was made that they would go back with strong orders from both the Premier and this minister to protect British Columbia's interests, to work with Canada to drive towards a fair and equitable treaty that supports the principles of the sharing of the resource and where it comes from, and to support Strangway-Ruckelshaus and all of the work that had gone into even getting us there. We sent our folks back to protect those interests, and in fact at the close of day we were moving towards agreement on the south. It appears -- I don't want to prejudice this -- that an agreement can be reached on the south. The stumbling block still is Alaska. At this stage there are no dates set for other talks. We're moving towards that now. I hope that helps the hon. member.

G. Wilson: It is important for us to understand how this is working, because, as I say, there are a lot of people whose livelihood is dependent on the outcome of these discussions. It is interesting to me to observe that as British Columbians. . . . I'm hearing a certain level of frustration in this minister's voice, and I have some sympathy with that frustration. It is interesting to observe as a British Columbian how difficult it is to try to convince those who are negotiating on our behalf how critical it is that they get it right this time. I don't think we're going to have a second shot at this with any degree of success if we're to protect these stocks, and I don't want to go back through that.

The minister indicated in a ministerial statement in this House some time ago -- I think it was last week -- that he wanted the unanimous consent of the House to support this province taking a hard line on these negotiations and, failing that, that we would be prepared to use whatever powers we have at our disposal. . . . I'm paraphrasing now, hon. Chair; I'm not quoting it. Basically it's that we're going to take whatever action is necessary.

In the south we have a big stick; it's called the Columbia River basin. And we have a big tap that we can turn to reduce water flows into the south-flowing rivers, which causes a great deal of concern to our neighbours to the south. In the north we don't have such a stick -- at least if we do, I'm not aware of it.

It seems to me that there must be an opportunity, and I don't know if the minister and his staff, whom I believe to be competent, certainly. . . . I've worked closely on other files with the minister's deputy, and I believe him to be competent; I have a great deal of confidence in this minister's deputy. But I wonder if it isn't a sensible approach for the province of British Columbia to settle the south and in combination then apply pressure on the north. It strikes me that the jurisdictions of Washington and Oregon have got as much to lose in the long term with an unfettered Alaskan fishery as we do. It seems to me that they're somewhat in the same boat. We do have a bit of a stick to get them to see our point of view, but we have nothing, I don't think -- at least, I'm not aware of it -- that can really bring Alaskans to heel. I wonder if the minister might comment on that.

Hon. D. Streifel: I'm going to try to appear unexcited around this discussion with the member; I'm going to try and hold it down. Cautiously spoken, this member's comments are right in the space where I have been for a while now. It becomes increasingly frustrating to both appear to be strong on behalf of British Columbia and avoid the building criticism from the public that British Columbia is just petulant and whining, that Ottawa won't do this and won't do that. Increasingly, that's the criticism that's coming our way.

Whatever pressures we bring to bear or, better than that, whatever strategies we form to put pressure on the Americans to settle a fair treaty with us, I think have to be less publicly threatened and be delivered in a more sophisticated, packaged manner as part of a negotiation structure. That would be my view of this. So I'm going to be very cautious in my response to the member. If I were to let go, to drop the reins here, we would be planning all kinds of moves that I believe are strong and supportive.

But some of the moves that British Columbia has attempted in the past have been cut off by no one else than our own parent government, Ottawa. They have interfered with our ability to bring pressures, and that's problematic for us. In other areas sometimes international relations are worth some sacrifices if we can reach for some fairness. But I like tough negotiations. I think we should be prepared to exert what pressures we can.

It's my opinion that if in fact we can work out a partial arrangement, we can bring other pressures to bear, because the conduct of the Alaskans is unacceptable -- and not just by our standards and the standards as evidenced in the south, where Washington is concerned about their coho and chinook and is willing to make moves. Alaska's fishing standards are not supportable or acceptable anywhere else in the world, at this stage. They are fishing out of a regime in which they are knowingly pushing a species to the brink of extinction.

There is time to stop. There is time to put international plans together to provide for conservation, to build the fisheries for the future. But for some reason, somebody up there has a bee up their backside. I believe they're being vindictive, for whatever reason, on this issue. They will pay the price. Alaska will pay the price on this issue in the eyes of the world if those stocks are gone.

We've had media reports, individuals, columnists asking to what end British Columbia would be spending $150 million on habitat preservation. To what end? And why would we bring around the Fish Protection Act to have very stiff environmental standards, and the logging standards of the Forest Practices Code, and work towards a constant solution and resolution to streams, watercourses, riparian. . . .? Why is DFO shutting down drainage ditches in the Fraser Valley and other areas that are harbouring fish, if they're just going to be gobbled up by somebody else? That has to be part of who we are at home. I would hope that the members here, when I'm looking for support on this issue, give a strong united voice from British Columbia, so we can try to avoid the criticism of whining petulance and transform that into being on the right side of this issue.

[ Page 7962 ]

[11:00]

It seems to me that there is surely a role for the government of British Columbia to play in the broader context of interstate and interprovincial discussions on the broader questions of investment opportunities in British Columbia. For us to start to play hardball. . . . If you take a look at the amount of private forest land now held by American investors in British Columbia, it is exceptionally high. Americans are investing in British Columbia because they find it an attractive place. Notwithstanding what you may read in the newspaper, they are investing here because it's an attractive place to put their money. It seems to me that as Canadians and British Columbians we've been somewhat weak on this by simply saying that we're not going to bring a correlation between those dollars we want to see invested in industry -- and where profits can be made -- and their domestic responsibility to bring their cousins in Alaska on line on this issue.

There is an obligation and a responsibility here. I think we need to address that. Quite obviously, the minister doesn't want to get too far down in the strategy discussion, because as a longtime veteran negotiator, he knows better than to tip his hand when he's still at the table -- at least, not willingly or knowingly. But I do think that we have not played hardball enough on this. We have depended on the federal government, and I think the federal government has failed.

I want to set up a somewhat tangential but related line of questioning. I don't know if the minister is aware of or has seen the April 27, 1998, copy of the Fisherman, in which there was a discussion of the amount of claimed federal funding by David Anderson and the actual amount received. I don't know if he's seen that, but the minister will know. . . . He's nodding that he has. Here's what causes me concern. We have now set up a separate ministry, a line ministry, on fisheries, which is supposed to be doing what it can with respect to habitat enhancement, replenishment of stocks, looking after displaced fishers and so on. The federal government is wandering around telling everybody that it has committed $220 million to this program, when in fact it's delivered $22 million. It's $200 million short, according to this document, if it's to be substantiated. There are a number of sources quoted which seem to be reputable, so I'll take it at face value that it's correct.

What's interesting about this is that when we start to look at where those committed dollars are in terms of displaced fishers -- people who are put out of work because of what's going on right now -- we see that the lion's share is connected to 1996-97 UI claims. Human Resources Development indicate that they have put, respectively, $29 million and $27 million into these programs, when in fact they haven't funded them at all, when in fact there have been no dollars.

When we look at the amount of money that's been put into early retirement. . . . There was supposed to be $7.7 million going into early retirement packages; it hasn't happened. There was supposed to be $5 million put into a legacy fund with respect to Community Futures operations for licence stacking; that didn't happen. There was an $80 million buyback; that's still promised, but has yet to happen. It's not coming. It's all federal money, right?

An Hon. Member: It's the fishermen's own money.

The Chair: Through the Chair, please, members.

G. Wilson: Yes, through you, hon. Chair, although Hansard might want to have that on record. At least, I would like to have it on the Hansard record: it's the fishers' own money. And that still hasn't happened.

We can carry on with this. If you take a look at the top-up legacy fund for loans -- the $5 million that was supposed to come into Community Futures -- that hasn't happened. It was promised, but it isn't here. The $8 million for coastal first nations community economic development opportunities -- that hasn't happened. So actually, $200 million of what our federal Fisheries minister is wandering around telling us that the government is doing on our behalf hasn't even materialized.

How are we as a province, when we're struggling to get at least a portion of the administrative line in this file, going to deal with a federal government that does a great deal of public relations work around this issue, talks about all kinds of money and then doesn't even make it happen? It doesn't materialize. Surely the difficulty we're going to face -- and I don't know if the minister is seeing this already -- is great confusion as to whether or not the province is even a party to this sham. If people think they are, my guess is that some of us aren't going to do well in the next election, and others might do better. I think it's incumbent upon us to get the word out on this.

Hon. D. Streifel: Let's clarify right off. . . . I wish I had that document in front of me. It's okay; I think I can pick up most of it from memory. I've had nightmares over that particular breakdown a number of times now.

The province is not a party to that sham. We've been fighting and fighting with the federal Department of Fisheries and Oceans in particular, and with other federal departments, to come clean on what has been spent. In my last conversation with the federal minister regarding those expenditures, they were presented in much the same vein as the member for Powell River-Sunshine Coast just presented them. It was like:

[ Page 7963 ]

The one that stands out stronger than any is the $80 million buyback. That was money that fishermen paid into a fund, from their own assessment, to buy themselves out, to retire. It has nothing at all to do with federal funds, and it is included in that $220 million expenditure. There's no evidence it has even been helpful or used to any degree.

It's an ongoing rolling in and adding up of whatever money comes from whatever department and saying: "We spent it on fishermen on the coast." My suspicion is that when the federal minister talks about the $220 million spent on fisheries in B.C. last year. . . . I would direct the member to look at the Department of Fisheries and Oceans' budget line item for west coast budgeting. I think that's where the number comes from. It has nothing to do with programs spending or anything else. It's the entire DFO budget spent on the west coast for whatever services they render. It has nothing to do with retirement or buybacks or anything else. I met as recently as the day before yesterday with the federal minister, David Anderson. He was in my office bringing forward a copy of his coho crisis report. He talked again about many of these issues.

British Columbia's anxiety is driven in part by an agreement with the federal government -- between Canada and British Columbia -- signed by Prime Minister Chrétien and Premier Clark last year, in April 1997. That lays out, in very specific detail, British Columbia's moving role in the management of fisheries. It's not just the British Columbia government, but the communities, the stakeholders who are referenced in here very plainly, very simply in the enhanced role of all of British Columbia -- the government and particularly the coast and the stakeholders -- in how we change the management of the fisheries and how we have involvement.

At this date, Ottawa has ignored not only the spirit and the intent but the letter of this agreement. I've again written to David Anderson, as recently as this morning, expressing my concern and our required involvement under this agreement. Those are the moves we've taken. Mostly that gets reported as B.C. whining, but in fact, if we don't stand up and fight for our beliefs and for who we are and for what has come our way, then we are no longer eligible to govern and represent the province of British Columbia on these issues.

I will be very strong on this issue. The abrogation of this agreement would be tantamount to Ottawa stepping over the Rocky Mountains into British Columbia and saying: "Remember that deal in 1937 when you got freshwater fish? We're just kidding, folks. We're taking it back." British Columbia has been managing our freshwater fishery under an agreement with Ottawa since 1937. This represents movement in that direction, moving further into the cooperative management and the stewarding of the Pacific salmon fisheries, the coastal fisheries and all the marine aspects of it.

We're in some pain right now at the ignorance in Ottawa of the validity and the strength in this document, but I appreciate the hon. member opposite and the help he's given on these issues. We still call openly for help, not only from this House but from the rest of British Columbia, to drive home the real meaning of this agreement, where we have a place of equality in the planning of the future of our resource, particularly around Pacific fisheries.

G. Wilson: Just a couple more questions, because I know others want to get into this debate. I think that one of the problems we face in this particular portfolio is that British Columbia, for the first time, is now actively trying to move into an area that has previously had virtually exclusive federal jurisdiction. We are starting to exercise a certain level of provincial responsibility over an area that the federal government has, up until now, basically just run as their own show, not having to deal with us.

I hear what the minister is saying when he says that we have to stand up and fight for it. You know, just in the last couple of days, we had a fairly lengthy debate in the House on the constitutional issues and the fact that we want to have some aspects of British Columbia concerns expressed in a manner that would have application right across Canada, one of which was the notion of the fishery and the need for us to deal with that constitutionally.

I was absolutely astounded at the editorial commentary coming out of some of the mainline newspapers, which obviously take their editorial bent from some centrist view of this country. They seemed to say, because British Columbians want to point out obvious failures in the federal system and our current relationship of power, that we as British Columbians don't have some kind of obligation, if not right, to stand up and point out that this is not working, that it's failing and that these are the reasons we have to change it.

The minister is right, though: they said that B.C. was whining and that somehow we're constantly trying to feather our own nest and trying to look after the interests of our own province. Well, my God, what an incredible concept! What an amazing concept that elected members of the Legislative Assembly of British Columbia, which has constitutional sovereignty on a whole host of areas, should actually come into this chamber and actually stand up and fight for and protect that which we are elected to protect!

[11:15]

I have two quick questions to finish up on this line. One of my earlier lines of questioning in these estimates had to do with the proliferation of net-pen aquaculture fisheries. There is a growing expectation, a growing belief, among people living in coastal communities that decisions have been taken, either consciously or subconsciously, to let the wild stocks go because what we have really decided to do is privatize the last common property resource in Canada and, through its privatization, enhance the profits of a handful of companies who are going to control the brood stock and supply and therefore will control the markets -- just as we did in the seed industry, in commercial agriculture and in a whole host of other areas where common property resources have been taken away. Here we have a fish with the very good manners to come back to where it started, one of the most easily managed of any of the pelagic species we have to deal with, and we can't even get that right. There are people in coastal British Columbia who believe that there is no real attempt being made to save the salmon, because what they really want to do is to privatize it.

When I hear a senior federal Fisheries officer turn around and say to a hall full of commercial fishermen, "You are the

[ Page 7964 ]

Hon. D. Streifel: I'll start off my comments to the member opposite by stating -- and it may be dangerous to do so -- that I believe there is a place for aquaculture on the coast of British Columbia. I believe it is a cautious place within very rigid boundaries and guidelines. I do not believe, nor does this government, that the place of finfish aquaculture on this coast is to supplant, replace or obliterate a wild fishery. The position of this government, of this ministry and of the Premier of this province is that we are dealing with a common property resource in the wild stock. We have an obligation to conserve and preserve that wild stock. We have an obligation that that wild stock be shared as a common property with coastal communities through the distribution of harvest to the small boat fleet, the owner-operator, the entrepreneur, the family with the kids in the back yard and so on. However it's couched, however it's explained, hon. Chair, that's our view of the salmon fishery on this coast.

We are concerned and worried -- with some knowledge -- that we will not have the salmon fishery that we had in the past. Therefore, if we are going to preserve the coastal community structure and the investment we have in those communities through whatever means, whether it be any kind of health or education infrastructure with support for the families and the folks who live there, the wild salmon have to play an integral part in the makeup of the coast and the coastal communities. Other regimes, other diversified fisheries and occupational activities will also form pieces of the puzzle that will preserve coastal life and the coastal communities of British Columbia for the future.

That's why we reject, offhand, what seems to be the federal motive for moving the resource into as few hands as possible. To the Department of Fisheries and Oceans, I guess an efficient fishery would be one owner, one boat, one net -- all big enough to catch whatever is available and be done with it. They'd have one individual or one entity to deal with. That's not our view of the resource, nor will we ever relax in our vigilance to protect that common-property resource for the shared benefit of British Columbians and of the coastal communities in particular.

G. Wilson: I guess we'll have to watch.

Is there a member who wishes to make an introduction?

Hon. S. Hammell: To the member, thank you very much.

May I have leave for an introduction?

Leave granted.

Hon. S. Hammell: I'd like to introduce to the House a friend of mine, Mr. Nachhattar Singh Kooner. He is here from Surrey, and with him is his brother-in-law Jagdev Singh Gill. He is here from the Punjab. With them is a member of our community in Victoria, a person who works for the government: Mr. Ron Randhawa. Would the House please make these three gentlemen welcome.

Hon. D. Streifel: I just want to conclude this last answer and give a wrap-up for the member. I don't know if the member has yet read the book, Lament for an Ocean, by Michael Harris. I recommend it strongly. It's a blueprint of how not to do something. There are so many similarities between the actions taken on the Atlantic coast and the actions that are still happening on the Pacific coast by the Department of Fisheries and Oceans. That book underscores the member's comments that this is a common-property resource, how and for whom that resource should be protected, and who should steward it.

G. Wilson: Just one last question. I said I would try to keep to a time, and for me that is always very difficult, especially on this subject. Aquaculture is a subject that's near and dear to my heart. I just have a couple of questions.

In the early part of these estimates, I raised the matter of seal scarers, and the minister indicated on that matter that it was a DFO-regulated issue. I talked about the fact that this was brought up in past sessions and that there had been a commitment that these would be banned. I just want to clarify for the record, because I'm partly right and partly wrong. I refer back to the third session of the thirty-fifth parliament, when the then member for Esquimalt-Metchosin was the minister -- at least, I think that's where he was from. The question was actually asked by the former member for Okanagan East, who asked: "Could the minister clarify that? Is he saying that they won't allow for seal scarers? Seal scarers are currently in use in the Broughton Archipelago."

The response was -- and I'll just close it. . . . We were talking about the Department of Fisheries and Oceans, for clarification. The minister then said: "That's a good point. I should have been a little clearer. They're not allowing for wide use of the seal scarers until that work is completed. It's not as if they've banned them; they're just not allowing for wide use of them."

What the minister was referring to was a Department of Fisheries and Oceans study into the impact of the use of these sonar devices on porpoises, whales and other sorts of things. It's my understanding from doing a little bit of research on this that the documentation that has come back indicates that these do in fact have a profound effect on sea mammals, which is the reasons that they're effective. That's why they use them: because it keeps them away. It's like saying: "Well, we're going to study to see whether or not when you fire a loaded gun at somebody, it might hurt them." The answer is yes. That's what it's designed to do, right? I'm curious to know, given that this is another DFO issue, whether this is a matter that has recently come to the attention of the minister. Among my constituents -- especially those in the Broughton Archipelago, which is in my riding -- there are growing concerns, because it is one of the largest, most abundant areas with respect to porpoises and dolphins, as well as orcas. I wonder if the minister might tell us whether the province has any desire to put pressure on the DFO to make sure that these seal scarers are no longer used.

Hon. D. Streifel: Well, I'll confess that the member is the first and only person to bring up this issue in a formal way. I don't recall correspondence on it in any manner. I'd be pleased to work with the member to reach a solution to this. The environmental assessment office, in the salmon aquaculture review we had done in the province -- which is a very extensive document; it cost a lot of money and took a lot of time -- recommended that these devices be phased out over a two-year period. The one thing I'm not sure of, hon. member, I'll confess -- but I'll commit to getting to work on it -- is whether we make a move on an aquaculture policy when that

[ Page 7965 ]

I think I might be getting my answer here. Aha, maybe I have just been given the gearshift -- and the steering wheel too. I think the determination may be mine -- when I decide. I'll commit to the member to decide immediately.

J. van Dongen: I'm pleased to participate in this debate today on the Fisheries budget estimates. I want to focus on a couple of potential bright spots in the sector. But before I do that, I want to state for the record that I feel the minister is correct, in that the commercial wild fishery is and will continue to be a very important segment of the total sector. It's certainly an integral part of coastal communities, and the economy and jobs that flow from that sector will continue to be important. The issues revolving around the salmon treaty negotiations and the whole issue of federal-provincial relations bear heavily on the future of the wild commercial fishing sector. As the provincial government struggles with that, I know we're prepared to work with them in a cooperative manner to try and resolve some of these ongoing difficulties. I don't know that there are any easy answers.

I want to start out today by discussing the potential of the shellfish aquaculture industry. I think the June 1997 report, done on behalf of Western Economic Diversification by Coopers and Lybrand, is a very good working document. It has a lot of credibility with virtually anybody who has looked at it. One of the tragedies in government is that a lot of studies are done and then not well used after that, particularly a report like this, which is fairly well respected.

[11:30]

Again, I want the minister to know that I recognize the difficulty that his ministry is in and that this is a joint effort with the Ministry of Environment. Because this is the Ministry of Fisheries, this ministry needs to take an active partnership role with the Ministry of Environment on behalf of the industry to try and resolve some of the serious constraints to what is potentially a strong industry. Could we start out with a discussion on the performance of the Ministry of Environment with respect to new sites in the last 12 months?

Hon. D. Streifel: In some ways it's good news for the member, and it's certainly good news for British Columbia. Shellfish aquaculture seems to be one of the survival tools for coastal communities, as well as a strong economic generator -- one that not very many folks have argued against, in fact. The member is quite correct that there has been some difficulty in tenuring. The Ministry of Fisheries responsibility is licensing, and the tenuring process goes to MELP, the Ministry of Environment, Lands and Parks. In the last year or so, when this ministry was still under the umbrella of the Minister of Ag, Fish and Food, we dedicated one staff person to work with B.C. Lands for 12 months to deal with the backlog and the tenuring issues. Through that, we were able to place 30 new tenures and allocations for shellfish farming. That's due to the good work of my colleague from Nelson-Creston, and in fact we're carrying that on.

We have a very close working relationship with MELP. They are working through a new way of doing business on some of these tenures. We're encouraging them very vigorously to move in this direction. This is an excellent opportunity for British Columbians, where we can not only increase our economy and jobs for the folks who work in there but also encourage entrepreneurialism and see economic generation for first nations and coastal communities. It's really important. That's why we have taken a role with Environment, Lands and Parks. I would suggest to the member that questions directly related to tenuring and all of that would be more appropriately answered -- and probably more quickly and accurately answered -- by the Minister of Environment, Lands and Parks. We do have a cooperative role, I suppose, in some ways to put pressure on a colleague through encouragement and to work through a system -- as we did when it was Ag, Fish and Food -- to bring about the inclusion of more tenured sites.

J. van Dongen: I can assure the minister that I will make every effort to question the Minister of Environment in her estimates on some of these tenure issues. I'm pleased that there have been some new sites issued in the past 12 months.

The report talks about the acreage -- hectares is what the report refers to now but I still think and talk in acres -- available to shellfish being fairly stable or having been virtually the same over the last four years. There has been some increase in this past year. In making its tenure projections on the potential for the industry, the report talks about the need for a 10 percent increase in sites available, starting in 1997. I'm wondering if the ministry or the government has any specific targets for the coming year and subsequent years, which may or may not be in line with the recommendations of the report.

Hon. D. Streifel: At this stage we haven't agreed to any particular target for numbers. The work goes on with communities and with MELP in order to establish how far we can go with this. A hectare, for the hon. member -- he probably knows this well -- is 2.2 acres.

J. van Dongen: Well, I would recommend to the minister that the ministry look at establishing some specific targets for the industry. I think the report lays that out as being certainly possible and desirable. If government doesn't have some form of strategic plan and some targets, then it's likely that we're not necessarily going to get there. It is a critical constraint of this industry to have additional sites. Certainly, as the report says, there are lots of potential sites available. From the growers' perspective, tenure and security of tenure are absolutely critical. It's critical to their financing and to any expansion plans in terms of financing, management and ongoing economics of their operation. So I would encourage the minister to establish some targets within the ministry, together with the Minister of Environment.

This has implications from a government perspective for staffing levels. As has been demonstrated in other sectors, in a lot of the economic sectors that the Minister of Environment is dealing with, there are paybacks not only for industry and for people in coastal communities in the way of jobs but also for government in terms of revenue generation. What we don't want to have is a situation where (a) we don't have targets,

[ Page 7966 ]

I want to ask the minister about the monitoring of water quality from a public health and safety perspective. The report talks about water quality being mainly a federal responsibility in terms of monitoring. But there are a lot of provincial decisions that have implications for water quality and impacts. I'm wondering if the minister could comment first of all from the regulatory perspective. What is the role of his ministry and the government in terms of water quality regulation, or is it exclusively a federal responsibility? That would be my first question on water quality.

Hon. D. Streifel: The first part of the member's presentation had to do with site numbers and how we're going to get there. I've directed my staff to work with MELP and others to develop the regime and the protocol or the process that would allow us to target a specific number of sites within a time frame. I think it would be very difficult to say this is the number or that is the number. We have to understand how we get to that number; that's what's in process now. So to satisfy the member's presentation, the earlier work is underway. We expect that it will be coming forward, and then we'll be working with a number of sites.

I'd ask the member for clarification on water quality. Is this in reference to aquaculture or to shellfish? Is it fresh water or groundwater? I'm not quite sure where the member's reference is.

J. van Dongen: I can reference a particular page in the report if that helps the minister; it's page 9 of the Coopers and Lybrand report. It is specifically with reference to shellfish. My understanding is that there's a high level of federal involvement in water-quality monitoring and the regulations involving water quality and shellfish. Again, my first question is: is there any regulatory involvement by the provincial government in monitoring or regulating water quality?

Hon. D. Streifel: The question was: whose jurisdiction is water quality -- us or the feds? It's the feds' jurisdiction to set the water quality and closures for bacterial contaminants and what not. I think that answers the member's question.

J. van Dongen: The report suggests that the industry is underserved by the current regulatory system. It talks about, for example, mandatory compliance with a quality control program that was introduced in December of 1997 by the U.S. government for all U.S. importers of seafood. So it expresses concern in that area, with implications for our industry. I'm wondering if the provincial government, through this ministry or the Ministry of Environment, has had any involvement in the U.S. initiative or anything else to do with water quality for shellfish.

Hon. D. Streifel: We're advisers to Canada on the standards and the criteria for it, if that's what the member. . . . We don't set them; we're advisers to Environment Canada.

J. van Dongen: Can the minister comment at all at this time on the U.S. initiative that I referenced? That's another potential constraint and concern for our industry. I think what we're trying to address here is some of the constraints or possible limitations on our shellfish industry.

Hon. D. Streifel: As a matter of fact, we've decided to utilize the standards, so we have continuity. We work with the U.S. standards of water quality.

[11:45]

The other aspect of water quality. . . . There are various references in the report to places like Baynes Sound, where we have basically 50 percent of our shellfish aquaculture production at the present time, and a couple of other major areas. But particularly with respect to Baynes Sound, I know there has been involvement in the past by the Ministry of Agriculture, Fisheries and Food and the staff at Courtenay, in terms of trying to address actual water-quality problems. Very often there are provincial areas of responsibility that impact on water quality. I'm wondering if the minister could give us an update on the status of that effort at Baynes Sound, particularly with reference to problems involving on-site sewage disposal, which is the regulatory responsibility of the Ministry of Health, and any other issues that involve provincial jurisdiction impacting on water quality.

Hon. D. Streifel: The member was referencing Baynes Sound. There's a round table that's chaired by us. The B.C. Ministry of Fisheries is there as are MELP, the Comox-Strathcona regional district, Environment Canada and the Ministry of Health. There's ongoing monitoring and testing of water in the spots around the sound, so we can regulate and work with the water quality that's acceptable in different areas and have closure where it's necessary. We do quite a bit of that. Part of it is to identify sources of pollution and to work to remediate and continually test the water quality.

With that, if we could close that one off, I move that the committee rise, report progress and seek leave to sit again.

Motion approved.

The House resumed; the Speaker in the chair.

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

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

Hon. D. Streifel moved adjournment of the House.

Motion approved.

The House adjourned at 11:50 a.m.

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The committee met at 10:11 a.m.

[ Page 7967 ]

ESTIMATES: MINISTRY OF ENERGY AND MINES AND
MINISTRY RESPONSIBLE FOR NORTHERN DEVELOPMENT

(continued)

R. Neufeld: What I'd like to do with B.C. Rail, if it's okay with the minister, is break it down into its different divisions and go through them one at a time -- maybe try to keep some semblance of order to it that way. I think some other members are going to come in and ask some questions surrounding B.C. Rail as it applies to their own different constituencies.

The first one I'd like to start with is Vancouver Wharves, if that's okay. Of course, the last annual report is 1996. As I understand it, Vancouver Wharves lost the potash traffic to the port of Portland. Maybe the minister could just tell me the reasons why we lost that traffic, what effect that will have on Vancouver Wharves and if there's something in the offing that's going to take its place.

Hon. D. Miller: Well, I presume there are commercial reasons why shippers want to take advantage of any particular port. We try to maintain a very aggressive position in the marketplace. Notwithstanding the potash issue, Vancouver Wharves has announced a capital expansion project of $42.5 million in specialty grains. I think they're being very competitive in the marketplace and will continue to do quite well.

R. Neufeld: I appreciate the response, but there must be some other reason why we were unsuccessful in retaining that important portion of tonnage not only for Vancouver Wharves but for B.C. Rail. How much tonnage was lost?

Hon. D. Miller: I'll try to give some details. During the four years that ended last December, we handled an average of about 1.4 million tonnes annually for potash -- 28 percent of the throughput. The forecast for '98 is 200,000 tonnes as a result of the move to Portland.

[10:15]

What we want to ensure, particularly on the grain side -- this doesn't directly impact Vancouver Wharves, although the specialty grains issue does -- is that we get a more rational system of transporting Canadian grain to Canadian ports. There's a big risk with the elimination of the Crow rate and the cancellation of the Western Grain Transportation Act. Particularly on the prairies, farmers are looking for the cheapest way to get their commodities to market. A lot of farmers on the prairies think that going down into the U.S. and using U.S. rail -- which, by the way, is not as efficient as Canadian rail -- out to subsidized U.S. ports offers an advantage.

We have several issues underway. Justice Estey is looking at the whole issue of the movement of western Canadian grain. We have taken some very aggressive moves, and as the member is aware, B.C. Rail has been a significant part of reaching agreements with CN Rail at Prince George and Dawson Creek in trying to capture much of the northern traffic and ultimately. . . . Hopefully, through other initiatives at a meeting that I'll be having in Prince Rupert on June 19. . . . Western ministers will be assembled there and will be looking at ways in which we can capture more of the prairie commodity business. That's certainly my agenda. We'll be working with Alberta specifically to look at ways in which Alberta's interest -- which is to drive up the value chain on the agricultural side -- can be synchronized with the efforts we're making here in B.C.

There are lots of things happening out there. We occasionally may lose a commodity or product that we've been shipping. We're in the game -- and very aggressively -- particularly with respect to the capital expansion of $42 million at Vancouver Wharves.

R. Neufeld: The minister just talked a bit about specialty grains and Vancouver Wharves. Maybe you could just bring me up to date on what they term as specialty grains and what processes are going on with Vancouver Wharves to handle specialty grains. I share the minister's concern about the movement of grain from the western provinces. We have to capture more of it and make sure that it does stay both in the port of Vancouver and in the port of Prince Rupert the best way we can. I'm not advocating that we do a lot of subsidizing either. Somehow we have to get around how we're going to do that. I want to work positively towards those kind of things, just to set the tenor of where I'm trying to go.

Maybe you could just explain to me a bit about specialty grains -- what they entail and what's happening with Vancouver Wharves in relation to those.

Hon. D. Miller: I'm flying blind here, Madam Chair, because quite frankly I know nothing about specialty grains. Going from memory, I think they're talking about peas and lentils -- those kinds of things. That's driven, to some degree, by changes that are taking place in the prairie provinces, where farmers are looking for diversification: specialty crops, niche markets. What Vancouver Wharves has done -- I think quite smartly, given the trend that is occurring in the producing provinces -- is to tailor their port facilities to meet the changes that are taking place. That's very smart strategic thinking on the part of B.C. Rail.

There are other areas -- particularly in the north, again -- where the opportunity for containerization is clearly one which ought to be pursued vigorously. I'm moving away a bit from B.C. Rail and Vancouver Wharves, but certainly our northern port ultimately needs to have containerization capacity. That fits in well -- and I'll use this as an analogy or a parallel -- with Alberta's desire to move up the value chain on their agricultural sector -- not just in crops that you grow but also in beef and other industries.

Their desire to go up the value chain means that they've got to have the ability to ship containers. Again, if we can tailor our port facilities to meet the customers' demands, then we'll get the business.

R. Neufeld: Containers are, I guess, a long ways away from specialty grains, true enough, but they are also a very

[ Page 7968 ]

Again, Seattle and those places, whether they are leading us or not, probably have an easier way of getting money to be able to do those kinds of things. We have to look at ways that we can compete against that.

Were there any other major losses of tonnage by Vancouver Wharves over the last year? Maybe you could explain to me the. . . . This is my first year dealing with B.C. Rail, so I'm not totally familiar with their operations. I haven't had a chance to really speak to very many people in B.C. Rail. But the Red Dog mine in Alaska is apparently shipping lead and zinc through Vancouver Wharves. Maybe the minister can bring me up to date on what's happening there. Is that still in place? Is everything fine?

Hon. D. Miller: Simple answer: there have been no other significant commodity losses. Apparently the Red Dog shipments are continuing. I certainly extend -- if it hasn't already been extended -- an invitation for the member to. . . . If at any time there is a requirement for information relative to any aspect of B.C. Rail's operation, or any of the component parts, the door is open with respect to getting that information.

R. Neufeld: I don't know if I wasn't listening or if we forgot about the Red Dog mine.

Hon. D. Miller: There is no change in shipments from that mine, nor have there been. . . . I think your question was: have there been any other significant losses? The answer is no.

R. Neufeld: I guess the other commodity that Vancouver Wharves handles a fair amount of is pulp. With what has been happening in British Columbia in the forest industry and with pulp, are there any concerns around the issue of pulp? How are Vancouver Wharves dealing with that issue?

Hon. D. Miller: Again, there has been a minor reduction of volume, of tonnage -- from 509 to 481.

R. Neufeld: The other one is sulphur. When I read the 1996 report, I noticed -- I can't remember where, but if I jog my memory -- that there was a reduction in sulphur shipments. I wonder why that would be. Did we lose some of those sulphur shipments because, simply put. . . . I know the production of natural gas is up tremendously, and with the announcements that we've had in the last few days, I can expect that there's going to be a lot more sulphur. I'm just wondering what took place with sulphur.

Hon. D. Miller: Again, there has been virtually no change. The 1996 number of 1,480 -- that's in the thousands of tonnes -- and the actual year to date number of 1,494. . . . Sorry, the number for 1997 is 1,494.

R. Neufeld: So the prognosis for sulphur in 1998 is that it will stay constant with what we experienced in 1996 and 1997?

Hon. D. Miller: Yes, that's true. Between the agriproducts that I talked about -- the $42.5 million -- and sulphur, there has been $100 million in new capital investment in the North Shore, which is clearly of significant benefit to the North Shore communities.

R. Neufeld: The 1996 report also stated that business developments include the handling of inbound South American concentrates. Can the minister expand on that a little bit? Can you tell me what kind of concentrates they are, what kind of loadings you are expecting and those kinds of things?

Hon. D. Miller: I apologize, Madam Chair, we don't have that specific information. If I can get it before we conclude these estimates, I would be happy to forward it to the member. If not, you have my commitment that we will forward that information to you.

R. Neufeld: I'm just about done with Vancouver Wharves. The other one is union contracts. Are the negotiations going on now? As I read the 1996. . . . They expire in December of 1998. Would that be correct for Vancouver Wharves? Is there a process going on now to deal with those contracts?

Hon. D. Miller: The member is essentially right, although I'm not exactly certain. We're not certain that negotiations have actually commenced yet with respect to renewing collective agreements.

R. Neufeld: Just so I understand a little bit. The Vancouver Wharves union agreements. . . . How many unions are involved in Vancouver Wharves? Do they coincide with the ones with B.C. Rail, or are they all different?

Hon. D. Miller: With respect to Vancouver Wharves, it's the B.C. Maritime Employers Association. We have a role to play, but the member appreciates that the employees are dispatched through the hiring halls. We do play a role in that, but the B.C. Maritime Employers Association is part of that as well.

R. Neufeld: The next one I'd like to move on to is WesTel Telecommunications. Maybe before we even get into WesTel, can the ministry tell me. . . ? You hear all kinds of rumours and read things about WesTel, that it's up for sale. I'm not sure whether it's sold or whether it's for sale or whether there are negotiations going on. Before we even start, maybe the minister could brief us on where we're at with it.

Hon. D. Miller: We did make a decision to divest WesTel, although there are opportunities for strategic partnerships as well. We'll see. B.C. Rail has retained Nesbitt Burns to run that process. It's at arm's length. All I can say at this point is that we did go out for expressions of interest. There was a fair degree of interest from across North America, really, and, I think, even outside of North America. That is being run by Nesbitt Burns. There are defined time lines with respect to those people who are interested in purchase to submit detailed information. That process is still ongoing. There have not been any final decisions made on that question.

R. Neufeld: Maybe the minister could tell me what rationale was used by his ministry in putting WesTel Telecommunications up for sale -- whether it's a partnership or a total sale over the last three years. I think WesTel has demonstrated that it's done quite well, according to the chartered accountants' reports. It's been an integral part of the BCR group of companies now for three years, and it's just getting to a point where it's starting to obviously make some money for the group. In fact, if I remember correctly, when I was sitting through estimates last year, the minister who was responsible

[ Page 7969 ]

[10:30]

There has always been a question. . . . Although I've tended to argue against those critics who suggest that because it's a Crown, it shouldn't be in business. I disagree with that fundamentally. So, given that WesTel had been very well managed by the B.C. Rail Group -- it had come from a point of incurring operating losses to generating a positive cash flow contributing to the bottom line -- it seemed opportune to look at this asset in terms of trying to attract more capital and to. . . . I don't want to presume what might be the result of the competitive process that's underway now -- whether in fact there would be a complete divestiture or whether there might be a strategic alliance. Those questions are part of the mix. For those reasons, the changing environment and the need for that kind of capital, this was an opportune time to put it on the market.

R. Neufeld: I find the answer interesting. As I recall, when WesTel was being formed, or being talked about just a short time ago, the marketplace was open at that time. I think the B.C. Railway group of companies or the government went into that knowing full well that the competition was going to be out there and that the regulatory system was going to change dramatically. If that wasn't part of the discussions around the table when they decided to create WesTel, I don't think that they looked too far into the future, because it's not that long ago that WesTel was created. I mean, it has been talked about for a long time that we were going to have competition in the business.

The other thing, I guess, is the infusion of money to keep it competitive. That's the second part of the answer I find interesting. I can't imagine that you would start a telecommunications company like WesTel and not expect to have to invest some money in it at some point in time to keep up with technology and what's going on. I think that it's probably more to do with needing money.

Unfortunately, if you have an arm of a Crown corporation that's making some good money and contributing to the bottom line. . . . I find it interesting that now, all of a sudden, we're looking at actually selling it off, especially in view of what the minister said last year. Obviously this is something that has changed from exactly a year ago, when he was on record as saying that the BCR Group was going to look at all kinds of business opportunities that contribute to the bottom line of the B.C. Railway Group. This is one that is doing that, but all of a sudden we're now going to hive it off and sell it. Obviously there has been a dramatic change either through the B.C. Railway group of companies or from government decree. Maybe the minister wants to expand on that a little bit.

Hon. D. Miller: I think all of what the member says is proof positive that we on this side are not rigid in our views, that we're open to new ideas at all times. Quite frankly, that's as it ought to be. I recall the chairman of the CIBC, I think it was, who said about eight months ago something to the effect that he was dead set against bank mergers and that his bank would never participate in them. Today I believe the same gentleman is talking actively about a merger with another Canadian chartered bank.

All of that goes to show that nothing is static with respect to the pace of change -- the competitiveness in our economy. B.C. Rail started this venture, nurtured it very, very well, added value to that core telecommunications asset that was simply being used to service the railroad's needs, and it has now developed a company that today clearly -- based on some of the initial expressions of interest that I've seen from the private sector -- has significant value.

It's prudent, I think, that you always examine these questions, look at your asset base and make strategic decisions. I would caution the member not to become isolated in one area, in WesTel, but to look at the broad picture with respect to how the B.C. Rail group of companies has operated -- and, I submit, very, very well. They're prepared to make strategic investments. I referred to the $100 million that's gone into Vancouver Wharves, both in the past and in the current $42.5 million capital plan, and the prospect of an investment into the Willow Creek project near Chetwynd -- a coal project in conjunction with some Japanese partners. Again, if that project comes to fruition -- and it's now got a green light from the environmental assessment process -- we can expect to see, I think, 70 to 80 new jobs in the Chetwynd area.

B.C. Rail's aggressive pursuit of agreements with CN Rail have had significant benefit in northern B.C.: their investments in property through the property division; the new office building in Prince George, which is fully leased; and participation in the development of a shopping centre in Squamish. So B.C. Rail is always looking at opportunities to make strategic investments that link into or flow out of some of their core assets -- land, etc., and in this case we're talking about telecommunications assets. Looking across the piece in the separate divisions, we're generating positive cash flow, returning a dividend to the taxpayer who rightfully ought to expect a dividend from this Crown corporation and providing service to British Columbians in a variety of ways.

This is a strategic decision; it was timely for the reasons I mentioned, and hopefully the result will be one that taxpayers in B.C. will look at with favour.

R. Neufeld: Maybe the fellow from the CIBC changed his mind after you told him that bankers really didn't know how to run their own business. It could be that he changed his mind. In any event, I digress.

The revenues, according to the 1996 year-end report, were up 60 percent for WesTel over 1995. Can the minister tell us what they were for 1997, and what's anticipated for 1998? Are they growing at that magnitude, or are they stabilizing?

[ Page 7970 ]

R. Neufeld: Obviously still fair-sized growth -- 15 to 18 percent.

Maybe to go back a bit. I don't know whether or not the minister has this information either, but does he know what the assets of WesTel were when it was formed? Let me back up a bit here: what was taken out of BCR to create WesTel -- the dollar value of those assets -- and how were those assets calculated? Were they actually calculated on what WesTel would do as a business, or were they calculated on replacement cost?

Hon. D. Miller: No, I don't have that information, but fundamentally the railway had for its own purposes telecommunications infrastructure. The decision was made in the creation of WesTel to take that infrastructure and spin it off into a separate company. As I said, they've added considerable value and made it profitable, and now it's a very attractive asset in the marketplace.

R. Neufeld: I wonder if I could impose on the minister to get me that information if I could.

Hon. D. Miller: If it's possible.

R. Neufeld: If it's possible. There's no need to go to a whole lot of bookkeeping work, but if I could get that information on two things: what the value was when it was first formed, and whether that value was calculated as a business or as actually a replacement cost. . . .

I guess the minister may not have this information either, so maybe what I'll do is just ask for it at the same time. What has been hived off BCR Properties since the conception of WesTel? What dollar figure is that? There was an initial amount that was done to get it started, and then obviously there must have been some transfer of some assets in the last three years from BCR Properties to WesTel.

Hon. D. Miller: Yeah, we'll endeavour to get the information. I'm sure there is a valuation that was done at the time -- probably the book value of the assets at that time. But I'll ask my staff to see if they can get that information.

Really, looking at the larger piece, what did we start with in terms of the asset base? What were they. . .the physical infrastructure? What was the valuation? What has been its progress with respect to the development of WesTel? You could do the same with respect. . . . You could sort of track the progress, if you like, of the property division. I'd be happy to try to get that information in a form that would illustrate the growth, if you like. What did they start with? How was it valued? Where are they today?

R. Neufeld: I guess the other part of it is that although we have WesTel. . . . The equipment that started WesTel -- the assets -- was an integral part of the B.C. Rail operations and obviously still has to be. How do you negotiate if you're going to sell WesTel? On what basis do you negotiate with BCR, the rail company, on access to those microwave sites and lines for the operations of the railroad?

[10:45]

R. Neufeld: So at the present time, you have commercial rates struck between WesTel and B.C. Rail that would be comparable to what they would have to pay in the marketplace. When I think about the microwave sites and the property that's involved with those sites, and all the things that go along with the telecommunications portion of it, would it be assumed that that would actually be sold as property along with WesTel? Remembering that some of those sites will be pretty integral to the BCR group in different areas of the province, how will that actually take place? Will it be a lease arrangement? Maybe you could expand on that a little bit more. I guess it refers back to my initial question about how we're going to go about selling the assets of WesTel.

Hon. D. Miller: Well, there may be a variety of possible outcomes. I don't mean to hedge by giving that answer, but when you go out and test the marketplace, you get a variety of responses in a variety of configurations. Again, I'm not trying to be evasive about what the outcome might be but to go back and affirm that the relationship between WesTel and B.C. Rail now is on a commercial basis. There is a contract between the two with respect to supply of services from WesTel to B.C. Rail. Making a general statement, even though there may be different forms or different permutations possible with respect to who owns fixed assets and the rest, there would be a contract at the end of this process that defined the service provided by WesTel to B.C. Rail.

R. Neufeld: I think that's basically all the questions I have for WesTel, unless my. . . . Do any of you have any questions with regard to WesTel? We're just moving right along here, hon. minister.

Hon. D. Miller: Amazing progress.

R. Neufeld: It's amazing progress. That's right.

BCR Properties. I wonder, first off, if there's a strategic plan for BCR Properties. Is there a strategic plan for each one of the companies within the group, or is there an overall plan? Maybe that's what I should ask first.

Hon. D. Miller: No, there's a strategic plan for each division or each entity in the B.C. Rail Group, updated annually. Generally, you always like to extol the virtues of Crown corporations under your purview. They're not always perfect, but I think B.C. Rail has been exemplary with respect to its activities in the marketplace across all of the operating groups. That's no less true of B.C. Rail Properties.

[ Page 7971 ]

R. Neufeld: Would there be any anticipation on the part of B.C. Railway Group or the government to hive off BCR Properties and sell out, the same as WesTel? I agree. I have no problem with what the minister says about the BCR group of companies being well run. I don't have any problem with that at all. I totally agree. I'm not here to pick apart how they do their business, because I think they do a good job of doing their business. But is there a move on the part of government to maybe hive off a few more of the group of companies and sell them for whatever reason that may happen to be?

Hon. D. Miller: I'll give the same answer that I gave previously with respect to WesTel. It's that I think any commercial entity in the business has to be prepared to look at change, to look at opportunity. I would say that the short answer is no, that there is not any contemplation of divestiture of the property division. If there are opportunities in the future, I guess we always have to be open to them.

What we have to bear in mind, though -- and this is absolutely critical with respect to the overall health of the B.C. Railway Group -- is that various sectors of the group. . . . For example, I cited rail. It may have declining revenues. What we want to ensure is that we have a healthy corporation that produces a positive cash flow, returns a dividend to the Crown and can operate on a truly commercial basis. So that's the underlying philosophy, but beyond that, there may be opportunities in the future. You should never, ever say: "Absolutely no."

I think there's one area where it seems to me that British Columbians would not want us to go, and that is the disposition of the core rail business. That was certainly an issue that came up during the last election. I think, if I'm not mistaken, that your party took a position that proved to be quite unpopular. I suspect that as a result of that experience, they have probably fundamentally changed their view on the question of the sale of the rail portion of the B.C. Railway Group. I'll leave it at that.

R. Neufeld: I appreciate what he said about the last election and the B.C. Liberal Party talking about selling B.C. Rail. I hope that it was my influence that actually changed their minds on it. It's an integral part of northern development and something that I think has to stay within as a Crown corporation, and I will be saying that for a long time to come.

I do have a little bit of concern -- and the minister has talked about it -- with a couple of divisions of the group of companies, those being WesTel and BCR Properties. They're actively looking at disposing of WesTel; BCR Properties, possibly. We know that B.C. Rail is having some difficulty on its own for a variety of reasons, a lot of which they can't control. But when we look at the viability of the whole operation, if we want to get to that, why would we be selling off portions of the company that are actually contributing good return on investment to the company? We know that the core part of the B.C. Railway group of companies is what we have to actually keep at the end of the time and keep operating so that we can continue to develop the north and move the freight that has to be moved either to Prince Rupert or into Vancouver. Maybe the minister would like to just give me a little rationale around why we would be doing that. To me, I know that if I had a company, and one part of it, which was my core, wasn't making money, and I had a few others that were helping to make ends meet, I don't know if I'd be looking at selling it off.

Hon. D. Miller: I'll go back and talk about some of the reasons I cited that contributed to the decision to sell or to test WesTel in the marketplace. I talked about the changing nature of the regulatory framework around telecommunications and the need in that business for a significant capital investment, looking at how B.C. Rail had nurtured that company and had added value to the asset so that it now was very attractive. You have to look at a variety of factors in reaching these conclusions. In the case of WesTel, it simply was doing that kind of analysis in determining that it was an appropriate time to put it out and test it on the marketplace.

Really, if you look at how B.C. Rail has grown, I think they've been very intelligent in moving beyond the core rail business and looking at other ways in which they could produce revenue for the Crown asset. And they'll continue to do that -- for example, investments in the Willow Creek coal project.

I, as the minister responsible for B.C. Rail, have publicly said that we are prepared to acquire the Ridley terminal in Prince Rupert, and I've decried -- the member wasn't in Prince George when I spoke to the Northwest Corridor Development Corporation a week ago. . . . It's clear that the federal government. . . .

Interjection.

Hon. D. Miller: You had to keep this place operating. Thank goodness, Madam Chair, that in my absence the House continued to function. I want to thank the member for his contribution.

I was in Prince George speaking to northerners about issues that are very important to them and to their economy, and I decried the fact that the federal government had -- with great fanfare when they had a Minister of Transport who was dynamic -- announced a series of changes. Mr. Young, who was never afraid of a challenge, bit the dust in the last election. But they were going to make fundamental changes to west coast ports, including more freedom for the ports to make their own decisions; the inclusion of representatives from the western provinces, specifically additional nominees on port boards from the province of British Columbia; and the divestiture of some of the assets, particularly Ridley Terminals. They've been dragging their feet ever since, and I've been imploring them to get on with the job. I think it makes a heck of a lot of sense for Ridley be to acquired. My own view is that it should be acquired by rail and coal interests.

Part of the problem we have faced with this whole western grain transportation -- and it's byzantine in its complexity -- is that because of ownership positions, we've got people shipping grain into the lower mainland to fill their terminals, because if they didn't they wouldn't be making money in the terminals. It takes longer to ship that grain to the market, to the end user -- right? But the people who ship it into the terminals don't care, because they're profit centres, presumably, and they're making a buck at it. The fact that it might take another two weeks to get it on a ship appears to be of little consequence.

[ Page 7972 ]

I've said B.C. Rail would acquire Ridley Terminals. It makes a nice fit. Look at the investment in the Chetwynd project. Look at the issue of northeast coal itself, which is clearly under some stress, given its ownership position, the slackening of demand and the reduction in world price. B.C. Rail is dynamic and is prepared to look at the variety of ways in which they can make critical investments that make sense for British Columbians and that result in a positive return for B.C. Rail.

R. Neufeld: Having said all that, maybe we can get back to the issue around B.C. Rail Properties, dispose of it and get on to B.C. Rail. Do you have a present value of BCR properties?

Hon. D. Miller: The answer is no, although I suspect we could get a value with respect to any of the assets I talked about: the Prince George asset, the Squamish asset, etc. We could get that. But in terms of the entire property that B.C. Rail has, no.

[11:00]

Hon. D. Miller: Yeah, I think this. . . . We don't want to get confused in the definition, but obviously B.C. Rail has significant land assets, a lot of which is not valued. We can get you the information on those entities that can be valued -- for example, the property that has been developed.

R. Neufeld: I appreciate that. That'll be sufficient.

In the rental part of BCR properties, what is the vacancy rate, and how does that compare to the private sector?

Hon. D. Miller: I don't have a precise figure, but they are, to all intents and purposes, fully occupied.

R. Neufeld: Has the BCR Properties portion of the group of companies sold any property? Are they actually in the business of buying some property someplace as an investment and also selling it? Is that what happens?

Hon. D. Miller: No, generally not, although there are some issues. Again, I don't have a current update on the status of the Squamish issue. There are some issues involving first nations around land swaps for port development in Squamish. I can get some more information for the member. I just don't have it at the top of my head. But generally, the answer is no. It's not a question of selling the property; it's a question of looking at opportunities for investment. The two projects I cited are examples of that.

R. Neufeld: I read in one of the annual reports that a fair amount of property became vacant in Squamish as a result of building by BCR Properties. Is that correct? Are we renting it out? Or maybe in the interim it's been leased out.

Hon. D. Miller: I'm not quite certain. I don't know if the member. . . . I'll try to give an answer. Some of the Rail property may have some vacancies. There have been some transfers of personnel from, I think, Squamish to Prince George. Was that the question? Or was the question on the commercial developments?

R. Neufeld: It surrounds the commercial development, and, as I recall, it was in Squamish. It amounts to something like 100,000 square feet of space left vacant because of some new construction. I'm also informed that BCR may have built access into this property. So maybe there is a switch back and forth from BCR Properties to the Group of Companies.

Hon. D. Miller: Madam Chair, I think we're both flying blind here. One of the dangers of that is you may crash. Perhaps we can get a report from B.C. Rail as to the current status of the Squamish properties. If that would satisfy the member, we'd be happy to do it.

R. Neufeld: That's fine.

The last question I have on BCR Properties is: what investments are proposed for 1998? Are there any, and where would they be?

Hon. D. Miller: No current projects, but we do have some liquid assets. I've always wanted to say that -- liquid assets. We are prepared to make investments. So we do have some capital on the investment side but no current projects in mind.

R. Neufeld: Okay.

Hon. D. Miller: It's like water.

R. Neufeld: Yeah, there are some liquid assets around. I guess we'd better be careful or someone will be taking them and using them someplace, that's for sure. Maybe it's best that we get them invested fairly quickly into something.

I'll carry on to BCR Ventures. The minister touched on this earlier, but maybe he could just give me some information -- or his people here may have some -- on what has been spent to date by BCR Ventures on the Willow Creek property.

Hon. D. Miller: Perhaps a couple of million. The real issue with respect to the Willow Creek project is the ability to secure sales for 50 percent of the production. I'd kind of anticipated that we might be there by now, but the Japanese situation has made life a bit difficult. So that's being pursued very aggressively. In fact, Mr. McElligott, who normally would be here, is in Japan as we speak. When we can get to that point, hopefully we can announce that the project will proceed.

R. Neufeld: What would be the total anticipated expenditure by BCR Ventures on this Willow Creek project?

Hon. D. Miller: It would be about one-third. As I recall, the proposed capital investment was about $26 million, which was really what made it such an attractive project. Relatively

[ Page 7973 ]

R. Neufeld: Who are the partners, and what is their exposure in the Willow Creek mine along with BCR Ventures?

Hon. D. Miller: It's one-third between B.C. Rail, Globaltex and Mitsui Matsushima of Japan.

R. Neufeld: I assume, then, that one-third, $7 million approximately, will be invested by BCR Ventures, which will recoup that investment simply through the movement of coal or through the actual. . .if there are profits in the company at the end of the day.

Hon. D. Miller: No. It's not just for the movement of coal -- although it's an interesting question. If the revenue was sufficient to service the investment, you might even reasonably construct an argument along those lines. But that's not the case; it will be a return on investment of, hopefully, a profitable company.

R. Neufeld: The other issue is the Japanese problem, of course. It's something that B.C. Rail doesn't have any control over. Is there a chance that they may not be able to fulfil their part of the bargain in dealing with this coal and taking it in a long-term agreement?

Hon. D. Miller: Sorry, I didn't hear the last part of that question.

R. Neufeld: The Japanese market, of course, and their ability to be able to fulfil taking the coal. You said that the CEO is at present in Japan trying to negotiate that. Is he trying to negotiate the sale of it now, or just actually talking to the companies that may not be able to take it?

Hon. D. Miller: Well, Mr. McElligott is probably involved in a variety of activities. But the advantage of having a Japanese partner -- and I've met with Mitsui on this -- is that they have the ability to find those markets in Japan. I'm not certain; I think it would be misleading to say that Mr. McElligott is there specifically to try to sell coal. I think that's being done generally.

There are, as well, some other opportunities. I'm always hesitant; I don't want to kind of hype things that I don't think are going to happen. But we have had extensive discussions. In fact, when I was in Japan and Taiwan last year, I met with some people who had expressed interest -- actually on behalf of someone who was trying to promote a project, which is the development of a pig iron mini-steel project in Prince Rupert. . . . There's a very nice fit, given the high quality of the coal from Willow Creek. In theory, you could construct a very rational scenario that saw Willow Creek coal flow to a coal-fired pig iron plant that had a mini-steel mill attached to it in Prince Rupert. Now, I'm not saying that's going to happen. But there are some very large companies that have been looking at that question -- some Japanese, some American. So we're always looking at ways in which there may be opportunities for the product that would be produced out of the Willow Creek mine. It may be that it will be just straight export into Japan for their use. If it's something you can put together that has even more value for B.C., then we'll pursue that as well.

R. Neufeld: I have no further questions on the BCR Ventures portion of it; I think they've all been answered. I'd really like to get on with the core business of B.C. Rail and deal with that. We'll delve a little more into some of the things the minister discussed earlier: the movement of grain and those kinds of things, how they fit and what's going on with BCR.

We talked earlier about a strategic plan for the group of companies and BCR, and I wonder if I could have a copy of that. I notice the minister nodding his head that they'll get that information for me.

I understand that '96-97 saw a decrease in car loadings or tonnage for forest products. Obviously with the forest industry slowing down, that would be lumber chips and pulp. Could the minister tell me what loss that represents to BCR's actual bottom line, what the company is doing to alleviate that loss and how you're dealing with it?

Hon. D. Miller: About $1 million, I am advised, on the revenue side, essentially in forest products. . . . But we're taking some very aggressive steps. Let me try to very briefly outline some of the advantages of the agreement we reached with CN Rail on both the Prince George and the Dawson Creek interchanges -- particularly Prince George. What that did was provide more opportunity, quite frankly, for both railways in terms of giving more flexibility to shippers to choose the access to port that they think makes sense for them -- if not port, at least rail into other North American markets. The lack of agreement was an inhibiting factor in Prince George; both railways were competing in what was arguably their own best long-term interests. The long hauls are desirable in the rail business, not the short hauls. But the result was an impediment to shippers.

[11:15]

There's going to be a variety of decisions made, but they'll be made on a commercial basis by shippers, in their own best interests. Obviously, impediments or factors like softening of commodity markets, slowdown of shipment of forest products and those kinds of things are always going to have an impact, but the idea is to grow the business. With that agreement, the Dawson Creek agreement, and with some of the issues we are pursuing, particularly with respect to development in the Peace region on the agricultural side. . . . There's a major impediment, by the way -- and I'd be happy to speak about that -- that's happening with CN Rail on the Alberta side, which I'm very worried about. Over time I think we could expect an increase in the volume of business. You've got to grow the volume; it's got to be part of the strategy.

R. Neufeld: The minister talks about the agreements with Alberta and those kinds of things, so I'll go down to that in my list of questions, and we'll deal with it a little bit.

I want to be on the record as saying that I think it is actually good for the Peace. It's good for the BCR to make

[ Page 7974 ]

That being said, I guess part of the ongoing problem with the movement of grain is, and always has been, the availability of grain cars. I don't think that's been resolved to any degree; at least, I haven't heard of it being resolved to any degree, other than that BCR has acquired some grain cars by purchase or lease. Maybe the minister could tell me where we're at with the acquisition of grain cars out of the national fleet for the movement of grain, so that we can actually facilitate what the agreement was all about for Dawson Creek and Fort St. John.

Hon. D. Miller: Again, to go back. . . . I don't want to just be a critic of the federal government, but it's hard to avoid. They've made a decision, as a result of some of the things I talked about earlier -- the Western Grain Transportation Act, those kinds of changes that are taking place -- to divest the railcars. Where is it? I mean, they announced that I don't know how long ago. They won't make a decision. B.C. Rail has applied to get some of those cars -- about 200, if I recall -- but we're operating in a vacuum. It's like playing tennis with a sponge, Madam Chair. You know, you keep sending the ball in, and it just disappears; it never comes back. We've also applied, because there is money available through the federal government, for some money for the northeast portion. Again, no response. We'd like to acquire some cars.

Let me deal now with the major problem that I see occurring. When we announced the Dawson Creek agreement, much to my dismay the CNR announced at the same time that they were going to short-line their northern Alberta rail lines. I think the member is probably aware of the rail configuration in northern Alberta. There are essentially two branch lines: the branch over to Dawson Creek and the two branch lines south to, I think, Swan Landing and Edmonton. The disconnect is at the Watino bridge.

Interjection.

Hon. D. Miller: Right. So we've got a bit of a problem there, because arguably, with the Watino bridge in place, you would have a feeder from northern Alberta south and then west, connecting ultimately into Dawson Creek, which would make Dawson Creek the load-out centre. That's my vision for Dawson Creek. If you can bring that grain in there, you can get into cleaning; you can get into agribusiness; there are others who've proposed commercial developments.

To my dismay, CN announced that they're short-lining their northern Alberta rail lines. I see a disconnect with the line feeding into Dawson Creek. CN obviously would say -- and they've told me this -- that part of the condition on a short-line agreement is that the new owner would deliver to CN. What that means -- and I've talked to a lot of Albertans, as well, who were in Prince George at this conference last week -- is that they now may be denied the opportunity to ship their grain to Dawson Creek, which is a far shorter distance, saving them about 200 to 300 kilometres. They're going to be denied the opportunity to ship in a more efficient way, a shorter way, to Dawson Creek, and from Dawson Creek down B.C. Rail to Prince George and hence out to the port of Prince Rupert.

I really am very unhappy about that announcement. I expressed that in very, very forceful terms when I was in Prince George last week to one CN official and one Transport Canada official. I've had some internal discussions on the question with a few others since then. I don't know that you can just sort of take a run at CN and say, "We don't like what you're doing; change it," and get the kind of response you're after.

So I want to take some time to consider, along with the government of Alberta. . . . I did have a meeting with Hon. Walter Paszkowski, the Minister of Transportation and Utilities, who shares our concern on that question. We did talk about making some joint presentations to CN. I know that Mr. Paszkowski has talked to the federal Minister of Transport, David Collenette. It's early yet. I would encourage the member to become informed on this question, because we're going to need all the support we can get, both in B.C. and Alberta, to try to ensure that what we think is a more rational approach -- to have Dawson Creek as the centre -- becomes a reality.

I think we're facing a bit of a hurdle in that respect. We can gather grain originating in Dawson Creek or Fort St. John that we can truck, because the Minister of Transportation of the day, Hon. Lois Boone, made an announcement a year ago that we had expanded our trucking radius in the Peace. Certainly hauling grain by truck makes sense in some places. But it will not provide the solution if we want Dawson Creek to be the centre. You can see the advantage to the farmer in B.C. and Alberta; you can see the advantage to B.C. Rail; and in fact you can see the advantage to CN Rail in having a more efficient system. This decision to short-line and disconnect from Dawson Creek is clearly one we all have to be concerned about.

R. Neufeld: I share that concern and have had discussions with people in Alberta over the movement of grain into Dawson Creek via CN and also into Fort St. John via truck and then going south, preferably to the port of Prince Rupert. I think it all makes good sense for us in the northeast and for northwestern Alberta. I mean, the groups of farmers I've talked to in northwestern Alberta are very enthused about having an alternative route to move their grain which will, in the end, be cheaper and will get it to the port and to the consumer quicker.

Along those lines, I don't have any problem with what the minister said. But I don't think we can just leave the railcar issue with CN. This is something that has been going on for a lot of years: the availability of grain cars for BCR. To just say that it's in the federal government's court and that they're not doing anything. . . . I don't think we can work in those parameters. I'd just as soon they got on with it also. I don't have any desire to see that strung out -- of course not -- because it's going to help the area I live in. I know that I will be working through my MP again to see what we can do to hurry those things along. Whether or not we can get it done, remembering that the MP is in opposition and that sometimes opposition members don't seem to get the government to listen to and act on some really good ideas. . . . But we'll attempt that.

Can I just ask the minister to expand a little further on what we're actually doing in the acquisition of grain cars so that we can fulfil what we're talking about? I guess the second part of the question is on CN wanting to do the short line into Dawson Creek. . . .

Interjection.

R. Neufeld: Okay. Well, maybe I misunderstood what the. . . .

[ Page 7975 ]

R. Neufeld: With the decision CN Rail just made recently, is there an opportunity for B.C. Rail to acquire some assets that will facilitate moving that grain?

Hon. D. Miller: First of all, I'll just to go back to the grain car issue. I'm advised that we do lease cars from CN. Currently we don't have a problem, actually. In fact, since the interchange agreements have been reached, I'm advised that the cooperation between CN and B.C. Rail has improved quite a bit. So there's not an immediate problem on the grain car issue.

The other larger issue with respect to acquisition of grain cars is really the Canadian Wheat Board. I've read one report on that. There are differences of opinion with respect to those grain cars -- whether they ought to go to the farmers or to the railways. It seems like one of those kinds of situations where the time it takes is forever, and really, we'd like to get on with things.

Let's go back to this short line. The problem is going to be that the link to Dawson Creek will be severed. There will not be an ability to ship grain from the Alberta side, except perhaps in a very short haul into Dawson Creek. They will require the short-haulers who purchase those assets to deliver south to the CN line -- right? So the ability to ship. . . . I actually said to Walter Paszkowski: "Buy it. You're the government of Alberta; buy the thing." He said: "No, we won't buy it. We weren't going to buy anything."

I don't know a lot about how that disposition of the asset takes place, but it's owned by CN Rail. CN Rail now says: "We're a private sector company. We no longer take our orders from the federal Crown. We'll make decisions that are in our own best interests." Quite frankly, they've made a lot of very good decisions. I have a lot of respect for Mr. Tellier. I think he's a very bright guy. Certainly their purchase of the Illinois Central lines in the U.S. south has now provided, again, what I think is a real opportunity for northern B.C., because there is unimpeded rail access from the port of Prince Rupert virtually down into Mexico. Over time, I think that's going to provide real opportunity.

But we've got an immediate problem, and I think we've got to combine forces. I hate to say this, you know -- I really do, as a Canadian -- but quite frankly, I don't think the federal government cares. I don't think they care at all about western interests in transportation, and I know they don't care anything about northern rail transportation issues. I've not received one piece of correspondence from the federal minister, ever, in the time I've been responsible -- not once -- inquiring about problems we might have, offering to try to be part of solutions. Not one single time have I ever received anything positive along those lines. I met with Mr. Collenette last year. I tried to be open, with respect. I wasn't looking for fights. I said to him: "What are you doing in your ministry in terms of western transportation issues?" Again, he's probably a fine gentleman. I have nothing against him personally.

[11:30]

I'll tell you, we've got an issue in northeastern B.C., and it's a serious one. People at the federal transportation level had better pay attention, because if we don't solve this one then we're going to deprive people in your constituency of economic opportunity. There's no rational reason in the world why that should happen.

R. Neufeld: I'm willing to yield the floor shortly to a couple of other members here. I just want to ask one more question that relates more or less to the Northwest Transportation Corridor Task Force, which was done in 1996, in conjunction with the federal government and the provinces of Alberta and British Columbia. There were 22 recommendations made by the task force in relation to grain movement through the BCR system. I don't have them all in front of me, but there were 22 fairly strong recommendations that had the approval of the people at the table and also of the Alberta government and the B.C. government. I just wonder: has there been a group formed that's working to bring into fruition some of these recommendations on the movement of grain specifically and all kinds of products from western Canada through British Columbia, specifically to the port of Prince Rupert? This whole report -- that's what it talked about. I just wonder if there has been a group formed and if it is actively working now with those different agencies -- CN and all the ones that are involved. It's not just grain; it's the movement of all kinds of products, as the minister spoke about before.

Hon. D. Miller: Yes, there has been. It's the group that I addressed last week, the Northwest Corridor Development Corporation.

But that's not all that's happening. And it's important. . . . I think we've seen more action as a result of the two agreements with B.C. Rail Ltd. and CN Rail. I think we're going to see more action as a result of the working group we have with Alberta. We had a meeting in Edmonton about a month and a half ago, and we'll be meeting again. On June 19, I'm also convening a meeting of those western ministers responsible for the northern development parts of their provinces. I intend to have some of those issues on the agenda for that. There's a myriad of things taking place.

At the same time, Justice Estey is involved in analyzing. . . . As a result of last winter's failure in terms of the delivery of grains to west coast terminals, there's a review being done by Justice Estey, who was appointed by the federal government. He's been to Prince Rupert; he's looked at the terminal there. I understand -- and I talked to the individual who accompanied him -- that he's impressed. He's aware that that terminal and rail corridor is underutilized. It's way below it's capacity. It's 600 kilometres closer to the Asian marketplace -- a full day's sailing on a return trip. It offers significant advantages in terms turnaround time and lack of congestion. We'll have to wait for the results of Justice Estey's report, but I hope that there will be some very encouraging comments with respect to the northern corridor and facilities at the port of Prince Rupert.

We need to work with the prairie provinces, and we will be doing that. We're going to expand the Alberta-B.C. working group to include Saskatchewan and Manitoba. For example, there is currently significant grain coming out of Saskat-

[ Page 7976 ]

I think the future of Vancouver -- given the dynamics of the regional economy, the diversity of port infrastructure, the new container port at Roberts Bank, the import of automobiles into the Fraser ports, the mix of commodities in the Vancouver harbour -- is far more secure. I worry more about the northern port, which has distinct advantages and yet remains terribly underutilized. So that's the focus of my work, and certainly, as the Minister Responsible for Northern Development, I intend to try to drive that agenda very, very hard.

R. Neufeld: I wonder if I could receive some briefings that relate to some of those meetings -- ones that don't have to remain confidential -- that will help me in trying to work from the opposition side to try and bring some of the recommendations that were made to fruition. I would appreciate it very much if I could receive that information, simply to use it to try and get the thing done. I think that on this point, we come from the same viewpoint: we want to see it happen. Anything that I can get that will help me, rather than digging it out someplace, would certainly be helpful.

The minister nods his head, and I'll just expect that he'll do that. Or if he wants to talk about it, he can.

I'll yield to the member for Richmond Centre for a number of questions.

Hon. D. Miller: Very briefly, I think that's the way we ought to be working in the north. I made that offer directly, as the member is well aware, at a reception in Fort St. John -- that, to the degree possible, I want to work on a bipartisan basis to identify what's good for the north and to try to work together. Certainly the member's added voice is appreciated. We have some papers we have developed internally in the ministry -- well, actually my old ministry -- that provide a pretty good overview of some of these issues. I'll make sure that the member is aware of that. Again, as I said at the outset, if there are particulars or details, the door is open in terms of access to that information.

D. Symons: We seem to be delving into two things: B.C. Rail and the whole northwest portion. You mention the northwest corridor group that is working; I think they had a meeting last week in Prince George. I believe there was fairly good representation from Alberta and Saskatchewan at that event. They've now formalized themselves, have a board of directors and have got up and running. You mentioned just a few moments ago that a group of other organizations is working towards the same thing, and that is to see that the northwest part of this province has developed to its potential, which hasn't been the case up to now.

One of the things that struck me, though, in talking to people in that northwest corridor group, was the idea of doing a circle tour, using B.C. Ferries, to Prince George, trying to get Via to do something with the line that runs out of Prince George as a passenger service and then B.C. Rail -- which is a really scenic tour -- back down to Vancouver. It would be a beautiful sort of thing that could promote. . . . Have you been discussing something of that sort with B.C. Rail, Tourism B.C. and all the other people that would be involved? I think it's a great idea just waiting to be developed.

Hon. D. Miller: Well, I applaud the member's initiative. In fact, I announced last week in Prince Rupert that we would be convening a major tourism conference in Prince Rupert. B.C. Rail has kindly offered to do the work on that very topic. It was very well received by the chamber people in Prince Rupert and by municipal leaders. Mr. McElligott talked about it briefly at the meeting in Prince George last week. We think there is sufficient opportunity.

By the way, I was delighted to announce in Prince Rupert the commencement of the MV Aurora, a motor vessel or pocket cruiser, which is going to be based in Prince Rupert and which will have gaming on the ship. I can tell you that the merchants of Prince Rupert, the chamber of commerce and the political leaders were overjoyed with that announcement. It was greeted very enthusiastically. We can see some of the tourism infrastructure; that's now being developed in a great way. Prince Rupert is a great place, by the way. I would encourage everyone to go there. I know the member has been there. We've got as much to offer as some of the communities in southeast Alaska. But again, it's underutilized. B.C. Ferries has announced that it would like to put a second vessel on the northern run, Port Hardy to Prince Rupert -- tough economics.

By the way, I'm very pleased that B.C. Ferries has announced. . . . We'll get to B.C. Ferries, I know. As the minister responsible, I was delighted to advise northerners and those who use that service that we will be expanding again the number of sailing days this year, to try to capture that shoulder season.

B.C. Rail has now developed a fair amount of experience in a very successful dinner train that they're running, as the member is aware. I think the capacity is about 350 or 400, or somewhere in that region. It's taken off. I've yet to take it myself. I've toured the cars, but I've yet to have the opportunity to go on the train. Mr. McElligott has extended a kind invitation to me, but I've been so busy that I haven't been able to take it up. It's proven to be very popular. So with the expertise we've got in-house at B.C. Rail and with the kind of interest that's been expressed as a result of the successful Rocky Mountaineer -- the train on the Via tracks from Vancouver to Banff -- we think that there's real potential on that northern line.

We think there's bigger potential on the coast. Certainly initiatives like Mr. Bartell's Aurora are a new beginning in terms of exploring the tourism opportunities on our coast -- in terms of circle tours. That's one of the issues that came out of the Premier's summit in Prince George last year, where we went to listen to northerners about these kinds of issues. Tourism, I think, has significant potential in northern B.C., so these kinds of initiatives. . . . At a major conference in the fall of this year we hope to bring all of the big players together to advance that.

D. Symons: Actually, I gave the minister a great chance to speak on the topic. But I'm very pleased to hear that, and I would commend all those who are working toward that end, because I think it's an untapped resource that we have there -- particularly the idea of doing a whole package fare. This

[ Page 7977 ]

Hon. D. Miller: Madam Chair, although it wasn't a direct question, I might add. . .

D. Symons: I'm giving you a chance.

Hon. D. Miller: . . .very briefly that there is one issue that is particularly vexatious. While I've announced a major tourism conference for Prince Rupert for the fall, sadly, the Via station in Prince Rupert is the worst, run-down, ramshackle mess that I have ever witnessed.

A Voice: Buy it.

Hon. D. Miller: Madam Chair, a suggestion from the opposition that we buy it -- which may have some merit. But it strikes me that we have Via Rail -- in the business of carrying passengers, in the business of tourism -- having passengers disembark at a facility that I'm sure no member would allow in their own community. It's a sad day. . . . I would ask members, if they care to, to perhaps drop a line. . . . I intend to talk to Mr. Morrison, the new head of Via Rail, as soon as I can. The members might drop a line and support our efforts to have Via Rail restore what is arguably a very nice, historic building on the waterfront of Prince Rupert to some semblance that's fit to look at. If we can't get the cooperation of a huge organization like Via Rail, I think that something's wrong. So if the member wants to take the initiative to drop Mr. Morrison a line or give him a call, I'd be very, very happy.

[11:45]

If there are resources that he or his colleagues need, it might be appropriate for him to get them.

The Chair: Minister, noting the time.

Hon. D. Miller: Well, we could do it right now. There's nothing to stop us.

M. de Jong: All I'm suggesting is that it's going to be longer than five minutes. My colleague will continue with questioning now, and I'm going to leave. But I didn't want the minister to be caught by surprise after.

Hon. D. Miller: It has taken me by surprise, because I was advised that there was an agreement that we'd wrap up before noon. But hey, I'm used to disappointments.

R. Neufeld: We'll be on into the afternoon. I'm sorry, but I wasn't aware. . . . It may have been something that came from the House Leaders and wasn't passed on -- that we were going to wrap up by noon.

I'll just make a motion that we rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 11:47 a.m.

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