[ Page 8725 ]

The House met at 2:04 p.m.

Prayers.

T. Nebbeling: In the gallery today we have Mr. Jacques Carpentier, who is president of the Nanaimo Community Bingo Association. In this position he has become a very fierce fighter for the rights of charity organizations. It is his first visit to the gallery. I would ask the House to make him very welcome.

B. McKinnon: It gives me great pleasure to introduce to the House a constituent of mine, Jack Dhaliwal. He is here in Victoria visiting for a few days and decided to visit the House to see what we do in question period. Would the House please make him welcome.

G. Bowbrick: Joining us in the precincts are two classes of grade 5 students from Herbert Spencer Elementary School in the Queen's Park area of New Westminster. They are having a great tour today with their teacher and several other adults, including parents. I would ask the House to please join me in making them welcome.

Hon. D. Streifel: It is my pleasure today to introduce a group from my constituency who are touring the precincts. They are 25 grade 5 and 6 students from Agassiz Christian School, and they're accompanied by their teacher, Mrs. Little, and a number of parents. I would bid the House make them welcome.

Hon. A. Petter: Today in the members' gallery we have some special visitors from the state of Victoria in Australia. The Hon. Michael John is leading the all-party Federal-State Relations Committee on a study tour, primarily looking at an issue that we're all very familiar with here in Canada: in their case, the overlap and duplication of roles and responsibilities between the Commonwealth and the state. The committee is in Victoria meeting with my colleagues and senior officials today and tomorrow. I would ask the House to join me in making them very welcome.

Hon. D. Miller: Perhaps I am stretching things a bit, but I would like to note -- and I'm sure the House would like to join me in congratulations -- that Lisa Walters from Prince Rupert, after 15 years on the LPGA tour, has finally won a major tournament and set a course record. I would ask all the members of the House to join me in a fantastic welcome for this. . . .

P. Nettleton: Please join me in welcoming Kim Teh. This gentleman is from Singapore and, more recently, from Ladysmith, here on Vancouver Island.

C. Hansen: Today I'd like to welcome two individuals who fight very hard on a day-to-day basis on behalf of B.C. small businesses and other job creators in this province: Keith Sashaw and Marcia Smith. Both are involved with the Coalition of B.C. Businesses. Please make them welcome.

J. Cashore: It is a great honour to introduce three good friends who are also members of the NDP Coquitlam-Maillardville executive: Brenda Justason, Tim Pollock and Rita Pollock. I just want to mention that Tim is, I believe, 73 years old, and that in any 24-hour period you will find him doing a 350-kilometre bicycle marathon. Please make them welcome.

Hon. C. Evans: Visiting us in the gallery today is my friend Antoinette Halberstadt. She is also an ambulance driver and paramedic in the valley I live in, sometimes my assistant and always my neighbour. Will the House please make her welcome.

J. Dalton: Visiting this afternoon is someone who is known to all members in this House, Mr. Arthur Griffiths.

Introduction of Bills

INCOME TAX AMENDMENT ACT (No. 2), 1998

Hon. J. Pullinger: I move the bill be introduced and read a first time now.

Motion approved.

Hon. J. Pullinger: Bill 33, the Income Tax Amendment Act (No. 2), 1998, introduces changes to the provisions which allow authority for the B. C. family bonus program. The amendments in Bill 33 include allowing for the introduction of a new B.C. earned-income benefit, which will be paid to eligible recipients of the B.C. family bonus. The new benefit will further the objective of our government of making work an attractive alternative to welfare.

The need for this legislation arises as a result of our B.C. family bonus program being extended in some measure to children across Canada, through the new national child benefit, which takes effect July 1 this year.

In 1996 our government introduced B.C. Benefits, a package of social policy reforms that has been deemed by social policy researchers as B.C.'s quiet revolution in social policy. Key to those reforms was the B.C. family bonus, which delivers up to $103 per month per child to approximately 45 percent of B.C. families. This program has been effective in narrowing the poverty gap for low-income families in British Columbia by 19 percent in just two years, and for single-parent families the B.C. family bonus has closed that gap by over 25 percent. We on this side of the Legislature are very pleased that the federal government is joining with all provinces and territories in Canada to take this B.C. initiative Canada-wide, in a modified form, to all children in the country. These legislative amendments provide for the implementation of the first new social program in Canada in a generation, one that all British Columbians have reason to be very proud of.

Hon. Speaker, I move that Bill 33 be placed on orders of the day for second reading at the next sitting of the House after today.

Bill 33 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

[ Page 8726 ]

Oral Questions

PREFERENTIAL ACCESS TO HEALTH CARE FOR WCB PATIENTS

Hon. Speaker, this is the same government that brought in the Medicare Protection Act and said. . . . They said it was illegal to do extra billing, to do queue-jumping and to have two-tiered medicine. So I want to know from the Minister of Labour why his ministry and the WCB are doing something today that last year they made illegal for every other patient in the province.

Hon. D. Lovick: I suspect that the member means WCB rather than WBC and expedited rather than expediated. But, having said that. . . .

Interjections.

The Speaker: Minister. . . .

Hon. D. Lovick: We did indeed discuss this matter in estimates at some length. We pointed out that one of the reasons why this change had been accommodated was because there was a dispute between orthopedic surgeons, who had not accepted the recommendations of the College of Physicians and Surgeons. Because those people had not accepted, therefore we went out of province.

S. Hawkins: Apologies to the Minister of Labour. It is my second language.

In typical NDP style, this minister and his government have set up one tier for WCB patients and another tier for every other patient on a waiting list in B.C. The Minister of Labour confessed that patients are being sent to Washington State for MRIs, and 69 patients this year alone have been sent to Alberta, of all places, for orthopedic surgery. I want to know -- again to the Minister of Labour -- if he will explain to the Minister of Health, when she says that her public health care system is so good, why he's sending WCB patients to Washington and Alberta for quicker service in the private health care system.

[2:15]

Interjections.

The Speaker: Members. . . .

Hon. D. Lovick: I guess it's recess time at school.

The Speaker: Minister. . . .

Hon. D. Lovick: Madam Speaker, the 69 patients who went to Alberta are indeed those who have fallen into the problem we had as a result of the dispute with the orthopedic surgeons. The number 69 refers to a total of about 8,000, so I don't think that 69 out of 8,000 is too problematic.

Interjections.

The Speaker: Order, hon. members.

L. Reid: On the one hand, we have the Minister of Health who says it's illegal for individuals to queue-jump in the province of British Columbia. On the other hand, we have the Minister of Labour who says it's not all that bad -- this terrible queue-jumping. My question is to the Minister of Health: if her government is so against two-tiered health care delivery, why is she allowing the Minister of Labour to send individuals to the front of the line?

Hon. P. Priddy: I think that the responsibility for the WCB is with the Minister of Labour. I think the Minister of Labour has put forth the position correctly: these are people who would get no care because they're caught in the middle of a dispute with physicians. Therefore they still deserve access to health care. In anyplace else in the province where we have had a dispute with physicians, people have still had access to health care.

The Speaker: First supplementary, the member for Richmond East.

L. Reid: That is in fact not the discussion. This minister's comments -- and I speak of the Minister of Labour -- extended to all patients in the province of British Columbia. The Blues will simply ascertain that fact. So this minister, when she attempts to justify a two-tier level of health care. . . . The Minister of Labour again says: ". . .overwhelming evidence. . .demonstrates that the longer we delay providing that medical work, the greater the likelihood of the patient not returning to work." My question to the Minister of Health is: why is it different for Workers Compensation patients in British Columbia? Why is every taxpayer in this province not afforded the same excellent standard of health care?

Hon. P. Priddy: The level of health care should be equal for everybody in British Columbia. We all know that throughout the province, there are rural disparities and there are urban disparities. There are a lot of areas in which we have huge challenges in terms of bringing that kind of equity and equal access to health care. In the case of the WCB, if this dispute was not going on, they would have the same access to health care that anyone else does. This is simply action that is being taken as a result of the dispute going on.

G. Plant: The Minister of Health has it wrong. The facts are that last year the government of British Columbia made it illegal for British Columbians to pay for premium health care services, but the Minister of Health seems to think that the WCB gets special treatment. My question for the Minister of Labour is: why is it that he gets to do something that nobody else in the province of British Columbia is allowed to do?

Hon. D. Lovick: The Minister of Labour doesn't get to do anything. It's rather what the WCB does, which is an arm's-length body separate from government. That's point one.

Interjections.

The Speaker: Order, hon. members.

[ Page 8727 ]

Interjections.

The Speaker: Members, I encourage all the voices that have something to say to put them in the form of a question. It would be more useful that way to all of us, I think.

I recognize, for his first supplementary, the member for Richmond-Steveston.

G. Plant: Well, every day in British Columbia people are injured. They're injured in their back yards, they're injured on the streets, and yes, some of them are injured in the workplace. But the fact appears to be that if you're injured in the workplace, you get special health care in British Columbia. You get better health care; you get premium health care -- health care that it is illegal for other people in British Columbia to ask for or to pay for. The minister still has not answered the question: why is it that people who are injured in the workplace get preferential access -- access which is denied to other British Columbians, access to health care which is illegal for other British Columbians? Why does the WCB get premium, top-tier access to medical health care in British Columbia?

Hon. D. Lovick: Nobody in British Columbia who is on a waiting list is being pushed aside by a WCB patient. That's point one.

An Hon. Member: That is not the case.

Hon. D. Lovick: No, it is the case. Point two is that this issue, which the Liberals seem to have discovered only last Friday, has in fact been going on for a number of years in this province. Number three is that it is just a little difficult to respond with equanimity to the comments made opposite, because these are the people who advocated and cheered the federal government on for 40 percent cuts to medicare and said they didn't go far enough. Now they have the temerity to say to the best system in the country bar none. . .

The Speaker: Thank you, minister.

Hon. D. Lovick: . . .that we aren't doing enough. It's a little hypocritical, a little galling.

CHARITY GAMING LICENCE APPLICATION DELAYS

Hon. M. Farnworth: The Gaming Commission is an independent body that will process the applications in the same way that they have for the last ten years, and charities can apply in the same way that they have for the last ten years. The fact of the matter is that there may be a small backlog, because the Gaming Commission was reconstituted earlier this year.

However, is the hon. member suggesting that the Gaming Commission not go by the rules? Is the hon. member suggesting that the Gaming Commission should have interference?

The Speaker: Minister. . . .

Hon. M. Farnworth: The Gaming Commission has a job to do, and I have every confidence that they'll be able to deal with the hon. member's concerns.

The Speaker: First supplementary, the member for Chilliwack.

B. Penner: The minister says that some charities may have to wait a while. Well, on Vancouver Island they've been told that they'll have to wait till January 1, 1999, because this government's too busy getting its hands on the money first.

Last year, as a result of the raffle, $7,000 went to recreational programs for underprivileged children, $500 went to an epilepsy support group and $3,000 was earmarked for the RCMP bike patrol squad. Now, that might not sound like a lot of money to an NDP government that spends millions of dollars on misleading advertising campaigns, but it means a lot to children who need funding to get into community soccer leagues.

Will the minister today commit to the people in Chilliwack and the charities that depend on that money that he will personally expedite this application process?

The Speaker: The Minister of Employment and Investment.

Hon. M. Farnworth: Thank you.

Interjections.

The Speaker: Order, hon. members. Minister, before you begin. . . .

Interjections.

The Speaker: Hon. members, hon. minister, order, please.

Minister, go ahead.

Hon. M. Farnworth: Thank you, hon. Speaker. I find it interesting to hear the comments of the opposition, a party that can still siphon a million dollars of taxpayers' money for a phony mailout. I find it interesting that we have a member of the opposition asking me to interfere in the day-to-day workings of the Gaming Commission, a body that is independent and at arm's length from the government. I will not interfere in the activities of the Gaming Commission.

T. Nebbeling: Every year hundreds of small charity organizations in British Columbia hold raffles to fund important community services. As a direct result of this govern-

[ Page 8728 ]

Hon. M. Farnworth: I guess it's the same answer as to the member over there. The Gaming Commission is a body that operates independently and at arm's length from the government. The fact of the matter is that the process has not changed in the last ten years. Charities still apply with the same forms; they still go through the same process. If the hon. member knew that, he would realize how stupid his question really is.

The Speaker: First supplementary, the member for West Vancouver-Garibaldi.

T. Nebbeling: I think the minister is really gambling with the well-being of many hundreds of small communities and their charity organizations. He should have no pride in being part of that.

The government's response to the applicants was a form letter. The essence of the form letter was: thanks, but no thanks. As my colleague stated, the letter blames the volume of casino applications for the ministry's refusal to process raffle applications. Can the minister responsible for gaming tell us why he thinks that small charities should take a back seat to the NDP's casino applications?

Hon. M. Farnworth: The hon. member clearly doesn't understand that the charities, whether they're small or large, don't take a back seat to anybody. In fact, the Gaming Commission is a body that is independent and at arm's length from government. They are charged with administering and dealing with applications for charity revenues in this province.

Hon. Speaker, we have listened to the opposition saying that government should not be interfering in the gaming process in that regard and that they should not be making decisions as to who does and does not get a licence. Well, the Gaming Commission makes those decisions and will continue to make those decisions, and this government will not interfere in how those decisions are made.

Orders of the Day

The House in Committee of Supply B; P. Calendino in the chair.

[2:30]

ESTIMATES: MINISTRY OF FORESTS

(continued)

Hon. D. Zirnhelt: We have been endeavouring to put together the information that was requested, and we are going to start with FRBC. There are some FRBC questions, and I'll try to respond in general terms. On silviculture, you asked for information about some of the target amounts between the coast and the interior. You asked about the contract for the timber jobs advocate and for information on the Empire Valley Ranch and the FRBC's role and the Ministry of Forests role in that. We may want to get into some of that, but first of all, with respect to the areas of silviculture treatments for the 1998. . . .

Interjection.

Hon. D. Zirnhelt: I'll send this whole package across to you.

There is a detailed breakdown between the interior and the coast on brushing, fertilization, juvenile spacing, planting, pruning and site prep. In general terms, something like 72 percent of that amount is now assigned by way of contract. You'll remember that I said that these are targets, which get translated into actual deliverables on a company-by-company contract basis. This is where the three-year, multi-year investments come in.

With respect to the contract for the jobs advocate, I committed to provide certain information. The contract is between Mr. Wouters of FRBC. . . . It was signed by Doug McArthur, deputy minister to the Premier, and Jake Kerr on behalf of industry; they are serving as interim directors of the company until the board of directors is established. They are also the co-chairs of the government-industry committee which is overseeing the accord and which Mr. Wouters reports to. The term of the contract is five years. Mr. Wouters will be paid $168,000 per year, and he will receive benefits similar to those received by a deputy minister, with industry paying the difference between what would normally be paid by government to a deputy minister and what is being provided under this employment contract. The contract does not provide for an extension beyond the five years.

With respect to the Empire Valley Ranch, you requested written responses to the questions, and I am pleased to send those over for you. There is a long chronology which addresses when FRBC did certain things and when MELP -- the Ministry of Environment, Lands and Parks -- did certain things.

With respect to the timber cruise completed on Empire Valley, the cruise was carried out by Simons Reid Collins, which is a forestry consulting firm. It was completed in September of '97. The project was managed by Environment, Lands and Parks and funded by Forest Renewal through its agreement with the ministry. I have also provided information on the cruise who did it, the level of accuracy, the number of cubic metres that were traded, and so on.

Just as a preface, the Ministry of Forests was not the ministry that decided on the relative quantums. We provided advice on terms of reference to the Ministry of Environment, Lands and Parks, should they want it, but the studies were all undertaken by that ministry. That minister is prepared to get into the details. This will be of particular interest to the member for Peace River North. The information will be available from the Minister of Environment. I'm prepared to answer questions related to FRBC's role and the Ministry of Forests' role.

G. Abbott: I want to thank the minister, first of all, for making available the materials which we discussed on Friday. I think perhaps, in order to keep things flowing along here, what we will do on this side of the House is try to review this material as the day goes on, so that we don't spend time now asking questions about things which we can read about in the

[ Page 8729 ]

The one other issue I'll just remind the minister of is the question which I closed on a few days ago, around section 8 of the Ministry of Forests Act, with respect to the statutory obligation of the ministry to have the five-year schedules for 1997-2002 in the five-year forest and range resource program, and the absence of that. Is the minister able to deal with that question now?

Hon. D. Zirnhelt: Yes, I can; I do have an explanation. I'll give you the short explanation. The Ministry of Forests officials that have that information are waiting to come in when we've done with FRBC, but I'll just give you the short explanation.

The planning which was once done by the Ministry of Forests with respect to silviculture is now done jointly -- the program planning, how much is spent in which section of silviculture. It's done at a planning table that involves FRBC, the ministry and the licensees, because the licensees are the delivery agency, particularly for industry-outstanding material which is funded by FRBC. The silviculture plans are provided by the ministry. Then it's done at a planning table. So that's the short explanation. I am prepared to provide you with fuller information and some details referring to the schedules.

G. Abbott: We will come back to that one. I do have some additional questions and comments to make with respect to that issue, but we'll leave it until the minister has the appropriate staff with him to deal with that. I think that was all that we were looking for at this point in time. As I say, we'll be reviewing this. I will review it with some of my colleagues, perhaps at a little break later in the day -- where we're at in terms of questions arising from the jobs accord advocate, the purchase of Empire Valley Ranch and the enhanced silviculture issues and requirements.

The issue that we were debating at the time we departed at 1 o'clock on Friday was the issue of New Forest Opportunities and issues about the collective agreement and how that would operate. It is a new approach in British Columbia. My colleagues and I certainly expressed a variety of concerns around that on Friday. We don't propose to beat this to death again today. I do want to briefly recap where we were in that discussion, from our perspective at least, and why we have ongoing concerns with this approach, described as New Forest Opportunities Ltd., on the coast of British Columbia.

It seems to me that there are four different ways that Forest Renewal B.C. and the government of British Columbia can proceed with respect to assisting displaced forest workers in acquiring employment in the silviculture industry -- if they are in the unfortunate position of being unemployed and should they choose to do that. I think that one way -- and we've talked about this one -- is to use existing programs and mechanisms. Indeed, up until 1998 this is what we did. And 1998 is not the first year that we have had displaced forest workers. It is kind of an ongoing problem in a cyclical industry like forestry. Periodically we have far more unemployed forest workers than we would like, but there are always some displaced forest workers, even in the good times, depending on local conditions and problems. So over time we've had forest workers moving into the silviculture industry and vice versa. They used existing programs and mechanisms to achieve that. So that's one way we can do it. Obviously the government would argue that that is inadequate to deal with a problem of the magnitude we have today, at least in the coast region. But that is an opportunity, and it's one way to go.

I would suggest that another model for dealing with the displaced-forest worker problem is a registry, whether it is operated by communities, industry, employment insurance offices or some other method. A registry would seem to be an appropriate way to deal with this as well, given that the industry would certainly want to commit to assisting in the delivery of displaced forest workers into silviculture wherever possible. That's a second model.

A third model -- and it seems to me that this has some merit as well -- is a model where we may have voluntary unionization, and where collective bargaining occurs between silviculture/forest workers and silviculture and other forest companies. It is, I guess, traditional that we have free collective bargaining, that people choose whether they wish to be unionized or not unionized. It is a choice that they make.

[2:45]

We have this imposed model, imposed by government -- forced unionization, whether workers choose it or not. As a consequence of that, workers are deprived of (a) their democratic right to unionize -- if they choose -- and (b) their right to influence, in any meaningful way, their rates of pay, their working conditions and all of the things that we associate with free collective bargaining in this province. Again, that's by way of bringing us back to where we left off: our very profound and very serious concerns with the New Forest model that has been imposed in British Columbia.

[J. Doyle in the chair.]

I have a few more questions with respect to this issue. Then, I guess, we will move on to the jobs and timber accord and the numerous questions that the opposition may have around that. Others of my colleagues may have further questions on New Forest Opportunities, as well, but I think I can finish up this section in relatively short order.

My first question this afternoon, in terms of New Forest Opportunities. . . . This relates to the coast, and it relates to machine operators. I've had calls from a few of them in recent weeks. Their concern is this. In the old system -- if that is what we can call the way things were conducted last year and

[ Page 8730 ]

I hope the minister can correct me on this and lay out precisely what can be done to remedy this. My understanding is that machinery operators who have worked on these kinds of projects in previous years are finding, in 1998, that they are not being welcomed into the New Forest Opportunities fold because they have not had. . . . I can't recall the exact figure, but I think it's 200 hours or something in the previous year. At any rate, they find themselves effectively frozen out of this kind of machinery work that was offered by Forest Renewal B.C. in previous years. It's a serious issue for them, because in some cases they have invested $80,000 to $100,000 in a machine. They need to keep it working in order to make the payments on that machine, and because of the new model they are concerned that they are effectively being frozen out of further work with New Forest Opportunities or with Forest Renewal B.C.

My questions to the minister are: (a) is he familiar with this problem, and (b) how are we going to deal with this in a way that will be fair to those machinery operators as well?

Hon. D. Zirnhelt: The whole idea behind multi-year agreements and moving to a model which provides for training and so on was to allow for some continuity of employment and to allow the industry, which would be overseeing these projects, to plan through the years and seasons to keep as many people going as possible. The objective was not to keep everybody who was working in the rush run-up to the big funding year -- which was last year, with over $600 million. We spent that because it was available and there was work needed. But the idea of the model was to ensure that people who had a history in the industry -- two years of employment and a certain number of hours -- would be on the priority list for hiring. That's the point: displaced forest workers.

So if a machine operator is not a displaced forest worker, then they don't qualify. I don't know what we could do to fix that particular situation; but if you have the details of someone's situation, we'd be happy to look at it and see if there's a glitch in the way it was set out -- the work, the terms of the contract and the programming -- to see what can be done about it. But we will be doing less work this year than we did last year; and probably more last year. . . . So there's less work to go around. All we've said is that everyone who has paid his or her dues in terms of the amount of time he or she has spent in the industry, and who truly is a displaced worker, qualifies. I don't think everybody can be kept whole -- not when the pie is shrinking and there's an increasing demand to provide equal opportunity for people from whichever part of the sector they're displaced from. So if a machine operator truly was employed in the forest industry for two years and had the requisite number of hours each year, he or she would then qualify as a displaced forest worker.

G. Abbott: I'm not sure whether this goes to the heart of NFO or not. I hadn't thought of it in those terms, but as the minister was speaking, I was beginning to sense that. Let me put it to him this way. If Forest Renewal B.C. has undertaken a watershed restoration project, and if, as a part of that watershed restoration project, that trail-building project or whatever it happens to be, there is a machinery component. . . . The argument I'm hearing from the machinery operators and small business people who've bought machines and are trying to make payments on them and keep their heads above water is that under the new model, they're being frozen out of that kind of work. Forest Renewal or New Forest Opportunities are bringing in machines, and people are being trained on those machines. In the process of one group being assisted to the extent of not only training but also being brought in from some distance, put up in motels and all the rest of it so that they can be recorded as a job created, the existing machinery operators, who have invested in their machines, are being frozen out of that work.

It seems to me that if that's the case, then we have imposed on this model a rigidity which is counterproductive to this society and to this economy. I'd like to the minister to comment on this, and to confirm whether that's the case -- and if it is, on whether that seems appropriate.

Hon. D. Zirnhelt: The decision on who gets contract and subcontract work is a decision made by the licensee if they got the money under a multi-year agreement. It's whoever the delivery agent is; it might be the Ministry of Environment or the Ministry of Forests. I'm told that there is an exemption for operators on watershed restoration projects. They are exempt from requirements of NFO because it was felt that putting trainees on someone else's machine wouldn't work. It was much too awkward. So that would be provided by way of some arrangement, whether it's direct hire on some contract or on a subcontracting basis. The information I've had is that there is an exemption from NFO for operators on watershed restoration.

If a company has decided on a different delivery model, and they want to use their crews and move them from enhanced silviculture one month into watershed restoration in another, then they may be doing some of the work, but there is that exemption in place. Again, that's why I asked if you have the details. It may be that we've accounted for it, and there may be some explanation other than the nature of the NFO contract.

G. Abbott: That's a step in the right direction if there is indeed an exemption for the machinery operators. If there is anything further that the minister can provide to me with respect to that issue and how exemptions are achieved and so on, that would be useful. Certainly the machinery operators that I've spoken to. . . . Again, these are individuals who own their machines and who want to get this kind of work. If there is some process for obtaining the exemption or expediting the exemptions or whatever -- I'm not sure how that's done. . . . But whatever information the minister might have on that, I'd certainly appreciate it if he could provide it to me. The impression of the machinery operators when they contacted New Forest Opportunities was that there was simply no place for them. So it would seem that at least under the broader umbrella of Forest Renewal B.C., there may indeed be some opportunities for them. If the minister could outline the processes whereby exemptions could be obtained, and that kind of thing, I think it would be very useful.

Further, I want to inquire about the collective agreement. We could go to page 11 of the collective agreement, which is the IWA-Canada checkoff. Could the minister advise whether the amounts for union initiation fees, union back dues and union dues per month are items which New Forest Opportunities negotiated with the IWA?

Hon. D. Zirnhelt: We don't have the details about how it's being implemented. I understand there's an implementa-

[ Page 8731 ]

G. Abbott: The reason I'm interested is to know whether New Forest Opportunities concluded some agreement with the IWA with respect to what the amount of the initiation fees would be and what the amount of the union dues per month would be -- whether it was something which would be a product of negotiation rather than a product of agreeing that the IWA could set whatever level was appropriate. Could the minister advise which approach has been used?

Hon. D. Zirnhelt: The information I have is that it will be the product of discussions between the parties. I'll bring that to you.

G. Abbott: That surprises me a little, given that a number of people are already employed under this method by New Forest Opportunities. It's curious to me that it hasn't been determined yet, given that there should be some people who have been receiving cheques and presumably have been involved in checkoff at this point. But we'll leave that for the moment and ask again a little later when that information might be available.

Could the minister advise what amount constitutes the communication/advertising portion of the $2.2 million budget -- I believe it was -- of New Forest Opportunities?

[3:00]

G. Abbott: I'll return to that question later on, when we can have that available. I'd like to know that, and I'd also like to know -- just to give the minister some advance notice so he can pick this one up, as well, prior to the end of estimates -- what the budget of the jobs accord advocate office is for communications, advertising and so on. That's something I'll be wanting to know down the line.

I want to briefly turn to the information the minister has provided today around areas of silviculture treatment, and I want to deal with this in relation to New Forest Opportunities. The 1998-99 business plan shows an estimate of. . . . "There were 38 planning units throughout the province that used the Ministry of Forests five-year silviculture plan, backlog plan and industry plans to select projects to be done. The current breakdown is estimated to be. . . ." And it goes through brush and fertilization, juvenile spacing and so on, for a total of 21,571 hectares on the coast and 103,294 hectares in the interior. Just for my education, are we talking of the objectives under the 1998-99 business plan, or is the portion that is to be achieved in the current business year something less than that?

Hon. D. Zirnhelt: The objective target estimates are still the same as in the business plan. These are where we're at now. In my opening comments, I said that this is where we're at in terms of having contracts in place and details of where it will be delivered.

G. Abbott: So in the current business year for FRBC, we are still aiming for a total treatment area on the coast of 54,000 hectares and a total for the interior of 118,000 hectares, for a total of 172,000 hectares. Is that correct?

Hon. D. Zirnhelt: Yes. That's the bottom line on that page of the business plan for '98-99. Those are still the objectives.

G. Abbott: What I'd like the minister to do while we're engaged on New Forest Opportunities is to advise me what percentage of those treatment areas on the coast will be subject to the New Forest Opportunities model. Is it 100 percent, or is it something less than that? I know that some or perhaps a very considerable portion of this work on the coast will be done through the multi-year agreements with the major licensees. Does the New Forest Opportunities model apply in every case or not?

I know that there are some that the IWA is doing directly and that community groups are doing directly, and so on. What I would like. . . . I don't need a precise breakdown, but I do need some indication on the 54,000 that are planned for treatment in 1998-99. What portion of that will be done under the NFO model? Presumably, the 1,300 hectares of planting would not be a NFO treatment area. But of the rest, could the minister explain where NFO applies and where it does not?

Hon. D. Zirnhelt: The member is correct. On the coast, 1,300 hectares of planting won't be covered, but the brushing, fertilization, juvenile spacing, pruning and stand improvement -- depending on how it's done -- could be. The fertilization is done by air; it wouldn't be -- it would be all aerial contracts.

G. Abbott: Just to make sure I've got it right, then: of the list, the fertilization and the planting would not be NFO model treatments, and there's some question about site prep and stand improvement -- those may or may not be, depending on what occurs there. But for the balance -- the brushing, the juvenile spacing and the pruning -- is the minister suggesting that for those three treatment methods, the New Forest model would operate in every instance?

Hon. D. Zirnhelt: With the possible exception that there are technical people who may be hired to do a certain amount of prescription or organizing. The actual work, though, would be.

I said about the fertilization. . . . There may be hand fertilization, if that's the case; I don't have people who know all the technicalities of how we fertilize. But as I said, if it's aerial, it wouldn't be, because we don't expect a NFO employee to be put into an airplane; it would be a contract.

G. Abbott: So will there not be comparable, competitively tendered work done alongside the New Forest model to test or measure the efficacy of the new model in relation to what's been done before? Or in Forest Renewal B.C., does the minister look to a comparison between the coast and the interior, in terms of the efficiency of the delivery of those kinds of enhanced silviculture methods as a way of testing the proposition that New Forest Opportunities is an efficient and productive model?

Hon. D. Zirnhelt: There's a number of things I can say about that. Any of the 250,000 contracts of $250,000 or more have to be tendered. By way of evaluating it, what happens is that each industry partner will have to do value-for-money audits. And there is going to be, as you know, on private land -- particularly on the coast; there is private land. . . . So industry does have an idea of its costs associated with private land treatments, which aren't covered by this. In coming up

[ Page 8732 ]

G. Abbott: The issue is an important one. Again, I don't propose to deal with this today with the intensity that we did on Friday. I think we've made very clear the concerns we have around this. From a business perspective, the concern will be that New Forest Opportunities contains in its approach an element of uncertainty, which is inevitably going to be reflected in the contracts that are let under the provisions of NFO.

We can have an interesting argument about whether or not that will occur, but I think that what we need more than anything is a reliable, accurate way to measure whether in fact that's the case. We need to be able to look at this and say, "Under these conditions we routinely had lower bids per hectare for brushing than we did under the New Forest method" -- or vice versa if that happened to be the case. Unless we compare coast and interior -- and we'll almost immediately run into an apples and oranges argument when we do that. . . . But we need some way to accurately measure the fiscal consequences of the new approach.

That doesn't appear to be possible, however, under the approach that's been adopted. As I see it, there is effectively a monopoly being introduced in terms of the model that's going to be used on the coast, so it may be difficult to measure that. Undoubtedly we'll be hearing a lot about this issue from a lot of people, as the advantages and disadvantages of the approach become more obvious as the year wears on.

To go back to the original question about New Forest Opportunities delivering opportunities for both union and non-union. . . . I'm still not clear, particularly after our discussion here, where the opportunities are for the non-union guys. It doesn't seem, at least on the coast, that a non-union firm, unless they are prepared to submit to the New Forest model. . . . There are no contracts which they are able to bid on. I think we've confirmed that already, but if the minister has any comment on that, I'd be pleased to hear it. Then we will probably be moving on -- at least, pending the minister's advice about the process involved in determining the IWA checkoff rates and the communications budget for New Forest Opportunities. I would like to hear about those before the end of estimates.

Hon. D. Zirnhelt: I have the information; it's $80,000 for the New Forest communications.

[3:15]

B. Penner: I seek leave to make an introduction.

Leave granted.

B. Penner: It's my pleasure today to introduce about 20 grade 6 students from Chilliwack Christian School. They are accompanied by ten adults, including their teacher Ms. Barb Stronks. I just had an opportunity to speak to the students outside the Legislature, and they challenged me with a variety of questions about what we're attempting to accomplish here. Would the House please make them welcome.

G. Abbott: I think the important point is whether the contracts are done by direct award or by competitive bid. The point is that on the coast we have confined all of those to the New Forest model. There is no opportunity -- and we find this utterly philosophically objectionable -- for those who, because of their concerns, do not wish to become part of a union. There are lots of silviculture workers who feel this way. The minister makes reference to the past, when we saw abuses where people didn't receive the kind of remuneration they should have, and so on. But there are a lot of people who have worked in silviculture for years -- and in some cases for decades. They love the life, they work very hard, they work very efficiently and they find it entirely objectionable that they are now being pounded into a slot called New Forest Opportunities that may, in many ways, limit their opportunities to exercise their initiative.

I guess we've gone around the bush on this a few times, and we are not finding common ground. Frankly, I think that experience will demonstrate that this approach by this government is (a) an ideological one, and, in a more practical sense (b) a faulty one. We certainly object to it on that basis, and we most profoundly, most basically object to the forest unionization of people who may or may not want it. We have certainly gone through that in some detail, on Thursday and Friday as well.

I think that concludes my questions on New Forest Opportunities, and unless others of my. . . . Pardon me. My colleague has a question.

D. Symons: Just to follow up on a question I was asking the minister last week. . . . He may remember that I was asking about people involved in silviculture or tree-planting, particularly about the possibility of students who were doing it. . . . I think the minister informed me that if a tree-planter has 700 hours in two years, and more than 65 percent of their income came from the tree-planting -- which I think could fit a lot of students, because in a four-month period one might get that number of hours in -- he or she might get a workforce transition program that could basically pay his or her university tuition and expenses up to about $21,000 a year -- for maybe three or four years of a university course. I gather, from what the minister was telling me, that this is a possibility.

Just another angle on that particular question that I might ask the minister, because I think it fits in with the hon. critic's questions at the beginning of this session: can the minister

[ Page 8733 ]

Hon. D. Zirnhelt: The answer is no.

D. Symons: The minister is saying that basically anybody who comes along and asks for a tree-planting job would be eligible for that job. Where I'm leading on this is. . . . If you do have people who are displaced forest workers coming into that job, we have something called Bill 84, 1992, which says that these fellows who are coming in could have an IWA membership in their hip pocket. I think you mentioned last week that tree-planting is one of the facets that does not require belonging to a union to get that FRBC money. I'm wondering if there might be a backdoor approach, through Bill 84, which basically says that if you hire enough people who had a union membership through some other job they had previously and who then come into tree-planting, after a while you hit that magic 55 percent and voilà -- automatically, no secret ballot is needed. That particular employer would now have this employee group certified as the bargaining unit and therefore would have it unionized. Is that not a possibility?

Hon. D. Zirnhelt: Tree-planting is exempt; it's not covered by the NFO agreement.

D. Symons: They are exempt in the sense that they do not have to be in a union to get the job to begin with. I'm wondering if the minister can clarify, if they're exempt, whether the workers decide. Or if they have 55 percent and happen to have an IWA membership in their back pockets from previous employment, there would be no possibility that they could seek unionization. Is that what you mean by exempt -- that they will not and cannot be unionized?

Hon. D. Zirnhelt: The point I've been trying to make is that tree-planting is not covered. We just went through this. Tree-planting is not covered by the New Forest agreement.

D. Symons: What I'm getting at is that although it's not covered by the facets of Bill 84 of 1992, it would be possible that through time and attrition in the student population of tree-planters, they could bring in forest workers who previously had an IWA membership. In that sense, they could become unionized. I'm just seeking confirmation that this is a possibility.

Hon. D. Zirnhelt: As I say, it's a Labour Code issue. I don't why we're discussing it in the Ministry of Forests estimates, because in New Forest tree-planting is exempt.

G. Abbott: Just so we can move along in an orderly fashion, my colleague from Peace River North has had an opportunity to review the follow-up materials which were provided by the minister. I will ask him now to discuss those, and I will review the material that has been provided, with respect to the jobs accord advocate. After the conclusion of a discussion around the purchase of Empire Valley Ranch, I would see us moving along to our review of the jobs and timber accord.

R. Neufeld: I'd like to start off by thanking the minister for the notes he sent over on some of the questions that were asked last week. I don't have a lot of questions surrounding the Empire Valley Ranch. They won't deal too much with Forest Renewal B.C. but rather with the ministry's role in the Empire Valley Ranch. Hopefully, we can get through them fairly quickly.

My first question is: what process was used to evaluate the Empire Valley Ranch? When was that evaluation first done for government?

Hon. D. Zirnhelt: I said in my opening remarks that the decision around the purchase was made by Environment, Lands and Parks; it was not made by the Ministry of Forests. The role of the Ministry of Forests was that of providing advice and terms of reference for assessments that were done. Other than that, it was not the Ministry of Forests that did the purchase.

R. Neufeld: I realize that there is an involvement with the Ministry of Environment. That's in fact true. The Empire Valley Ranch is in the minister's own constituency. I would think that as a Minister of Forests -- and the fact that there was a trade-off of timber values in the Peace country to purchase the Empire Valley Ranch -- he would have some involvement with and knowledge about what was going on. Is the minister telling me that anything to do with the purchase of the ranch, or evaluating it -- any of those questions -- will be deferred to the Minister of Environment and that the Minister of Environment will take all the questions on that issue?

Hon. D. Zirnhelt: The evaluation was done by Crown Lands. We had peripheral involvement when called upon to advise on timber values. But as a minister, I was not consulted on timber values; it was part of the overall land trade. Yes, I have confirmed with the Minister of Environment; she's prepared to answer all the questions around it. This isn't a dodge from one minister to the other; the minister responsible -- who has all the information, whose ministry conducted the appraisals and the negotiations -- is prepared to answer those questions.

R. Neufeld: I guess the reason that I thought that the minister would have some knowledge -- or have some people in the House to deal with these issues -- is because anything that I see that was sent out about the purchase of the Empire Valley Ranch was signed not just under the Minister of Environment, but also signed under the Ministry of Forests, whether it was letters sent to the Alaska Highway News to explain to the people that the deal that was signed by your ministry and by yourself, along with the Ministry of Environment. When I see other letters to the Ministry of Forests from other people who had some problems with it, your ministry dealt with it fairly straightforwardly. So it would seem natural to me -- and I guess that's probably part of the problem. . . . You must understand that I'm a bit suspicious of just transferring all of these questions over to the Ministry of Environment, because I'm sure the Minister of Environment is going to say at some point in time: "You should have asked those questions in the Ministry of Forests estimates."

So when I go through all the documentation, I come up with your signature as the Minister of Forests. Maybe what we can deal with. . . . I'll try to deal with some of the things that would be very specific to your ministry. Possibly you could tell me if you know -- as the MLA for the region -- how

[ Page 8734 ]

[3:30]

R. Neufeld: I guess I have not received in total the package of information that was sent to me. Maybe in that portion of what I did not receive, the minister could tell me what the quality of the wood was on the Empire Valley Ranch in comparison to the wood exchanged in Peace River North.

Hon. D. Zirnhelt: It was a value for value, but in preparing for the estimates I said that that was part of the appraisal and part of the negotiation -- part of the dealing. The Minister of Environment is prepared to answer those questions.

R. Neufeld: I asked these questions to the minister because I'm sure that when I stand up and ask the Minister of Environment what the quality of the wood was at the Empire Valley Ranch, the minister will very curtly say: "That is a question that you should ask the Minister of Forests. I would think that it would be the Minister of Forests that would be responsible and who would have the people who are knowledgeable about those issues."

I've quickly read my notes again. The information that you sent across the way to me was about the cruise on the Empire Valley Ranch. You state who did it and when it was done, but no cumulative amounts of any kind. The cumulative amounts that you have are for the land in Fort St. John or Peace River North.

Hon. D. Zirnhelt: The information I quoted was on the next page. Perhaps it was missed in the photocopying.

R. Neufeld: Then we'll ask about silviculture obligations on the Empire Valley Ranch. Will that be performed by the Ministry of Forests?

Hon. D. Zirnhelt: There was a misunderstanding; it took us time to clear it up. There are no outstanding silviculture obligations on that land -- on the ranch.

R. Neufeld: I'd like to go to the land in Fort St. John. By the way, I didn't get this copy of. . . . I guess it got missed in the photocopying. But I'd like to go to Fort St. John. Again, the minister may want to defer this question to the Minister of Environment, but I'll pose the question. Was Vesco given the opportunity to pick wood anywhere in the province in exchange for the Empire Valley Ranch? If so, is that in writing?

Hon. D. Zirnhelt: Yes. Lands was doing the negotiation, as the member remembers, and we were consulted in the process. But it was Lands that steered the overall negotiations. It's my understanding that they were asked where they preferred the timber and lands for the exchange. Beyond that, I don't know anything more.

R. Neufeld: So, to the minister's knowledge, they were given the opportunity to go anywhere in the province and log approximately 150,000 cubic metres of wood. Would that be a correct statement for me to understand from the minister?

Hon. D. Zirnhelt: I guess it would be accurate to say that in the process of negotiation they stated their preference as to where they would like it. So it was a product of the negotiation. I don't think I can help the member any more than that, because the staff responsible for the negotiations and the details were employees of the Ministry of Environment, Lands and Parks. That minister has that file and is prepared to discuss the negotiations.

R. Neufeld: Maybe I'll just briefly ask the minister if he wants to deal with consultation with affected parties in the northeast or if he would like to also defer that to the Minister of Environment?

Hon. D. Zirnhelt: The Ministry of Forests involvement is roughly as follows: they were asked to be brought in to discuss the impact on the grazing licenses -- the grazing tenures -- that were there. There was some discussion around impact on woodlot licensing. We were brought into the consultations at some point, but I repeat: the consultations were conducted by Lands; they were in charge of the consultation process.

R. Neufeld: The consultation process that took place when the Ministry of Forests was brought into the picture. . . . Was that after the deal had been made, after I had been informed that there were some secret dealings going on in Fort St. John to exchange land and timber in Fort St. John for the Empire Valley Ranch -- or prior to that?

Hon. D. Zirnhelt: I'm informed that there were discussions before and after. There were some early discussions with the impacted ranchers, and then afterwards there were discussions and consultations with respect to implementing the decision. So both before and after.

R. Neufeld: If there were discussions with the ranchers involved prior to that, could the minister please tell me who they were? And I don't mean specifically ranchers. Was it the Upper Cache Creek Cattleman's Association? Because I'm afraid that they were not involved. At least they were very clear on that issue: that they had not been consulted in any way, shape or form until after the deal was done.

Hon. D. Zirnhelt: We can get the information, and we can discuss what they were consulted about. But as I recall, they weren't consulted specifically about specific potential owners of certain lots. The impact on grazing and the management of grazing in the area were discussed as part of the fall consultations with, I believe, one of the groups that you mentioned. I'll get the specifics; I don't have it with me, and my advisers don't have it, but we'll get you the names of the ones that were consulted. We may have this on public record already -- it was information that was available at the time of the announcement -- but I'll get the details of that for you.

I know the issue: the argument is that it wasn't a public process. Well, in defence, the answer is: we don't negotiate in public when we're dealing with land trades or land sales. They're not public negotiations.

R. Neufeld: The minister keeps talking a little bit more about consultation and his involvement in the deal, and it seems as though there was a little bit more involvement than what he let me know to start with.

[ Page 8735 ]

The other thing is that the Upper Cache Creek Cattlemen's Association had agreements with the Ministry of Forests and the Ministry of Environment that they actually would be party to any discussions about changing the land use or logging. In fact, there was a Blueberry forest reserve put over the area many years ago. That was part of the discussion at that time -- that cattlemen in that area would be advised of any dramatic changes. Unfortunately, they are of the opinion that you didn't live up to that agreement of the Blueberry forest reserve. Maybe the minister has a comment on that.

Hon. D. Zirnhelt: I'd be happy to provide the member with an explanation as to how we discharged any obligations we had in the area. I'll just preface it by saying that the negotiations that were taking place with Lands were confidential in nature; therefore, there was limited disclosure that could take place. We will get you the information about the nature of the consultations and provide that to you.

R. Neufeld: You know, when I think about the issue of the time. . . . The minister is adamant that there could not be any consultation with people in the north about these issues, knowing full well the dynamics of what was taking place -- that this timber was actually going to leave Fort St. John in log form and go to Prince George. The minister would obviously know that that would bring some fairly serious concern, especially when these were woodlots that were turned back to the Crown because, by the minister's own admission, with the high cost of silviculture, the high cost of stumpage, royalties and all the issues that go around harvest plans and those kinds of things, people could not make a buck out of those woodlots. That's why they went back to the Crown.

The minister knows full well that there would have been a lot of people upset had they known that he was going to turn that land over, fee simple, to a logger from Prince George to come in and log all that land and move all those logs down to Prince George to compensate for buying a ranch in the Cariboo. I don't think people in the north had very much problem with the government of the day purchasing the ranch in the Cariboo; I don't think they had a lot of trouble with it at all. In fact, I think this whole issue could have been handled a lot better had the government had the will or the desire to come to the north and say, "Folks, this is what's going to happen to accomplish this," rather than doing the whole little deal in secret, behind closed doors, with different individuals, in the guise that you can't do it in public.

[3:45]

Hindsight is always great. But I think this is one case where you could have gone to the people up there -- as the minister, as the MLA that represents the area encompassed by the Empire Valley Ranch -- and told the people what you wanted to do. You know, I think people probably would have accepted it. But to be given that kind of deal was just about too much for anyone to take. I think the minister knows full well that if the roles were reversed completely, it would be no different; it would be just as bad. If we were going to buy a historic piece of land in the Peace River country and trade it for a whole bunch of timber in the Cariboo and then take that timber, cut it down and move it to the Peace country to saw it and then sell it, I think you would have the same, if not larger, reaction.

I think it was a terrible way to go about purchasing a ranch that probably was in the best interest of being purchased by the province of British Columbia. But the process stinks. Let me tell you, it stinks big-time where I come from. Even those people who believed in, voted for and probably still will vote for the NDP. . . . They couldn't believe. . . . Your own party that you represent could not believe the process of doing deals in the back room and in the dark, which your ministry went through -- and the Ministry of Environment and your government -- to acquire this piece of land. In fact, if I had those people standing in this House today, they'd be just as angry at you and your government as I am.

The Chair: Would the member speak through the Chair, please.

R. Neufeld: Through the Chair to the minister, I want to know what. . . . Further to the minister's comments, when he spoke to me personally -- although the Forest Practices Code won't apply, no environmental rules will apply, no stumpage is going to be paid. . . . In fact, after the person has finished logging it, it's going to revert to the Crown, and the Crown is going to be responsible for tree-planting and for all the silviculture and all the environmental upgrade. What role. . . ? In fact, I asked the minister personally how we were going to ensure that watersheds around Fort St. John for the community's water supply, which would be affected, would be looked after. In the minister's own words, he said to me: "Although the Forest Practices Code will not apply, we will set up a set of stringent rules that that contractor is going to have to abide by."

Mr. Minister, I asked in March, when you completed the deal, for that set of guidelines and for who was going to administer them. To this day, the community of Fort St. John -- my constituency -- has not been told what those guidelines are, even though logging is going on. They haven't been told. You haven't had the courtesy -- your ministry, through the Chair -- of responding to. . . . Actually, it wasn't March. Pardon me. The record says it was February 10 when your ministry was asked what those rules and regulations would be. What is that -- four months ago? Logging took place right after this.

I'm not here to rag on the logger, but I want to tell the minister, and I want to put it on the record, that within ten days of logging, two loads were seized for improper timber marks. By contrast, Canfor, which logs hundreds of thousands of cubic metres yearly, has had one load seized in four years because of improper timber marks. There is no way. I think that you know that the ministry knows how much timber is coming off that land and how it's being tracked and whether it is being tracked.

[ Page 8736 ]

Hon. D. Zirnhelt: The member talked about two loads being seized. The information I have is that two loads were discovered at a highway scale to be improperly marked by the truckers as per the regional procedures. Once the truckers were advised, no other occurrences of the infractions occurred. The wood should have been marked on four corners -- two front, two back -- and paint on the sides. It wasn't as though there was anything wrong other than a little problem with the marking, but it was corrected. They have a good system in place, I'm told. They have hammers on the loading site, and there are instructions to the truckers in writing. There were new scaling regulations being brought in about that time, and they're apparently up to standard on that.

The district office is in charge of scaling. Apparently the scale matches the cruise closely. There are no regulations as such in place, but there was an environmental agreement between the district manager and Vesco, and I understand that Vesco is complying with it. To my knowledge, there are no environmental impacts there. If the member has information to the contrary, I would be interested.

R. Neufeld: First off, about the first two loads being seized: I received that information from the Ministry of Forests office in Fort St. John. That's the information I got. You have some other information, and that's fine. Regardless, two loads within the first ten days of logging had to be either seized or stopped because of improper markings. When I relay that and compare it to Canfor, which logs hundreds of thousands of cubic metres a year and had only one in four years, I don't think that's a very good record right off the bat.

I want to go back to what the minister said about the environmental concerns and those issues that surround the Forest Practices Code. I don't want to get into the whole Forest Practices Code. The minister knows full well that that's now fee simple land; I know it -- there's no Forest Practices Code that applies. But as an assurance, the minister himself gave me the assurance that the ministry, not the district manager. . . . Between them, the Ministry of Environment and the Ministry of Forests were going to set up some stringent rules -- in fact, we could probably get a copy of that somehow -- as to how logging was to take place on those four plots of land in the Fort St. John timber supply area.

Now the minister says it's just kind of a little bit of a deal between the regional manager and Vesco Contracting. I don't go for that. That's not good enough for me. Is that the reason why the minister has not been able to respond to me for the last six months? If that's how simple it was, why didn't he just write me a letter back and say: "No, we don't really have anything; I didn't really mean that. It's really just a kind of cozy deal between the regional manager and the contractor." Why wouldn't the minister just send me back the letter and tell me that?

Hon. D. Zirnhelt: Who is better suited than the district manager to implement that? He knows the land and knows the logging practices in the area. He's the one who worked on the environmental agreement with the contractor. It wasn't between the regional manager. . . . I'm told it's the district manager. I don't know whether the member would consider that stringent enough, but what you have to get at is: is there environmental damage? If so, I said: "Show me the damage, and we'll see what can be done about it." But I don't know that there is any. In fact, I'm informed there isn't any. So what's the problem?

R. Neufeld: It's absolutely amazing that he would just ask: "What's the problem?" Obviously, if that's all it takes -- a deal cut between a regional or district manager and the logging company -- what in the world do you need a Forest Practices Code for? If there's no environmental damage happening, what do you need a Forest Practices Code for? I mean, you've answered my question. The thousand pages of the Forest Practices Code -- what in the world do you need them for?

Interjection.

R. Neufeld: On private land -- don't give me this. You turned it over. It was Crown land, and you turned it over fee simple to Vesco Contracting for a backroom deal you cut with Vesco to buy a ranch. Actually, I'll go through the cost of it, which was probably about three times as much as what you should have paid in the first place. You bungled the whole deal -- the Ministry of Environment and the Ministry of Forests.

Hon. D. Zirnhelt: The member is getting on a roll here. He can direct the questions about the value of the land exchange and the timber exchange to the Minister of Environment, who is prepared to answer those questions. Just a caution that I won't be answering many more detailed questions.

R. Neufeld: I know it's a bit touchy for the minister. He doesn't like dealing with this, as much as anybody, because he knows that the whole deal was wrong to start with. In the first place, it cost the province about three times as much as it should have because you couldn't make the deal when you should have -- back in 1995.

Can the minister tell me when the Cariboo land use plan first recommended to government that the Empire Valley Ranch should be purchased?

[W. Hartley in the chair.]

Hon. D. Zirnhelt: As I recollect, it was in October of 1994 that the Cariboo land use plan was released. There was a 90-day implementation period, in which they went through how to implement the land use plan.

R. Neufeld: The province had an opportunity to purchase that ranch in 1996. Can the minister tell me why that wasn't accomplished? Or would you like to defer that to the Minister of Environment? He nods that he would like to refer that also.

Other than a couple of questions that I have about the valuation of the wood in Fort St. John. . . . Approximately 146,000 cubic metres of wood is going to be logged by Vesco Contracting. In the background information that came from the Ministry of Environment, Lands and Parks, there's discussion around the value of the timber on both the Empire Valley

[ Page 8737 ]

[4:00]

Hon. D. Zirnhelt: For the actual value of the timber in the trade, you can ask the Minister of Environment. They did the appraisal and used the discounted cash value approach. So we're comparing apples and oranges. Yes, if woodlot people had that stumpage rate or that value, they would have been able to make money. But the fact is that the land they log on is Crown land that became private land. It was exchanging private land for Crown land that became private land, not private land for Crown land. So you compare on the basis of what the economic value of the private land was, so it had to be an equivalent exchange. To have a common basis of comparison, the objective was to treat the timber values on both lands equally, recognizing that there are different timber types and so on. The Minister of Environment can handle all those questions in her estimates.

R. Neufeld: It's an interesting comment that the Minister of Forests just made. I think it's more trying to justify the end by the means of how you come up with $25 a cubic metre, because had that land stayed in Crown hands. . . . It didn't have to transfer from the Crown to fee simple. The government of the day transferred it for their own purposes. You have forgone a huge dollar value. If the Ministry of Forests office in Fort St. John believes that that timber was worth between $50 and $60 per cubic metre in stumpage to the province of British Columbia, just because you change it to fee simple land doesn't mean that it's all of a sudden worth only $25. That just doesn't ring true in anybody's language.

I have one last question, I guess. It relates to a public meeting that I called in Fort St. John. Actually, I was the only one that wanted to get this kind of information out to the public so that they could take part, hopefully, in the discussion surrounding this land trade deal to maybe try and get some concerns dealt with. In fact, I invited the Minister of Forests, the Minister of Environment and a few other people from the ministry to the meeting. Obviously those people elected not to show up.

The same district manager in the Fort St. John forest district, who you stated earlier would be making agreements with the contractor as to how the environment was going to be looked after in the logging of the land in Fort St. John, sent out an e-mail to his staff. I'm not going to read the whole e-mail because I don't think you want to hear the whole e-mail, but I am going to read part of it. It seems to kind of go along with what the government of the day has been doing in the last while. I want to read it: "I do not believe that ministry staff, other than those above, should attend the meeting." This is the meeting in Fort St. John. "If you were to attend, it would be perceived as support for the protest against the Crown. And as an employee of the Crown, this may be a career-limiting decision." This is a directive from the ministry office not to attend a public meeting in Fort St. John: "Also, I expect there will be media coverage. Since you may be recognized as a ministry employee, the media may want to interview you for your personal views. I do not want you to get caught in this trap. Therefore I ask that you do not attend even on your own time. I will be there, as I am one of the six noted above, and will give you an update after the meeting."

Is that consistent direction from the ministry's office to regional and district offices when people are actually trying to get some information that government seems to be hiding or information on something that's going on in their area. Is this a standard procedure that would take place? Maybe the minister would like to comment on that; it is actually within his purview.

Hon. D. Zirnhelt: There certainly was no directive. I probably found out about this after the member. I was concerned when I heard about it. I think the district manager perhaps erred in suggesting that people not attend on their own time. But as far as representing the Ministry of Forests, the district manager went, and I think the district manager was trying to keep the politics of the issue separate from what they were doing as administrators of a Crown resource.

The district manager did what he thought was correct at the time, and perhaps it could have been handled better. But there was no instruction from my office to. . . . I don't give out directives like that.

R. Neufeld: The silviculture obligations for the harvested land in Peace River North. . . . I understand, and again I'm going by written documents: "Vesco and the province will contribute to a reforestation fund to cover site preparation and replanting. Vesco will pay $200,000, and the province will contribute $100,000." Is it anticipated that $300,000 is going to be sufficient to replant 700,000 hectares of land? Where is Vesco's portion of this money? Is it in trust, at the present time, with the Ministry of Forests -- with their $100,000? Just where is that at?

Hon. D. Zirnhelt: I'm advised that $300,000 will be sufficient. As to the question of where Vesco's money is, my understanding is that it is in trust. I couldn't tell you exactly where the account is, but it's in a trust account.

R. Neufeld: Well, I can hardly resist: maybe the minister can provide me with the account number and the bank where this $200,000 is in trust, or at least provide to me where it is in trust, so that I can feel comfortable that it is actually there already. If he could provide me with that information, I'd appreciate it.

Hon. D. Zirnhelt: Unless there's some legal reason why I can't. But if I have to undertake to provide you an assurance, I'll undertake to do that and give you as many details as I can.

G. Abbott: Before we turn to the jobs and timber accord, the deputy critic for Forests has a couple of questions around a FRBC issue which could be usefully dealt with while this staff is here.

R. Coleman: Given the most recent discussion in the House this year, I think we're probably going to have the longest estimates in the Ministry of Environment's history, because there are a number of issues relative to that that are affecting jobs.

[ Page 8738 ]

Hon. D. Zirnhelt: I don't have that detailed information here. I'd be happy to get it and to provide it to the member.

R. Coleman: If you don't have the price or who printed it. . . . There's no indication as to the printer, so obviously it wasn't done by the Queen's Printer. I'd also like to know how many copies were printed of this particular publication. Could the minister tell me what the distribution was of this particular catalogue -- to what agencies? Where did it go?

Hon. D. Zirnhelt: It's FRBC's publication. It was distributed throughout the province. It's a directory of value-added services and products.

R. Coleman: The information I was asking the minister for is: how many copies were distributed? Obviously I'd like to know whether the contract for printing was put out to tender. How many bidders were there for the tendered contract, if it was put out to tender? If not, how did they make a decision as to who would get the printing contract for the particular catalogue? The next question I would have is: given that some of the companies, for instance, Scott Paper, a pretty large, multinational corporation. . . . Did any of the companies contribute to the cost of this particular publication?

Hon. D. Zirnhelt: I'll have to get that information for you.

J. Wilson: Last week I requested a little bit of information from the minister with regard to comparative logging costs in the Empire Valley-Churn Creek area, and that information wasn't put forward today. I would ask the minister what the logging cost would be on a piece of Crown land in the vicinity of the Empire Valley Ranch, including the hauling costs out of there factored in, where it's Crown land.

Hon. D. Zirnhelt: We did provide the information to your critic, and the information was $34 a cubic metre for the Empire Valley logging costs. The average logging cost in northeast British Columbia will range from $35 to in excess of $60 a metre, and the averages will be in the range of $45 a cubic metre. The parcels in the land exchange will have a lower-than-average logging cost, as most parcels are closer to the mill and require little or no access road construction.

J. Wilson: On this logging cost: is the cost of the trucking factored into this?

Hon. D. Zirnhelt: We believe it is. We can double-check that, but we believe it's in there. The answers were prepared from the questions in Hansard, so I'll just double-check that.

G. Abbott: If we could turn to the jobs and timber accord now, and perhaps most usefully, if the minister has a copy of the accord with him, I'll deal with the questions on a page-by-page basis, and we might most efficiently move through it that way. Let me begin, though, by following up on some of the initial questions we had with respect to the contract for the jobs accord advocate. The minister noted that the term of the contract is five years, so presumably we have a contract with Mr. Wouters that runs from approximately June 1, 1998, through to June 1, 2003. Is that correct?

[4:15]

G. Abbott: The minister noted in my initial questions that there is an office of the advocate, as well, that would operate under the direction of the advocate, and the cost of that, as I recall, was somewhere around $800,000 a year. Will the office run to roughly June 1, 2003, as well?

Hon. D. Zirnhelt: We don't expect the initiatives to end when the accord ends. As you know, there's a provision to review elements of the accord, particularly the fibre transfer portion of it. . . .

Interjections.

The Chair: Members, it has been pointed out that it's hard to hear in the room. Perhaps members who are having conversations could take them out of the room.

Hon. D. Zirnhelt: I gave you an example that two years into the accord, we're to review the wood fibre transfer program, which is essentially an undertaking by industry to provide 16 to 18 percent of the fibre. But as we note, the accord is of four years' duration, and we expect a lot of the initiatives to carry on, including evaluating how the accord is going. We're hopeful that there will be ongoing initiatives under elements of the accord that he can advocate. But by way of explanation, industry is fully part of this. They felt it was important to get the right person; they felt it was important to have some continuity there and to have it of sufficient length that we can do the job that he's undertaken to do.

G. Abbott: The minister anticipated my next question. Despite the term of the accord being to December 31, 2001, in fact the role of the jobs accord advocate would continue on after that. Is it the expectation of the government that the jobs and timber accord is going to be renewed or that some successor accord is going to be put in place?

Hon. D. Zirnhelt: I think it's really premature to speculate on that. The market conditions, the economic conditions, are different than when we brought in the accord. I say it would just be speculation. I think we're satisfied that there will be the continuation of some aspects of the accord and that there will be a role for the advocate to play in the future. That is simply the reason.

G. Abbott: If the minister could go to page 3 of the accord, my first question is on that. This is under the general provisions of the accord. "A provincial target of 37,800 new jobs will be the goal for the term of this accord, made up of 20,400 direct and 17,400 indirect jobs."

The first question I have is: if the goal of 37,800 new jobs is only a target or just a rough target, why is it that the government puts such precision on the number? If it is a rough target, why not 40,000? I guess it actually has been

[ Page 8739 ]

Hon. D. Zirnhelt: The numbers could have been rounded, but we looked at each of the buckets of jobs, if you will, and in discussion with industry came to an agreement about what might be reasonably expected given the conditions that we were trying to bring to bear on job creation in the sector. So they added up to this figure of 20,400, and the indirect is, I believe, simply a factor of what could be reasonably expected to be generated from that. To give it as much precision as possible, we picked those numbers. Then we're managing by the buckets of jobs that are later enumerated in the accord.

G. Abbott: In almost every instance throughout the accord a 1-to-1 ratio is extended for indirect jobs in relation to direct jobs. There's just the one case, and that's the alternate work arrangements, where there's no claim of 3,000 indirect jobs created, although 3,000 are expected to be directly created. Was there any particular reason why the government chose the 1-to-1 ratio? Is that a standard multiplier in British Columbia?

Hon. D. Zirnhelt: A 1-to-1 ratio wasn't used, because some of them -- for example, new work arrangements -- don't have a multiplier. But we're going to continue to refine the jobs. These were the closest estimates we could come up with at the time, and we didn't want to overestimate the multiplier. We could have used different multipliers, but we wanted to be conservative. We're focusing on the direct jobs. That's the key. In the discussions, industry was keen to have the extra 17,000 jobs added to the list, because they felt that those genuinely would be created, were we successful in creating the original 22,400.

G. Abbott: The only case in which the 1-to-1 ratio was not used is in the alternate work arrangements, where 3,000 would be created directly through alternate work arrangements but there's no anticipation that additional indirect jobs would be spun off from that. That's probably appropriate in that case.

Is it the view of the ministry that, given the 1-to-1 ratio and given the deficit position we're in, in relation to jobs. . . . The minister can correct me on this. Different figures have been used -- 12,000 in deficit, 12,000 lost, 13,000 lost -- at different times by the Premier or the minister. If we are down that many direct jobs, can we also assume a 1-to-1 ratio as we have with the creation of jobs, and that we are down that many indirect jobs as well?

Hon. D. Zirnhelt: Just to clarify: if you take the 22,400 jobs, and you take off the work arrangements and the Fisheries Renewal jobs, which we're not going to count in any multiplier for, then we're down to 17,400, on which it is a 1-to-1. We intend to count the direct jobs. We talk about SEPH -- the database on which we agree -- and we're going to measure against the 20,400 plus the 2,000 Fisheries Renewal jobs. That's what we'll be looking for. The direct forestry jobs is the 20,400, and that's what we're going to measure against. We're not going to be measuring the multiplier jobs, although we expect that they're there. Conversely, if we lose some jobs at some point in the industry, yes, there will be some multiplier effect. I can't speak to the actual multiplier, except to say that we're going to count the jobs as measured by the survey of employment, payroll and hours.

G. Abbott: Could the minister confirm that the government is going to count not only jobs created but also jobs lost, as in the job curtailment reports that we have discussed previously? Both sides of the equation are going to be measured in a systematic way by the ministry or some group authorized by the ministry -- is that correct? Are both sides of the equation going to be measured?

Hon. D. Zirnhelt: The survey data that we're talking about, which is the most scientifically valid, is going to pick up the pluses and minuses. We're not going to blend databases here. But if there's a job lost, it will be picked up by the SEPH data. In the end it will be SEPH that counts how many jobs there are in the industry at any given time.

G. Abbott: The fact is that this is a highly cyclical industry in British Columbia, and it has been for the last 150 years. I thought, even back in 1996, that it would give one pause prior to setting out ambitious claims about how many new jobs were going to be created. Notwithstanding that advice, which was tendered from numerous sources, the government adopted and then advertised very widely these very ambitious job targets associated with December 31, 2001. That's when the accord ends. I guess it is probably June something-or-other of 2001 when the four years will be up.

The government set out these very ambitious targets. Do they stand? The minister said at one point that they were being reviewed or something to that effect. Can the minister advise, in light of the downturn -- the significant layoffs and job losses that have been experienced in the past months and years in the B.C. forest industry -- if that provincial target of 20,400 direct jobs is going to be revised downward? If so, when? If there is a current figure as to where it should appropriately be, what is that figure?

Hon. D. Zirnhelt: I think that if you go back to the public record, you'll see that I have said consistently that we are going to leave those targets there. They are targets. We said that it took many things to create those jobs. It took the cooperation of industry and government; it was a joint agreement. At this point we see no need to do that. We are going through curtailments of jobs that are related to market and economic conditions. It's our hope that it's short and cyclical. But we go back to the fact that those targets represent the vision. They represent an increased number of jobs per cubic metre, and all of the pieces of the accord are going to have to be played out before we'll see those jobs.

We won't revise those numbers now. I didn't say they are under review, except to say that we're constantly reviewing progress on the jobs and timber accord. I've said time and time again that when the accord was signed, nobody expected a major downturn. I think that one industry spokesperson who was there in Prince George when it was announced did say that it would be very difficult to achieve those if the industry went into a serious downturn. I think everybody has recognized that. We've gone into it with our eyes wide open. The public of British Columbia understand how difficult it is, because they've seen in previous down cycles the shedding of tens of thousands of jobs on a permanent basis through restructuring. We've said we'll use the policy levers of government, the incentives in the accord, to work toward these goals, and we have to take the jobs package by package.

[4:30]

[ Page 8740 ]

There's a lot of pretentious thinking, I think, that goes along with saying: "We're going to create an accord; therefore the jobs are going to be created." I think that's nonsense. Jobs are created as a product of opportunity; they're created as a product of people making an investment based on the prospect of having some return. There are many things that enter into whether those new jobs are created, whether that new opportunity or investment is followed through on. Certainly the marketplace. . . . There needs to be a market where a product can be sold at a price that will provide a return on the investment made.

The notion that people are going to invest or the notion that people are going to follow up opportunities, based on an accord that's signed, is nonsense, and people understand that it's absolute nonsense. The idea that we set out these ambitious job numbers, then spend one hell of a pile of money saying that these numbers are true and that we're going to do it is, I think, dream-making of the most offensive kind.

I know that the minister wants to take a short break, and I'm happy to do that as well. Perhaps I can carry on after that, hon. Chair.

The committee recessed from 4:33 p.m. to 4:38 p.m.

[W. Hartley in the chair.]

G. Abbott: I'll just pick up the theme again from where we left off. I think that people do understand the cyclical nature of the forest industry in British Columbia. I think they also understand the politics of illusion that is associated with this accord.

The minister said: "Well, regardless of what's going on in terms of job losses or job curtailment, we're not going to revise the targets, because they're targets, and that's what we want to see."

Well, that's fine, but the fact of the matter is that no one in the forest industry in British Columbia is going to create one new job because the accord says they have to create one new job. In the forest industry in British Columbia -- whether it's a value-added producer, a major licensee or a small business logger -- no one is going to create a new job in British Columbia unless they see an opportunity there, unless they see a market there and unless they see a cost structure which will allow them to invest and see a return on that investment at the end of the day. Without that, they're not going to invest, no matter how many accords there are, no matter how much encouragement there may be in an accord, in a moral way, to create jobs.

I guess this debate about what induces people to create jobs has been around for a long time. The fact of the matter is that they don't create them to be good citizens. People create jobs because they see an opportunity and because they see a possibility of return on an investment. Without that, it ain't gonna happen; without that, the job accord means nothing.

The fact of the matter is that the biggest discouragement to investing in British Columbia has been a set of tax and regulatory policies that have been utterly discouraging to the creation of new jobs in the province. It's the issue of the very expensive Forest Practices Code; it's the issue of very onerous stumpage rates; it's the issue of excessive taxation. All of these things, in combination with a declining market in Japan, have sent our forest industry into a tremendous downspin. Regardless of any of the pretty words in the accord, it's those things -- the fundamentals -- that have to be corrected if we want to see jobs created in British Columbia. Without the correction of those fundamentals, we'll continue to see additional job losses in the province. I think that's a fact, and no amount of social forestry, where we create short-term jobs to meet job creation numbers, is going to change things.

What we desperately need to do in British Columbia -- and I hope this is clear, after our discussion around New Forest Opportunities -- is make our industry more competitive in world markets once again. We absolutely have to do that, and we absolutely have to address the fundamentals on the cost side if we're going to make our industry competitive again. I'm afraid that one of the things that happens with New Forest Opportunities, the jobs accord advocate and all these things is that they pile additional costs onto the industry and discourages them from making the investments and creating the new jobs. We pile more costs onto the industry, claiming that we're creating new jobs, when in fact we're doing exactly the opposite.

That's my overriding concern here -- that this accord may set up the very noble illusion of creating more jobs. If it's doing the opposite, if the cost of the thing is actually making it less likely that we're going to create jobs in the province, then surely that has to be pointed out. Before we move along, I'd like to hear the minister's response to that.

Hon. D. Zirnhelt: I think that if the member wanted to refer to the preamble in the accord, it says: "Whereas industry and government agree that the creation of new, economically viable jobs and the sustaining and enhancement of the existing base of jobs are key priorities for the publicly owned forests. . . ." We say that there. Under general principles we say: ". . .any plans, strategies, or initiatives agreed to under this accord must be workable, practical and feasible for industry and government." It's all there.

There was a recognition that there had to be adequate return on investment. It says that we believe it has to be an internationally competitive industry. I think everything is there, in terms of recognizing it. We have addressed the cost structure issues. Industry has to deal with some of their productivity issues, but government dealt with the cost of the code. You can't have it both ways. Industry said, "Don't relax the standards," so we have to find the most cost-effective way of doing that. I submit that we have moved significantly in that direction, which will change the cost structure of industry.

But we can't remove the floor of environmental and forest stewardship protection. We can't do that. You can't say that you have to drive that floor down. What is implied, in statements from your benches about gutting the code and too much red tape, is words, until you look at what is actually behind those words. Really, it means: change the standards; don't do something you were doing before. I submit that we have done and will do more, if someone can demonstrate that

[ Page 8741 ]

We've reduced stumpage. A 30 percent reduction has happened since last fall. We've made it more market-sensitive. Those are all things we've done, in addition to the accord. The accord assumes that fibre will be available, so if you look at the accord, behind every initiative is the providing of more fibre, whether it's for the small business program or whether it's dealing with the undercut, or whatever. Industry agrees that if we do the things in the accord, they will then be poised to create the jobs. It isn't government creating all these jobs, although it is government funding through Forest Renewal that is creating the land-based jobs. We want longer-term, more year-round jobs. We have discussed that, I think, in the discussions around NFO.

[4:45]

This is an incentive-based accord. There are incentives in here about getting access to fibre that they wouldn't ordinarily have access to. Given the access to the fibre, then the jobs can flow and the investments can happen. We don't disagree that there has to be a return on investment, and we have addressed the cost structure issues.

G. Abbott: The first thing I should note, in response to the minister's comments, is that no one on the opposition benches has ever used the term "gutting the accord." That was a phrase that a reporter may have attributed to us, but the phrase has never been used. Believe me, I was there. We have never said "gutting the accord." What we have repeatedly argued for is a results-based code, and in fact, I think the minister has over time -- in response to the arguments we've made -- adopted some of that view. Certainly if we had said two years ago that we needed to move away from the process-oriented code that we currently have to a more results-based code, he would have said: "Oh, you're going to gut the accord."

In fact, the minister himself and the Minister of Environment have recently announced changes which theoretically reduced the cost of the code from something like $750 million a year to $400 million a year, without -- supposedly -- compromising any of the environmental objectives contained in the code. I guess we'll be onto this in a more detailed fashion later on, anyway. But the important point here is that both ministers argue that we can save some $350 million a year in code costs without compromising environmental goals.

We're not satisfied that we have achieved anything near what we can achieve from a results-based code, yet we feel that a good deal more can be done. We feel that there is still too much regulation, too much duplication and too much overlap in terms of the way a lot of these issues are dealt with, and more needs to be done. Again, if we don't move on that -- and I hope that in fact the minister is going to move on this. . . . Without moving on that, we are still going to have cost-side problems to deal with. We will be getting back to code issues, and I know this debate will continue there.

The point, again, that I want to make is. . . . And I don't disagree with some of the stuff the minister says. He says: "Well, we realize that markets have to turn around. We realize that we have to address the cost side. We realize this. . ." and so on. But the point I make -- and it has to be made, because it's a necessary counterbalance to what the Premier has been saying over the past couple of years about this -- is the following. If you don't believe the numbers, if it's only a hypothetical target and not a reality, then don't make it the centrepiece of your throne speech, and don't sign a big-deal accord around this thing based on those numbers. And the advertising -- millions of dollars in advertising. It's absolutely wrong to set up the illusion that we're going to do it, that it can be done and that it will be done.

I can, if the minister wishes, bring in the 1996 throne speech in which the Premier, through the Lieutenant-Governor, stated very clearly that we're going to create 21,000 new jobs by 2001 in British Columbia. He didn't say: "We would like, under certain circumstances, to create 21,000 new jobs." He didn't say: "Well, maybe we will," or "We might," or "We may." He said: "We will create the jobs." We find the words "will create" on numerous occasions, and I'll point them out to the minister as we go. He didn't say, "We might." He said: "We will." And that's where, I'm afraid, we have to hold this government accountable for the illusion that it created.

No one was shy and bashful about proclaiming the success that the government was going to enjoy in creating new jobs. There was a campaign about a job behind every tree -- blah, blah, blah. It went on and on, at enormous expense, to create the illusion that this government was creating jobs, when in fact their policies were contributing to the destruction of jobs. So I'm not retreating from the point at all, and perhaps we can continue this general discussion as well. I have some additional, more specific questions for the minister.

On page 4, second paragraph down, it says: "Consultation will be undertaken between government and industry for a B.C. forest job creation tax credit to hire youth, with additional incentives to employ women and aboriginals." Can the minister tell me what the current status is with respect to those consultations and the job creation tax credit?

Hon. D. Zirnhelt: Yes. There has been some preliminary analysis done, and the work will be turned over to the advocate.

G. Abbott: On page 4, as well, it talks about job maintenance and creation. It says: "Job creation will come from increasing major licensee harvest volumes towards AAC by three million cubic metres by 1999-2000. This will create 3,900 direct jobs and 3,900 indirect jobs." It seems clear enough there that they will be created. Is the minister telling me now that we should really be saying this may create 3,900 new jobs?

Hon. D. Zirnhelt: The numbers come as a ratio. It's a ratio of 1 to 3. The undertaking by government was to make the fibre available through arrangements with the companies -- they do certain things and we do certain things. We have increased the standing timber inventory which provides for this to happen. The intention was that we make the AAC available by the year 1999-2000. Having done that, industry agreed that the jobs would be created. That's the intent: if you cut more wood, you should create more jobs. The intent is to reduce the gap between the AAC and the actual wood harvested.

G. Abbott: Will the minister acknowledge that in fact the gap between the AAC and the cut volume actually increased

[ Page 8742 ]

Hon. D. Zirnhelt: Yes, we anticipate 1998 to be a difficult year, so the numbers will be down. That's why the accord is of some years in duration. We expect that there will be more inventory, provided that companies make application for cut permits. If companies don't apply and don't do the development planning, the wood won't be available. So it should say. . . . We've implemented this by having agreements with any industry that wants to do it. They said: "Give us the wood. Make the wood available, and we will be able to create the jobs." But given the market conditions, we don't expect that those jobs will be created.

G. Abbott: The minister anticipates that they won't be created in 1998. Is it anticipated that they will be created by 1999-2000?

Hon. D. Zirnhelt: I've said time and time again -- I've said it publicly; I've said it here in the House -- that there has to be a turnaround in the market to create the jobs. We didn't foresee the particular market we're in -- the falloff in Asia. Nobody foresaw that when the accord was signed, so it will be very difficult to achieve these objectives in the time frame. Nevertheless, we will attempt to do everything we said we would do about making the fibre available. The market has to take up the fibre, but we will do everything in the accord to make the fibre available. Any arrangements in here that we've undertaken to do will be done, so that when the market turns around, industry will be poised to create the jobs.

G. Abbott: Clearly there won't be the creation of jobs until we do see a turnaround there and significant changes on the cost side. That's exactly the point I've been trying to make. Those jobs may be created. "May create" would certainly cover off the possibilities here, whereas "will create" is not informative of the situation at all. "Will" suggests that something is going to happen, whereas we were saying that this may happen under certain circumstances.

Further, I think that when the Premier adjourned the House for two days in the last session to fly up to Prince George to unveil this accord, it was pretty clear that we had big problems in the Japanese market. Yet, notwithstanding that, we chose to, with great hoopla, unveil this accord and, with even greater hoopla, to spend a lot of money saying that we were going to do that. That is, I'm afraid, the fundamental flaw here: this is a product of the politics of illusion, not of the politics of reality.

The second bullet under "Job Maintenance and Creation" says: ". . .achieving standing timber inventory (STI) targets sought by each licensee to reach two years of STI by March 1999 and maintaining those levels." Could the minister advise -- by region if necessary, but generally -- what the average across the province currently is with respect to STI? I gather it remains something considerably less than two years. STI, of course. . . . I'll explain it to anyone who is confused by the expression. This is the time in hand of the cutting permits of licensees. I understand that the average across the province is considerably less than two years at this point, that there has been considerable variation regionally in the level of success achieved. Can the minister advise me generally what the situation is and in what areas the STI rate of achievement has been less?

Hon. D. Zirnhelt: In parts of the interior we're approaching two years. Across the province it's just over a year. When the accord was announced, it was approximately nine months, so we've made improvement there. We have offered, to any company that wishes it, to enter into an agreement on how to achieve the numbers by March of '99. In some cases industry is not prepared to invest in the development planning, but we can't offer that without work that they do. This is a two-way street; they have to do certain things. We're prepared to enter into performance agreements. The approval times have been turned around. This is one of those areas where we will achieve it. Industry wanted the two years. We've offered it; we've offered a means to get it. It's in the hands of industry.

G. Abbott: So the minister is committing here today that provided industry is prepared to put in the cutting permit applications necessary, his ministry, by March of '99, is going to commit to having those two years of cutting permits in hand for industry.

[5:00]

G. Abbott: Two bullets down. . . . I'll ask the minister to explain this one. This is an interesting turn of phrase. Anyway, the sentence reads, "Job creation will come from," and then it reads: ". . .monitor forest management policy reflected in protected-areas strategy, land use plans, first nations deferrals, etc. to ensure that the AAC can be spatially demonstrated." Can the minister translate that into farmerese for me, please?

Hon. D. Zirnhelt: The explanation of "spatially demonstrated. . . ." Spatial data is a technical term that refers to the geographic location of a forest stand within a geographic information system database at a specific time. It just says that they have to be prepared to show where it is on the landscape; they have to have a map that shows where it is. It's important to demonstrate that the allowable annual cut or where harvesting will take place or has taken place recognizes the conflicts with other resource values or code requirements, such as visual green-up or a block harvested prior to harvesting adjacent blocks. So they have to look at green-up and they have to look at the overall spatial distribution -- where on the landscape the cut is distributed. The intent of this particular issue is to take into account the various planning initiatives that we have -- first nations concerns, for example -- and make sure that there are no holdups. We've got to make sure that the plans. . . . The industry has to undertake to look at all the things in the planning environment when they make the submission of their plans.

You asked a question about standing timber inventory. It's at 1.7 years in the Cariboo; 1.41 years in Kamloops; 1.31 years in Nelson; 0.81 years in Prince George; 0.99 years in Prince Rupert; and in Vancouver, it's 0.82 years. The average is 1.04 years.

G. Abbott: Now that we've returned to the first proposition about standing timber inventory, can the minister give me some indication of why, for example, the amount of standing timber inventory is more than double in the Cariboo what it is in Prince George and in the lower mainland?

Hon. D. Zirnhelt: To illustrate a bit, in the Cariboo we have a land use plan. The economics of the interior industry

[ Page 8743 ]

G. Abbott: The minister is saying that he's committing to a two-year STI, even to achieving that two-year STI in the problem areas of Prince George and the south coast?

Hon. D. Zirnhelt: We are committing, provided industry puts in plans of sufficient quality that they can be approved.

G. Abbott: I appreciate the minister's translation of the last bullet under "Job Maintenance and Creation." What's still puzzling me is how doing that will create jobs. It seems to me that having to work within all of the elements that are laid out there might be an impediment to job creation rather than an incentive to it. Could the minister tell me what I'm missing to demonstrate that it is, in fact, a job creator?

Hon. D. Zirnhelt: Well, there are some policy problems and initiatives that have to be coordinated and integrated. It creates a policy environment altogether, and if it's not aggressively addressed, it could lead to delays in approvals. If we don't move expeditiously towards completing the protected area, then some of the deferral areas that exceed the amount that will be in the protected areas will be out of limits for development. There are deferrals associated with land use planning, such as first nations areas of concern. We don't deal with measures around treaties, for example. In the pre-treaty environment, that may create other uncertainties. We acknowledge that there are uncertainties out there on the landscape, and we intend to reduce those uncertainties and work towards that.

G. Abbott: A little later on in these estimates I'll be asking the minister to reconcile some of the apparent new initiatives under the Forest Practices Code with this particular provision. It would seem -- again, I hope that I'm going to stand corrected here -- that at least a portion of the savings associated with the changes to the Forest Practices Code may be offset by policy changes around identified wildlife and woody debris and stuff like that. But we'll hold that discussion for a little later on in these estimates when we hit the code in a more precise way. I will want the minister to reconcile those two things at that time.

Under the next section," Initiatives by Tenure Holders," the second paragraph says: "Specifically, industry will commit to projects that will create 2,000 direct commercially feasible jobs. This will also result in 2,000 indirect jobs." How is the ministry monitoring the creation of those 2,000 commercially feasible jobs? What paperwork has been laid on to demonstrate that?

Hon. D. Zirnhelt: The work on monitoring will be done by the jobs advocate. It's his responsibility. They will be able to access the incentives under the accord if they create more jobs, like the 5 percent takeback on licensed transfers and that sort of thing. We expect that the jobs advocate will find out from industry what their plans are to create jobs. This particular bucket of jobs will be monitored by the jobs advocate.

G. Abbott: One of the things that has always absolutely amazed me about the B.C. forest industry is the drive by the industry to improve itself on the technological side. On the physical side, there seems to be some mind-boggling developments in terms of better utilization of fibre, more efficient manufacture of fibre and so on. I'm wondering what the value is. . . . We have a forest industry which is going to be propelled by its own interest towards investing capital to improve technology, to make its operations more efficient, to enhance its product values. When those things are a given in an industry, what is the value of having the government second-guess and/or measure that? That's what troubles me about this section. What's the value here?

Hon. D. Zirnhelt: This is what the industry brought to the accord. They were prepared to see this in the accord and felt that it was reasonable. So as I have said, we have suggested that there are incentives available; but we don't want to see incentives for modernizing that doesn't create jobs. We'd like to see modernization that creates jobs. There could be some investments in a higher recovery of logs; there could be pulp and paper conversions; there could be new panel-board plants; there could be, in fact, value-added investments that industry might make.

The value of counting it is simply that we have tried to be visionary here and show where the industry can grow. We're hoping that when things turns around, these investments will take place. We'll see some of these investments even now, with people going through upgrades. I think that Canfor announced the other day that they will be adding value to their pulp products. So we're seeing some of these investments.

G. Abbott: The point here is this. I'll give you an example. I have a friend in Sicamous who, as part of his work, goes around the province and does computer work, improving to the nth degree the maximization and the almost perfect utilization of fibre going through mills. It seems to me that we don't need a jobs accord advocate to encourage and cajole industry to do these things. The industry are doing it themselves. I simply don't see the value in a jobs advocate asking, in order to prop up some specious job numbers, for the creation of jobs. It seems to me illusory to ask the jobs advocate to do that and put another obligation on an industry that does these things because it's in their interest to do them.

Hon. D. Zirnhelt: The member is correct. Industry should be motivated towards making investments that create jobs. They aren't always focused on jobs. They may be focused on production that maximizes their bottom line only and doesn't pay any regard to jobs. We're saying that access to fibre that belongs to the Crown is there and is an incentive that can be used. Those people who want to make the investments will, by filing documents and job plans that reflect those investments that they would be making anyway, and documenting by saying, "Here, we are making investments that can create the jobs; we want access to the incentives under the accord," which are the opportunity to do the Forest Renewal work, have access to the 5 percent takeback and credit for transferring wood.

The problem we have in the province is that most of the wood was already allocated to people under licence form, and

[ Page 8744 ]

G. Abbott: We could continue an interesting debate on this section for some time, but I don't want to, because we have other stuff to deal with today.

Let's go on to initiatives by Forest Renewal B.C. We discussed earlier in these estimates the probable impact that the recently announced stumpage relief would have on Forest Renewal B.C. in terms of its programs and so on. I want to focus in, given that we're on to the jobs and timber accord and numbers, on the jobs side of this. Again, just as we've had in similar paragraphs earlier, we have the following initiatives by Forest Renewal B.C.: "Job creation objectives will be further enhanced through the. . .delivery of funds and programs from Forest Renewal B.C., so that at least 5,000 direct and 5,000 indirect jobs will be created."

[5:15]

Hon. D. Zirnhelt: Well, I remind the member that this year there will be 7,000 person-years of employment created. So any reduction in FRBC's budget has some room. . . . I explained earlier that the board of Forest Renewal will be going through a strategic planning exercise to look at the targets and commitments. You'll note in the accord that the expenditures committed were -- of the 70 percent of total expenditures directed to land-related activities -- up to $300 million. So the intention is to go through a strategic planning exercise, keeping in mind this commitment to these 5,000 jobs.

G. Abbott: I appreciate that, depending on whether we're ramping up or ramping down -- as we discussed at some length in the select standing committee. When we ramp up, as we are this year, we can ramp up the number of jobs. Some ramping down was already in the works for next year, and further ramping down, as I recall, was in the works for the year 2000. What we are superimposing on top of that now, as I understand it, is a very considerable reduction in the amount of revenue available to Forest Renewal B.C. as a consequence of the stumpage relief. I'm not arguing whether that's a worthy goal; I'm just trying to come to reality about whether, realistically, we're going to have to change that job target of 5,000.

Hon. D. Zirnhelt: I can't anticipate what the board is going to come up with, but they have to go through it. I can't prejudge what they're going to go through. They're fully aware of what the revenue implications of the stumpage changes will be. We went into this knowing fully that it would be a challenge. All of this is a challenge. These 5,000 jobs are a challenge, and that is the target that the board is charged with trying to fund and come up with a business plan that will do that.

G. Abbott: When we say "5,000 will be created" in the context of Forest Renewal B.C., do we mean that 5,000 seasonal jobs will be created, or 5,000 jobs of X determinant length will be created? Or does it mean that 5,000 jobs will be created that will be sustained into the future? In other words, given that this is the second year of the accord, will we be looking at a total of 10,000 jobs created over the two years, or are we talking the former case, where 5,000 seasonal jobs will be created every year?

Hon. D. Zirnhelt: All work in the forest industry is, to some extent, seasonal. So we have in the back of the accord the provision that a job is measured in terms of person-years of employment. One person-year is defined as a minimum of 188 days or 1,440 hours per year for logging, silviculture and other forest fieldworkers, unless the traditional operating season in the region is shorter. So if it's a shorter season in the very far north, then we can't expect the job to last all the months of the year -- or the 220 days for all other forest sector workers. So that's how we define the jobs.

G. Abbott: The point then is that these are seasonal jobs; these are not jobs which are created by Forest Renewal B.C. and which become self-sustaining into the future. In other words, the 5,000 created in 1997 are not continuing on into 1998, if only on a seasonal basis. We are -- and I just want confirmation from the minister here -- annually creating seasonal jobs which are of a duration prescribed at the back of the accord. But were it not for new FRBC funding, those 5,000 jobs would not be continuous or revived from 1997. Is that correct?

Hon. D. Zirnhelt: The intent is very clear: the multi-year agreements are the basis of the funding, and those multi-year agreements are to see jobs that will continue year after year. That's why we're entering into multi-year agreements: so that these jobs can become year-round jobs as much as is possible, given the nature of the work. It's to get away from short-term, seasonal jobs that begin and end in one year. We would like to see them become dependable jobs that people in those communities can rely on, year after year, as long as Forest Renewal funding is available.

G. Abbott: Given that there may be upwards of several thousand people who would like to have jobs of that nature into the future, can the minister advise when we're likely to hear -- from Forest Renewal B.C. and their strategic exercise -- what number of jobs are likely to be sustained into the future with the new world of funding after June 1, 1998?

Hon. D. Zirnhelt: Any new targets, any change in strategic direction, would result from the strategic planning exercise and will be part of next year's business plan. Discussions and information-gathering and planning will begin later this summer -- the normal budget cycle -- so that by next March-April, there will be a business plan that's been changed. If there's a need at any time to change strategic direction, then the board can do that. Right now, they will be sticking with the plan that they have for this year, and next year's business plan will reflect any changes. They're well aware of the conditions under which they're doing the planning.

G. Abbott: Our first review in 1997 of the current business plan was in November. Is the minister committing here that in the business plan we will likely be debating again in November of 1998, we will see the results of that strategic planning exercise by the board?

Hon. D. Zirnhelt: I'm informed that there may be some preliminary targets at that time, but the final business plan

[ Page 8745 ]

G. Abbott: May -- not will.

Hon. D. Zirnhelt: I said that there may be -- not will be.

G. Abbott: I think that I'm beginning to educate the minister here on "may" and "will" and when it's appropriate to use "may" -- and that's good to see.

The next issue I want to raise is actually the same issue. There has been, over time, some controversy around what it costs to create a job as defined in the jobs and timber accord -- a minimum of 180 days or 1,440 hours a year. What is Forest Renewal's expectation or judgment about what it costs to create a job through Forest Renewal B.C.?

Hon. D. Zirnhelt: The cost per job can vary from $48,000 for spacing and pruning to $96,000 for the higher-cost watershed restoration jobs where there's a lot of equipment involved. Those costs per job are taken into account when the strategic planning is done.

G. Abbott: That cost is presumably not. . . . For example, if we use the lower figure of $48,000, I presume that is not what the forest worker is likely to receive; that is the cost of what the forest worker is likely to receive plus the cost of administering the programs and so on. Is that correct?

Hon. D. Zirnhelt: It includes the cost of overhead, equipment rental, travel and transportation.

G. Abbott: Using the $48,000 figure, could the minister advise what portion of it would FRBC anticipate going directly into wages to the employee?

Hon. D. Zirnhelt: I'm told that we have some breakouts that we can provide as examples. It varies highly from one type of project to another.

G. Abbott: I fully expect that the figure would vary by project. What I want to get from the minister is a general idea of what it would cost. I'm sure there's going to be variation. On a job that costs $48,000 all included, would the expectation be that the worker would receive $36,000 and the overhead cost would be $12,000? On average, what would be the typical kind of profile of a job creation cost?

Hon. D. Zirnhelt: I don't have those details here, but I can get them and provide them to the member.

[5:30]

If I could turn to initiatives for small business. . . . I don't necessarily want to spend a lot of time on this one, because we talked a lot the other day about the small business program and the changes. But it's assumed that 1,500 direct jobs and 1,500 indirect jobs will be created through a full harvest under the small business forest enterprise program. We talked the other day about ways in which the goal might be achieved or how the performance of the program might be improved. Again, hopefully, that will be the case, because the program has consistently underperformed, with the possible exception of the last year. So, hopefully, it will move ahead.

The one area where I want to reiterate a point that I made extensively the other day. . . . I think this whole issue around the small business program as it relates to fixed versus variable stumpages is something that the minister is going to be confronted with again and again. We're probably going to see some jobs lost in British Columbia, I think, as a consequence of the position that's been taken that fixed-rate stumpages will not enjoy the stumpage relief that has been extended to everyone else under the program. I've made my case there; I hope the minister has listened. I have recommended to those who are still seeking that relief -- and I think they ought to keep fighting for that relief if they have fixed-rate stumpages -- that they talk to members like the member for Skeena and the member for North Coast and so on, who have a lot of small business harvest operations in their ridings. Clearly this is going to be a big problem, and I think some people are going to lose their jobs as a consequence of the position that's been taken. I won't pursue that again, because I think we've been round that mulberry bush several times now. If my message has not been received by the minister to this point, it's unlikely that anything I could say right now would change it, either.

In the next section it says: "Government and industry will work together to achieve the goal of 5,000 direct and 5,000 indirect jobs, which will be created through increasing availability of sawn lumber to independent remanufacturers." Have the changes that were recently announced around the increase of volume to the value-added sector been sufficient on their own to achieve the goal of the 5,000 direct and 5,000 indirect jobs? Or is there going to be a further cut directed towards value-added to achieve that goal? In other words, has what's been announced to date been sufficient to achieve the 5,000 goal, or are further changes going to be necessary to achieve that?

Hon. D. Zirnhelt: The 5,000 direct jobs will be arrived at by a number of initiatives. The initiatives we've announced so far aren't sufficient to achieve that. This will require the wood fibre transfer program, which has not yet been announced. It's being worked on; it's in the accord. We're working on getting the fibre facilitators in place. This is in the hands of the major licensees to work out an acceptable method of transferring that fibre. What we have announced to date under Small Business 2000 won't achieve all the jobs. This is necessary.

G. Abbott: If we can move along to page 9 and the paragraphs under "Alternative Work Arrangements," in paragraph 2, the second line says: "As a pilot project, government will provide funding or programming assistance up to one-third of direct payroll costs associated with new hires, up to a maximum of $3,500 per new employee annually for the life of the collective agreement or the accord, whichever is shorter." Has this provision been finalized? Has it been used? Where has it been used? And what has been the cost of it to date, if indeed it has been used?

Hon. D. Zirnhelt: Well, to date there have been no alternative work arrangements put in place. Alternative work

[ Page 8746 ]

G. Abbott: Again, this goes back to the point which I have been attempting to make throughout the debate we've been having here -- that when the business climate improves, the necessity of actually having to subsidize jobs disappears, because the industry will want to take people on, want to have them working and producing a product that they can, hopefully, sell at a profit in the marketplace. It seems to me that without that, without having the opportunity to sell a product at a profit in the marketplace, the offer won't do anything. Apparently that's what the situation is. This notion that the government could subsidize the hiring of a new employee has been greeted, I guess, with indifference. I presume it's not with derision. It appears to have been greeted with indifference as a consequence of the fact that they're laying off people, not hiring them, because of the cost structure and the market situation that they face. I'm curious as to why the minister would anticipate that. . . . If the industry decides that they want to bring on new people because of an improvement in markets and so on, why would they want to do this? And why does the government want to throw some money at it if improvements in the marketplace improve hirings in a very direct fashion?

Hon. D. Zirnhelt: Using direct tax incentives makes it more possible to have more people on payroll. The feeling is that with the incentive there, there will be more rearrangement of the workplace so that they end up with more jobs. Overtime, in particular, is the one that I can mention. In the Fletcher Challenge settlement with the pulp union, they referenced the accord. This matter, I understand, is before the timber jobs advocate by way of trying to give effect to this. So if we share work, there are more jobs.

G. Abbott: To me, the point here is that we need to make our industry more competitive. How do we do that? I think we do it by leaving decisions about the effective use of labour with those who are making decisions about products and markets and so on. The notion that, as government, we should be subsidizing jobs seems to me -- in an indirect way if not a direct way -- to be further penalizing the industry on the other side.

All of these different little things that we throw at the industry to either threaten, cajole or induce them to create jobs. . . . It seems to me that all of these things take us away from the central point: we need an efficient, productive industry. I'm puzzled at the value of this provision, in particular given that no one's used it to this point, and they're not likely to use it until they're in an economic position where they can likely afford to do without it.

Hon. D. Zirnhelt: There's a fundamental disagreement. This side of the House believes that the public resources should be there to provide, amongst other things, employment. Many will admit that industry's job is not so much to focus on employment but to focus on running their businesses. At the announcement of the accord, one of the CEOs said that he used to focus on investments that got rid of workers. Now, having gone through the process of negotiating an accord, he sees that it is important to focus on those investments that will maintain and, hopefully, increase jobs. He said he's asked his managers to bring him proposals for investments that have jobs attached to them. They understand that that's part of the social contract, part of the understanding we have in this society that jobs are important. If we didn't focus on them, then what the member calls an efficient industry could be very efficient in putting people out of work. We saw that in '81 to '83. It got efficient to the point that we had fewer jobs per cubic metre than virtually any other jurisdiction.

G. Abbott: I think the minister's right. There is a big difference in the way that we look at these things. I think what we see here is social forestry -- the notion that government can subsidize its way to a forest industry that creates a lot of jobs. The fact of the matter is. . . . I hear some of the Luddites across the way barking, so maybe I should pay some attention to that. Back when they created they spinning wheel or machines like that, there was a whole group -- the Luddites -- who said: "Well, that's going to destroy all the jobs we have." Of course, what we've seen since then is the creation of many more jobs. It seems to me that we can't. . . . It's always a false logic for people to argue: "Well, you know, we have to make the industry create more jobs."

Historically, it's been the case that more jobs are created through efficiency and greater productivity, because it enhances the wealth of economies and societies when there is maximum efficiency. If we take our industry and we base it around the, I think, fundamentally false premise of socialist forestry, all we will do is make our industry less competitive in relationship to the rest of the world. It'll make it less possible for our industry to sell our products in international markets, because the rest of the world doesn't stop. That's the thing.

We could be neo-Luddites here in this chamber -- and clearly we have some across the way. There's lots of neo-Luddites around, but if we want to do that -- if we want to be neo-Luddites -- we're not going to keep our industry competitive. We're going to be a modern-day society where we employ people to watch what other people are doing, and have people watching them watching somebody else. It just doesn't work, and I think this is an example of where we need to get away from that kind of thinking and focus on being more efficient and productive. From that, industry will produce the jobs. If they see markets, if they see opportunity, they'll create the jobs. They won't need the government to help them in doing it. If there's an opportunity there, people always exercise the opportunity to put the investment in, with the prospect of receiving a return. We can carry on this philosophical argument for a long time too, but I don't want to do that, as we're running out of time.

[5:45]

Hon. D. Zirnhelt: There's no connection between bullet 4 and the first bullet. That heading is appropriately there; you

[ Page 8747 ]

G. Abbott: Thank you. I appreciate that explanation from the minister. That makes sense. The incentives and compliance apply to the accord as a whole, not simply to the alternative work arrangements section.

Just to follow through, though, can the minister confirm that of the job target of 3,000 for the alternative work arrangements, zero have been created, and zero has been expended from the $20 million set aside for that purpose?

Hon. D. Zirnhelt: Yes.

G. Abbott: I'm completely in concurrence with that level of expenditure for this purpose, as I think my previous sermonette probably indicated. That first sentence, then, under the incentives and compliance section -- "Forest Renewal B.C. ongoing funding for each company will be tied to achieving the objectives of this accord. . . ." Are we going to see the advocate looking at the job creation record of each company and, based on that, setting the level of funding in each company's multi-year agreement? If they fail to reach those objectives, might their funding within the multi-year agreement be reduced? Or am I reading far too much into this? I'd like some explanation of it.

Hon. D. Zirnhelt: As a company wants to access the benefits on the accord -- one of them is access to the Forest Renewal dollars under multi-year agreements -- it will be asked to report out its progress and other elements in the accord. If they want to access the 5 percent takeback, for example, they'll be asked to show how they're performing with respect to the other aspects. Only those companies that want to access the benefits under the accord will be asked to provide a jobs plan.

G. Abbott: For example, in order for a company to be eligible for the new, innovative forest practices agreements, they would have had to demonstrate that their plans coincided with the objectives of the accord. Are we to assume, then, that those who have to this point been successful in achieving new, innovative forest practices agreements have satisfied someone other than the advocate? Are we to assume that they are in compliance with the objectives of the accord?

Hon. D. Zirnhelt: The nature of the reporting on these matters is going to be worked through with the advocate, industry and government. We have provided funding for multi-year agreements around the innovative forest practices agreements, and we've kept in mind that they will have to report on progress towards meeting the objectives. Some of the objectives are year-round employment, enhanced silviculture and so on. We'll expect them to report on that.

G. Abbott: The final paragraph in "Incentives and Compliance" reads: "If industry fails to achieve its job targets referred to in this accord, government will undertake a review of these provisions, and additional measures may be necessary to ensure compliance." Can the minister advise more specifically what this paragraph means? It's not clear exactly what the government has in mind here.

Hon. D. Zirnhelt: Most of the accord is about incentives. This is the stick, if you will. If we don't see progress on the elements in the accord, then government has the full range of licensing tenure issues to examine. It's not any more explicit than that, because it was a statement of intent. It was a statement that we recognized that we were serious about making progress towards these goals and that the whole purpose of Crown tenures, from the government's point of view, is to create the maximum employment we can get.

G. Abbott: I think we've thoroughly canvassed the jobs accord advocate.

The next paragraph, on layoff procedure, advises that "where a company intends to permanently lay off more than 25 workers, it will give notice to the jobs accord advocate of potential layoff four (4) months in advance of any intended action." Given that the advocate has just come on line, has the ministry been the de facto advocate to this point? If indeed it has, can the minister advise the number of times that this provision has been used?

Hon. D. Zirnhelt: I'd have to check for sure, but there's twice that we can think of here. They're the obvious shutdowns of facilities, or the reductions of more than 25, that the member probably knows about. Northwood is one; Canfor at Eburne is another one. Yes, the ministry has been providing that function to this point, and it will be turned over, now that the advocate is in place.

Noting the hour, hon. Chair, move that the committee rise, report progress and ask leave to sit again.

G. Abbott: I want to note that. . . . If possible, could we get started at 6:35 p.m.? The tendency has been for it to kind of slip back to 6:45 or 6:50. If we could get going at 6:35 p.m., given some of the constraints we have around the time of the House, that would be terrific from my perspective.

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. Lovick: I move that the House, at its rising, do stand recessed until 6:35 p.m. and continue thereafter.

Motion approved.

The House recessed from 5:55 p.m. to 6:36 p.m.

[The Speaker in the chair.]

Hon. D. Zirnhelt: I call Committee of Supply, hon. Speaker. In Committee A, it's the estimates of the Ministry of Employment and Investment. In Committee B, it's the estimates of the Ministry of Forests.

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

[ Page 8748 ]

ESTIMATES: MINISTRY OF FORESTS

(continued)

G. Abbott: If we move to page 12 of the accord -- and again, we've discussed this before, but I just want to get further clarification -- the final paragraph just above "Aboriginal and Treaty Rights," one sentence in that paragraph reads: "If an agreement cannot be reached for a region, the mediator will recommend a system to government based on the negotiating positions outlined above for that region, within fifteen (15) days of the end of the negotiating period."

What I'm looking for is more detail. We're obviously talking about the interior of British Columbia and a situation where the industry and government fail to reach agreement on how the displaced forest workers will be provided with the opportunity to work in the industry. We've talked about this before, but I want to know in more detail just exactly what that means. Do we have an idea of when the end of the negotiating period is, for example? What happens after that? What is meant by "the mediator will recommend a system to government based on the negotiating positions outlined above"? Could the minister clarify those two points first, please?

Hon. D. Zirnhelt: We have not written in stone a negotiating time frame. They are trying to conduct negotiations now; the mediator is there. He obviously can't recommend anything until there's a negotiating position submitted by both parties, but he will be endeavouring to get their positions and to monitor and facilitate the discussions. There's no time frame, but he is asked to report 15 days after. That's why he's involved now, so he knows the issues that are at hand. We're trying to facilitate and get an agreement on a timely basis.

G. Abbott: Could the minister identify the mediator for me, please?

Hon. D. Zirnhelt: The name of the mediator is Dan Johnston.

G. Abbott: That's right; I recall that name now.

So there is no fixed negotiation period. At the conclusion of that, Mr. Johnston will be recommending a "system" to government. Does that mean that he may recommend binding arbitration on the parties? Is that what is meant by "recommend a system"?

Hon. D. Zirnhelt: The system is how to achieve the objectives of a priority hiring system. The system referred to is to ensure a priority hiring system -- not another means of resolving it. We have not contemplated arbitration; we've just contemplated the mediation.

G. Abbott: If at some point Mr. Johnston feels that there is an impasse at hand, he will make a recommendation to the government: for example, that the current market-driven approach be used, a voluntary registry approach be used or an HCL model be used -- although it appears that the agreement pretty much rules out the latter. But that's the kind of thing we have in mind here -- that he will be recommending one of those things to the government and I guess to industry as well. What happens to his recommendation at that point? If his recommendation is not accepted by government and/or industry, what happens then?

Hon. D. Zirnhelt: The parties may well come up with a definition of a system. If they don't, he'll make recommendations to government. It may involve a system that requires assistance from FRBC to implement. If that's the case, assistance will be given. But what we would do is to consult with industry before we implemented a system that he recommended.

G. Abbott: I don't want to go over old ground, but given that it's June 15 and the mediator has not booked out of this discussion, so to speak, we're looking at least at sometime in July and perhaps August or September before he would be coming back with an alternative. I presume that, as we talked about earlier, in all likelihood the industry will be proceeding in the current year on the same basis that it has in the past in the interior.

Hon. D. Zirnhelt: They're proceeding without a system at the moment. If a system comes down, we'll try to get a transition to the system on an orderly basis.

G. Abbott: I want to change the subject a little bit, although not entirely away from the accord.

Another way to deal with the current malaise -- some would say crisis -- in the forest industry. . . . Clearly some stimulation is needed to help the industry to get back on its feet. The relief that's been proposed re the code and regarding stumpage is certainly something that I think will assist the industry in getting back. I am not at all convinced that the jobs and timber accord will do that. Obviously we've had a brisk discussion around that. But I think there's an alternative way to deal with the problem of the forest industry without going down the road of subsidy provisions and so on -- the kind of approach that is embodied in the jobs and timber accord -- and that is. . . . I'm interested in the minister's thoughts on this: an alternative approach would be to provide tax credits and tax relief to the industry, along the lines of the recently introduced film tax credit that was the product of some discussion in the Legislature earlier in the session.

[6:45]

Hon. D. Zirnhelt: The accord contemplated some kind of tax incentives around employment, specifically for women and aboriginal people. But I would have to say that the relief on payroll taxes amounts to tax relief in that category; it's in the same category. So the accord did contemplate that on a limited basis. The reduction in stumpage has to be seen as an incentive as well, and that's a big incentive. I think that's seen as perhaps the biggest incentive that has been packaged around this desire to maintain and/or enhance employment.

G. Abbott: I guess the issue is one of whether it would be a more systematic and thorough-going approach towards tax credits than the rather limited credits that are available in the accord. The question I have is whether the model of tax credits that's embodied in the legislation recently passed by this Legislature for the film industry might pose a reasonable model to pursue, in relation to providing incentives to industry to invest.

Hon. D. Zirnhelt: I believe the request from industry in the organized discussions that we had with them -- indeed,

[ Page 8749 ]

G. Abbott: That pretty much concludes my questions around the accord, unless my colleagues have questions -- and I don't believe they do. Now I'd like to shift gears and move to the Forest Practices Code and the recent changes to that. But before we do that, a couple of colleagues have questions which will probably occupy a relatively limited period of time, and then we can go on to the Forest Practices Code.

J. Weisbeck: I just would like some clarification regarding the log theft issue. The minister, in a response to a question on notice last week, commented that there were 440 compliance and enforcement officers in place in the field. I'm just curious to know how these individuals are selected and what sort of training they have.

Hon. D. Zirnhelt: I'll try to get some details of the training, but there's an awful lot of training involved. They're selected through a competition, if it's a new job. There were some compliance and enforcement staff already in place, but they go through a fairly rigorous training in the code and methods of enforcing the code.

J. Weisbeck: I'm more interested in the sort of investigative skills they have. I'm seeing a situation here where they've had 266 investigations, and I'm just wondering how many criminal convictions they actually incurred with these 266 investigations.

Hon. D. Zirnhelt: We do have that information available, and we will attempt to get it for you. But I'd like to explain that one of the reasons that there is a log theft squad in the RCMP is that they are the experts on criminal investigation. A lot of our compliance and enforcement isn't around criminal activity; it's around administrative law and compliance and enforcement -- in which case you have to know about forestry and environmental matters and be experts in that in order to be able to conduct those kinds of investigations. So their training is across the full range of collecting information about what might be a minor ticketed item, to an administrative penalty item, through to a criminal matter, ultimately. But where they need assistance in gathering evidence for a criminal matter, they do go to the RCMP and the local detachments who know about that. Perhaps regional detachments and regional centres have more information ultimately -- right up to headquarters.

J. Weisbeck: I know that there are four members that are attached to the log theft team, and it seems that there is a bit of an imbalance. You've got 440 compliance officers and four RCMP officers. You've got that number of investigations that are occurring out there and people that, obviously, aren't really capable of handling investigations. So I just wonder what the logic behind that is. Why aren't there more police officers out there, when you consider that it is the major problem out there in the forests?

Hon. D. Zirnhelt: The log theft team concentrates on advising and coming in when required in order to investigate things that might be beyond the local detachment. Theft items would be dealt with, if it's a criminal activity, by the local detachment. So the compliance and enforcement people do an awful lot of things that have nothing to do with log theft. They're dealing with a whole range of activities under the Forest Practices Code Act.

J. Weisbeck: In your statement, you commented that these officers and the field staff are in the woods every working day. I would like you to tell me exactly what the length of the work week is. Is every day of the week covered by these officers? For example, what happens on the weekends? Or does this whole thing shut down at 4 o'clock on Friday afternoon?

Hon. D. Zirnhelt: If we suspect that there are problems out there. . . . On a routine basis we have been asked that the schedules be varied, so that during the weekend and after hours there is some staff available on a priority basis. If there is a problem in an area, then they will do what they have to do to go out and collect evidence. So they're acting off regular hours. It is a matter of deployment by the compliance and enforcement people when they go out, and they do it on a needs basis.

J. Weisbeck: That's all I have on that.

I have one more issue here. I was sent a letter by one of my constituents, who is a member of a fish and game club in Kelowna. They have a cutting licence, so they've got a piece of property. They have a cutting licence to remove some trees from their fields for shooting, I guess, and they're very, very concerned, because they're a non-profit society. The high stumpage fees, of course, are creating some sort of impact on their bottom line, basically. Is there any relief at all from stumpage fees for non-profit organizations?

Hon. D. Zirnhelt: No, there's nothing, with the possible exception of the small operators' allowance, which small licences to cut can often qualify for. It's approximately $11 a cubic metre. If there's any question about the appraisal, it should be. . . . A letter to me can do it, or an approach by you to the district manager could kick in an assessment to see whether or not they've been granted that. But that's the only incentive, and that would go to all small operators, whether they're woodlot. . . . It's usually on a volume. . . . I think it's under 3,000 cubic metres a year, so it's under 90 loads. That incentive should already be built into the stumpage system.

I think you'll find that the problem is the lack of a private market for wood. When the demand is down, the major licensees that buy most of the wood are already using their own wood. It's also a price issue as opposed to just cost. There is no log market determination of stumpage price for the small operator.

R. Neufeld: Just a couple of issues surrounding forest development plans in the Fort St. John area as they relate to Treaty 8 negotiations. Maybe the minister -- so I don't have to ask a whole bunch of questions -- could bring me up to date on what the ministry has accomplished in discussions with Treaty 8 around the forest development plans for both Fort St. John and Fort Nelson.

Hon. D. Zirnhelt: I'm informed that we're progressing on a first nation by first nation basis on individual development plans and that we're still in the early stages of discussions of a more comprehensive nature. We're proceeding to do consultations so that, hopefully, we can approve the forest development plans on a timely basis.

[ Page 8750 ]

This brings to a head. . . . We could have Canfor actually closing down in Fort St. John and Taylor and curtailing an awful lot of work. We could have Slocan actually slowing down in Fort Nelson, for the same reason. As I'm sure the minister is aware, both of these companies log most of their logs in the wintertime. Just recently, I was in receipt of a letter to the ministry, stating that these development plans have not been dealt with even though everything is in place. I want to know what the Ministry of Forests is going to do to get these development plans signed off, new permits signed off, so that these companies can continue to cut where they're supposed to be able to and to provide the jobs that they do.

[7:00]

I assure you that we're aware of the jam that some companies might be in if they don't get approvals on, as I said, a timely basis. We just have to carry on and do what we can to get the consultations completed, however difficult that may be, and the companies have to help. District staff are working very hard on this.

R. Neufeld: All this was prior to Delgamuukw. Obviously, Delgamuukw has been another roadblock, but this is in a treaty area. We're already under treaty in the northeast, and this is not something that just became created because of the Delgamuukw decision. This was an issue long before that, and in fact, it goes back a number of years. What I'm saying is that with the oil and gas initiative and the funding of Treaty 8 with millions of dollars for consultation in the oil and gas industry. . . . What I'm told, and what is common knowledge in the north, is that they say they'll deal with the oil and gas because they are given money to consult. But they'll not deal with forestry cutting permits or development plans, because they have no money to do the consultation. I guess it's a catch-22 that the government is in today, because they made the agreement with Treaty 8 to start with, with funding for oil and gas, knowing full well what would take place in forestry. It wouldn't take a rocket scientist to figure out that it's going to rebound fairly quickly. So I want to bring to the minister's attention that it is very serious. We are under treaty, and if they don't want to negotiate. . . . If you've met all the rulings of Delgamuukw, as the minister says, and if you've met all the Forest Practices Code issues, we should be able to go ahead instead of having people sit idly by. I'd hate to see what would happen if hundreds of people were laid off because somebody wouldn't negotiate. I think that would be very difficult to deal with.

The second issue is the increase in the AAC and the proposal that was put out in the Fort St. John and Dawson Creek district. Has that been awarded, or is it in the same glue that the development plans and all those issues are? I say that knowing that Canfor and the minister have made an agreement with the West Moberly band -- who, by the way, are fully in agreement with Canfor and are partnered with Canfor in their proposal. I just wonder where that proposal is and how we can deal with it.

Hon. D. Zirnhelt: I'll answer the last question first. I expect a briefing note, a decision note, on that particular item within a week, I'm told by the people who are preparing it for me. It is not caught up in the glue, as you said. It's not; it's going to proceed.

On your first question around the approval of development plans, I now have the staff that are charged with that responsibility. We expect to approve Canfor's development plans imminently. So again, we have two things happening. We're carrying on with business, knowing there's a treaty there and knowing that the treaty is somewhat limited. Delgamuukw really isn't related to this treaty land. On the other hand, we are working to develop a consultation protocol with Treaty 8. It'll be different but will encompass the same objectives of expediting consultations, such as we have on oil and gas. A consultation protocol is what we're working on with them so that there will be an agreement.

G. Abbott: Just in terms of cleaning up a couple of the issues that we've put off at one point or another through the estimates discussions. . . . I mentioned this morning the statutory obligation of the Ministry of Forests to produce a five-year resource program, and I discussed previously that the five-year forest and range resource program, from 1997 to 2002, unlike the preceding five-year block, had not provided the five-year schedules of goals for basic and incremental silviculture, etc. The minister mentioned this morning -- or it appeared that he was saying this -- that that was now a matter of convenience, given that Forest Renewal B.C. was doing some of the same things and that it was felt to be an overlap and duplication for the province to do that. I'm still puzzled as to why the statutory obligation in section 8 of the Ministry of Forests Act is not being met. Is a change required in the statute, eliminating that requirement from the ministry? Or is something else at play here that's not clear to me?

Hon. D. Zirnhelt: The ministry still retains statutory obligations around the approval of silviculture plans and prescriptions and other works that require some kind of standard. We're still the adjudicating body with respect to whether it's appropriate. What I said was that the planning activities

[ Page 8751 ]

G. Abbott: Again, because this has been a concern that's been raised with me a couple of times now, the 1992-97 program shows five-year schedules for basic and incremental silviculture, with target areas, treatment areas and so on. The 1997-2002 program here carries no schedules. It's my understanding that those schedules are a statutory obligation for the ministry to provide in this resource program. Could the minister advise why that omission occurs, how it can occur and whether the statute needs to be amended to comply with changes in practice?

Hon. D. Zirnhelt: I think I've got it. What section 8 requires is that there be a program recommended for implementation during the five-year period. The way it used to work is that options would go to cabinet, cabinet would pick a funding option, and then it would become part of the plan. What happens now is that the options are considered in a different vein, because they are administered and achieved through cooperative ventures between FRBC, the ministry and industry. So they consider the options at the planning table. Once those options are agreed on, then they become part of the budget, which would be the budget of the. . . . If it's FRBC and if they're funding it, they're the ones that put it in their business plan.

G. Abbott: More precisely, just to pursue that, is it accidental or deliberate that the schedules that appeared in the 1992-97 program are no longer appearing in the 1997-2002 program? There are some people -- and I think some professional foresters in particular -- who like to look at those and form some conclusions around them. But they don't appear in the most recent forest and range resource program. It's a departure from the past, and I'm wondering why that is.

Hon. D. Zirnhelt: Well, those goals are achieved through FRBC's expenditure and business plan. That's why those equivalent schedules will appear in FRBC's business plan now -- because they're the ones that are funding it.

G. Abbott: I don't want to continue on this one. If the minister is satisfied that the statutory obligations are being met and that those schedules could not usefully appear in the five-year forest and range resource program book, then that's fine. Obviously others have a different opinion and would find it useful to have those contained within that document as well. But I'll just leave that with the minister, because I don't want to take up the rest of the night dealing with that issue.

If we could turn to the code now, I think it would be useful if we could deal with some issues around that. Are the appropriate staff in place for that purpose?

Okay. If I could begin, then, this is a question one of my colleagues has asked me to pose; he's not able to be here. The issue is deactivation of roads as required under the code and a concern that, although ministry staff are apparently required to contact mineral tenure holders prior to deactivation, in fact they are not doing that -- at least, not on any sort of systematic basis. Our Mines critic, who has asked me to ask this question, notes that he personally has received in excess of a dozen complaints of damage to drill holes, disruption of trenches, etc. So this is an important issue, obviously, for those who have mineral claims and have expended funds in order to put those in place, only apparently to have them disrupted or destroyed as a consequence of deactivation of roads. Is the minister familiar with this problem? Is the ministry -- perhaps in consultation with the Ministry of Environment -- undertaking any program to mitigate this problem?

Hon. D. Zirnhelt: Over the dinner hour, I spoke to the member who gave you that information, and I asked him to get tenure-specific information that we could follow up on. It does seem to be a bit irregular, but I know it happens sometimes by mistake. I've been out on a range tenure and found a road had virtually disappeared. You know, this can happen. I think it's sometimes a matter of the roads not being recognized as being active, and maybe glitches in the mapping and so on. We're happy to pursue those particular specifics. I think there are ten or a dozen, and I asked the member to give me the details. We'll follow up on that.

G. Abbott: I want to ask a general question about the five-year silviculture plans and logging plans associated with the code. What occurred earlier in the spring, with the announcement by the minister and the Minister of Environment about the streamlining of the code, was that -- theoretically, at least -- six operational plans were being reduced to three operational plans. One of the criticisms which I've heard, although. . . . Let me put it into context. Generally, these changes are seen as in the right direction but not nearly substantial enough.

The concern here is that, although six operational plans have been reduced to three, many of the elements that were contained in the six. . . . Of the three plans that have been theoretically eliminated, much of the content of those three has been rolled into the remaining three. So I'll ask the minister to begin here in our discussion of the code by explaining what elements have been removed. How is the removal of those elements going to contribute to the saving of $5 a cubic metre?

[7:15]

With the logging plan, a few of the elements, particularly areas of environmental sensitivity, were transferred to the silviculture prescription, and we eliminated the access management plan. It was consolidated. As I say, these particular streamlinings were a minor amount of the savings. Just by way of background, I think it's fair to remind you that there were some 20 policy, legislative and regulatory changes that would lead to the $5 savings. It wasn't all code-related.

G. Abbott: Among most people in the industry I have talked to in past months, the conclusion is that while this is a modest step in the right direction, the saving they can see from their analysis of not only the code but also of other changes that have been brought into place in recent months is possibly, at best, a saving of $3.50 a cubic metre. In fact, it will be probably one to two to three years before even those modest savings are achieved. The minister may disagree, for I know that the official position of the government is that the

[ Page 8752 ]

Hon. D. Zirnhelt: Yes. If we started last year, which we did on things like the five-year silviculture plan, it will take until the end of '99. It will take three years to get the full savings. So you have to add green-up matters to the $3.50 figure you are using. The matter of the wood ahead is fairly significantly -- in some areas it's more and in some areas it's less, so it's an average figure. That's where the saving is at, up to the $5.

G. Abbott: We've had some discussion throughout these estimates about a process-oriented code versus a results-oriented code and so on. I would be interested in the minister's comments with respect to that matter in a general way. With his staff, he works with the code on a daily basis. For that reason, I suspect that he would have an acute appreciation of its strengths and weaknesses. Even after the changes that are announced and anticipated, does the minister still see a necessary process in the code, and is further streamlining of the code anticipated?

Hon. D. Zirnhelt: I think I may have explained before that I did ask: who put forth a results-based code? The answer was no one. The professional foresters themselves are working on trying to accept more responsibility. It isn't easy to go from process to results overnight. In theory, everybody agrees that it's results that we want to deal with. But as we build up the confidence, we can set results and measure them and enforce them. I think that's fine, but we've had to bring in amendments to the act so that it is in fact enforceable. In the end, this is one of the problems. If you don't have an enforceable code, there's no point in having it. It does require that if you need it, the power is there.

I'm very interested if any professional forester wants to put forth a system that safeguards the public values and that's good forest stewardship. I'm receptive to that. The RPFs' organization hasn't done that. In fact, the industry groups I've worked with haven't put forward a results-based code. So if anybody wants to put something forward, they should do that. We're certainly interested, because we are committed to results. We still have to see somebody suggesting what it might look like. The invitation is open.

G. Abbott: Does the minister see any merit in a possible -- if simple -- alternative model in the code that is being proposed. . . ? I've seen the draft of it -- the draft for the private forest lands -- as I'm sure the minister has.

Hon. D. Zirnhelt: The only problem with the private land model is that it doesn't go as far in terms of protecting biodiversity and other environmental values. It is recognizing that those values are achieved on the rest of the land base, and therefore it's not as critical to achieve them with the private land. You'll note that even in those, there's a recognition that if that's the only place that there is a certain habitat for endangered species, then there may be some requirement to provide for that. So I think that knowing that it's a simplified standard on private land, we have a different and more elaborate standard and larger landscapes on which to achieve those on public land.

Having said that, we would like to see the private land people actually implementing the spirit and the letter of those draft regulations. Maybe in doing so, we could then examine the results and say: "We're going to achieve what we set out to achieve under the code." I think the objective of the code is to protect a high level of biodiversity where required on somewhat larger landscapes and over a much larger and, I think, wider range of biological and geographical situations. Most private land is on relatively easy terrain. We have a challenge with the code on the tougher terrain of public lands.

G. Abbott: I don't necessarily disagree with any of that. I do think, though, that we shouldn't underestimate the model as a model. I share the minister's view that it would be interesting to see a private land code in operation, to see the results of that. Over time and through experience we may find that the ideal workable code or model falls somewhere in between the 40-some pages, I think, of the private land code versus -- and I'm not even sure what it is now -- 1,700 pages or whatever of our Forest Practices Code. We may find that we can possibly distil the results into a far smaller text than has been achieved to date with our Forest Practices Code, notwithstanding the distillation that has occurred in the recent changes.

One of the other important issues that I want to pursue with the minister is the way in which the code is administered. The essential co-administration of the code by the Ministries of Environment and Forests has always caused me to wonder whether that was the most efficient way to deal with it. It seems to me that even though the Premier's deputy minister, Doug McArthur, made some fairly bold statements around treating the industry as our most important client and so on, and that while in a cultural sense the Ministry of Forests may be able to move in that direction, I'm not so sure that we have seen the same inclination for a change of culture in the Ministry of Environment. It seems to me -- at least this is the story we hear on an almost constant basis out in the real world -- that the licensees frequently find it difficult, if not impossible, to deal with some of the bureaucratic resistance they see in the Ministry of Environment.

Could the minister comment -- candidly, I hope -- on his perspective with respect to the co-administration of the code and on any problems or issues that surface around that? Are there efficiencies that could be achieved through streamlining the administration of the code so that the designated Environment officials don't have to sign off on the full range of issues that they do now?

Hon. D. Zirnhelt: The comments made by the deputy minister to the Premier, when launching the code changes, said that the Ministry of Environment -- who were in attendance, along with their deputy minister and other program managers. . . .

It became clear that we had to consider the forest industry as a client. The Ministry of Environment has other clients -- fish and game clubs, the public of British Columbia -- and has stewardship responsibilities. It's getting the culture right around approvals on a timely basis, so that the requirements of the legislation that the Ministry of Environment undertakes -- or at least is there to protect -- and the objectives that it's supposed to achieve get the proper blending. If there is a delay, a reconsideration of something, it's for a good reason and not just purely bureaucratic. There is a public policy, a legal or substantive environmental protection or a forest protection measure there. It might be something as simple as soil erosion, which in the end may affect fish, but would affect the very productivity of the forest land base itself.

We will be looking for efficiencies, where we will have a minimum amount of key officials involved in a decision, but

[ Page 8753 ]

G. Abbott: One of the suggestions I have heard is that while the Ministry of Forests, for example, committed to the two-year standing timber inventory -- and committed to it in writing -- the Ministry of Environment did not. Is that correct?

[7:30]

It's our view that they have to facilitate the two years' wood ahead, given that there are limits. It's not just two years if you apply; you have to apply with plans that are consistent with the code, and there are restrictions on what they can do in development plans. Having said that. . . . If they give applications that can be approved, then they will be. There are concerns around workload and so on. To do the job properly is quite a tall order, but we're still determined to do that, and we will assist the Ministry of Environment by providing information, if they need it, upon which to conduct approvals.

G. Abbott: I do hope that the government engages in this drive for administrative efficiencies in a serious manner. I hope that as they proceed with that drive, it is not a matter of looking at it as an incremental or tinkering exercise, as opposed to looking at the fundamentals.

I'll make the case here, as I see it. One of the big problems with the way the Forest Practices Code has been put in place in British Columbia is that it is based on a premise of check, counter-check, distrust and a constant watching agenda. We have, for example, the professional foresters in industry having their plans second-guessed by professional foresters, technicians, and so on in the Ministry of Forests. It seems to me that in turn, the Ministry of Forests personnel are being double-checked by the Ministry of Environment. This whole system has produced -- and hopefully, to some extent, this is currently being addressed -- very costly delays and inordinate amounts of expenditure on planning processes which I don't think are necessary.

In my view at least, the government doesn't employ teams of lawyers to double-check and rethink legal opinions that are furnished by the legal community around the province. We don't employ teams of doctors to second-guess the diagnoses and prescriptions that any doctor may provide. Yet with professional foresters, we do seem to have built into the system a distrust that says that everything -- right down to silviculture prescriptions for individual cutblocks -- has to be double-checked and, in fact, triple-checked if the Ministry of Environment comes into play. This is all about saying that if we're going to rethink the efficiency thing, let's rethink it in fundamental terms.

Why do we need the Ministry of Environment to check on the Ministry of Forests? If it's a training issue, then we'll work with our Ministry of Forests personnel to make sure that they are in tune with all of the issues that may be of concern from an environmental perspective. But I think that there really needs to be something more than tinkering at the edges. There needs to be a fundamental rethinking to see if we can deliver the administration of the code in a much simpler fashion. It would not only be a saving for government by taking out that extra loop; I think it would constitute a significant saving for the industry as well. I'd be interested in the minister's comments on that.

Hon. D. Zirnhelt: I think that we should remember where we came from. We had some horrible logging practices in the past, and the public said: "We want assurance that that won't happen again." There was damage to water, fish and soil and, in some cases, very extensive damage to habitats -- and no regard for other users of the forest, whether they be people who use the game or people who use tourism facilities and look at viewscapes. So there were legitimate reasons why we brought a code into place.

What we've done is say: "We won't second-guess the methods of achieving your silviculture objectives." So we're allowing the registered professional forester to sign that off. But he has to bear in mind, when he signs it off, the regeneration of that forest and what it provides in terms of habitat, protection for community watersheds and that sort of thing. Even if you had only one ministry of natural resources, you would still have the same tensions within different units, because you have to have watershed specialists and wildlife specialists -- and not every RPF can be an expert in all those things. I think we're moving in that direction in terms of education; there are more wildlife biology courses. Ultimately perhaps, the public will be prepared to accept the sign-off of a RPF on a broader range of environmental and forest conservation matters. I would love that day to be today, and to the extent that we can have some of that, we are moving in that direction. The RPFs have undertaken to train their own people in a broader range of public values that are implicit in approvals of, say, silviculture prescriptions. We moved in that direction; I think we've moved as far as the profession is ready to take it. When we're ready to take it further, I think we can. The challenge to government is to change the culture of approval so that it's more cooperative. We are achieving that integration at the level of the assistant deputy ministers in charge of operations in Environment and Forests. They're working together. I'd say that even if we were one ministry, you'd still have the forestry operations people and probably the habitat conservation people as specialists that had to work together. So I'm not sure it's a matter of two ministries; I think it's a matter of how and where we reconcile competing interests on the land base.

G. Abbott: The whole upshot of what I was saying is that as you go into the exercise of rethinking the administration of this thing, don't assume that it's necessarily an advantage or a problem. Go into it with the view: "Let's look at the fundamentals here; let's not just look at possibly massaging the system here or there." If it's possible that the system can be improved by expanding the role of Forests and contracting the role of Environment, then that may be an advantage. I think that we need to move into it in that frame of mind, if real changes are to be made.

One of the concerns that has been raised with respect to the anticipated savings from the reorganization of the code is that any savings that might be achieved between now and 1999 or the year 2000 may be offset by new initiatives that may be overlaid or included in the code. In particular, there are concerns around some draft policies that, initially at least,

[ Page 8754 ]

I want to run through some of these because I'd like to know precisely where these draft policies sit in terms of the likelihood that they are going to be added to the code and, as a consequence, will add to the administrative burden, the costs and availability of timber, and so on, down the line. Could the minister, for example, tell me where the identified wildlife management strategy sits, in terms of its inclusion in the code?

Hon. D. Zirnhelt: Yes. Our objective is to not impose any additional costs. We still have a responsibility to achieve a high level of environmental protection under the code. Industry wants to know what the rules are, and we have given a target of impact of the code. We are sticking with the original target of the impacts. We've noted industry's concerns. We've done some revisions to the identified wildlife management guidebook. We're still trying to refine it to a point where we're comfortable that it will achieve the objectives and do so at no additional costs.

G. Abbott: Are the foregoing comments from the minister, then, indicative of a draft policy which remains a draft policy which continues to be refined? Or is this something which we are going to see added to the code in the foreseeable future?

Hon. D. Zirnhelt: Well, it depends a bit on what happens with respect to the federal government's initiatives on endangered species. It's our view that it's better for the province to integrate the economic and biological objectives and conservation issues into our own economy than to allow the federal government to do it. I think industry recognizes that it's better that we use our code and guidebooks under our code than have a federal law imposed. Our view is that we can achieve the protection for wildlife with the appropriate guidebooks, bearing in mind that the guidebooks themselves are just that. They are guidebooks and not part of the regulatory regime, but they are important to help resource managers in doing their planning.

G. Abbott: The note that they will be guidebooks, as opposed to statutory regulations or regulations pursuant to statute or whatever. . . . Nevertheless, when the rubber hits the road and a cutting permit plan is submitted by the industry, if there is something in the proposal which appears to offend the strategy or the guidebook, it very quickly becomes something that has to be shifted or the application is not likely to be approved.

Has the ministry costed out what it's likely to mean to the industry if, depending on what the federal government does, the strategy is introduced?

Hon. D. Zirnhelt: The budget, if you will, for identified wildlife impacts is approximately 1 percent of the cut. This was within the original target of 6 percent, so it's 1 of the 6 percent.

G. Abbott: I want to ask the minister, as well, about the guidebook on coarse woody debris. I gather that the concern here is around the volume of debris that's left on logging sites and that this guidebook would be another addition to the code. Could the minister advise where this draft policy sits, in terms of its possible inclusion in the code?

Hon. D. Zirnhelt: Yes, it is a policy. There is no regulation in mind right now. It's part of the guidance needed to achieve the biodiversity and balance between biodiversity and utilization. Where it stands right now is that we're piloting it. We have a number of pilots, with industry being involved, so we're trying to properly assess how to bring it about in a cost-effective manner. No implementation decisions have been made on this yet.

[7:45]

Hon. D. Zirnhelt: We're still working on the guides. What we've done is establish boundaries for the landscape units. We've got strategies in place to implement landscape unit planning. We're refining the objectives for the landscape unit plans. Keep in mind that the overall intent is to allow the blending of five-year development plans and cutting plans, such that over the landscape we can achieve the multiple objectives that are out there -- which should make it easier for individual cutting plans, because you know that in this landscape you've provided for certain values. It is to be an aid, and it should facilitate development planning on an expeditious basis.

G. Abbott: With respect to the code, could the minister advise whether any change in the definition of what constitutes a stream has been achieved or contemplated? And if there has been that change, what implications does that have for the code?

Hon. D. Zirnhelt: What we've done is clarify the definition of streams. We've added no additional streams. The changes were made to reflect the original intent in the code.

G. Abbott: All of those issues that I've just mentioned -- the possible additions to the code, the identified wildlife management strategy, landscape unit planning guides, course woody debris guidebooks and so on. . . . Has the minister got a sense of what the cumulative cost of those things is in relation to the code? Are we talking about a couple of bucks a cubic metre? What magnitude would the minister anticipate?

Hon. D. Zirnhelt: Some of these would facilitate planning and would have no cost. Some of them have to be achieved within the budgets that are already set out there. The policy is to not impose any additional costs on industry.

G. Abbott: As commendable as that goal is, I'm not sure that that's going to be possible, given the nature of it. If the guiding principle has to be -- and I guess this has been the theme of these estimates -- that we need to do these things to make the industry more competitive, we can't be trying to reduce the administrative burden on the one hand, and on the other hand, adding to it. I do hope we will see from the ministry some fundamental thinking about how to achieve new ways of doing business in the forest, particularly on the administrative end.

Our time's running relatively short here. I want to get a quick update from the minister on the Vancouver Island land use plan. As of last March, there were a number of anticipated

[ Page 8755 ]

Hon. D. Zirnhelt: As the member knows, we've gone through the public input stage. We anticipate finalizing it by the end of the summer.

G. Abbott: Just to conclude on that matter, a former Premier of this province at one time said that there wouldn't be a single job lost as a consequence of the planning process. Does that still remain the goal of the ministry?

Hon. D. Zirnhelt: Well, we're debating many of those things. I think the words were: "There won't be a forest worker that doesn't have an opportunity to work in the woods after the land use plan." We're actively ensuring that they do have an opportunity, but as you know, we do have to grow the jobs in the value-added sector. There are going to be all kinds of opportunities to create forest-related employment once the plan is there. The plan will bring more certainty.

G. Abbott: I don't think the former Premier put it in quite those terms. He was rather more definitive and bold, given that it was some years down the line before he would be held accountable for it. The level of complexity in the documents associated with the plan is quite astonishing. They have been the product of public consultations and so on. Hopefully, what we'll see in the end is something that people will be able to work with and something that won't kill too many jobs. I think it's bound to kill some in the way it's been done.

I also want to ask briefly here -- given the time frame -- about one narrow stumpage issue, and that is the issue of stumpage in arrears. Could the minister advise what the current situation is with stumpage in the province? Do we have a lot of stumpage owing at this point in time in British Columbia? How much is it at this point in time? I guess you're probably awaiting the right staff.

Hon. D. Zirnhelt: We're awaiting the staff. They'll be right here, and I'll deal with that.

In the meantime, I do have one matter that I think is important for the record. The member for Cariboo North asked about a woodlot which was retendered after it was cancelled. I just want for the record to know that on September 24, 1993, a Mr. Foley was convicted by the Supreme Court of B.C. of fraud in relation to a number of forest agreements, including woodlot 226. On March 12, 1996, woodlot 226 was cancelled due to non-payment of outstanding debts. On November 2, 1996, the B.C. Supreme Court ruled that Mr. Foley must follow an administrative review process. On February 20, 1997, the administrative review appeal period was extended. On April 29, 1997, the regional manager supported the district manager's cancellation decision. In September 1997, the forest appeal board supported the district manager's cancellation. In December, then, the new woodlot opportunity was advertised.

So it should be noted that the woodlot was not advertised, and after the administrative review process was completed -- but subsequent to the woodlot advertisement -- staff were notified that Mr. Foley had appealed the cancellation to the Supreme Court. Upon notice, the district manager committed that the award of the new woodlot licence would not take place until the Supreme Court decision was made. So Mr. Foley is eligible to apply for the new opportunity, and there has been extensive discussion around this matter and assurances given that there won't be an award.

On your previous question about accounts in arrears, on May 31, 1998, the overdue accounts receivable was $120 million. Interest is charged on overdue amounts and action taken to collect the money. The auditor general, in his 1996-97 report on public accounts, said: "In general, the government has built strong controls into the forest credit management system. The Ministry of Forests has an effective collection procedure."

Historically, the amount of bad debt written off each year as a ratio to revenue is 30 cents accounts receivable per $100 of revenue claimed. This is very low. But spring breakup is always a factor, and a good number of people do go into arrears. We try to be reasonable in administering it. It all depends on whether there's an expectation of collecting and how soon we have to act to secure what is owed government and the taxpayer.

G. Abbott: Is the $120 million that was in arrears as of May 31 an unusually large amount? For example, could the minister compare it to May 31, 1997? Is the $120 million also a reflection of the difficulties currently facing the industry?

Hon. D. Zirnhelt: We haven't noticed a difference with a number of the small licensees, but a number of the large licensees have asked to make payments over the summer. It is higher than last year, and one of the factors is the state of the industry. The other factor is breakup and how long breakup was before they had revenues flowing.

G. Abbott: What was the comparable figure for 1997?

Hon. D. Zirnhelt: We do have that figure. For May '97 the figure was $63 million.

G. Abbott: Obviously it's a fairly staggering difference year to year -- from $63 million to $120 million.

Could the minister advise. . . ? He said that generally 30 cents on $100 is the write-off figure. Was that the case in 1997 as well? Or again, due to the difficulties facing the industry, particularly in the latter part of '97, did that 30 cents on $100 figure rise in '97?

Hon. D. Zirnhelt: The 30 cents on $100 that I gave you is the average over a few years. We don't notice a large difference. What I explained is that because of breakup and because of the state of the industry, a number of the large accounts asked for more time. That's what the difference is here. We don't consider those as bad debts; on the contrary. . . .

G. Abbott: The $120 million that is owed as of May 31, though, is presumably a cumulative figure. That is the total, over time. Is that correct?

Hon. D. Zirnhelt: That's the total sitting at that day, and we don't consider those to be high risk. That increase is not a high risk.

G. Abbott: Could the minister advise what portion, if any, of the outstanding stumpage, as of May 31, is from Skeena Cellulose operations?

[ Page 8756 ]

G. Abbott: Can the minister advise whether any of Skeena's outstanding stumpage has ever been written off?

Hon. D. Zirnhelt: No, not in the last four years.

G. Abbott: On a little different note, back when Skeena was Repap -- back as far as '96, at least -- the Repap-Skeena operation had been looking for stumpage relief and had been working through the Interior Appraisal Advisory Committee to try to achieve that. It took them, I guess, until January of the current year to actually see the implementation of something they had been looking for for some time. Can the minister advise what the reason was for the delay in the implementation of the Repap proposal?

[8:00]

G. Abbott: I was certainly familiar with the fact that it affected others. The situation at Evans Forests Products, of course, was an issue where stumpage came into play as well. I know that Evans was trying to work with Repap to get those changes. I guess there are some similarities in the challenges that those two organizations faced, in terms of terrain and climate and difficulty of accessing timber, and they were looking for stumpage relief to reflect that.

I think that pretty much covers things off. The one small matter here is the issue around. . . . Has Forest Renewal or New Forest Opportunities negotiated a dollar figure associated with the items in the IWA checkoff we talked about earlier? Has the minister been able to come up with that?

Hon. D. Zirnhelt: The union dues are two and a half times the base rate. So two and a half times $17.17 an hour is $42.92 monthly. The initiation dues are two times the above, which is $42.92. That's one time only, for a total of $85.84. These arrangements came about after the collective agreement was negotiated, and it was done in consultation with NFO. It's the IWA's standard approach, and it compares to the industry standard.

G. Abbott: One final issue, which was raised but which I didn't get a figure on, is the communications/advertising budgets for New Forest Opportunities and the jobs accord advocate.

Hon. D. Zirnhelt: We don't have a communications budget yet for the jobs advocate. He is still working on his workplan. I can't imagine it being very much, just what's necessary for people to know that the service is there.

I did read the NFO budget into the record, I believe, and as I recall, it was $80,000.

G. Abbott: That's right. The minister did that, so pardon me for forgetting that for the moment.

That concludes the questions I have in relation to these estimates. I think it concludes my colleagues' questions as well. The one item I look forward to receiving in the near future is whatever the minister can provide in terms of the job curtailment numbers. Again, in the interests of getting out information, which should be of concern to all of us, I do look forward to receiving that.

I think the notion that the opposition should be going to freedom of information to access that sort of information is not a good approach. Regardless of whether it's something that flatters or embarrasses the government, I think it is pretty fundamental that if we in this House are to make informed and well-advised decisions on issues related to forestry, all members should be provided with that information.

In conclusion, I would like to thank the minister, and particularly the minister's staff, for providing, generally speaking, quick and thorough responses to the many questions that I've posed. I thank you for that.

Hon. D. Zirnhelt: I would like to thank the member for his helpful notice on as many of the questions as he could give us. I will provide those; I have details available.

With respect to the job curtailment numbers, we have been able to work it through, and we have some information that is available, which I will provide to you. The information does have some firm-specific information that we have had to eliminate. But the numbers are available, and how they relate to other numbers that are out there will be provided.

There has been a lot of concern about forest communities and people working in the industry. In these hard times, government is concerned that we work and do everything we can to get employment re-established. It isn't going to be easy. We're facing a lot of challenges, particularly in the marketplace. But we're going to pursue every level -- whether it's the salvage program or the small business program -- to get fibre in the hands of people who have an established market. Hopefully, when the industry recovers, those fibre flow patterns can remain and be part of a more diversified industry. So we're determined to get the code cost changes and the structural changes, and to deliver efficiencies with respect to the administration of the forest. I'd just like to add, finally, that FRBC is committed to establishing as many year-round jobs as we can in communities close to where the people live.

With that, I'll conclude my comments and call vote 44.

Vote 44 approved.

Vote 45: ministry operations, $258,334,000 -- approved.

Vote 46: fire suppression, $78,865,000 -- approved.

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

Motion approved.

The House resumed; the Speaker in the chair.

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

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

[ Page 8757 ]

Motion approved.

The House adjourned at 8:09 p.m.

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The committee met at 2:36 p.m.

ESTIMATES: MINISTRY OF
EMPLOYMENT AND INVESTMENT
AND MINISTRY
RESPONSIBLE FOR HOUSING

Hon. M. Farnworth: It's a pleasure to rise today to speak in the debate on the estimates of the Ministry of Employment and Investment for the 1998-99 fiscal year. This is the lead provincial agency for creating and protecting jobs across British Columbia. It is a ministry that has a wide variety of components and parts to it. We deal with a whole host of issues. Clearly, economic development is one of them, and I think it's one that comes to mind when you look at the name. It also encompasses a whole range of other agencies and tasks, including what I believe we're dealing with today, the Insurance Corporation of British Columbia. As well, it deals with B.C. Hydro, B.C. Housing, the Gaming Commission and a host of other agencies.

I look forward to the next number of days as we go through the estimates. My officials will be here to hopefully answer all the questions that my colleagues in the opposition have. If we don't have the information at our fingertips, we'll certainly do all we can to get that information for them. So I look forward to an interesting estimates debate and turn the floor over to them.

T. Nebbeling: First of all, I'd like to thank the ICBC delegation from the city, who have come over here. I believe you were already here last night, because I saw you on Shaw Cable, I think, answering many of the questions that I was going to ask you today. For that reason, we can keep it fairly short; we're not going to keep you here for days on end.

Yes, these are going to be interesting estimates, no doubt, because besides ICBC, obviously we're going to look at a number of other areas that the minister is responsible for: jobs, investment. . . . I believe you have received my agenda that I gave your staff this morning, so that we can have staff here for B.C. Hydro and the B.C. Lottery Corporation, so that they don't have to hang around unnecessarily.

Of all the Crown corporations -- besides gaming, the B.C. Lottery Corporation and the various agencies associated with it -- I think ICBC has been receiving the most press. It's still not clear to me whether this is because of the enormous amount of money that has been spent this year on promoting how well ICBC is serving the citizens of British Columbia or if it is because of the various programs that have been introduced by ICBC recently, which have created a fair amount of bad blood in that same community and amongst the same citizens. I hope that at the end of this segment of the estimates, we will be able to identify what has caused this exposure of ICBC as a Crown corporation and its responsibilities.

I, like the minister, will spend little time on speaking, due to the focus on the issues. Talking about some of the programs, I would like to ask a quick question on one before I hand over the mike to my colleague from North Vancouver-Seymour. One of the introductions you made was the crash responsibility charge. Can the minister tell me how much money the ministry expects to receive through that program?

Hon. M. Farnworth: Approximately $13.2 million, but it won't all be coming in this fiscal year.

T. Nebbeling: How many claims does ICBC handle on an annual basis? How many of these claims have an element of fault that would lead to a driver being asked to contribute to the so-called crash responsibility charge?

Hon. M. Farnworth: There would be approximately 130,000 claims, of which half, I think, would be attributable.

T. Nebbeling: Does this money go into the general revenue of ICBC, or is it set aside for a specific purpose?

Hon. M. Farnworth: General revenue.

T. Nebbeling: So it's just another hidden charge to anybody involved in an accident.

In general, when people take out insurance, under the liability clause, is the first $100 or $250 automatically the cost for whoever is found guilty?

Hon. M. Farnworth: That is correct.

T. Nebbeling: This is another form of fee that is collected at the time that somebody is involved in an accident. If there is a dispute about fault, who would ultimately have the final decision? Is it the ICBC adjuster or whoever happens to file it, or is it an independent or outside body?

Hon. M. Farnworth: The ultimate arbitrator would be small claims court.

T. Nebbeling: In section 64.1(4) of the regulations there is a statement that this amount of money has to be paid on demand to the corporation. The corporation then considers it as a debt. The person who was involved has to pay it. What happens in a case where somebody refuses to pay and goes to arbitration, and arbitration takes a fairly lengthy period of time to get through it? In that period of time he or she has to renew their licence. What happens to that individual?

Hon. M. Farnworth: The program is fairly new, so that situation hasn't happened. If it were to happen, you wouldn't be invoiced until the entire issue had been resolved. If it took a lengthy period of time, then so be it. It wouldn't impact.

T. Nebbeling: Two points, and then maybe the minister can provide me with his facts, rather than what we think. The cases where this clause comes into effect where the individual has to pay an additional $250. . . . I would like to have the real percentage of the total claims that come. The second one that I would like to have a more specific answer on, which is maybe also for later, is this debt issue. If you claim this $250 charge as

[ Page 8758 ]

[2:45]

D. Jarvis: Last session, the minister at that time committed to deliver data to the official opposition establishing the claims paid in various regions -- the total dollars paid in claims in various regions versus the amount of the premiums collected in the same region. To date we haven't received them. I was wondering if we could get a commitment now that you will give us that information.

The Chair: I remind the members to please direct their comments through the Chair.

Hon. M. Farnworth: Hon. Chair, I understand why the member may want those exact figures. I can inform him that there are some significant competition concerns on the part of the corporation. So I can give him some general ideas, but I am not in a position to give him the exact figures.

D. Jarvis: We are not asking for the exact figures, to the penny. If he wants to round them out to the nearest thousand dollars, that's fine. I look forward to that information.

Again, in the last session we discussed the corporation's high level of unexplained absenteeism -- that is, what you'd call sick leave. The official opposition was very surprised to learn that ICBC has no target for reduction of these costly situations or problems. I'll ask three quick questions here and see if the minister can. . . . Has ICBC developed a plan for reduction of unplanned absenteeism? What is the target? What is the current rate, the percentage of unplanned absenteeism?

Hon. M. Farnworth: Last year the figure was about 3.78 percent, which is down slightly over the previous year, which at that time was 3.82 percent. The goal or the plan of the corporation is to get it down below 3 percent.

D. Jarvis: Again a discussion we were in last year: one of our members was criticized because he used to be an employee of ICBC, and it was suggested that perhaps he shouldn't ask the questions. So I asked the questions last year. I was promised an answer, which I have never received. I just want to know if the minister would please let us know this time: how many managers has ICBC terminated in the past year? What is the total cost of the severance settlements and/or judgments?

Hon. M. Farnworth: There were 12 terminations, hon. member, for a total cost of $425,826.

D. Jarvis: I am wondering if the minister could. . . . I'll explain first of all, minister, that time is limited. . . .

Hon. M. Farnworth: I just want to clarify. I may have inadvertently given you the incorrect figure, and I wouldn't want to do that.

D. Jarvis: Oh, too low?

Hon. M. Farnworth: God, you're astute. Yeah, $662,500.

D. Jarvis: I understand that was $600,000-plus for 12 managers. So it's running in excess of $50,000 per manager. That's $55,200 -- my adding machine just kicked in. That's quite a sizeable figure for those managers, I would say. We'll probably discuss that at a later date.

Could the minister please tell me if ICBC's windshield claims are now. . . ? I've been hearing this story that they are presented only through glass shops.

Hon. M. Farnworth: Yes, that is the way it's currently done. But that is under review, and there is a pilot project underway.

D. Jarvis: I was going to ask the minister how many have been reported since that situation started, how they're being handled and whether the cost per windshield claim has gone up or down since they started this pilot project.

Hon. M. Farnworth: The number of windshield repair claims has gone up approximately 20 percent per year, and the cost for the past three years. . . . It totalled about $67 million last year.

D. Jarvis: Could the minister please tell us how many FTEs ICBC now has and what the total payroll is?

Hon. M. Farnworth: There are 4,607 FTEs. I will have the payroll number for you momentarily; I can tell you it is a lot of money.

D. Jarvis: Would the minister please send us that information when he receives it?

I'd like to ask the minister how many contract employees ICBC now has and what their total payroll is.

Hon. M. Farnworth: The number of contract employees. . . . I'll have to get that for you. It is counted in the figure that I gave you a few moments ago.

D. Jarvis: I would think it rather unusual that you would have your contract employees in with your full-time employees. The minister is telling me that he doesn't have that information with him at this stage? On that premise, if he's going to get me the information, could he tell me how many contract employees he had the year before and what the total payroll was for that year, so that I can use it as a comparison, if he wouldn't mind? And would the minister please advise us what size his communications department is and what its total budget is?

Hon. M. Farnworth: I'll get those numbers for the hon. member. But in terms of the communications department, there isn't a freestanding communications department. There are employees who have communications functions, and they're in different parts of the corporation. If you're wanting to know the number of employees who actually work on communications, I can probably get that for you. But in terms of an actual department, there isn't one.

D. Jarvis: Well, I'm rather surprised, Mr. Minister. You certainly haven't got much information with you; you need more staff. Bring them all out and let's get the information.

But anyway, the communications department -- there's no specific budget for communications at all in ICBC? Is it just a running total that comes from every department?

[ Page 8759 ]

[3:00]

The Chair: Again, I'll remind the members to direct their comments through the Chair.

D. Jarvis: Madam Chair, through you to the minister, would it be presumptuous to ask at this time whether he has the dollar value for those three divisions of the communications department?

Hon. M. Farnworth: I'll give you an exact dollar figure shortly for each of those departments.

D. Jarvis: So far, I think you've given me three out of eight answers, and the rest you're getting back to me on. You're going to be a pretty busy person -- would you not think so, Madam Chair? -- in the next little while. I'm going to ask another question, but I want to follow up on those answers you just gave me, Mr. Minister. I assume that we can expect this information within a reasonably short time. I comment because last year, as you appreciate, I asked for some information, and it never came forward. We followed up, as well, and it never came forth.

We were talking about the communications department, and I wanted to. . . . The minister mentioned that it had been broken down into advertising, public affairs and road safety. Does road safety include Road Sense and CounterAttack? Is the Road Sense radio show in that section?

Hon. M. Farnworth: That's correct, hon. member.

D. Jarvis: Does the minister have available to him the cost of Road Sense and CounterAttack and the Road Sense show?

Hon. M. Farnworth: For the impaired-driving road-check program, the cost was $3.72 million.

D. Jarvis: I'm sorry, Madam Chair, I didn't quite get that. Is that for the Road Sense show? Or is that for all of the Road Sense, CounterAttack. . . ?

Hon. M. Farnworth: That was the CounterAttack program.

D. Jarvis: Now that we're talking about communications, I noted in a recent column -- as recently as today, I guess it was; no, it was about five months ago -- that a reporter in the Times Colonist, Les Leyne, was talking about the Road Sense show. You had budgeted at that time for approximately $600,000 for that year, and I was just wondering if. . . . I was trying to. . . . But you're going to send me the information as to the exact amounts anyway.

In that article, the minister -- and I'm not sure if it was the present minister or the one before -- was asked where the money came from for ICBC, and he mentioned at the time that it was investment income, not premium income, that was used to pay for that show. I wonder if the minister could clarify that for me. Before you get any of your investment income, you get premium dollars, and it's the premium dollars that are invested.

Hon. M. Farnworth: The program is funded out of general revenue, and investment income goes straight into general revenue.

D. Jarvis: And the cost this year?

Hon. M. Farnworth: Approximately $300,000, hon. member. Again, I can get you the exact figure.

D. Jarvis: I wonder if the minister has a breakdown of that and if he can tell me what the operating cost is, and what the difference is in the administration cost as well.

Hon. M. Farnworth: I didn't hear the first part of the question. Could the member repeat it, please?

D. Jarvis: I asked if he could give me a breakdown as to the operating cost for that advertising of the road show and the administration cost. If he does not have it now. . . .

Hon. M. Farnworth: We're talking about the radio program. In terms of the actual cost for operating it, I'm told that it's minimal. But if you want the exact figure, I will get that for you.

D. Jarvis: Yes, I do.

Photo radar -- you've heard of that, I assume. Can the minister provide for us what the overview of the photo radar program is for 1997? What were the total expenditures and the costs and everything? Break it down as to how. . . . Could he give me a little story on what he feels photo radar is all about, while I dig into my file?

Hon. M. Farnworth: Just for the record, so that I'm getting the right information for the hon. member, and to clarify the question: do you want to know the costs for photo radar projected over the coming year and how we're measuring its effectiveness for this year? Okay.

The estimated cost for photo radar in the coming year is approximately $10.9 million.

D. Jarvis: Could the minister tell us what the revenues were in 1997 for photo radar?

Hon. M. Farnworth: Approximately $19 million was collected. There's an additional $5 million still outstanding.

D. Jarvis: Could the minister advise us as to where those moneys go? Do they go to general revenue or to the government?

Hon. M. Farnworth: They go straight into general revenue.

D. Jarvis: Could the minister tell us who is paying for all the costs of photo radar?

Hon. M. Farnworth: ICBC.

[ Page 8760 ]

Hon. M. Farnworth: They are full-time, hon. member, and the costs are paid for by ICBC.

D. Jarvis: To follow up: would the minister please tell us the cost of paying those full-time officers?

Hon. M. Farnworth: The labour costs are included in the earlier figure of about $11 million that I gave you. In terms of the exact breakout, I will get that number for you.

[3:15]

D. Jarvis: I thank the minister for that.

That $11 million-plus that you say you paid out to operate photo radar. . . . Are you saying that ICBC is paying all this out of our premium dollars that go into ICBC?

Hon. M. Farnworth: The answer is yes.

G. Farrell-Collins: The minister is telling me that ICBC and people who go out and insure their cars pay $11 million a year into the photo radar plan, on their car insurance. So their car insurance pays to operate photo radar, and 100 percent of the revenue goes into general revenue. Is that correct?

Hon. M. Farnworth: Yes, the hon. member would be correct. The fact is that ICBC is paying for the cost of photo radar. But I think the way to look at this is that the cost of photo radar is part of a program whose long-term goals are to bring down accident rates within the province, thereby making premiums cheaper.

G. Farrell-Collins: That's a load of horse hooey. I mean, the reality is that if ICBC. . . . When people go out and pay their insurance premiums, it's to buy insurance that will allow them, if they're in an accident, to receive costs, compensation, replacement vehicles, personal injury compensation or whatever. That's what they're paying for when they buy insurance. They're not paying for a program that returns $19 million in cash to the government. Why should people, when they pay for their car insurance, not have the cost of running the photo radar, at least, offset by the revenues gained by photo radar? Would that not make sense? If there's a surplus there, I would argue that the money could stay in ICBC perhaps. It would be far easier for people to swallow the $11 million cost of running photo radar -- if they were to pay for that up front -- if they recovered at least $11 million from photo radar and then had the surplus passed on to the government in the form of general revenue. There may be some logic to that.

But to have the people who are buying car insurance pay 100 percent of the cost and to have all of the cash from that going to the government. . . . I think that's an outrage. That's artificially increasing the cost of people's auto insurance -- not keeping it low -- by having them foot the bill for a law enforcement program that generates cash for the government. The government is making money off this, and people are having to pay for it through their car insurance. That doesn't have anything to do with this little side issue that the minister has of trying to improve safety on the roads and to reduce accidents and then to have some downstream benefit -- a poor choice of words, perhaps -- accrue to motorists because of a reduction in accident rates. The fact of the matter is that if they're investing $11 million in a program, they should at least have those costs covered by the revenue.

How does the government justify forcing motorists to pay the cost in their insurance and then putting 100 percent of the revenue into general revenue for other programs?

Hon. M. Farnworth: From the point of view of the corporation, whether photo radar generates or doesn't generate any revenue, the fact is that if it works to bring claims down, then it's judged to be a success.

However, the other point to consider, and one that I think we all seem to look at is: do you want a safety program like this being dealt with within the corporation, where you have the corporation both doing the law enforcement and, at the same time, also collecting the revenue? If you were to ask the public, I think the answer would be no. For example, do you want ICBC putting photo radar in place on the one hand, and at the same time generating the revenue? There's an inherent conflict there. I mean, the member has a point; I think it's something that needs to be taken into consideration. But the fact of the matter is that in terms of reductions of claims, we've seen a reduction of between approximately $50 million and $70 million.

G. Farrell-Collins: The minister is. . . .

A Voice: Skating.

G. Farrell-Collins: More than skating. First of all, he's making the assertion that we've seen a $50-70 million reduction in the accident rate, and he's attributing that reduction solely to the introduction of photo radar, which is ridiculous. There is a drop in accident rates across North America right now. It has to do with a whole range of issues, including the economy, the age of people and driving habits right across not only North America. . . . It's a trend elsewhere. So to attribute all of that to one program is not very frank and upfront.

Let me put it this way. What we've got here, and what the minister is essentially telling us is that yes, photo radar is a cash cow. But it's somebody else's cow; the government doesn't even own the cow. ICBC gets the cow, and the government gets the cash. The ratepayers have bought this cow, it's stabled at ICBC headquarters, the milk is going into general revenue, and the government is using it for other programs. That certainly isn't the way this program was put forward to the people of British Columbia when it was brought in. They were never told that British Columbia ratepayers were going to pay the cost and receive none of those costs back if the revenue exceeded those costs; they were never told that.

The minister stands up and says that if we were to do it that way, there would be an inherent conflict. Then why did the minister put traffic policing and these types of programs in with ICBC? Why didn't they stay with the motor vehicle branch, which is where they were before? You know, the government. . . . The minister just argues against the very case made by the minister responsible at the time, when she stood in the House and said that we had to take the motor vehicle branch and ICBC and put them together. Many members of the House raised the issues of conflicts and said that

[ Page 8761 ]

The only conflict here is that the government is demanding that ICBC run a program for which the government gets every penny of the cash. We foot the bill; you get the cash. That is patently unfair; it's not the way you should do it. Normal accounting principles are that you attach the cost to the revenue and the revenue to the cost. Here all the costs are borne by the ratepayers; all the revenue goes to the government. Technically, if the government. . . . If one wanted to, one could add yet another $11 million to the budget deficit this year, because the government has moved $11 million off to a Crown corporation. And directly attached to that are the revenues. I wonder what the auditor general would have to say about this; I wonder if the auditor general has given an opinion on this one. I suppose he may want to have a look at it, because it certainly isn't very transparent for assigning costs and revenues to each other, where they belong. I expect that he'll have something to say about that at some time.

What I'd like to ask the minister is this: can he tell me what the costs and associated revenues of this program have been since its inception, fiscal year by fiscal year, and what they're projected to be for the year in the future? If he can divide those into collected and uncollected revenues, that would be helpful also.

[E. Conroy in the chair.]

Hon. M. Farnworth: In terms of costs for the last couple of years -- and there are operational and development costs in there -- '96-97 was $19.5 million, and for April to December '97 the total operational costs were $8.1 million. Estimated costs for '98 are anticipated at $11 million. I think ticket revenue is projected at $27 million.

[3:30]

Hon. M. Farnworth: In '96-97, development costs were $16.3 million, direct operating costs were $2.3 million, and indirect allocated costs were $878,000. In '96-97, ticket revenue was $5.3 million. For '98, as I said earlier, it's anticipated at $27.4 million.

G. Farrell-Collins: Was the $19-million-plus-$5-million figure -- the $24 million figure the minister gave earlier -- for 1997? He said $19 million plus $5 million uncollected.

Hon. M. Farnworth: The $5 million outstanding would be on top of the $17 million that is collected.

G. Farrell-Collins: Perhaps I'm a little confused here, because I'm getting different figures. What I'd like from the minister is this: can he tell me what the revenue is, both collected and uncollected, for '96-97, the '97 year and the '98 year? Essentially I need six figures: both collected and uncollected for each of those three years.

Hon. M. Farnworth: I can give you the total uncollected; I can't give you the total uncollected on a year-by-year basis. The $5 million figure that I gave the hon. member earlier is cumulative outstanding as opposed to occurring in any one year.

G. Farrell-Collins: So we'll have to assume that the $5 million is over the whole period. What I would like are the total expected revenue due to the Crown corporation from photo radar for each of those years. Certainly you have the revenue received in '96-97, the revenue received in '98 and a projected revenue for 1998.

Hon. M. Farnworth: For '96-97, it was $5.3 million; '97-98 is $19 million. The $17 million that I mentioned to you before would be April to December of '97, and '98-99 is estimated at $27 million. The reason for the change in the $17 million is the fact that ICBC is on a different year-end than the government is.

G. Farrell-Collins: Yeah, I'm aware of that; that's why I asked the question in a certain way. I guess ICBC went to a. . . . I don't know if it always was, but certainly it was when all this shifted over there.

We have a photo radar program for '96-97, which would have ended March 31, 1997, with $5.3 million in revenue. Then from March 31 to December 31, that figure is -- what? Is it $17 million or $19 million? It's $17 million. Then for January 1 to December 31, 1998, the projection is $27.4 million in revenue, if I'm correct. Thank you.

Can the minister tell me what the $878,000 in indirect, unaccounted-for or unallocated, unassigned expenses -- whatever words he used -- in the '96-97 fiscal year was used for?

Hon. M. Farnworth: That cost would have occurred at the developmental stage, and it would have included rental space for temporary employees at the time.

G. Farrell-Collins: It would have included that. What else would it have included?

Hon. M. Farnworth: It would also include personal computers, PCs. If the member wants a full, complete breakdown, we'll get that for him.

G. Farrell-Collins: We do. Can the minister tell us when we'll receive that?

Hon. M. Farnworth: Hopefully, this week.

G. Farrell-Collins: My colleague is going to continue, but I just want to sum up what we have here. We have developmental and operational costs for the photo radar program to the tune of $39 million, which have been paid for by the ratepayers of British Columbia. The province has collected $49.7 million in the form of cash from this photo radar program. The government has picked up roughly $50 million in cash from this program, and the ratepayers have paid $39 million of the costs -- and have recovered not one penny of that. I want to make that clear. I'll pass the issue back to my colleague, who has some more questions to ask. If that's not correct, I assume the minister will stand and correct that.

D. Jarvis: The KPMG report said that if we didn't have no-fault, payments would go up 40 percent. I think they were referring to revenue from photo radar going up 40 percent.

[ Page 8762 ]

Hon. M. Farnworth: There'll be approximately 30 cameras moving through 120 sites throughout the province. It's not slated to start until towards the end of this year, so there'll be very little cost, if any, this year.

D. Jarvis: Again, I don't quite understand, minister. Thirty cameras? I thought these were going to be fixed, stationary cameras. Like the photo radar, are they movable?

Hon. M. Farnworth: They are stationary when they're in that particular intersection, but you won't know where they are on a regular basis. Let's say you've got a problem intersection, and you put them up there. You put them in place for, let's say, two months, and you notice that traffic is slowing down and that the problem is under control. You're able to take the box down off the intersection, move it to another intersection where there may be a problem and install the red-light camera there.

D. Jarvis: I don't know what you base this procedure on or whether it has been followed in other jurisdictions or not. I understand that in the state of Victoria in Australia they put up permanent cameras on problem intersections, and that's where the help was. I can just see that if the thing's down, the word will get out, and those that are irresponsible and have done it before will continue doing it.

At the same time, Mr. Minister, I'm wondering if you are aware that Ontario doesn't have photo radar anymore. Reports all over the place are showing that it is not the reason why fatalities are going down. As a matter of fact, they say that fatalities are ostensibly the same or have risen and that photo radar isn't the reason for fatalities decreasing.

[3:45]

D. Symons: Just a question on the red-light cameras. Can the minister give me an approximation of the cost of installing one of these in a given intersection? Apparently you'll have to do those same costs on all 140 intersections to prepare them for accepting a camera.

Hon. M. Farnworth: We're currently in the process of assessing the bids to install and do the red-light camera program, so I can't give you that particular information at this present time.

Interjection.

Hon. M. Farnworth: I'd be reluctant to even do a ballpark. Clearly, once it's up and running, we're more than willing to let you know the cost.

D. Symons: I'm hearing that it may be in excess of $100,000 per intersection for installing the loops and all the rest that will be required for this. My question to the minister is: how are those installation charges going to be paid for? Is it going to be coming out of ICBC's operating budget, or will it be taken out of the proceeds you receive from photo radar before the proceeds from tickets and so forth go into general revenue?

Hon. M. Farnworth: It comes out of the general revenue of ICBC.

D. Jarvis: On a different subject, Mr. Minister, I want to talk about the road safety initiative programs. What were the development costs and communication costs of the road safety initiative programs -- and their communication costs, or is that part of the. . . ? I want to know the development costs of the program as a whole -- and the communication costs, if you have them -- for that road safety program.

Hon. M. Farnworth: We spent $61.7 million on the road safety program, of which $9 million would be related to advertising.

D. Jarvis: I am wondering if you could supply us with the total costs for the crackdown on impaired drivers and the increase in the number of 24-hour suspensions -- over 1996.

Hon. M. Farnworth: ICBC spent approximately $4.6 million last year on the enhanced Counter Attack program. The result of that campaign was a decrease of approximately 1,200 -- down from 10,241 in 1996 to 9,043 -- in the number of drivers charged or issued a 24-hour roadside suspension during enhanced Counter Attack.

D. Jarvis: Could you give us a figure for the cost of police training for drug-impairment recognition?

Hon. M. Farnworth: The drug program that the member is referring to is a new program, and we don't have the costs in for that yet.

D. Jarvis: I'll ask this next question, then perhaps I'll follow up with another question.

Was there a budget for this program? If there was, does it have that figure in the budget? Another question is on the red-light cameras -- and I know I'm going back, and I don't mean to keep going back on things. You did studies and all the rest of it. Can you tell us specifically when these cameras are going in -- or as close to. . . ? I mean, is it in the next couple of months? Surely you have a budget for it. Could you give us the cost of these red-light cameras?

Hon. M. Farnworth: The overall cost is estimated, and this includes development cost as well. I'll give you everything, the complete gross, which is estimated to be $11.2 million.

D. Jarvis: A lot of bucks.

Hon. M. Farnworth: In terms of the timing. . . .

The Chair: Through the Chair, minister.

Hon. M. Farnworth: I'm sorry, hon. Chair.

[ Page 8763 ]

D. Jarvis: Has there been any sort of projected return on that, on the basis of. . . ? We know that for photo radar, you were expecting so many fines or charges. What would you. . . ? Have you got any specific figures? You have so many -- I forget how many -- channels going there. What type of revenue do you expect out of that?

Hon. M. Farnworth: It's estimated at between $3 million to $5 million a year in revenue.

D. Jarvis: What is that based on? How many tickets would you issue on something like that?

Hon. M. Farnworth: Approximately 30,000 to 50,000 tickets a year.

D. Jarvis: Are you going to graduate the fines on these like you have been doing with the photo radar? What's the plan for charging them on, say, the first ticket, second ticket or third ticket, etc.?

Hon. M. Farnworth: No, you either go through a red light or you don't. It's not like speeding, where the faster you go, the more you pay. You're either going through the red light or you're not going through the red light, so it's one standard fine.

D. Jarvis: Could the minister give me an idea as to what that fine would be?

Hon. M. Farnworth: I think it's about $150 -- the same as it is right now.

D. Jarvis: I would assume that the fine would change or the situation would change if he was involved in an accident or was out drinking.

Hon. M. Farnworth: No.

D. Jarvis: Are there penalty points added to these fines if they're in an accident?

Hon. M. Farnworth: The answer is no.

D. Jarvis: My associate was saying that the revenue is based on 30 cameras. That's 1,000 tickets per camera annually. Is that what they estimate it at?

Hon. M. Farnworth: I would agree with your associate -- or, as I would refer to it, my colleague -- across the way. I would agree that that would be roughly 1,000.

D. Jarvis: Would the minister give us an idea of the number of people they expect to employ -- including the transfers -- for the intersection cameras?

Hon. M. Farnworth: It's kind of hard to say right now. We don't anticipate much of an increase, in terms of staff to operate it. It will depend in part upon who makes the winning bid, and that's still under evaluation. Right now, I can't give you a firm answer on that.

D. Jarvis: I'm wondering if the minister could give me some idea about this new graduated system of fines and penalty points. Could he give us a list of all the fees associated with this new system?

Hon. M. Farnworth: The extra fees associated with it apply if you accumulate more than four points in any one year. Let's say you have ten points right now. I don't expect, for a moment, that you do, but let's say in this coming year, from January to December, you accumulate another six points. You would pay a penalty on those six points, not on your pre-existing points. Basically, for four to six points, it's a 10 percent increase, and then after that it's a 20 percent increase. When you're at the high end of the scale, you face about a 40 percent increase. Those are the only extra fees associated with that.

[4:00]

Hon. M. Farnworth: That would be correct. At the same time, ICBC and the premium holders would reap the benefits in terms of reduced claims.

T. Nebbeling: It's hypothetical that the effect will indeed lead to reduced claims. Three tickets a day per camera doesn't sound to me like a hell of a lot. What I do wonder, however: considering the cost to ICBC of approximately $11 million, as you just calculated it to be, do you think this is responsible financial expenditure, considering that $11 million in other areas, including more cops on the road, would most likely be much more effective in reducing claims?

Hon. M. Farnworth: I would have to say that it is money well spent, for a number of reasons. One, overall I think the safety program has worked across the province. We've seen that; we have evidence around that. Two, the fact is that you are seeing a substantial reduction in claims. That also translates elsewhere, in the health care system. . . . The fact of the matter is that a significant proportion of accidents occur at intersections. There is broad-based public support for cameras at intersections in terms of an overall safety program. When you take in all those costs together and look at the overall goal, the startup costs and the annual operating costs, it is very much money well spent.

T. Nebbeling: The jury is still out as far as the effectiveness of photo radar and the reduction of claims are concerned. I can speak from personal experience and talk about certain stretches of road that I travel frequently. Photo radar is very prevalent on these roads. I'm talking about the Sea to Sky Highway. I can also talk from experience that fatal accidents and accidents with serious consequences to vehicle users are up this year.

It's really unfortunate, because lots of the money that now is spent on photo radar. . . . There was a time when ICBC actually spent a fair amount of money on getting more cops and more police cars on the road. During those times there has always been a considerable reduction in vehicle accidents and thereby a reduction in loss of life or very serious accidents. So I think the jury is out on photo radar.

[B. Goodacre in the chair.]

[ Page 8764 ]

Hon. M. Farnworth: You know, it doesn't matter whether it's one ticket a day or ten tickets a day. The issue is that ideally it's one because people aren't doing it. There's a tremendous deterrent effect. So that is key: addressing people's behaviour when it comes to intersections and the accidents being down at intersections.

In other jurisdictions the evidence is in, and the evidence is coming in here. The fact of the matter is that in other jurisdictions there is a cost-benefit ratio of approximately 2-to-1 on the amount that's been spent on red-light intersection cameras. I will stand by that program, and I will stand by the benefit of the red-light intersection cameras. The public has said repeatedly, on an ongoing basis, that they support the measures on the red-light intersection program.

The fact of the matter is that once you start to change the motoring public's behaviour, whether it's speeding, drinking and driving, or how you approach an intersection -- whether you decide to make a left-hand turn on the orange light at the beginning as it changes or decide to go ahead and say, "Okay, it's just quickly turned red, and I know it's going to take two seconds for someone to come through on the green," and go through -- now that you have these cameras in place, the fact that you've got the potential for a fine has a big impact on the public.

The member talks from personal experience. I too can talk from personal experience. I know that the photo radar van is out there. I can tell him that I have dropped my speed on average by approximately at least ten kilometres an hour, because I've seen photo radar vans out there. I know where they are, and I don't want to get a ticket. I think I'm pretty typical of the general public in that regard. So I can tell you from personal experience that it's affected my own driving habits. I feel confident that the program will prove itself to be a success. At the end of the day, the people who will benefit are the policyholders at ICBC.

T. Nebbeling: I'm not going to further argue the point, because I think we have a different opinion. However, it is easy for the government to take these positions and then quote all the lines from pamphlets. I've seen the ICBC pamphlets as well. All the arguments that the minister is making are reflective of what has been put in these pamphlets. I think that later on we're going to look a little bit more at costs there.

But the bottom line is that the government can take this position, because they do not take any financial liability. They just have another party pay the expense -- ICBC or the users, the policyholders of ICBC, through the premiums. Whatever revenue comes their way goes exclusively to the government. So it's easy and understandable why the minister is quite committed to this program. He and the government can only win. The premium payers will be the losers. That was basically what I wanted to finish up with. I'll let my colleague continue.

D. Jarvis: Further to what my colleague was talking about, I can distinctly remember sitting in the office of ICBC's CEO -- and the gentleman happens to be here in the room right now with you -- when they first had the photo radar presented, and this gave us a show of what was going on. Everything that I was told there by the RCMP officer who is in charge of photo radar and by the head of ICBC with respect to how they were going to treat photo radar and where they were going to put them was untrue. Virtually everything they said was untrue. They weren't going to do it on the bottom of the hills in North Vancouver. Where is the photo radar van? Every time you see it, it's at the bottom of the hill in North Vancouver.

I'm just wondering how the minister can possibly say that this is the end-all of, say, fatalities, when jurisdictions all over, from what I've read, have said it's not slowing down fatalities. We see that on the Sea to Sky Highway: the death toll is mounting every day. It's getting higher and higher. There's photo radar all along there. It's not having a significant effect on the Sea to Sky Highway. It's not having a significant effect across British Columbia and across Canada, because fatalities are dropping everywhere -- all through North America, as a matter of fact. I would suggest that the basic claims have dropped. They are dropping all across North America.

We've had a reduction in claims of about $100 million. You had an overstatement of your losses. You've sold more insurance -- about $60 million worth -- and you've made about $40-odd million plus interest. That's where you've saved money this year: on those things; it's not because of photo radar on these roads. Mind you, it has helped to a degree, but that's not the sole thing that's saved us. So I am wondering if the minister would agree to table the reports that he has to the contrary -- as he told my associate -- that photo radar is having an effect of 2-to-1. Would you table those in the House today or tomorrow?

Hon. M. Farnworth: I'll repeat the same message that I gave my colleague from West Vancouver-Garibaldi: the issue is road safety; the issue is a whole range of measures that ICBC has instituted. The fact of the matter is that there is broad public support for them. They are paying off. We do see a significant reduction in the number of deaths on the road last year and again this year, and the fact of the matter is that photo radar is part of that program, as is CounterAttack. There is a measured reduction in speed -- that is happening, and all of those things are contributing. Red-light cameras will be part of that.

We've had radar in this province for a long time -- certainly as long as I can remember. Photo radar is just a variation of that. It has helped to change the driving of the motoring public. It certainly helped to change mine, and I know that from personal experience. While you may take issue with that, I think that at the end of the day it will be seen to work. The fact of the matter is that it will continue. And it's only going to improve. Whether we have photo radar as it is today or whether we couple it with red-light intersection cameras, it's all part of the overall package, and it's working.

D. Jarvis: The minister is exactly right when he says that we've had radar in this province for many, many years -- as long as I can remember driving; well, not that long. It's relatively new in the last couple of decades -- let's put it that way -- and the death rate has always been climbing. So that hasn't had an effect on it, that's for sure.

The fact is that we've had our fatalities drop in this last year. The saving of money by ICBC is a culmination of everything, and you were originally trying to say that it's all owing

[ Page 8765 ]

Again, I ask the minister if he will table those reports that he has, so we can see the evidence he has to support that -- if the minister wouldn't mind.

Hon. M. Farnworth: I will get you the information that you're seeking. Whether it's in report form or whatever form it's in, I'll make sure that you get that information.

D. Jarvis: What the minister is going to do is appreciated.

I want to move into one quick section. A couple of my associates here want to ask questions pertaining to AirCare. I'll lead into that by ostensibly asking the minister: has there been any consideration to pushing commercial vehicles into AirCare? I'll leave it at that.

[4:15]

J. van Dongen: Just to follow up on that question, was there not an announcement made by one of the previous ministers that trucks would be brought under AirCare testing?

Hon. M. Farnworth: That relates to my previous answer to the member for North Vancouver-Seymour. We're looking at how to do it, but there just aren't any plans to do it right now. We're looking at ways of how you would do it.

J. van Dongen: I want to ask the minister a few questions about AirCare. My questions relate to two areas. One is that I get a significant amount of representation from constituents who question both the merits and the reliability of the test. Particularly with respect to the merits of the AirCare program -- and I'm going by memory here -- there was a study done two or three years ago by a consulting firm somewhere in the United States; I think it was in Texas. I wonder if the minister could tell us whether or not there have been any other independent reviews done of the merits of AirCare in the last couple of years.

Hon. M. Farnworth: In response to the member's question, I'll raise a couple of points. The first is that over all, the tests are accurate; they are reliable. The fact is we're seeing that new vehicles are getting better and better each year. In that sense, the amount of emissions being put out is decreasing.

When it comes to emissions in the atmosphere as a whole, it's important to remember that approximately 85 percent do come from the tailpipe. I understand the member's concern, because they tend to accumulate up the valley, and that's where his constituency is. My own constituency has a similar problem in its geographical location from the wind currents; there tends to be a pooling effect of air pollutants in my area. We have the same concerns also, and these are shared by many of the communities up the valley.

The evidence we have here in the lower mainland is that the tests are reliable. Anything you can do in this regard, to ensure that people maintain vehicles in a well-maintained manner, is effective, and it will pay out over the long time.

J. van Dongen: The concern is also that the demands being put on the public, as opposed to the perceptions people have about impact on air quality. . . . There doesn't seem to be a discernible impact on air quality, even though, as we get more and more new vehicles. . . . Certainly, if you look at the charts -- and I do read the material that I get from AirCare on a regular basis, as an MLA. . . . When you have newer vehicles, even if they are badly tuned, they are far and away ahead of older vehicles. As we take older vehicles off the road, automobile emissions are definitely going to improve. That does not seem to be borne out in terms of the air-quality readings that we get in the valley; we don't seem to be gaining on those. People question the degree to which automobiles and the impact of AirCare is really helping the actual air quality problem.

Hon. M. Farnworth: I think you have to look at it a couple of ways. One, undeniably the growth in the number of vehicles has been phenomenal. There are probably 300,000 more vehicles than there were, let's say, seven or eight years ago. That clearly has an impact. Two, there's no denying the fact that newer vehicles are a lot better than older vehicles, and as long as they're maintained, they will continue to perform at low emission levels.

I also think you have to look at it this way: if you did not have an AirCare program in place, what would be the effect? Sure, you can say either that air quality has not improved or that there has been an incremental improvement, but you also have to look at it in the way of. . . . Well, if it wasn't there, how bad would it be? It would be a lot worse.

It's the same with a lot of preventive programs. You do the preventive measure to ensure that you don't get the negative result. The fact that you're not seeing the negative result doesn't mean the program isn't working; to the contrary, quite often it means that it is working.

J. van Dongen: I agree with the minister that one of the measures that laypeople are using is: if it wasn't there, how much worse would it be? People are wondering if it would be much worse; I think that's part of the point. When you read in articles -- such as the Bob Stall column we saw in the weekend newspaper -- that people are tuning vehicles specifically to go through AirCare and then retuning them to operate them for the coming year, I think that's the question.

I don't want to belabour the point; I know that our time is limited here. I wanted to register that that's the concern of the people I talk to. They wonder if the incremental improvement in air quality warrants the amount of hassle and time and $18 times two or three visits for certain vehicles. I get a lot of representation that questions the incremental benefit versus the incremental cost. As I said, I refer the minister to the Bob Stall column of June 14.

Related to this, I wanted to ask the minister. . . . I think the contract between the provincial government and the pri-

[ Page 8766 ]

Hon. M. Farnworth: None at the present time. That's all tied up with the transfer to the GVTA. Hopefully that will be complete later this year and that once that's straightened out, they'll be able to engage in the contract discussion.

J. van Dongen: Is it the intent, then, of the provincial government to turn over sole responsibility for the AirCare contract to the GVTA? Or will there be strings attached?

Hon. M. Farnworth: That's certainly my understanding.

T. Nebbeling: Just to change the subject now, in 1996 ICBC, the Crown corporation, recorded a loss of $135 million. For 1997, the projection was $150 million -- a loss as well. In January of this year, the then Minister of Finance announced that ICBC was actually going to break even, which I think came as a big surprise to a lot of people. Then at the end of February, if I'm not wrong, a surplus of $14 million actually materialized. First of all, my question to the minister is: how did this turnaround, from a $150 million deficit in 1997 to a $14 million surplus, materialize?

Hon. M. Farnworth: I guess the projections of around $150 million that were made at the time -- in fact, some estimates had it at around a $300 million loss -- were based on claims increasing at the same rate they had. The fact of the matter is that claims were projected to increase by about 13 percent. In fact, they didn't increase anywhere near that.

T. Nebbeling: Can you tell me, then, exactly what was the claim increase for 1997?

Hon. M. Farnworth: For '97 over '96, it was 2.4 percent increase.

T. Nebbeling: Isn't that funny? We just heard the minister making a very passionate case for photo radar having reduced claims, and in '96-97 there was an increase when photo radar was in place.

But that's not the point I'm going after here. It is a substantial amount of money -- a $160 million difference in one year. To miscalculate that based on a percentage of claims that is better than anticipated does not necessarily justify that kind of money.

In the records of ICBC, it shows that for 1996 over 1997, a certain amount of money was set aside for claims that were not finalized by the end of 1997. Can the minister tell me how many of these claims were outstanding? And is the $163 million that I believe was set aside still there today?

Hon. M. Farnworth: A couple of comments. First, the $163 million that was reduced was not for the previous year but was for an accumulation of previous years. That's an important point to clarify.

The second point I'll make is to the member's first comment, which was around my "impassioned" support of photo radar. The interesting thing is that in 1996 you had the 14 percent increase in claims; 1997, when you had the 2.4 percent increase in claims, was actually the first full year that photo radar was in place.

T. Nebbeling: The Minister of Finance would have claimed it was the weather.

Can the minister, then, say how many of the 1996 claims that were outstanding and were recovered by that $163 million have been resolved?

Hon. M. Farnworth: I can get you the exact figure, if you like, but approximately half of that money would have been for 1996.

T. Nebbeling: That's interesting, but I wanted to know how many of these cases were resolved. If half of that money was for 1996 cases, that's one thing. But by how much has the caseload been reduced for 1996, and what dollar value did that represent?

[4:30]

T. Nebbeling: If that's the case, at what times in the process does the administration of ICBC look at the amount of money and evaluate the size of its fund to what at the same time ICBC will establish as a reasonable or realistic figure based on the caseloads?

Hon. M. Farnworth: It's reviewed on a quarterly basis, and adjustments are usually made at the end of the year, when you can get a sense of any definitive patterns that are emerging.

T. Nebbeling: Just for the record, does the same principle apply to 1997 as well?

Hon. M. Farnworth: That's correct.

T. Nebbeling: Can the minister tell us if there has been a transfer made at the end of 1997 or the beginning of 1998 reflecting the adjustment that has been happening on a bimonthly or quarterly basis from that particular fund?

Hon. M. Farnworth: Nothing has been reflected so far this year; it's too early. We need to have another quarter before we start to see a full look at how trends are going.

T. Nebbeling: We are talking about caseloads of '96 and '97. Considering that we are six months into the year and that you have quarterly reviews where you make the adjustments, I cannot understand your answer that the 1996 caseload may still be unsolved or unsettled -- whatever term we give it -- and that you cannot establish in the first six months of 1998 whether more money should go toward that holdback or less.

Hon. M. Farnworth: I understand the point the member is making, and I won't argue with it. But I guess what's

[ Page 8767 ]

T. Nebbeling: Is there a specific name for the fund that holds these holdbacks, or is it just identified as a number?

Hon. M. Farnworth: I guess the best name for it is the unpaid claims reserves.

T. Nebbeling: That makes sense. I was worried it was going to be the clawback resource.

Can the minister tell me how much is in that fund today?

Hon. M. Farnworth: Approximately $3.7 billion.

T. Nebbeling: Did the minister say $3.7 billion or $3.7 million?

Hon. M. Farnworth: It's $3.7 billion.

T. Nebbeling: I think we're talking about different funds. I'm talking about the funds that were claimed or, most likely, disputed in 1996, and at the end of the book year. . . . Do you know where I'm going?

Hon. M. Farnworth: We're on the same topic but on different years. The cumulative fund is $3.7 billion, and we've been talking about this fund in terms of it being a cumulative fund. The amount for 1996 is $932 million.

T. Nebbeling: I am trying to figure out how in heaven's name we got into this fund of $3.7 billion. Sorry for the language. I'm not used to. . . .

In 1996, at the end of the book-year, there was a fund in place to deal with these cases that were not solved in 1996. Cumulatively -- or just for 1996; I think it was just for 1996 -- the amount was $163.2 million. That is 96'-97. Sorry. That specific amount of money was rolled back into '98. Where is that fund now? If the minister needs more help, I have some other figures here.

Hon. M. Farnworth: I'll explain this, and hopefully, we're both on the same thing. In 1996 the money that was set aside to deal with the unpaid claims for cumulative years -- because this is a cumulative-year fund -- was $3.66 billion. In 1997 it was $3.783 billion. Each year changes, because you then have the ability. . . . Some claims are settled; some claims change. Due to the severity of the claim or what have you, you're able to get a better assessment of the actual cost. So it was determined at the end of it that in fact there was more than enough money put aside, and that's where the reduction of $163 million comes from. I guess you could call it a re-evaluation of those claims that were still outstanding on the money that's required to be set aside. So you're able to reduce it by that $163 million. That's for the number of years going back.

T. Nebbeling: That transaction happened at the end of '97 or the beginning of '98, I take it?

Hon. M. Farnworth: That happens every year.

T. Nebbeling: Basically, what has happened there is that you had a deficit, and then, through your own deliberations, you decided that the stabilization fund -- the holdback fund or whatever name you give the fund, the not-paid-out-claims fund -- had $163 million more in it than was necessary. So you offset it to operations or to your books, and suddenly, from a deficit of $164 million, you had a surplus of $14 million.

What type of bookkeeping practices do you exercise which allow this kind of determination to happen at a time when you have to come out with your final-year numbers?

Hon. M. Farnworth: The process used is the same from year to year. It's not the case of government coming in and saying: "I want $163 million to show a $13 million or $14 million surplus." The adjustment is made each year, and it's reviewed by two outside actuaries. It's the same method that every insurance corporation uses. The fact is that if the actuaries, for example, were to determine that the amount of money in the claims things was insufficient, then we would have to find the money, which would translate into a rate increase.

T. Nebbeling: Or a freeze. Basically, what has happened this year is that from reserves, $160 million -- $163 million, $164 million -- was taken to offset the deficit that you were experiencing at ICBC, and that's okay. If that is the standard practice, then who am I to argue with that? However, it certainly should not have given. . . . The Minister of Finance made the announcement in February on how well ICBC was doing and how the claims have come down because of all the special programs introduced -- be it photo radar, be it red light, be it other programs -- and that these were the reasons for this reduction in the deficit becoming a surplus.

I think that, again, we see the form of NDP bookkeeping and NDP announcements that have really nothing to do with the truth. The truth is that the government or the ICBC management, with or without actuaries, decided or felt compelled to take $163 million out of reserve and offset that against the deficit, thereby having a balanced year-end. I don't think that is the way I would expect ICBC or any other Crown agency to operate.

Having said that, I believe my colleague still has one or two questions, and then we'll go back to my colleague from North Vancouver-Seymour.

The Chair: I recognize the member for Penticton-Okanagan.

R. Thorpe: Thank you very much, hon. Chair. It's a great place -- Okanagan-Penticton.

Can the minister advise. . . ? In establishing the potential liability, is it the practice that by type of accident or type of injury. . . ? Do you have a schedule you follow that allows you to accrue the various liabilities you may incur?

[4:45]

R. Thorpe: There's a system.

Hon. M. Farnworth: A little system. I'd just like to address a couple of points in the system that. . . .

[ Page 8768 ]

Hon. M. Farnworth: I'm speaking to the Chair -- the empty chair, the vacant chair.

The point the member makes is extremely simplistic and very. . . . I don't want to use the term disingenuous. It's very simplistic and not at all accurate. The fact of the matter is that ICBC last year sold significantly more policies. There was a substantial increase in investment income, and there was a dramatic reduction in claims -- all of which, coupled with the safety programs, were responsible for the decline, or for the fact that ICBC achieved a surplus.

[E. Walsh in the chair.]

To make some suggestion that somehow, because actuaries determined that the amount required in the unclaimed payment fund declines in one year, that is the reason that the corporation's in a surplus is extremely simplistic and simply not reflective of the actual picture. I just want to get that on the record.

But to come back and repeat the answer to my colleague's question which he asked a moment ago, the answer is, as I said, that there is no set form that says that if you have this type of injury, you're going to get X amount of payment.

R. Thorpe: So when you have a list of potential liabilities, outstanding cases, and the list could be in the thousands. . . . I'm sure it is from time to time. Do you mean to tell me that each one of these is randomly established as a number and that there is no set procedure for establishing the value of those potential liabilities?

Hon. M. Farnworth: When you go to ICBC with an accident, it's dealt with on an individual basis -- on a case-by-case basis -- and it will involve a whole host of factors. You don't go in, in North Vancouver-Seymour, from a car accident, with a broken arm, a head injury and a broken kneecap and hear: "Okay, you get $5,000." Then somebody else comes in with a different set of injuries. That isn't done. You're dealt with on a case-by-case basis, using actuarial methods on the severity and type of injury. The way the claim proceeds over time depends, in part, upon what the eventual payment is, because sometimes claims can take a number of years to settle. One thing that happens is that the injury that may be severe isn't really that severe as it starts out, and the payment can vary accordingly. So it's not. . . .

Interjection.

Hon. M. Farnworth: I hope you're getting some enjoyment out of that!

The Chair: Order, members.

Hon. M. Farnworth: The bottom line is that there isn't a set schedule of fees.

R. Thorpe: Can the minister then advise. . . ? Let's just say, for argument's sake, that I had a neck injury, and mine was one of the outstanding. . . . I was led to believe that my settlement was going to be in the area of $30,000, and we were negotiating. But all of a sudden, towards the end of last year, someone said: "Hold it. Time out on this issue. We're now only going to pay for that type of neck injury based on our previous experience of last year or the year before. And by the way, that was only $20,000." Can the hon. minister advise if that practice took place last year at ICBC?

Hon. M. Farnworth: The answer would be no.

R. Thorpe: With respect to the actuarial comments and the independent record of the two actuaries that you mentioned earlier -- I'm sorry; I don't have your financial statement -- do the year-end financial statements include a statement from the actuaries with respect to their findings on annual reviews?

Hon. M. Farnworth: The only one that is included in the financial statement would be the auditor's and not the actuaries'.

R. Thorpe: Can the minister advise if that's the practice that other insurance companies in Canada have to comply with? Or, in fact, do they actually have to have a note in their financial statements that is endorsed by their actuaries?

Hon. M. Farnworth: The auditor has an actuary, and so in the process of endorsing the report, the actuary's comments would be taken into account.

R. Thorpe: I'm not sure that was the question I asked. Maybe I didn't say it clear enough, so maybe I'll just try to get. . . . Is the practice in the industry, with the rest of the insurance companies across Canada. . . ? Do they in fact, as part of their annual financial statements, not have to have statements from their actuaries included in their financial statements? I think that's really a simple yes or no.

Hon. M. Farnworth: Most do, but I'm not positive that they all do.

R. Thorpe: So once again, we see a difference in ICBC in conforming to what the minister has just said is generally accepted practice in other jurisdictions. Not only does ICBC not match revenue with expenses, but apparently they don't attach actuarial support to their financial statements; they rely on their auditors. I'm just wondering -- and if the minister doesn't have the answer to this question, perhaps he can get it to me in writing -- why we would not want to follow practices similar to those of other insurers across Canada.

Hon. M. Farnworth: I must admit, I do appreciate the theatrics of the hon. member; they do act as a sort of entertainment. I guess he has a point to make and a set point that he wants to get in the Hansard Blues. But I think he's again being disingenuous. I think what's taking place here is the fact that ICBC conducts itself in the same way as do other insurance companies. In spite of the fact that it does not do what the member wants to maintain is the practice, how those numbers are arrived at -- in terms of having actuarial reports -- in practice is the same, whether it's ICBC or any other insurance corporation.

I will get the member's answer if he asks for it, but I submit that one of the main differences between ICBC and a lot of the other insurance corporations is the fact that ICBC is a Crown corporation -- it's backed by government. At the end of the day, that's pretty solid backing.

The final point I would make -- and it comes back to the point I made before -- is that even though there is no actuarial

[ Page 8769 ]

I'm quite sure, judging from his body language, that he will have a difference of opinion, and that's fine. So I'll leave it to you.

R. Thorpe: First of all, I just want to amend any false thoughts that were going through the minister's head. My questions were very genuine. They were not disingenuous whatsoever. Quite frankly, it was the minister who told me about the practices in other jurisdictions; I asked the question and he told me. My comments were very genuine, and I think it's important that the people of British Columbia have access to the same genuine information as in other jurisdictions.

I now turn it over to my colleague from North Vancouver-Seymour.

D. Jarvis: I'm going to come back to it in a moment, but I just remind the minister that ICBC is not the same as every other insurance company in every other jurisdiction in North America. There's no superintendent of insurance that they have to apply to, they really do not have an independent auditor to look at their books, and they don't rate their policies of insurance on people the same as every other jurisdiction in North America. In fact, they are separate and on their own. Every other jurisdiction uses a system that clearly identifies the differentiation of rates and everything.

But I want to ask the minister in regard to some mediation and the alternate dispute resolution. The minister had stated at one time that he was going to use this more -- this ADR system. Then ICBC came out with a document in 1995 entitled "The Use of Mediation in Settling Injury Claims," which stated that a cost-benefit analysis showed that mediation does save money over trial judgments.

You will recall that leaked memo which came out of ICBC recently -- you've probably heard of that -- it stated that ICBC had taken on the strategy of being tough but fair. I appreciate their being tough but fair, but in the claims end of it, I'll tell you, I'm getting calls all the time -- you're probably getting them too. Your claims adjusters have been hostile and incompetent and, you know, they've been rude, crude and socially unattractive in many, many cases.

But I'll give you a compliment on the one side, Mr. Minister. Steve Heather, Keith Stewart, Bart Dueck and George Federoff, the senior management end of it, have been really good at handling claims, settling disputes, getting people straightened around and being cooperative with myself and insureds who call about complaints. But on the adjusting end of it, it's really bad out there. If you think it's good -- because you've mentioned in your annual report the cooperation of the ICBC with the general public -- that's not so. That's not happening out there. I don't know where you're getting your information.

But what I want to ask you is: why, in this supposed time of increased mediation and arbitration, has ICBC discontinued the customer appeal program -- the CAP, they call it?

[5:00]

D. Jarvis: Why, at this time when there's supposed to be increased mediation, has ICBC. . . ? ICBC, I understand, has discontinued the customer appeal program -- the CAP, they call it.

Hon. M. Farnworth: I've just two points. First, to answer the question, it's because it's being replaced with an entirely new program, which will in fact be better than the old program.

The second point that I want to make is on the member's opening remarks, and that was. . . . I'll get on the record that ICBC operates the same way as other insurance companies do in terms of their accounting practices and procedures and in terms of their actuarial procedures. So to suggest that somehow it is engaging in -- you know, whatever they want to say, and the inference was clearly one of trickery, or that they're operating outside standard accounting practices or standard actuarial procedures. . . . That is simply not true. The fact is that accounting procedures at ICBC are standard accounting procedures. The issues around actuarial procedures are the same. I just want to put that on the record. I answered the member's question.

D. Jarvis: Well, I don't wish to get into a discussion on this, but ICBC does not operate the same way as every other company does. They don't use the actuarial position that other companies do to establish rates -- the rating system. They use their own, not what everyone else does. Everyone else pretty well follows what they call the CLEAR system, and ICBC does not use that. You do not have to abide by the superintendent of insurance. Can the minister qualify that?

Hon. M. Farnworth: Actuaries don't set rates; underwriters do.

D. Jarvis: I'm sorry, I missed that. Did the minister say they don't use the CLEAR system, or they do?

Hon. M. Farnworth: All new cars coming into the system automatically go to the CLEAR system.

D. Jarvis: I assume that they then go into the ICBC system of rating after that.

Hon. M. Farnworth: No, they stay on the CLEAR system.

D. Jarvis: So on that premise, then, all vehicles are rated in the ICBC system under the CLEAR system.

Hon. M. Farnworth: Since '96.

D. Jarvis: Now in June of '97 the government stated -- or issued a directive, actually -- for more arbitration in the ADR system. The minister is now saying that they have a new system of mediation. Could he explain that in further detail?

Hon. M. Farnworth: The old program has been replaced, I guess you could put it, by two components. One is the internal mechanism which ICBC has put in place. The second is the measures announced earlier this session, which will come into force with the passage of what the Attorney General announced about the mandatory claims, whereby if you or I were in an accident, for example, either one of us can ask for mandatory mediation, as opposed to having to have both parties agree.

[ Page 8770 ]

Hon. M. Farnworth: I can get the exact figures for the hon. member.

D. Jarvis: I assume that the minister will get those at his earliest convenience -- that is, tout de suite -- reasonably?

Hon. M. Farnworth: In the short fullness of time.

The Chair: Through the Chair.

D. Jarvis: I keep wanting to remind the minister that last year what they promised to send us never arrived; then we wrote them and asked them for it, and it still never arrived. So, since we have a new minister now. . . .

I wonder if the minister would also tell me: in each year, how many files were referred to ICBC for mediation and how many of those were mediated? Will you include that?

I want to go into another topic with the minister with respect to rating and things like that. If the minister wasn't aware of it, ICBC is not really appreciated by a lot of people out there. I don't know if you're aware of that; they really do feel that you're operating a cash cow. Part of it is the question of rating. You're saying that your rates are the lowest in Canada; the ICBC information is that they provide the lowest insurance premiums in Canada. Do they not now?

Hon. M. Farnworth: We've never said that; I've certainly never said that. I do know that the lowest rates in the country. . . . We're somewhere in the middle of the pack. The lowest rates in the country are our brother-and-sister public insurance companies in Manitoba and Saskatchewan.

D. Jarvis: Could the minister tell us, then, when it's said that in most cases their rates are lower than other comparable jurisdictions -- comparing, for example, the province of British Columbia to Ontario -- have they ever compared what the rates in Abbotsford would be in relationship to Mount Vernon, Washington, which is comparable -- or rural areas, or Vancouver versus Toronto?

Hon. M. Farnworth: I can give you some figures. But we do comparisons across Canada, and that's what we care about -- Canada. I mean, I don't care what insurance is in Mount Vernon, Washington, because it's completely ridiculous to suggest that you have a choice in getting your insurance in Mount Vernon, Washington or here, you know. They have a completely different insurance system, different liability levels. I think that if you want to compare insurance in Canada, that's one thing, and that's where you should stick. Look at it on a province-by-province basis.

We can give you figures for all the major cities right across Canada. For example, I do happen to have some handy here that I'm more than willing to let you know. The average basic premium in B.C. is approximately $527. That's compared to $588 in Edmonton, Alberta, and $378 in Winnipeg, Manitoba, and $1,845 in Toronto, Ontario. We can compare insurance rates right across the country. If that's of help to you, we can get you more information, if you need it.

D. Jarvis: Well, how about, for example. . . ? I've got some figures here, because I was doing some inquiring too. In Langley, someone with a '98 Ford Taurus, a four-door sedan for pleasure use only, with a $300 deductible, $100,000 comprehensive, $1 million in liability and a loss-of-use provision, etc., would pay about $1,384. That's a little rural area, or it's growing a bit bigger. But in Orillia, Ontario, the same driver would pay $1,090. They're comparable areas. In Toronto, you now pay $1,690. But you've got to remember that Ontario and most of the jurisdictions around it. . . . Most of the private companies in Ontario just applied to the superintendent of insurance for a 10 percent decrease in all their rates, so they're getting less. You have frozen our rates.

Hon. M. Farnworth: I think there are a couple of points. One: Ontario has a sort of threshold no-fault system. Two: hon. member, if you're going to compare, then compare like places to like places. Comparing Langley to Orillia is absolutely asinine. Langley is a commuting town to Vancouver, where you drive every day in major rush-hour traffic. Orillia is some sleepy little hollow about 90 miles north of Toronto, where they roll up the sidewalks at night and are in accidents. . . .

A Voice: Gordon Lightfoot lives in Orillia.

The Chair: Order, members.

Hon. M. Farnworth: I know that, because I've been to Orillia. I had to. . .

The Chair: Members, order.

Hon. M. Farnworth: . . .spend a weekend there. It was probably one of the dullest weekends I've ever spent. But if you're going to compare insurance rates. . . .

Interjections.

The Chair: Order, members.

Hon. M. Farnworth: Mind you, if that says that. . . . What does that say about Abbotsford and Matsqui, hon. member? Or are you setting yourself up as the arbiter of a good time in Matsqui?

Anyway, compare the major metropolitan centres -- Edmonton, Vancouver, Toronto, Calgary, Winnipeg. That's what you need to do. When you include those, include the day-to-day suburbs that occur in each of those areas where people actually live and then drive into the city centres to work, where they're doing most of the driving. That way you'll get an accurate reflection of what rates are here in British Columbia and right across the country.

D. Jarvis: Well, it all depends on taste. Obviously, if he was bored in Orillia, we can understand why.

One of the concerns was also with this freeze of rates. The dollar value seems to be the same, but the coverage is less. You aren't getting the same coverage for the same dollar that you were before, because if you have an accident and your deductible is moved up -- let's say you have a $250 deductible -- you have to pay out yourself.

Hon. M. Farnworth: The cross-responsibility charge is the only change that's taken place. Other than that, there is very little difference.

D. Jarvis: I would like to ask the minister one more question. The loss experienced in some regions is consistently

[ Page 8771 ]

[5:15]

D. Jarvis: Yes, I would like to talk to the minister privately. Also, there is the question of just liability alone. You don't have competition in the liability end of it with private insurance, anyway. At this stage, it's strictly the non-compulsory end where you have competition.

Gosh, time's running, isn't it. We've got enough here for a couple of days yet.

I was wondering if the hon. minister could tell me anything about the anti-theft device that they're putting on, which is supposedly reducing the cost of it. They're giving a discount -- are they not? -- for someone putting an anti-theft device on their vehicle. It's been stated that it's rather a picayune amount for the incentive to go out and spend that money on an anti-theft device. Could you comment?

Hon. M. Farnworth: It's a 10 percent discount, and if you want to criticize -- and there are always critics who'll find something to pick away at -- you could say that it's not enough. But if you increased it 10 percent, then everybody would jump up and down and say that you're doing some massive, horrendous increase. But it is a 10 percent discount, and I would rather have a 10 percent discount than a 10 percent increase.

D. Jarvis: I was wondering if the minister could tell us a little bit about the situation with the insurance agents. Are they still. . . ? It wasn't too long ago that they were having a list and they were going to cut off different insurance agents throughout this province, and they were going to limit the number. I'm wondering if that program is still in force.

Hon. M. Farnworth: I'm aware of what the hon. member is talking about, and that was under discussion a while back -- before I became minister, anyway. I can tell you that we have no such plans underway, and no such plans are contemplated.

D. Jarvis: I would now like to ask the minister about. . . . I note that the financial statements show for the software a little over $18 million of indebtedness. Is that separate from the system they set up with IBM for the agents?

Hon. M. Farnworth: Most of the $18 million is the tail end of IBM, hon. member.

D. Jarvis: I wonder if the minister could advise me of the hardware they put in with IBM. It was sort of botched at the time. Last I heard, it was running $45 million to $60 million, and they were writing part of it off. Could you explain to me what actually happened there and what's happening now?

Hon. M. Farnworth: The hardware part works fine. It's the software that's being applied to smaller projects but not to the overall project that was anticipated -- I would say, on a much smaller scale.

D. Jarvis: Can the minister tell us how much that whole system has cost to date and if they have lost any money on it?

Hon. M. Farnworth: It's been expensed, as opposed to written off; the previous amount that was spent plus the tail end part of this year would be approximately $55 million. As I said, in terms of the use gotten out of it, some of it is being used now. The issue is making applications over the coming years.

T. Nebbeling: When was this IBM program -- hardware and software -- introduced?

Hon. M. Farnworth: In 1994.

T. Nebbeling: What was put in place, including the additional software of $18 million in 1997, is the equipment that now operates the evaluation system and other systems, such as brokerage contacts.

Hon. M. Farnworth: No, it's not being used to replace the old insurance system.

T. Nebbeling: So at the time of the introduction in 1994, roughly four years ago, what elements of the ICBC infrastructure and programs was the IBM program supposed to cover?

Hon. M. Farnworth: When it was started, it was hoped that it would be able to replace that; that's not been the case.

T. Nebbeling: Can the minister explain why it has not been the case? After all, we made an investment of millions of dollars. There must be a reason for the shift in the use of this program at the cost, again, to the ratepayers of ICBC.

Hon. M. Farnworth: It has not been successful in being applied to the system overall; it was found to be a lot more difficult than was initially anticipated. So what's happening is that it's being used almost on more of a bite-sized approach, applied to smaller projects, and a lot of it is being used in terms of dealing with the year 2000 problem.

T. Nebbeling: Who made the decision to go with this system in 1994? It must have gone through an evaluation process. No doubt, at the time the decision was made to go with IBM, there were other proponents of product as well. Who was responsible for making the decision? What materialized? I don't buy the year 2000 bug. Whatever you put in place there today may not comply with the year 2000 bug either. Somewhere along the line somebody said that this was the product, and then there was a point when the product didn't work out. How have you dealt with that internally? We're talking about $55 million.

Hon. M. Farnworth: The decision would have been a board decision made back in 1994, so that's who would have made the decision.

[ Page 8772 ]

We were talking about $110 million to $120 million put to use under ICBC, which is mandatory, and then we're just supposed to say: "Well, you know, that happened." I think this is outrageous; this is unacceptable. Who is the minister ultimately making responsible for these policies, which were created by his predecessors -- that lead to money being diverted away from ICBC to go into general revenue rather than the revenue from the tickets coming back into ICBC?

This $55 million boondoggle that I seem to hear about now. . . . I didn't know much about this, but I'm really surprised to hear the minister taking it very lightly -- an expenditure of $55 million that now, four years later, proves to maybe not be a smart decision by the board. The board is advised by so-called knowledgeable people, who I also expect to be within the ICBC infrastructure. Has anything happened to deal with this issue so that the next thing that ICBC is going to spend its multimillion dollars on will indeed not have this kind of result after a couple of years? Or are we just going on a crapshoot here and see where the dice fall?

Hon. M. Farnworth: I listened to the hon. member's comments. If you wish to try and. . . . His point in the comments so far, whether it's on photo radar or red-light cameras, is that somehow the idea is that the goal of this is to put money into the pocket of the government. The fact of the matter is that those safety measures are there to bring down claims, but also, most importantly, to save lives. If the opposition wants to quibble with those programs, that's fine. The fact is that they work, and they have a broad base of support from the general public. Whether it is photo radar, red-light cameras or drunk-driving crackdowns, they are all initiatives of ICBC and the government, and every single one of them is working. That's one of the reasons we've seen the reduction in claims and a reduction in fatalities and why we've seen rates frozen.

Around the issue of insurance that the member talked about, no one takes these issues cavalierly or glibly, as the member has suggested. The member has asked questions, and I've answered the questions. The fact is that 1994 was four years ago; the board made a decision and the minister at that time was responsible. As minister now, I review decisions that are happening today. We always watch what's going on, where expenditures are taking place. We're always concerned about that. To suggest that we've not, I think is. . . . Quite frankly, I'm not even going to comment on what I think about it.

The other point I want to make is that the year 2000 is a serious problem, not just in the insurance industry of which ICBC is a part, but right throughout government, right throughout the private sector and right around the world. That's why a tremendous amount of money, time and effort is being invested in trying to resolve those issues. When the decision to go to a new technology system to replace a 25-year-old outdated system was made in 1994, it was done in the best interests of trying to put in place a new system to work for the corporation. I wish we could say that there is a product that we could have bought off the shelf, but the fact is that ICBC went to develop a new system that would meet the needs of ICBC and the needs of the customers. Has that technology been able to meet all of those goals? Clearly not. But parts of it are used within the corporation, and a lot of the information is being used on the year 2000 project.

[5:30]

Interjection.

Hon. M. Farnworth: Pardon me, hon. Chair, there seems to be a dispute within the family over there.

D. Jarvis: You're talking too much.

The Chair: Order, members.

Hon. M. Farnworth: I've never been accused of talking too much.

But, hon. member, you'll just have to take the answers we can give you for what they are.

T. Nebbeling: Before I finish, just one more point. What does the minister expect to spend in the next two or three years on software and hardware that will keep ICBC flowing without the fears that he has expressed? Because if this is not working, inevitably he'll have to put a new system in place, and I don't think you can buy that for $55 million today.

Hon. M. Farnworth: Year 2000 is estimated to be $20 million to $40 million a year.

D. Jarvis: Just to follow up, Mr. Minister, we're all in favour of all of the initiatives going on there, but it's the matter of how you socialists are creating the savings that we disagree with. Are there any further studies or is more research being done by ICBC with respect to no-fault?

Hon. M. Farnworth: Absolutely, categorically and certainly not the hell while I'm minister.

D. Jarvis: Could the minister tell me briefly about the ATP, the alternative transportation program?

Hon. M. Farnworth: What exactly would you like to know?

Interjections.

The Chair: Through the Chair, members.

Hon. M. Farnworth: It's a program whereby ICBC pays a portion of the cost of the. . . . If you go get your car in an accident, right, and you go to the body shop and get the courtesy car back, part of that cost is picked up by ICBC.

[ Page 8773 ]

Hon. M. Farnworth: We'll get that exact figure for you.

D. Jarvis: I hope that next year, when we arrive here again. . . . For about 60 percent of the questions I've asked you, you haven't had the information, which is rather unfortunate. I will expect the information very soon on all the questions that you were unable to answer.

I have one more quick question to ask; then I'm turning it over to my associate from Matsqui. Is Bob Williams the new chair of ICBC?

Hon. M. Farnworth: No.

M. de Jong: I don't think I'll be long. I was listening earlier this afternoon when the discussion took place about revenue divisions on the photo radar program. My particular question relates to some of the expenditures that are part of that exercise. I understand that many of the photo radar sites have been established through the province on private property, as opposed to roadsides on public property. The first question is: is that impression correct? Is photo radar equipment established on private property sites? I can imagine a whole bunch of reasons why that would make sense in terms of the view of the road and the oncoming traffic. That's the first question.

Hon. M. Farnworth: I can't confirm that, because that's up to the police. The key thing is that they've got to be pretty close to the shoulder of the road, so. . . . I mean, if they're on main streets, there's probably going to be a bit of a right-of-way lots of times -- an easement, or on the shoulder. That's probably the best answer I can give you right now.

M. de Jong: Not to be cute about this, but what I'm told is that in a number of locations -- at intersections, though we're not talking about the red-light cameras -- the best vantage point would be in a parking lot off the roadside right-of-way. The information I've received is that in cases where that is taking place, arrangements have been entered into between the operators and the owners of the private property that could involve the payment of fees. Is that happening? If it is, who's paying the fees? Is it the police who are operating the cameras, or is it ICBC?

Hon. M. Farnworth: That sounds to me more like rumour, because I can tell you that there are no fees coming from ICBC for practices of that kind. The police set them up, and they do that independently. ICBC doesn't tell them where to set them up, but clearly there are no fees going from ICBC to enter any arrangements of that nature. I can tell you that if there were, that would end.

M. de Jong: The minister's comments over the last five minutes suggest to me that there may be a cabinet shuffle in the offing. I won't prolong this unnecessarily.

I think I heard the minister say that he is unaware of any instance in which a location fee is paid to a private property owner. If I've garnered an incorrect impression of his comments, he could correct me. I'll leave it at that.

Hon. M. Farnworth: Your comments are accurate.

G. Plant: There are two issues I want to pursue; hopefully, both will be relatively brief. Last year I think Bill 41 was the Traffic Safety Statutes Amendment Act. A number of the initiatives related to graduated licensing, and some of the things were talked about in the context of traffic safety -- perhaps as an alternative to no-fault. That was the language that was used last summer.

One of the interesting provisions of that bill gave the superintendent of motor vehicles powers in relation to assessing those drivers who have a record of driving while impaired for substance abuse problems, the idea being that there are sometimes health issues involved in impaired driving. If we can address the person's addiction to alcohol or drugs, then we are taking an important step down the road to making somebody a better driver, and perhaps they will get their licence back once they prove that they have put that problem behind them. This initiative, though, has not been implemented yet, to my knowledge. The government has made a certain amount of mileage out of the implementation of other aspects of the traffic safety initiatives. I'm wondering if the minister has any observations about why this particular initiative has not yet been implemented and about when we are going to get it, if we are going to get it.

Hon. M. Farnworth: I can tell the hon. member a couple of things. One, the Ministry of Transportation and Highways has responsibility for that particular program. Never wanting to impinge on that minister's territory, I can also tell you that they are currently having discussions with the Ministry of Health on the best way to implement the program and on what sorts of rehab facilities are available. That's what I can tell you about that program.

G. Plant: I'd love to see the binder with the flow chart that says: "Well, this issue is in the Ministry of Attorney General on Tuesdays and Thursdays, it's in the Ministry of Transportation and Highways on Mondays and Wednesdays, but on Friday afternoons we'll let ICBC issue the press release." It's an interesting game, following motor vehicle policy around through the government.

I'll come back to something that I think is probably more. . . .

A Voice: Interesting?

G. Plant: Yes, more interesting and more clearly within the minister's purview.

ICBC is a major corporation in British Columbia. It's virtually a monopoly with respect to the provision of motor vehicle insurance -- most motor vehicle insurance. It is a significant factor, I suggest, in the economy of the province, including communications, marketing, advertising and so on. In fact, a big part of the success around some of the public safety programs is attributed to the fact that the corporation spends a lot of money advertising them. At the same time, I think it's important to recognize that when you're a major player in the marketplace -- when you are nearly a monopoly in terms of the service that's provided -- obviously there is a challenge in terms of ensuring that that market power is not used unfairly, that people are not intimidated and that the corporation respects the fact that it has a lot of power.

In terms of how the corporation deals with advertising and the relationship between advertising its initiatives and seeking news coverage with respect to those initiatives, does the corporation have a policy? Clearly when the corporation is about to embark upon Drinking and Driving CounterAttack initiatives, there is going to be some news value associated

[ Page 8774 ]

[5:45]

Hon. M. Farnworth: Thank you, hon. Chair. Gee, I thought my answers had been rather concise.

The answer to your question is: ICBC buys time on the basis of viewership. If TV station A has 30 percent market share and TV station B has 10 percent, A is getting a lot more advertising than B is.

G. Plant: Clearly ICBC would never go out and say to a communication vehicle like a newspaper or TV station: "Listen, we'll place some ads on TV or radio or newspaper in return for your assurance that you'll run a newspaper story about our initiative." At least the minister would be obviously outraged to learn that the corporation ever engaged in any activity like that.

Hon. M. Farnworth: One, I don't believe that would even work -- that with this media in B.C., you could go and say: "If we spend this advertising, will you give us good coverage?" If it did -- and I'm being very facetious here -- you'd see a hell of a lot more advertising than you probably do right now. The fact is that that doesn't work. The decisions on advertising are made on the base of viewership and that type of thing, not who's going to give you good coverage on a story. I don't, for one minute, believe that that even works.

With that, hon. Chair, I move the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 5:49 p.m.

The House in Committee of Supply A; E. Walsh in the chair.

The committee met at 6:39 p.m.

ESTIMATES: MINISTRY OF EMPLOYMENT AND INVESTMENT
AND MINISTRY RESPONSIBLE FOR HOUSING
(continued)

G. Plant: Before we broke, I had asked the minister a question or two about the policies that the corporation might have around the relationship between placing advertising and obtaining news coverage. The minister made some pretty powerful statements, which I think most people would be happy with, about the undesirability of any connection between placing advertising and news coverage. Unfortunately, I suppose, for at least the people of Richmond, there is some doubt about whether that is in fact the approach taken by ICBC. I have what purports to be a copy of a memorandum, dated February 13, 1998, addressed to the Richmond Review, from someone who is identified as an ICBC official with public affairs and road safety from Richmond-Delta. It concerns youth grant advertising. Actually, I have a copy of it. I'm not sure how one does this, but it could be provided to the minister.

A Voice: Pass it over.

G. Plant: The document I'm reading from was extracted in the Richmond Review on February 25. It's a memorandum, as I said.

"Dear Chris,

"Thank you for taking time to meet with me yesterday afternoon. As discussed, I spoke with my manager about placing an advertisement in the February 21-22 edition of the Richmond Review and the Surrey-Delta Leader. I contacted the Richmond News" -- and I pause to observe that that's another newspaper in Richmond -- "and they assured me that their editorial department will run the youth grant news release in the same issue as the youth grant advertisement. Yesterday you mentioned that your editorial and advertising departments operate at arm's length, and I understand that you may not be able to make the same assurances. My manager and I came to the conclusion that if we are not able to receive any like assurances, we will not be in a position to place an advertisement in the Richmond Review or the Surrey-Delta Leader."

It goes on to talk about the Road Sense youth grant program, and then it says:

"We are prepared to place advertisements with the Richmond Review and the Surrey-Delta Leader only on the condition that the news release runs in both publications."

Reading this -- and I have no reason to doubt that the document is a copy of an actual memorandum -- it certainly looks to me as though ICBC was expressing here, as a matter of policy, a connection between spending public money -- premium dollars -- on advertising in the newspaper and receiving news coverage. Now, it may be that they're not talking about: "Here, we'll run your ad if you say something nice about us." But on the other hand, it does look as though ICBC is saying: "We'll pay you some money to place an ad if you give some news coverage to our press release."

I suppose I'm particularly disturbed by this memorandum, given what the minister said before the break about the absolute improbability that anything like this would be the case. When we talk about the potential that a large corporation has to abuse its power in the marketplace, this is the kind of thing that could be hauled out by some people as evidence of that very risk. So I'm asking the minister what his views are on this document.

Hon. M. Farnworth: I guess there are a couple of points. Firstly, I will certainly look into it for a couple of reasons, and not just the issue the member raised. The fact is that what purports to be a memorandum from ICBC is actually on internal stationery, so this would be something that would circulate internally and would not be used in outbound correspondence. Secondly, if it is, it is completely and totally inappropriate, and it is not something that I would countenance in any way. That's the answer I'll give you. I'll look into it. If it's true, I don't countenance it in any way, shape or form. I'd like to find out exactly the details on it.

G. Plant: As to the first point made by the minister, I take it that his question is: why is stationery which would ordinarily be used only for internal purposes apparently being used externally -- that is, someone taking in-house ICBC memorandum forms and using them to send a memo to somebody at the Richmond Review? Is that what the minister meant by the concern around the use of the stationery?

[6:45]

[ Page 8775 ]

Having said that, I would repeat that I would in no way countenance what this alleged memo says. If it is, we'll do something about it. But I don't intend for that to be standard policy in any way, shape or form.

G. Plant: So the first concern is really an authenticity issue.

Hon. M. Farnworth: Yes.

G. Plant: If that issue is resolved in a way that determines that this is a true copy of an actual memorandum, then I understand the minister's expression of opposition to this as being ICBC policy. One could ask, I suppose, whether this was an isolated instance, perhaps, of a particular employee or a manager who got it wrong, versus whether or not this is in fact systemic or reflective of the way the corporation actually operates on a regular basis when it's dealing with small, community-based newspapers.

Does the corporation have an internal policy manual, in writing, with respect to advertising that allows people in the position of local public affairs officers to look to something that says: "Here is what ICBC policy around advertising is"?

Hon. M. Farnworth: No, there isn't a policy that would cover an issue like this. The fact of the matter is that I can tell you that it appears to me that this is an isolated incident, if it is in fact genuine. My sense of things is that if this. . . . Knowing how the newspaper industry works, if this type of memo were going out on a regular basis, you would have heard about it. I think it would be a front-page story either at the local level or at the provincewide level. The fact of the matter is that ICBC has. . . . You know, this is just not acceptable policy or acceptable behaviour from ICBC's or my point of view. The fact is that it's completely contrary to ICBC policy.

G. Plant: But there's nowhere we can look to, in writing, to find the expression of the policy that the minister has just so eloquently stated.

Hon. M. Farnworth: The answer is no, there is no policy manual that deals with this. I will say this for the record: it would not have occurred to me that someone would even send out a memo like this. You know, it's just not. . . . You just don't do it.

G. Plant: So in summary, the minister intends to look into this.

Oh, I see that there is more information.

Hon. M. Farnworth: I have got more information on the incident. The fact of the matter is that it was a junior person, the individual in question, who did send out the memo. He was told after this happened that this was improper procedure, and he was subsequently reprimanded.

G. Plant: And from that the minister concludes that this was an isolated instance, as opposed to being reflective of something that happens more broadly, even though there isn't really anything in writing that we could point to that says: "This is what you're allowed to do and what you're not allowed to do."

Hon. M. Farnworth: I'm certainly aware of this as being only an isolated incident. These things do happen in the best of organizations from time to time. People get overzealous. But as I said, it is completely inappropriate, and the individual was dealt with. It's not ICBC policy -- that's what I can tell the member.

Having said that, though, I can give the member my assurances that I will pursue this issue further and make sure that it is written down -- because this may be a symptom. Somebody just hiring on, for example, needs to have this brought to their attention. The member has brought it to my attention. I've been able to shed some light on the issue, and I give him my assurances that it's not policy and that I will pursue it further.

D. Jarvis: I'd just like to ask the minister a quick question, following up prior to our break. We were somewhat constrained for time, and I wanted some of them to get some questions in. On that ATP policy you have with regard to ICBC paying 40 percent, what does that pertain to? I always thought that courtesy cars. . . . You know, you pay for a better courtesy car for somebody you're responsible for if they have a business-risk policy or something like that. Does this apply to all insurance now?

Hon. M. Farnworth: It applies to everybody who's covered by collision.

D. Jarvis: Why do you have to pay extra insurance for a business risk which covers a courtesy car? That's one of the aspects of business coverage. Why should you be paying 40 percent for all insureds for a courtesy car? That's a cost that's unnecessary.

Hon. M. Farnworth: Business risk doesn't have anything to do with a courtesy car, but it has everything to do with the amount of driving that you're doing.

The Chair: I recognize the member for West Vancouver-Garibaldi.

T. Nebbeling: Thank you, Madam Chair, and more so also to staff. I think we are not totally satisfied with this portion of the estimates, but I think we have pushed it as far as we can go. There are other issues we have to discuss, so I would like to thank staff for taking the time to come here and help us find out some of the answers. You also got some questions you couldn't answer, and in the very near future we hope to get answers to those as well. So thank you very much for doing this.

Interjections.

Hon. M. Farnworth: Just to follow up on my colleague's. . . . There were a number of questions raised where more information and particular details were asked for, and we will endeavour to get that to the member as quickly as we can.

T. Nebbeling: Maybe the minister is going to need a couple of minutes to get a new team in. We're going to talk about jobs, investment and trade.

[ Page 8776 ]

The committee recessed from 6:54 p.m. to 6:58 p.m.

[E. Walsh in the chair.]

T. Nebbeling: What I would like to do now is spend the rest of the time this evening talking about jobs in the province. Without going into too much detail tonight, I'd like to talk a little bit about the philosophy that drives the ministry to find new ways to rejuvenate opportunities for people in the province -- the philosophy behind the drive to create new jobs, and the strategy as well. In particular, when we talk about strategy, I'd like to talk about how it relates to certain areas that the minister is involved with.

Like many of us who travel throughout the province, when we see extremely high levels of unemployment in certain areas, we think we know what the reasons are. There doesn't seem to be much government activity to deal with it in an effective way. And I'm not saying that it's being ignored, but it's not being dealt with effectively. Every time I've been to a place where things are going wrong when it comes to jobs and economic opportunities, when I come back a year later, very often it is still exactly the same -- this in spite of the government's attempt to make things different and to make things better.

As one of my questions in that philosophical discussion, how does the minister measure the activities by his ministry and his team? How do you evaluate to see if, indeed, what you are doing is correct? What kinds are things are they doing? It may be a little bit of a loaded question, which we will discuss in much more detail when we go through some of the points I'd like to raise later on. If the minister can give me a feel for how he takes the various elements that make up our economic structure, what the pillars of that structure are, and if he can somehow speak to these elements, that may kick-start the line of questioning.

[7:00]

I guess if we're going to engage initially in a somewhat philosophical discussion on how I see things working and where we need to be going, part of my remarks will in fact encompass a number of different ministries. The economy of the province is clearly based on a number of key industries, some of which have their own ministries responsible for them and for their activities. But the external and internal factors in those industries, to a great extent, have an impact on this ministry and the approaches taken.

I guess I would say that from where I sit, one of the key functions of the ministry is to try to identify trends and opportunities within and outside of B.C., to build on our strengths and to look at the economy and where it is now. I think to some extent we need to look at where we have been and where it is we want to go. Traditionally we have been a resource-extraction province. That's what built this province, and it's still very much a cornerstone of the economy today. The question is: will it continue to be so in the future? If so, how much of a cornerstone will it be?

I think if you look at where we are today and compare that to, say, 1982 or 1983 -- the last time we had a severe economic downturn -- you'll see that the province then was highly dependent on the forest industry, to a greater degree than it is now. The fact is that since that time, there has been a conscious effort to start to diversify the economy in British Columbia. To some extent it has worked. That has been one of the things allowing us to deal with and to weather the current situation, in terms of downturning commodity prices and the changes that are taking place in the forest industry, better than we did in 1982-83. We have to build on that strategy, and we have to focus on what are going to be the key opportunities for British Columbia.

My sense is that these opportunities do focus in on a number of areas. Clearly we've seen, over the last decade or so -- particularly since Expo '86 -- the advent of tourism in British Columbia. It has gone from being. . . . It has always been there, but it has never assumed quite the profile that it has right now. That is likely to continue. It's not something that's likely to change over either the short term or the long term. British Columbia is a highly attractive place to visit; people want to come here. Tied into that are a lot of the activities that have taken place around environmental things and parks and issues like that. That's one focus, if you like.

The second sector that is key and fundamental is one that all of us are aware of, and that is the area of technology. Over the last seven years we've seen huge advances in technological change not just here in B.C. but globally. The fact is that seven years ago, probably most people in this room did not use the Internet; they did not use personal computers. The explosive growth in the high-tech industry is happening here in British Columbia. We have growth rates of 20 percent a year. Clearly it is now an increasingly important part of the B.C. economy, and it's going to continue. The challenge for us is to build on what's here and to make it a larger cornerstone than it already is.

That brings us to the third point I'd like to raise, which is around the resource industry itself. There have been challenges in the resource industry. A lot of people are saying that they are sunset industries in the province. The challenge in many parts is to try and start to position the changes that are taking place from the point of view of resource extraction in terms of the level of resource extraction, the type of resource extraction and the markets that they are going into, and whether there other avenues that you can start to diversify. One of the key aspects of the government has been around the issue of aluminum, for example. It's a natural fit here in British Columbia. The challenge is to recognize, particularly outside the lower mainland, where the resource economy is still strong and is going to continue to be the dominant employer outside the lower mainland and southern Vancouver Island, that we have to have other industries that can further diversify the economy, not just in forestry but also in mining. Right now, clearly we're impacted by low commodity prices. One only has to look at the price of copper to realize the effect that has in terms of mines that are in production.

I think you almost have to look at it as twofold: there's a lower mainland economy, and there's an economy outside of the lower mainland. So the question is: in the resource areas of British Columbia, what can we do to ensure that resource development is taking place? We can look at alternatives to some of the traditional resource-extraction industries that have been there. That's why I mentioned aluminum. It is a

[ Page 8777 ]

The fourth point that I want to raise is around the whole issue of. . . . It falls outside this ministry, but if we're engaging in a philosophical discussion, then I think we can be fairly wide-ranging. That is the issue of small business. The role of small business in British Columbia. . . . It's no secret that more and more people in this province are turning to either home-based businesses or small businesses as an alternative to traditional sectors of the economy. We've seen tremendous growth in it, particularly in certain sectors of the economy. Tourism is a classic one. Again, high technology is another one, so we have to foster that. That is outside the ministry, but it's part of the overall picture.

Finally, the other area that we need to continue to deal with is the issue of foreign investment. British Columbia has four million people. The fact of the matter is that this gives you access to a limited pool of capital for investment. There's an entire world out there that has disposable income or money to invest, and we need to get our fair share of that. We need to have that outside investment coming here to British Columbia, because it allows a great deal of opportunity. In part, it was the influx of capital that allowed the boom to take place in the late eighties and early nineties. I think we have to ensure that British Columbia, in that regard, remains a good place to invest.

One of the things that I think we need to do is sell B.C. We're in competition not only with other provinces and other jurisdictions but also. . . . A lot of the world knows about us for forest and mining products, but there's a lot more here. Part of the job is to promote B.C. and make sure that we're there when opportunities are there.

I guess in a nutshell that's sort of a general sense of how I see things. We can get in and expand this more over the next few hours or as long as the discussion takes.

I think one of the biggest challenges that faces the province from an economic perspective is the fact that we have a lower mainland economy -- and I would include in that southern Vancouver Island and certainly parts of the Okanagan -- and then we have what's very much an economy that's dependent on resource extraction and world prices for those commodities. It's still very, very cyclical. I think the challenge for us is to try and start to create opportunities and to help opportunities happen that can, I guess, smooth out the cycle. You're never going to completely eliminate a cycle; that's just impossible. But certainly the challenge is to try and moderate some of the swings and to enable communities to be in a position that if one area is going down, there are other possibilities out there -- other opportunities.

If you ask me for sort of a brief overview, that's probably the best I can give you right now. We'll take it from there.

T. Nebbeling: Some of what I call the bases or the pillars that we all try to pursue in developing an economy are definitely made up of some of the components that you mentioned. I think tourism certainly has an opportunity to develop much beyond what it is today, although it is successful. And I think the knowledge-based industry is really where a lot of potential is. So I do agree with your overall view, as limited as it is right now because of time.

One of the areas that I find critical that I've never been able to get an answer on -- maybe you can help me today -- is that you are the Minister of Employment and Investment, and you also recognize that. . . .

The Chair: Through the Chair.

T. Nebbeling: Through the Chair, to the minister, you also, as minister, have to depend to a large extent on other ministries, be it the Ministry of Forests, the Energy and Mines ministry, the Training and Technology ministry and so on. I have never really figured out -- through the Chair, Mr. Minister -- how that relationship actually works to the point that it is effective.

You mentioned the Power for Jobs strategy, which I believe is ultimately the responsibility of your ministry. However, you have to work together with the Minister of Northern Development. I'm not going to say that he, as the Minister of Northern Development, would see your role as interference in his job and that therefore he would say: "Hey, stay out of this." I think he is beyond that, as a minister. But I can see that there is that element of: "Hey, I'm the Minister of Forests or the minister of this. Who are you?" How have you overcome that, as part of your strategy? I believe you have to overcome that. How does that relationship work? Where do you meet? Where do the ideas come from? How do you fund the ideas? I've never been able to get an answer to all these kinds of questions. Maybe you can spend some time explaining a little bit about that area -- what to me is the area where an initiative can be made or can be broken. If you don't mind spending some time on those relationships.

Hon. M. Farnworth: That's a good question. While we're in this sort of philosophical discussion, it's probably a question that can equally apply here in this Legislature and right across the province. I suppose you could have a superminister responsible for economic development who could deal with all of the components of the economy under one ministry, and that would include forests and mining and the energy sector. I think the problem there is that it would be too big; it's too much for one individual. Sure, on certain issues, you can say, "Do this, do this or do this," but then you lose the ability to focus on a particular area exclusively. Forests are such a big component; they do require their own ministry. As such, I think the advantage of the split approach, if you like, is that each individual who's responsible for that particular component has the ability to focus exclusively on it and the problems within that area of jurisdiction.

Let's take forests, for example. You can get ideas coming up from within that can be brought forward and that need implementation. Usually, to have implementation, you've got to have some sort of cooperation between the different ministries, because they have different perspectives. Basically, the key is to recognize that you're not working in isolation. If it's to go forward successfully, it's got to have the view of Employment and Investment; it's got to have the view of Energy and Mines. How do the changes that you may be proposing in terms of forests impact on mining, for example, or how would they be perceived by, let's say, the investment community? I guess the best way of putting it is that we have regular contact on a broad range of issues, so we're able to get input at the appropriate point; then the issues work their way up.

[7:15]

[ Page 8778 ]

That's an example, I would say, of how it has worked. When the changes were made. . . . For any change that comes forward to the cabinet table, the first questions asked from my point of view are: "How are you going to deal with the concerns of local government? And if you can't deal with the concerns of local government, then why are we moving forward on this?" So when I made the move to this ministry, I already had the background on the issue, and again, it's like working with. . . . Even though the portfolio splits to Energy and Mines, it's like: "Okay, have we got those issues resolved? And how is it going to impact on other sectors of the economy?" So those are resolved, and you can go forward.

A lot of it is the ability, as my colleague said earlier on, to get beyond straight turf protection. I think you're right: if you are hung up too much on that, then you're not going to get the necessary cooperation, and you're not going to have the ability to get the information and input you need. That's one of the key things you have to do, whether it's in this ministry or in any of the economic ministries -- to get beyond, "This is entirely the responsibility of my ministry," and to recognize that we are supposed to be working as a team to get to a common goal. I mean, is it down on paper? We all have our own defined roles as to what we're responsible for, but I don't think you could put down on paper that you've got to be able to work with the other guy and get something done.

T. Nebbeling: We have now looked at that relationship, which has always intrigued me, and how that can develop. I think the minister has given some insight into how he looks at it. I almost get a feeling that the minister is a clearinghouse, rather than being necessarily the initiator of these initiatives. That doesn't mean that the ministry as a whole just sits back and waits for orders to come to the ministry. I know that is not the way it works. But it also seems that the ministry, from time to time, plays the role of bringing people into a neutral area, where the various interests, with assistance, can indeed find some common ground. If that is part of the role of the ministry, then I think that is a very worthwhile component. It will overcome what I have often seen in the past to be the barriers: turf protection and self-interest. I'm really happy to hear that the minister looks at it this way. I think we're going to need more of that kind of an approach. This may be a little bit holistic. I don't know if I would go that far, but it gets close to that, and it's all-encompassing.

To complete the philosophical picture that I'm trying to get from the minister, and which I will use in a positive manner during estimates. . . . The other element that has to come into the fray is the element of investment. The minister did allude briefly to the involvement of overseas investment or foreign investors.

In the last two or three years, we have not been very successful in enticing the outside world into looking at British Columbia for investment that carries with it some comfort that the return will make the investment worthwhile. I think we are seeing less and less of the little that has been invested continuing to come our way. I would like to hear from the minister how he incorporates into his philosophical thinking how this investment and employment segment of our society works -- how these work together and how he incorporates that into his way of thinking and brings it into his contact with the other ministries that are playing critical roles in creating a new direction as well.

Hon. M. Farnworth: I'll start by saying that from the point of view of this ministry, in terms of outside investment this ministry is clearly the lead entry point for investment in the province -- the lead ministry in terms of the interface between that investment and government in terms of opportunity. Others tend to work in concert.

Let's say, for example, that there is interest in a particular area, whether it's forestry or mining. The contacts are there in those particular ministries in terms of who may or may not be interested or where the action is, because they're in day-to-day contact with developments in the mining industry, for example, or in day-to-day contacts with what's happening in the forestry industry. High-tech is in day-to-day contact with what's happening in technology. So they have the ability to help identify, and then we can go and say: "Okay, look. Here's what is happening; here's what you need to know. If you're interested in this or if you're interested in that, we can start to put together the type of information that you're looking for."

I guess one of the biggest challenges. . . . I'll stress this, because the member's right. A big part of what I think this ministry does or needs to do -- I guess clearinghouse is the wrong term -- is help coordinate what's going on so that one hand knows what the other hand is doing. If there are needs in forestry, or if they're trying to deal with a particular issue and are looking for a particular expertise, we're able to help in conjunction -- not going off doing our own thing without making sure that we talk to the other ministries.

I guess it's the same thing in terms of investment: to look at what's happening around the globe and how that fits in from British Columbia's perspective. We've had a great deal of focus on Asia. Part of that has been that on a regular basis we're not just meeting with investors from Asia -- getting a sense of what's going on in Asia and getting a sense from the nationals that live in that part of the world of what they think is going on -- but also staying in regular contact with the federal government, our missions abroad and our own people abroad, so that we have a sense of what's happening in those areas and where some of the opportunities are, and we can then start to build on that.

One of the other points I would add is that we also need to make sure that we don't have all our eggs in one basket. I think you've started to see a broadening. We have had a focus on Asia now for a considerable length of time, and I think it's been very successful and will continue to be a success story for the province, even though we're in a downturn right now. But I think that part of my job and part of the ministry's job is also to identify opportunities in other parts of the world -- South America, for example, and Europe.

Again, that comes back to what I was talking about: working with different ministries. For example, mining has been extremely successful in Chile. Well, clearly there's a presence there in one particular industry. What can we do? How can we build on what's happening there? It's likewise with Forests. We have continuing issues around Greenpeace,

[ Page 8779 ]

I think it comes back to what we talked about earlier in terms of dealing with issues internally in B.C. A similar approach, I think, needs to be taken with a view to external investment, with the focus of this ministry being in terms of identifying opportunities and working with prospective investors to identify areas here in B.C.

T. Nebbeling: Again, I find it interesting -- the perspective that the minister has on how these components come together and can turn into a benefit for the province. I'm 100 percent sure that that is indeed your motivation. How do you deal, then -- if I can ask this through the Chair -- with other forces that are either government-driven or bureaucracy-driven and that counteract many of these objectives that the ministry would have -- not only the objectives but also the way to get to these objectives?

I can give an example. I will try to keep it light at this point, because I really do not want to go into too much detail, pending the hour. The investment climate in this province truly needs a boost. I think the minister and some of his colleagues have tried, through discussions with the various business groups in British Columbia, to somehow find a way to get that investment climate lifted out of that cloud of suspicion that we are facing today. It's not what the minister wants to hear, but I think that's how it works right now, when I talk to anybody. I was just in Europe for three days, and I met with a fair number of business people there. It is suspicion, more than the inability of this province, that leads the investment world to stay away from here right now. That suspicion, to a certain extent, is driven by policies or actions that have been happening in this province for the last number of years.

Maybe I should ask a question here. In his new portfolio, has the minister made trips abroad already to meet with these groups? What kinds of messages does the minister get from the investment world, be it bankers or corporations? Is there anything that the minister recognizes that he has to bring back here and find the changes internally? I think the last budget that was presented to the province was, to me, a good example of how the message from the investment world was not heard. The investment world was not looking for a $200 break per year for a small business. They were not looking for a small break in the corporate capital tax; they were looking for something significant, and it wasn't there. I think that is the type of budget that adds to the suspicion that I feel when I talk with business people and ask them: "Why are you not coming here?" Everybody I talk to is aware of the richness of this province and the committed workforce that we have in this province -- two very strong components to entice the investment world to come here. It is that suspicion which I talked about that stops them from doing that.

[7:30]

Hon. M. Farnworth: I want to make a couple of comments. We can get into a discussion on budget and we'll disagree, and I don't know if that will accomplish a lot. What I would like to talk about, given that we seem to be in more of a philosophical discussion right now, are some of the issues that the member has raised, particularly around foreign investment and what my role as minister can do and where I see things going.

In answer to one of the questions that you raised -- "Where have you gone when you travelled?" -- I got sworn in on February 17, and we started sitting at the end of March. I haven't had a chance to go anywhere yet. However, having said that, within the member's question there is a really valid point. One of the things that we have to do in B.C. is get out, as I said earlier, and sell the province. We do have to get out and find out what's going on in the rest of the world. That's important. My sense is, as I said earlier, that some of the key areas that we need to focus on are clearly. . . . Asia is one of them -- Japan, Korea, Taiwan, Hong Kong and China. And there's the activity that's taking place in South America and the growing trade links with South America -- Chile, for example, and Mexico and what's happening there. Then, clearly, there's Europe and the effect of what's happening now in the European Union and the changes that are taking place there. It's not only the internal trade policies and how they impact on British Columbia but also the currency changes that are taking place and how that will affect the North American market -- not just British Columbia, because we're part of that North American market. Some of those changes that are taking place need to be addressed, and we need to do it on the basis of what British Columbia's interest is and how we tap into it.

Part of the problem right now -- and you touched on it -- is how decisions are made from outside. A lot of it right now is dependent upon commodity prices. There are a lot of areas where we can't do. . . . I mean, you can put in place all the policy changes to make mining investments attractive; you can deal with all the royalty issues; you can deal with a whole host of issues. But if copper's down at 80 cents per pound, it doesn't matter if it's British Columbia, Washington State, Oregon, Alberta, or Queensland, Australia, no one is opening copper mines, because it's dependent on the price of the commodity. That applies to a host of commodities that British Columbia produces.

The key, then, is: do you focus on those areas, or are there other areas that we need to be looking at? Are there other issues that we need to be addressing that deal with the security of the markets that we have, that we get our products into? There, specifically, the key one would be forests, as I mentioned briefly earlier. It's complicated. That's where it comes back to when we were talking about the issue around the Forests ministry. The issue is one of access and markets and of how you maintain that access and deal with the threats to that access. That's one of the key roles that we do need to take. It's dealing with the Greenpeace timber boycott threats that are currently there and making sure that you are able to. . . .

We need to be in there getting our message out and getting our message across. I mean, that's one of the key opportunities we need to take. In the case of the high-tech sector, it's to build on opportunities that are here in British Columbia, and it's to identify the key components of that sector and say: "Okay, where are the dominant players? Let's go out there and sell what we have to sell."

You're seeing that to a certain extent -- and we'll come back to it, I'm sure, throughout the whole of the debate -- around the aluminum industry. Initially, it was the province

[ Page 8780 ]

What that did was create a buzz and talk within the industry. The result of that has been further companies coming on their own initiative to look here and see what's going on and how it fits into their plans and into where the aluminum industry is going overall. You've got a combination of activity by the government of identifying a key area and taking action on that area, and the result of that has been to generate interest.

Have we done enough of it? Probably not. Do we need to do more? Yes, we do. When the House finishes sitting -- whenever that is this summer -- that will become one of the key parts. . . .

Interjection.

Hon. M. Farnworth: Let's hope it's not in October.

T. Nebbeling: No, September. Don't say October -- middle of September.

Hon. M. Farnworth: Only someone from Peace River North would be that pessimistic. Geez, Richard.

R. Neufeld: I didn't say that. I said as soon as the House is out.

The Chair: Order, members.

Hon. M. Farnworth: Yeah, when the House is finished sitting, that will be one of the key parts of this ministry: to get out and get to some of these places to find out what's going on, to hear input and bring it back, and to then try and start to look at things and at how you can take the information you received and internalize everything and work it through the system.

One final point. You were talking about working within the bureaucracy and outside the economic ministries. . . . I mean, it is difficult. Sometimes you'd like to throw in a bomb -- right? You get obstruction that. . . .

I know that the issue you're going to raise with that is going to come up. One of the challenges is to recognize and to try and get that balance between regulation which is desirable from a social point of view in terms of, specifically, environmental regulation. . . . It's part of what the public is demanding, whether it's clean air and water or whether it's how we harvest in the forests or how we maintain roads -- or an environmental review process. How do you make sure that it doesn't hinder and tie things up for so long that you're causing unnecessary delays? That's one of the biggest challenges that we face.

T. Nebbeling: A couple of issues. Again, for a sense of comfort and for the minister, as well, I'll be very frank that this is more being philosophical than really getting to the issues. I don't want you to feel trapped by talking on the philosophical level, in a sense, and then me trying to. . . .

Hon. M. Farnworth: I understand what you're saying.

T. Nebbeling: You mentioned a couple of things in your last statements that made me think, and one of them was that yes, the Asian flu is having a negative effect on our export markets. Of course, our export markets are not just Asia; we have other markets as well. The products in the lumber industry that I've really had much admiration for. . . . The way they have been produced is, indeed, by the secondary manufacturing industry: doors, windowsills, log homes -- the higher-end products.

Here on the Island, there are a couple of secondary manufacturers. One is in Duncan. The work these people do is just phenomenal. Actually, most of their product goes to Germany. I know that what they make is very desirable. I talked to them recently on one of my trips up north, and clearly, they're having trouble selling their product. So when I read in the paper this morning -- and I do not want to quote the clippings -- that the secondary manufacturing industry in British Columbia is having trouble selling their product, exporting it abroad, compared to other provinces where there's a secondary manufacturing industry, it really said it to me: "Here we are in British Columbia with probably the very best product that is produced for those niche markets abroad, if you want to call them that, and they won't buy it." And there's only one reason for it: the cost that the B.C. manufacturer has to charge to cover his operation is, to a certain extent, prohibitive for the market to get rid of it all. They get rid of a portion of the product, but they really get stuck. The reason for that, of course, is in part the cost of the lumber -- it's extremely high-grade lumber -- and its various consequences policy-wise, regulation-wise -- fees, royalties, stumpage.

So as the "minister of enticement," as I would almost like to call you, because I think that's part of your role, I hope that as we get further into the debate, we can talk a bit about that, and maybe about how the minister has to be a little bit more aggressive in dealing with these kinds of issues. We are missing opportunities -- for small communities in particular, where these secondary manufacturing plants are operating -- that we just can't afford to lose. The problem is that with these types of industries, once you've lost your client, it's very difficult to get them back. They have to go to somebody else, and it seems they've been going to the East. Without partisan pride, I know for a fact that what is produced here is superior to what they can produce in the East. So I hope that during these estimates tomorrow, we'll spend a little bit of time on how the minister sees his influence or role growing in controlling that kind of element.

[7:45]

The third point I would like to raise. . . . The minister also spoke about the fact that he would like to go to Chile, because they have a flourishing mining industry there and also a flourishing forest industry. The set point when the minister is there, is that he will find out that the flourishing of the mining industry today is, to a large extent, driven by the fact that we have lost our mining industry. Many of the brains that were involved in the mining industry in British Columbia have left.

[ Page 8781 ]

Chile did that a number of years ago, and they used that knowledge of the mining industry in British Columbia to further their own interests, with much success. Right now, as the minister knows, there are a number of companies in British Columbia that actually run mines in Chile, with know-how that comes from here. The same applies to the forest industry.

Without hindering people from travelling and sharing knowledge, I was quite. . .not appalled but taken aback when I saw that last year or the year before, BCIT started a program to have young students sent to Chile to work in forestry after they'd been trained in the forest industry here. I think the government actually played a role in building that bridge. I really had to question: how can it be? Here we train our young people and use that knowledge that they accumulate in our institutions, to further our own benefit to a large extent. . . . What's happening in the forest industry is so devastating, and it is so undermining for many, that we now see these young people -- with the assistance of the provincial government as a bridge-builder -- leaving B.C. and travelling to Chile, where they're developing a forest industry that in the long run will be a major competitor, if it's not already. They'll be a major competitor for British Columbia.

So I have a little bit of a problem with the concept. If somebody goes on his or her own accord, there's nothing that will stop me from ever encouraging a person to find their role, wherever it is. But when government starts building bridges to export our knowledge base in that industry, I really have a problem with that.

Having said that, the point I want to make is. . . . This may be a question. Granted that he has to stay in British Columbia because of the parliamentary agenda, does the minister from time to time see the opportunity to talk with these companies that operate today in Chile, be it in the mining industry or in the forest industry? What do these companies give the minister as a message -- like, you know: "This is how we would be able to stay in British Columbia"? Hopefully the minister can spend some time on that.

Hon. M. Farnworth: The member has raised a whole host of interesting points, and I'll try and address as many of them as I can. I guess I'll start on the issue of forestry and mining. I mean, there's a whole host of issues. The member raises the point of the parliamentary agenda, and that's true. I mean, it is constraining on what you can and cannot do.

The fact is that I do talk on a regular basis with industry. We do that through a number of forums here, you know -- the association meetings and other opportunities that arise. That happens on a regular basis. For example, in the limited time I've had, I've had a number of opportunities to go to different parts of the country since becoming minister, to get a sense of what's going on there. So that's key, and that will continue.

But I just want to touch on some of the issues that face us, because they're key. I mean, we can point the finger at one thing and say, okay, it's regulation or it's taxation. But it's more than that, because there's a whole component of things that go into why we are strong in certain areas and why we could do better in other areas. Some things we have control over and can take action on. Other things we don't have control over -- other things that we can't change.

We can, for example, deal with issues around red tape or regulation. We can go out and talk with the oil and gas industry or with the Mining Association. We can come to grips with issues around land tenure, for example, or we can come to grips with how long it takes to process a permit or what the cost of that permit is. We can deal with those issues to the satisfaction of the forest industry -- or I'll deal specifically, in this case, with the mining industry: we can deal with those issues and make them attractive for the mining industry.

But there are also some key things that we have to realize we don't have control over. We don't have control, for example, over the fact that copper deposits in British Columbia have been mined for over a hundred years and that a lot of the best ore has been mined. The fact is that a lot of copper deposits in British Columbia are running -- I don't know -- let's say 0.2 percent copper. That's economic if the world price is decent, but it doesn't compare to Chile or South America.

Interjection.

Hon. M. Farnworth: I heard that comment, and I'll address it in a second. Around the Tatshenshini -- I heard that.

I just want to come back to Chile. It doesn't compare to Chile, where you have copper ores that are running 1.5, 2 or 2.5 percent copper, which is a phenomenal difference. That's something, you know. . . . We can't do anything about that in British Columbia. I mean, we can't put in what's not there. There's a lot more exploration that needs to take place and a lot more deposits to be found. But a lot of those accessible, easy, high-grade deposits have been mined out in British Columbia. They haven't, as of yet, been mined out in Chile. In fact, some of the copper deposits in Chile are absolutely enormous. There are not deposits like them in the rest of the world that are that large.

A Voice: We had some.

Hon. M. Farnworth: And most of them have been mined out. So issues like that, you know, we can't affect.

We can deal with regulation, with some of the key elements, key pillars or cornerstones, in terms of trying to encourage exploration. I think that's the message that we've heard and that we've tried to make some changes on.

Around the issues of lumber, forestry and secondary manufacturing. . . . The member is right. Secondary manufacturing needs to become more of a strength and a player than -- for a whole host of reasons -- it has been. One reason is a system of forestry in this province where secondary manufacturing has essentially been secondary. It has been squeezed out, because the main exports have been logs and 2-by-4 to the States. Clearly we know that that's not the case. We have to make changes around that.

I think I read the same article the member did. He says sales are up 2.5 percent here in British Columbia, 4.5 percent Canada-wide. The article identified some of the key things. One was access to lumber; that's a critical one. We need to put in ways of dealing with that, and we're seeing changes like that. There are issues around stumpage, but they're tied to a bigger global issue, a bigger continentwide issue: our relationship, in terms of lumber production, with the United States and how much lumber we ship into the United States. That's impacted in terms of coastal producers and how much lumber is shipped to Japan -- and they're in the doldrums and not buying, so now that lumber is available to be shipped to the United States. Unfortunately we can't do it because there is a quota system in place. That's one component.

[ Page 8782 ]

One of the problems we have in competing with the rest of Canada on that issue is that they don't want old-growth -- right? An old-growth tree in Ontario, Quebec or Alberta is six inches in diameter. It doesn't mean anything to anybody; it doesn't look nice. Here in B.C., that high-quality, high-grade lumber is probably coming from a tree that is three to six feet wide -- a nice cedar on a very picturesque mountainside. People don't like to see it cut, and it's that type of message that we have to deal with.

Some of those things around regulations and red tape, we can deal with. Some things we can't deal with. And there are others where we have to be more aggressive in terms of getting the message out and saying: "Look -- what is it that you want? What is it that you're after? If you're protecting the environment, then look at our record, because it's second to none compared to the rest of the country. Look at what our competition is saying are their practices." That's part of it.

Finally, I'd address the issues that you raised around knowledge-based issues. I think some of the key issues that need to be dealt with are. . . . We do need to deal with the issue around the "brain drain." That's not just here in British Columbia; it's nationwide. We need to deal with issues around taxation policies, with opportunity in terms of encouraging the development of high-tech industry here in B.C. That's clearly part of it.

But the other side of that coin is going to be that we will send people abroad. We will train people here and send them abroad for a number of reasons. If we don't do it, the United States will; if we don't do it, Germany, Holland or Australia will. We have expertise in a particular area. I understand what the member is saying, but it's not necessarily a bad thing to have our people, our knowledge, our brain trust, establishing industries or whatever in Chile or Mexico, because we're creating a link back to British Columbia for us to build upon in the future. I think that's one of the advantages that has come about with the investments in South America in the mining industry.

Those head offices are still here. I see by the time on the clock that I've got to adjourn. Anyway, suffice it to say that there's a lot we can do and a lot we can't do, and we need to do more.

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

Motion approved.

The committee rose at 7:56 p.m.

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