Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

[ Page 12405 ]

The House met at 10:04 a.m.

Prayers.

Hon. U. Dosanjh: I want to expand upon the introduction that I made yesterday in the House at 2 o'clock with respect to the parole board members that were here. I did not complete my thought, and I may have left the impression that they don't do a good job. Parole board members right across the country do a very good job under very difficult circumstances. What I meant to add was that not all their decisions are always acceptable to us Canadians. We are very critical, but that's not because they don't do a good job. They do a very good job under very difficult circumstances, so I want to make sure that I correct that record.

Orders of the Day

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

ESTIMATES: MINISTRY OF ENERGY AND MINES AND MINISTRY RESPONSIBLE FOR NORTHERN DEVELOPMENT
(continued)

D. Jarvis: Well, I see the minister has brought in the power today -- has he? Yes. Well, we're not going to be too tough on him. There aren't going to be many things that we're going to go into other than where we were when we started off yesterday -- or where we finished off, I should say.

I was under the feeling that the minister should be more of an advocate and try to make some more changes in regard to the land use planning of this province. I think I've asked him what his situation was with regard to an independent sort of analysis on the economic and social impacts of what mining would do -- that perhaps the economic aspect is being put aside by the groups for all beings, etc., etc. And there was very little. . . . When someone from the mining industry -- either metal mining or. . . . In the case in the Kootenays where they had land use meetings, there was also a representative of coal there as well. But the ministry also had a representative at these tables. Now you're the only one there.

[1010]

Are you going to stress the economic advantage of mining, for example, in these areas where they are being closed off? There's no question that we're now probably. . . . When you look at the special management zones and you look at the parks and the way that little hook in the agreement is, where the special management zones could be pushed up to a higher level, there is no question that the province is being closed off. Instead of 12 percent, we're up into the mid-20s. I think the figure that was thrown at me the other day was something around 23 percent, when you start adding all of these things together. We're only halfway through the province. That is the concern of the people out there in the industry. So I am wondering if you would like to comment on that.

Hon. D. Miller: The ministry's role at the land use planning tables is to provide the kind of information that's required for the tables to arrive at their decisions, and clearly, in doing that, to point out areas that have significant potential for mining. I think the real issue is this, and it's a difficult one: unlike other activities on the land base. . . . For example, say, with forestry or agriculture it's easy to contemplate the use. You have land that contains trees and presumably recognize that there's a trade-off between maintaining some of those trees, if you like, or those timberlands in the working forests so that timber companies can access them. . . . Similarly, if they're agricultural activities, identifying those lands and ensuring that they're available for agriculture is fairly straightforward.

But mining is different in this regard. No one really knows where the minerals are in British Columbia. We have very good geophysical data that indicate where we think there are significant deposits, but those are only discovered through exploration activity. That exploration activity typically, as the member referred to yesterday, can take place over a fairly long period of time, as much as 30 or 40 years. So it's much more difficult to be precise about mineral values and where they are in the land use planning process. Notwithstanding that, the end result of the land use planning process is to preserve some areas in a protected status -- parks -- and to make other areas available for general development.

The mining industry's concern -- and to some degree I can understand it -- is that, going back to the point I made, it requires extensive exploration. Now, the only. . . . There are a couple of ways in which you could address that. One is to say that we will not restrict exploration activity -- or, in fact, mining activity -- in parks. But my sense of that issue, in a public way, is that the public would not accept that. So if I'm right there, it leaves the mining industry with a smaller land base to explore on than they would previously have had.

They've also registered concerns about special management zones. But we have tried to take some care in advising the mining industry -- and, indeed, other industrial sectors -- that a special management zone is not a de facto park. It's available for development under the rules.

[1015]

I understand their concerns about land use planning, but I still submit that they are better off as an industrial sector to be at the table -- to make their case at the table -- as opposed to not being there. But those are decisions that they have to deal with.

D. Jarvis: Well, that's exactly what their complaint is: the fact that no one knows where the minerals are. That's for sure.

[ Page 12406 ]

You are restricting those areas, because you can move the special management zones up to a higher level. You know, take away the aspect of parks; I think the mining industry was agreeable right from the start. Reluctantly, they agreed that 12 percent of this province would be designated as park area, and they would be willing to stay out of it even though one of their most productive mines is already in a park -- that being Myra Falls. They were agreeable to that. But their land base is crunching down to mountain tops and glaciers; it's very little. That's why exploration is down: they can't go into areas. When you take the areas that are put aside right at the moment because of the disruption of aboriginal land claims and these special management zones. . . . That is the problem.

No one seems to be out there from the government side saying: "Well, look. We have some economic value in this province, and we have to consider these as primary." There's a feeling out there that you are listening to that environmental wing, who seem to value trees over people. We have a large province out there where we have a lot of people in the resource areas. If we take away the land base for exploration and mining and all of the rest it, what are they going to do? They can't all be computer operators; we know that's not going to happen. The government has to sit down and say: "Look, there's an economic value out there, and we can't just control or crunch the areas where exploration cannot go into." That's what is happening -- the Muskwa-Kechika, for example. That is now being brought up to a higher level, where they can't get in.

You say: "Well, the energy people can do it." But don't forget that the line was drawn on the other side of the trench, where there was gas on one side and minerals all on the other side. You mentioned that there are new technologies to get minerals out. I think it was you who mentioned one day that you could always put a pipe down and try to suck the copper out. I think that was the minister's explanation one morning; it must have been very early. But anyway, I'll just leave it at that and see if he can come back at me with some kind of explanation as to what they intend to do themselves.

Hon. D. Miller: I'll just make two points to the member's question. One is that the Muskwa-Kechika, using that as an example. . . . Let me back up a moment. It's clear that land use planning is not a simple or easy process. I guess that if I draw on my own experience and observation, that can also be the case, for example, with respect to municipal zoning. There are always conflicts between competing uses of the land. The member for Peace River North will recall an issue that arose in Fort St. John about a gas well being drilled in fairly close proximity to a residential neighbourhood, and how the residents came out and said: "We don't want this activity to take place; we don't like this gas well being so close to the residential area." So that's a conflict between competing users. I think the member for Peace River North recognized that; he offered some valuable input into it and eventually we resolved the problem. But these are the kind of conflicts that do arise when you plan land use.

[1020]

If you broaden that discussion to include the entire provincial land base, it's not surprising that conflicts would arise between people who want to use the land for different things. I agree with the member. There are some people who. . . . I note, for example, the press release put out yesterday, I think, by the Western Canada Wilderness Committee -- WC2 -- that said, the way I read it, that we should put 40 percent of the land in B.C. into protected status. We've rejected that notion.

In the case of the Muskwa-Kechika, it was interesting to observe that the oil and gas industry -- a very big industry in the province which contributes significantly; I read some stats yesterday in terms of the investment they make in our province -- were fully supportive of the Muskwa-Kechika decision. They participated in the land use table. They stood on the platform with the Premier and environmentalists and others in the region and applauded the decision to create the Muskwa-Kechika protected area. The mining industry was critical.

Interjection.

Hon. D. Miller: I know, but my point is this: land use planning is not an attempt to satisfy one group -- whether that's the mining industry, the forest industry, the oil and gas industry or the people who want more parks. It's not intended to support one group over another. It's intended to have those groups engaged in the planning process and, presumably, to come up with a plan that, while not perfect, at least is one that everybody can subscribe to. Everybody gives and takes something. I can only repeat what I've said about the mining industry: they're better off participating in that process than they would be standing outside the process, attacking it.

You talked about Ontario. I don't want to go on too long, Mr. Chairman, but Ontario has done much the same as British Columbia has done. It's remarkably similar in terms of. . . . There they started calling it Lands for Life, and now it's the Living Legacy -- to protect 12 percent of their land base in half of the province. The rules around mining companies' rights to explore and indeed bring mines on in some of these areas -- both the protected areas and what are equivalent to special management zones -- are pretty much the same as they are here in British Columbia.

I recognize that the member is speaking on behalf of the mining sector. That's all well and good; I do that myself. I point out constantly that it's an important industry and one that we value. But as far as the larger issue of land use planning, they have to be like all other participants in the process: at the table, arguing for their issues. Once it's completed across the entire landscape of British Columbia, I think the end result will be one that we can all live with and that citizens should all proud be of, which will have a combination of protected areas and parks and which will have most of the land base allocated for resource development -- whether that be forestry, mining or any other kind of development -- subject to the kind of normal rules that you would apply so that it's done properly.

[ Page 12407 ]

The process really is totally inappropriate for subsurface resources. There's no question of that. You were talking about people that. . . . The member from the north was talking about gas drilling near a residential area. We're not talking about residential areas like Colwood and all of the rest of it. We're talking about massive areas, the size of whole provinces in Canada, where there are few or no people residing, and you're closing it off.

[1025]

Interjection.

D. Jarvis: Yeah. Well, as I said before, you have said that. We all appreciate it, because we are finding it very difficult to see how you can drill and suck copper out of a tube by drilling horizontally. Do you recall yourself saying that at one time? We do. Anyway, we could go on that subject for hours and hours and hours. It's really a shame that this government doesn't seem to be enough of an advocate for mining -- that the minister is not standing up there and saying that there's an economic value here and that we should be protecting it rather than restricting it.

I want to ask the minister, in regard to deactivation of roads. . . . I get calls all the time -- and I imagine his office gets a lot -- about deactivation of roads by FRBC. I was informed that, originally, this was to. . . . If there was a decision to be made to deactivate a road, the mining division would be called; and if there were any claims or any work being done there, there would be an arrangement that the road would not be deactivated. But I keep getting call after call after call on situations where it's still happening. These roads are actually. . . . It's not only the fact that the roads are being deactivated and disturbing claims that are already there; it's the fact that the government doesn't seem to recognize that the roads are an asset. I mean, these are resource roads all throughout the province. Taxes have been paid on them. They belong to the people of this province. As I say, these are an asset, and I'm wondering if the minister has given any further consideration to talking to FRBC to see whether they are abiding by the rules and regulations that were set up with regard to FRBC having to contact you first. This doesn't seem to be happening, and I've phoned your office a couple of times on that. Would the minister care to comment?

Hon. D. Miller: The member has indeed raised an important question. While, at least in theory, the process requires that kind of consultation between agencies in mining and forestry, there are conflicts between the requirements of the Forest Practices Code in terms of road deactivation and the desire, at times, of people in the mining sector to keep the road open. It's not a simple issue, because it raises different issues. Why is the road being required to be deactivated? Is it because of wildlife issues? It's those kinds of questions. It's early yet, I suppose. It's an area that we are watching very closely.

We've initiated some processes with the Ministry of Forests and the industry to try to get better at it, but it's clear that a lot of these forest roads are the access for exploration activities. So we just have to continue to work at it and try and improve the coordination between agencies so that we don't unduly compromise the ability of people that use these roads to access exploration or claims.

D. Jarvis: So if I have another call, I can phone your ministry, and then you will get on the phone right away and try to correct that situation with the FRBC or whoever it is doing the deactivation?

Hon. D. Miller: Well, there's a great risk, of course, in the minister assuming that he or she should try to deal with every single issue that might be raised. But certainly the member is most welcome to call my office when problems arise, and we will treat it very seriously and give a lot of attention to it. If we can help resolve any problems, we're most happy to do so.

[1030]

Hon. D. Miller: The package I talked about yesterday, of the initiatives on mining that we brought in last year, was a result of a negotiating table with the mining sector, and we considered a range of taxation measures. The agreement that we reached was to provide $9 million annually for incentives for exploration. We extended the gross-up -- that's where you can gross up your capital investment by, I think, one-third as much. We extended that for a further ten years. It was set to expire.

Clearly the member does appreciate that if you look at the broad array of tax measures that any government might have, you can't be exclusionary -- in other words, you couldn't, for example, say that you'll lift the corporate capital tax on mining activity without considering other industries as well. Ontario has a corporate capital tax similar to British Columbia. It's interesting. In their recent budget they made some moves, again, that are quite similar to ones that we've made here in British Columbia, in that they raised the threshold before the corporate capital tax applies. It's not an unusual tax. It's not as though British Columbia is the only place that has it. In Ontario, Mr. Harris has it. We always have to be concerned about our competitive position, and we are looking at that all the time. I think the moves we made last year were a positive contribution to the mining sector.

D. Jarvis: It appears that we're not being as competitive as we should be in the industry with regard to the restrictions we have on the rules and regulations and the taxation. Yesterday you made an announcement that Highland Valley Cop-

[ Page 12408 ]

Hon. D. Miller: Not at all. Clearly the Power for Jobs legislation, which is being used in the case of Highland Valley Copper, does allow government to offer hydro rates based not on the flat rate but looking at -- as we've done with Highland Valley Copper -- tying that rate to the price of the commodity. It's an interesting concept and one that perhaps might be debated a little more publicly. In other words, is that a way in which Hydro should be looking at their charges for power? There is some interest, I know. I've talked with some Hydro people about that.

The issue, I guess, is transfer of the. . . . Because commodity prices do go up and down, you balance over the cycle. I suppose the question is: should the obligation to balance over the cycle be with the private company? Or should the Crown agency -- Hydro -- take that responsibility, on the theory that prices do go up and down?

[1035]

If you go farther afield. . . . Take Japan as one example. The cost of electricity in Japan, both for homeowners and for industry, is about 15 times greater than it is here. Now, you can imagine that. That's a significant difference. Yet Japan is a heavily industrialized country. So we do enjoy very, very competitive and low hydroelectric rates.

If we were to have adopted the proposal by industrial customers for a reduction in their base hydro rate. . . . I can't recall exactly what they were asking for; I think it was 7.5 or 12 percent -- somewhere in that neighbourhood. Let's assume that we had done that. We would still not have resolved the dilemma that Highland Valley Copper found itself in.

Looking at future trends for both gas and energy, most forecasters are saying that the price of energy and gas is going to rise over time, because of the demand. If that were to be the case -- in other words, if electricity costs continued to rise in other jurisdictions in North America, in the United States and other Canadian provinces -- then more and more of B.C.'s competitive advantage would be realized: a very stable, low-cost energy.

So I suspect it's not as simple as acquiescing at times to what industry might say on a particular subject. But rather, if we think it through, I think we have a significant advantage here in British Columbia.

D. Jarvis: I thank the minister. I have been informed that the sale of power to, I think it was, Intalco in the state of Washington, in the northwest corner of Washington, was somewhere around about 2.6 cents per kilowatt -- that's the figure I was given. If Highland Valley could have that price, for example, they would save approximately $23,000 a day in production costs. Then they would be in a situation where they would be competitive with the rest of the mines operating in the world that fall under the same sort of structure -- that have the same structure price-wise. They are not closing down. But the rules and regulations and the taxation in this province are excessive, and it's making them non-competitive.

On that basis, I also thought: well, has this ministry, being. . . ? I assume that the minister is prepared to say that he's an advocate for mining; I guess he will say that. Has he ever considered, in view of his government using Hydro as a cash cow, allowing industry -- the mining industry, for example -- in this province to have direct access to the markets, the electrical producers in this province? Have you given any thought to that theory, rather than leaving the monopoly of B.C. Hydro as it is? Obviously, as a monopoly, they're not prepared to give anyone the break that they should have in order to be competitive.

Hon. D. Miller: Well, it's certainly a complex subject. Let me make a couple of observations. If we were to simply look at what the market price of electricity or energy is today in North America -- it varies on a regional basis, depending on where you are. . . . If we were to look at the market price right now. . . .

Let's say in theory that we were going to end the monopoly of B.C. Hydro and bring in quite a wide-open, market-based system so that all customers in British Columbia paid the market price, regardless of where they live. Then the cost of electricity. . . . For example, the people in the constituency of the member for Peace River North would see a dramatic -- and I mean dramatic -- increase in their electricity bill, because the market price is higher than B.C. Hydro's price. I was trying to make that point.

[1040]

B.C. Hydro sells through an arm called Powerex, an agency of B.C. Hydro, electricity generated in British Columbia that is surplus to our needs. It's surplus; it's extra. They sell that to Alberta, to the United States. They make a nice dollar on that; they make a lot of money selling that surplus power. That money comes back to B.C. Hydro. Obviously the dividend from B.C. Hydro, because it's owned by all British Columbians, comes into government revenue. That revenue is used in part to help pay for the costs of schools, roads and the normal things that governments provide.

In fact, the deal. . . . Obviously the arrangement with Intalco is a commercially private deal between Powerex and Intalco. But I can tell you that if you asked any industry in B.C. faced with a choice, "Okay, do you want the Intalco deal, or do you want B.C. Hydro's industrial rate?" right now they would take B.C. Hydro's industrial rate. It's because that industrial rate is for firm, uninterrupted power. The Intalco deal is not

[ Page 12409 ]

But I stray. Perhaps, Mr. Chairman, it's not actually my portfolio. I'm constantly chided by my own colleagues for speaking on matters that I shouldn't.

R. Neufeld: I ask leave to make an introduction, please.

Leave granted.

R. Neufeld: I'm not sure whether they've left the gallery or not, but there is a class in Victoria today from Fort St. John, from Fort St. John Central Elementary School. It's not that often, actually, that I get to introduce a class of school people in the House. There are about 20 of them -- grade 7. They're accompanied by five adults and their teacher Ms. Crowley. The topics that they deal with -- it's customized to their level -- deal with general history, government and other applicable topics, and it's all taught in French. I would like the House to please make them welcome to Victoria and especially to the Legislature.

D. Jarvis: I appreciate that the minister was perhaps straying somewhat to another ministry, but I sort of led him into that. I think I should not have.

I want to put over the point. . . . No, maybe I'm wrong. We control our own electricity market in this province. I think we have, they say, approximately one-seventh of the world supply of fresh water in British Columbia. Now, whether that figure is exactly right, I'm not sure. I know that Canada has about 20 percent, but we have about one-seventh.

[1045]

So I can't see, if we control our own market with electricity, why we can't make it beneficial to our producers to make them competitive or even more than competitive with other industries. That's an advantage we have. I mean, Japan doesn't have any water to speak of.

Hon. D. Miller: Well, the member is right: we do. As I pointed out to the member, our B.C. Hydro rates are lower than the marketplace rates that are established in other jurisdictions -- the northwest of the United States and those kinds of areas. Our costs are lower.

The other point is this. As the member noted, we have a hydro system that's water-based. The amount of electricity that we can generate is related to the amount of water that flows and the kind of year we might have. You might have a heavy snowpack year; you might have a heavy rain year. There might be incidents, like the hole in the Bennett Dam, that create the situation where you're generating more power than you can use in British Columbia.

If we could find a way to store power in a warehouse, we might make a decision to put some in that warehouse and say that we'll use it later for our own needs. Unfortunately, when you generate power, you have to use it. When we're generating power that's surplus to our domestic needs, we sell it. We sell it to Washington, and we sell it into the U.S. grid, and we sell it to Alberta. The money we receive from selling it comes back to British Columbia, and some of that's returned to government by way of the Hydro dividend. We use it to provide services to British Columbians.

I really do think that we are competitive, that we have a good policy. We've added to that, as the member is aware, and Highland Valley is a good example. We've added to that. Because of the Columbia River Treaty years ago -- which is coming to its end -- the power that we sold to the United States in that treaty originally. . . . At the end of that treaty that power, as a result of the agreement we've made, is now coming back into British Columbia. It's being delivered at the border -- at Blaine, I think -- and it's power that bears no cost.

There are 1,400 megawatts of power. The United States has to deliver it back to British Columbia, and there's no cost for that power. We've said that those 1,400 megawatts. . . . We're going to make that power available in two ways. For new industries. . . . We will sit down and negotiate with a new industry and give them a very, very good power rate, as partial inducement to locate here in British Columbia and create jobs here.

We've also allocated some of that power to be used to help existing industries, which is what we're proposing to do with Highland Valley Copper -- use the power that's ours, that's being returned from the United States, in this case, in a creative way to help a major mine which employs 1,000 people stay in operation and continue to provide those jobs and benefits here in British Columbia. It's an entirely appropriate use. It makes sense.

We will do more of those kinds of deals, if you like, if they're required, particularly now that the commodities that we produce in the province. . . . Copper is a good example. Its world price is at an all-time low. When the price of copper goes up -- which it will, eventually -- then the need to provide these kinds of deals tends to diminish. So, really, I think we're doing what the member would want us to do, in terms of utilizing the generation of power here in British Columbia in a very creative and beneficial way.

[1050]

I just want to get the minister's feeling, when he talks about some of our hydro rates being very low, yet we're still not getting industry to come here. . . . Industry is having some difficulty, although I know it is the world price. But industry is having difficulty. Obviously something else in the

[ Page 12410 ]

The Mining Association met with the Finance minister last fall, prior to the budget, and had five issues that they brought forward to your government that you could deal with to make the mining industry more competitive worldwide, with the markets the way they were. Some of that was removal of corporate capital tax and a reduction in the high marginal personal income tax rates so that we're more competitive with other provinces. So what is the minister doing to look at that other side of the puzzle, to make industry more competitive in British Columbia and worldwide?

Hon. D. Miller: Well, I have spoken fairly extensively about the mining initiative that we did bring forward last year. It was in April of last year. I recall having the announcement over in our caucus room. Mr. McKnight from the B.C. and Yukon Chamber of Mines was there. Mr. Livingstone from the Mining Association of B.C. was there, as were several people from the industry. I could go dig up the quotes, but all of them were universal in their support of the initiative. Their comments were that this was a refreshing breakthrough, a change. The fact that we'd brought in the mineral exploration code, tried to diminish and reduce the amount of red tape and regulation. . . . Tax incentives, right to mine, access to claims, compensation for claims -- all of those initiatives were supported publicly by the mining industry.

I would say that the biggest issue they now have is land use. We talked extensively about land use earlier in these estimates. I think we've moved in a significant and meaningful way to try to address the issues that the mining industry has raised. Is life perfect? No, it isn't. Is it ever perfect? No, it isn't. We'll continue to work with the industry, because we think mining is a good industry, and we welcome the kind of investment and jobs it produces in the province.

D. Jarvis: I won't go on with this very much longer. I'm going to make just one statement, and then I'll go on to another subject, if you wouldn't mind. I'm sure you won't.

There's no question -- you said it -- that Hydro is a monopoly. And they have made no effort whatsoever to allow industry to come into the business as well. I mean, for the environmental end of it, we could have had them. . . . We could have had cogeneration plants through the coalmines. We could have created power through the coal. We could have burnt off the excess in forest residue and created power that would have assisted all these people in the industry.

[1055]

Hon. D. Miller: Again, I spoke yesterday about having attended the opening in the last year and a half or two years of two brand-new mines, the opening of the Kemess mine, which I didn't go to. . . . It's clear that world commodity prices have had an impact on British Columbia mining, but at the same time, we've opened up new mines in the province. We're working very hard with those companies now to ensure that we can help to cushion the downturn in commodity prices, and we've had some success there. I could point out that B.C. Hydro rates have not increased since 1993.

Just to close on this, the marketplace can be very unkind. We all know that. Some people advocate that the marketplace should determine all that we do. The Fraser Institute is a good example. Others advocate more the middle of the road. Certainly it was the proud history of the Social Credit Party that government had a role to play, and certainly W.A.C. Bennett was a pioneer or visionary in terms of that kind of thing. I think he would have rejected your argument entirely and said: "No, I think what we're doing here makes sense. We have B.C. Hydro. It has low rates, lower than the marketplace, and we ought to use that for the benefit of British Columbians and B.C. enterprises." That's exactly what we are doing. We all buy a lot of things, I guess, and how many things that we consume have not had a price increase since 1993? Not many that I can think of, unless they've been influenced to a high degree by technology. All in all, I don't think that hydro. . . . Certainly the member can talk about taxation and those kinds of questions, and I understand, because nobody seems to like taxes; in fact, everybody hates taxes. But I don't know that they necessarily equate the kind of things that we have in our society with taxation. I prefer to live in a society like this.

[1100]

[ Page 12411 ]

So everything's a trade-off, when it comes to these kinds of questions. While it's fashionable, as I say, sometimes to look. . . . What do they say? The grass seems to always be greener on the other side of the hill. The reason that saying came into being is because quite often it's not greener. Maybe we ought to focus a little more on the positive things we have in this province, as opposed to constantly running ourselves down and claiming that the person over the hill, whether it be in Alberta or anywhere else, is far better off, because I don't believe that's true.

D. Jarvis: No, I'm not running us down; I'm running down the philosophy of this present government. If he thinks we've got a pretty good standard of living, I would dare to say that our standard of living. . . . Maybe yours is doing fine, but a lot of people out there -- and if we want to get into. . . . I'm helping out the deputy critic for the Ministry for Children and Families. If you want to get into that topic, let's go into it and see where this caring party has taken those people that are affected in this province.

I just wonder if the minister could discuss with us exploration in the province of B.C. and if he is happy with exploration. When you start comparing our investment attractiveness -- say in North America alone -- I can show you where we have 31 different jurisdictions, and of those 31, we are tied for second to the bottom with Maine and Wisconsin.

Interjection.

D. Jarvis: Oh yeah -- and that's one of the great institutions of this province that has come out with that. I say that with a little bit of jest, but it certainly shows that British Columbia is not being looked at as a province that has opportunities to invest your money in. That is a concern with everyone in every industry, I think. So is the minister prepared to say that he's happy with mineral exploration in this province -- that we have done what we have, or all that we can?

Hon. D. Miller: Before I respond to that question, it's an interesting observation relative to. . . . We were talking about the B.C. economy and its attributes. I was saying, in essence, that I thought there were a lot of benefits to living in British Columbia. But it's very, very interesting to note that there has been an extensive debate on productivity between the U.S. and Canada. It has been so complex and difficult that nobody seems to be able to answer the simple question: has productivity in Canada increased relative to the U.S., or have they increased relative to us?

There's been a bit of back-and-forth. The final study says that Canadian productivity has in fact increased, and we see a relative strengthening in the Canadian dollar and some of those kinds of issues. But I was struck by one fact that did emerge: that even though the U.S. economy is probably the hottest economy in the world today, and even though the U.S. unemployment rate has gone down significantly -- probably in the 4 or 5 percent range -- the benefits have not accrued to the populace.

Real wages have gone down in the United States. It defies conventional logic, which says that when your economy starts to heat up -- when labour shortages and those kinds of things happen -- workers' incomes start to rise. In the United States, in fact, they've gone down. I think there are some broader issues in terms of reasons why benefits are not flowing to ordinary working people. Many people are startled by things like executive compensation, which we see has reached the point of absolute absurdity in some cases, with people taking home $25 million or $40 million on an annual basis and collecting wealth that is immeasurable -- yet people on the very lowest part of the socioeconomic ladder are struggling.

[1105]

The member asked me a specific question: am I happy with the level of expenditures for exploration in this province? The short answer is no, I am not. It's not sufficient, in my view, to maintain the mining sector into the future. We need more exploration. It has dropped down to around the $40 million range annually; that's not sufficient. I was hoping that the $9 million in tax incentives that we introduced last year would stimulate more exploration. I think it's perhaps early, and the commodity price issue is tangled up with this question of exploration.

But I'm working very hard, trying to promote mining in this province, and hopefully. . . . You know, you don't change the world overnight, but I think we've got to continue to work hard and say that there are opportunities in British Columbia. I think we would be helped sometimes, quite frankly, if the Mining Association of B.C. would occasionally talk about our attributes instead of sending out a negative message to investors around the world. Perhaps they might want to consider talking about our strengths. I can tell you, working with individual companies -- and I do that on a regular basis -- that we enjoy a good relationship. There are investment plans for British Columbia, but I think we need to see a little more relief on the price side, and we're going to continue to try to lever up the amount of dollars put into exploration.

D. Jarvis: Well, you know, exploration and staking activity, I guess, is almost at an all-time low -- since records were kept, anyway.

I think that the mining industry would speak positively if the minister would turn around and speak positively and declare the fact that he's aware that mining is a unique industry. It's got hidden treasures underneath the ground. And he understands that. . . . The people who want to go out and explore can't get at them, because of restrictions that are sanctioned by the government which prevent them from

[ Page 12412 ]

Then there's the. . . . I have not heard the minister come out and say anything against the Y-to-Y program that is, theoretically, being punched out by the environmental concerns in North America -- Y-to-Y; you know, Yukon to Yellowstone.

Interjection.

D. Jarvis: No, that's not the year 2000.

The minister gets up and talks about Ontario. As I said before, it's a legacy of lunacy -- what they're trying to do there. It's gradualism that's happening in this province. You know, the environmental world was given 12 percent. Everyone bought into that and said: "Twelve percent, fine." But now we're up into the mid-20s or high 20s. It's gradually getting to be more and more, and this government is not standing up and saying: "No, stop. Let's sit back and look at what the economic value of this industry or other industries is to this province."

But that's a philosophy, and that's what we're saying is bad about what's going on in this province now -- not the province itself or the industries in the province; it's the philosophy of this socialist government. They believe in big government and big unions.

Anyway, I'm going to change the subject, because I think that perhaps the minister is. . . .

An Hon. Member: Let him comment.

D. Jarvis: Well, he's got lots of time to comment. I've just given him an opportunity, where he can get up and stand in front of the mining industry and say to the rest of the world: "We realize that we have been wrong, and we are going to change." This is his opportunity to do it.

[1110]

Hon. I. Waddell: I ask leave to make an introduction.

Leave granted.

Hon. I. Waddell: I'd like to ask the House to welcome an old friend of mine, who's a unique person, and her friend that she's with here. Carol Mills has two claims to fame. Not only is she probably the only vegetarian in the Gwitchen universe, from the Northwest Territories, but she is also, I think, now a world-renowned scientist in Arctic pollution. She's with her friend Mark Foster from Sidney. So would the House please welcome Carol Mills and Mark Foster.

Hon. D. Miller: There is indeed a problem with the two ex-mines -- if I can use that term -- that the member talked about. There is a proposal forward to government -- which is being studied both by ourselves, the provincial government, and the federal government -- to look at the potential for using the old Britannia site to deposit low-grade contaminated soils. My ministry has looked at it. I think it has some merit, but it is being studied by both the federal and provincial agencies, and that's not been concluded yet.

With respect to the Tsolum, it's a far more difficult problem. But there is the Tsolum River task force. My colleague the MLA for Comox Valley has been very active, working with local stakeholders to see if efforts can't be made to try to reduce the acid mine drainage from the Tsolum River. It's a bit more complicated there because there's some natural acid mine drainage. It does occur naturally in some parts of the province; it's not always simply as a result of mining activity. In that area, it's a very complex issue and not easy to resolve. But there is a committee, a task force, that is looking at trying to find long-term solutions.

Beyond that, I think we're relatively well off in terms of that question of old or abandoned mines and the discharges that some of them continue to emit. In the Tulsequah Chief-Redfern project up in northwestern British Columbia -- in fact, an old Cominco mine -- the proponent who now wants to reopen and expand that operation will in fact, as a result of that, resolve or solve an existing problem of acid mine drainage. It's not a huge problem. Water testing has been done that indicates it's not a huge problem, but nevertheless, it is to some degree. So that project will actually fix an old problem.

Thank goodness, we are not settled with what appear to be some horrendous problems. I was reading about an operation -- I can't recall exactly where, but internationally -- where there are significant problems with respect to huge tailing deposits that are leaking -- or indeed, from what I've read so far, the issue around the Giant mine in Yellowknife, which appears to have a horrendous amount of arsenic stored underground. Some of the newspaper reports -- they're not objective, so I'm not speaking with authority on the topic -- appear to suggest that the cost of that liability is in the hundreds of millions of dollars. It's shocking. Thank goodness, we don't have those problems.

[1115]

D. Jarvis: Seeing that the minister brought up Tulsequah Chief, if they're going to do such a good job in there and look after environmental problems, what in heck are the Americans and the environmental group. . . ? What's their concern? I

[ Page 12413 ]

Hon. D. Miller: Well, nothing's holding it up particularly. Just to briefly recap, British Columbia has been very, very active in supporting this project. The member is correct: it went through about a three-and-a-half-year environmental review. The Alaskans were involved in that review and were supportive. It was only when we gave the project a green light, after it had gone through the review -- the minister signed off and said: "You can now proceed with the project" -- that the Governor of Alaska made the decision to write to President Clinton and to publicly make his view known that this project should be referred to the International Joint Commission.

The Premier, myself and others have written extensively to the Prime Minister, to the Minister of Natural Resources Canada and to the Secretary of State arguing that that wasn't required. We've made presentations to the federal government; we've made presentations to the Americans. I discussed yesterday the decision of the House of Representatives in Alaska. We sent a representative from the environmental assessment process, Mr. Ringstad, to Alaska to appear before the committee to outline the efforts we had taken with respect to environmental assessment.

As a result of that, the Alaska House of Representatives voted to ask the Governor to rescind his request to refer this to the International Joint Commission. Why there continues to be opposition, I'm not certain, but I suspect it's mostly around the issue of building a road. The northwest corridor of British Columbia is a relatively underdeveloped corridor. It has significant geological potential, and I suspect that there are those who simply don't like the fact that there may be more mining sometime in the future and see this as sort of the initial battleground -- "Let's stop this now." I think they're wrong.

I have nothing but praise for Redfern, the company. They're very nice people to deal with. They did extensive work. As I indicated yesterday, I did fly up last Friday to meet with the Taku River Tlingit, the band that lives on the shore of Atlin Lake.

Although, quite frankly, I was appalled. . . . I must say this: I wonder sometimes at decisions by those in the past. In this particular case, we have a relatively small band. It's clear that they have lived in that region for many, many years -- a long, long time, historically. It's clear that the lake is a significant resource. I was struck by the singular fact, an appalling fact, that this band -- its reserve is a very tiny reserve -- has no access to the lake. I asked myself, when I came away from there, how it could be that an aboriginal band that have lived there thousands of years, long before any Europeans arrived on the scene. . . . How could it be that it ended up that they would be confined to a very, very tiny piece of land as their reserve and that that land didn't provide any access to the lake? Who was minding the store when those kinds of things were allowed to happen? I think it's shocking.

[1120]

Hon. D. Miller: Well, we've been trying to redress some old problems, which is why we're resolving land claims.

But, Mr. Chairman, I just think that. . . . That was my observation. I don't think any member on the other side would think any differently. How could that possibly come to be -- that an aboriginal community, a band, were now denied access to the very lake that they used and occupied for who knows how many hundreds or thousands of years? Notwithstanding that, we had a very decent conversation about what we think may be some benefits for the band. Clearly it's a small community, and there need to be opportunities to develop the economy. There need to be opportunities for young people who grow up there to acquire skills to get good jobs. We had a general discussion about those questions, and we'll continue to have those kinds of discussions -- in a positive way, I hope. And as we develop the resources, hopefully, we can develop them so that they leave a lasting benefit for people who live in the regions where these resources exist.

D. Jarvis: Well, on that last sort of breath that you made there, I do agree with you. I wonder where the people have been. I wonder where the NDP Party or the NDP members who have represented that area have been for the last 20 years. Now, finally, you're bringing it to the House.

Anyway, don't shake your head, Mr. Minister. You brought the subject up. But that still doesn't say what is going to happen to. . . . Where do we stand now with Tulsequah Chief? Who is holding it up? Is there a group holding it up, or is it the federal government that is holding it up? Where does it specifically stand? It's been so long now. Surely some conclusion is going to come out one way or the other, and it should be in a very short time.

Hon. D. Miller: No one is really holding it up. It's in the permitting process. Redfern, as an operating company, clearly is trying to raise capital in the marketplace. It's been very difficult for them because of the adverse publicity, the threats of IJC, and those kinds of things. But there's no one at all holding the project up.

D. Jarvis: So ostensibly it is the operator of this potentially new mine. . . . They have their permits in their hands. They can go ahead if they wish to -- if they have sufficient moneys or the market conditions are right for them to open up. There is no one to say now: "No, you cannot go ahead with that mine."

Hon. D. Miller: That's correct. The project has gone through the environmental assessment process. It's been signed off by ministers. It's received approval to proceed. It now needs to go through the normal permitting process -- the one that's being dealt with now. I'm not sure when the permit will be issued. It's a special-use permit to construct the road. Now, that permit in itself is not a permit to build, but it stipulates a number of requirements that have to be dealt with before construction can start. In addition to that, we as a government need to do some work in terms of environmental baseline studies, wildlife studies and those kinds of things. The budget's in place for that, so the project is moving. But I do suspect. . . . Again, I have the utmost regard for Redfern

[ Page 12414 ]

[1125]

Hon. D. Miller: There are certain legal requirements that we as government have. Having approved the project through the environmental assessment process, we can't then say that we're not prepared to approve the subsequent stages. Whether it's special-use-permitted or other. . .we are legally obliged to respond to the request for those. Obviously with the caveats I talked about -- the kind of work that needs to be done before you can actually build a road. . . . You have to have routes, and ensure that not only are. . . . Environmental values -- wildlife, those kinds of things -- have to be accounted for.

We also have an obligation, a legal obligation, to account for aboriginal interests. There has been a case launched. I'm not familiar with the details, but I think that recently the judge in the case severed the aboriginal-rights-and-title argument and put that forward to some other process or other time, leaving the more narrow issues of environmental integrity. In other words, did we follow due process in making the approval? It may be that will be subject to judicial review.

That's happened in other projects. I think it happened in the Huckleberry project, if I'm not mistaken. It's not unusual for those things to happen. Sometimes the results can be surprising, as they have been recently in Alberta, where the proposed Cheviot coalmine from Luscar was recently deemed -- by the federal appeal court, I think it was -- not to have satisfied the environmental assessment process. In fact, it raises serious concerns about provincial versus federal jurisdiction.

Those are things that do happen, and we're continuing to discuss opportunities for involvement with the Taku River Tlingit. There's nothing holding up the project.

D. Jarvis: Then do you think there's any possibility of anything holding it up? Could the aboriginal band in that area suddenly say no, and then this government would have to deny them the permit for the road?

Hon. D. Miller: Well, I did say that we do have an obligation to. . . . It's the law that we have to consider aboriginal interests before making approvals, and we're doing that. We're also discussing with the Taku River Tlingit the potential for greater involvement in the project.

I can't predict the future. I've outlined fairly well, I think, the range of things that are happening around this project. I've repeated now, I think three times, that there's nothing "holding the project up." I've tried to answer the member's questions.

D. Jarvis: That is ostensibly the problem with British Columbia right now: people are really reluctant to come in and invest in this province because of the period of time it takes to get approval of any kind of project in the mining industry. There are so many potential holdups. It's a wonder that Redfern has even stuck around. It's gone on and on, and there's no road in sight to come to a conclusion on this, because it seems to go on and on.

I'm going to change the subject now and ask the minister if he can give me some answers to some fairly brief questions. I don't intend to be long. This is on some advanced projects that are going on in British Columbia. He could tell me what's happening to. . . . Well, first of all, let's. . . . No, I will go on with that premise.

What's happening, say, to Cirque and Bronson and Red Chris and Mount Milligan and all of these mines that are on what they call an advanced-project list? Tulsequah is included in there and, I guess, Prosperity, which is another one that has been held up for years and years due to philosophies. If the minister could care to comment on some of those I mentioned: Cirque, Bronson, Red Chris, Red Mountain, Mount Milligan, Telkwa, Willow Creek, Prosperity, Tulsequah, Sinola -- lots of potential.

[1130]

Prosperity. Again, I've been meeting on a fairly regular basis with Taseko. It's a very good company that is proposing to develop a significant project near Williams Lake. The project is being reviewed under both the B.C. and the Canadian Environmental Assessment Acts. It was actually stalled for quite some time because of DFO. That project continues to work its way through the various approval processes and is well. . . . After meeting with the company last year, we have signed, through the Ministry of Employment and Investment, a cooperative resource development protocol. In other words, we are considering, in this discussion with Taseko, the potential to use the Power for Jobs legislation, which I talked about earlier in these estimates, to supply the company with low-cost energy as part of a package to move forward.

Red Chris copper-gold. . . . It's an open-pit copper-gold mine on the Todagin plateau, 80 kilometres southeast of Dease Lake. I'm not very good with names. The project has been in the environmental process since '95. It proceeded to the report stage. The environmental assessment office indicates that the proponent is working to respond to the project specifications and is substantially modifying the proposed mine plan to a smaller operation. So it is going through the environmental assessment process. I haven't heard, anecdotally, of any particular problems that have emerged.

All of these are prospective mines. They are at various stages in terms of the environmental assessment process. I think it's fair to say that current world prices may be having

[ Page 12415 ]

D. Jarvis: I would appreciate it if you would give me a synopsis of what is going on and also of the number of people that are in the ministry, etc. -- the traditional questions that we're not asking.

I wonder if the minister could now tell me, with regards to the Kemess. . . . I think there was an agreement that something like about $50,000 had to be paid back each year at, say, 41/2 percent interest. With the developments at Kemess, what is happening to the government's interest in that?

[1135]

It's not clear. . . . I think I said this publicly a number of weeks ago. While we think our position is relatively secure in terms of an ongoing agreement, regardless of who owns the mine, one can never be absolutely sure of those things. When things wind up in bankruptcy, it is very difficult. We don't control the process absolutely.

I think, on the positive side. . . . And I do regret, quite frankly, the failure of Kemess and Royal Oak. Certainly Peggy Witte is and has been a very controversial person, but she's not afraid to take risks. As sometimes happens with people who are out on the edge taking risks, it doesn't always work, and that's regrettable. I think that somebody who's put that kind of energy into building a company clearly suffers whenever these kinds of events happen and it fails.

Notwithstanding that, the receiver has been publicly indicating that they fully expect to be able to sell the mine. They have indicated publicly that they anticipate that that could be concluded sometime in August -- but one never knows. It is a very good project. Their costs of production are low, both in copper and gold. In the normal course of events, I would expect that someone will buy that project and will continue to operate it for the benefit of the economy and the jobs that it produces here in the province.

D. Jarvis: Before I turn it over to my associate from Peace River North -- and I don't know if time prevails -- there's a question I want to ask about whether the government, or the Mines ministry, is doing anything with regard to their prospectors assistance program. Are they going to supplement it at all or try to boost it up in any way -- and the same with the geological survey branch? I haven't got into coal yet.

Hon. D. Miller: We're not contemplating any change. We have maintained the funding for both the prospectors assistance grants -- I spoke about them yesterday; it's a half-million-dollar budget item in the ministry -- and the geological survey branch -- that's in the million-dollar range. I think these are valuable programs. It's always a struggle. The member will know that the budget for my ministry this year has been decreased, and that's very difficult. Over the last two years we have actually had to lay people off. It's always tough to do that. We've managed to get through that and to maintain these programs. I'm going to continue to look at ways for innovation, quite frankly. I think the geological survey is quite an important program, in that it identifies major potential areas for claim-staking for the industry. At the Cordilleran Roundup every year, we display that work. As a result of displaying that work, significant claim-staking does take place. The member appreciates that sometimes the dilemma of trying to maintain all of your programs at the same time as having to cut your budget. . . .

As I was remarking not long ago, I had a visit from the representatives of Alcan. Eric Sykes, who is the general manager of Kitimat Works, came to see me and other ministers to, regrettably, advise us that as part of a cost-cutting measure ordered by Alcan, they were having to close the community of Kemano. Rather than have a community with people living there full-time and schools and those kinds of things -- a very small community -- they had made the very tough choice of having to shut the community down. They'll run Kemano by sending crews in on a rotating basis. All of that was done because. . . . When you look at Alcan as an international company, the competition is fierce and commodity prices are low. While they have an operation here in B.C., they have operations worldwide, and the head office had ordered that they had to cut $700 million from their costs worldwide in order to be more competitive.

[1140]

We've managed to maintain these programs -- and I think the industry appreciates that -- and we'll continue to try to do that. I can never give a guarantee into the future, but we'll do our best.

D. Jarvis: I want to ask some questions on coal, which will only take a short while. Maybe we'll do that after lunch. In the interim, my associate from Peace River North wants to ask a few questions on -- I think it is -- Kemess.

R. Neufeld: I just want to flesh out a little bit about the Kemess mine and the involvement of the province -- and to

[ Page 12416 ]

Hon. D. Miller: The original agreement with Royal Oak, which was predicated on the compensation issue around Tatshenshini, called for the province to provide Royal Oak with $162 million. Part of that was compensation, and part of that was incentive for the development of the Kemess property. In return, the province was to receive a royalty on the copper production, at 4.8 percent of copper production. I can't recall the specific terms of the repayment schedule, but I did, in one of my previous answers, indicate that Royal Oak had failed to meet those payments and that the issue is now caught up in the bankruptcy proceedings.

R. Neufeld: Those numbers agree with some of the numbers I have here. Maybe the minister could help me a little bit more here. The $162 million compensation -- was that paid out in a lump sum to Royal Oak prior to anything happening at Kemess?

Hon. D. Miller: I'm advised that it was probably paid out over about a two-year period.

R. Neufeld: The numbers that I've been provided with show $46 million for a power line installation. Would that have been done by the government or B.C. Hydro, or was that part of the $162 million?

[1145]

R. Neufeld: I'll list off the other ones, and maybe you can also tell me if this is all part of the $162 million: a $50 million royalty investment to help finance the mine infrastructure, and that was part of what would be offset by the 4.8 percent on all copper that would be extracted; $26 million in direct compensation; $17 million for mine development; $3.5 million for training and skills development; and $11.3 million for other related infrastructure. Was that all part of the $162 million, or is any of this in excess of the $162 million? If it was all part of it, is there anything that the government of British Columbia has invested in the Kemess operations in excess of the $162 million?

Hon. D. Miller: No, it's all part of the $162 million. There are no investments in excess of the $162 million. And the member is correct: the 4.8 percent was on the $50 million.

R. Neufeld: That answers my questions on Kemess.

Maybe, just to go back a bit to some questions that my colleague from North Vancouver-Seymour asked about the Y-to-Y proposal. I'm interested in that proposal, because I don't think the argument is so much from the mining industry or from other people in the province -- about the 12 percent set-aside. I think we all agreed to that a long time ago. The issue that they take umbrage with is the special management zones and not really knowing what the requirements are in those special management zones. The special management zones have reached 9 percent -- almost as much as what the protected area is today -- and we're not finished the land use process in the province. We fully understand that it's difficult to deal with; no one says it's easy. But those are some of the problems.

I wonder if the minister could just comment a bit on his government's position on the Y-to-Y proposal, which is highly funded. It is being proposed by a huge organization. In fact, I've met one of the gentlemen from Calgary, a lawyer who is actually selling his business and moving to the U.S. to devote all his time to the Y-to-Y proposal. So it's obviously highly funded and well organized. They have some very well-qualified people on their side. Just so the minister knows, I attended a forum in Elkford a while ago on the Y-to-Y proposal, and some of the comments that were made disturbed me a bit -- as to what is proposed. I just wonder what your government's position is and the position you, as Minister of Energy and Mines, have about this proposal.

Hon. D. Miller: Two points. I understand the element of controversy around special management zones -- I do. And I've talked a lot to the mining industry, and we've tried to make it clear. I've stated in this House -- I'll repeat it -- that special management zones are not parks. They're special in the sense that they may recognize something unique about the zone, but they are not parks. They are available for development. I've tried to make that clear to anyone who will listen.

The Y-to-Y, quite frankly, is a concept being advanced by some people. The government is not involved in any process, in any way whatsoever, contemplating the Y-to-Y.

[1150]

R. Neufeld: We might as well use up the time as we can. We'll be back after lunch with some more questions.

I want to deal a little bit more with Y-to-Y. Of course, this is from the Yukon to Yellowstone. It's a corridor for the movement of animals, as it was told to me, from Yellowstone to the Yukon -- to the Richardson Mountains. It goes up through the Rocky Mountain Trench. It comes across, actually, through southeastern British Columbia and goes up through the Rockies. It comes right up through the area where I live, in northeastern British Columbia. It has some dramatic effects not just for where I live but, obviously, for the southeastern part of the province and where this corridor is planned to be put in place. So the minister knows there was talk about putting in a huge amount of fencing and having to go under highways, railroads and roads for the free movement of animals. In fact, there would be -- or the proposers said that there should be -- no industrial activity of any kind through this whole corridor. This is another issue that is highly supported by the U.S. government. We know what happened with the Tatshenshini when the U.S. government got involved in supporting the creation of the Tatshenshini park. Actually, Washington and the White House knew about it before British Columbians did through working with this government.

I want to find out. . . . The minister was very vague about his government's acceptance of, or working with, these proposals to have this corridor. Are you in favour of it, or are you not? Is your government going to actually take up the battle cry and say: "No, we can't do that. We've already set aside 12

[ Page 12417 ]

Hon. D. Miller: Well, I can, I guess, offer my own views as the Minster of Energy and Mines. I can't speak for other members of government. It may be that. . . .

An Hon. Member: It's not stopped you before.

Hon. D. Miller: It's not stopped me before -- you're right. It may be that the question, or the line of questioning, is more germane, perhaps, to the Minster of Environment. But I'll take some risks.

It really is, as I indicated, a concept. I've read some of the newspaper accounts. Anecdotally, I've talked to people about it. I've talked to people, for example, who think there are severe problems with the concept -- that it simply won't work. It's utopian or idealistic in its conception. But I can tell you that there is no process. The government is not planning and is not participating in any process relative to this concept that's been put forward. So I would assume that that indicates to the member that while some people have put forward this idea, there are no plans by this government, that I'm aware of, to actively look at it and study it and see if we can't put it into practice.

R. Neufeld: Through the Chair to the minister, I know it's a bit out of your ministry's responsibilities, but it would affect your ministry in a huge fashion if it was put into place. I guess that's why I'm posing the questions to you. Also in your position as Deputy Premier of the province of British Columbia, it should be something that's important -- and I'm sure it is -- to you.

I just want to say -- I know we're just about ready to break for lunch -- that I have a letter signed by the Minster of Environment on the issue of Y-to-Y that indicates the government's acceptance, basically, of the Y-to-Y proposal and that in fact, it is implementing it now. I don't have the letter here with me, but I'll bring it after lunch, and I'll send a copy over to the minister.

[1155]

Noting the hour, I move that we rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; the Speaker in the chair.

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

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

Hon. D. Miller moved adjournment of the House.

Motion approved.

The House adjourned at 11:57 a.m.

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The committee met at 10:10 a.m.

ESTIMATES: MINISTRY OF AGRICULTURE AND FOOD
(continued)

J. van Dongen: I just want to pick up on the previous question and give the minister the name of the farmer involved. It's Gelderman Ltd. -- Gerry Gelderman. I'm wondering if overnight the minister has been able to find any answers in terms of the 20-day delay established in Victoria.

Hon. C. Evans: Yes. Overnight, staff and I attempted to find out whether or not the question of a 20-day delay in issuing cheques under the whole-farm insurance program was in fact correct and, if so, what we could do about it. It may be correct, and it will be fixed. If it is correct, it is my fault, because it will be a result of the contracting-out to another ministry of our corporate services division. I am not sure that it is correct, but I absolutely know that it's fixable if it is, and we are working to assure that Mr. Gelderman and everybody else receive their money within 14 days of applying.

Now, why is it important that they receive their money within 14 days of applying? Firstly, from my standpoint, it's important because I said so, and I promised people that that would happen. If it doesn't happen, it certainly is the minister's responsibility to keep his commitments. Secondly, it's important because -- as the hon. member knows -- there are commodities. . .like fruit growers, which we discussed at length yesterday, to whom I am saying: "If you want cash before the season to deal with debt or input costs or simply operating funds, then you need to apply for the whole-farm program. You will receive your cash within 14 days." If we do not deliver, it denigrates that promise, and it reduces the likelihood that people will hurry up and apply. For all of those reasons, we're committed to solving the problem.

J. van Dongen: I know that the minister appreciates the need, and he certainly seems to be trying to deal with the issue.

[ Page 12418 ]

[1015]

We don't actually expect that there's a big time delay. We kind of think that it will happen almost simultaneously. But it is our process that will be followed, and cheques ought to be -- in fact, some cheques have already been -- cut.

J. van Dongen: I wonder if I could just ask the minister and his staff, then, to contact Mr. Gelderman once they have nailed down the answer to his question, because I know that he is anxiously awaiting word from us.

I just have a couple of questions for the minister on his ministry's involvement in emergency response planning for a potential flood in some of the low-lying areas, obviously affecting a lot of agriculture. Could the minister just describe the extent of the involvement by the ministry -- how many staff are involved, and what is the scope of their involvement -- in this planning for a potential flood?

Hon. C. Evans: The number of people involved is difficult to define. There are a minimum of 20 people working on the project on an ongoing basis; however, all of the directors around the province have been instructed that the possibility of flood conditions is their highest priority. In areas where there are not ongoing meetings, there is nevertheless the obligation by the director to have a flood preparedness plan in place. So I can't tell you exactly how many people -- somewhere between 20 and 250 -- because this entire ministry will be dedicated to that issue, as need be, should it become a crisis situation.

Now, on the second part of the question -- what is the scope of their involvement? -- our ministry is responsible primarily for looking after the health and safety of human beings and stock and for consideration of the necessity of transporting stock outside possible high-water areas. We are also responsible for working with the dairy industry to find alternative milking parlours, because there's not only the possibility that we will have to move animals, but, of course, they need to be milked twice a day. We're working with other farmers, both in British Columbia and in northern Washington, to find (1) empty milking parlours that might be available, (2) milking parlours or barns that might have excess capacity available and (3) portable milking facilities that we might be able to use.

We're responsible for organizing, with the feed distribution industry, how we will distribute feed if the transportation network becomes disturbed. We have written to all the feed companies, asking them to have enough feed on hand in case they can't take delivery. We have also advised the farm community of the need to make plans for how they're going to get that feed or where they're going to move their stock to higher ground. We've advised the poultry industry, if they're not capable of moving, to organize their shipping schedule so that their barns -- or at least the lowest floor of their barns -- are empty in the possibility of high water.

There are probably other issues, which staff are busy writing down, that I've missed, but the hon. member can remind me if he wishes.

[1020]

I just want to draw the minister's attention to a letter that he sent out to local governments. It got a little bit of a negative reaction, in the sense that the feeling was: here is the Ministry of Agriculture dumping on us. To the degree that you can make an ongoing effort on the ground -- through staff connecting with local government staff -- to, once this thing is actually in the implementation phase. . . . Certainly I have a greater concern today than I did three weeks ago, given the ongoing cool weather that we're having. So I just want to flag that for the minister. This is a letter dated April 28: "I strongly urge you to review your own local emergency plans to be sure they fully address agricultural challenges, particularly evacuation of livestock."

I think the concern of local government, as expressed to me, was: "We don't know anything about livestock. We're relying on the Ministry of Agriculture to help deal with that part of our area." I just want to mention that for the minister's information.

Hon. C. Evans: I think the hon. member is right. There are stresses between the various levels of government which are exposed by the possibility of flood conditions. It's true that the letter I sent out to municipalities came as a bit of a shock to some of them -- that they actually have responsibilities which we perhaps should have discussed with them in years past and at times when there wasn't quite such an impending crisis. I think that the worst behaviour of governments is the tendency to pass the buck -- federal to provincial or provincial to municipal. We don't wish to get into that kind of situation. The best behaviour of governments is when they work together.

What I did was send municipalities a letter that said: "Okay, here's the wake-up call; we're all responsible." Yesterday or today -- I'm not sure which -- all of the municipalities in the Fraser Valley are invited to a meeting with our staff which I hope will smooth the waters and explain, as best as we understand it, the various roles of the various governments and create the cooperative working environment that the hon. member obviously alludes to and that should exist -- rather than one where we tell other people that they're responsible.

I do want to say this, hon. Chair: because floods only come around every 25 or 50 years, and the regulatory and

[ Page 12419 ]

[1025]

J. van Dongen: I'm pleased to hear that the meeting the minister talked about between local governments and ministry staff in the Fraser Valley is taking place. I think that's exactly the kind of thing that I had in mind.

I certainly agree also that the decision by the federal government to shut down CFB Chilliwack was, all things considered, a very ill-founded decision. There's no question about it. I also agree with the minister's comments that there's no point in arguing about who should have done what -- certainly, get on with the job of dealing with whatever might come our way in the next couple of weeks or months.

Just one other question to the minister. I'm aware that he's had at least one proposal and probably more from people who are looking for or proposing that the government advance dollars to put up feed supplies and this kind of thing. I wonder if the minister could tell us what his response has been to those proposals and what his rationale and thinking on that are.

Hon. C. Evans: I personally am unaware of the request that the hon. member alludes to. I want to say unequivocally that it is the responsibility of the farmer to source emergency supplies of feed, to find relocation and to work with the landowner at that location to source alternative supplies of feed. We have tried to advise farmers of their responsibility and to work with the feed companies to ensure that feed is available. We have not yet gotten into any situation of prepaying for or stockpiling of feed for the farm community.

I'm just going to run through a list of activities that we are engaged in, for the hon. member; that might preclude some of his concerns or questions. We are preparing lists of vacant farms in B.C. and in Washington, possibly to relocate animals to. We have made lists of livestock-hauling companies and of individuals capable of hauling livestock, so that we have the industrial capacity to move large numbers of stock at need. We have located. . . . We are making lists of qualified milkers that can be employed at need and lists of veterinarians who can assist us to move and look after stock in a crisis situation. We are responsible for the unfortunate possibility that we will be required to look after animal disposal in the case of real crisis. We are arranging for or finding facilities capable of looking after that function.

[1030]

J. van Dongen: The letter that I'm referencing is dated May 5, addressed to the minister from a fellow named Guy Nesbitt of Nesbitt Consolidated Farms. They're basically hay dealers.

Just one final question to the minister: does the ministry have any assessment at this point of the ability -- the overall ability; not just the ministry's, but everybody's -- to evacuate, say, an area like Nicomen Island, which is considered at some risk and which has about 8,000 cows? Does the ministry have an assessment of how that could be and would be handled today, and what the outcome of that situation might be?

Hon. C. Evans: Yes. Nicomen Island has two problems. The hon. member alludes to the fact that there are 8,000 livestock there in total. But there are also 3,500 dairy cows, so for those animals, we have to figure out not only how to move them but also where to move them to and how to milk them.

We have authority to spend money on Nicomen Island -- to build a loading chute. We may decide to build two. The reason we're doing that is that it is low enough land that we will have very little notice of high water, and it is one of the four places in the province where we figure we will have to be pre-emptive and move animals before the water is actually visible as a problem. The other three areas are Barnston Island, Glen Valley and Creston Flats.

The last thing I want to say, hon. Chair, is that the media, and ordinary citizens too, have a role to play. We will build loading chutes on the assumption that the correct way to move animals is to hire the truckers that we are making lists of, and to put animals in trucks. But there is the possibility that in some of these areas it might be quicker to close off roads -- and we might actually have to -- and drive cattle to higher ground -- not from an island, of course, but in other areas.

I was advised some time ago that the last time that happened in the United States during flood conditions, they had all the animals on the road and the side roads blocked off. They were driving thousands of cattle; eight helicopters flew overhead to take their picture and spooked the animals and they drowned. So ordinary citizens and the media and everybody will actually have to participate in a respectful consideration of the process if, in the worst case, we actually get to the place of attempting to drive cattle, rather than truck them, to higher ground.

[1035]

[ Page 12420 ]

J. van Dongen: I would just like to thank the minister for his answers. I appreciate the work that the ministry is doing. We'll look forward to working with them and keep our fingers crossed that we don't have a catastrophe.

B. Barisoff: Picking up where we left off yesterday, for 1998 the crop participation levels for grain had a 73 percent uptake, tree fruits had a 95 percent uptake and vegetables had a 37 percent uptake. What were the 1998-99 participation figures for grain, vegetable and berry growers?

Hon. C. Evans: Grain was 73 percent, vegetables were 37 percent and tree fruits were 95 percent in '98.

B. Barisoff: Last year the minister set a goal of $9.7 million in crop insurance revenues for '98-99. Did the premiums paid last year reach the $9.7 million mark?

Hon. C. Evans: If the hon. member would like to go on to his next question, we'll save time while we look up the answer to that one.

B. Barisoff: The minister reported that the total '97 figures for claims under basic and basic-plus were $16.5 million. What were the claims total figures for 1998?

Hon. C. Evans: In 1998, crop insurance claims were $1.715 million.

B. Barisoff: Currently, the basic program pays out 80 percent of the market price. When the minister was questioned as to whether he would reconsider the 80 percent pay-out scheme in favour of a 100 percent pay-out scheme, he said: "If the crop insurance review or the producers themselves, were to suggest that we had it wrong, I'd be pleased to reconsider." Is the minister reconsidering the 80 percent pay-out claim?

Hon. C. Evans: Going to the third question back, we don't have that information, hon. Chair, and we will supply it to the hon. member as soon as we do.

On the question that the hon. member just asked, we are, I hope -- the hon. member and I -- going to Saskatchewan next month to try to renegotiate the way that the safety net system works for Canada. I have said to producers that if we are successful, the hon. member and I, in promoting British Columbia's case for reorganizing the system away from grain and towards a more diversified farming community, yes, I am prepared to discuss with the industry where they would like to see those benefits -- that larger amount of money -- spent. If it's moving from 80 percent to 100 percent, that would be an alternative, and one that I don't object to.

[1040]

B. Barisoff: An issue that has come up before in crop insurance policy for yield offset. . . . Would the minister consider changing the yield offset policy to probable yield rather than the production guarantee level?

Hon. C. Evans: I think the easiest answer is: I am not sure. It is a really technical issue which I don't personally pretend to understand. I will communicate my response to the hon. member in writing, for him to share with others.

B. Barisoff: During last year's estimates the minister mentioned that the ministry had issued a contract to an independent non-government person to do a review of crop insurance and give a critique of the ministry's own changes. He added: "We've committed to share it with the industry and then to work on it to make further changes." The report was supposed to be completed in June of last year. Was the report completed? What is the outcome? What are the changes recommended?

Hon. C. Evans: The answers to the questions are: yes, it was finished on time, and yes, it was released to the industry. As for whether or not changes have occurred, the first recommendation of the report itself was that no changes be made until we could make long-term changes and re-engineer the whole thing.

That recommendation was rejected by a couple of commodities, first by tree fruits and then vegetables. The tree fruit industry argued that for them, changes had to be made quite quickly. We agreed to a process, engaged in the process and in fact have made changes to their scheme. Vegetables made the same request. We are presently engaged in re-engineering the process and how it works for the vegetable industry.

B. Barisoff: During a recent visit to the Peace district, the main agricultural concern voiced by the farmers was the fact that they needed to receive their crop insurance payments more quickly. I think we've touched on this a little bit, but the delays seem to still be there. They seem to still be thinking that they are not getting crop insurance as quickly as possible -- so that they can get their next year's crop in the ground. Could the minister comment on that?

[1045]

There are at least four different programs, primarily federal but also provincial, that at different times of year and through different processes pay out, assisting people: NISA, crop insurance, whole-farm insurance, the federal disaster assistance program, transportation payments. Then there's also the payment schedule of the elevators and the railroads. So I just want to caution that even though I will provide the member with turnaround time for whole-farm -- for the provincial component -- it doesn't mean that the farmers aren't right about some portion of their safety net or their payment schedule. It highlights the importance, I think, of ending the division between what the federal government of Canada does and what the provinces do, because you can wind up with one partner or the other doing their job on time, and the perception of the client group still being that government is too slow or that payments don't happen or something.

[ Page 12421 ]

Hon. C. Evans: Following our re-engineering process with tree fruits, we received a letter from their representatives saying that they were satisfied with the changes that we had gone through together and that no further changes were required until we see how it works -- a period of time estimated to be three years. I think that means that the tweaking of the process that the hon. member refers to is accomplished. I won't say it's to the satisfaction of the tree fruit industry, but I would say it's with their participation.

B. Barisoff: With the crop insurance, the ministry self-insures to an extent, and it also reinsures some of the revenue with private sector insurance. According to the ministry, B.C. is one of the first provinces to adopt this type of system. Can the minister explain a bit more about how the self-insuring and reinsuring system is set up?

Hon. C. Evans: I'll try. Reinsuring means that the province receives premiums from farmers, and we agree to provide a certain insurance. However, in order that in a disaster year we do not overreach our capacity to make payments, we pass on that cost to reinsurers -- which means that we go to a private insurance company and say that we will buy insurance from them to cover our losses, should we have to pay out. We used to reinsure only to a level of 150 percent of premium intake. We now reinsure to between 135 and 400 percent, according to the commodity involved.

[1050]

B. Barisoff: Has the system been a success, and on what basis? If you could provide me with a breakdown of the figures. . . . You can just send that. But I just wonder whether you think it's been a success.

Hon. C. Evans: I definitely think it's been a success. It works, and it allows us to have some assurance when we sell crop insurance, that what you buy we can actually pay without any fallback on the provincial treasury. It is an insured assurance. So I'm quite satisfied with it.

B. Barisoff: During last year's estimates the minister confirmed that at least $9.7 million of the $10 million that the ministry put into the whole-farm insurance program would go into the farmers' pockets. In the worst case, he added that about $300,000 would be consumed for administration. How did the minister's estimates add up for '98-99?

Hon. C. Evans: I don't have the number. But I'm going to find out what the number is and why. If the hon. member keeps writing down what I said last year and asking me again, I'm going to give shorter answers.

B. Barisoff: It's just that we're making sure we get last year's answers. I was reading one of the questions where I think the member for Peace River South asked it for about three or four years in a row, and finally he got the answer.

Carrying on with the whole-farm insurance, many groups -- such as hog farmers, ginseng growers, tree fruit growers and others -- have complained that the whole-farm insurance program has been inadequate. It either didn't provide enough money or they weren't eligible for the program for one reason or another. Again, during last year's estimates the minister stated that his long-term goal for the program was to make whole-farm insurance work. Can the minister provide an explanation as to why whole-farm insurance is not working for as many growers?

[1055]

On the question that the hon. member is presently asking, I guess I think that the answer is complicated but a good answer. People tend to say that the program isn't good enough until it pays them. What they then say to me is that they were very surprised that the whole-farm insurance program actually paid them and actually paid them what they had coming. I am always surprised by the degree of the difference: number one, the cynicism; and number two, the surprise that people have when they find out that it actually works. That's probably a function of the fact that for years crop insurance was just sort of treated off the side of the desk as something that was the farmer's responsibility to buy -- in a sort of entrepreneurial sense, where we go out and sell it. We make the package work well enough that the people would want to buy it.

In the specifics of for whom does it work and for whom does it not, which the hon. member alluded to, he's right. Crop insurance didn't used to be available for all commodities. We are now engaged in a two-year pilot, where we are offering whole-farm to everybody growing every commodity that I know of. No doubt somebody will come up with something I don't. All commodities that I'm aware of, including livestock producers and people who don't have crop insurance. . . . There ought not to be a lot of people out there saying that it doesn't work for them.

My last comment is something that I said yesterday. Last year, when we had hail and the like, I also got all kinds of comments from people who said that crop insurance doesn't work. In fact, there was so much rhetoric in the newspapers, after the hail, that crop insurance didn't work. There were people who had crop insurance, who had paid for it, who then had hail and didn't bother to apply, because people said it didn't work. So why go through the trauma of filling out the pieces of paper?

When we actually paid it out last year, there was enough of a pay-out in crop insurance and tier 2 and whole-farm that the industry met or exceeded their five-year average income, in spite of the fact that the value of the product was at a

[ Page 12422 ]

B. Barisoff: Another comment that was made by the grain growers in the Peace River country is that when they have two years of low returns, their three-year income average becomes so low that the safety net relief is actually almost ineffectual. Are there any comments that the minister can make that would help or soothe the grain growers of the Peace River?

Hon. C. Evans: Yes. I've got a bunch of comments, and I'll try to make them really fast. Number one: yes, that is the comment, not just by grain growers but by anyone who's experienced a series of bad years in a row. The argument is made that the three-year averaging is unfair to them, because they've happened to have three bad years. So it should be five-year or ten-year averaging.

I would ask everybody to look at it a little bit from common sense. What kind of insurance program do you want, except one that figures out some kind of an average and pays on it? You can't have an insurance program that pays everybody all the time, or it's not insurance; it's a grant.

[1100]

My second point is that lots of farmers think that what they got from crop insurance last year doesn't count in their three-year averaging. That's false. So long as you buy crop insurance, you can get paid up to your three-year average for every year that you buy crop insurance. If you decide you're not going to buy the stuff, then I think the province ought not to pay you the same as they pay your neighbour who actually has the wherewithal to buy crop insurance.

I shouldn't answer these questions as if they actually cared about the answer. I'll give shorter answers, hon. Chair.

B. Barisoff: I'm sure that the farmers do care about the answers. The reason I'm touching on a lot of these is that the minister has had a letter from the B.C. Pork Producers Association indicating that the whole-farm insurance program isn't working for them either. I guess the list goes on; the ginseng growers are in the same kind of situation.

One of the other areas that I might touch on -- because I'm sure there will be the same kind of answer that I'll get for most of these questions -- is the entry-level program. When a farmer has just gone into business and negotiated the entry-level program, and works back the estimates of what the operation should have been worth and has existed for the three-year average. . . . However, according to some of the hog farmers, it's estimated that of the $3 million to be paid out to hog producers, there will be no return for the beginning hog farmers who just go into the program. Does the minister know how that could be adapted or worked?

Hon. C. Evans: It is my impression that the entry system works. We built a three-year model so that if you come into the industry, you can model where you would have been three years back and actually buy crop insurance as if you'd had that income, even though you haven't been in that business.

If the hon. member says that there's a letter to me making this point, then I would remind the hon. member that I probably answered that letter and the individual is in receipt of my reply.

B. Barisoff: According to the ministry, a trust fund will be created through the whole-farm insurance program. A $500 whole-farm insurance application fee will go directly into this fund, and the unused portion of the whole-farm insurance program allocation for this year -- if there is any -- will also be transferred into this fund. As we understand it, the money that goes into this fund will only be used for the whole-farm insurance program and will not go into any other areas. Can the minister expand on this fund, and on how it is going to work and how much is expected to go into the fund by the end of the year?

[1105]

B. Barisoff: On May 7, 1999, in an article in the Globe and Mail, a Reform MP labelled the AIDA program as a disaster in itself. "Farmers are complaining that application forms are too complicated and arrived at a busy time of the year. . . ." Canadian farm incomes are expected to fall another 40 to 80 percent this year, so efficient and capable assistance programs will be needed more than ever. Has the minister found these problems with the AIDA program to be occurring in B.C.?

Hon. C. Evans: No, I think that's the typical rhetorical nonsense you get out of the Reform Party. They want to have it every single way. It is their ideological cant that got Canada into this jam, by giving up every possible program we could at the trade table. That's the Reform ideology. Then they go around and say that the farmers aren't getting their fair share out of the programs that Reform led the way in giving up. I've had it with these people wandering around going, "Oh, the papers are too complicated; the bureaucrats are bad; we should find ways to give money to farmers," and then running off to Ottawa and demanding that we give up every single program that actually transfers money to people -- because according to the right-wing point of view, that's the right thing for the country to do. So, yeah, I read the article, and yeah, it made me irritated, and no, I ain't going to deal with it, except to say that that kind of thinking is what's killing agriculture.

B. Barisoff: I didn't mean to set the minister off. Just another question. . . . I think we'd better get off the whole-farm insurance program.

The agriculture lease program. Many farmers believe that in order to promote agriculture and make viable the farm

[ Page 12423 ]

Hon. C. Evans: I actually think that production of forest land is production and that the tax laws someday in British Columbia will come to their senses and recognize trees as a crop, and then we won't have this anomaly where we have ag land and forest land and grazing leases and woodlots and we try to put everything in a compartment and charge different values according to what your outcome is. I think that if trees are a crop -- we had this discussion yesterday -- they ought to be a legitimate use of agriculture. Then on that day when we see trees as a crop and tax them accordingly, all these arguments about what stumpage should be, or about who should be allowed to cut what, will go away.

B. Barisoff: We have several studies -- by the Canada West Foundation and the Ference Weicker company -- that show that B.C. is lagging badly behind the rest of Canada in agricultural commodity processing. If B.C. had an equivalent share of agrifood processing relative to population, the province could probably gain around 10,000 jobs. Could the minister indicate why he thinks this gap between B.C. and the rest of Canada is growing?

Hon. C. Evans: The two biggest reasons are the signing of NAFTA and the entry of food and agriculture into the GATT. When we agreed to the GATT, the government of Canada decided to end feed-grain transportation assistance and the Crow rate. The prairie provinces then decided that in order to add value to their grain, they were going to have to figure out a way to turn it into meat or product on the other side of the Rockies. Without exception, Alberta, Manitoba and Saskatchewan developed programs to move, by subsidy, industries to the Prairies that would feed hogs, process dairy, or feed or process poultry, in order to deal with the crisis that they experienced with the changing trade rules.

Now, I don't want to suggest for a second that that's an excuse. Those are facts. British Columbia is alone in Canada, we discovered last year when we did our own analysis, in having no subsidies whatsoever for the food-processing industry. But those subsidies are not GATTable, so all other provinces in the country engage in them.

[1110]

It is in order to make that happen that this ministry is engaged in working with municipalities and the ALR, in order to loosen up the rules about what kind of processing you can do on farm. It's why we're working with municipalities to try and make farmers' markets and different ways of selling food happen. We are doing all of that in our attempt to get around what the GATT, the NAFTA and the FTA have done to British Columbia.

You wrote down something you wanted me to say. Staff remind me that I could have bypassed that entire rant by simply saying to the hon. member that the value of B.C. food processing increased, actually, from 1993 to 1997, from $338 million to $577 million a year. But I hope you enjoyed the political lesson, also.

J. Wilson: I'd like to take the minister back a couple of questions and address this issue of stumpage on ag leases once again. Ag leases are a contract between a producer and the government. They are on a ten-year lease basis. There are a lot of ag leases out there today that were taken up eight, nine and ten years ago. They are coming to the point where they have to be proved up so that the producer can buy the lease from the government. When they were taken up, the stumpage rates were in a line so that the producer could expand his operation. He could get some more land into production. He could log that land and maybe not make anything off the timber to speak of, but at least he could get rid of the timber, clear the land and put that land into production. It's a well-established fact that agricultural land produces a lot more jobs and a lot more productivity than land that's growing trees.

What's happened in the last three years is that the minister's government has jacked the stumpage rates up to a point where you are now looking. . . . If you didn't log that five or six years ago when you had the opportunity, if you left some of that wood and now you have to clear that land to make your improvements, you're looking at a cost -- cash out of your pocket -- of about $3,000 an acre, just to get rid of the wood before you can even stump it or clear the land.

These people that took these leases up have already put thousands of dollars into them, because the first requirement you do is that you fence it; that's not cheap. Then the land-clearing is a real expense as well. In most areas, it'll run $600 to the acre, which is $1,500 a hectare. With the stumpage being elevated beyond the point where they even can break even by cutting the logs and shipping them off to town, the cost is prohibitive. We're looking at half a million dollars, in a lot of cases, for that producer just to improve that land and get it into production -- to get rid of the timber alone. That doesn't take in the land-clearing or the purchase of the land; this is just to get the timber off his hands so that he can fulfil the terms of his lease.

[1115]

Hon. C. Evans: Thank you to the hon. member for helping me to understand this issue. I'm sure that I misunderstood, and I thank him for helping me to understand the issue better.

G. Abbott: Just to follow up on my colleague's question with respect to agricultural leases and the stumpage issue, I

[ Page 12424 ]

He believes that he's paying the super-stumpage as well as stumpage on his ag lease. I'm not sure if that's the case or not. If he is, he probably has a good argument here in that the area that is cleared for agricultural purposes. . . . Obviously he's not going to be doing silviculture work on it or attempting to return it to forest. His argument is that he is paying for something which he's not going to benefit from -- that is, enhanced silviculture.

I guess the question to the minister, hon. Chair, first of all, is whether it's factually correct that on agricultural leases super-stumpage is paid for FRBC purposes. And second, if it is, would the minister acknowledge that Mr. Butcher has a good argument in terms of the applicability or suitability of that expense to an agricultural lease?

Hon. C. Evans: I would encourage the hon. member to ask his question during the estimates of the Minister of Forests, who's in charge of the stumpage system. If I knew the answer, I'd give it. But I don't.

Just so that he understands where I'm coming from, part of the reason is that I think trees should be a crop. I think trees should be sold for what they're worth, rather than some kind of arbitrary stumpage that we set in some room somewhere that results in questions like this. If people were able to sell trees -- and the Crown were able to sell trees -- and people were able to buy them for what they're worth, then the value would be set by the marketplace rather than a process that leads to having to discuss it at estimates.

B. Barisoff: It would be good if trees were considered a crop. Then Mr. Lusted would be able to operate his log home on ALR land.

An Hon. Member: Good point.

B. Barisoff: I just thought I'd throw that in there.

Hon. C. Evans: So long as the trees come from his land.

B. Barisoff: In a letter dated April 10, 1999, the executive director of the Agricultural Workforce Policy Board outlined many workforce issues in agriculture that need to be addressed. Agriculture job opportunities need to be addressed as part of a long-term rural adjustment for agriculture. The Agricultural Workforce Policy Board has called upon the Ministry of Agriculture and Food for a sectorwide review of the workforce and of the way our sectoral groups and public agencies relate to it. The review was to be completed towards the end of April. Can the minister please provide us with an update of the workforce review?

[1120]

Hon. C. Evans: Yes. The review has happened. The consultant that did it was Robin Junger. The draft came in a week ago. I haven't read it. When the report is made public, I will make it available to the hon. member.

B. Barisoff: A 1998 ministry briefing note on agricultural implications of the Nisga'a treaty stated that there were likely to be significant localized disruptions to individual ranchers within close proximity of existing first nations. Now that the treaty has been ratified, can the minister provide us with some more details on how these are going to impact B.C. agriculture?

Hon. C. Evans: I had some difficulty with the briefing material. I don't accept its information at face value. I think I answered that question pretty well in question period at the time.

B. Barisoff: Just one more question, then. In the South Okanagan, they're estimating that there are 1,000 farmers with Crown tenures within ten kilometres of existing Indian reserves. The briefing notes state that fair compensation for unavoidable disruption of commercial interests will be assured. How will the farmers who lose Crown tenures be compensated?

Hon. C. Evans: The provincial Treaty Commission's policy has always been that there would be compensation for tenure lost. It's my assumption that the compensation will be in the form of alternative land, alternative water or money and that that will all be worked out on a case-by-case basis -- rather than a blanket policy which might not apply.

I want to say, though, that the hon. member raising the question is probably the MLA in the entire Legislature who understands best of all the wonderful opportunities that exist with bringing native land into production. Some of the most concentrated investment in the province on native land has happened in the hon. member's constituency, and I would invite the hon. member to help teach the rest of us what can happen to a local economy when instead of looking at native land in rural communities as a problem, we turn it upside down and look at it as an opportunity and use it to attract investment and jobs and work. I actually think he knows more about it than I or all the other hon. members do. So I hope that he will lead us in that direction in the future.

B. Barisoff: The minister is right. In my riding, the Osoyoos Indian band is probably one of the leaders in developing agricultural land and, along with the different wineries, have done a marvellous job. I guess my concern, from the briefing note, is that when it impacts the surrounding area. . . . I not only represent the native population; I represent all the population in the South Okanagan. And when we see a briefing note that says that there will be impacts on other areas of agricultural land, my concern is that if that's going to happen, we would just like to know about it. But it's a fair comment by the minister to say that the Osoyoos Indian band is probably one of the most progressive bands in agriculture in that area, and they've done a marvellous job. Along with Vincor, they're in the process of doing another, I think, 1,500 to 2,000 acres, which is progressing very well. I think they've got 500 or 600 acres in the ground already. It's very positive.

Just another question here on agriculture and education. Could the minister provide us with stats on how many pre-

[ Page 12425 ]

[1125]

B. Barisoff: I just want to lead into this question, because I do have other members that want to ask about it. During last year's estimates I asked if a small niche market such as organic milk production would be shut down. The minister replied that he was working on this problem and that the organic milk question is one of the big issues on the agenda for this summer, for supply management generally. Did the ministry and the British Columbia marketing boards look into this situation?

Hon. C. Evans: Yes, they did.

I. Chong: I'm pleased to be able to participate in the estimates debate of the Ministry of Agriculture and Food. My colleague started the topic here in terms of organic products. I'd like to pursue the area of organic farming as well. It's a regional issue here, as the minister probably is aware. Oak Bay-Gordon Head doesn't have any organic farms per se, but a number of the adjacent constituencies -- Saanich South, in particular, and Saanich North and the Islands and those in the Western Communities -- are expanding in terms of organic farming.

As the minister alluded to earlier when the debate started today -- I wasn't here to hear him. . . . When was the question going to come up? That was to do with the aerial spraying of Foray 48B, being Btk. As the minister is aware, there have been numerous people in opposition to this. I posed a number of questions to the Minister of Environment when those estimates took place earlier. From an environmental standpoint, I'm hoping to get some answers there. From an agricultural standpoint, though, I would like to know whether the minister can advise what his ministry is doing in terms of protection of this new and expanding industry. I have heard of concerns. Again, I don't profess to be an expert in this area, but those who have contacted me have indicated that the aerial spraying that is currently taking place can and will affect their certification. I'm not sure how that is based. The certification which they currently have, which will allow them to market their products. . . . Losing that certification can last up to three years. So I'm wondering what this minister is doing, in particular, to protect this form of agriculture -- and whether there is an alternative or some solution he is looking at in the event that the aerial spraying is not successful this year.

Hon. C. Evans: Hon. Chair, before I answer the question, could you make a ruling? The aerial spraying is the prerogative of the Ministry of Forests. I would like to know whether or not this line of questioning is appropriate to this debate. Personally, I was really hoping that it would be in question period, with the light of the world on us. So I want to know from you whether we are going to do this now or if that's a more appropriate place.

The Chair: I'd like to ask the member for Oak Bay-Gordon Head to clarify her question and, if it isn't relevant to the Ministry of Agriculture and Food, to either make it relevant or refer her questions over to the appropriate ministry.

I. Chong: I do believe it's appropriate, for the following two reasons. Firstly -- I think it was on February 4, 1999; I have it somewhere in my records -- the press release that was issued was a joint press release, so it came out under the purview of the Ministry of Environment. The order-in-council that was also signed in February indicates that although the Ministry of Forests will be the lead agency, the Ministry of Environment, Lands and Parks, as well as the Ministry of Agriculture, are very much involved with this particular issue. I raise it not so much to ask about the environmental questions or about the health issues. I raise it here under the Ministry of Agriculture in particular for those complainants I've heard from -- who actually aren't my constituents but are constituents of the minister's colleagues, who haven't been heard in the area of protection of their industry.

[1130]

Hon. C. Evans: Okay, we'll deal with it. I just wanted to give you the chance to move it to another venue if. . . .

Interjection.

Hon. C. Evans: Yeah. [Laughter.]

The hon. member is correct. We are responsible for the care and feeding of the organic food industry. She's also correct that it is a growth story that's important to tell. It's one of the fastest-growing sectors of the agriculture industry. She's also correct that one of the centres of production in British Columbia is southern Vancouver Island. So it's an important issue to her constituents.

We grappled with this question of how to deal with the aerial spraying of Btk for a long time. As the hon. member no doubt knows, Btk is an acceptable organic, natural product. If you removed it from the marketplace, organic farming would probably go broke. In fact, most organic farmers use it, and all organic associations in British Columbia accept and endorse its use. It is part of the applications that are recommended in the field guides that are produced for the industry by our ministry.

It's kind of odd that Btk, which is what we're applying, should be objected to by the organic industry. The reason for that is that the particular form being sprayed has an emulsifier that the company that made it won't name. The reason they won't name it is because they don't want their competition to know how to do it. We tried for a really long time to get around it -- promised to keep it secret -- and to somehow get the name of the emulsifying chemical so that we could share it

[ Page 12426 ]

Now we're left with having to spray, I would argue, in order to protect southern Vancouver Island from ecological disaster -- which is what I think would happen if this population of gypsy moths became endemic here. So we went to the organic community and said: "Okay, what do you want to do?" They said: "Well, it's kind of hard for us. There are two farms in the spray area which are certified. If you spray, we're going to decertify them, not because we think that BTK is bad or that the spray program shouldn't happen but because we don't know what's in the compound. If we don't decertify these farms, we ourselves might lose our international certification, which is the basis of our income." In other words, if you sell a carrot and it's ordinary, you get 10 cents; if you sell an organic carrot, you get 20 cents. That dime is what the certification itself is worth.

[1135]

You now have the story, which I think should be told at question period so that this whole community has to actually grapple with the contradiction of the fact that we did what they needed to be done in order to protect the ecosystem and their ability to make a living, and then they took us to court. I think that they should have to deal with the farm community, whose income is threatened everywhere if the gypsy moth becomes an endemic problem on this island. And they should have to deal with the fact that our MP is now in Ottawa. . . . It's my opinion that the Hon. Mr. Anderson is sometimes even arguing that the federal government should stop spraying -- it should abandon the program because it's an endemic population and it will go on forever. I disagree. I went to Ottawa and went around these local folks. I spoke to the federal minister and said: "We need this spray program in order to protect agriculture as a whole, and I will take responsibility for looking after the organic sector." I attempted to do so, and it didn't work.

Hon. Chair, that's an overly long answer, and I apologize. But I did encourage the hon. member to take it out into the light of day. I would still encourage her to do so.

I. Chong: I thank the minister for his prolonged answer. I knew he needed to get his points across. Just in reference to his questions as to why this isn't brought forward in question period for the record, I have more opportunity to ask more than one question here. Also, given that the answers can be longer than expected, 15 minutes would go by awfully fast. As the minister can understand, I think that we can canvass it thoroughly here. Those who would care to follow this can also read this in Hansard in the next few days.

I want to raise a number of points that the minister made which didn't give answers to the questions that I initially raised -- though I think he attempted to. That is, what are we doing for the organic industry? As he stated, the certification status will be affected. My question was: how long would that be affected for? For the one farmer that he mentioned -- who, I have to say, I've never met. . . . I want the minister to be assured that I have not had any direct dealing with him, so I'm not trying to pursue any of his special interests. But I am looking at the industry as a whole.

In terms of the organic industry certification, I would like to know, for the record, how long this spray program this year would affect those farms that did not cover -- or even those who are not registered as such currently but were initiating their farm operation, if they failed to properly cover or seek the protection under the Ministry of Agriculture -- and how long their certification would be affected for. Are we saying that they will virtually have to stop growing organic products for three years? Are they going to have to take their investment -- whatever they've invested in their industry -- and put it on hold for three years? That was one of my questions.

And the other one was that the minister mentioned. . . . I believe he stated that those within the spray zone would still be considered as certifiable. I just wonder if he can correct that -- certifiable because the Ministry of Agriculture and Food feels that this Btk is in fact a safe product. . . . So that was a second question. I'll ask them all so the minister can answer them all, hopefully, in the interests of saving time.

[1140]

Also on the same line of questioning, is the Minister of Agriculture and Food's area of pest management control. . . ? Can the minister advise when the last time was that pest management guidelines were issued from his ministry?

Hon. C. Evans: Running through the questions. . . . I know I'll miss some, and staff are trying to get the answers to others. The hon. member is concerned about how long a certified grower would lose their certification if they didn't cover with plastic. That would be three years.

Secondly, the hon. member is concerned about people who might be undergoing the certification process and who might lose time. Suppose they had been organically growing or looking after their land for two years, so they had one more

[ Page 12427 ]

The hon. member then asked how much money it was going to cost. The total for plastic is $3,000. The total for the program -- in other words, the workers that we are hiring to spread the plastic -- and the plastic is going to be something under $10,000. Obviously we couldn't do it if it was a whole lot of people.

It is our belief that the gypsy moth is not endemic to British Columbia and that this is an anomaly. We will spray it and it will go away. It will probably turn up again somewhere, someday, because it always does. In previous years, it has shown up somewhere. That's because it moves by freighter, or it can get under somebody's camper as they are travelling from eastern Canada or from the United States. Each time that it shows up, if we manage one way or another to kill it, this will not be an ongoing program.

[1145]

If you want to tell me when, I would be pleased to make the appropriate motion.

The Chair: Noting the time, now is probably a good time.

Hon. C. Evans: I think the correct words, hon. Chair, would be that I move we rise, report progress and seek leave to sit again.

Motion approved.

The committee rose at 11:47 a.m.

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