1998/99 Legislative Session: 3rd Session, 36th Parliament
HANSARD

The following electronic version is for informational purposes only.
The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

THURSDAY, JUNE 17, 1999

Volume 16, Number 6

[ Page 13785 ]

The House met at 2:10 p.m.

Hon. J. MacPhail: I'm delighted to be joined in the Legislature today by a group of community and labour activists, all of whom are friends. They are visiting today to talk to us about the value of pay equity -- the contribution that it makes to our economy and to equality. Joining us are Irma Mohammed, Anne Bailey, Theresa Martin, Sharon Borrill, Alice Albert, Karen Whitfield, Louise Hutchinson, Regina Brennen, Heather Inglis, Colleen Jordan, Maire Kerwin, Norah Butz, Betty Stevens, Faith Uchida, Shirley Jaco and Lee Macree. Would the House please make all of these good friends very welcome.

R. Coleman: This afternoon in the gallery for question period is a group of 28 grade 4 students from Betty Gilbert Elementary School in my riding. They are accompanied by their teacher, Wendy Friedenstab, and a number of parents. Would the House please make them welcome.

Hon. D. Zirnhelt: Today in the House are three visitors from school district 27 in the Cariboo-Chilcotin: Pete Penner, the chair; Rilla Warwick, the vice-chair; and Don Woytowich, the secretary-treasurer. Please welcome them to the House.

Hon. P. Priddy: In the gallery today is a member of the Vancouver-Richmond health board, John Kennedy, with his partner Lois Kennedy. I would ask the House to make them welcome, please.

Hon. D. Streifel: I'd like to add my voice to the welcome from our Minister of Finance to some of the folks here that work on behalf of others. In particular, I recognize two people: Betty Stevens and Norah Butz. They're very dear old friends of mine and lifetime workers on behalf of women in the trade union movement. In fact, I worked very closely with these folks when I was a business agent with the union on behalf of others. I bid the House make them welcome.

Introduction of Bills

MISCELLANEOUS STATUTES AMENDMENT ACT (No. 2), 1999

Hon. U. Dosanjh: Hon. Speaker, I move that the bill be introduced and read a first time now.

Motion approved.

Hon. U. Dosanjh: I am pleased to introduce Bill 74, Miscellaneous Statutes Amendment Act (No. 2), 1999. This bill amends quite a number of statutes. They are: Animal Disease Control Act, Assessment Act, British Columbia Wine Act, Builders Lien Act, Building Safety Standards Act, Commercial River Rafting Safety Act, Community Financial Services Act, Diking Authority Act, Drainage, Ditch and Dike Act, Electrical Safety Act, Elevating Devices Safety Act, Employee Investment Act, Environment Management Act, Fire Services Act, Fisheries Act, Gas Safety Act, Health Act, Heritage Conservation Act, Highway Act, Hospital Act, Hydro and Power Authority Act, Land Act, Land Title Act, Library Act, Manufactured Home Act, Mineral Tax Act, Ministry of Social Services and Housing Act, Municipal Act, Natural Products Marketing (BC) Act, Power Engineers and Boiler and Pressure Vessel Safety Act, Seed Grower Act, Seed Potato Act, Travel Regulation Act, Vancouver Charter, Veterinarians Act, Waste Management Act and Weed Control Act.

Of course, we'll talk about these in second reading. I move that the bill be placed on orders of the day for second reading at the next sitting of the House after today.

[1415]

RESIDENTIAL TENANCY AMENDMENT ACT, 1999

Hon. U. Dosanjh: Hon. Speaker, I move that the bill be introduced and read a first time now.

Motion approved.

Hon. U. Dosanjh: I am pleased to introduce Bill 75, Residential Tenancy Amendment Act, 1999. This bill amends the Residential Tenancy Act to provide for a more streamlined and accountable residential tenancy system. The act's provisions concerning service of documents have been streamlined and the methods of service expanded to make it easier for landlords and tenants to serve documents on each other. The formula used under the act to calculate a justifiable rent increase if a tenant disputes the increase has also been streamlined. The new, simplified formula will make it easier for landlords to calculate rent increases and easier for tenants to verify the rent increases being sought by landlords. The amendments contained in this bill will eliminate the arbitration review panel and streamline the process for review of arbitration decisions. Arbitrators will be given statutory authority to reconsider their original decision. Only one review hearing will be held, rather than up to the three hearings that may be held under the current review system. Lastly, this bill gives the director of the residential tenancy office the statutory authority to manage arbitrators and the arbitration process to provide for more accountability and consistency in decision-making. I move that the bill be placed on orders of the day for second reading at the next sitting of the House after today.

Bill 75 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

PREMIER'S ROLE IN HYDRO-RAIWIND PROJECT INQUIRY

[ Page 13786 ]

Today we have a transcript from the Supreme Court of British Columbia, where the judge finds that that was simply not the truth. The Premier of the province of British Columbia knew in August of 1995 who some of those shareholders were. He knew that Mr. Laxton's daughters had invested at that time -- a full eight months before he cared to admit it. Can the Deputy Premier of the province of British Columbia answer this question, seeing that the Premier has not seen fit to come in here and answer these questions himself. . . ?

The Speaker: The hon. member knows the rules about mentioning absences.

G. Farrell-Collins: Will the Deputy Premier tell us how anyone in the province of British Columbia -- including members of his own political party, his own caucus -- is expected to believe a word the Premier says to the people of B.C.?

Interjections.

The Speaker: Order!

Hon. D. Miller: Well, hon. Speaker, we know that the member is rather excitable these days. I would like to advise the House that B.C. Hydro has indicated in a press release issued a short while ago that it is reviewing the decision to determine whether or not it will appeal.

Interjections.

The Speaker: Members, come to order.

Hon. D. Miller: Since we're referring back to February 1996, let me quote the member opposite when he said in a release that month -- and I'm quoting directly from the transcript of his notes: "In short, the material we will be releasing today will show that B.C. Hydro and a group of insiders are involved in a Cayman Island corporation created to financially benefit the NDP friends and B.C. Hydro insiders among others." He went on to say: "This is about a special deal -- driven by the Premier and approved by the NDP cabinet -- structured to result in significant profits for NDP friends and B.C. Hydro insiders." We know what the judge said in his judgment yesterday: "There was no secrecy. There was no inappropriate tax avoidance. The investments were subject to great risks. There was no effort to benefit 'NDP friends' or to restrict the share sales to 'NDP friends.' "

Perhaps the member might take this opportunity to apologize to every person he slandered. . .

The Speaker: Thanks, minister.

Hon. D. Miller: . . .without any information at that time.

[1420]

Interjections.

The Speaker: Order, members.

G. Farrell-Collins: The Deputy Premier is right about one thing: it was a high-risk investment. The people of British Columbia are now out $10 million because of his incompetence and the incompetence of the Premier.

Interjections.

The Speaker: Order!

G. Farrell-Collins: Hon. Speaker, the Premier said in this House -- in this chamber and in this Legislature -- on August 1, 1996: "I want to set the record straight just for the members opposite. I did fire Mr. Laxton from the board of B.C. Hydro. I did that immediately. Information was not given to me; instructions I gave were not obeyed. Actions taken were unacceptable to me and unknown to me." The findings of a judge of the Supreme Court of British Columbia are in direct conflict with the statements of the Premier in this House. How can the Deputy Premier or any member of that caucus or that cabinet stand up and defend a man who stood in this House and said something that a Supreme Court judge says was blatantly not the case?

Interjections.

The Speaker: Order, members. Come to order.

Hon. D. Miller: We can both selectively quote from a judgment -- a rather long one, I understand -- which may be subject to an appeal. The judgment also concluded that Mr. Sheehan had committed errors in judgment. But that member there is particularly known for getting on his moral high horse -- always in high dudgeon and always insisting that there's wrongdoing over here. Now he has an opportunity to apologize to people that he's been slandering for three years, and he fails to take it.

The Speaker: Thank you, minister.

Hon. D. Miller: One is tempted to use the hon. Paul Martin's words to describe him: "This member is a pretty big rival."

The Speaker: Second supplementary, the member for Vancouver-Little Mountain.

G. Farrell-Collins: For three years, neither Mr. Laxton nor Mr. Sheehan, nor a member of the government or anyone else, has chosen to take me to court. Instead they took the government to court, and they lost. For three years nobody has challenged those assertions in court, but they have challenged the assertions of the Premier. The Premier went before a judge of the Supreme Court of British Columbia and gave his explanation of events. . .

Interjections.

The Speaker: Members. . . .

An Hon. Member: Under oath.

[ Page 13787 ]

The Speaker: Careful, careful.

G. Farrell-Collins: . . .falsehoods said to the people of British Columbia and in this House and still defend that Premier?

Hon. D. Miller: Perhaps I just have to keep repeating the same thing. That member there. . . .

Interjections.

The Speaker: Order, order!

Hon. D. Miller: That member there, because he thought there was political gain, slandered all kinds of British Columbians, made false accusations -- false accusations, that member there -- and the judge in the Supreme Court has now confirmed that every accusation that member made was false. And he refuses to get up and offer a simple apology to all of those British Columbians that he viciously maligned.

The Speaker: Thank you, minister.

Hon. D. Miller: And he wants to pass moral judgment? That member over there, for three years, has maligned people, and he wants to pass moral judgment? I don't think so, hon. Speaker. I don't think so.

The Speaker: I recognize the member for Richmond-Steveston.

Interjections.

The Speaker: Members will come to order. The member for Richmond-Steveston has the floor.

G. Plant: I have been listening very carefully to the words of the Deputy Premier. He has been given three opportunities to defend the Premier. He has not once defended the Premier. Perhaps, for once, the Deputy Premier realizes the impossibility of defending a Premier who takes a story -- a story that he tried to sell to British Columbians on the first day of his office as Premier, takes it into a courtroom, tries to sell it in a courtroom and is not believed. The Deputy Premier has to admit that the Premier of this province is not fit to hold office. Will the Deputy Premier stand here and admit that that is the case?

[1425]

The Speaker: Through the Chair.

Hon. D. Miller: Hon. Speaker, if he was listening closely, perhaps he heard me read part of the judgment of the court with respect to the slanderous allegations made by his colleague. The member might take the opportunity to stand now and ask his colleague to apologize to all those people he viciously slandered.

Interjections.

The Speaker: Order, order.

First supplementary, the member for Richmond-Steveston.

G. Plant: The Deputy Premier still won't defend the Premier. I have listened to the Deputy Premier, and what's more, I've read the reasons for judgment. The Premier -- it is clear from these reasons for judgment -- took a story into a courtroom, a story on which his reputation and his government depended, a story he told to save his government on the first day of office. He said to the judge: "Believe me. Believe this story." And the judge said: "I do not believe you."

I ask the Deputy Premier: can he stand here now. . . ? Will he stand here and defend the Premier of British Columbia, or will he not?

Hon. D. Miller: I have no. . .

Interjections.

The Speaker: Order, members. Order, members.

Hon. D. Miller: . . .difficulty whatsoever -- no hesitation whatsoever -- in defending the Premier. But I'm trying to say, hon. Speaker. . . .

Interjections.

The Speaker: Members, members.

Hon. D. Miller: I'm trying to say. . .

The Speaker: Members, come to order. Come to order, members.

Hon. D. Miller: . . .it wasn't the Premier who put out a slanderous press release in February of 1996. It was that member right there who put that out, stuck to that line, lied about. . . .

The Speaker: Hon. member. . . .

Hon. D. Miller: And lied. The judgment clearly. . . .

The Speaker: Words, minister. . . . I recognize the member for Vancouver-Little Mountain.

G. Farrell-Collins: On a point of order, the minister knows full well that that is not the truth, and those kinds of words are not permitted in this House. I demand he withdraw them.

The Speaker: The minister will recognize that the words used were not correct -- not parliamentary -- and I'm sure will withdraw them.

[ Page 13788 ]

I guess I was somewhat perplexed, hon. Speaker, when I looked at the language used by the member opposite in February of '96, and when I read the judgment, I came to the conclusion that I thought was obvious. But even that member can't bring himself to admit it.

M. de Jong: The non-defence of the Premier continues. "I prefer the evidence of Mr. Sheehan to the evidence of [the Premier]," said the court. That's what the judge said. The Premier said that no meeting took place on August 29, 1995. "I prefer the evidence of Mr. Sheehan. . . . The meeting did. . .take place." The Premier says: "I didn't know who was buying the shares; I didn't know that Mr. Laxton was pressuring senior Hydro officials." The judge says: "I don't believe those facts."

Madam Speaker, when will the charade end? When will the Deputy Minister recognize that he is trying to deflect attention from an example of the worst kind of deception -- a deception of the people of British Columbia and a deception, quite frankly, that didn't fool the Supreme Court of British Columbia.

Hon. D. Miller: As I indicated, Hydro is reviewing the decision in order to make a determination whether or not that decision ought to be appealed. But in that decision. . .

[1430]

The Speaker: Order, members.

Hon. D. Miller: . . .the judge said: "In my view, as CEO Mr. Sheehan was obliged to bring to the attention of the board any matters that could materially affect Hydro. . . . Mr. Sheehan ought to have advised the Hydro board. In my view, his failure to do so constituted an error in judgment."

The judge also said -- and I think this is important. . . .

Interjections.

Hon. D. Miller: And it's with some dismay that that member there. . . . In fact, it's been a common strain amongst all Liberal caucus members -- making slanderous allegations without foundation. They're later found -- proven -- to be absolutely false, and they refuse to get up and apologize for their mudslinging, for rolling in the gutter. I repeat from the judge: "There was no secrecy. There was no inappropriate tax avoidance. The investments were subject to great risks. . . . But there was no effort to benefit 'NDP friends' or to restrict the share sales to 'NDP friends.' "

The Speaker: Minister. . . .

Hon. D. Miller: That's the ruling of the court, and that member there doesn't have the courage. . .

The Speaker: Thank you, minister.

Hon. D. Miller: . . .to stand up right now and apologize. . .

The Speaker: Thank you, minister.

Hon. D. Miller: . . .for all of the people he slandered and will probably continue to slander.

The Speaker: I recognize the member for Victoria-Hillside.

S. Orcherton: Thank you. . . .

Interjections.

The Speaker: I beg your pardon. Supplementaries are certainly at the discretion of the Chair. The Chair recognizes the member for Victoria-Hillside.

S. Orcherton: Thank you, hon. Speaker.

Interjections.

The Speaker: Order in the chamber.

Interjections.

The Speaker: Members, come to order.

Interjections.

The Speaker: Okanagan-Penticton, Peace River North, North Vancouver-Seymour, West Vancouver-Garibaldi -- all of you come to order.

GOVERNMENT ROLE IN EARTHQUAKE PREPAREDNESS TRAINING

Interjections.

The Speaker: Hon. members will come to order.

Interjection.

The Speaker: Peace River North will come to order.

Interjections.

The Speaker: Members will come to order.

Interjection.

The Speaker: The member for West Vancouver-Garibaldi will come to order.

S. Orcherton: As I was saying, the Public Accounts Committee is preparing a report on earthquake preparedness for British Columbia. One of the items that has come to the attention. . .

Interjection.

[ Page 13789 ]

S. Orcherton: . . .of the committee is issues around training for emergencies -- both medical training and emergency preparedness -- and the lack of knowledge in that regard in terms of the people of British Columbia. Historically, the military reserve has offered its assistance in the event of emergencies. I have heard recently that the Minister Responsible for the Public Service has a plan to indeed allow more people in British Columbia to be more able to. . . .

Interjections.

The Speaker: Will the member present his question, please.

S. Orcherton: The question is to the Minister Responsible for the Public Service. What is the plan? How does it work? When will it be implemented so that people in British Columbia can be adequately trained in the event of emergencies in British Columbia?

The Speaker: I recognize the Minister Responsible for the Public Service, who, given that the light is now on, will be very, very brief.

Interjections.

Hon. M. Sihota: I'd be happy to oblige, hon. Speaker, as soon as the members opposite settle down and allow me the opportunity to speak to this matter.

Interjections.

The Speaker: Order, members.

Hon. M. Sihota: Hon. Speaker, there are reservists throughout British Columbia. Many of those reservists work for the provincial government. Obviously, coming from a constituency with a military tradition, as indeed would be the case with the member for Chilliwack. . . . A lot of these reservists perform duties for British Columbians, particularly in times of events such as the member for Victoria-Hillside just alluded to. They may well be required to provide assistance during floods which may occur -- indeed which are occurring in the northwest region of the province right now. In the past, reservists. . .

[1435]

Hon. M. Sihota: . . .who work for the provincial government have been required to conduct and secure training on their own time without pay. The government has now changed the policy so as to allow reservists to take that training, upgrade their skills and provide vital services to British Columbians, and the government will pay for their time when they're away doing that work.

G. Farrell-Collins: I rise to reserve my right to raise a matter of privilege against the Premier of the province of British Columbia from his statements on August 1, 1996, when he said that he had no knowledge of the shareholders of B.C. Hydro.

Interjections.

The Speaker: Hon. members, come to order. The member for Skeena will come to order.

Ministerial Statement

B.C. RESPONSE TO SALMON-FISHING AGREEMENT WITH U.S.

The federal government set three objectives for the new agreement: conservation, equity -- that's returning fish to Canada -- and improving Canada-U.S. relations. Others can determine if Ottawa has improved relations with the U.S. with this treaty; however, even though the final text has not been made available to anyone, I want to report to this assembly that my ministry has completed a preliminary analysis of the treaty, based on the information made public to date, to determine if the primary objectives of conservation and equity have been met.

First, conservation. In 1998 a total ban on coho catches was introduced in B.C., effectively shutting down B.C.'s fishing industry to protect survival of endangered B.C. coho. Despite B.C.'s concerns about the survival of these stocks, in 1998 Alaska caught 870,000 endangered B.C. coho. Preseason Alaska forecasts indicate that 1999 will be a year of average abundance for Alaskan coho. As a result, it is likely that under the new rules negotiated by the federal government, Alaska will continue to catch as many endangered B.C. coho as they did in '98.

When negotiating these new arrangements, Ottawa should have sought to negotiate changes in Alaskan fishing practices, to reduce or eliminate interceptions of endangered B.C. coho. Minister Anderson should have insisted that Alaska employ the same practices as British Columbia. He let Alaska off the hook and allowed them to escape with a much lower conservation standard than B.C.'s. This will have dire consequences for the recovery of our endangered coho stocks.

With respect to equity, Ottawa said that the objective was to move salmon back to Canada. Under the 1995 treaty, the sharing arrangements were based on the principle of providing the U.S. with access to surplus Fraser River sockeye in exchange for Canada having access to surplus U.S. chinook and coho passing by the west coast of Vancouver Island. Unfortunately, this principle was abandoned under the new rules negotiated by Minister Anderson. B.C. catches virtually no U.S. chinook or coho, to ensure their safe return to their spawning streams; yet our analysis shows that the new rules

[ Page 13790 ]

I'm deeply concerned that the new rules under the Pacific Salmon Treaty will prevent any significant recovery for B.C.'s endangered coho stocks. I am also concerned that they will cause irreparable harm to the very fabric of many of our coastal communities. For those who would excuse this deal as "Any deal is better than no deal," this treaty fails to conserve our fish and fails to return any fish to Canada.

In light of the new agreement and the undermining of the treaty's conservation and equity principles, it is incumbent upon us to work together with affected British Columbians to do what we can now to ensure the survival of our endangered salmon stocks and to give hope in the future to our coastal communities.

[1440]

Like the government, we on this side of the House have also not seen the final text of the Pacific Salmon Treaty, but I think a few general points need to be made. For the past three years this government has politicized fisheries issues in British Columbia, to the detriment of all British Columbians, particularly those who live in B.C.'s devastated coastal communities. We on this side of the House agree with the government, and we disagree with the federal government's decision to exclude B.C. from the Pacific Salmon Treaty negotiations this year. But I suggest that an objective consideration of the record makes it clear that the blame for this exclusion is a blame that should be assigned to the Premier and to the government of British Columbia, because. . . .

The Speaker: Hon. member, the tradition in ministerial statements is that it is not a proceeding intended for partisan debate or argument. Generally speaking, that is the tradition that has been followed in this House. I encourage the member to pursue that policy.

G. Plant: I certainly listened to the words of the Minister of Fisheries from the perspective of whether or not they constituted an offence against that ruling. I personally, for whatever it's worth, thought that almost every paragraph was an astonishing display of partisanship by the Minister of Fisheries, and I don't intend to go on anywhere near as long as he does. If we are going to talk about fish, if the Minister of Fisheries is going to take advantage of the opportunity that the rules present in this House to stand up and talk about a treaty that his government is not even a party to. . . .

The Speaker: Hon. member, you have risen to make a response to a ministerial statement on fisheries, and I would encourage you to do so.

G. Plant: I will do so. I have never heard the Minister of Fisheries articulate or express, in this House or anywhere, a coherent, principled policy in respect to fisheries on behalf of the citizens of British Columbia. I did not hear that today, and I do not expect to hear it ever from this Minister of Fisheries.

Interjections.

The Speaker: Order, members.

Orders of the Day

[1445]

ESTIMATES: MINISTRY OF FORESTS
(continued)

L. Reid: Might I beg leave to make an introduction?

Leave granted.

L. Reid: In the gallery today, we have students from Jessie Wowk Elementary School in Richmond. Ms. Borthwick and Ms. Ridout are the teachers. There are 51 grades 3, 4 and 5 students. I am pleased to ask the House to make them welcome on behalf of my colleague the hon. member for Richmond-Steveston. Would the House please make them welcome.

K. Krueger: The minister and I have interacted for two years now concerning the issue of salvageable timber lying on the forest floor in the North Thompson Valley and initially going to rot. This has been a happy circumstance where the minister and the staff of the forest district have been tremendously helpful. A contract employee was assigned for a year to help get a program up and running. I was delighted by this development.

One of my constituents, who is knowledgable in salvage logging and has equipment to conduct the practice, felt shut out of the forests before this program was developed and had reached such a state of frustration that he had actually taken the law into his own hands, done some salvage logging and immediately found himself in violation of the law and with his logs seized. It was looking like a very unhappy outcome for a while, but the district manager, Mr. Jim Munn, was very professional and businesslike about it and ended up accepting the seized logs as penalty payment for the offence.

As I say, a contract employee was provided and a salvage logging program was created for the North Thompson Valley. It has had amazing results. There are a number of people -- dozens of people, I understand -- who were on welfare who are now gainfully employed. They're pulling logs out of the bush which otherwise would have rotted or perhaps given rise to bug infestations or created forest fire hazards. There are small portable sawmills. There are contracts for the delivery of

[ Page 13791 ]

It's a tremendous success story and a real credit, not only to those who are salvaging the timber but also to the licensees who are readily purchasing all that they deliver, to the local forestry staff and management and to the minister himself for having had the flexibility and for providing the resources. I think it's a wonderful example of what can be done when the government demonstrates flexibility. It's such a successful program, in fact, that I understand the annual allowable cut which was apportioned to this program for the North Thompson Valley is about to be exhausted for 1999.

We haven't quite made it halfway through the year, and there are a flood of applications. There is, happily, no shortage of timber that can be salvaged, and it's been identified all over the valley. Apparently there is still a strong willingness on the part of the licensees to accept these logs, and there is an ability on the part of the ministry staff in place to certainly process more applications and administer this program. The amount that was set aside was 10,000 cubic metres. I'm told that there is a capacity on the part of staff to process applications for 30,000 cubic metres, and the supply is probably far more than that.

The problem seems to be that the annual allowable cut for this salvage program has to be provided from the global annual allowable cut. I think ministry staff perhaps find themselves in a situation of, from their point of view, having to rob Peter to pay Paul. I'm not interested in that, and neither would any of the people involved be, I believe, including the minister. It seems to me that if this commodity is going to rot on the forest floor or, worse, give rise to fires or bug infestations -- and I know there are arguments about biodiversity, but the limbs and the bark and the stumps and everything else will be there to provide for the biodiversity -- and if instead it could generate employment and continue to have these kinds of results. . . . If we have 100 jobs out of 10,000 cubic metres, perhaps we could have 300 jobs out of 30,000 cubic metres.

[1450]

Hon. D. Zirnhelt: As the member correctly points out, it is a bit of a success story. And as the member also points out, it could be even more successful.

As I understand it -- and we did have a chance to look into it -- it is not an AAC issue. It is a question of resourcing and processing the amount and volume. As you indicated, 10,000 cubic metres can be used up in the first half or first third of the year, and you have a capacity of the system in place to handle triple that amount.

A couple things are going to be done. Industry itself will be advertising some salvage opportunities, and the ministry itself is going to look at examining some longer-term tenures -- up to two or perhaps three years -- where more work can be done by the proponent, in terms of the planning and stewardship and engineering -- minor planning aspects.

As you know, if you start getting into 10,000 or 30,000 cubic metres, and we're talking about a lot of wood. If it can be salvaged, why isn't it part of the AAC? Why don't those people with the tenures in the area have a responsibility to cut the whole profile, from the very best to the very worst? You can't allow only some licensees to take only the best.

However, we know the salvage situation has improved. It has been a successful program, we are looking at ways of expanding it, and I'm told that that's in process in that district.

K. Krueger: Just to firm that up in my own mind, then, I think the minister said that the salvage log quota does not form part of the AAC for the area; it's something that's being allowed in addition. Is that correct?

Hon. D. Zirnhelt: It is both. Some wood that is down, even dead and down, can serve part of the quota, because it's good wood. The stuff that's of the poorer grades is off quota, and I understand that we'll concentrate on that off-quota wood.

K. Krueger: A second part of this question that I only recently became aware of -- and if the minister needs to get back to this next week, that would be just fine with me, because I didn't know enough about it to raise it with him earlier -- is this: I'm told that there was an uncertainty how much cedar salvage ought to be left on the forest floor for biodiversity purposes and how much has to be removed. Because people didn't know the answer to that for sure, a study was launched. But while the study is underway, no cedar timber sales are being allowed. So even though we have tremendous success, with 100 people working, there are a lot of people who would like to be working as cedar shake-blockers in the Clearwater small-scale salvage program, but they're out of work until a decision is made. Shake-blocking is kind of a way of life all its own, as I understand it. Of course nobody wants to see these folks shut down during a study. Since shake-blockers only take a portion of the log or tree, there are substantial portions, again, left behind for biodiversity purposes. My own experience with cedar is that the stuff doesn't seem to rot if you leave it lying for 50 years, so I don't know that it is necessarily going to become part of the earth readily or not. I'd love to see it creating jobs.

[1455]

Hon. D. Zirnhelt: Certainly we'll look into the specifics. We do allow cedar shake salvage in many of the districts. If there was a need for a study. . . . Perhaps things are difficult in that district, but we'll look into it. I do know, though, that cedar and a lot of the coarse woody debris is important for long life cycles of plants and animals, in particular. We'll look into it and get back to you on it.

G. Abbott: I want to thank the minister for responding to the questions on small-scale salvage while I was detained

[ Page 13792 ]

When we left just prior to the luncheon break, we were talking about section 71 -- or, more precisely, the appurtenancy rules that currently exist in British Columbia. My information is never complete, regrettably -- unlike the minister's -- but I gather that in the last year or 18 months we have seen approximately 16 major mill closures in British Columbia. Bowater would be an example of one of those mills that did not involve tenures, but in a number of cases there were appurtenant tenures that were involved with the mills. Could the minister first of all clarify the issue of the number of closures, and could he indicate the number of instances where section 71 letters were sent out to the licensees to indicate that the invocation of section 71 was being considered?

Hon. D. Zirnhelt: I'll do some checking and answer in a few minutes. The number isn't quite 16, and there have only been one or two instances where section 71 has been used. There are other instances where we use other sections of the act. As I say, section 71 itself is a general takeback provision, whereas there are other sections of the act, including transfer agreements and the licence documents themselves, that speak to the appurtenancy issue, and that varies. In some cases, all those are factors that are used in dealing with potential takebacks for closures.

I have checked, and we have to go back and just make sure, because the time period is significant. There have been 14 temporary closures and 11 permanent closures, and there have been between three and five letters sent out on section 71. The reason I am not precise is because we have to check on the time period, but there are at least three that we can identify in that time period.

[1500]

Hon. D. Zirnhelt: For clarity to the member, section 71 is a general clause to be sure. It can be used, and it doesn't require an appurtenancy clause in the licence documents. I can clarify the procedure. A member of the government's staff would send out an unofficial letter on section 71, basically a warning, saying: "Please identify the throughput of your mill in the last time period." That's the basis on which any determination would be made. Section 71 allows you to take back the average throughput in the last 24 months -- something to that effect. So a warning is sent out. Then we measure whether or not there's a satisfactory resolution to the workers' issues and to the community.

As I explained before, whether or not the social contract is broken around the notion of processing wood in a community that originates near that community is a question of assessing whether or not the social and economic factors have all been taken into account. Where the minister is satisfied that the workers have been taken care of in some way -- either through re-employment, early retirement, severance or whatever -- and that the community feels satisfied that the wood is processed appropriately and in the appropriate place, that's a good indication. It's not the final decision, but those are the indicators. Basically the section 71 action is one where the minister reserves, for a year, the ability to take back should someone not live up to the terms and conditions around closures.

G. Abbott: I thank the minister for that thorough and very useful explanation of what occurs there.

One issue that has raised its head at times around the use of, we'll call it broadly, section 71 issues or issues regarding appurtenancy is whether there is a distinction in a legal sense between a forest licence and the rather more secure provisions of a tree farm licence. From the perspective of section 71, or the possible use of section 71 and related provisions in the Forest Act, is there a subtle or an obvious legal distinction between those forms of tenure and the ability to use section 71?

Hon. D. Zirnhelt: Section 71 does not discriminate with respect to licence type. Within TFLs, which are generally more secure tenures, as you pointed out, they again vary. But as a rule, it's that type of document that has a specific appurtenancy requirement for a processing facility.

G. Abbott: The minister correctly noted at the outset that in his ministry -- during his watch, I guess -- there has not actually been a follow-through on the removal of tenure as a consequence of section 71 issues, or appurtenancy issues. That hasn't happened. Have there been -- the minister can give me the right term here -- clawbacks or removal actions undertaken by previous administrations which have tested out the ability of the province to use section 71 in relation to TFLs as well as forest licences?

[1505]

G. Abbott: I appreciate the minister doing that.

In terms of the issue, which the minister characterizes as: "Is the social contract broken. . . ?" I actually think that's a good way to frame the issue: "Is the social contract broken?" As I said at the outset of my questions on this, I think there is an ongoing tension, sometimes, between the need to rationalize industry in the area and the obvious concern of a community or a group of workers respecting the resources in their area. That's regardless of whatever political differences the minister and I might have. That's obviously going to be a difficult tension to resolve. So I think that "Is the social contract broken?" is a good way to frame the issue.

[ Page 13793 ]

Hon. D. Zirnhelt: There is no well-developed set of factors. You do have to look at the community in a situation, and it would be very difficult to define in policy. But as we reiterated with the mill closure review process, we often have to answer questions. "Is the mill viable or not?" That's the first question people ask. So we like to have a sense of that, just to be sure that there aren't other objectives that the company might have -- just simply preferring to operate in another community at the expense of the workers there.

We come back to the primary concern being the well-being of the individuals themselves. We would take the position that if a mill was shut, and they didn't have a job, it's better to have another job in another community than to stay in that community and not have a job. As I say, we take the method with which people are treated as being one of the significant factors. We expect there to be a four-month notice of permanent no-closures. That is a new provision where there are 24 or more employees involved. That's something that the jobs and timber advocate's office keeps track of, and he reviews and notifies the minister whether the existing operation can be made more viable. I've mentioned that.

[1510]

G. Abbott: I am not going to use the names of any companies here. First of all, I don't think the minister would be comfortable -- and rightly so -- in responding to such a question around this, nor do I think it would be fair for me to do it. So I'll try to frame the question in a way that I think points to a public policy concern but doesn't call into question the viability of any particular operation.

The public policy concern would be this. Over the past few years, some companies in British Columbia, particularly some in the coast region of British Columbia who, because of different constraints on operating, because of the creation of new parks. . . . For a variety of reasons their fibre supply, their fibre flow, has been constricted or constrained by a series of developments. In those instances where a company, for economic reasons, was forced to temporarily or permanently close a mill, and they had at the same time faced these external constraints on their timber supply that avoidably or unavoidably were there. . . . Is that a factor which would weigh in the contemplation of the minister when it came to the section 71 issues which would ultimately arise?

[G. Robertson in the chair.]

Hon. D. Zirnhelt: The answer is yes.

G. Abbott: I'm pleased to hear that, because we don't need to talk about the names of the places. There are more than a few that have been affected in that way and who are struggling through their situations, and I don't think they would be assisted, frankly, by being stripped any further of their tenured holdings.

I guess in a way this is the flip side of section 71. I don't have a section name to attach to it. I know we actually debated this a little bit in the House a couple of years ago. Perhaps it was in the context of Bill 47; I'm not sure about that. It is a provision which allows companies, on the submission of job creation plans, to have the 5 percent takeback which the government can invoke on the sale of a timber licence. It allows the company to resecure that 5 percent. Perhaps the minister can give me a shorthand way of describing what we're talking about here, by section or by name.

The first question is: how many instances have there been. . . ? There have been quite a number of sales and purchases and so on in British Columbia in the last year or two. How many companies have submitted job creation plans to resecure that 5 percent that was taken back after a sale or purchase?

Hon. D. Zirnhelt: To the best of my knowledge, there have been five applications: two have been reinstated, one has been turned down, and two are under consideration.

G. Abbott: Could the minister advise how many sale-purchase arrangements have occurred since that new provision was put in place? Is the number five, or are there additional companies who could apply for it but who have not yet availed themselves of that opportunity?

[1515]

G. Abbott: The two that to date have had their job creation plans approved and have had the benefit of the 5 percent return. . . . I think the minister has, usefully, just outlined in a broad sense what the Crown is looking for as it explores a proposed reinstatement of the 5 percent. What I got from it was -- and again this is, I suspect, a very broad-brush response -- that the ministry looks at the interests of the Crown, and the ministry looks at the job creation plans of the applicant. Of the two that were reinstated to date, could the minister put a little bit more flesh in terms of interests of the

[ Page 13794 ]

Hon. D. Zirnhelt: Well, the minister takes advice from the timber jobs advocate and the ministry. The most important factors that we look at are the timber supply in the region, job creation, the needs for economic activity in the community, first nations considerations and, in particular, the value-added industry -- that's a variation on the needs in the area.

G. Abbott: So basically all of those five areas could come into play: timber supply, job creation, the needs of the community, the needs of first nations and the needs of the value-added industry. I guess the review process is perhaps a little bit of science but quite a lot of art, in terms of assessing the magnitude of those different factors and what the 5 percent reinstatement would mean to those communities. Is that a fair summary of how it's done? I take it that there is a considerable element of subjectivity here, as opposed to strict objective criteria, about what's going to work and what's not.

[1520]

G. Abbott: As I recall from what I have read in the news, the two that have been approved are one on Vancouver Island and another in the Kootenays. Is that correct?

Hon. D. Zirnhelt: Yes, the two that you mentioned are the ones where the 5 percent has been returned.

G. Abbott: The two that remain under consideration. . . . Is the continuing consideration of them reflective of difficulties in resolving them, or are they simply later into the pipe and therefore later out of the pipe?

Hon. D. Zirnhelt: I'm not aware of any particular difficulties. I am just advised that they are on their way to me for my consideration. I will treat them the way I treat all of these applications. I'll get them off my desk as soon as possible so that people can go back to work and plan their future. I have to say that we do expect another application. We've been served notice, on a recent acquisition, that the company does intend to apply. That would make six that we're aware of.

G. Abbott: The one that was turned down to this point. . . . Could the minister characterize the geographic location and the reasons why the application for reinstatement of the 5 percent was refused?

Hon. D. Zirnhelt: It is public knowledge. It is in the Cariboo forest region, so it's in the interior. It was a case where the job creation plan was not sufficiently strong to offset the advantages from the long-term stability that it might create for communities in the area.

G. Abbott: Could the minister advise. . . ? Again, I obviously have the disadvantage here of not having seen a successful job creation plan, nor of having seen the unsuccessful job creation plan. I am curious as to what the differences between a successful job creation plan and an unsuccessful job creation plan would be. How would one go about quantifying or otherwise distinguishing between those two?

[1525]

G. Abbott: I appreciate that, although. . . . I appreciate that the minister has to retain confidentiality here, and I'm happily participating in that exercise while, hopefully, usefully exploring the public policy elements here.

I'm sure the concern is there, within the company that was turned down, about why their job creation program failed. And I have no doubt that there have been considerable discussions between the ministry and the affected company with respect to the reasons for that. Now, we are in relatively new territory when we talk about the return of that 5 percent. As the minister pointed out, I guess we first see reference to a 5 percent reinstatement in the jobs and timber accord signed two years ago. That was given legal effect in the bill, which I'm not sure whether we saw last year or in '97. I can't remember which year it was. It's a relatively new feature on the landscape here in British Columbia -- this concept of returning the 5 percent.

Given that it's new and given that new things are explored and stretched and examined in detail, does the opportunity exist for a company, having been turned down with their original job creation proposal in return for reinstatement of the 5 percent. . . ? Is there an appeal opportunity or a resubmission opportunity after discussion with the ministry on the issues around its job creation plan? In short, what happens at this point for a company that's unhappy with the decision of government and that is prepared, for example, to resubmit a revised plan?

Hon. D. Zirnhelt: The answer is: there is no opportunity to submit a revised plan. They can write and appeal, which they have done; and I'm preparing a response.

Just to put it into perspective, here's one company. The amount of cut involved is only on a couple of their licences, so for that particular company it amounts to maybe one-half of 1 percent of their volume. But if you take the volume in the immediate manufacturing community that's served, it's around, say, one-tenth or one-eighth of a percent; whereas there are other communities for whom there is no allocation of timber, and for whom it means a tremendous increase in the

[ Page 13795 ]

G. Abbott: When we have an instance, as we have, of the 5 percent reinstatement being refused, the intent in that case is that that 5 percent which the government recovered as a part of the sale of the licences. . . . Is the recovered timber from the Crown designated for community forest, for first nations timber development, for value-added industry, for small business sales or for all of the above? Is there a sort of design or a principle behind what occurs with that 5 percent after the job creation request has been refused?

[1530]

G. Abbott: The minister has noted that there are more than one application for community forest licences in the area in question. I can't imagine that the area would be any different than anywhere else in the province, and I'm certain that there is a good deal of interest in section 13 value-added licences.

Are there also demands for first nations provisions, whether inside or outside the treaty? Does that enter into the mix in this particular case as well?

Hon. D. Zirnhelt: At one level, of course, there is always demand by first nations for more tenures. In this case, there have been administrative decisions taken that would allocate any of that money for treaties. The other part of your question was: is any of the wood available for first nations forest licences? I would say no, not at this point.

G. Abbott: I think I would be correct in assuming that none of the recently approved four community forest licences are involved in the area in question around the 5 percent takeback.

Hon. D. Zirnhelt: No, in this area, in fact, one has been approved, and it's in exactly the same timber supply area.

G. Abbott: So one of the four that was approved is going to be utilizing a portion of the timber that was involved in the 5 percent application by the company. Is that correct?

Hon. D. Zirnhelt: The answer is yes, that's the intention. What I can't tell you is exactly where the particular administrative apportionment decision is. But in the decision-making, the information that was presented to me looked at the various demands for wood in the area. As I said, there were section 21 and section 13 demands, as well as community forest demands. As you may know, there were four such applications in that area. I took the recommendations of the advisory committee in setting the priorities as to which ones to apply. So it's fair enough to say that there were competing demands in front of the minister at the same time. A decision around the 5 percent and the availability of fibre for the community forests was made together as an integrated, comprehensive decision.

G. Abbott: I thank the minister for that clarification.

In the two more recent applications that are making their way through the process around the return of the 5 percent -- subject to satisfactory job creation plans -- do applications for community forests come into play in those areas as well?

[1535]

G. Abbott: No?

Hon. D. Zirnhelt: No, they had none.

G. Abbott: I would guess that the processing of those job creation plans is probably assisted when there aren't the competing applications for community forests in the area.

In terms of where we are going around community forests, I want to say at the outset that I think what the ministry has done to date with respect to community forests has been sound public policy. I think the ministry has been assisted greatly by the creation of the advisory committee, and I think there's credit due to them and the very capable people that have worked on that committee.

In terms of where we go from here -- from the four that have been created -- I know that there are quite a few more community forest applications in the pipeline. Where will the wood come from to supply that demand for community forests? And what's the minister's expectation in terms of the future proliferation of community forests in the province? Certainly it's all in the direction of diversification of tenure, which I think is being more and more embraced as a goal in this province. But where does the minister see the community forest issue going in the foreseeable future? And how will we find the timber to supply those community forest licences?

Hon. D. Zirnhelt: This has been given some considerable thought. In the current round of applications, one of the criteria was that there had to be cut available, and in the case of a 5 percent takeback, it was available. It has been taken back from a company.

I want to go back a step and say that when I said that there were no proposals in the areas under consideration, there were no competing proposals. What we said to licence applicants was: "You have to identify a land base, and there has to be agreement by the ministry and/or stakeholders in the area that there would be some general availability." In the case of one of them, anyway, there was small business wood, where the small business community -- of loggers, licensees -- and the ministry administrators of the program agreed that it would be a good use of the small business apportionment -- if I can use the word there.

[ Page 13796 ]

For the long term, I think this is a prospect for community stability and diversification, but it does raise the issue of where it comes from. We've had at least one company that has said that they think that in the interests of communities and first nations settlement and meeting environmental objections, it would be good for everybody in B.C. if they move out of some areas and make some areas available. That is for future policy, and I expect there will debate around it.

G. Abbott: I certainly expect there'll be debate around it, as well; there's no doubt about that.

Again -- so that I can place into simple terms what I think was a pretty clear explanation from the minister -- for the foreseeable future, the ministry and, presumably, the Community Forest Advisory Committee will be looking at the creation of new community forests on a kind of one-off basis where there is wood available and the business case can be made for the community forest. Those will be approved as they come along.

[1540]

Hon. D. Zirnhelt: The answer is yes, if you're considering a wholesale change in policy, but we are committed to a pilot. I think the question as to how many would constitute a pilot is a judgment that we can make, but there is a capacity issue around a new type of licence. Until we know how it's going to work, we should proceed cautiously. If it's the only hope in some communities, we may have to consider those where wood might be available.

I would certainly say, though, that if a company defaults on its promises and commitments under a takeback reinstatement, we're going to get clear demand from communities -- and we do -- where the social contract, the new job creation plan, isn't being lived up to. There's a demand there. The community says: "We think we can find markets. We think we're in a better position to make a judgment as to whether there is marketability for the logs from our area."

In any event, I expect that there will be pressure to have more community licences. We doubled the number. We said three to four, and we're committing to seven, providing they go through the final test. If we did ten, that might be 10 percent of the communities. In my view, that's probably still a pilot. It certainly isn't providing wood in a general way. We're trying to test different kinds of community forests.

G. Abbott: As I said earlier, I think that's actually sensible. I think that's the right thing to do -- to test the proposition in that way -- because we'll learn from it. After the experience of the past couple of years, everyone appreciates that a forest licence is not a guarantee of prosperity to a community or a company or anyone else. It's always going to have its set of challenges. I think the community forest thing needs to proceed in the cautious way that it has to date.

The woodlot licence tenure is a little bit of an earlier version of ways in which we can diversify tenure. I think there is currently something in excess of 800 woodlots in the province. There is an enormous demand for it -- at least to me it appears that there must be, judging from the number of people that write to me looking for one. There seems to be a great appetite for them, but again we're talking, I guess, 800 hectares for a woodlot licence. Finding the timber, presumably, is a challenge. Finding appropriate business plans and so on, I'm sure, is a bit less of a challenge, but a challenge as well.

Where does the theoretical view of the ministry lie in respect of woodlots at this point in time? Will we continue to see the creation of woodlots, or was it something that from the ministry's perspective was a demand which has been satisfied, and we won't be seeing much more of it in the forseeable future?

Hon. D. Zirnhelt: The woodlot program. . . . The commitment from previous ministers was to double the area -- it hasn't quite doubled the number, but it has doubled the area -- given the top-up. I think we've talked about that before. It was a movement from 400 to 600 hectares in the interior. On the coast, it's still at 400 hectares. So my view would be that when we enter into the long-term policy review, we expect that the woodlot association and other advocates who are or aren't members of associations would put forth this view. I know that many people have expressed that they think that's one form of tenure. Again, as you pointed out, where does the cut come from?

[1545]

Hon. D. Zirnhelt: There were particular problems around applying the code to these small areas. It was still a relatively new tenure. As we learned from it, there was a need to do some streamlining around administration and management. The view of the ministry is that once we've streamlined and made it as effective as we can, then we'll look at the capacity of the ministry to respond to the demand that's there.

G. Abbott: I think we'll probably return, directly and indirectly, to issues about community forests, woodlots and native tenures -- that sort of thing -- when I direct some questions to the public review process of forest policy in British Columbia. But before we go there, I want to just canvass a broad area here again.

One of the suggestions I have heard that will certainly affect the future of the forest industry in British Columbia -- and which apparently is already affecting the character of the forest industry, particularly in Scandinavia -- concerns the fully integrated, factory-built housing advancements that

[ Page 13797 ]

I don't know what sort of navel-gazing the ministry does. Perhaps it does remarkably little, or maybe it does lots. What's the sense that the minister has about the direction of the forest industry, and is B.C. gearing itself to meet what apparently is an increased demand for the prepackaged assembly of housing units in the future?

Hon. D. Zirnhelt: There are two areas where I think that is relevant. One is the log-home building industry, and it's kind of a variation on where things are going with section 21 sales -- the value-added sales. Certainly if somebody is prepackaging and adding value to the point of ready-made houses with all the hinges and windows and everything on them, they're going to win sales because they're adding a lot of value. So I think the policy as it is supports that. Further to that, the FRBC program, the value-added strategy, is helping to develop the capacity of small companies to get into that kind of work. If they know there's a market demand and have to organize back from the market to production, then there's assistance there, partly through developing the infrastructure or the associations for those companies, and partly through upgrading the skills of the people working so they can run the full range of equipment needed to produce that product.

[1550]

Hon. D. Zirnhelt: The ministry's role has not been to lead in any one market direction, because if it collapsed, we would be there and blamed for leading people. What we do is support people. We do fund organizations. Government generally has been funding FERIC and organizations that are involved in exploring any market opportunity. It is partly in response to those who have identified markets that we supply the sub-support services.

[R. Kasper in the chair.]

G. Abbott: I certainly wasn't suggesting that the ministry should be giving business advice to business. I think that's quite rightly their purview, and their interests are entirely dependent on it. I was looking more to what sense the minister had of the direction of the marketplace, rather than giving people advice about it, but it's not a point I intend to pursue here.

The value-added manufacturing area, though -- I want to talk a little bit about that. We have talked about it a good deal in previous estimates here, and certainly in the Select Standing Committee on Forests review of the FRBC business plan, we talk about value-added manufacturing and the importance of furthering that for the future. I would be surprised if anyone in the House would suggest that it is something that should be discouraged. Clearly it's something that should be encouraged. It diversifies our product base and adds value and lots of good things. Regrettably, it appears that value-added manufacturing operations have been struggling for survival for, I suppose, many of the same reasons that primary producers might struggle for survival in British Columbia.

I'll give you the example of an operation in my constituency. Milestone Wood Products in Armstrong has struggled for a number of years with different issues. Initially they had labour problems that curtailed their operations. Later they had fibre supply problems that curtailed their operations and produced financial problems. Ultimately their fibre supply problems seemed to be resolved, but they couldn't afford. . . . At least, they advised me they couldn't get the fibre out because of the stumpage involved.

That was a good value-added operation that should have done well but appeared to succumb to the problems that have been plaguing the industry generally for a couple of years. What we frequently find with the value-added manufacturers is that they simply don't have as deep pockets as a large forest company, particularly a large integrated forest company, and they can't weather some of these crises that have appeared in the last couple of years.

That's long-winded way of asking where we're at, from the minister's perspective, in terms of the advancement of value-added manufacturing in the province.

[1555]

We're in a situation where, as you alluded, we have to make sure that competitiveness is improved. That means that you have to move more fibre through the facilities that exist. We haven't had enough throughput. So if there's one thing, it's that the scale of their operation hasn't matched the need to keep costs under control and in some cases meet market demand. If they do that -- if they grow the markets and the throughput through their facilities -- then the viability will follow. I think we're looking at about a 4 percent rate of increase per year in employment, and I trust that'll continue. We'd like to see it higher. The value-added strategy is one year old -- well, since August of last year. I think that as we go into further years, we'll see an increase in the capacity of the industry to manage. As it does its training, market development and business development, we're going to see more and more.

G. Abbott: I certainly hope that's the case and that we don't see many, if any, of the value-added operations foundering, as indeed some have in recent years.

In the view of the minister, have the fibre supply problems been resolved? The minister rightly points out a couple

[ Page 13798 ]

Hon. D. Zirnhelt: We have seen the demand for more wood drop off a bit, although you can always find people that say they want more. Of course, the question is that they need more at less cost, which means they would like to see themselves get round logs on which they can make some money in the process of getting them broken down. We're at an all-time high in the amount of wood that's been available to them. I think I alluded to the fibre transfer program, which has created some relationships that the fibre facilitators hope will be sustained through the next uptake in the market. The companies will see that it's in their interests to have a diverse market. Even though they could send supply offshore, for example, they'll see the need to put some supply into the value-added industry.

G. Abbott: Is the fibre transfer program -- and the minister is, I think, getting closer to the heart of where I want to go, here -- purely a voluntary arrangement, or are there penalties associated with it? For example, the minister makes the point that if there's suddenly an upturn in the Japanese market and companies have an opportunity to move their production through a few big sales as opposed to many smaller sales, that might be a tempting development for them. Is the fibre transfer program something that in that hot commodity market will still produce the results, or is there a danger that we will again see those fibre shortages in value-added?

[1600]

G. Abbott: Market access and, I suppose, the markets themselves are important issues which I want to canvass briefly. I should check and see if my colleague had any questions around the value-added area at this point in time. I guess not -- obviously deep in thought somewhere else.

The issue of the markets and our access to those markets, either with standard dimensional lumber or with value-added products, is an area I want to discuss here briefly with the minister. Let's just talk about the markets generally, first of all. My understanding -- and it was formed, I guess, by the presentations that were made at the timber industry conference back in January or February -- is that the expectation is that we will see a modest improvement in the Japanese marketplace, possibly in the range of 0.5 to 1 percent. Is that what the ministry expects in terms of improvement in that particular marketplace for British Columbia's producers?

Hon. D. Zirnhelt: As I said earlier, we assessed a static market this year, but recent market activity indicates that a modest improvement can be expected, on average, across the year. It isn't the dramatic number of housing starts in Japan that I think we were hoping for. If I recall correctly, we might go from 1.1 to 1.2 percent. Some people were hoping for 1.3 percent, but there's no exact science to that. It is a modest improvement, but it's not enough to see a dramatic turnaround on the coast.

G. Abbott: Does the minister have any information with respect to what has occurred in recent months with respect to the price of baby squares in the Japanese market -- what that's likely to do in '99 and 2000 and what impact that might have on our producers?

Hon. D. Zirnhelt: The trend for '99 to 2001 -- that's the three-year trend that we use -- is baby squares, $547 for '99; $581 for 2000, so there's an improvement there; and trending to, in the year 2001, about $600.

[1605]

Leave granted.

W. Hartley: Visiting us today from Covington Elementary School in Kent, Washington, are some 41 grade 6 students and a number of adults and their teacher, Ms. Kay Marez. Would members please welcome them.

G. Abbott: The prospects in the Japanese market are encouraging, and hopefully, we will see that become a reality.

One of the concerns that I have read in some of the analyses around the Japanese market and our ability as producers in British Columbia to sustain our share of the market is that as the price of baby squares declined, the ability of B.C.'s producers to stay in that marketplace as one of the higher-cost producers in the world really restricted -- and in fact has seen us lose -- market share to places like Scandinavia.

Is that the analysis that the minister would share as well? Or does he have a different view of that?

[W. Hartley in the chair]

Hon. D. Zirnhelt: That is a simple analysis that one would think would be true. But as a matter of fact, from '97, when we had 49.7 percent share of lumber imports into Japan, we went to 54.3 percent in '98, so we didn't lose market share.

G. Abbott: Is the expectation that as we see an improvement in the price of baby squares, we will obtain an even larger share of the marketplace in Japan?

[ Page 13799 ]

I think the considered advice about the Japanese market is that it is going to change, and people who have the ability to move with changing trends are going to be successful.

G. Abbott: The major market for Canadian forest products -- British Columbia's forest products and, I suppose, particularly interior forest products -- is the United States. We of course always have the big issue of quotas under the U.S. softwood lumber agreement, but we also have the general issue of whether we can hope or expect that the demand for lumber in the American market is going to sustain itself.

Does the research or reconnaissance of the Ministry of Forests suggest that the demand for softwood lumber in the United States will be sustained through '99 and 2000, or are there any clouds on that particular horizon?

[1610]

G. Abbott: Generally, retrenchment or downward trends suggests that there would be a decline in the softwood lumber price as well. Is the expectation of the revenue branch of the ministry, as well, that we're likely to see, in combination, a gradual decline in demand and a gradual decline in prices? Or could those two work independently in this instance?

Hon. D. Zirnhelt: Yes, we forecast $295 (U.S.) per 1,000 board feet in the budget, and the mean right now of the forecasters is $308 (U.S.). So the average or mean is not all that much higher. We're through a spike right now, but the forecasting is at $308 (U.S.).

We don't have a projection for next year yet. We have a projection for this year. As we prepare next year's budget, we'll look at the year ahead. But most people are very loath to look beyond two years, and the certainty in two-year forecasting isn't all that high.

G. Abbott: The issue of how B.C. is doing in the American marketplace is, of course, difficult to judge. One could argue, for example, that it's all skewed by the fact that we're limited by quota considerations, which changes things entirely, and I'd probably be inclined to agree with them. But I want to get a little background here in terms of where we're going in that marketplace. Unlike Japan, has there been a decline in British Columbia's share of the American marketplace over time? And if you have the figures from '96 through to the present, that would be useful. But whatever you have there. . . .

Hon. D. Zirnhelt: If I could ask the minister, do you mean a decline in quota or share?

G. Abbott: I appreciate the elevation of status to minister. That's a pleasant surprise. "Member" is good enough for now, thanks.

Interjection.

G. Abbott: Well, it's Friday afternoon. We're all in good humour. We've got to change that -- right? It's Thursday afternoon, not Friday afternoon. Gee, I'm as confused here as the minister is.

No, I was looking for market share.

Hon. D. Zirnhelt: The member wants to know the B.C. market share in the U.S. It has gone from 17.4 percent of the U.S. market in '97 to 16.7 percent in '98.

[1615]

Hon. D. Zirnhelt: Yes, our share of the quota has gone down.

G. Abbott: Could the minister quantify that?

Hon. D. Zirnhelt: It has gone from 57.1 to 55.8 percent of the Canadian export quota.

G. Abbott: Just to make sure I got that right -- 57.1 to 55.8. There's been a modest decline in B.C.'s share of the quota.

Frankly, I've always been fascinated in trying to figure out what the basis of the allocation of quota across the country was. I don't know whether the minister has ever come closer than I have to understanding the basis on which the Canadian quota is distributed, but it appears that there's a certain amount of ad hockery involved in it. Is that his sense as well?

Hon. D. Zirnhelt: We don't have access to the formulas, to the details. That is kept confidential by the federal government. But the rule is based on '94-95 production. I think the general rule was that our exports for '94-95 were the basis for the allocation. We knew when we were awarded the 57 percent of the quota that it would go down, because it would be temporarily allocated to existing producers but would be clawed back as new entrants in the east came on. That argument had been made.

So really the question is: is 55.8 percent a fair amount of the quota in Canada? Of course, we'd have to say that we would like more. But the federal government obviously feels that's a fair amount. Those people who are new entrants in British Columbia don't feel it's fair. We think there has to be room for growth in British Columbia.

G. Abbott: I agree. That's an issue that we'll want to explore a little bit when we get to talking about the renegotiation of the softwood lumber agreement.

Could the minister advise -- if indeed those figures are available -- how many companies made use of the full

[ Page 13800 ]

Hon. D. Zirnhelt: We don't know an individual company's statistics. The federal government keeps those and doesn't share them. But about 99 percent of the $50 wood has been used. There's no quota, of course, on the $100 wood, so that's unlimited.

G. Abbott: One of the suggestions that is made in the recent paper that's been put out by Doug Smyth of the IWA is that even if the quota agreement hadn't been in place, the high cost of wood in British Columbia would have made it difficult for B.C. producers to get extra wood into the American marketplace. Does the ministry concur with that view of Doug Smyth's?

[1620]

G. Abbott: The issue of the value-added exemption, as the minister knows, keeps rearing its ugly head out of the States. I don't think there's any dispute among the members in this House about how unfortunate that is. I have to work with less information than, I hope, the minister does with respect to this. The value-added issue is a really critical one. I think -- as everyone agrees in British Columbia -- that there are a host of lumber producers in British Columbia who have quota only for a relatively small portion of their production. They have been, I guess, getting through that situation the only way they can: by producing value-added products for the American marketplace and hoping that their exemption under the agreement will persist. The Americans have been growing increasingly aggressive in terms of challenging those.

Does the minister have any thoughts or useful information that he can add to the debate that has occurred to date around this issue? Again, I'm assuming that the Ministry of Forests would have fuller information on this situation than I do.

Hon. D. Zirnhelt: No, there's nothing new, other than what I have been reported as saying in the press. The federal government is going to go through the arbitration procedures on some of those products. They've gone through it on others. We keep in close touch -- daily touch -- with the federal government and stay on top of it.

I think the general problem that these producers are facing is that they are always looking for unrestricted markets. I think there is going to be a state of play here in British Columbia. They'll always have to continue to adapt as somebody finds an administrative barrier somewhere, whether it's Japan or the United States. Market adaptability is one of the keys to success. I think of the very firm that you may be thinking of that has a very low amount of quota. They've been very flexible, and they'll have to remain so.

G. Abbott: I guess there is really nothing that the provincial government can do -- in the short term, at least -- until, hopefully, we can see a renegotiated softwood lumber agreement that defines value-added, from the British Columbia perspective, in a way that secures the access for those products in the next agreement. Beyond that, until we see that new agreement, I guess there is nothing else that we can do as a province to deal with that situation, other than allowing the federal government to continue to go to arbitration and to deal with these on a kind of one-off basis. I'm assuming there's nothing else that we can do, but perhaps the minister can correct me on that.

Hon. D. Zirnhelt: We have asked the committees. . . . The deputy who is with me chairs the softwood advisory committee here in British Columbia. We have asked the federal government to consider allocating some of the trigger-price volumes. In other words, there seems to be a small residual volume that can be reallocated when the price goes up in the United States. We've asked that Canada address the needs where there's a hardship. That might be relatively low volume or some particular anomaly that happened at the time of awarding.

[1625]

G. Abbott: I want to move on, then, to some of the issues which will undoubtedly form the background or the context to the renegotiation, or the possible renegotiation, of the softwood lumber agreement and its implementation in 2001.

The crisis we have seen in the forests in the past year or two, in combination with the difficulties that have emerged -- the unintended consequences of the softwood lumber agreement -- has, it seems, provided a predisposition to look at new ideas around timber pricing and tenure reform that probably would have been unimaginable just a few years ago. In the area of public policy around forestry, we certainly have some exciting opportunities, as I mentioned in my initial statement. The issue of a public review of forest policy in British Columbia is, I think, an important issue. I want to explore that issue with the minister for a time here.

The last discussion of that sort was the Forest Resources Commission back in 1991 -- the commission chaired by Sandy Peel. Since then, we've had a four-sector strategy committee and some other committees that have looked at different elements of forest policy in British Columbia, but we haven't had a broad-based look at public policy around forests in British Columbia since at least 1991.

[ Page 13801 ]

Hon. D. Zirnhelt: I certainly wouldn't go back on my word that there needs to be a vast public component to the debate around forest policy. You've participated in it on "Voice of the Province," on some of the open-line shows. We see the transcripts. I have done the same thing, and I've said every time that I want to hear from British Columbians. As soon as you put an idea out there -- a MacMillan Bloedel puts an idea out there, or the Deputy Premier puts an idea out there -- we hear. We are not wedded to any kind of a formal, lengthy commission-type process. I've said, quite frankly, that we don't have time to do that.

We do have a number of institutions that are out there thinking about policy reform. There are books published almost every week and articles published every week. I don't think there's any secret to the number of ideas that are out there. The IWA has contributed. I know the truck loggers are working on a position. We were told that COFI would have a position, and indeed when the Premier and I sat down with them -- in the 90-day process which I think took 120 days, or the 30 days which took 60 days, or something -- we were told that there would be forthcoming positions. We at that time invited submissions. They haven't been forthcoming, in part probably because of the developments in the industry. It's become very clear that we have two or three or more forest industries in the province, given the geography, given the market access problems.

Yes, there should be a public component. But every time there's an article or a letter in the paper, or a speech made by a public figure, we've had part of the debate. There are panels that we listen to. There were panels at NFPA. There are panels amongst the professional foresters. All of these constitute input that is available to us. We will formalize some of that input and open up the process even wider. We're just waiting. . . .

[1630]

G. Abbott: I'll invite the minister to tell me at some point what a possible time line might be on that, but I appreciate that that's future policy. He can make that response if he wishes, and that's fine. There has to be some joy in being the Minister of Forests and some privileges retained for holding that office. I won't bother him too long with trying to find out what the time frame is.

I appreciate the minister's response, and I actually agree with it. As I see the issue of a process or a public review, we should never undertake a process or a public review unless we have a compelling public policy reason to do so. In the case of British Columbia in 1999 that compelling reason is clearly to ensure that we are in the best position we can possibly be in. as the horizon of April 30, 2001, and the expiration of the U.S. softwood lumber agreement, day by day moves closer and closer. I agree that we can't have a process that's going to take us up to 2001. That just isn't going to work. We need to have a process that sorts things out well in advance of the expiration of that agreement so that we can make what internal adjustments we need to in our forest policy framework to equip ourselves for the final negotiations -- and, hopefully, for the commencement of a new agreement, or in the absence of one, life after that point.

I concur that a process has to be structured in that way and in a way that will produce timely results. We don't have a lot of time to dither. What we do have -- and it seems to me that these are the critical components in actually achieving some public policy changes that normally might be impossible to achieve -- are two things: the looming deadline of April 30, 2001, and as a consequence of some of the difficult restructuring we've gone through in British Columbia in the last couple of years, a predisposition to look at new ideas in a way that wouldn't have been possible in the past.

The minister's quite right that we have on some days a bewildering array of interests out there in the forest sector in British Columbia. But there's also some common ground, and hopefully a part of this process will be for British Columbians to identify what that common ground is. I do think there is some common ground there, so we perhaps have a predisposition to look at the ideas. We have some new ideas out there, and undoubtedly there'll be all kinds of permutations on those ideas presented in the months ahead. But I do think it's important that a well-defined and particularly a well-led process be undertaken, and in a way that is going to produce results well before the critical deadline of April 30, 2001. I'd be interested in hearing the minister's response to that.

[1635]

It is important that the government of British Columbia be involved in the discussions. The federal government has approached us to seek our view, as they have approached industry. We intend, though, that this tail called the softwood lumber agreement isn't going to wag the forest policy dog in British Columbia. It's important; you can't have the dog without the tail, but we aren't going to be wagged by it.

You're right. We have to come to some kind of agreement within British Columbia in advance. There are some strategic considerations, though, with respect to the kind of tactics that will be played by the U.S., which doesn't want to increase exports to the United States. What we say about our pricing systems and so on will to some extent have to remain internal discussions, as they have before. There is a negotiating aspect to this. We will conduct, to the fullest degree possible, public debate on all of these matters. They're all interconnected, and

[ Page 13802 ]

G. Abbott: There have been some suggestions around the form that that review should take. One of the more interesting suggestions, I thought, was one from the Association of B.C. Professional Foresters. A little earlier this year they advocated a review, and I think they have indicated that they would be prepared to participate in or possibly lead such a review.

Is that a live possibility in terms of the government's approach to this? The professional foresters certainly are non-partisan and professional and respected. Is that option one that is still under consideration by the government?

S. Orcherton: I seek leave to make an introduction.

Leave granted.

S. Orcherton: I know that many members of the House have been involved in the scouting movement, and it's indeed a great pleasure today to advise the House that Mr. Lemon, the scoutmaster of the 6th Cedar Hill Scouts from my constituency is in attendance, and accompanying him are a number of his scout troop. I'd ask the House to make them all very welcome to these chambers.

Hon. D. Zirnhelt: There's a generous offer by the professional foresters to host or conduct a policy review. They certainly can be part of it. I see them as a stakeholder that would be empowered in the process. In my own dialogue with them I've been encouraging them to think about the public interest in forests, as they do, and think more in terms of the considerations that a government has to make in terms of determining public interest.

There has to be a broader opportunity, though, for citizens. I think that the professional foresters might be seen as a special interest in the forests, a special stakeholder. While I would encourage every stakeholder to take a public interest view, I think it's a case where government has to lead and we have to open it up to the pubic. There is a massive amount of policy development that needs to take place, and we have to be ready to move where we have to move, should some problem come up.

I would just remind the member that we have a number of pilots underway. The Premier is committed to pilots for a results-based code, and I encourage the opposition to come up with papers and positions on any of these topics. So far, we haven't had a lot of suggestions for what a results-based code would look like, so we're prepared to take a small step and not wait for a major policy review to take place -- similarly with the community forests, similarly with a market-based pricing system for the small business program.

[1640]

G. Abbott: That debate certainly goes on from day to day and goes on in a variety of forums. I'm still attempting to get a sense of where we could or should go with respect to the public policy review that the professional foresters, among others, have called for.

There are some different approaches. Some have said that what we need is a council of experts. Some have said that what we need is a stakeholder-based panel that would represent the range of interests across the province, whether it's communities, first nations or so on -- and perhaps that's all a given. In terms of the form of the review, is there a model which incorporates the various elements that the ministry would like to see included in that review?

Hon. D. Zirnhelt: In the weeks to come -- I hope it isn't months -- I will announce what the government's plan is. But I am prepared to say that there will be an involvement of the public. There will be involvement of the stakeholders. But it won't be a negotiation between stakeholders and the province, because the very nature of stakeholders means someone has a special interest.

This is far too important. We need to involve the public and therefore a very broad definition of who has an interest in the forest industry, because the forest is everything from parks to intensely utilized land. People who want to take land out of forest production have an interest in the forest -- the communities who live next to the forest, who need it for growing room. So we have every intention of being effective and inclusive.

G. Abbott: I guess the wisdom of the process that's selected and the wisdom of the panellists that are selected will ultimately be measured by the report that is produced and the extent to which the report's recommendations form the basis for actual changes in public policy down the line. I'm obviously, as a British Columbian, hopeful that the minister enjoys spectacular success, in the final analysis, in his choice of panellists -- if indeed it's a panel that's created. Hopefully the report that emerges is something that will be practical and will form the basis for thoughtful changes to the forest policy framework in British Columbia.

The only advice I'll give the minister, and he can accept it or reject it. . . . The critical elements, it seems to me, in the success of such a venture, are first of all that there be a clear mandate for the process -- that there be a well-defined package that people can express their views around.

[1645]

I think it's also critical that it be professional, so that the conclusions it reaches will be not simply saleable from a

[ Page 13803 ]

Those are my brief thoughts with respect to the panel. The minister may wish to respond to that, or we can pick this up next week. I know we have an agreement here to rise and report progress. If the minister wants to respond and then move that, that would be great.

Hon. D. Zirnhelt: A quick response. We haven't determined that indeed it would be a panel, but that's certainly an option to be considered. What needs to be done is to have some process through which we can consult stakeholders and the public. We need that, and that has to be done in an effective and open way. I don't think a panel, if that were the model chosen, can be expected to develop policy. Policy is much more complex. They might point the direction, but some of it is very technical, and there needs to be. . . . This is a challenge to government, and my argument would be that we have shown that we can develop policy. The short-term action plan is policy. This is somewhat more complicated, but it's going to take the resources of government and the thoughts of British Columbians to come up with a new direction for us.

G. Abbott: Hon. Chair, I move the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; the Speaker in the chair.

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

Hon. D. Lovick: With that, I would wish everybody a pleasant time away from the House and move adjournment of the House.

Hon. D. Lovick moved adjournment of the House.

Motion approved.

The House adjourned at 4:49 p.m.

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