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)

MONDAY, JUNE 21, 1999

Volume 16, Number 7

[ Page 13805 ]

The House met at 2:07 p.m.

Prayers.

L. Reid: One of our staff members in the Liberal caucus, Dave Beaton, has a family member in the gallery today. I would ask the House to please join me in welcoming Mr. Jim Beaton, who is visiting this Legislature from Ontario.

G. Campbell: I'm pleased today to be able to introduce to the Legislature Marg Lundy and Alex Dawson. They are in-laws of my brother Robert, who lives in Perth, Western Australia. They're here to find out about not just the glories of Victoria and Butchart Gardens but also the thrilling and invigorating debate that we have here in the Legislature. I hope we'll all make them welcome.

W. Hartley: Joining us in the gallery today are Ken and Sheri Levine, who I understand work in the Florida state legislature. On behalf of the Clerks, let's welcome them to the session here today.

G. Bowbrick: Joining us in the gallery today are approximately 20 visitors from Vancouver Formosa Academy, in the Premier's riding. Ms. McLardy, a teacher, is here with about five adults and about 15 grades 8-to-10 students. I ask all members to join me in welcoming them.

[1410]

L. Stephens: It's a pleasure for me to welcome my son Mark Stephens, who's in the gallery today with his friend Aaron Bartlett. Mark is president of the Kwantlen Student Association, and Aaron is vice-president external. Kwantlen is the largest university college in Canada, with 23,000 students on four campuses: Langley, Surrey, Newton and Richmond. They're here today to meet with the Minister of Advanced Education and the opposition. Would the House please make them welcome.

F. Randall: In the precinct today are 27 grade 7 students. They're from John Knox Christian School in Burnaby-Edmonds. They're accompanied by their teacher Laura Gaeger and six other adults. They asked for an emphasis on grade 7 social studies for their tour. Would the House please make them welcome.

B. Goodacre: In the gallery today, and visiting Victoria from Houston, are Mayor Tom Euverman, Deputy Mayor Sharon Smith, Councillor Bonny Hawley -- who's also past president of the NCMA and a board member of the UBCM -- and Bill Beamish, the town administrator. I would ask the House to please make them welcome.

Introduction of Bills

HEALTH STATUTES AMENDMENT ACT, 1999

Hon. P. Priddy: I move that Bill 76 be introduced and read a first time now.

Motion approved.

Hon. P. Priddy: This legislation makes amendments to a number of health statutes, as well as some consequential amendments to other statutes. It's an example of government's commitment to reducing red tape for British Columbians, particularly for consumers of the health care system. In support of government's initiatives to streamline, this bill repeals several very obsolete parts of the health legislation, including the Hospital (Auxiliary) Act and some provisions of the Community Care Facility Act, Health Act and Hospital Act.

This bill also amends section 11 of the Health Act, which authorizes medical health officers to order a person who has a reportable communicable disease to comply with certain conditions, up to and including quarantine. The medical health officer may charge a person who is not complying with such an order. Section 11 is amended to also authorize assistant or deputy medical health officers to lay a charge of non-compliance.

Hon. Speaker, last year this House passed the Mental Health Amendment Act, 1998, which made a number of important changes to our mental health legislation in support of the government's mental health plan. This bill makes several minor corrections to last year's act, to the Interpretation Act and to the Patients Property Act which will allow us to proceed with bringing all of last year's Mental Health Act amendments into force at the earliest opportunity.

Finally, the bill provides for the repeal of the Naturopaths Act and the Psychologists Act. This is being done at the request of the governing bodies of those professions. In the future both professions will be regulated under the Health Professions Act. There are several consequential amendments to other statutes accompanying the repeal of these two acts, as well as some necessary transitional provisions.

I'm pleased to be able to table this legislation today, and I move that this bill be placed on the orders of the day for second reading at the next sitting of the House following today.

Bill 76 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.

FORESTS STATUTES AMENDMENT ACT, 1999

[1415]

[ Page 13806 ]

Hon. D. Zirnhelt: Bill 82 contains amendments to the Forest Act and the Forest Practices Code of British Columbia Act.

The amendments to the Forest Act improve tenure administration for government and industry, provide for more effective and fair compliance and enforcement, strengthen log-marking requirements and provide implementation powers for the Nisga'a final agreement.

The amendments to the Forest Practices Code of British Columbia Act clarify operational responsibilities related to forest roads and improve provisions relating to compliance and enforcement and reviews and appeals. The amendments will also allow pilot projects to be established that test ways to move towards a more performance-based Forest Practices Code, as was promised by the Premier at the Cariboo economic summit in May.

The changes in this bill build on the forest action plan and government's other initiatives for the forest sector. I move that Bill 82 be placed on the orders of the day for second reading at the next sitting of the House after today.

Bill 82 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 CREDIBILITY IN HYDRO-RAIWIND LAWSUIT

Hon. D. Miller: I would say that the individual who has the clearest political agenda is the member who just spoke.

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

G. Farrell-Collins: A ringing endorsement of the Premier's credibility, yet again, from the Deputy Premier.

The Deputy Premier stood at the Premier's side at the press conference on Friday when the Premier said that he had personally directed the chair of B.C. Hydro to pursue this case and that he had been speaking with Mr. Smith to tell him and direct him to pursue an appeal. How does the Deputy Premier feel, standing there, when he knows the Premier is fiddling with B.C. Hydro's legal matters because he has a clear personal, political interest? When will the Deputy Premier stand up and tell that man he has no credibility?

Hon. D. Miller: It's amazing how two people can be at the same press conference and come away with different opinions. For the edification of those members who weren't there, let me try to deal with two topics relative to this matter that were raised at the press conference. The first was that the Premier indicated that B.C. Hydro officials had said to him they were prepared to settle this matter out of court. The Premier indicated that he would rather they didn't do that, because he felt very strongly about his position. He rejected what some might say, in hindsight, was sort of the easy way out, because of the strength of his feeling.

The second point was whether or not this issue ought to be appealed. B.C. Hydro had already indicated in a press release prior to the Premier's remarks that they were examining that question. The Premier simply offered his opinion that in view of the fact that the courts had found. . .

Interjections.

The Speaker: Order, members. Minister, finish up your comments, please.

Hon. D. Miller: . . .that Mr. Sheehan had in fact been derelict in his duty, he thought it should be appealed; that he rejected the idea that someone in that senior position, making those kinds of wages, had been found by a court to have committed errors in judgment. . . . We should appeal that, because the principle of paying people for that, particularly in those senior positions, was unacceptable.

[1420]

G. Farrell-Collins: What's completely unacceptable is that the people of British Columbia have been paying the Premier for all these years -- with his performance and his lack of judgment. The easy way out for the Premier, rather than directing the legal affairs of B.C. Hydro, would have been to tell the truth in the first place.

We know that this Premier has no credibility. The Supreme Court of British Columbia said they didn't believe a word he said. They chose Mr. Sheehan's statement over the Premier's. Why do the people of British Columbia have to pay several thousand dollars more -- probably tens of thousands of dollars -- to appeal something they already know -- that you can't believe a thing the Premier tells you?

Hon. D. Miller: As I said last week, what is truly remarkable is that the member opposite engaged in perhaps one of the more vicious smear campaigns that I can recall in this province -- one of the most vicious, underhanded, ill-founded smear campaigns, in the gutter, that we have ever witnessed in this province. I would say it's safe to say that when you engage in that kind of activity, some of it sticks. What we know from the judgment of the courts is that every spurious, unfounded allegation made by that member there was determined by the courts to have absolutely no foundation. That member there can't bring himself -- it's not within him -- to stand up and offer an apology to. . .

The Speaker: Thank you, minister.

Hon. D. Miller: . . .all of the people he smeared. And we are supposed to take moral lessons from that member over there. I think not.

[ Page 13807 ]

PREMIER'S CREDIBILITY IN NORTH BURNABY CASINO APPLICATION

Given that the Supreme Court has said that the Premier cannot be believed, is this gambling minister still prepared to stand up and defend the Premier's claim that he had no involvement in the granting of that licence to his friend?

Interjections.

The Speaker: Order, members. Come to order.

Hon. D. Miller: Here we have the modus operandi. . .

Interjections.

The Speaker: Order!

Hon. D. Miller: . . .of the opposition party in British Columbia: engage in smear campaigns; engage in innuendo with no proof; smear, smear, smear; roll around in the gutter; call everything a scandal and hope that it works politically. Then, when they're proven by the courts to have been wrong. . .

An Hon. Member: Roll some more.

Hon. D. Miller: . . .smear some more. This is the agenda that these people here would bring to the province of British Columbia: nothing but throwing mud. As I've said before, he who throws mud loses ground.

We do not need to defend against those kinds of allegations, that kind of mudslinging. We don't have to defend a Premier who's frozen tuition fees for four years in a row in British Columbia. We don't have to defend a Premier, who has been leading a government that signed the first modern land claims treaty, against the narrow, bigoted view of the members opposite. I and British Columbians wish, hon. Speaker, that they would stop smearing, would stop the innuendo, would get out of the gutter and start to come clean on what it is they're proposing to do in this province.

The Speaker: First supplementary, member for Port Moody-Burnaby Mountain.

[1425]

The point is that every time the Premier puts his personal credibility on the line, he loses. He told British Columbians to believe him that the budget was balanced, and the auditor general said it wasn't true. He told British Columbians that he didn't know what was going on at B.C. Hydro, and a Supreme Court judge has said he doesn't believe the Premier.

The Premier has stood up and said that he had nothing to do with the gaming scandal in North Burnaby. My question is this: after what we know the Supreme Court has said about the Premier's credibility, will the gambling minister stand up and defend the Premier and continue to stand by those claims? Does he still believe that the Premier wasn't involved?

Interjections.

The Speaker: Order, members. Come to order.

Hon. D. Miller: What we won't do is engage in the guttersnipe tactics of the opposition.

Interjections.

The Speaker: Order, members.

PREMIER'S CREDIBILITY IN HYDRO-RAIWIND LAWSUIT

I heard the Premier rail against the evil right-wing corporate agenda being driven by the opposition in cahoots with the media, Madam Speaker. What I didn't hear from the Premier is any explanation, let alone an apology, for the fact that nothing he had to say about the Hydrogate scandal was believed by the Supreme Court of British Columbia.

My question for the Premier is: how does he expect, in the face of his ongoing silence. . . ? Will the Premier stand up in the House today and explain to British Columbians why they should believe anything he says, or is his continued silence an admission that he's finally run out of excuses?

Some Hon. Members: Where is he?

Interjections.

The Speaker: Members. . . . Members are very aware of the rule about presence and absence in the House.

Hon. D. Miller: The member for Matsqui has just confirmed everything I've said. He referred to the Hydrogate scandal. The Hydrogate scandal defined by the Liberals was that shares were made available to friends and insiders. That was one. Number two is that it was a tax avoidance scheme. That was the Hydrogate scandal. That was the sum and substance of the Hydrogate scandal, and the courts have just ruled that there was no foundation to any of those allegations. Notwithstanding that, the member still says: "Hydrogate scandal." They are muckrakers of the first order. It's a tactic that might seem convenient in the short term, but I can give them assurance based on some years in politics that it doesn't carry you anywhere in the long term.

The Speaker: First supplementary, the member for Matsqui.

[ Page 13808 ]

I want to go back to the gambling minister, because, you know. . .

Interjections.

The Speaker: Order, members.

M. de Jong: . . .I wasn't fair to the Premier a moment ago. He did actually offer an excuse on Thursday. If you can believe this, the Premier, in attempting to explain why the Supreme Court of British Columbia didn't believe him, said: "Bad legal work on the part of our lawyers -- sloppy legal work." My question to the minister responsible for hiring those lawyers -- the minister responsible for the Crown corporation that hired those lawyers -- is: does he agree with the Premier? Was it sloppy legal work? Was it bad legal work? And just how much money did British Columbia taxpayers pay for what the Premier has characterized as sloppy legal work?

[1430]

Tabling Documents

Interjections.

The Speaker: Order, members.

Ministerial Statement

NATIONAL ABORIGINAL DAY

It has been an exciting year for our ministry in British Columbia, since June 21. Among our achievements, the Nisga'a treaty was completed, and the Sechelt agreement-in-principle was signed. Fifteen more tables are now fully mandated, which will result in a number of agreements-in-principle before this time next year. The province is pleased with the progress that has been achieved under the six-year-old B.C. Treaty Commission process. This is a process for resolving land claims, achieving economic and land use certainty and creating jobs and new economic opportunities. Fifty-one first nations groups are currently active in the B.C. Treaty Commission process. One of these groups, the Sechelt, have reached an agreement-in-principle, while 37 tables are now in the agreement-in-principle stage, the substantive stage of negotiations. Several of these groups are very close to reaching agreement.

An agreement for improving and fast-tracking treaty negotiation remains a high priority for the provincial government. Outside the treaty process, we will continue to support consultation processes related to interim measures, dispute resolution and other negotiations. The Delgamuukw decision heightens the importance of the treaty negotiations. We are now applying a consistent consultation regime in accordance with Delgamuukw, and we are currently reviewing the treaty process with Canada and first nations to revitalize negotiations and achieve settlements. We recognize that many aboriginal people do not live on reserve; therefore the province is actively working with urban aboriginal peoples, including youth groups, on child care, education and job and training issues to address their specific needs.

Treaties will take time. We need to create opportunities today. Government encourages partnerships between business and first nations. This increases participation of aboriginal communities in the provincial economy, provides opportunity for aboriginal youth by creating a sense of purpose and hope for the future and stimulates local and regional economies. Already there are many examples of this across Canada and in British Columbia, including financial services, construction contracting, transportation, forestry, manufacturing and health care.

High-profile partnerships in B.C. include the Khowutzun Development Corp., the development arm of the Cowichan tribes, which received the recognition award in November 1998 from the Council for the Advancement of Native Development Officers. The Campbell River Indian band received the economic-development-of-the-year award in February 1999 from CANDO for its Discovery Harbour shopping centre. It is wonderful to see this recognition of hard work and dedication.

[1435]

[ Page 13809 ]

The Speaker: I recognize in response the hon. member for Matsqui.

M. de Jong: I am mindful of the ruling you made in the past, though I confess I am somewhat at a loss to understand its application over the past couple of ministerial statements. But let me say this.

Interjections.

The Speaker: Members, come to order.

M. de Jong: I think we should recognize this day, National Aboriginal Day, which falls on the longest day of the year -- and I'm sure these days seem long if you're sitting on the government side of the benches. . . .

Interjections.

The Speaker: Members. . . .

M. de Jong: We should recognize this as a day where we focus on the cultural and historical qualities of aboriginal peoples in Canada. The minister referred to that at the beginning of his statement. We should -- as we have been during the course of the debate that's taken place in this House over the last year -- be mindful of their struggle and of the discriminatory elements of the laws that have been passed in Ottawa and British Columbia that they have had to overcome over the past number of years and generations. It is a day when we should join with aboriginals and attempt to articulate and express to them how we have come to better understand some of those struggles -- not all of them; we do have a long way to go.

However, as we look to the future. . . . The minister has gone on at some length, pointing to things that he and his government would define as accomplishments. We should also be mindful of some of the challenges and recognize them and speak about them. We have first nations groups who are engaged in a negotiation process -- which the minister reminded members of this House of during the estimates debate -- which has seen them incur more in terms of the cost of negotiations than they are likely to ever reap as the result of an ultimate settlement. That can't be a satisfactory state of affairs for anyone.

On a day when we properly celebrate the accomplishments and achievements of first nations -- the progress that they and we have made as a society, as British Columbians and as Canadians -- let us not lose sight of some of the tremendous obstacles that lay in the paths of all of us in achieving the settlements that I think we have at least established in this chamber that all of us look to. If we disagree on what those final settlements should look like, surely we do agree on the fact that we have to continue to work towards achieving them. This is a day when we should recognize that, above and beyond everything else.

[1440]

Orders of the Day

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

ESTIMATES: MINISTRY OF FORESTS
(continued)

G. Abbott: Hon. Chair, we are recommencing the first section of the Forests estimates, which we began on Thursday of last week. I don't know whether it's good timing or bad timing, but we have an interesting development in the B.C. forest industry at a time when we're discussing the state of the industry. That, of course, is the story around the purchase of MacMillan Bloedel by Weyerhaeuser.

Could the minister advise what process will be followed from this point on, with respect to that purchase? Is there a specific process, from the minister's perspective, which will have to be followed in order to allow that sale? What are the regulatory issues involved from the ministry's perspective?

Hon. D. Zirnhelt: It'll be the same as any other change of control. Section 54 of the Forest Act will be followed -- where the company has to apply for the transfer of the rights under the forest legislation.

[1445]

Hon. D. Zirnhelt: Most of the process is governed by policy, and there are some practices that have become customary. An assessment is made as to the nature of the public interest. In this case, I have said already that there would be some public hearings to assess community response to the proposed transfer. The policy basically is that once we have the application in hand, we then proceed to analyze the information provided to us and plan a series of public meetings in those communities that are primarily affected by the transfer.

G. Abbott: Is the assessment of the public interest something that is formed by the submissions which are made at the public hearings, or is professional assistance engaged to complement the submissions that are made at public hearings?

Hon. D. Zirnhelt: It's customary that we provide a resource -- either from the ministry or from outside the

[ Page 13810 ]

G. Abbott: I appreciate the minister's detail on this. The appointment of a panel will presumably follow formal notification from the parties that they intend to proceed with this. Is the size and structure of that panel something which is flexible, or is it certain under the terms of section 54?

Hon. D. Zirnhelt: It is not governed by section 54; it's governed by policy. Basically, it's the determination by the minister of what is required to assist him in determining the degree of public input. What's been customary is to have MLAs of the affected region involved on the panel in some way, as representatives of the communities that are affected.

G. Abbott: Just so I understand the panel issue a little bit more. . . . The companies will notify the minister; the minister, in turn, will attempt to appoint a panel, which is at least in part comprised of MLAs from the affected areas. Is that correct? I guess the reason why it raises questions in my mind is that, given the size of the two companies involved here, a pretty big patch of British Columbia is affected by this sale -- or could potentially be affected by this sale. How would that, then, be managed?

Hon. D. Zirnhelt: In this case, because of the licences of M&B that are affected, we don't expect there to be any effect upcountry in Weyerhaeuser territory. Those licences aren't being transferred. So it'll be the Island, parts of the mid-coast and the Queen Charlottes, primarily, and some of the lower mainland.

[1450]

Hon. D. Zirnhelt: It was in the case of the sale of Crestbrook Forest Industries to Tembec.

G. Abbott: In that case, there was a public hearing in Cranbrook. The panel included what, in that case -- one MLA?

Hon. D. Zirnhelt: As we recall, there were four communities primarily affected. The committee was chaired, as is often the custom, by the Parliamentary Secretary to the Minister of Forests. That was one MLA; two other MLAs sat on the panel.

G. Abbott: I'm not familiar with the process in terms of the involvement of opposition MLAs. Is it the expectation of the ministry that the panel is comprised exclusively of government MLAs? Or is it typical in these cases to involve opposition MLAs whose constituencies may be affected by it?

Hon. D. Zirnhelt: I haven't personally looked at the communities involved. I take advice from the officials and consider the advice, and I look at which MLAs might be affected and take that into consideration when I appoint a panel. So it's possible to include opposition MLAs in the hearings.

G. Abbott: I guess the timing of the public hearings is going to be dictated, at least to some extent, by the timing of the official notification from the parties in this, so I won't pursue that further. Presumably the public hearings and the assessment of the public interest follow fairly quickly upon formal notification. Or is a time frame of a couple of months what one might expect in these situations?

Hon. D. Zirnhelt: Well, the consideration every time that I've been asked to do this -- and I think it's been four -- is the balance between giving the public enough time to become informed about the nature of the transaction and the implications of it, and the expediency required to successfully complete the business transfer. Typically, it's two to three months for the public involvement process. I understand that it's two to four months for the closure of the deal between the companies -- which of course would be contingent upon approval of the transfer. Sometimes these dates come together about the right time. But we are cognizant of the balance between giving people time to be heard and an expedient decision.

G. Abbott: I'm not aware of any reason why today's announcement between the parties would affect the other process which is underway, which is public hearings with respect to the resolution of compensation issues between the Crown and MacMillan Bloedel. Is the minister aware of any reason why that schedule would be changed or disrupted?

Hon. D. Zirnhelt: No, I'm not aware of any reason why there should be a change.

G. Abbott: I want the minister to outline to me what the consequences are to the holdings of the party. I guess this would be MacMillan Bloedel in particular. For example, will the 5 percent takeback rule come into play with respect to this sale?

Hon. D. Zirnhelt: Yes. I have already said publicly that this will probably be an issue discussed at the hearing, although the 5 percent issue is separate from the transfer of licences. The takeback of 5 percent is automatic. That's what the Forest Act says. We have a provision in the act that says that they may apply to have it reinstated, should they provide an acceptable job creation plan.

[1455]

Hon. D. Zirnhelt: It's really too early to tell, because I don't have an application in front of me. I'm only going on the intent that was stated, which was to apply for the transfer. In the briefings from the company we did not get into any detail

[ Page 13811 ]

G. Abbott: I thank the minister for his responses to those questions. I think that covers off the questions I have -- at least at this point in time -- on today's announcement.

I want to return briefly -- or perhaps not so briefly -- to the issue of a public review of forest policy, which we were engaged in last day. I think that where we left it was with my view that the review may be very timely. It may be an excellent opportunity, because there is some predisposition on the part of the public, the industry, the IWA and all of the stakeholders in the process to look at new ideas at this point in time. It could be very valuable for equipping the forest industry for the twenty-first century. I think I left off with the suggestion that, in my view, it is absolutely critical that the panel, commission or group -- whatever it is -- be professional, non-partisan, independent and unbiased, so that the public will enjoy a lot of confidence in the group that leads the process.

That begs the next question: who is going to drive the process? Will this process, if and when it arrives. . . . We know that it's going be in the short fullness of time or something like that -- it's not immediate. But certainly, if we're looking at 2001 and the renegotiation of the softwood lumber agreement, it's not going to be too far in the future either. The question is: who's going to drive the process? Who's going to coordinate the process? Is this a process which is going to be coordinated by the Ministry of Forests, or is it something that is going to be involving the Premier's Office as well?

Hon. D. Zirnhelt: In due course we'll have an announcement, and we will explain that in the announcement. With respect to the softwood lumber agreement, I have to say that federal-provincial relations come under the responsibility of the Minister of Intergovernmental Relations and the Premier. But as is practice, the minister from a sectoral ministry like Forests is obviously involved. So we will, on behalf of British Columbians and the government of British Columbia, take leadership as required in federal-provincial consultations with respect to the replacement of the softwood lumber agreement.

[1500]

Let me frame the next question this way. I am very concerned that this public policy review of forest policy, if it becomes one of the pets of the Premier's Office, will be doomed to fail, frankly. We don't need another process that is driven by a political agenda out of the Premier's Office. We've seen more than enough of those in the past few years. The success of them, to say the least, has been dismal, and I'm extremely concerned that if the Premier's Office is guiding, driving or coordinating this thing, it will become just another on the list of failed initiatives by this particular government.

I think it would be most unfortunate if that were to happen. I appreciate that we're partisans in a partisan environment here, but I think that we do have an opportunity to make a difference in terms of future forest policy in British Columbia, if this process is done right. If it's taken over by the Premier's Office, one can only anticipate that the process will get mired in a whole range of considerations that are extraneous to good forest policy in British Columbia.

The minister may not want to answer that. I'll certainly allow him the opportunity, but let me at least frame it by saying that it is my heartfelt opinion that we need to keep -- as much as we can, at least -- the politics out of this thing. We need to have an opportunity to look, in a non-partisan way, at critical issues in forest policy in British Columbia. So I'll invite the minister to comment on that proposition if he wishes. I appreciate that it's his prerogative to reserve all the final detail about the process to a time when he wishes to announce it.

The other point that I need to ask about is the recurrent rumours around who is going to be leading this process -- if indeed the process comes to a forum. The rumours that are recurrent are around former cabinet ministers or former MLAs being invited to take on the process. It may not even be just former NDP MLAs or former NDP cabinet ministers but people who certainly come with a good deal of political baggage and who I certainly don't think would be viewed as non-partisan. They might be viewed as professional, but they're certainly not going to be viewed as non-partisan, independent and unbiased. Can the minister assure me that the leadership in this process won't be from that direction?

Hon. D. Zirnhelt: It's my view that any process taking on a major policy review like this has to be credible. I would just remind the member that the short-term forest action plan process, which was really led by the Premier and me, with the assistance of the deputy minister, the CEO of Forest Renewal B.C. and the timber jobs advocate, was a successful process that led to some short-term policy changes that have been beneficial to the industry. So it is possible for a process led by government and agencies close to government to have credible output. I think that in order for it to be successful, we need stakeholders and the public to offer us their comments. The public interest is behind any policy review like this. What's critical -- whatever the outcomes -- is that it reflects the view of the public. I can say no more, because it is future policy. I hear what the member's saying. I too want the process to be credible, effective, good for the people of British Columbia and good for the sector.

[1505]

The question of the scope of the issues to be addressed by the process is one that interests me, because this is a time when there are a lot of ideas out there. MacMillan Bloedel, for example, issued their White Paper on stumpage and tenure reform back in June 1998. It contains a lot of interesting ideas and suggestions around adjusting tenure, changing stumpage

[ Page 13812 ]

Similarly, in the discussion that occurred at the last meeting of the Association of B.C. Professional Foresters, there were some substantial discussions around important changes to tenure. I think it was an Assistant Deputy Minister of Forests who advanced her personal vision of forest tenure reform in British Columbia, rather along the lines -- in some respects, at least -- of that put forward by M&B and others: equal division of forest tenure between government, industry and first nations.

Of course, there's going to be a whole range of different ideas, permutations around what we do about tenure, what we do about market-based stumpage -- those kinds of things. To me, the question is: how does the ministry anticipate taking some of those ideas and packaging them in a form that British Columbians would want to give their meaningful comments to? Is that the objective here -- to try to capture a particular vision of tenure reform and stumpage reform by saying, "Here's one set of ideas," and asking what they think about it? Is that the kind of process we have in mind here, or is that a misreading of where we are going with respect to the process?

Hon. D. Zirnhelt: Well, it is future policy. But let me say that we intend to advance ideas to ensure that the public has some sense of where we might go in forest policy to reflect a future state that's better than the one we're in. There has to be an awful lot of work. We will invite the views of many, and on an appropriate basis those might be summarized and made available to people for comment. But the government intends to show some leadership with respect to the directions that we might go in.

[1510]

I'll exclude the discussions around the 30-day and 90-day plans. But the last process of a more expansive character was the Forest Resources Commission, which released its report entitled "The Future of Our Forests" back in April 1991. The report of the Forest Resources Commission contained well over 100 recommendations. I certainly don't propose to revisit those 108, but there are a few which I think might be worth talking about again because perhaps elements of them will reappear in the pending process.

For example, in the Forest Resources Commission list of recommendations there's a recommendation by the commission -- this is recommendation 22 -- that a two-year timetable be established for completion of all district land use plans. I don't think that has been achieved. Is there a sense that it would be useful to revisit the issues of land use plans? Is that something that would form a part of the ministry vision, which would be under discussion in a future process?

Hon. D. Zirnhelt: Of course, the land use planning, as the member knows, has taken some years. It's not something that can be done easily, and perhaps that's going to be the case with the recommendations for any change in policy. You can't do any of this overnight. It's the policy of government to carry on with land use planning, but it is time-consuming both on the part of the volunteers and on the part of the government staff that back up and provide information to the processes.

Before we're to have a new era of a results-based Forest Practices Code, we have to have very detailed land use objectives at least at the landscape unit planning level. I don't think the Forest Resources Commission really contemplated 2,000 landscape unit plans, because those may take some considerable resources and require the full set of provincial, then regional and now subregional planning processes to take place first. I think that recommendation was overambitious. There just weren't enough resources to do it or the ability of people to do it at the level which was necessary to give the detailed input into a landscape level of objectives, wherein you can balance various uses on a smaller scale within the landscape.

G. Abbott: The commission also made a number of recommendations with respect to the management and financial structure of the ministry. It suggested, for example, the establishment of a new ministry of renewable natural resources -- obviously something which hasn't come to be nor perhaps should have come to be. I don't think we've had the debate around that.

[1515]

Hon. D. Zirnhelt: I don't think that particular proposal has ever been on a table. The Deputy Premier did give his views -- not the deputy minister -- of one possible option for managing. . . . We may or may not be that specific with respect to the policies that are required to take us into the new millennium with forest policy. But as I said, that would be future policy -- if something like that were contemplated. I'm not sure who is recommending that we pick up from the Forest Resources Commission and just go from there. Some of it may well be applicable to today, but since that came out. . . . Ten years later things have changed a little bit around the world and in British Columbia. So in a sense we have to start over and see what's relevant, but we're mindful of the previous commission's recommendations as, I think, are most educated observers on the scene of forest policy review.

G. Abbott: The issue of "privatization" of provincial forests has been prominent in recent weeks as well. Again, the debate was prompted by the comments of the Deputy Premier. I apologize if I said the deputy minister. It certainly wasn't the deputy minister; it was the Deputy Premier at

[ Page 13813 ]

In any event, the issue of "privatization" has prompted a lot of discussion. And a lot of it, I guess, is around actual sale of land as opposed to reforming tenures to convert shorter-term or volume-based tenures to long-term area-based tenures, which I think is the real debate in British Columbia. I suspect, in fact, from the comments the minister has made, that that's his view as well. Again, appreciating that we are talking future policy here, at least in respect of how the question will be cast for the pending process, does the minister see the issue around tenure primarily as one involving the conversion of shorter-term, less secure, volume-based tenures to longer-term, area-specific tenures? Is that where the debate will occur, from the minister's perspective? Or will the tenure debate take on some other form than that?

Hon. D. Zirnhelt: Well, the first debate around which we'll have to achieve some consensus is: what ends do you want to achieve? If it happens to be timber production, then the question has to be: what's the most appropriate tenure to have for the maximum timber production? If the end happens to be stability of communities, then you have to ask the question: what's the appropriate form of tenure to stabilize communities? So I think it depends on what the public policy purpose is and what the public interest is, and there's a wide variety there. Similarly, it would be surprising if the topic of governance of community watersheds didn't come up: what's the appropriate tenure form for governing community watersheds where the purpose might be to first and foremost preserve the quality of drinking water in that area?

[1520]

G. Abbott: We've been talking about the debate around the process in the context of that looming 2001 horizon -- which, as the minister corrected me the other day, is actually the end of March as opposed to the end of April. I think I was actually thinking of the end of the tenure of this government when I was talking about the end of April. Perhaps that's the source of my confusion.

That's not to get off the point, which is: if we're looking at roughly a 22-month window until the expiration of the current softwood lumber agreement, is it the expectation that we will be able to go beyond simply discussing reform of tenure over that period? Or does the minister think it's possible to actually introduce reforms prior to that deadline?

Hon. D. Zirnhelt: There will be a negotiation with the United States, and it will be handled primarily by Canada. So any changes to the management regime in Canada will have to be rolled out in the process of those delegations. It's very tricky to have a very public process and show where we want to go and not interfere with the strategy involved in negotiation. It's very complicated.

The process of dealing with the softwood lumber agreement replacement has begun. Work is happening in the trade section of the Ministry of Forests. There are discussions between the federal and provincial governments, and as you may know, some of the industry are down in Washington on a familiarization tour this week.

G. Abbott: The Forest Resources Commission made some useful suggestions around the inventory of renewable forest resources in British Columbia. I'll just mention a few of them and get a sense of the extent to which the minister thinks the recommendations have been achieved to date and the extent to which these continue to be important issues that might form a part of a process.

We have, for example, these recommendations:

"No. 76. British Columbia undertake a commitment to complete inventories for all renewable forest resource values using standardized compatible systems.

"No. 77. A provincial resource inventory committee be established to plan and develop a program for these inventories.

"No. 78. An updated provincial timber inventory, complying with the new standards, be completed over the next ten-year period.

"No. 82. The new inventory program must be designed and funded to provide reliable statistically sound data that can be used by local resource planning groups.

"No. 84. A system for continuous updating of the provincial timber inventory must be established."

[1525]

With respect to wildlife inventory, the whole province has been covered, at least in a general way, thanks to the funding that was available from Forest Renewal. So we have a great deal of inventory information available. Since the last time I reviewed the Forest Resources Commission, I think we've made substantial progress on land use planning and substantial progress on the inventory side, which puts us in a much better position to do the planning and the fine-tuning of the timber supply reviews as necessary.

G. Abbott: I'll quickly look at a couple of the other areas to see where we are. . . . One of the things that the Forest Resources Commission discussed in its report was education. It talked about the public school curriculum and the efforts to

[ Page 13814 ]

Is this something that remains a concern of the ministry -- I presume it was at the time of the report -- and would this form any part in the pending discussion?

Hon. D. Zirnhelt: Information is important, and the government has limited resources to do that. Having said that, I think that there's been a massive program by the Forest Alliance. The ministry has a web site posting information, and there are information booths set up whenever there's a fair or an exposition that relates to forest resources. There are programs available in the school curriculum, and there are always improvements being made. I would say that there's been a substantial increase in the amount of information available to the public.

On the international side, there are tours set up so that those people who are buying products from British Columbia can come and get information about our forest practices.

G. Abbott: I think most of my questions have been answered with respect to the pending process. I do want to discuss the 30- and 90-day proposals. . .unless my colleagues have any questions around it. But I do have a last question further to recommendation No. 108 of the Forest Resources Commission, which says: "All major areas where public participation is required in the planning and management of forest land-based activities be enshrined in legislation." Does the minister have any comment with respect to that recommendation?

Hon. D. Zirnhelt: That recommendation was substantially implemented with the public review components that were put into law in the code. Before we became government, there wasn't sufficient opportunity for the public to be involved. I would say that now, in some cases, the opportunities for the public to participate exceeds the number of people and comments available to fill the opportunities. There has been a substantial increase in the public review provisions under the Forest Act, primarily in the Forest Practices Code of British Columbia Act.

[1530]

One of them is the declining timber supply. In one report I read, it's been described as follows: "Timber deficits are pervasive, as shown in the following schedule." I have a schedule here that shows that B.C. harvests, from 1987 to 1997, had a decline of 39 percent on the coast and 12 percent in the interior, which is an average of a 22.2 percent decline in harvest over that period of time. There is a prediction in some reports that, given the existing policies, the available volume is going to drop to approximately 55 cubic metres by the year 2010. I'm wondering if the minister would like to just comment on how we're going to address that concern, given that there seems to actually be an increase in demand for certain forest products in the world as we see a drop in our cut. How is that going to affect the industry?

Hon. D. Zirnhelt: The amount of wood we cut is not a function of world demand. The demand in forest products is a modest increase. What's happened in British Columbia is that previous governments greatly exceeded the carrying capacity for timber production, so it had to come down. A decision made by the chief forester has instructed to bring it down if it needs to come down or increase it if it can go up. What you're seeing -- the declining cuts in some areas -- is simply a matter of the calculations made by the chief forester in terms of what's available out there. He will then make a determination based on how rapidly he can get to a sustainable cut.

R. Coleman: What definitive things are we doing to basically address this problem over the next ten years? If I read this industry correctly, we need people involved in both the bureaucracy and the planning at the company and the provincial level that can think in a box that looks at 50 years as a window as to how we're going to grow timber in this province. It's not a short-term solution, by any means. It's something that takes some definitive planning and some thought going into how we're going to get a better quality of timber over the next period of years so that our cut that's coming in either is larger or is grown faster and has less pulp in it and more quality. Obviously that's going to require some definitive program relative to some thinning, planting, fertilizing -- growing the forest.

If you look at some of the reports by, I think, Apsey and Reed, they're quite focused on the fact that we could improve how our forests would be operated over the long term if we would make some changes now. Yet I've never read anything in any of the ministry reports that I have here that leads me to believe that we're actually moving in that direction in an aggressive manner. I'm wondering what the minister thinks.

[1535]

There are enhanced forest management planning pilot projects. There's been a tremendous amount of work done in growth and yield studies, which indicate what's happening on the second-growth forests. All this has been worked on in concert with land use plans that seek to dedicate lands under which we can have enhanced forestry activities. So there's

[ Page 13815 ]

[P. Calendino in the chair.]

R. Coleman: I'm just reviewing a report. Would the minister agree that the cost of delivering wood to mills in British Columbia rose by 75 percent between 1992 and 1996?

Hon. D. Zirnhelt: When I know what report you're referring to, I'll tell you whether we agree with that or not.

R. Coleman: The reports are done by F.L.C. Reed, a forest policy consultant in White Rock.

Hon. D. Zirnhelt: I don't know. It doesn't really help me. Mr. Reed has put out various reports at various times. We do know that the costs have gone up. We do know that we were conducting forest practices that weren't even integrating the values of integrated resource management, and some constraints were put on as a result of the code in order to protect soil, wildlife and forest productivity. And yes, in general terms, the cost of delivering wood has gone up -- no surprise.

R. Coleman: I agree that Mr. Reed has put out the odd report over time, and if you're involved at all with forestry, you'll probably come across his and a number of other stakeholder and consultant reports. I understand the minister won't have time to read all of them.

The concern that I have more than anything, I guess, having sat on the Select Standing Committee on Forests, is the fact that there was supposed to be 50 cents of every dollar spent on silviculture -- FRBC dollars. Every time I read a report, I see something that tells me that if we would increase the spending on silviculture and on basically farming the forest so we get a better yield, it would be better. Instead, it comes in somewhere between 10 and 15 cents.

Last year, when I wanted to ask him about Forest Renewal, the minister referred me back to the select standing committee. I still stand before the House today, after three years on that committee, and I have a real concern for the minister. That is that there is no measurement of outcomes of Forest Renewal. When I look at the whole aspect of how we're going to create a vision for the forest and how we're going to create long-term sustainability for our cut and actually see our cut go up, one of the places we've spent close to $2 billion is Forest Renewal BC.

During that period of time I've continually asked the question: how many trees have you planted? On how many acres that you worked on have you actually done intensive silviculture? How many have you thinned? How many have you fertilized? Where are they? Every time that question comes up to the select standing committee and you look at the annual report, these people don't measure outcomes. They don't measure outcomes and details, and they can't honestly tell you how they're accomplishing that. That's a real concern because it's tax dollars being spent; it's stumpage that came out of an industry.

I just mention that the costs of getting product to mills in our province have gone up, and part of that was the agreement that we would deal through Forest Renewal B.C., which was created as a result of the superstumpage that we added on. Now we have a Crown corporation that frankly just does not seem to meet the priorities that were set out for it back at the beginning.

[1540]

Hon. D. Zirnhelt: I think that, by general agreement, we were going to talk about FRBC at the last, but let me answer in general terms. All of this that you put forward is interesting. But even Mr. Reed doesn't have all the answers, and he's been a professor for 30 years. What I'm saying is that there is literature on this, and there is wide debate on how you measure objectives. There were a number of things that needed to be done to restore watersheds, but FRBC did not hit the ground running with a blueprint. Members of the opposition, and people you know, were arguing that the money should be spent: "We know that there's a watershed that needs fixing. Never mind spending millions of dollars doing detailed planning as to which one should come first and exactly how it should be done." A lot of it, by nature, was experimental. Watershed restoration was a new program, a new idea.

Forest Renewal, in its first years, was project-driven. It took several years -- and it's defensible and understandable that it would take a while -- to be strategic-planning driven. I would say that we have better information now, based on the growth and yield studies that we've done, but you can do a lot more research. We started Forest Renewal with an inadequate amount of research, I would argue; but it's quite an interesting debate as to how much you should spend. People will argue, when the research doesn't yield economic results immediately, that it isn't necessary or that it isn't advisable to spend the money on that. So the idea of coming up with measurable outcomes is something Forest Renewal has taken seriously, and they're in the process of compiling those results, which are supposed to be available sometime this summer.

R. Coleman: I guess that I'll save my comments on FRBC for that section of this. Suffice it to say that if it's four or five years after it was started that it's going to come out with these measurable results, in the summer of 1999, I wouldn't find that acceptable if I were the Minister of Forests. I'd be very disappointed, if I were in his position.

I'm just wondering. . . . When was the last analysis completed in regard to forest, range and recreation resource analyses for our forests, relative to timber supply targets?

Hon. D. Zirnhelt: If you're asking about the forest, range and recreation resource analysis, it's done every ten years. The last one was done in 1994.

R. Coleman: Does the ministry have a number relative to current management practices that they see as the long-term harvest level for the province of all TSAs and TFLs?

Hon. D. Zirnhelt: Considerable resources were spent on the last TSR review -- the timber supply review -- and based on the outcome of that, it would appear that the long-run harvest level would be in the 55-60 million range. You have to

[ Page 13816 ]

[1545]

Hon. D. Zirnhelt: Yes, most of the estimates don't take into account research that's currently underway. Since it's a new science, the impact of implementing biodiversity guidelines isn't known. There was no textbook on this when a lot of this was undertaken. So we have the research and studies being undertaken now. As the results are known, they're taken into account by the chief forester when he makes his determinations.

R. Coleman: Is the ministry conducting those studies, or is it FRBC that's conducting those studies?

Hon. D. Zirnhelt: Well, there is some work being done under specific innovative forest practices arrangements that we have with companies in particular regions, but the ministry is undertaking the major studies that are being done. I will say that universities do some work. Sometimes they apply to do work, and there are chairs that conduct and oversee research at the universities. The primary responsibility for the studies is with the ministry.

R. Coleman: How do the numbers for projected timber harvest measure up to the actual current harvest that's taking place?

Hon. D. Zirnhelt: The current harvest is in the neighbourhood of 56 million, and it is below what the AAC is. The AAC is around 70 million.

R. Coleman: With the AAC being at 70 million and the harvest at 56 million, is this the first year that our harvest has actually been close to our predicted levels? Was it not higher the year before? Last year was there not a harvest above what we were saying -- the 50-55 million range? Was it not higher than that?

Hon. D. Zirnhelt: Last week we were into what the harvest was last year, this year and the year coming up. I can get the staff that have that information at their fingertips if you like. But no, it would be a couple of years. My recollection is that two years ago we were below the approved AAC.

R. Coleman: Would the minister know if we are the only province in Canada that has an annual allowable cut that's substantially higher than the current harvest taking place in the field?

[1550]

R. Coleman: Could the minister tell me, then, how other jurisdictions are. . . ? Let's just take an example. How is Alberta compared to us? How do they calculate their cut that's so much different than us?

Hon. D. Zirnhelt: I'm informed by the assistant chief forester that we can get the technical information. Basically the difference is that they do a calculation as opposed to a determination. Our chief forester has certain things that he calculates, but he makes a determination based on a wide range of factors. That's the difference.

R. Coleman: Last year in estimates I asked a few questions relative to the overall goals of the ministry. The minister said that there were some things ongoing and that we would see some outcomes this year in estimates relative to the forest industry and the goals for the ministry. The questions I asked were basically: what were your goals for the forest-bred industries in the province, and, if the minister had goals, how were they developed and when would they be completed? I'm wondering how you've progressed down that road since a year ago, when I asked you that question.

Hon. D. Zirnhelt: Well, last year we embraced those goals of the jobs and timber accord that were ministry responsibilities, and we proceeded to implement those -- like more wood for the value-added industry and making some wood available under the. . . . We can get into this under the section on the jobs and timber accord. We've made substantial progress in making the undercut available, and we have measured that. Last year we were also working on the forest action plan, and I think the results speak for themselves. We had an objective to set two years of wood ahead, and I think we achieved 1.9, plus or minus. We responded to all those industry interests and licensees that wanted two years of wood ahead. Those are some of the highlights of the goals we had, and I think we've performed, based on those goals.

R. Coleman: As the minister knows, goals and planning are an ongoing evolutionary process that takes place year on and year off. What provisions has the ministry got to move forward into some process for public debate or public disagreement to develop goals for the future of the ministry from here -- outside of the jobs and timber accord, which we'll obviously discuss when we get to that section, and some of the things that were implemented as a result of that? What about the ministry as a whole and its processes for establishing those goals and objectives that can be measured for the entire ministry rather than just relative to one accord?

[1555]

[ Page 13817 ]

But the short answer is that we don't hold a public consultation every year to determine what the short-term operational goals of the ministry are. They carry on the programs that they have until we make a policy shift -- such as, for example, the two years' wood ahead. Then the ministry takes that as a goal and subsumes that into their operations.

R. Coleman: A number of months ago various groups were making presentations to the Premier and Mr. Wouters relative to the industry -- including the independents and some corporate people, as well as COFI and what have you. I'm wondering what the minister and the ministry's participation in those meetings were.

Hon. D. Zirnhelt: We had ministry staff at most, if not all, of those sessions. As you know, the short-term forest action plan was overseen at the technical level by the Deputy Minister of Forests, the CEO of Forest Renewal B.C. and the jobs and timber accord advocate's office, which has a number of staff people. They were there when there were major consultations. Any subsequent meetings -- by way of clarification and so on -- had ministry staff participating. We had a team in the ministry that backed up those discussions for information.

R. Coleman: It would seem to me that it was a pretty interesting initiative on behalf of the Premier. Where was the minister's involvement -- not the ministry's -- in that process and those presentations? What input did the minister have into it?

Basically, what drove that agenda? Was it ministry-driven or was it Premier's Office-driven -- the decision that we should start to meet with industry? It would seem to me that the person that's responsible for the Ministry of Forests, who is the minister himself, would be in attendance or be tightly involved in that process. I'm just wondering where the initiative came from and what drove that initiative.

Hon. D. Zirnhelt: I think, because of the difficulties in the forest industry and the importance for the province, it's quite appropriate that the Premier be involved and show an interest and concern. I was at all the meetings that the Premier attended. At those meetings we had the key committee that I mentioned just before. That committee went away and did more work and held further consultations. So the process was fairly simple.

We invited all those people we met with to prepare submissions, which came not to myself and the Premier but to the committee. Anything that it looked like we could make a policy change around went to the Ministry of Forests for policy development, which then came to me as the Minister of Forests. If I needed to take any of those policies to cabinet, I would; if I needed to go to other ministries, I would. But it was all executed and implemented by the Deputy Minister of Forests.

R. Coleman: So this was an initiative of the Deputy Minister of Forests and not the Premier's Office -- that these meetings took place?

[1600]

R. Coleman: I just want to be clear whose initiative it was for the first set of meetings. Was it a Premier's Office initiative or was it an initiative of the Ministry of Forests to have those meetings with the various people that attended them? I guess the supplemental question, to save having to just keep asking the questions, would be: who selected the presenters to the meetings with the Premier? Who decided who and what would come and make those presentations?

Hon. D. Zirnhelt: I selected the people and gave instructions to the person calling the meeting, which in most cases was the timber jobs advocate. I discussed the list of invitees with him; I take responsibility for the list. The creation of those lists was my initiative, but it was with the full involvement of the Premier. I discussed the process with the Premier. He gave me general direction, and I came up with recommendations and gave lists which would guide the timber jobs advocate. Of course, he had some opportunity to recommend additions, as did the deputy and the other member of the technical support staff.

R. Coleman: I think the first part of my question still hasn't been answered. Was this the Premier's initiative or a Ministry of Forests initiative?

Hon. D. Zirnhelt: It was a joint initiative.

R. Coleman: That's probably about as close as I'm going to get.

What happened to the submissions that were made? How were they circulated? Were they broadly circulated? Were they tightly held in circulation, or. . . ? What happened to the presentations that were made by the various proponents at those meetings, and is there a list available of those presenters?

[H. Giesbrecht in the chair.]

Hon. D. Zirnhelt: We could probably make up a list, but it wasn't a bureaucratic process. It wasn't a royal commission. It was designed to focus. . . . And I think the validation of the short-term forest action plan by a broad range of stakeholders validated the process. We did not share or publish the submissions or anything. We asked people to make submissions, and we asked them to share those submissions with other stakeholders.

R. Coleman: So the circulation was relatively broad, then. It would have been to ministry staff, to stakeholders. These particular submissions that were made to these meetings were obviously broadly circulated so that a lot of people got an opportunity to have input back from them. Or was it just to other stakeholders and to the minister himself?

[ Page 13818 ]

We did not go through a bureaucratic process of registering a submission, publishing it, putting it on a list and circulating it broadly. We did not undertake a broad circulation of all those policies. The short time frame dictated that we had to focus on some actions. And I can give you, for example, the list that the northern mayors came up with, which they submitted. We were able to act on slightly more than seven -- partially on the eighth -- of their recommendations. I think they published that in the newspaper themselves, and they circulated that amongst their members and I think have made it generally available.

I think it's a mixed bag -- where these papers are. The papers that were submitted belong to those people submitting them. We did not ever pretend that we would make all the submissions available. But as a rule, in addition to the local governments, we had some submissions from environmental groups, from labour groups, from independent sawmillers, from the value-added sector, truck loggers and the Council of Forest Industries. I can't think of any others, actually.

[1605]

Hon. D. Zirnhelt: That's pretty much it. We took what we thought we could act on -- and where there was enough consensus -- and moved on those. They became the short-term forest action plan.

R. Coleman: For opening questions. . . . Although I have a plethora of others, I think that they will be picked up as we go through each one of the sections that the critic has outlined to the minister. So we will obviously canvass those. I would reserve the right to come back and ask some general questions relative to these as some of the items highlighted in various reports relative to forestry that I've gone through come back to bear. . . . I'll discuss those as we go through them.

G. Abbott: The member's questions were useful, because they lead into the next area that I want to canvass here. That's around the 30-day process and the 90-day process. The 30-day process was to identify those things which could be done on an immediate basis to provide assistance to the industry. The 90-day process, as it was known, obviously was concerned with longer-term issues around the strength of the industry, competitiveness and so on. The thing gets confused, of course, because not surprisingly the 30-day process ended up taking about 90 days. I guess the 90-day process has kind of melted into the broader processes that we have been previously discussing.

Just to put some issues around the 30-day process to bed, was there the creation of any sort of committees or a committee structure to look at the many suggestions that were put forward by stakeholders in that 30-day process? Is there a committee structure? Are some of the committees still outstanding in terms of their reporting?

Hon. D. Zirnhelt: No, there was no elaborate committee structure set up, as may have happened under the forest sector strategy before. It was quite an informal process. After the Premier and I met with the groups to kick it off, the detailed consultation took place under the auspices of the three key officials that I've mentioned several times. If there was policy work or analysis to be done, it fell largely to the Ministry of Forests. The deputy minister would have a committee of officials do the work, and we'd report back. It was very much an iterative process. The results are the decisions we took under the short-term forest action plan.

G. Abbott: As the minister notes, some of the suggestions that were made by various stakeholders as part of the 30-day process have found their place in the forest action plan. Are there issues, suggestions or proposals from that 30-day process which are still under consideration by the ministry, or in the minister's view, is that process complete?

[1610]

The market pricing system. We're looking at how that is achieving the goals and making adjustments as we go there. Then there's the mill closure review process, which really came out of that, and that's ongoing. If there's a mill closure, we'll review it -- those mills. Those are three examples of where the follow-up is taking place.

G. Abbott: The 90-day process, which was the longer-term stuff -- and the minister can correct me on this -- seems to have melted into the bigger process, which is pending, I guess, at this point. Is that a fair assessment, or is there an ongoing 90-day process? I gather that it has just melted into the future process, but the minister can correct me if I'm wrong.

Hon. D. Zirnhelt: Let me try to give you some perspective. You're right: the 30-day process took somewhat longer. When the Premier met with them, he said: "Okay, there's some urgency here." He was getting the message that it was urgent. So he said: "Okay, let's have the short-term stuff in 30 days, and 90 days later, let's have your suggestions for the long term." We didn't get that. Hence we had to design a process. There are one or two people. . . . I think the IWA have put out a substantial piece, but I understand that COFI is still working on theirs. It was put back to stakeholders to come forward with suggestions. Had we had suggestions from the major stakeholders, we'd be able to get into a technical review of those at this point.

I think people concentrated on making effective the short-term forest action plan, knowing that it would take somewhat longer than 90 days, certainly, to complete it. But I think we went into it. . . . The Premier certainly wanted us to get on

[ Page 13819 ]

G. Abbott: As the minister noted, the IWA provided their White Paper very recently -- certainly April or May '99 -- for their discussion of tenure and stumpage reform. I understand that the Truck Loggers Association is very close to releasing its paper on tenure and stumpage reform. And COFI? -- I don't know. I presume they are probably getting close as well. Is the suggestion, then, that the ministry is going to review those submissions and, presumably, other long-term suggestions for reform? Will those be reviewed independently of any new process that may be announced around a public review of forest policy in British Columbia, or are we talking about one and the same bigger process?

Hon. D. Zirnhelt: As the member can appreciate, there are different levels of technical debate. Some of the policy debates are around values and objectives and that sort of thing. It will be a bit of both. What will happen with the IWA paper. . . . It's a version of a draft that's been around. When we receive it, it goes into some analysis so we're ready to respond -- so if I'm called upon to respond to some ideas, we have some ideas and some views. We will conduct some analysis as it becomes available. If the truck loggers produce one, we'll immediately start some analysis.

[1615]

Today you will note that I tabled legislation that enables pilots of a performance-based code. So we're going to move on that. Of course, that's part of the long-term action plan and part of the objectives that were set when we sat down and met with the various stakeholders.

G. Abbott: I want to discuss some of the suggestions that were made in the 30-day process and review the extent to which the government has endorsed the suggestions, which is fairly easy to determine. A little more difficult is the success with respect to the implementation of those suggestions. There's been a ton of suggestions made, so that makes it a little difficult to know where to stop and start.

Among the more important suggestions that were made were those that included, for example, how to limit future cost increases to the industry. One of the concerns that was raised, I suspect not only by COFI but by others, was provincial electricity rates. Has the government moved to try to deal with electricity costs in British Columbia? What initiatives have been approved to date, and what initiatives in that regard are still being contemplated?

Hon. D. Zirnhelt: The example that the member gave, really, was one of those things that was punted off out of the short-term process to be considered for the budget. As the member knows, the Minister of Finance chose not to reduce hydro costs, because generally we have the lowest costs in North America. But those kinds of considerations, around the impact of items like that, can be reviewed during a long-term policy review.

G. Abbott: Likewise, there was a concern around discharge and emission fees. Those have increased, of course, over time, and the concern is that any increases in those fees need to be limited or eliminated. Is there any initiative by the government or by this ministry to get agreement with other ministries or agreement across government with respect to discharge and emission fees?

Hon. D. Zirnhelt: No, not at this time.

G. Abbott: Do discussions continue with respect to that issue, in hopes that there can be some agreement by government or a protocol by government on avoiding those kinds of increases in the future?

Hon. D. Zirnhelt: No, the Ministry of Forests isn't, because we are not the experts on impact on air quality or on water quality by emissions. It would be something that would be undertaken by the Ministry of Environment.

[1620]

Hon. D. Zirnhelt: Again, the responsibility is that of the Minister of Environment. But I can say that as part of the long-term policy review, we'll be looking at the need to have a pulp strategy that would look comprehensively at the regulatory regime, timber supply, cost structures and so on. We really will look at competitiveness issues in that long-term forest policy review. That's where we'll touch on that, but the responsibility for the regulation is still with the Minister of Environment.

G. Abbott: It's certainly an issue that will come into play in terms of competitiveness, because it does lead inevitably to a product which has been tried elsewhere and which hasn't met any appreciation in the marketplace. I think there are a lot of problems which have not been properly worked through with respect to the zero-AOX initiative.

My understanding is that the zero-AOX issue has been given to the job protection commissioner for his consideration.

[ Page 13820 ]

Hon. D. Zirnhelt: No, I'm not aware of the issue having been delegated to the job protection commissioner.

G. Abbott: I want to just talk about some of the areas where some progress has been made with respect to the 30-day proposals and the forest action plan, where a number of the suggestions have become short-term policies or solutions. The equalization of stumpage over a longer period. . . . The ministry has certainly committed to that in the forest action plan. Has the policy been implemented? Is it in place now, and is it in place for keeps? Or is it something that is only going to be there for a time?

[1625]

G. Abbott: The issue of permits for water-bedding burnt wood was also something that found a place in the forest action plan and certainly was appreciated in instances like the Salmon Arm fire, where there's a substantial amount of wood that, I guess, otherwise would've been water-bedded. It's not a huge cost saving, I don't think, but relative to a particular area, it certainly adds to the opportunity to deal with the burnt wood situation.

Is it correct that the policy around not water-bedding burnt wood is for '99 only? Does it have to be renewed in 2000, or this going to be an ongoing policy of the ministry from this point on?

Hon. D. Zirnhelt: The burnt-timber provision was implemented on January 1 as a one-time only reduction. Industry asked for an additional year, and we have granted that. So it's going to be a two-year program.

G. Abbott: Is there a particular reason why we would not take the policy around not water-bedding burnt wood and make it an ongoing policy? Why would we limit it from year to year?

Hon. D. Zirnhelt: Well, it was a one-time effort because of the fact that it attracts attention, and we have to explain why we're doing it -- why we're not water-bedding. So it was seen as a short-term action. Failing that, the timber evaluation for dead-and-down and the appraisal system will pick up and generally be good enough for the distribution of pricing over the classes of logs.

G. Abbott: Is that another way of saying that making it a permanent policy might arouse American suspicions and concerns as part of the softwood lumber agreement?

Hon. D. Zirnhelt: Yes. Every quarter we have to file policy changes with the U.S. government, so to do this repeatedly would require explanations and so on. I think, as I say, it was because of the amount of burnt wood last summer that it was seen as a function of good forest management to encourage the harvesting of that wood on a timely basis.

G. Abbott: I think the minister is right that it was a sensible piece of public policy, given the situation, the amount of burnt wood and so on. I'm happy to say I hope we never see a summer like last one, but chances are we will. Chances are we'll have significant volumes of burnt wood again. I won't hope it's anywhere in the province, but there will be a volume of burnt wood in the north or the east or somewhere in the future that we have to deal with.

If the Americans don't give us any signal of concern here, and I would hope they wouldn't -- it seems like a pretty commonsensical and small-potatoes thing for them to be grieving. . . . If they don't grieve -- if they don't protest -- is this something that we could look forward to having enshrined in permanent policy and not having to be the product of negotiation from year to year?

[1630]

G. Abbott: That's interesting. Obviously they're nothing if not thorough in their perusal of our policies. Among those 40 questions, was there one with respect to water-bedding burnt wood?

Hon. D. Zirnhelt: Yes.

G. Abbott: Another one of the proposals was the elimination of water-bedding on pulp log volumes. I think this found its way into the forest action plan, but I may be wrong. Could the minister advise whether it has, whether it's been implemented and whether it's a long-term change?

Hon. D. Zirnhelt: That was the X-grade logs. That would have been a huge revenue reduction, so it was a sizeable request from industry. Instead, we set up benchmarks for the amount of waste they can leave behind and handled it that way, so that the marketplace would determine whether or not they harvested that grade of log.

G. Abbott: That was where we went, I guess, with respect to the proposal about change utilization and stumpage treatment of X-grade logs and eliminating them from water-bedding. So the policy has not changed with respect to water-bedding pulp log volumes. But I know the utilization standards were changed with respect to the X-grade logs. Is that correct?

Hon. D. Zirnhelt: Yes, that's correct.

G. Abbott: Is that permanent, or is it subject to renewal every year as well?

Hon. D. Zirnhelt: It is to be reviewed every six months. We've renewed it. We are conscious of how much merchantable waste might be left behind; that's why we've built in a review process.

[ Page 13821 ]

Among those areas that are of particular concern is the identified wildlife management strategy that was jointly announced by the Minister of Forests and the Minister of Environment several months ago. As I recall, the suggestion was that the strategy would cost no more than -- I can't remember -- a dollar per cubic metre, or something along that line. Where do we sit in terms of the identified wildlife management strategy, its implementation, its costs and so on?

[1635]

G. Abbott: The 3-cents-a-cubic-metre figure -- was that intended to be an average across the province? I presume it was. To follow up on the minister's answer, I gather that what the committee will attempt to do is ensure that those areas of the province that have species at risk or other problems in that area will not be unduly penalized by this strategy. Is that what's being attempted here?

Hon. D. Zirnhelt: Yes. Anything over and above the 3 cents, we're attempting to keep within those bounds. The attempt is to ensure that people who are hit inordinately, in terms of cost increases, can find some mitigation. That's the intent of the strategy that's being implemented by this committee.

G. Abbott: The federal government, I understand, is contemplating -- or perhaps has introduced -- a wildlife management strategy of its own. Is it clear to the ministry at this point how those two would mesh in practice?

Hon. D. Zirnhelt: It's too early to tell how those two initiatives are going to mesh, but clearly we want to have strategies in place that will hold off any intrusive efforts by the federal government.

G. Abbott: I don't know if the two governments are still talking, but are they talking about this particular area of public policy? Are there ongoing discussions between the ministry and the appropriate federal officials to ensure that the federal regulations, if and when they are put into place, will not prove onerous to the B.C. forest industry?

Hon. D. Zirnhelt: In order to get into some detail on that, I'll have to get the appropriate official here. But from time to time there are discussions. The discussions are led by the Ministry of Environment, and they do consult with us with respect to the impacts on forest harvesting.

G. Abbott: The other element that has been under discussion for some time -- I believe we talked about it in last year's estimates as well. . . . The guidebook on coarse woody debris is an initiative by the Ministries of Forests and Environment. Where does that sit currently? Is that in place now, or is that still an item to be negotiated?

[1640]

G. Abbott: It sounds like we won't be seeing it for a while. Is there an objective in the ministry at this point in time to ensure that if and when we do see the guidebook, the magnitude of costs associated with it will be like the identified-wildlife management strategy -- in the pennies? Or are we looking at a more costly item there?

Hon. D. Zirnhelt: We will be looking at the cost implications. There may be cost savings by having the ability to leave coarse woody debris on the forest floor. So we don't know yet until we complete the guidelines as to what the impacts might be, but that will be looked at.

G. Abbott: The watershed assessment procedure guidebook is also under the code. The possibility of that providing a new cost element is significant. Where does that guidebook currently sit in respect to provincial policy?

Hon. D. Zirnhelt: We have to wait a couple of minutes. I wonder if we could call a short recess, and the official will be here.

The Chair: Does the committee agree to a. . . ? Is it five or ten minutes?

Hon. D. Zirnhelt: Just five.

The Chair: A five-minute recess. Hearing no. . . . The committee is recessed for five minutes.

The committee recessed from 4:42 to 4:48 p.m.

[W. Hartley in the chair.]

Hon. D. Zirnhelt: I think I have the answer to the member's question. The watershed assessment guidebook has been out for about a month. We agreed that industry would be involved in evaluating the appropriateness of it, and I think the answer has been that industry agrees that it addressed the issues and concerns. The basic thrust was to reduce the number of planning phases from three to one. So there actually should be a cost saving involved as a result of this guidebook.

G. Abbott: The question was on the watershed assessment procedure guidebook. Perhaps the answer addressed

[ Page 13822 ]

[1650]

With respect to endangered species, the federal government was going to introduce it last session. They didn't. I understand it is now the fall, and there may well be -- in fact, we would argue that there should be -- discussions if they're to make any modifications to what they last consulted with us about. We expect that they would talk to us. In fact, we will try to require that they talk to us about it.

G. Abbott: I'm sure we'll come back to discussing this point in a later section, so I'm just looking for a brief update on it at this point in time. We'll likely come back to this when we're talking about section 5 of the code in the estimates.

One of the suggestions made in the COFI presentation to the ministry was around establishing a one-window approach for obtaining government approvals under the Forest Practices Code. Now, this would certainly seem to be, in spirit, at least, in line with the policy changes around Bill 47 and so on. Where does this proposal sit with the ministry right now? Is this still being considered?

Hon. D. Zirnhelt: In principle, we recognize the need for there to be an efficient approval process -- hence the idea of one window. So in principle we believe that that objective is the target. First, under that, we looked at the two-year wood ahead -- expedient approval of the amount of wood under permit. We've achieved that, and now we're concentrating on the cost-drivers initiative. To the extent that one window -- one place where approvals are taken -- helps that, then we are focused on that.

G. Abbott: The specific concern, of course -- and it's not a new one -- has been around as long as the code has been around, I guess, in that both the Ministry of Forests and the Ministry of Environment are charged with administering and enforcing particular aspects of the code. I guess we wouldn't have this problem if we were in Ontario and we had a ministry of natural resources, or whatever it's called there. I don't know that we need to amalgamate the ministries to achieve this objective, but. . . .

I guess the question is whether there is. . . . Is there some outstanding principle or outstanding policy objective which compels us to keep the two-window approach? I guess the minister's indicated that, from a cost perspective, this is something that we would want to move to. Certainly if that's what he was intending to say, I agree. I think the simplification of the process is something that would always be welcome here, and I'm not sure we're ever going to be able to get it when we have at least two ministries and perhaps at times, with Fisheries involvement now, three. Are we moving to a one-window approach? What are the constraints? What are the limitations? What's holding us back from undertaking that?

[1655]

G. Abbott: I'll leave that particular issue, because I'm sure we'll be coming back to it in some form in the discussion of the code and recent initiatives to improve the code.

The final area I want to talk about briefly, on the 30-day process, is the suggestion about providing relief from annual cut control constraints. In the current situation, if a company cuts below 50 percent of its AAC, it can obviously lose the amount of that cut permanently. One of the suggestions was for relief from that constraint. I gather that for the short term at least -- at least for the purposes of the 30-day package or the forest action plan -- there is no contemplation of relief from the cut control constraint. I should have the minister confirm that, but assuming that he does confirm that, this strikes me as an interesting area for further consideration in either a 90-day process or the broader review of forest policy in this province. It would seem to me that it may be a move towards greater market sensitivity, which might be appropriate. But I would welcome the minister's comments with respect to that issue generally and where we sit currently on it.

Hon. D. Zirnhelt: I believe that a 50 percent reduction in any one year is a significant reduction. We don't have that by way of average, so there are some cases where there's an anomaly. But we do hear from people who say: "I can cut that." So it's a function of volume.

There are two aspects to market sensitivity. There's volume -- how much volume the market can absorb -- and then the question is: at what price? Hopefully, as we review the long-term policy, we might find ways of making the stumpage system more sensitive, so that the stumpage is less and therefore you can cut more because you have more of a market at a lower price. But what we experienced over the last two years was that there was a very real limit, regardless of price. There was only so much that was going to be bought by, say, the Japanese.

It's a very difficult issue, because there are people -- in particular, some of the workers in the IWA -- who would argue from time to time that we should perhaps have tighter cut control. If there's only 50 percent being cut in one year, that means that half the jobs are gone, at least on the harvesting side.

G. Abbott: Just before we move on to the U.S.-Canada softwood lumber agreement. . . . The minister noted earlier

[ Page 13823 ]

[1700]

G. Abbott: I appreciate the minister's clarification on the market pricing system -- that it is in relation to the small business program.

That does prompt another question to the minister on that specific area, although we may come back to it again. I know the minister has received some correspondence, because I receive all the cc copies he gets about the impact of the new system. Has it produced a lower stumpage on those sales? I know the intent is to make it more market-sensitive, but I'm advised that a fair percentage of the time it actually produces stumpage rates as high as or higher than it would have under the old system. Is that the case? Is that the experience of the ministry to date with the new pricing system?

Hon. D. Zirnhelt: The net effect is that we're up to 98 percent of the wood being sold. So the market pricing system just sets the upset price. The market bids competition; the competitive process sets the final price -- sets the bonus, as it were. We're telling you that basically 90 percent is being sold, so we're getting awfully close to 100 percent being sold at a price that's competitive, and that has to reflect the market.

G. Abbott: I'll leave that aside for now. We may come back to some discussion of that when we're looking at the small business forest enterprise program a little more closely later on. I think we'll leave that aside for now.

What I want to do is move to a few questions I have with respect to the possible renewal and certainly the renegotiation of the Canada-U.S. softwood lumber agreement. It's been in the news lately -- some headlines about the Premier wanting to get out of the agreement or the Premier not wanting to sign a new softwood lumber deal. Generally, after you look a little bit more closely at the articles, the actual quotes are rather less dramatic than the headlines might suggest. However, I guess it does certainly prompt some questions about what we want to achieve with a new softwood lumber agreement.

I guess the first question is this. We went, I'm sure, into the last agreement with the best of intentions, but clearly there were some unintended consequences -- or perhaps it was just the nature of world markets and particularly the collapse of Japan's. But it has put us very quickly -- in fact, I guess, only a year into the agreement -- into a whole new realm of market realities with the collapse, particularly of the Japanese and other Asian markets.

Perhaps I'll begin with a general question. To what extent has the existing agreement met the province's aims from 1996? What, in the minister's view, have been the unintended consequences of the softwood lumber agreement?

[1705]

G. Abbott: In the realm of unintended consequences, I would certainly include, if asked, the ongoing problems -- the ongoing disputes -- we are having with the Americans around what is or what is not a value-added product deserving exemption under the agreement. Would the minister also consider these disputes around value-added products to be one of the. . . ? I don't know if it's an unintended consequence, but it has certainly been an unanticipated issue, as far as I know. Would the minister share that view?

Hon. D. Zirnhelt: I don't think anyone predicted the number of annoyances that we were having around the definition of products, as to what is covered. I think the genuine shippers of value-added products are penalized by the fact that there are -- as industry has acknowledged -- some cheaters who minimally add value and attempt to, in effect, circumvent the agreement.

Yes, there are consequences that were not foreseen. I think there is a genuine feeling that true value-added products would not be stopped. I think we're finding that, in an attempt to stop some kind of attempt at moving through a loophole, the United States has chosen to overreact and block off access to legitimate products. That truly is an unintended consequence.

G. Abbott: I think we'll come back to the resolution of the value-added issue as we talk about aims and objectives for the coming round of negotiations.

I also want to ask about limitations on the ability of the government of British Columbia, in particular, to provide stumpage relief. When the agreement was negotiated and signed, was there a clear understanding on the part of the provincial government that our ability to shift or to reduce or relieve stumpage payments -- or indeed to revisit the whole nature of our stumpage policies in British Columbia -- would be limited by the agreement? Was that clearly understood when we went into it? Or again, are we in the realm of changing circumstances and, as a consequence, of changing perceptions of the agreement?

[1710]

[ Page 13824 ]

Hon. D. Zirnhelt: We did not acknowledge and don't acknowledge that they have any jurisdiction or domain over things like stumpage fees. That's domestic policy. But the softwood lumber agreement has a clause in it that says that we can't do anything that has the effect of offsetting the export fees. We can't do anything to offset the export fees on wood above the quota.

G. Abbott: The issue of domestic control over stumpage was a concern on June 1, 1998, when the reductions in provincial superstumpage were announced. It certainly was a concern then that the Americans would respond with some kind of protest or charge or whatever they do. As we've been discussing the stumpage or the market timber pricing system in B.C., there have been some concerns expressed that we have to be careful about how we do this or that, because the Americans may protest. Am I misunderstanding some of the signals that came out earlier, or are there constraints around our ability to manage our stumpage policies under the softwood lumber agreement?

Hon. D. Zirnhelt: This is the very point that is being discussed and on which we've had consultation, which ultimately went to arbitration. When we made the reduction in stumpage, we said it was to deal, in part at least, with unintended increased costs, which we estimated to be about $5 a cubic metre, when we brought in the Forest Practices Code. We intended to address that issue through the stumpage reduction, and we still argue that it is our position. We argue that vigorously. But the United States chooses to cite article 7, which is the circumvention clause. It says in article VII(2) in the general provisions: "Neither party shall take action to circumvent or offset the commitments set out in this agreement, including actions having the effect of reducing or offsetting the export fees provided for in article II(2) or undermining the commitments set out in article I." It is a question of interpretation of the agreement. It's our point that we haven't circumvented the agreement.

[1715]

Hon. D. Zirnhelt: The market share peaked in 1995 at 19.9 percent on average, and it went down in '96 to 18.3 percent, in '97 to 17.4 percent, and in '98 to 16.7 percent. The softwood lumber agreement came in in '96. There has been about a 2 percentage point -- just less, 1.7 percent -- drop in the market share. That has been basically taken up by new entries that have come in in the east. That was built into the agreement at the time. It was always expected that there would be a change based on new entrants coming in -- not in British Columbia, although we argued it should, but for eastern producers.

G. Abbott: I'm glad that the minister raised the latter point about new entrants, because this is obviously a bit of a sore point with new producers or producers in British Columbia that were, for one reason or another, on a reduced production schedule in '95 and therefore didn't get the benefit of the quota that they thought they should -- and so on. Is it clear to the minister why the agreement makes provision for new entrants from eastern Canada but not from British Columbia? How did that come about?

Hon. D. Zirnhelt: At the time of the agreement we had Asia as a market, which other provinces didn't have. Asia was there, and we had had the lion's share of the U.S. market -- just under 60 percent traditionally. Our AACs were coming down from '87, so that the amount we had to market was being reduced at the same time as probably a lot of second growth and new areas were being developed in eastern Canada. So they had more new capacity coming on, and that's the difference.

You can't argue that our coastal operators are new capacity. They had a mature market. They'd been in the Far East for a long time. I think that's generally the take. We understood that at the time, based on '94-'95, we were cranking along pretty well. As a result, we got the lion's share, because those were the years that were used as the indicator years of market share.

[1720]

Hon. D. Zirnhelt: I think our analysis is that the softwood lumber agreement has helped us with respect to competitiveness, because when you've got a quota, it tends to keep the price up. As a result, we -- being one of the high-cost jurisdictions. . . . It protected us and gave us some time, really, to work on getting our cost structures down.

G. Abbott: The issue of where we go from here. . . . Obviously we've got 22 months left to sort out a provincial and federal position with respect to the possible renegotiation of the softwood lumber agreement. I know that ten CEOs are off to Washington this week to begin some informal discussions, at least, with their counterparts in the United States. What are the process elements that are going to be underway here? We have, of course, a federal treaty. It's not an agreement between B.C. and the United States; it's an agreement between Canada and the United States. So obviously the federal government's going to be playing a central or, at least, a very important role in the negotiation of a renewed softwood lumber agreement -- if indeed there is one.

[ Page 13825 ]

Hon. D. Zirnhelt: First of all, the federal-provincial relationship with respect to softwood lumber is a little bit different than it is with salmon. We've been working closely with the federal government. We did the last time; we intend to now. We want to ensure that all interests are going to be recognized. We have agreed that the primary and secondary producers will work together. We have a Softwood Lumber Advisory Committee in British Columbia that's chaired by the Deputy Minister of Forests and that has primary and secondary producers on it.

[1725]

G. Abbott: Can the minister tell me a little bit more about the Softwood Lumber Advisory Committee? Is that a nationally based committee or a provincially based committee? How large is it? Who are the members or the components of it?

Hon. D. Zirnhelt: It's a B.C. committee. Each province handles it in its own way. In some provinces industry and government have different positions on advising the federal government. In British Columbia we try to have one position amongst industry and between industry and government. So it's a B.C. committee.

We have a number of people who are on it. I can probably give you some of the names. But it's the same committee we discussed last year; it hasn't changed, although maybe some of the members have. For the primary sector there are four representatives: Ike Barber of Slocan, Jake Kerr of Lignum, Duncan Davies of Interfor, Gordy Steele from Riverside. The secondary sector is represented by Dennis Mawhinney of Abeda Wood Products and John Brink, who happens to be with Brink Forest Products. The wholesale sector is represented by Brad Johansen from Welco Lumber and Larry Taddei from Fraser Pacific Lumber. Government is represented by two members: John Allan and Hartley Lewis from the Ministry of Forests. We've recently added Ron Gorman from Gorman Bros.

G. Abbott: Ron is on, presumably. . . . I guess he could represent either the secondary or the primary sector, given that his company is involved in both in Revelstoke. Is that correct?

Hon. D. Zirnhelt: Well, mostly the smaller primary. But for the most part, he does represent the secondary.

G. Abbott: Then, in terms of the advice which the province ultimately will be imparting or passing on to the Canadian government as they do the actual negotiations, it's expected that that position will be discussed, debated, massaged and ultimately revealed to the world through this process, this Softwood Lumber Advisory Committee. They'll be forming the conclusions about what B.C.'s aims and objectives should be in the agreement. Is that correct? Or does that come from a higher level?

Hon. D. Zirnhelt: We think we're going to have to talk to the committee about expanding the membership. But we're going to give it a try to come up with a consensus position, within British Columbia, out of this committee or some modification of this committee.

G. Abbott: There has been obviously a good deal of debate, even among forest producers in this province, about where we should be going in the softwood lumber debate. The positions, I guess -- at least, this is how it would be characterized in the press -- are between so-called free-traders, who want to persuade the Americans to open up their markets to us and to embrace the objectives of free trade. . . . Other producers in British Columbia have been characterized as endorsing a managed trade position, where the explicit or implicit assumption is that there is no hope that a free trade arrangement could be reached; therefore we should be looking now to find the best deal we can, short of that. That seems to be the sort of character of the debate in British Columbia around the future of the agreement.

[1730]

It seems to me that the debate is probably really about how much access we can get -- how close we can get to free trade with the United States in softwood lumber. I haven't yet heard anyone suggest that if it was offered, we wouldn't embrace the opportunity to have free trade with the United States. Even people who have been characterized as managed-traders would, it seems to me, like to see something very close to or identical to free trade with the United States. Is that the minister's view with respect to this, as well -- that British Columbia's interests would be best served by moving as close as we possibly can to free trade with the United States in softwood lumber products?

Hon. D. Zirnhelt: The objective has to be more market access. If freer trade was the way to do that, then we could embrace that. Some people see free trade as free trade in logs and so on, but we draw the line around free trade in logs. So it really is about trade on lumber products. Yes, we'd see us move toward more open access to the U.S. market, however we achieve that.

G. Abbott: If the Softwood Lumber Advisory Committee and the producers generally were to embrace something like that position and if it was presented to the federal negotiators, is it the minister's understanding that that position -- the one which the minister has just articulated -- would be one that would be shared by ministers of forests and indeed forest industry producers in other parts of Canada as well? I guess

[ Page 13826 ]

Hon. D. Zirnhelt: As yet, we haven't had those discussions with other provinces, although we do know that Quebec has expressed that they like the agreement. So we haven't had those discussions yet.

G. Abbott: I'm not sure, when the minister responded that Quebec likes the agreement. . . . They certainly like access to the American market as well. Is it the minister's understanding that Quebec would like to see an enhancement of their access to the Canadian market as well? Or are they keen on the agreement as it is, with the built-in quotas and limitations that exist now?

[1735]

G. Abbott: When we look at how world producers of softwood lumber products are treated in the American marketplace, do we find, for example, that there are quotas on Scandinavian countries bringing softwood lumber into the U.S. -- or Russian producers or indeed producers anywhere else in the world? My understanding is -- and hopefully I'm wrong -- that the only country constrained in the same way that Canada is by quotas and so on is Canada.

If we continue to be limited in terms of our access to the American market -- in the hope of some Canadian producers that it keeps the price up -- is it not a danger that, particularly in the very competitive world of forest products that we have today, we could see the Scandinavians, for example, moving into the American market in increasingly larger ways -- or the Russians? I guess they're really more an untapped and undeveloped market for softwood lumber than Scandinavia. But is there a danger that we could, in hopes of keeping prices up, actually see not only the prices go down but also our share of the marketplace lost?

Hon. D. Zirnhelt: Well, as the member may know, it has been competition from Canada, and particularly from B.C., that has given rise to the Coalition for Fair Lumber Imports, as they call themselves in the United States, whose goal it is to limit exports from Canada and in particular from B.C. They target the roughly one-third of their market that is a ceiling, above which they don't wish Canada to rise. We have to look at that and realize that they really and truly want to put constraints on. So it is given that context -- that they are allowing other imports.

You're correct; we know of no quotas for any other countries that. . . . As far as I'm concerned, Canada should take the view that that's not correct and that we should seek to redress that next time around.

[1740]

Hon. D. Zirnhelt: There is an annual meeting of producer groups, provinces and in some cases, I guess, individual producers. Canada invites participation from across the country, and they meet annually. It's not such a formal group, but it is the consultative body to the federal minister.

G. Abbott: From the discussions that the minister has had with his federal counterpart or the minister responsible for trade, is it the minister's sense that the federal government is fully attuned to the critical importance to British Columbia of the renegotiation of this agreement? Are we, in the minister's view, moving as expeditiously as we can or should be toward the renegotiation of this agreement?

Hon. D. Zirnhelt: From my conversations with the minister, he is aware of how critically important this is to British Columbia. I know that when the standing committee moved around the province, they were given many reminders. As late as last week we were still providing answers under the arbitration on the softwood lumber agreement for the last stumpage change. I think the federal government has seen a bit of focus taken away by the ongoing arbitration, but they have begun the consultations and have asked people to put together their positions with respect to the replacement.

G. Abbott: In terms of B.C.'s ability to get out of the current agreement, I think that's clear enough. The Premier, at some point in October, made some comments which suggested -- to those who interpreted them, at least -- that we should get out of the softwood lumber agreement. My understanding -- and perhaps the minister can confirm this -- is that we can't get out of the softwood lumber agreement. It is a federal agreement. We're a part of that as a Canadian province, and I guess we're a part of that as a signatory to the agreement, if indeed we are. At least, we're participants of some sort in it. We are in it whether we like it or not, in short, until March 28, 2001. Is that the minister's understanding as well?

[1745]

G. Abbott: No question about that. We certainly do need more market access. The question I had, though -- and I presume it was answered in the affirmative -- is that we've got the agreement until 2001, whether we like it or not. If the government of Canada negotiated and signed off an agreement in 2001 which didn't meet the satisfaction of British

[ Page 13827 ]

Hon. D. Zirnhelt: We could ask at any time to be dropped out of the agreement, and then we just wouldn't have access. Theoretically we could ask, but we have no power to drop out. It is something permitted by the Canadian agreement under their jurisdiction for trade. We expect that we're in the agreement for two years. At the end of that, when a new agreement comes along, our producers could argue that they don't want to be part of it, and they could ask us to adopt that position. Were we to do that, then they would find themselves without market access, unless the United States decides to free up trade, in which case an agreement wouldn't be necessary.

G. Abbott: Is it possible for the Canadian government to enter into an agreement without having the support of the government of British Columbia and the producers of British Columbia?

Hon. D. Zirnhelt: I think it's theoretically possible, but I don't think it's a realistic outcome given the importance of the B.C. industry. It just would not be acceptable.

[1750]

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.

The House recessed from 5:52 p.m. to 6:37 p.m.

[The Speaker in the chair.]

Hon. I. Waddell: I call, in Committee A, the estimates of the Ministry of Employment and Investment, and in this House the estimates of the Ministry of Forests.

The House in Committee of Supply B; T. Stevenson in the chair.

ESTIMATES: MINISTRY OF FORESTS
(continued)

J. Wilson: A couple of years back, the Minister of Forests initiated two or three log salvage programs in the Cariboo forest region. I would like to find out from the minister whether these programs were a success or whether they were not. I believe a report was coming out on the success of the programs. At one point I had requested a copy of it; however, I still seem to be waiting for that. Perhaps the minister could bring me up to date on the outcome of these pilot programs.

Hon. D. Zirnhelt: There were five or six pilot salvage programs. Yes, they were successful. The program has since been expanded. There was a doubling suggested for this year. We ended up with salvage program officers in 44 district offices, and we are hitting 144 percent of the objective in the increase of the pilot volumes.

J. Wilson: So what was the pilot volume, and what does 144 percent of that work out to in cubic metres?

Hon. D. Zirnhelt: At the time of the pilots, all told across the province, we were delivering about 200,000 cubic metres. Our goal was to double it, to 400,000 cubic metres, and the 144 percent is 579,000 cubic metres.

J. Wilson: The pilot projects, I understand the minister to say, have been expanded. Have the guidelines for the salvage operations changed, or have they remained the same as they were in the pilot projects?

[1840]

We've gone to some longer-term tenures. It's something we learned from the pilots. We've got some policies that encourage some very small direct sales.

J. Wilson: Could the minister give me an explanation of what is involved in and what he means by a long-term tenure?

Hon. D. Zirnhelt: Well, the tenures are four to five years. Basically, they state that if you find salvage within a given area, you have the right to harvest it. We're using different types of licences to see which ones are appropriate.

J. Wilson: If you can get a four-to-five-year licence on an area base, what would the volume be per year? What would the area encompass in size? Are there any restrictions on it? How would the shipping of these logs. . . ? Would it be a timber mark issued on a salvage area for five years, or would it come up each operation? Would you have to reissue a mark for that specific site?

[1845]

J. Wilson: So with an area-based tenure of up to 10,000 cubic metres, that could be taken out in one year, I presume. One of my questions to the minister is: is there a specified area that this type of licence would cover in size? Is it whatever the applicant would choose to try and harvest? Or has the ministry set any standards or any guidelines as to how large an area you could apply for, for that type of salvage?

Hon. D. Zirnhelt: The volumes would be over the life of the licence, so 2,000 a year for five years. I guess there's some ability to vary within that; I would have to check.

[ Page 13828 ]

J. Wilson: Who would be eligible to apply for one of these new area-based tenures?

Hon. D. Zirnhelt: You have to be registered in the small business program for the large sales. I just want to correct. . . . There are sales over a specified area, but they aren't area-based tenures as such. When we talk about area-based tenures, we have a survey or some detailed land tenure to that area. It implies much more extensive rights than what we have here. With small sales and even the free-use permits, you actually have a line on a map. So I just want to make sure that we're not confusing it with woodlot licences or community forest licences or tree farm licences.

J. Wilson: I can understand having to draw a line on a map, but area-based, to me, could be something as simple as a height-to-land or a watershed. If that's the case, then what I understand the minister to say is that within a five-year time frame, a licensee could go in and harvest up to 10,000 metres in a non-specified area. It could be 1,000 hectares, or it could be 20,000 hectares in area. If the volume that the permittee can take out in five years isn't controlled a bit by the area of land that he is allowed to harvest on, then is the actual salvage going to be an effective program? You may find that the amount of salvage in there could be three or four times what the operator was actually given a permit for. Yet if he controls an area, what will happen to that wood?

[1850]

J. Wilson: How does one acquire this licence? Is there an application fee? Is there a permit fee? Or is there something like ground rent applied to this area?

Hon. D. Zirnhelt: I'm checking on the ground rental, but I believe we've proposed to eliminate that in the legislation this year for small timber sale licences under 10,000 cubic metres.

The process is that they advertise the qualifications, which are asking for experience, asking what equipment people have and asking whether or not they're familiar with the geography in the area. There is the application fee to join the small business program, which is $200, and then they would pay the stumpage. I'm checking on the ground rental. I believe there is ground rental at the moment, but I'll check on that.

J. Wilson: Since this is a new concept in salvage, and I think it perhaps has a lot of merit, could the minister tell me at this point how many of these licences or applications the ministry has accepted and put in place?

Hon. D. Zirnhelt: There are hundreds of small direct awards that are used, but the larger sales that we were talking about, the 2,000-to-10,000-metre ones. . . . We're just in the process of advertising those now. So I don't believe there have been any granted.

J. Wilson: I'm sorry, but I couldn't quite hear the last remark that the minister made. I understood him to say that these area-based licences are just in the process of being developed. Or have some been issued now? And if so, how many?

[1855]

J. Wilson: So, then, this is an idea that hasn't actually happened yet. It's something that the ministry is thinking about and perhaps toying with the idea of putting out, but it isn't actually a fact yet.

Hon. D. Zirnhelt: In different areas we're proceeding probably at different speeds, depending on the buy-in and the state of development of these sales which take place in consultation with the salvage loggers. It's a little bit different.

In Burns Lake, we've advertised five or ten of these already, and there may be some in the process of being awarded. So it's not just an idea. It's actually a process and a program that's being implemented, and the policy and guidelines are being worked on. One of the things the pilot showed us is that you need a little bit different type of program in each area. So we're trying to adapt the policy to the area to suit the needs.

J. Wilson: Should this type of program succeed and have some merit, it would appear that one of the practices of the ministry in the area of road deactivation would have a detrimental affect on this type of log salvage. Has the minister considered this in the equation? If you take out an area-based license over a period of five years, a lot of these areas where you're going to be operating in are going to be on the edge of cutblocks that have been out there for some time, and you need access to those areas. Under the present practice of deactivating roads once the stand is freed up, those salvage operators would be left on a limb without any means of getting to the area they might want to work in.

Hon. D. Zirnhelt: We've encouraged a salvage association at both the provincial level and the regional level, so that we can conduct some consultations with them about what goes on and so that it isn't just a policy made by the district manager and other users. So attempts are made to involve them, and if there's a good environmental reason why a road should be deactivated, then I suspect it would be. If that only allows access for three or two or one year, well, that's what happens. We can't keep all the roads open all the time. If they're doing some damage. . . . In an ideal world, the salvages are there during the access-management planning. So if

[ Page 13829 ]

We're not introducing a policy to leave all roads open for five years in every area, but it doesn't make sense to issue somebody a five-year licence in an area and they've only got access for two. Those kinds of inconsistencies will have to be taken out in the planning process.

[1900]

Hon. D. Zirnhelt: Well, the licences are non-replaceable licences, like many of them, but that's not to say that a new, non-replaceable licence couldn't be issued if it was possible that there was access in an area. The plan is to have a mix of short- and long-term licences to meet the ongoing need of salvage. As I said, the amount of salvage has more than doubled. We've put staff in there to do it. It has a very high employment-generating factor, and I think that as a rule it's running quite well. We're finding ways to set criteria for the sales so that we deal with the issue around whether or not there needs to be competition to establish the log-salvaging rights in an area.

J. Wilson: That sort of covers off the area-based salvage program.

I gather from talking to people and listening that the ministry has more than one type of salvage program up and running. Perhaps they vary from region to region or perhaps from one area in the province to another. Could the minister give me a brief rundown on how many different types of salvage operations we have developed to date?

Hon. D. Zirnhelt: There are basically three types. There are the small-volume, short-term, maybe 10-to-15-cubic-metre direct sales. The second type is the little bit larger sales, but still a short term. Those are usually offered by a competitive process. Then there are the area-based salvage licences that we were talking about. They too are advertised.

J. Wilson: I would like to focus now on the short-term small and medium-sized sales. And I would like the minister to look at the situation that is faced by a lot of forest districts in the interior right now, with a massive bug infestation. Could the minister tell me if the problem out there with the pine beetle is being addressed through the short-term salvage program?

[1905]

J. Wilson: What constitutes a large-scale beetle infestation, and what does he classify as a small infestation -- up to what size?

Hon. D. Zirnhelt: A large-scale infestation would be one that's over many, many acres, and a small one would be a volume of less than, say, 50 cubic metres. But there's a whole range, and it really depends on the geography. In some cases, small volumes are treated by burning, because there's no road access, and that's the best way to deal with it. So there's a whole range of methods of dealing with infestation.

J. Wilson: I'm still not much wiser. I see cash sales going out -- or they're called bug sales -- and to my knowledge, they're not always done through a joint effort with the major licensees. I think the ministry, in many cases, awards them. I'd like to know what volume the ministry would award, say, to someone that goes out and finds a bug infestation and comes in and applies for it. What is the maximum volume, and what can that applicant look forward to as far as paperwork and things he has to address in order to get the thing approved?

Hon. D. Zirnhelt: Well, the policy is to have volumes up to 500 cubic metres done in the simplest way. Over 500 metres would go to some kind of competitive sale. It is possible to go for larger volumes than 500 cubic metres if the only way to do it is through the award of a direct sale.

J. Wilson: So then the ministry has the ability to award a direct sale of up to 2,000 cubic metres without putting it up and advertising it? It's simply that someone comes in and says: "I've found an area that needs to be addressed out there; it's quite a bit larger than 500 cubic metres, but it may be in that 1,800-2,000-cubic-metre range"? Now, what I understand the minister to say is that they can do that if they so desire.

Hon. D. Zirnhelt: Yes, it is possible to have a sale up to 2,000 cubic metres, but it depends a bit on the local situation -- whether or not there's competition. If there's lots of people wanting to do it, then you don't get into direct sales. For example, on the Island, there are very few direct sales, because there's so much competition. So it does vary with the nature of the loggers in the area -- how many there are, what the demand is, what their capacity is -- and what the situation is with respect to an epidemic: how it's distributed, how big the patches are and that sort of thing. It all varies.

[1910]

Hon. D. Zirnhelt: The answer to the member's question is that some of it, if it's good quality, comes out of the small business categories, out of the apportionment. If it's poor volume that doesn't qualify for the sawlog portion, then it could be in addition to the AAC for any given program in the area.

J. Wilson: So I assume that the wood quality -- what the minister is referring to here -- would be whether we're dealing with a green attack or one that's a couple of years old and is already dead. Am I right in that assumption?

Hon. D. Zirnhelt: I just want to say to the member that in the interest of some flexibility, the ministry will administer its

[ Page 13830 ]

J. Wilson: Has the minister considered the magnitude that we're looking at right now, with the bug infestation in the Cariboo-Chilcotin and areas like Prince George and Bulkley Valley? There's a huge number of infestations. Some are quite small, but others are very large-scale, and they're going to take a considerable effort to deal with. But the job creation opportunity here is quite an actual thing. I'm wondering if the ministry is going to open up, say, and anybody that wants to apply for a small salvage operation of, say, 500 up to 2,000 cubic metres will be welcome to apply, and the ministry will try and get that work opportunity made available for them.

[1915]

But there's only so much you can do to move the licensees into cutting the beetle-kill wood. There's only so much market for pine, for example. What we're finding now is that if you salvaged every tree that was attacked, you wouldn't have markets. You'd be shutting down some operation somewhere because you don't have a market for it. So there are volume limits. There's only so much that the market will buy.

J. Wilson: I must have heard that wrong, because what I heard the minister say was that if we approach the beetle problem today in a fashion that would deal with it, the volume of wood produced would flood the market, and we wouldn't be able to sell it. Is it that bad that we cannot market that wood? It is part of the AAC, and if you have to take in two million cubic metres of bug wood, should that not come off the AAC for that particular region or district or year?

Hon. D. Zirnhelt: It does come off the AAC; that's the point. What I'm saying, though, is that current management practices and very aggressive beetle control can't keep up with the amount of beetle-kill across the whole forest. You'd have roads everywhere; you'd have. . . . You can't get ahead of the beetles when winter doesn't knock them back. So you ask the licensees to take as much as they can and run it through their mills. Clearly you can't use the beetle-kill to make plywood, so don't expect the plywood producers to buy the beetle-kill. If there's a soft market for some of these other products, they aren't going to buy it, because they haven't got a sale for some of their product. That's why we've seen a reduction in the amount that's been cut and exported. But if the demand is high, then there will be an opportunity for salvagers to increase the volume.

J. Wilson: What the minister is telling me is that if, say, it's a green attack, that wood is not merchantable for lumber or plywood. Say it's something that's just occurred in that season. What is the impact on that tree at that point in time? It hasn't died yet; it's still alive.

Hon. D. Zirnhelt: I'm saying a few things. I'm saying there's a limit to how much wood can go through a mill before the bugs fly. There isn't actually the capacity to process all the beetle-attacked wood, even if you could get it there. When you've got an epidemic, it exceeds the ability of the mills to run it. They can run full out -- three and sometimes four shifts -- and they can't process it all. What I said was that some of the mills are plywood mills, and as a rule, they can't process small pine. They don't make pine plywood, that I'm aware of.

The people making studs and small-dimension lumber have only a certain capacity. But it's the policy of the ministry to have licensees address the green attack as their first priority for their normal licences. In some areas, where you've had beetle attack getting ahead of the harvesting in the area in a major way, you get the incentive licences, which you had in the Quesnel district for many years and which ended. Now you've got the incentive licences still existing to clean up the salvage from the last major beetle attack that left millions of cubic metres behind in the Williams Lake timber supply area.

[1920]

Hon. D. Zirnhelt: First of all, there is no way to stop the bugs. All we can do is try to manage. So the efforts go to dealing with the brood trees at the front end of the attack, to stop them from spreading into areas that haven't been attacked. There are ways to give uplifts to the AAC so that you could add shifts and capacity, if that was the only way to deal with it. We try to take as much of the salvage as possible out of the normal AAC, but short of managing it, we cannot eradicate the bugs. They have been there and will be there. In some cases, where you have mild weather, it does get out ahead of the capacity to process and log it, to plan for it and develop the roads.

J. Wilson: Has the ministry looked into any type of biological control of the beetle?

Hon. D. Zirnhelt: I'm told that so far, the research hasn't developed a pest-specific solution. They do use pheromone

[ Page 13831 ]

J. Wilson: I realize that weather is the one thing that will solve the problem and solve it quickly. I would like to know how much money the ministry has actually put into research in this area to see if there aren't some other types of bugs that maybe would help -- or releasing certain genetically altered bugs that they might try to mate with them, and this kind of thing.

Hon. D. Zirnhelt: It's always been the responsibility of the Canadian Forest Service to do the research into alternative pest control.

J. Wilson: If it's been the responsibility of the Canadian Forest Service, has the minister gotten a firm commitment from them as to what they're going to allot for dollars and what they're going to do for research. Or have they even addressed the problem?

[1925]

J. Wilson: It would appear to me that we've kind of got ourselves in a bind here. We've got a problem in our forests that could literally destroy our forests in a matter of five to ten years. The province could be in a serious situation. In language that I'm sure the hon. minister could understand, I think perhaps it's time that he took the bull by the horns and got a few dollars redirected within the ministry to get as much work done as possible to address this situation, because it is a very serious problem, and we need to address it immediately -- not wait for the Canadian Forest Service to come up with an answer for us. We have to deal with it head-on, today.

Hon. D. Zirnhelt: Well, we've almost doubled the amount spent on forest health from last year to this year. The nature of research that we're talking about here, new methods. . . . You can spend lots of money on research, as the member knows. It might be a ten-year lead time to develop a new technique. We have been addressing, instead, the short-term management with those kinds of techniques that we know about, like the pheromone trapping and so on. You could spend a lot of money, and you could develop something. Then you'd have to get it licensed by the federal government and so on. That's why the long-term research has been left to the federal government. It's been their jurisdiction, their responsibility.

We take what proven methods there are. There just aren't any easy methods of dealing with these epidemics. You might want to spray a whole area or something like that, but there may be consequences to it that we don't know of. So there are a lot of things we just don't know. We do our best with limited funds.

J. Wilson: Well, I can appreciate the fact that we haven't put enough into it, and we don't really know what it would cost us and the rest of it. But there are ways of getting research done, and there are ways of getting results. Sometimes it does pay to have enough foresight to address the problem. I know that dealing with the federal government on registration of insecticides and this kind of thing can be a problem. You could be looking at a window there of perhaps up to 20 years in some cases -- or maybe never. But it still is an issue that perhaps the province should deal with a little more firmly, because it's critical to our survival here, or it could be.

We all hope and pray that next winter will be an old-fashioned winter and that it'll be 40 below by the middle of October. Well I don't, but those that are in the forest industry do. If we do get that, then that's the end of our problem, at least for a few more years.

[1930]

Hon. D. Zirnhelt: I'm not sure that I've got the precise question. But what we have attempted to do is, through the wood fibre transfer program, have the major licensees transfer volumes by agreement, by developing relationships with the majors. That would be a target of 16 percent of their sawn volume. We have put more wood up under small business sales -- the value-added, section 21 sales. We've also directed a certain amount into longer-term, non-replaceable forest licences. So the number of categories of wood that we've attempted to make available. . . .

The forest renewal strategy is more developed than that. It deals with the development of infrastructure, the support organizations, the marketing development and the financing of the businesses so they can grow.

J. Wilson: We've heard an awful lot of talk and promotion of value-added and of people that are getting into value-added. We hear about fibre exchange. Under the small business forest enterprise program, if an opportunity came up for, say, a little company to get into a value-added line, is there going to be wood available on a ready basis? Or is it something where they will never quite be sure whether or not they will get an allotment or an opportunity to actually get a licence?

Hon. D. Zirnhelt: The basic problem is. . . . Everybody who thinks they have an idea for a product could produce it if they could get a long-term supply of wood. Well, there are many sources of long-term supply. They're going to have to bid on sales or negotiate with people who have licences, or they can bid on the value-added sales. We've increased the amount of wood available from 2.6 million cubic metres to 5 million cubic metres. We've doubled it, so there have to be twice as many opportunities. There are cases, though, where people need small volumes and aren't able to get them

[ Page 13832 ]

[W. Hartley in the chair.]

J. Wilson: So the volume that's been allotted has gone up to 5 million cubic metres. In the last two years, what has happened in the small business forest enterprise program in relation to the AAC for that? Is it undercut? Is it overcut? Where does it actually stand?

[1935]

J. Wilson: At this point, then, we really don't have a shortage of fibre that should be available to the people that would like to work in the value-added area. If we have one-point-some million cubic metres left to try and sell, supply of fibre should not really be a problem -- should it?

Hon. D. Zirnhelt: There was a schedule to sell it over a number of years, and we're adhering to that schedule. We worked with the value-added associations in terms of the size and nature of the sales, which vary region by region. We will be selling it; it just can't instantly be available. The 2.1 million cannot be available, because we had to sell the undercut. At least, we want to sell the full volume so that we're not adding to the undercut. We're trying to get as much of the undercut sold. . . . But it's going to take us three or four years before we have finished selling it. We didn't want to flood the market, either, because there are other sources. As you know, there is a soft market. There has been for the last couple of years. People have trouble selling their wood. There is wood that's been left standing because there isn't a market.

It's a question of matching up the value-added producer with the right kind of wood. Being that there isn't a huge market, as a result of 85 percent of the tenures being tied up in long-term volumes and usually committed to a particular facility, there isn't a lot of extra wood there. We've taken the wood that we thought we could make available, apportioned it into types of categories and then proceeded to sell it. But we can't instantly drop all those sales on the market. I don't think that would be wise, and I don't think it would be in the interest of the value-added industries. We're trying to bring them on to keep a steady supply, but there's no question that there will be a one-time hit. Over five to ten years, we'll use up the undercut volume, because quite a few of these sales are in longer-term sales.

J. Wilson: The reason I ask about this is that we have a serious problem in my riding right now. It's to do with jobs and unemployment. It's one of the highest areas of unemployment in the province -- probably the highest. Anything that we can do to create even only one more job is important.

We have a company there that has been trying to get a timber sale so they can build some log homes. They're having trouble; they can't find any supply. There was a small business sale that came up, and they bid on it, really hoping that they could get it. This isn't just one job; it's between 15 and 17 jobs. These jobs right now in Quesnel are absolutely critical. We can't afford not to put people back to work.

One sale came up, and it was awarded to a company in Lillooet. The district manager was sort of taken to task on this by the press, because if we have a local company and a local wood supply, it would only seem logical that if you bid on it, you should have a good opportunity. Or if we have a supply of wood that is available in the value-added sector, when you need it, you should be able to access it. It would appear that is not the case. One sale -- the only one -- was allotted. Had there been two, then both companies probably would have ended up with some fibre. But the way it is, there has been no other sale put up. As a result, we've had a job opportunity loss.

[1940]

Hon. D. Zirnhelt: We'd have to get very specific. There's nothing stopping the member from canvassing the small business community in the area -- all of the people -- and coming up with some judgment as to what the balance in types of sales should be. The minister makes a decision ahead of time on what the criteria are, based on advice from the ministry. In some cases you weight local employment and existing manufacturing plants first, because what's the point of starting a new plant up if another plant's sitting there and wants to qualify for the wood?

So there is a competitive process, but the rules are set ahead of time, and then they're awarded according to the criteria. If it's a section 21 sale, then there is no room. You go through the point system, and the point system tells who's the winner. There may be sales; the non-replaceable forest licences under section 13 have more latitude for the minister to decide who gets it. But there have been hundreds of thousands of cubic metres advertised. We're on the verge of awarding a licence in the Quesnel area; I think it was 100,000 cubic metres a year for a number of years. It's a large sale, and it can be broken down into any number of pieces.

The party you talk about may or may not have applied. I don't know. But what I suggest they do. . . . If they're new in the business, then they may need some assistance on how to construct their bids and how to show the value-added, because we can only go by the evidence that's provided.

So two answers. If you have some advice on the various components of the small business program, then I'd be happy to see it. If it's the explanation of what happened in a particular sale, I'd be pleased to try to provide that to you.

But I agree with you that there is a need for employment. But I guess my answer is that it's not just a matter of putting all the wood you possibly can on sale -- what happens when

[ Page 13833 ]

So yes, there is a million and a half cubic metres across the province. We sent someone around to find where this undercut was and to advise us, in consultation with the small business community, how we could put it on the market and at what stage and how big the sales are. So we are attempting to put as much wood as we possibly can out there.

I have to say that log house builders are very successful in bidding, because they have high value-added. So if they're bidding on the section 21 sales, they should be able to get wood. In the case of the 100 Mile district, they pool their resources, and they do quite a bit of advance planning.

[1945]

The wood leaving the area. . . . Some of these sales are open to larger areas, depending on the local demand. If the local demand doesn't exceed its supply, we often put those sales out. But one of the purposes of the small business program is to put it out to the companies that bid and have the most value-added, so you're not just protecting jobs in one area. The purpose of the small business program was not to stabilize all the employment in an area; that's what the major licensees are supposed to do.

But I say to you that if somebody is going without wood, I would be very interested in the specifics, and we'll try to find out why they can't get wood. Every time we hear from someone that they can't get wood, we'll follow up on it and see what the root of the problem is and try to help them.

J. Wilson: What I thought I heard the minister say there was that should this company find itself in a position where it doesn't have the wood it needs, it could go to a major licensee and get a portion, or get what it needs, through the percentage that they have been given that they have to put back into value-added. Or do they have to have something to trade? Do they need some fibre so that they could trade logs for the materials that they would require?

Hon. D. Zirnhelt: Well, I'm saying that given the softness of the market, I'm sure that there is wood available that isn't being cut. The majors probably aren't cutting it, but maybe they can't process the residual amounts.

What I said is that there's a voluntary wood transfer program. Under the jobs and timber accord, industry did not want to be compelled, didn't want to be legislated, didn't want to be regulated. I'm sure the member understands where they were coming from. They said voluntarily they will offer a percentage, and that program will be audited. We'll have a report on the first two years of the wood fibre transfer program. What I'm saying is that that member can organize the small business community -- the value-added producers, the small loggers, the log house builders -- to provide advice to the ministry in terms of the frequency, size and types of sales that should come up.

We're always getting advice. The Premier's summit had people around the table giving advice on what we should do. One of the recommendations was to move some wood into section 13, which is away from sections 20 and 21; to put it in section 13 with longer-term sales, where there's more flexible criteria, where we can look at the existing operators.

So there's all kinds of advice coming from different directions, and what the ministry tries to do is provide advice that generally meets the demands in the area. So if there is a persistent inability of somebody to get wood -- not just that they aren't competitive when they bid, but if there isn't enough wood -- then the nature and type of sales should reflect the demand in the area. But we need the evidence that this isn't just an isolated case.

J. Wilson: Whether it's an isolated case or not shouldn't matter. If we have that fibre out there and there's an exchange going on all the time, we shouldn't have isolated cases like this, unless the applicant isn't aware of the channels that they have to go through. However, I would doubt that very much.

I'm pleased to hear the minister say that he's open to advice. But should the people that are involved in this and some of businesses in the area come up with some advice for the minister, can we be rest assured that he will accept that and implement it? I mean, this is not something new. Advice is free, and that's the only one thing that the people in this province have left. It doesn't cost them anything. They have been inundating this government with advice for the last two years. So far there is very, very little of it that's ever gotten through and been acted on. So that is my point. I would like to know with some assertion or assurance from the minister that, should they come up with a plan that is feasible and will work, the minister will act on it.

[1950]

As for the gratuitous comments about not taking advice, I beg to differ. It's like the advice that member gave on. . . . They talk about a results-based Forest Practices Code. When they were challenged to come up with something, they came up with absolutely nothing -- some advice.

An Hon. Member: You wouldn't take it. They made. . . .

Hon. D. Zirnhelt: Oh, we would. You haven't come up with anything yet; you've come up with nothing.

The Chair: Member. . . .

J. Wilson: I'm sure that the minister is. . . . We have a program -- well, it's sort of a program, I guess. It's a hardwood co-op that has been started in the Quesnel area. I would like to know what steps the ministry has taken or is going to take to ensure a constant fibre supply to the hardwood producers there.

Hon. D. Zirnhelt: Well, there is a hardwood part of the cut. The hardwood history is a bit mixed in the interior, where

[ Page 13834 ]

We're going to encourage the major licensees to bring some of it out on a consistent basis, because there is some of it being wasted. In parallel, we've asked the district manager to consider developing a sale that might be offered to encourage long-term investment. In the meantime, the hardwood co-op has got assistance through Forest Renewal and, I think, the Wood Enterprise Centre to develop the production. It isn't just a matter of harvesting; it's a matter of cutting appropriately, grading, drying and marketing. So there's a whole series of things that need to be done in parallel.

J. Wilson: It's true; there's a lot to it. The first thing that the minister referred to was an exchange supply from the major licensees. They do have a small volume, and it's usually fairly consistent; however, the understanding I have is that that is not working. In some cases, for some reason, they may not want to acknowledge the fact that there is a supply out there. Or it may be intermittent in some cases, so they can't really guarantee it. The problem that these people. . . . And, I must say, they've worked pretty hard to get this up and going. It's not something that's just a whim. It's taken a lot of hard work and a lot of years of experimenting, in some cases, as to how to get the best product from this fibre.

[1955]

Hon. D. Zirnhelt: He may be closer than I am to it. The last time I checked was in the middle of May, and at that point it was working. So if this is recent information, we'll have one of the directors of operations here with me phone the district manager tomorrow and take a look at it, because I'd like to see that program succeed as much as that member would. I think that a lot of work has gone into it -- lots of effort. If it takes a sale where they can work up into a longer-term sale, then I'm fully supportive of that. I think I made that commitment in your presence. If what they thought was working isn't working, we'll have to look at it again so we don't stymie their progress.

J. Wilson: My understanding is that there is a supply out there, but it's not a consistent supply. I think what some of the members in the co-op would like to see happen is that. . . . If the minister were to put up, say, a cash sale periodically -- whenever they need it -- for 500 metres or 1,500 metres or whatever, they can go in and harvest it. That way they have access should they run short at any point, because that supply from the harvesting out in the TSA is not quite meeting their needs. There are months, maybe, when they don't get that coming in. They need something that will balance it out and make it a continual availability of wood. Now, I think the volume is out there, and it would be a fairly simple thing to award some direct sales to these people, if they should need it, on a short-term basis. It shouldn't take a long time to get them awarded.

Hon. D. Zirnhelt: Well, I believe that the direct sale is a solution in the short term. If they're having supply problems coming from the major licensees, then we'll have to consider that. But I think they need some long-term access, and that's what I think we have to concentrate on for the long term. But to keep them alive, perhaps a series of short-term sales will do it. So we'll look into that and get a report on how it's working.

B. Penner: I'd like to ask the minister a question relating to a forestry-based company in Chilliwack that I'm told may be going out of business by the end of this summer. I'm referring to a company known as Columbia-Pacific Woodchips, which has been in operation in my community since, I believe, the late seventies or the early 1980s. At the present time, I'm told that close to 25 individuals are employed at this business.

As the name suggests, the business produces woodchips from low-grade fibre obtained from various parts of the province. In speaking with the general manager a number of weeks ago, I was told that with the downturn of the forest industry in the Fraser TSA, the company has had to go further afield to obtain the type of fibre that they use. The situation has been further complicated, I'm told, by recent changes to the Forest Practices Code which permit logging operations to leave larger quantities of the lower-grade timber behind on the ground. This apparently is causing a shortage in the low-quality wood supply that Columbia-Pacific Woodchips relies upon to generate their product.

[2000]

Hon. D. Zirnhelt: Yeah. As you said, there's a conundrum, but it is a direct result of the flexible utilization standards that industry asked us to bring in. So because there wasn't a market, generally, they are able to leave some behind. We said at the time, though, that if there was anybody who could utilize wood -- in other words, if there was a market for that low-quality pulpwood -- then the district manager could require that the companies bring it out. But if it costs them more to bring it out than they get from it. . . . Hence the conundrum, because it takes from the bottom line of the companies. Now, we would argue that -- having taken about a billion dollars in costs out of the industry -- there's got to be some flexibility built in there so that they can meet the needs.

[ Page 13835 ]

We would have to get. . . . A couple of steps: the job protection commissioner could look into it, or the executive director of operations could look into it. I'll give you that commitment -- that we'll look into that. If we haven't already been on top of it, we certainly will be right away.

B. Penner: I appreciate the minister's comments. I will write to the minister to follow up with the name and address of the company and give the minister specific details.

Just a further question to the minister: would the minister suggest that I follow up directly with the job protection commissioner? Or is that more appropriately done through the minister's office?

Hon. D. Zirnhelt: The executive director of operations here with me, Doug Konkin, will do it. You don't even need to write; it's on record in Hansard. He'll phone the district manager tomorrow, and he'll do a little bit of work on it. We will advise you directly when we do.

B. Penner: It is an important issue in my constituency because, as I stated, about 25 individuals work there. I'm told that the average annual pay for those people is up to $50,000. So they're pretty good-paying jobs in our community, and I would be very upset if we were to lose those jobs. With that, I'll turn the floor over to our Forests critic.

G. Abbott: Prior to the dinner hour, we had almost concluded our discussion of the renegotiation of the softwood lumber agreement. I just have a couple of final questions on that, and then we can move along to the jobs and timber accord.

The question I have at this point would be what the aims and objectives of the provincial government are as we proceed into the negotiations around the possible renewal of the softwood lumber agreement. What are the principal improvements which the Ministry of Forests and the B.C. government would like to see in a renewed softwood lumber agreement?

[2005]

G. Abbott: That would seem to be a reasonable objective. The exercise will be a remarkable political spectacle -- to redistribute quota. It would be a remarkably challenging exercise, no doubt, given that there would be winners and losers in that game. The position of the distributor would, I think, be almost untenable because of the wins and losses involved.

Does the Ministry of Forests in particular, and the government of British Columbia in general, want to arrive at not only a clearer understanding but also a fairer distribution of quota within Canada? We had this discussion briefly the other day, discussing the basis on which quota is distributed by the central government. I don't think either of us had a particularly good answer as to how that occurred. Would one of the objectives of the provincial government be to obtain a clearer understanding of that and certainly to ensure that the interests of B.C. producers were well recognized and well respected in that process of distributing quota?

Hon. D. Zirnhelt: We're looking for some of the parts of the agreement that led to the redistribution. Those are part of the rules. I can give you some details of that when we can find it here.

Our objective within Canada, I would say, is to get more for British Columbia; that ought to be the self-interest of B.C. The question is: if a deal is made that has distribution between the provinces, will we sign on? Will it be, in our judgment, the best deal possible, given the circumstances? I don't know. But the answer would be to have a larger quota if we could in some way achieve it, if it had to be a quota system. Short of that, then we want rules that apply generally equally. Some people will succeed, based on their ability to go into the marketplace and be competitive.

G. Abbott: The other area, just off the top of my head, that I thought would be of interest or concern to the province as they pursue a new agreement is the issue of the value-added exemption. Given the ongoing nature of American challenges to different kinds of value-added products, is that something which the province would like to see additional clarity brought to over the course of these discussions, so that we won't be faced with ongoing challenges in the five years that follow the renegotiation of the agreement?

[2010]

G. Abbott: The final question is around the prospect of expanding Canada's quota and, most importantly, B.C.'s quota. Is it too early yet to get a sense of what our chances or opportunities or prospects might be for negotiating the kind of agreement which we have been discussing in the last hour or two?

Hon. D. Zirnhelt: Generally it is too early, but that's not to say that we haven't scoped out the situation. We do know that the Americans are concerned about wood coming in from, particularly, the Maritimes. It's not covered by quota but constitutes part of Canada's market share of the U.S. market. So I would say the issue is: if it's the American view that all provinces should be rolled in, then we would argue that the new sum of the total quota would have to be at least equal to what we ship now. But if the U.S. market grows in its entirety, then we would argue for an increased share. We would like to

[ Page 13836 ]

G. Abbott: Of course, Canadians went through the great free trade debate in the late 1980s and, to a lesser extent, the early 1990s. I guess one of the ironies for B.C. forest product producers is that despite going through what -- at the time, at least -- was the agony of the free trade debate, we find ourselves in 1999 in a position where we never have had free trade in softwood lumber. Perhaps the prospects of free trade in that area are still not good.

What is the ministry's sense of why the free trade initiative failed for forest products -- simply the power of the American fair lumber coalition or the politics of the U.S.? Or is there some relationship to the way in which we have managed the forest industry in British Columbia in not achieving that free trade, which I think everyone anticipated we would have at this point?

Hon. D. Zirnhelt: Well, I think the easy answer is that it's not about the policy and principle of free trade. It's about the power that the U.S. lumber lobbies mount, asking their national government to use some kind of administrative override or interference with the principles of free trade. We've been battling over this item for a hundred years, and it goes on. I think it's a case of trying to get support in the United States from the consumers in particular, so that they will put countervailing pressures on their political leaders to ensure that lumber at a reasonable price comes through their borders.

[2015]

Interjection.

G. Abbott: Okay, great.

The accord, as many people may know, is another agreement that will. . . . Agreement is perhaps a loose term for it. It's another accord that will end on March 31, 2001 -- right along with the softwood lumber agreement, I guess. It's not clear, however, in this case -- certainly not any clearer -- whether the jobs and timber accord will be renegotiated or recommenced as well. The accord is most widely remembered for the very ambitious -- some would say foolish -- job creation targets that are contained in it. But there's a whole range of other policies and promises contained in the accord, which I'd like to review as well. I guess the best way to proceed here, in my view, is to simply pick up some questions as we make our way through.

I'll start with the jobs and timber accord general provisions, which one finds on page 3 of the jobs and timber accord. The first sentence sets out the job targets, and it states: "A provincial target of 37,800 new jobs will be the goal for the term of this accord, made up of 20,400 direct and 17,400 indirect jobs." So if one goes through the accord, the 37,800 jobs are made up of jobs in different areas -- initiatives by FRBC, small business remanning, etc. But the first question is this: with roughly 22 months left until the end of the five years of the jobs and timber accord, what is the likelihood at this point of achieving 20,400 direct jobs and 17,400 indirect jobs through this jobs and timber accord?

Hon. D. Zirnhelt: You know, the accord was dependent on world competitiveness. There was a general sense that the markets had to be fairly strong in order to see fulfilment. So we worked at putting some of the pieces into place, like the wood fibre transfer program, the sale of undercut volumes and so on. There are two years more to go in it. It took a year to negotiate, and there are four years left in the time frame, so you are right: we are three years into it. But I won't make a prediction on what will happen, except to say that if the market does pick up and is as strong as we saw back in the mid-nineties, we may see some job growth. But it all depends on whether we have robust enough markets. As we know, there's been general demand, including from your side of the House, to lower the cost of doing business. Having done that, we have restricted the number of dollars going into forest renewal. As a result, even those targets are not going to be the same.

[2020]

Hon. D. Zirnhelt: For the record, we agreed we would use the SEPH data. The ministry isn't doing the projections. The jobs and timber accord advocate will report out, probably, in July. That's the target. So he will give a progress report on the accord. In March '96, when the accord was announced as an objective, there were 86,000 people working. In March '99 the number had dropped to 78,300. So there was a net loss of 7,900 over the three-year period. That's up over 300 from a negative of 8,200 -- that's direct jobs -- as of March '98.

G. Abbott: So we're talking about, roughly, a loss of 7,900 jobs over the first three years of the accord, with the minister noting that in the most recent year, that appeared to be reversing. I think people would accept that the forest industry goes up and down with the global marketplace and so on were it not for a lot of the rhetoric that came, particularly from the Premier, around this accord and around what he was going to achieve through the accord, in terms of getting more jobs per cubic metre or per thousand cubic metres or whatever it happened to be. There was, in fairness to history, a real brassiness in the announcements that were made around the accord and certainly no hesitation at all in this being one of the most ambitious job creation projects that had ever been launched in Canada. I think that's one of the reasons why people have a difficult time dealing with this: that the Premier put so much stock in it at the time it was first announced in March '96, just prior to the 1996 election. There certainly wasn't a lot of use of the word "may"; there was a lot of use of the word "will," reflecting the certainty with which the Premier was approaching the demand on the forest industry to create jobs.

Frankly, the whole notion that through an edict or an accord or an ultimatum, industry could be compelled or

[ Page 13837 ]

[2025]

Does that remain a founding principle for this government? Recognizing that obviously, if we have a stronger value-added industry, it's going to mean more jobs per cubic metre, but also recognizing that the value-added industry can only grow in Canada where the fundamentals exist for it to survive and, hopefully, prosper. . . . Is the government still wedded to the notion that we need to get so many jobs per cubic metre of wood, or is the thinking of the ministry changing with respect to that?

Hon. D. Zirnhelt: The objective there is still to get more jobs, which means moving up the value chain. But you know, I listen to the member basically making the same comments he made last year and the year before. I'd have to reply by saying that there were a number of initiatives undertaken, and in the absence of a policy from the other side, I'm going to reiterate for you what we've done.

Three years ago we had a situation where we had to make adaptations to the Forest Practices Code. Year after year the opposition says: "Give us a results-based code." You didn't produce anything. You have a research department, and you have linkages to stakeholders. You could come up with something. Your member for Cariboo North was invited to participate and contribute suggestions for a performance-based code. Nothing came -- nothing from the RPFs, nothing from the majors, nothing from minors, nothing from anybody. So it isn't easy. You have to move slowly and progressively towards a results-based code. You have to set objectives. At the rhetoric level, you keep making these comments; on a practical level, there are no positive solutions. We've worked on that, and we've streamlined the code substantially in terms of the planning apparatus. We've moved on to try, in silviculture and in the case of woodlots, to move towards a more cost-effective code.

So we had that initiative going that we agreed to work with industry on. They said something had to happen with stumpage -- the way we set the lines and the formulas. By agreement with the Forest Sector Strategy Committee, it didn't work out. We had to make some adjustments to the lines and the overall structural nature of stumpage. We did that. We worked on that, and at the same time, industry agreed we would work together on job creation initiatives. That resulted in the accord. Then we had the downturn that no one predicted, and as a result we ended up with a situation where we in fact went into a job loss situation.

Government has implemented its commitments under the accord. Industry agreed, more or less. Without being legislated, regulated or forced into a legal agreement, they voluntarily came into what we say is an accord. Yes, their commitment was soft. Did they intend to create jobs? Maybe not; maybe they intended to reduce jobs. It was government's intention to try to use the policy instruments that we have to encourage the creation of jobs.

We said that under the accord we'd do a number of things: community forest pilot projects, innovative forest practices agreements, enhanced forest management pilot projects, increase the standing inventory, increase the small business forest enterprise program sales and deliver the FRBC land-based programs in multi-year agreements and create employment. In the first two years of the accord we more than achieved the employment goals under Forest Renewal. That's over 5,000 jobs in those two years. So we have moved on those things.

We've moved on now. We're not stuck there saying: "The agreement we had is forever going to bind us, and we're going to go back. It's going to haunt us, and we're going to get upset." Instead, we're going to challenge the industry to come up with suggestions. A log cost reduction strategy makes sense if you're a high-cost producer. Eight hundred suggestions have come forth from industry, and we're intending to implement them.

[2030]

G. Abbott: I'm delighted to see a debate breaking out here. I think it's good that we have one.

The minister's right. We're back again in 1999, asking about the jobs and timber accord. You can bet we'll be back in 2000 and quite possibly in 2001 talking about the jobs and timber accord. I'm sure that this government would like to consign the jobs and timber accord to the wastebasket of history and hope that everybody goes away and forgets about it.

This government spent millions of dollars of taxpayers' money trying to convince British Columbians that they knew the answer to how to cure every ill and reinvent the forest industry in British Columbia. They put a lot of resources into that, and it wasn't -- again, as I said earlier -- a process where the Premier shared a lot of doubts about what he was doing. He figured he knew everything. He figured that he had all the answers and that the industry was the thing that was going to change. He was prepared to use the power of government to do it.

Frankly, having laid it all out there for all the world to see and to, I guess, set up a bunch of goalposts to make com-

[ Page 13838 ]

I think one of the reasons why it's important to talk about the accord is that it underlines some fundamental differences between the government and the opposition. The government, particularly as reflected in the ideology and the rhetoric of the Premier, is a blunt instrument that can be used to change the nature of the world. I really think he believes that, and if one wants to look back at the throne speeches, particularly, that comes through really clearly.

We on this side of the House have a different view about how jobs are created and maintained in this province, and that is that industry needs to be competitive. Unless we have a climate in British Columbia where people want to invest and to work hard and see a return on that investment and hard work. . . . Unless they are able to achieve that, no one can be compelled to create jobs in the province. We have to have markets, opportunities, investment and competitive tax and regulatory policies so that we can compete with other jurisdictions in Canada and the world -- particularly at a time when, in the 1990s, we see growing competitiveness throughout the world. We see a host of new players coming into the game that weren't there previously. Plus, we see even more efficiency and competitiveness from our longstanding competitors in Scandinavia and elsewhere.

[2035]

The minister may want to respond to that, and I certainly welcome that. I also want to ask a question on the one commitment that we find right at the top of page 4 in the jobs and timber accord: "Industry and government agree to develop strategies to increase the timber supply over time." In the estimation of the minister, has this been achieved, or have we seen new issues which in fact have decreased timber supply over time?

Hon. D. Zirnhelt: A few comments. There is no question that 1995 was a year of almost record profits for the industry. It was the year just before the accord. That year ending, there was a profit of $1.2 billion. So the industry was competitive. I would have to say that based on the results this year, our industry is competitive in 1999. When you get to prices above $350 (U.S.) per 1,000 board feet -- which is where it is on average -- the industry is very competitive. They're making money, and the profits are showing that. So we're in a new situation.

When it was clear that we had a different market prevailing out there, we went to work on the cost reductions, which resulted in taking $1 billion in costs out of the industry. So we did address those issues, because the fundamental underpinnings that everybody assumed when the forest sector strategy worked initially. . . . When the accord was drawn up, we made certain assumptions. When the assumptions changed, we went back to try to deal with the problems that were then created. I would submit that the industry is competitive now. They're competitive at certain prices, and they will remain so. We have to look ahead as well as look back.

With respect to working on initiatives to increase timber supplies over time, what we've done is achieve the standing timber inventory targets that were sought by licensees. We agreed to get into a contractual arrangement with them. Any industry that wanted two years could get it, if they did certain work, and the ministry would respond. So we agreed to do that by March '99. We don't have the full two years, because in most cases, industry saw that as not a high priority. They weren't prepared to put the money into the development of the sales.

So we're working on reducing the gap between the actual cut and the AAC. That is part of that objective. On the work on growth and yield, a report was released last year, reporting that the second-growth forests are generally in better shape than we thought they were in terms of the amount of productivity. We looked at the growth and yield assumptions, and we do have considerable progress shown there. The other objective was to tender the full harvest to the small business program.

[2040]

The minister suggests that the forest industry is now competitive. Well, perhaps it is. We'll see. Does one-quarter of profits by some companies signal that we are free and clear in terms of being competitive and profitable again? It may be, or it may not be. I think, as I mentioned earlier in these estimates, that we are still in a pretty precarious situation in British Columbia in relation to the American markets, the value of the Canadian dollar and the impact of competition from a host of international competitors. I think that in a lot of ways, the urgency of finding ways of reducing fibre costs is still just as important today as it was a year ago.

Now, the minister may want to take some credit for reducing some costs, and that's fine. If we look at the Pricewaterhouse report, there has been a reduction in delivered log costs. And that's great. The minister can take some credit for that. But as a member of this government, he also has to take some responsibility for the driving up of those costs since the mid-1990s. This government has been reckless, to say the least, in the addition of new costs to the industry over time. If the cost of administering the code has been reduced, well, that's great, but the costs of the code were too high to begin with.

The opposition has said from the start that we need a less process-oriented code, a more results-based code, and that has been said over and over again. We can continue that debate, I

[ Page 13839 ]

The minister noted the growth and yield stuff, which certainly bears on the timber supply over time. But I'm presuming that the way to read this section is that it is in relation to the long-term sustainable cut. We have talked about that as being in the 55-to-60-million-cubic-metre range as opposed to increasing the cut from what it is now, which is in the 70-million-cubic-metre range. Is that correct?

Hon. D. Zirnhelt: I think it's safe to say that the jobs and timber accord was a relatively short-term objective, based on trying to get what was under licence out there, what was within the AAC being cut and, in so doing, getting a bump on the employment. There's no question that in British Columbia we are going to face a falldown sometime in the future, and that is a result of overcutting in the past.

I'd like to remind the member that it would have been reckless of any government not to deal with the forest practices at the time. It would have left the industry and the people of British Columbia vulnerable to the world marketplace, to say nothing of what the policies of the past did to undermine the long-term sustainability of all the resources in British Columbia. It would have been reckless to do that. It was not reckless to bring in a tough code to nip the problem in the bud. Yes, it was a little more onerous than it was anticipated to be. But as soon as we were aware of that, we took steps to address it.

We're working on strategies to deal with the increase in supply over time. The strategies that we're working on are combinations of enhanced management activities and additions to the land base, such as reducing regeneration delay, increasing the volume gains from fertilization, increased use of genetically superior tree seedlings, reducing the loss of trees to insects and disease, increased utilization of hardwood tree species, the conversion of land currently being occupied by non-commercial tree species to commercially viable tree species, the conversion of marginal agricultural land to commercial tree species as well and, finally, the conversion of the backlog of not satisfactorily restocked to areas of commercially viable species.

[2045]

Hon. D. Zirnhelt: The accord doesn't have fibre targets as such; I think the member is getting at that. There weren't any fibre targets. It's very controversial. Yes, some work was done on it; but no, there is no agreement in industry or between industry and government as to how we can lay down an exact blueprint for how to produce more wood on a smaller land base.

I guess I would have to say that yes, the trend is downward over time. The accord was a short-term boost as we made investments in the land base, but a lot of the investments we've made that are a direct application of Forest Renewal dollars will see benefits accruing 30 and 40 years out.

G. Abbott: I actually wasn't wanting to get a rough idea of the total timber supply gain that might come from those initiatives just because they're listed in the accord, but rather, just as a matter of information as to what the government projected the benefit of those various activities would be.

The other question I have with respect to the timber supply. . . . I had a discussion today with a forester who indicated that through improved genetic management of planting stock and so on, their average rotation period could be reduced significantly. Does the government have any projection on how, through innovative forest practices or other initiatives, the rotation period could be reduced in British Columbia?

Hon. D. Zirnhelt: Well, we have an estimate, and that is about an 8 percent lift across the province from genetically improved stock. But I want to say that the decrease in the allowable annual cut -- that is, the falldown that is predicted -- is for the midterm. For the long term, we see it coming back to 70 million. That's out a few more decades -- perhaps six decades. The falldown would happen gradually towards, say, four decades out. That's roughly what it is. So all the improvements in genetic stock and so on have been programmed in and should show the results as they show maturity at 50 to 60 years.

G. Abbott: The projection is that, with those improvements, we could reduce the turnaround period from roughly 80 to 60 years. Did I get that right?

[2050]

G. Abbott: In terms of strategies to increase timber supply over time, some of the initiatives. . . . We mentioned a couple of them today. Will things like the identified wildlife management strategy, landscape unit planning. . . ? Are these initiatives ones that will in fact decrease the timber supply over time?

Hon. D. Zirnhelt: Yes. When we budgeted the 6 percent downward pressure on the timber supply from the code, we budgeted in that 1 percent for identified wildlife. So what landscape unit planning and identified wildlife management will do is provide more optimal management of all the timber resources that are out there. I would say that if it has a downward pressure on the timber supply, so be it. The challenge, then, is for industry and government to meet the challenge of getting more on a more constrained land base.

G. Abbott: I see the other House is reporting out. 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 resolutions, was granted leave to sit again.

[ Page 13840 ]

Motion approved.

The House adjourned at 8:54 p.m.

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The committee met at 2:49 p.m.

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

S. Hawkins: When we left off on Wednesday, we left off with the minister giving us his reassurance that an announcement with respect to gaming and the change in policy wouldn't be introduced on Saturday, Sunday or Friday. But I guess perhaps he missed out Thursday, because the very next day the thing we were debating about in this House, where we feel that policy should be announced -- and we are debating the estimates of the minister responsible for gambling. . . . You know, it should be announced here.

[1450]

The answers we were looking for in the House on Wednesday weren't really answered on Thursday with the gaming announcement. In fact, I think it gave rise to more questions. I'm wondering if the minister will stand up today and put some meat around the bones of the new gaming policy. We understand, because there's the press release. . . . I wonder at its sincerity -- and perhaps I question his sincerity, because we did ask on Wednesday, and the very next day he makes this announcement, with a press release and a media conference and the whole nine yards. If he didn't know about it, that surprises me: and if he did know about it, I would have hoped that he would have shared it with the members in the House when we asked for it on Wednesday.

So I wonder if the minister will tell us a little bit more about the NDP's new gaming policy, if he will put some meat around the bones of this regulatory authority and if he will tell us what the terms of reference are for this new body and this independent advisor.

Hon. M. Farnworth: Well, the hon. member didn't ask me about Thursday; she asked me about Friday. And actually, that was an afterthought. In fact, she said: "Do not announce a policy change during the convention. Will the minister commit to me not to do it on a Saturday or a Sunday?" That was the question. Then someone else added: "And a Friday, as well." And I said: "I'm happy to, because it won't be." I also said last week. . . .

K. Krueger: Weasel words.

Hon. M. Farnworth: Oh, the member says "weasel words." Well, be definitive. You can obviously tell why you're not a lawyer.

K. Krueger: You can tell why you're not going to be in cabinet much longer.

The Chair: Order, members.

Hon. M. Farnworth: Well, when you're on this side of the House we'll see if you're in cabinet, okay?

Interjection.

The Chair: Members will come to order.

Hon. M. Farnworth: The issue around the gaming policy. . . . I said the universe would unfold as it should, and it unfolded on Thursday. I wouldn't expect the opposition, if they were sitting over here, to announce policy changes just because I asked them what those policy changes were. I told them there was going to be a change in direction, and it was announced on Thursday.

I'm happy to put some meat on the questions the hon. member may have in terms of changes to direction. I'm happy to outline them for her, and if she'll ask the questions, I will answer them.

S. Hawkins: Well, I did ask the question. The question was: what are the terms of reference for this regulatory body? What are the terms of reference for the independent advisor?

Hon. M. Farnworth: First off, no independent body has yet been set up. What I announced was that I would be appointing an individual whose job it will be to go out and bring back recommendations on the form and shape of a body or an individual or a process to create an arm's-length way of ensuring that government is removed from decisions around the relocation of casinos in the province of British Columbia.

S. Hawkins: You know, I'm sorry I never asked about Thursday. I thought the minister had enough integrity to let us know when the announcement was coming down. I asked if it was going to come sometime before the convention. I did ask that. He can go back and look at the record. I mentioned Saturday and Sunday. Someone mentioned Friday. I guess the minister wants to talk in semantics, so the exact date wasn't mentioned: Thursday.

K. Krueger: The minister responsible for hairsplitting.

S. Hawkins: The member says "the minister responsible for hairsplitting." I question that too.

K. Krueger: We have wide parts, he and I.

[ Page 13841 ]

S. Hawkins: I am disappointed, because what the minister's telling me is that they don't have a policy. What they announced is that they will try and find someone who is independent and who can maybe help them prepare some policy. Well, you know what? We spoke about this on Wednesday. The government spent $690,000 on a White Paper on gambling, and what he's telling me that the independent adviser's going to do. . . . I would think some of that should have been done with the almost $1 million we spent on the Rhodes report.

I want the minister to tell me: what is the difference between what the Rhodes report did and was supposed to do -- as far as going out and widely consulting people and charities and groups around the province -- and what this new independent adviser is supposed to do?

[1455]

The role of an independent person is to take out. . . .

K. Krueger: Note to self: weasel words evoke chippiness.

The Chair: The member will come to order.

Hon. M. Farnworth: I listened to the critic's questions in silence. I would ask that the hon. member please extend me the same courtesy to answer the question in silence.

The Rhodes report is the basis for changes to gaming policy. The amount of work done is significant and will, I suspect, aid whoever is appointed in looking at the situation, the rules and regulations around gaming and some of the issues that need to be addressed. The change in gaming policy is a significant one in that it says that local governments will have control over the extent and type of gaming activities that take place within their communities. That includes slot machines. This is a significant change in policy. There will be no more casino licences issued, other than those which are currently in the pipe. Again, this is a significant change in policy. There will be an independent person appointed whose job it will be to come back and recommend to me, as minister, what form or structure of an independent body or process needs to be in place to deal with issues such as relocations and to be at arm's length from the political level.

The Rhodes report makes significant recommendations around the issue of enforcement and ways to improve accountability within the Gaming Commission. All of those recommendations will be implemented. So there's a considerable body of work that's been done and that forms the basis for a directional change in gaming policy. Plus, there is now an independent person who has some extra duties. I look forward to their report and to implementing their recommendations. If the member has any other questions, I'd be pleased to answer them.

S. Hawkins: It's interesting that the minister says that they've stopped the expansion of gambling, because they haven't. There are seven new casinos still on the books. Frankly, because we don't know what this new independent adviser is going to advise, it would be nice if the government actually thought out some policy before they just threw out a trial balloon. It started in the hallways here in the Legislature the middle of last week and sort of came into the House on Wednesday with questions to the minister, and then it spilled back out into the hallways and into press conferences and press releases.

It would be nice if we knew exactly what the government had in mind. Is this independent adviser going to be able to make recommendations to actually increase betting limits and to increase slot machines? Now that the minister is allowing communities to decide, does that mean that they are going to be able to decide whether they want to expand gaming or gambling in their communities? We don't know any of that. Is there going to be direction given to this independent adviser that there is going to be no more expansion of gambling than what the government has done already? That has been to massively expand gambling in the province by introducing seven new casinos that are still on the table.

I want to know if what the government is announcing, which is a halt to gambling, will mean that bet limits remain where they are or might be rolled back, that slot machines remain where they are or might be rolled back, that the government will work with municipalities to see that gambling doesn't get out of hand. Is that what he means? Or does it mean that there will actually be more local control and that the independent advisor can advise that communities, if they wish, may expand even more than the NDP has?

[1500]

It's local communities who will decide. They will decide within a set of criteria. One, there are no more casino licences being issued, with the exception of the seven that are currently in the pipeline. Those came about because of community support, so the local communities themselves have approved of them. That's in keeping with the decision -- their view that local communities should decide. I mean, if I'm not mistaken, the member said in Kelowna: "If the community is in favour of the casino at the Grand hotel, then I guess I'm in favour of it too. If the local community feels it's good, then I'm in favour of it as well, even though I'm opposed to expanded gaming. It's a community decision."

The communities around the province have made those decisions on those seven applications. In terms of their ability to increase the number of slot machines -- no. The current limit of slot machines in British Columbia is 300, and there is no ability for local governments to say -- nor in fact, do they want it -- that they will increase above 300. If they have a casino in their community, they can decide on the number of

[ Page 13842 ]

If you talk to the municipalities, the issue has not been around whether or not there should be gaming in the province but that they should have the right to decide the extent and type of gaming in their community. And we've agreed to that. I made it clear to the head of the UBCM, for example, that the 300 limit is the limit. Kelowna, for example, could not go out and say they will go to 600 slot machines. Three hundred is the limit, and that's where it's at.

S. Hawkins: The minister is right about one thing. I did say that if my community was in support, then I would have to support it. But you know what? I don't know if my community is in support. They never took a referendum. The mayor is in support; the minister knows that. The Grand hotel is in support; the minister knows that. There was one community that did do a referendum. I believe the Penticton community did a referendum, and it was 53 percent. Well, there's a ringing endorsement. I'm glad we've got some clarification here from the minister this afternoon that the betting limits won't necessarily go up and that the number of slot machines won't necessarily go up. You know what? I get as many comments, or more, from people in my community who aren't necessarily supportive of the kinds of changes in gambling that have occurred there as I do from people who are. So it works both ways.

We've never done a referendum in my community, so I don't know. I just have to gauge support by the calls I get to my office or the people I meet in malls or on the street. Frankly, I get as many, or more, saying that they're concerned. They know about the policing problem in our community. Our population at least doubles in the summer, and we are very short of those kinds of supports. I know that when the NDP decided to do their massive expansion of gambling, they didn't necessarily put in the kinds of resources -- policing resources, social service-type resources and all those kinds of things -- that need to be planned for the kinds of problems that might emerge because of the massive expansion in gambling.

[1505]

We did almost a year on the White Paper. There were all kinds of recommendations in the White Paper about municipalities having local control and wanting to be able to decide on zoning and bylaw issues and slot machines and tables and talking to the minister about whether there were enough resources as far as policing and social concerns -- addiction, all those kinds of things -- and whether those were actually in place before they imposed it on the communities. That was all in the White Paper in submissions made to Mr. Rhodes when he was preparing the White Paper.

It's interesting that the minister announces on Thursday that there's a halt to the expansion of gaming, which we know. . . .

The Chair: Hon. member, your time has run out. If you have a question that you'd like to pose for the minister, please do so.

S. Hawkins: Well, I want to know what areas of the government's gambling expansion plan have been ended by this announcement.

Hon. M. Farnworth: Thank you, hon. Chair. That's a first.

S. Hawkins: Excuse me. I thought we had 15 minutes. How did that end. . . ?

Hon. M. Farnworth: We were so entranced by your remarks, hon. member, that. . . .

S. Hawkins: So it felt like 15 minutes?

Hon. M. Farnworth: It felt like an eternity.

The member makes a number of interesting comments. She complains because "Kelowna didn't have a referendum." Kelowna city council represents the people of that community, and Kelowna city council is the one that decides. It's not the government imposing how you decide how to tell whether your community supports. . . . It's up to the local council to decide how to gauge public opinion. The council did that, and they did their job. That's local community control. If the government said that the council must decide this way, she'd be the first one jumping up and down and saying: "No, that's an infringement of local autonomy." The council is the one who makes the decisions, because they're the ones who represent their community. They will also answer for their decisions around this issue in November.

The member then goes on to say: "Well, Penticton had a referendum, but it only got 53 percent. Gee, that is a ringing endorsement." I can tell you that if the member gets 53 percent at the next provincial election -- or if that's what her party gets -- she'll be crowing from every rooftop and flagpole in this province: "My God. The public is endorsing us 110 percent. The people of this province are behind the Liberal Party like never before. It is a ringing endorsement of the first order." Never mind the fact that it would be 47 percent that voted against. She'd be very happy with a 53 percent endorsement in an election campaign.

There was a referendum held, and a majority of the people said yes. I'm very sorry that she doesn't think that it's 55 percent or 65 percent or 100 percent. . . . In a referendum in Quebec, we were all very thankful that it was 50.1 percent that voted to stay in Canada. Is that a ringing endorsement? Should that not be a valid. . . ?

S. Hawkins: What was behind those election results? Come on, what was behind. . . ? That's all being investigated.

[ Page 13843 ]

S. Hawkins: That's all being investigated.

Hon. M. Farnworth: Is it not a valid result? That was the result. We were happy.

S. Hawkins: It was fixed ballots and stuff. There was tampering of ballots there. Come on.

The Chair: Order, members.

[1510]

In terms of the changes that have taken place, the decision to say that local communities' bylaws are supreme in this area is a significant change, a recommendation that came out of a presentation that was made to the White Paper process by the UBCM. The issue around local decision-making on the issue of slot machines and the type and extent of gaming that takes place in local communities is out of a submission that the UBCM made in the White Paper process. The changes that have taken place in terms of making sure that charities receive their guarantee of $125 million -- the highest guarantee of any province in this country -- is straight out of the White Paper. The extent and nature of charitable gaming being the domain of charities is right out of the White Paper.

I also said on Thursday that we will be moving to gaming legislation, but only if it has broad-based support, and that it means the specific involvement of local government in the development of that legislation, the specific involvement of the charities in the development of that legislation and a broad process of public consultation. All those things are happening.

S. Hawkins: The minister is very defensive today. It's interesting that, I think, he gets caught up in the rhetoric and forgets to answer the question that I asked, so I'll ask it again.

Hon. M. Farnworth: Wait till 15 minutes.

S. Hawkins: You have 15 minutes. I don't think I spoke for 15 minutes last time, but I'm sure I can find 15 minutes this time.

I asked: what areas of the government's gambling expansion plan have been ended by the announcement? Isn't it more true to say that the announcement was that there would be no further expansion in the government's massive expansion to gambling, not that it was an end to the current plan? That's because the current plan still says there are going to be seven casinos. So the government didn't end their massive gambling plan. They just ended the current plan; they just cut if off. Basically, I think it's been characterized quite rightly in reports I've been reading. You know, they let the horses out of the barn before they closed it. So what areas of the expansion in gambling have been ended by this announcement?

Hon. M. Farnworth: You know, the whole issue around this has been around community control. The decision by the government means that the government will no longer be imposing its view on local governments or on communities. The local communities will decide on slot machines.

The widely held view that the province was going to go in and impose slot machines, for example, on Vancouver-Surrey isn't going to happen. The widely held view that the province was going to ram everything down the throats of local governments isn't going to happen. This is a community issue; that's what we're saying. The view that the province was going to ram down a piece of legislation over the objections of municipalities and charities isn't going to happen. The view that government wouldn't share revenue with local governments and that they would keep it all for themselves isn't going to happen. The view that the government was going to go out and approve more and more casino licences isn't going to happen.

A Voice: Now.

Hon. M. Farnworth: Well, do you have different plans if you're sitting over on this side of the House? Are you going to go out and approve a few more casino licences?

The Chair: Through the Chair.

[1515]

D. Jarvis: Don't be silly. You know darn well what. . . .

Hon. M. Farnworth: "Oh," he says, "don't be silly." Hon. Chair, the member says: "Don't be silly." I guess he means he won't tell the public what he's going to do. Then, when they're over here, they'll tell the public what they're going to do. Prior to '96, "Well, we think the policies of the Liberals are more in keeping with our thinking," was what the gaming industry said at that time. How quickly they ran from those comments.

The view that we were going to impose casinos all over the place and that there would be casinos throughout the province isn't going to happen, because we will not be approving any more licences, with the exception of the seven that are currently in the pipe. They're there because local communities said they approved of them; they said they wanted them. They said all along that the level of gaming in their communities is up to them; the province should not be mandating it. That's a change as well.

S. Hawkins: We'll get to the seven casino licences that were approved. But it's interesting, because the minister keeps emphasizing the fact that it's up to the community. I know that in Burnaby it wasn't up to the community, because the minister bypassed his own casino evaluation process by approving a -- how did he put it -- conditional licence approval-in-principle. I have no idea how he characterized it. But that was very much not in keeping with the community's wishes. We'll get to that one in a moment.

The minister did make reference to the gaming legislation. For years there's been recognition that comprehensive gaming legislation is needed, and it's needed soon. Provinces across Canada have been in contravention of the Criminal Code with respect to how they have conducted business with

[ Page 13844 ]

I'm just wondering: what about this gaming legislation? When are we going to see it? There's a great need for it. Is this new regulatory body -- this new adviser that's going to advise on a regulatory body. . . ? How long is this process going to take? How much money is that going to chew up? When are we going to see some changes that will positively impact on some positive changes for gambling in this province?

Hon. M. Farnworth: There has been, I think, a general agreement amongst local government and the charity on the directions that I announced on Thursday, and they're very happy with the changes that I announced. They're looking forward to participating in the formation of legislation. It will take place over the coming months and will only be introduced when there is broad support and we have dealt with all the issues.

S. Hawkins: So is the minister telling me that there are no time lines in place yet for this independent adviser or for setting up this body or for introducing a gaming law? Is that what he's telling me?

Hon. M. Farnworth: The independent person's job is not to go out and come up with legislation. Their job is to go forward and to develop, as I've told you earlier, an arm's-length process that deals with relocations. I will be announcing that person in the very near future. At that time I will sit down with that individual, and we will discuss their task. They themselves may have some ideas as to how long they expect the process to take, but I'm not going to put artificial time lines or barriers on someone. I would hope that it could be done reasonable expeditiously. Before I make any definitive statement around time lines, I want to sit down and talk with them, get their take on the task, get their sense of what the task involves and then say: "Okay, this is an appropriate time frame."

[1520]

Hon. M. Farnworth: It's my understanding that we are down to a shortlist of two names, and I will have an announcement, hopefully, within the next two weeks.

S. Hawkins: Very good. You've narrowed it down to two weeks, anyway. We'll await that.

In the press release of June 17 -- last Thursday -- when the minister announced the change in direction of NDP gambling policy, 1997 revenue numbers were used, and I'm just wondering why. Are the 1998 numbers not available? Why weren't they used?

Hon. M. Farnworth: These are the latest independent StatsCan figures.

S. Hawkins: Is that the only place we get the numbers from? Are there 1998 numbers available?

Hon. M. Farnworth: We do not have the comparative numbers for 1998 as of yet.

S. Hawkins: Will the minister commit to forwarding them to my office once he receives them?

Hon. M. Farnworth: Yes.

S. Hawkins: Thank you.

Will the minister tell me if the province will place any parameters on the process of relocating any existing gaming establishments? Or is that within the parameters of the MOA that was signed with UBCM -- that they will have the local control to do that?

Hon. M. Farnworth: That is a local government decision. Let's put it this way: if a casino wants to locate from one community to another, it would first have to have the support of the community that it wants to move to.

S. Hawkins: I want to talk a little bit and get some information on the casino evaluation and approval process. If the minister will outline for me the seven casinos that are going ahead -- which ones they are and where they are -- we'll just get into a dialogue about those.

Hon. M. Farnworth: They are the Casino of the Rockies in Cranbrook; MV Pacific Aurora based in Prince Rupert; Jack O'Clubs in Wells; Lake City Casino in Penticton; the Arrowleaf Resort and Casino in Penticton; Star of Fortune in New Westminster; and the Campbell River Casino There's also one in Merritt. Bingo Country is a bingo as opposed to a casino -- that's in Burnaby -- and the Bingo Country one has already been approved.

S. Hawkins: Will the minister outline for us exactly what the casino evaluation process was, with respect to granting these approvals-in-principle?

[1525]

S. Hawkins: There was huge public concern -- I know the minister is aware of that -- over how the casino evaluation process unfolded. The minister has publicly stated that he is unhappy with the casino approval process. I wonder if he'd tell us what he was unhappy about and how he sees the approval process changing in the coming year.

Hon. M. Farnworth: I guess the point I'm making is that one can always improve a process and that I think there are ways that it can be improved. That's why I'm saying that we should have an arm's-length person to look at relocations. There are not going to be any more approved other than the existing seven.

[ Page 13845 ]

S. Hawkins: The better way of dealing with it will come out of the results of a study that he is appointing the independent adviser for. Is that correct?

Hon. M. Farnworth: That is correct.

S. Hawkins: I wonder, for the seven casinos that are approved, if the minister can give me an update on those casinos -- when they're expected to come on line and whether the terms of casino-operating agreements will differ from casino to casino.

Hon. M. Farnworth: They will, as far as possible, have common agreements, in that they will all have a common operational agreement. The development agreements will be different in some cases, because the nature of the development is different in different areas of the province.

S. Hawkins: Can the minister tell me when they are expected to come on line? Are there time lines for them?

Hon. M. Farnworth: Specific time lines for each one? No, other than I expect Penticton's Lake City Casino probably very, very soon. But other than that. . . . And of course, Star Fortune in New Westminster has been approved, and the bingo in Burnaby has also been approved. But the rest are in various stages of negotiations with the Lottery Corporation, and to say that there are some coming within the next month or so. . . . I'm not aware of any that are coming within the next month for approval. The negotiations with the Lottery Corporation are quite vigorous.

[1530]

Hon. M. Farnworth: The ones that have received final approval so far -- those estimates are in fact valid, yes.

S. Hawkins: Can the minister go over those job predictions for me, just so we have them on the record?

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

S. Hawkins: That's fine. Can the minister tell me how the timing of the final approvals will affect government revenues as predicted in the 1999-2000 estimates?

Hon. M. Farnworth: Our current understanding is that the revenue that is projected is consistent with what is in the blue book, which was in the budget forecast. I'm not sure what the exact number is, but we can get that for you.

S. Hawkins: I'll take a minute and look at the book. I can't remember exactly how much was reflected for revenues from gambling, but I wonder if the minister can tell me -- and if his staff can look for that number, because this next question is a follow-up to that number -- how many casinos, given the direction change that the government took last week on the expansion of gambling. . . . Can he tell me how many casinos are to come on line to meet that number as set out in the projections in the budget?

Hon. M. Farnworth: In terms of which casinos are projected to come on line in terms of the revenue projections, they are New Westminster, Penticton and Cranbrook.

S. Hawkins: Can the minister provide for us details of any government incentives or any government dollars that were spent in order to facilitate a casino development? Can the minister tell us if the government has provided any financial assistance in any form to any proponent?

Hon. M. Farnworth: We're not aware of any assistance that has been provided to any proponent, other than what is in the RFP process in the way of the split of the revenue.

S. Hawkins: There was some question about a road that was built and paved right to the Casino of the Rockies in the Cranbrook area, and I wonder if the minister would comment on that.

Hon. M. Farnworth: This ministry did not fund any road to a casino in Cranbrook. In fact, there is no casino in Cranbrook yet. So the questions around a road really should be in Transportation and Highways. I don't mean that to be. . . . That's where that would be.

[1535]

I wonder if the minister can tell me why casino proponents who didn't receive approvals-in-principle were told in their debriefings that all decisions were made by cabinet and were therefore not appealable. I know there has been a question about whether the decisions on the AIPs -- the approval-in-principle -- were actually made by the minister or by cabinet. This comes out of a press release on December 17, 1998, which I think the minister is quite aware of, which makes it very clear that the decisions for the AIPs were made by cabinet. I know that's been going back and forth. The minister came back and said that he was given the power to make those decisions. Yet proponents who didn't receive AIPs were told in their debriefings that all decisions were made by cabinet and therefore were not appealable. I wonder if the minister will comment on that.

Hon. M. Farnworth: First, this is not an appealable process.

The second point, around the cabinet. . . . As the member is aware, there is an investigation underway which is looking at that question. So I am going to have to say that we'll leave it at the fact that there is an investigation underway, and that is one of the things they're looking at.

[ Page 13846 ]

Hon. M. Farnworth: That is under investigation right now.

S. Hawkins: So "under investigation" means the minister can't comment, I guess. I will keep asking the questions. Where the minister can comment, I hope he does help us clear up some of the mess that was created with the approval-in-principle process.

I wonder if the minister can tell us whether there were any proposals that were allowed to be modified or resubmitted after the RFP closed in November of 1997 -- if there was any follow-up with any of those.

Hon. M. Farnworth: No resubmitted applications were allowed. There was clarification sought by the people doing the evaluation process on certain applications, but there would be no amended applications, for example.

[1540]

Hon. M. Farnworth: All of the AIP proponents would have had points in their proposals, parts of their proposals, that would have been asked for further clarification.

S. Hawkins: I know the minister understands why we're asking the questions. The perception was that it wasn't open and it wasn't transparent. It wasn't clear how the casino licensees got their approval, and certainly there were a lot of things in applications that appear to have been overlooked. Certainly the events of the last few months have made it even more clear to the public that the casino approval process needs to be more open and transparent. We need to see how decisions are actually being made, to make sure that things are done properly and problems are recognized early rather than late -- as I think happened in one of the cases.

I wonder if the minister can tell me how many market segments or areas were evaluated under the casino RFP process.

Hon. M. Farnworth: It wasn't done on the basis of market segmentation. It was done, in part, on the basis of local government support.

S. Hawkins: I wonder if the minister will tell me why the RFP evaluation approval process switched from being conducted on a regional basis to a site-by-site analysis after August 14, 1998, when he made casino announcements.

Hon. M. Farnworth: I'm not aware of there being a change.

S. Hawkins: Can the minister tell me what the approval process was, then? It was understood that it was being done on a regional basis, and then it seemed to change direction, after August 14 last year, to a site-by-site basis.

Hon. M. Farnworth: There were three announcements. Roughly, it was the north in the first, the Island-Okanagan-Thompson in the second and then the lower mainland in the third.

S. Hawkins: Is the minister telling me that there wasn't really a regional or a site-by-site -- that they just looked at what applications they were getting in and decided on where they were going to do the approvals?

Hon. M. Farnworth: All proposals were looked at and evaluated individually on a provincewide basis. But in terms of the announcement, when it took place it was the north, then Okanagan-Vancouver Island and then the lower mainland. That's all it was.

[1545]

Hon. M. Farnworth: There was a market analysis done by PricewaterhouseCoopers.

S. Hawkins: Can the minister tell me, then: were all the casino approvals-in-principle consistent with the market analysis and assessments put forward by the evaluation team?

Hon. M. Farnworth: No, it did not follow the analysis. For example, it said that we could have significantly more casinos in the lower mainland, and that did not in fact materialize.

S. Hawkins: Then on what basis did the minister move casino proposals up and down the ranking system and make the decision that seven was the number they were going to go with?

Hon. M. Farnworth: I did not move them up and down the ranking system.

S. Hawkins: Okay. On what basis did the evaluation team move them up and down?

Hon. M. Farnworth: They were scored individually on the basis of the criteria that were established by the team at the beginning of the process.

S. Hawkins: Is the minister prepared to release all the evaluations?

Hon. M. Farnworth: Subject to the investigations that are currently underway -- yes.

S. Hawkins: That will be a while, won't it?

[ Page 13847 ]

It's unclear exactly when this changed. On December 17 it said that cabinet was making the decision, and then sometime in March we heard the minister say that he had been authorized to make the decision. Did the minister have the authority then to make the decision before December 17? Or did that change after December 17?

Hon. M. Farnworth: We have an ongoing. . . . There is an investigation underway, and that's one of the questions I'm sure they are dealing with.

S. Hawkins: I wonder if the minister can confirm that the gaming audit and investigation and office approved all casino applicants, with the exception of the applicants from the North Burnaby Inn, the Pilarinos-Ng application, before the approvals-in-principle were granted.

Hon. M. Farnworth: That is an incorrect statement. About half did and about half did not.

S. Hawkins: Can the minister tell me which ones did receive approval before they were approved by the gaming audit and investigation office and which ones didn't?

Hon. M. Farnworth: Subject to the investigation, I'll be happy to.

S. Hawkins: I know there's an investigation going on, and I want the questions on the record. If the minister can answer some of these, that's great; if not, we await the results of the investigation. On what basis did the minister approve two casinos for Penticton?

Hon. M. Farnworth: They were two of the best proposals, and the town of Penticton had had a referendum.

S. Hawkins: Was there any analysis done for that region to show that they could sustain two casinos?

Hon. M. Farnworth: There was not an analysis done to show that it could sustain two casinos.

S. Hawkins: Does the minister have any concern that the town might not be able to sustain two casinos? There are business plans for both casinos, but it's not exactly. . . . It is a tourist destination, but I'm wondering what kind of criteria around the business plans. . . . And with no studies done to see if they could sustain them, how was that decision made to put two casinos in one community?

Hon. M. Farnworth: I'll make a couple of points. The first is that Penticton was viewed, as the member has said, as a prime tourist destination centre. There's an opportunity there to build on that in terms of the casinos located there and the ability to market Penticton south of the border, in conjunction with the Okanagan Valley as a whole, to take advantage of the current recreational activities that are there -- perhaps tied in, for example, with a wine tour. There was a unique opportunity to market that. At the end of the day, you know, that can work, and at the end of the day, maybe it won't work. We live in a free market system. But certainly it was felt that there was an opportunity in Penticton to take advantage of its unique location -- the wine industry, for example -- and the ability to build on the recreational opportunities that are already in place in the Okanagan Valley.

[1555]

Hon. M. Farnworth: I think there was a view that there's an opportunity here to generate considerably more tourist traffic. The fact is that you have, within a geographic area in the United States, the ability to draw from a fairly sizeable market; and if properly marketed and promoted, there's no reason to suggest why two or three casinos could not be a viable option. If at the end of the day they can't be, that's a market decision.

S. Hawkins: The answers don't seem to be clear around that one either. Is the minister aware of any studies that the casino proponents did to show that there would be viability with two casinos in such close proximity in that community?

Hon. M. Farnworth: No, I'm not.

S. Hawkins: I guess we'll just let the chips fall where they may and see what happens to that community and the viability of the two casinos.

The minister, I'm sure, is very aware of the possibility of lawsuits from failed proponents. My question is: have any of the failed casino proponents filed lawsuits against the government to date -- or an intention to sue?

Hon. M. Farnworth: I am not aware of any lawsuits having been filed against the government.

S. Hawkins: Have any of the failed proponents engaged in dialogue with government with respect to seeking any damages in having failed in their application for a casino? I make note of the Ontario situation, where the government had to pay $50 million after changes were made to their expansion of charitable gaming. Can the minister tell me if they're in dialogue or discussion with any of the failed proponents over their unhappiness that they didn't get their licence?

Hon. M. Farnworth: They would have all been debriefed. They may have questions of a technical nature, for example, but we're not engaged in any dialogue around lawsuits or financial compensation or anything of that nature.

[1600]

[ Page 13848 ]

Hon. M. Farnworth: That's an issue between them and their partner, and it's not one where we have any regulatory role or any role to play.

S. Hawkins: So when the minister's staff, the evaluation committee, saw the business plans and the financial arrangements for those first nations casino proponents that had financial arrangements with interest as high as 35 percent, that didn't raise a red flag -- or did it? I'm wondering how they scored that in their evaluation process.

Hon. M. Farnworth: First, there wasn't 35 percent. Second, we did raise the issue with the band, and we were told: "Those are our agreements that we've negotiated."

I move that we recess for two minutes.

The committee recessed from 4:01 p.m. to 4:05 p.m.

[E. Walsh in the chair.]

S. Hawkins: I wonder if the ministry staff can tell me -- or tell the minister -- if they're aware of any former government employees who were involved in gambling policy going to work for private sector gambling interests. Is the minister aware of that? And if he is, can we have a list of the ones who have left the ministry and who were involved in making gaming policy or influencing gaming policy and are now working for private sector gaming interests?

Hon. M. Farnworth: There was a junior inspector who went to work for one of the proponents, the MV Pacific Aurora.

S. Hawkins: Is the ministry concerned about this at all? Are there any guidelines about conflict of interest? Does this raise a red flag for the minister?

Hon. M. Farnworth: This individual was not involved in terms of either evaluation or development of the RFP process. The corporation does have conflict guidelines in place.

S. Hawkins: Will the minister find those conflict guidelines and commit to sending them to my office?

Hon. M. Farnworth: Yes.

S. Hawkins: Thank you.

I wonder if I can just ask some questions with respect to the approvals-in-principle that have been granted for casinos. I just want to put the framework around the questions that I'm going to be asking, because I know that in the past several months we've seen what can happen when things go terribly wrong. I can just put the questions into context with respect to when the government actually embarked on their massive gambling expansion strategy.

On December 4, three years ago -- in '96 -- the then Minister of Employment and Investment, who is the Deputy Premier, announced that a senior civil servant, Peter Clark, would be responsible for reviewing gambling expansion options available to the province. So that started down the road of what was going to happen as far as gambling options go.

Two years ago, on March 13, the same minister, who is the Deputy Premier now, announced that gambling expansion would proceed with the introduction of destination and new charity casinos. The government at the time -- the same government that's sitting today -- created the lottery advisory committee, the LAC, to work with the groups affected by the proposed expansion of gaming. From March. . . . Well, I think I'll leave out some details. I won't go through all of them. I want to start with the North Burnaby Inn.

On June 27, 1997, Mr. Pilarinos and Mr. Ng incorporated a numbered company. The number was 545738 B.C. Ltd., and records show that there was one other shareholder, Paschos Katanas. On September 4, 1997, at a proponents' information meeting, the government informed the casino applicants that proposals could be declared null and void if they lobbied government members, in particular cabinet ministers. The warning was out there that lobbying was strictly forbidden.

[1610]

On November 24, 1997, as far as we can track the chronology, the same numbered company -- 545738 B.C. Ltd. -- applied to the province for a casino at the North Burnaby Inn. Burnaby council passed a resolution on a 5-3 vote that month to consider allowing one destination casino, preferably at Metrotown, and a charity casino at a Halifax Street location owned by another casino proponent, named Mr. Derrick Luu.

The next month, December 2, 1997, this government announced that 49 proposals had been received for additional charitable and destination gaming facilities. Mr. Peter Clark, who is the chair of the LAC, noted that some of the proposals did not have official and final approval from the host local governments, as was required by the criteria that were set out. The 49 were then reduced to 37 proposals. The host local governments that were interested in having additional gaming facilities were told that they could participate in the proposal-evaluation process for their communities.

On December 8, Mr. Ng appeared at Burnaby council to outline a proposal for a charity casino at the North Burnaby Inn. Council made it clear that the city did not want a casino in the Hastings commercial district.

I'm taking these facts from reports that have been reported and just tying in the people that were involved in the casino licence at the North Burnaby Inn that was given approval in principle. We know that the Premier's involved here, and we know that one of the proponents of that casino proposal, Mr. Pilarinos, took out a building permit for the Premier's residence on December 17, 1997. That was a week and a half or so after he had gone to council, and certainly after they had put their proposal in for the casino licence.

[ Page 13849 ]

In February of '98 we saw Mr. Tim Gallagher come to the gaming policy secretariat as a senior policy analyst. We'll ask the minister later what role he played.

In June of 1998 the Premier had his deck built by Mr. Pilarinos. The work was completed, I understand, by July 1998. There was a value attached to that -- apparently $16,000. The minister is right -- there is an investigation proceeding. We don't know the exact payment amount; it hasn't been confirmed to date. No receipts, bank statements or cashed cheques have been provided, that we're aware of, to prove that the work had been paid for. We know that the Premier's lawyer, David Gibbons, did state that the Premier paid $11,000 for the work. But again, there are a lot of questions but no answers around that.

On May 14 of 1998 the government approved in principle proposals for three destination casinos: one in the Kootenays, in Cranbrook; one in the Cariboo, in Wells; and one in the North Coast-Prince George area.

[1615]

On July 29, it has been said by this government, the cabinet met and the Premier delegated authority for a number of casino licences, including the Pilarinos-Ng proposal, to this present minister. Certainly the Premier's lawyer, David Gibbons, stated that the Premier almost certainly instructed his gaming minister -- this minister -- to personally approve or reject a casino application by his friend and neighbour, Dimitrios Pilarinos. The Premier's lawyer said: "I'd be guessing, but I'd be darn sure it was the Premier." As I have pointed out a couple of times in these estimates, no announcement of the change in process was made. In fact, the December 17, 1998, press release says very clearly in there that the decision was made by cabinet.

On August 14, 1998, the government approved four destination casinos: two in Penticton, one in Campbell River and one in New Westminster, which is a riverboat casino. The government announced that ten other proposals required further evaluation, and this appeared to directly contradict earlier statements that casino applications would be evaluated on a region-to-region basis. That was the perception out there.

The government also didn't reveal that after a July 29 cabinet meeting, authority for all remaining casino decisions would be made by this gambling minister and not the cabinet. So this change -- and the lack of announcement -- appears to directly contravene the RFP issued by the government.

On August 24, 1998 -- we're still talking about a year ago, as we work through the casino applications -- Burnaby council wrote to four of the local MLAs reiterating its opposition to a casino at the North Burnaby Inn. In August of 1998 the RCMP were made aware that there was a problem with the applicants at the North Burnaby Inn casino, and their relationship with the Premier.

In October 1998 the police began an investigation of the Lumbermen's Social Club inside the North Burnaby Inn and of Mr. Dimitrios Pilarinos. Mr. Larry Vander Graaf of the gaming audit and investigation office apparently stated that he was aware of the Lumbermen's Social Club activities, and the GAIO office began conducting background checks into this application by Mr. Pilarinos and Mr. Ng.

On December 17 the government did announce three more casinos. That was the destination casino near Merritt, the charity bingo casino in Burnaby and the charity casino by Mr. Pilarinos and Mr. Ng. The government's press release that day very clearly stated that the evaluation results were presented to cabinet for a decision, and we understand that. . . . Certainly from what the minister said, the gaming audit and investigation background checks were not completed prior to the announcement. I think the minister did say that there were several that perhaps didn't get that complete approval from GAIO before they were announced.

The very next day, after the press release was released -- December 18, 1998 -- the Burnaby city council pledged to kill the North Burnaby Inn casino proposal. They were very unhappy, and that seemed to go against the minister's criteria for approving this application or giving it an approval-in-principle, because one of their criteria was that the proponent have the approval of the host government.

[1620]

In January 1999 Mr. Paschos Katanas resigned as president of the Lumbermen's Social Club for, he says, "health reasons," and the RCMP interviewed Burnaby city councillor Mr. Jim Young. Mayor Doug Drummond and well-known NDP councillor Derek Corrigan were also made aware of the RCMP investigation. This is all public knowledge.

On February 17, I understand, the minister wrote to Mr. Pilarinos and Mr. Ng and denied the proponents' request to alter the original location. On March 2 the RCMP did execute 13 of 14 search warrants, and they did raid the Lumbermen's Social Club. Mr. Pilarinos had some charges laid with respect to an illegal gambling establishment at the Lumbermen's Social Club. We did see a very public search warrant executed at the Premier's residence in Vancouver, and certainly the search warrants executed at the Marble Arch Hotel and the provincial gaming policy secretariat were carried out as well.

Before I complete the chronology of events I have listed here, I am interested in asking the minister why this proposal by Mr. Pilarinos and Mr. Ng was given approval-in-principle before critical background checks were completed by the gaming audit and investigation office?

Hon. M. Farnworth: This matter is under investigation, and I am not able to answer that particular question at this time.

[ Page 13850 ]

The Premier was questioned on March 3. I believe the minister was actually out of the country at the time these events took place, and I'm sure the minister was as surprised as the public was at what was unfolding here in the province. I believe the minister was in Peru at a trade meeting. I note that the minister stated that it was his decision alone to award the casino licence to Mr Pilarinos and Mr. Ng. The quote, which I have, that the minister gave -- I believe it was at the airport as he stepped off the plane and came back to reality here in B.C. . . . He said: "The cabinet decision was that it was up to my discretion." He has said publicly that he has never met Mr. Pilarinos, and it was that date -- March 4, 1999 -- that the memo by Mr. Adrian Dix was presented to the public.

On March 5 it was revealed that the Pilarinos-Ng application -- at least this was publicly reported -- was the only approval-in-principle granted without having background checks -- criminal and financial -- completed before approval was granted. The minister made reference to perhaps a couple of others that didn't get full approval either. We can ask about those.

The government sources that gave that information also said that this same application, the Pilarinos-Ng application, was inadequate and that it was initially rejected, but somehow it managed to stay alive. I wonder if the minister can comment on that.

Hon. M. Farnworth: As the member knows, there is an investigation underway, and I can't answer those particular questions -- or I am unable to answer those particular questions at this time.

[1625]

The next day the Premier did reveal that Mr. Pilarinos helped him build a deck, not only on his house but at his vacation cabin near Penticton, over the course of a two-week summer vacation the prior summer, 1998. I wonder if the minister had any information or any idea that the Premier knew Mr. Pilarinos, that he had done some renovation work for him, that he was a close friend and had advised his. . . . Well, we'll just leave it at that -- if he knew of any work that was done at the Premier's residence, either at the lake or at his home, and whether he was paid for it or not.

Hon. M. Farnworth: I would prefer not to say this, but this is all the subject of an investigation, and I'm not able to answer those questions at this time.

S. Hawkins: Well, I can tell you, just by the look on the minister's face when he came back from Peru and was given the information, that it would appear -- the perception is -- that he was ambushed. He didn't know this information. And that's too bad. Those are the kinds of pieces of information you would hope would be shared at the cabinet table -- and the minister would be made aware of relationships of this kind and be able to make a reasoned decision and not have it tainted with the kind of Casinogate scandal, as it's been labelled, that has been unfolding in the province over the last few months.

The day after, the Premier did reveal that he knew Mr. Pilarinos and that he had built a deck on his lake residence. The minister made an announcement that the Pilarinos-Ng application basically died after a letter of February 17, 1999, rejected the proponent's offer to move the casino from the North Burnaby Inn location. I'm wondering if the minister can tell us how that came about. He did make the announcement on December 17 -- and perhaps he can answer this question for us -- that this one had approval-in-principle. But he waited until March 10 to tell us that this proposal had actually died on February 17 because the move of the casino was rejected. Will the minister comment on that?

Hon. M. Farnworth: Those are also questions which are part of the investigation. And, you know, at this time I. . . .

S. Hawkins: Again, we'll await the answers, I guess, when we see the volume of records that are going to result from the investigation. I'm sure there are a few filing cabinets full already.

In response to the growing concern and the scandal that was surrounding this whole issue of approvals-in-principle for casinos, the minister was on record as saying: "I always felt we needed a new process to deal with new casinos." Can the minister comment on that? Why did he make those comments? What was concerning him at that time, on March 10, when he did reveal that the Pilarinos-Ng application had died on February 17 and that he felt that new processes to deal with new casinos were needed?

[1630]

S. Hawkins: I wonder if the minister got his enlightenment about the need to change the process as a result of the

[ Page 13851 ]

Hon. M. Farnworth: I will say this. Hindsight and 20-20 vision are very good things. If everyone were looking back and designing a process, they would be able to take all of those things into account. That happened a number of years ago. I think that is one of the questions that may well be answered by the current investigation.

S. Hawkins: It's too bad. I think the minister probably recognized a little too late that the process was going sideways. Perhaps he knew of the need for an arm's-length process before, but it had gone too far down the road to turn it around. It's funny -- the events that will make you change direction. I'm sure the events of the last few months have certainly given him cause for reflection and concern. I'm glad he's come to the realization that an arm's-length process is probably the most appropriate.

Just to finish the chronology of events, on March 16 the RCMP did engage in, I believe, an hour-and-a-half search of the Premier's Victoria office. Later in March, proponents who didn't receive approval were voicing their concern and their disapproval of the process and were looking into launching a class action lawsuit against the government. The minister tells me that as far as he knows, that hasn't gone anywhere yet. But the possibility is there. That is a concern that has been raised.

Just a couple of months ago -- on April 7, 1999 -- Mr. Gibbons briefed the NDP caucus on the Premier's involvement in the casino scandal -- in a late-night caucus meeting, I believe. During this meeting it was disclosed that the Premier gave a hunting knife to his friend Dimitrios Pilarinos. The Premier failed to disclose whether this gift of a knife was given in lieu of labour costs for the work that Mr. Pilarinos did on the Premier's home and recreational property or what kind of gift it was. But that was also disclosed with the facts of this case. On April 14 the Premier stated that even if he did receive free labour from Mr. Dimitrios Pilarinos, it would not be a conflict, because the gift was not related to his dealings as the Premier.

[1635]

It's a pretty sorry mess, if I can put it that way. It's unfortunate, but perhaps we will learn from it. Certainly the government is responding, albeit it a bit late, with ways to try and make the process of approving casino licences more at arm's length, hopefully more open, hopefully more transparent and clearer and easy to understand for people who are not only applying for the licences but for the people who are going to be affected by casinos being granted in their communities.

With respect to the North Burnaby Inn, I'm wondering if the minister can tell me if any of the MLAs on the government side were lobbied or met with the proponents of the North Burnaby Inn. Does this minister have any record or knowledge of that?

Hon. M. Farnworth: That's one of the questions that is being addressed by the investigation.

S. Hawkins: Getting back to the gaming audit and investigation office, did anyone in the government, the minister or the gaming policy secretariat tell the gaming audit and investigation office to proceed with investigating the North Burnaby Inn application at the same time as the other investigations? I understand that the applications were picked up by the gaming audit and investigation office, and then they investigated them as they could -- or the ones that were given priority by the government to say: "Well, this one looks like it's going to go ahead." What exactly happened with the North Burnaby Inn application with respect to the gaming audit and investigation office?

Hon. M. Farnworth: I'll make two points. First, the gaming audit and investigation office is under the auspices of the Attorney General. Second, the role of the gaming audit and investigation office and where it fits into the whole scheme of things and everything is also under investigation as well.

S. Hawkins: So the minister can't tell me if any direction was given from his ministry or his evaluation team to the gaming audit and investigation office to either proceed with the application or not. I see the minister nodding no.

Hon. M. Farnworth: As I said earlier, all of that is under investigation.

S. Hawkins: Can the minister tell me. . . ? I know that Burnaby city council rejected this proposal, this application for a casino licence. The casino evaluation process clearly states that the proposal must have demonstrable local government support in the form of a resolution. This proposal for the North Burnaby Inn did not have that. Can the minister tell me why the local government's decision wasn't respected?

Hon. M. Farnworth: I will make two points. In the initial go-round what was required was host local government support for a casino -- a casino as opposed to a particular application. That's the issue there. I'll also say that that whole thing is under investigation.

[1640]

Hon. M. Farnworth: In the original announcement of December 17, I said that they had to get the rezoning approval from the city of Burnaby. Clearly they had not got the rezoning approval of the city of Burnaby.

S. Hawkins: Can the minister tell me if the MLA for Burnaby North ever approached any proponents of casinos on

[ Page 13852 ]

Hon. M. Farnworth: Decisions around this issue are under investigation. I'm unable to answer those questions at this time.

S. Hawkins: I wonder if the minister can tell me if he or his staff conversed with the MLA for Burnaby North on this issue and whether he knows if that MLA was aware of the Premier's relationship with Mr. Pilarinos.

Hon. M. Farnworth: Again, the matters relating to this issue around the North Burnaby Inn are currently under investigation. I'm unable to answer that at this time.

S. Hawkins: I wonder if the minister can tell us, because this application was obviously discussed and obviously discussed by cabinet -- the December 17 press release says that the decisions were made by cabinet. . . . I wonder if the minister can confirm that the Premier did not absent himself from the meetings that took place regarding this application or from the cabinet meeting that vested the decision-making authority over casinos in this gambling minister.

Hon. M. Farnworth: That is a subject of the investigation by the conflict-of-interest commissioner.

The Chair: I'll bring to the member's attention that the questions that the member has been posing for the minister. . . . The minister has repeatedly stated that this is a subject of investigation, and that the case that she is talking about is a subject of investigation. I would encourage the member -- realizing that this is actually a subject of investigation -- to perhaps go into another area of questioning.

S. Hawkins: There are different questions on this issue. I had made the minister aware that we would be asking the questions, and where he could, he could answer, and where he couldn't, he would answer that he couldn't because it was a subject of investigation. That's fair. I appreciate the answers he gave. There are a lot of unanswered questions. Certainly we await the investigation. Hopefully, it will give us the answers that we're seeking.

[1645]

Hon. M. Farnworth: That initial evaluation took place under a different process -- the previous one -- and in terms of the communities, what was required, what would have been asked would have been in the purview of that particular community, and they would have indicated either yes or no. I don't have the exact responses from the different communities, but that's what they would have been asked.

S. Hawkins: If the minister can get me those responses that would be helpful. We'll look forward to getting that.

Moving on to the Coquihalla Casino in Merritt, which is the Trillium gaming corporation and the Lower Nicola Indian band, why did this proposal need further evaluation after the August casino announcement? Can the minister clarify that?

Hon. M. Farnworth: I'm trying to remember back to the discussion, but basically, I think it was around. . . . There was support from the band and support from the community, and we were starting to get into the lower mainland group and it was thought: "Well, we can do it at the same time." There wasn't a rush to approve it in August.

S. Hawkins: Moving on to the Star of Fortune Riverboat Casino in New Westminster, there was a report in the Vancouver Sun on March 16, where it was reported that Brad Zubyk, who is a government relations consultant, said that the Minister for the Public Service had a meeting with failed competing bidders in the area in December of 1998. I'm wondering if the minister can tell me if he was aware of that meeting -- if he's concerned about that. I understand that they were warned not to be meeting with ministers, not to, you know, lobby MLAs. This was a failed competing bidder perhaps coming later to apply for another licence. Can the minister tell me if he is concerned at all about that meeting? Was there a financial concern that was revealed at that meeting?

[1650]

S. Hawkins: I asked the minister if he was concerned at all about cabinet ministers meeting with casino proponents. Does that concern the minister? There is already a lot of concern out there about politicization of the casino approval process. Was the minister aware of this meeting at all? Does it concern him at all?

Hon. M. Farnworth: First off, I'm not even sure if the member was at that point a member of the executive council. And second, the decision had already been made. They were in negotiations. But no, as I said, I wasn't sure if he was. The fact of the matter is that even if he was, that's not a problem, as I said, in that the decision had already been made -- and that's it.

S. Hawkins: To clarify, yes, he was a minister at the time, and the report of March 16 in the Vancouver Sun does state: "[The Minister Responsible for the Public Service] intervened in the casino approval process last December to urge a failed casino applicant to keep alive his New Westminster riverboat project. . . ." That was reported by Mr. Brad Zubyk. I'm sure that is certainly something that the independent adviser will be looking at and making recommendations to the minister on -- about how closely members of cabinet and MLAs should be in touch with people looking for casino licences. I'm sure that we'll await the results of that report.

[ Page 13853 ]

Hon. M. Farnworth: Which casinos are you talking about?

S. Hawkins: I'm talking about the two Penticton casinos. I'm wondering: what were the high scores? I do have the book here for ranking and scoring, but is the minister prepared to tell us what scores these two casinos received and how high up on the ranked scale they were?

Hon. M. Farnworth: I said earlier on that in terms of the scores, when we're able to release them, we will. The documentation around them is part of the investigation, but I can tell the member that they were right at the top of the list. They scored very well.

S. Hawkins: Well, we'll move on then to the Casino of the Rockies, as we did speak about the Penticton casinos. In the Casino of the Rockies, which will be situated at St. Eugene Mission near Cranbrook, the key proponent of the casino is Chief Sophie Pierre. She has stated bluntly that she was astute enough to use her political connections to help win the approval. What does that mean? Can the minister comment on that?

Hon. M. Farnworth: To be quite blunt, I don't know. I didn't meet with her to talk about her proposal. Her proposal won because it scored the highest -- it scored very well in that area -- and because it had the support of the local government and the support of a number of first nations groups in that area. She didn't or would not have needed to lobby me for that particular proposal to win.

[1655]

Hon. M. Farnworth: I have no knowledge about any decision to pave a road or not to pave a road. It's not something that, to be quite blunt, we particularly even care about. I don't see anything wrong, for example, with paving a road to a reserve. Quite frankly, that would seem to me to be a necessity, particularly when there's a big hotel-resort complex going in there. But I was not involved, nor was anybody in my ministry, with any issues around paving a road in the Kootenays.

S. Hawkins: Does this same proposal for the Casino of the Rockies require any environmental permits that the minister is aware of, and have they met those requirements?

Hon. M. Farnworth: Before any licence is given, they would have to meet any applicable governmental -- whether that be federal, provincial or local -- regulatory and environmental requirements.

S. Hawkins: We'll move, then, to the Pacific Aurora cruise boat -- Pacific Gaming Ltd. Does the minister have any comments on the financial plight of this proposal? We know that it has suffered financial and ownership changes. Can the minister tell us whether this will affect the final approval process?

Hon. M. Farnworth: They are currently in the negotiation process, and whether or not they are successful remains to be seen. There's certainly no conclusion expected in the near future.

S. Hawkins: I have some questions on the B.C. Gaming Commission. Are they the same staff? There was an interim trust fund set up to hold money for charities until a decision was made on what to do with the funds. I'm wondering if the minister can tell me: has the failed casino interim trust fund been fully disbursed?

[1700]

S. Hawkins: Can the minister give me more details on the $9.9 million that's in there right now?

Hon. M. Farnworth: There are about 800 charities that are entitled to a share of those proceeds. They have been written to about how they can access the money.

S. Hawkins: Was there interest from these trust funds?

Hon. M. Farnworth: The interest is still involved in some court discussions as to who will get the money.

S. Hawkins: Will the minister kindly tell us how much the interest is?

Hon. M. Farnworth: The interest is around $400,000.

S. Hawkins: What are the current waiting times for direct-access funding?

Hon. M. Farnworth: By that, you're talking about what the waiting time is if you're a charity and you want to access the money? There is no waiting time. If you apply, it will be processed within about three weeks.

S. Hawkins: The Gaming Commission recently changed the rules for direct-access funding from 50 kilometres or closer to a gaming facility to anywhere in the province. How come that wasn't advertised? How was that made public? You advertise everything else. This is good news.

Hon. M. Farnworth: I can't help but take the opportunity. . . . This is a first -- to hear the hon. member saying: "Why haven't you advertised something that the government

[ Page 13854 ]

S. Hawkins: I don't have a problem with government advertising if there are criteria for it -- for public awareness, for public education, for organ donorship. That kind of stuff is totally legit. It's all the political and the feel-good stuff that the government does -- the $25 million a year which the auditor general points out that there's no accountability for. That's what I have a problem with.

This is for charities. This gets them closer to direct-access funding. I think that for people who are out there raising funds for doing good things in their communities, hey, it would be nice if they knew that the rules had been changed. It is good to know that there is a notice going out to inform them about that.

Now, if the minister wants to sit down with me and go over the advertising that the government does and what I think is public education and awareness and what I think is totally political and nonsense, we can do that.

I'm wondering what the current waiting times are for bingo licences.

Hon. M. Farnworth: If you want to access charity moneys through a bingo, a bingo hall is licensed for a two-year period. Then when that two-year period is up, the relicensing of the individual charities that have access to it takes place. You may enter into the stream at that point. Or if you don't want to wait, what you can do is access directly -- direct access -- through the casino charity option.

[1705]

Hon. M. Farnworth: Let's say you are a bingo in Kelowna right now. You'll have a set of charities that have a licence to access. Those charities have that licence for a two-year period, and then the hall is relicensed again. If your charity is still in business and is meeting the criteria, you can relicense. If you're a new charity that comes along and you want to access funds through that route, you can get licensed as well. If you don't want to wait. . . . Let's say you start up today, and you know the hall has just been relicensed. Probably the best avenue for you is to direct access through the casino charity -- through the Gaming Commission.

S. Hawkins: Can the minister confirm that there's no waiting list for that direct access?

Hon. M. Farnworth: That is correct. There is no waiting list.

S. Hawkins: Can the commission provide a breakdown of funding to each of the 11 categories of charitable gaming funding and tell me how this has changed over time?

Hon. M. Farnworth: We're currently in the process of compiling that information, and we will make it available to you when we have it.

S. Hawkins: Can the minister tell me if the terms and conditions for applicants, then, have changed over the past year?

Hon. M. Farnworth: The only change was in the 50-kilometre rule.

S. Hawkins: Does the Gaming Commission have a conflict policy restricting staff from leaving immediately to work at or own a private or non-profit casino or bingo operation? Are there any rules in place?

Hon. M. Farnworth: Yes, there are conflict guidelines in place.

S. Hawkins: Are those the same conflict guidelines that the minister committed to providing me before?

Hon. M. Farnworth: If they are not, I will commit that you can get these ones.

S. Hawkins: Can the minister provide me with statistics on the decline in revenues experienced by many bingo operators in the post-expansion gambling environment?

Hon. M. Farnworth: The charities are still getting the same amount of money from bingo, because there is a defined guarantee by the province. So in terms of the money that the charities are able to access, that had not declined.

S. Hawkins: Bingo operators.

Hon. M. Farnworth: Yeah. That's something that's probably different for each bingo operator. It depends on where you are, probably, in the province.

S. Hawkins: I understand that the Gaming Commission has allowed bingo operators to continue operating without going bankrupt. I'm wondering if those distribution variances are going to be permanent.

[1710]

S. Hawkins: Does the commission have criteria, then, to determine who is allowed to operate with variances? If it does, can it provide me with that?

Hon. M. Farnworth: In order to be considered for a variance, there must be a joint application made by both the charities that use the facility and by the operator. They must make an application within specific guidelines. Before any variance is approved, they have to be audited by an outside auditor to confirm that what is in fact being requested is legitimate. At that point, it is only for a six-month period.

S. Hawkins: Does that mean it will be reviewed every six months automatically? Or does the operator have to make an application again?

[ Page 13855 ]

S. Hawkins: I wonder if I can get the Gaming Commission's position on charitable bingo. Where would the commission like to take charitable bingo?

Hon. M. Farnworth: I think there's a number of issues around bingo that we'd like to try and address. One is to stabilize bingo so that it can continue to flourish in British Columbia. There are some things we need to do, I think, to make that happen. One -- and I said this in the announcement on Thursday -- is to work with the charities in terms of dealing some issues around the Criminal Code, in terms of what electronic bingo is. Changes in that field are coming so quickly these days that I think the law in itself needs to be updated. To do that, we have said that we want to work with the bingos, both the operators and the charities, to determine what changes should take place and what's the best way of pursuing them.

S. Hawkins: Can the minister confirm for me that the province is still operating in contravention of the Criminal Code as far as charities and bingo? Or are we in line with the Criminal Code now?

Hon. M. Farnworth: No, we are currently operating within the context of the Criminal Code. That took place when we moved the casinos from section 207(1)(b) to 207(1)(a).

I. Chong: I'd like to ask some questions of the minister in regard to the White Paper and then, in particular, to a section. I understand that the White Paper's recommendations -- draft laws -- were to focus on gambling complying with the Criminal Code and that all the gambling in this province is controlled through B.C. Lottery Corporation. But because of the lack of provincial laws and conflicts with municipal bylaws, you know, the idea of the White Paper was to address all those concerns. If legislation was adopted, then it would eliminate much of the conflict and the confusion surrounding the gambling industry. I didn't hear, when the critic was asking questions of the minister, whether there was an affirmative from the minister on whether legislation was in fact currently being drafted, which was specifically dealing with some or all or part of the recommendations. Other than the fact that the gambling policy has been announced recently to take in some of the concerns, but whether. . . . Are we still to anticipate legislation to deal with some of the recommendations in the White Paper? Can the minister advise whether that will be forthcoming?

Hon. M. Farnworth: What I said was that we will not be introducing legislation this session -- that we need to move towards legislation. I said that at the announcement. We need to do that, I think, with local government and the charities. We need to do that working together, and we've agreed with that. I think we've dealt with the issues that are affected around local bylaws and decisions around slot machines. Those were the key areas of contention, so we want to move forward on that.

The second point is that the one I just mentioned to my hon. colleague the critic. We also want to see some changes to the Criminal Code, particularly as it deals with bingo and technology-assisted bingo. We want to make sure that we pursue those things. We are working towards that goal, but it will not be this session.

[1715]

Hon. M. Farnworth: I think it's a combination of both. There's a number of recommendations in there that can be dealt with without legislation, and there are others that would require legislation. For example, any change to the Criminal Code clearly would require legislation. In terms of policy, as a policy decision, you can say that local government will choose around issues such as slot machines, and you can say that their bylaws will be respected. Those are also things that you can include in legislation at a later date.

I. Chong: Specifically, then, I'd like to move into the area that was in the White Paper. That's section 9.5, page 237, "Internet Gaming," which I think the minister is aware -- or he may not be aware. . . . But I have spoken on this issue to people in my constituency. I understand that the minister is personally opposed to Internet gaming. That's my impression. Whether or not that will be something that his cabinet and the rest of his caucus discuss in more detail, I'll leave with him.

My concern is that there is a phenomenal growth in Internet gaming. It seems that there is no cohesive work or study being done in this province in collaboration with other provincial jurisdictions to ensure that we can nip this problem in the bud before it becomes greater. I wonder if the minister can advise, rightly or wrongly: is there any work being done interprovincially to deal with this issue?

Hon. M. Farnworth: This is a very interesting and fascinating topic. I'll just take a couple of minutes. . . . I know we're trying to be brief here, but on this particular issue I want to take a couple of minutes to expand on the member's comments, because I do believe it's important.

I've spoken publicly on this issue on a number of occasions, and I have said that within the discussion of gaming in this province, that pales in comparison to the Internet and the challenge that it places in terms of Internet gaming. It is not something that this province can regulate alone, because it's impossible. This province cannot regulate Internet gaming. This is a global issue, because a lot of what takes place is that you have a company based in one place and an account that is centred offshore in another jurisdiction, so there is no direct link between the two. It's the beauty of the Internet and also the disadvantage of the Internet, in that it is total freedom, and it is virtually impossible, in that sense, to regulate.

But we are not alone. Every other province faces the same challenge; every other jurisdiction, whether it's national or provincial, faces the same challenge. There is considerable work now being done both in this country and outside this

[ Page 13856 ]

South of the border, the United States is attempting to deal with the issue. States by themselves cannot deal with the issue. The federal government is trying to deal with it, for example, through the telephone lines -- through some cases of using the transmittal of gaming information over telephone wires. But as we move to different forms of Internet access and different forms of Internet transmission, that becomes increasingly difficult. It's no longer just telephone lines, but now you're using fibre optics and cable and things of that nature. So it is a very, very complex problem.

[1720]

I. Chong: I would agree with the minister. I haven't indicated that it wasn't a huge problem, and I've not indicated that it was not complex. Like the minister, I certainly have looked into this to some extent in great detail, knowing that regulation on the Internet is a difficult task. Enforcement of cyberspace -- I mean, it's a topic all on its own. You'll have professors everywhere -- those of civil liberties -- writing papers. I'm quite aware of that, and I want the minister to know that I'm quite aware of that. I guess the reason that I raise this issue is because until now there didn't appear to be much movement either from this jurisdiction -- this province -- or from other provincial jurisdictions, a national effort or an international effort. That was the reason I asked the question of this minister: what is being done? Or is anything being done? He has answered -- and I'm grateful for that -- that there is work being done with the B.C. Lottery Corporation.

I guess I would still like to know to what extent that work has been done. Is this work being done with internal staff? Have we got an advisory panel of experts? Have we got people coming in as outside consultants who are travelling across Canada, in conjunction with the federal government, listening to public consultation on this issue specifically, as opposed to what the B.C. Lottery Corporation is doing? What is being done, and how can this be more publicly -- I wouldn't say advertised -- notified so that people are aware that this is something we are all grappling with, so that those who continue to have illegal games on the Internet know that they're being watched and that their number is going to come up soon, so that they don't continue to expand in the way that they have been? It's something that we have to do in a proactive way, and I'd like the minister to share that with us.

Hon. M. Farnworth: I agree with the member's comments, and there are initiatives that we're taking. We have been working for the last two or three years, and it's a process of identifying activities that are taking place here in British Columbia, working interprovincially with the different provincial lottery corporations and also nationally.

The work is very much, in a sense, in its infancy. It has arisen with the growth of the Internet, and the Internet really has exploded over the last four to five years, when it's really taken off. In that sense we are in step with the activity that has taken place, in that we are starting our work at the beginning, if you like. But the thing that worries me is that this industry has a potential to grow so fast, and we have to make sure that we're on top of it. That's a view that I think is shared by many other jurisdictions, particularly those who have lotteries or where lotteries are important. I would include every province in the country on that -- and every state, probably, south of the 49th parallel, most European nations and Australia and such like.

[1725]

I also think that there are things we can be doing right now to deal with this particular issue in a more public way. One of them, for example, was the shaming of CKNW to take off the ads for Internet gaming, which they were running on their radio station this past number of months. They were advertising Internet gaming -- not on their web site; they were running them on the radio. People phoned in and complained. It's a small step, but it is the right step. You can't always take big steps. Sometimes you have to take little steps as well, and those little steps can be just as important. If you don't, in the case of this, nip it in the bud through advertising standards, for example, then it becomes a much larger issue, and it's much more difficult to deal with. I'll give you an example of that around tobacco advertising. If it had been made very difficult for tobacco makers to advertise in magazines and periodicals or on radio and television as the advent of those means of communication occurred in the thirties and then in the fifties, it would have been much easier to control, for example, the tobacco media as opposed to trying to do it later on down the road.

Here we have a similar situation. We're starting to develop an industry. In an effort to control -- or at least to nip it in the bud -- its ability to target and market to people, I think we should try and pursue that whenever possible.

[ Page 13857 ]

As I mentioned, I realize it's a complex issue. But to even make a statement that Internet gambling is an expansion of gambling -- and that therefore we do not want to support this -- we must find or will find a way to decide whether or not, first of all, we're going to regulate Internet gaming. Even to make the statement that we intend to and then develop the process on how we're going to do that and have the discussions that we're going to have with other jurisdictions -- national, international, etc. . . . Those will follow. To make that statement, to begin with, seems to be lost. I haven't heard clearly from this government -- and the minister's looking confused -- that there is a movement towards regulating or stopping Internet gaming.

I was a participant in a panel discussion recently, in fact, where one of the panellists mentioned that Internet gaming is here to stay. We have to accept it. We can't do anything about it, and it's impossible to regulate. Quite honestly, I did not take that statement without challenging it. I recognize, as the minister has stated, that people who set up these Internet gaming sites will likely set them up offshore. Again, it's difficult to regulate them. But the problem is that we have people here in British Columbia that are accessing them, thinking that they are in some way, shape or form regulated and that because they can go on line, these are legitimate games.

[1730]

Hon. M. Farnworth: Let me be clear. I don't know how the member can think that I have not been clear. We are opposed to Internet gaming. I have said that we are opposed. As a government, we are opposed to Internet gaming. We do not want to see it take place. As I've said -- and I've told the Lottery Corporation -- it is a priority in terms of us working with other jurisdictions to deal with the issue. We are doing that. There is a major conference later this year, where this is the topic. It's a national conference. It's being dealt with there. I expect that this issue will eventually become a world trade issue at some point, to go to the World Trade Organization or to be dealt with by a United Nations task force. I will support such an initiative. I think that's the type of thing that we need to do.

Am I going to say that we're going to bring in a piece of legislation? There's no point in doing that if it's "feel-good" and doesn't accomplish anything. What we have to do is get a handle on the issue by working cooperatively with other jurisdictions -- our friends and neighbours, other provinces and other nations. We have to advance the issue on that basis. The government is committed to doing that; I am committed to doing that. I have given instructions to the Lottery Corporation that we are to do that. That is the direction we are moving in.

I. Chong: I am grateful to the minister for making it that clear on the record, because we have seen past occasions where government has come out with a statement on policy, and because support hasn't been received through caucus or cabinet or whatever, things quickly turn. This government, just weeks ago, was committed to expanded gambling, and now the minister has offered a new gaming policy. I have heard the minister state this commitment. It's on the record. We look forward to making sure that it occurs.

I would like to offer to the minister. . . . I have stated that the role of opposition members is not always to criticize what this government is doing. If they are working towards good public policy, then I believe it is supportable. I would also like to offer solutions. I have offered them to various ministers at times. They all shake their heads and say, "That's a good idea," but we never hear back. So we never get the opportunity to work with government members to ensure that we can develop good government policy and solutions.

I would like to offer this possibility to the minister. Perhaps the B.C. Lottery Corporation, if they have not already considered this, would consider this in their efforts to deal with the problems of Internet gaming. While it is difficult to regulate and while it has a complex nature, if this province was in any way able to stop or hinder the ease with which cash or currency or financial obligations are transferred across the border. . . . If this government were able to do that, then perhaps those who have these sites would be less likely to allow British Columbia residents to play these games. If you are a youth at home and have gained access to your parents' bank cards -- or, worse, credit cards -- or mortgage documents. . . . One would hate to see that everything was played on line and was lost and that the parents had no recourse. This is why I bring up the issue of consumer protection.

[1735]

Hon. M. Farnworth: We are, and we will explore all conceivable options around this. We are doing it in cooperation with our friends and neighbours in other provinces and other jurisdictions. If there are concrete steps we can take that are effective and will work, we will do that.

I. Chong: I would hope, then, that even though the friends and neighbours that the minister's staff are consulting

[ Page 13858 ]

What I would like to also ask is the following question. Given that he has stated that this is something that the staff have been looking at and trying to address over the last couple of years. . . . There are several B.C.-based companies that have been involved in Internet gaming -- in particular, I believe, Starnet -- of which the minister is aware. The shareholders are Mr. Ng, who is a partner of Mr. Pilarinos. . . . I'm wondering if these concerns or issues are something that staff or the B.C. Lottery Corporation have been looking at. How have they addressed those sites? How has that site been allowed to continue without the ministry having -- I won't say regulate -- the opportunity to curtail those activities?

Hon. M. Farnworth: They're not even here in British Columbia. They're not based here in B.C.; they're based in Antigua. They're licensed by the Antiguan government. You know, that's the Internet; that's what the Internet is all about. You don't even have a physical presence here in the province. So that's the challenge that provincial, state and national governments face, and those are the type of issues that we in this province and every other jurisdiction are trying to deal with.

[1740]

Internet gambling is as addictive, if not more addictive, than other forms of gambling. The difficulty, of course, is that because there are no checks and balances in place, oftentimes there are underage people who will be the next group that will be targeted. We know that the addictive problem with gambling at this point is generally 4 percent, and that's in the adult population. It's been estimated that those in the youth categories, once exposed to gambling, whether it's on-line gambling or otherwise. . . . The rate escalates to 10 percent.

Again, I think we have to be as proactive as possible in this place. I appreciate the minister and staff who are working on this, and I look forward, as I say -- whenever criteria or guidelines are developed -- to them sharing those with us so that we can help and offer some concrete solutions. All members on this side of this House, I would say, are also opposed to the expansion of Internet gaming and would certainly like to see that proper mechanisms are put in place to protect British Columbians. So with that, I thank the minister.

S. Hawkins: I just have a couple of questions that I'd like to ask, which I didn't ask before. I'm wondering if the minister can tell me how much money the government spent to fight the six court cases, which they lost, against the local governments and charities with respect to gaming.

Hon. M. Farnworth: The Lottery Corporation spent about $400,000.

S. Hawkins: Is that number inclusive of all the legal costs around the six cases from all different agencies of government that were involved, working on the gaming court cases?

Hon. M. Farnworth: Those are the costs that are directly attributed to my ministry. Other costs would be through the AG's.

S. Hawkins: That's helpful.

I also want to ask the minister about Mr. Tim Gallagher. His name comes up during the casino approval process. I understand that Mr. Gallagher did work as a senior policy analyst with the lottery advisory committee from about March to April of 1997. In 1998 he moved in as the ministerial assistant for a few months, and then he returned to the gaming policy secretariat as a senior policy analyst.

On December 20, 1998, he is quoted as telling a Burnaby newspaper that the White Paper on gaming would address the unique situation developing in Burnaby and that precedents existed to transfer casino licences. I'm wondering if the minister can tell me if he's aware that Mr. Gallagher made these statements to media and if he can tell me what that means about the unique situation developing in Burnaby -- that precedents existed to transfer casino licences and that this would be addressed in the White Paper that was under Mr. Rhodes's purview at that time.

Hon. M. Farnworth: I'm not aware of any comments made by Mr. Gallagher.

S. Hawkins: Is the minister concerned at all that Mr. Gallagher, as staff in his ministry, is making comments like that to the paper? I'm wondering if the minister can tell us what Mr. Gallagher's status is now. I understand that in February he was sent back to the Ministry of Employment and Investment as an economic policy analyst.

[1745]

S. Hawkins: I will share that media report with the minister. I understand from his comments that he's not aware of it; he might like to be made aware of it. I know that I would be concerned if staff were making those kinds of comments when the casino approval process was in process.

I want to move to the B.C. Lottery Corporation. I have a general question just before we break. We'll come back to it after the supper break. I understand that the B.C. Lottery Corporation annual report is completed and ready and has been for several months. I believe I had asked the minister about this before. I would have hoped that the report would have been tabled in the House and released before we got into the estimates process. I'm just wondering why the report hasn't been tabled. I understand that it is ready.

Hon. M. Farnworth: It will be tabled soon. I have yet to read it.

S. Hawkins: Well, I might just tell you what's in it. I may have some information that might interest you. But it would

[ Page 13859 ]

The Chair: Minister, noting the hour.

Hon. M. Farnworth: Let's put it this way: I don't think I'm going to be in a position to table it after supper. I haven't even read it.

S. Hawkins: Noting the hour, I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 5:48 p.m.

The committee met at 6:41 p.m.

[E. Walsh in the chair.]

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

S. Hawkins: We'll continue with the B.C. Lottery Corporation -- some more questions on that. Just before the break, I registered my displeasure at not having the annual report. I understand that it is complete. It is now already June 21, 1999, and the 1988 or 1999. . . . Maybe the 1988 report hasn't been tabled either -- I don't know. The '98-99 report would have been helpful to me with preparing for estimates, so I'll screen it extra carefully when the minister tables it.

I want to ask some questions around the charitable bingo operators, because I know that they're very concerned that there's a void left in the wake of the White Paper recommendations. Many of the recommendations do not require legislation to move forward with respect to charity bingo, so I'm wondering if the minister can tell me what the time line is for action on the recommendations with respect to charitable bingo operators.

Hon. M. Farnworth: There are a number of things that will happen. The majority require legislation, but the security around the availability of the electronic linked bingo and hand-held bingo is something that does not require legislation. That is something they have asked for, and that's something that they will continue to be able to access. So that is one issue.

The other issue is around some of the changes that require legislation in regard to the Criminal Code of Canada -- things are on greater certainty -- and we've said that we're willing to work with them towards that.

S. Hawkins: Will the minister keep me informed on what's going on in that respect? Thank you -- I see him nodding yes.

Does the Lottery Corporation have any contingency plans in place if revenues from gambling expansion are not as high as predicted, due to the fact that new casinos aren't going to be coming on line as fast as originally planned?

Hon. M. Farnworth: There are no contingency plans in terms of measures to raise other areas of gaming activity. The revenue that we get is the revenue we get. We guarantee the charities their share, and that guarantee is fixed. There is no impact to charities, so we don't see any need for contingency plans.

[1845]

Hon. M. Farnworth: There are 558 FTEs for this year.

S. Hawkins: How many of those are in communications?

Hon. M. Farnworth: Six.

S. Hawkins: Can the minister give me the budget for the B.C. Lottery Corporation and then the budget for the communications department?

Hon. M. Farnworth: Just to clarify, when you say communications, are you talking about advertising and marketing, as well, or just the communications?

S. Hawkins: I wonder if the minister can give me both.

Hon. M. Farnworth: The communications budget -- with staff and everything -- is not more than $400,000; the marketing budget is $18 million; and total revenues are $1.4 billion.

S. Hawkins: Was the $18 million marketing and advertising together? Yeah, I see the minister nodding. Thank you. Can the minister tell me where this $18 million is spent? Can he tell me what was spent last year -- and where -- and how the $18 million is going to be spent this year? I'd like a year-over-year comparison.

[1850]

S. Hawkins: The $1.4 billion was the revenue from last year, 1998-99? Is that correct?

Hon. M. Farnworth: That's the estimate for this year.

[ Page 13860 ]

Hon. M. Farnworth: It was $1.26 billion.

S. Hawkins: Can the minister tell me how much they paid out compared to what they got in? People buy tickets. How much of the $1.26 billion was actually prize money?

Hon. M. Farnworth: About $800 million was paid out in prizes. Take the $1.2 billion; that's gross revenues. And $800 million was paid out in prizes.

S. Hawkins: I have some people who are interested in knowing how much Mr. Neilsen makes for his ads. I wonder if the minister can give us that information.

Hon. M. Farnworth: That is the subject of an FOI request. There are third-party interests at stake or that are important there. So I can't tell you the exact nature of the contract.

S. Hawkins: How much does the Lottery Corporation spend on polling?

Hon. M. Farnworth: The Lottery Corporation spends about $800,000 a year on market research, product research.

S. Hawkins: What types of polling, then, do they do with that $800,000?

Hon. M. Farnworth: We track a whole series of things, from such things as advertising, the environment, new technology, sales retailer, marketing development, advertising testing, product research, instant-game research, post-game research, modelling around the 6/49 -- the whole range of things. "Do you like the Lucky Horseshoes game? Do you like the Lucky Clover game?" So the member gets the idea.

[1855]

Hon. M. Farnworth: Affirmative.

S. Hawkins: I would also like to know who the key contractors are for the polling and the marketing research, the amounts of the contracts, and who the other consultants are that work on contract for the Lottery Corporation, what they do and how much they're paid.

Hon. M. Farnworth: Our primary market research company is the Angus Reid Group.

Interjection.

Hon. M. Farnworth: Oh, you approve.

A Voice: No, he said he'd heard of them.

Hon. M. Farnworth: He said he approves of them.

A Voice: No, he didn't.

D. Symons: I didn't quite say that.

The Chair: Order, members.

Hon. M. Farnworth: The tone was that he approves.

Anyway, we can get you more info. Okay?

D. Symons: Just following along on the questions regarding polling, I wonder if the minister might be able to tell us whether any polling has been done with the intent of expanding their market and looking for new clientele, so to speak, so that you're trying to bring people in that maybe have not bought lottery tickets before, and you're finding ways that you might entice them into buying tickets.

Hon. M. Farnworth: Part of our commercial operation is that we market. That's what my colleague says the Leslie Nielsen ads are for.

D. Symons: What I'm trying to determine is: you aren't just providing a service to people who may want to be involved in purchasing lottery tickets. You're actually trying to entice people into buying them and therefore really going out for a larger portion of the population to entice them into gambling, when it's known that gambling can become addictive and can become a social issue and a social problem. It seems that the government is in the business of enticing people into gambling, from what the minister has said. Is that correct?

Hon. M. Farnworth: We're allowing people to make a free choice, and we let them know that the Lottery Corporation is here and the 6/49 is here. Most people in the province, I think, like that.

S. Hawkins: I think what the member's trying to say is important. I'm wondering, as well, if the Lottery Corporation has any policies to ensure that, through advertising or marketing, it's not targeting British Columbians with gambling addictions, or youth. I'm wondering if the Lottery Corporation deals in any way with the ministry responsible for gambling addiction to evaluate the acceptability of the business activities that the Lottery Corporation carries out.

Hon. M. Farnworth: We advertise and we market, as any good corporation or business does, I think. I think we are responsive in terms of our advertising. We don't go out and target people who may have a problem. We don't target youth. We have a policy of not selling -- in fact, it's against the law -- to people who are under-age. We don't say that you will win, for example.

S. Hawkins: The Lottery Corporation tries to carry out its job as professionally as it can, but it doesn't have any policies in place that say it shouldn't be targeting youth. Or are there policies in place? That's the clarification I was seeking from the minister.

Hon. M. Farnworth: Yes, there are policies in place.

S. Hawkins: Can the minister share those with me?

[ Page 13861 ]

S. Hawkins: I also noticed that the B.C. Lottery Corporation has a new highly interactive web site. I'm wondering what the public policy is behind that. How much did the web site cost to develop?

[1900]

S. Hawkins: Who helped develop the web site? Was there a consultant hired to do the web site?

Hon. M. Farnworth: I wonder what the reaction would be if I said Now Communications. Just kidding. Palmer Jarvis is the consultant firm.

Interjection.

Hon. M. Farnworth: Yes, you know them as well; I know. And there's Sierra Systems.

S. Hawkins: How much do they get paid?

Hon. M. Farnworth: We can get that information for you.

S. Hawkins: We also understand that the chair, Mr. Simonis, is retiring, and we're wondering what the status is of the search for a replacement and when a new CEO will be in place.

Hon. M. Farnworth: We should have the CEO search completed and a new CEO in place in the next short while -- certainly before the end of the year.

S. Hawkins: Who's conducting the search? And are there consultants hired for that?

Hon. M. Farnworth: There's a subcommittee of the board, and they've engaged Caldwell Partners.

S. Hawkins: Could the minister outline the cost of that, just for interest's sake? If not, he could commit to getting me that.

Hon. M. Farnworth: The process isn't finished, so that would have to be at some future date.

S. Hawkins: Okay, I'll take that as a commitment from the minister to get me that information when it's completed.

Does the Lottery Corporation have any proposals to introduce any kind of gaming -- to expand gaming onto B.C. Ferries?

Hon. M. Farnworth: No.

S. Hawkins: Thank you. Next to the Leslie Nielsen question, the most asked question I get is: where do the revenues go for the Lottery Corporation? I know that the government -- and this minister sits in cabinet. . . . We hear: "Health and education, health and education." Can the minister tell me how much of the lottery revenues go to Health and how much to Education?

Hon. M. Farnworth: Fifty percent goes to Health, and 50 percent goes to general revenue.

S. Hawkins: So if there was any going to Education, it would come out of the general revenue pot.

How many slot machines are currently operating in the province?

Hon. M. Farnworth: Around 1,800.

S. Hawkins: And how many slot machines are the revenue estimates for the Lottery Corporation based on?

Hon. M. Farnworth: It's about the 1,800 plus the New West and Penticton and Cranbrook. . . .

[1905]

Hon. M. Farnworth: There are 300 in New West, 250 in Penticton and 200 in Cranbrook.

S. Hawkins: And are the slot machines that are currently operating generating more or less revenue than originally predicted by the Lottery Corporation?

Hon. M. Farnworth: Right now they are running ahead of predictions, in part because they're new. When you bring them into a location, you tend to get a peak and then, you know, a stabilizing.

R. Thorpe: Perhaps the minister covered this, and if he did I won't pursue it; he could just acknowledge it. What is the anticipated consolidated profit of the Lottery Corporation for the fiscal year 1999-2000?

Hon. M. Farnworth: It's $424 million.

R. Thorpe: So the consolidated profit from the Lottery Corporation is $424 million. How does that flow to government?

Hon. M. Farnworth: It's a 100 percent dividend paid monthly.

R. Thorpe: A 100 percent dividend flows monthly, and that flows right into general revenue. Is that correct?

Hon. M. Farnworth: Half goes to the Health special account; half goes to general revenue.

R. Thorpe: I'm wondering. . . . The book here shows the entire $424 million flowing into general revenue. Where does the 50 percent that he makes reference to flow out of general revenue?

Hon. M. Farnworth: I would suggest that you ask the Finance minister.

[ Page 13862 ]

Hon. M. Farnworth: It's March.

R. Thorpe: When was the last annual report of the Lottery Corporation issued?

Hon. M. Farnworth: Last year.

R. Thorpe: For the fiscal year ended March 31, 1998 -- has that annual report been issued by the Lottery Corporation?

Hon. M. Farnworth: Yes, it has.

[1910]

Does the Lottery Corporation follow the accountability matrix and performance measurement guidelines of the government?

Hon. M. Farnworth: Yes, we do.

R. Thorpe: What would be the top three performance measurements for the Lottery Corporation for the year 1999-2000?

Hon. M. Farnworth: They would be customer satisfaction, retailer satisfaction and profit per capita.

R. Thorpe: What are the goals for retailer satisfaction in this performance measurement?

Hon. M. Farnworth: Our goal is to achieve 90 percent satisfaction with our retailers and to be the number-one-rated supplier of our retailers.

R. Thorpe: How do you measure that? And how often do you measure it?

Hon. M. Farnworth: We measure annually, and we go about it by surveying our retailers.

R. Thorpe: I just wonder if the minister could give us a little better explanation than: "We survey our retailers." How do you survey your retailers? Who surveys your retailers? And how much does it cost?

Hon. M. Farnworth: We have a research company that does it.

R. Thorpe: Within your annual business plan, do you have a section that covers all of the performance measurements and accountability matrix items?

Hon. M. Farnworth: That is affirmative.

R. Thorpe: Would the minister undertake to provide us a copy of that?

Hon. M. Farnworth: I might be persuaded to do that.

S. Hawkins: We might cease and desist with this line of questioning if the minister makes a firm commitment to get us the business plan. The deputy was kind enough to give us the business plan for the Ministry of Employment and Investment, and we were told that there were separate business plans for the other areas that the minister is responsible for. Seeing that we didn't get a briefing, it would be nice to have the business plan, and perhaps later we will see that annual report as well.

Hon. M. Farnworth: Yes.

S. Hawkins: We'll move on, then.

A Voice: In due time?

S. Hawkins: In due time, I'm sure we'll get it.

I want to talk about the gaming policy secretariat. I want to know how many staff work in that secretariat.

Hon. M. Farnworth: Seven.

S. Hawkins: What do they do?

[1915]

S. Hawkins: What budget do they work within?

Hon. M. Farnworth: It's $1.8 million.

S. Hawkins: What are the annual salary costs?

Hon. M. Farnworth: It's $800,000.

A Voice: Over a hundred grand each.

S. Hawkins: My colleague says: "Over a hundred grand each." What is the GPS's role in gambling expansion?

Hon. M. Farnworth: I just want to clarify that the $800,000 is for nine FTEs. We currently have only seven FTEs.

S. Hawkins: Because it's a burning question on everybody's mind on this side of the House, what is the top salary, and how many of those staff make over $100,000?

Hon. M. Farnworth: None.

S. Hawkins: Is "none" the top salary too?

Hon. M. Farnworth: The executive director's is the highest. It's an ML 8. I don't know what that is, and I would not know what level within that step it is. I'm sure there are days when "none" probably does feel like an applicable amount.

S. Hawkins: Given the events of the last few months, I'm sure none was the exact amount, compared to the hours some of those people probably put in.

[ Page 13863 ]

Hon. M. Farnworth: GPS has a strict rule that no outside influence be brought to bear on applications.

S. Hawkins: Do they have written policies on that? And if they do, can the member get a copy?

Hon. M. Farnworth: While there is no written policy, there is an RFP document that outlines all those criteria.

S. Hawkins: Does the GPS put out reports? If they do, what kind of reports and what kind of policy development are they involved in?

Hon. M. Farnworth: They've put out the bingo review, they're currently working on a horse-racing review, and they are my main policy advisers.

S. Hawkins: Just to clarify a question I asked a few moments ago. . . . The minister said that the GPS staff had a strict policy that they don't allow people to interfere with the process or make any undue influence. But are government MLAs allowed to contact the GPS to make inquiries? I'm not talking about influencing decisions or anything. Is the minister aware of any MLAs that contacted the GPS to make inquiries about the status of the casino applications? Or is there any role there that allows them to do that?

[1920]

S. Hawkins: What role will the GPS play in getting government out of the gambling expansion?

Hon. M. Farnworth: That's a very broad question, in the fact that they would be involved in any sort of policy change or any advice that I would request and any change in the future -- for example, an independent person that I have talked about earlier may in fact want to consult them or use their expertise on any manner of questions that they may want to look at.

S. Hawkins: A broad answer for a broad question, I guess.

I would like to have a briefing with the Lottery Corporation and the gaming policy secretariat at a later date. I just have a few questions on horse racing, and then my colleague for Okanagan-Penticton would like to ask questions about the Vancouver Trade and Convention Centre. So I'll probably be about ten or 15 minutes.

The ministry is supposed to have completed a review of horse racing in the province -- around the industry. I'm wondering what the status of this review is and when it is estimated that it might be released.

Hon. M. Farnworth: They're currently in the process of completing the review and hope to deliver it to me shortly.

S. Hawkins: I think the minister knows that there's a lot of concerns around the horse-racing industry, and certainly my colleagues have been contacted by many people involved in the horse-racing industry who are concerned about the future of the industry in the province. I wonder if the minister can first provide some statistical information on the decline in the number of live racing days over the past several years. What is the explanation, if the government has one, for this decline?

Hon. M. Farnworth: We don't have the exact numbers with us. We can get that for the hon. member. But it is an issue that is not just unique to Vancouver but in fact is taking place on a North America-wide trend and is related to a number of factors, not the least of which is that there is a wider variety of entertainment dollar these days. Also, there is a significant change in some of the activities at racing tracks in that there's now much more off-track betting on, you know. . . . For example, in Vancouver you can bet in Hong Kong, and that has had an impact on the live handle betting at a racetrack.

S. Hawkins: Can the minister tell me what the total amount is that government grants to the horse-racing industry?

Hon. M. Farnworth: There are no grants, but there's a tax rebate of about $3.5 million.

S. Hawkins: Can the minister tell me if this is increasing or decreasing year over year?

Hon. M. Farnworth: It's stable, but it decreases as the live handle betting goes down. It's one of the issues that I am concerned about. I mean, the member raises the issue around racing, and she's been contacted by lots of people. I have as well. It's no secret that I like the horse-racing industry. I'm a fan of the horse-racing industry, so I'm very interested in trying to ensure its long-term future.

S. Hawkins: Are the rebates. . . ? What are they contingent on? Can the minister explain? If they're not grants, they're rebates. Can he explain how one gets the tax rebate?

[1925]

Interjection.

Hon. M. Farnworth: That's a good name for a horse -- exactly. And let's say that people bet on this horse named Blushing Hector. Let's say a minister -- oh, I don't know -- over the course of a season bet $700 on a horse named Blushing Hector. I'd say that what would happen is that there would be a 7 percent tax paid on that: 3 percent would go to the provincial government, and 4 percent would go to the British Columbia Racing Commission. That assumes that the horse is running and that the horse wins. But if the horse doesn't win, nobody makes any money.

Now, if the same person took that money and wagered it on a horse in Hong Kong, let's say, or the Kentucky Derby,

[ Page 13864 ]

S. Hawkins: I was trying to decide if the minister was talking about a minister of the Crown or a minister of the cloth, but I'll leave that to everybody's imagination.

Can the minister tell me: does everybody in the horse-racing industry, then, that's involved in this receive the rebate? I guess I need that explained, because unlike the minister, I know very little about this industry.

Hon. M. Farnworth: It goes to the British Columbia Racing Commission as opposed to the individual horse owners, and it's broken down into two funds: the horse racing improvement fund and a research and facilities fund.

S. Hawkins: Who accesses these funds? Do people in the industry then apply for grants through these funds?

Hon. M. Farnworth: In terms of the research and facilities fund, the associations to improve the facilities get to access those funds. On the HRIF, which is the horse racing improvement fund. . . . Let's say that this horse that I talked about, called Blushing Hector, won a race -- right?

R. Thorpe: Everyone would be pleased, then, wouldn't they?

Hon. M. Farnworth: Then it would be able to access this fund. But if Blushing Hector doesn't win a race, then he can't access this fund.

S. Hawkins: So Blushing Hector can't improve unless he actually wins. I don't know. . . . I guess that leads to my next question: how are the grant amounts determined, then? Is that the only determination from the horse racing improvement fund -- that if the horse wins, then the owner can access that fund? And for the other fund, can the minister tell me how the grants from that fund are determined?

Hon. M. Farnworth: In both those cases, there are formulas. I would be happy to brief the member on how those formulas work.

S. Hawkins: I would appreciate having a breakdown of their criteria and how that works. How does the government, through the B.C. Racing Commission, ensure that the grants are spent as they're supposed to be spent?

Hon. M. Farnworth: They're audited by a private auditor.

S. Hawkins: I'm sure he can read my mind. Who's the auditor? How often is it done, and at what cost?

Hon. M. Farnworth: Smythe Ratcliffe, on a five-year proposal. They're done through the comptroller general, and the audits take place annually.

S. Hawkins: Have there ever been compliance audits done to ensure that the money is being spent. . . ? Well, yes, there are compliance audits on it; that's what you're doing. When you find a problem, how is that dealt with?

[1930]

S. Hawkins: What is the budget of the Racing Commission, and what percentage of this is administrative costs?

Hon. M. Farnworth: It's a $1,000 vote.

S. Hawkins: Did the minister say a $1,000 vote?

Hon. M. Farnworth: Yeah.

The Chair: Through the Chair.

S. Hawkins: I don't know what that means.

Hon. M. Farnworth: It returns all the costs of running the commission back to the minister, with the exception of $1,000.

S. Hawkins: Does the Racing Commission get complaints? How many do they get -- say, over the past year? Do they keep track of how many complaints they got? Can the minister, with his staff, just tell me what kinds of complaints they're dealing with? And has Blushing Hector ever won?

Hon. M. Farnworth: I can get the number of complaints for the hon. member. But certainly I'm sure that there are people who, if they have not raised complaints, might want to raise complaints around a horse -- say, Blushing Hector. But far be it from me to be one of those.

S. Hawkins: Can the minister give me a flavour of the kinds of complaints that the Racing Commission gets and how they're investigated? Because I never had a briefing, I'm looking for some information on the process.

A Voice: Did you get any briefing on this ministry?

S. Hawkins: I got no briefing on this one either. I just want to know how they deal with complaints, what kind of complaints and how much of their time they spend dealing with this. What, if any, remedial action has the Racing Commission taken as a result of these complaints?

Hon. M. Farnworth: There are about half a dozen complaints a year -- that's all. They're dealt with in writing, and they can range from not being able to get to the wicket in time to place a bet to: how come that damn Blushing Hector hasn't won a race yet? There are investigators who will look into it, and they're dealt with in writing.

S. Hawkins: Do the complaints have to be in writing before the commission will deal with them?

Hon. M. Farnworth: Yes.

[ Page 13865 ]

Hon. M. Farnworth: Staff are in a position to deal with most of them, as I would suspect is the case in most businesses. You have staff able to deal with complaints in a way that they don't have to get to a position where they need to be investigated thoroughly.

[1935]

Hon. M. Farnworth: Yes, we do; and yes, we will.

S. Hawkins: Does the Racing Commission have a policy position on slot machines at the racetracks?

Hon. M. Farnworth: No, they don't. In fact, the issue of slot machines at racetracks would be something for the city of Vancouver, because the lease prohibits slot machines at the racetrack.

S. Hawkins: I just have a couple of questions on the Pacific Racing Association, which is the not-for-profit that runs Hastings Park. What's the total amount of government grants, if there have been any, to the Pacific Racing Association?

Hon. M. Farnworth: They receive about $1.2 million a year from the research and facilities fund.

S. Hawkins: Does the government monitor how they spend that money? When was the last audit done on the PRA?

Hon. M. Farnworth: An internal audit has just been completed, and it was done by MacKay and Partners.

S. Hawkins: What was the purpose of that audit? What instigated that audit?

Hon. M. Farnworth: It's a regular audit done to ensure that the $1.2 million is spent the way it's supposed to be spent.

S. Hawkins: Is the Pacific Racing Association audited annually?

Hon. M. Farnworth: Yes, they are audited annually, and their fiscal year runs from January to December.

S. Hawkins: Will the results of the recent audit be made public?

Hon. M. Farnworth: Yes.

S. Hawkins: When?

Interjection.

S. Hawkins: I'll expect a copy of that audit from the ministry.

The Pacific Racing Association also received, I believe, a $6.5 million loan from the government. How much of this loan has been paid back to date? Is any part of the loan in default?

Hon. M. Farnworth: It is not in default, but we are looking at restructuring the loan.

S. Hawkins: It's not in default, but you're looking at restructuring. Is it because they have difficulty paying it back?

Hon. M. Farnworth: They requested a longer period to pay it back and to restructure it accordingly. We are looking at doing that.

S. Hawkins: Three questions: at what interest rate will they be paying it back, how much is overdue, and how much is left on the loan?

Hon. M. Farnworth: We can get the exact figures for you.

S. Hawkins: I would appreciate that.

Can the minister just refresh my memory? When exactly did they receive that $6.5 million loan?

Hon. M. Farnworth: That would have been about 1993.

D. Symons: I'm wondering if the minister might tell me whether the Pacific Racing Association vets applications that come to them for the opening of new racetracks. I'm thinking particularly of one that's been proposed for Richmond. Do they come before the minister for consideration? How are these handled when people come up with a grandiose idea of a racetrack or whatever?

[1940]

D. Symons: There are other locations around the lower mainland where I think there's been talk in the past. . .that have also been considered for moving of the racetrack from Exhibition Park. I'm wondering if the minister might be able to give me an idea of how many applications he might have seen in the last five years -- not applications, but these proposals for racetracks. Richmond is one, and I think Colony Farm was another a few years back.

Hon. M. Farnworth: I've never seen a single application, because we've never received a single application. There is just a lot of rumour and speculation. As we all know -- because I'm the MLA for Colony Farm -- I said: "Over my dead body would there be a racetrack at Colony Farm." One of my great satisfactions as MLA was seeing Colony Farm turned into a regional park. There will never be a racetrack there.

S. Hawkins: That completes what we want to do with the Gaming Commission. I look forward to having a briefing with the Gaming Commission, the gaming policy secretariat and the other groups involved -- the Lottery Corporation. Thank you very much.

We would like to ask a few questions on the Vancouver Trade and Convention Centre, if we can.

[ Page 13866 ]

S. Hawkins: Yes. Could we recess for two minutes, hon. Chair?

The Chair: If it's the will of the committee, we will recess for two minutes.

The committee recessed from 7:42 p.m. to 7:44 p.m.

[E. Walsh in the chair.]

R. Thorpe: Can the minister advise us of the current status of the proposed Vancouver convention centre?

Hon. M. Farnworth: It's a project which is currently involved in detailed negotiations with a number of parties; it's a complex project. But I can list the parties for the member. They include Greystone, the Vancouver Port Corporation, the city of Vancouver, the federal government, a number of federal government agencies and, of course, the province.

[1945]

Hon. M. Farnworth: They're ongoing.

R. Thorpe: When do we expect those to be concluded?

Hon. M. Farnworth: When we have an agreement.

R. Thorpe: What is the target date for concluding this exercise?

Hon. M. Farnworth: The whole project, including the hotel, should be completed by the end of 2003; that's the entire project. The convention centre portion will be completed by 2002.

R. Thorpe: When do you expect to commence construction of the convention centre?

Hon. M. Farnworth: We are targeting the end of July. That's assuming two things: (1) we get our environmental permits; and (2) our agreements are signed. We are 90 percent of the way there on the agreements.

R. Thorpe: What 10 percent of the agreements haven't we reached conclusion on?

Hon. M. Farnworth: The discussions are down to, I would say, the allocation of costs. If I told you which costs, that might give away part of our negotiating position. We have resolved the vast majority of issues.

R. Thorpe: What is the projected cost of this project now?

Hon. M. Farnworth: The total cost of the entire project is around $800 million. The convention centre is $300 million; that's what we are budgeting.

R. Thorpe: Will that be a fixed-price contract?

Hon. M. Farnworth: We are working to a fixed-cost price. That's one of the reasons we have hired Henry Wakabayashi, who has a reputation for bringing projects in on budget.

R. Thorpe: I wonder if the minister can just be a little clearer for me. I wasn't sure whether I heard him incorrectly or what. Are we working towards a fixed price, or will the contract be a fixed price?

Hon. M. Farnworth: This is a project that has some components to it, in the sense that we are concerned about the province's costs, which are for the convention centre. That's part of the larger project. As I said, we are working towards the final agreement. The issue is around the $300 million, which is the province's part. We're in negotiations around the allocation of costs. Once that's decided on, then we will have final agreements to sign. As I said, that's what we're working towards right now.

[1950]

Hon. M. Farnworth: It's our plan to be going to Treasury Board in the middle of July for a decision.

R. Thorpe: Is that the revised date, as opposed to the original March 31, 1999, Treasury Board date that was a go-no-go date?

Hon. M. Farnworth: That March date was always a date that was subject to a number of conditions being met. For example, the subject-tos are now starting to be either removed or ready to be removed. One of the key ones is around environmental issues, and we expect to have those resolved.

R. Thorpe: Well, based on the piece of paper that I see, with respect to that March 31 decision date, I don't see environmental concerns being one of the key attributes. Have those been introduced since March 31, 1999?

Hon. M. Farnworth: No, they have always been there. In fact, we could never get in the water to do construction until we get that permit.

R. Thorpe: But, in fact, we are in the water right now, are we not, doing some piling work around the project?

Hon. M. Farnworth: Nope.

R. Thorpe: With respect to the $300 million -- and I'm asking this of the minister -- can I conclude that the total project is $800 million and the province's concern is $300 million, so we have no liability -- no concern -- with respect to the $500 million? Can I make that conclusion?

Hon. M. Farnworth: No.

R. Thorpe: I just wonder, then, if the minister could clarify that for me, because just a second ago, we were on the

[ Page 13867 ]

Hon. M. Farnworth: There are the federal costs until an agreement is concluded with the federal government.

R. Thorpe: What is that amount of money estimated to be?

Hon. M. Farnworth: About $140 million.

R. Thorpe: So then, hon. Chair. . . . Sorry to be so detail-orientated here, but I want to get a handle on what the province's potential liability is. So is the province's potential liability -- if we don't get a nickel or a penny from the federal government. . . ? Is our total liability then capped at $440 million out of $800 million?

Hon. M. Farnworth: Somewhere in that range.

[1955]

Hon. M. Farnworth: There's detailed work underway which can attach a more precise figure to that number, but $140 million is what the member asked about, and it is around $140 million. It may come in at $137 million; it could come in at $141 million. But right now, what we can tell you is that in terms of the federal costs -- which are the issues around the upgrade to the existing convention centre and the work around the pier -- the anticipated costs are around $140 million.

R. Thorpe: At any point in the evaluation of this project, is there any figure that has been established by the people working on this or the provincial government that says: "No, we are not going. . . . The costs are too high"?

Hon. M. Farnworth: The net present value of the project to the province is around $500 million. I don't want to get into too much more around that, because I'm not prepared for us to give away our negotiating position.

R. Thorpe: In present value -- as of today -- the province's outside liabilities are capped, in the minister's estimation, at half a billion dollars. How do we anticipate financing this project?

Hon. M. Farnworth: We're looking at about a $170 million contribution from the federal government; $114 million from the province; from the authority, which is a private sector authority, $250 million -- being able to borrow that; and from industry, $90 million.

R. Thorpe: How is the authority -- the Vancouver Trade and Convention Centre Authority; I think that's what it is -- going to raise the $250 million?

Hon. M. Farnworth: It comes from the fees obtained by Pavco leasing the convention centre facility. The ability, then, for the authority to go out and raise the money is on the basis of the revenue coming in from the leasing agreement with Pavco.

R. Thorpe: Is the authority an operating unit as we speak?

Hon. M. Farnworth: Yes.

R. Thorpe: Has it established a line of credit or borrowing power? If so, what is the amount of money that it has the authority to borrow?

[2000]

R. Thorpe: The $90 million from industry -- how is that anticipated to flow to this project?

Hon. M. Farnworth: There's the incremental revenue from the 2 percent hotel tax that Tourism Vancouver currently collects; that would be part of it. The other would be around delegate fees to the convention centre and other measures which are currently still under negotiation.

R. Thorpe: I just wonder if we could break that down between. . . . What do we think we'd get on delegate fees? What do we think we'd get on the room tax? And for now, let's just call the other "other."

Hon. M. Farnworth: It's $34 million, $34 million and $17 million.

R. Thorpe: In that order?

Hon. M. Farnworth: In that order.

R. Thorpe: It doesn't add up to. . . . You're $5 million short, but what can I say? The delegate fees of $34 million -- how many other jurisdictions in North America charge delegate fees?

Hon. M. Farnworth: None. They have a variety of fees that are reflected in sales taxes and/or hotel taxes. There are different ways of doing these kinds of funding arrangements.

R. Thorpe: Does the minister, or do any of the staff present, have any concerns about the viability of being able to achieve this number in reality versus it being a justifying number on a piece of paper?

Hon. M. Farnworth: We have no problems in terms of the global number. We think that's very justifiable, and we're currently in discussions on the exact breakdown of the components.

R. Thorpe: With respect to the "other" number -- and some of us may know what it is -- I understand the confidentiality of negotiations. Can we be assured that some of

[ Page 13868 ]

Hon. M. Farnworth: We have had consultation, and we have been consulting for two years.

R. Thorpe: With respect to the confidentiality, I've been advised personally -- and I don't want to break the confidences of what staff is negotiating on -- that the consultations in some of those areas perhaps need some speedy updating for those who are going to be directly affected, as opposed to some of those others that may be involved in respect to the bigger arena.

Hon. M. Farnworth: Well, as I said, we are in negotiations and consultations. I can inform the hon. member that as recently as 5:30 tonight, my officials were in contact -- for example, in discussions with Tourism Vancouver. . . .

[2005]

With respect to the room tax, does the government have that authority right now to collect those moneys?

Hon. M. Farnworth: That would require a legislative change.

R. Thorpe: And we know we would never want to talk about future legislation in these debates. But it has been acknowledged by the minister, hon. Chair, that legislation changes would be required.

With respect to the financing of this project, is it the intention of the government to move forward only on the basis that all of the i's are dotted and the t's are crossed with respect to the revenue flows?

Hon. M. Farnworth: We have received approval in principle from Treasury Board, but we have to go back to Treasury Board, where I am sure they will ask a lot of tough and detailed questions. There will no doubt have to be answers to those questions before any final approval is given.

R. Thorpe: Would it be the minister's intention and the staff's intention to ensure that whatever goes forward, goes forward in the spirit of the business lens or, as the government's now referring to it, the regulatory impact study process?

Hon. M. Farnworth: There has been a strong business lens on this project, I think, from the very beginning. There are a number of people that we have to work with, and we're trying to work cooperatively and closely with them. The city of Vancouver -- all the users of the port have to go to Ottawa to deal with some issues around the environment and work cooperatively there. There are problems around that, but we've been getting them resolved. We're working with the user groups and the industry. The board of trade, for example, is very supportive of the project, and we are aware of the importance of this project to Vancouver and indeed the entire province. We want to ensure that it goes forward in a manner that is consistent with the goals, I think, and aspirations of the business community as well as the general public.

R. Thorpe: I don't mean to be negative, because I'm a very positive person. In the event, though, that something comes up that you didn't anticipate in your thorough studies and analysis, what kind of costs are we locked into to date? And do we know, as every month unfolds, what costs we're locked into with respect to the contractor-developer?

Hon. M. Farnworth: Yes, we do.

R. Thorpe: I just wonder if the minister could share with us, to date, how much that would be.

Hon. M. Farnworth: It would be my pleasure to share that number with the member: $46 million to the end of April.

[2010]

Hon. M. Farnworth: Probably about $4 million.

R. Thorpe: Per month?

Hon. M. Farnworth: Yeah. But once we start construction, of course, that would ramp up.

R. Thorpe: Of course. Construction will only start once you have approval, and that's only going to happen after you have all the i's dotted and the t's crossed. We'll wait to see that.

The March 1999 monthly progress report, which we received through an FOI, refers to a critical impasse on several key business issues between the Vancouver Trade and Convention Centre Authority, which is the owner, and Greystone Properties, the manager. What is the impasse?

Hon. M. Farnworth: Cost-sharing around common costs between our part of the project and the hotel, where Greystone is an equity partner.

R. Thorpe: The progress report goes on to say: "All parties are fully aware of the urgency. Closed-door meetings are being convened in an effort to negotiate through the differences." Other than what the minister has just said here on common costs, are there any other differences? What is the most urgent?

Hon. M. Farnworth: It's the environment -- in this case, the environmental mitigation -- and then also the delivery of the hotel on time and on cost.

R. Coleman: That sort of segues into my first question. What is the status on the hotel and the relationship with Marriott?

Hon. M. Farnworth: Greystone and Marriott are in negotiations with their bankers. We're not part of those negotiations.

[ Page 13869 ]

Hon. M. Farnworth: Actually, the vacancy rate has improved over the last few months. But overall, in terms of Vancouver, this is probably the most key site to construct a hotel in the city of Vancouver. There are not many hotels that have almost a captive market, being located right on a convention centre.

R. Coleman: My concern is this -- and my question didn't get answered. Is this a key component of Treasury Board approving this project to go forward -- that a 1,000-unit hotel be developed as part of the overall site? Is there any other part of the overall development of this site where there will be commercial space or whatever that's also a key component that's going to lead to Treasury Board being able to approve the convention centre?

Hon. M. Farnworth: Second question, no. First question, yes, it is a key component.

R. Coleman: So it would be fair to say that if the hotel doesn't get financed, and Greystone and whoever -- their partner in the hotel -- don't come to an agreement, then the entire project would not go forward.

[2015]

R. Coleman: The minister just stated that it's a Treasury Board decision. But my question before that was: is this a key component of this project to go ahead? The answer I got to that is yes. So which is it? I mean, Treasury Board has to approve the project. The minister is saying that the key component to the project -- before you can go to Treasury Board, I would assume -- would be that the hotel deal would be put in place. I'm just wondering which it is.

Hon. M. Farnworth: Yes, it is a key component. We expect to have that commitment in place before we go to Treasury Board. Having said that, if we did not, for example, when we went to Treasury Board, or they asked, "Why don't you? What are you doing?" they may suggest, then: "Go find another hotel partner before you come to us to make a decision." It's a key component. But the final decision, at the end of the day, is Treasury Board's.

R. Coleman: Are there any other financing components -- federal or whatever -- that are also key components to this going forward to Treasury Board? Does the federal government have to come to the table? Does the expansion of the cruise ship facility have to be approved somewhere federally before it becomes a key component to go forward?

Hon. M. Farnworth: Well, there are issues around the allocation of costs which we were discussing several moments ago, and then there's a subdivision that has to be done by the city of Vancouver. We have been working cooperatively with them and don't anticipate any problems in that regard.

R. Coleman: My understanding is that there's some water frontage. For lack of a better description, let's call it piling requirements on this site relative to the harbour itself and the understructure of the soil base underneath. I was also led to understand that there may be an envelope issue relative to the one that is actually able to be done in cooperation with the Department of Fisheries and Oceans, or whatever environmental issues there are around that. Is there a window that if you miss, you're going to lose an extended period of time before you'd actually be able to start full construction of the facility?

Hon. M. Farnworth: We're able to work around those envelopes.

R. Coleman: Do you have your environmental and fisheries approvals for the project in place?

Hon. M. Farnworth: We don't have them in hand, but we have reached an agreement-in-principle.

R. Coleman: I should caution the minister on agreements-in-principle with either one of those agencies. I recently saw a facility where, after the agreement-in-principle was agreed to, the permit was issued a year later. One might want to make sure that both agencies, federal and provincial, are certainly spending the correct time on this thing.

I have a real concern about the hotel. I believe that the. . . .

Interjection.

R. Coleman: Okay, I'll let you respond to that.

Hon. M. Farnworth: We share all those concerns.

R. Coleman: Probably, in particular, with your own Ministry of Environment approvals and permits being issued. . . .

The development business is always running into environmental and fisheries issues. Has a complete environmental assessment been done on this site? When you say that you're basically at your agreement-in-principle -- however you want to describe it -- have you completed those environmental assessments, and have they been signed off by the ministry?

[2020]

R. Coleman: Have you started any site work on this site -- loading, piling or anything on this site -- in preparation for being ready for construction?

Hon. M. Farnworth: There has been some inside work done in relation to the existing cruise ship facility. That's where existing work has been done.

[ Page 13870 ]

Hon. M. Farnworth: No.

R. Coleman: Have we done a stage 1, 2 or 3 environmental assessment of the site and issued a report to the city of Vancouver relative to the permits and applications on this site?

Hon. M. Farnworth: We're following the federal process.

R. Coleman: Maybe the minister could enlighten me as to the difference between the federal process versus the environmental process that we're dealing with in normal circumstances.

Hon. M. Farnworth: It's a more intensive process. It's the one that the port is required to go through, in part because we are on leased space from the port.

R. Coleman: Is that both on land and on water-based land? And on the on-land base, have we done soil samples looking for any contaminants or PCBs or anything like that? And do we have a remediation plan in place, if there is such a thing?

Hon. M. Farnworth: Yes.

R. Coleman: That would be required in the other process outside the federal government as well.

Relative to the fallout of a trade and convention centre, because the minister knows that I often deal with housing issues. . . . There was a report done by the trade and convention centre community impact team, relative to how this project will impact on the social housing aspects of the downtown east side, some of the park areas around the community and what have you. The report does not specifically identify two things. First, it doesn't identify to me how many displaced units we're talking about; there is no number. I wonder if the minister knows that number.

Hon. M. Farnworth: We're probably talking around 600.

R. Coleman: On what basis does the minister give that answer? Was there actually a study in addition to this study that identifies 600 potential unit losses? And then what is the dollar figure that's attached to a loss of 600 housing units as an impact of this particular project?

Hon. M. Farnworth: It's an estimate. Right now the study people are out talking to the community about the results of the report, but the estimate is based on the number of units that are being lost in the area on an annual basis, with consideration taken for the impact of the trade and convention centre. With the operating that takes place because of the proximity of a number of lower-income hotels, for example, around the new facility. . . . Because of that upgrading that takes place, those rooms are alienated from the people who are currently occupying them.

R. Coleman: That's the loss of SRO stock -- that's what we're doing. But we're not replacing SRO stock with SROs in our budget process or in the planning process for housing. The replacement of even the cheapest form of housing on the downtown east side would be somewhere around $80,000 a unit. If I take $80,000 a unit times 600, that's $48 million.

I see that in this report there is a small commitment by comparison by the trade and convention centre of. . . . I think it's $5.3 million to the city of Vancouver and to the province to help offset the impact on the housing stock. Given that the minister, with the 1,200 units we've already discussed about a week ago, has applications from every corner of the province -- a number of them in the pipeline; all the housing stock that's set aside is there -- where are we going to find the $48 million to $60 million to replace that stock if it's not in the impact of this budget?

[2025]

Hon. M. Farnworth: I think there are a number of opportunities. First, there's the ability to upgrade existing stock, which is cheaper than building new stock; that is something that we can do. As well, I think there are opportunities to add new stock.

A second point I would make is that this is a four-year project. It's not expected to be complete until the year 2003. So there are opportunities in future years either to make additions in terms of housing stock overall or to specifically target this particular area. There has been a willingness by the city of Vancouver to work with the province on a number of levels in terms of increasing the housing stock both in the city of Vancouver and specifically in the downtown east side.

We have a number of avenues that we can pursue, and we have a time line over the next four years to 2003 in which to accomplish that. It all doesn't have to happen, for example, in the next fiscal year.

R. Coleman: I think, first of all, that the minister and whoever is involved in the presentation to Treasury Board had best identify this as an additional cost to the trade and convention centre for Treasury Board, when they're making their decision as to the impacts and the costs of this particular project to the community. I think we'd better not stop at Vancouver, because the report itself -- I'll just quote a portion of it -- says: "This entails the further loss of low-income housing in single-resident-occupancy hotels, therefore forcing residents further east in Vancouver and into neighbouring municipalities along the SkyTrain route."

I'm wondering what has taken place with this impact study -- I was going to call it a victim impact study -- relative to this project with the communities of Burnaby, New Westminster, Coquitlam and Port Coquitlam, as the need for that housing stock now moves out along the SkyTrain route, according to your report. I'm just wondering what conversations and discussions have taken place. If it's only $5.3 million to the city of Vancouver, what are you providing to these other communities to identify their housing opportunities and their building of stock and revamping of stock?

[ Page 13871 ]

Hon. M. Farnworth: First off, there is no SkyTrain route to Port Coquitlam -- not even in that report. It's to Coquitlam Centre, and that is scheduled to be completed by the end of the year 2003.

This report was based on the information obtained by interviews with groups in the particular area, the downtown east side near the trade and convention centre. It is a report that we have received and are now in the process of analyzing.

We are working with communities throughout the province, not just in the lower mainland, on issues around housing. That's why we have increased the number of units over the next couple of years and have been working with the municipalities on ways of getting more housing stock into the market, to make land available, to work on a much more cooperative approach.

This report was more than just about housing but also about employment opportunities. We see that with the potential for a very positive impact on the downtown east side. I think there are a number of ways to address the concerns raised in the report, there are a number of ways to ensure that we mitigate impacts, and there are a number of approaches that we can take.

[2030]

That's why I think Treasury Board should know the real dollars as to what the cost of that additional housing is going to be in the future. There are two costs to that, as the minister knows. There is the capital cost of replacing the housing stock, and then there is the subsidy for that housing stock over the long term. We're talking about substantial dollars that should be identified as a real cost to this particular project, since it's a government project for all intents and purposes.

The project itself. . . . The minister talks about training and employment opportunities and what have you -- and the community revitalization, which is also covered in this report. I don't see, though, other than the employment opportunities, where the convention centre is making any substantive financial contribution to the upgrades that are mentioned in the report, whether it be Crab Park or the community monitoring or the implementation strategies or what have you. I'm wondering if those numbers have been put together and are included in your package to Treasury Board, or whether it's going to be something that we just have to accept.

In other communities, when there is this type of displacement, usually the developer -- which in this case is the province, along with Greystone Properties -- makes substantial contributions back to the community to offset some of these infrastructure questions and costs. I'm just wondering what has been done to identify what all those additional infrastructure costs are to the downtown east side and to Vancouver -- housing plus, plus, plus -- what has been done as far as a dollar figure and whether the minister can give me an idea of what that figure might be as far as what the impact costs are.

Hon. M. Farnworth: There are a number of things. First off, this report is not definitive in itself. It is a basis for discussion. It has come about because of discussions with the people affected, with the groups affected. It's a question of: what do you see as the impact, and what would you like? Whenever you do that, you're going to get a considerable list of things that need to be done.

Clearly some of the key focus areas are around housing, which I have talked about, as well as employment opportunities. There are employment opportunities because of the work of the project under construction itself, and in terms of spinoffs in the surrounding service area, there's potential there.

Secondly, there's potential because Marriott has indicated a willingness to do employment programs so that people living in the downtown east side can start to access some employment opportunities. Those sorts of things, when you do that, start to have an impact as well -- positive impacts, not just a negative cost impact -- because you start to save money on areas such as health care and income support. Those sorts of positive things also need to be factored into the equation.

[2035]

R. Coleman: I know that we're tight for time; I know the critic wants to move on to some other things. I'm just going to put a couple of questions on the record, and some comments.

My comment would be that to have spent $46 million -- $4 million a month -- and still not have these issues in anything but what seems to be some esoteric discussion going on, and to be about to spend $300 million on a trade and convention centre before some of them are actually dealt with and the real costs are determined, disturbs me. And it should disturb Treasury Board.

The questions, I guess, would be -- and the minister can tell me. . . . Maybe I'll put the questions on the record, and then the answers can get back to me, simply because I know they want to move on here. If Marriott isn't the hotel that ends up coming in here because of their investment structure, is there going to be something in the agreement that definitively says that they have to take a portion of the people from the community into a job training program? If so, is there any nervousness on behalf of the ministry about that being a deterrent to investment, particularly if they have a specific type of individual or front-line staff they're looking to hire,

[ Page 13872 ]

Those are the questions that I would have concerns about. I also have concerns that we're dealing with these questions around a project that's been some time in discussion. The minister commented earlier about there being no SkyTrain in Coquitlam, but there are some plans for going ahead relative to SkyTrain. The truth of the matter is that if this is hitting 2003 -- and that's 2003 -- this displacement is going to go out along that line, and those communities are going to be affected. They should be made aware of it. Their councils should be in the discussion, and the communities should be in the discussion of how we're going to deal with that housing stock.

Hon. M. Farnworth: As I said, there is no SkyTrain to Port Coquitlam. It's not even on the drawing board. It shows how much the member knows about Port Coquitlam and Coquitlam -- there is a difference.

Anyway, the member's questions. . .

R. Coleman: I know the difference.

Hon. M. Farnworth: Then he wouldn't ask that question, if he knows the difference.

Anyway, the questions are duly noted. They will need to be addressed, and they will be addressed.

R. Coleman: I put them on the record because I wanted a response -- and that it would come to me, not to somebody else.

Hon. M. Farnworth: You will get a response.

R. Thorpe: I'll try to move along here quickly. I just have a couple of questions. One of the things we've been told about this project is that it was originally going to be a public-private partnership, but then it was decided that the province could borrow cheaper. How much has been estimated by the people working on the project as going to be saved by the province financing it as opposed to the public-private partnership?

Hon. M. Farnworth: It's about $100 million -- and also the fact that we own it at the end of the day.

[2040]

Hon. M. Farnworth: This project was put out to bid for anyone to bid on. The fact of the matter is that only union firms bid on it.

R. Thorpe: So even though British Columbians are going to be paying a very significant portion of this cost, the project will not be open for all British Columbians to bid on it. They're going to have to have a certain affiliation to participate in it. That's what the minister has said.

In the interests of time, I would appreciate a written response to how we can save $100 million in costs by going from a public-private to being financed by the government. I'm sort of intrigued by the fact that we can save $100 million there, but it's more advantageous for us to have a public-private school built for $3 million in the Abbotsford-Chilliwack area. So I don't understand the economics, and I'd like that addressed to me in a letter.

The other thing that I would just like to make sure of is that when a decision is made to go -- if in fact that's the decision -- the price will be a fixed price -- a guaranteed maximum price -- to the province of British Columbia. So I'd appreciate receiving that.

To date, we've asked a number of times, because conceptually we're supportive of the project -- provided it has a sound business plan. But unfortunately, due to confidentiality issues, we have been unable to see or review a comprehensive business plan. So I'd ask the minister for an undertaking that when the next Treasury Board briefing takes place, we could have a briefing after that Treasury Board presentation so that we can be kept up to date with what's going on with respect to the business plan -- since we have not had access to the business plan in its most comprehensive state.

Hon. M. Farnworth: We'd be pleased to give you a full briefing.

S. Hawkins: I will move on just a wee bit. I want to talk about the economic development division of the ministry. Do they have a business plan?

Hon. M. Farnworth: Yes.

S. Hawkins: Can I get that business plan?

Hon. M. Farnworth: Affirmative.

S. Hawkins: Does that business plan include working with the economic development commissions around the province?

Hon. M. Farnworth: It most certainly does.

S. Hawkins: Can the minister just give me a thumbnail sketch of how they plan to do that, if he's got that information with him?

Hon. M. Farnworth: We do it through summits, through regional opportunities.

[ Page 13873 ]

In the interests of time, which we don't have a lot of right now, I wonder if the minister will commit to telling me what they've achieved in each summit. The reports are out, but the ministry, I know, is doing follow-ups. So when they do the follow-up reports to see what the suggestions were at the summits and then the measurables, as far as achievements from the summits. . . .

I attended the one in Kamloops, and a lot of good local people came out with lots of great ideas. I want to know how the ministry follows up with those ideas and how they measure to see if all of the investment they've made in those summits actually pays off in some kind of economic development in the regions.

[2045]

S. Hawkins: I did understand that there was at one time some financial help given to the EDCs. When was the last time that was done?

Hon. M. Farnworth: Four years ago. However, we still do help on specific projects from time to time.

S. Hawkins: I don't know how close the relationship is between the EDCs and the government. I understand it's not that close. So I wonder if the business plan is addressing that issue and if they plan to work more closely with the local people who belong to their own economic development commissions.

Hon. M. Farnworth: The relationship is quite close with the association, and then it depends on the different communities.

S. Hawkins: I will look forward to that information. I would also like a briefing with the job protection commissioner and the commission. I have the 1997 annual report, and I'm wondering if the minister has the '98 or '99 report.

Hon. M. Farnworth: The '98 report isn't out yet.

S. Hawkins: Okay, I'm waiting for '98 and '99. Is that correct?

Hon. M. Farnworth: We're in '99 now, so that won't come out. . . .

A Voice: If they go from January to December. . . .

Hon. M. Farnworth: When '98 is available, we will get that to you as soon as we can.

S. Hawkins: That's right; the fiscal year is January to December. Before I meet with the commissioner, I would like, if I could, to get the following information: a little thumbnail sketch of what the philosophy is behind the Job Protection Commission and what criteria the commissioner uses in assessing whether or not a company requires assistance. I want to know if the job protection commissioner works with government MLAs in areas where there is help needed. I would also like a review of the projects that the commissioner is working on. Maybe the minister can tell me today what funding is available to the job protection commissioner for this fiscal year.

Hon. M. Farnworth: The funding provided for the job protection commissioner this year is $700,000. You may rest assured that the answer to all of those other questions and requests for information is yes. We will do that.

S. Hawkins: I also need to know what funds the job protection commissioner accesses to help the different industries that need his help.

Hon. M. Farnworth: Only 24 percent of the money that is part of a restructuring or package, or what have you, comes from the public. The rest comes from restructurings or from banks or financial institutions. Certainly we can get you more briefings on that.

S. Hawkins: I know the member for Kamloops-North Thompson wanted to ask a question about the Highland Valley Copper mine. Unfortunately, he must be busy either in the other House. . . . I wonder if the minister can give me an update on what's happening there.

Hon. M. Farnworth: It's basically in negotiations between the union and the company, as was indicated a number of weeks ago by a press release, which we -- in terms of the participation of Hydro and the government, for example -- had agreed to. Now it is just up to the union and the company to iron out whatever issues there are between the two of them.

S. Hawkins: Does the minister foresee any action in the near future? Of course the minister knows that there was quite an impact on the community. I think there were 1,400 jobs lost. If he can give me a time line and, if he's got some reason for optimism, he could share that with us, that would be great.

[2050]

S. Hawkins: I have a follow-up question, as well, on B.C. Hydro that I didn't ask. I found it at the bottom of my notes. I forgot to ask what Hydro's debt was. If we could get that information -- and if they have a debt reduction plan, I'd like to see that as well.

Hon. M. Farnworth: Yes, they do; and yes, we will.

S. Hawkins: Well, thank you. Unless there are any more questions from this side of the House, I think that completes my questions.

I thank the minister and his staff for their help. I'm sure that next year the briefings will come a lot earlier. The reports will be out on time, so I can review them before the estimates.

[ Page 13874 ]

S. Hawkins: Yeah, I might be. . . . I could brief him on the lottery commission's report right now. I look forward to receiving all the information that the minister committed to. So thank you.

Hon. M. Farnworth: I'd like to thank the critic and the regular attendees who accompanied her for their cooperation. I think that, by and large, they were fine. The regular attendees, I thought, were great. It's the drive-by crowd and the interlopers you've got to worry about -- the people who don't stay for the whole debate. I'd just like to say that I think that we've canvassed a wide variety of issues. There's information that we said we'd get for you, and we will do that.

Vote 23 approved.

Vote 24: British Columbia Utilities Commission, $1,000 -- approved.

Hon. M. Farnworth: With that, I move the committee rise, report resolutions and ask leave to sit again.

Motion approved.

The committee rose at 8:52 p.m.

[ Return to: Legislative Assembly Home Page ]

Copyright © 1999: Queen's Printer, Victoria, British Columbia, Canada