Hansard -- Wednesday, April 2, 2003 p.m. -- Vol. 13, No. 12 (HTML)



CONTENTS

	Routine Proceedings
		Page

Introductions by Members		5909

Statements (Standing Order 25b)		5909
	Wine industry on Vancouver Island B. Kerr Forest industry in B.C. E. Brenzinger Offshore oil and gas industry B. Belsey

Oral Questions		5910
	Privatization of B.C. Rail J. MacPhail Hon. G. Campbell School-based education funding W. McMahon Hon. G. Hogg Addiction treatment and mental health services J. Bray Hon. G. Cheema Director of public prosecutions model in justice system T. Bhullar Hon. G. Plant Air Canada service in B.C. J. MacPhail Hon. G. Campbell

Petitions		5913
	J. MacPhail

Committee of the Whole House		5913
	Hospital District Amendment Act, 2003 (Bill 25) R. Hawes Hon. C. Hansen

Report and Third Reading of Bills		5915
	Hospital District Amendment Act, 2003 (Bill 25)

Second Reading of Bills		5915
	Provincial Revenue Statutes Amendment Act, 2003 (Bill 30) Hon. B. Barisoff

Comittee of Supply		5916
	Estimates: Ministry of Energy and Mines (continued) Hon. R. Neufeld D. MacKay P. Bell B. Bennett W. McMahon R. Harris J. MacPhail B. Belsey P. Nettleton Estimates: Ministry of Water, Land and Air Protection (continued) J. MacPhail Hon. J. Murray G. Trumper R. Lee

R. Harris: It's my pleasure today to be able to introduce to the House the members of the board of directors of the Northwest Corridor Development Corporation. In the gallery today we have Mr. Jeff Burghardt, Mr. Tom Baldwin, Mr. Graham Dallas, Ms. Diane Hewlett, Mr. Mike Mihaly, Mr. Mike Osborn, Mr. Bud Powell, Mr. Ken Veldman, Mr. Graham Kedgley, Ms. Susan Clark, Mr. Mike Proctor and Ms. Chris Morey.

The Northwest Corridor Development Corporation is truly a public-private partnership that brings together businesses, business people, municipal leaders and provincial leaders from both Alberta and British Columbia — with membership in Alaska — who are absolutely tremendous advocates of the entire Highway 16 corridor and a lot more than that. They are advocates for development in the north across both provinces, and they're here today in Victoria to meet with ministers and to just basically introduce themselves to our organization and do what they can to continue to promote this province as a great place to live and do business.

J. Nuraney: We have in the House today 28 students in grades 4 and 5 from Suncrest Elementary School in Burnaby.

Make no mistake. These are young people, a very bright group of people. I had the opportunity to go to their classroom a few days ago, and the first question I was asked was: "How much money do you make?" So please do not be deceived. They are very bright. They are learning things about the governments in Canada and in British Columbia, and they are here visiting us today.

They are accompanied by their teachers, Joanne Hunchak and Andrew Hunchak; the parents, Grover Wong, Terry McCue, Debbie Meehan, Sook Sihota and Janet Litke.

S. Brice: I have pleasure today in introducing Robert Boyd. Robert is a student at Reynolds Secondary School in my riding. He's a young Liberal, very interested in politics. He's a star on our team about to come forward in the future. I have no doubt he will one day take his seat in this Legislature as an MLA. I ask the House to make him welcome.

R. Hawes: Today in the House we have Mr. Ron Lome visiting from Seattle. He's here to do what we hope all our American visitors do, and that's take advantage of our lower dollar by spending an awful lot of American money here in Victoria. Would the House please make him welcome.

V. Anderson: I would like the House to join me in welcoming a group of excited students who have ventured over here from Vancouver to see the city and to sit in the Legislature and see how we behave. I hope we will show them a good opportunity while they're here. There are 60 grade 5 students and the adults who are accompanying them from Sir Wilfrid Laurier Elementary School in Vancouver, with their teachers Ms. King and Ms. Gordon. Please, let's make them welcome.

W. McMahon: It's a pleasure today to introduce two constituents, Norma and Buzz Harmsworth — great friends from the great community of Invermere — who are here with two Rotary exchange students: Renske van Andel, an exchange student from Holland who's been sponsored by the Victoria Harbourside Rotary Club; and Pedro Arkcoverde from Brazil, who is sponsored by the Invermere Rotary Club. I ask the House to please make them welcome.

B. Kerr: Just over ten years ago, the first commercial winery was opened on Vancouver Island. The winery is located about 50 kilometres north of Victoria in the pastoral and farming community of Glenora in the beautiful Cowichan Valley. The soil in this area is ideal for grape-growing and has been compared to the best of the Alsace and Chablis areas of France.

During the next ten years, a number of other vintners recognized the potential of the valley and have moved into the region. There are now nine commercial wineries in the valley cultivating a variety of wines, with more than 250 acres, with 500 acres in various levels of planning.

These vintners, along with the vintners from Saturna, Saanich, and Saltspring, have come together to form VIVA, the Vancouver Island Vintners Association. This is an association of licensed wineries dedicated to producing quality wines and ciders on Vancouver Island. Recently, VIVA set up a committee to work towards creating the region as an appellation. In doing this, they hope that more people will recognize the wines of the Island and visit the vineyards as part of a culinary and wine-tasting experience.

What is really exciting is that VIVA wishes to create a wilderness wine tour. The modern tourist is looking for adventure as well as good food and wine, so the combination of wine on the Island's east coast and amazing but accessible wilderness on the west coast is sure to be a winner. This tour will take the traveller up

the west coast of Vancouver Island through Sooke to Port Renfrew, and there the traveller will turn east to a working forest to complete their tour in the wine country of the Cowichan Valley.

This trip can be done in conjunction with the many events that will be sponsored by VIVA this year, but don't wait for a festival. Every weekend of the summer the wineries will be open for tastings, lunches and picnics. So plan to stay in B.C. this year, come to Vancouver Island, and be sure to visit the many wineries that will soon be creating a name for themselves and for the region.

E. Brenzinger: I want to take a moment to talk about forestry. I know Surrey isn't in the heartlands, and it might seem odd for an urban MLA to want to talk about forestry issues. On the map we're not shown as a forest-dependent community, and in the strictest sense that is true, but we are all forest-dependent in British Columbia.

The forest sector generates more than a billion dollars in revenue. It is one of the primary sources of money that we use to pay for schools and hospitals. Forestry built the heartlands, but it has also built this province.

My riding does have a forestry presence: Interfor Mackenzie Mills and Mill and Timber Products Ltd. Both operations have shown innovation in creating products that are in demand and building markets that want those products.

The forest revitalization plan introduced by the Forests ministry is an exciting opportunity to build the industry. The province, as a whole, will benefit from opening up access to timber, to putting more wood into the hands of small entrepreneurs through woodlots, and communities can have a greater voice through community forests. We need to remember that in the lower mainland, the forest sector provides 120,000 direct and indirect jobs in metro Vancouver alone.

These reforms are designed to create opportunities. They are designed to rebuild an industry that was in decline for the past decade. These changes ensure that we practise forestry in a sustainable way. We know we have the people and the product. Now we have the tools to ensure our industry can be competitive and can thrive in the global marketplace.

B. Belsey: The government of Canada recently announced that they will start a process to review the lifting of a moratorium that currently inhibits offshore oil and gas exploration off our coast. As early as 1913 the first well was drilled in the Queen Charlotte Islands, Haida Gwaii. Between 1949 and 1971, eight wells were drilled on Graham Island, and between 1965 and 1969, Shell Canada drilled and capped eight offshore subsurface exploratory wells.

The federal moratorium was put in place in 1972 to prevent oil tankers from travelling through the Dixon Entrance, Hecate Strait, Queen Charlotte Sound en route from Alaska to Washington State.

A little-known fact is that for 90 years the oil and gas industry has been exploring around the Queen Charlotte Islands, Haida Gwaii. More significant is the fact that offshore and onshore exploration, seismic work and exploratory drilling were completed with very little, if any, impact to the environment — no blowouts, no oil spills, no damage to the flora and fauna.

The whales, the seals, the sea lions, the salmon, the herring, the crab and the birds continue to migrate in these waters. The shellfish and seaweed on the beaches, as well as the marine life in the ocean, continue to provide nourishment and income to those that harvest them.

I offer one very important question. Why do we permit oil and gas wells off the east coast, but we do not permit them on the west coast? With two new federal government panels and a new UNBC panel scheduled to travel the province to review lifting the moratorium, I would suggest that we as a province are going to need this oil and gas just to fuel the transportation of these groups working around the province and Ottawa to study oil and gas.

It is not with reckless abandonment that I and the people in my riding ask to lift this moratorium. We insist that any oil and gas exploration must take into consideration ownership, safety and the environmental concerns. We will look forward to participating in the process as soon as it comes to my riding.

J. MacPhail: To wiggle out of his promise not to privatize B.C. Rail, the Premier has said over and over that B.C. Rail is a drain on the taxpayer. In his February infomercial, he repeated that B.C. Rail was costing taxpayers a billion dollars in subsidies.

The facts prove the Premier wrong. B.C. Rail's strategic plan predicts big profits for the public railway over the next three years. Can the Premier explain why he is breaking his promise to the people of the north and privatizing a public service that is making a profit?

Hon. G. Campbell: The facts on B.C. Rail are clear. Over the last 15 years the taxpayers have subsidized B.C. Rail to the tune of $1 billion. The fact is that customers are leaving B.C. Rail. The fact is that northern communities are saying it's time for us to look at B.C. Rail not just as an economic engine but as an important transportation component of an integrated transportation system for all of North America, for British Columbia to get our products to marketplace and for products to come to British Columbians.

B.C. Rail will be an important part of our economic future, as we said. The B.C. Rail right-of-way will be maintained in public hands so that we make sure that

we have an integrated rail service that meets the needs of northern British Columbia.

J. MacPhail: I guess it's hard for British Columbians to actually believe the Premier when he just spouts off what he just said, which is entirely wrong. This past fiscal year the government booked $61 million in revenue from the corporation. We learned from a memo obtained by the opposition that things are going so well for B.C. Rail that big bonuses are being handed out. The memo of this past month tells management: "The 2002 net operating income for bonus purposes came in at an impressive $76.8 million."

Again, to the Premier: why are bonuses being paid to B.C. Rail management for exemplary financial performance at a company that the Premier wants to privatize because he says it's a money-loser? Who's telling the truth here?

Hon. G. Campbell: The facts do speak for themselves. B.C. Rail has been subsidized by the taxpayer of British Columbia to the tune of a billion dollars over the last three years. The facts also speak for themselves that customers have been leaving B.C. Rail. The facts also speak for themselves that northern communities have said it's time for a change in B.C. Rail so they can be assured of long-term, integrated rail access to their communities and to their resources. It's critical to their economic future.

That is the plan the government laid out for British Columbians. It is the plan we intend to execute in concert with people from the north, from the customers of B.C. Rail and from B.C. Rail itself.

J. MacPhail: Yes. It's interesting that the Premier goes back 15 years. It may be that he's having to articulate mistakes made by the then Social Credit government, of whom some now sit in his cabinet. But the fact of the matter is that the Premier knew all of that information…

J. MacPhail: …and the Premier still made a promise to residents in the north purely for political reasons. As soon as the election was over, he started to spin a tale about B.C. Rail that isn't true. He wants to make a case for privatization.

B.C. Rail freight and passenger service has earned a profit for taxpayers every year since 1993, but in the past few months the government has been meeting with CN and CP about B.C. Rail — corporations that have given over $50,000 to the B.C. Liberals. In fact, we learned just today that CN gave this government $36,000 last year.

Will he just admit that B.C. Rail does provide good value, at a profit, but that he never intended to keep his promise to the people of the north and that he's now just paying off his political friends?

Hon. G. Campbell: It is the member opposite's government that had…. I quote: "They were looking at whether they wanted to sell a big-ticket item." It was the member opposite who sat in cabinet and said they were thinking of selling British Columbia Railway Co. It was the member opposite whose government said it was time to sell a symbolic asset, and B.C. Rail was one of her government's potential sales. What this government has done….

Hon. G. Campbell: What this government has done is exactly what we said we'd do. We have worked with northern communities. We have listened and learned from northern communities. We have worked with B.C. Rail. We have listened to B.C. Rail. We have listened to customers. We have said: "How can we assure that B.C. Rail is an important asset in the future economic development of our province?"

That's what this government is going to do. We are going to undo the damage of the last government. We're going to build a new era of prosperity right across the north.

W. McMahon: My question is to the Minister of Children and Family Development. Earlier this week in estimates I asked the minister whether his review of school-based programs was complete. The minister responded that he might be in a position to announce the results shortly.

As parents and local school boards are concerned about whether these programs will continue, can the minister provide my constituents any assurances that school-based programs will be preserved?

Hon. G. Hogg: Yes, I can. Consistent with the commitment the Premier made, school-based programs will continue. This year these programs….

Hon. G. Hogg: This year these programs will be funded at over $43 million. That's more money than has ever been put in this basket of services, which are designed to support the socially and economically disadvantaged students of this province. We will have the most effective, the most accountable and the most measurable system of service delivery. We will have that by coordinating with many of our service partners, our community partners — with teachers, administrators, trustees, parents and community service providers — who have come together to assist us with support and to ensure that we do have the very best system of service delivery in all of Canada.

Mr. Speaker: The member for Columbia River–Revelstoke has a supplementary question.

W. McMahon: That is great news. I think everybody has been worried about it over the last while.

For the past decade the Revelstoke school district has been passed over countless times for school-based funding. In fact, they have never received one penny. It is clear that when it comes to school-based funding, there has been a great inequity across the province with some school districts receiving large amounts of funding at the expense of other districts.

Can the minister tell us whether the new school-based funding will address these inequities?

Hon. G. Hogg: We have completed the first-ever comprehensive review and restructuring of the school-based programs. We have used the best research available, both locally and internationally, to look at what type of model can best ensure that those students with the greatest needs will be receiving the allocation. We developed a socioeconomic model that provides us with the information necessary to ensure that funding goes to those students and those schools that have the greatest needs.

As a result of that, three school districts that have not received a cent in the past will be included in this model. We'll ensure that those students and those schools who have the greatest need will receive the services they need to start providing services to the most socially and economically disadvantaged students in this province, so they can perform and reach their goals as all students should have the opportunity to do.

J. Bray: My question is to the Minister of State for Mental Health. I have spoken a great deal recently in this House about substance abuse and homelessness issues in Victoria's downtown. Government has teamed up with the city of Victoria and the Vancouver Island health authority on several short-term strategies, such as funding for needle pickup and the funding for Sandy Merriman House.

My community also wants leadership from the province in dealing with addictions and mental health issues in Victoria on longer-term strategies. Can the minister tell my constituents and those who serve in the downtown what he is doing to provide permanent solutions for persons living with concurrent disorders?

Hon. G. Cheema: When we formed the government, it was clear that we had two separate systems working independently of each other: an addictions system that operated in isolation from the health system…

Hon. G. Cheema: Mr. Speaker, it seems like the member for Vancouver-Hastings is very upset and very unhappy.

…and a mental health system that operated independently of the addictions system. About 70 percent of the patients in the addictions system are also patients of the mental health system. For the first time in B.C., our government brought addictions care directly into the health care delivery system. We have also merged mental health and addictions to serve patients more effectively. Our restructuring is helping health authorities revitalize their service system to provide the best evidence-based care.

Victoria is a great example of the partnerships that are resulting from these very significant changes. Also, both the municipality and the health authority are working closely together to improve the system.

T. Bhullar: My question is to the Attorney General. Has he given any thought to basing our justice system on the director of public prosecutions model?

Hon. G. Plant: I thank the member for his question. The system that we have in British Columbia is pretty close, functionally, to an independent or director of public prosecutions model. Crown counsel make their decisions on a case-by-case basis in a way that's independent from government. We have, as the member knows, the institution of special prosecutor used to ensure that in particularly important or po-

tentially challenging cases, we appoint a special prosecutor outside the prosecution service. The prosecution service is protected by statute by the Crown Counsel Act from direct day-to-day operational intervention by the government.

We're very close to most of the features of a DPP model. I don't ever close my mind to the idea of how you could make something work better. If the member has particular ideas in that regard, I'd be happy to hear about them. I actually think that we have a service in British Columbia that serves the public interest well. It gives good value for money and ensures that we do the best we can to keep the streets of British Columbia safe.

J. MacPhail: Yesterday the Minister of Finance and the Premier said that B.C. won't be too hard-hit by Air Canada's troubles, because WestJet is filling the breach. The Premier encouraged the federal government to do nothing.

WestJet doesn't serve Kamloops or Nanaimo; nor does it serve Castlegar, Prince Rupert, Dawson Creek, Williams Lake, Terrace or Cranbrook — all communities who depend on Air Canada for service.

To the Premier: how does doing nothing help those communities who will be hard hit immediately when Air Canada cuts its services to those communities, as it is speculating today?

Hon. G. Campbell: In travelling the province, I can tell you that the current system that we have been undergoing since Air Canada became a sole provider of major air traffic in Canada has not met the needs of the people of British Columbia. It has not met the needs of the small communities of British Columbia.

What is important is that we create an environment where all communities in British Columbia have the opportunity to be properly serviced by an economic carrier like WestJet, certainly. I certainly do not want the federal government to do something that will put WestJet at disadvantage, which will put at disadvantage many, many British Columbians.

J. MacPhail: I rise to present a petition signed by over 1,500 British Columbians, which says the selective training regime contemplated by the province will compromise trades training and will undermine the effectiveness of B.C.'s workforce.

The House in Committee of the Whole (Section B) on Bill 25; J. Weisbeck in the chair.

R. Hawes: Minister, I wonder if you could just explain. This change does transfer some capacity. Does this give increased power to the regional hospital districts, or are you looking to somehow give them more power to do more than they have been able to do before?

Hon. C. Hansen: What this does, in effect, is maintain the powers that have been in practice by the regional hospital districts. What we've had up until now are provisions that allow the provincial government, in essence, to interfere, to oversee and to direct regional hospital districts. Given that these hospital districts are creatures of the regional government, all of the individuals who serve on regional hospital districts — as the member knows, because I think he previously served on a regional hospital district board…. All of those members are drawn from elected officials of either municipal or regional governments.

In essence, these are powers the province has not used certainly in recent history. We are now just regularizing that so the power clearly rests 100 percent with that hospital district board and removes the ability of the province to interfere. In doing so, we satisfy some of the conditions set out by the auditor general to ensure that this body is seen as an independent body as we move to generally accepted accounting principles and the reporting requirements under those GAAP rules in 2004-05 fiscal year.

R. Hawes: Has there been any consultation with hospital districts around the province about granting them this greater autonomy?

Hon. C. Hansen: There is a review underway right now of the broader mandates of the regional hospital districts. That's something I announced in November, actually, at the time of the last meeting of the Union of B.C. Municipalities annual general meeting. I think that was very well received by the regional hospital districts, because there are some broader unanswered questions.

That review and that consultation are currently underway. This particular legislation is not directly connected to that. This particular legislation is fairly narrow in scope and is housekeeping in nature, in my view.

There has been consultation with the UBCM. Certainly, all of the regional hospital districts in the prov-

ince were advised that we were going to be taking this particular action. It has been well received, because it does confirm their authority, and I think it clearly helps us live up to our new-era commitment that we're going to ensure that local powers are properly vested with local groups without the opportunity for provincial government interference. So, yes, there has been consultation around this particular piece of legislation, and the feedback we have got from the regional hospital districts has been positive.

Section 3 removes the requirement that the minister give approval before regional hospital districts can borrow money or assume financial obligations. Does this in any way put taxpayers at risk because that oversight now will be gone — the oversight of the ministry? Is there any further risk to taxpayers without that oversight?

Hon. G. Cheema: I have three of my constituents visiting us today in this House. Mr. Swarn Singh Buttar is accompanied by Mr. Gurbans Singh Sandhu, who is a retired principal from Punjab, and his wife, Mrs. Ranjit Kaur Sandhu. Can the House please make them very welcome.

Hon. C. Hansen: The short answer to the member's question is no, there would not be any increased tax burden put on local taxpayers. In fact, the way this has been practised up till now is that the request for the establishment of that borrowing authority has really come from local governments and has simply been rubber-stamped by the provincial government in the past year. Now we're simply removing the rubber-stamp portion of that. There is nothing in the changes we're doing today that would result in increased burden on local taxpayers.

R. Hawes: Just to clarify, then, there really has not been oversight by the ministry. The local governments, through the hospital districts, have made decisions, and the ministry has just simply…. It's almost meaningless, then — the ministry's approval of the borrowing of the regional districts?

Hon. C. Hansen: The answer is, in essence, yes. This has just been one added level of bureaucracy that really has not been necessary. It has been totally redundant. Given that all the members who serve on the local hospital district board are themselves elected officials, elected by their local communities, it really is a case of the provincial government having the powers to interfere with what should be local government decisions. Even though those powers have never been exercised in the past, that power was still there. I think the fact that we're removing it clearly puts the accountabilities where they belong, and that's clearly with local government.

I think this is good news in terms of setting the tone for relationships between the provincial government and local government, which I think is a common theme through a lot of the changes we're making vis-à-vis governance overlaps between the provincial and municipal governments.

R. Hawes: I did sit for quite a number of years on a regional hospital district, and I can tell you that it did take a long time to get approval to do things quite often, and it was seen to be overly bureaucratic. I think some of us felt that there was some oversight on the part of the government, because the government of the day seemed to imply that there was. I'm taken aback a bit that there wasn't and that this is just a rubber-stamp exercise, but I guess nothing really should surprise me.

I know these kind of changes, then, are going to be welcomed greatly by regional hospital districts. I know that at the local level, autonomy is greatly, greatly cherished. This does, it looks like to me, provide a great deal more autonomy. It allows regional governments to get on with the job far more easily, with far less interference, and to continue…. After all, what they're doing here in many cases is providing 40 percent funding for capital projects for the health authorities within their own district.

Through the rest of the bill, is there anything in here that does anything but remove a bunch of bureaucracy that really is not necessary? Are there any powers that are taken from regional hospital districts in any way by this bill? Or are all of their powers, if you will — the autonomy, I guess I would say, of regional districts — enhanced in every section of this bill?

Hon. C. Hansen: To answer the member's question, this is 100 percent giving that power back to local governments. There is nothing in this bill that is taking powers away from the regional hospital district. It is in fact giving up power that the provincial government could have exercised. We've never had reason to. We think it's unnecessary. It's just part of the red tape and bureaucracy that is there, and we're trying to streamline.

This is partly a deregulation initiative. It does help us achieve some of our deregulation targets. It's in a minimal way, but I think it's good news for local government in that it does give power to local governments, which is where it belongs.

R. Hawes: One last question to the minister, and I'm not sure whether you can answer the question, minister. Local government, when it borrows money for a term of longer than five years, is required to go to the taxpayers for assent. There are occasions when regional hospital districts will borrow funds — substantial amounts of funds.

I think of the area in which I live as an example, where the regional hospital district will be putting up a considerable amount of money towards a new hospital. Those funds could be borrowed. If they are borrowed for a period of more than five years, does the regional hospital district have to go to the taxpayers for assent with the removal of the ministry's approval requirement, or can they just proceed?

Hon. C. Hansen: I don't have a specific answer for the member, other than to say that what we're doing here today does not change the existing requirements. Those requirements are really driven, I'm assuming, under the Municipal Act but certainly fall under the authority of the municipal government legislation that would apply in that case. There's nothing we are doing in this change that would affect that one way or the other.

Hon. C. Hansen: I move that the committee rise and report the bill complete without amendment.

Bill 25, Hospital District Amendment Act, 2003, reported complete without amendment, read a third time and passed.

Hon. B. Barisoff: Bill 30, Provincial Revenue Statutes Amendment Act, 2003, proposes a number of amendments to the taxation and revenue statutes administered by the Minister of Provincial Revenue.

The measures included in this bill will help to achieve our goals of fair, efficient and equitable administration of tax and revenue statutes and collection of all outstanding amounts owed to government. Amendments to the corporation capital tax ensure that authorized foreign banks and domestic banks receive equivalent tax treatment.

Amendments to the Income Tax Act align the act with parallel provisions in the federal Income Tax Act. Similar amendments are required each year to accommodate changes in the federal legislation.

One of the recommendations of the core services review was that the Mineral Tax Review Board be replaced with a ministerial appeal process. This bill amends the Mineral Tax Act by replacing the board with a ministerial appeal process consistent with the ministerial appeal processes in other taxation legislation.

The Ministry of Provincial Revenue is charged with the responsibility for collection of all oil and gas revenues under the Petroleum and Natural Gas Act. To ensure that the ministry has adequate statutory authority to carry out its revenue collection duties, this act must be amended to authorize the Ministry of Provincial Revenue to appoint a ministry employee as a royalty collector.

The Hotel Room Tax Act, the Motor Fuel Tax Act, the Social Service Tax Act and the Tobacco Tax Act are amended to clarify that where the province has information that tax liability exists, but the taxpayer disagrees with that information, it is the taxpayer's responsibility to provide evidence to refute the existence of the tax liability.

However, in the interests of fairness, these statutes are also amended to allow taxpayers to request a waiver of the six-year assessment limitation period. This will provide the taxpayer with additional time in which to gather evidence to refute the proposed assessment. Waiver provisions are also proposed for the Corporation Capital Tax Act and the Logging Tax Act.

In addition to a number of minor housekeeping amendments introduced in this bill, the appeal provisions under the Social Service Tax Act, the Hotel Room Tax Act, the Motor Fuel Tax Act and the Tobacco Tax Act are expanded to ensure that the taxpayer has the right to appeal all decisions by the administrator under these statutes and to clarify the appeal process.

The Land Tax Deferment Act is amended to clarify situations for which existing tax deferment agreements may continue despite partial transfer of property ownership. The School Act is amended to explicitly require that municipalities apply for available grants in place of school taxes. These grants are available from the government of Canada, Crown corporations and some provincial public bodies. These amendments ensure that the province receives a school tax portion of available grants. The School Act is also amended to repeal outdated references and procedures.

Hon. B. Barisoff: I move that Bill 30 be referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Bill 30, Provincial Revenue Statutes Amendment Act, 2003, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. G. Collins: I call estimates debate for the Ministry of Energy and Mines.

Hon. R. Neufeld: We left off last evening, starting on the mines portion of the ministry. We will move through the mines portion of the ministry to the energy portion of the ministry and then move to the Crowns — B.C. Hydro, Columbia Basin Trust and the B.C. Utilities Commission.

I have with me Fred Hermann, the chief inspector of mines for the province; Ross Curtis on my right-hand side, the acting deputy minister for the Energy ministry; and Doug Callbeck, who's with the ministry. He's the assistant deputy minister to management services.

D. MacKay: A couple of questions having to do with mining that I'd like some clarification on. I asked a question in the House the other day having to do with the quality of water that is extracted during the coalbed methane process, and the concern around the quality of the water and what happens to the water when it is extracted if, in fact, it is toxic. I wonder if I could get an answer to what happens to that water.

Hon. R. Neufeld: Yes, in the production of coalbed methane you have to remove the water. First you drill the well, then you have to remove the water, and that allows the coalbed methane to be released from the coal-bearing seams.

The process works like this. The company will — of course, after they get all their permits; they have to do all those kinds of things — drill a well to the coal seam they want to go into — usually about 3,000 feet deep, or something like that, into the earth. They will then set a surface casing, and they will cement the surface casing on the outside so there's no way for anything to get up outside of the casing. They will then perforate, which means that under high pressure they will send sand and that kind of thing down in the well to perforate the coal. Then they will put a tubing inside of the casing, and they will pump the water off. Once the water is pumped off, then the gas will come up.

Some of that water — the member is correct — is toxic. Some of it is potable, and some of it, with a bit of treatment, can be potable. So there's a process that we have to go through. The Ministry of Water, Land and Air Protection is responsible for it, where water is tested.

If it's tested, they then make application if they can actually…. They may be able to spread it on land for farmers, for irrigation. They may be able to put it into streams. Again, that has to be a permitted thing.

If it is toxic, what has to happen is that it has to go to a disposal well. A disposal well will be one that's approved by the ministry, which is deep in the earth. Usually it's a gas well that's gone dry or an oil well that's gone dry, and it's into caverns. The water will be forced down there under pressure, all regulated by the Oil and Gas Commission.

D. MacKay: It sounds like there has to be a reservoir in place before the drilling actually starts to release the methane gas. So there's a place to put the water as it's being extracted, prior to the gas coming up?

Hon. R. Neufeld: Yes. Once they drill the well, that's how they test to see how much gas is there. They'll start pumping the water off. Depending on the water and how much is there and how long they have to pump…. Those aren't known ahead of time until you start doing the process. Really, it's when you lift the water off of it that it allows the natural gas to come up. But once you start pumping the water off, the water immediately has to be tested to find out exactly what you can do with the water.

D. MacKay: Given the fact that Bulkley Valley–Stikine has some huge coal deposits, and given the recent legislation that was introduced in the House and passed the other day declaring the owner of the resource, I wonder: has that generated any interest in the mining sector or the petroleum sector to go out and start looking for this product in these coal fields?

Hon. R. Neufeld: Yes, it has. The ministry, through its titles branch, has sold tracts of coal land around the province — in the southeast of the province, in the Kootenays. In fact, there's a project that's been drilled there already, and they are pumping water to test it. In the northeast there has been land sold. In the Princeton area there has been land sold. On Vancouver Island there's been land sold.

Basically, that's it. But there is a lot of interest in starting to develop coalbed methane. So it'll come more and more as we move forward.

D. MacKay: Given some of the native unrest that we're facing in the province in the forest industry and, I suspect, in the mining industry, I wonder if the minister could tell me if we're taking any steps to ensure that the development or the exploration for minerals can

take place without this unrest that we seem to be encountering in the forest industry and — to a small degree, that I'm aware of — in the mining industry.

I just wonder if the minister could explain to me what steps the ministry has taken to resolve or minimize the impact of native unrest as people are looking for minerals and gas.

Hon. R. Neufeld: Yes, there's a process that the Oil and Gas Commission takes upon itself when some company applies to drill on Crown land. If it's on private land, there's a negotiation between the oil company and the private landholder. If it's on Crown land, there's obviously a negotiation that has to take place with first nations.

The proponent, after going through all the processes to get permits to drill a well, will have to pay — and someone may correct me here — $7,800 per well. Half of that goes to first nations on the traditional territory of whoever it happens to be for capacity purposes so that the first nations can actually hire the proper people, or the people they think they need, to be able to negotiate with the oil companies and to mitigate some of the concerns they may have on their traditional territory.

It's a process we've used in the northeast now for a number of years. I wouldn't say it's absolutely perfect, but it does work relatively well. There is a negotiation that goes on between the Oil and Gas Commission and the first nation that would be affected, and there's also a requirement that there's a negotiation between the proponent and the first nation to come to some agreements around how this work is going to take place, exactly the same as it would be if it was private land.

D. MacKay: I apologize to the minister. I missed part of the answer. Did I understand the minister to say that 50 percent of the cost for the permit goes to the natives?

Hon. R. Neufeld: Half of the $7,800, and we're going to check that I have the number correct — yes — that goes to…. If there's some activity happening in a traditional territory of a first nation and there's going to be a well drilled, the proponent has to pay the $7,800 upfront. Half of that is to manage the Oil and Gas Commission. The other half is to negotiate with first nations and to deal with their issues on their traditional territory.

D. MacKay: I'm sorry. I'm having a problem understanding that, Mr. Chair. Again, to the minister. The other half — is that used for the treaty negotiation process, or is it given directly to the native band? I apologize.

Hon. R. Neufeld: No, the $7,800 has nothing to do with the treaty negotiations. That's totally outside of what we're talking about. This is for the first nations to be able to get the capacity — the knowledgable people needed who know what happens with coalbed methane, with natural gas drilling, with oil well drilling if it happened to be oil wells or other issues that they think they should find out about before they allow any activity to take place on their land. This is totally, completely separate from the treaty negotiations office. This is a fee that's been negotiated with the industry, which is paid upfront to be able to accommodate first nations so that they can actually work on these processes.

The member maybe should understand that this originated in the northeast. We drill just under 1,000 wells a year — I don't know how many kilometres of seismic line — and I'm not exactly sure how many kilometres of pipeline, but it is significant. To be able to get the process done so we can actually consult, because we have to consult by law with first nations, they have to have some money to be able to finance that. They can't finance it unless it is paid that way. Now it's paid by the proponent into the system, so they can actually hire the correct people, so they can do the negotiations and know what's happening.

On a first nations traditional territory just north of Fort St. John, there might be 300 of those wells drilled. Understandably, it takes a few people to be able to do that work. That's what that money is meant to do.

D. MacKay: Thank you for the patience in responding to that question, which has bothered me for some time. I wonder — just to go back to the mining again, because of the proximity of mineralization in the northwest part of the province — if we could talk for a moment about the Kemess mine and the Kemess North mine properties.

I understand there is some exploration going on further north of Kemess mine. There has been some talk, and I believe the Ministry of Energy and Mines is the lead agency on the Kemess mine road to hook up to Highway 37. I wonder if the minister could bring me up to speed on where we are with that proposed highway connection.

Hon. R. Neufeld: Yes, the Ministry of Energy and Mines is the lead on the Stewart-Omineca road. It's a road that, if built, would open up an awful lot more country. It would be very beneficial to Kemess, to the logging industry, and would actually open up some other areas in the member's constituency — which would be good news for his constituency, I'm sure.

There have been some initial meetings. I think the member was at the one I was at quite a while ago. The group proposing the road were asked to come back with some more costs and a little bit firmer figures than what they originally had. They have come back to the ministry with those costs just recently. We're still trying to evaluate that. Within the ministry we're working to actually bring this to fruition.

We hope…. In fact, we don't hope. We have people going to the northwest to talk to the first nations, to work with them and also to do further work with the proponents on this road. There is work being done on the road. I can get some further information for the

member and give it to him in written form if he wishes. That's basically what we know today sitting here.

The Kemess North mine. Yes, there is another deposit north of Kemess, the original site, that will add a fair amount of life to the mine. I'm not exactly sure how many years, but it's significant and will actually keep a lot more people employed up there, which would be good news for the northwest. In fact, I'm told it would extend the life of the mine by 15 years, so that's another 15 years that Kemess could be operating. By then maybe they'll have found another deposit that's just as good, and it can continue to produce for quite a while into the future.

D. MacKay: Thank you for that response. I would like to ask a couple more questions, and then I will give up the floor to other members who may have questions. Going through the service plan, I noticed the notation there to introduce flow-through shares. I just wonder if the minister could tell me if that flow-through share project has been realizing the revenue that we had anticipated. Is it raising funds for the mining industry?

Hon. R. Neufeld: Yes, there has been significant uptake on the flow-through shares. We anticipate that in this upcoming year there will be also. The Ministry of Finance actually would have the numbers of how much has been taken up, and we can get that for the member so he has that information.

Last year, actually, exploration doubled in British Columbia, up from about $20 million to $40 million last fiscal year. The Mining Association of B.C. has said that all indications for this year are for it to double again. That will be up to $80 million. They also tell me on a regular basis that to sustain the mining industry moving forward, we need about $150 million spent yearly on exploration to sustain new mines coming on stream.

So we're getting there, maybe not as fast as we'd like to, but that's not bad to double it last year and to look forward to doubling it this year. I also think, to be truthful about it, the price of minerals has actually increased a bit, especially gold. That's probably helped. In fact, not probably — it will have helped spur some of the expenditures on exploration.

We're now at 9 percent, I believe, of the Canadian total of exploration dollars spent — up from 4 percent a year ago. So this last fiscal year we moved from 4 percent to 9 percent. That's substantial. We want to get to a minimum of 15 percent of the exploration dollars spent in Canada, spent in British Columbia.

P. Wong: Joining us in the House today, we have 61 grades 5 and 6 students with their teacher Ms. Baker, along with Ms. Grossey, Ms. Irving, Ms. Janes, Ms. Atwall, Ms. Lauder and Mr. Yow, who have come over from Sir Alexander Mackenzie Elementary School in Vancouver. Would you please join me in making them all very welcome.

D. MacKay: Looking at the service plans for the Ministry of Energy and Mines, on page 17 we talk about increasing mine and exploration and development activity and some targets that we were reaching for. I notice in the performance target for 2003-04 that we're hoping to achieve $100 million worth of capital investment. I know it's early in the year, but are we moving toward that target? Again, is that something I should perhaps be asking from the Finance ministry, or is that something you're able to respond to?

Hon. R. Neufeld: Actually, we're working towards this year's target, which just started yesterday — '03-04. Last year the $100 million that the member said…. We will get the exact number for you, but it's close to the $100 million if you look at some of the projects that moved forward last year in the mineral industry. We were close to meeting our target, even though we were in hugely depressed markets, and that didn't help us a bit until later on in the year when the price of gold went up.

D. MacKay: Again, using that as a positive indicator, looking at the service plan and the performance target to generate increased revenues of $27.2 million, based on the last response I got, I assume that the revenues are increasing as well?

D. MacKay: For my own clarification, I wonder if the minister, looking at the supplement to the estimates, could explain to me the $2.5 million we spend on resource-revenue-sharing agreements. Where does that money go, and how is it distributed?

Hon. R. Neufeld: There's a resource-revenue-sharing agreement of $2.5 million that was negotiated many years ago with the Fort Nelson Indian band — in fact, in the early seventies — for pools of gas that were drilled into under their actual reserve. Also, I believe there's an agreement with the Blueberry first nation for the same reasons.

D. MacKay: Is that an ongoing cost to government only while the oil is under there, or is it ongoing even after the reserve has been depleted?

Hon. R. Neufeld: It's revenue sharing. As long as they're producing, that will be an ongoing expense. If they quit producing and the wells are dry, then it won't be.

D. MacKay: My final question to the minister, again under vote 21, has to do with dealing with the Vancouver Island natural gas pipeline agreement. I notice a cost of $20.850 million. Again, is that an annualized cost to government?

Hon. R. Neufeld: It's annual, and it's not always the same number. There is a complex, long agreement that was negotiated by the last government, which puts in place those numbers. I think, in fact, it's a lot less than the $20 million this year because of the price of the product and all those kinds of things. If the member wishes to review that whole contract, I can make it available to him.

D. MacKay: That concludes my questions as they relate to mining, but I do have some on B.C. Hydro.

P. Bell: I'd just like to start out on the revenue side for the Ministry of Energy and Mines. I see an increase in the '03-04 fiscal year from $1.44 billion to $1.77 billion. I'm wondering if the minister has a breakout of how much of that comes through minerals versus energy.

Hon. R. Neufeld: The staff is looking for that number right now. If you want, go on to the next question. In the book they're inclusive, so we'll break that out for you. Minerals are probably — I'm going to make a guess here — about $50 million of that $1.7 billion.

P. Bell: Great. Actually, what I'd like to know is if there is an expected increase from '02-03 to '03-04.

The next question is a pretty generic question, I think. I'll just ask the minister to take a few moments to compare the regulatory and taxation regimes in the province as they stand today with some of the other jurisdictions in Canada that we compete with. Principally, I'd be interested in hearing his thoughts on how we compare, perhaps, to Ontario and Quebec, but he should feel free to expand to any of the provinces. I'm just curious — again, more specifically as it relates to mines as opposed to energy and specifically our regulatory regimes and taxation regimes.

Hon. R. Neufeld: Our taxation regimes are very good in the province of British Columbia. The member will remember that when we came into office, this government committed to reducing the corporate tax to the level of our neighbours — from 16½ percent to 13½ percent. We've removed the tax on machinery and equipment for the mining industry and the oil and gas industry. In fact, in parts of the forestry industry we're increased for exemption. We also committed, prior to the election and early on in our mandate, to remove the corporate capital tax. That's been done. In fact, it's in total effect now, as we speak, this last fiscal year.

Our taxation regimes, as far as I know — in relationship to Quebec, Ontario, Alberta, Saskatchewan and B.C. — are about the same. The difference, probably, between…. In fact, one of the differences between us and Quebec…. I'll make this an example. I'm not so sure about Ontario anymore. Quebec highly subsidizes who they think they can pick as winners and losers. In this province we said that…. What we're going to do is keep our costs as low as we possibly can and quit having government pick winners and losers in the process. Actually, if it's economically viable, they should be able to go out there and make a dollar.

I do know Quebec highly subsidizes a lot of its industry — I'll use one example, production of aluminum, although it's not in my portfolio — and just recently gave a really low hydro rate guaranteed for quite a few years into the future and gave some interest-free loans and some grants in the hundreds of millions of dollars to an aluminum corporation. It's hard for us to compete against that. In fact, we don't. We said we wouldn't do it anymore.

Our regulations and our legislation are about the same. There will obviously be differences, because we're a different geography from Ontario or Quebec or Alberta. In fact, it's compared in one report that I saw lately that Alberta has a very favourable regulation and legislation process in place for mining, but when you look at how much mineralization there is in the province of Alberta, it's almost that much in comparison to the mineralization in the province of British Columbia — again, hugely different geographies across Canada. If you look at that in its fullest form, you'll find that we have a fairly good regime.

You should also know that through the ministry, we've reviewed for a couple of years now our regulations and have been removing what we call the needless regulation and the red tape. I am actually speaking to one of the members of the Legislature, who is going to take it upon himself to work with a number of you — and I hope this member will be one — to take our mines regulations and legislation and actually take it as a project and say, "Look, this is what we need, and this what we don't need," so that we get some input from people who are on the ground, like yourself in your constituency, and people who are familiar with the mining industry. The member from the Kootenays would probably be interested in that. I think that's a positive thing to look forward to — that we can actually get a little bit more red tape removed.

The targets in the service plan are being met. In fact, we're ahead of our targets this year. I think we've reduced across the whole ministry 15 percent of our regulations. We're actually ahead of what our target is, and we want to continue to be ahead of what our target is so that we can encourage the industry to come to British Columbia and invest their money.

I have the breakout of the dollars for the member for '02-03. The total oil and gas…. Rather than the bonus bids and all that, I can send the member a copy of this. It's $1.357 billion. The minerals are $65 million. I

was out $15 million. Then there's also the Columbia downstream benefits that are figured into that. That gives you a breakdown.

P. Bell: As the minister will know, the Fraser Institute does a report annually which ranks various jurisdictions both from a mineralization perspective and from a regulatory perspective. I thank the minister for pointing out all the significant, very significant, changes that have been made in our regulations.

I'm sure he was as disappointed as I was with the lack of movement in our rankings last year in the Fraser Institute report. I note that in the report it stated very clearly that despite all the significant changes that were made, it didn't appear as if industry, for whatever reason, was aware of those changes. I think the people who actually did the report noted it was unexpected by them to see little movement on our part.

I'm just wondering if the minister would take a few moments to expand on his thoughts in terms of what it's going to take to get the mining industry to recognize the significant changes he has made in terms of the regulatory regimes and how we are a much more friendly environment to the mining industry than governments of the last decade or so.

Hon. R. Neufeld: I agree with the member. I was a bit disappointed with the Fraser Institute report. That's the report I was alluding to earlier, where we were at the bottom of the page when it came to being overregulated, and Alberta was at the top of the page. When you turned the next page and looked at the mineralization, well, Alberta was at the bottom of the page and we were up at the top. Obviously, if you don't have a lot of minerals to go after, you're not going to have many regulations in place.

Alberta — to be fair to Alberta — leads us in a whole bunch of areas when it comes to industry and investment. Obviously, their investment is a lot more in the oil and gas industry than it is in the mineral industry, although they mine an awful lot of coal because almost all of their electricity is generated by coal.

To get the mindset changed is — I agree with the member — a difficult process. This last fall or summer I decided in the ministry that we should get our external relations branch working on how we can actually get out to at least the people in B.C. that we have made some significant changes. We've put together a group of people that have been going to different communities — I don't know if we've been to all of them yet; it was eight or nine communities — to explain the benefits of mining and the benefits to the community and the region where that mining takes place, to explain the benefits of coalbed methane, to explain the benefits of oil and gas activity — all that kind of activity on the land base that can actually work very well with all the other industries in the province like tourism or forestry or any of those.

We're trying to do that to get it out to the people who actually do the exploration, because a lot of those people aren't aware of some of the changes we've made. It's going to be, I believe, a difficult uphill battle, especially with the prices staying low for mainly copper, for instance. Copper is still not up there enough that we can open some of the mines that are closed now. Hopefully, those prices go up.

We also have had a presence at the Cordilleran Roundup both years that I've been minister and at PDAC. I didn't get to PDAC this year, but we had people from the ministry there. We have a booth. We try to make contact with as many people as we possibly can at both the Cordilleran Roundup and PDAC in Toronto to let them know what's happening. Actually, it's starting to pay off a bit. Slowly, people are starting to respond to the fact that there has been a significant change in the province, that the government of the province enjoys investment. They actually think if they're going to invest, they should make a profit to pay their shareholders and are starting to move back to the province.

Again, for instance — I'll use copper again — what I've said before is to get people to go out and find new copper mines now…. To develop a whole copper mine is hugely expensive, so the price has to get up a little bit, especially since the industry can't open the ones they've already closed because of low prices. We will continue to go out there and meet with the industry, with both the large industry and the smaller mining industry — the small miners — and also with the exploration industry as much as we possibly can to encourage them to develop in the province of British Columbia. They're quite welcome here.

I think it's probably going to take us a number of years yet before people are actually comfortable. They want to look and see, before they invest a billion dollars in developing a mine. Is it real? Is it going to stay this way? Is the government going to be able to continue on into the future? I know the member and I surely think that will continue. We're hopeful that over time, that brings more investment to the province.

I also am, I believe, making a trip to London in the fall to talk to the investment community. Not all investment comes out of Vancouver or Bay Street. There's a tremendous amount of investment that comes out of London. In fact, when I was in the Kootenays this last week, I met with two individuals over there — small mining companies — who said they get all their financing out of London. It would be very good if I went to London and started telling the financiers that things are changing in British Columbia and that we are moving forward and trying to encourage mineral development in the province.

P. Bell: Thank you very much. That certainly gives me reason to feel way more optimistic in terms of our future. It's extremely important for my riding. As much as the member for Bulkley Valley–Stikine would like to think that the Kemess mine is in his riding, it actually is in my riding, and we'd like to see several more just like it.

P. Bell: With that…. He's trying to funnel it away, but I'm okay. As long as that road opens up more territory, I'm fine with it going ahead.

Just to finish off with a final question, Mr. Chair. The Muskwa-Kechika area has significant distribution and concentrations of minerals, as I understand it, and I know that the minister has recently worked closely with the Minister of Sustainable Resource Management to open up a large area. If memory serves me correctly, it's on the order of 55,000 hectares. I wonder if the minister would just expand a bit on the definition of that area, what he hopes to accomplish by having opened that area up and how quickly we might see some forms of exploration taking place in the Muskwa-Kechika.

Hon. R. Neufeld: Yes, the 55,000 hectares were spread across the province of British Columbia, not just in the Muskwa-Kechika, although some of it was there. I think some of it may have even been in the member's riding. They were areas that had been held by OICs for quite a number of years from land planning processes that had taken place and that were kind of in limbo. With the Minister of Sustainable Resource Management and my ministry, we were able to open that up, actually, to mining, to natural resource extraction.

The Muskwa-Kechika actually is a bit different than some of the other protected areas. In most of it — not all of it, but in a good part of it — industrial activity is allowed. I put a caveat on that: in some areas there are pretty stringent rules they have to abide by to actually get into certain areas. It is rich in mineralization, and it is rich in oil and gas. On the east side of the slopes, the Ministry of Sustainable Resource Management and my ministry are actively working on doing the planning that goes forward with some of the base profit and those areas that there is high interest in for oil and gas development.

Those plans are moving forward. They were plans in the Sustainable Resource Management service plans. We'll move those forward, probably not quite as quickly as we wanted to. That's not going to slow the industry down, but the industry has told us where they're interested in going. What we want to do is a better job of managing those areas where they want to go into so that we can have some main corridors for roads instead of roading a lot of it.

Let's look at where they want to go, because they have a pretty good idea where the oil and gas is and where those main corridors could be built, so that everyone can use the same kind of access. I think that's good work on the part of Sustainable Resource Management to work towards those ends. Hopefully, we'll continue to develop as we move forward.

B. Bennett: I represent, as Mr. Chair just said, the East Kootenay. We have five coalmines in the East Kootenay, so I would like to ask just a couple of questions of the minister about the coalmining sector.

In reference to the mission statement of the ministry, it refers specifically to fostering a competitive investment climate. We all know that the mining industry is not an easy industry. It's subject to international market price fluctuations and all kinds of other challenges. The coal industry in particular, I think, is a challenging industry to be in. I just wonder if the minister could relate for me what the ministry has done to foster a competitive investment climate for the coal industry.

Hon. R. Neufeld: Certainly. The coal industry is, as the member pointed out, very important in the province. It generates over $1.5 billion to the GDP every year of coal mined mostly the out of the southeast, not so much out of the northeast. That will probably end in the next year or the upcoming year.

We want to keep the coal industry active and operating in the province. To that end, we responded to the coal industry when we were elected and reduced taxation for not just the coal industry but the mining industry, which includes coal, and reduced the tax on machinery and equipment, reduced the corporate tax and reduced — in fact, eliminated — the corporate capital tax to bring our taxes in line with other jurisdictions around us.

As the member said, the coal industry in his constituency provides a lot of well-paying jobs. We want to see those jobs continue and, in fact, increase into the future as the world around us continues to need more and more energy. It doesn't matter whether it's in coal, whether it's in natural gas or whether it's coalbed methane or oil.

Those fossil fuels that some folks think we don't need anymore, we'll be needing for a long, long time into the future. I see a bright future for the coal industry in the province, and we want to work closely with those that are in the industry so that it can continue to expand.

B. Bennett: I'd like to thank the minister for that answer, and I'd like to follow up with another question about the coal industry.

The minister mentioned that the industry has high-paying jobs, and it does indeed. There are about 2,300 people right now working in the Elk Valley coal industry in my riding. The average salary, with benefits, is $79,000 a year. These are terrific family-sustaining jobs that we need more of in British Columbia.

One of the issues that I hear an awful lot about in the Elk Valley, when I'm there on a regular basis, is the coal-fired power project that Fording Coal put forward. For at least ten years they've been essentially wrestling with the former provincial governments to find out what the rules were around air emissions and what the provincial energy policy was with respect to using coal to generate electricity.

I just wonder, for the benefit of my constituents in the Elk Valley — who are very, very keen to know where the government stands on this issue — if the minister could enlighten us as to the prospects of that kind of project.

Hon. R. Neufeld: Yes, we have, in the energy plan that was put out last fall — last November — that the

government announced…. Part of that energy plan has been to develop emission standards for the burning of coal for the generation of electricity. I'm happy to say that through negotiations with my ministry and Water, Land and Air Protection, we were able to come forward with some very competitive standards for the province that actually compare very closely to our neighbours east of us, Alberta, who burn an awful lot of coal and have a lot of experience in it.

The other thing is that the technology around burning coal is changing constantly. The member, I'm sure, is aware of that also. As we move forward, clean coal technology will become more and more part of the generation of electricity and the burning of coal for that purpose. In fact, I'm told it won't be that long into the future until coal can be burnt economically and with as low emissions as natural gas has today, which is good news for the coal industry. It's a number of years away, I'm told, but those things are happening as we speak.

We look forward to actually having Teck Cominco or whoever put forward a proposal for a coal-fired plant in the Elk Valley. As I understand — in fact, I've got letters from the communities there — they support it. They want to be careful about the environment, and so do we as a government. The member also agrees with that. We're going to be very careful with the environment and what we do. But we also have a fair amount of coal in the Elk Valley that can't be shipped and is just being stored on site, which would be perfect for generation of electricity.

With our new energy plan also — the access to transmission for those companies to be able to sell their power — if they wanted to sell it to Hydro and if Hydro was going to buy it in one of their calls for energy, they could do that. Or they could actually export it, if they wish.

That separation hasn't totally happened yet, but it will happen as we move forward in the next legislative session. I think that looks pretty bright for the Elk Valley and the Kootenays, with the development of coal.

For the benefit of my constituents in the Elk Valley and the East Kootenay and also for those British Columbians who live in areas that have coal, and I understand that there are many, many areas in the province that have this natural resource…. Of course we're not using it, as the minister stated, to generate electricity, unlike our neighbours in Alberta who generate, I think, about 60 or 65 percent or so of their electricity with coal or maybe more than that. The Americans do the same thing.

I'm just wondering, for all of those folks who are looking for good jobs and economic development, whether the minister could confirm that this government has done everything it can, from a regulatory point of view, to remove the regulatory obstacles to going forward with this kind of project. Of course, the companies who would take the projects forward have to deal with the realities of the marketplace and whether there is a demand for electricity and all those kinds of practical considerations, but I'd just like the minister to confirm that in terms of what government can do to allow these kinds of projects to go forward, we've done everything we can possibly do.

Hon. R. Neufeld: Yes, we have. In fact, I'm comfortable that we've done everything we could possibly do to put into place regulations that actually respect the environment around us and still allow for industry to be competitive out there and build their coal-fired plants.

To be honest, I haven't had one letter since we released those standards — actually, we released them in January of this year — saying those are not good standards. In fact, I've had letters saying: "That's great. We're happy now that at least we know what the standards are, and we can move forward from there."

As far as the coal industry in your part of the world right now, with the amalgamation of the companies, there's probably a little bit more high-level stuff going on in how they're figuring on integrating those companies. Hopefully, in the very near future we'll see some proposals come forward from the industry.

There's a couple of other small things that we did for the industry, and those are the things that always get forgotten. They just came to mind as I was sitting here listening to your last question. Prior to us coming into government, coalmines couldn't use aggregate on their coal lands to develop their roads. It's hard to believe that that was actually in legislation — that they couldn't do that. We changed that, so they can actually use that gravel to develop their own haul roads.

We also looked seriously at the impediments with the higher-level plans and how they affected expansion of the coal industry, and we decided we would deal with that also. So we've done a number of little things like that — not little, but things for the coal industry to make it more economical for them to be able to provide those well-paying jobs the member just spoke about.

B. Bennett: I just have one final question/comment. The Ministry of Energy and Mines recently held meetings in Sparwood and Fernie to gather public opinion on issues such as coal-fired power generation and coalbed methane development and mining in general. I understand that those open houses were very successful; there was a good turnout.

I actually don't really have a question for the minister. I would like to just thank the minister for, first of all, holding those meetings — and I know he's held those meetings in other places in the province — because it allowed my constituents to come out and learn about coalbed methane development and how it can be done in an environmentally sensitive way. It also allowed them to express their keen desire to have a coal-fired power project go forward.

Given the minister's answers here in the House today, I'm going to be telling my constituents that now the ball is in the court of the companies with respect to the coal-fired power plant. So thank you very much.

W. McMahon: I have been told by the mining industry that they are pleased with the inspection service that is currently managed by your ministry. I'm told the process has worked extremely well in making the mining industry the safest heavy industry in the province. I'm also hearing some concern that the service might be transferred to WCB. I would ask for your comments in this regard.

Hon. R. Neufeld: Yes, the health and safety standards we have in the Ministry of Energy and Mines are very well run. It's actually, I believe, partly funded by industry through a tax on payroll tax. They have input into the process, both labour and industry. We do have the safest mine activity, I believe, across Canada. Do we not?

Hon. R. Neufeld: We're tied with Ontario right now, so we're proud of that. We're proud of the industry and the people who work in the industry and work hard to make sure it's a safe workplace. With those health and safety standards, we know we can move forward and actually get ahead of Ontario not just in that but in a lot of other things.

The WCB — I almost forgot. There is no intention for us to move all those regulations into the Workers Compensation Board as we speak.

R. Harris: First of all, I appreciate the answers to a lot of the questions I was going to ask. You've already answered them for some of the other members, specifically in the area of what we're doing to get investment back into this province.

But I want to focus on one specific area: the Bowser basin. That's certainly a part of the province that holds a lot of opportunity for quite a number of communities and appears to be significantly rich in high mineralization, gas and oil opportunities as well as — once we get access — some forest opportunities.

Can the minister maybe tell me what we're doing specifically in terms of marketing that region of the province and how you're going about that?

Hon. R. Neufeld: Yes, we have had some activity in the Bowser basin and at what we call the interior basins, also just in the Cariboo. We've had some targeted geoscience ongoing and have it ongoing now in the Bowser basin. In the Bowser basin, as we speak, there are companies that are interested in the interior basins' potential — Devon, a large oil and gas company, and another one — so there is interest in those basins.

I've also had an opportunity — or the ministry people did; I wasn't able to be there — with some investors from China, of all places, that came to British Columbia to talk about the energy industry. They pointed out some of the basins to them, and they were quite astounded and, in fact, drew a circle with their fingers around the Bowser basin and asked: "How much for that one?" They had obviously come with a little bit of money they want to invest in Canada.

There is significant interest in those basins. I've also met with numerous oil and gas companies in relationship to the basins, and they have all expressed interest. They're new basins that haven't been drilled to any extent, and so the targeted geoscience work we want to do — and we'll have some more moving forward this year — will help us to market those basins to the right people so that they'll come in and invest.

Part of the problem in doing it is because it is new, because there is no infrastructure. When I say infrastructure, I'm talking more in relationship to the oil and gas industry as to the pipelines and the plants and all those kinds of things that would be needed. That's readily available in Alberta obviously, all over the province and in northeastern B.C., so we have to look at ways we can actually encourage the industry.

One of the other ways we can encourage the industry is by reducing the royalty rate in general in a certain area. It's not a subsidy, but it's an incentive for industry to come in and do their work. We haven't done that, but we're actively thinking about doing it so that we can get some interest into those areas. The upfront costs to them to actually get something happening commercially would involve a fair amount of investment.

We're trying hard to make those things happen. I know that in the member's region, it would be great if we could have some drilling and some mining take place in those basins.

J. MacPhail: I'll continue on with coalbed methane, and I have questions, of course, on offshore oil and gas, which I understand we have not got to yet. I'll finish my series of questions on GSX as well, and I have a few questions on Columbia Trust. Now, on coalbed methane, the minister has introduced legislation, and I will be having a substantial number of questions at the legislative level in terms of how his legislation is going to work, but the whole issue around coalbed methane development is what I want to explore now.

I understand the Minister of Energy and Mines will appear at a public meeting tomorrow, Thursday, April 3, in Hudson's Hope. Certainly, there's been a news release released by the concerned citizens of Hudson's Hope, which reads that there is…. Let me just read from it:

Anyway, the minister is going to attend that meeting tomorrow in Hudson's Hope. We will get the update on…. I'm not to going to ask the minister to repeat what answers he's giving there, but that's the citizens' concern.

Just to carry on, there's an open letter from Larry Peterson, who's a resident of the Peace River valley, dated March 18. It's to the Minister of Energy. It says:

I'm not going to read the whole letter. It's actually a very good letter. He goes on then to say:

I've got one other letter to read into the record and then a series of questions based on this. This letter is dated March 20 from Mrs. Terry Webster, who also copied me on the letter:

Those are just some of the examples. Just before I start my questions, will the minister be attending the Hudson's Hope meeting tomorrow?

Hon. R. Neufeld: Yes, I will be. In fact, I will be going up to Fort St. John later tonight, so she knows

my whole itinerary. I will speak about the energy plan that we have in the province at the Dawson Creek Chamber of Commerce. I'll be meeting with a number of first nations over some other issues. I will have some meetings with the public, some private meetings with some of the people from Hudson's Hope and also a public meeting.

Before I sit down, as far as public meetings go, I should maybe put on the record the number of public meetings we've had in Hudson's Hope. In fact, June of last year was the first one — talking to the folks at Hudson's Hope about the development of petroleum and natural gas in their area, which is inclusive of coalbed methane. We've had two public meetings in March that were attended by my ministry, Water, Land and Air Protection and Sustainable Resource Management to bring forward and actually try to answer the people's questions from Hudson's Hope.

I can tell you that I can understand why some of those people would be concerned after listening to the environmental law society go through the province trying to instil some fear into people. There have been mistakes made in the U.S.A in development of coalbed methane. I don't defend that at all. That's the United States of America.

We've had our people to those basins to review what went wrong; why it went wrong. In fact, at the ministry level we want to do it right also. We want to make sure there isn't the impact on people — regardless of whether they live in Hudson's Hope or on Vancouver Island, where there's been a well drilled; or in the East Kootenays, where there have been about 16 wells drilled; or in the Tumbler Ridge area, where there have been about 11 or 12 wells drilled for coalbed methane. We don't want to see unnecessary impact on any of those people or landowners.

We've had those meetings to bring forward the ministry's viewpoint and to listen to the individuals who are concerned about coalbed methane development. I'm going there to talk to them a little bit more about it and also about the benefits of coalbed methane and the benefits that could happen in the community of Hudson's Hope if we, in fact, move forward with this proposal.

J. MacPhail: I have a series of questions that arise out of the government's move forward on coalbed methane production. Just to put it in context for the people who are listening, in order to get the methane out of the coalbeds, what is done is that water pressure is applied. Basically, the methane is pushed out along with the water, so there are water quality issues and water quantity issues.

Well, there's water production produced. I'm fine for the minister's staff to correct.… I'm trying to put it in lay terms here. Feel free to stand up and correct it. There's water production that arises out of coalbed methane production, which has some concerns around that.

What water quality issues and problems may arise with the produced water? I think the term "produced water" is the technical term that arises out of the water that results from coalbed methane production.

Hon. R. Neufeld: The member is basically correct in the way she described it. The difference is that water is pumped out to release the coalbed methane from the coal seams. There is a lot of water that has to be pumped before the coalbed methane will come to surface, and so there are obviously some issues around disposal of water.

Depending on where you're at, depending on the geology, some of that water can actually be potable. In fact, in some of the terrible basins in the U.S., some of the communities are pretty happy, because they didn't have a source of water prior to the drilling for coalbed methane, and now they have potable water. Some of the water needs very little treatment, and it can be released to the environment either by spraying it on farmland for irrigation purposes or by releasing it into streams — those kind of things — if it's potable water.

All of that has to be done under the regulation of the Oil and Gas Commission. You don't just pump the water and put it wherever you want. There are those who infer that that's what happens, but it's not in fact what happens. The Oil and Gas Commission will permit the removal of the water, and they will test the water to make sure it isn't toxic. If it is toxic, it has to be disposed of in a disposal well, one that's approved of by the Oil and Gas Commission. That would be a well that's spent — an old gas well or an oil well, where there are caverns 6,000 to 8,000 feet below surface, where you can actually pump that kind of water into them. It's usually salt water — high in salt quantity.

It's not very much different from the conventional natural gas industry and the oil industry. There's an awful lot of water produced out of natural gas wells and oil wells that is disposed of in the same way.

I'll go the U.S. again. When they started drilling for coalbed methane, they obviously did it a little differently than they do it today. As we move forward, we always learn. The procedure in B.C. is that it's governed under the Petroleum and Natural Gas Act and also under the Waste Management Act for the water and the other things that might be involved with drilling the well.

They will drill a well, usually about — how many feet, on average, in the Hudson's Hope area? — 3,000 feet. They'll drill a well. It's not as large a drilling rig as you would use in conventional natural gas or oil. They will then set casing — that means steel tubing — from surface right down to the coalbed seam they want to exploit. Then that casing will be cemented, not inside the casing but outside the casing. It's cemented between the soil, the strata that it goes through and the pipe.

Then there is a smaller pipe put down the centre. What you do is pump the water up through the larger casing, and through the smaller casing finally will come the coalbed methane as you take all the water off. That seals it from the aquifers that you would be using

for domestic use — probably wells ranging from 100 feet deep, something to that effect. They're sealed from those domestic water wells.

Early on, when they did it in the U.S., they didn't use casing. They didn't cement it. They didn't do anything. They just drilled a well and pumped the water out. Obviously, that was the wrong thing to do. That was 20 years ago. Times have changed.

There are places in the U.S. where, actually, communities are pretty happy about the development of coalbed methane. We should also remember that coalbed methane is cleaner than most natural gas. Most natural gas has high quantities of H2S, poison gas. The coalbed methane does not have that in it and actually, with very little treatment — in fact, no treatment in some cases — can be put right in the pipeline for domestic or commercial use.

Hon. R. Neufeld: Baseline water quality from the well? Is that what the member is asking?

Yes, that will be done under regulations that are in place by Water, Land and Air Protection, which the Oil and Gas Commission administers with someone from Water, Land and Air Protection. That's been going on for some 40 years in northeastern British Columbia in the drilling of conventional natural gas and oil, so those people have the qualifications to determine what's potable water and what's saline water.

J. MacPhail: Well, I am going to explore some of this in estimates for the Ministry of Water, Land and Air Protection. It's one of these dilemmas that British Columbians face, where the minister responsible for the economic activity refers the public to the Ministry of Water, Land and Air Protection, and then we find out it's actually been delegated to the Oil and Gas Commission.

I understand in this concern that water quality protection is going to be the responsibility of the Oil and Gas Commission. How will the regulations around all of this be determined — by public consultation?

Hon. R. Neufeld: The legislation and regulations are in place. Maybe I wasn't explicit enough. We have wells in northeastern British Columbia that have been producing water for 40 years that we've been disposing of, testing to find out how you dispose of it and where you dispose of it. All those regulations are in place. As I said, they've been around for a long time, and they're sufficient. In fact, they're fairly stringent — probably more stringent than our neighbours just east of us.

J. MacPhail: Yes, but I understand that compliance is not great by any stretch of the imagination. The last…. Well, it may not be the last one — I'm not sure — but the 2001 compliance audit conducted by the Oil and Gas Commission had a fairly high non-compliance rate in this area. Is the minister aware of that, and what's being done to improve it?

Hon. R. Neufeld: The member has maybe not been informed correctly about that. There were some water non-compliance issues that had nothing to do with wastewater or produced water from wells. That had to do with working in the oil and gas industry out in the muskeg, where water trucks — just give me a minute, and I'll get it through — actually go to streams and load water to take to the well, because you need water at a well to drill a well.

They did something wrong in some cases. They pumped water out of streams that they shouldn't have. They pumped water out of the stream to use in the drilling process and actually affected some beaver houses. That's something that shouldn't have happened, but it did happen, and those companies had to rectify that.

J. MacPhail: Yes, I understand that, but thank you to the minister for putting it on record. I understand the difference, but there is an issue of turning…. This is going to be almost self-regulation by the industry, and parts of the industry have been shown to be, in other areas of resource extraction, in non-compliance at a substantial level. The minister says it's not going to be self-regulation. Perhaps he could put that explanation on record.

Hon. R. Neufeld: It's not self-regulation. There is a set of rules and regulations that they have to live up to. They're fairly extensive as to the tests — how many tests have to be made, how many gallons or litres or cubic metres of water can be pumped into different wells, which wells it can be pumped into. Annual reports and in fact monthly and probably, in some cases, daily reports have to be made to the Oil and Gas Commission.

The Oil and Gas Commission will monitor that, as they have in the past, and continue to monitor it. I know they have just recently hired, I believe, another six compliance officers at the Oil and Gas Commission to deal not specifically with Hudson's Hope but with the industry as a whole, because as we move forward in British Columbia, there's actually an interest in developing the oil and gas industry in the province. It provides well-paying jobs, and there are people that want to invest in the province. The Oil and Gas Commission, to respond to that, had to beef up the number of people who work at the commission to be able to do that compliance testing.

K. Johnston: I have the pleasure today to welcome to the gallery 80 grade 10 social studies students from the largest high school in Vancouver, Killarney Secondary. I'm very delighted they have come here under the guidance of Ms. Nicol, Mr. Koutsonikas, Miss

Zogaris and Miss Fransblow. They're enjoying their day in Victoria. They've had tours all around the city today and are now here to watch government in action. Would the House please join me in welcoming this group of great kids.

J. MacPhail: This government has been promoting coalbed methane extraction…. I guess it was this time last year we were debating this in the Legislature, and more flexibility was given. Then the regulatory requirements were clarified, I think, in October of last year. Now legislation is being introduced, but I'm not discussing the legislation, Mr. Chair. What has been the increased activity in the area of coalbed methane extraction since this government has been promoting it for over a year?

Hon. R. Neufeld: There are no commercial activities happening in British Columbia. In fact, as I spoke earlier, I believe there are 16 wells that have been drilled in southeastern British Columbia by a company called EnCana. That activity began under the last administration, which you were a part of, that promoted the extraction of coalbed methane. I believe at that time…. In fact, when I asked questions about it when I was in opposition, the Minister of Energy and Mines assured British Columbians that the Petroleum and Natural Gas Act would be sufficient to regulate the coalbed methane industry. I concur with that. In fact, it is too stringent in some areas.

We want to move forward with being able to encourage people to drill in the province. In the northeast we've had about 11 wells drilled. As we speak — that's an interesting one — in the southeast the water, with some treatment, can be dispersed into the streams by Water, Land and Air Protection. That's being monitored. In the northeast it's a little bit more heavy saltwater, and they haul the water from Tumbler Ridge all the way north of Fort St. John to a preapproved disposal well — preapproved by the Oil and Gas Commission with heavy compliance. Those kinds of things are happening as we speak in the province, and there's interest in the Princeton area, as we speak, about developing coalbed methane there also.

Maybe the other part I neglected to talk about earlier is the consultation process that goes on prior to the drilling of coalbed methane and what happens in the Oil and Gas Commission. This is a bit in response to the letters the member read into the record. I appreciate that she did that.

The district of Hudson's Hope. I think there have been four land sales in the district of Hudson's Hope dating back a number of years, 2½ years — four different sales. The consultation that took place with the community, with the district of Hudson's Hope, with the mayor and council varied anywhere from 14 weeks to 62 weeks with the council. Actually, in the consultation process through the mineral titles branch, the community asked that some areas be removed from the sale prior to the sale, and in fact, we complied with that. We have worked closely with the community of Hudson's Hope on which parcels should be put up for sale.

There's a two-step process. You have to actually communicate and consult with the first nations. That's a requirement, and we do that before the land is put up for sale. We also communicate with the community that would be affected. In this case, it happened to be Hudson's Hope. In other regions it could be the regional district that you communicate with.

Those are fairly lengthy consultations that go on — 62 weeks — before you actually have a land sale. After that, that doesn't mean you can just go ahead. You still have to have consultations again with first nations. That's done with the Oil and Gas Commission and the proponent. You also have to have negotiations with the communities that would be affected. When I spoke earlier about the meetings in March — in fact, as far back as June of last year and into March of this year — they are responding to those kinds of consultations. Then the proponent has to have his or her own consultation with the communities and with first nations.

What I'm trying to say here is that there is an awful lot of communication with the people that are affected in the area and with first nations. Once the proponent has had those consultations, they may or may not be awarded a right to drill on the land that they purchased the right to drill on. There is a pretty significant process that has to be undertaken by the proponent, by the Oil and Gas Commission and by the communities.

I should also put on the record that during the 62-week consultation process with the district of Hudson's Hope — the member read into the record that landowners didn't know this was going to take place — the mayor and council were kind enough to mail a letter to every landowner that was affected in the district of Hudson's Hope, letting them know what was taking place, so they actually knew that was happening. That was two years ago or a year and a half ago.

We think we have done a pretty good job of consultation. As I said earlier, there are obviously some fears out there. When people start going around the province instilling fear in people about what happened someplace else or whatever, for whatever reason they want to do that, it's certainly understandable why people would want to have more information.

That's one thing this ministry is all about and the Oil and Gas Commission is all about. We have websites. We have everything on the website — the land sales, the areas, where they're happening, when they're happening, all those kinds of things — to try and consult with both aboriginal and non-aboriginal communities.

J. MacPhail: In the fine tradition of all previous Ministers of Energy that I know, the minister is filibustering his own estimates. That may be the passion he has for all of this. Certainly, previous Energy ministers

The minister is quite correct. Nine experimental projects are underway, but they were established as experimental projects. This government is going to get into the business of coalbed methane extraction in a substantial way.

I wanted to ask the minister…. I know that EnCana is working with Fording Coal, and of course, they've arranged their own price cut on that. The government is now going to become the middleman in those kinds of arrangements. What other companies actually have expressed interest in coalbed methane extraction? As a layperson, I know there's a huge untapped resource already available for extraction in natural gas. What other companies have expressed interest?

Hon. R. Neufeld: There are quite a number of companies — EnCana, Anadarko, Talisman, Fording Coal, now Teck Cominco — that have interest in developing coalbed methane on their freehold land. There's Devon. There are quite a number of companies that are very interested in the development of coalbed methane.

J. MacPhail: Well, I understand that there's a substantial reduction in the royalty payments between natural gas and coalbed methane. I actually have the details of…. I always feel the necessity to do this so that the public can understand that royalty is a method of taxation the industry pays to the government. The difference — paying less royalties for coalbed methane production — is really a subsidy. In this particular case, there is a substantial subsidy being offered to coalbed methane extraction companies from those who might actually produce natural gas. Why is that?

Hon. R. Neufeld: Yes, there is a difference between the royalty that would be paid on coalbed methane as compared to conventional natural gas. There's also a time frame that we had in the legislation that, because of the large upfront costs before you can have a project commercialized — that means into production — they have a royalty credit up until, I think, February 2004 of $50,000.

J. MacPhail: Why is there a substantial reduction in the royalties for coalbed methane? Isn't that a subsidy?

Hon. R. Neufeld: No it's not, because it's across the whole industry. There are different royalty rates for different production of different oils.

The member may not remember, but during her administration there was quite a huge reduction in a field called the Hayfield for oil to actually encourage the development of that oil in that region because of the cost of developing it. It's not uncommon to do those kinds of things. It's not a subsidy; it's across the whole coalbed methane industry.

The member laughs, but as I said, under her administration they did a number of those kinds of things also. Maybe it was funny then — I'm not exactly sure — but it was to try and get some investment going in some of those areas.

There are other things that you can do, also, to change the rate for natural gas in areas that are high cost — maybe deep wells or maybe shale gas or anything like that. You can actually encourage the development of it. It creates economic activity in the province. It creates jobs — in fact, really good-paying jobs.

The member may not have been here, but we talked about the amount of royalties that are coming to the province. This year they're expected to be about $1.7 billion in royalties from oil and gas. That all goes to pay for hospital care and for schools and all those types of things. It's actually a good industry, and we need and use those products every day in our daily lives.

J. MacPhail: I don't need a sales pitch. My point is this: this is a government that said there would be no subsidies to industry. My government gave subsidies to industry for the very reasons that this minister is now spewing off as his own.

My government gave subsidies, and this minister is standing up and saying: "We're doing exactly the same thing." The answer is: you're right. The minister is finally telling the truth. He's doing exactly the same thing. He's giving subsidies to industry.

This is a subsidy. It's a subsidy that spreads across the coalbed methane industry. It's gas extraction. It's to promote the royalties that will be paid across the coalbed methane industry at a lower rate than natural gas extraction. It walks like a subsidy, smells like a subsidy and drills like a subsidy. It is a subsidy.

The minister stands up and says: "Well, your government did it too. Maybe the member didn't remember that." I do; I acknowledge it. It gave huge impetus to the industry. In fact, thank God, in the 1990s there was such expansion of the oil and gas industry because of targeted help to that industry directly. Thank God, because we would be in a terrible economic situation today without that expansion of the industry. It was targeted help from the government to the industry. That's called a subsidy.

This government is carrying on doing exactly the same thing, except that they say they're not. In fact, they are. They're subsidizing the coalbed methane extraction industry to the tune that the coalbed methane, in some circumstances, will be paying only three-quarters of the royalties that conventional gas pays. In some circumstances coalbed methane will only be paying half the royalties that natural gas extraction pays. In some circumstances…. No, that's half too. They're getting a subsidy by this government of anywhere from a half to a quarter reduction in their royalties. That's a subsidy.

Hon. R. Neufeld: It's not a subsidy when it's across the whole industry. There's a significant difference. We

just went through half an hour talking about coalbed methane extraction as compared to conventional natural gas extraction. It's completely different. What we have done is put a royalty process in place that will encourage the development of coalbed methane across the province of British Columbia. We put it across the whole industry.

When that member was part of government, what they did was target different companies doing the same work. That's different. That is pure subsidy to one company. There is a huge difference in what we have done here, and the member may not like it, and that's fine.

It's not a subsidy as far as I'm concerned. She says it's a subsidy. Listen. What we ought to do is get on with the business of creating the jobs in the province of British Columbia, get on with creating wealth, actually make some money for the province and put people to work so that we can continue to pay for health care and education.

J. MacPhail: Well, thank God all of this wealth was created in the 1990s, because it's the only thing that's keeping this government going now, by their own admission. It's the only thing working. I just asked the minister to tell me how, under his great government, coalbed methane extraction has expanded. Zero. None. So, thank God for that awful decade of decline — that decade of decline that greatly expanded resource extraction, oil and gas extraction. Thank God the previous government actually did some experimental projects. This government's achieved absolutely nothing.

The minister tries to say: "No, it's a completely different industry. It's not a subsidy." Boy, I'll tell you, "How many angels dance on the head of a pin?" would be an interesting question to ask this minister. See how he can dance his way out of that one.

The Petroleum and Natural Gas Act regulates coalbed methane and natural gas because they're like products. If the minister wants to change that, good. But until he does that and goes against what the rest of the world actually defines as what natural gas is, which includes coalbed methane extraction, it's a subsidy. The reduction in the royalties is a subsidy — full and straight up.

I'm very happy, actually, to use targeted tax relief for industries that do create jobs, but it's hypocritical of this government. That would be nothing new, but to hide their hypocrisy is pretty new. They take great comfort in their arrogant, overwhelming majority to actually not even bother to hide their hypocrisy. In this case, the minister is trying to hide it.

Hon. R. Neufeld: Again, if there was ever an arrogant government, it was the one that just got booted out of the province of British Columbia and ended up with two people in this House.

I will again state for the record — and maybe the member may concur, and she may not — that the royalty rate for coalbed methane is across the whole industry of coalbed methane. That, in my view, is not a subsidy but is an incentive to get the industry started, to get it working so that we can actually generate some jobs and some activity in the province. I think that's good news for British Columbia. I think we should look forward to that with a lot of joy. I think we should look forward to an expanded mineral industry in the province and to well-paying jobs and the taxes that that industry pays.

I'm really happy to hear the member concur with me that the extraction of coalbed methane is very important to the province. She thought it was important when she was in government. She still thinks it's important to the province of British Columbia. With that in mind, I think we should move forward.

J. MacPhail: On July 29, 2002, this minister released a news release saying: "Fees Eliminated to Help Foster Oil and Gas Development." Fees eliminated will be: "Pipeline plan approval, compressor or pump station specifications approval, compressor or pump station annual inspection, farm tap installation whether or not drawings are approved by the chief inspecting engineer, issue of certificate under section 2 of the Pipeline Act, Surveyor General examination of well site plans."

Can the minister update the Legislature on how this has been a benefit to the industry?

Hon. R. Neufeld: Actually, again we're talking about the Oil and Gas Commission, which is fully funded by the industry. The taxpayer of British Columbia does not fund the Oil and Gas Commission. How it's funded is through fees from industry.

As I said earlier, each well drilled costs so much money. Some of that's used for consultation with first nations and operation of the business. The other portion is given to first nations so they can build some capacity. The Oil and Gas Commission was fully funded, in fact, in a surplus position. The small amount of money that all those fees brought — and all the work that went with maintaining them, with all the paperwork that goes with them — had nothing to do with reducing how careful we are about the environment. It was just a way — I guess, instituted maybe by the last government…. In their own way, they thought they would be getting more money.

But we don't get money from the Oil and Gas Commission. The Oil and Gas Commission is fully funded internally by the industry, not by the people of British Columbia.

J. MacPhail: I'm getting a sense from the tone of the minister that he doesn't like being asked questions. That was just a straight-up question. I'm not quite sure why he has to get so antsy about it. I could actually try to do it in the same way that the sheep do, which is praise him first about all the great work he's doing, and maybe he'd be a little less petulant. I'm just collecting the stuff, doing my job, Mr. Chair. So maybe he could just….

What is the update from the Oil and Gas Commission about the extra economic activity generated by this?

Hon. R. Neufeld: Again to the member, if she's talking about the same fees and the reduction of those fees, it had nothing to do with encouraging the industry. It had everything to do with uncomplicating a process that had, actually, no bearing on what was happening at the Oil and Gas Commission. It is funded 100 percent by the industry.

The industry fees that go into funding the Oil and Gas Commission were sufficient. In fact, the Oil and Gas Commission has a surplus as we speak today. So there was no need to do those kinds of small things. If there needs to be more money going into the Oil and Gas Commission to operate it, there are simpler ways to do it — by increasing the levy on natural gas and oil produced that would actually fund the Oil and Gas Commission.

All we were trying to do was to remove some needless red tape from the system and continue on with having those compliance officers or those people who were working in the commission doing all that red tape and processing that paperwork, actually out doing the work that they should.

J. MacPhail: Well, that actually is what I'm interested in — proof of that. The news release says: "'Eliminating these fees will help to reduce costs, because there will be less paperwork for industry and government,' said the minister. 'This change is part of our strategy to approve permits faster and more efficiently and help to realize $24 billion in investment in the energy and mineral sectors over the next six years, leading to 8,000 direct jobs.'"

It wasn't me making the link. It was the minister himself making the link. Clearly, if he can't give me the update about how that worked out, so be it. But I would assume that when one's eliminating fees, one would actually keep track of the success.

On March 25, 2002, I raised an issue with the minister around the Columbia Basin Trust. I'll just repeat what it was. This was March 25 in debates. I said: "As I recall, the Columbia Basin Trust used to have public forums. Do those continue?"

Me: "Just for my benefit, describe the last one — the issues, the attendance, the acceptance by the public and what issues are arising for the Columbia Basin Trust."

The minister: "I don't have someone with Columbia Basin Trust here — just Columbia Power Corporation. Rather than try to guess at the last one, what we'll do is get that information and get it to the member."

That was March 25. The Columbia Basin Trust did write a memo up for the minister. They wrote that memo on March 26, 2002. For some reason I don't know, the minister didn't send it to me until October 1, 2002. But what the hell, eh? Six months? That's okay. Maybe it was…. It certainly seemed a pretty straightforward memo.

The memo said the last public meeting was held…. "A series of 12 community meetings from May to July 2001 to keep in touch with the residents of the basin." That's the information I got October 1, 2002. Can the minister update me even more about what…? Since May to July of 2001, what's the public input around the Columbia Basin Trust?

Hon. R. Neufeld: Maybe before we go to the Columbia Basin Trust, I could ask the member if she is done with stuff to do with oil and gas or mining. I'll get someone from Columbia Basin Trust in here if she wants to pursue that questioning. I'd have to change some people here.

J. MacPhail: I have questions on offshore oil and gas and the GSX pipeline. Would you prefer me to do those first?

J. MacPhail: Sure. I'm happy, Mr. Chair, to do the GSX pipeline first, then offshore oil and gas — and if members have questions on that — and then go to Hydro after supper.

Last week we had a brief discussion. I think it was Thursday of last week that I began these estimates with questions about the GSX pipeline and the Vancouver Island generation project. The minister said something that was incorrect about the GSX pipeline and gas-fired generation projects in Port Alberni. He said: "…I would suggest that a plant that is going to deliver 265 megawatts of electricity by generation from natural gas will be a lot less than the plants that the last administration was going to put at Port Alberni, which would have burned natural gas and generated some 650 to 700 megawatts of electricity."

Anyway, not to belabour a point, but the minister has his history wrong. As the minister may know, you can't plan and you can't move forward very intelligently until you know your history, so let's just review that in the hope that this will actually shape his decision-making around the GSX pipeline. The original project proposed for Port Alberni was to be built by PanCanadian and Atco — two companies. It was a 270 megawatt plant. It was estimated to cost $240 million, but of course the minister knows that quite well. B.C. Hydro didn't reach an acceptable deal with PanCanadian and Atco, and those companies are no longer in the project. They're gone from Alberni.

Hydro needed a project, though. They needed a project in Port Alberni, so they came up with another deal — I'd say "cooked up" another deal — with Calpine for a 265 megawatt plant. That plant was going to cost $300 million, but that replaced the previous proposal that fell through. The people of Port Alberni kicked that project out of town in a rezoning hearing. Even though the MLA from Alberni lobbied long and hard for it, Port Alberni people said no. Fair enough.

B.C. Hydro then took it to North Cowichan, and the people there gave them the boot, as well, at a rezoning hearing. Then B.C. Hydro came to Nanaimo. At Duke

Point no rezoning hearing would be required, so this government started working on B.C. Hydro actually putting the plant at Duke Point. I guess B.C. Hydro thought they had struck gold by not having to go through a rezoning hearing. However, I'm wondering whether the minister is aware that there actually were many big public meetings in Nanaimo, which hundreds of people attended, and that none of them wanted the plant.

Hon. R. Neufeld: I appreciate the update on the facts. I should maybe put in a few more facts. It was the last administration that gave an exemption to B.C. Hydro to construct a plant on Vancouver Island, so it didn't have to go before the B.C. Utilities Commission. That was the past administration who wanted to push things on people without letting them have an opportunity to talk about the benefits or the problems associated with it.

We made a commitment during the election that we would put B.C. Hydro back under the responsibility of the B.C. Utilities Commission. B.C. Hydro has applied for a CPCN for the Duke Point plant site to build a 265 megawatt plant burning natural gas. Those hearings are taking place either now or in the near future. They have applied for the CPCN. Unlike the last administration, who was just going to ram it through without the ability for the B.C. Utilities Commission to review the whole project, we have done that. Also, as I understand, with the Duke Point site it was the city of Nanaimo that actually offered to B.C. Hydro a site where they could build a plant on Vancouver Island.

J. MacPhail: Well, Mr. Chair, just like he was wrong last Thursday, he's wrong again. He'll do anything to spin partisan politics, but it is interesting. Again, the last refuge of scoundrels. This minister excels at it. I love it. "We're no worse than you were." Isn't that great? They continually criticize the last administration. He uses words like "decade of decline" — all that stuff. His only defence, wrongly so even in this case, is: "Well, we're no worse than you are." Wow. I wonder, if he'd actually campaigned on that and if his government had actually come clean on all of that, what might have been the outcome of that.

He's wrong on what was given to the previous B.C. Hydro, but even if that's the case, maybe he could actually take responsibility for his own actions now, not try to defend the fact of what he's doing now by what happened in the past. He got it wrong before. He's got it wrong now. But even then the public won't accept that. The public wants to know why this government is behaving in a way it said it wouldn't. I asked him a question about whether he was aware of the big public meetings — refused to answer it and then blames the city of Nanaimo. He won't take responsibility for his own actions and stands up and says: "It was the city of Nanaimo that wanted it to go into Duke Point."

Well, Calpine has looked at this project at Duke Point. They took a second look at the economics of the deal, the gas-fired project on Vancouver Island, and they have left the project. They've said: "No, thanks."

Did any money change hands in the collapse of that deal before Calpine left town?

Hon. R. Neufeld: Yes, on this side of the House we are proud of the fact that we put B.C. Hydro back under the auspices of the B.C. Utilities Commission. We made that promise. We are proud of it. It was the last administration that removed that responsibility. It is this administration and this ministry that actually instructed B.C. Hydro to the letter that they're going to undergo a full review from the B.C. Utilities Commission, they will undergo a full review of the EA process, and the pipeline will go through its full review of whatever has to happen with the pipeline.

We've been upfront with the people of the province of British Columbia and upfront with the people on Vancouver Island as to what's taking place now with the Duke Point plant. Let me put it this way. That's a lot better — not worse — than what we experienced just a number of years ago.

The member asked a question in regard to the Calpine agreement with B.C. Hydro. That agreement was nullified. There was an opportunity to off-ramp out of the agreement for B.C. Hydro at a certain point in time. B.C. Hydro chose to do that, because at that particular point in time all the things that were going on in the U.S.A. — in the California market, in the Pacific Northwest market — were happening. B.C. Hydro thought it in the best interest of British Columbians to actually buy their way out of that project. I can get the exact dollar amount, but it's somewhere between $2 million and $3 million, I believe.

J. MacPhail: Why doesn't the minister have that information here now? Would it be better to ask that question under Hydro estimates later tonight?

Hon. R. Neufeld: Actually, we can get that number for you. Someone will be watching the estimates right now and will be out there getting that number.

J. MacPhail: B.C. Hydro also bought two turbines during this time. Can the minister tell us how much those turbines cost?

J. MacPhail: I was just trying to confirm it. You know, I'm one person, and I've done my research. The GSX hearing transcript of March 3, 2003, says the two turbines cost about $91 million.

Hon. R. Neufeld: Yes. The gentleman from Hydro says it's $91 million that was expended on the two turbines.

Hon. R. Neufeld: We'll get that exact number for you. It is not what was paid for them. It is less, but I don't know how much less. We'll have that information, also, for the member when we debate Hydro estimates.

J. MacPhail: The VP of engineering at the hearing said that they were worth about $45 million, so a loss in value of about half. I guess the government wouldn't want that information out there though, would they, because they might have to shut up about fast ferries in that case. Where are the turbines now?

J. MacPhail: Where are the turbines? Does the minister want me to wait and ask these questions when Hydro estimates are up?

Hon. R. Neufeld: No, it's fine. She can ask those questions. I don't have that right in front of me.

Hon. R. Neufeld: That's fine. If the member has already got them, she knows them. I'm not sure she does, but we'll get that information. Hydro is recording these questions, and they'll get you the exact amount.

J. MacPhail: I'll put my questions on the record, then, and we can have the answers after supper. Where are the turbines? What will B.C. Hydro do with the turbines if the Vancouver Island gas pipeline is not built? How much money has been sunk into the Vancouver Island natural gas projects? Where in the minister's estimates does the cost of the money being sunk into this pipeline project appear?

Okay, let me just see whether I have other questions. Oh yes. Maybe the minister can answer this question now. Policy action No. 9 — and these are from the government's energy policy — says: "Electricity distributors will acquire new supply on a least-cost basis." Can the minister tell us how much the electricity generated at the Duke Point project will cost?

Hon. R. Neufeld: The energy prices go up and down an awful lot, but it's expected to be around $73 a megawatt-hour.

J. MacPhail: Okay. I'm sorry. Did the minister say $73? Yes. Okay. Is that the least-cost generation?

Hon. R. Neufeld: In comparison to what it costs to generate electricity by hydro, by water, on the mainland, it is more expensive. But it is the least-cost option for Vancouver Island, because you have to get the electricity to Vancouver Island somehow. It is the least-cost option moving forward for Vancouver Island.

J. MacPhail: I was wondering about that. The other day in this House, one of the minister's Liberal colleagues got up to ask the minister about the success B.C. Hydro is having in attracting clean and green energy sources to its grid. The minister then, as I recall, stood in the House and told us that when Hydro went looking for 800 gigawatt-hours of customer-based energy on a cogeneration basis, they received proposals for 6,800 gigawatt-hours.

Then when Hydro went looking for another 800 gigawatts of clean energies, they got proposals for another 6,400 gigawatt-hours. So that's a huge success, but I'm wondering…. That seems like a huge success, but is that energy more expensive than the Vancouver Island gas pipeline, and is that why the minister is ignoring it?

Hon. R. Neufeld: As I explained, I believe most of those projects are on the mainland. You still have to get the electricity to Vancouver Island, so when you take all that into account, the least-cost electricity for Vancouver Island is still natural gas fired on Vancouver Island. There are also some other reasons around that.

We can't get enough natural gas through the lines that already come to the Island to provide natural gas for heating and for the commercial and industrial plants that we have. Also, in the peak periods, the plant at Campbell River will run short of natural gas and would actually be forced, if it needed to be running, to burn diesel fuel. We want to get away from that. We want to get a clean source of fuel to Vancouver Island so that we can actually get people off burning diesel fuel in their home furnaces, as best we can. There are a number of issues around this, not just taking out a call for clean energy.

Now, clean energy — most of it was Hydro-developed — is relatively cheap. It's less than the rates that I just quoted for the generation of natural gas on Vancouver Island. We were oversubscribed for British Columbia, which bodes well for the province. That means that in the energy plan, where we're looking to grow our incremental load from the private sector, the private sector is actually there, willing and able to make those investments so that we can have that energy.

J. MacPhail: Is this minister saying that of the total of 13,000 gigawatt-hours of proposals that B.C. Hydro got, none of them is on the Island to compensate for what would be — what is it? — a 270 megawatt production for the Vancouver Island gas pipeline?

Hon. R. Neufeld: I can't give the gigawatt-hours that these proposals would be able to develop because of confidentiality. The 30 that were short-listed are still dealing with Hydro. But there are six small ones on Vancouver Island that put proposals forward that have been short-listed. I can provide a list to the member so that she can have a look at them. The only thing I can't

give out to the public, or that's for public consumption yet, is how big they are, because of some commercial nature in the deal.

J. MacPhail: I'm fine with that, but I would appreciate the six that have been short-listed.

Here's where I'm going on this: clean emissions versus the Vancouver Island generating plant. Of course, let's be very clear. This government is taking a certain point of view on the Vancouver Island gas pipeline that it's pushing through, and it's taking exactly the opposite point of view at Sumas 2, but we'll get into that in a moment. By B.C. Hydro's own records, the Vancouver Island generating plant will add some 930,000 tonnes of greenhouse gas per year to the atmosphere. These additions to the airshed that Nanaimo shares will have to be offset by B.C. Hydro elsewhere. B.C. Hydro admits this.

Can the minister tell us how or where B.C. Hydro will find the promised offsets to the additional greenhouse gases produced by the Duke Point plant?

Hon. R. Neufeld: Yes, B.C. Hydro did purchase offsets in, I believe, 1999-2000 — some, as I'm told, 33,000 tonnes — to offset the plant that the government of the day was intending to build at that time. The offsets that would come from some of the run-of-the-river projects that would happen around the province would be used to offset the emissions from the Duke Point plant moving forward. Now, those are still in negotiation and will be in negotiation. Some of the proponents may want to keep those credits, and B.C. Hydro would pay them for it. Or they may just want to leave them with B.C. Hydro, and B.C. Hydro would use them as offsets. Those negotiations could be different in different cases.

That doesn't mean that all 30 of the communities on the Island that are short-listed will actually be chosen. What happens is that they will do a bit more development and proposals to B.C. Hydro. The first was for a general call, and now these 30 will actually go out and prepare fairly detailed proposals of what they plan to do and how they plan to generate the electricity and provide it to….

Hon. R. Neufeld: This is for the last call that we made in October for clean energy, yes. There's Port Alberni, China Creek; Gold River, Cypress Creek; Nanaimo, Nanaimo reservoir; Mount Brandes wind farm, Holberg; Ucona River hydro project in Gold River; and one in Zeballos, the Zeballos Lake hydroelectricity facility. Those are the six on Vancouver Island.

J. MacPhail: I hope the minister understands my premise. Perhaps it would be better to pursue the conclusion of negotiations around those clean energy projects before proceeding with the Vancouver Island generating plant, because the minister said last week that the difference between the Vancouver Island generating plant and Sumas 2 is that the airshed is much different around Nanaimo and will not be adversely affected by this plant as it would be in Sumas.

On September 16, 2002, this document was submitted to the environmental assessment office. It's from a substantial group of physicians and health care workers. Here's what they wrote: "We are writing to express our concerns with the potential health risks to the residents in the regional district of Nanaimo posed by the proposed Vancouver Island generating project power plant at Duke Point." I will read just parts of this. I'll be happy to give the minister a copy, because I'm not editorializing it to make a certain point.

They then go on to say later on: "We, as physicians and health workers, are very concerned about the deterioration in our air quality and its detrimental health impact that will very likely result from the operation of the proposed power plant. We think we should endeavour to work towards the reduction of ambient air particulate matter to optimize the health of our citizens." It's signed by a whole bunch of physicians and health care workers.

The point I'm trying to make here is that there are proposals going forward for clean energy on the Island. Wouldn't it be better to pursue those first and see whether they're possible so that we wouldn't have this huge increase in tonnage of greenhouse gas being pushed into the air every year? What impact is this generating plant going to have on B.C.'s ability to meet its Kyoto targets?

Hon. R. Neufeld: I appreciate the letter that she read into the record. Those people presented that to the environmental assessment authority while they were having hearings in regards to this plant, and that's the proper place for that information to go.

The second thing I want to bring forward, and the member's right…. We should be pursuing the clean energy proposals on Vancouver Island and off Vancouver Island, and we are doing that. B.C. Hydro will move forward with those six projects on Vancouver Island, and hopefully, they come to fruition — that they're actually there. The other thing I want the member to remember is that those projects, I believe, are all run-of-the-river projects — the six of them. I could be corrected there a little bit, but I believe all six of them

are. That's not firm power, because these are smaller projects. The rivers don't always run, and they can't generate power year round, so it's not firm power.

The plant at Duke Point would be firm power. It could actually deliver the amount of electricity that's needed. That plant would just take the place of the cables that would be decommissioned, going from Vancouver to Vancouver Island. It's about the same 265 megawatts that come across in those cables that are to be decommissioned once this plant goes into place. That doesn't take care of any load growth going forward.

Vancouver Island is growing fairly quickly. There are a lot of people moving here, so we need new electricity going forward. The Duke Point plant will just replace what the cables deliver now, and actually, we want to get generation on Vancouver Island moving forward for the incremental load growth that we see out in the future. That's on average, across the province, just under 2 percent a year.

J. MacPhail: Thank you for that information. I am asking, though, about the costs now of putting this plant in place and what it will cost B.C. in its ability to meet its Kyoto targets. Let me just add some more information so that maybe the minister can then answer that question. The Business Council of B.C. has noted that the key factors contributing to higher greenhouse gas emissions in B.C. are rising population; the increasing role of non-hydroelectricity generation, mainly gas but including coal; and the expansion of upstream and gas production. It seems this energy plan for the Island is a plan that will increase greenhouse gas production, and there will be costs associated with that. What costs has the minister estimated will be incurred by the provincial economy for his plan around the Vancouver Island generating plant, which will increase greenhouse gases?

Hon. R. Neufeld: That is actually a good question that is on most Canadians' minds and most British Columbians' minds — the Kyoto protocol. The federal government has still not informed us of what our targets will be, how we will meet those targets, how much they're prepared to put forward on offsets and how they're going to move forward with heavy industry. We also should know in British Columbia that the fastest-growing greenhouse gas emitters are the vehicles, the cars that drive on our roads. In fact, I believe about 60 to 70 percent of the greenhouse gases created in the province is from transportation, not from generation of electricity.

I appreciate the member's concern about Kyoto. We are concerned about Kyoto also. I'm sure she stands with the government in trying to negotiate with the federal government that we should have some clean energy credits for what was done in the past with the hydroelectric facilities we have in the province. I'm hopeful she stands alongside of us and argues with the federal government that the forests in British Columbia, a great sink for greenhouse gases, actually belong to British Columbia and that they should belong to the people of the province and not the federal government, as proposed now, and that she will stand alongside of us and say, yes, the agricultural sinks should belong to the province and not to Canada as a whole as some national treasure for the federal government. Those are the arguments that we're trying to make with the federal government as we speak today.

I don't have an exact cost of what it would be. Offsets trade on the New York Stock Exchange. They're all over the place. No one really knows, but those offsets can be purchased. Some of what I find a bit ridiculous about the Kyoto protocol is that you actually buy them in countries that have some failed economies, one of them being Russia. Russia is one of those countries that's classed as a clean country, and they have some greenhouse gas credits that they can sell. The federal government is proposing that they go to Russia, as the federal government, and spend hundreds and hundreds of millions of dollars buying greenhouse gas offsets to reduce us to 6 percent below 1990 levels.

Our government thinks we would be better off to spend that money in British Columbia or in Canada at least — what the federal government is going to spend on R and D — to deal with greenhouse gas, CO2 sequestration. That can be done in the province. It's expensive, but it's done in the oil and gas sector to a degree. We will move forward — the industry — with greenhouse gas sequestration.

It's a huge issue. It's not that simple just to say it's going to cost X amount of money. Everything we do in the environment, moving forward with Kyoto in fossil fuels, which will be with us for a long time into the future, we're going to have to deal with as the days come to us and as the federal government finally decides what they're going to do with Kyoto. They've signed it. It's been no further than a signing and a lot of ads on TV.

L. Mayencourt: In the gallery today we have some guests that are very, very special. They are friends of many members of this Legislature but also friends to many, many British Columbians. We're joined by a delegation from the Salvation Army led by Lt.-Col. Donald Copple, Maj. Richard Cooper, Maj. Bill Mollard, Capt. John Murray, Capt. Penny Lang, Capt. Juan Bury and Corrine Cameron. They're here today to provide information to MLAs about the good work they do throughout the many communities in British Columbia. I'm going to have the pleasure of being with these folks on Friday to break ground on their newest

J. MacPhail: I'm delighted to join with the member for Vancouver-Burrard in welcoming them, and I just offer my apologies that I may not be able to join them later. My heart is there, and I'll get all of the information from all of my wonderful colleagues here amongst the Liberal caucus. I welcome the delegation as well.

R. Hawes: I, too, want to welcome the delegation. In addition to their giving us information, they did receive information today that certainly I know made them very happy and makes me very happy in my riding, in that we have been able to confirm full funding for the coming year for the Miracle Valley Drug and Alcohol Treatment Centre. That's a cause for, I think, a considerable amount of celebration for them and certainly for us.

B. Belsey: I'd like to ask a few questions regarding the offshore oil and gas. There's been approximately $2 million that was made available to UNBC. Can the minister tell me where we are with that amount? Do we know what's been spent, and do we know what UNBC is preparing and where they are with the proposal?

Hon. R. Neufeld: The $2 million that was given to UNBC to start researching some of the scientific research panel's questions…. There's been, to date, about $100,000 plus spent of that $2 million. I'm told that they have four substantial requests for proposals out, as we speak, that will be decided on fairly soon.

My second question deals with the oil and gas group that has been set up within the ministry. Can the minister tell me what the size of this group and the operating budget of this new organization are?

Hon. R. Neufeld: Yes. I'm happy that we created an offshore oil and gas team within the ministry to deal specifically with offshore oil and gas issues. The budget for that this year is $5.7 million for fiscal '03-04.

My third question is: what first nations communities or bands has the minister met with to date to discuss the potential development for offshore oil and gas?

Hon. R. Neufeld: The ministry has met with a number of groups and organizations. The minister hasn't, but the ministry people have. I can read out some of them. We met with the task group on First Nations Summit, the president of the Union of B.C. Indian Chiefs, the B.C. Aboriginal Fisheries Commission, the Native Brotherhood, the executive of the Turning Point initiative, Chief Robert Dennis and Chief Judith Sayers. I was too quick to say I hadn't met with anyone. I've met with Chief Robert Dennis and Chief Judith Sayers and discussed very briefly issues around offshore oil and gas.

B. Belsey: Can the minister tell me if he or the ministry has spoken with anybody from the Haida first nations or the Tsimshian first nations?

Hon. R. Neufeld: Yes, the ministry has talked to both the Haida and the Tsimshian. They're part of the Turning Point. They have been contacted, also, by letter.

B. Belsey: This is my last question. Can the minister tell me whether the province has started negotiating with the federal government over ownership of the offshore rights for the North Coast bodies of water?

Hon. R. Neufeld: There have been some initial discussions with the federal government over ownership, although it's not as in-depth yet as we'd like it. We've just created the offshore oil and gas team, and that'll be one of the things that they obviously have to work towards achieving.

J. MacPhail: We'll move back to the GSX Vancouver Island pipeline project, if I may. We're talking about alternative sources to the Georgia strait crossing and the Vancouver Island generating plant at Duke Point — alternative sources to that — in order to not add to greenhouse gases.

A couple of issues. The minister, I'm sure, is aware that NorskeCanada, through its three pulp mills that are already on the Island, consumes about 25 percent of the total hydro capacity for Vancouver Island. I'm sure he's aware that Norske has come forward with a plan that would see them cut their energy consumption by 200 to 250 megawatts. In fact, if NorskeCanada does that, this would, in effect, make the Duke Point plant not necessary at all, because it is, by the minister's own admission, going to produce only 250 megawatts of power.

There's that factor. Then there's another factor, which is that a historical analysis of the load growth on the Island shows it to be flat, and yet Hydro continues to forecast a load increase of 1.5 times the forecast demand growth rate. Yet Hydro delayed its application to

the B.C. Utilities Commission by three months in order to re-evaluate its load forecasts for the Island.

So on the one hand, we have corporate citizens moving forward to come up with a solution that won't require the plant at all. On the other hand, we have it up in the air, at best, about whether indeed the megawatt capacity offered by the Duke Point plant is necessary at all.

How much faith does the minister actually have in Hydro's load forecasts for the Island?

Hon. R. Neufeld: The member's right. Norske is Hydro's largest customer provincewide. Actually, Norske did come forward with some proposals to reduce their consumption and actually generate some electricity out of the plant. The reason Hydro delayed going to the B.C. Utilities Commission was simply to review what Norske had put forward to them and to make sure that all that was put forward was actually real and could happen. In their estimation at the end of the day, there was no doubt Norske could save some energy and generate some energy, but there was still a need for a generation plant at Duke Point.

The other issue will be clearly dealt with, with the B.C. Utilities Commission — that's what the B.C. Utilities Commission is all about — when Hydro presents to the commission all the reasons why they think they should do it, all the costs associated with the project and all the reasoning. The B.C. Utilities Commission's responsibility is to make sure that, in what Hydro is putting forward, there's an avenue for the public to get involved, for people to get involved to talk about these issues.

Actually, the B.C. Utilities Commission, in its own right…. And it has the right to say: "No, you don't need that plant. There are other alternatives that you can use on Vancouver Island." Then B.C. Hydro will have to go back and think very seriously about how they're going to deal with load growth on Vancouver Island.

J. MacPhail: At these B.C. Utilities Commission hearings, where the commission will consider the NorskeCanada proposal, the commission will be considering that in conjunction with the necessity for the Vancouver Island generating plant and also examining the validity of B.C. Hydro's load growth projections? It'll all be done together as a package?

Hon. R. Neufeld: I would assume that Norske, with their proposal, would come before and be an intervener at the B.C. Utilities Commission and make their presentation on how they can generate that electricity either through conservation or new proposals they would have moving forward to generate it. So the B.C. Utilities Commission will review that. That's what the B.C. Utilities Commission's job is: to make sure that B.C. Hydro provides British Columbians with electricity at the cheapest rate we possibly can.

J. MacPhail: I just want confirmation that all of this will be done in conjunction with the Utilities Commission evaluating the accuracy of B.C. Hydro's load-growth projections.

Hon. R. Neufeld: Yes, the B.C. Utilities Commission will be reviewing all aspects of it, which will be inclusive of B.C. Hydro's estimate, going forward, of load growth.

J. MacPhail: Now, the minister has said that after the Duke Point plant is built, it will be sold. My understanding is that Hydro's private sector partner in the pipeline is in serious financial trouble, and of course, we've already said that its partner for the power plant, Calpine, has backed out. How much taxpayer money has the minister got set aside as a budget that he's willing to spend on the project and then turn it over to the private sector?

Hon. R. Neufeld: Actually, what we've asked Hydro to do, once the plant is completed — if it is, and that remains a decision of the BCUC at the end of the day — is actively look for partners so that they can remove themselves from both the pipeline and the plant on Vancouver Island — to the private sector, not at a fire sale loss but to sell it for the best commercial dollar we can possibly get.

If it isn't something that's substantial and actually meets the obligations that have been put in place to put the plant on Vancouver Island, I'm sure B.C. Hydro will have a serious look at it and talk to the government before they make the sale. It's not that when you're done, just sell it.

J. MacPhail: Okay, because I heard the minister be very firm that the Duke Point plant will be sold, so it's encouraging to hear that's not necessarily so. I'm told that the price tag for the project so far, the current price tag, is $700 million. Is that correct?

Hon. R. Neufeld: Approximately, it's right, and we'll have those answers after supper. The people from Hydro are getting the exact answers, but it's in that neighbourhood, yes.

J. MacPhail: Maybe I should ask my questions around agreements with Powerex as well. I'll save that for after supper.

Just on the pipeline construction, in 2000 the pipeline was being put forward with a price tag of $180 million. I understand that now, as of this year, 2003, the cost has nearly doubled to $320 million. Of course, on top of that, there's the $380 million for the Duke Point plant. The minister has said that this is about $73, I think it is.

J. MacPhail: A megawatt-hour. That works out to 6.8 cents, I think, a kilowatt-hour. Is that correct, or…?

Because I know the member wants to get on to some other questioning, maybe she can tell me: is she is done with offshore oil and gas and the ministry? I could let those people actually go home, if we're going to stick straight to Hydro, or if there are some questions from some of the other members that want to ask a few around maybe offshore oil and gas and the ministry…. Is that possible? I'm just trying to accommodate everyone, that's all.

J. MacPhail: I'm fine to ask my questions around GSX, Sumas 2 and Hydro afterward, and I have a few questions around offshore oil and gas. I think perhaps I'm fine to move over there, by agreement that we deal with Hydro after supper — right after supper.

I think it's safe to say that the minister has made less-than-subtle threats directed at the federal government to the effect that if the federal government does not move to lift the moratorium on offshore oil and gas, B.C. will go it alone. The minister has invested a lot of his own personal political capital in the project. He has actually picked a fight with the federal Minister of Environment and gave him the greatest insult that this minister is capable of, which is to put the federal Minister of Environment in the same category as my colleague the member for Vancouver–Mount Pleasant and me. Of course, the federal Minister of Environment is the lead minister on this file. Then on top of that, the Premier has suggested that offshore oil and gas exploration will be a reality by 2010, as has the Minister of Competition, Science and Enterprise.

Once you get past the rhetoric of this government, a different picture actually emerges. Scott Trollope, the chief geologist and manager of new business development for Shell Canada, says the estimates that have been quoted by the minister and other boosters of offshore reserves are inaccurate. These estimates refer to the in-place resources believed to be there. They do not relate to the actual recoverable amount. There's a difference between what's there and what you can get out. Also, Rob Woronuk, a consultant and senior analyst with the Canada Gas Potential Committee, could, I think, be described as being skeptical about both the amount of resource and the timing for its development. Can the minister, given that context, tell us what the ministry's best estimate of the actual amount of recoverable oil and gas is in the Queen Charlotte basin?

Hon. R. Neufeld: First, I want to correct something. The member referred to an article, I believe, in the National Post today authored by John Greenwood, where I said British Columbia would go it alone. The member is quite aware that sometimes some of the conversation is forgotten and not written in its entirety. What I said was that all the negotiations would need to take place with the Department of Fisheries and Oceans, with Natural Resources Canada, with first nations. All those things would have to happen before you could even move in the Strait of Georgia. That clears that up.

Yes, I have been a bit critical of the federal Minister of Environment, and I'm not alone in that. I don't know of anybody in British Columbia, other than maybe a select few, who isn't a bit critical of his opposition to people actually having jobs in the province and to actually having some wealth generation happening in the province.

Another correction: the Minister of Natural Resources, Herb Dhaliwal, is the lead minister on this, not David Anderson. At least, that's how I understand it.

The estimate of the reserves is 42 trillion cubic feet and ten billion barrels of oil off the whole coast. The amount that's recoverable is obviously not known today.

It's interesting that she quotes some geologists that say it's only so much. I use the example of a field just north of Fort Nelson that was drilled 30 years ago and thought to be depleted. There are new technologies today that allow EnCana to go in there and invest some $300 million to $500 million and actually extract a different kind of gas from a different zone, because of technology change. They're going to do that over the next number of years in the same field that was expended, was done, as far as Mobil Oil and Esso and PetroCan thought. Those things happen as we move forward and technology comes on stream to allow you to extract more.

I met with the people from Shell. Shell in Calgary have told me that they're, in fact, quite excited about exploring offshore British Columbia, but they've said a number of things have to be in place first, unlike what took place on the east coast. That is, you first have to have the ownership determined between the federal government and the province. You have to have the ownership dealt with between first nations and the province. You also have to have a regulatory system in place so we know what we're doing or what we have to do before we start.

There were a number of other things, but those were the three main things. I'm not from the east coast, but as I understand and am told about the east coast, they ventured out there saying, "Well, we'll just kind of try all this, and we'll make those decisions as we move along," and it actually cost quite a bit of money.

I've met with a number of other companies that are quite interested — in fact, very interested — drilling companies that drill offshore, oil companies that actually explore offshore around the world quite safely…. They would like to come to the west coast, as long as we get a lot of those things done — the scientific studies that we committed to — before they would move forward offshore. That's why we're trying to get those things done. That's why we created an offshore oil and

gas team within the ministry to start working at those things in a serious manner.

J. Bray: Joining us in the House are two future voters from the Victoria area. Diana Izard is here accompanied by her friend Adam McLaren, and they are both accompanied by Diana's mother, Daphne Izard. If those names are somewhat familiar, they are relations of our erstwhile Law Clerk, Ian Izard. I'd ask the House to please make them welcome.

J. MacPhail: We certainly won't tell her the stories that her father tells about her to anyone. Promise.

It is interesting. It is a good checklist put forward by EnCana, and of course EnCana has shut down after billions of dollars of investment on the east coast.

J. MacPhail: Well, EnCana has pulled out as well. Shell put forward the list. Sorry, the minister is right to correct me. Shell put forward the checklist of things that need to be done before exploration can be put forward. Of course, EnCana, who I think had invested over $2 billion in offshore oil and gas drilling on the east coast, has pulled back and out and put a stop on that basis.

I also note, further to the questions of the member for North Coast, who is also asking whether the minister has met with the Haida, etc…. Of course, the Haida have filed a claim to the seabed. That will be a substantial legal matter to be resolved. Of course, there is the legal matter, after that is resolved, of what remains and how it's divided up between the federal and the provincial governments.

The anticipation of offshore oil drilling by 2010. I haven't been selective in choosing my quotes here. These are the only quotes I could find. I don't know of the companies that the minister has been meeting with, and certainly there's no public record of their excitement around this. Here's what Rob Woronuk said: "Offshore oil and gas by 2010? The Premier may talk that way, but the National Energy Board, whom I consider to be very optimistic on this, sees the first production in 2017. I see that as a very optimistic target." We would be hard-pressed to devise a whole economic strategy around the hope that this will on line, so to speak, by 2010.

How much of the minister's budget is devoted in this fiscal year, '03-04, to offshore oil and gas, and what is it being used for?

Hon. R. Neufeld: I've been advised that the chief geologist for Shell, Scott Trollope, made a presentation to a conference in Vancouver just recently in regard to offshore oil and gas. We can certainly get that for the member and give it to her.

What is budgeted for the offshore oil and gas division in the Ministry of Energy and Mines is $5.7 million.

J. MacPhail: What will it be used for? This year, what will that money be spent on?

Hon. R. Neufeld: Obviously, there will be a team of individuals. There is a lot of information to gather, some scientific information that needs to be gathered. There will be a lot of discussion surrounding first nations and their concerns. That will be funded out of that money — money for operations to be able to deal with Natural Resources Canada, Environment Canada, DFO and all the folks we have to deal with, with the federal government. There will be some projects put out to tender to different firms to do some work offshore for the ministry.

J. MacPhail: The federal Minister of Environment estimates that environmental assessments necessary for offshore oil and gas to go ahead will cost $120 million. The industry itself puts those costs at around $100 million. What are the minister's estimates of the cost of environmental assessment for offshore oil, and who pays?

Hon. R. Neufeld: We have not put together what we think it would cost in actual dollars to do it. I think, to be perfectly honest, the Minister of Environment…. I'm not sure where the studies are to show what he thinks $120 million would get you. We know, from the 15 recommendations from our scientific panel, that we're going to move forward with those with the money we have allotted today. As we've done with other things, this would be something that industry would contribute to — and, I would expect, fairly heavily — to get the environmental and scientific information we require.

Hon. R. Neufeld: The member had asked some questions earlier in regard to B.C. Hydro. We wrote them down. They are: what were the costs to get out of the Calpine partnership? It's $2.525 million. This represents Calpine's costs to date in the project, which Hydro agreed to pay them.

What was the total cost of the turbines? It's $87 million. What is the value today of the turbines? The re-

sponse is that we have not tried to sell the turbines, but a conservative estimate is that they are worth about half the purchase cost, remembering that those turbines were ordered actually under the member's administration. They were in great demand at that time. I'm not trying to say you overpaid for them. I'm just saying there was a huge demand for turbines at that time in the Pacific Northwest, and that's why the price was so high.

Where are the turbines? One turbine is still with the manufacturer, General Electric. The other is at Hydro's warehouse in Surrey.

What will Hydro do with the turbines if it doesn't go ahead? The turbines will be sold. Again, not at fire sale prices, but Hydro will try to get the best dollar they possibly can out of them.

What are B.C. Hydro's total costs on Vancouver Island so far related to the natural gas strategy? The costs to date are: Vancouver Island generation project, $68.8 million; Port Alberni, $3.5 million; GSX, $25.2 million is B.C. Hydro's share. Williams' share is $20.7 million for the pipeline. Total B.C. Hydro costs to date are $97.5 million.

Where do these numbers appear in the minister's estimates? They don't. They're in Hydro's balance sheets.

Is the $700 million total cost figure for Vancouver Island projects correct? The total projected costs are $340 million for the pipeline and $370 million for the plant.

P. Nettleton: I do have a few questions. I'll take up, actually, where I left off, if I may, on Thursday of last week. On Tuesday of last week, B.C. Hydro and Accenture named their appointees to the board of directors of the new company, to be called Accenture Business Services of B.C., that is taking over the management services of B.C. Hydro as of April 1, 2003. Again, to the minister, who has the responsibility of appointing board members to Accenture Business Services of B.C.?

Hon. R. Neufeld: B.C. Hydro has the right to appoint three, and Accenture has the right to appoint four.

P. Nettleton: I have some concerns regarding some of those appointees, especially in light of my request to the auditor general of B.C., in part to investigate whether there be any connection between Accenture and Andersen Consulting, Arthur Andersen LLP. One of the board appointees, Etienne Deffarges, held the same position of global managing partner with Andersen Consulting as he will now be holding with Accenture Business Services of B.C.

A quote that I have in this regard comes from Utility Business Magazine, the December 1, 1999, issue, under the heading "Andersen Consulting Appoints Partner": "Andersen Consulting has appointed Etienne Deffarges as global managing partner for its worldwide utilities practice. Deffarges specializes in portfolio strategy, privatization, foreign investment, mergers and acquisitions."

A question, then, to the minister: is this the same Etienne H. Deffarges that the publication Fortnightly Energy Customer Management, October 15, 2000, identifies as the global managing partner for utilities strategy at Andersen Consulting, San Francisco?

P. Nettleton: Is this the same Etienne H. Deffarges who, as a presenter at the third annual Enertech Forum, extolled his success with Accenture in making Enron Corp. a clear winner in revenue growth for 1999-2000?

P. Nettleton: It would appear that Mr. Deffarges himself is crediting Accenture with Arthur Andersen's earlier claims to have made Enron a clear winner. This shows that Mr. Deffarges is still proud of his Andersen work with Enron.

To the minister: is this the same Etienne Deffarges who alternatively and concurrently described himself in different publications as both the global managing partner of Andersen Consulting and of Accenture consulting in the U.S.A.?

Hon. R. Neufeld: I can't answer that question. I don't know. It's really not a lot to do with B.C. Hydro.

P. Nettleton: Accompanying Tuesday's media release from B.C. Hydro is a backgrounder containing bios on each of the newly appointed board members, and Mr. Deffarges's bio conveniently omits to mention that he was a global managing partner for Andersen Consulting U.S.A. What it does say is: "Previously, Mr. Deffarges held the position of global managing partner of the strategy and business architecture resources practice for Accenture." These statements and claims by Mr. Deffarges are highly contradictory, unless Mr. Deffarges has a twin brother with the very same first name.

A question for the minister: could we be looking at an altered or adjusted résumé here to conceal the fact that Mr. Deffarges was indeed high up in the Andersen organization at that time? My research into Accenture/Andersen indicates they are masters of revisionist history. In fact, they prefer to have no corporate history that links them to Andersen and Enron, but I'm telling you that Andersen's director's career history is directly linked from Accenture back to Andersen Consulting — all the way back to Arthur Andersen accounting and their involvement with the Enron corporation and the other accounting scandals that we are all aware of.

Now they're moving into B.C. Hydro with the blessing of this government. Does this not concern you, Mr. Minister?

Hon. R. Neufeld: First off, the CV that was prepared, which went with the announcement — I don't

take umbrage with it. I assume the person put in there what they normally do. I don't know if they've put in there everything they've done in their lifetime. That's entirely up to the individual.

It's obviously no secret that Accenture and Arthur Andersen were a business before. I think we have to move forward from there, and we should not say that anyone that ever worked for Andersen Consulting, Arthur Andersen or Enron are all bad people, unless you want to say everybody that worked for Enron were bad people. I'm not sure if that's what you're inferring.

Obviously, we know the name. I've confirmed the name, and that should answer the question.

P. Nettleton: A question, then: are this government and B.C. Hydro concealing these facts because they don't want the people of this province to come to the conclusion that their government and B.C. Hydro are actually going into partnership with Andersen Consulting of Enron infamy by engaging Accenture?

Can you tell me, Mr. Minister, who made the decision to remove Andersen Consulting from the bio of Mr. Deffarges? If Andersen Consulting has a clean record, as you suggest, why did it misidentify the name of his previous employer, thereby attributing Andersen's work with Enron to Accenture?

Hon. R. Neufeld: Accenture Business Services is a corporation incorporated in the province of British Columbia. It will employ British Columbia people, pay taxes in British Columbia and move forward and provide services to B.C. Hydro through an outsourcing agreement. That outsourcing agreement will save B.C. Hydro ratepayers approximately $250 million over ten years. I think that's actually good news for the province.

The member continues to bring things from some other time frame. I suppose we should look at B.C. Hydro and see that with Arthur Andersen and Accenture, B.C. Hydro spent some $50 million or $60 million in the last 12 years with those corporations. I guess everybody at Hydro who did that should be fired and anybody that was in control of Hydro should be fired. They're all bad people. I don't think so. Those services were procured because they can provide the services to British Columbians.

Hon. R. Neufeld: I should also let the member know that there was — and maybe he knows this — a request for proposals where 19 corporations came forward to make a presentation to B.C. Hydro about outsourcing their services. Accenture was short-listed from that.

P. Nettleton: Another question, if I may: were you aware that Andersen Consulting did not officially change their name to Accenture until January 1, 2001, but that they used the names Andersen and Accenture interchangeably before that time following the Enron scandal? Given that that's the case, do you agree with me that these questions, among others regarding Accenture, should be investigated?

Hon. R. Neufeld: The member has asked the auditor general to review the deal that Hydro has with Accenture Business Services. I don't know what the decision is of the auditor general at this point, but I'm sure he asked that same question there.

Also, the contract. When B.C. Hydro applies for a rate review sometime this fall, the B.C. Utilities Commission will have an opportunity to review that contract and make sure the agreement that was made in that contract is actually going to save British Columbians money. They will review it to make sure they're going to receive the same services and the quality of service. I'm comfortable with that. That's all done within British Columbia.

I'm also comfortable with the fact that if we can save $250 million, I think it's incumbent on this government, on me, to actually exercise that right. I'm not sure; maybe the member is saying we shouldn't save $250 million — that maybe we should just kiss $250 million goodbye. I'm sure that isn't what he's inferring, but it tends to lead me to believe that that could be what's happening.

P. Nettleton: One further question regarding another appointee to the Accenture Business Services board: Mary Tolan, chief executive, resources group, Accenture. I see that her bio does not include specifics of her career history. Is it not true that, in fact, Ms. Tolan was a global managing partner of Andersen Consulting and that she was based in Andersen's head office in Chicago — according to her interviews in Information Week, November 20, 2000, and CNETnews.com, February 9, 2000?

Hon. R. Neufeld: I'm going to reiterate that Andersen Consulting is gone. We're dealing with a company called Accenture Business Services, actually incorporated in British Columbia with a head office in Vancouver. As far as what the member said, I have no reason to disbelieve him, because I don't have in front of me the information that he has. That's the answer to the question.

P. Nettleton: Just a thought. Perhaps the minister could introduce his staff at this time, so we have some sense as to who his staff are.

Hon. R. Neufeld: Actually, if the member…. Earlier, when we began estimates this afternoon, I introduced the folks, and I have a list here. During his next question I'll find it.

P. Nettleton: Well, this move into B.C. must be very important to Accenture, as Ms. Tolan was second-in-

charge of Andersen Consulting worldwide to chief executive Joe Forehand. It appears that B.C. Hydro and the B.C. government are now helping Accenture legitimize or launder itself into an onshore, made-in-B.C. company. Will this subsidiary of Accenture, to be known as Accenture Business Services of B.C., no longer avail itself of Accenture's tax-dodge base in Bermuda, or will Accenture Business Services of B.C. be registered in both B.C. and Bermuda? What assurances can the minister provide the people of B.C. that Accenture Business Services of B.C. will be 100 percent a B.C. company and not even a teeny, weensy bit Bermuda-based or tainted with the Andersen-Enron scandal?

Actually, I shouldn't even be asking that, because it's not possible for such a big, crafty leopard to change its spots. Either somebody in this government has had the wool pulled over their eyes by this Andersen-Accenture Houdini act, or someone in government is in cahoots with Andersen-Accenture. The more I research into the Accenture-Andersen-Enron connection, the more I see of the careless doublespeak of the companies' directors and principal officers nationally and internationally.

Mr. Minister, loose lips sink ships, and I believe the Accenture ship is not a seaworthy craft. It's an old ship with new paint. The name on the side says "Accenture," but under the peeling paint, if you look carefully, you can still see the name "Arthur Andersen," which will never go away, no matter how much they paint over it. I do hope, Mr. Minister, that you are an innocent dupe in this whole sordid scheme and that you're not caught with paint on your hands when this is all over. Thank you.

I'm going to introduce, again, the people that are with me: Bob Elton, the executive vice-president of finance and chief financial officer; Gary Sherlock, director of finance with B.C. Hydro; and Les MacLaren, with the province of British Columbia, executive director.

J. MacPhail: Perhaps we could go back to the answers on what Hydro has planned in terms of the allocation of hydroelectricity on the Island in terms of its load-growth forecast — explaining that.

Hon. R. Neufeld: Through the Chair to the member: would she ask the question again? I wasn't listening. I'm sorry.

J. MacPhail: Sorry, we talked about it before supper, but I understand wanting to repeat it. The load-growth forecast historically has, until very recently, for Vancouver Island been flat. Now it appears the forecast has been changed to say that they need…. There's a load increase of 1.5 times the forecast demand growth rate. Could the minister explain the difference and why that occurred?

Hon. R. Neufeld: The load growth going forward is expected to actually increase slightly on Vancouver Island as we see more people move to Vancouver Island and more industry. We're trying to contain those load factors as much as we can through conservation.

What is also happening with the Vancouver Island gas project is to replace the cables that will come to the end of their life sometime in 2007. That's the projection forward. It won't add new generation to the system; it will actually just take the place of the generation when you retire the cables.

J. MacPhail: Well, I beg to differ. Perhaps we could actually deal in numbers then, because it isn't a replacement load. The load forecast takes into account replacement, etc., so maybe we could have some numbers. Well, okay, maybe the minister can explain to us laypeople how it doesn't.

Hon. R. Neufeld: The information I've been given for the load growth on Vancouver Island is that it's increasing a small amount. But if you look at the charts, the replacement for the planned plant at Duke Point — whether it goes ahead or not remains to be seen; that's a decision of the BCUC — will replace about the same amount of electricity that was transported across to Vancouver Island in the HVDC cables. So once those are decommissioned, then the generation capacity goes down. But when you put on Duke Point, it just takes the place of that. There is still a modest load growth going forward. I'm just going by memory. The gentlemen that are with me are saying it's about 1 percent maybe.

If the member has different information, I appreciate that. But the need for the plant is to actually replace what we're soon going to lose, which comes across from the mainland.

J. MacPhail: Okay, so we really are dealing in the discussions…. And I appreciate the discussion we had before from the minister that nothing is final yet. But we really are dealing, then, only with a need to have a capacity change of source of 250 megawatts. Is that right?

J. MacPhail: Okay. Again, let me just say that it would surely be more accepted, I think, by the communities throughout Vancouver Island if the minister could, first and foremost, examine the proposals he's received on green and clean energy sources before proceeding even to hearing at the B.C. Utilities Commission about the future of the GSX pipeline and the Duke Point power plant.

I had some other questions that I didn't even get to put on record, so I'll just continue on with those.

Central to the GSX pipeline is an agreement with Powerex that it will pay all the tolls on the pipeline and will do so even if no gas is actually shipped through the pipeline, and I'm told it's a 30-year contract. Is that right?

Hon. R. Neufeld: Yes. Approximately three years ago that contract was negotiated.

J. MacPhail: Madam Chair…. Oh, sorry. Mr. Chair, it would be. [Laughter.] Sorry. Under no circumstances could you be called the tooth fairy.

Mr. Chair, please, through you to the minister: stop doing that. If the minister is trying to justify all of his actions because everything was in place, put in there by the previous government, and it couldn't be stopped, he's dead wrong — dead wrong. And that's what he tries to do. He tries to do it at every point: "Oh, the turbines were on order under your government. The contract was put in place under your government." Balderdash.

This government enters in here approximately every three to four months to break a contract. There are all sorts of contracts that have been broken by B.C. Hydro — or compensated for. He just named one, with Calpine. So stop it. If this government was put in place only to do what was already in the "pipeline," then what was the good of British Columbians voting for them? What was the good of holding public hearings where the public may have changed its mind? Take responsibility for your actions, I say to the minister. Stop trying to hide behind: "Oh God, we had no choice."

B.C. Hydro has choices at every step of the way — every step of the way. I mean, if he's not proud of his actions, just stand up and say so. If he feels compelled to pursue a particular line because he agrees with the previous government, stand up and say so. Stop trying to spin it that it was everybody else's fault but his, and he's not responsible for anything. Either he agrees with what was happening before, or else he has the ability to change it.

Much has happened in the interim as well. Much has happened in terms of changes to the project. The Port Alberni cogeneration plant that was supposed to create lots of jobs is off. There's been substantial change in the nature of the project since the change in government. It's not washing with the citizens, so he doesn't need to try to spin it in here as if somehow I'll be cowed by feeling guilty about it.

Hydro has a 50-50 partnership with Williams, yet my understanding is that Hydro is putting up all of the development money and Williams is on the verge of bankruptcy. In fact, I understand that Williams was recently fined $20 million (U.S.) for anti-competitive practices, the largest fine ever levied by the Federal Energy Regulatory Commission, FERC.

Can the minister explain how this is a good deal for Hydro and for British Columbians when the taxpayers are carrying all the risk and all the costs?

Hon. R. Neufeld: My goodness, I didn't think she was so touchy about issues that took place under her administration. I'm not trying to do anything but tell the people of British Columbia, through this estimates process, what's taken place. I mean, all I did was say that the contract was signed three years ago. I didn't even say that was under the last administration. When I talked about purchase of the turbines, I said that's not a fault of the last administration, because turbines were in great demand and they were priced at a high rate.

I think the member just protests too much. I don't know what's wrong. I'm trying to be as fair-minded as I possibly can in bringing forward all the issues to the member and in responding to her questions as fairly as I can.

There was a transfer that took place when we became government. There were contracts that were signed prior to us becoming government. I'm not….

Hon. R. Neufeld: There she is again. I'm sorry that it bothers her, but it is fact and it is true. I will continue to bring forward those facts as I see fit as we go through the estimates.

J. MacPhail: Could he answer my question, please, Mr. Chair? I mean, he seems to think we're fools in this House. Some of them are sheep, but they're not fools. I'm certainly not a fool.

I know exactly what the minister is doing. He's trying to protect himself and to blame others for decisions that he's making. That's what he's doing. There's good reason why he needs that coat of protection. It's because it's going from bad to worse because of this government's actions or Hydro's actions. Let's just be clear — Hydro's actions.

Hon. R. Neufeld: The total costs are $97.5 million. There is a contract between Williams and B.C. Hydro. It is, as I'm told, a fairly complicated contract. I don't think there are any confidential parts of it. If the member wishes to have a copy of it to review and critique, I can certainly make that available to her at any time.

As far as Williams being bankrupt or not, I'm not sure. I don't think it's any secret that their share value is pretty limited, as was Calpine's, as are quite a number of corporations in the U.S. that generate merchant power and sell it into the grid, because of the low prices for electricity that we're actually facing today.

J. MacPhail: Well, perhaps the minister could just answer the question. It's a 50-50 partnership, but Hydro is putting up how much of the development money, then?

Hon. R. Neufeld: Again, this was apparently a complicated contract. I'm afraid to say when the contract was signed. In any event, B.C. Hydro will be paying the costs for the pipeline, as was negotiated, and Williams will ante up their share. It's a 50-50 contract, so Williams will have to ante up their share, or B.C. Hydro may have to find another partner for the project if, in fact, it is okayed and can go ahead.

J. MacPhail: Let me ask this question. When this government came in, they looked at all these contracts

and said: "Oh, we have to live with them regardless." Is that what the minister is saying?

Hon. R. Neufeld: No, it's not. Actually, B.C. Hydro as a Crown corporation, the member knows, was and is in the process of getting new generation on Vancouver Island and made the decision that the best way to move forward is with natural gas–fired generation. We're actually carrying on with that project. That should make the member happy.

J. MacPhail: Well, it only makes me happy if, as we move through the twenty-first century, it makes sense. The project doesn't even bear any resemblance to what the previous government's project had in mind — none whatsoever. I'm just curious as to why the minister thinks that in this particular case, it's important when contracts were signed — that's all — because he's the one that's making an issue of it.

I just wondered whether the minister and Larry Bell and the Premier got together and looked at these contracts and said: "Oh, wow. We hate them, but we've got to proceed with them anyway." If the minister didn't do that, then it's entirely his government's responsibility that the Crown corporation proceeds with this and the project. In fact, I would assume that if the minister has learned from the mistakes of the past government, he would have done that. They certainly didn't hesitate to do that in the area of bids for fast ferries. They, this government, didn't hesitate to reject the offer of $88 million for fast ferries. They didn't hesitate to do that.

If there's some reason why the minister is ashamed or is forced or didn't feel like it was comfortable enough to bring legislation in to break a contract the way this government's done seven times already, then stop talking about it and take responsibility. That's what I'm saying. Stand up and take responsibility for its own actions. Surely B.C. Hydro must know about whether Williams was recently fined $20 million (U.S.) for anti-competitive practices by FERC.

Hon. R. Neufeld: Actually, we are taking responsibility for getting generation on Vancouver Island. B.C. Hydro is taking responsibility for getting generation on Vancouver Island, as the legislation tells them they have to. They are to provide electricity to British Columbia consumers. That includes Vancouver Island. B.C. Hydro has a responsibility to make sure that they have enough electricity on Vancouver Island to keep the lights on and to keep people's homes heated.

B.C. Hydro and the government don't want to see that not happen, so the process we're going through with B.C. Hydro actually is a bit different than the last administration, who ordered Hydro to do things. We said the B.C. Utilities Commission should review the costs associated with this proposal to get 265 megawatts of electricity onto Vancouver Island, and that is significantly different than what took place before.

BCUC will review all these costs, will move forward with all these costs. The member is entirely wrong when she says Larry Bell, the Premier and myself sat down and read all these contracts and decided, in our wisdom, that we could blame the last administration for everything. I'm not blaming the last administration.

In fact, she should take some comfort in the fact that we're moving forward with the Williams deal for the pipeline, which — again, quietly — was before our time. We know we have to get some generation on Vancouver Island so Vancouver Island can move forward and when the cables that are reaching the end of their lives are deactivated, there's actually generation in place to take care of that.

J. MacPhail: I take no comfort in that whatsoever, because the circumstances have changed substantially since 2000. In 2000, for the pipeline that was being advocated, the price was $180 million, and the reason why B.C. Hydro…. My gosh, I feel so badly for B.C. Hydro. Those poor people at B.C. Hydro — making $300,000 and $400,000, $100,000, $200,000 — were bullied by the previous government. There is absolutely no evidence of that whatsoever. None whatsoever — absolutely none.

J. MacPhail: I'd be happy to have the evidence of that. Let Michael Costello present the evidence. Let the bureaucrats making $200,000 and $300,000 show how they were bullied by the government. Produce the memos and the minutes from the board of directors meetings, and show how they're different under this government in terms of direction. Let's see how Michael Costello was bullied by the previous government or by the chair, Brian Smith. Let's just see that.

If that is the case, then they weren't doing their job, the bureaucrats at B.C. Hydro, and if they continue to hide behind the skirts of that defence, it's pathetic, I'll tell you. If they're not hiding behind that defence, it's disgusting that this minister is alleging that they are, is accusing the bureaucrats at B.C. Hydro of doing that.

The pipeline had a cost of $180 million in 2000, and in fact, my understanding is that why B.C. Hydro chose that as an alternative was because the cost to replace the cables that the minister is now talking about hovered around $200 million, or just under $200 million. So in terms of cost, the pipeline was the cheaper alternative. However, now, in 2003, the cost of the pipeline has nearly doubled to $320 million.

As we've already discussed, the plant cost at Duke Point has skyrocketed to $380 million, far and above what the original proposal at Port Alberni would have cost. There's no cogeneration aspect to it whatsoever. In fact, they're now going to be producing electricity at 7.3 cents per kilowatt-hour.

Hon. R. Neufeld: It's interesting. I'm not sure where the power comes from when you get to the mainland. You still need to build a plant or something to generate the 265 megs. Or do you just plug into a system that has all kinds of electricity? No, you can't, because at the present time…. In fact, the member knows that in the last ten years — and this isn't, again, critical; it's just fact — we have been net importers of electricity three years out of ten. That's a fact.

You can't just say: "We'll just replace the cable, and we're home free." You still have to generate it on the mainland. In fact, the mainland, which is very close to here…. They don't want it in the Vancouver area. They don't want it in the Fraser Valley area. I guess probably you take it to Williams Lake, and you generate it in Williams Lake. I guess that makes the people on Vancouver Island happy, but then we have to deal with things at Williams Lake. There would probably have to be some upgrades to the transmission system — I'm not sure, but there probably would be — to take care of it. There's more to it than just cables and a plant.

You're right. Things have changed. Costs have gone up. I don't disagree one bit. Again, I'm going to stress to the member: we have to get electricity on Vancouver Island. I don't know if the member is telling me that we shouldn't have electricity on Vancouver Island. I kind of agree that we should keep the lights on in this building. People that heat with electricity on Vancouver Island should be able to keep their homes warm. They should be able to have a secure, reliable supply.

We also — and I explained this to the member — need some natural gas on Vancouver Island. The lines that are presently across from the mainland, again, are full. Now, you can compress them again and get more compression, but it's going to cost you over $100 million to get more compression on it, and it won't get you enough to look into the future for what we're going to need on Vancouver Island for replacement of fuel — to the cleanest-burning source we know, which is natural gas today.

Also, the plant at Campbell River…. In peak periods there's not enough natural gas to keep the gas going to the commercial consumers and residences and keep that plant running, so that plant turns to diesel fuel. We don't want it to burn diesel fuel. We want it to burn natural gas. It's cleaner.

All we're trying to do is get a natural gas–fired plant on Vancouver Island — 265 megawatts. I don't know what's so wrong with trying to keep the lights on, on Vancouver Island. It's getting difficult for me to understand what's wrong with keeping people on Vancouver Island with their electricity on. I don't know what's wrong with that. I can't for the life of me figure that out.

Let's move forward and let the B.C. Utilities Commission, which is hugely different from what took place before…. I can send the member a copy of the letter the previous Minister of Energy, Dan Miller, wrote to Hydro saying they're exempt from a CPCN for the Vancouver Island project.

We changed that. We said: "Look. There are experts out there." I know the past administration didn't believe in the BCUC, but there are experts in the BCUC that would review all the costs associated with the Vancouver Island generation project. If they find that those costs — at 7.3 cents a kilowatt-hour — are far too high, they will come back with some recommendations, I'm sure, to B.C. Hydro, which has the responsibility to make sure we provide electricity on Vancouver Island, and tell them what some of their options are.

That could actually happen. I don't know. I'm not going to try to pre-guess what the BCUC is going to come up with after they've reviewed all this. I'm not going to try to pre-guess what the environmental assessment is going to say when they're done with it. That's up to those people to do that. I'm not going to mess in that. That's a process that's outside of my control. It's actually a good process, because people can actually come and make representation to the B.C. Utilities Commission about all the reasons that the member just brought forward a while ago — the doctors, all the people that want to say: "No, it's not a good project."

There has to be something that takes its place. We can't just say: "Well, I guess we don't need any hydro anymore. Someone decided." We actually need some electricity on Vancouver Island. That's all this government's trying to do, and I take full responsibility for it.

I take full responsibility for B.C. Hydro. The Premier has charged me with doing that. I want to move forward. It's a great corporation, it does a great job, and it is well liked in the province of British Columbia — whether it's on Vancouver Island or the mainland. In fact, people love it. We've kept it public; it's a publicly owned corporation.

We'll move forward with the lowest rates we possibly can, and we'll still enjoy probably the third-lowest rates in North America even after they go through their next rate review. Their next rate review will be the first one that they've had in ten years.

J. MacPhail: Yeah, exactly, because the rates were frozen. That was good news for the ratepayers. The corporation made a profit, the corporation paid a dividend, and rates were frozen.

Here is what I'm saying. When this original project was planned, it was to go to Port Alberni. It was going to be a cogeneration project, create extra jobs, and it was going to cost $180 million. To replace the cables — the hydro transmission lines to the Island — was going to cost $200 million, so a decision was made to go with the pipeline and to have public hearings. Public hearings happened. Port Alberni was allowed to say no to the plant and did. Cowichan said no to the plant.

The government, in the meantime, takes great pride in saying that there are over 13,000 gigawatt-hours of new clean and green proposals, which the minister has just admitted are mostly on the mainland side. All I'm saying to you is that this government has chosen the natural gas pipeline when there are all sorts of other alternatives that are cleaner and greener.

I'm asking questions about that. Will B.C. Hydro be presenting a proposal to BCUC about the alternative of replacing the cables?

J. MacPhail: What is the corporation's estimate in 2003 for replacing the cables?

Hon. R. Neufeld: The B.C. Hydro officials have the total cost that would be 20 years into the future. I've asked for the capital cost. I think that's what the member was asking for at the present time.

J. MacPhail: Thank you. I'd appreciate that information. So there is one alternative. We're not on a holy crusade here to light up Vancouver Island. We've all agreed that we're talking about 250 megawatts here. That's what we're talking about. I'm not sure what the minister was going on about: "Does the member disagree with getting power to Vancouver Island?" Some of my best friends are on Vancouver Island.

The problem here is that the minister has a $700 million project going ahead, about double its original proposal. No cogeneration now — it's gas-fired. We're facing Kyoto protocol, we're dealing with greenhouse gas levels that are going to have to be offset somewhere else, and there are other alternatives. There's an alternative of replacing the cables and using all those green, clean gigawatt proposals that he's got on the mainland and powering it through the cables. That's a proposal that could be put forward, which would actually be greener and cleaner than this proposal.

Of course, if the minister is somehow saying that this is tied to having to get more natural gas to Vancouver Island, then that's a different matter. If somehow we're having to build this pipeline for the natural gas industry, then that's wrong. That's dead wrong. They're a private industry. They were privatized by his colleagues in the eighties, and they should be responsible for their own infrastructure costs.

I don't know why the minister…. I think the minister may have probably misspoken by telling the truth — that it has to do with getting natural gas to Vancouver Island, and it's not really about power on Vancouver Island.

In January of this year Hydro admitted that because of the success of the Power Smart program, they were forced to re-evaluate future load requirements. That, of course, was based on the success of the program just in Comox and Courtenay.

I'm wondering if the corporation has, because they were forced…. They're not forced. That's not the right word. They revealed that they could re-evaluate for future load requirements. What's the update on examining the success of Power Smart in other areas beyond Comox and Courtenay?

Hon. R. Neufeld: Part of the analysis that's going forward to the B.C. Utilities Commission in the hearing process incorporates Power Smart and the savings that B.C. Hydro will expect there. B.C. Hydro is targeting about 30 percent, I believe, of its incremental load growth going forward — this is across the whole province — that will be garnered from conservation. Those numbers will be there for the B.C. Utilities Commission to review.

Hon. R. Neufeld: The actual peak for Vancouver Island is about 1,955 megawatts, which occurred on December 17, 2001.

J. MacPhail: Thirty percent of 1,955 is what? About 600 megawatts, around that — 650 megawatts?

Hon. R. Neufeld: No. Maybe I confused the member. What I'm saying is that Hydro is looking to get 30 percent of its incremental load going forward, which is about 1½ percent on average for the whole province. Thirty percent of that will come from conservation. It doesn't have anything to do with this 1,955 megawatts. That's the total peak load on Vancouver Island.

J. MacPhail: Let me work this through, then, because the minister just admitted that the load growth forecasted on Vancouver Island is a maximum of 1 percent growth. He said that earlier, because I was talking about forecasts for load growth being flat on Vancouver Island. He kind of agreed and said: "Well, there might be about 1 percent increase."

Let's say Power Smart actually does save 30 percent of incremental growth costs. Is that what the minister is saying?

Hon. R. Neufeld: Again, I'm going to say that a third of the incremental average load going forward for the whole province — this is everything, Vancouver Island and the mainland — estimated to be about 1.5 percent going forward, will come from Power Smart. Hydro is investing heavily in Power Smart.

I just have the annual report for 2002 for B.C. Hydro. On Vancouver Island B.C. Hydro is estimating the load growth at about 1.4 percent. It's a bit lower than what the average would be for the whole province, but fairly close. It's almost the same thing. I'm not trying to be difficult. I'm trying to say how they're moving forward with trying to do conservation and to supply the incremental load needed going forward.

I guess they do their estimates on population increase, on investment increase in jobs. In fact, their third-quarter report that just came in…. They had a record year, this past year, for tie-ins to B.C. Hydro. I forget how many residences and businesses tied in, but it was actually quite a few. There is actually a growth going forward, on average, across the province. It may be a smidgen lower on Vancouver Island, but there's still a load growth.

J. MacPhail: Well, let me just ask this. It's quite an uncomplicated lay question: how much of the forecast load growth is anticipated to be absorbed by Power Smart savings on Vancouver Island?

Hon. R. Neufeld: While my friend figures that out for me, I have been given the estimates for the cable replacement at $230 million — to replace the cables that are actually reaching the end of their life. Also, I'm told, and I was remiss in not mentioning it before…. I was reminded that the ability to just go in and change a cable is not that simple either. That takes a fair amount of engineering. It takes a lot of work, and also, the environmental processes you have to go through would be fairly lengthy, and you would start on that right from now. It is expensive to replace the cables also. As I said earlier, to put the power in the cables to bring it over to Vancouver Island would take the construction of a plant somewhere in the province.

J. MacPhail: Yes, but first of all, the price of the pipeline is $380 million now, so the cost of the cable replacement is about 60 percent of the cost of the pipeline. Also, the minister has admitted that the green and clean proposals that create 13,000 or so gigawatts of power are mostly on the mainland. So the opportunities for creating green and clean power and, I would also suggest, for reliable, consistent, stable sources rest on the lower mainland as opposed to on Vancouver Island.

Where I'm going on the future increase of load growth being taken up by Power Smart…. I'm just trying to figure out if there's any reason why we would have to prepare for more than 250 megawatts of power. The minister and I have both agreed that we're talking about replacing 250 megawatts of power, and it seems to me that there's also a potential that that'll do it for the Island for a very, very long time if the Power Smart program is as successful as has been admitted.

Of course, we also have the results from Comox and Courtenay, so the minister could tell us the results of the re-evaluation of future load requirements as a result of examining the Power Smart programs in Comox and Courtenay.

Hon. R. Neufeld: Again, I'm going to say that the reason for the pipeline is mainly to provide natural gas for electricity generation on Vancouver Island. I tried to explain earlier that the plant at Campbell River at times has to burn diesel fuel instead of natural gas. I've explained that the lines that already come across from the mainland to Vancouver Island are full. We can compress them further, but that would cost another $100 million. All these are taken into account.

I don't bully these folks like the member talked about before. I actually respect them. I respect their knowledge and their ability to forecast power out into the future. B.C. Hydro has done this for a long time. They're experts at it. Everyone knows they're experts at it. They have provided to us what they feel we need, moving forward, for electricity on Vancouver Island, and we're trying to take in all the conservation we possibly can, not just on Vancouver Island but in the whole province.

The other part about the projects that I talked about the other day…. There were 70 proposals. They've been short-listed to 30, so out of the 70, 30 are probable. The other 40, for whatever reason — I don't know — probably weren't. So there isn't that amount, but the 70 incorporated that much. The 30 still, if they all went ahead, I believe are about 3,000 gigawatts — somewhere in that neighbourhood — or 3,300 gigawatts.

That's not all firm power either. A lot of that is run-of-the-river, small projects. The rivers may not run year-round, so you can't depend on it as hard, firm power. What we need to replace the cables — which is hard, firm power on Vancouver Island — is hard, firm power, not run-of-the-river projects that may not be able to generate year-round, because the power still has to come from someplace.

It is a complicated system of trying to get energy onto Vancouver Island. It always has been. To be perfectly frank, it has been this way as long as I can remember. As long as I've been in this House, there have been discussions about how we get more energy on Vancouver Island. And it is expensive. There's no doubt about it, but somehow B.C. Hydro has to do that. There's a process they're going through now, which is open and transparent, through the B.C. Utilities Commission to be able to make those proposals to make sure we get the best process moving forward. I believe I have…. If the member will give me a minute.

Again, these numbers are in generalities so that the member knows this. The yearly load growth going forward is estimated to be 30 megawatts on Vancouver Island. So 30 percent of that is about nine megawatts out of that 30 megawatt growth that we should be able to get through Power Smart. That's a target they're working towards.

J. MacPhail: I have the greatest of respect for B.C. Hydro. That's why I am a huge proponent of keeping B.C. Hydro as a public corporation. However, I do know that the world energy needs fluctuate, and we're an export corporation. B.C. Hydro is a very successful export corporation as well as providing some of the cheapest domestic power in all of North America.

I remember my first year in cabinet, and it was very early on in my first year in cabinet, in 1993, when B.C. Hydro came to the cabinet table and forecast that we would be literally having rolling blackouts by the year 2000 if nothing was done. That scared the hell out of me. They were probably accurate in 1993, but the forecasts didn't come to fruition. Huge investments of the kind that we're talking about have to be done with as precise a forecasting science as we can imagine.

Things have changed greatly on the export side of B.C. Hydro in the last 18 months. I can't remember this exactly, but I thought Hydro includes its anticipated exports in its load forecasts so that if there is any an-

ticipated shortage for domestic use, it is influenced by what the corporation forecasts it will export. Do I remember that correctly?

Hon. R. Neufeld: Actually, Hydro's responsibility is to meet the domestic load first. That is their job one. That's B.C. first, and then, if they are able to export any excess electricity, they will do that.

Through Powerex they actually maximize that with the systems we have, with the dams on the Peace and the Columbia. I'm sure the member's aware of that — that they try to sell what power they do have at the peak periods and import from the jurisdictions south of the border and from Alberta. At nighttime when their thermal plants are generating around the clock, we'll import that electricity because they're on a market-based price system. We're not. We'll buy that electricity fairly cheap and put it into the system, store the water and, again, generate when we can sell it at a higher price.

Hydro over the last ten years has consistently made, on average, about $150 million every year from export trade, not including the year — the member's aware of it — when prices went through the roof in California. That was an abnormal year for a whole bunch of things — natural gas and hydroelectricity.

J. MacPhail: Yes, I appreciate that. My point is a different one, though. I'm talking about determining future load requirements. I fully appreciate that as long as it remains a public corporation, B.C. Hydro's first obligation is to domestic power. What I'm talking about, which is what we're discussing right now, is future load requirements. In estimating future load requirements, which I think the minister said was 1.4 percent throughout the province on average, does that include any estimation for export changes?

J. MacPhail: I have two other areas of canvassing in the area of B.C. Hydro.

Just to finish this up, what's the best guess of the corporation of when the B.C. Utilities Commission will hold its hearings around the Duke Point power plant and the Vancouver Island gas pipeline?

Hon. R. Neufeld: There are workshops happening, apparently, in April — later in the month. The actual hearing will be sometime in early summer. That's our best guess, but then again, that's up to the B.C. Utilities Commission and when they feel they're ready to do that.

J. MacPhail: Again, I ask — I don't know whether I've actually asked this — before I move on to the comparison of GSX and Sumas 2, does the B.C. Utilities Commission examine issues relating to both the Duke Point power plant and the Vancouver Island gas pipeline together?

Hon. R. Neufeld: The pipeline is under the jurisdiction of the NEB, but when the BCUC holds its hearing in regard to the generation plant at Duke Point, they will take into consideration the costs associated with the pipeline that will be part of the package.

J. MacPhail: That's why the corporation, B.C. Hydro, will be presenting the costs of replacing the transmission lines at that time?

J. MacPhail: Now, I want to talk again about — when I say GSX, I'm sorry; it is jargon — the Georgia strait crossing, which is what the Vancouver pipeline, the gas pipeline, is called. The Georgia strait crossing is the term for the pipeline that will go from the mainland to the Duke Point power plant, which is called the Vancouver Island generating plant. I want to compare that to the Sumas 2 plant that's being built in Washington State just south of the border.

During the National Energy Board hearings on the Georgia strait crossing pipeline, the lawyer for B.C. Hydro and for this government argued that the end use of the gas that will flow through the pipeline could not or, rather, should not be considered by the board in its deliberations. The same lawyer argued that the economic and environmental viability of the Duke Point power plant was irrelevant to the application of the pipeline itself.

Now, the government of B.C. — indeed, the very same lawyer — has also argued before the National Energy Board that in the case of a hydro transmission line from Sumas, Washington, to Abbotsford, as the line is an integral part of the power plant, any decision on the line must consider the environmental effects of the plant that produces the power. One lawyer, one government, two projects. One project is in the United States of America, and one project is of this government's own making — two different arguments completely.

Hon. R. Neufeld: We dealt with this briefly the other night, and we didn't complete it. I know the one question the member had that I remember was the name of the lawyer. Obviously, she's aware the Georgia strait crossing lawyer is Chris Jones. The SE2's is James Yardley and was previously Chris Jones. There is a different lawyer on the SE2 file.

Hon. R. Neufeld: Yes, now. The member is correct. At the beginning, it was the same lawyer.

I tried to explain at that time that we made an effort to the NEB that they should not review what happens at the burner tip on the pipeline crossing across to Vancouver Island. There was good reason to do that at the time because the National Energy Board did not and, we felt, didn't have the authority to actually review what happens at the burner tip. We wanted them….

Hon. R. Neufeld: Yeah, burner. Sorry. Burner tip. We thought they were exercising greater authority than what they actually had. The National Energy Board, in its own convenient way, decided that they had that authority and that they wouldn't go to the burner tip in houses, but they would go to the burner tip at the Duke Point plant. We agreed to that.

Now, when we go and take that argument to Sumas…. I think I made the argument or presented to the member that the reason for opposing Sumas is because it's in the wrong airshed. We're actually saying that the airshed has all that it can handle at the present time and, with the growth they're going to have in the Fraser Valley with cars and trucks and you name it in the future, that there was no need for or shouldn't be more CO2 put in the air from a plant at Sumas. What we're doing is using what's available to us with what the NEB decided to do on Vancouver Island, and we're saying now: "Well, then use that same rationale at Sumas." That's basically where we're going.

J. MacPhail: I'll just confirm what the minister is saying, as I understand it. The government was arguing that the source pollution is important in relation to the approval of the transmission line in Abbotsford, but it was not important on Vancouver Island. And that's what the minister means by the burner tip, I think. So the government was using two different arguments on the same kinds of projects. So now….

J. MacPhail: All right, I'm going to get to the airshed question. But there's a transmission mechanism and there's an end power plant in both circumstances. There's a transmission mechanism and there's a power plant at the end of…. That's what both projects are.

In the case of Sumas to Abbotsford, an international crossing, the government argued that they had to consider both aspects of the project. Then the government argued that because of the airshed — the deterioration of the quality of air in that airshed as a result of the project — the project shouldn't go ahead.

When it came to the government's own project with the Vancouver Island gas pipeline, the GSX crossing and the Duke Power plant, they tried to make the argument that the two parts shouldn't be considered. But, virtually, the National Energy Board rejected their argument, and now both have to be considered.

So what will the government's position be? How does the government distinguish the airshed quality in Nanaimo, around Duke Point, to somehow suggest that it's okay to put over 900,000 extra — I want to get it right — or 933,000 tonnes of greenhouse gas in that airshed?

Hon. R. Neufeld: I neglected to say in my earlier comments that it is a completely different airshed, and different airsheds are handled in different ways. The airshed on Vancouver Island is completely different, and there's a movement of that. In the Fraser Valley it's locked in the valley because it can't go out through the mountains, and they have some problems with that.

The other issue the member from Chilliwack brought to my attention is that, in fact, on Vancouver Island we can have and are having the environmental assessment done on the plant to find out about the airsheds and all these things you and I talk about in here, just kind of saying in different airsheds. They will actually have the experts to review those kinds of things and decide whether what I'm saying is correct or not. They may say the airshed on Vancouver Island can't handle it. That could be. I'm not saying that that plant's going ahead. I've said that from the start. There are processes. We said we'd go to the B.C. Utilities Commission. We're going to go to the environmental assessment process on Vancouver Island to make sure we're having the right process done on Vancouver Island.

The Sumas plant. We can't have our environmental process review the Sumas plant, because it's south of the border. So what we're trying to do is use whatever avenue we can, and I would think the member would appreciate that the government is trying to look after the airshed in the lower mainland, also, in the best way we possibly can. Given what we have to deal with — the geography and what we're trying to do in British Columbia with energy — I think that we're doing the best we possibly can with what we have today.

J. MacPhail: Yes, I fully accept that. But it doesn't mean the government didn't try to get out of having the plant subject to review, and so the self-righteous views of the member for Chilliwack-Kent somehow just drive me crazy.

J. MacPhail: The self-righteous view that he champions a cause unlike anyone else did, including the former government, just simply doesn't hold up. That's unless he can show that he stands up, that he's not a sheep and stood up in caucus and challenged the government that tried to make the argument that the generating plant should be separate from the pipeline. If he can prove that he's not a sheep….

J. MacPhail: If he can actually prove he's not a sheep, I'll be happy to withdraw my remarks, Mr. Chair, but in reality, I must say that his chatter, chatter, chatter about being the champion….

J. MacPhail: The chatter, chatter, chatter that he and he alone is the champion to bring down SE2 really just disappears in bravado when his own government tried to make exactly the argument that he abhors at SE2. They tried to make the same argument at the GSX crossing.

J. MacPhail: Anyway, maybe he's not a sheep, Mr. Chair. Maybe he did stand up on his…. Oh, and I have been corrected. Sheep don't have paws. Sheep have hooves. I said the other night that every sheep is raising its paw, and I had a lot of feedback on that matter. So I'm sorry. Sheep, when you raise your hooves, maybe…. Sorry, Mr. Chair.

The Chair: Members, maybe we can keep the animals in the barnyard, and we'll just stick to decorum in the House.

J. MacPhail: Mr. Chair, this will be my final area. It is to deal with allied Hydro agreement projects. What is the status of allied Hydro agreements? Is it my understanding — can I remember this correctly — that the government outlawed them?

Hon. R. Neufeld: I appreciate the question, but I'm not exactly sure what the member is referring to, and neither do my officials. Maybe she could expand on it a little bit for me.

Also, the member challenged me a while ago to send her a copy of the letter where B.C. Hydro was exempted on Vancouver Island by the previous government. It was the Minister of Employment and Investment, Tim Stevenson, December 18, 2000. I'll send this over to the member for her information. It was exempted from the BCUC from a hearing by the previous government.

J. MacPhail: Sorry, I don't remember challenging him. I don't deny that, but there was an environmental assessment process that was in place.

Let me tell you what an allied Hydro agreement is. In fact, I'll just read this. It's from the operating engineers, and it actually talks about the Arrow Lakes generating station at the Keenleyside Dam. An allied Hydro agreement, if I may, started under the Social Credit government and W.A.C. Bennett, and it was an agreement with the construction workers in the province about how there would be an allied agreement to build the infrastructure for B.C. Hydro.

It was union. It had to be negotiated, but it was union. I admit that right up front. This government has said, as I understand it, that it will no longer build hydro projects under the allied Hydro agreement. The reason given for it was that union labour costs are too high. That was the reason that was given. I'm happy to have the minister challenge me on this and say no, no, that has been reversed, and there's going to be agreement.

But here's the recent history about the very last time that the allied Hydro agreement was used, and recent history proves that union labour is the only way to go if the government is really looking for good value for dollars spent. Quite a few operating engineers worked long and hard to build the Arrow Lakes generating station at the Keenleyside Dam for the Columbia Power Corporation.

This project was completed one year ahead of schedule and for $25 million less than the estimated cost of $250 million, leaving funding to build the transmission line as well. For the building trades members' hard work, the contractor gets to share in an "early delivery bonus" of two-thirds of the profit from the first year of operation of the generators. It seems that the use of well-trained union labour paid off quite well for all concerned.

Greg Dixon, project manager for Kiewit, who built it, was quoted in the June 2002 Design Build Business Magazine as saying: "A positive relationship is the key. We had a great team and good luck." That's from the union.

Okay, that's true. That could be union propaganda. What is it people like to call it — socialist propaganda? All right. Let me see whether I can find another — what anyone else is saying about that. Well, let's go to the Columbia Power Corporation's own website. Basically, here's what it says. It's a project background. Construction begins after four years of public consultation. Now, who would that be under? Let me see. That was a decade of decline.

Okay. Now, I hope the government doesn't say that's just propaganda because it's their own website.

That's the last allied Hydro agreement project. It seemed pretty successful. Why is the government outlawing them?

Hon. R. Neufeld: I don't disagree with what the member just read into the record. I don't have someone here from CPC. I don't believe we're outlawing it. In fact, I think the projects that are going forward will probably go forward under the same process. I will, in fact, get back to the member on that, and it won't be six months from now. We'll actually get a response to her tomorrow or the next day.

Actually, I'm gone till Tuesday, but we'll have Lorne Siverton from CPC respond to the member on this issue.

J. MacPhail: I'm sorry, Mr. Chair. I appreciate that the minister's going to get me a response. It was just that the Columbia Power Corporation was the last body to build a hydro project. The Keenleyside Dam was the last project. Allied Hydro projects come from B.C. Hydro. The minister just has to call up B.C. Hydro and find out. And boy, if there's been a whole bunch of confusion that allied Hydro projects aren't outlawed and will proceed, that's great news for the taxpayer.

Hon. R. Neufeld: I apologize to the member. I misunderstood what she was saying because of Columbia Power Corporation, and I got a little bit ahead of myself with the project they're going to do in the near future. I will get back to the member with that answer.

Hon. R. Neufeld: Can you give us about five minutes here, and we'll check with the House Leader?

J. MacPhail: I'm sorry, Mr. Chair. This is the first time I'm joining these estimates. I wonder if the minister would introduce her staff.

Hon. J. Murray: I'm joined by the deputy minister, Gord Macatee; assistant deputy minister for environmental stewardship, Nancy Wilkin; and Sheila Taylor of our corporate services division.

Hon. J. Murray: Mr. Chair, we'd like a moment to ask the assistant deputy minister responsible for airshed protection to join us and give that information.

Different scientists have different ways of defining airsheds, so Nanaimo could be in an airshed that includes Sumas 2, or it could be in an airshed that doesn't include Sumas 2, depending on how it's defined by the scientists.

J. MacPhail: One is tempted to say "on how the wind blows." Actually, I think that is key. What's the ministry's view of this, because it's key to presentations that will be made by the government at various hearings that are coming up? In fact, I recollect that while in opposition the Liberals argued that the Sumas 2 airshed was exactly the same airshed that the Nanaimo airshed is. Has something changed? Is the wind blowing in a different direction now?

Hon. J. Murray: At this time the ministry is in the process of mapping the airsheds for the province, so there isn't a definite determination of the boundaries of the airshed Nanaimo is situated in.

J. MacPhail: Well, how is that possible when the government's own lawyer went to hearings and in one circumstance said that the airshed quality — for instance, in the Sumas 2–Abbotsford area — was such that the hearings had to encompass both the transmission lines and the end power plant? Yet they went to the hearings at GSX crossing and then Duke Point power plant and argued completely differently.

The Minister of Energy and Mines just finished telling us it was because they were different airsheds. Quite frankly, I was taken aback by the minister when she stood up and said there are some who may say they're in the same airshed. I thought the minister would stand up automatically, given what we just heard an hour ago — that they're completely different airsheds.… Is there a possibility they are not completely different airsheds?

Hon. J. Murray: Our concern is for the health of British Columbians and the impact of air quality on health. That means outcomes are what is important. The environmental assessment process will determine whether the outcome is of concern or not with respect to air emissions in the Nanaimo area.

J. MacPhail: The Duke Point power plant will put 930,000 tonnes of greenhouse gas into the air every

year. What argument will the Ministry of Water, Land and Air Protection be making about the viability of that on air quality?

Hon. J. Murray: Based on the modelling of the air flows and the emissions from the proposed plant, the ministry will assess whether the predicted impact on the airshed will exceed the ambient air quality guidelines or not. That will determine whether a permit would be issued or not.

J. MacPhail: We're told that those hearings are going to be taking place by early summer, by July. What resources is the ministry putting in to making its case?

Hon. J. Murray: The ministry staff will be in parallel to the environmental assessment process. We'll be using the information coming out of that assessment to do their analysis of the impact on the ambient air quality, and it will be staff time that will be devoted to that.

J. MacPhail: Could the minister tell us how the airshed mapping project came about, how far along it is and when the results will be available?

Hon. J. Murray: The project of mapping airsheds is being undertaken jointly with the federal government, and I would be pleased to bring some details as to where that project is at back to the member.

J. MacPhail: Well, maybe we could have that at the next sitting of the estimates. I'd appreciate that, because there are many questions that flow from that.

We're told that B.C. Hydro has committed to finding elsewhere credits for 50 percent of the pollution, the greenhouse gases, that will be put into the air by the Duke Point power plant. Would it be the ministry that would monitor that, about the success of delivering on finding air emission credits elsewhere?

Hon. J. Murray: The federal government is in the process of discussing with the various sectors what the plan for reducing their greenhouse gases might be. That's not completed yet, so the way that will conclude and how it will be monitored and enforced hasn't been determined yet.

J. MacPhail: I just have two other questions in this area. When Liberal backbenchers get up and lob questions about Sumas 2, it's the Minister of Water, Land and Air Protection who gets up and answers them. Is she the lead on making the submissions to the Sumas 2 National Energy Board hearings?

J. MacPhail: Sorry, I wasn't asking a political question. What is the relationship of this government to the hearings that are occurring around the Sumas 2 power plant? Is there not a policy role or a ministerial role that's being played here? I don't understand — John van Dongen?

The Chair: In the future we should not use names. We should use their title: Abbotsford-Clayburn.

Hon. J. Murray: Abbotsford is leading the presentation overall. In terms of who's speaking for the province, at this point it's John van Dongen.

The Chair: Minister, we should not use the name of the individual. "The MLA for Abbotsford-Clayburn" would be sufficient.

J. MacPhail: But then if I want to ask questions, do I have to call the member for Abbotsford-Clayburn in from the east annex? Theoretically, these questions are supposed to be answered by ministers. But listen. If the minister can't answer the question and if I'm supposed to go to the backbencher from Abbotsford-Clayburn, I'll have to figure out a new forum and parliamentary procedure to do that, because one doesn't exist now. God knows, there'll probably be a new rule in the House tomorrow where I can get at the member for Abbotsford-Clayburn, so I'll ask him those questions.

My last question in this area is: does the Ministry of Water, Land and Air Protection still set the standards for ambient air quality?

J. MacPhail: There are several questions that the minister will get back to me on in this area, and that concludes this section on this particular matter.

Hon. G. Bruce: I believe there are still some further questions yet to be asked.

G. Trumper: I have a question for the minister regarding the use of fees — the new system for fees for parks. The question has been raised. It is a concern not only in my area with the lakes, but I'm sure there are other areas that have the same concerns.

My question which is being raised is: if there are going to be fees to go to certain parks and the fees will go back into those parks, is there an opportunity for a choice to be made with some of those fees to be able to maintain and clean up some of the beaches that are around the lakes, some of which are provincial parks but are only accessible by water?

It is becoming a very severe problem amongst many of the lakes in this province over the access by

water by squatters on the beaches — the garbage, etc., that's left. It's becoming a problem to the lake from which many residents take their water. The question arises over the quality of water.

Would there be an opportunity for discussions to take place between those who will be managing those particular parks and, particularly, a regional district to look at ways of being able to clean up or manage some of those out-of-the-way beaches — some of them being provincial parks which were donated by residents — and to deal with this very serious issue which is getting much worse?

Hon. J. Murray: Fifteen percent of any fees that are charged for day use will be allocated to the park facility operator to assist in the maintenance and operation of the park facilities. Ministry staff are always willing and interested in talking with local government representatives about problems with the park or improvements that are being sought.

G. Trumper: Following up on that, has there been any discussion taking place between your ministry and the Ministry of Sustainable Resource Management? I'm quite sure some of those lands also come in under that jurisdiction.

I'm wondering whether there's been any discussion on somehow maintaining those areas which people use the parks to get through to. They use the boat ramps to launch their boats, etc. Some of them certainly are not provincial parks but do come under the jurisdiction of Sustainable Resource Management.

Hon. J. Murray: The ministry's involved in and supports a partnership that has been doing some of the work of monitoring and cleanup of Sproat Lake Park and is very interested in continuing participation with that organization.

R. Lee: My question is regarding sulphide contents of gasoline. There will be a standard for gasoline that will contain less sulphide. Some of the refineries are going to extract some of those sulphide contents out of the gasoline. In the process they will release more sulphide compound into the air.

My question to the minister is: what kind of regulations are going to be used in B.C. to regulate that kind of extraction?

Hon. J. Murray: I would be happy to get a technical answer to that quite technical question for the member.

R. Lee: My other question is on the storage tanks for refineries and companies. I understand that there's a national standard for storage tanks, yet B.C. has its own standard. I understand that there's a move to a national standard for B.C. above-ground storage tanks. May I have an update on the progress on that movement?

Hon. J. Murray: I think the member is referring to a code of practice with respect to storage tanks that has been agreed on by the Canadian Council of Ministers of the Environment. The ministry staff consider this quite a prescriptive standard and have not put it into force in regulation in British Columbia. Some other provinces have, but the ministry staff believe there are other means of protecting the environment from storage tank spills. The research indicates that the outcomes in British Columbia are equivalent to the outcomes in provinces that have put into force the CCME code of practice with respect to the tanks.

R. Lee: So the ministry is not taking into account the national standard? When you compare the two standards, which standard is more protective of the environment?

Hon. J. Murray: The ministry does recommend that proponents review the Canadian Council of Ministers of the Environment guidelines in their decisions around their storage tanks, but the outcomes do not suggest that putting into regulation an enforcement of that code of practice produces a better outcome, so the ministry is not planning to do that. The ministry believes there are other mechanisms that are equally effective in protecting the environment.

Hon. J. Murray: Mr. Chair, I would like to rise and report progress and seek leave to sit again.

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

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